What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2021-11-18 · 158 added, 283 removed, 14 unchanged (97% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

should read the following discussion and analysis of financial condition and operating results together with our financial statements

and the related notes and other financial information included elsewhere in this quarterly report on Form 10-Q, as well as our audited

consolidated financial statements and related notes as disclosed in our prospectus, dated September 14, 2021, filed with the Securities

and Exchange Commission (“SEC”) in accordance with Rule 424(b) of the Securities Act on September 16, 2021 (the “Prospectus”)

in connection with our initial public offering (“Initial Public Offering”).

Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis

of financial condition and operating results together with our financial statements and the related notes and other financial information

included elsewhere in this quarterly report on Form 10-Q, as well as our audited consolidated financial statements and related notes

as disclosed in our annual report on Form 10-K for the year ended December 31, 2021.

This discussion contains forward-looking statements

2 unchanged sentences

Factors” and elsewhere in this quarterly report on Form 10-Q as well as the risk factors set forth in the section titled “Risk

Factors” included in the Prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

Factors” included in our annual report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking

For convenience of presentation some of the numbers have been rounded in the text below.

Company was incorporated in the State of Delaware on May 12, 2020.

The Company is a biotechnology company focused on the research and

discovery of new and effective treatments for psychiatric and neurological disorders.

The Company’s primary biotech operations

will focus on developing drugs that target the pathophysiology underlying such disorders rather than symptomatic treatments, with the

goal of developing new pharmacological agents that display significant advantages over conventional therapies with respect to efficacy

and tolerability.

Company’s secondary operations are focused on providing business support services to anti-depression clinics in the UK and in the

United States.

Its operations in the UK will involve providing business support services to registered healthcare providers who will

assess patients and, if appropriate, administer intravenous infusions of ketamine.

Its operations in the United States will involve providing

business support services to entities that furnish similar services to patients who personally pay for those services.

Operations are

expected to initially take place across the United States and the UK through partnerships with healthcare companies, and its operations

in the UK and the United States are expected to be limited to providing business support services to healthcare companies.

Company is located in Miami Beach, Florida USA.

of September 30, 2021, the Company had not commenced core operations or entered into agreements with independent professional services

companies or other potential counterparties relating to its ketamine infusion business in the United States.

All activity for the period

from May 12, 2020 (inception) through September 30, 2021 relates to the Company’s formation and raising funds through issuing shares

of the Company’s Common Stock.

The Company has selected December 31 as its fiscal year end.

this report, the terms “our,” “we,” “us,” and the “Company” refer to Pasithea Therapeutics

and its subsidiaries, Pasithea Therapeutics Limited (UK) and Pasithea Clinics Inc.

Pasithea Therapeutics Limited (UK) is a private

limited Company, registered in the United Kingdom (UK).

Throughout this report, the terms “our,”

“we,” “us,” and the “Company” refer to Pasithea Therapeutics Corp.

and its subsidiaries, Pasithea

Therapeutics Limited (UK) and Pasithea Clinics Inc.

Pasithea Therapeutics Limited (UK) is a private limited Company, registered in the

United Kingdom (UK).

Pasithea Clinics Inc.

is incorporated in Delaware.

The consolidated financial

statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America

The consolidated financial statements include the consolidated financial statements of the Company and its

subsidiaries.

All inter-company balances and transactions among the companies have been eliminated upon consolidation.

Public Offering

On September 17, 2021, we completed our Initial

Public Offering of 4,800,000 units (“Units”), each Unit consisting of one share of our common stock (“Common Stock”),

par value $0.0001 per share, and one warrant (“Warrant”) to purchase one share of our Common Stock at an initial public offering

price of $5.00 per Unit, resulting in aggregate net proceeds to us of approximately $20.6 million, after deducting the underwriting discount

and commissions of approximately $2.1 million and offering expenses of approximately $1.3 million.

We granted the underwriters an option

for a period of 45 days to purchase up to an additional 720,000 shares of Common Stock and/or Warrants to purchase up to 720,000 shares

of Common Stock at $5.00 per Unit less the underwriting discounts and commissions.

On October 29, 2021, the underwriters’ option

lapsed without exercise.

of COVID-19 Pandemic

March 2020, the WHO characterized the outbreak of the novel strain of coronavirus, specifically identified as COVID-19, as a global pandemic.

This has resulted in governments enacting emergency measures to combat the spread of the virus.

These measures, which include the implementation

of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to business, resulting in a global

economic slowdown.

Equity markets have experienced significant volatility and weakness and the governments and central banks have reacted

with significant monetary and fiscal interventions designed to stabilize economic conditions.

current challenging economic climate may lead to adverse changes in cash flows, working capital levels and/or debt balances, which may

also have a direct impact on the Company’s operating results and financial position in the future.

The ultimate duration and magnitude

of the impact and the efficacy of government interventions on the economy and the financial effect on the Company is not known at this

The extent of such impact will depend on future developments, which are highly uncertain and not in the Company’s control,

including new information which may emerge concerning the spread and severity of COVID-19 and actions taken to address its impact, among

The repercussions of this health crisis could have a material adverse effect on the Company’s business, financial condition,

liquidity and operating results.

response to COVID-19, the Company has implemented working practices to address potential impacts to its operations, employees and customers,

and will take further measures in the future if and as required.

At present, we do not believe there has been any appreciable impact

on the Company specifically associated with COVID-19.

Growth Company Status

Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our

Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements

that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required

to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations

regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding

advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section

102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards

until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a

class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply

to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended

transition period which means that when a standard is issued or revised and it has different application dates for public or private

companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the

new or revised standard.

This may make comparison of the Company’s financial statements with another public company which is neither

an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible

because of the potential differences in accounting standards used.

of Operations

Months Ended September 30, 2021 and 2020

the three months ended September 30, 2021 and 2020, we reported no revenues and incurred operating expenses of $1,273,600 and $13,970,

respectively.

For the three months ended September 30, 2021, operating expenses were primarily attributable to legal and professional

fees related to corporate development and financing and stock based compensation.

For the three months ended September 30, 2020, operating

expenses were attributable primarily to legal fees and advertising.

the three months ended September 30, 2021, we reported a loss on the change in fair value of warrant liabilities of approximately $252,000

due to an increase in the fair value of our warrant liabilities.

the three months ended September 30, 2021 and 2020, we incurred a net loss of $ 1,526,108 and $13,970, respectively.

Months Ended September 30, 2021 and the Period from May 12, 2020 (Inception) to September 30, 2020

the nine months ended September 30, 2021 and the period from May 12, 2020 (inception) to September 30, 2020, we reported no revenues

and incurred operating expenses of $2,551,156 and $13,970, respectively.

For the nine months ended September 30, 2021, operating expenses

were primarily attributable to legal and professional fees, as well as stock based compensation.

For the period from May 12, 2020 (inception)

to September 30, 2020, operating expenses were primarily attributable to legal fees and advertising.

the nine months ended September 30, 2021, we reported a loss on the change in fair value of warrant liabilities of approximately $252,000

due to an increase in the fair value of our warrant liabilities.

the nine months ended September 30, 2021 and for the period from May 12, 2020 (inception) to September 30, 2020, we incurred a net loss

of $2,803,664 and $13,970, respectively.

September 30,

The full extent to which the COVID-19 pandemic may

directly or indirectly impact our business, results of operations and financial condition, will depend on future developments that are

uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat

COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

We have made estimates

of the impact of COVID-19 within our financial statements, and although there is currently no major impact, there may be changes to those

estimates in future periods.

Actual results may differ from these estimates.

Company Summary

We are a biotechnology company focused on the research

and discovery of new and effective treatments for psychiatric and neurological disorders.

Epidemiological data indicate neuropsychiatric

disorders as being some of the most prevalent, devastating, and yet poorly treated illnesses.

We believe that the current treatments

for these disorders, such as depression, are inadequate and that conventional medicines have low success rates in long-term treatment.

According to an article published by PLOS One, randomized, double-blind, placebo-controlled clinical trials of antidepressants were only

effective for 42-51% of patients with MDD.

For example, current pharmacotherapies for MDD and bipolar depression (BDep) have a distinct

lag of onset that can generate further distress and impairment in patients.

According to an article published in 2000 by The Journal

of Clinical Psychiatry and an article published in 2010 by Pharmaceuticals (Basel), available antidepressant medications usually take

several weeks before patients display significant therapeutic benefit.

This delayed onset of treatment can result in increased morbidity

and increased risk for suicidal behavior.

This has been reported in a base population study including 159,810 users of 4 antidepressant

drugs showing that the risk of suicidal behavior increased in the first month after starting antidepressants, and in particular during

the first 1 to 9 days, regardless of the chemical class of antidepressant.

This study was published in a 2004 article published by The

Journal of the American Medical Association.

Similarly, other studies including a 2006 article published by The American Journal of Psychiatry

have shown a significantly higher risk of suicide attempts during the first week of antidepressant treatment compared to subsequent weeks.

Furthermore, depressive symptoms are commonly known to affect the ability of patients to function across multiple domains, impacting

self-esteem, motivation and cognitive function.

Delayed onset of antidepressants contributes to ongoing functional impairment and may

interfere with integration back into daily life, in turn delaying full functional recovery.

Furthermore, according to a 2012 article

published by Biological Psychiatry and a 2013 article published by Brain Stimulation, the continued presence of depressive symptoms may

promote chronic neuronal loss and suppress neurogenesis in the hippocampus.

Traditional psychiatric drugs can also cause side

Furthermore, the approval of psychotropic drugs with novel mechanisms of action has been rare in recent years.

Our biotech operations

focus on developing drugs that target the pathophysiology underlying such disorders rather than symptomatic treatments, with the goal

of developing new pharmacological agents that display significant advantages over conventional therapies with respect to efficacy and

tolerability.

We particularly focus on the cross-talk between the immune system and brain disorders and how immune dysregulation affects

CNS function.

Our secondary operations in the U.K., and our intended

secondary operations in the United States, are focused on providing business support services to anti-depression clinics.

Our operations

involve providing business support services to registered healthcare providers who assess patients, and if appropriate, administer

intravenous infusions of ketamine, and our intended operations in the United States involve providing business support services to entities

that furnish similar services to patients who personally pay for those services.

Operations initially take place across the United States

through partnerships with healthcare companies, including Zen Healthcare and The IV Doc.

Our operations in the U.K.

and our intended operations in the United States will be, limited to providing business support services to healthcare companies.

the United States, certain of these business support services will be subcontracted to The IV Doc through a Business Support Services

We do not provide professional medical services, establish or own anti-depression clinics, provide psychiatric assessments,

or be responsible for the administration of intravenous infusions of ketamine in the United States.

Furthermore, we do not obtain or

administer ketamine, nor do we maintain any license or registration to own, maintain or dispense controlled substances in the U.K.

in the United States.

We provide business support services to properly authorized companies that provide clinical services of the type

described above to self-pay patients, and we subcontract certain of these business support services to The IV Doc.

Company Strategy

Our core strategy is to become a leader in solving

psychiatric and neurological disorders, one of the world’s biggest clinical problems, through research, development, and commercialization

of novel CNS drugs.

Key elements of our business strategy are as follows:

● Research new drugs or the treatment

of CNS disorders targeting the pathophysiology underlying the disease and with different

mechanisms of action than conventional psychiatric and neurological drugs.

Research will

be conducted under the leadership of Professor Lawrence Steinman, a renowned neurologist

and immunologist based at Stanford University, and Dr.

Tiago Reis Marques, a psychiatrist

and neuroscientist at Imperial College and King’s College London;

● Partner with reputable and successful healthcare companies and

clinics to provide and support the intravenous administration of ketamine to treat treatment-resistant

depression and PTSD;

○ Create a capital

efficient revenue stream with significant client bases across the United States and the U.K.,

including in Los Angeles, New York City, London;

○ Create a diversified

revenue stream by establishing and supporting clinics to provide greater visibility of revenue

Results of Operations

Three Months Ended March 31, 2022 and 2021

Our financial results for the three months ended March 31, 2022 and 2021

are summarized as follows:

Three Months Ended

Cost of servicesd

Selling, general and administrative expenses

Loss from operations

Other income (expense), net

Loss before income taxes

$ (1,574,240 )

Revenues for the three months ended March 31, 2022

relate to our operations in the U.K.

providing business support services to registered healthcare providers who assess patients, and

if appropriate, administering intravenous infusions of ketamine.

The increase in our loss before income taxes for the three months ended

March 31, 2022 compared to the same period of 2021 is mainly attributable to increased selling, general and administrative expenses as

a result of further expansion of operations following the receipt of proceeds from our initial public offering and private placement

offering in November 2021, partially offset by a decrease in the fair value of our warrant liabilities of $785,297.

Working Capital

Current assets

1 unchanged sentence

Working capital

assets increased by $20,818,421 between December 31, 2020 and September 30, 2021 due mainly to funds received as part of our Initial

Public Offering.

liabilities increased by $521,493 between December 31, 2020 and September 30, 2021 due mainly to an increase in accounts payable attributable

to outstanding payments related to legal and professional fees.

and Financial Condition

September 30,

(Inception) to

September 30,

Working capital decreased by $2,336,915 between December 31, 2021 and

March 31, 2022 due primarily to cash used to fund our loss from operations for the three months ended March 31, 2022.

Liquidity and Financial Condition

Three Months Ended

$ (1,574,240 )

Net cash (used in) operating activities

2 unchanged sentences

Effect of foreign currency translation

Increase in cash and cash equivalents

Flows From Operating Activities

cash used in operating activities for the nine months ended September 30, 2021 was $1,429,725, as compared to net cash used in operating

activities of $23,970 for the period from May 12, 2020 (inception) to September 30, 2020.

This increase was primarily attributable to

legal and professional fees.

Flows From Investing Activities

cash used in investing activities for the nine months ended September 30, 2021 was $8,570 for the purchase of equipment.

the period from May 12, 2020 (inception) to September 30, 2020, there were no cash transactions related to investing activities.

Flows From Financing Activities

cash provided by financing activities for the nine months ended September 30, 2021, was $21,763,726, primarily from the sale of 4,800,000

Units in our Initial Public Offering.

the period from May 12, 2020 (inception) to September 30, 2020, we received $33,000 from the sale of our common stock.

& Capital Resources Outlook

of September 30, 2021, we had approximately $20.5 million of working capital.

Our liquidity needs prior to the consummation of our Initial

Public Offering had been satisfied through proceeds from the issuance of common stock in private placements.

Subsequent to the consummation

of the Initial Public Offering, our liquidity is satisfied through the net proceeds from the Initial Public Offering.

Based on the foregoing,

management believes that we will have sufficient working capital to meet our needs through twelve months from the date of these financial

Sheet Arrangements

did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act.

Obligations and Commitments

did not have any contractual obligations.

Accounting Policies

of Presentation

accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and are unaudited.

information and disclosures normally included in consolidated financial statements prepared in accordance with U.S.

GAAP have been condensed

The condensed consolidated balance sheet as of December 31, 2020 was derived from our audited financial statements but does

not include all disclosures required by U.S.

Accordingly, these unaudited condensed consolidated financial statements should be

read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Form S-1 Registration

Statement, as filed with the Securities and Exchange Commission on April 13, 2021, as amended.

The results of operations for the three

and nine months ended September 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021 or for any

future period.

of Consolidation

Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810, “Consolidation,” (“ASC

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Pasithea Therapeutics

Limited (UK) and Pasithea Clinics Inc.

All significant consolidated transactions and balances have been eliminated in consolidation.

These condensed consolidated financial statements are presented in U.S.

Growth Company

Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our

Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements

that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required

to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations

regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding

advisory vote on executive compensation and approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1)

of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until

private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class

of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging

growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition

period which means that when a standard is issued or revised and it has different application dates for public or private companies,

the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised

This may make comparison of the Company’s unaudited consolidated financial statements with another public company which

is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult

or impossible because of the potential differences in accounting standards used.

preparation of financial statement in conformity with U.S.

GAAP requires the Company’s management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statement and the reported amounts of revenues and expenses during the reporting period.

estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate of the effect of

a condition, situation or set of circumstances that existed at the date of the financial statement, which management considered in formulating

its estimate, could change in the near term due to one or more future confirming events.

Accordingly, the actual results could differ

significantly from those estimates.

and cash equivalents

Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

costs consist of professional fees, filing, regulatory and other costs incurred through the balance sheet date that are directly related

to the Initial Public Offering.

Company accounts for its Public and Representative Warrants (each, the “Public Warrants” and “Representative Warrants”

and, collectively, the “Warrants”) in accordance with the guidance contained in ASC 815 under which the Warrants do not meet

the criteria for equity treatment and must be recorded as derivative liabilities.

Accordingly, the Company classifies the Warrants as

liabilities at their fair value and adjusts the Warrants to fair value at each reporting period.

This liability is subject to re-measurement

at each balance sheet date until the Warrants are exercised or expire, and any change in fair value is recognized in the Company’s

statement of operations.

The fair value of the Public and Representative Warrants was initially and subsequently measured at the end

of each reporting period, using a Black-Scholes option pricing model.

Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax

assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement

carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included

the enactment date.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be

740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions

taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more likely than not to be

sustained upon examination by taxing authorities.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits

as income tax expense.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30,

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation

from its position.

The Company is subject to income tax examinations by major taxing authorities since inception.

Concentration

of Credit Risk

instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,

which, at times, may exceed the Federal Depository Insurance Coverage of $250,000.

As of September 30, 2021, the Company has not experienced

losses on this account and management believes the Company is not exposed to significant risks on such account.

Value of Financial Instruments

fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements

and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term

Value Measurements

value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction

between market participants at the measurement date.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs

used in measuring fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets

or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

These tiers include:

1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments

in active markets;

2, defined as inputs other than quoted prices in active markets that are either directly

or indirectly observable such as quoted prices for similar instruments in active markets

or quoted prices for identical or similar instruments in markets that are not active;

3, defined as unobservable inputs in which little or no market data exists, therefore requiring

an entity to develop its own assumptions, such as valuations derived from valuation techniques

in which one or more significant inputs or significant value drivers are unobservable.

some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.

those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input

that is significant to the fair value measurement.

Loss Per Share

loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period.

Diluted earnings per share is computed similar to basic earnings per share, except the weighted average number of common shares outstanding

are increased to include additional shares from the assumed exercise of share options, if dilutive.

There are no outstanding dilutive

or potentially dilutive instruments.

Currency Translations

Company’s functional and reporting currency is the U.S.

All transactions initiated in other currencies are translated into

dollars using the exchange rate prevailing on the date of transaction.

Monetary assets and liabilities denominated in foreign currencies

are translated into the U.S.

dollar at the rate of exchange in effect at the balance sheet date.

Unrealized exchange gains and losses

arising from such transactions are deferred until realization and are included as a separate component of stockholders’ equity

(deficit) as a component of comprehensive income or loss.

Upon realization, the amount deferred is recognized in income in the period

when it is realized.

Comprehensive

Income (Loss)

220, “Comprehensive Income,” establishes standards for reporting and display of comprehensive income and its components

in a full set of general-purpose financial statements.

As of September 30, 2021, the Company had no material items of other comprehensive

income except for the foreign currency translation adjustment.

Accounting Pronouncements

does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material

effect on the Company’s financial statements.

Increase (decrease) in cash and cash equivalents

$ (2,645,500 )

Cash and cash equivalents decreased by $2,645,500

for the three months ended March 31, 2022, which was primarily attributable to cash used to fund our loss from operations and make equipment

purchases during the period.

Liquidity & Capital Resources Outlook

As of March 31, 2022, we had $50,321,206 in our operating bank accounts

and working capital of $50,516,262.

Our liquidity needs prior to the consummation of the Initial Public Offering had been satisfied through

proceeds from the issuance of common stock in private placements.

Subsequent to the consummation of the Initial Public Offering and the

November 2021 Private Placement, our liquidity was and will continue to be satisfied through the net proceeds from the consummation of

the Initial Public Offering and the November 2021 Private Placement.

Based on the foregoing, management believes that we will have sufficient

working capital to meet our needs through twelve months from the issuance date of the financial statements included in this quarterly

Contractual Obligations

See Note 4 – Commitments and Contingencies

in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a summary of our contractual

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements

as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act.

Critical Accounting Policies and Estimates

Our critical accounting policies, which include (1)

revenue recognition, (2) stock-based compensation and (3) fair value measurements, are more fully described in the notes to our financial

statements included in our 10-K for the fiscal year ended December 31, 2021.

We believe that the following critical accounting estimates

are particularly subject to management’s judgment and could materially affect our financial condition and results of operations:

● Assumptions used in the Black-Scholes pricing model for valuation

of stock option awards, such as expected volatility, risk-free interest rate, expected term and expected dividends.

● Valuation of the liability for Representative Warrants, for

which there is no active market, based on the relative fair value to the quoted market price of the Public Warrants, accounting for a

small difference in the exercise price.

and Qualitative Disclosures about Market Risk

Not Applicable.

As a smaller reporting company, we are not

required to provide the information required by this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis