UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, ~~2020~~2021

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NO. 000-54318

ONCOSEC MEDICAL INCORPORATED

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEVADA		98-0573252
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

24 NORTH MAIN STREET
PENNINGTON, NJ		08534
(Address of principal executive offices)		(Zip Code)

3565 GENERAL ATOMICS COURT, SUITE 100		92121
SAN DIEGO, CA

(855) 662-6732

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		ONCS		~~NASDAQ~~Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The number of shares outstanding of the Registrant’s Common Stock, $0.0001 par value, was ~~22,752,821~~37,159,684 as of March ~~13, 2020.~~12, 2021.

OncoSec Medical Incorporated

Form 10-Q

for the Quarterly Period Ended January 31, ~~2020~~2021

PART I—FINANCIAL INFORMATION		3
Item 1.	Financial Statements:	3
	a) Condensed Consolidated Balance Sheets as of January 31, ~~2020~~2021 (unaudited) and July 31, ~~2019~~2020	3
	b) Condensed Consolidated Statements of Operations for the three and six months ended January 31, ~~2020~~2021 and ~~2019~~2020 (unaudited)	4
	c) Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended January 31, ~~2020~~2021 and ~~2019~~2020 (unaudited)	5
	d) Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended January 31, ~~2020~~2021 and ~~2019~~2020 (unaudited)	6
	e) Condensed Consolidated Statements of Cash Flows for the six months ended January 31, ~~2020~~2021 and ~~2019~~2020 (unaudited)	8
	f) Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2927
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3735
Item 4.	Controls and Procedures	3735
PART II—OTHER INFORMATION		3836
Item 1.	Legal Proceedings	3836
Item 1A.	Risk Factors	3836
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3836
Item 3.	Defaults Upon Senior Securities	3836
Item 4.	Mine Safety Disclosures	3836
Item 5.	Other Information	3836
Item 6.	Exhibits	3836
SIGNATURES		3937

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements:

OncoSec Medical Incorporated

Condensed Consolidated Balance Sheets

	January 31, 2020			July 31, 2019			January 31, 2021			July 31, 2020
	(unaudited)						(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	9,256,351		$	25,147,780		$	60,330,571		$	20,354,462
Prepaid expenses and other current assets		2,947,757			3,359,556			2,273,201			2,467,223
Total Current Assets		12,204,108			28,507,336			62,603,772			22,821,685
Property and equipment, net		919,561			1,031,129			718,073			814,494
Operating right-of-use asset		6,360,863			-
Intangible assets, net								483,353			-
Operating lease right-of-use assets								5,869,984			5,948,224
Other long-term assets		306,355			353,547			331,319			319,058
Total Assets	$	19,790,887		$	29,892,012		$	70,006,501		$	29,903,461

Liabilities and Stockholders’ Equity

Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	9,438,981		$	4,217,017		$	8,850,352		$	7,923,036
Accrued compensation related		408,701			676,223			369,168			285,127
Operating lease liabilities		640,253			-			784,371			500,357
Note payable		-			83,760
Notes payable								797,674			969,509
Total Current Liabilities		10,487,935			4,977,000			10,801,565			9,678,029
Operating lease liability, net of current portion		6,128,021			-
Other long-term liabilities		-			635,913
Operating lease liabilities, net of current portion								5,739,873			5,874,442
Liability under co-promotion agreement - related party								5,000,000			-
Notes payable, net of current portion								322,244			480,554
Total Liabilities		16,615,956			5,612,913			21,863,682			16,033,025

Commitments and Contingencies (Note 8)

Stockholders’ Equity
Common stock authorized - 26,000,000 and 16,000,000 common shares with a par value of $0.0001 as of January 31, 2020 and July 31, 2019, respectively, common stock issued and outstanding — 10,752,529 and 10,633,043 common shares as of January 31, 2020 and July 31, 2019, respectively		1,075			1,063
Common stock authorized - 100,000,000 and 100,000,000 common shares with a par value of $0.0001 as of January 31, 2021 and July 31, 2020, respectively, common stock issued and outstanding — 36,491,976 and 23,054,474 common shares as of January 31, 2021 and July 31, 2020, respectively								3,649			2,305
Additional paid-in capital		184,965,590			177,656,149			274,633,208			214,789,808
Warrants issued and outstanding – 3,114,288 and 3,631,953 warrants as of January 31, 2020 and July 31, 2019, respectively		5,708,127			10,809,724
Accumulated other comprehensive income		251,522			169,037
Warrants issued and outstanding – 2,221,315 and 3,114,288 warrants as of January 31, 2021 and July 31, 2020, respectively								4,330,949			5,708,127
Accumulated other comprehensive loss								(285,323	)		(19,504	)
Accumulated deficit		(187,751,383	)		(164,356,874	)		(230,539,664	)		(206,610,300	)
Total Stockholders’ Equity		3,174,931			24,279,099			48,142,819			13,870,436
Total Liabilities and Stockholders’ Equity	$	19,790,887		$	29,892,012		$	70,006,501		$	29,903,461

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

OncoSec Medical Incorporated

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended Six Months Ended
January 31, 2020 January 31, 2019 January 31, 2020 January 31, 2019
Revenue $ - $ - $ - $ -
Expenses:
Research and development 6,055,218 4,746,530 11,485,031 9,485,975
General and administrative 7,468,375 3,733,408 11,886,660 6,497,497
Loss from operations (13,523,593 ) (8,479,938 ) (23,371,691 ) (15,983,472 )
Other income, net 46,768 105,903 128,697 220,305
Interest expense (78 ) - (1,070 ) -
Foreign currency exchange (loss) gain, net (154,672 ) 63,912 (147,995 ) (108,002 )
Realized loss on sale of securities, net - - - (12,134 )
Loss before income taxes (13,631,575 ) (8,310,123 ) (23,392,059 ) (15,883,303 )
Provision for income taxes 2,450 4,904 2,450 7,340
Net loss $ (13,634,025 ) $ (8,315,027 ) $ (23,394,509 ) $ (15,890,643 )
Basic and diluted net loss per common share $ (1.27 ) $ (1.33 ) $ (2.19 ) $ (2.70 )
Weighted average shares used in computing basic and diluted net loss per common share 10,712,022 6,272,625 * 10,680,281 5,896,031 *

*On May 20, 2019, the Company effected a 1 for 10 reverse stock split. Shares have been retroactively restated.

	Three Months Ended						Six Months Ended
	January 31, 2021			January 31, 2020			January 31, 2021			January 31, 2020
Revenue	$	-		$	-		$	-		$	-
Expenses:
Research and development		8,915,381			6,055,218			18,714,740			11,485,031
General and administrative		2,110,696			7,468,375			5,351,429			11,886,660
Loss from operations		(11,026,077	)		(13,523,593	)		(24,066,169	)		(23,371,691	)
Other (expense) income, net		(440	)		46,768			(1,063	)		128,697
Interest expense		(4,722	)		(78	)		(10,856	)		(1,070	)
Foreign currency exchange gain (loss), net		328,592			(154,672	)		151,674			(147,995	)
Loss before income taxes		(10,702,647	)		(13,631,575	)		(23,926,414	)		(23,392,059	)
Income tax expense		1,450			2,450			2,950			2,450
Net loss	$	(10,704,097	)	$	(13,634,025	)	$	(23,929,364	)	$	(23,394,509	)
Basic and diluted net loss per common share	$	(0.37	)	$	(1.27	)	$	(0.86	)	$	(2.19	)
Weighted average shares used in computing basic and diluted net loss per common share		28,676,719			10,712,022			27,723,948			10,680,281

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

OncoSec Medical Incorporated

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

													Three Months Ended						Six Months Ended
	Three Months Ended						Six Months Ended						January 31, 2021			January 31, 2020			January 31, 2021			January 31, 2020
	January 31, 2020			January 31, 2019			January 31, 2020			January 31, 2019
Net Loss	$	(13,634,025	)	$	(8,315,027	)	$	(23,394,509	)	$	(15,890,643	)	$	(10,704,097	)	$	(13,634,025	)	$	(23,929,364	)	$	(23,394,509	)
Foreign currency translation adjustments		98,134			(46,043	)		82,485			61,857			(358,134	)		98,134			(265,819	)		82,485
Comprehensive Loss	$	(13,535,891	)	$	(8,361,070	)	$	(23,312,024	)	$	(15,828,786	)	$	(11,062,231	)	$	(13,535,891	)	$	(24,195,183	)	$	(23,312,024	)

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

OncoSec Medical Incorporated

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

Three Months Ended January 31, 2021

														Accumulated
					Additional									Other						Total
	Common Stock				Paid-In			Warrants						Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital			Shares			Amount			Income (Loss)			Deficit			Equity
Balance, October 31, 2020		27,694,604	$	2,769	$	230,282,585		��	3,114,288		$	5,708,127		$	72,811		$	(219,835,567	)	$	16,230,725
Common stock issued for employee stock purchase plan		1,538		—		5,798			—			—			—			—			5,798
Exercise of common stock warrants		882,261		88		4,178,747			(882,261	)		(1,135,035	)		—			—			3,043,800
Exercise of common stock options		158,248		16		261,710			—			—			—			—			261,726
Stock-based compensation expense		6,541		1		478,158			—			—			—			—			478,159
Tax withholdings paid on equity awards		—		—		(12,927	)		—			—			—			—			(12,927	)
Tax shares sold to pay for tax withholdings on equity awards		—		—		13,937			—			—			—			—			13,937
Cancellation of expired warrants		—		—		242,143			(10,712	)		(242,143	)		—			—			—
January 2021 Public Offering, net of $2,970,165 issuance costs		7,711,284		771		39,055,561			—			—			—			—			39,056,332
Common stock issued for services		37,500		4		127,496			—			—			—			—			127,500
Dividends declared ($0.00 per share)		—		—		—			—			—			—			—			—
Net loss		—		—		—			—			—			—			(10,704,097	)		(10,704,097	)
Other comprehensive income		—		—		—			—			—			(358,134	)		—			(358,134	)
Balance, January 31, 2021		36,491,976	$	3,649	$	274,633,208			2,221,315		$	4,330,949		$	(285,323	)	$	(230,539,664	)	$	48,142,819

Six Months Ended January 31, 2021

														Accumulated
					Additional									Other							Total
	Common Stock				Paid-In			Warrants						Comprehensive				Accumulated			Stockholders’
	Shares		Amount		Capital			Shares			Amount			Income (Loss)				Deficit			Equity
Balance, July 31, 2020		23,054,474	$	2,305	$	214,789,808			3,114,288		$	5,708,127		$	(19,504	)		$	(206,610,300	)	$	13,870,436
Common stock issued for employee stock purchase plan		1,538		—		5,798			—			—			—		��		—			5,798
Exercise of common stock warrants		882,261		88		4,178,747			(882,261	)		(1,135,035	)		—				—			3,043,800
Exercise of common stock options		158,248		16		261,710			—			—			—				—			261,726
Stock-based compensation expense		13,082		1		2,372,180			—			—			—				—			2,372,181
Tax withholdings paid on equity awards		—		—		(26,459	)		—			—			—				—			(26,459	)
Tax shares sold to pay for tax withholdings on equity awards		—		—		28,049			—			—			—				—			28,049
Cancellation of expired warrants		—		—		242,143			(10,712	)		(242,143	)		—				—			—
August 2020 Registered Direct Offering, net of $1,464,276 issuance costs		4,608,589		461		13,513,177			—			—			—				—			13,513,638
January 2021 Public Offering, net of $2,970,165 issuance costs		7,711,284		771		39,055,561			—			—			—				—			39,056,332
Common stock issued for services		62,500		7		212,494			—			—			—				—			212,501
Dividends declared ($0.00 per share)		—		—		—			—			—			—				—			—
Net loss		—		—		—			—			—			—				(23,929,364	)		(23,929,364	)
Other comprehensive loss		—		—		—			—			—			(265,819	)			—			(265,819	)
Balance, January 31,2021		36,491,976	$	3,649	$	274,633,208			2,221,315		$	4,330,949		$	(285,323	)		$	(230,539,664	)	$	48,142,819

Three Months Ended January 31, 2020

														Accumulated																					Accumulated
					Additional									Other					Total							Additional									Other					Total
	Common Stock				Paid-In			Warrants						Comprehensive		Accumulated			Stockholders’			Common Stock				Paid-In			Warrants						Comprehensive		Accumulated			Stockholders’
	Shares		Amount		Capital			Shares			Amount			Income		Deficit			Equity			Shares		Amount		Capital			Shares			Amount			Income		Deficit			Equity
Balance, October 31, 2019		10,680,428	$	1,068	$	178,448,285			3,631,953		$	10,809,724		$	153,388	$	(174,117,358	)	$	15,295,107			10,680,428	$	1,068	$	178,448,285			3,631,953		$	10,809,724		$	153,388	$	(174,117,358	)	$	15,295,107
Common stock issued for employee stock purchase plan		2,841		—		4,744			—			—			—		—			4,744			2,841		—		4,744			—			—			—		—			4,744
Stock-based compensation expense		10,448		1		1,366,392			—			—			—		—			1,366,393			10,448		1		1,366,392			—			—			—		—			1,366,393
Tax withholdings paid on equity awards		—		—		(7,611	)		—			—			—		—			(7,611	)		—		—		(7,611	)		—			—			—		—			(7,611	)
Tax shares sold to pay for tax withholdings on equity awards		—		—		8,632			—			—			—		—			8,632			—		—		8,632			—			—			—		—			8,632
Cash paid for stock options cancellation		—		—		(25,819	)		—			—			—		—			(25,819	)		—		—		(25,819	)		—			—			—		—			(25,819	)
Repurchase of warrants		—		—		2,457,976			(266,098	)		(2,636,201	)		—		—			(178,225	)		—		—		2,457,976			(266,098	)		(2,636,201	)		—		—			(178,225	)
Cancellation of expired warrants		—		—		2,465,396			(251,567	)		(2,465,396	)		—		—			—			—		—		2,465,396			(251,567	)		(2,465,396	)		—		—			—
Common stock issued for services		58,812		6		247,595			—			—			—		—			247,601			58,812		6		247,595			—			—			—		—			247,601
Dividends declared ($0.00 per share)		—		—		—			—			—			—		—			—			—		—		—			—			—			—		—			—
Net loss and comprehensive loss		—		—		—			—			—			98,134		(13,634,025	)		(13,535,891	)
Net loss																							—		—		—			—			—			—		(13,634,025	)		(13,634,025	)
Other comprehensive income																							—		—		—			—			—			98,134		—			98,134
Balance, January 31, 2020		10,752,529	$	1,075	$	184,965,590			3,114,288		$	5,708,127		$	251,522	$	(187,751,383	)	$	3,174,931			10,752,529	$	1,075	$	184,965,590			3,114,288		$	5,708,127		$	251,522	$	(187,751,383	)	$	3,174,931

Six Months Ended January 31, 2020

														Accumulated																					Accumulated
					Additional									Other					Total							Additional									Other					Total
	Common Stock				Paid-In			Warrants						Comprehensive		Accumulated			Stockholders’			Common Stock				Paid-In			Warrants						Comprehensive		Accumulated			Stockholders’
	Shares		Amount		Capital			Shares			Amount			Income		Deficit			Equity			Shares		Amount		Capital			Shares			Amount			Income		Deficit			Equity
Balance, July 31, 2019		10,633,043	$	1,063	$	177,656,149			3,631,953		$	10,809,724		$	169,037	$	(164,356,874	)	$	24,279,099			10,633,043	$	1,063	$	177,656,149			3,631,953		$	10,809,724		$	169,037	$	(164,356,874	)	$	24,279,099
Common stock issued for employee stock purchase plan		2,841		—		4,744			—			—			—		—			4,744			2,841		—		4,744			—			—			—		—			4,744
Stock-based compensation expense		22,146		2		1,940,461			—			—			—		—			1,940,463			22,146		2		1,940,461			—			—			—		—			1,940,463
Tax withholdings paid on equity awards		—		—		(15,676	)		—			—			—		—			(15,676	)		—		—		(15,676	)		—			—			—		—			(15,676	)
Tax shares sold to pay for tax withholdings on equity awards		—		—		15,596			—			—			—		—			15,596			—		—		15,596			—			—			—		—			15,596
Cash paid for stock options cancellation		—		—		(25,819	)		—			—			—		—			(25,819	)		—		—		(25,819	)		—			—			—		—			(25,819	)
Repurchase of warrants		—		—		2,457,976			(266,098	)		(2,636,201	)		—		—			(178,225	)		—		—		2,457,976			(266,098	)		(2,636,201	)		—		—			(178,225	)
Cancellation of expired warrants		—		—		2,465,396			(251,567	)		(2,465,396	)		—		—			—			—		—		2,465,396			(251,567	)		(2,465,396	)		—		—			—
Common stock issued for services		94,499		10		466,763			—			—			—		—			466,773			94,499		10		466,763			—			—			—		—			466,773
Dividends declared ($0.00 per share)		—		—		—			—			—			—		—			—			—		—		—			—			—			—		—			—
Net loss and comprehensive loss		—		—		—			—			—			82,485		(23,394,509	)		(23,312,024	)
Net loss																							—		—		—			—			—			—		(23,394,509	)		(23,394,509	)
Other comprehensive income																							—		—		—			—			—			82,485		—			82,485
Balance, January 31, 2020		10,752,529	$	1,075	$	184,965,590			3,114,288		$	5,708,127		$	251,522	$	(187,751,383	)	$	3,174,931			10,752,529	$	1,075	$	184,965,590			3,114,288		$	5,708,127		$	251,522	$	(187,751,383	)	$	3,174,931

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

~~OncoSec Medical Incorporated~~

~~Condensed Consolidated Statements of Stockholders’ Equity~~

~~(Unaudited)~~

Three Months Ended January 31, 2019*

Accumulated
Additional Other Total
Common Stock Paid-In Warrants Comprehensive Accumulated Stockholders’
Shares Amount Capital Shares Amount Income Deficit Equity
Balance, October 31, 2018 5,967,575 $ 597 $ 155,590,519 892,890 $ 11,171,166 $ 91,876 $ (141,656,437 ) $ 25,197,721
Exercise of common stock options 2,341 — 26,417 — — — — 26,417
Common stock issued for employee stock purchase plan 1,429 — 10,720 — — — — 10,720
Stock-based compensation expense 9,950 1 912,451 — — — — 912,452
Tax withholdings paid on equity awards — — (35,458 ) — — — — (35,458 )
Tax shares sold to pay for tax withholdings on equity awards — — 25,594 — — — — 25,594
Tax withholdings paid related to net share settlement of equity awards — — (8,165 ) — — — — (8,165 )
Public offering in December 2018, net of issuance costs of $304,916 466,667 47 6,695,037 — — — — 6,695,084
Common stock issued for services 14,300 1 205,786 — — — — 205,787
Dividends declared ($0.00 per share) — — — — — — — —
Net loss and comprehensive loss — — — — — (46,043 ) (8,315,027 ) (8,361,070 )
Balance, January 31, 2019 6,462,262 $ 646 $ 163,422,901 892,890 $ 11,171,166 $ 45,833 $ (149,971,464 ) $ 24,669,082

* On May 20, 2019, the Company effected a 1 for 10 reverse stock split. Shares have been retroactively restated.

Six Months Ended January 31, 2019*

Accumulated
Additional Other Total
Common Stock Paid-In Warrants Comprehensive Accumulated Stockholders’
Shares Amount Capital Shares Amount Income (Loss) Deficit Equity
Balance, July 31, 2018 5,351,290 $ 535 $ 145,749,189 895,805 $ 11,271,327 $ (16,024 ) $ (134,080,821 ) $ 22,924,206
Exercise of common stock options 43,029 4 566,131 — — — — 566,135
Common stock issued for employee stock purchase plan 2,636 — 23,390 — — — — 23,390
Stock-based compensation expense 15,107 2 2,304,106 — — — — 2,304,108
Tax withholdings paid on equity awards — — (50,640 ) — — — — (50,640 )
Tax shares sold to pay for tax withholdings on equity awards — — 40,243 — — — — 40,243
Tax withholdings paid related to net share settlement of equity awards — — (32,505 ) — — — — (32,505 )
Public offering in October 2018, net of issuance costs of $573,189 533,333 53 7,446,758 — — — — 7,446,811
Public offering in December 2018, net of issuance costs of $304,916 466,667 47 6,695,037 — — — — 6,695,084
Cancellation of expired warrants — 100,161 (2,915 ) (100,161 ) — — —
Common stock issued for services 32,700 3 445,608 — — — — 445,611
Modification of equity award 17,500 2 135,423 135,425
Dividends declared ($0.00 per share) — — — — — — — —
Net loss and comprehensive loss — — — — — 61,857 (15,890,643 ) (15,828,786 )
Balance, January 31, 2019 6,462,262 $ 646 $ 163,422,901 892,890 $ 11,171,166 $ 45,833 $ (149,971,464 ) $ 24,669,082

* On May 20, 2019, the Company effected a 1 for 10 reverse stock split. Shares have been retroactively restated.

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

OncoSec Medical Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended						Six Months Ended
	January 31, 2020			January 31, 2019			January 31, 2021			January 31, 2020
Operating activities
Net loss	$	(23,394,509	)	$	(15,890,643	)	$	(23,929,364	)	$	(23,394,509	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		111,568			121,741			108,068			111,568
Amortization of right-of-use asset		361,015			-			417,059			361,015
Amortization of discount on investments		-			(42,893	)
Stock-based compensation		1,940,463			2,304,108			2,372,181			1,940,463
Common stock issued for services		450,107			445,611			212,501			450,107
Modification of equity award		-			135,425
Foreign currency exchange loss, net		147,995			108,002
Foreign currency exchange (gain) loss, net								(151,674	)		147,995
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		388,478			(340,425	)		246,393			388,478
Other long-term assets		42,505			(8,051	)		(21	)		42,505
Accounts payable and accrued liabilities		5,222,378			(618,005	)		240,307			5,222,378
Accrued compensation related		(267,522	)		1,018,826			84,041			(267,522	)
Operating lease liabilities		(574,334	)		-			(189,373	)		(574,334	)
Other long-term liabilities		-			(461,205	)
Net cash used in operating activities		(15,571,856	)		(13,227,509	)		(20,589,882	)		(15,571,856	)
Investing activities
Maturity of investment securities		-			12,986,000
Sale of investment securities		-			5,977,794
Net cash provided by investing activities		-			18,963,794

Investing Activities
Purchase of intangible assets								(250,000	)		-
Net cash used in investing activities								(250,000	)		-

Financing activities
Proceeds from issuance of common stock through ESPP		4,744			23,390			5,798			4,744
Proceeds from issuance of common stock and/or warrants		-			15,000,000
Proceeds from issuance of common stock								57,004,411			-
Payment of financing and offering costs		-			(573,189	)		(4,157,379	)		-
Proceeds from exercise of warrants								3,043,800			-
Proceeds from exercise of options								261,726			-
Proceeds from co-promotion agreement								5,000,000			-
Cash paid for stock options cancellation		(25,819	)		-			-			(25,819	)
Cash paid for repurchase of warrants		(178,225	)		-			-			(178,225	)
Proceeds from exercise of options		-			566,135
Principal payments on note payable		(83,760	)		-			(330,144	)		(83,760	)
Tax withholdings paid on equity awards		(15,676	)		(50,640	)		(26,459	)		(15,676	)
Tax withholdings paid related to net share settlement of equity awards		-			(32,505	)
Tax shares sold to pay for tax withholdings on equity awards		15,596			40,243			28,049			15,596
Net cash provided by (used in) financing activities		(283,140	)		14,973,434			60,829,802			(283,140	)
Effect of exchange rate changes on cash and cash equivalents		(36,433	)		(26,081	)		(13,811	)		(36,433	)
Net increase (decrease) in cash and cash equivalents		(15,891,429	)		20,683,638			39,976,109			(15,891,429	)
Cash and cash equivalents, at beginning of period		25,147,780			3,803,627			20,354,462			25,147,780
Cash and cash equivalents, at end of period	$	9,256,351		$	24,487,265		$	60,330,571		$	9,256,351

Supplemental disclosure for cash flow information:
Cash paid during the period for:
Interest	$	1,624		$	-		$	6,089		$	1,624
Income taxes	$	2,450		$	1,700		$	2,950		$	2,450
Noncash investing and financing transactions:
Amount accrued for purchase of intangible asset							$	245,000		$	-
Expiration of warrants	$	2,465,396		$	100,162		$	242,143		$	2,465,396
Increase in right-of-use assets and operating lease liabilities resulting from contract modification	$	5,288,981			-		$	338,819		$	5,288,981
Amounts accrued for offering costs	$	-		$	304,916		$	277,062		$	-

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

OncoSec Medical Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1—Nature of Operations and Basis of Presentation

OncoSec Medical Incorporated (together with its subsidiary, unless the context indicates otherwise, being collectively referred to as the “Company”) began its operations as a biotechnology company in March 2011. The Company has not generated any revenues since its inception. The Company was incorporated in the State of Nevada on February 8, 2008 under the name of Netventory Solutions, Inc. and changed its name in March 2011 when it began operating as a biotechnology company.

The Company is a late-stage biotechnology company focused on designing, developing and commercializing innovative therapies and proprietary medical approaches to stimulate and guide an anti-tumor immune response for the treatment of cancer. Its core technology platform, ~~technology,~~ ImmunoPulse®, is a drug-device therapeutic modality comprised of a proprietary intratumoral electroporation (“EP”) delivery ~~device.~~devices (the “OncoSec Medical System (“OMS”) Electroporation device” or “OMS EP device”). The ~~ImmunoPulse® platform~~OMS EP device is designed to deliver plasmid DNA-encoded drugs directly into a solid tumor and promote an immunological response against cancer. The ~~ImmunoPulse®~~OMS EP device can be adapted to treat different tumor types, and consists of an electrical pulse generator, a reusable handle and disposable applicators. The Company’s lead product candidate is a DNA-encoded interleukin-12 (“IL-12”), called tavokinogene telseplasmid (“TAVO”). The ~~ImmunoPulse®~~OMS EP ~~platform~~device is used to deliver TAVO intratumorally, with the aim of reversing the immunosuppressive microenvironment in the treated tumor. The activation of the appropriate inflammatory response can drive a systemic anti-tumor response against untreated tumors in other parts of the body. In 2017, the Company received Fast Track designation and Orphan Drug Designation from the U.S. Food and Drug Administration (“FDA”) for TAVO in metastatic melanoma, which could qualify TAVO for expedited FDA review, a rolling Biologics License Application (“BLA”) review and certain other benefits.

The Company’s ~~current~~primary focus is to pursue its ~~study~~clinical trials of TAVO in combination with KEYTRUDA® (pembrolizumab) in anti-PD-1 checkpoint refractory metastatic melanoma and metastatic triple negative breast cancer (“TNBC”).

The Company’s KEYNOTE-695 study targets melanoma patients who are ~~definitive~~ anti-PD-1 non-responders. In May 2017, ~~the Company~~we entered into a clinical trial collaboration and supply agreement with a subsidiary of Merck & Co., Inc. (“Merck”) in connection with the KEYNOTE-695 study. Pursuant to the terms of the agreement, both companies will bear their own costs related to manufacturing and supply of their product, as well as be responsible for their own internal costs. The Company is the study sponsor and is responsible for external costs. The KEYNOTE-695 study is fully enrolled and currently ~~enrolling~~treating patients. This study is a registration-directed, Phase 2b open-label, single-arm, multicenter study in approximately 100 patients of TAVO in combination with KEYTRUDA® (pembrolizumab) in anti-PD-1 checkpoint refractory (either nivolumab or pembrolizumab) metastatic melanoma being conducted in the United States, Canada, Australia and ~~treating~~Europe. The Company provided interim preliminary data from this study at the Society of Immunotherapy of Cancer (SITC) in November 2020. In December 2020, the protocol was amended to include an additional cohort, consisting of patients who progressed on prior treatment of both ipilimumab and ~~is expected to complete enrollment in 2020.~~nivolumab.

In May 2018, the Company entered into a second clinical trial collaboration and supply agreement with Merck with respect to a Phase 2 study of TAVO in combination with KEYTRUDA® to evaluate the safety and efficacy of the combination in patients with inoperable locally advanced or metastatic TNBC, who have previously failed at least one systemic chemotherapy or immunotherapy. This study is referred to as ~~KEYNOTE-890.~~KEYNOTE-890, Cohort 1. Pursuant to the terms of the agreement, both companies will bear their own costs related to manufacturing and supply of their product, as well as be responsible for their own internal costs. The Company is the study sponsor and is responsible for external costs. The KEYNOTE-890 study, Cohort 1 final patient treatment was completed in December 2020. The Company completed enrollment ~~is complete,~~in fourth quarter 2019 and ~~the Company~~ provided interim preliminary data from this study at the San Antonio Breast Cancer Symposium ~~(“SABCS”)~~ in December ~~2019.~~2019 and December 2020. The study is a Phase 2 open-label, single-arm, multicenter study in the United States and Australia.

~~OMS-131~~In June 2020, the Company amended its second clinical trial collaboration and supply agreement with Merck to include another Phase 2 study of TAVO in combination with KEYTRUDA® plus chemotherapy to evaluate the safety and efficacy of the combination in patients with inoperable locally advanced or metastatic TNBC. This study is referred to as KEYNOTE-890, Cohort 2. Pursuant to the terms of the amended agreement, both companies will bear their own costs related to manufacturing and supply of their product, as well as be responsible for their own internal costs. The Company is the study sponsor and is responsible for external costs. The KEYNOTE-890, Cohort 2 study began enrolling patients in January of 2021. The Company expects to complete enrollment within fifteen months from the start of enrollment and expects to provide interim preliminary data from this study at a future medical conference. The study is a Phase 2 open-label, single-arm, multicenter study in the United States and Australia.

In August 2020, the Company commenced an investigator-initiated Phase 2 study conducted by the H. Lee Moffitt Cancer Center and Research Institute and the University of South Florida Morsani College of Medicine to evaluate TAVO™ as neoadjuvant treatment (administered before surgery) in combination with intravenous OPDIVO®(nivolumab) in up to 33 patients with operable locally/regionally advanced melanoma. This investigator-initiated Phase 2 study has been designed to evaluate whether the addition of TAVO can increase the anti-tumor response observed with monotherapy OPDIVO®, an anti-PD-1 checkpoint inhibitor, in patients with locally/regionally advanced melanoma prior to surgical resection of tumors. This study began enrolling patients in December of 2020 and is expected to complete enrollment within eighteen months of the start of enrollment.

In November 2020, the Company exclusively licensed rights to the Cliniporator® electroporation gene electrotransfer platform from IGEA Clinical Biophysics. The license encompasses a broad field of use for gene delivery in oncology, including use as part of the Company’s visceral lesion applicator (“VLA”) program. This platform has been used for electrochemotherapy in and outside of Europe in over 200 major oncological centers to treat cutaneous metastatic cancer nodules, including melanoma.

In April 2020, the Company announced that Providence Cancer Institute, a part of Providence St. Joseph Health (“Providence”), is pursuing a first-in-human Phase 1 clinical trial of OncoSec’s novel DNA-encodable, investigational vaccine, CORVax12, which is designed to act as a prophylactic vaccine to prevent COVID-19. CORVax12 consists of the Company’s existing product candidate, TAVO™, in combination with an immunogenic component of the SARS-CoV-2 virus developed by researchers at NIH’s National Institute of Allergy and Infectious Diseases (“NIAID”). Providence investigators filed and received an Investigator-Initiated Investigational New Drug (“IND”) Application; however, at this time, Providence does not intend to continue further enrollment in this study.

In May 2019, the Company commenced an investigator-initiated Phase 1 clinical trial conducted by the University of California San Francisco Helen Diller Family Comprehensive Cancer ~~Center.~~Center (“OMS-131”). This study targets patients with ~~squamous cell carcinoma head and neck (“SCCHN”)~~Squamous Cell Carcinoma Head & Neck Cancer and is a single-arm open-label clinical trial in which 35 evaluable patients will receive TAVO, KEYTRUDA® and epacadostat. OMS-131 is currently enrolling and treating ~~patients.~~patients and is expected to complete enrollment within the next eighteen months.

In June 2019, the Company entered into a collaboration with Dana-Farber Cancer Institute (“DFCI”), a world-leading cancer research and treatment institution, and The Marasco Laboratory, a cutting-edge CAR T-cell research laboratory led by Wayne Marasco, M.D., Ph.D., a renowned cancer immunology researcher, to develop CAR T-cell therapies for triple-negative breast cancer and ovarian cancer.

The Company intends to continue to pursue ~~other ongoing or~~ potential new trials and studies related to TAVO, in various tumor types. In addition, the Company is also developing its next-generation EP device and applicator, including advancements toward prototypes, pursuing discovery research to identify other product candidates that, in addition to IL-12, can be encoded into propriety plasmid-DNA and delivered intratumorally using EP. Specifically, ~~the Company is~~we are developing a new, propriety technology to potentially treat liver, lung, bladder, pancreatic and other difficult to treat visceral lesions through the direct delivery of plasmid-based IL-12 with a new ~~Visceral Lesions Applicator (“VLA”).~~VLA.

The new VLA has been designed to work with low voltage EP generators, including but not limited to the Company’s ~~recently announced~~proprietary APOLLO^TMEP generator ~~APOLLO,~~ and Cliniporator^®to leverage plasmid-optimized EP ~~enhancing~~and enhance the depth ~~and frequency~~ of transfection of immunologically relevant genes into cells located in ~~deep~~ visceral ~~lesions. Using its~~organs. In early 2020, the Company had two poster presentations, one at the Society for Interventional Oncology (“SIO”) and one at the Society for Interventional Radiology, where it presented preclinical data on both the new VLA and APOLLO generator. Additionally, the Company has successfully completed several large animal studies and aim to bring the new VLA into the clinic in 2021. By using the Company’s next-generation technology with the new VLA (and in cutaneous/subcutaneous settings as well), the Company’s goal is to reverse the immunosuppressive mechanisms of a tumor, as well as to expand ~~its~~the Company’s pipeline. The Company believes that the flexibility of ~~its~~the Company’s propriety plasmid-DNA technology allows the Company to deliver other immunologically relevant molecules into the tumor microenvironment in addition to the delivery of plasmid-DNA encoding for IL-12. In June 2020, the Company had two poster presentations at the 2020 America Association for Cancer Research (“AACR”) where the Company presented pre-clinical data regarding its new anti-tumor product candidate, which will amplify the power of intratumoral IL-12 through the addition of both CXCL9, a critical T cell chemokine, and anti-CD3, a membrane bound pan T cell stimulator. These other immunologically relevant molecules may complement IL-12’s activity by limiting or enhancing key pathways associated with tumor immune subversion.

The Company has established a collaboration with Emerge Health Pty (“Emerge”), athe leading Australian company providing full registration, reimbursement, sales, marketing and distribution services of therapeutic products in Australia and New Zealand, to commercialize TAVO and ~~make~~made it available under Australia’s Special Access Scheme (“SAS”). early in calendar year 2020. As a specialized Australian pharmaceutical company focused on the marketing and sales of high-quality medicines to the hospital sector, Emerge has previously made numerous other products successfully available under Australia’s SAS.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet as of January 31, ~~2020,~~2021, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of stockholders’ equity for the three and six months ended January 31, ~~2020~~2021 and ~~2019,~~2020, and the condensed consolidated statements of cash flows for the six months ended January 31, ~~2020~~2021 and ~~2019,~~2020, are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. The condensed consolidated results of operations for the three and six months ended January 31, ~~2020~~2021 shown herein are not necessarily indicative of the consolidated results that may be expected for the year ending July 31, ~~2020,~~2021, or for any other period. These condensed consolidated financial statements, and notes thereto, should be read in conjunction with the audited consolidated financial statements for the fiscal year ended July 31, ~~2019,~~2020, included in the Company’s Annual Report on Form 10-K (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”) on October 28, ~~2019,~~2020, as well as the financial information contained in the Company’s Form 10-K/A filed with the SEC on November ~~27, 2019.~~30, 2020. The condensed consolidated balance sheet at July 31, ~~2019~~2020 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements.

~~Reverse Stock Split~~

On May 20, 2019, the Company effected a one-for-ten reverse stock split of its authorized and outstanding common stock. All share and per share information has been retroactively adjusted to reflect the reverse stock split. The par value was not adjusted as a result of the reverse stock split.

Note 2—Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, OncoSec Medical Australia PTY LTD. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Such estimates include stock-based compensation, ~~accounting~~the accrual of research, product development and clinical obligations, impairment of long-lived assets, determining the Incremental Borrowing Rate for ~~long-lived~~calculating Right-Of-Use (“ROU”) assets and lease liabilities and accounting for income taxes, including the related valuation allowance on the deferred tax asset and uncertain tax positions. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. On an ongoing basis, the Company reviews its estimates to ensure that they appropriately reflect changes in the business or as new information becomes available. Actual results may differ from these estimates.

Segment Reporting

The Company operates in a single industry segment—the discovery and development of novel immunotherapeutic product candidates to improve treatment options for patients and physicians, intended to treat a wide range of oncology indications.

Cash and Cash Equivalents

The Company considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less at the time of purchase to be cash equivalents.

Concentrations and Credit Risk

The Company maintains cash balances at a small number of financial institutions and such balances commonly exceed the $250,000 amount insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts and management believes that the Company does not have significant credit risk with respect to such cash and cash equivalents.

Property and Equipment

The Company’s capitalization threshold is $5,000 for property and equipment. The cost of property and equipment is depreciated on a straight-line basis over the estimated useful lives of the related assets. The useful lives of property and equipment for the purpose of computing depreciation are as follows:

Computers and equipment:		3 to 10 years
Computer software:		1 to 3 years
Leasehold improvements:		Shorter of lease period or useful life

Intangible Assets

Definite life intangible assets include a license. Intangible assets are recorded at cost. License agreements cost represent the fair value of the license agreement on the date acquired. Intangible assets are amortized on a straight-line basis over their estimated useful life.

Impairment of Long-Lived Assets

The Company periodically assesses the carrying value of intangible and other long-lived assets, and whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. The assets are considered to be impaired if the Company determines that the carrying value may not be recoverable based upon its assessment, which includes consideration of the following events or changes in circumstances:

	●	the asset’s ability to continue to generate income from operations and positive cash flow in future periods;

	●	loss of legal ownership or title to the asset(s);

	●	significant changes in the Company’s strategic business objectives and utilization of the asset(s); and

	●	the impact of significant negative industry or economic trends.

If the assets are considered to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Fair value is determined by the application of discounted cash flow models to project cash flows from the assets. In addition, the Company bases estimates of the useful lives and related amortization or depreciation expense on its subjective estimate of the period the assets will generate revenue or otherwise be used by it. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less selling costs. The Company also periodically reviews the lives assigned to long-lived assets to ensure that the initial estimates do not exceed any revised estimated periods from which the Company expects to realize cash flows from its assets.

Research and Development Expenses

Research and development expenses consist of costs incurred for internal projects, as well as partner-funded collaborative research and development activities. These costs include direct and research-related overhead expenses, which include salaries, stock-based compensation and other personnel-related expenses, facility costs, supplies, depreciation of facilities and laboratory equipment, as well as research consultants and the cost of funding research at universities and other research institutions, and are expensed as incurred. Costs to acquire technologies that are utilized in research and development that have no alternative future use, are expensed when incurred.

Accruals for Research and Development Expenses and Clinical Trials

The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts vary from contract to contract and may result in payment terms that do not match the periods over which materials or services are provided under such contracts. The Company accounts for these expenses in its financial statements by matching those expenses with the period in which services are performed and efforts are expended. The Company determines accrual estimates through financial models and takes into account discussion with applicable personnel and outside service providers as to the progress of clinical trials, or the services completed. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. During the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates.

Fair Value of Financial Instruments

The carrying amounts for cash and cash equivalents, prepaid expenses, accounts payable and accrued expenses and notes payable approximate fair value due to the short-term nature of these instruments. It is management’s opinion that the Company is not exposed to significant interest, currency, or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where expressly disclosed.

The accounting standard for fair value measurements provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.

The three tiers are defined as follows:

	●	Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets at the measurement date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

	●	Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities.

	●	Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s ~~Principal Accounting Officer.~~management.

Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

The Company had no assets or liabilities that required remeasurement on a recurring basis as of January 31, ~~2020~~2021 and July 31, ~~2019.~~2020.

Warrants

The Company assesses its warrants as either equity or a liability based upon the characteristics and provisions of each instrument. Warrants classified as equity are recorded at fair value as of the date of issuance on the Company’s balance sheet and no further adjustments to their valuation are made. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as liabilities are recorded on the Company’s balance sheet at their fair value on the date of issuance and are re-measured on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. Management estimates the fair value of these liabilities using option pricing models and assumptions that are based on the individual characteristics of the warrants or other instruments on the valuation date, as well as assumptions for future financings, expected volatility, expected life, yield and risk-free interest rate. As of January 31, ~~2020,~~2021, and July 31, ~~2019,~~2020, all outstanding warrants issued by the Company were classified as equity.

Net Loss Per Share

The Company computes basic net loss per common share by dividing the applicable net loss by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the applicable net loss by the weighted-average number of common shares outstanding during the period plus additional shares to account for the dilutive effect of potential future issuances of common stock relating to stock options and other potentially dilutive securities using the treasury stock method.

The Company did not include shares underlying stock options, restricted stock units and warrants issued and outstanding during any of the periods presented in the computation of net loss per share, as the effect would have been anti-dilutive. The following potentially dilutive outstanding securities were excluded from diluted net loss per share because of their anti-dilutive effect:

	For the Three and Six Months Ended January 31, 2020		For the Three and Six Months Ended January 31, 2019		For the Three and Six Months Ended January 31, 2021		For the Three and Six Months Ended January 31, 2020
Stock options		15,000		914,830		2,359,604		15,000
Restricted stock units		47,998		113,854		19,332		47,998
Warrants		3,114,288		892,890		2,221,315		3,114,288
Total		3,177,286		1,921,574		4,600,251		3,177,286

~~Subsequent to January 31, 2020, the Company issued shares of common stock that will impact earnings per share in the future. (See Note 11)~~

Stock-Based Compensation

The Company grants equity-based awards (typically stock options or restricted stock units) under its stock-based compensation plan and outside of its stock-based compensation plan, with terms generally similar to the terms under the Company’s stock-based compensation plan. The Company estimates the fair value of stock option awards using the Black-Scholes option valuation model. For employees, directors and consultants, the fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option. The Company estimates the fair value of restricted stock unit awards based on the closing price of the Company’s common stock on the date of issuance.

Employee Stock Purchase Plan

Employees may elect to participate in the Company’s stockholder-approved employee stock purchase plan. The stock purchase plan allows for the purchase of the Company’s common stock at not less than 85% of the lesser of (i) the fair market value of a share of common stock on the beginning date of the offering period orand (ii) the fair market value of a share of common stock on the purchase date of the offering period, subject to a share and dollar limit as defined in the plan and subject to the applicable legal requirements. There are two six-month offering periods during each fiscal year, ending on January 31 and July 31.

In accordance with applicable accounting guidance, the fair value of awards under the stock purchase plan is calculated at the beginning of each offering period. The Company estimates the fair value of the awards using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and the offering period. This fair value is then amortized at the beginning of the offering period. Stock-based compensation expense is based on awards expected to be purchased at the beginning of the offering period, and therefore is reduced when participants withdraw during the offering period.

Leases

The Company determines if an arrangement is a lease at inception. Operating lease ~~right-of-use (“ROU”)~~ROU assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease liabilities on the Company’s condensed consolidated balance sheets.

Lease ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at commencement date calculated using ~~our~~the Company’s incremental borrowing rate applicable to the lease asset, unless the implicit rate is readily determinable. ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recognized on the condensed consolidated balance sheets. The Company’s leases do not contain any residual value guarantees. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company accounts for lease and non-lease components as a single lease component for all its leases.

Foreign Currency Translation

The Company uses the U.S. Dollar as the reporting currency for its financial statements. Functional currency is the currency of the primary economic environment in which an entity operates. The functional currency of the Company’s wholly owned subsidiary is the Australian dollar.

Assets and liabilities of the Company’s subsidiary are translated into U.S. Dollars at period-end foreign exchange rates, and revenues and expenses are translated at average rates prevailing throughout the period. Translation adjustments are included in “Accumulated other comprehensive income” a separate component of stockholders’ equity, and in the “Effect of exchange rate changes on cash and cash equivalents,” on the Company’s condensed consolidated statements of cash flows. Transaction gains and losses including intercompany transactions denominated in a currency other than the functional currency of the entity involved are included in “Foreign currency exchange gain (loss), net” on the Company’s condensed consolidated statements of operations.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) includes foreign currency translation adjustments related to the Company’s subsidiary in Australia and is excluded from the accompanying condensed consolidated statements of operations.

Australia Research and Development Tax Credit

The Company’s wholly-owned Australian subsidiary incurs research and development expenses, primarily in the course of conducting clinical trials. The Company’s Australian research and development activities qualify for the Australian government’s tax credit program, which provides a 41% credit for qualifying research and development expenses. The tax credit does not depend on the Company’s generation of future taxable income or ongoing tax status or position. Accordingly, the credit is not considered an element of income tax accounting under ASC 740“Income Taxes”and is recorded against qualifying research and development expenses.

Tax Reform

On March 27, 2020, the president signed into law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) providing nearly $2 trillion in economic relief to eligible businesses impacted by the coronavirus outbreak. The ~~Tax Cuts and Jobs~~CARES Act, ~~(the “Act”) was enacted in December 2017. Among~~among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss (“NOL”) utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In addition to the Small Business Administration (“SBA”) loan received in April 2020 (See Note 5), the Company continues to review, and may seek, any other available and appropriate potential benefits under the CARES Act ~~reduced~~as well as any future legislation signed into law during 2021. Other than the ~~U.S. federal corporate tax rate~~proceeds from ~~34 percent to 21 percent as of January 1, 2018 and eliminated~~ the ~~alternative minimum tax (“AMT”) for corporations. Since~~SBA loan, the ~~deferred tax assets are expected to reverse in a future year, it has been tax effected using the 21% federal corporate tax rate. The~~ effects of the ~~2017 Tax~~CARES Act did not have a significant impact on the Company’s condensed consolidated financial statements during the three and six months ended January 31, ~~2020~~2021 and ~~2019.~~2020.

Recent Accounting Pronouncements

In ~~February 2016,~~August 2020, the ~~Financial Accounting Standards Board (“~~FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the ~~FASB”) issued Accounting Standards Update No. 2016-02, Leases (“~~derivative scope exception, which will permit more equity contracts to qualify for it. The ASU ~~2016-02”), which supersedes previous lease accounting~~also simplifies the diluted net income per share calculation in certain areas. The new guidance ~~(Topic 840) and establishes a right-of-use model that requires a lessee to record an asset and liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02~~ is effective for ~~fiscal years~~annual and interim periods beginning after December 15, ~~2018. A modified retrospective transition approach~~2021, and early adoption is ~~required~~permitted for ~~lessees for capital~~fiscal years beginning after December 15, 2020, and ~~operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU No. 2018-11,~~~~Leases (Topic 842): Targeted Improvements~~. In issuing ASU No. 2018-11, the FASB decided to provide another transition method in addition to the existing transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2016-02 also requires expanded financial statement disclosures on leasing activities.

interim periods within those fiscal years. The Company ~~adopted~~is currently evaluating the ~~standard effective August 1, 2019 using the modified retrospective approach with the effective date as the date of initial application. Consequently, prior period balances and disclosures~~impact that this new guidance will have ~~not been restated.~~

ASC 842 provides a number of optional practical expedients in transition. For leases that commenced prior to August 1, 2019, the Company elected: (1) the “package of practical expedients”, which permits it not to reassess under the new standardon its prior conclusions about lease identification, lease classification, and initial direct costs, and (2) the use-of-hindsight in determining the lease term and in assessing impairment of ROU assets. In addition, ASC 842 provides practical expedients for an entity’s ongoing accounting that the Company has elected, comprised of the following: (1) the election for classes of underlying asset to not separate non-lease components from lease components, and (2) the election for short-term lease recognition exemption for all leases that qualify.

~~See Note 9 for the Company’s additional required disclosures under Topic 842.~~

condensed consolidated financial statements.

Note 3— Liquidity and Financial Condition

The Company has sustained losses in all reporting periods since inception, with an inception-to-date loss of $187.8 million as of January 31, 2020, which raises substantial doubt. Further, the Company has neverCompany’s products are being developed and have not generated any cash from its operations and does not expect to generate meaningful cash in the near term. Consequently, the Company will need additional capital to continue operating its business and fund its planned operations, including research and development, clinical trials and, if regulatory approval is obtained, commercialization of its product candidates. In addition, the Company will require additional financing if it desires to in-license or acquire new assets, research and develop new compounds or new technologies and pursue related patent protection, or obtain any other intellectual property rights or other assets.

revenue. As of January 31, ~~2020,~~2021, the Company had approximately $60.3 million in cash and cash equivalents of $9.3 million, which consisted of cash of $1.3 million and cash equivalents of $8.0 million. Since inception, cash flows from financing activities has been the primary source of the Company’s liquidity.on its balance sheet. The Company currently estimates its monthly working capital requirements to be approximately $2.5 million, although the Company may modify or deviate from this estimate and it is likely that the Company’s actual operating expenses and working capital requirements will vary from its estimate.

Subsequent to January 31, 2020, the Company received gross proceeds of approximately $30.0 million from the sale of its common stock. The net proceeds, after deducting offering fees and expenses paid by us, were approximately $28.0 million (see Note 11). In addition, the Company received approximately $0.9 million as part of the Australian government’s research and development tax credit program.

~~The above financing activities substantially increased the Company’s cash position. As a result, as of the date of the issuance of these condensed consolidated financial statements, the~~ Company believes its current cash position ~~as a result~~is sufficient to fund its business plan into approximately the third calendar quarter of 2022. The estimate is based on assumptions that may prove to be wrong, and the Company could use available capital resources sooner than currently expected. Because of the ~~Company’s financing activities through February 2020 has alleviated substantial doubt about~~numerous risks and uncertainties associated with the development and commercialization of its ~~ability~~product candidates, the Company is unable to ~~sustain operations through at least~~estimate the ~~next 12 months from~~amount of increased capital outlays and operating expenses associated with completing the ~~issuance date~~development of ~~the condensed consolidated financial statements.~~ its current product candidates.

The Company ~~is anticipating raising~~recognizes it may need to raise additional capital ~~but there can be~~in order to continue to execute its business plan. There is no assurance that itadditional financing will be available when needed or that management will be able to ~~do so~~obtain financing on terms acceptable to the Company or ifwhether the ~~terms of any such raising of~~Company will become profitable and generate positive operating cash flow. If the Company is unable to raise sufficient additional funds, it will have to scale back its business plan. The ongoing COVID-19 pandemic has also caused volatility in the global financial markets and threatened a slowdown in the global economy, which may negatively affect our ability to raise additional capital ~~will be favorable to the Company.~~on attractive terms or at all.

Note 4—Balance Sheet Details

Property and Equipment

Property and equipment, net, is comprised of the following:

	January 31, 2020			July 31, 2019			January 31, 2021			July 31, 2020
Equipment and furniture	$	1,859,824		$	1,859,824		$	1,859,824		$	1,859,824
Computer software		109,242			109,242			109,242			109,242
Leasehold improvements		21,934			21,934			21,934			21,934
Property and equipment, gross		1,991,000			1,991,000			1,991,000			1,991,000
Accumulated depreciation and amortization		(1,071,439	)		(959,871	)		(1,272,927	)		(1,176,506	)
Total	$	919,561		$	1,031,129		$	718,073		$	814,494

Depreciation and amortization expense recorded for the three and six months ended January 31, 2021 was approximately $46,000 and $96,000, respectively. Depreciation and amortization expense recorded for the three and six months ended January 31, 2020 was approximately $56,000 and $112,000, respectively. ~~Depreciation~~

Intangible Assets

Intangible assets, net, is comprised of the following:

January 31, 2021
License $ 495,000
Accumulated amortization (11,647 )
Total $ 483,353
In November 2020, the Company licensed generator technology for use in its clinical trials and other research and development efforts. Unless earlier terminated, the term of the license agreement will remain in effect for 85 months. The Company has determined that the license has alternative future uses in research and development projects. The value of the acquired license is recorded as an intangible asset with amortization over the estimated useful life of 85 months.
Intangible asset amortization expense recorded for the three and six months ended January 31, ~~2019~~2021 was approximately ~~$61,000~~$12,000 and ~~$122,000,~~$12,000, respectively. Intangible asset expense recorded for both the three and six months ended January 31, 2020 was $0.

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At January 31, 2021, the estimated amortization expense by fiscal year based on the current carrying value of intangible assets is as follows (in thousands):
2021 $ 34,941
2022 69,882
2023 69,882
2024 69,882
2025 69,882
Thereafter 168,884
Total $ 483,353
Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are comprised of the following:

January 31, 2020 July 31, 2019 January 31, 2021 July 31, 2020
Research and development costs $ 3,394,197 $ 2,380,215 $ 6,152,870 $ 4,730,347
Professional services fees 5,926,385 1,702,886 2,362,178 3,097,881
Other 118,399 133,916 335,304 94,808
Total $ 9,438,981 $ 4,217,017 $ 8,850,352 $ 7,923,036

Accrued Compensation ~~and Related~~

Accrued compensation is comprised of the following:

January 31, 2020 July 31, 2019
Separation costs $ 132,041 $ 495,004
Accrued payroll 270,361 181,219
401K payable 6,299 -
Total $ 408,701 $ 676,223
~~Other Long-Term Liabilities~~
~~Other long-term liabilities are comprised of the following:~~
January 31, 2020 July 31, 2019 January 31, 2021 July 31, 2020
Deferred rent $ - $ 635,913
Accrued payroll $ 361,067 $ 279,473
401K payable 8,101 5,654
Total $ - $ 635,913 $ 369,168 $ 285,127

Note 5—~~Note~~Notes Payable

On April 27, 2020, the Company was granted a loan (the “Loan”) from the Banc of California in the aggregate amount of $952,744, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act, which was enacted March ~~22, 2019,~~27, 2020. The term of the loan is two years. Monthly payments will be due beginning August 15, 2021 if the Loan is not forgiven. Interest accrues at 1% per year, effective on the date of initial disbursement. The outstanding principal balance on the loan as of January 31, 2021 was $952,744.
The Company submitted its application for full loan forgiveness on January 6, 2021. The Company believes that it has used the proceeds from the Loan for purposes consistent with the PPP. If the Loan is not forgiven the entire principal balance remaining unpaid, along with all accrued and unpaid interest, shall be due and payable on April 30, 2022.
On February 12, 2021, the Company received notice that the full Loan amount of $952,744 had been forgiven.
On June 18, 2020, the Company entered into a finance agreement with ~~First Insurance Funding~~AFCO Premium Credit LLC (“~~FIF”~~AFCO”). Pursuant to the terms of the agreement, ~~FIF~~AFCO loaned the Company the principal amount of ~~$185,990,~~$551,803, which ~~would accrue~~accrues interest at ~~6.25%~~3.381% per annum, to partially fund the payment of the premium of the Company’s ~~D&O~~director & officer insurance. The agreement ~~required~~requires the Company to make ~~nine~~ten monthly payments of ~~$21,207,~~$56,039, including interest, starting on ~~April~~July 18, ~~2019.~~2020. At January 31, ~~2020,~~2021, the outstanding balance related to this finance agreement was ~~paid in full.~~$167,174.
Future minimum payments under note payable liabilities as of January 31, 2021 are as follows:
Years ending July 31,
2021 (remainder of fiscal year) $ 167,174
2022 952,744
Total $ 1,119,918

Note 6—Stockholders’ Equity

~~Reverse Stock Split~~January 2021 Offering

On ~~May 20, 2019,~~January 25, 2021, the Company ~~effected a one-for-ten reverse stock split~~completed the offer and sale of an aggregate of 7,711,284 shares of its ~~authorized~~common stock at a purchase price of $5.45 per share in a public offering. The gross proceeds from the offering were approximately $42.0 million, and ~~outstanding common stock. Under Nevada law,~~the net proceeds, after deducting the placement agent’s fee and ~~in accordance with NRS Section 78.207, the split was approved~~other offering fees and expenses paid by the ~~Board of Directors~~Company, were approximately $39.1 million. In connection with the offering, the Company paid the placement agent and other financial advisors an aggregate cash fee equal to 6.0% of the Company and shareholder approval was not required. Pursuant to this reverse stock split, the total number of authorized common shares was reduced from 160,000,000 to 16,000,000 shares and the number of common shares outstanding was reduced from 71,216,082 shares to 7,121,594 shares (which reflects adjustments for fractional share settlements). The par value was not adjusted as a resultgross proceeds of the ~~reverse stock split. All applicable share~~offering, as well as legal and ~~per share information contained in these condensed consolidated financial statements has been retroactively adjusted~~other expenses equal to ~~reflect the reverse stock split.~~approximately $0.4 million.
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~~Amendment to Articles of Incorporation~~
On September 6, 2019, the Company filed with the Secretary of State of the State of Nevada an amendment to its Certificate of Incorporation increasing the number of shares of common stock that the Company is authorized to issue from 16,000,000 shares of common stock, par value $0.0001 per share, to 26,000,000 shares of common stock, par value $0.0001 per share.
On October 7, 2019, the Company’s Board of Directors approved an amendment to its Articles of Incorporation (the “Amendment”) to, among other things, increase the number of shares of common stock authorized for issuance to 30,000,000 shares. Pursuant to the Amendment, the total number of authorized common shares will increase from 26,000,000 to 30,000,000 shares. The increase in authorized shares is subject to stockholder approval.
~~Alpha Holdings~~August 2020 Offering

On August ~~31, 2018,~~19, 2020, the Company ~~entered into a stock purchase agreement with Alpha Holdings, Inc. (“Alpha Holdings”), pursuant to which~~completed the ~~Company agreed to issue~~offer and ~~sell to Alpha Holdings~~sale of an aggregate of 4,608,589 shares of its common stock ~~equal to an aggregate amount of up to $15.0 million~~ at a ~~market~~ purchase price of ~~$15.00~~$3.25 per share ~~which was the closing price of the Company’s common stock the day immediately before the agreement was executed by the parties.~~
~~On October 9, 2018, the Company received total~~in a registered direct offering. The gross proceeds ~~before expenses, of $8.0 million in cash~~ from the offering were approximately $15.0 million, and ~~issued Alpha Holdings 533,333 shares of common stock. There~~the net proceeds, after deducting the placement agent’s fee and other offering fees and expenses paid by the Company, were ~~no underwriting or~~approximately $13.5 million. In connection with the offering, the Company paid the placement agent ~~fees associated with~~and other financial advisors an aggregate cash fee equal to 8.0% of the ~~offering.~~
~~On December 6, 2018, the Company received total~~gross proceeds ~~before expenses,~~ of ~~$7.0 million in cash from~~ the offering, as well as legal and ~~issued Alpha Holdings 466,667 shares of common stock. There were no underwriting or placement agent fees associated with the offering.~~other expenses equal to approximately $0.3 million.
Common Stock Option Exercise

During the six months ended January 31, ~~2019,~~2021, shares of common stock issued related to option exercises totaled ~~43,029.~~158,248. The Company realized proceeds of ~~$0.6~~approximately $0.3 million from the stock option exercises. There were no stock options exercised during the six months ended January 31, 2020.

Outstanding Warrants
During the six months ended January 31, 2021, shares of common stock issued related to warrant exercises totaled 882,261. The Company realized proceeds of approximately $3.0 million from the warrant exercises. There were no warrants exercised during the six months ended January 31, 2020.

During the six months ended January 31, 2020, the Company repurchased an aggregate of 266,098 warrants from certain warrant holders for an aggregate of approximately $0.2 million. The repurchase price was paid in cash, and upon repurchase, all ~~the~~of these warrants were ~~cancelled and of no further force and effect.~~cancelled.

At January 31, ~~2020,~~2021, the Company had outstanding warrants to purchase ~~3,114,288~~2,221,315 shares of its common stock, with exercise prices ranging from $3.45 to ~~$43.75,~~$22.69, all of which were classified as equity instruments. These warrants expire at various dates between ~~November 2020~~May 2021 and May 2024.

18 19

Note 7—Stock-Based Compensation

The OncoSec Medical Incorporated 2011 Stock Incentive Plan (as amended and approved by the Company’s stockholders (the “2011 Plan”)), authorizes the Company’s Board of Directors to grant equity awards, including stock options and restricted stock units, to employees, directors and consultants. The 2011 Plan authorizes a total of ~~750,000 shares for issuance thereunder, and includes an automatic increase of the number of~~3,350,000 shares of common stock reserved thereunder on the first business day of each calendar year by the lesser of: (i) 3% of the shares of the Company’s common stock outstanding as of the last day of the immediately preceding calendar year; (ii) 100,000 shares; or (iii) such lesser number of shares as determined by the Company’s Board of Directors. As of January 31, 2020, there were an aggregate of 1,050,000 shares of the Company’s common stock authorized for ~~issuance under the 2011 Plan. The 2011 Plan allows for an annual fiscal year per individual grant of up to 50,000 shares of its common stock.~~issuance. Under the 2011 Plan, incentive stock options are to be granted at a price that is no less than 100% of the fair value of the Company’s common stock at the date of grant. Stock options vest over a period specified in the individual option agreements entered into with grantees and are exercisable for a maximum period of 10 years after the date of grant. ~~Stock~~Incentive stock options granted to stockholders who own more than 10% of the outstanding stock of the Company at the time of grant must be issued at an exercise price of no less than 110% of the fair value of the Company’s common stock on the date of grant.

Modification of Stock Option Awards

During the six months ended January 31, 2021, the compensation committee of the Company’s Board of Directors approved the accelerated vesting of 791,019 and 91,666 previously granted time-vesting awards for employees and directors, respectively. The Company accounted for the effects of the stock option modifications described above under the guidance of ASC 718 as follows:
● The unamortized compensation costs associated with the time-vesting options was expensed on the date of acceleration, which was approximately $1.2 million and $0.1 million for the employees and directors, respectively.
● Upon modification, it is required under ASC 718 to analyze the fair value of the instruments, before and after the modification, recognizing additional compensation cost for any incremental value. The Company computed the fair value of the award immediately prior to the modification and compared the fair value to that of the modified award. Since the value of the awards were less after the modification as compared to immediately prior to the modification, no additional compensation expense was recorded.
During the six months ended January 31, 2020, the Company cancelled 878,534 outstanding common stock option awards under the following terms:

●
The Company entered into Stock Option Cancellation Agreements (the “Cancellation Agreements”) with certain executive officers, directors and other senior level employees of the Company, pursuant to which such individuals (the “Senior Level Option ~~holder”~~Holders”) agreed to the voluntary surrender and cancellation of certain previously granted stock options (the “Cancelled Options”) to purchase in the aggregate 699,140 shares of the Company’s common stock. Under the terms of the Cancellation Agreements, each Senior Level Option ~~holder~~Holder and the Company acknowledged and agreed that the surrender and cancellation of the Cancelled Options was without any expectation on the part of ~~the~~each Senior Level Option ~~holder~~Holder to receive, and without any obligation on the Company to pay or grant, any cash, equity awards or other consideration presently or in the future with respect to the Cancelled Options.

● The Company cancelled outstanding common stock options held by employees and consultants other than the Senior Level Option ~~holders of the Company,~~Holders, pursuant to which such individuals were previously granted stock options to purchase in the aggregate 179,394 shares of the Company’s common stock, ~~were cancelled~~ for aggregate cash consideration of approximately $26,000.

The Company accounted for the effects of the stock option modifications described above under the guidance of ASC 718 as follows:

● A cancellation of an award that is not accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration shall be accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation is recognized at the cancellation date.

● The amount of cash paid to settle an equity-classified award is charged directly to equity as long as that amount is equal to or less than the fair-value-based measure of the award on the settlement date. To the extent that the settlement consideration exceeds the fair-value-based measure of the equity-classified award on the settlement date, that difference is recognized as additional compensation cost. The cash paid to settle employee and consultant equity-classified awards, other than the Senior Level Option ~~holders,~~Holders, was less than the fair-value-based measure of the award on the settlement date. The approximately $26,000 in cash paid to settle the equity-classified awards was charged directly to additional paid in capital.
Following the cancellation of the outstanding stock option awards described above, there were 15,000 stock option awards outstanding under the 2011 Plan. The Company recorded the previously unrecognized compensation cost related to the cancelled outstanding stock option awards of approximately $1.2 million on the date of cancellation.
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Modification of Award

On October 2, 2019, the Company entered into an amendment to a consulting agreement with a consulting firm. Prior to the amendment, the Company was required to issue 3,000 shares of restricted common ~~shares~~stock monthly for services through July 2, 2020. As per the terms of the amended agreement, starting October 2, 2019, the Company ~~will be~~was required to issue 15,000 shares of restricted common stock monthly for services through July 2, 2020. Upon modification, it is required under ASC 718 to analyze the fair value of the instruments, before and after the modification, recognizing additional compensation cost for any incremental value. The Company computed the fair value of the award prior to the amendment and compared the fair value to that of the modified award. The incremental compensation cost of approximately $0.2 million resulting from the modification ~~will be~~was recognized ratably over the remaining term of the consulting agreement.

Stock Options
During the six months ended January 31, 2021, the Company granted options to purchase 787,251, 125,000 and 25,000 shares of its common stock to employees, directors and a consultant under the 2011 Plan, respectively. The stock options issued to employees have a 10-year term, vest over three years and have exercise prices ranging from $3.43 to $6.28. The stock options issued to directors have a 10-year term, vest over one year and have an exercise price of $3.43. The stock options issued to the consultant have a 10-year term, vest over one year and have an exercise price of $3.82.
During the six months ended January 31, 2021, in accordance with Nasdaq Listing Rule 5635(c)(4), the Company granted an inducement equity award that consisted of options to purchase 300,000 shares of its common stock to an employee outside the 2011 Plan. The stock options issued to the employee are nonqualified, have a 10-year term, vest over one year and have an exercise price of $3.56.

During the six months ended January 31, 2020, the Company granted options to purchase 5,050 shares of its common stock to employees under the 2011 Plan. The stock options issued to employees have a ten-year term, vest over three years, and have exercise prices ranging from $1.89 to $2.21. All options granted during the six months ended January 31, 2020 were cancelled during the second quarter of fiscal year 2020 as part of the stock option cancellation transaction discussed previously.
During the six months ended January 31, 2019, the Company granted options to purchase 124,100 and 67,500 shares of its common stock to employees and directors under the 2011 Plan, respectively. The stock options issued to employees have a ten-year term, vest over three years, and have exercise prices ranging from $6.00 to $15.80. The stock options issued to directors have a 10-year term, vest over a period ranging from one to three years and have exercise prices ranging from $6.55 and $8.41.
During the six months ended January 31, 2019, the Company granted options to purchase 20,000 and 50,000 shares of its common stock to employees and consultants outside the 2011 Plan. The stock options issued to employees have a ten-year term, vest over three years, and have an exercise price of $16.40. The stock options issued to consultants have ten-year terms, vest in accordance with the terms of the applicable consulting agreement and have exercise prices ranging from $8.46 and $14.30.

The Company accounts for stock-based compensation based on the fair value of the stock-based awards granted and records forfeitures as they occur. As such, the Company recognizes stock-based compensation cost only for those stock-based awards that vest over their requisite service period, based on the vesting provisions of the individual grants. The service period is generally the vesting period, with the exception of stock options granted pursuant to a consulting agreement, in which case the stock option vesting period and the service period are defined pursuant to the terms of the consulting agreement.

The following assumptions were used for the Black-Scholes calculation of the fair value of stock-based compensation related to stock options granted during the periods presented:

Six Months Ended
January 31, 2020 Six Months Ended
January 31, 2019
Expected term (years) 5.00–6.50 years 5.00–6.50 years
Risk-free interest rate 1.35 – 1.70 % 2.47 – 3.09 %
Volatility 80.93 – 83.66 % 72.88 –81.96 %
Dividend yield 0 % 0 %

Six Months Ended
January 31, 2021

Six Months Ended
January 31, 2020

Expected term (years) 5.00–6.50 years 5.00–6.50 years
Risk-free interest rate 0.27 -0.65 % 1.35 – 1.70 %
Volatility 85.31 – 88.95 % 80.93 –83.66 %
Dividend yield 0 % 0 %
The Company’s expected volatility is derived from the historical daily change in the market price of its common stock. The Company uses the simplified method to calculate the expected term of options issued to employees, non-employees and directors. The risk-free interest rate used in the Black-Scholes calculation is based on the prevailing U.S. Treasury yield in effect at the time of grant, commensurate with the expected term. For the expected dividend yield used in the Black-Scholes calculation, the Company has never paid any dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future.

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The following is a summary of the Company’s 2011 Plan and non-Plan stock option activity for the six months ended January 31, ~~2020:~~2021:

Weighted
Average
Exercise
Options Price
Outstanding - July 31, 2019 921,572 $ 12.63
Granted 5,050 $ 1.98
Forfeited/Cancelled (911,622 ) $ 12.67
Outstanding – January 31, 2020 15,000 $ 6.34
Options vested and expected to vest - January 31, 2020 15,000 $ 6.34
Options Exercisable – January 31, 2020 12,085 $ 6.29
Weighted
Average
Exercise
Options Price
Outstanding - July 31, 2020 1,442,856 $ 1.65
Granted 1,237,251 $ 3.79
Exercised (158,248 ) $ 1.65
Forfeited/Cancelled (162,255 ) $ 3.58
Outstanding - January 31, 2021 2,359,604 $ 2.64
Outstanding and expected to vest – January 31, 2021 2,359,604 $ 2.64
Exercisable – January 31, 2021 1,405,282 $ 1.97

As of January 31, ~~2020,~~2021, the total intrinsic value of options outstanding and exercisable was ~~$0.~~$12.0 million and $8.1 million, respectively. As of January 31, ~~2020,~~2021, the Company has approximately ~~$13,000~~$2.2 million in unrecognized stock-based compensation expense attributable to the outstanding options, which will be amortized over a period of approximately ~~1.75~~2.05 years.
Stock-based compensation expense recorded in the Company’s condensed consolidated statements of operations for the three and six months ended January 31, 2021 resulting from stock options awarded to the Company’s employees, directors and consultants was approximately $0.4 million and $2.3 million, which included approximately $0 and $1.3 million, respectively, related to the accelerated vesting of time-vesting options. Of the total expense, $0.3 million and $1.3 million, respectively, was recorded to research and development and $0.1 million and $1.0 million, respectively, was recorded in general and administrative in the Company’s condensed consolidated statements of operations for the three and six months ended January 31, 2021.

Stock-based compensation expense recorded in the Company’s condensed consolidated statements of operations for the three and six months ended January 31, 2020 resulting from stock options awarded to the Company’s employees, directors and consultants was approximately $1.3 million and $1.7 million, respectively, which included approximately $1.2 million and $1.2 million, respectively, related to the cancellation of certain stock option awards. Of the total expense, $0.7 million and $0.8 million, respectively, was recorded to research and development and $0.6 million and $0.9 million, respectively, was recorded in general and administrative in the Company’s condensed consolidated statements of operations for the three and six months ended January 31, 2020.

~~Stock-based compensation expense recorded in the Company’s condensed consolidated statements~~The weighted-average grant date fair value of ~~operations for~~stock options granted during the three and six months ended January 31, ~~2019 resulting from stock options awarded to the Company’s employees, directors~~2021 was $4.19 and ~~consultants was approximately $1.1 million and $2.9 million,~~$2.66, respectively. Of this balance, $0.25 million and $1.1 million, respectively, was recorded to research and development and $0.85 million and $1.8 million, respectively, was recorded in general and administrative in the Company’s condensed consolidated statements of operations for the three and six months ended January 31, 2019.
The weighted-average grant date fair value of stock options granted during the three and six months ended January 31, 2020 was $1.44 and $1.35, respectively. ~~The weighted-average grant date fair value of stock options granted during~~
Restricted Stock Units (“RSUs”)
For the three and six months ended January 31, ~~2019 was $4.60~~2021, the Company recorded approximately $42,000 and ~~$5.70, respectively.~~$69,000, respectively, in stock-based compensation related to RSUs, which is reflected in the condensed consolidated statements of operations.
~~Restricted Stock Units~~As of January 31, 2021, there were 19,332 RSUs outstanding. During the six months ended January 31, 2021, 13,082 RSU’s vested.

For the three and six months ended January 31, 2020, the Company recorded $0.1 million and $0.2 million, respectively, in stock-based compensation related to RSUs, which is reflected in the condensed consolidated statements of operations.

~~As of January 31, 2020, there were 47,998 restricted stock units (“RSUs”) outstanding. During the six months ended January 31, 2020, 22,146 RSU’s vested.~~Shares Issued to Consultants

In December 2018, the Company granted its President and Chief Executive Officer 75,000 restricted stock unit awards (“RSUs”). The units vest as follows: 6,250 units vested on January 31, 2019, and the remaining 68,750 units vest in equal quarterly installments of 6,250 units beginning on April 30, 2019 and ending on October 31, 2021. The closing price of the Company’s common stock on the date of grant was $6.00 per share, which is the fair market value per unit of the RSUs.
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In October 2018, the Company granted 5,000 RSUs to an employee. The units vest as follows: 1,250 units vested on October 29, 2018, and the remaining 3,750 units vest according to the following vesting schedule: 1,250 units on October 29, 2019, 1,250 units on October 29, 2020 and 1,250 units on October 29, 2021. The closing price of the Company’s common stock on the date of grant was $16.40 per share, which is the fair market value per unit of the RSUs.
On October 26, 2018, in accordance with a severance agreement with an employee, the Company’s Board of Directors approved the accelerated vesting of 25% of the outstanding RSUs held by the employee. The RSUs, which originally vest on the third anniversary of the grant date, or March 29, 2020, were accelerated to vest on October 26, 2018. As per ASC 718, on the date of the modification the Company reversed the previously accrued expense on the unvested RSUs of $63,278 and recognized the fair value of the modified grant of $44,250 on the date of the modification.
~~For~~During the three and six months ended January 31, ~~2019,~~2021, 37,500 and 62,500 shares of common stock valued at approximately $0.1 million and $0.2 million, respectively, were issued to a consultant for services. The common stock share values were based on the date the shares were granted. The Company recorded compensation expense relating to the share issuances of approximately $0.1 million and $0.2 million, respectively, during the three and ~~$0.4 million, respectively, in stock-based compensation related to RSUs, which is reflected in the condensed consolidated statements of operations.~~six months ended January 31, 2021.

~~Shares Issued to Consultants~~
During the three and six months ended January 31, 2020, 58,812 and 94,499 shares of common stock valued at approximately $0.2 million and $0.5 million, respectively, were issued to consultants for services. The common stock share values were based on the dates the shares were granted. The Company recorded compensation expense relating to the share issuances of approximately $0.2 million and $0.5 million, respectively, during the three and six months ended January 31, 2020.

During the three and six months ended January 31, 2019, 14,300 and 32,700 shares of common stock valued at approximately $0.2 million and $0.5 million, respectively, were issued to consultants for services. The common stock was valued based on the dates the shares were granted. The Company recorded compensation expense relating to the share issuances of approximately $0.2 million and $0.5 million, respectively, during the three and six months ended January 31, 2019.
2015 Employee Stock Purchase Plan

Under the Company’s 2015 Employee Stock Purchase Plan (“ESPP”), the Company is authorized to issue 50,000 shares of the Company’s common stock. The ~~sixth~~ninth offering period under the ESPP ended on January 31, ~~2019,~~2021, with 1,428 shares purchased and distributed to employees, the seventh offering period under the ESPP ended on July 31, 2019, with 2,053 shares purchased and distributed to employees, and the eighth offering period under the ESPP ended on January 31, 2020, with 2,8411,538 shares purchased and distributed to employees. At January 31, ~~2020,~~2021, there were ~~34,767~~31,871 shares remaining available for issuance under the ESPP.

The ESPP is considered a Type B plan under FASB ASC Topic 718 because the number of shares a participant is permitted to purchase is not fixed based on the stock price at the beginning of the offering period and the expected withholdings. The ESPP enables the participant to “buy-up” to the plan’s share limit, if the stock price is lower on the purchase date. As a result, the fair value of the awards granted under the ESPP is calculated at the beginning of each offering period as the sum of:

● 15% of the share price of an unvested share at the beginning of the offering period,
● 85% of the fair market value of a six-month call on the unvested share aforementioned, and
● 15% of the fair market value of a six-month put on the unvested share aforementioned.

The fair market value of the six-month call and six-month put are based on the Black-Scholes option valuation model. For the six-month offering period ended January 31, 2021, the following assumptions were used: six-month maturity, 0.1% risk free interest, 122.84% volatility, 0% forfeitures and $0 dividends. For the six-month offering period ended January 31, 2020, the following assumptions were used: six-month maturity, 2.04% risk free interest, 90.64% volatility, 0% forfeitures and $0 dividends. ~~For the six-month offering period ended January 31, 2019, the following assumptions were used: six-month maturity, 2.22% risk free interest, 61.83% volatility, 0% forfeitures and $0 dividends.~~

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Approximately ~~$2,700~~$4,100 and ~~$6,500~~$2,700 was recorded as stock-based compensation during the six months ended January 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Common Stock Reserved for Future Issuance

The following table summarizes all common stock reserved for future issuance at January 31, ~~2020:~~2021:

Common Stock options outstanding (within the 2011 Plan and outside of the terms of the 2011 Plan) ~~15,000~~2,359,604
Common Stock reserved for ~~outstanding~~ restricted stock ~~units~~unit release ~~47,998~~19,332
Common Stock authorized for future grant under the 2011 Plan ~~779,757~~841,905
Common Stock reserved for warrant exercise ~~3,114,288~~2,221,315
Commons Stock reserved for future ESPP issuance ~~34,767~~31,871
Total ~~common stock~~Common Stock reserved for future issuance ~~3,991,810~~5,474,027
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Note 8—Commitments and Contingencies

Contingencies

In June 2019, Dana Farber Cancer Institute (“DFCI”) and OncoSec (each a “Party” and collectively the “Parties”) entered into a Sponsored Research Agreement (the “SRA”). On ~~October 29, 2019,~~May 11, 2020, the ~~Company’s stockholder, Alpha Holdings, Inc. (“Alpha”) filed~~SRA was terminated by DFCI, after a dispute arose between the parties. The Parties resolved the dispute through mediation and reached an agreement in principle. OncoSec agreed to pay DFCI a total of $900,000 in full and complete satisfaction of any and all claims that DFCI may have for reimbursement of expenses under the SRA in two ~~civil actions~~equal installments of $450,000, the first of which shall be due on December 7, 2020 and the second of which shall be due on or before March 31, 2021. As of January 31, 2021, the Company paid the first installment of $450,000 and has accrued $450,000 under the agreement, which is included in accounts payable and accrued liabilities at January 31, 2021 in the district court, Clark County, Nevada (the “District Court”), related to the proposed equity investment in the Company (the “Proposed Transaction”) by (i) Grand Decade Developments Limited (“Grand Decade”), a British Virgin Islands limited company and a wholly-owned subsidiary of China Grand Pharmaceutical and Healthcare Holdings Limited (“CGP”) and (ii) Sirtex Medical US Holdings, Inc., an affiliate of CGP (“Sirtex”). The first action, asserted against the Company only, sought to compel the Company to make its books and records available for inspection, so that Alpha could solicit proxies from other stockholders in connection with the vote to approve the Proposed Transaction. The second action, a putative class action asserted against the Company, certain directors on the OncoSec Board (the “Director Defendants”), Sirtex and Grand Decade, sought, among other things, a preliminary injunction to enjoin the Proposed Transaction and a special meeting of OncoSec’s shareholders seeking approval of the Proposed Transaction, based on claims that the Director Defendants breached their fiduciary duties by (i) failing to make complete and accurate disclosures concerning the Proposed Transaction, (ii) adopting improper defensive measures to preclude the Company from pursuing or receiving alternatives to the Proposed Transaction, and (iii) running an inadequate “sales process” that failed to obtain the highest value reasonably available. This second action also asserted a claim against Sirtex and CGP for aiding and abetting the Director Defendants’ alleged breaches of fiduciary duties. On November 13, 2019, the two actions wereaccompanying condensed consolidated into a single proceeding, when the court so-ordered a joint stipulation filed by the parties. On February 6, 2020, the District Court judge denied Alpha’s motion for preliminary injunction in its entirety and allowed the special meeting of shareholders to take place on February 7, 2020. The Nevada Supreme Court then denied Alpha’s request for an emergency appeal. Alpha subsequently filed a stipulation dismissing the action with prejudice, which the District Court entered on March 5, 2020. Since Alpha’s cases were dismissed with prejudice, they cannot be relitigated and the Company has no liability to Alpha with matters addressed in these lawsuits.balance sheets.

~~We are~~The Company is not a party to any other legal proceeding or aware of any other threatened action as of the date of this ~~quarterly~~ report.

Employment Agreements

The Company has entered into employment agreements with ~~each of its~~certain executive officers and certain other key employees. Generally, the terms of these agreements provide that, if the Company terminates the officer or employee other than for cause, death or disability, or if the officer terminates his or her employment with the Company for good cause, the officer shall be entitled to receive certain severance compensation and benefits as described in each such agreement.

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Note 9 – Leases

In February 2016, the FASB issued ASU 2016-02, which supersedes previous lease accounting guidance (Topic 840) and establishes a right-of-use model that requires a lessee to record an asset and liability on the balance sheet for all leases with terms longer than 12 months. The Company does not have any material variable payments, residual value guarantees or restrictive covenants for its leases and does not have any leases with terms of 12 months or less.Lease Agreements

On August 1, 2019, upon adoption of ASC Topic 842, the Company recorded right-of-use assets of approximately $1.4 million, lease liabilities of approximately $2.1 million and a reduction in deferred rent liabilities of $0.6 million for operating leases. Also, the adoption of ASC 842 did not have an impact on the Company’s beginning accumulated deficit balance.
~~In November 2019,~~25, 2020, the Company entered into a second amended lease agreement (“Second Amendment”) with MawIt Inc. to further extend the lease term at 24 N. Main Street, Pennington, New Jersey, which serves as the Company’s New Jersey corporate headquarters. Under the Second Amendment, effective January 1, 2021, the lease term is extended through and included December 31, 2021 and the base rent for ~~its office space in California directly with~~2021 is $12,416 per month. The lease term shall automatically renew for up to two additional one-year terms unless the ~~landlord, ARE-SD Region No. 18, LLC (“ARE”), with an effective date being~~Company gives the ~~earlier of: (a) October 1, 2020 or (b)~~Landlord a notice of non-renewal at least six months prior to the ~~day after the termination~~end of the ~~Company’s existing sublease if it ends prior to September 30, 2020. The lease is for a~~renewal term ~~of 36 months, with one renewal option for an additional 36-month term. The minimum monthly payment is $55,989.~~then in effect. During 2022, the base rent will be $12,665 per month and during 2023, the base rent will be $12,918 per month. The Company accounted for the ~~ARE lease~~Second Amendment as a contract modification, and accordingly, recorded an additional ~~right-of-use~~ROU asset for approximately ~~$5.3 million~~$388,000 and lease liabilities of approximately ~~$5.2 million~~$388,000 for this operating lease.

The Company has operating leases for corporate offices and lab space. These leases have remaining lease terms of approximately one year to seven years, some of which include options to extend the lease. For any lease where the Company is reasonably certain that a renewal option will be exercised, the lease payments associated with the renewal option period are included in the ROU asset and lease liability as of January 31, ~~2020.~~2021.

Supplemental balance sheet information related to leases as of January 31, ~~2020~~2021 was as follows:

Operating Leases:
Operating lease right-of-use assets $ 6,360,863

Current portion included in current liabilities $ 640,253
Long-term portion included in non-current liabilities 6,128,021
Total operating lease liabilities $ 6,768,274
Operating Leases:
Operating lease right-of-use assets $ 5,869,984
Operating Leases:
Current portion included in current liabilities $ 784,371
Long-term portion included in non-current liabilities 5,739,873
Total operating lease liabilities $ 6,524,244
Supplemental lease expense related to leases was as follows:

For the Three
Months Ended
January 31, 2020

For the Six
Months Ended
January 31, 2020

For the Three Months Ended
January 31, 2021

For the Six Months Ended
January 31, 2021

Operating lease cost $ 318,404 $ 530,771 $ 371,414 $ 743,373
Total lease expense $ 318,404 $ 530,771 $ 371,414 $ 743,373

Other information related to leases where the Company is the lessee is as follows:

As of
January 31, ~~2020~~2021

Weighted-average remaining lease term ~~6.5~~5.5 years

Weighted-average discount rate ~~9.99~~9.94 %

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Supplemental cash flow information related to operating leases was as follows:

For the Three
Months Ended
January 31, 2020

For the Six
Months Ended
January 31, 2020

For the Three Months Ended
January 31, 2021

For the Six Months Ended
January 31, 2021

Cash paid for operating lease liabilities $ 349,474 $ 682,485 $ 206,215 $ 516,392
Total cash flows related to operating lease liabilities $ 349,474 $ 682,485 $ 206,215 $ 516,392

Future minimum lease payments under non-cancellable leases as of January 31, ~~2020~~2021 were as follows:

Years ending July 31,
2020 $ 723,682
2021 1,116,946
2022 1,392,265
2023 1,431,473
2024 1,474,552
Thereafter 3,290,695
Total minimum lease payments 9,429,613
Less: Imputed interest (2,661,339 )
Total $ 6,768,274
~~Disclosures related to periods prior to adoption of ASC 842~~
~~The future minimum obligations under leases in effect as of July 31, 2019 having a noncancelable term in excess of one year as determined prior to the adoption of ASC 842 are as follows:~~
Years ending July 31,
2020 $ 1,356,000
2021 308,000 $ 755,898
2022 1,418,580
2023 1,585,224
2024 1,539,142
2025 1,516,126
Thereafter 1,774,569
Total minimum lease payments $ 1,664,000 8,589,539
Less: Imputed interest (2,065,295 )
Total $ 6,524,244

Note 10—401(k) Plan

Effective May 15, 2012, the Company adopted a defined contribution savings plan pursuant to Section 401(k) of the Code. The plan is for the benefit of all qualifying employees and permits voluntary contributions by employees of up to 100% of eligible compensation, subject to the maximum limits imposed by Internal Revenue Service. The terms of the plan allow for discretionary employer contributions and the Company currently matches 100% of its employees’ contributions, up to 3% of their annual compensation. The Company’s contributions are recorded as an expense in the accompanying condensed consolidated statements of operations and totaled approximately $32,000 and $60,000 for the three and six months ended January 31, 2021, respectively. The Company’s contributions totaled approximately $21,000 and $59,000 for the three and six months ended January 31, 2020, respectively. ~~The~~
Note 11—Related Party Transactions
Except as disclosed elsewhere herein, below are the Company’s ~~contributions totaled approximately $18,000 and $45,000 for the three and six months ended January 31, 2019, respectively.~~related party transactions.

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~~Note 11—Subsequent Events~~
~~Strategic Transaction Overview~~

Equity Offerings
On ~~February 7, 2020,~~January 25, 2021, the Company ~~closed (the “Closing”)~~completed the offer and sale of an aggregate of 7,711,284 shares of its common stock at a ~~strategic transaction (the “Transaction”) with~~purchase price of $5.45 per share in a public offering (See Note 6). Grand Decade Developments Limited, a direct, wholly-owned subsidiary of China Grand Pharmaceutical and Healthcare Holdings Limited, a company formed under the laws of the British Virgin Islands (“CGP”), and its affiliate, Sirtex Medical US Holdings, Inc., a Delaware corporation (“Sirtex” ~~and, together with CGP,~~) participated in the “Buyers”). On October 10, 2019, the Company and the Buyers entered into Stock Purchase Agreements (as amended, the “Purchase Agreements”) pursuant to which the Company agreed to sell and issue tooffering. Each of CGP and Sirtex ~~10,000,000 shares and 2,000,000 shares, respectively,~~exercised its right of the Company’s common stock for a total purchase price of $30 million. The net proceeds, after deducting offering fees and expenses paid by us, were approximately $28.0 million. Upon Closing, CGP and Sirtex owned 43.95% and 8.79%, respectively,participation in future offerings in order to maintain respective ownership percentages of the outstanding shares of common stock of the ~~Company.~~Company upon close.

~~Purchase Agreements~~
~~Pursuant to the Purchase Agreements, beginning on February 7,~~On August 19, 2020, ~~and ending on the first anniversary thereof (the “Option Period”),~~ the Company ~~granted to~~completed the offer and sale of an aggregate of 4,608,589 shares of its common stock at a purchase price of $3.25 per share in a registered direct offering (See Note 6). CGP ~~an option to make an offer to acquire~~and Sirtex participated in the ~~remaining~~registered direct offering and maintained their respective ownership percentages of the outstanding shares of common stock of the Company upon close.
Co-Promotion and Funded Research Agreement
In January 2021, the Company entered into a co-promotion agreement with Sirtex, pursuant to which the Company granted Sirtex the option to co-promote TAVO for the treatment of anti-PD-1 refractory locally advanced or metastatic melanoma in the U.S., including its territories and possessions. In consideration for the option, the Company received an upfront, non-refundable payment of $5.0 million from Sirtex (the “option fee”). The option to co-promote is non-exclusive and may be exercised at any time by Sirtex from the effective date until 90 days following the receipt by Sirtex of a ~~purchase price per share equal to the greater of (a) $4.50 or (b) 110%~~complete copy of the ~~last closing stock price~~final BLA filed by the Company with the FDA (the “option period”). If Sirtex exercises the option, the Company will receive an additional non-refundable and non-creditable option exercise fee of $25.0 million, comprised of $20.0 million in cash, and $5.0 million for the issuance of common stock on the date prior to CGP delivering written notice to the Company of its intent to exercise such option along with a proposal on all other material terms. This purchase option does not create an obligation on the partshares of the Company determined by the average closing price of the stock for the 30 days prior to ~~accept~~ the date of receipt of the exercise notice for the option.
Under the terms of the co-promotion agreement, if Sirtex exercises the co-promote option, the Company will pay to Sirtex a high-teens to low-twenties royalty (“promotion fee”) of U.S. net sales of the TAVO products. The co-promotion agreement will continue until the earlier of the expiration of the option period without Sirtex extending the option or the eighth anniversary of the first FDA approval of the BLA, and can extended by mutual agreement between the Company and Sirtex. During the co-promotion term, the Company is responsible for funding approximately two-thirds of the promotional costs incurred by Sirtex and Sirtex shall be responsible for approximately one-third.
The Company has determined that the co-promotion agreement represents a funded research and development arrangement within the scope of ASC Subtopic 730-20, Research and Development—Research and Development Arrangements (ASC 730-20). The Company concluded that there has not been a substantive and genuine transfer of risk related to the co-promotion agreement and the Company’s ongoing development of TAVO as there is a presumption that the Company is obligated to repay Sirtex based on the significant related party relationship that exists between the parties. This significant related party relationship is based on Sirtex’s approximate 8% ownership of the outstanding shares of the Company’s common stock, and that of its significant equity holder, CGP (which owns 49% of Sirtex), which owns approximately 42% of the outstanding shares of the Company’s common stock and is the Company’s largest shareholder.
The Company has determined that the appropriate accounting treatment under ASC 730-20 is to record any proceeds received from Sirtex for the co-promote option or upon exercise of the option nor does it prevent any interested third parties from making offers to acquire shares of the Company. Additionally, the shares are subject to a lock-up provision restricting the sale or disposition of the shares for a period of six months following the Closingas cash and ~~a standstill provision prohibiting certain actions by CGP and Sirtex during the Option Period. In addition, upon the Closing, the Stockholder Agreements and Registration Rights Agreements between~~cash equivalents as the Company has the ability to direct the usage of funds, and ~~each of CGP and~~as a corresponding long-term liability (“Liability under co-promotion agreement – related party”) on the Company’s condensed consolidated balance sheet when received. The liability will remain on the balance sheet until (i) Sirtex ~~were effective (all described further below). The Company’s Special Committee will be responsible for~~exercises the ~~evaluation of any such future offer~~option which results in royalties paid by ~~CGP.~~
~~The Purchase Agreements include customary covenants that obligate~~ the Company to ~~use commercially reasonable efforts to cause~~Sirtex based on the ~~purchased shares to be approved for listing on The Nasdaq Capital Market,~~net sales of the TAVO products, or (ii) Sirtex does not exercise the option and ~~a contractual anti-dilution mechanism that accounts for~~ the Company’s outstanding options and warrants, as well as other customary covenants. In addition, the Company, CGP, and Sirtex each shall pay their respective fees and expenses in connection with the transactions contemplatedco-promotion agreement is terminated by the ~~Purchase Agreements. On~~parties.
As of January 31, 2021, the ~~date~~balance of the ~~Closing~~Liability under co-promotion agreement – related party relates to the ~~Company reimbursed legal fees and expenses incurred by each~~option fee payment of ~~CGP and Sirtex in an aggregate amount of $600,000.~~
$5.0 million received from Sirtex.
~~First Amendment to the Purchase Agreements and Stockholder~~
Consulting Agreement

On ~~November 26, 2019,~~February 12, 2020, the Company entered into a consulting agreement with the spouse of the Company’s Chief Scientific Officer. The term of the agreement is four months and can be extended by written agreement. The agreement provides for an ~~amendment (the “First Amendment”)~~hourly based fee structure for assisting the Company with matters related to oncology and device development related to the ~~Purchase Agreements with CGP and Sirtex and~~Company’s platform. In addition to an hourly based fee structure, the ~~Stockholder Agreement with CGP. The First Amendment provides that following the Closing,~~consultant will be eligible to receive stock option awards. On June 12, 2020, the Company ~~will,~~amended the consulting agreement, extending the term of the existing agreement until December 12, 2020. In addition, the consultant was granted 30,000 non-qualified stock options valued at ~~its next annual meeting~~approximately $48,000 on the date of ~~stockholders (instead~~grant. The non-qualified stock options have a 10-year term, vest immediately and have an exercise price of at$1.56. The consultant was paid consulting fees of approximately $0 and $0.2 million during the ~~Special Meeting, as previously required by the Purchase Agreements), seek, among other things, the requisite stockholder approval for~~three months and six months ended January 31, 2021. Effective October 9, 2020, the Company ~~to amend its Articles of Incorporation to (i) increase~~hired the consultant as an employee.
Note 12—Subsequent Events
Except as disclosed elsewhere herein, below are the Company’s ~~authorized~~subsequent events.
Subsequent to January 31, 2021, warrants to purchase 507,000 shares of common stock ~~by 4,000,000~~were exercised for aggregate proceeds of approximately $1.7 million.
Subsequent to January 31, 2021, options to purchase 135,417 shares from 26,000,000 shares to 30,000,000 shares and (ii) add the corporate opportunity waiver (described below). In addition, the First Amendment (a) amended the Purchase Agreements to provide that a material breach of ~~the Purchase Agreements shall be deemed to have occurred if the Closing does not occur within 10 business days~~common stock were exercised for aggregate proceeds of the satisfaction of the conditions to the Company’s obligations, including the approval of the Proposed Transactions by the Company’s shareholders and (b) amended the Stockholder Agreement with CGP to provide that rescission of the corporate opportunity waiver is subject to the enhanced voting requirements described below.approximately $0.2 million.

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In connection with approving the First Amendment, to the extent permitted by applicable law, the Board has (i) renounced any interest or expectancy of the Company in, or in being offered an opportunity to participate in, business opportunities that are presented to CGP and certain related parties, the directors on the Board which have been nominated by CGP or Sirtex pursuant to the Stockholder Agreements, any other person or persons who are, at the time, associated with or nominated by, or serving as representatives of either CGP or Sirtex, or the respective affiliates of the foregoing parties (including their officers or directors who are employees, officers, directors, managers, stockholders or members) (the “Covered Persons”), (ii) resolved that none of such Covered Persons shall have any obligation to refrain from (a) engaging in similar activities or lines of business as the Company or developing or marketing any products or services that compete, directly or indirectly, with those of the Company, (b) investing or owning any interest publicly or privately in, serving as a director or officer of or developing a business relationship with, any person engaged in similar activities or lines of business as, or otherwise in competition with, the Company, (c) doing business with any client or customer of the Company or (d) employing or otherwise engaging a former officer or employee of the Company, and (iii) resolved that neither the Company nor any of its subsidiaries shall have any right to be offered any opportunity to participate or invest in any venture engaged or to be engaged in by any Covered Person.
~~License Agreement and Services Agreement~~
Concurrently with the execution and delivery of the Purchase Agreements, the Company and CGP entered into a License Agreement (the “License Agreement”), which became effective upon the Closing. Pursuant to the License Agreement, the Company, among other things, granted CGP and its affiliates an exclusive, sublicensable, royalty-bearing license to develop, manufacture, commercialize, or otherwise exploit the Company’s current and future products, including TAVO and the VLA in the following territories: China Mainland, Hong Kong, Macau, Taiwan, Armenia, Azerbaijan, Bahrain, Bangladesh, Bhutan, Brunei, Burma, Cambodia, East Timor, Georgia, India, Indonesia, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Laos, Malaysia, Mongolia, Nepal, Oman, Pakistan, Papua New Guinea, Philippines, Qatar, Saudi Arabia, Singapore, South Korea, Sri Lanka, Tajikistan, Thailand, Turkmenistan, United Arab Emirates, Uzbekistan and Vietnam (the “Territory”). Under the terms of the License Agreement, CGP will pay the Company up to 20% royalties on the net sales (as defined in the License Agreement) of such products in the Territory during the applicable Royalty Term (as defined in the License Agreement).
In addition, the Company and Sirtex entered into a Services Agreement (the “Services Agreement”) which became effective upon the Closing. Pursuant to the Services Agreement, the Company agreed, among other things, to pay Sirtex low single-digit royalties on the Net Sales (as defined in the Services Agreement) of all Products (defined as TAVO and VLA products and their accompanying generators, and any products (including, for clarity, combination products) incorporating or including such products and their accompanying generators), in all countries other than those in the Territory. In exchange for the royalty fee, Sirtex will provide the Company with certain services for these products, including key opinion leader management and engagement services, voice of customer (VOC) services, development of a go to market strategy, and pricing, reimbursement and market access services.
If either party believes that the other party has materially breached one or more of its material obligations under the License Agreement, then the non-breaching party may, following a cure period, terminate the License Agreement upon written notice to the breaching party, subject to other conditions. Licensee may terminate the License Agreement in its entirety for any reason or no reason upon prior written notice to Licensor. Additionally, the License Agreement may be terminated upon certain events involving bankruptcy or insolvency. If CGP terminates the License Agreement for convenience or the Company terminates the License Agreement due to CGP’s breach or insolvency, then, subject to certain conditions, each party’s rights and licenses will terminate, and CGP will have certain obligations to assign to the Company, or grant a right of reference under, certain regulatory documentation or approvals. If CGP terminates the License Agreement due to the Company’s breach or insolvency, then CGP will have the option either to keep the License Agreement in effect with the royalty rate owed by CGP to the Company reduced by 50% or to terminate the License Agreement (in which case each party’s rights and licenses will terminate, except that CGP will have the right to wind down certain clinical trials).
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~~Stockholder Agreements~~
Concurrently with the execution and delivery of the Purchase Agreements, the Company, CGP, and Sirtex entered into Stockholders Agreements (the “Stockholders Agreements”), to be effective upon the Closing, pursuant to which, among other things, CGP and Sirtex will have the option to nominate a combined total of three (3) members to the Board of Directors, initially at the Closing, and thereafter at every annual meeting of the stockholders of the Company in which directors are generally elected, including at every adjournment or postponement thereof. CGP will also have the option to nominate two (2) independent directors to the Company’s Board of Directors if any independent director currently serving on the Board of Directors ceases to serve as a director of the Company for any reason, provided that the independent director nominee shall be satisfactory to a majority of the independent directors of the Company. If either CGP or Sirtex beneficially owns less than 40% of the shares acquired pursuant to the Purchase Agreements, either (as applicable) shall have the right to nominate members to the Board of Directors in proportion with their ownership of the issued and outstanding common stock.
In addition, CGP and Sirtex will have certain rights of participation in future financings as well as a right of first refusal related to future potential transactions. The Stockholders Agreements implement a 70% supermajority approval by the Board of Directors for certain actions, as well as stockholder consent rights for CGP, all of which are conditioned upon CGP and Sirtex maintaining certain ownership thresholds.
Effective February 7, 2020, Punit Dhillon resigned as a member of the Board of Directors (the “Board”) of the Company pursuant to the Purchase Agreements. His resignation was not the result from any disagreement with the Company, or any matter related to the Company’s operations, policies or practices, the Company’s management or the Board.
Immediately thereafter, the Board appointed Dr. Yuhang Zhao, a senior adviser to China Grand Enterprises, Chao Zhou, the Executive Deputy Officer of CGP, and Kevin R. Smith, the Chief Executive Officer of Sirtex, as new members of the Board.
~~Registration Rights Agreements~~
On the date of the Closing, the Company, CGP, and Sirtex entered into Registration Rights Agreements (the “Registration Rights Agreements”), pursuant to which, among other things, CGP and Sirtex will each have the right to deliver to the Company a written notice requiring the Company to prepare and file with the SEC, a registration statement with respect to resales of shares of some or all the common stock of the Company held by CGP and Sirtex.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Unless the context indicates otherwise, all references to “OncoSec,” “our company,” “we,” “us” and “our” in this report refer to OncoSec Medical Incorporated and its consolidated subsidiary. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included in this report.

This discussion and analysis of our financial condition and results of operations is not a complete description of our business or the risks associated with an investment in our common stock. As a result, this discussion and analysis should be read together with our condensed consolidated financial statements and related notes included in this report, as well as the other disclosures in this report and in the other documents we file from time to time with the Securities and Exchange Commission, or SEC, including our Annual Report on Form 10-K for our fiscal year ended July 31, ~~2019~~2020 filed with the SEC on October 28, ~~2019, or the Annual Report.~~2020, and as amended (the “Annual Report”). Pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K promulgated by the SEC, in preparing this discussion and analysis, we have presumed that readers have access to and have read the discussion and analysis of our financial condition and results of operations included in the Annual Report.

This discussion and analysis and the other disclosures in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Forward-looking statements relate to future events or circumstances or our future performance and are based on our current assumptions, expectations and beliefs about future developments and their potential effect on our business. All statements in this report that are not statements of historical fact could be forward-looking statements. The forward-looking statements in this discussion and analysis include statements about, among other things, the status, progress and results of our clinical programs and our expectations regarding our liquidity and performance, including our expense levels, ~~sources~~and the potential impact of ~~capital and ability to maintain our operations as a going concern.~~the COVID-19 pandemic. Forward-looking statements are only predictions and are not guarantees of future performance, and they are subject to known and unknown risks, uncertainties and other factors, including the risks described under the heading “Risk Factors” in Part I, Item IA of the Company’s most recent Annual Report on Form 10-K and similar discussions contained in the other documents we file from time to time with the SEC. In light of these risks, uncertainties and other factors, the forward-looking events and circumstances described in this report may not occur and our results, levels of activity, performance or achievements could differ materially from those expressed in or implied by any forward-looking statements we make. As a result, you should not place undue reliance on any of our forward-looking statements. Forward-looking statements speak only as of the date they are made, and unless required to by law, we undertake no obligation to update or revise any forward-looking statement for any reason, including to reflect new information, future developments, actual results or changes in our expectations.

Overview

We are a late-stage biotechnology company focused on designing, developing and commercializing innovative therapies and proprietary medical approaches to stimulate and to guide an anti-tumor immune response for the treatment of cancer. Our core technology platform, ~~technology,~~ ImmunoPulse®, is a drug-device therapeutic modality platform comprised of a proprietary intratumoral electroporation (“EP”) delivery, ~~device.~~devices (the “OncoSec Medical System (OMS) Electroporation Device” or “OMS EP device”). The ~~ImmunoPulse® platform~~OMS EP device is designed to deliver plasmid DNA-encoded drugs directly into a solid tumor and promote an immunological response against cancer. The ~~ImmunoPulse®~~OMS EP device can be adapted to treat different tumor types, and consists of an electrical pulse generator, a reusable handle and disposable applicators. Our lead product candidate is a DNA-encoded interleukin-12 (“IL-12”), called tavokinogene telseplasmid (“TAVO”). The ~~ImmunoPulse®~~OMS EP ~~platform~~device is used to deliver TAVO intratumorally, with the aim of reversing the immunosuppressive microenvironment in the treated tumor. The activation of the appropriate inflammatory response can drive a systemic anti-tumor response against untreated tumors in other parts of the body. In 2017, we received Fast Track designation and Orphan Drug Designation from the U.S. Food and Drug Administration (“FDA”) for TAVO in metastatic melanoma, which could qualify TAVO for expedited FDA review, a rolling Biologics License Application review and certain other benefits.
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We have completed monotherapy and combination programs and our current focus is to pursue clinical development programs with TAVO, in combination with anti-PD-1 checkpoint inhibitors, in metastatic melanoma, triple negative breast cancer ~~(“TNBC”)~~ and squamous cell carcinoma head and ~~neck (“SCCHN”).~~neck. The Company intends to continue to pursue other ongoing or potential new trials and studies related to TAVO, in various tumor types. In addition to TAVO, we have identified and are developing new DNA-encoded therapeutic candidates and tumor indications for use with our new Visceral Lesion Applicator, ~~(“VLA”),~~ to target deep visceral lesions, such as liver, lung, bladder, pancreatic and other difficult to treat visceral lesions.

Performance Outlook

We expect to use our available working capital in the near term primarily for the advancement of our existing and planned clinical programs, including performance of the KEYNOTE-695 and KEYNOTE-890 studies and, to a lesser extent, the continuation of our other clinical trials and studies. We anticipate our spending on clinical programs and the development of our next-generation OMS EP device will continue throughout our current fiscal year, primarily in support of the KEYNOTE-695 and KEYNOTE-890 studies, while our spending on research and development programs will be prioritized, based on our focus on the KEYNOTE-695 and KEYNOTE-890 studies. We expect our cash-based general and administrative expenses to remain relatively flat in the near term, as we seek to continue to leverage internal resources and automate processes to decrease our outside services expenses. See “Results of Operations” below for more information.

Our operational and financial performance have already been affected by the impact of the COVID-19 pandemic. Our clinical trials have experienced delays in patient enrollment, potentially due to prioritization of hospital resources toward the COVID-19 pandemic or concerns among patients about participating in clinical trials during a public health emergency. The COVID-19 pandemic is also affecting the operations of government entities, such as the FDA, as well as contract research organizations, third-party manufacturers, and other third-parties upon whom we rely. The extent of the impact on our operations cannot be ascertained at this time.
Results of Operations for the Three Months Ended January 31, ~~2020~~2021 Compared to the Three Months Ended January 31, ~~2019~~2020

The unaudited financial data for the three months ended January 31, ~~2020~~2021 and January 31, ~~2019~~2020 is presented in the following table and the results of these two periods are included in the discussion thereafter.

January 31,
2020 January 31,
2019
$
Change

%
Change

January 31,
2021

January 31,
2020

$
Change

%
Change

Revenue $ - $ - - - $ - $ - $ - -
Expenses
Research and development 6,055,218 4,746,530 1,308,688 28 8,915,381 6,055,218 2,860,163 47
General and administrative 7,468,375 3,733,408 3,734,967 100 2,110,696 7,468,375 (5,357,679 ) (72 )
Loss from operations (13,523,593 ) (8,479,938 ) 5,043,655 59 (11,026,077 ) (13,523,593 ) 2,497,516 (18 )
Other income, net 46,768 105,903 59,135 56
Other (expense) income, net (440 ) 46,768 (47,208 ) (101 )
Interest expense (78 ) - 78 100 (4,722 ) (78 ) (4,644 ) 5,954
Foreign currency exchange (loss) gain, net (154,672 ) 63,912 218,584 342
Foreign currency exchange gain (loss), net 328,592 (154,672 ) 483,264 (312 )
Loss before income taxes (13,631,575 ) (8,310,123 ) 5,321,452 64 (10,702,647 ) (13,631,575 ) 2,928,928 (21 )
Provision for income taxes 2,450 4,904 (2,454 ) (50 )
Income tax expense 1,450 2,450 (1,000 ) (41 )
Net loss $ (13,634,025 ) $ (8,315,027 ) 5,318,998 64 $ (10,704,097 ) $ (13,634,025 ) $ 2,929,928 (21 )

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Revenue

We have not generated any revenue since our inception, and we do not anticipate generating meaningful revenue in the near term.

Research and Development Expenses

Our research and development expenses increased by ~~$1.3~~approximately $2.9 million, from ~~approximately $4.7 million during the three months ended January 31, 2019 to approximately~~ $6.0 million during the three months ended January 31, ~~2020.~~2020 to $8.9 million during the three months ended January 31, 2021. This increase was primarily due to the following approximate increases: (i) ~~$1.0~~$1.7 million in clinical trial-related costs to support our various clinical studies and costs for discovery research and product development and (ii) ~~$0.5~~$1.5 million increase in ~~stock-based compensation expense for employees~~payroll and ~~consultants~~related benefits expenses, primarily due to bonuses, additional headcount and ~~(iii) $0.1 million in higher rent expense as a result of the adoption of Accounting Standards Codification (“ASC”) 842 for our operating leases on August 1, 2019.~~merit increases. These increases were partially offset by a ~~$0.3~~$0.4 million ~~reduction~~decrease in ~~payroll~~stock-based compensation to employees and ~~related benefits expenses.~~consultants.

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General and Administrative

Our general and administrative expenses ~~increased~~decreased by approximately ~~$3.7~~$5.4 million, from ~~$3.7~~$7.5 million during the three months ended January 31, ~~2019,~~2020, to ~~approximately $7.4~~$2.1 million during the three months ended January 31, ~~2020.~~2021. This ~~increase~~decrease was largely due to the following approximate ~~increases:~~decreases: (i) ~~$3.4~~$3.3 million in legal costs primarily related to the Alpha Holdings litigation and the contested ~~proxy;~~proxy costs in the prior period, and $1 million in insurance recoveries from the Alpha Holdings litigation in the current period (ii) ~~$0.5~~$0.6 million in proxy costs related to the Company’s special meeting to approve the CGP transaction in the prior period (iii) $0.6 million in stock-based compensation to employees and ~~(iii) $0.1~~consultants and (iv) $0.3 million in consulting costs. These ~~increases~~decreases were partially offset by a ~~$0.3~~$0.4 million ~~reduction~~increase in payroll and related benefits ~~expenses. The Company believes a significant portion of its legal costs related~~expenses, primarily due to ~~the Alpha Holdings litigation are recoverable and are likely to be recovered. At this point, no amount for insurance recoveries has been recorded.~~bonuses.

Other (Expense) Income, Net

Other (expense) income, net, ~~stayed consistent at~~decreased by approximately ~~$0.1 million during both~~$47,000 from income of $46,000 for the three months ended January 31, 2020 ~~and~~to an expense of $1,000 for the three months ended January 31, ~~2019.~~2021. This decrease was primarily due to reduced interest income as a result of a lower return on our investments during the current period.

Foreign Currency Exchange ~~Loss,~~Gain (Loss), Net

Foreign currency exchange ~~loss,~~gain (loss), net, increased by approximately ~~$0.2~~$0.5 million from a loss of $0.2 million during the three months ended January 31, 2020 to a ~~$0.1~~$0.3 million gain for the three months ended January 31, ~~2019.~~2021. This increase was primarily due to ~~higher~~ unrealized foreign currency transaction ~~losses~~gains recognized in connection with the Australian subsidiary’s intercompany loan.

Results of Operations for the Six Months Ended January 31, ~~2020~~2021 Compared to the Six Months Ended January 31, ~~2019~~2020

The unaudited financial data for the six months ended January 31, ~~2020~~2021 and January 31, ~~2019~~2020 is presented in the following table and the results of these two periods are included in the discussion thereafter.

January 31,
2020 January 31,
2019
$
Change

%
Change

Revenue $ - $ - - -
Expenses
Research and development 11,485,031 9,485,975 1,999,056 21
General and administrative 11,886,660 6,497,497 5,389,163 83
Loss from operations (23,371,691 ) (15,983,472 ) 7,388,219 46
Other income, net 128,697 220,305 91,608 42
Interest expense (1,070 ) - 1,070 100
Foreign currency exchange loss, net (147,995 ) (108,002 ) 39,993 (37 )
Realized loss on sale of securities, net - (12,134 ) (12,134 ) 100
Loss before income taxes (23,392,059 ) (15,883,303 ) 7,508,756 47
Provision for income taxes 2,450 7,340 (4,890 ) (67 )
Net loss $ (23,394,509 ) $ (15,890,643 ) 7,503,866 47

January 31,
2021

January 31,
2020

$
Change

%
Change

Revenue $ - $ - $ - -
Expenses
Research and development 18,714,740 11,485,031 7,229,709 63
General and administrative 5,351,429 11,886,660 (6,535,231 ) (55 )
Loss from operations (24,066,169 ) (23,371,691 ) (694,478 ) 3
Other (expense) income, net (1,063 ) 128,697 (129,760 ) (101 )
Interest expense (10,856 ) (1,070 ) (9,786 ) 915
Foreign currency exchange gain (loss), net 151,674 (147,995 ) 299,669 202
Loss before income taxes (23,926,414 ) (23,392,059 ) (534,355 ) 2
Income tax expense 2,950 2,450 500 20
Net loss $ (23,929,364 ) $ (23,394,509 ) $ 534,855 (2 )
Revenue

We have not generated any revenue since our inception, and we do not anticipate generating meaningful revenue in the near term.

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Research and Development Expenses

Our research and development expenses increased by ~~$2.0~~approximately $7.2 million, from ~~approximately $9.5 million during the six months ended January 31, 2019 to approximately~~ $11.5 million during the six months ended January 31, ~~2020.~~2020 to $18.7 million during the six months ended January 31, 2021. This increase was primarily due to the following approximate increases: (i) ~~$2.6~~$4.8 million in clinical trial-related costs to support our various clinical studies and costs for discovery research and product development (ii) ~~$0.2~~$1.8 million ~~in higher rent expense as a result of the adoption of ASC 842 for our operating leases on August 1, 2019. These increases were partially offset by (i) $0.6 million reduction~~increase in payroll and related benefits expenses, ~~which was~~ primarily ~~related~~due to ~~a decrease in severance expense~~additional headcount, bonuses and ~~(ii) $0.2~~merit increases and (iii) $0.4 million ~~decrease~~increase in stock-based compensation expense ~~for~~to employees and consultants.

General and Administrative

Our general and administrative expenses ~~increased~~decreased by approximately ~~$5.4~~$6.5 million, from ~~$6.5 million during the six months ended January 31, 2019, to approximately~~ $11.9 million during the six months ended January 31, ~~2020.~~2020, to $5.4 million during the six months ended January 31, 2021. This ~~increase~~decrease was largely due to the following approximate ~~increases:~~decreases: (i) ~~$4.5~~$4.1 million in legal costs primarily related to the Alpha Holdings litigation and the contested ~~proxy;~~proxy costs in the prior period, and $1 million in insurance recoveries from the Alpha Holdings litigation in the current period (ii) ~~$0.7~~$0.8 million in consulting costs ~~and~~ (iii) ~~$0.6~~$0.7 million in proxy costs related to the Company’s special meeting to approve the CGP ~~transaction.~~transaction in the prior period and (iv) $0.2 million decrease in stock-based compensation expense to employees and consultants. These ~~increases~~decreases were partially offset by ~~(i)~~ a ~~$0.3~~$0.4 million ~~reduction in stock-based compensation expense for employees and consultants and (ii) $0.1 million decrease~~increase in payroll and benefits related ~~benefits expenses. The Company believes a significant portion of its legal costs related~~expenses, primarily due to ~~the Alpha Holdings litigation are recoverable~~bonuses and ~~are likely to be recovered. At this point, no amount for insurance recoveries has been recorded.~~merit increases.

Other (Expense) Income, Net
Other (expense) income, net, decreased by ~~$0.1 million~~approximately $130,000 from ~~$0.2 million~~income of $129,000 for the six months ended January 31, ~~2019~~2020 to ~~$0.1 million~~an expense of $1,000 for the six months ended January 31, ~~2020.~~2021. This decrease was primarily due to reduced interest income as a result of a lower ~~cash balances for these respective periods.~~return on our investments during the current period.

Foreign Currency Exchange ~~Loss,~~Gain (Loss), Net

Foreign currency exchange gain (loss), net, increased by approximately $0.3 million from a loss ~~net, stayed consistent at~~of $0.1 million during the six months ended January 31, 2020 ~~and~~to a $0.2 million gain for the six months ended January 31, ~~2019.~~2021. This increase was primarily due to unrealized foreign currency transaction gains recognized in connection with the Australian subsidiary’s intercompany loan.

Liquidity and Capital Resources

Working Capital

The following table and subsequent discussion summarize our working capital as of each of the periods presented:

At
January 31, 2020

At
July 31, 2019

At
January 31, 2021

At
July 31, 2020

Current assets $ 12,204,108 $ 28,507,336 $ 62,603,772 $ 22,821,685
Current liabilities 10,487,935 4,977,000 10,801,565 9,678,030
Working capital $ 1,716,173 $ 23,530,336 $ 51,802,207 $ 13,143,655

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Current Assets

Current assets as of January 31, ~~2020 decreased~~2021 increased by ~~$16.3~~$39.8 million to ~~$12.2~~$62.6 million, from ~~$28.5~~$22.8 million as of July 31, ~~2019.~~2020. This ~~decrease~~increase was primarily due to ~~a decrease in cash~~the $52.8 million net proceeds received from the August 2020 and ~~cash equivalents as a result of~~January 2021 offerings, $5 million received from the co-promotion agreement with Sirtex, and $3.3 million received from warrant and option exercises. The increase was partially offset by cash used to support our ~~operations.~~operations during the six months ended January 31, 2021.

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Current Liabilities

Current liabilities as of January 31, ~~2020~~2021 increased by ~~$5.5~~$1.1 million to ~~$10.5~~$10.8 million, from ~~$5.0~~$9.7 million as of July 31, ~~2019.~~2020. This increase was primarily due to ~~the timing of payments of~~an increase in accounts payable and accrued expenses ~~related~~pertaining to ~~the Alpha Holdings litigation~~our manufacturing and ~~contested proxy as well as the addition of operating lease liabilities to the balance sheet as a result of the adoption of ASC 842.~~clinical research activities.

Cash Flow

Cash Used in Operating Activities

Net cash used in operating activities for the six months ended January 31, ~~2020~~2021 was ~~$15.5~~$20.6 million, as compared to ~~$13.2~~$15.6 million for the six months ended January 31, ~~2019.~~2020. The ~~$2.3~~$5.0 million increase in cash used in operating activities was primarily attributable to an increase in cash used to support our operating activities, including but not limited to, our clinical trials, an increase in R&D activities, amounts for the Alpha Holdings, Inc. litigation and contested proxy incurred in the prior fiscal year and general working capital requirements.
Cash ~~Provided by~~Used in Investing Activities

Net cash ~~provided by~~used in investing activities for the six months ended January 31, ~~2020~~2021 was ~~$0,~~$250,000, as compared to ~~$19.0 million provided by investing activities~~$0 for the six months ended January 31, ~~2019. Net cash provided by investing activities for~~2020. During the six months ended January 31, ~~2019 was related to maturities~~2021, the Company licensed generator technology for use in its clinical trials and ~~sales of certain investment securities. We have an investment policy which is administered by management~~other research and ~~reviewed by the Board of Directors. We believe our investment policy is conservative and maximizes returns, while minimizes risk, since we rely on the cash to fund operations.~~development efforts.

Cash Provided by (Used in) Financing Activities

Net cash ~~used in~~provided by financing activities was ~~$0.3~~$60.8 million for the six months ended January 31, ~~2020,~~2021, as compared to ~~$15.0~~$0.3 million ~~provided by~~cash used in financing activities for the six months ended January 31, ~~2019.~~2020. Net proceeds during the six months ended January 31, ~~2019~~2021 was primarily attributable to the $52.8 million net proceeds received from the ~~Alpha Holdings offering~~August 2020 and January 2021 offerings, $5 million received from the co-promotion agreement with Sirtex, and $3.3 million received from warrant and option exercises (see “Sources of Capital” below).

Uses of Cash and Cash Requirements

Our primary uses of cash have been to finance clinical and research and development activities focused on the identification and discovery of new potential product candidates, the development of innovative and proprietary medical approaches for the treatment of cancer, and the design and advancement of pre-clinical and clinical trials and studies related to our pipeline of product candidates. We have also used our capital resources on general and administrative activities ~~including~~and building and strengthening our corporate infrastructure, programs and procedures to enable compliance with applicable federal, state and local laws and regulations.

Our primary objectives for the next 12 months are to continue the advancement of our KEYNOTE-695 and KEYNOTE-890 studies and, to a lesser extent, our other ongoing clinical trials and studies, and to continue our research and development activities for our next-generation EP device and drug discovery efforts. In addition, we expect to pursue capital-raising transactions, which could include equity or debt financings, in the near term to fund our existing and planned operations and acquire and develop additional assets and technology consistent with our business objectives as opportunities arise.

We currently estimate our monthly working capital requirements to be approximately $2.5 million, although we may modify or deviate from this estimate and it is likely that our actual operating expenses and working capital requirements will vary from our estimate. Based on these expectations regarding future expenses, rate of consumption, as well as our current cash levels, we believe our cash resources are sufficient to meet our anticipated needs for more than the 12 months following the issuance of this quarterly report. We will continue to assess our cash resources and anticipated needs on a quarterly basis.
33 31

Liquidity and Financial Condition
The Company’s products are being developed and have not generated revenue. As of January 31, 2021, the Company had approximately $60.3 million in cash and cash equivalents on its balance sheet. The Company believes its current cash position is sufficient to fund its business plan into approximately the third calendar quarter of 2022. The estimate is based on assumptions that may prove to be wrong, and the Company could use available capital resources sooner than currently expected. Because of the numerous risks and uncertainties associated with the development and commercialization of its product candidates, the Company is unable to estimate the amount of increased capital outlays and operating expenses associated with completing the development of its current product candidates.
The Company recognizes it may need to raise additional capital in order to continue to execute its business plan. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company or whether the Company will become profitable and generate positive operating cash flow. If the Company is unable to raise sufficient additional funds, it will have to scale back its business plan. The ongoing COVID-19 pandemic has also caused volatility in the global financial markets and threatened a slowdown in the global economy, which may negatively affect our ability to raise additional capital on attractive terms or at all.
Sources of Capital

We have not generated any revenue since our inception, and we do not anticipate generating meaningful revenue in the near term. Historically, we have raised the majority of the funding for our business through offerings of our common stock and warrants to purchase our common stock. If we issue equity or convertible debt securities to raise additional funds, our existing stockholders would experience further dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we incur debt, our fixed payment obligations, liabilities and leverage relative to our equity capitalization would increase, which could increase the cost of future capital. Further, the terms of any debt securities we issue or borrowings we incur, if available, could impose significant restrictions on our operations, such as limitations on our ability to incur additional debt or issue additional equity or other operating restrictions that could adversely affect our ability to conduct our business, and any such debt could be secured by any or all of our assets pledged as collateral. Additionally, we may incur substantial costs in pursuing future capital, including investment banking, legal and accounting fees, printing and distribution expenses and other costs.

Public Offering
On January 25, 2021, the Company completed the offer and sale of an aggregate of 7,711,284 shares of its common stock at a purchase price of $5.45 per share in a public offering. The gross proceeds from the offering were approximately $42.0 million, and the net proceeds, after deducting the placement agent’s fee and other offering fees and expenses paid by the Company, were approximately $39.1 million. In connection with the offering, the Company paid the placement agent and other financial advisors an aggregate cash fee equal to 6.0% of the gross proceeds of the offering, as well as legal and other expenses equal to approximately $0.4 million.
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Registered Direct Offering
On August 19, 2020, the Company completed the offer and sale of an aggregate of 4,608,589 shares of its common stock at a purchase price of $3.25 per share in a registered direct offering. The gross proceeds of the offering were approximately $15.0 million, and the net proceeds, after deducting the placement agent’s fee and other offering fees and expenses paid by the Company, were approximately $13.5 million. In connection with the offering, the Company paid the placement agent and other financial advisors an aggregate cash fee equal to 8.0% of the gross proceeds of the offering, as well as legal and other expenses equal to approximately $0.3 million.
Common Stock Option Exercise
During the six months ended January 31, 2021, shares of common stock issued related to option exercises totaled 158,248. The Company realized proceeds of approximately $0.3 million from the stock option exercises.
Common Stock Warrant Exercise
During the six months ended January 31, 2021, shares of common stock issued related to warrant exercises totaled 882,261. The Company realized proceeds of approximately $3.0 million from the warrant exercises.
Sale of New Jersey Net Operating Losses (NOLs)
In May 2020, the Company received $0.9 million in net proceeds from the sale of its New Jersey Net Operating Losses under the State of New Jersey NOL Transfer Program for the period ended July 31, 2019.
Small Business Administration Loan
On April 27, 2020, the Company was granted a loan from the Banc of California in the aggregate amount of $952,744, pursuant to the Paycheck Protection Program under the CARES Act, which was enacted March 27, 2020. The term of the loan is two years. Monthly payments will be due beginning August 15, 2021 if the Loan is not forgiven. Interest accrues at 1% per year, effective on the date of initial disbursement. The Company submitted its application for full loan forgiveness on January 6, 2021.
On February 12, 2021, the Company received notice that the full Loan amount of $952,744 had been forgiven.
CGP and Sirtex

On February 7, 2020, the Company closed ~~(the “Closing”)~~ a strategic transaction ~~(the “Transaction”)~~ with Grand Decade Developments Limited, a direct, wholly-owned subsidiary of China Grand Pharmaceutical and Healthcare Holdings Limited, a company formed under the laws of the British Virgin Islands (“CGP”),CGP and its affiliate, ~~Sirtex Medical US Holdings, Inc., a Delaware corporation (“Sirtex” and, together with CGP, the “Buyers”).~~Sirtex. On October 10, 2019, the Company, CGP and ~~the Buyers~~Sirtex entered into Stock Purchase Agreements, ~~(as~~as amended, ~~the “Purchase Agreements”)~~ pursuant to which the Company agreed to sell and issue to CGP and Sirtex 10,000,000 shares and 2,000,000 shares, respectively, of the Company’s common stock for ~~a total~~an aggregate purchase price of ~~$30~~$30.0 million. The net proceeds, after deducting offering fees and expenses paid by us, were approximately $28.0 million.

~~May 2019 Offering~~
On May 24, 2019, we completed our offer and sale of an aggregate of 3,492,063 shares of our common stock, together with 3,492,063 accompanying warrants to purchase an aggregate of 2,619,047 shares of our common stock, at a combined purchase price of $3.15 per share of common stock and warrant. The warrants have an exercise price of $3.45 per full share, became exercisable on May 24, 2019 and expire on May 24, 2024. The gross proceeds of the offering were approximately $11.0 million, and the net proceeds, after deducting the placement agent’s fee and other offering fees and expenses paid by us, were approximately $10.0 million. In connection with the offering, we paid the placement agent (i) a cash fee equal to 6.5% of the gross proceeds of the offering, as well as legal and other expenses equal to $90,000. In addition, pursuant to the underwriting agreement, the Company granted the underwriters an option, exercisable for 45 days, to purchase up to an additional 523,809 shares of our common stock (the “Option Shares”) and/or warrants to purchase up to 392,857 shares of common stock (the “Option Warrants”). On May 24, 2019, the underwriters partially exercised their option and purchased 238,095 Option Warrants to purchase an aggregate of 178,571 shares of our common stock, at a purchase price of $0.01 per warrant before underwriting discounts, or $2,381. The Option Warrants have an exercise price of $3.45 per full share, became exercisable on May 24, 2019 and expire on May 24, 2024.
~~Aspire Capital~~
~~On March 29, 2019,~~January 2021, the Company entered into a ~~common stock purchase~~co-promotion agreement ~~(the “Purchase Agreement”)~~ with ~~Aspire Capital Fund, LLC, (“Aspire Capital”)~~Sirtex, pursuant to which the Company ~~agreed~~granted Sirtex the option to ~~issue~~co-promote TAVO for the treatment of anti-PD-1 refractory locally advanced or metastatic melanoma in the U.S., including its territories and sell to Aspire Capital shares of its common stock equal to an aggregate amount of up to $20.0 million at the Company’s request from time to time during a 30-month period. The Company filed with the Securities and Exchange Commission a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 registering all the shares of common stock that have been offered to Aspire Capital from time to time.possessions. In consideration for ~~entering into~~ the ~~Purchase Agreement,~~option, the Company ~~issued to Aspire Capital 120,201 shares~~received an upfront, non-refundable payment of ~~the Company’s common stock which represented 3% of the aggregate commitment.~~$5.0 million from Sirtex.

34 33

Critical Accounting Policies
~~Under~~
Impairment of Long-Lived Assets
The Company periodically assesses the ~~Purchase Agreement, on any trading day selected by~~carrying value of intangible and other long-lived assets, and whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. The assets are considered to be impaired if the Company determines that the ~~Company had the right, in~~carrying value may not be recoverable based upon its ~~sole discretion, to present Aspire Capital with a purchase notice, directing Aspire Capital to purchase up to 30,000 shares~~assessment, which includes consideration of the ~~Company’s common stock per business day, up to $20.0 million of the Company’s common stock~~following events or changes in ~~the aggregate at a per share price equal to the lesser of:~~circumstances:

● the ~~lowest sale price~~asset’s ability to continue to generate income from operations and positive cash flow in future periods;
● loss of legal ownership or title to the asset(s);
● significant changes in the Company’s strategic business objectives and utilization of the ~~Company’s common stock on the purchase date; or~~asset(s); and

● the ~~arithmetic average~~impact of ~~the three (3) lowest closing sale prices for the Company’s common stock during the ten (10) consecutive trading days ending on the trading day immediately preceding the purchase date.~~significant negative industry or economic trends.

~~Upon execution of~~If the ~~Purchase Agreement, the Company agreed~~assets are considered to sell to Aspire Capital 400,674 shares of common stock for total proceeds, before expenses, of $2,000,000. Additionally, in April 2019, the Company sold a total of 90,000 shares of its common stock to Aspire Capital resulting in the Company receiving total proceeds, before expenses, of approximately $520,000 in cash. There were no underwriting or placement agent fees associated with the offering.
~~On May 27, 2019, the Company terminated the Purchase Agreement.~~
~~Alpha Holdings~~
On August 31, 2018, the Company entered into a stock purchase agreement with Alpha Holdings, Inc. (“Alpha Holdings”), pursuant to which the Company agreed to issue and sell to Alpha Holdings shares of its common stock equal to an aggregate amount of up to $15.0 million at a market purchase price of $15.00 per share, which was the closing price of the Company’s common stock the day immediately before the agreement was executed by the parties.
On October 9, 2018, the Company received total proceeds, before expenses, of $8.0 million in cash from the offering and issued Alpha Holdings 533,333 shares of common stock. There were no underwriting or placement agent fees associated with the offering.
On December 6, 2018, the Company received total proceeds, before expenses, of $7.0 million in cash from the offering and issued Alpha Holdings 466,667 shares of common stock. There were no underwriting or placement agent fees associated with the offering.
~~Critical Accounting Policies~~
~~Accounting for Long-Lived Assets~~
~~We assess~~be impaired, the impairment ~~of long-lived assets, consisting of property and equipment, periodically and whenever events or circumstances indicate that~~recognized is the amount by which the carrying value ~~may not be recoverable. Examples~~ of ~~such circumstances may include: (1)~~ the ~~asset’s ability to continue to generate income from operations and positive~~assets exceeds the fair value of the assets. Fair value is determined by the application of discounted cash flow ~~in future periods; (2) loss of legal ownership or title~~models to an asset; (3) significant changes in our strategic business objectives and utilization of the assets; and (4) the impact of significant negative industry or economic trends. If a change were to occur in any of these or similar factors, the likelihood of a material change in our net loss would increase.
~~Recoverability of assets to be held and used in operations is measured by a comparison of the carrying amount of an asset to the future net~~project cash flows ~~expected to be generated by~~from the assets. Although we believe the factors used by management to evaluate future net cash flows are reasonable, this evaluation requires a high degree of judgment, and results could vary if the actual amounts are materially different than management’s estimates. In addition, ~~we base~~the Company bases estimates of the useful lives and related amortization or depreciation expense on ~~our~~its subjective estimate of the period the assets will generate revenue or otherwise be used by ~~us. If long-lived assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.~~it. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less selling costs. The Company also periodically reviews the lives assigned to long-lived assets to ensure that the initial estimates do not exceed any revised estimated periods from which the Company expects to realize cash flows from its assets.

35
Accruals for Research and Development Expenses and Clinical Trials

The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts vary from contract to contract and may result in payment terms that do not match the periods over which materials or services are provided under such contracts. The Company accounts for these expenses in its financial statements by matching those expenses with the period in which services are performed and efforts are expended. The Company determines accrual estimates through financial models and takes into account discussion with applicable personnel and outside service providers as to the progress of clinical trials, or the services completed. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. During the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates.
Equity-Based Awards

The Company grants equity-based awards (typically stock options or restricted stock units) under our stock-based compensation plan and outside of our stock-based compensation plan, with terms generally similar to the terms under our stock-based compensation plan. The Company estimates the fair value of stock option awards using the Black-Scholes option valuation model. For employees, directors and consultants, the fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option. The Company estimates the fair value of restricted stock unit awards based on the closing price of the Company’s common stock on the date of issuance.

~~Employee Stock Purchase Plan~~
Employees may elect to participate in our stockholder approved employee stock purchase plan. The stock purchase plan allows for the purchase of our common stock at not less than 85% of the lesser of (i) the fair market value of a share of stock on the beginning date of the offering period or (ii) the fair market value of a share of stock on the purchase date of the offering period, subject to a share and dollar limit as defined in the plan and subject to the applicable legal requirements. There are two 6-month offering periods during each fiscal year, ending on January 31 and July 31. In accordance with applicable accounting guidance, the fair value of awards under the stock purchase plan is calculated at the beginning of each offering period. We estimate the fair value of the awards using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and the offering period. This fair value is then amortized at the beginning of the offering period. Stock-based compensation expense is based on awards expected to be purchased at the beginning of the offering period, and therefore is reduced when participants withdraw during the offering period.
Australia Research and Development Tax Credit

Our Australian, wholly-owned, subsidiary incurs research and development expenses, primarily in the course of conducting clinical trials. The Australian research and development activities qualify for the Australian government’s tax credit program, which provides a 41% credit for qualifying research and development expenses. The tax credit does not depend on our generation of future taxable income or ongoing tax status or position. Accordingly, the credit is not considered an element of income tax accounting under ASC 740 and is recorded against qualifying research and development expenses in the Company’s condensed consolidated statements of operations.

34
Leases

The Company determines if an arrangement is a lease at inception. Operating lease ~~right-of-use (“ROU”)~~ROU assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease liabilities on the Company’s condensed consolidated balance sheets.

Lease ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at commencement date calculated using our incremental borrowing rate applicable to the lease asset, unless the implicit rate is readily determinable. ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recognized on the condensed consolidated balance sheet. The Company’s leases do not contain any residual value guarantees. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company accounts for lease and non-lease components as a single lease component for all its leases.

36
Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is contained in Note 2 to our condensed consolidated financial statements included in this report.
~~Off-Balance Sheet Arrangements~~
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, or Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, or the SEC, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer (our principal executive officer) and our Principal Accounting Officer ~~(our interim principal financial officer),~~and Controller, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures reflects the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

As required by Rule 13a-15(b) under the Exchange Act, our management, under the supervision and with the participation of our President and Chief Executive Officer and our Principal Accounting Officer and Controller, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of January 31, ~~2020.~~2021. Based on such evaluation, our President and Chief Executive Officer and our Principal Accounting Officer and Controller concluded that, as of January 31, ~~2020,~~2021, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during our fiscal quarter ended January 31, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In January 2020, our Chief Financial Officer (“CFO”) and Chief Operating Officer (“COO”) resigned. The resignation of our CFO/COO did not have an impact on our internal controls over financial reporting.

Limitations on Effectiveness of Controls

Our management, including our President and Chief Executive Officer and Principal Accounting Officer and Controller, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

37

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we are involved in legal proceedings in the ordinary course of our business. Refer to Footnote 8: Commitments and Contingencies for more information on legal proceedings.

ITEM 1A. RISK FACTORS.

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended July 31, 2019, except as noted below. The risk factors disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended July 31, 2019, in addition to the other information set forth in this report, could materially affect our business, financial condition, or results of operations.2020.
~~Business or economic disruptions or global health concerns could seriously harm our development efforts and increase our costs and expenses.~~
Broad-based business or economic disruptions could adversely affect our ongoing or planned research and development. For example, in December 2019 an outbreak of a novel strain of coronavirus originated in Wuhan, China, and has since spread to a number of other countries, including the United States. To date, this outbreak has already resulted in extended shutdowns of certain businesses in the Wuhan region and has had ripple effects to businesses around the world. The outbreak may result in additional or more extensive travel restrictions, closures, disruptions of businesses or facilities in China or other affected regions around the world or lead to social, economic, political or labor instability in the affected areas may impact our, our suppliers’ or our customers’ operations.
Global epidemics, such as the coronavirus, could also negatively affect the hospitals and clinical sites in which we conduct any of our clinical trials, which could have a material adverse effect on our business and our results of operations and financial condition. We cannot presently predict the scope and severity of any potential business shutdowns or disruptions, but if we or any of the third parties with whom we engage, including the suppliers, clinical trial sites, regulators and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively impacted.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

From November 1, 2019 to January 2, 2020, we issued a total of 45,000 shares of our common stock to a third-party firm pursuant to a consulting agreement at an average market price of $2.05 per share for services rendered.None.
~~On January 2, 2020 we issued 13,812 shares of our common stock to a third-party firm pursuant to a consulting agreement at a market price of $1.81 per share for services rendered.~~
The securities above were offered and sold without registration under the Securities Act of 1933, as amended, or the Securities Act, pursuant to the exemption provided in Section 4(a)(2) under the Securities Act as a transaction not involving a public offering as well as similar exemptions under applicable state laws, in reliance on the following facts: no general solicitation was used in the offer or sale of such shares; the recipient of such shares represented that it was acquiring the shares for investment for its own account and not with a view to or for resale in connection with any distribution thereof within the meaning of the Securities Act; the recipient of such shares had adequate access to information about us; the recipient of such shares represented that it had a preexisting business or personal relationship with us or had the capacity to protect its own interests in connection with acquiring such shares; and such shares were issued as restricted securities with restricted legends referring to the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

The following exhibits are either filed or furnished with this report:

10.1*
~~10.1~~
~~Amendment~~Co-Promotion Agreement, dated as of November 26, 2019, by and between OncoSec Medical Incorporated and Grand Decade Developments Limited, (incorporated by refence to Exhibit 10.1 of our Current Report on Form 8-K, filed with the SEC on November 26, 2019).
~~10.2~~ ~~Amendment Agreement, dated as of November 26, 2019,~~January 19, 2021, by and between OncoSec Medical Incorporated and Sirtex Medical, ~~US Holdings,~~ Inc.~~, (incorporated by refence to Exhibit 10.2 of our Current Report on Form 8-K, filed with the SEC on November 26, 2019).~~†

31.1* Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

31.2* Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS* XBRL Instant Document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.
38

† Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.
SIGNATURES

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

ONCOSEC MEDICAL INCORPORATED

By: /s/ Daniel J. O’Connor
Daniel J. O’Connor
President & Chief Executive Officer
(Principal Executive Officer)

Dated: March ~~13, 2020~~12, 2021

By: /s/ Robert J. DelAversano
Robert J. DelAversano
Principal Accounting Officer & Controller
~~(Interim Principal Financial Officer)~~

Dated: March ~~13, 2020~~12, 2021

39 37

	January 31, 2021
License	$	495,000
Accumulated amortization		(11,647	)
Total	$	483,353

2021	$	34,941
2022		69,882
2023		69,882
2024		69,882
2025		69,882
Thereafter		168,884
Total	$	483,353

	January 31, 2020		July 31, 2019
Separation costs	$	132,041	$	495,004
Accrued payroll		270,361		181,219
401K payable		6,299		-
Total	$	408,701	$	676,223

Years ending July 31,
2021 (remainder of fiscal year)	$	167,174
2022		952,744
Total	$	1,119,918

	●	The unamortized compensation costs associated with the time-vesting options was expensed on the date of acceleration, which was approximately $1.2 million and $0.1 million for the employees and directors, respectively.

	●	Upon modification, it is required under ASC 718 to analyze the fair value of the instruments, before and after the modification, recognizing additional compensation cost for any incremental value. The Company computed the fair value of the award immediately prior to the modification and compared the fair value to that of the modified award. Since the value of the awards were less after the modification as compared to immediately prior to the modification, no additional compensation expense was recorded.

	●	The Company entered into Stock Option Cancellation Agreements (the “Cancellation Agreements”) with certain executive officers, directors and other senior level employees of the Company, pursuant to which such individuals (the “Senior Level Option ~~holder”~~Holders”) agreed to the voluntary surrender and cancellation of certain previously granted stock options (the “Cancelled Options”) to purchase in the aggregate 699,140 shares of the Company’s common stock. Under the terms of the Cancellation Agreements, each Senior Level Option ~~holder~~Holder and the Company acknowledged and agreed that the surrender and cancellation of the Cancelled Options was without any expectation on the part of ~~the~~each Senior Level Option ~~holder~~Holder to receive, and without any obligation on the Company to pay or grant, any cash, equity awards or other consideration presently or in the future with respect to the Cancelled Options.

	●	The Company cancelled outstanding common stock options held by employees and consultants other than the Senior Level Option ~~holders of the Company,~~Holders, pursuant to which such individuals were previously granted stock options to purchase in the aggregate 179,394 shares of the Company’s common stock, ~~were cancelled~~ for aggregate cash consideration of approximately $26,000.

	●	A cancellation of an award that is not accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration shall be accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation is recognized at the cancellation date.

	●	The amount of cash paid to settle an equity-classified award is charged directly to equity as long as that amount is equal to or less than the fair-value-based measure of the award on the settlement date. To the extent that the settlement consideration exceeds the fair-value-based measure of the equity-classified award on the settlement date, that difference is recognized as additional compensation cost. The cash paid to settle employee and consultant equity-classified awards, other than the Senior Level Option ~~holders,~~Holders, was less than the fair-value-based measure of the award on the settlement date. The approximately $26,000 in cash paid to settle the equity-classified awards was charged directly to additional paid in capital.

	Six Months Ended January 31, 2020			Six Months Ended January 31, 2019
Expected term (years)		5.00–6.50 years			5.00–6.50 years
Risk-free interest rate		1.35 – 1.70	%		2.47 – 3.09	%
Volatility		80.93 – 83.66	%		72.88 –81.96	%
Dividend yield		0	%		0	%

	Six Months Ended January 31, 2021			Six Months Ended January 31, 2020
Expected term (years)		5.00–6.50 years			5.00–6.50 years
Risk-free interest rate		0.27 -0.65	%		1.35 – 1.70	%
Volatility		85.31 – 88.95	%		80.93 –83.66	%
Dividend yield		0	%		0	%

				Weighted
				Average
				Exercise
	Options			Price
Outstanding - July 31, 2019		921,572		$	12.63
Granted		5,050		$	1.98
Forfeited/Cancelled		(911,622	)	$	12.67
Outstanding – January 31, 2020		15,000		$	6.34
Options vested and expected to vest - January 31, 2020		15,000		$	6.34
Options Exercisable – January 31, 2020		12,085		$	6.29

	●	15% of the share price of an unvested share at the beginning of the offering period,
	●	85% of the fair market value of a six-month call on the unvested share aforementioned, and
	●	15% of the fair market value of a six-month put on the unvested share aforementioned.

Common Stock options outstanding (within the 2011 Plan and outside of the terms of the 2011 Plan)			~~15,000~~2,359,604
Common Stock reserved for ~~outstanding~~ restricted stock ~~units~~unit release			~~47,998~~19,332
Common Stock authorized for future grant under the 2011 Plan			~~779,757~~841,905
Common Stock reserved for warrant exercise			~~3,114,288~~2,221,315
Commons Stock reserved for future ESPP issuance			~~34,767~~31,871
Total ~~common stock~~Common Stock reserved for future issuance			~~3,991,810~~5,474,027

Operating Leases:
Operating lease right-of-use assets	$	6,360,863

Current portion included in current liabilities	$	640,253
Long-term portion included in non-current liabilities		6,128,021
Total operating lease liabilities	$	6,768,274

	As of January 31, ~~2020~~2021
Weighted-average remaining lease term		~~6.5~~5.5 years

Weighted-average discount rate		~~9.99~~9.94	%

Years ending July 31,
2020	$	723,682
2021		1,116,946
2022		1,392,265
2023		1,431,473
2024		1,474,552
Thereafter		3,290,695
Total minimum lease payments		9,429,613
Less: Imputed interest		(2,661,339	)
Total	$	6,768,274

Years ending July 31,
2020	$	1,356,000
2021		308,000	$	755,898
2022				1,418,580
2023				1,585,224
2024				1,539,142
2025				1,516,126
Thereafter				1,774,569
Total minimum lease payments	$	1,664,000		8,589,539
Less: Imputed interest				(2,065,295	)
Total			$	6,524,244

	January 31, 2020			January 31, 2019			$ Change			% Change			January 31, 2021			January 31, 2020			$ Change			% Change
Revenue	$	-		$	-			-			-		$	-		$	-		$	-			-
Expenses
Research and development		6,055,218			4,746,530			1,308,688			28			8,915,381			6,055,218			2,860,163			47
General and administrative		7,468,375			3,733,408			3,734,967			100			2,110,696			7,468,375			(5,357,679	)		(72	)
Loss from operations		(13,523,593	)		(8,479,938	)		5,043,655			59			(11,026,077	)		(13,523,593	)		2,497,516			(18	)
Other income, net		46,768			105,903			59,135			56
Other (expense) income, net														(440	)		46,768			(47,208	)		(101	)
Interest expense		(78	)		-			78			100			(4,722	)		(78	)		(4,644	)		5,954
Foreign currency exchange (loss) gain, net		(154,672	)		63,912			218,584			342
Foreign currency exchange gain (loss), net														328,592			(154,672	)		483,264			(312	)
Loss before income taxes		(13,631,575	)		(8,310,123	)		5,321,452			64			(10,702,647	)		(13,631,575	)		2,928,928			(21	)
Provision for income taxes		2,450			4,904			(2,454	)		(50	)
Income tax expense														1,450			2,450			(1,000	)		(41	)
Net loss	$	(13,634,025	)	$	(8,315,027	)		5,318,998			64		$	(10,704,097	)	$	(13,634,025	)	$	2,929,928			(21	)

	At January 31, 2020		At July 31, 2019		At January 31, 2021		At July 31, 2020
Current assets	$	12,204,108	$	28,507,336	$	62,603,772	$	22,821,685
Current liabilities		10,487,935		4,977,000		10,801,565		9,678,030
Working capital	$	1,716,173	$	23,530,336	$	51,802,207	$	13,143,655

	●	the ~~lowest sale price~~asset’s ability to continue to generate income from operations and positive cash flow in future periods;

	●	loss of legal ownership or title to the asset(s);

	●	significant changes in the Company’s strategic business objectives and utilization of the ~~Company’s common stock on the purchase date; or~~asset(s); and

	●	the ~~arithmetic average~~impact of ~~the three (3) lowest closing sale prices for the Company’s common stock during the ten (10) consecutive trading days ending on the trading day immediately preceding the purchase date.~~significant negative industry or economic trends.

10.1*
~~10.1~~		~~Amendment~~Co-Promotion Agreement, dated as of November 26, 2019, by and between OncoSec Medical Incorporated and Grand Decade Developments Limited, (incorporated by refence to Exhibit 10.1 of our Current Report on Form 8-K, filed with the SEC on November 26, 2019).

~~10.2~~		~~Amendment Agreement, dated as of November 26, 2019,~~January 19, 2021, by and between OncoSec Medical Incorporated and Sirtex Medical, ~~US Holdings,~~ Inc.~~, (incorporated by refence to Exhibit 10.2 of our Current Report on Form 8-K, filed with the SEC on November 26, 2019).~~†

31.1*		Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

31.2*		Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		XBRL Instant Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

ONCOSEC MEDICAL INCORPORATED

By:	/s/ Daniel J. O’Connor
	Daniel J. O’Connor
	President & Chief Executive Officer
	(Principal Executive Officer)

Dated: March ~~13, 2020~~12, 2021

By:	/s/ Robert J. DelAversano
	Robert J. DelAversano
	Principal Accounting Officer & Controller
	~~(Interim Principal Financial Officer)~~

Dated: March ~~13, 2020~~12, 2021