See accompanying Notes to Condensed Consolidated Financial Statements.

PHARMACYTE BIOTECH, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

THREE MONTHS ENDED JULY 31, 2020 AND 2019 

(UNAUDITED)

See accompanying Notes to Condensed Consolidated Financial Statements.

PHARMACYTE BIOTECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

See accompanying Notes to Condensed Consolidated Financial Statements.

PHARMACYTE BIOTECH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – NATURE OF BUSINESS

Overview

PharmaCyte Biotech, Inc. (“Company”) is a clinical stage biotechnology company focused on developing and preparing to commercialize cellular therapies for cancer and diabetes based upon a proprietary cellulose-based live cell encapsulation technology known as “Cell-in-a-Box^®.” The Cell-in-a-Box^®technology is intended to be used as a platform upon which therapies for several types of cancer, including locally advanced, non-metastatic inoperable, pancreatic cancer (“LAPC”), and Type 1 and insulin dependent Type 2 diabetes will be developed.

The Company is developing therapies for pancreatic and other solid cancerous tumors by using genetically engineered live human cells that it believes are capable of converting a cancer prodrug into its cancer-killing form, encapsulating those cells using the encapsulation of live cells which are surgically implanted at appropriate sitesCell-in-a-Box^® technology and placing those capsules in the body as close as possible to enable the deliverytumor. In this way, the Company believes that when the cancer prodrug is administered to a patient with a particular type of cancer-killing chemotherapy drug atcancer that may be affected by the sourceprodrug, the killing of the cancer.patient’s tumor may be optimized. On September 1, 2020, the Company submitted an Investigational New Drug Application (“IND”) to the U.S. Food and Drug Administration (“FDA”) for a planned Phase 2b clinical trial in LAPC. On September 4, 2020, the Company received an Information Request from the FDA. The Company responded to the FDA’s Information Request on September 11, 2020. See Note 13 “Subsequent Events”.

The Company is also developing a therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. The Company’s diabetes therapy consists of encapsulating genetically modified human cells and/or beta islet cells using the Cell-in-a-Box^® technology and then implanting them in the body to act as a bio-artificial pancreas for insulin production.

In addition, the Company is examining ways to exploit the benefits of the Cell-in-a-Box^® technology to develop therapies for cancer that involve prodrugs based upon thecertain constituents of the Cannabis plant,plant; these constituents are of the class of compounds known as “Cannabinoids.“cannabinoids.”

Cancer Therapy

Targeted Chemotherapy

The Company’s live-cell encapsulation technology consists of encapsulating different types of genetically modified living cells, depending on Until the disease being treated. For its leading product candidate, a therapy for pancreatic cancer, about 10,000 genetically modified live cells that produce an enzyme, which convertsFDA allows the chemotherapy prodrug ifosfamide into its cancer-killing form, are encapsulated in porous, pinhead-sized capsules usingCompany to commence the Cell-in-a-Box^® technology. In each patient to be treated, about 300 of these capsules will be surgically implantedclinical trial involving LAPC described in the blood supply as close to the pancreas tumor as possible. Once that is completed, the chemotherapy prodrug ifosfamide is given to the patient intravenously at one-third the normal dose. The prodrug is normally activated in the patient’s liver. By activating the prodrug near the tumor using the Cell-in-a-Box^® capsules, the Company’s cellular therapy acts as a type of “artificial liver.” Using this “targeted chemotherapy”recently filed IND, the Company is seeking to create an environment that enables optimal concentrations of the “cancer-killing” form of ifosfamide at the site of the tumor. Because the cancer-killing form of ifosfamide has a short half-life,not spending any further resources developing this program.

In addition, the Company believes that by using this treatment approach it results in little to no collateral damage to other organs in the body. The Company believes this treatment significantly reduces tumor size with no treatment-related side effects.

Pancreatic Cancer Therapy

A critical unmet medical need exists for patients with pancreatic cancer whose tumors are locally advanced, non-metastatic and inoperable but no longer respond to Abraxane^® plus gemcitabine, the current standard of care for advanced pancreatic cancer. These patients have no effective treatment alternative once their tumors no longer respond to this combination therapy. Commonly used treatments for these types of patients include 5-fluorouracil (“5-FU”) or capecitabine (a prodrug of 5-FU) with or without radiation. However, such treatments are only marginally effective in treating the tumor and result in serious side effects. The Company is developing a therapy that it believes can serve as a “consolidation therapy” with Abraxane^® plus gemcitabine that addresses the critical unmet medical need.

Subject to FDA approval, the Company plans to commence a Phase 2b clinical trial involving locally advanced, inoperable non-metastatic pancreatic cancer. The Company had a Pre-Investigational New Drug Application (“Pre-IND”) meeting with the Center for Biologics Evaluation and Research of the FDA on January 17, 2017. At the Pre-IND meeting, the FDA informed the Company it agreed with certain aspects of the Company’s development plan, charged the Company with completing numerous tasks and provided the Company with the guidance the Company needs to complete what it expects will be a successful Investigational New Drug Application (“IND”) process, although no assurance can be given whether the FDA will approve the Company’s IND once it is submitted. The proposed clinical trial is designed to show that the Company’s Cell-in-a-Box^® plus low-dose ifosfamide therapy can serve as an effective and safe consolidation chemotherapy for patients whose tumors no longer respond after four to six months of therapy with Abraxane^® plus gemcitabine. The trial will take place in the United States with possible study sites in Europe.

Malignant Ascites Fluid Therapy

The Company is also developing a therapy to delay the production and accumulation of malignant ascites fluid that results from many types of abdominal cancerous tumors. Malignant ascites fluid is secreted by an abdominal tumorcancerous tumors into the abdomen after the tumor reachestumors have reached a certain stage of growth. This fluid contains cancer cells that can seed and form new tumors throughout the abdomen. This fluid accumulates in the abdominal cavity, causing swelling of the abdomen, severe breathing difficulties and extreme pain.

Malignant ascites fluid must be removed by paracentesis on a periodic basis. This is painful and costly. There is no therapy that prevents or delays the production and accumulation of malignant ascites fluid. The Company has been involved in a series of preclinical studies conducted by Translational Drug Developmentis using its therapy for pancreatic cancer to determine if the combination of Cell-in-a-Box^® encapsulated cells plus ifosfamideit can prevent or delay the production and accumulation of malignant ascites fluid. The Company plansAs with the Company’s Cannabis program, until the FDA allows it to conduct another preclinical studycommence the clinical trial involving LAPC described in Germany. If the preclinical studies are successful andits recently filed IND, the Company receives approval to do so from the FDA, the Company plans to conduct a clinical trial in the United States. The Company also plans to have additional study sites in Europe if it receives approval to do so from the European Medicines Agency.

Diabetes Therapy

Bio-Artificial Pancreas for Diabetesis not spending any further resources developing this program.

The Company plans to developis also developing a therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. ItThe Company’s diabetes therapy consists of encapsulated genetically modified human liver cells and insulin-producing stem cells. The encapsulation for each type of cell will be done using the Cell-in-a-Box^® technology. Implanting these cells in the body is designed to function as a bio-artificial pancreas for purposes of insulin production. As with the two previous programs, the Company is not spending any further resources developing a therapy that involves encapsulationthis program until the FDA allows it to commence the clinical trial involving LAPC described in its recently filed IND. Additionally, work at the University of Technology, Sydney (“UTS”) on the Melligen cells continues. Melligen cells are human liver cells that have been genetically engineered to produce, store insulin and release insulin on demand at levels in proportionresponse to the levels of blood sugar (glucose) in the human body. It also plans to explore the encapsulation of beta islet cells as an alternative to using genetically modified human cells. The encapsulation will be done using the Cell-in-a-Box^® technology.

Cannabis Therapy

Cannabinoids

The Company plans to use Cannabinoids to develop therapies for cancer, with the initial target of brain cancer. The Company is focusing on developing specific therapies based on carefully chosen molecules rather than using complexCannabis extracts. The Company’s therapy will use the Cell-in-a-Box^® technology in combination with genetically modified cell lines designed to activate cannabinoid molecules for the treatment of diseases and their related symptoms.

To further itsCannabis therapy development plans,Finally, the Company entered into a Research Agreement in May 2014 withhas licensed (“Hai Kang License Agreement”) from Hai Kang Life Corporation (“Hai Kang”) the University of Northern Colorado. The goal of the research isright to develop methods for the identification, separation and quantification of constituents of Cannabis, some of which are prodrugs, that may be used in combination with the Cell-in-a-Box^® certain technology owned or controlled by Hai Kang related to treat cancer. Studies have been undertaken using cannabinoids to identify the appropriate cell type that can convert the selected cannabinoid prodrugs into metabolites with anticancer activity. Once identified, the genetically modified cells which are expected to produce the appropriate enzyme to convert that cannabinoid prodrug will be encapsulated using the Cell-in-a-Box^® technology. The encapsulated cells and cannabinoid prodrugs identified by these studies will then be combined and used for future studies to evaluate their anticancer effectiveness.SARS-Cov2 COVID-19 diagnostic kits (“Kits”).

The Company’s license is both for the sale of Kits as well as for the use of the technology underlying the Kits. Pursuant to the Hai Kang License Agreement, the Company may directly (or through a third party) conduct research, use, develop, market, sell, distribute, import and export Kits and utilize their underlying technology for human and veterinary uses in North America, the United Kingdom and certain other European sites. A Kit is defined as any existing Kit of Hai Kang or any future Kit derived from Hai Kang’s Kits. The Kits will be manufactured and supplied to the Company by Hai Kang. With respect to the Hai Kang License Agreement and related products, including the Kits, we may not be able to (i) develop a related product candidate with our current resources, on a timely basis, or at all; (ii) obtain the necessary regulatory authorizations or approvals for such a product candidate or for a Kit; (iii) commercialize any such product candidate or Kit; or (iv) obtain reimbursement for such a product candidate or Kit in the U.S. and elsewhere. It is uncertain that any such product candidates or Kit will comply with U.S. regulatory requirements or that any health care facility or provider will be willing or able to use such product candidates or Kits.

Impact of the COVID-19 Pandemic on the Company’s Operations

The coronavirus SARS-Cov2 (“COVID-19”) pandemic is causing significant, industry-wide delays in clinical trials. Although the Company is not yet in a clinical trial, the Company has filed an IND with the FDA to commence a clinical trial in LAPC and is awaiting a response from the FDA. Currently, many clinical trials are being delayed due to COVID-19. There are numerous reasons for these delays. For example, patients have shown a reluctance to enroll or continue in a clinical trial due to fear of exposure to COVID-19 when they are in a hospital or doctor’s office. There are local, regional and state-wide orders and regulations restricting usual normal activity by people. These discourage and interfere with patient visits to a doctor’s office if the visit is not COVID-19 related. Healthcare providers and health systems are shifting their resources away from clinical trials toward the care of COVID-19 patients. The FDA and other healthcare providers are making product candidates for the treatment of COVID-19 a priority over product candidates unrelated to COVID-19. As of the date of this Report on Form 10-Q (“Report”), the COVID-19 pandemic has had an impact upon the Company’s operations, although the Company believes that impact is not material. The impact primarily relates to delays in tasks associated with the preparation of the Company’s recently submitted IND to treat LAPC. There may be further delays in generating responses required by the Company to comments by or requests from the FDA related to the IND.

As a result of the COVID-19 pandemic, commencement of the Company’s planned clinical trial to treat LAPC may be delayed. Also, enrollment may be difficult for the reasons discussed above. In addition, after enrollment in the trial, if patients contract COVID-19 during their participation in the trial or are subject to isolation or shelter in place restrictions, this may cause them to drop out of our trial, miss scheduled therapy appointments or follow-up visits or otherwise fail to follow the trial protocol. If patients are unable to follow the trial protocol or if the trial results are otherwise affected by the consequences of the COVID-19 pandemic on patient participation or actions taken to mitigate COVID-19 spread, the integrity of data from the trial may be compromised or not be accepted by the FDA. This could impact or delay the Company’s clinical development program.

It is highly speculative in projecting the effects of COVID-19 on the Company’s clinical development program and the Company generally. The effects of COVID-19 quickly and dramatically change over time. Its evolution is difficult to predict, and no one is able to say with certainty when the pandemic will subside and life as we knew it before the pandemic will return to normal.

Company Background and Material Agreements

The Company is a Nevada corporation incorporated in 1996. In 2013, the Company restructured its operations to focus on biotechnology. The restructuring resulted in the Company focusing all its efforts upon the development of a novel, effective and safe way to treat cancer and diabetes. OnIn January 6, 2015, the Company changed its name from Nuvilex, Inc. to PharmaCyte Biotech, Inc. to better reflect the nature of its restructuredcurrent business.

In

Commencing in May 2011, the Company entered into an Asset Purchase Agreement (“APA”)a series of agreements and amendments with SG Austria Private Limitedto acquire certain assets from SG Austria as well as an exclusive, worldwide license to use, with a right to sublicense, the Cell-in-a-Box^® technology and trademark for the development of therapies for cancer. (“SG Austria”) to purchase 100% of the assets and liabilities of SG Austria. Austrianova Singapore Pte. Ltd. (“Austrianova”) and Bio Blue Bird AG (“Bio Blue Bird”), wholly-owned subsidiaries of SG Austria were to become wholly-owned subsidiaries of the Company on the condition that the Company pay SG Austria $2.5 million and 100,000,000 shares of common stock of the Company. The Company was to receive 100,000 shares of common stock of Austrianova and nine bearer shares of Bio Blue Bird representing 100% of the ownership of Bio Blue Bird.

Through addenda to the APA, the closing date of the APA was extended twice by agreement between the parties.APA”)

In June 2013, the Company and SG Austria entered a Third Addendum to the SG Austria APA (“Third Addendum”). The Third Addendum materially changed materially the transaction contemplated by the SG Austria APA. Under the Third Addendum, the Company acquired 100% of the equity interests in Bio Blue Bird and received a 14.5% equity interest in SG Austria. In addition, the Company received nine bearer shares of Bio Blue Bird to reflect its 100% ownership of Bio Blue Bird. The Company paid: (i) $500,000 to retire all outstanding debt of Bio Blue Bird; and (ii) $1.0 million to SG Austria. The Company also paid SG Austria $1,572,193 in exchange for thea 14.5% equity interest of SG Austria. The Third Addendumtransaction required SG Austria to return to the Company the 100,000,000 shares of our common stock held by SG Austria and for the Company to return to SG Austria the 100,000 shares of common stock of Austrianova thatwhich the Company held.

Effective as of the same date ofthe Company entered into the Third Addendum, the partiesCompany and SG Austria also entered into a Clarification Agreement to the Third Addendum (“Clarification Agreement”) to clarify and include certain language that was inadvertently left out of the Third Addendum. Among other things, the Clarification Agreement confirmed that the Third Addendum granted the Company an exclusive, worldwide license to use, with a right to sublicense, the Cell-in-a-Box^® technologyTrademark and its Associated Technology for the development of treatmentstherapies for cancer and use of Austrianova’s Cell-in-a-Box^®trademark and associated technology.cancer.

With respect to Bio Blue Bird, licensed certain types of genetically modified human cells from Bavarian Nordic A/S (“Bavarian Nordic”) and GSF-Forschungszentrum für Umwelt u. Gesundheit GmbH (collectively, “Bavarian Nordic/GSF”) pursuant toand Bio Blue Bird entered into a non-exclusive License Agreement (“Bavarian Nordic/GSF License Agreement”) in July 2005, whereby Bio Blue Bird was granted a non-exclusive license to further develop, make, have made (including services under contract for Bio Blue Bird or a therapysub-licensee, by Contract Manufacturing Organizations, Contract Research Organizations, Consultants, Logistics Companies or others), obtain marketing approval, sell and offer for sale the clinical data generated from the pancreatic cancer using a certain type of encapsulatedclinical trials that used the cells (“Cells”and capsules developed by Bavarian Nordic/GSF (then known as “CapCells”). The or otherwise use the licensed patent rights to the Cells pertain torelated thereto in the countries in which Bavarian Nordic/GSF obtained patent protection. Hence, facilitated by the acquisition ofpatents had been granted. Bio Blue Bird was required to pay Bavarian Nordic a royalty of 3% of the Third Addendum providesnet sales value of each licensed product sold by Bio Blue Bird and/or its Affiliates and/or its sub-licensees to a buyer. The term of the Company with an exclusive, worldwideBavarian Nordic/GSF License Agreement continued on a country by country basis until the expiration of the last valid claim of the licensed patent rights.

Bavarian Nordic/GSF and Bio Blue Bird amended the Bavarian Nordic License Agreement in December 2006 (“First Amendment to Bavarian Nordic/GSF License Agreement”) to reflect that: (i) the license granted was exclusive; (ii) a royalty rate increased from 3% to use4.5%; (iii) Bio Blue Bird assumed the Cell-in-a-Box^® technology and trademarkpatent prosecution expenses for the developmentexisting patents; and (iv) to make clear that the license will survive as a license granted by one of a therapy for all formsthe licensors if the other licensor rejects performance under the Bavarian Nordic License Agreement due to any actions or declarations of cancer using these encapsulated Cells.insolvency.

In June 2013, the Company acquired from Austrianova an exclusive, worldwide license to use the Cell-in-a-Box^® technologyTrademark and trademarkits Associated Technology for the development of a therapy for Type 1 and insulin-dependent Type 2 diabetes (“Diabetes Licensing Agreement”). TheThis allows the Company paid Austrianova $2.0 million to secure this license.develop a therapy to treat diabetes through encapsulation of a human cell line that has been genetically modified to produce, store and release insulin in response to the levels of blood sugar in the human body.

In October 2014, the Company entered into an exclusive, worldwide license agreement with the UTS (“Melligen Cell License Agreement”) with the University of Technology Sydney (“UTS”) in Australia to use insulin-producing genetically engineered human liver cells (“Melligen Cells”) developed by UTS to treat Type 1 diabetes and insulin-dependent Type 2 diabetes. The Company plansThese cells, named “Melligen”, were tested by UTS in mice and shown to develop an effective therapy for diabetes by encapsulatingproduce insulin in direct proportion to the amount of glucose in their surroundings. In those studies, when Melligen cells were transplanted into immunosuppressed diabetic mice, the blood glucose levels of the mice became normal. In other words, the Melligen Cells usingcells reportedly reversed the Cell-in-a-Box^® technology.diabetic condition.

In December 2014, the Company acquired from Austrianova an exclusive, worldwide license to use the Cell-in-a-Box^® technologyTrademark and its Associated Technology in combination with genetically modified non-stem cell lines which are designed to activate Cannabinoidcannabinoid prodrug molecules for development of therapies for diseases and their related symptoms using of the Cell-in-a-Box^® technology and trademark (“Cannabis Licensing Agreement”). This allows the Company to develop a therapy to treat cancer and other diseases and symptoms through encapsulation of genetically modified cells designed to convert cannabinoids to their active form using the Cell-in-a-Box^® trademark and its associated technologies.

In July 2016, the Company entered into a Binding Memorandum of Understanding with Austrianova (“Austrianova MOU”). Pursuant to the Austrianova MOU, Austrianova agreed towill actively work with the Company to seek an investment partner in territories not covered by the Bavarian Nordic/GSF License Agreement. The plan is for the investment partner toor partners who will finance clinical trials and further develop products for the Company’s therapy for cancer, in exchange for which the Company, Austrianova and any future investment partner will each receive a portion of the net revenue from the sale of cancer products.

In October 2016, the partiesBavarian Nordic/GSF and Bio Blue Bird further amended the Bavarian Nordic License Agreement (“Second Amendment to Bavarian Nordic/GSF License Agreement toAgreement”) in order to: (i) include the right to import in the scope of the license; (ii) reflect ownership and notification of improvements,improvements; (iii) clarify which provisions survive expiration or termination of the Bavarian Nordic/GSFNordic License Agreement, toAgreement; (iv) provide rights to Bio Blue Bird to the clinical data after the expiration of the licensed patent rightsrights; and to(v) change the notice address and recipients of Bio Blue Bird.

In August 2017,May 2018, the Company entered into a series of binding term sheet amendments (“Binding Term Sheet withAmendments”). The Binding Term Sheet Amendments provide that the Company’s obligation to make milestone payments to Austrianova is eliminated in their entirety under the: (i) Cannabis License Agreement; and (ii) the Diabetes License Agreement, as amended. The Binding Term Sheet Amendments also provide that the Company’s obligation to make milestone payments to SG Austria for therapies for cancer to be eliminated in their entirety. In addition, the Binding Term Sheet Amendments also provides that the scope of the Diabetes License Agreement is expanded to include all cell types and Austrianova pursuantcell lines of any kind or description now or later identified, including, but not limited to, whichprimary cells, mortal cells, immortal cells and stem cells at all stages of differentiation and from any source specifically designed to produce insulin for the parties reached an agreement to amend certain provisionstreatment of diabetes.

In addition, one of the Binding Term Sheet Amendments provides that the Company will have a 5-year right of first refusal from August 30, 2017 in the APA,event that Austrianova chooses to sell, transfer or assign at any time during this period the Diabetes Licensing AgreementCell-in-a-Box^® Trademark and Associated Technologies , intellectual property, trade secrets and know-how, which includes the Cannabis Licensing Agreement. See Note 10, Commitmentsright to purchase any manufacturing facility used for the Cell-in-a-Box^® encapsulation process and Contingencies,a non-exclusive license to use the special cellulose sulfate utilized with the Cell-in-a-Box^® encapsulation process (collectively, “Associated Technologies”); provided, however, that the Associated Technologies subject to the right of first refusal do not include Bac-in-a-Box^®. Additionally, for additional information.

NOTE 2 – LIQUIDITY

Liquiditya period of one year from August 30, 2017 one of the Binding Term Sheet Amendments provides that Austrianova will not solicit, negotiate or entertain any inquiry regarding the potential acquisition of the Cell-in-a-Box^® and its Associated Technologies.

The Company's Condensed Consolidated Financial Statements are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) applicable to a going concern which contemplatesBinding Term Sheet Amendments further provide that: (i) the realization of assets and liquidation of liabilitiesroyalty payments on gross sales as specified in the normal courseSG Austria APA, the Cannabis License Agreement and the Diabetes License Agreement are changed to 4%; and (ii) the royalty payments on amounts received by the Company from sublicensees on sublicensees’ gross sales under the same agreements are changed to 20% of business.the amount received from the sublicensees, provided, however, that in the event the amounts received by the Company from sublicensees is 4% or less of sublicensees’ gross sales, Austrianova will receive 50% of what the Company receives (up to 2%) and then additionally 20% of any amount the Company receives over that 4%.

One of the Binding Term Sheet Amendments requires that the Company pay $900,000 to Austrianova ratably over a nine-month period in the amount of two $50,000 payments each month during the nine-month period on the days of the month to be agreed upon between the parties, with a cure period of 20 calendar days after receipt by the Company of written notice from Austrianova that the Company has failed to pay timely a monthly payment. As of January 31, 2018,April 30, 2020, the Company had an accumulated deficit$900,000 amount has been paid in full. The Binding Term Sheet Amendments also provide that Austrianova receives 50% of $94,668,675any other financial and incurred a net loss fornon-financial consideration received from the nine months ended January 31, 2018 of $5,533,373.

During the nine months ended January 31, 2018, funding was provided by investors to maintain and expand the Company. The remaining challenges, beyond the regulatory and clinical aspects, include accessing funding for the Company to cover its future capital requirements. During the previous fiscal year and through the nine months ended January 31, 2018, the Company continued to acquire funds through salesCompany’s sublicensees of the Company’s common stock pursuant to the Company’s Registration Statement on Form S-3 under which the Company’s placement agent sold shares of the Company’s common stock “at-the-market” or pursuant to “block trades” in a program structured to provide up to $50 million in funding to the Company less certain commissions.Cell-in-a-Box^® technology.

The Company requires substantial additional capital to finance its planned business operations and expects to incur operating losses in future periods due to the expenses related to the Company’s core businesses. The Company has not realized any revenue since it commenced doing business in the biotechnology sector, and there can be no assurance that it will be successful in generating revenues in the future in this sector.

The Company believes its cash on hand at January 31, 2018, sales of registered and unregistered shares of its common stock and any public offerings of common stock in which the Company may engage in will provide sufficient capital to meet the Company’s capital requirements and to fund the Company’s operations through March 31, 2019.

The Company will continue to be dependent on outside capital to fund its research and operating expenditures for the foreseeable future. If the Company fails to generate positive cash flows or fails to obtain additional capital when required, the Company may need to modify, delay or abandon some or all its business plans.

The Company’s ability to use its current Form S-3 will be retested at the time of the Company’s filing of its Form 10-K for fiscal year 2018. If the Company does not meet the eligibility requirements of its current Form S-3, it will not be eligible to continue to use it to raise capital. In such event, the Company would need to raise capital pursuant to a Form S-1 or pursuant to private placements. Either method could entail greater time periods to raise capital and could entail increased total costs.

NOTE 32 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The accompanying Condensed Consolidated Financial Statements as of January 31, 2018 and for the three and nine months ended January 31, 2018 and 2017 are unaudited. These unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP for interim financial information and are presented in accordance with the requirements of Regulation S-X of the United States Securities and Exchange Commission (“Commission”) and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete Condensed Consolidated Financial Statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended January 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2018. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements as of and for the fiscal year ended April 30, 2017 and the Notes thereto included in the Company’s Annual Report on Form 10-K for the period ended April 30, 2017 (“Form 10-K”) the Company filed with the Commission.

The Condensed Consolidated Balance Sheet as of April 30, 2017 contained herein has been derived from the audited Consolidated Financial Statements as of April 30, 2017, but does not include all disclosures required by U.S. GAAP.

Principles of Consolidation and Basis of Presentation

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. The Company operates independently and through four wholly-ownedwholly owned subsidiaries: (i) Bio Blue Bird; (ii) PharmaCyte Biotech Europe Limited; (iii) PharmaCyte Biotech Australia Private Limited.Pty. Ltd.; and (iv) Viridis Biotech, Inc. and are prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAPGAAP”) and the rules and regulations of the Commission.United States Securities and Exchange Commission (“Commission”). Intercompany balances and transactions are eliminated. The Company’s 14.5% investment in SG Austria is presented on the cost method of accounting.

Use of Estimates

The preparation of Condensed Consolidated Financial Statementsfinancial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates these estimates including those related to fair values of financial instruments, intangible assets, fair value of stock-based awards, income taxes and contingent liabilities, among others. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s Condensed Consolidated Financial Statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company’s condensed consolidated financial position and results of operations.

Intangible Assets

The Financial Accounting Standards Board ("FASB") standard on goodwill and other intangible assets prescribes a two-step process for impairment testing of goodwill and indefinite-lived intangibles, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. The Company has elected to perform its annual analysis at the end of its reporting year.

The Company’s intangible assets are licensing agreements related to the Cell-in-a-Box^®technology for $1,549,427 and the diabetes license for $2,000,000 for an aggregate total of $3,549,427.

These intangible assets have an indefinite life; therefore, they are not amortizable.

The Company concluded that there was no impairment of the carrying value of the intangibles for the ninethree months ended JanuaryJuly 31, 2018.2020 and 2019.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset are less than carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. No impairment was identified or recorded during the ninethree months ended JanuaryJuly 31, 2018.2020 and 2019.

Fair Value of Financial Instruments

For certain of the Company’s non-derivative financial instruments, including cash, accounts payable and accrued expenses, the carrying amount approximates fair value due to the short-term maturities of these instruments.

Accounting Standards Codification ("ASC") Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the Condensed Consolidated Balance Sheetscondensed consolidated balance sheets for current liabilities qualify as financial instruments and are a reasonable estimate of their fair values because of the short period between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

The Company adopted ASC subtopic 820-10, Fair Value Measurements and Disclosures and ASC subtopic 825-10, Financial Instruments,

Income Taxes

Deferred taxes are calculated using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

A valuation allowance is provided for deferred income tax assets when, in management’s judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. The Company believes the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based on, among other things, an estimate of future taxable income in the United StatesU.S. and certain other jurisdictions, thatwhich is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against the Company’s net deferred income tax assets, the Company considers all available evidence, both positive and negative. Consistent with the Company’s policy, and because of the Company’s history of operating losses, the Company does not currently recognize the benefit of all its deferred tax assets, including tax loss carry forwards, thatwhich may be used to offset future taxable income. The Company continually assesses its ability to generate sufficient taxable income during future periods in which deferred tax assets may be realized. When the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in the statements of operations.

The U.S. GAAP method of accounting for uncertain tax positions utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority or the statute of limitations expires. Positions previously recognized are derecognized when the Company subsequently determines the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates.

On March 27, 2020, Congress enacted the “Coronavirus Aid, Relief and Economic Security ("CARES") Act” to provide certain relief as a result of the 2019 Coronavirus pandemic. The Company maintains a full valuation allowance on its U.S. net deferred tax assets. Deferred tax asset remeasurement (tax expense) was offset by a net decrease in valuation allowance, that resulted in no impact on the Company's income tax expense. Therefore, the Company does not expect the provisions in the CARES Act will impact the Company’s Condensed Consolidated Financial Statements.

Research and Development

Research and development (“R&D”) expenses consist of costs incurred for direct and overhead-related research expenses and are expensed as incurred. Costs to acquire technologies, including licenses, that are utilized in research and development and that have no alternative future use are expensed when incurred. Technology developed for use in the Company’s product candidates is expensed as incurred until technological feasibility has been established.

Under the Cannabis Licensing Agreement, entered into in December 2014, the Company acquired from Austrianova an exclusive, world-wide license to use the Cell-in-a-Box^®trademark and its associated technology with genetically modified non-stem cell lines which are designed to convert Cannabinoids from cannabis to develop cancer therapies.

Under the Cannabis Licensing Agreement, the Company was required to pay Austrianova an upfront payment of $2.0 million in full by no later than June 30, 2016. The Company paid Austrianova $2.0 million in a timely manner. The cost of the license was recorded as research and development costs.

Research and development costsR&D expenses for the three and nine months ended JanuaryJuly 31, 20182020 and 20172019 were $802,565, $579,717, $1,745,692$270,574 and $1,008,489,$72,330, respectively.

Stock-Based Compensation

The Company recognizes stock-based compensation expense for only those awards ultimately expected to vest on a straight-line basis over the requisite service period of the award, net of an estimated forfeiture rate.award. The Company estimates the fair value of stock options using a Black-Scholes-Merton valuation model. This model which requires the input of highly subjective assumptions, including the option's expected term and stock price volatility. In addition, judgment is also required in estimating the number of stock-based awards that are expected to be forfeited. Forfeitures are estimated based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The assumptions used in calculating the fair value of share-based payment awards represent management's best estimates, but these estimates involve inherent uncertainties and the application of management's judgment. Thus, if factors change and the Company uses different assumptions, itsthe stock-based compensation expense could be materially different in the future.

Concentration of Credit Risk

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains most of its cash balance at a financial institution located in California. Accounts at this institution are insured by the Federal Deposit Insurance Corporation up to $250,000. Uninsured balances aggregated approximately $1,258,000$1,887,000 and $3,214,000$618,000 at JanuaryJuly 31, 20182020 and April 30, 2017,2020, respectively. The Company has not experienced any losses in such accounts. Management believes it is not exposed to any significant credit risk on cash.

Foreign Currency Translation

The Company translates the financial statements of its foreign subsidiarysubsidiaries from the local (functional) currencies to U.S. dollars in accordance with FASB ASC 830,Foreign Currency Matters. All assets and liabilities of the Company’s foreign subsidiaries are translated at year-endperiod-end exchange rates, while revenue and expenses are translated at average exchange rates prevailing during the year.period. Adjustments for foreign currency translation fluctuations are excluded from net loss and are included in other comprehensive income. Gains and losses on short-term intercompany foreign currency transactions are recognized as incurred.

Going Concern

The accompanying Condensed Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern; however, the following conditions raise substantial doubt about the Company's ability to do so.   As of July 31, 2020, the Company has an accumulated deficit of $104,742,203 and incurred a net loss for three months ended July 31, 2020 of $883,944. The Company requires substantial additional capital to finance its planned business operations and expects to incur operating losses in future periods due to the expenses related to the Company’s core businesses. The Company has not realized any revenue since it commenced doing business in the biotechnology sector, and there can be no assurance that it will be successful in generating revenues in the future in this sector. The Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

For the three months ended July 31, 2020, funding was provided by investors to maintain and expand the Company’s operations. Sales of the Company’s common stock were made under an operative Form S-3 (“S-3”) allowing for offerings of up to $50 million dollars in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act or transactions structured as a public offering of a distinct block or blocks of the shares of the Company’s common stock. During the three months ended July 31, 2020, the Company continued to acquire funds through the Company’s S-3 pursuant to which the placement agent sells shares of common stock “at-the-market” in a program which is structured to provide up to $25 million to the Company less certain commissions pursuant to the S-3. From May 1, 2020 through July 31, 2020 the Company raised capital of approximately $1.9 million in Block Trade transactions and “at-the-market” transactions.

From August 1, 2020 through August 12, 2020, the Company raised capital of approximately $2.8 million in Block Trades net of commissions.

On August 13, 2020, the Company no longer met the eligibility requirements to use the S-3 to raise capital, and the Company ceased to use the S-3 to raise capital after that date.

Management determined that its plans to raise additional capital alleviate substantial doubt about the Company’s ability to continue as a going concern. The Company believes the cash on hand, the potential sales of unregistered shares of its common stock and any public offerings of common stock in which the Company may engage in will provide sufficient capital to meet the Company’s capital requirements and to fund the Company’s operations through September 30, 2021.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 "Revenue from Contracts with Customers" (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in Topic 605,“Revenue Recognition,” including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments create a new Subtopic 340-40,“Other Assets and Deferred Costs—Contracts with Customers.” In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period; early application is not permitted. The Company is not currently generating revenue; therefore, it does not expect there will be an impact from this guidance on the Company’s consolidated financial position and consolidated statement of operations.

ASU No. 2016-02,Leases, allows the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. The classification criteria for distinguishing between finance leases and operating leases are similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The Update 2016-02 is effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company is still evaluating the effect of this update.

The Company does not anticipate any material impact on its consolidated financial statements upon the adoption of the following accounting pronouncements issued: (i) ASU No. 2016-01,Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities; (ii) ASU No. 2016-13,Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments;Instruments (iii) ("ASU 2016-13"), was issued in June 2016. Under ASU 2016-13, existing guidance on reporting credit losses for trade and other receivables and available for sale debt securities will be replaced with a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowances for losses. The Company’s adoption of ASU 2016-13 during the quarter ended July 31, 2020 did not result in an impact on the Company’s Condensed Consolidated Financial Statements.

ASU No. 2017-07,2019-12, Compensation - Retirement Benefits (Topic 715): ImprovingSimplifying the PresentationAccounting for Income Taxes ("ASU 2019-12"), was issued in December 2019. Under ASU 2019-12, the accounting for income taxes is simplified by eliminating certain exceptions and implementing additional requirements which result in a more consistent application of Net Periodic Pension CostASC 740. The Company is currently in the process of evaluating the impact of adopting ASU 2019-12 in 2021, but it does not expect it to have a material impact on the Company’s Condensed Consolidated Financial Statements.

NOTE 3 – ACCRUED EXPENSES

Accrued expenses at July 31, 2020 and Net Periodic Postretirement Benefit Cost;April 30, 2020 are summarized below:

The Company financed the Director and (iv) ASU No. 2017-09,Compensation-Stock Compensation (Topic 718): ScopeOfficer insurance policy. The term of Modification Accounting.the policy is from March 8, 2020 through March 8, 2021. The financing agreement has an interest rate of 4.25% per annum and requires eight monthly payments of $12,806. The unpaid balances as of July 31, 2020 and April 30, 2020 are $75,908 and $113,245, respectively, are included in accrued expenses.

NOTE 4 – BINDING TERM SHEET AGREEMENT OBLIGATIONSMALL BUSINESS ADMINISTRATION – PAYCHECK PROTECTION PROGRAM

On March 27, 2020, the CARES Act was enacted to provide financial aid to family and businesses impacted by the COVID-19 pandemic.  The Company participated in the CARES Act, and on April 15, 2020, the Company entered into a Binding Term Sheetnote payable with a bank under the Small Business Administration (“Term Sheet”SBA”) Paycheck Protection Program (“PPP loan”) in the amount of $75,200. This loan payable matures on April 15, 2022 with SG Austriaa fixed interest rate of 1% per annum with interest deferred for six months. The PPP loan has an initial term of two years, is unsecured and Austrianova pursuant to whichguaranteed by the parties reached an agreement to amend certain provisionsSBA. Under the terms of the APA,PPP loan, the Diabetes Licensing Agreement andCompany may apply for forgiveness of the Cannabis Licensing Agreement.amount due on the PPP loan. The Term Sheet statesCompany used the proceeds from the PPP loan for qualifying expenses as defined in the PPP. The Company intends to apply for forgiveness of the PPP loan in accordance with the terms of the CARES Act. However, the Company cannot assure at this time that the CompanyPPP loan will pay Austrianova periodic payments totaling $900,000 upon execution ofbe forgiven partially or in full. If the amendments requiredloan is not forgiven based on the PPP guidelines to be issued by the Term Sheet. AsSBA, as defined, then, the monthly payment amount will be $4,229 beginning on October 15, 2020 through April 15, 2022. The PPP loan balance as of JanuaryJuly 31, 2018, the amendments to the APA, the Diabetes Licensing Agreement2020 and Cannabis Licensing Agreement to be entered into pursuant to the Term Sheet have not been finalized. The terms have been generally agreed to and the Company has made payments totaling $600,000. As of January 31, 2018, the Company’s obligation under the Term Sheet is $300,000. (See Note 10).April 30, 2020 was $75,200.

NOTE 5 – PREFERRED STOCK

The Company has authorized 10,000,000 shares of preferred stock, with a par value of $0.0001, of which 13,500 shares have been designated as “Series E Convertible Preferred Stock.” There are no outstanding shares of preferred stock or Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock has the following features:

NOTE 65 – COMMON STOCK TRANSACTIONS

A summary of the Company’s non-vested restrictedcompensatory stock activity and related weighted average grant date fair value information for the three and nine months ended JanuaryJuly 31, 20182020 and 2017 are2019 is as follows:

TheDuring the three months ended July 31, 2019, the Company awarded 3,600,000issued 2,000,000 shares of common stock to officers as partfour non-employee members of their compensation agreementsthe Company’s Board of Directors (“Board”) pursuant to Director Letter Agreements (“DLAs”) with the Company for 2016. Theseservices relating to the prior year. The shares vest on a quarterly basis over a twelve-month period and are subject to their continuing service under the agreements. During the three and nine months ended January 31, 2017, 600,000 and 2,400,000 shares vested upon issuance and the Company recorded a non-cash compensation expense inof $0 and $13,804 for the amount of $35,940three months ended July 31, 2020 and $143,760,2019, respectively. There were no unvested shares as of January 31, 2018.

The Company awarded 1,200,000 shares of common stock to an employee as part of his compensation agreement for 2016. These shares vest on a quarterly basis over a twelve-month period and are subject to the employee providing services under the agreement. During the three and nine months ended January 31, 2017, 200,000 and 800,000 shares vested and the Company recorded a non-cash compensation expense in the amount of $11,980 and $47,920, respectively. There were no unvested shares as of January 31, 2018.

During the nine months ended January 31, 2017,Effective July 1, 2018, the Company issued 600,0001,200,000 shares of common stock to a consultant. TheseThe term of the agreement is for twelve months. The shares vest on a quarterly basismonthly over a twelve-month period and are subject to the consultant providing services under the agreement. During the three and nine months ended January 31, 2017, 150,000 and 450,000 shares vested and theThe Company recorded a non-cash consulting expense in the amount of $8,550$0 and $26,650,$12,816 for the three months ended July 31, 2020 and 2019, respectively. There were nozero unvested shares as of JanuaryJuly 31, 2018.2020 and 2019, respectively.

During the nine months ended January 31, 2017, the Companymonth of April 2019, two consultants were issued 500,0002,500,000 shares of common stock pursuant to two consultants.their consulting agreements. The termsterm of the agreements areis for twelve months each.which covered prior and current periods. The shares vested upon issuancevest monthly over a twelve-month period and are subject to the consultant providing services under their respective consulting agreements. The Company recorded a non-cash consulting expense in the amount of $21,400$0 and $21,400$7,209 for the three and nine months ended JanuaryJuly 31, 2017.2020 and 2019, respectively. There were nozero and 83,333 unvested shares as of JanuaryJuly 31, 2018.2020 and 2019, respectively.

During the ninethree months ended JanuaryJuly 31, 2017, the Company issued 750,0002019, a consultant was owed 500,000 shares of Common Stockcommon stock pursuant to two consultants.his consulting agreement with the Company. The termsterm of the agreements areconsulting agreement is for twelve months each.which covered prior and current periods. The shares vested upon issuancevest monthly over a twelve-month period and are subject to the consultant providing services under his consulting agreement. The Company recorded a non-cash compensationconsulting expense in the amount of $25,900$0 and $3,306 for the ninethree months ended JanuaryJuly 31, 2017. There were no unvested2020 and 2019, respectively. As of July 31, 2020 and 2019, zero and 500,000 shares as of January 31, 2018.remained unissued, respectively.

The Company awarded 6,600,000 shares of common stock to officers as part of their compensation agreements for 2017.2019. These shares vest monthly over a twelve-month period and are subject to them continuing service under the agreements. During the three and nine months ended JanuaryJuly 31, 2018,2020 and 2019, the Company recorded a non-cash compensation expense in the amount of $114,400$0 and $457,600,$104,726, respectively. AsThere were zero and 2,750,000 unvested shares as of JanuaryJuly 31, 2018, there were no unvested shares.2020 and 2019, respectively.

During the ninethree months ended JanuaryJuly 31, 2018,2019, three non-employee members of the CompanyBoard were issued 1,750,0001,500,000 shares of common stock pursuant to four directorstheir DLAs with the Company. The shares were fully vested upon issuance. The Company recorded a non-cash expense of $7,356 and $11,642 for the three months ended July 31, 2020 and 2019, respectively. There were zero unvested shares of Common Stock remaining related to these DLAs as of July 31, 2020 and 2019.

During the three months ended July 31, 2019, a consultant was issued 2,000,000 shares of common stock in respect of his services as the Chairman of the Company’s Medical and Scientific Advisory Board over a four-year period with their vesting subject to the consultant providing services to the Company. The Company recorded a non-cash consulting expense in the amount of Directors (“Board”)$0 and $7,150 for the three months ended July 31, 2020 and 2019, respectively. There were zero unvested shares remaining related to these compensation agreements as of July 31, 2020 and 2019.

During the three months ended July 31, 2020, three non-employee members of the Board were issued 1,500,000 shares of Common Stock pursuant to Board compensation agreements.their DLAs in respect of their service during that year. The shares were fully vested upon issuance. The Company recorded a non-cash expense of $7,029 and $0 for the three months ended July 31, 2020 and 2019, respectively. There were zero unvested shares remaining related to a DLA as of July 31, 2020.

During the three months ended July 31, 2020, four consultants were issued 1,000,000 shares of restricted Common Stock pursuant to their respective consulting agreement with the Company. The terms of the agreements are for twelve months. The shares vested upon issuance and the Company recorded a non-cash expense of $25,038 and $50,947 for the three and nine months ended January 31, 2018, respectively.

During the nine months ended January 31, 2018, the Company issued 4,200,000 shares of common stock to three consultants. The terms of two of the agreements are for twelve months and one agreement is for eighteen months. The shares vest monthly over a twelve-month to eighteen-month period and are subject to the consultants providing services under the agreements.consultant’s respective consulting agreement. The Company recorded a non-cash consulting expense in the amount of $69,840$4,199 and $150,630$0 for the three and nine months ended JanuaryJuly 31, 2018,2020 and 2019, respectively. AsThere were 750,000 unvested shares remaining related to these consulting agreements as of JanuaryJuly 31, 2018, there were 2,100,000 unvested shares.2020.

TheIn January 2020, the Company awarded 6,600,000 shares of common stock to officers as part of their compensation agreements for 2018.agreements. These shares vest monthly over a twelve-month period and are subject to them continuing service under the agreements. During the three and nine months ended JanuaryJuly 31, 2018,2020, the Company recorded a non-cash compensation expense in the amount of $30,690 and $30,690, respectively. As$67,320. There were 2,750,000 unvested shares as of JanuaryJuly 31, 2018, there were 6,050,000 unvested shares.2020.

All shares listed above were issued without registration under the Securities Act of 1933, as amended (“Securities Act”) in reliance upon the exemption afforded by Section 4(a)(2) of the Securities Act.

During the ninethree months ended JanuaryJuly 31, 20182020 and 2017,2019, the Company sold and issued approximately 62.4234 million and 89.266.7 million shares of common stock, respectively, at prices ranging from $0.02approximately $0.01 to $0.16$0.03 per share.share pursuant to the Company’s S-3. Net of underwriting discounts, legal, accounting and other offering expenses, the Company received net proceeds of approximately $1.75 million$1,857,000 and $3.1 million$558,000 from the sale of these shares for the ninethree months ended JanuaryJuly 31, 20182020 and 2017,2019, respectively.

A summary of the Company’s non-vestedunvested restricted stock activity and related weighted average grant date fair value information for the ninethree months ended JanuaryJuly 31, 20182020 are as follows:

NOTE 76 – STOCK OPTIONS AND WARRANTS

Stock Options

As of JanuaryJuly 31, 2018,2020, the Company had 95,250,00068,700,000 outstanding stock options to its directors and officers (collectively, “Employee Options”) and consultants (“Non-Employee Options”).

During the ninethree months ended JanuaryJuly 31, 20182020 and 2017,2019, the Company granted 16,150,0001,500,000 and 01,500,000 Employee Options, respectively.

The fair value of the Employee Options at the date of grant was estimated using the Black-Scholes-Merton option-pricing model, based on the following weighted average assumptions:

During the nine months ended January 31, 2018 and 2017, the Company granted Non-Employee Options of 4,200,000 and 13,100,000, respectively. The Non-Employee Options granted during the nine months ended January 31, 2017 consisted of 600,000 guaranteed options and 12,500,000 non-guaranteed performance based options. The 12,500,000 non-guaranteed performance based options expired on April 30, 2017.

The fair value of the Non-Employee Options was estimated using the Black-Scholes-Merton option-pricing model, based on the following weighted average assumptions:

The Company’s computation of expected volatility is based on the historical daily volatility of its publicly traded stock. For stock option grants issued during the ninethree months ended JanuaryJuly 31, 20182020 and 2017,2019, the Company used a calculated volatility for each grant. The Company lacks adequate information about the exercise behavior now and has determined the expected term assumption under the simplified method provided for under ASC 718, which averages the contractual term of the Company’s stock options of five years with the average vesting term of two and one-half years for an average of three years. The dividend yield assumption of zero is based upon the fact the Company has never paid cash dividends and presently has no intention of paying cash dividends. The risk-free interest rate used for each grant is equal to the United StatesU.S. Treasury rates in effect at the time of the grant for instruments with a similar expected life.

During the three months ended July 31, 2020 and 2019, the Company granted no Non-Employee Option grants that do not vest immediately upon grant are recorded as an expense over the vesting period. At the end of each financial reporting period, the value of these options, as calculated using the Black-Scholes-Merton option-pricing model, is determined, and compensation expense recognized or recovered during the period is adjusted accordingly. As a result, the amount of the future compensation expense is subject to adjustment until the Non-Employee Options are fully vested.Options.

A summary of the Company’s stock option activity and related information for the ninethree months ended JanuaryJuly 31, 2018 are2020 is shown below:

A summary of the activity for unvested stock options during the ninethree months ended JanuaryJuly 31, 20182020 is as follows:

The Company recorded approximately $220,000$72,317 and $110,000$116,914 of stock basedstock-based compensation related to the issuance of Employee Options to certain officers and directors in exchange for services during the three months ended JanuaryJuly 31, 20182020 and 2017, respectively, and approximately $612,000 and $438,000 during the nine months ended January 31, 2018 and 2017,2019, respectively. At JanuaryJuly 31, 2018,2020, there remained approximately $362,000$88,526 of unrecognized compensation expense related to unvested Employee Options granted to officers and directors, to be recognized as expense over a weighted-average period of the remaining 11 months.five months in the calendar year. The non-vestedunvested options vest at 850,000750,000 shares per month and are expected to be fully vested on December 31, 2018.2020.

The Company recorded approximately $57,000$0 and $6,000$9,411 of stock basedstock-based compensation related to the issuance of Non-Employee Options in exchange for services during the three months ended JanuaryJuly 31, 20182020 and 2017, respectively, and approximately $154,000 and $18,000 during the nine months ended January 31, 2018 and 2017,2019, respectively. The non-vestedThere were no unvested Non-Employee Options vest at 400,000 shares per month and are expected to be fully vested on DecemberJuly 31, 2018.2020.

The following table summarizes ranges ofthe outstanding stock options by exercise price at JanuaryJuly 31, 2018:2020:

As of January 31, 2018, theThe aggregate intrinsic value of outstanding options as of July 31, 2020 was $188,360.zero. This represents options whose exercise price was less than the closing fair market value of the Company’s common stock on JanuaryJuly 31, 20182020 of approximately $0.07$0.014 per share.

Warrants

The warrants issued by the Company are classified as equity.equity-classified. The fair value of the warrants was recorded as additional-paid-in-capital,additional paid-in-capital, and no further adjustments are made.

For stock warrants paid in consideration of services rendered by non-employees, the Company recognizes consulting expense in accordance with the requirements of ASC 505-50 and ASC 505.

Effective May 24, 2017,June 13, 2019, the Company issued a common stock purchase warrantCommon Stock Purchase Warrant to the placement agent of the Company’s at-the-market and block trade offerings.Aeon Capital, Inc. (“Aeon”) for a Block Trade transaction. The Company issued a warrant to purchase 833,3331,338,889 shares of common stock based upon a block tradethe Block Trade transaction pursuant to the amendedCompany’s engagement agreement with Aeon dated May 19, 2017 with the Company’s placement agent.February 22, 2018 (“Aeon Engagement Agreement”). The Company classified these warrants as equity, and theequity. The warrants have a term of five years with an exercise price of approximately $0.03$0.01 per warrant share. Using the Black-Scholes-Merton warrantoption pricing model, the Company determined the aggregate fair value of these warrants to be approximately $20,000.$9,000. The warrants have a cashless exercise feature.

Effective July 26, 2017,15, 2019, the Company issued a common stock purchase warrantCommon Stock Purchase Warrant to the placement agent of the Company’s at-the-market and block trade sales.Aeon for a Block Trade transaction. The Company issued a warrant to purchase 2,000,0001,944,444 shares of common stock based upon a block tradethe Block Trade pursuant to the amended engagement agreement dated June 28, 2017 with the Company’s placement agent.Aeon Engagement Agreement. The Company classified these warrants as equity, and theequity. The warrants have a term of five years with an exercise price of approximately $0.03$0.01 per warrant share. Using the Black-Scholes-Merton warrantoption pricing model, the Company determined the aggregate fair value of these warrants to be approximately $23,000.$12,000. The warrants have a cashless exercise feature.

Effective July 10, 2020, the Company issued a Common Stock Purchase Warrant to Aeon for a Block Trade transaction. The Company issued a warrant to purchase 4,100,000 shares of common stock based upon the Block Trade pursuant to the Aeon Engagement Agreement. The Company classified these warrants as equity. The warrants have a term of five years with an exercise price of $0.01 per warrant share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate fair value of these warrants to be approximately $29,000. The warrants have a cashless exercise feature.

Effective July 18, 2020, the Company issued a Common Stock Purchase Warrant to Aeon for a Block Trade transaction. The Company issued a warrant to purchase 3,500,000 shares of common stock based upon the Block Trade pursuant to the Aeon Engagement Agreement. The Company classified these warrants as equity. The warrants have a term of five years with an exercise price of approximately $0.01 per warrant share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate fair value of these warrants to be approximately $18,000. The warrants have a cashless exercise feature.

Effective July 19, 2020, the Company issued a Common Stock Purchase Warrant to Aeon for a Block Trade transaction. The Company issued a warrant to purchase 1,333,333 shares of common stock based upon the Block Trade pursuant to the Aeon Engagement Agreement. The Company classified these warrants as equity. The warrants have a term of five years with an exercise price of approximately $0.01 per warrant share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate fair value of these warrants to be approximately $7,000. The warrants have a cashless exercise feature.

Effective July 27, 2020, the Company issued a Common Stock Purchase Warrant to Aeon for a Block Trade transaction. The Company issued a warrant to purchase 2,500,000 shares of common stock based upon the Block Trade pursuant to the Aeon Engagement Agreement. The Company classified these warrants as equity. The warrants have a term of five years with an exercise price of approximately $0.01 per warrant share. Using the Black-Scholes-Merton option pricing model, the Company determined the aggregate fair value of these warrants to be approximately $13,000. The warrants have a cashless exercise feature.

A summary of the Company’s warrant activity and related information for the ninethree months ended JanuaryJuly 31, 2018 are2020 is shown below:

The following table summarizes additional information concerning warrants outstanding and exercisable at JanuaryJuly 31, 2018:2020:

NOTE 87 – LEGAL PROCEEDINGS

The Company is not currently a party to any pending legal proceedings, material or otherwise. There are no legal proceedings to which any property of the Company is subject. However, in the past the Company has been the subject of litigation, claims and assessments arising out of matters occurring in its normal business operations. In the opinion of management, none of these had a material adverse effect on the Company’s consolidated financial position, operations and cash flows.

NOTE 98 – RELATED PARTY TRANSACTIONS

The Company had the following related party transactions during the three and nine months ended JanuaryJuly 31, 20182020 and 2017, respectively.2019.

The Company owns 14.5% of the equity in SG Austria and is reported on the cost method of accounting. SG Austria has two subsidiaries: (i) Austrianova; and (ii) Austrianova Thailand Co.,Pte Ltd. The Company purchased products and services from these subsidiaries in the approximate amounts of $317,000$64,000 and $372,000$2,400 in the three months ended JanuaryJuly 31, 20182020 and 2017, respectively, and approximately $959,000 and $517,000 in the nine months ended January 31, 2018 and 2017,2019, respectively.

In April 2014, the Company entered a consulting agreement withthe Vin-de-Bona Trading Private Limited (“Vin-de-Bona”)Consulting Agreement pursuant to which it agreed to provide professional consulting services to the Company. Vin-de-Bona is owned by Prof. Walter H. Günzburg (“Prof. Günzburg) and Dr. Brian Salmons (“Dr. Salmons”), both of whom are involved in numerous aspects of the Company’s scientific endeavors relating to cancer and diabetes.diabetes (Prof. Gunzburg is the Chairman of Austrianova, and Dr. Salmons is the Chief Executive Officer and President of Austrianova). The term of the agreement is for 12 months, automatically renewable for successive 12-month terms. After the initial term, either party can terminate the agreement by giving the other party 30 days’ written notice before the effective date of termination. The agreement has been automatically renewed annually. The amounts paid for the nine months ended January 31, 2018 and 2017 were approximately $27,000 and $69,000 respectively, and approximately zero and $27,000incurred for the three months ended JanuaryJuly 31, 20182020 and 2017,2019 were approximately $13,000 and $13,000, respectively. Also,In addition, during the ninethree months ended JanuaryJuly 31, 2018 and 2017,2020 the Company awardedissued 250,000 shares of restricted common stock to Dr. SalmonsSalmons. The Company recorded a noncash consulting expense of approximately $8,000 relating to these share issuances for services in the amountthree months ended July 31, 2020.

During the year ended April 30, 2020, the Company issued one share of 250,000 and 250,000, respectively, and Dr. Günzburg earned 500,000 sharesSeries A Preferred Stock to the Chief Executive Officer of the Company’s restricted common stockCompany for $1 pursuant to a Subscription Agreement. The Series A Preferred Stock is described in detail in Note 12 – Preferred Stock. The Board exercised its right to have the nine months ended January 31, 2018.Company redeem the one share of Series A Preferred Stock. It is no longer issued and outstanding.

NOTE 109 – COMMITMENTS AND CONTINGENCIES

The Company acquires assets still in development and enters research and developmentR&D arrangements with third parties that often require milestone and royalty payments to the third-party contingent upon the occurrence of certain future events linked to the success of the asset in development. Milestone payments may be required, contingent upon the successful achievement of an important point in the development life-cyclelifecycle of the pharmaceutical product (e.g., approval of the product for marketing by a regulatory agency). If required by the license agreements, the Company may have to make royalty payments based upon a percentage of the sales of the pharmaceutical productsproduct if regulatory approval for marketing of the product candidate is obtained.

Office Lease

The Company formerly leased office space at 12510 Prosperity Drive, Suite 310, Silver Spring, Maryland 20904. The term of the lease expired on July 31, 2016 and was extended to August 31, 2016 at the same amount of monthly rent.

Effective September 1, 2016,2017, the Company entered into a newan office lease for office space at 23046 Avenida de la Carlota, Suite 600, Laguna Hills, California 92653 (“Leased Premises”). The term of the lease is for 12 months.24 months and expired on August 31, 2019. In May 2017,2019, the Company entered into an additional two-yearone-year lease for the Leased Premises, commencing upon the expiration of the term of the firstprior lease. The term of the lease expires on August 31, 2020.

On May 28, 2020, the Company entered into an additional six-month lease of the Leased Premises, commencing on September 1, 2020. The term of the new lease expires on August 31, 2019.February 28, 2021.

Rent expenseexpenses for these offices for the three months ended JanuaryJuly 31, 20182020 and 2017 was $8,3272019 were $7,152 and $13,702, respectively, and $25,152 and $37,131 for the nine months ended January 31, 2018 and 2017,$8,661, respectively.

The following table summarizes the Company’s aggregate future minimum lease payments required under the officeoperating lease for the Leased Premises as of JanuaryJuly 31, 2018.2020.

LicenseMaterial Agreements

Binding Term SheetThe Company’s material agreements are identified and summarized in Note 1 – Nature of Business – Company Background.

On August 30, 2017, the Company entered into a binding Term Sheet (“Term Sheet”) with SG Austria and Austrianova pursuant to which the parties reached an agreement to amend certain provisions in the APA, the Diabetes Licensing Agreement and the Cannabis Licensing Agreement.

The Term Sheet provides that the Company’s obligation to make milestone payments to Austrianova will be eliminated in their entirety under (i) the Cannabis License Agreement, (ii) the Diabetes License Agreement and (iii) the APA. The Term Sheet also provides that the scope of the Diabetes License Agreement will be expanded to include all cell types and cell lines of any kind or description now or later identified, including, but not limited to, primary cells, mortal cells, immortal cells and stem cells at all stages of differentiation and from any source specifically designed to produce insulin for the treatment of diabetes.

In addition, the Term Sheet provides that the Company will have a 5-year right of first refusal in the event that Austrianova chooses to sell, transfer or assign at any time during such period the Cell-in-a-Box^® tradename and its associated technology, intellectual property, trade secrets and know-how, which includes the right to purchase any manufacturing facility used for the Cell-in-a-Box^® encapsulation process and a non-exclusive license to use the special cellulose sulphate utilized with the Cell-in-a-Box^® encapsulation process (collectively, “Associated Technologies”); provided, however, that the Associated Technologies subject to the right of first refusal do not include Bac-in-a-Box^®. Additionally, for a period of one year following the date of the Term Sheet, the Term Sheet provides that Austrianova will not solicit, negotiate or entertain any inquiry regarding the potential acquisition of the Cell-in-a-Box^® and its Associated Technologies.

The Term Sheet further provides that (i) the royalty payments on gross sales as specified in the Cannabis License Agreement, the Diabetes License Agreement and the APA will be changed to 4% and (ii) the royalty payments on amounts received by the Company from sublicensees on sublicensees’ gross sales under the same agreements will be changed to 20% of the amount received by the Company from its sublicensees,provided, however, that in the event the amounts received by the Company from sublicensees is 4% or less of sublicensees’ gross sales, Austrianova will receive 50% of what the Company receives (up to 2%) and then additionally 20% of any amount the Company receives over 4%.

The Term Sheet provides that Austrianova will receive 50% of any other financial and non-financial consideration received from the Company’s sublicensees of the Cell-in-a-Box^® technology. The Term Sheet also provides that the Company will pay Austrianova Singapore $150,000 per month for a period of six months upon the execution of the amendments to the Term Sheet.

Finally, the Term Sheet provides that Prof. Walter H. Günzburg, who currently serves as the Chief Scientific Officer of the Company, will not receive any cash compensation from the Company for services rendered as the Company’s Chief Scientific Officer for a period of six months beginning September 1, 2017.

As of January 31, 2018, the amendments to the APA, the Diabetes Licensing Agreement and the Cannabis Licensing Agreement to be entered into pursuant to the Term Sheet have not been finalized. The terms have been generally agreed to and the Company has made payments totaling $600,000. As of January 31, 2018, the Company’s obligation under the Term Sheet is $300,000. (See Note 4).

Melligen Cell License Agreement

The Melligen Cell License Agreement requires that the Company pay royalty, milestone payments and patent costs to UTS as follows:

Agreement with Eurofins

On June 5, 2017, and as amended on January 24, 2018, the Company and Eurofins Lancaster Laboratories, Inc. (“Eurofins”) entered into an agreement for the preparation and characterization of a Master Cell Bank (“MCB”) for use in the Company’s therapy for pancreatic cancer. The agreement includes pre-bank testing, MCB preparation and MCB characterization, as well as optional testing. The total future costs to the Company, without optional testing, is estimated to be approximately $150,000.

Compensation Agreements

The Company entered into executive compensation agreements with its three executive officers in March 2015, each of which was amended in December 2015.2015 and March 2017. Each agreement has a term of two years.years with automatic annual extensions thereafter unless the Company or the officer provides written notification of termination at least ninety days prior to the end of the term or subsequent extensions. The Company also entered a compensation agreement with a Board member in April 2015 which continuescontinued in effect until amended in May 2017.

In May 2017, the Company amended the compensation agreement with the Board members and the terms continue in effect until a member is no longer on the Board.

In March 2017, theThe Company amended the executive compensation agreements. The term for each agreement is two years from an effective date of January 1, 2017. Athas four independent directors. Each director receives the same time, the Company amended the compensation agreement with the Board member referenced above. It continues in effect until the member is no longer on the Board.

In May 2017, the Company appointed Mr. Thomas C.K. Yuen to the Board to fill a vacancy created by the departure of certain members of the Board in October 2014. In connection with Mr. Yuen’s appointment to the Board, the Company entered into a Board compensation agreement with Mr. Yuen pursuant to which the Company agreed to pay Mr. Yuencompensation: (i) $12,500 in cash for each calendar quarter of service on the Board and agreed to issue annually: (i)Board; (ii) 500,000 fully-paid, non-assessable shares of the Company’s restricted common stock (“Yuen Shares”); annually; and (ii)(iii) a five-year option to purchase 500,000 Yuen Shares (“Yuen Option”) to Mr. Yuenannually at an exercise price equal to the fair market value of the Company’s common stockShares on the date of grant. The Yuen Shares and the Yuen Option wereoption Shares fully vestedvest on the date of the grants. The Board approved the initial issuances of the Yuen Shares and the Yuen Option on May 1, 2017, and the Yuen Option has an exercise price of $0.058 per share of common stock.

In July 2017, the Board appointed Dr. Michael M. Abecassis to the Board to fill a vacancy created by the departure of certain members of the Board in October 2014. In connection with the appointment of Dr. Abecassis to the Board, the Company entered into a Board compensation agreement with Dr. Abecassis pursuant to which the Company agreed to pay Dr. Abecassis $12,500 in cash for each calendar quarter of service on the Board and agreed to issue him annually: (i) 500,000 fully-paid, non-assessable shares of the Company’s restricted common stock (“Abecassis Shares”); and (ii) a five-year Option to purchase 500,000 Abecassis Shares (“Abecassis Option”) at an exercise price equal to the fair market value of the common stock on the date of the grant. The Abecassis Shares and the Abecassis Option were fully vested on the date of the grants. The Board approved the initial issuances of the Abecassis Shares and the Abecassis Option on July 3, 2017, and the Abecassis Option has an exercise price of $0.058 per share of common stock.

In July 2017, the Board appointed Dr. Linda S. Sher to the position of the Company’s Chief Medical Officer (“CMO”). In connection with the appointment, the Company entered into a Professional Services Agreement (“PSA”) with Dr. Sher pursuant to which the Company agreed to pay Dr. Sher $10,000 in cash for each calendar month of service as the Company’s CMO. The Company also agreed to issue Dr. Sher: (i) 1,200,000 fully-paid, non-assessable shares of the Company’s restricted common stock (“Sher Shares”); and (ii) a five-year Option to purchase 1,200,000 Sher Shares (“Sher Option”) at an exercise price equal to the fair market value of the Company’s shares of commons stock on the date of the grant. The Sher Shares and the Sher Option each vest in the amount of 100,000 shares per month. The Board approved the issuances of the Sher Shares and the Sher Option on July 18, 2017, and the Sher Option has an exercise price of $0.089 per share of common stock. Effective as of the effective date of the PSA, the agreement was amended to provide that the Company will indemnify Dr. Sher for her work as the Company’s CMO.

In October 2017, the Board appointed Dr. Raymond C.F. Tong to the Board to fill a vacancy created by the departure of certain members of the Board in October 2014. In connection with Dr. Tong’s appointment to the Board, the Company entered into a Board compensation agreement with Dr. Tong pursuant to which the Company agreed to pay Dr. Tong $12,500 in cash for each calendar quarter of service on the Board and agreed to issue annually: (i) 500,000 fully-paid, non-assessable shares of restricted common stock (“Tong Shares”); and (ii) a five-year option to purchase 500,000 Tong Shares (“Tong Option”) to Dr. Tong at an exercise price equal to the fair market value of the Company’s common stock on the date of grant. The Tong Shares and the Tong Option were fully vested on the date of the grants. The Board approved the initial issuances of the Tong Shares and the Tong Option on October 9, 2017, and the Tong Option has an exercise price of $0.055 per share of common stock.

NOTE 1110 - INCOME TAXES

The Company had no income tax expense for the three and nine months ended JanuaryJuly 31, 20182020 and 2017,2019, respectively. During the ninethree months ended JanuaryJuly 31, 20182020 and 2017,2019, the Company had a net operating loss (“NOL”) for each period which generated deferred tax assets for NOL carryforwards. The Company provided valuation allowances against the net deferred tax assets including the deferred tax assets for NOL carryforwards. Valuation allowances provided for the net deferred tax asset increased by approximately $1,341,000$98,000 and $830,000$201,000 for the ninethree months ended JanuaryJuly 31, 20182020 and 2017,2019, respectively.

There was no material difference between the effective tax rate and the projected blended statutory tax rate for the ninethree months ended JanuaryJuly 31, 20182020 and 2017.2019.

In assessingCurrent tax laws limit the realizationamount of deferred tax assets, management considered whether itloss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. Based on the assessment of all available evidence including, but not limited to, the Company’s limited operating history in its core business and lack of profitability, uncertainties of the commercial viability of its technology, the impact of government regulations and healthcare reform initiatives and other risks normally associated with biotechnology companies, the Company has concluded that is more likely than not that some portion or all of the deferred assetthese operating loss carryforwards will not be realized. The ultimate realizationAccordingly, 100% of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on the available objective evidence, including the history of operating losses and the uncertainty of generating future taxable income, management believes it is more likely than not that the net deferred taxvaluation allowance has been recorded against these assets at JanuaryJuly 31, 2018 will not be fully realizable. Accordingly, management has maintained a valuation allowance against the net deferred tax assets at January 31, 2018.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code including lowering the U.S. federal tax rate to 21%.

The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance for the accounting of the effects of the Tax Act. SAB 118 provides a measurement period that should not be extended past a year from the enactment date for companies to complete the accounting of the Tax Act under ASC Topic 740,Income Taxes(“ASC 740”). Companies that do not complete the accounting under ASC 740 for the tax effects of the Tax Act, must record a provisional estimate of the tax effects of the Tax Act. If a provisional estimate cannot be determined a company should continue to apply ASC 740 based on the tax laws in effect immediately before the enactment of the Tax Act.

At January 31, 2018, the Company has not completed the accounting for the tax effects of the Tax Act; however, the Company has made a reasonable estimate of the effects on the rate change on its existing deferred tax assets by decreasing its deferred tax assets by approximately $5,447,000. The Company has a full valuation allowance; therefore, the decrease in deferred tax assets did not impact the tax expense in the accompanying condensed consolidated statements of operations.

In order to complete the accounting requirements under ASC 740, the Company needs to (a) evaluate the impact of additional guidance, if any, from the FASB and external providers on its application of ASC 740 to the calculation; (b) evaluate the impact of further guidance from Treasury and/or the Internal Revenue Service on the technical application of the law with regard to our facts; (c) evaluate the impact of further guidance from the state tax authorities regarding their conformity to the provisions of the Tax Act; and (d) complete the analysis of the revaluation of deferred tax assets and liabilities as the Company is still analyzing certain aspects of the Tax Act. The accounting for the tax effects for the Tax Act will be completed in 2018.2020.

The Company’s policy is to recognize any interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of the ninethree months ended JanuaryJuly 31, 20182020 and 2017,2019, the Company had no accrued no interest or penalties related to uncertain tax positions.

See Note 1210 of Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended April 30, 20172020 for additional information regarding income taxes.

NOTE 1211 – EARNINGS PER SHARE

Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted average number of shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares and potentially dilutive shares of common sharesstock outstanding during the period increased to include the number of additional shares of common stock that would be outstanding if the potentially dilutive securities had been issued. Potential shares of common sharesstock outstanding principally include stock options and warrants. During the ninethree months ended JanuaryJuly 31, 20182020 and 2017,2019, the Company incurred losses. Accordingly, the effect of any common stock equivalent would be anti-dilutive during those periods and are not included in the calculation of diluted weighted average number of shares outstanding.

The table below sets forth the basic loss per share calculations:

The table below sets forth these potentially dilutive securities:

NOTE 12 – PREFERRED STOCK

 The Company has authorized 10,000,000 shares of preferred stock, with a par value of $0.0001, of which one share has been designated as "Series A Preferred Stock". The one share of Series A Preferred Stock was issued on October 30, 2019 and repurchased by the Company on December 3, 2019. As of July 31, 2020, there are no shares of preferred stock issued and outstanding.

The tabledescription of the Series A Preferred Stock below sets forth these potentially dilutive securities:is qualified in its entirety by reference to the Company’s Articles of Incorporation, as amended.