What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-11 compared with 2023-05-12 · 419 added, 384 removed, 201 unchanged (80% of the section changed)

Financial Statements

PASITHEA THERAPEUTICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2023

December 31, 2022

THERAPEUTICS CORP.

CONSOLIDATED BALANCE SHEETS

Current assets:

Cash and cash equivalents

Due from related party

Amount due from sale of assets

Prepaid expenses

22 unchanged sentences

Common stock, par value $ 0.0001 , 495,000,000 shares authorized;

and 26,043,406 shares issued and outstanding as of March 31, 2023, and December 31, 2022, respectively

26,143,407 and 26,043,406 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

5 unchanged sentences

Total liabilities and stockholders’ equity

The accompanying notes are in integral part of these

unaudited condensed consolidated financial statements.

PASITHEA THERAPEUTICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

For the Three Months Ended

See accompanying notes to the unaudited condensed

consolidated financial statements.

THERAPEUTICS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Operating expenses:

4 unchanged sentences

( 2,611,559 )

Other income (expense):

( 7,041,253 )

( 4,690,437 )

Other income:

Change in fair value of warrant liabilities

Interest expense, net

Other (expense) income, net

Interest and dividends, net

Other income, net

Loss before income taxes

1 unchanged sentence

( 2,189,859 )

( 6,863,894 )

( 3,483,440 )

Provision for income taxes

2 unchanged sentences

$ ( 2,189,859 )

Net loss from discontinued operations

$ ( 6,863,894 )

$ ( 3,483,440 )

Net loss from discontinued operations, net of tax

$ ( 3,763,230 )

$ ( 2,658,394 )

$ ( 7,300,909 )

$ ( 4,232,634 )

Weighted-average common shares outstanding, basic and diluted

4 unchanged sentences

$ ( 2,658,394 )

Foreign currency translation

$ ( 7,300,909 )

$ ( 4,232,634 )

Foreign currency translation

Comprehensive loss

1 unchanged sentence

$ ( 2,707,379 )

The accompanying notes are in integral part of these

unaudited condensed consolidated financial statements.

PASITHEA THERAPEUTICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY

$ ( 7,303,709 )

$ ( 4,286,132 )

See accompanying notes to the unaudited condensed

consolidated financial statements.

THERAPEUTICS CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Comprehensive

2 unchanged sentences

$ ( 19,356,880 )

Stock-based compensation expense

Stock-based compensation:

-restricted share units

-restricted stock

Foreign currency translation

3 unchanged sentences

$ ( 22,894,559 )

Stock-based compensation:

-restricted share units

Foreign currency translation

( 3,763,230 )

Balance at June 30, 2023

$ ( 26,657,789 )

Balance at January 1, 2022

$ ( 2,214,505 )

Stock-based compensation:

Stock-based compensation expense:

-restricted share units

-restricted stock

Foreign currency translation

3 unchanged sentences

$ ( 3,788,745 )

The accompanying notes are in integral part of these

unaudited condensed consolidated financial statements.

PASITHEA THERAPEUTICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

Stock-based compensation expense:

-restricted share units

-restricted stock

Warrants issued for acquisition

Common shares issued for acquisition

Foreign currency translation

( 2,658,394 )

Balance at June 30, 2022

$ ( 6,447,139 )

See accompanying notes to the unaudited condensed

consolidated financial statements.

THERAPEUTICS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss from continuing operations

$ ( 6,863,894 )

4 unchanged sentences

Change in fair value of warrant liabilities

( 1,206,997 )

Non-cash lease expense

Gain on sale of assets

Changes in operating assets and liabilities:

Due from related party

Prepaid expenses

Accounts payable and accrued liabilities

Lease liabilities

Net cash used in operating activities

3 unchanged sentences

Purchase of property and equipment

Net cash used in investing activities

Net cash proceeds from sale of assets

Acquisition of business, net of cash acquired

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

4 unchanged sentences

Net cash used in operating activities of discontinued operations

Net cash used in investing activities of discontinued operations

Net cash provided by (used in) investing activities of discontinued operations

Net cash used in financing activities of discontinued operations

4 unchanged sentences

Cash – End of period

The accompanying notes are in integral part of these

unaudited condensed consolidated financial statements.

PASITHEA THERAPEUTICS CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Pasithea Therapeutics

(“Pasithea” or the “Company”) was incorporated in the State of Delaware on May 12, 2020 and completed an

Initial Public Offering (the “Initial Public Offering”) on September 17, 2021.

The Company is a biotechnology company focused

on the discovery, research and development of innovative treatments for central nervous system (CNS) disorders and other diseases.

Company is leveraging its expertise in the fields of neuroscience, translational medicine, and drug development to advance new molecular

entities that target the pathophysiology underlying such diseases with the goal of bringing life-changing therapies to patients.

The Company’s

therapeutic pipeline currently consists of four programs.

The Company’s lead product candidate, PAS-004, is a next-generation macrocyclic

mitogen-activated protein kinase, or MEK inhibitor that the Company believes may address the limitations and liabilities associated with

existing drugs targeting a similar mechanism of action.

The remaining three programs are in the discovery stage, which the Company believes

address limitations in the treatment paradigm of the indications the Company plans to address with these programs, which are currently

amyotrophic lateral sclerosis (“ALS”), multiple sclerosis (“MS”) and schizophrenia.

Through December

31, 2022, the Company operated a Clinics business that was focused on providing business support services to anti-depression clinics in

Supplemental disclosure of cash flow information:

Amount due from sale of assets

See accompanying notes to the unaudited condensed

consolidated financial statements.

THERAPEUTICS CORP.

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

1 – NATURE OF THE ORGANIZATION AND BUSINESS

Therapeutics Corp.

(“Pasithea” or the “Company”) was incorporated in the State of Delaware on May 12, 2020 and

completed an initial public offering (the “Initial Public Offering”) on September 17, 2021.

The Company is a biotechnology

company focused on the discovery, research, and development of innovative treatments for central nervous system (CNS) disorders and other

The Company is leveraging its expertise in the fields of neuroscience, translational medicine, and drug development to advance

new molecular entities that target the pathophysiology underlying such diseases with the goal of bringing life-changing therapies to

Company’s therapeutic pipeline currently consists of four programs.

The Company’s lead product candidate, PAS-004, is a next-generation

macrocyclic mitogen-activated protein kinase, or MEK inhibitor that the Company believes may address the limitations and liabilities

associated with existing drugs targeting a similar mechanism of action.

The remaining three programs are in the discovery stage, which

the Company believes address limitations in the treatment paradigm of the indications the Company plans to address with these programs,

which are currently amyotrophic lateral sclerosis (“ALS”), multiple sclerosis (“MS”) and schizophrenia.

December 31, 2022, the Company operated a Clinics business that was focused on providing business support services to anti-depression

clinics in the U.K.

and in the United States.

Its operations in the U.K.

involved providing business support services to registered healthcare providers

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

Its operations in the United States involved providing

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

Operations in the

and the United States were conducted through partnerships with healthcare providers and the Company did not provide professional

medical services or psychiatric assessments.

During the first

quarter of 2023, we discontinued our at-home services in New York, NY as well as our services in the U.K.

In addition, we discontinued

our clinical operations in Los Angeles, CA and are actively exploring options for the disposal of related property.

Accordingly, as of

the date of this Quarterly Report on Form 10-Q, we have discontinued the operations of our Clinics segment.

involved providing business support services to registered healthcare

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

Its operations in the United States

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

Operations in the U.K.

and the United States were conducted through partnerships with healthcare providers and the Company did not provide

professional medical services or psychiatric assessments.

During the three months ended as of March 31,

2023, we discontinued our at-home services in New York, NY as well as our services in the U.K.

During the three months ended as of June

30, 2023, we sold our assets associated with the Clinics operations in Los Angeles, CA and the lease associated with the related property

was assumed by the buyer in the transaction.

Accordingly, as of the date of this Quarterly Report on Form 10-Q, the previously discontinued

operations of our Clinics segment have been disposed of.

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

and its subsidiaries, Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, Pasithea Clinics Corp, Alpha-5 Integrin, LLC, and

AlloMek Therapeutics, LLC.

Pasithea Therapeutics Limited (U.K.) is a private limited Company, registered in the United Kingdom (U.K.).

Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda is a private limited Company, registered in Portugal.

and its subsidiaries, Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, Pasithea

Clinics Corp, Alpha-5 Integrin, LLC, and AlloMek Therapeutics, LLC.

Pasithea Therapeutics Limited (U.K.) is a private limited Company,

registered in the United Kingdom (U.K.).

Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda is a private limited Company, registered

Pasithea Clinics Corp.

is incorporated in Delaware.

Alpha-5 Integrin, LLC is Delaware limited liability company.

AlloMek Therapeutics, LLC is Delaware limited

liability company.

The 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.

Alpha-5 Integrin, LLC is a Delaware limited liability company.

Therapeutics, LLC is a Delaware limited liability company.

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.

Growth 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

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.

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.

may make comparison of the Company’s condensed 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.

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 condensed 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.

and Capital Resources

31, 2023, the Company had approximately $ 29.9 million of cash and cash equivalents and working capital of approximately $ 29.2 million.

The Company’s major sources of cash have been comprised of proceeds from various private offerings, the Initial Public Offering

and exercise of warrants.

The Company is dependent on obtaining additional working capital funding from the sale of equity and/or

debt securities to continue to execute its development plans and continue operations.

Based on the foregoing, management believes

that the Company will have sufficient working capital to meet its needs through twelve months from the date of these condensed consolidated

financial statements.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

Principles of Consolidation

The Company evaluates the need to consolidate affiliates

based on standards set forth in Accounting Standards Codification (“ASC”) 810, “Consolidation,” (“ASC 810”).

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

Limited (U.K.) and Pasithea Clinics Corp.

As of June 30, 2023, the Company had approximately

$ 26.6 million of cash and cash equivalents and working capital of approximately $ 25.8 million.

The Company’s major sources

of cash have been comprised of proceeds from various private offerings, the Initial Public Offering, and the prior exercise of warrants.

Company is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities to continue to execute

its development plans and continue operations.

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

working capital to meet its needs through twelve months from the date of these condensed consolidated financial statements.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Consolidation

Company evaluates the need to consolidate affiliates based on standards set forth in Accounting Standards Codification (“ASC”)

810, “Consolidation,” (“ASC 810”).

The condensed consolidated financial statements include the accounts of the

Company and its wholly owned subsidiaries, Pasithea Therapeutics Limited (U.K.) and Pasithea Clinics Corp.

(“Pasithea Clinics”).

All significant intercompany transactions and balances have

been eliminated in consolidation.

These condensed consolidated financial statements

are presented in U.S.

Use of Estimates

The preparation

of financial statements 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.

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

condensed consolidated financial statements are presented in U.S.

preparation of financial statements 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 statements, which management considered

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

Management regularly makes

estimates related to the fair value of warrant liabilities;

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 statements, which management considered in formulating

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

Management regularly makes estimates related

to the fair value of warrant liabilities;

the recoverability of long-lived assets;

the fair values and useful

lives of intangible assets acquired in business combinations;

the fair values and useful lives of intangible assets

acquired in business combinations;

the potential impairment of goodwill;

and income taxes.

bases its estimates on historical experience and on various assumptions that are believed to be reasonable, the results of which

form the basis for the amounts recorded in the condensed consolidated financial statements.

As appropriate, the Company obtains

reports from third-party valuation experts to inform and support estimates related to fair value measurements.

The Company bases its estimates on historical

experience and on various assumptions that are believed to be reasonable, the results of which form the basis for the amounts recorded

in the consolidated financial statements.

As appropriate, the Company obtains reports from third-party valuation experts to inform and

support estimates related to fair value measurements.

and Development

development costs are charged to operations when incurred and are included in operating expense, except for goodwill related to intellectual

property & patents.

Research and development costs consist principally of compensation of employees and consultants that perform the

Company’s research activities, payments to third parties for preclinical and non-clinical activities, costs to acquire drug product

from contract development and manufacturing organizations and third-party contractors relating to chemistry, manufacturing and controls

(“CMC”) efforts, the fees paid for and to maintain the Company’s intellectual property, and research and development

costs related to our discovery programs.

Depending upon the timing of payments to the service providers, the Company recognizes prepaid

expenses or accrued expenses related to these costs.

These accrued or prepaid expenses are based on management’s estimates of the

work performed under service agreements, milestones achieved and experience with similar contracts.

The Company monitors each of these

factors and adjusts estimates accordingly.

Cash and cash equivalents

The Company considers all short-term investments

with an original maturity of three months or less when purchased to be cash equivalents.

The Company had $ 10.0 million of cash equivalents

consisting of marketable securities in U.S.

government money market funds as of March 31, 2023, and did not have any cash equivalents

as of December 31, 2022.

Property and Equipment

Property and equipment is recorded at cost.

is computed using straight-line and accelerated methods over the estimated useful lives of the related assets.

Expenditures that enhance

the useful lives of the assets are capitalized and depreciated.

and development costs are charged to operations when incurred and are included in operating expense, except for goodwill related

to intellectual property & patents.

Our research and development costs consist principally of compensation of employees and consultants

that perform the Company’s research activities, payments to third parties for preclinical, non-clinical and regulatory activities,

costs to acquire drug product from contract development and manufacturing organizations and third-party contractors relating to chemistry,

manufacturing and controls (“CMC”) efforts, the fees paid for and to maintain the Company’s intellectual property,

and research and development costs related to our discovery programs.

Depending upon the timing of payments to the service providers,

the Company recognizes prepaid expenses or accrued expenses related to these costs.

These accrued or prepaid expenses are based on management’s

estimates of the work performed under service agreements, milestones achieved and experience with similar contracts.

The Company monitors

each of these factors and adjusts estimates accordingly.

General and Administrative

selling, general and administrative expenses primarily consist of personnel and related costs, including stock-based compensation, legal

fees relating to both intellectual property and corporate matters, accounting and audit related costs, insurance, corporate communications

and public company expenses, information technology, office and facility rents and related expenses, including depreciation, amortization

and maintenance, and fees for consulting, business development and other professional services.

and Cash Equivalents

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

The Company had cash equivalents of $ 10.1 million as of June 30, 2023, and did not have any cash equivalents as of December 31, 2022.

and Equipment

and equipment is recorded at cost, net of depreciation.

Depreciation is computed using straight-line and accelerated methods over the

estimated useful lives of the related assets.

Expenditures that enhance the useful lives of the assets are capitalized and depreciated.

Maintenance and repairs are expensed as incurred.

When properties are

retired or otherwise disposed of, related costs and related accumulated depreciation are removed from the accounts.

Warrant Liability

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

and, collectively, the “IPO Warrants”) in accordance with the guidance contained in ASC 815, “Derivatives and Hedging,”

under which the IPO Warrants do not meet the criteria for equity treatment and must be recorded as derivative liabilities.

the Company classifies the IPO Warrants as liabilities at their fair value and adjusts the IPO Warrants to fair value at each reporting

This liability is subject to re-measurement at each balance sheet date until the IPO Warrants are exercised or expire, and any

change in fair value is recognized in the Company’s condensed consolidated statement of operations and comprehensive loss.

value of the Public and Representative Warrants was initially measured at the end of each reporting period, using a Black-Scholes option

pricing model.

As of March 31, 2023, the fair value of the Public Warrants was measured using quoted market prices, and the fair value

of the Representative Warrants was based on an estimate of the relative fair value to the Public Warrants, accounting for a small difference

When properties are retired or otherwise disposed of, related costs and related accumulated

depreciation are removed from the accounts.

The Company accounts for the publicly traded warrants

issued in its Initial Public Offering (the “Public Warrants”) and the warrants issued as compensation to the underwriters

in its Initial Public Offering (the “Representative Warrants” and together with the Public Warrants, the “IPO Warrants”)

in accordance with the guidance contained in ASC 815, “Derivatives and Hedging,” under which the IPO Warrants do not meet

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

Accordingly, the Company classifies the IPO Warrants

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

This liability is subject to re-measurement

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

condensed consolidated statement of operations and comprehensive loss.

The fair value of the IPO Warrants was initially measured using

a Black Scholes pricing model.

Currently, the fair value of the Public Warrants is measured using quoted market prices, and the fair value

of the Representative Warrants is based on an estimate of the relative fair value to the Public Warrants, accounting for a small difference

in the exercise price.

Concentration of Credit Risk

Financial 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 March 31, 2023, the Company has not experienced losses on this account and management

believes the Company is not exposed to significant risks on such account.

Fair Value of Financial Instruments

Except for liabilities related to the IPO Warrants, described in the

table below, the 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 condensed consolidated balance

sheets, primarily due to their short-term nature.

Fair Value Measurements

Fair 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).

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 June 30, 2023, 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

for liabilities related to the IPO Warrants, described in the table below, the 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 nature.

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:

Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

Level 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;

Level 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.

The following table presents information about the

Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of

the valuation inputs the Company utilized to determine such fair value:

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.

following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring

basis and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Fair value measurements at reporting date using:

Quoted prices

for identical

Cash equivalents

Public warrant liabilities, March 31, 2023

Representative warrant liabilities, March 31, 2023

Public warrant liabilities, December 31, 2022

Representative warrant liabilities, December 31, 2022

The following

table presents a reconciliation of the Level 3 representative warrant liabilities for December 31, 2021 through March 31, 2022:

Representative warrant liabilities, December 31, 2021

Cash equivalents, June 30, 2023

Public Warrants, June 30, 2023

Representative Warrants, June 30, 2023

Public Warrants, December 31, 2022

Representative Warrants liabilities, December 31, 2022

following table presents a reconciliation of the Level 3 Representative Warrants liabilities:

For the three months ended

Beginning balance, March 31

Change in fair value

Representative warrant liabilities, March 31, 2022

The following

table presents a reconciliation of the Level 3 representative warrant liabilities for December 31, 2022 through March 31, 2023:

Representative warrant liabilities, December 31, 2022

Ending balance, June 30

For the six months ended

Beginning balance, December 31

Change in fair value

Representative warrant liabilities, March 31, 2023

The change in

fair value of the representative warrant liabilities is recorded in change in fair value of warrant liabilities on the condensed consolidated

statement of operations and comprehensive loss.

The fair value

of the cash equivalents is based on the fair value of marketable securities invested in U.S.

Ending balance, June 30

The change in fair value of the Representative

Warrants liabilities is recorded in change in fair value of warrant liabilities on the condensed consolidated statement of operations

and comprehensive loss.

fair value of the cash equivalents is based on the fair value of marketable securities invested in U.S.

government money market funds.

The fair value

of the liability associated with the Public Warrants as of March 31, 2023 was based on the quoted closing price on The Nasdaq Capital

Market and is classified as Level 1.

The fair value of the liability associated with the Representative Warrants as of March 31, 2023

was based on an estimate of the relative fair value to the Public Warrants, accounting for a small difference in the exercise price, and

is classified as Level 3.

In some circumstances,

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

In 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.

Net Loss Per Share

Net 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.

The following outstanding shares issuable upon exercise of stock options and

warrants and vesting of restricted stock units were excluded from the computation of diluted net loss per share for the periods presented

because including them would have had an anti-dilutive effect:

Three months ended

fair value of the liability associated with the Public Warrants as of June 30, 2023 was based on the quoted closing price on The Nasdaq

Capital Market and is classified as Level 1.

The fair value of the liability associated with the Representative Warrants as of June 30,

2023 was based on an estimate of the relative fair value to the Public Warrants, accounting for a small difference in the exercise price,

and is classified as Level 3.

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 similarly to the 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.

The following outstanding

shares issuable upon exercise of stock options and warrants and vesting of restricted stock units were excluded from the computation

of diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect:

Six months ended

June 30, 2023

Stock options

Restricted stock units

Foreign Currency Translations

The Company’s functional and reporting currency

All transactions initiated in other currencies are translated into U.S.

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

Upon realization, the amount deferred is recognized in income in the period when it is realized.

Translation of Foreign Operations

The financial results and position of foreign operations

whose functional currency is different from the Company’s presentation currency are translated as follows:

assets and liabilities are translated at period-end exchange rates prevailing at that reporting date;

equity is translated at historical exchange rates;

income and expenses are translated at average exchange rates for the period.

Exchange differences arising on translation of foreign

operations are transferred directly to the Company’s accumulated other comprehensive loss in the condensed consolidated financial

Transaction gains and losses arising from exchange rate fluctuation on transactions denominated in a currency other than the

functional currency are included in the condensed consolidated statements of operations and comprehensive loss.

The relevant translation rates are as follows:

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.

of Foreign Operations

financial results and position of foreign operations whose functional currency is different from the Company’s presentation currency

are translated as follows:

and liabilities are translated at period-end exchange rates prevailing at that reporting date;

is translated at historical exchange rates;

and expenses are translated at average exchange rates for the period.

differences arising on translation of foreign operations are transferred directly to the Company’s accumulated other comprehensive

loss in the condensed consolidated financial statements.

Transaction gains and losses arising from exchange rate fluctuation on transactions

denominated in a currency other than the functional currency are included in the condensed consolidated statements of operations and

comprehensive loss.

relevant translation rates are as follows:

Closing rate, British Pound (GBP) to $USD at period end

2 unchanged sentences

Average rate, EUR to $USD for the period ended

Comprehensive Income (Loss)

ASC 220, “Comprehensive Income,” establishes

standards for reporting and display of comprehensive income (loss) and its components in a full set of general-purpose financial statements.

As of March 31, 2023 and December 31, 2022, the Company had no material items of other comprehensive income (loss) except for the foreign

currency translation adjustment.

Recent Accounting Pronouncements

Management 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

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial

Instruments - Credit Losses, which requires entities to estimate all expected credit losses for financial assets measured at amortized

cost basis, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable

and supportable forecasts.

The Company adopted this guidance on March 31, 2023.

The adoption of this accounting standard did not have

a material impact to the Company’s condensed consolidated financial statements.

NOTE 3 – PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:

Comprehensive

Income (Loss)

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

in a full set of general-purpose financial statements.

As of June 30, 2023 and December 31, 2022, the Company had no material items of

other comprehensive income (loss) 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.

Adopted Accounting Pronouncements

June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, which requires entities to estimate

all expected credit losses for financial assets measured at amortized cost basis, including trade receivables, held at the reporting

date based on historical experience, current conditions, and reasonable and supportable forecasts.

The Company adopted this guidance

on March 31, 2023.

The adoption of this accounting standard did not have a material impact to the Company’s condensed consolidated

financial statements.

3 – PROPERTY AND EQUIPMENT, NET

and equipment, net consists of the following:

Leasehold improvements

4 unchanged sentences

Property and equipment, net

NOTE 4 – LEASES

Lease – South San Francisco, California

In August 2022,

the Company, as a lessee, entered into an amended sublease agreement to sublease laboratory and office space in South San Francisco, California.

August 2022, the Company, as a lessee, entered into an amended sublease agreement to sublease laboratory and office space in South San

Francisco, California.

The lease commenced on August 15, 2022.

The term of this sublease is for a period of thirty-nine and one-fourth (39.25) months commencing

on the effective date, until May 15, 2024.

The lease has a gross monthly rent of $ 16,171 per month, which will increase to $ 16,656 beginning

January 1, 2024.

was accounted for as an operating lease under ASC 842, Leases, which resulted in the recognition of a right of use asset (“ROU

The term of this sublease is for a period of thirty-nine and one-fourth

(39.25) months commencing on the effective date, until May 15, 2024.

The lease has a gross monthly rent of $ 16,171 per month, which

will increase to $ 16,656 beginning January 1, 2024.

lease was accounted for as an operating lease under ASC 842, Leases, which resulted in the recognition of a right of use asset (“ROU

asset”) and liability of approximately $ 569,000 at inception.

The ROU asset is recorded as a component of non-current

assets and the liability a component of current and non-current liabilities on the Company’s condensed consolidated balance

The Company discounted the future lease payments of this lease using the prevailing collateralized lending rate which would

be extended to the Company based on its credit profile relative to the period of inception, and the duration of the lease from

The interest rate used in calculating the fair value listed above was 7.8 %.

Medical Office

Lease – West Hollywood, California

In March 2022,

the Company entered into an agreement to lease a medical office in West Hollywood, California.

The lease commenced on April 1, 2022.

lease is attributable to the Clinics segments which was discontinued as of March 31, 2023.

See Note 10, Discontinued Operations for more information related.

31, 2023, the Company recognized total ROU assets and lease liabilities as follows:

Non-current leases

- right of use assets

Current liabilities - operating

lease liabilities

Non-current liabilities -

operating lease liabilities

The ROU asset is recorded as a component of non-current assets

and the liability a component of current and non-current liabilities on the Company’s consolidated balance sheets.

discounted the future lease payments of this lease using the prevailing collateralized lending rate which would be extended to the Company

based on its credit profile relative to the period of inception, and the duration of the lease from inception.

The interest rate used

in calculating the fair value listed above was 7.8 %.

of June 30, 2023, the Company recognized total ROU assets and lease liabilities as follows:

Non-current leases – right of use assets

Current liabilities – operating lease liabilities

Non-current liabilities – operating lease liabilities

Operating lease expense

Cash paid for amounts included

in the measurement of operating lease liabilities

The following table summarizes the maturity of the

Company’s operating lease payments as of March 31, 2023:

Cash paid for amounts included in the measurement of operating lease liabilities

following table summarizes the maturity of the Company’s operating lease payments as of June 30, 2023:

2023 (remaining)

2 unchanged sentences

Present value of net future minimum lease payments

NOTE 5 – INTANGIBLE ASSETS AND GOODWILL

Intangible assets,

net consists of the following:

In-process research

and development

and intellectual property

5 – INTANGIBLE ASSETS AND GOODWILL

assets, net consists of the following:

June 30, 2023

December 31, 2022

In-process research and development

Patents and intellectual property

Intangible assets, net

$ ( 157,541 )

31, 2023, future expected amortization expense of Intangible assets was as follows:

of June 30, 2023, future expected amortization expense of Intangible assets was as follows:

Remaining future amortization expense

There were no changes to goodwill for the three months

ended March 31, 2023.

were no changes to goodwill for the six months ended June 30, 2023.

NOTE 6 – STOCKHOLDERS’ EQUITY

The Company had 26,126,740 and 26,043,406 shares of

its Common Stock issued and outstanding at March 31, 2023 and 2022, respectively.

Common Stock Issuances for the Three Months Ended

March 31, 2023

During the three months ended March 31, 2023, the

Company issued 83,334 shares of common stock due to the vesting of restricted stock units, and recognized approximately $ 24,000 of stock-based

compensation expense related to its outstanding restricted stock units.

Stock-based compensation expense related to the Company’s

restricted stock units is recognized within selling, general and administrative expense.

As of March 31, 2023, remaining unamortized RSU

stock-based compensation expense was approximately $ 165,500 .

The Company did not grant any restricted stock units

or restricted stock during the three months ended March 31, 2023.

The Company had 26,143,407 and 26,698,688 shares

of its Common Stock issued and outstanding at June 30 , 2023 and 2022, respectively.

Common Stock Issuances for the Three and Six

Months Ended June 30 , 2023

During the three and six months ended June

30 , 2023, the Company issued 16,667 and 100,001 shares of common stock, respectively, due to the vesting of restricted stock units

(“RSUs”), and recognized approximately $ 24,000 and $ 48,000 , respectively, of stock-based compensation expense related to its

outstanding restricted stock units.

Stock-based compensation expense related to the Company’s restricted stock units is recognized

within selling, general and administrative expense.

30 , 2023, remaining unamortized RSU stock-based compensation expense was approximately $ 142,000 .

The Company did not grant any RSUs or restricted

stock during the three and six months ended June 30 , 2023.

NOTE 7 – STOCK OPTIONS

During the three months ended March 31, 2023, the

Stock Options Issued, Vested and Cancelled

During the three months ended June

30 , 2023, no stock options were issued.

During the three months ended June 30 , 2023,

stock options to purchase an aggregate of 333,334 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

During the three months ended June

30 , 2023, stock options to purchase an aggregate of 200,000 shares of Common Stock were cancelled.

During the six months ended June 30, 2023, the

Company issued stock options under the 2021 Plan to employees, to purchase an aggregate of 880,000 shares of Common Stock with a strike

3 unchanged sentences

These options had a total

fair value of approximately $ 288,000 , as calculated using the Black-Scholes model with a volatility assumption of 68.64 %.

During the three months ended March 31, 2023, stock

options to purchase an aggregate of 16,667 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

For the three

months ended March 31, 2023 and 2022, total stock-based compensation expense related to the Company’s stock options was approximately

fair value of approximately $ 288,000 , as calculated using the Black-Scholes pricing model with a volatility assumption of 68.64 %.

During the six months ended June

30 , 2023, stock options to purchase an aggregate of 350,001 shares of Common Stock, subject to time-based milestone vesting conditions,

During the six months ended June 30 , 2023, stock options to purchase an aggregate

of 200,000 shares of Common Stock were cancelled.

Stock-Based Compensation

three months ended June 30, 2023 and 2022, total stock-based compensation expense related to the Company’s stock options was approximately

$ 195,000 and approximately $ 100,000 , respectively.

For the three months ended March 31, 2023, the Company recognized approximately

For the three months ended June 30, 2023, the Company recognized approximately

$ 136,000 of stock-based compensation related to its options within selling, general and administrative expense, and approximately $ 59,000

within research and development expense.

For the three months ended March 31, 2022, all stock-based compensation expense was recorded

within Selling, general and administrative expense.

For the three months ended June 30, 2022, all stock-based compensation expense was recorded within

selling, general and administrative expense.

six months ended June 30, 2023 and 2022, total stock-based compensation expense related to the Company’s stock options was approximately

$ 348,000 and approximately $ 194,000 , respectively.

For the six months ended June 30, 2023, the Company recognized approximately $ 267,000

of stock-based compensation related to its options within selling, general and administrative expense, and approximately $ 81,000 within

research and development expense.

For the six months ended June 30, 2022, all stock-based compensation expense was recorded within selling,

general and administrative expense.

The following

table summarizes the activity related to the Company’s stock options for the three months ended March 31, 2023:

table summarizes the activity related to the Company’s stock options for the six months ended June 30, 2023:

(in thousands)

1 unchanged sentence

Expired/Cancelled

March 31, 2023

Exercisable, March 31, 2023

As of March 31, 2023, remaining unamortized stock-based

compensation expense related to the stock options was approximately $ 776,000 .

Outstanding, June 30, 2023

Exercisable, June 30, 2023

30 , 2023, remaining unamortized stock-based compensation expense related to the stock options was approximately $ 581,000 .

NOTE 8 – WARRANTS

As of March 31, 2023, the fair value of the Public

Warrants was approximately $ 0.04 per Public Warrant based on the closing price of the warrants on The Nasdaq Capital Market.

value of the Representative Warrants was approximately $ 0.042 per Representative Warrant which was based on the relative fair value to

the Public Warrants.

30 , 2023, the fair value of the Public Warrants was approximately $ 0.02 per Public Warrant based on the closing price of the warrants

on The Nasdaq Capital Market.

The fair value of the Representative Warrants was approximately $ 0.02 per Representative Warrant which was

based on the relative fair value to the Public Warrants.

The following table summarizes the Company’s

3 unchanged sentences

average exercise

No warrants were granted during the three months

ended March 31, 2023.

No warrants were granted during the three and

six months ended June 30 , 2023.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

15 unchanged sentences

NOTE 10 – DISCONTINUED OPERATIONS

three months ended March 31, 2023, we discontinued our at-home services in New York, NY as well as our services in the U.K.

we discontinued our clinical operations in Los Angeles, CA and are actively exploring options for the disposal of related property.

as of the date of this Quarterly Report on Form 10-Q, we have discontinued the operations of our Clinics segment.

We have separately reported the assets and liabilities

of the discontinued operations in the condensed consolidated balance sheets.

The assets and liabilities have been

reflected as discontinued operations in the condensed consolidated balance sheets as of March 31, 2023, and consist of

the following:

Current assets of discontinued operations:

Cash and cash equivalents

Due from related party

Prepaid expenses

Other current assets

Total current assets of discontinued operations

Non-current assets of discontinued operations

Property and equipment, net

Right of use asset- operating lease

Intangibles, net

Total non-current assets of discontinued operations

Current liabilities of discontinued operations:

Accounts payable and accrued liabilities

Lease liability- short term portion

Total current liabilities of discontinued operations

Non-current liabilities of discontinued operations:

Lease liability

Warrant liabilities

Total non-current liabilities of discontinued operations

Total liabilities of discontinued operations

three months ended March 31, 2023, we discontinued our at-home services in New York, NY, our Clinics operations in Los Angeles, CA, as

well as our services in the U.K.

During the three months ended June 30, 2023, we sold our assets associated with the Clinics operations

in Los Angeles, CA, and the lease associated with the related property was assumed by the buyer in the transaction.

Accordingly, as of

June 30, 2023, the previously discontinued operations of our Clinics segment have been disposed of.

As of June 30, 2023, the carrying amounts of the

classes of assets and liabilities related to the discontinued operations of the Clinics operations were $ 0 .

The results of operations from discontinued operations for

the three months ended March 31, 2023 and 2022, have been reflected as discontinued operations in the condensed consolidated

statements of operations and consist of the following:

the three and six months ended June 30 , 2023 and 2022, have been reflected as discontinued operations in

the condensed consolidated statements of operations and consist of the following:

Three Months Ended

Six Months Ended

Cost of services

1 unchanged sentence

Loss from discontinued operations

$ ( 271,869 )

$ ( 325,659 )

Gain on forgiveness of accounts payable

Gain on sale of assets

Loss from discontinued operations, before income tax

Income tax expense

Net loss from discontinued operations, net of tax

Weighted-average common shares outstanding, basic and diluted

Basic and diluated loss per share from discontinued operations

In accordance with accounting principles generally accepted in the

United States (“GAAP”), only expenses specifically identifiable and related to a business to be disposed may be allocated

to discontinued operations.

As such, the selling, general and administrative and research and development expenses recorded in discontinued

operations include corporate costs incurred directly in support of the Clinics business.

The following table presents the gain on the sale

of assets in Los Angeles, CA:

Cash proceeds

Proceeds to receive in installments

Less transaction costs

Less book value of assets

Gain on sale, before income tax

Income tax expense

Gain on sale, net of tax

The following table presents non-cash items related

to discontinued operations, which are included in the Company’s unaudited condensed consolidated statement of cash flows:

Six months ended

Cash Flows From Operating Activities:

Gain on sale of assets

Supplemental disclosure of cash flow information:

Amount due from sale of assets

NOTE 11 – NOTE PAYABLE

5 unchanged sentences

The balance due

under this financing agreement was approximately $ 264,000 and $ 0 at March 31, 2023 and December 31, 2022, respectively.

under this financing agreement was approximately $ 133,000 and $ 0 at June 30 , 2023 and December 31,

2022, respectively.

NOTE 12 – SUBSEQUENT EVENTS

On July 20, 2023, the Company announced that its

Board of Directors authorized the repurchase, through a $ 4.0 million tender offer of up to approximately 5.7 million shares of the

Company’s outstanding common stock at a cash purchase price of $ 0.70 per share (the “Tender Offer”).

launched the Tender Offer on August 9, 2023, which is expected to expire on September 8, 2023, subject to the terms and conditions of

the Tender Offer.

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 1. Financial Statements