TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Condensed Consolidated Balance Sheets as of ~~January 31, 2018~~April 30, 2020 (Unaudited) and October 31, ~~2017~~2019	31

	Condensed Consolidated Statements of Operations (Unaudited) for the six months ended April 30, 2020 and 2019	2

	Condensed Consolidated Statements of Operations (Unaudited) for the three months ended ~~January 31, 2018~~April 30, 2020 and ~~2017~~2019	3

	Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the six months ended April 30, 2020	4

	Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the three months ended ~~January 31, 2018~~April 30, 2020	5

	Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the six months ended April 30, 2019	6

	Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the three months ended April 30, 2019	7

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~three~~six months ended ~~January 31, 2018~~April 30, 2020 and ~~2017~~2019	68

	Notes to Condensed Consolidated Financial Statements (Unaudited)	79

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.	1827

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2334

Item 4.	Controls and Procedures.	2335

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings.	2536

Item 1A.	Risk Factors.	2536

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2538

Item 3.	Defaults Upon Senior Securities.	2538

Item 4.	Mine Safety Disclosures.	2538

Item 5.	Other Information.	2538

Item 6.	Exhibits.	2538

SIGNATURES		39	26

Item 1. Financial Statements.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	April 30, 2020		October 31, 2019
ASSETS	April 30, 2020		October 31, 2019
Current assets:
Cash and cash equivalents	$	2,888,197	$	3,491,625
Short-term investments in certificates of deposit		2,620,000		2,350,000
Receivables		32,338		66,527
Prepaid expenses and other current assets		116,252		184,972
Total current assets		5,656,787		6,093,124

Property and equipment, net of accumulated depreciation of $124,433 and $95,015, respectively		186,942		200,569
Operating lease right-of-use asset		81,166		-
Total assets	$	5,924,895	$	6,293,693

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	170,778	$	585,817
Accrued expenses		850,155		895,498
Operating lease liability		55,748		-
Total current liabilities		1,076,681		1,481,315

Operating lease liability, non-current		25,964		-
Total liabilities		1,102,645		1,481,315

Commitments and contingencies (Note 9)

Equity:
Shareholders’ equity:
Preferred stock, par value $100 per share; 19,860 shares authorized; no shares issued or outstanding		-		-
Series A convertible preferred stock, par value $100 per share; 140 shares authorized; no shares issued or outstanding		-		-
Common stock, par value $.01 per share; 48,000,000 shares authorized; 21,479,335 and 20,331,754 shares issued and outstanding, respectively		214,793		203,317
Additional paid-in capital		192,122,260		186,849,299
Accumulated deficit		(187,049,899)		(181,817,263)
Total shareholders’ equity		5,287,154		5,235,353
Noncontrolling interest (Note 1)		(464,904)		(422,975)
Total equity		4,822,250		4,812,378

Total liabilities and equity	$	5,924,895	$	6,293,693

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ITUS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
January 31,
2018
October 31,
2017
ASSETS
Current assets:

Cash and cash equivalents
$
2,846,863
$
3,339,374
Short-term investments in certificates of deposit

2,650,000

3,500,000
Prepaid expenses and other current assets

278,496

174,566
Total current assets

5,775,359

7,013,940
Patents, net of accumulated amortization of $1,371,660 and $1,290,336,
respectively

1,664,451

1,745,775
Property and equipment, net of accumulated depreciation of $39,756 and $35,725,
   respectively

50,828

52,701
Total assets
$
7,490,638

$
8,812,416
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable
$
416,925

$
480,324
Accrued expenses

669,633

409,169
Total current liabilities

1,086,558

889,493
Commitments and contingencies (Note 10)




Equity:

Shareholders’ equity:
Preferred stock, par value $100 per share; 19,860 shares authorized; no
shares issued or outstanding

                      -

                     -
Series A convertible preferred stock, par value $100 per share; 140 shares
authorized; no shares issued or outstanding
-
-
Common stock, par value $.01 per share; 24,000,000 shares authorized;
16,631,191 and 16,602,759 shares issued and outstanding, respectively

166,312

166,028
Additional paid-in capital
164,281,744
163,931,079
Accumulated deficit

(158,012,256)

(156,174,184)
Total shareholders’ equity
6,435,800
7,922,923
Noncontrolling interest (Note 1)

(31,720)

-
Total equity

6,404,080

7,922,923

Total liabilities and equity
$
7,490,638
$
8,812,416
The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Six Months Ended April 30,
	For the Six Months Ended April 30,
	2020		2019

Revenue	$	-	$	250,000

Operating costs and expenses:
Inventor royalties, contingent legal fees, litigation and licensing expenses related to patent assertion		-		166,250
Amortization of patents		-		376,875
Research and development expenses (including non-cash share-based compensation expenses of $855,655 and $2,228,845, respectively)		2,719,378		3,516,665
General and administrative expenses (including non-cash share-based compensation expenses of $1,275,765 and $1,842,769, respectively)		2,580,628		3,348,422
Impairment in carrying amount of patent asset (Note 1)		-		418,750
Total operating costs and expenses		5,300,006		7,826,962

Loss from operations		(5,300,006)		(7,576,962)

Interest income		25,441		35,419

Loss before income taxes		(5,274,565)		(7,541,543)

Provision for income taxes		-		-

Net loss		(5,274,565)		(7,541,543)

Less: Net loss attributable to noncontrolling interest		(41,929)		(122,010)

Net loss attributable to common shareholders	$	(5,232,636)	$	(7,419,533)

Net loss per common share attributable to common shareholders:
Basic and diluted	$	(0.25)	$	(0.38)

Weighted average common shares outstanding:
Basic and diluted		20,927,212		19,403,933

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Three Months Ended April 30,
	For the Three Months Ended April 30,
	2020		2019

Revenue	$	-	$	250,000

Operating costs and expenses:
Inventor royalties, contingent legal fees, litigation and licensing expenses related to patent assertion		-		166,250
Amortization of patents		-		125,625
Research and development expenses (including non-cash share-based compensation expenses of $458,132 and $655,066, respectively)		1,228,790		1,269,393
General and administrative expenses (including non-cash share-based compensation expenses of $651,954 and $666,384 respectively)		1,441,347		1,281,966
Total operating costs and expenses		2,670,137		2,843,234

Loss from operations		(2,670,137)		(2,593,234)

Interest income		12,147		18,300

Loss before income taxes		(2,657,990)		(2,574,934)

Provision for income taxes		-		-

Net loss		(2,657,990)		(2,574,934)

Less: Net loss attributable to noncontrolling interest		(17,897)		(37,242)

Net loss attributable to common shareholders	$	(2,640,093)	$	(2,537,692)

Net loss per common share attributable to common shareholders:
Basic and diluted	$	(0.12)	$	(0.13)

Weighted average common shares outstanding:
Basic and diluted		21,155,505		19,645,140

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED)

				Additional Paid-in Capital				Total Shareholders’ Equity		Non- controlling Interest
	Common Stock					Accumulated Deficit						Total Equity
	Shares	Par Value				Accumulated Deficit						Total Equity

Balance, October 31, 2019	20,331,754	$	203,317	$	186,849,299	$	(181,817,263)	$	5,235,353	$	(422,975)	$	4,812,378

Stock option compensation to employees and directors	-		-		2,019,211		-		2,019,211		-		2,019,211

Stock options issued to consultants	-		-		112,209		-		112,209		-		112,209

Common stock issued upon exercise of stock options	43,900		439		103,291		-		103,730		-		103,730

Common stock issued pursuant to employee stock purchase plan	9,618		96		15,356		-		15,452		-		15,452

Common stock issued in at-the-market offering, net of offering expenses of $158,296	1,094,063		10,941		3,022,894		-		3,033,835		-		3,033,835

Net loss	-		-		-		(5,232,636)		(5,232,636)		(41,929)		(5,274,565)

Balance, April 30, 2020	21,479,335	$	214,793	$	192,122,260	$	(187,049,899)	$	5,287,154	$	(464,904)	$	4,822,250

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED APRIL 30, 2020 (UNAUDITED)

Additional
Paid-in
Capital
Total
Shareholders’
Equity
Non-
controlling
Interest
Common Stock
Accumulated
Deficit
Total
Equity
Shares
Par Value
Balance, January 31, 2020
20,841,309

$
208,413

$
189,646,000

$
(184,409,806)

$
5,444,607

$
(447,007)

$
4,997,600
Stock option compensation to employees and
    directors
-

-

1,055,331

-

1,055,331

-

1,055,331
Stock options and warrants issued to consultants
-

-

54,755

-

54,755

-

54,755
Common stock issued upon exercise of stock
    options
25,000

250

75,000

-

75,250

-

75,250
Common stock issued pursuant to employee
    stock purchase plan
9,618

96

15,356

-

15,452

-

15,452
Common stock issued in at-the-market offering,
    net of offering expenses of $57,324
603,408

6,034

1,275,818

-

1,281,852

-

1,281,852
Net loss
-

-

-

(2,640,093)

(2,640,093)

(17,897)

(2,657,990)
Balance, April 30, 2020
21,479,335

$
214,793

$
192,122,260

$
(187,049,899)

$
5,287,154

$
(464,904)

$
4,822,250
The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED APRIL 30, 2019 (UNAUDITED)

Additional
Paid-in
Capital
Total
Shareholders’
Equity
Non-
controlling
Interest
Common Stock
Accumulated
Deficit
Total
Equity
Shares
Par Value
Balance, October 31, 2018
18,908,632

$
189,086

$
175,415,931

$
(170,170,209)

$
5,434,808

$
(251,377)

$
5,183,431
Stock option compensation to employees and
    directors
-

-

2,024,664

-

2,024,664

-

2,024,664
Stock options and warrants issued to consultants
-

-

92,509

-

92,509

-

92,509
Common stock issued upon exercise of stock
    options
30,000

300

79,500

-

79,800

-

79,800
Restricted stock award compensation to
    employee pursuant to stock incentive plan
-

-

1,954,441

-

1,954,441

-

1,954,441
Common stock issued pursuant to employee
    stock purchase plan
5,411

54

18,506

-

18,560

-

18,560
Common stock issued in at-the-market offering,
    net of offering expenses of $152,911
1,061,032

10,610

4,347,193

-

4,357,803

-

4,357,803
Net loss
-

-

-

(7,419,533)

(7,419,533)

(122,010)

(7,541,543)
Balance, April 30, 2019
20,005,075

$
200,050

$
183,932,744

$
(177,589,742)

$
6,543,052

$
(373,387)

$
6,169,665
The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED APRIL 30, 2019 (UNAUDITED)

				Additional Paid-in Capital				Total Shareholders’ Equity		Non- controlling Interest
	Common Stock					Accumulated Deficit						Total Equity
	Shares	Par Value				Accumulated Deficit						Total Equity

Balance, January 31, 2019	19,470,235	$	194,702	$	180,336,763	$	(175,052,050)	$	5,479,415	$	(336,145)	$	5,143,270

Stock option compensation to employees and directors	-		-		805,104		-		805,104		-		805,104

Stock options and warrants issued to consultants	-		-		46,290		-		46,290		-		46,290

Common stock issued upon exercise of stock options	20,000		200		56,900		-		57,100		-		57,100

Restricted stock award compensation to employee pursuant to stock incentive plan	-		-		470,056		-		470,056		-		470,056

Common stock issued pursuant to employee stock purchase plan	5,411		54		18,506		-		18,560		-		18,560

Common stock issued in at-the-market offering, net of offering expenses of $85,750	509,429		5,094		2,199,125		-		2,204,219		-		2,204,219

Net loss	-		-		-		(2,537,692)		(2,537,692)		(37,242)		(2,574,934)

Balance, April 30, 2019	20,005,075	$	200,050	$	183,932,744	$	(177,589,742)	$	6,543,052	$	(373,387)	$	6,169,665

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the six months ended April 30,
	2020		2019
Cash flows from operating activities:
Reconciliation of net loss to net cash used in operating activities:
Net loss	$	(5,274,565)	$	(7,541,543)
Stock option compensation to employees and directors		2,019,211		2,024,664
Stock options and warrants issued to consultants		112,209		92,509
Restricted stock award compensation to employee pursuant to stock incentive plan		-		1,954,441
Depreciation of property and equipment		29,418		18,108
Amortization of operating lease right-of-use asset, net of lease payments		546		-
Amortization of patents		-		376,875
Impairment in carrying amount of patent assets		-		418,750
Change in operating assets and liabilities:
Receivables		34,189		(489,963)
Prepaid expenses and other current assets		68,720		51,219
Accounts payable		(415,039)		135,908
Accrued expenses		(45,343)		194,742
Net cash used in operating activities		(3,470,654)		(2,764,290)

Cash flows from investing activities:
Disbursements to acquire short-term investments in certificates of deposit		(2,620,000)		(1,000,000)
Proceeds from maturities of short-term investments in certificates of deposit		2,350,000		250,000
Purchase of property and equipment		(15,791)		(175,457)
Net cash used in investing activities		(285,791)		(925,457)

Cash flows from financing activities:
Net proceeds from sale of common stock in at-the-market offering		3,033,835		4,357,803
Proceeds from sale of common stock pursuant to employee stock purchase plan		15,452		18,560
Proceeds from exercise of stock options		103,730		79,800
Net cash provided by financing activities		3,153,017		4,456,163

Net (decrease) increase in cash and cash equivalents		(603,428)		766,416
Cash and cash equivalents at beginning of period		3,491,625		3,055,890
Cash and cash equivalents at end of period	$	2,888,197	$	3,822,306

Supplemental disclosure of non-cash investing and financing activities:
Operating lease right-of-use asset	$	(106,221)	$	-
Operating lease liability	$	106,299	$	-

The accompanying notes are an integral part of these condensed consolidated financial statements.

ITUS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended
January 31,
2018
2017
Revenue
$
-

$
-
Operating costs and expenses:

Inventor royalties, contingent legal fees and litigation and licensing
expenses related to patent assertion
25,353
2,121
Amortization of patents

81,324

81,324
Research and development expenses (including non-cash stock option
compensation expense of $40,057 and $79,700, respectively)
777,873
451,630
General and administrative expenses (including non-cash stock
option compensation expense of $226,916 and $180,037 respectively)

990,036

859,885
Total operating costs and expenses

1,874,586

1,394,960

Loss from operations
(1,874,586)
(1,394,960)

Interest expense
-
(195,299)

Interest income

9,112

999

Loss before income taxes
(1,865,474)
(1,589,260)

Provision for income taxes

-

-

Net loss
(1,865,474)
(1,589,260)

Less: Net loss attributable to noncontrolling interest
(27,402)
-

Net loss attributable to common shareholders before deemed dividend
(1,838,072)
(1,589,260)

Deemed dividend to preferred shareholder (Note 6)

-

(2,008,775)

Net loss attributable to common shareholders
$
(1,838,072)
$
(3,598,035)

Net loss per share attributable to common shareholders:
Basic and diluted
$
(0.11)

$
(0.41)
Weighted average common shares outstanding:

Basic and diluted

16,610,770

8,755,057
The accompanying notes are an integral part of these condensed consolidated financial statements.

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ITUS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JANUARY 31, 2018 (UNAUDITED)
Additional
Paid-in
Capital
Total
Shareholders’
Equity
Non-
controlling
Interest
Common Stock
Accumulated
Deficit
Total
Equity
Shares
Par Value
Balance, October 31, 2017
16,602,759

$
166,028

$
163,931,079

$
(156,174,184)

$
7,922,923

$
-

$
7,922,923
Stock option compensation to employees and
directors
-

-

214,427

-

214,427

-

214,427
Stock option compensation to consultants
-

-

52,546

-

52,546

-

52,546
Common stock issued upon exercise of stock
options
23,085

231

(231)

-

-

-

-
Common stock issued to consultants
5,347

53

14,949

-

15,002

-

15,002
Issuance of noncontrolling interest in Certainty
Therapeutics, Inc
-

-

68,974

-

68,974

(4,318)

64,656
Net loss
-

-

-

(1,838,072)

(1,838,072)

(27,402)

(1,865,474)
Balance, January 31, 2018
16,631,191

$
166,312

$
164,281,744

$
(158,012,256)

$
6,435,800

$
(31,720)

$
6,404,080
The accompanying notes are an integral part of these condensed consolidated financial statements.

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ITUS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended
January 31,
2018
2017
Reconciliation of net loss to net cash used in operating activities:

Net loss
$
(1,865,474)
$
(1,589,260)
Stock option compensation to employees and directors

214,427

259,737
Stock option compensation to consultants
52,546
                 -
Common stock issued to consultants

15,002

17,811
Depreciation of property and equipment
4,391
10,505
Amortization of patents

81,324

81,324
Accretion of interest on patent acquisition obligations to interest expense
-
141,299
Issuance of noncontrolling interest in Certainty Therapeutics, Inc. expensed
as a license fee

64,656

-
Change in operating assets and liabilities:
Prepaid expenses and other current assets

(103,930)

93,480
Accounts payable
(63,399)
167,453
Accrued expenses

260,464

87,738
Net cash used in operating activities

(1,339,993)

(729,913)

Cash flows from investing activities:
Disbursements to acquire short-term investments in certificates of deposit
(1,250,000)

-
Proceeds from maturities of short-term investments in certificates of deposit
2,100,000
150,000
Purchase of property and equipment

(2,518)

(14,121)
Net cash provided by investing activities

847,482

135,879

Cash flows from financing activities:
Redemption of convertible preferred stock

-

(500,000)
Proceeds from exercise of employee stock options

-

5,665
Net cash used in by financing activities

-

(494,335)
Net decrease in cash and cash equivalents

(492,511)

(1,088,369)
Cash and cash equivalents at beginning of period

3,339,374

2,488,323
Cash and cash equivalents at end of period
$
2,846,863

$
1,399,954
Supplemental disclosure of non-cash financing activities:

Redemption of Series A convertible preferred stock into secured
debenture (Note 6)
$
-

$
(3,000,000)

The accompanying notes are an integral part of these statements.

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~~ITUS CORPORATION~~ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BUSINESS AND FUNDING

Description of Business

As used herein, “we,” “us,” “our,” the “Company” or ~~“ITUS”~~“Anixa” means ~~ITUS Corporation~~Anixa Biosciences, Inc. and its ~~wholly-owned~~consolidated subsidiaries. ~~From inception through October 2012, our~~Our primary operations ~~involved the~~involve developing a number of programs addressing cancer and infectious disease. Our therapeutics programs consist of development of ~~patented technologies in~~a vaccine against triple negative breast cancer (“TNBC”), development of chimeric endocrine receptor T-cell technology, a novel form of CAR-T technology, initially focused on treating ovarian cancer, and discovery and ultimately development of anti-viral drug candidates for the ~~areas~~treatment of ~~thin-film displays and encryption. Commencing in October 2012 the primary operations~~COVID-19 focused on inhibiting certain viral protein function. Our cancer diagnostics program consists of development of the ~~Company involved the development, acquisition, licensing, and enforcement of patented technologies that were either owned or controlled by the Company.~~artificial intelligence (AI) driven Cchek™ liquid biopsy platform for early cancer detection.

In June of 2015, the Company announced the formation of a new subsidiary, Anixa Diagnostics Corporation (“Anixa”), to develop a platform for non-invasive blood tests for the early detection of cancer. That platform is called CchekÔ . In July of 2015, ITUS announced a collaborative research agreement with The Wistar Institute (“Wistar”), the nation’s first independent biomedical research institute and a leading National Cancer Institute designated cancer research center, for the purpose of validating our cancer detection methodologies and establishing protocols for identifying certain biomarkers in the blood which we identified and which are known to be associated with malignancies. In August of 2016 and again in August of 2017, ITUS announced the renewal and expansion of our relationship with Wistar.

~~From October of 2015 through January of 2017, ITUS announced that we had demonstrated the efficacy of our Cchek~~Ô early cancer detection platform with 15 different types of cancer, including: breast, lung, colon, melanoma, ovarian, liver, thyroid, pancreatic, appendiceal, uterine, osteosarcoma, leiomyosarcoma, liposarcoma, vulvar and prostate. Breast, lung, colon and prostate cancers represent the four largest categories of cancer worldwide.

In November of 2017, the Company announced the formation of a new subsidiary, Certainty Therapeutics, Inc. (“Certainty”), to develop immuno-therapy drugs against cancer. Certainty entered into a license agreement with Wistar pursuant to which Certainty was grantedWe hold an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Cleveland Clinic Foundation (“Cleveland Clinic”) related to certain breast cancer vaccine technology developed at Cleveland Clinic. We are working in collaboration with Cleveland Clinic to develop a method to vaccinate women against contracting breast cancer, focused specifically on TNBC, the most lethal form of the disease. A specific protein, alpha-lactalbumin, has been identified that is only present during lactation in healthy women, but reappears in many forms of breast cancer, especially TNBC. Studies have shown that vaccinating against this protein prevents breast cancer in mice. We are working with researchers at Cleveland Clinic to advance this vaccine toward human clinical testing, and we are in the process of manufacturing the vaccine and upon completion we will be prepared to file an Investigational New Drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”). While we anticipate filing the IND during the third calendar quarter of 2020, we may experience delays in the vaccine manufacturing and characterization process due to the global coronavirus pandemic. We do not currently anticipate any potential delays to significantly alter our expected timeline. The IND application, after review and approval by the FDA, will enable us to begin testing our vaccine in human subjects.

Our subsidiary, Certainty Therapeutics, Inc. (“Certainty”), is developing immuno-therapy drugs against cancer. Certainty holds an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Wistar Institute (“Wistar”) relating to Wistar’s ~~chimeric endocrine receptor targeted therapy technology (such technology being akin to chimeric antigen receptor T-cell (“CAR-T”) technology).~~CAR-T technology. We ~~plan to~~have initially ~~focus~~focused on the development of a treatment for ovarian cancer, but we may also ~~may~~ pursue ~~future~~ applications of the technology for the development of treatments for additional solid tumors. The license agreement requires Certainty to make certain cash and equity payments to Wistar. With respect to Certainty’s equity obligations to Wistar, Certainty issued to Wistar shares of its common stock equal to five percent (5%) of the common stock of Certainty.

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~~On November 20, 2017, we announced that~~ Certainty, ~~entered into a~~in collaboration ~~agreement~~ with the H. Lee Moffitt Cancer Center and Research Institute, Inc. (“Moffitt”) ~~to advance~~, is advancing toward human clinical testing ~~the~~its CAR-T technology ~~licensed by Certainty from Wistar aimed initially at~~for treating ovarian cancer. ~~Certainty intends to work with researchers at Moffitt to complete studies necessary~~Clinical grade materials are currently being manufactured and upon completion will undergo extensive testing. Once the materials have been successfully tested, we will be prepared to submit an ~~Investigational New Drug (“IND”)~~IND application with the ~~U.S. Food~~FDA. While we anticipate filing the IND by the end of 2020, we may experience delays in completing the manufacturing and ~~Drug Administration~~testing of clinical materials due to the global coronavirus pandemic. We do not currently anticipate any potential delays to significantly alter our expected timeline. The IND application, after review and approval by the FDA, will enable us to begin testing our therapy in ovarian cancer patients.

In April 2020, in collaboration with OntoChem GmbH (“~~FDA”~~OntoChem”)., we have commenced a project to discover and ultimately develop anti-viral drug candidates for COVID-19. Through this collaboration, we are utilizing advanced computational methods, machine learning, and molecular modeling techniques to perform in silico screening of over 1.2 billion compounds in chemical libraries (including publicly available compounds and OntoChem’s proprietary libraries) to evaluate if any of these compounds could disrupt one of two key enzymes of SARS-CoV-2, the virus that causes the disease COVID-19.

~~On January 29, 2018,~~

While the screening process is ongoing and we ~~announced~~anticipate discovering several drug candidates, we have identified a lead molecule as well as three similar analog compounds. Our in silico molecular modeling indicates that any of these four compounds might disrupt the ~~results~~interaction of the virus’ endoribonuclease with a host human protein that is necessary for the virus to replicate upon infection. Disrupting this protein-protein interaction is expected to dramatically reduce or eliminate the virus’ ability to cause disease. The biological testing of these compounds will initially determine how well they bind to the endoribonuclease, and then how well this translates into reducing viral replication in human host cells. We anticipate completing the in vitro biological assays within the next two to three months. If the biological activity of any of these compounds is verified, they will be tested in animal studies to further evaluate their candidacy as COVID-19 therapeutics.

Our subsidiary, Anixa Diagnostics Corporation (“Anixa Diagnostics”), is developing Cchek™, an AI driven platform of non-invasive blood tests for the early detection of cancer which is based on the body’s immune response to the presence of a ~~study augmenting data from our preliminary study released in December 2016. The majority~~malignancy. We have demonstrated the efficacy of patient samples collected for this study were from breast cancer and prostate cancer patients, but several other types were also included. With the additional cancers included in this study, we have now demonstrated our technologyCchek™ with 20 different types of ~~cancer from solid tumors. In addition to the 15 cancer types noted above, we have evaluated~~cancer: breast, lung, colon, melanoma, ovarian, liver, thyroid, pancreatic, appendiceal, uterine, osteosarcoma, leiomyosarcoma, liposarcoma, vulvar, prostate, bladder, cervical, head and neck, gastric and testicular cancers. Breast, lung, colon and prostate cancers represent the four largest categories of cancer worldwide.

Based on a number of factors, including key scientific, clinical, and commercial considerations, for the past year the primary commercial focus for Cchek™ has been on developing a prostate cancer confirmatory test. In February 2019 we formed a strategic alliance with ResearchDx, a CLIA certified, CAP Accredited laboratory, to prepare the Cchek™ Prostate Cancer Confirmation (“Cchek™ PCC”) test for launch as a laboratory developed test. In December 2019, upon completion of independent analytical validation by ResearchDx, we announced the commercial launch of Cchek™ PCC. We are currently conducting a number of activities to support the marketing of Cchek™ PCC, including the completion of a clinical validation study, development of marketing materials, education of key opinion leaders in urology and development of a reimbursement path for the test. These activities, including the clinical validation study, have been delayed for a number of reasons, including the global coronavirus pandemic.

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Over the next several quarters, we expect ~~Cchek™~~the development of our breast cancer vaccine, Certainty’s CAR-T technology, our COVID-19 therapeutic discovery program and ~~Certainty’s ovarian cancer treatment~~Anixa Diagnostic’s Cchek™ to be the primary focus of the Company. As part of our legacy operations, the Company remains engaged in limited patent licensing activities in the area of encrypted audio/video conference calling. We do not expect these activities to be a significant part of the Company’s ongoing operations nor do we expect these activities to require material financial resources or attention of senior management.

Over the past several ~~quarters,~~years, our revenue was derived from technology licensing and the sale of patented technologies, including revenue from the settlement of litigation. We have not generated any revenue to date from our cancer therapeutics and diagnostics programs. In addition, ~~to Anixa~~while we pursue our cancer therapeutics and ~~Certainty, the Company~~diagnostics programs, we may also make investments in and form new companies to develop additional emerging technologies.

Funding and Management’s Plans

During the three months ended January 31, 2018, cash used in operating activities was approximately $1,340,000. Net cash provided by investing activities was approximately $847,000, which reflects the purchase of certificates of deposit totaling $1,250,000, offset by proceeds from the sale or maturity of certificates of deposit totaling $2,100,000 and the purchase of property and equipment of approximately $3,000. As a result, our cash, cash equivalents and short-term investments at January 31, 2018 decreased by approximately $1,342,000 to approximately $5,497,000 from approximately $6,839,000 at the end of fiscal year 2017.

Based on currently available information as of ~~March 8, 2018,~~June 9, 2020, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient to fund our activities for the next 12twelve months. We have implemented a business model that conserves funds by collaborating with third parties to develop our technologies. However, our projections of future cash needs and cash flows may differ from actual results. If current cash on hand, cash equivalents, short-term investments and cash that may be generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or companies or new technology or technologies that are synergistic with or ~~complimentary~~complementary to our technologies, we may be required to obtain more working capital. During the six months ended April 30, 2020, we raised an aggregate of approximately $3,034,000, net of expenses, through the sale of 1,094,063 shares of common stock in our at-the-market equity offerings. This included approximately $427,000, net of expenses, through the sale of 112,238 shares of common stock in an at-the market equity offering which expired in November 2019 and approximately $2,607,000, net of expenses, through the sale of 981,825 shares of common stock in an at-the-market equity offering under which we may issue up to $50 million of common stock. Under our current at-the-market equity program which is currently effective and may remain available for us to use in the future, we may sell an additional approximately $47,248,000 of common stock. We may seek to obtain working capital during our fiscal year ~~ending 2018~~2020 or thereafter through sales of our equity securities or through bank credit facilities or public or private debt from various financial institutions where possible. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we do identify sources for additional funding, the sale of additional equity securities or convertible debt could result in dilution to our shareholders. Additionally, the sale of equity securities or issuance of debt securities may be subject to certain security holder approvals or may result in the downward adjustment of the exercise or conversion price of our outstanding securities.stockholders. We can give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable terms or at all. If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition. Furthermore, such lack of funds may inhibit our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the business and development of operations.

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Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and disclosures required by generally accepted accounting principles in annual financial statements have been omitted or condensed. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures included in our Annual Report on Form 10-K for the year ended October 31, ~~2017.~~2019. The accompanying October 31, ~~2017~~2019 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by ~~accounting principles generally accepted in the United States of America (“~~US ~~GAAP”).~~GAAP. The condensed consolidated financial statements include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of our financial position as of ~~January 31, 2018,~~April 30, 2020, and results of operations and cash flows for the interim periods represented. The results of operations for the ~~three~~six months ended ~~January 31, 2018~~April 30, 2020 are not necessarily indicative of the results to be expected for the entire year.

Noncontrolling Interest

Noncontrolling interest represents Wistar’s equity ownership in Certainty and is presented as a component of equity. The following table sets forth the changes in noncontrolling interest for the ~~three~~six months ended ~~January 31, 2018:~~April 30, 2020:

Balance, October 31, 2019	$	(422,975)
Net loss attributable to noncontrolling interest		(41,929)
Balance, April 30, 2020	$	(464,904)

Revenue Recognition

Balance October 31, 2017
$
0
Issuance of noncontrolling interest in Certainty

(4,318)
Net loss attributable to noncontrolling interest
(27,402)
Balance January 31, 2018
$
(31,720)

Since fiscal 2016 our revenue has been derived solely from technology licensing and the sale of patented technologies. Revenue is recognized upon transfer of control of intellectual property rights and satisfaction of other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive.

9
On November 1, 2018 we adopted Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers using the modified retrospective method. Upon adoption of ASU 2014-09 we are required to make certain judgments and estimates in connection with the accounting for revenue. Such areas may include determining the existence of a contract and identifying each party’s rights and obligations to transfer goods and services, identifying the performance obligations in the contract, determining the transaction price and allocating the transaction price to separate performance obligations, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services and evaluating whether a license transfers to a customer at a point in time or over time.

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~~Revenue Recognition~~

Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectability of amounts is reasonably assured.

~~Patent Licensing Revenue~~

~~In certain instances, our past~~Our revenue arrangements ~~have provided~~provide for the payment of contractually determined, one-time, paid-up license fees in settlement of litigation and in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These arrangements typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. In such instances, the intellectual property rights granted have been perpetual in nature, extending until the expiration of the related patents. Pursuant to the terms of these agreements, we ~~had~~have no further ~~obligations. As such,~~obligations with respect to the ~~earnings process~~granted intellectual property rights, including no obligation to maintain or upgrade the technology, or provide future support or services. Licensees obtained control of the intellectual property rights they have acquired upon execution of the agreement. Accordingly, the performance obligations from these agreements were satisfied and 100% of the revenue was ~~complete and revenue has been~~ recognized upon the execution of the ~~agreement, when collectability was reasonably assured, and when all other~~agreements. The adoption of ASU 2014-09 had no impact on revenue ~~recognition criteria were met.~~recognized.

~~Intangible Assets~~Cost of Revenues

~~Our only identifiable intangible assets are patents and patent rights. We capitalize patent and patent rights acquisition~~Cost of revenues include the costs and ~~amortize~~expenses incurred in connection with our patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external counsel, other patent-related legal expenses paid to external counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the ~~cost over~~amortization of patent-related investment costs. These costs are included under the ~~estimated economic useful life. We did not capitalize any patent acquisition~~caption “Operating costs ~~during~~and expenses” in the ~~three months ended January 31, 2018~~accompanying condensed consolidated statements of operations.

Research and ~~2017. We recorded patent amortization expense~~Development Expenses

Research and development expenses, consisting primarily of ~~approximately $81,000 during each~~employee compensation, payments to third parties for research and development activities and other direct costs associated with developing a platform for non-invasive blood tests for early detection of cancer, developing immuno-therapy drugs against cancer, development of our breast cancer vaccine and development of anti-viral drugs candidates for COVID-19, are expensed in the ~~three-month periods ended January 31, 2018 and 2017, respectively.~~consolidated financial statements in the period incurred.

2. STOCK BASED COMPENSATION

The Company maintains stock equity incentive plans under which the Company grants incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, performance awards, or stock units to employees, directors and consultants.

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Stock Option Compensation Expense

The compensation cost for ~~service based~~service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is ~~recognized as an expense~~expensed on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to ~~ten~~four years. We recorded stock-based compensation expense related to service-based stock options granted to employees and directors of approximately ~~$214,000~~$2,019,000 and ~~$260,000~~$1,649,000 during the six months ended April 30, 2020 and 2019, respectively, and approximately $1,055,000 and $805,000 during the three months ended ~~January 31, 2018~~April 30, 2020 and ~~2017,~~2019, respectively.

~~Table of Contents~~

For ~~service based~~ stock options granted to employees and directors that vest based on market conditions, such as the trading price of the Company’s common stock exceeding certain price targets, we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest). On May 8, 2018, we issued market condition options to purchase 1,500,000 shares of common stock, to our Chairman, President and Chief Executive Officer, vesting at target trading prices of $5.00 to $8.00 per share before May 31, 2021, with implied service periods of three to seven months. In October 2018, the first tranche of 500,000 shares of market condition options became exercisable upon achieving an average closing price above $5.00 per share for twenty consecutive trading days. We recorded stock-based compensation expense related to market condition stock options granted to employees of approximately $-0- and $376,000 during the six months ended April 30, 2020 and 2019, respectively. We did not have any market condition stock-based compensation expense during the three months ended April 30, 2020 and 2019.

On November 1, 2018 we adopted Accounting Standards Update 2018-07 (“ASU 2018-07”) for stock options granted to consultants. Upon adoption of ASU 2018-07 we estimated the fair value of unvested service-based and performance-based stock options at the date of adoption, using the Black-Scholes pricing model. Subsequent to adoption of ASU 2018-07, future grants to consultants ~~we estimate~~are measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, consistent with our policy for grants to employees and directors. In prior periods, in accordance with US GAAP, we estimated the fair value of service-based and performance-based stock options ~~and recognize expense~~granted to consultants at each reporting period using the Black-Scholes pricing model. We recognize the fair value of stock options granted to consultants as consulting expense over the requisite or implied service period of the grant. We recorded stock-based ~~compensation~~consulting expense related to stock options granted to consultants of approximately ~~$53,000~~$112,000 and ~~$-0-~~$50,000 during the six months ended April 30, 2020 and 2019, respectively, and approximately $55,000 and $25,000 during the three months ended ~~January 31, 2018~~April 30, 2020 and ~~2017,~~2019, respectively.

Stock Option Activity

During the ~~three~~six months ended ~~January 31, 2018 and 2017,~~April 30, 2020, we granted options to purchase ~~50,000 shares and 106,000~~800,000 shares of common stock ~~respectively,~~ to employees ~~directors~~ and consultants, ~~at weighted average~~with exercise prices ~~of $2.30 and $5.00~~ranging from $3.84 to $4.04 per share, ~~respectively,~~ pursuant to the ~~ITUS Corporation 2010~~Anixa Biosciences, Inc. 2018 Share Incentive Plan (the ~~"2010~~“2018 Share Plan”). We did not grant any options during the six months ended April 30, 2019. During the ~~three~~six months ended ~~January 31, 2018~~April 30, 2020 and ~~2017,~~2019, stock options to purchase ~~28,600~~43,900 and ~~2,200~~30,000 shares of common stock, respectively, were exercised with aggregate proceeds of approximately ~~$-0-~~$104,000 and ~~$6,000,~~$80,000, respectively. ~~Under certain circumstances, stock options may be exercised on a cashless basis. During the three months ended January 31, 2018 and 2017, 5,515 and -0- shares~~

Table of ~~common stock, respectively, were withheld in connection with cashless exercises of stock options.~~Contents

Stock Option Plans

~~As of January 31, 2018,~~

During the six months ended April 30, 2020, we ~~have two~~had three stock option plans: the ~~ITUS Corporation~~Anixa Biosciences, Inc. 2003 Share Incentive Plan (the "2003 Share Plan"), the Anixa Biosciences, Inc. 2010 Share Incentive Plan (the "2010 Share Plan") and the ~~2010~~2018 Share Plan, which were adopted by our Board of Directors on April 21, 2003, ~~and~~ July 14, 2010 and January 25, 2018, respectively. The 2018 Share Plan was approved by our shareholders on March 29, 2018.

~~The~~2003 Plan

During the six months ended April 30, 2020, the remaining outstanding options granted under the 2003 Share Plan ~~provided for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants.~~expired. In accordance with the provisions of the 2003 Share Plan, the plan terminated with respect to the ability to grant future options on April 21, 2013. Information regarding the 2003 Share Plan for the ~~three~~six months ended ~~January 31, 2018~~April 30, 2020 is as follows:

Weighted
Average Exercise
Price Per Share

Aggregate
Intrinsic
Value

Shares

Options Outstanding at October 31, 2017
30,600

$
3.16

Exercised
(10,600)

$
0.67

Forfeited
(5,600)

$
3.63

Options Outstanding and exercisable at
January 31, 2018
14,400

$
4.81

$
17,280

		Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value

	Shares

Options outstanding at October 31, 2019	400		$ 17.00
Forfeited	(400)		$ 17.00
Options outstanding and exercisable at April 30, 2020	-		$ -0-		$ -0-

Information regarding the 2003 Share Plan for the six months ended April 30, 2019 is as follows:

		Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value

	Shares

Options outstanding at October 31, 2018	12,000		$ 2.77
Exercised	(4,000)		$ 3.63
Options outstanding and exercisable at April 30, 2019	8,000		$ 2.34		$ 19,666

The following table summarizes information about stock options outstanding and exercisable under the 2003 Share Plan as of ~~January 31, 2018:~~April 30, 2019:

Number

Outstanding

and

Exercisable

Weighted Average

Remaining

Contractual Life

(in years)

Weighted Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise
Price

Range of

Exercise Prices

Number

Outstanding

and

Exercisable

Number

Outstanding

and

Exercisable

Weighted Average

Remaining

Contractual Life

(in years)

Weighted Average

Remaining

Contractual Life

(in years)

$ 0.67 - td7.50

14,400

1.31

4.81

$ 0.67 - td7.00

8,000

0.45

$ 2.34

The 2010 Share Plan provides for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. As of ~~January 31, 2018,~~April 30, 2020, the 2010 Share Plan had ~~802,450~~800,000 shares available for future grants. Information regarding the 2010 Share Plan for the ~~three~~six months ended ~~January 31, 2018~~April 30, 2020 is as follows:

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of April 30, 2020:

Information regarding the 2010 Share Plan for the six months ended April 30, 2019 is as follows:

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of ~~January 31, 2018:~~April 30, 2019:

The 2018 Share Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. As of April 30, 2020, the 2018 Share Plan had 2,000,000 shares available for future grants. Information regarding the 2018 Share Plan for the six months ended April 30, 2020 is as follows:

The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of April 30, 2020:

Information regarding the 2018 Share Plan for the six months ended April 30, 2019 is as follows:

The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of April 30, 2019:

The following table summarizes information about stock options outstanding and exercisable that were granted outside of Share Plans as of April 30, 2020:

Information regarding stock options that were granted outside of Share Plans for the six months ended April 30, 2019 is as follows:

The following table summarizes information about stock options outstanding and exercisable that were ~~not~~ granted ~~under the 2003~~outside of Share ~~Plan or the 2010 Share Plan~~Plans as of ~~January 31, 2018:~~April 30, 2019:

On May 8, 2018, ~~and 2017, we issued 5,347 shares and 3,463 shares, respectively,~~a restricted stock award of ~~common stock to consultants for services rendered. We recorded consulting expense for the three months ended January 31, 2018 and 2017 of approximately $15,000 and $18,000, respectively, for the~~1,500,000 shares of common stock was granted under the 2018 Share Plan to our Chairman, President and Chief Executive Officer. The restricted stock award vests in its entirety upon achievement of a target trading price of $11.00 per share of the Company’s common stock before May 31, 2021. For restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest). During the six-month and three-month periods ended April 30, 2019, we recorded compensation expense related to the restricted stock award of approximately $1,954,000 and $470,000, respectively. We did not record any compensation expense related to the restricted stock award during the six-month period ended April 30, 2020.

The Company maintains the Anixa Biosciences, Inc. Employee Stock Purchase Plan which permits eligible employees to purchase shares at not less than 85% of the market value of the Company’s common stock on the offering date or the purchase date of the applicable offering period, whichever is lower. The plan was adopted by our Board of Directors on August 13, 2018 and approved by our shareholders on September 27, 2018. During the six months ended April 30, 2020, employees purchased 9,618 shares with aggregate proceeds of approximately $15,000. During the six months ended April 30, 2019, employees purchased 5,411 shares with aggregate proceeds of approximately $19,000.

During the six months ended April 30, 2019 we issued a warrant, expiring on November 1, 2023, to ~~consultants.~~ purchase 25,000 shares of common stock at $4.04 per share, vesting over 12 months, to a consultant for investor relations services. On November 1, 2019 the warrant was exchanged for a stock option with the same terms as the warrant. During the six-month and three-month periods ended April 30, 2019, we recorded consulting expense of approximately $43,000 and $21,000, respectively, based on the fair value of the warrant recognized on a straight-line basis over the vesting period. No warrants were issued during the six months ended April 30, 2020.

As of April 30, 2020, we also had warrants outstanding to purchase 500,000 shares of common stock at $5.03 per share expiring on November 30, 2021.

US GAAP defines fair value and establishes a framework for measuring fair value. We have categorized our financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1 - Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which we have the ability to access at the measurement date.

Level 2 - Financial assets and liabilities whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset and liabilities.

The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of ~~January 31, 2018:~~

The following table presents the hierarchy for our financial liabilities measured at fair value on a recurring basis as of April 30, 2020:

~~At January 31, 2018 and October 31, 2017, we had~~ ~~certificates of deposit~~ ~~of $2,650,000 and $3,500,000, respectively, which were classified as~~ ~~short-term investments and reported at fair value.~~

6. ~~PREFERRED STOCK REDEMPTION~~Accrued expenses consist of the following as of:

On November 11, 2016, the holder of all our outstanding Series A Preferred Stock (the “Series A Preferred”) with an aggregate stated value of $3,500,000 exercised its right of redemption to receive such amount from proceeds from the sale of the Company’s equity securities. On December 6, 2016, we entered into an agreement with the holder of the Series A Preferred setting forth the terms under which such redemption would take place (the “Series A Redemption Terms”). Pursuant to the Series A Redemption Terms, on December 9, 2016 the holder of the Series A Preferred received (i) $500,000 in cash, (ii) a 12% secured debenture evidencing the remaining $3,000,000 amount to be redeemed, $1,000,000 of which was due on or before June 1, 2017 and the remainder of which was due November 11, 2017 (the “Redemption Debenture”), and (iii) a 5 year warrant to purchase 500,000 shares of the Company’s common stock at an exercise price equal to 10% below the thirty (30) day volume weighted average closing price of our common stock at closing (the “Redemption Warrant”). The Redemption Debenture was secured by a lien on the Company’s assets and prohibited the Company from incurring any senior indebtedness other than equipment financing in connection with the Company’s business. The Redemption Debenture was paid in full during fiscal year 2017.

The difference between the fair value of the consideration given to the holder of our Series A Preferred and the carrying value of the Series A Preferred represents a return to the preferred shareholder which is treated in a similar manner as that of dividends paid on preferred stock. In the redemption, the Series A Preferred holder received $500,000 in cash, the Redemption Debenture with a present value of approximately $2,999,000 and the Redemption Warrant with a fair value of approximately $2,801,000, determined using the Black Scholes pricing model, and waived the Series A Preferred’s conversion right with an intrinsic value of approximately $792,000, resulting in total consideration given to the Series A Preferred holder of approximately $5,508,000. The difference between the fair value of the consideration and the $3,500,000 carrying value of the Series A Preferred resulted in a deemed dividend to the Series A Preferred holder of approximately $2,008,000.

Basic net ~~income (loss)~~loss per common share (“Basic EPS”) is computed by dividing net ~~income (loss)~~loss by the weighted average number of common shares outstanding. Diluted net ~~income (loss)~~loss per common share (“Diluted EPS”) is computed by dividing net ~~income (loss)~~loss by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding. The treasury stock method reduces the dilutive effect of potentially dilutive securities as it assumes that any cash proceeds (from the issuance of potentially dilutive securities) are used to buy back shares at the average share price during the period.

Diluted EPS for all periods presented is the same as Basic EPS, as the inclusion of the effect of common share equivalents then outstanding would be anti-dilutive. For this reason, excluded from the calculation of Diluted EPS for the six and three months ended ~~January 31, 2018~~April 30, 2020 and ~~2017,~~2019, were stock options to purchase ~~3,458,846~~8,382,234 and ~~3,162,272~~7,280,668 shares, respectively, and warrants to purchase ~~829,400~~500,000 and ~~837,405~~854,400 shares, respectively.

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers. This amendment updates addressing revenue from contracts with customers, which clarifies existing accounting literature relating to how and when a company recognizes revenue. Under the standard, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. This standard update is effective for interim and annual reporting periods beginning after December 15, 2016, and were to be applied retrospectively or the cumulative effect as of the date of adoption, with early application not permitted. In July 2015, a one-year deferral of the effective date of the new guidance was approved. We do not expect the adoption of ASU 2014-09 to have a material impact on our consolidated financial statements and related disclosures.

In November 2015, the FASB issued Accounting Standards Update 2015-17 (“ASU 2015-17”) to simplify the presentation of deferred taxes. This amendment requires that all deferred tax assets and liabilities, along with any related valuation allowances, be classified as noncurrent on the balance sheet. Adoption of this standard is required for annual periods beginning after December 15, 2016. The adoption of this amendment did not have an impact on our consolidated financial statements and related disclosures as we currently do not present deferred tax assets or liabilities.

~~In February 2016, the FASB~~(FASB) issued Accounting Standards Update 2016-02 (“ASU 2016-02”) Accounting Standards Codification Topic 842, Leases (ASC 842), which supersedes Topic 840, Leases, and which requires lessees to recognize most leases on the balance sheet. ~~This is expected to increase both reported assets and liabilities.~~ The new lease standard does not substantially change lessor accounting. For public companies, the standard ~~will be~~was effective for the first interim reporting period within annual periods beginning after December 15, 2018, although early adoption iswas permitted. Lessees and lessors ~~will be~~were required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new ~~guidance, using~~guidance. In July 2018, FASB issued ASU 2018-11, Leases, which provides an additional transition option for an entity to apply the provisions of ASC 842 by recognizing a ~~modified retrospective transition method.~~cumulative effect adjustment at the effective date of adoption without adjusting the prior comparative periods presented. The requirements of this standard include a significant increase in required disclosures. ~~We began a detailed assessment of the impact that this guidance will have on our consolidated financial statements and related disclosures, and our analysis is currently ongoing.~~

~~In March 2016, the FASB issued Accounting Standards Update 2016-09 (“ASU 2016-09”) that changes the accounting for certain aspects of share-based payments to employees.~~ The new guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also allows an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election for forfeitures as they occur. The guidance is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those years. WeCompany adopted ASU ~~2016-09~~2016-02 on November 1, ~~2017 and the~~2019. The adoption of this standard did not have ana material impact on our condensed consolidated financial ~~statements~~statements. See Note 8 regarding the accounting and disclosures related ~~disclosures.~~to our office lease.

In May 2017, the FASB issued Accounting Standards Update 2017-09 (“ASU 2017-09”) that provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. This update is effective for all entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. We began a detailed assessment of the impact that this guidance will have on our consolidated financial statements and related disclosures, and our analysis is ongoing.

We file Federal, New York ~~California~~ and ~~Pennsylvania~~California state income tax returns. Due to net operating losses, the statute of limitations for Federal and New York State income tax returns remains open to examination by taxing authorities since the fiscal year ended October 31, ~~1998.~~1999. We account for interest and penalties related to income tax matters, if any, in general and administrative expenses. There are no unrecognized income tax benefits as of ~~January 31~~April 30, ~~2018~~2020 and October 31, ~~2017.~~2019.

We recognize deferred tax assets and liabilities for the estimated future tax effects of events that have been recognized in our financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized. We have substantial net operating loss carryforwards for Federal, New York State and California income tax returns. These net operating loss carryforwards could be subject to limitations under Internal Revenue Code section 382. We have provided a full valuation allowance against our deferred tax asset due to our historical pre-tax losses and the uncertainty regarding the realizability of these deferred tax assets.

We lease approximately 2,000 square feet of office space at 3150 Almaden Expressway, San Jose, California (our principal executive offices) from an unrelated party pursuant to an operating lease that expires September 30, 2021. Our base rent is approximately $5,000 per month and the lease provides for annual increases of approximately 3% and an escalation clause for increases in certain operating costs. Under an operating lease that expired on May 31, 2019 we also leased approximately 3,000 square feet of office space at 12100 Wilshire Boulevard, Los Angeles, California (our former executive offices) from an unrelated party. As of August 1, 2018, we had subleased these facilities. Rent expense was approximately $32,000 and $30,000, respectively, for the six months ended April 30, 2020 and 2019, and approximately $16,000 and $12,000, respectively, for the three months ended April 30, 2020 and 2019.

On November 1, 2019, the Company adopted ASC 842, which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating lease liabilities on the balance sheet. The Company adopted the new guidance using the modified retrospective approach on November 1, 2019. As a result, the condensed consolidated balance sheet as of October 31, 2019 was not restated and is not comparative.

The adoption of ASC 842 resulted in the recognition of ROU assets of $106,221, and lease liabilities for operating leases of $106,299 on the Company's condensed consolidated balance sheet as of November 1, 2019. The difference between the ROU assets and the operating lease liability represents the difference between the lease cost and the amount of rent paid in October.

The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components. The Company has also elected the short-term lease accounting policy under which Anixa would not recognize a lease liability or ROU asset for any lease that at the commencement date has a lease term of twelve months or less and does not include a purchase option that Anixa is more than reasonably certain to exercise.

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. The remaining 17 month lease term as of April 30, 2020 for the Company’s lease includes the noncancelable period of the lease. The lease does not contain a Company option to extend the lease or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment.

As of April 30, 2020, the annual minimum lease payments of our operating lease liabilities were as follows:

~~Other than suits we bring to enforce our patent rights we~~We are not ~~a party to~~involved in any ~~material pending~~litigation or other legal proceedings ~~other than~~and management is not aware of any pending litigation or legal proceeding against us that ~~which arise in the ordinary course of business. We believe that any liability that may ultimately result from the resolution of these matters will not, individually or in the aggregate,~~would have a material adverse effect onupon our ~~financial position or~~ results of ~~operations.~~operations or financial condition.

We follow the accounting guidance of ASC 280 “Segment Reporting” (“ASC 280”). Reportable operating segments are determined based on the management approach. The management approach, as defined by ASC 280, is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making operating decisions and assessing performance. While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker manages the enterprise in five reportable segments, each with different operating and potential revenue generating characteristics: (i) CAR-T Therapeutics, (ii) Cancer Vaccines, (iii) Anti-Viral Therapeutics, (iv) Cancer Diagnostics and (v) our legacy Patent Licensing activities. The following represents selected financial information for our segments for the six and three months ended April 30, 2020 and 2019 and as of April 30, 2020 and October 31, 2019:

Operating costs and expenses excluding non-cash share-based compensation is the measurement the chief operating decision-maker uses in managing the enterprise.

On March 10, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The virus and actions taken to mitigate its spread have had and are expected to continue to have a broad adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates and conducts its business and which the Company’s partners operate and conduct their business. We are currently following the recommendations of local health authorities to minimize exposure risk for our team members and visitors. However, the scale and scope of this pandemic is unknown and the duration of the business disruption and related financial impact cannot be reasonably estimated at this time. While we have implemented specific business continuity plans to reduce the potential impact of COVID-19, there is no guarantee that our continuity plans will be successful.

We have already experienced certain disruptions to our business such as temporary closure of our offices and similar disruptions have occurred for our partners. Specifically, the outbreak has caused shutdowns of the laboratories and other service providers that we rely on to develop our CAR-T and breast cancer vaccine programs, and those laboratories and service providers that have been operating or that have begun operating recently have been doing so with more limited capacity due to social distancing requirements. As a result, our progress has been slowed and there is no assurance that we will be able to meet our previously announced timelines regarding the IND filings for our CAR-T therapy for ovarian cancer and for our breast cancer vaccine. Moreover, our plan to sell and/or license our Cchek™ technology to a strategic partner has been impacted by the pandemic even more significantly as we have been unable to complete our clinical validation study for Cchek™ to have a more robust data package for potential partners.

The extent to which COVID-19 or any other health epidemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. Accordingly, COVID-19 could have a material adverse effect on our business, results of operations, financial condition and prospects.

~~As used herein, “we,” “us,” “our,” the “Company” or “ITUS” means ITUS Corporation and its wholly-owned subsidiaries.~~ From inception through October 2012, our primary operations involved the development of patented technologies in the areas of thin-film displays and encryption. Commencing in October 2012 the primary operations of the Company involved the development, acquisition, licensing, and enforcement of patented technologies that were either owned or controlled by the Company.

On November 20, 2017, we announced that Certainty entered into a collaboration agreement with the H. Lee Moffitt Cancer Center and Research Institute, Inc. (“Moffitt”) to advance toward human clinical testing the CAR-T technology licensed by Certainty from Wistar aimed initially at treating ovarian cancer. Certainty intends to work with researchers at Moffitt to complete studies necessary to submit an Investigational New Drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”).

On January 29, 2018, we announced the results of a study augmenting data from our preliminary study released in December 2016. The majority of patient samples collected for this study were from breast cancer and prostate cancer patients, but several other types were also included. With the additional cancers included in this study, we have now demonstrated our technology with 20 types of cancer from solid tumors. In addition to the 15 cancer types noted above, we have evaluated bladder, cervical, head and neck, gastric and testicular cancers.

Over the next several quarters, we expect Cchek™ and Certainty’s ovarian cancer treatment to be the primary focus of the Company. As part of our legacy operations, the Company remains engaged in limited patent licensing activities in the area of encrypted audio/video conference calling. We do not expect these activities to be a significant part of the Company’s ongoing operations nor do we expect these activities to require material financial resources or attention of senior management.

Over the past several quarters, our revenue was derived from technology licensing and the sale of patented technologies, including revenue from the settlement of litigation. In addition to Anixa and Certainty, the Company may make investments in and form new companies to develop additional emerging technologies.

~~RESULTS OF OPERATIONS~~

~~Three months ended January 31, 2018 compared with three months ended January 31, 2017~~

~~We had no revenue during the three-month periods ended January 31, 2018 and 2017.~~

~~Inventor Royalties, Contingent Legal Fees and Litigation and Licensing Expenses Related to Patent Assertion~~

Inventor royalties, contingent legal fees and litigation and licensing expenses related to patent assertion activities were approximately $25,000 in the three months ended January 31, 2018 compared to approximately $2,000 in the comparable prior year period due to expenses related to continuing litigation. Inventor royalties and contingent legal fees are expensed in the period that the related revenues are recognized. Litigation and licensing expenses related to patent assertion, other than contingent legal fees, are expensed in the period incurred.

Amortization of patents was approximately $81,000 in each of the three-month periods ended January 31, 2018 and 2017, respectively. We capitalize patent and patent rights acquisition costs and amortize the cost over the estimated economic useful life.

~~Research and development expenses are related to the development of our early cancer detection and cancer immune-therapy drug platforms and~~ increased by approximately $326,000 to approximately $778,000 in the three months ended January 31, 2018, from approximately $452,000 in the three months ended January 31, 2017. The increase in research and development expenses was primarily due to an increase in costs related to our collaboration and license agreements with Wistar and the initiation of our collaboration agreement with Moffitt of approximately $363,000 and an increase in employee compensation and related costs, other than stock option expense, of approximately $42,000, offset by a decrease in employee stock option expense of approximately $40,000 and a decrease in patent development costs of approximately $26,000.

General and administrative expenses increased by approximately $130,000 to approximately $990,000 in the three months ended January 31, 2018, from approximately $860,000 in the three months ended January 31, 2017. The increase in general and administrative expenses was principally due to an increase in legal and accounting fees of approximately $120,000 due primarily to potential strategic transactions, the commencement and subsequent termination of an at-the-market equity program and the special shareholder meeting scheduled for March 2018, an increase in consultant stock option expense of approximately $53,000 and an increase in consultant fees of approximately $22,000, offset by a decrease in employee compensation of approximately $70,000.

Interest expense decreased from approximately $195,000 in the three months ended January 31, 2017 to $-0- in the current period due to the payment in full of the patent acquisition obligation and the secured debenture during fiscal year 2017.

Interest income increased by approximately $8,000 to approximately $9,000 in the three months ended January 31, 2018, from approximately $1,000 in the comparable prior year period as a result of additional cash on hand.

The net loss attributable to noncontrolling interest of approximately $27,000 in the three months ended January 31, 2018 represents Wistar’s 5% ownership interest in Certainty’s net loss for the three-month period.

The deemed dividend to preferred shareholder of approximately $2,009,000 in 2017 resulted from the redemption of our Series A Preferred. The difference between the fair value of the consideration given to the holder of our Series A Preferred and the carrying value of the Series A Preferred represented a return to the preferred shareholder and was treated in a similar manner as that of dividends paid on preferred stock.

~~Our primary sources of liquidity are cash, cash equivalents and short-term investments.~~

Based on currently available information as of March 8, 2018, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient to fund our activities for the next 12 months. However, our projections of future cash needs and cash flows may differ from actual results. If current cash on hand, cash equivalents, short-term investments and cash that may be generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or companies that are synergistic with or complimentary to our technologies, we may be required to obtain more working capital. We may seek to obtain working capital during our fiscal year ending 2018 or thereafter through sales of our equity securities or through bank credit facilities or public or private debt from various financial institutions where possible. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we do identify sources for additional funding,the sale of additional equity securities or convertible debt could result in dilution to our shareholders. Additionally, the sale of equity securities or issuance of debt securities may be subject to certain security holder approvals or may result in the downward adjustment of the exercise or conversion price of our outstanding securities. We can give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable terms or at all. If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition. Furthermore, such lack of funds may inhibit our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the business and development of operations.

The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing these financial statements, we make assumptions, judgments and estimates that can have a significant impact on amounts reported in our condensed consolidated financial statements. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly.

We believe that, of the significant accounting policies discussed in Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017, the following accounting policies require our most difficult, subjective or complex judgments:

In certain instances, our past revenue arrangements have provided for the payment of contractually determined fees in settlement of litigation and in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These arrangements typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. In such instances, the intellectual property rights granted have been perpetual in nature, extending until the expiration of the related patents. Pursuant to the terms of these agreements, we had no further obligations. As such, the earnings process was complete and revenue has been recognized upon the execution of the agreement, when collectability was reasonably assured, and when all other revenue recognition criteria were met.

The compensation cost for service based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to ten years. For service based stock options granted to consultants we estimate the fair value of the stock options and recognize expense at each reporting period using the Black-Scholes pricing model.

The Black-Scholes pricing model requires the input of highly subjective assumptions. These variables include, but are not limited to, our stock price volatility over the term of the stock options, and actual and projected employee stock option exercise behaviors.

~~We discuss the effect of recently issued pronouncements in the Notes to our Condensed Consolidated Financial Statements.~~

Information included in this Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, ~~(the “Securities Act”),~~as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and factors include, but are not limited to, those factors set forth in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2017~~2019 and the condensed consolidated financial statements included in this Report. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Report.

We discuss the description of our business in the Notes to our condensed consolidated financial statements.

RESULTS OF OPERATIONS

Six months ended April 30, 2020 compared with six months ended April 30, 2019

We did not record any revenue for the six months ended April 20, 2020. For the six months ended April 30, 2019, we recorded revenue of $250,000 from one license agreement. The license agreement provided for a one-time, non-recurring, lump sum payment in exchange for a non-exclusive retroactive and future license, and covenant not to sue. Pursuant to the terms of the agreement, we have no further obligations with respect to the granted intellectual property rights, including no obligation to maintain or upgrade the technology, or provide future support or services. Accordingly, the earnings process from the license was complete and 100% of the revenue was recognized upon execution of the license agreement. As discussed in Note 1 to our condensed consolidated financial statements, as part of our legacy operations, the Company remains engaged in limited patent licensing activities which we do not expect to be a significant part of our ongoing operations or revenue.

Inventor Royalties, Contingent Legal Fees, Litigation and Licensing Expenses Related to Patent Assertion

Amortization of patents was $-0- in the six months ended April 30, 2020 compared to approximately $377,000 in the comparable prior year. We capitalize patent and patent rights acquisition costs and amortize the cost over the estimated economic useful life. The decrease in amortization of patents was due to the patent asset being fully amortized in fiscal year 2019.

Research and development expenses are related to the development of our cancer diagnostics and therapeutics programs and our anti-viral drug program, and decreased by approximately $798,000 to approximately $2,719,000 in the six months ended April 30, 2020, from approximately $3,517,000 in the six months ended April 30, 2019. The decrease in research and development expenses was primarily due to a decrease in employee stock award compensation expense of approximately $1,251,000, a decrease in employee stock option compensation expense of approximately $129,000, offset by an increase in outside research and development expense, excluding license expense, of approximately $414,000 primarily related to the development of Cchek™, our non-invasive blood tests for early detection of cancer, and an increase in license expense related to our collaborative agreement with OntoChem concerning discovery and development of anti-viral drugs for COVID-19 of approximately $111,000.

Research and development expenses incurred in the six months ended April 30, 2020 associated with each of our development programs consisted of approximately $1,827,000 for cancer diagnostics, approximately $565,000 for CAR-T therapeutics, approximately $171,000 for cancer vaccines, and approximately $156,000 for anti-viral therapeutics.

General and administrative expenses decreased by approximately $767,000 to approximately $2,581,000 in the six months ended April 30, 2020, from approximately $3,348,000 in the six months ended April 30, 2019. The decrease in general and administrative expenses in fiscal year 2020 was principally due to a decrease in employee stock award compensation expense of approximately $704,000, a decrease in legal and accounting fees of approximately $440,000 in fiscal year 2020 primarily related to fees incurred in fiscal year 2019 in connection with a putative shareholder derivative complaint which was settled in August 2019, a decrease in expense resulting from the discharge in January 2020 of a disputed liability of approximately $337,000 upon the expiration of the vendor’s statutory right to pursue collection of the disputed liability which reduced expenses in fiscal year 2020, offset by an increase in employee compensation and related costs, other than stock option compensation expense and stock award compensation expense, of approximately $327,000, an increase in consulting expense of approximately $114,000 in fiscal year 2020 primarily related to the commercialization of Cchek™, our non-invasive blood test for early detection of cancer, an increase in corporate insurance expense of approximately $156,000 primarily due to an increase in directors and officers insurance premium and increase in employee stock option compensation expense of approximately $124,000.

The impairment in carrying amount of patent assets related to our legacy patent licensing activities of approximately $419,000 in the six months ended April 30, 2019 resulted from the write down of the value of our patent assets to the estimated undiscounted future cash flows we anticipated receiving from the patent assets as of January 31, 2019. Our estimates of future cash flows were based on our most recent assessment of the market for potential licensees, as well as the status of ongoing negotiations with potential licensees.

Interest income decreased by approximately $10,000 to approximately $25,000 in the six months ended April 30, 2020, from approximately $35,000 in the comparable prior year period as a result of a decrease in interest rates.

The net loss attributable to noncontrolling interest, representing Wistar’s 5% ownership interest in Certainty’s net loss, decreased by approximately $80,000 to approximately $42,000 in the six months ended April 30, 2020, from approximately $122,000 in the six months ended April 30, 2019, as Certainty’s net loss decreased. The decrease in Certainty’s net loss was primarily due to decreases in employee stock option compensation expense and employee stock award compensation expense.

Three months ended April 30, 2020 compared with three months ended April 30, 2019

We did not record any revenue for the three months ended April 20, 2020. For the three months ended April 30, 2019, we recorded revenue of $250,000 from one license agreement. The license agreement provided for a one-time, non-recurring, lump sum payment in exchange for a non-exclusive retroactive and future license, and covenant not to sue. Pursuant to the terms of the agreement, we have no further obligations with respect to the granted intellectual property rights, including no obligation to maintain or upgrade the technology, or provide future support or services. Accordingly, the earnings process from the license was complete and 100% of the revenue was recognized upon execution of the license agreement. As discussed in Note 1 to our condensed consolidated financial statements, as part of our legacy operations, the Company remains engaged in limited patent licensing activities which we do not expect to be a significant part of our ongoing operations or revenue.

Inventor Royalties, Contingent Legal Fees, Litigation and Licensing Expenses Related to Patent Assertion

Inventor royalties, contingent legal fees, litigation and licensing expenses related to patent assertion activities decreased from approximately $166,000 in the three months ended April 30, 2019 to $ -0- in the six months ended April 20, 2020. The decrease was primarily due to the decrease in related revenues. Inventor royalties and contingent legal fees are expensed in the period that the related revenues are recognized. Litigation and licensing expenses related to patent assertion, other than contingent legal fees, are expensed in the period incurred.

Amortization of patents was $-0- in the three months ended April 30, 2020 compared to approximately $126,000 in the comparable prior year. We capitalize patent and patent rights acquisition costs and amortize the cost over the estimated economic useful life. The decrease in amortization of patents was due to the patent asset being fully amortized in fiscal year 2019.

Research and development expenses are related to the development of our cancer diagnostics and therapeutics programs and our anti-viral drug program, and decreased by approximately $40,000 to approximately $1,229,000 in the three months ended April 30, 2020, from approximately $1,269,000 in the three months ended April 30, 2019. The decrease in research and development expenses was primarily due to a decrease in employee stock award compensation expense of approximately $301,000, offset by an increase in license expense related to our collaborative agreement with OntoChem concerning discovery and development of anti-viral drugs for COVID-19 of approximately $111,000, an increase in employee stock option compensation expense of approximately $102,000 and an increase in outside research and development expense, excluding license expense, of approximately $51,000 primarily related to the development of Cchek™, our non-invasive blood test for early detection of cancer.

Research and development expenses incurred in the three months ended April 30, 2020 associated with each of our development programs consisted of approximately $761,000 for cancer diagnostics, approximately $235,000 for CAR-T therapeutics, approximately $156,000 for anti-viral therapeutics, and approximately $77,000 for cancer vaccines.

General and administrative expenses increased by approximately $159,000 to approximately $1,441,000 in the three months ended April 30, 2020, from approximately $1,282,000 in the three months ended April 30, 2019. The increase in general and administrative expenses in fiscal year 2020 was principally due to an increase in employee compensation and related costs, other than stock option compensation expense and stock award compensation expense, of approximately $158,000, an increase in employee stock option compensation expense of approximately $148,000, an increase in consulting expense of approximately $116,000 primarily related to the commercialization of Cchek™, our non-invasive blood test for early detection of cancer, an increase in corporate insurance expense of approximately $78,000 primarily due to an increase in directors and officers insurance premium, offset by a decrease in employee stock award compensation expense of approximately $169,000 and a decrease in legal and accounting fees of approximately $156,000 primarily related to fees incurred in fiscal year 2019 in connection with a putative shareholder derivative complaint which was settled in August 2019.

Interest income decreased by approximately $6,000 to approximately $12,000 in the three months ended April 30, 2020, from approximately $18,000 in the comparable prior year period as a result of a decrease in interest rates.

The net loss attributable to noncontrolling interest, representing Wistar’s 5% ownership interest in Certainty’s net loss, decreased by approximately $19,000 to approximately $18,000 in the three months ended April 30, 2020, from approximately $37,000 in the three months ended April 30, 2019, as Certainty’s net loss decreased. The decrease in Certainty’s net loss was primarily due to decreases in employee stock option compensation expense and employee stock award compensation expense.

Our primary sources of liquidity are cash, cash equivalents and short-term investments.

Based on currently available information as of June 9, 2020, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient to fund our activities for the next twelve months. We have implemented a business model that conserves funds by collaborating with third parties to develop our technologies. However, our projections of future cash needs and cash flows may differ from actual results. If current cash on hand, cash equivalents, short-term investments and cash that may be generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required to obtain more working capital. During the six months ended April 30, 2020, we raised an aggregate of approximately $3,034,000, net of expenses, through the sale of 1,094,063 shares of common stock in our at-the-market equity offerings. This included approximately $427,000, net of expenses, through the sale of 112,238 shares of common stock in an at-the market equity offering which expired in November 2019 and approximately $2,607,000, net of expenses, through the sale of 981,825 shares of common stock in an at-the-market equity offering under which we may issue up to $50 million of common stock. Under our current at-the-market equity program which is currently effective and may remain available for us to use in the future, we may sell an additional approximately $47,248,000 of common stock. We may seek to obtain working capital during our fiscal year 2020 or thereafter through sales of our equity securities or through bank credit facilities or public or private debt from various financial institutions where possible. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we do identify sources for additional funding, the sale of additional equity securities or convertible debt could result in dilution to our stockholders. We can give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable terms or at all. If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition. Furthermore, such lack of funds may inhibit our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the business and development of operations.

During the six months ended April 30, 2020, cash used in operating activities was approximately $3,471,000. Cash used in investing activities was approximately $286,000, resulting from the purchased of certificates of deposit totaling $2,620,000 and the purchase of property and equipment of approximately $16,000, which was offset by the proceeds on maturities of certificates of deposit totaling $2,350,000. Cash provided by financing activities was approximately $3,153,000, resulting from the sale of 1,094,063 shares of common stock in our at-the-market equity offering over the past six months of approximately $3,034,000 (which is ongoing), the proceeds from sale of common stock pursuant to employee stock purchase plan of approximately $15,000 and the proceeds from exercise of stock options of approximately $104,000. As a result, our cash, cash equivalents, and short-term investments at April 30, 2020 decreased approximately $334,000 to approximately $5,508,000 from approximately $5,842,000 at the end of fiscal year 2019.

We believe that, of the significant accounting policies discussed in Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, the following accounting policies require our most difficult, subjective or complex judgments:

Our revenue has been derived solely from technology licensing and the sale of patented technologies. Revenue is recognized upon transfer of control of intellectual property rights and satisfaction of other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive.

On November 1, 2018 we adopted Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers using the modified retrospective method. Upon adoption of ASU 2014-09 we are required to make certain judgments and estimates in connection with the accounting for revenue. Such areas may include determining the existence of a contract and identifying each party’s rights and obligations to transfer goods and services, identifying the performance obligations in the contract, determining the transaction price and allocating the transaction price to separate performance obligations, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services and evaluating whether a license transfers to a customer at a point in time or over time.

Our revenue arrangements provide for the payment of contractually determined, one-time, paid-up license fees in settlement of litigation and in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These arrangements typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. In such instances, the intellectual property rights granted have been perpetual in nature, extending until the expiration of the related patents. Pursuant to the terms of these agreements, we have no further obligations with respect to the granted intellectual property rights, including no obligation to maintain or upgrade the technology, or provide future support or services. Licensees obtained control of the intellectual property rights they have acquired upon execution of the agreement. Accordingly, the performance obligations from these agreements were satisfied and 100% of the revenue was recognized upon the execution of the agreements. The adoption of ASU 2014-09 had no impact on revenue recognized.

The compensation cost for service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to four years. For employee options vesting if the trading price of the Company’s common stock exceeds certain price targets we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period.

For stock awards granted to employees and directors that vest at date of grant we recognize expense based on the grant date market price of the underlying common stock. For restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).

On November 1, 2018 we adopted Accounting Standards Update 2018-07 (“ASU 2018-027”) for stock-based compensation to non-employees. Upon adoption of ASU 2018-07 we estimated the fair value of unvested awards at the date of adoption, using the Black-Scholes pricing model. Future grants to consultants will be measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, consistent with our policy for grants to employees and directors.

The Black-Scholes pricing model and the Monte Carlo Simulation we use to estimate fair value requires valuation assumptions of expected term, expected volatility, risk-free interest rates and expected dividend yield. The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. We use the simplified method, which is a weighted average of the vesting term and contractual term, to determine expected term. The simplified method was adopted since we do not believe that historical experience is representative of future performance because of the impact of the changes in our operations and the change in terms from historical options. Under the Black-Scholes pricing model, we estimated the expected volatility of our shares of common stock based upon the historical volatility of our share price over a period of time equal to the expected term of the grants. We estimated the risk-free interest rate based on the implied yield available on the applicable grant date of a U.S. Treasury note with a term equal to the expected term of the underlying grants. We made the dividend yield assumption based on our history of not paying dividends and our expectation not to pay dividends in the future.

We will reconsider use of the Black-Scholes pricing model and Monte Carlo Simulation if additional information becomes available in the future that indicates other models would be more appropriate. If factors change and we employ different assumptions in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.

We discuss the effect of recently issued pronouncements in the Notes to our Condensed Consolidated Financial Statements.

There was no change in our internal control over financial reporting during the ~~first~~second quarter of fiscal year ~~2018~~2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are not involved in any litigation or other legal proceedings and management is not aware of any pending litigation or legal proceeding against us that would have a material adverse effect upon our results of operations or financial condition.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, in addition to our risk factors as set forth in our Form 10-K, filed with the SEC on January 9, 2020 and as amended on January 10, 2020, we have also identified the following additional risks to our company:

Our business activities for fiscal 2020 are expected to be adversely affected by the global COVID-19 pandemic.

The COVID-19 pandemic has spread globally and the World Health Organization (WHO) has declared it a global pandemic. While still evolving, the COVID-19 pandemic has caused significant worldwide economic and financial turmoil, and has fueled concerns that it will lead to a global recession. On March 13, 2020, the United States declared a national emergency with respect to COVID-19 and the majority of states and U.S. territories, including the State of California, have since issued orders requiring the closure of non-essential businesses and/or requiring residents to stay at home. The Company is following the recommendations of local health authorities to minimize exposure risk for its team members and visitors, including requiring its employees to work from home. The continued and prolonged implementation of restrictions by federal, state and local authorities to slow the spread of COVID-19 have disrupted and, we expect, will continue to disrupt, our business and operations.

Specifically, the pandemic has caused shutdowns of the laboratories and other service providers that we rely on to develop our CAR-T and breast cancer vaccine programs, and those laboratories and service providers that have been operating or that have begun operating recently have been doing so with more limited capacity due to social distancing requirements. As a result, our progress has been slowed and there is no assurance that we will be able to meet our previously announced timelines regarding the IND filings for our CAR-T therapy for ovarian cancer and for our breast cancer vaccine.

Moreover, our plan to sell and/or license our Cchek™ technology to a strategic partner has been impacted by the pandemic even more significantly. We are currently performing a clinical validation study for Cchek™ to have a more robust data package for potential partners, but the pandemic has slowed our partnering discussions due to a dramatic decrease in the number of patients seeking treatment from their urologists, resulting in the substantial diminishment of our flow of blood samples for the study. Further, most potential partners have been focusing their attention on developing COVID-19 diagnostics and are not as focused on discussing or diverting resources to cancer diagnostics. Although we anticipate the sample flow returning to normal soon, there is no assurance as to how quickly sample flow will return or when a partnership will be completed, if ever.

The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; our ability to continue daily operations, including as a result of travel restrictions and people working from home; and any closures of our and our business partners’ offices and facilities.

While the Company is currently implementing solutions designed to reduce the potential impact of COVID-19, there can be no assurance that our efforts will adequately mitigate the risks of business disruptions and interruptions. Further, events such as natural disasters and public health emergencies divert our attention away from normal operations and limited resources. Our inability to timely resume normal operations following the pandemic disruption could adversely affect our business, financial condition or results of operations in a material manner.

Any of these events could materially adversely affect our business, financial condition, results of operations and/or stock price.

There is no guarantee that our collaboration with OntoChem will produce a successful anti-viral drug for COVID-19.

On April 14, 2020, the Company entered into a collaboration agreement with OntoChem for the purpose of discovering and ultimately developing anti-viral drug candidates for COVID-19. The parties have developed a research plan pursuant to which OntoChem will utilize advanced computational methods, machine learning and molecular modeling techniques to perform in silico screening of over 1.2 billion compounds in OntoChem’s chemistry and gene ontology database (including publicly available compounds and OntoChem’s proprietary libraries) to evaluate if any of these compounds could disrupt one of two key enzymes of COVID-19. While, to date, we have synthesized four potential COVID-19 compounds that will advance to biological assay testing, there is no guarantee that any of these compounds (or any other future compounds that we may identify), once synthesized and tested in biological assays, will demonstrate sufficient potency as predicted by the molecular modeling algorithms. Further, even if these compounds do demonstrate sufficient potency, there is no guarantee that the compounds will be effective in animal or human testing and that they will ultimately be effective anti-viral drugs for COVID-19.

We may not have sufficient resources to pursue animal and/or human trials for compounds that we identify that we believe demonstrate sufficient potency to combat COVID -19.

Clinical trials are time consuming and expensive. Even if we identify one or more compounds thatdemonstrate sufficient potency as predicted by the molecular modeling algorithms to pursue animal and ultimately human testing for a COVID-19 treatment, we may not have sufficient resources (cash or personnel) to pursue such testing. In such a case, we may pursue a partnership arrangement to have a third party fund our clinical testing, but there is no guarantee that we will be able to identify such a partnership or that a partnership will materialize in terms that are beneficial to the Company.

There is significant competition in the search for a treatment for COVID-19.

There is significant competition, including from other companies and governmental organizations, to find a treatment for COVID-19. Many of these entities have substantially greater resources (including capital and personnel) than we do and many of these entities are much further ahead in pursuit of a treatment than we are. Even if we are successful in identifying a compound that may act as an effective treatment for COVID-19, there is no guarantee that we will have the only effective treatment for COVID-19 or that we will be able to get our treatment to market prior to our competitors.

Other than suits we bring to enforce our patent rights we are not a party to any material pending legal proceedings other than that which arise in the ordinary course of business. We believe that any liability that may ultimately result from the resolution of these matters will not, individually or in the aggregate, have a material adverse effect on our financial position or results of operations.

~~There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017.~~

During the three months ended January 31, 2018, the Company issued an aggregate of 5,347 shares of our common stock to a company in payment of investor relations services. The common stock was issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act as they were issued to recipients, without a view to distribution, and were not issued through any general solicitation or advertisement.None.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this ~~report~~Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware		11-2622630
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3150 Almaden Expressway, Suite 250
San Jose, CA		~~San Jose, CA~~ 95118

Title of each class	Trading symbol	Name of exchange on which registered
Common Stock, par value $.01 per share	ANIX	NASDAQ Capital Market

Large accelerated filer [ ]			Accelerated filer [ ]
Non-accelerated filer ~~[ ] (Do not check if a smaller reporting company)~~[X]		Smaller reporting company [X]
	Emerging growth company [ ]

		Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value

	Shares
Options Outstanding at October 31, 2017	1,637,246	$	1.50
Granted	50,000	$	2.30
Exercised	(18,000)	$	0.67
Forfeited	(4,800)	$	3.80
Options Outstanding at January 31, 2018	1,664,446	$	1.52	$	3,752,696
Options Exercisable at January 31, 2018	1,013,106	$	1.72	$	2,120,876

		Weighted Average Exercise Price Per Share
				Aggregate Intrinsic Value
	Shares			Aggregate Intrinsic Value

Options Outstanding at October 31, 2019	1,998,668		$ 2.80
Exercised	(43,900)		$ 2.36
Forfeited	(5,534)		$ 2.58
Options Outstanding at April 30, 2020	1,949,234		$ 2.81		$ 291,195
Options Exercisable at April 30, 2020	1,740,484		$ 2.85		$ 213,820

ITUS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	January 31, 2018		October 31, 2017
ASSETS	January 31, 2018		October 31, 2017
Current assets:
Cash and cash equivalents	$	2,846,863	$	3,339,374
Short-term investments in certificates of deposit		2,650,000		3,500,000
Prepaid expenses and other current assets		278,496		174,566
Total current assets		5,775,359		7,013,940

Patents, net of accumulated amortization of $1,371,660 and $1,290,336, respectively		1,664,451		1,745,775
Property and equipment, net of accumulated depreciation of $39,756 and $35,725, respectively		50,828		52,701
Total assets	$	7,490,638	$	8,812,416

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	416,925	$	480,324
Accrued expenses		669,633		409,169
Total current liabilities		1,086,558		889,493

Commitments and contingencies (Note 10)

Equity:
Shareholders’ equity:
Preferred stock, par value $100 per share; 19,860 shares authorized; no shares issued or outstanding		-		-
Series A convertible preferred stock, par value $100 per share; 140 shares authorized; no shares issued or outstanding		-		-
Common stock, par value $.01 per share; 24,000,000 shares authorized; 16,631,191 and 16,602,759 shares issued and outstanding, respectively		166,312		166,028
Additional paid-in capital		164,281,744		163,931,079
Accumulated deficit		(158,012,256)		(156,174,184)
Total shareholders’ equity		6,435,800		7,922,923
Noncontrolling interest (Note 1)		(31,720)		-
Total equity		6,404,080		7,922,923

Total liabilities and equity	$	7,490,638	$	8,812,416

The accompanying notes are an integral part of these condensed consolidated financial statements.

ITUS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Three Months Ended January 31,
	For the Three Months Ended January 31,
	2018		2017
Revenue	$	-	$	-

Operating costs and expenses:
Inventor royalties, contingent legal fees and litigation and licensing expenses related to patent assertion		25,353		2,121
Amortization of patents		81,324		81,324
Research and development expenses (including non-cash stock option compensation expense of $40,057 and $79,700, respectively)		777,873		451,630
General and administrative expenses (including non-cash stock option compensation expense of $226,916 and $180,037 respectively)		990,036		859,885
Total operating costs and expenses		1,874,586		1,394,960

Loss from operations		(1,874,586)		(1,394,960)

Interest expense		-		(195,299)

Interest income		9,112		999

Loss before income taxes		(1,865,474)		(1,589,260)

Provision for income taxes		-		-

Net loss		(1,865,474)		(1,589,260)

Less: Net loss attributable to noncontrolling interest		(27,402)		-

Net loss attributable to common shareholders before deemed dividend		(1,838,072)		(1,589,260)

Deemed dividend to preferred shareholder (Note 6)		-		(2,008,775)

Net loss attributable to common shareholders	$	(1,838,072)	$	(3,598,035)

Net loss per share attributable to common shareholders:
Basic and diluted	$	(0.11)	$	(0.41)

Weighted average common shares outstanding:
Basic and diluted		16,610,770		8,755,057

The accompanying notes are an integral part of these condensed consolidated financial statements.

ITUS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the three months ended January 31,
	2018		2017
Reconciliation of net loss to net cash used in operating activities:
Net loss	$	(1,865,474)	$	(1,589,260)
Stock option compensation to employees and directors		214,427		259,737
Stock option compensation to consultants		52,546		-
Common stock issued to consultants		15,002		17,811
Depreciation of property and equipment		4,391		10,505
Amortization of patents		81,324		81,324
Accretion of interest on patent acquisition obligations to interest expense		-		141,299
Issuance of noncontrolling interest in Certainty Therapeutics, Inc. expensed as a license fee		64,656		-
Change in operating assets and liabilities:
Prepaid expenses and other current assets		(103,930)		93,480
Accounts payable		(63,399)		167,453
Accrued expenses		260,464		87,738
Net cash used in operating activities		(1,339,993)		(729,913)

Cash flows from investing activities:
Disbursements to acquire short-term investments in certificates of deposit		(1,250,000)		-
Proceeds from maturities of short-term investments in certificates of deposit		2,100,000		150,000
Purchase of property and equipment		(2,518)		(14,121)
Net cash provided by investing activities		847,482		135,879

Cash flows from financing activities:
Redemption of convertible preferred stock		-		(500,000)
Proceeds from exercise of employee stock options		-		5,665
Net cash used in by financing activities		-		(494,335)

Net decrease in cash and cash equivalents		(492,511)		(1,088,369)
Cash and cash equivalents at beginning of period		3,339,374		2,488,323
Cash and cash equivalents at end of period	$	2,846,863	$	1,399,954

Supplemental disclosure of non-cash financing activities:
Redemption of Series A convertible preferred stock into secured debenture (Note 6)	$	-	$	(3,000,000)

The accompanying notes are an integral part of these statements.

Balance October 31, 2017	$	0
Issuance of noncontrolling interest in Certainty		(4,318)
Net loss attributable to noncontrolling interest		(27,402)
Balance January 31, 2018	$	(31,720)

	Options Outstanding			Options Exercisable
		Weighted Average Remaining Contractual Life (in years)
					Weighted Average Remaining Contractual Life (in years)
			Weighted Average Exercise Price			Weighted Average Exercise Price
Range of Exercise Prices	Number Outstanding			Number Exercisable
Range of Exercise Prices	Number Outstanding			Number Exercisable
$0.67 - $2.30	561,500	6.03	$1.56	480,250	5.84	$1.66
$2.58 - $3.13	853,200	3.28	$2.79	853,200	3.72	$2.79
$3.46 - $5.75	534,534	7.69	$4.16	407,034	7.54	$4.38

		Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value

	Shares
Options Outstanding at October 31, 2017	1,780,000	$	1.58
Options Outstanding and exercisable at January 31, 2018	1,780,000	$	1.58	$	3,953,820

	Number Outstanding and Exercisable	Weighted Average Remaining Contractual Life (in years)
				Weighted Average Exercise Price
Range of Exercise Prices
Range of Exercise Prices
$0.67	1,046,000	4.66	$	0.67
$ 2.58-$ 5.56	734,000	4.11	$	2.88

	Level 1		Level 2		Level 3		Total

Money market funds – Cash equivalents	$	2,470,624	$	-	$	-	$	2,470,624
Certificates of deposit – Short-term investments		-		2,650,000		-		2,650,000
Total financial assets	$	2,470,624	$	2,650,000	$	-	$	5,120,624

	January 31, 2018		October 31, 2017
	January 31, 2018		October 31, 2017
Accrued severance costs		161,475		237,563
Payroll and related expenses		178,916		51,643
Accrued collaborative research and license expenses		220,431		-
Accrued other		108,811		119,963
	$	669,633	$	409,169

	Balance Sheet Location	April 30, 2020		November 1, 2019		October 31, 2019
	Balance Sheet Location	April 30, 2020		November 1, 2019		October 31, 2019
Operating Lease:
Right-of-use asset	Operating lease right- of-use asset	$	81,166	$	106,221	$	-
Right-of-use liability, current	Operating lease liability		55,748		51,101		-
Right-of-use liability, long-term	Operating lease liability, non-current		25,964		55,198		-

For Years Ending October 31,	Operating Leases
2020 (excluding the six months ended April 30, 2020)	$	31,476
2021		59,136
Total future minimum payments, undiscounted		90,612
Less: Imputed interest		(8,900)
Present value of future minimum lease payments	$	81,712

	~~ITUS CORPORATION~~ANIXA BIOSCIENCES, INC.

	By:	/s/ Dr. Amit Kumar
		Dr. Amit Kumar
		Chairman, President and Chief Executive Officer
~~March 8, 2018~~June 9, 2020		(Principal Executive Officer)


	By:	/s/ Michael J. Catelani
		Michael J. Catelani
		Chief Operating Officer and Chief Financial Officer
		(Principal Financial and
~~March 8, 2018~~June 9, 2020		Accounting Officer)

Weighted Average
Remaining
Contractual Life
(in years)

Number
Outstanding
and
Exercisable

Weighted
Average
Exercise Price

Range of
Exercise Prices

Range of
Exercise Prices