Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (including but not limited to this Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations") 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"), that are intended to qualify for the "safe harbor" created by those sections. In addition, we may make forward-looking statements in other documents filed with or furnished to the Securities and Exchange Commission ("SEC"), and our management and other representatives may make forward-looking statements orally or in writing to analysts, investors, representatives of the media and others. These statements relate to future events or to our future operating or financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.

Forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts and include, but are not limited to, statements using terminology such as "can", "may", "could", "should", "assume", "forecasts", "believe", "designed to", "will", "expect", "plan", "anticipate", "estimate", "potential", "position", "predicts", "strategy", "guidance", "intend", "seek", "budget", "project" or "continue", or the negative thereof or other comparable terminology regarding beliefs, plans, expectations or intentions regarding the future. You should read statements that contain these words carefully because they:





  · discuss our future expectations;

  · contain projections of our future results of operations or of our financial
    condition; and

  · state other "forward-looking" information.

We believe it is important to communicate our expectations. However, forward-looking statements are based on our current expectations, assumptions, estimates and projections about our business and our industry and are subject to known and unknown risks, uncertainties and other factors. Accordingly, our actual results and the timing of certain events may differ materially from those expressed or implied in such forward-looking statements due to a variety of factors and risks, including, but not limited to, those set forth in this Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report, those set forth from time to time in our other filings with the U.S. Securities and Exchange Commission ("Commission"), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2022 and the following factors and risks:





  · As a result of the clinical hold that has been placed on our IND by the FDA,
    it has taken and may continue to take considerable time and expense to
    respond to the FDA, and no assurance can be given that the FDA will remove
    the clinical hold in which case our business and prospects will likely
    suffer material adverse consequences;

  · We contract with Austrianova for the manufacture of our product candidates
    and for certain preclinical and clinical activities. Austrianova may not be
    able to manufacture sufficient quantities of our product candidates for
    preclinical studies and clinical trials which could delay, prevent or impair
    our development or commercialization efforts. The production of our product
    candidates relies in part on the proprietary know-how of Austrianova which
    is held by them as a trade secret and as to which we are not privy;

  · We rely on officers of Austrianova for the development of our product
    candidates. If they decide to terminate their relationship with us, we may
    not be successful in the development of our product candidates;

  · In the event Austrianova experiences financial difficulties, their ability
    to provide products or services to us may be delayed or curtailed and may
    affect the carrying value of our intellectual property and cost-based
    investment in Austrianova;








  28






  · At this time, we are unaware of any available substitute manufacturer other
    than Austrianova;

  · We are seeking FDA approval to commence a clinical trial in the U.S. of our
    product candidate for LAPC based on clinical data that was obtained in
    trials conducted nearly 20 years ago outside the U.S., and it is possible
    that the FDA may not accept data from trials conducted in such locations or
    conducted nearly 20 years ago nor allow us to proceed with a Phase 2b as
    opposed to a Phase 1 or Phase 1/2 trial;

  · Results in previous clinical trials of our encapsulated live cell and
    ifosfamide combination for pancreatic cancer may not be replicated in future
    clinical trials which could result in development delays or a failure to
    obtain marketing approval;

  · Due to the significant resources required for the development of our
    programs, and depending on our ability to access capital, we must prioritize
    development of certain product candidates. We may expend our limited
    resources on programs that do not yield a successful product candidate and
    fail to capitalize on product candidates or indications that may be more
    profitable or for which there is a greater likelihood of success;

  · As the patents covering our Cell-in-a-Box technology have expired, our
    intellectual property, which is primarily trade secrets, and data and market
    exclusivity may not be sufficient to block others from commercializing
    identical or competing products; and

  · We have experienced significant management changes which could increase our
    control risks and have a material adverse effect on our ability to do
    business and our results of operations.

Any or all of our forward-looking statements may turn out to be wrong. They may be affected by inaccurate assumptions that we might make or by known or unknown risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in our forward-looking statements. Among the factors that could affect future results are:





  · our expectations of future revenues, expenditures, capital or other funding
    requirements;

  · the inherent uncertainties of product development based on our new and as
    yet not fully proven technologies;

  · the risks and uncertainties regarding the actual effect on humans of
    seemingly safe and efficacious formulations and treatments when tested
    clinically;

  · the inherent uncertainties associated with clinical trials of product
    candidates;

  · the inherent uncertainties associated with the process of obtaining
    regulatory clearance or approval to market product candidates;

  · the inherent uncertainties associated with commercialization of products
    that have received regulatory clearance or approval;

  · economic and industry conditions generally and in our specific markets; and

  · the volatility of, and decline in, our stock price.








  29

All forward-looking statements and risk factors included in this Quarterly Report are made as of the date hereof, in each case based on information available to us as of the date hereof, and we assume no obligations to update any forward-looking statement or risk factor, unless we are required to do so by law. If we do update one or more forward-looking statements, no inference should be drawn that we will make updates with respect to other forward-looking statements or that we will make any further updates to those forward-looking statements at any future time.

Forward-looking statements may include our plans and objectives for future operations, including plans and objectives relating to our product candidates and our future economic performance, projections, business strategy and timing and likelihood of success. Assumptions relating to the forward-looking statements included in this Quarterly Report involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development and commercialization of our technologies, all of which are difficult or impossible to predict accurately and many of which are beyond our control.

Any of the assumptions underlying the forward-looking statements contained in this Quarterly Report could prove inaccurate and, therefore, we cannot assure you that any of the results or events contemplated in any of such forward-looking statements will be realized. Based on the significant uncertainties inherent in these forward-looking statements, the inclusion of any such statement should not be regarded as a representation or as a guarantee by us that our objectives or plans will be achieved, and we caution you against relying on any of the forward-looking statements contained herein.





Overview of Business

We are a biotechnology company focused on developing cellular therapies for cancer, diabetes, and malignant ascites based upon a proprietary cellulose-based live cell encapsulation technology known as "Cell-in-a-Box®." The Cell-in-a-Box® technology is intended to be used as a platform upon which therapies for several types of cancer, including LAPC, will be developed. The current generation of our product candidate is referred to as "CypCaps™."

On August 15, 2022, the Company entered into a Cooperation Agreement ("Cooperation Agreement") with Iroquois Master Fund Ltd. and its affiliates, pursuant to which the Company elected a reconstituted Board. The Board has formed a Business Review Committee to evaluate, investigate and review the Company's business, affairs, strategy, management and operations and in its sole discretion, to make recommendations to the Company's management and Board with respect thereto. The Business Review Committee is also reviewing many of the risks relative to the Company's business. In addition, the Board is reviewing risks associated with the Company's development programs and its relationship with SG Austria, including that all licensed patents have expired, that know-how relating to the Company's Cell-in-a-Box® technology solely resides with SG Austria, and that the incentives of SG Austria and its management may not be currently aligned with those of the Company. The Board has curtailed spending on the Company's programs, including pre-clinical and clinical activities, until the review by the Business Review Committee and the Board is complete and the Board has determined the actions and plans to be implemented. The Business Review Committee's recommendations will include potentially seeking a new framework for the Company's relationship with SG Austria and its subsidiaries. In the event that the Company is unsuccessful in seeking an acceptable new framework, the Company will reevaluate whether it should continue those programs which are dependent on SG Austria, including its development programs for LAPC, diabetes and malignant ascites. The issues involving SG Austria have delayed the Company's timeline for addressing the FDA clinical hold for its planned clinical trial in LAPC and could result in other delays or termination of the development activities. In addition, the curtailment of spending on the Company's programs pending the review by the Business Review Committee and the Board may cause additional delays.

The Cell-in-a-Box® encapsulation technology potentially enables genetically engineered live human cells to be used as a means to produce various biologically active molecules. The technology is intended to result in the formation of pinhead-sized cellulose-based porous capsules in which genetically modified live human cells can be encapsulated and maintained. In a laboratory setting, this proprietary live cell encapsulation technology has been shown to create a micro-environment in which encapsulated cells survive and flourish. They are protected from environmental challenges, such as the sheer forces associated with bioreactors and passage through catheters and needles, which we believe enables greater cell growth and production of the active molecules. The capsules are largely composed of cellulose (cotton) and are bioinert.









  30

We have been developing therapies for pancreatic and other solid cancerous tumors by using genetically engineered live human cells that we believe are capable of converting a cancer prodrug into its cancer-killing form. We encapsulate those cells using the Cell-in-a-Box® technology and place those capsules in the body as close as possible to the tumor. In this way, we believe that when a cancer prodrug is administered to a patient with a particular type of cancer that may be affected by the prodrug, the killing of the patient's cancerous tumor may be optimized.

We have also been developing a way to delay the production and accumulation of malignant ascites that results from many types of abdominal cancerous tumors. Our potential therapy for malignant ascites involves using the same encapsulated cells we employ for pancreatic cancer but placing the encapsulated cells in the peritoneal cavity of a patient and administering ifosfamide intravenously.

We have also been developing a potential therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. Our product candidate for the treatment of diabetes consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box® technology. Implanting these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes of insulin production.

In addition to the two cancer programs discussed above, we have been working on ways to exploit the benefits of the Cell-in-a-Box® technology to develop therapies for cancer that involve prodrugs based upon certain constituents of the Cannabis plant. However, until the FDA allows us to commence our clinical trial in LAPC and we are able to validate our Cell-in-a-Box® encapsulation technology in a clinical trial, we are not spending any further resources developing our Cannabis Program.

Finally, the Company has been developing a potential therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. The Company's product candidate for the treatment of diabetes consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box®technology. Implanting these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes of insulin production.

Until the Business Review Committee completes its evaluation of the Company's programs and the Company enters into a new framework for its relationship with SG Austria, spending on the Company's development programs has been curtailed.

Investigational New Drug Application and Clinical Hold

On September 1, 2020, we submitted an IND to the FDA for a planned clinical trial in LAPC. On October 1, 2020, we received notice from the FDA that it had placed our IND on clinical hold. On October 30, 2020, the FDA sent us a letter setting forth the reasons for the clinical hold and providing specific guidance on what we must do to have the clinical hold lifted.

In order to address the clinical hold, the FDA has requested that we:





  · Provide additional sequencing data and genetic stability studies;

  · Conduct a stability study on our final formulated product candidate as well
    as the cells from our Master Cell Bank ("MCB");

  · Evaluate the compatibility of the delivery devices (the prefilled syringe
    and the microcatheter used to implant the CypCaps™) with our product
    candidate for pancreatic cancer;

  · Provide additional detailed description of the manufacturing process of our
    product candidate for pancreatic cancer;

  · Provide additional product release specifications for our encapsulated
    cells;








  31






  · Demonstrate comparability between the 1st and 2nd generation of our product
    candidate for pancreatic cancer and ensure adequate and consistent product
    performance and safety between the two generations;

  · Conduct a biocompatibility assessment using the capsules material;

  · Address specified insufficiencies in the Chemistry, Manufacturing and
    Controls information in the cross-referenced Drug Master File;

  · Conduct an additional nonclinical study in a large animal (such as a pig) to
    assess the safety, activity, and distribution of the product candidate for
    pancreatic cancer; and

  · Revise the Investigators Brochure to include any additional preclinical
    studies conducted in response to the clinical hold and remove any statements
    not supported by the data we generated.

The FDA also requested that we address the following issues as an amendment to our IND:





  · Provide a Certificate of Analysis for pc3/2B1 plasmid that includes tests
    for assessing purity, safety, and potency;

  · Perform qualification studies for the drug substance filling step to ensure
    that the product candidate for pancreatic cancer remains sterile and stable
    during the filling process;

  · Submit an updated batch analysis for the product candidate for the specific
    lot that will be used for manufacturing all future product candidates;

  · Provide additional details for the methodology for the Resorufin (CYP2B1)
    potency and the PrestoBlue cell metabolic assays;

  · Provide a few examples of common microcatheters that fit the specifications
    in our Angiography Procedure Manual;

  · Clarify the language in our Pharmacy Manual regarding proper use of the
    syringe fill with the product candidate for pancreatic cancer; and

  · Provide a discussion with data for trial of the potential for cellular and
    humoral immune reactivity against the heterologous rat CYP2B1 protein and
    potential for induction of autoimmune-mediated toxicities in our study
    population.

We assembled a scientific and regulatory team of experts to address the FDA requests. That team has been working diligently to complete the items requested by the FDA. We are in the latter stages of conducting the studies and providing the information requested by the FDA. We have completed the pilot study of two pigs and are evaluating the preliminary data before it commences the larger study of 90 pigs.









  32

The following provides a detailed summary of our activities to have the clinical hold lifted:





  · Additional Regulatory Expertise Added to IND Team. In addition to ?our
    existing team of regulatory experts, we retained Biologics Consulting to
    perform a regulatory "Gap Analysis" and to assist us with our resubmission
    of the IND. Biologics Consulting is a full-service regulatory and product
    development consulting firm for biologics, pharmaceuticals and medical
    devices and has personnel with extensive FDA experience.

  · Stability Studies on Our Clinical Trial Product Candidate for Pancreatic
    Cancer. We have successfully completed the required product stability
    studies. The timepoints were 3, 6, 9, 12, 18 and 24 months of our product
    candidate for pancreatic cancer being stored frozen at -80C. These studies
    included container closure integrity testing for certain timepoints.

  · Additional Studies Requested by the FDA. We have successfully completed
    various additional studies requested by the FDA, including a stability study
    on the cells from our MCB used to make our CypCaps™. We are already at the
    36-month stability timepoint for the cells from our MCB. We are also
    collating existing information on the reproducibility and quality of the
    filling of the MCB cells into vials ready for CypCaps™ manufacturing.

  · Determination of the Exact Sequence of the Cytochrome P450 2B1 Gene. We have
    completed the determination of the exact sequence of the cytochrome P450 2B1
    gene inserted at the site previously identified on chromosome 9 using
    state-of-the-art nanopore sequencing. This is a cutting edge, unique and
    scalable technology that permits real-time analysis of long DNA fragments.
    The result of this analysis of the sequence data confirmed that the genes
    are intact.

  · Confirmation of the Exact Sequence of the Cytochrome P450 2B1 Gene Insert.
    An additional, more detailed analysis of the integration site of the
    cytochrome P450 2B1 gene from the augmented HEK293 cell clone that is used
    in our CypCaps™ was found to be intact. In this new study, we were able to
    confirm the previously determined structure of the integrated transgene
    sequence using more data points. These studies also set the stage for a next
    step analysis to determine the genetic stability of the cytochrome P450 2B1
    gene at the DNA level after multiple rounds of cell growth. This new study
    has been completed in which our original Research Cell Bank ("RCB") cells
    were compared with cells from the MCB. The analysis confirmed that the
    cytochrome P450 2B1 and the surrounding sequence has remained stable with no
    changes detected at the DNA level.

  · Biocompatibility Studies. We have been involved with 10 biocompatibility
    studies requested by the FDA, eight of which have been completed
    successfully. The remaining studies are underway or about to start. The
    Acute Systemic Toxicity Study of Empty Cellulose Sulphate Capsules in Mice
    is underway. The Skin Sensitization Study of Empty Cellulose Sulphate
    Capsules in Guinea Pigs is about to start. These last two studies ?should be
    completed well before the pig study (see below) is completed.

    To enable the biocompatibility studies to be performed, we had Austrianova
    Singapore Pte. Ltd. ("Austrianova") manufacture an additional 400 syringes
    of empty capsules.

  · Systemic Toxicity Testing. We evaluated the potential toxicity of the
    capsule component of our product candidate for pancreatic cancer? and
    determined there is no evidence of toxicity in any of the parameters
    examined. The study also confirmed previous data that shows our capsule
    material is bioinert.

  · Micro-Compression and Swelling Testing. This testing is underway. We are
    developing and optimizing two reproducible methods for testing and
    confirming the physical stability and integrity of our CypCaps™ under
    extreme pressure. These studies required the acquisition of new equipment by
    Austrianova as well as validation and integration into Austrianova's Quality
    Control laboratory.








  33






  · Break Force and Glide Testing. We are in the process of developing a
    protocol to measure whether the syringe, attached to the catheter when used
    to expel the capsules, will still have a break and glide force that is
    within the specifications we have established. We are setting the
    specifications based on the syringe/plunger manufacturer's measured break
    and glide forces, or alternatively, accepted ranges for glide forces
    routinely used in the clinic.

  · Capsules Compatibility with the Syringe and Other Components of the
    Microcatheter Delivery System. We are in the process of showing that
    CypCaps™ are not in any way adversely affected by the catheters used by
    interventional radiologists to deliver them into a patient. Compatibility
    data is being generated to demonstrate that the quality of the CypCaps™ is
    maintained after passage through the planned microcatheter systems.

  · CypCaps Capsules and Cell Viability after Exposure to Contrast Medium. We
    have commenced testing to show that exposure of CypCaps™ to the contrast
    medium interventional radiologists ?used to implant the CypCaps™ in a
    patient has no adverse effect on CypCaps™. Contrast medium is used to
    visualize the blood vessels during implantation.

  · Master Drug File Information. Austrianova is providing additional detailed
    confidential information on the manufacturing process, including information
    on the improvements and advancements made to our product candidate for
    pancreatic cancer since the last clinical trials were conducted with respect
    to reproducibility and safety. However, Austrianova has not changed the
    overall physical characteristics of CypCaps™ between the 1st and 2nd
    generations.

  · Additional Documentation Requested by the FDA. We are in the process of
    updating our IND submission documentation, including our discussion on
    immunological aspects of our treatment for LAPC.

  · Pig Study. We have commenced a study in pigs to address biocompatibility and
    long-term implantation and dispersion of CypCaps™. The study has two phases:
    (i) a pilot study with 2 pigs; and (ii) a 90-pig study. The first phase has
    been completed and we are evaluating preliminary data. We believe this study
    should complement the positive data already available from the previous
    human clinical trials showing the safety of CypCaps™ implantation in human
    patients. The second phase of the pig study may be delayed as a result of
    supply chain problems, production delays at Austrianova, and to the
    Company's curtailment of spending pending review of the Company's programs
    by the Business Review Committee and the reconstituted Board (See "Business
    Review Committee"), including seeking a new framework for its relationship
    with SG Austria and its subsidiaries.




Reverse Stock Split

Effective July 12, 2021, we filed a Certificate of Change with the Nevada Secretary of State that authorized a 1:1500 reverse stock split of our common stock. The reverse stock split resulted in reducing the authorized number of shares of our common stock from 50 billion to 33,333,334 with a par value of $0.0001 per share. Any fractional shares resulting from the reverse stock split were rounded up to the next whole share. All warrants, option, share and per share information in this Quarterly Report gives retroactive effect to such 1:1500 reverse stock split.









  34

Impact of COVID-19 on Our Financial Condition and Results of Operations

In March 2020, the World Health Organization declared an outbreak of COVID-19 as a pandemic, and the world's economies have experienced pronounced effects. Despite the multiple COVID-19 vaccines globally, there remains uncertainty around the extent and duration of disruption and any future related financial impact cannot reasonably be estimated at this time. COVID-19 has caused and may continue to cause significant, industry-wide delays in clinical trials. Although the Company is not yet in a clinical trial, the Company has filed an IND with the FDA to commence a clinical trial in LAPC, and this clinical trial may experience delays relating to COVID-19 once commenced, including but not limited to: (i) delays or difficulties in enrolling patients in the Company's clinical trial if the FDA allows the Company to go forward with the trial; (ii) delays or difficulties in clinical site activation, including difficulties in recruiting clinical site investigators and clinical site personnel; (iii) delays in clinical sites receiving the supplies and materials needed to conduct the clinical trial, including interruption in global shipping that may affect the transport of the Company's clinical trial product; (iv) changes in local regulations as part of a response to COVID-19 which may require the Company to change the ways in which its clinical trial is to be conducted, which may result in unexpected costs, or to discontinue the clinical trial altogether; (v) diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as the Company's clinical trial sites and hospital staff supporting the conduct of the Company's clinical trial; (vi) interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others, or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the integrity of clinical trial data; (vii) risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events; (viii) delays in necessary interactions with local regulators, ethics committees, and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; (ix) limitations in employee resources that would otherwise be focused on the conduct of the Company's clinical trial because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; (x) refusal of the FDA to accept data from clinical trials in affected geographies; and (xi) interruption or delays to the Company's clinical trial activities. Many of these potential delays may be exacerbated by the impact of COVID-19 in foreign countries where the Company is conducting these preclinical studies, including India, Europe, Singapore and Thailand.

Further, the various precautionary measures taken by many governmental authorities around the world in order to limit the spread of COVID-19 has had and may continue to have an adverse effect on the global markets and global economy, including on the availability and pricing of employees, resources, materials, manufacturing and delivery efforts and other aspects of the global economy. COVID-19 could materially disrupt the Company's business and operations, hamper its ability to raise additional funds or sell securities, continue to slow down the overall economy, curtail consumer spending, interrupt the Company's supply chain, and make it hard to adequately staff the Company's operations.





Performance Indicators

Non-financial performance indicators used by management to manage and assess how the business is progressing will include, but are not limited to, the ability to: (i) acquire appropriate funding for all aspects of our operations; (ii) acquire and complete necessary contracts; (iii) complete activities for producing genetically modified human cells and having them encapsulated for our preclinical studies and the planned clinical trial in LAPC; (iv) have regulatory work completed to enable studies and trials to be submitted to regulatory agencies; (v) complete all required tests and studies on the cells and capsules we plan to use in our clinical trial in patients with LAPC; (vi) ensure completion of the production of encapsulated cells according to cGMP regulations to use in our planned clinical trial; (vii) complete all of the tasked the FDA requires of us in order to have the clinical hold lifted; and (viii) obtain approval from the FDA to lift the clinical hold on our IND so that we may commence our clinical trial in LAPC.

There are numerous items required to be completed successfully to ensure our final product candidate is ready for use in our planned clinical trial in LAPC. The effects of material transactions with related parties, and certain other parties to the extent necessary for such an undertaking, may have substantial effects on both the timeliness and success of our current and prospective financial position and operating results. In addition, the review of our programs by our Business Review Committee and reconstituted Board and the curtailment of spending until their review is complete and recommendations are made may have an adverse effect on the timeliness and success of our programs. In addition, if we are unsuccessful in seeking a new framework for the Company's relationship with SG Austria and its subsidiaries, the Company will reevaluate whether it should continue those programs which are dependent on SG Austria, including its programs for LAPC, diabetes and malignant ascites. See "Overview of Business." We will assess these factors on a regular basis to provide accurate information to our shareholders.









  35






Results of Operations

Three and nine months ended January 31, 2023, compared to three and nine months ended January 31, 2022





Revenue

We had no revenues for the three and nine months ended January 31, 2023, and 2022.

Operating Expenses and Loss from Operations

The total operating expenses and loss from operations during the three months ended January 31, 2023, increased by $696,864 to $1,552,983 from $856,119 in the three months ended January 31, 2022. The increase is mainly attributable to increases in director fees and general and administrative costs in 2023 from 2022, net of decreases in R&D costs, compensation expense and legal and professional expense costs in the amount of $27,578.





                                           Three Months        Change -         Three Months
                                              Ended            Increase            Ended
                                           January 31,        (Decrease)        January 31,
Operating expenses:                            2023           and Percent           2022
R&D                                       $       45,393     $    (112,646 )   $      158,039
                                                                      (71% )

Compensation expense                      $      251,556     $     (15,554 )   $      267,110
                                                                       (6% )

Director fees                             $      795,969     $     711,072     $       84,897
                                                                      838%

General and administrative, legal and
professional                              $      460,065     $     113,992     $      346,073
                                                                       33%

The total operating expenses and loss from operations during the nine months ended January 31, 2023, increased by $2,667,898 to $5,552,2118 from $2,884,313 in the nine months ended January 31, 2022. The increase is mainly attributable to increases in compensation expense, director fees and legal and professional expense in 2023 from 2022, net of decreases in R&D costs and general and administrative costs of $51,339.









  36






                                           Nine Months        Change -         Nine Months
                                              Ended           Increase            Ended
                                           January 31,       (Decrease)        January 31,
Operating expenses:                           2023           and Percent          2022
R&D                                       $     382,662     $     (54,210 )   $     436,872
                                                                     (12% )

Compensation expense                      $     979,694     $     178,687     $     801,007
                                                                      22%

Director fees                             $     951,031     $     741,921     $     209,110
                                                                     355%

General and administrative, legal and
professional                              $   3,238,824     $   1,801,500     $   1,437,324
                                                                     125%




Other Income (Expenses), Net

Other income, net, for the three months ended January 31, 2023, was $788,847 as compared to other expense, net of $44,829 for the three months ended January 31, 2022. Other income, net, for the three months ended January 31, 2023, is attributable to interest income of $635,889, net of other income (expenses), net of $152,958. Other income, net, for the three months ended January 31, 2022, is attributable to interest income of $45,459 net of other expenses of $630. The increase in interest income is attributable to an increase in the rates of interest.

Other income, net, for the nine months ended January 31, 2023, was $1,362,556 as compared to other expense, net of $67,859 for the nine months ended January 31, 2022. Other income, net, for the nine months ended January 31, 2023, is attributable to interest income of $1,214,562, net of other income (expenses), net of $147,994. Other income, net, for the nine months ended January 31, 2022, is attributable to interest income of $71,078, net of interest expense of $509 and other expenses of $2,710. The increase in interest income is attributable to an increase in the rates of interest.

Discussion of Operating, Investing and Financing Activities

The following table presents a summary of our sources and uses of cash for the nine months ended January 31, 2023, and 2022.





                                                                                Nine Months
                                                        Nine Months Ended          Ended
                                                           January 31,          January 31,
                                                              2023                 2022
Net cash used in operating activities:                 $        (3,505,343 )   $  (2,925,479 )
Net cash used in investing activities:                 $                 -     $           -

Net cash provided by (used in) financing activities: $ (9,253,125 ) $ 87,362,049 Effect of currency rate exchange

                       $            (1,970 )   $       1,081

Net increase (decrease) in cash and cash equivalents $ (12,760,438 ) $ 84,437,651










  37






Operating Activities:

The cash and cash equivalents used in operating activities for the nine months ended January 31, 2023, and 2022, is a result of our net losses offset by securities issued for services and compensation of approximately $648,000 and $104,000, respectively, other income of approximately $166,000 and $0, respectively, and changes to prepaid expenses, accounts payable and accrued expenses totaling approximately $129,000 and $213,000, respectively.

Investing Activities: We had no investing activities for the nine months ended January 31, 2023, and 2022.





Financing Activities:

The cash and cash equivalents used in financing activities for the nine months ended January 31, 2023, is mainly attributable to the repurchase of common stock net of the proceeds from the sale of our common stock in the amount of approximately $9.3 million.

Liquidity and Capital Resources

As of January 31, 2023, our cash and cash equivalents totaled approximately $73 million, compared to approximately $87 million as of January 31, 2022. Working capital was approximately $72 million as of January 31, 2023, compared to approximately $87 million as of January 31, 2022. The decrease in cash is attributable to an increase in our operating expenses of approximately $3.5 million and the repurchase of our common stock of approximately $9.3 million.

On August 9, 2021, the Company entered into an underwriting agreement to offer and sell shares of common stock, pre-funded warrants to purchase common stock and warrants to purchase common stock in a public offering ("First Offering"). The gross proceeds of the First Offering were $15 million, before deducting underwriting discounts, commissions, and offering expenses.

In August 2021, the Company received 27 cash exercise notices relating to the common warrants with respect to the First Offering totaling 2,522,387 warrant shares ("Warrant Exercises"). The Company received approximately $10,720,000 and issued 2,522,387 shares of common stock as a result of the exercise notices.

On August 19, 2021, the Company entered into a securities purchase agreement ("Securities Purchase Agreement") with certain institutional investors ("Purchasers") pursuant to which the Company agreed to sell in a registered direct offering ("Registered Direct Offering") shares of the Company's common stock and pre-funded warrants to purchase shares of common stock. Further, pursuant to the Securities Purchase Agreement, in a concurrent private placement (together with the Registered Direct Offering, "Second Offering"), the Company also agreed to issue to the Purchasers unregistered warrants ("Series A Warrants") to purchase shares of common stock. The Company received gross proceeds from the Second Offering, before deducting placement agent fees and other offering expenses payable by the Company, of approximately $70 million. On November 17, 2021, the Company's Registration Statement on Form S-3 registering the resale of the common stock underlying the Series A Warrants was declared effective by the Commission.

In total, in August 2021, we received funding in the amount of approximately $87.4 million through the First Offering and the Second Offering and the Warrant Exercises. Sales of our common stock, pre-funded warrants and exercise of Common Warrants occurred in the First Offering, Second Offering, and the Warrant Exercises.









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On May 14, 2018, we entered into amendments to all of the material agreements with SG Austria and Austrianova (see Section entitled, History of the Business" in Item 1. Business in our Form 10-K for the period ended April 30, 2022, for a description of these amendments). These arrangements are under review by our Business Review Committee and reconstituted Board which has curtailed spending on our programs until their review is complete and recommendations are made. This includes seeking a new framework for the Company's relationship with SG Austria and Austrianova. In the event the Company is unsuccessful in such efforts, the Company will reevaluate whether it should continue those programs which are dependent on SG Austria, including its programs for LAPC, diabetes and malignant ascites. We have no other off-balance sheet arrangements that could have a material current effect or that are reasonably likely to have a material adverse effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

To meet our short and long-term liquidity needs, we expect to use existing cash balances and a variety of other means. Other sources of liquidity could include additional potential issuances of debt or equity securities in public or private financings, partnerships, collaborations and sale of assets. Our history of operating losses and liquidity challenges may make it difficult for us to raise capital on acceptable terms or at all. The demand for the equity and debt of pharmaceutical companies like ours is dependent upon many factors, including the general state of the financial markets. During times of extreme market volatility, capital may not be available on favorable terms, if at all. Our inability to obtain such additional capital could materially and adversely affect our business operations. Our future capital requirements are difficult to forecast and will depend on many factors, but we believe that our cash on hand will enable us to fund operating expenses for at least the next 12 months following the issuance of our financial statements.





Service Agreements

We entered into several service agreements, with both independent and related parties, pursuant to which services will be provided over the next twelve months related to the clinical hold on our IND submission involving LAPC. The services include developing studies and strategies relating to clearing the clinical hold. The total cost is estimated to be approximately $214,000, of which the related party portion will be approximately $157,000. These agreements are under review by our Business Review Committee and reconstituted Board which has curtailed spending on this program until their review is complete and recommendations are made.

Critical Accounting Estimates and Policies

Our financial statements are prepared in accordance with U.S. GAAP. We are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 2 of the Notes to our Condensed Consolidated Financial Statements contained in this Quarterly Report. Management believes that the accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results and require management's most difficult, subjective or complex judgments resulting from the need to make estimates about the effects of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with our Board.









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Research and Development Expenses

R&D expenses consist of costs incurred for direct and overhead-related research expenses and are expensed as incurred. Costs to acquire technologies, including licenses, which are utilized in R&D and that have no alternative future use are expensed when incurred. Technology developed for use in our product candidates is expensed as incurred until technological feasibility has been established.





Stock-Based Compensation

Our stock-based compensation plans are described in Notes 2 and 5 of the Notes to our Condensed Consolidated Financial Statements contained in this Quarterly Report. We follow the provisions of ASC 718, Compensation - Stock Compensation ("ASC 718"), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees.





Net Income (Loss) Per Share

Basic net income (loss) per share of common stock is computed using the weighted-average number of shares of common stock outstanding. Diluted net income (loss) per share of common stock is computed using the weighted-average number of shares of common stock and shares of common stock equivalents outstanding. Potentially dilutive stock options and warrants to purchase 10,172,783 and 10,821,982 post reverse stock split shares of common stock at January 31, 2023, and 2022, respectively, were excluded from the computation of diluted net income (loss) per share because the effect would be anti-dilutive.

New Accounting Pronouncements

For a discussion of all recently adopted and recently issued but not yet adopted accounting pronouncements, see Note 2 "Summary of Significant Accounting Policies" of the Notes to our Condensed Consolidated Financial Statements contained in this Quarterly Report.





Available Information

Our website is located at www.PharmaCyte.com.In addition, all our filings submitted to the Commission, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all our other reports and statements filed with the Commission are available on the Commission's web site at www.sec.gov. Such filings are also available for download free of charge on our website. The contents of the website are not, and are not intended to be, incorporated by reference into this Quarterly Report or any other report or document filed with the Commission or furnished by us, and any reference to the websites are intended to be inactive textual references only.

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