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Item 1. Financial Statements

2023-11-13 compared with 2023-08-11 · 413 added, 330 removed, 290 unchanged (72% of the section changed)

Financial Statements

THERAPEUTICS CORP.

CONSOLIDATED BALANCE SHEETS

PASITHEA THERAPEUTICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

25 unchanged sentences

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

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

20,836,623 and 26,043,406 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

7 unchanged sentences

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,

PASITHEA THERAPEUTICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Operating expenses:

6 unchanged sentences

( 8,546,161 )

Other income:

Other income (expense):

Change in fair value of warrant liabilities

Interest and dividends, net

Other income, net

Other income (expense), net

Loss before income taxes

14 unchanged sentences

$ ( 10,913,499 )

$ ( 8,818,764 )

Weighted-average common shares outstanding, basic and diluted

Basic and diluated loss per share from continuing operations

Basic and diluted loss per share from continuing operations

Basic and diluted loss per share from discontinuing operations

12 unchanged sentences

consolidated financial statements.

THERAPEUTICS CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

PASITHEA THERAPEUTICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Comprehensive

16 unchanged sentences

$ ( 26,657,789 )

Stock-based compensation:

-restricted share units

Stock repurchase

( 5,323,451 )

( 3,725,884 )

( 3,726,416 )

Foreign currency translation

( 3,612,590 )

Balance at September 30, 2023

$ ( 30,270,379 )

Balance at January 1, 2022

11 unchanged sentences

-restricted stock

-common stock

Warrants issued for acquisition

5 unchanged sentences

$ ( 6,447,139 )

Stock-based compensation expense:

-restricted share units

-restricted stock

Warrants issued for acquisition

Common shares issued for acquisition

Foreign currency translation

( 4,586,130 )

Balance at September 30, 2022

$ ( 146,573 )

$ ( 11,033,269 )

See accompanying notes to the unaudited condensed

consolidated financial statements.

THERAPEUTICS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

PASITHEA THERAPEUTICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Change in fair value of warrant liabilities

( 1,206,997 )

Non-cash lease expense

11 unchanged sentences

Acquisition of business, net of cash acquired

Net cash (used in) provided by investing activities

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

1 unchanged sentence

Principal payments on note payable

Net cash provided by financing activities

Repurchase of common stock

( 3,726,416 )

Net cash used in financing activities

( 3,726,416 )

Effect of foreign currency translation on cash

Net cash used in operating activities of discontinued operations

( 1,026,911 )

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

Net cash used in financing activities of discontinued operations

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

NET CHANGE IN CASH

1 unchanged sentence

$ ( 10,522,198 )

Cash – Beginning of period

Cash – End of period

Cash and cash equivalents - Beginning of period

Cash and cash equivalents - End of period

Supplemental disclosure of cash flow information:

Lease liabilities arising from obtaining right-of-use assets

Amount due from sale of assets

1 unchanged sentence

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.

PASITHEA THERAPEUTICS CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

30, 2023 AND 2022

NOTE 1 – NATURE OF THE ORGANIZATION AND

Pasithea Therapeutics Corp.

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.

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 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 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.

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 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

and the United States

were conducted through partnerships with healthcare providers and the Company did not provide professional medical services or psychiatric

As of June 30, 2023, the at home services in New

York, NY as well as in the U.K had been discontinued and we sold and disposed of our assets associated with the Clinics operations in

Los Angeles, CA, and the U.K.

The lease associated with the related property in Los Angeles was assumed by the buyer in the transaction.

Throughout this report, the terms “our,” “we,”

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

and its subsidiaries, Pasithea Therapeutics Limited

(U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, , 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.

Pasithea Clinics Corp.

is incorporated in Delaware.

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

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 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

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.

Alpha-5 Integrin, LLC is

a Delaware limited liability company.

AlloMek Therapeutics, LLC is a Delaware limited liability company.

Basis of Presentation

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.

Emerging Growth Company

The 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.

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.

Liquidity and Capital Resources

As of September 30, 2023, the Company had approximately $ 19.6 million

of cash and cash equivalents and working capital of approximately $ 18.7 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.

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 unaudited 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

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.

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;

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

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.

Making 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;

the recoverability of long-lived assets;

the fair values and useful lives of intangible assets

acquired in business combinations;

the potential impairment of goodwill;

the fair values and useful lives of intangible assets acquired in business combinations;

potential impairment of goodwill;

and income taxes.

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

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.

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.

Research and Development

Research and development costs are charged to

operations when incurred and are included in operating expense, except for goodwill related to intellectual property and 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.

Selling, General and Administrative

Our 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.

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, classified as trading securities.

The Company had cash equivalents of $ 10.3

million as of September 30, 2023, and did not have any cash equivalents as of December 31, 2022.

Property and Equipment

Property 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.

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

Warrant Liability

The Company accounts for the publicly traded warrants

13 unchanged sentences

in the exercise price.

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).

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 September 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.

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 balance

sheet, 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

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;

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:

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:

Fair value measurements at reporting date using:

Quoted prices

for identical

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

identical liabilities

Significant other

observable inputs

Significant unobservable

Cash equivalents, September 30, 2023

Public warrant liabilities, September 30, 2023

Representative warrant liabilities, September 30, 2023

Public warrant liabilities, December 31, 2022

Representative warrant liabilities, December 31, 2022

The following table presents a reconciliation

of the Level 3 Representative Warrants liabilities:

Three months ended

September 30,

Representative warrant liabilities, July 1

Change in fair value

Ending balance, June 30

For the six months ended

Beginning balance, December 31

Representative warrant liabilities, September 30

Nine months ended

September 30,

Representative warrant liabilities, January 1

Change in fair value

Ending balance, June 30

Representative warrant liabilities, September 30

The change in fair value of the Representative

1 unchanged sentence

and comprehensive loss.

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

The fair value of the cash equivalents is based

on the fair value of marketable securities invested in U.S.

government money market funds.

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

The fair value of the liability associated with

the Public Warrants as of September 30, 2023 was based on the quoted closing price on The Nasdaq Capital Market and is classified as Level

The fair value of the liability associated with the Representative Warrants as of September 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.

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 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:

Nine months ended

September 30,

Stock options

Restricted stock units

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:

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:

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

1 unchanged sentence

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:

Exchange 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.

The relevant translation rates are as follows:

September 30,

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)

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:

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 September 30, 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:

As of September 30,

As of December 31,

Leasehold improvements

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Property and equipment, net

Lease – 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.

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 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:

NOTE 4 – LEASES

Laboratory Lease – South San Francisco,

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.

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

This 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 consolidated balance sheets.

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 inception.

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

As of September 30, 2023, the Company recognized

total ROU assets and lease liabilities as follows:

As of September 30,

As of December 31,

Non-current leases - right of use assets

3 unchanged sentences

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:

The following table summarizes the maturity of

the Company’s operating lease payments as of September 30, 2023:

2023 (remaining)

2 unchanged sentences

Present value of net future minimum lease payments

5 – INTANGIBLE ASSETS AND GOODWILL

assets, net consists of the following:

June 30, 2023

NOTE 5 – INTANGIBLE ASSETS AND GOODWILL

Intangible assets, net consists of the following:

September 30, 2023

December 31, 2022

Gross Carrying

In-process research and development

1 unchanged sentence

Intangible assets, net

$ ( 157,541 )

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

As of September 30, 2023, future expected amortization expense of

Intangible assets was as follows:

2023 (remaining)

Remaining future amortization expense

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

There were no changes to goodwill for the nine

months ended September 30, 2023.

NOTE 6 – STOCKHOLDERS’ EQUITY

The Company had 20,836,623 and 26,548,688 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.

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

Common Stock Issuances for the Three and Nine

Months Ended September 30 , 2023

During the three and nine months ended September

30 , 2023, the Company issued 16,667 and 116,668 shares of common stock, respectively, due

to the vesting of restricted stock units (“RSUs”), and recognized approximately $ 24,175 and $ 71,736 , 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.

As of September 30 ,

2023, the remaining unamortized RSU stock-based compensation expense was approximately $ 117,000 .

The Company did no t grant any RSUs or restricted

stock awards during the three and nine months ended September 30 , 2023.

Tender Offer (Common Stock Repurchase)

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 and it expired on September 8, 2023.

14, 2023, the Company disclosed the results of the Tender Offer.

A total of 5,323,451 shares of the Company’s common stock

(the “Tender Offer Shares”) were validly tendered and not properly withdrawn at a purchase price of $ 0.70 per for an aggregate

purchase price of $ 3,726,416 , including fees and expenses relating to the Tender Offer.

The Company had 20,819,956 shares of common stock

outstanding following payment for the shares of common stock purchased in the Tender Offer.

The Tender Offer Shares were retired and cancelled

following the closing of the Tender Offer.

NOTE 7 – STOCK OPTIONS

Stock Options Issued, Vested and Cancelled

During the three months ended June

During the three months ended September

30 , 2023, no stock options were issued.

During the three months ended June 30 , 2023,

During the three months ended September 30 ,

2023, stock options to purchase an aggregate of 279,167 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

During the nine months ended September 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

price equal to $ 0.491 per share and a term of ten years .

3 unchanged sentences

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

During the nine months ended September

30 , 2023, stock options to purchase an aggregate of 629,168 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

During the nine months ended September 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 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 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

For the three months ended September

30, 2023 and 2022, total stock-based compensation expense related to the Company’s stock options was approximately $ 102,000 and

approximately $ 111,000 , respectively.

For the three months ended September 30, 2023, the Company recognized approximately $ 81,000

of stock-based compensation related to its options within selling, general and administrative expense, and approximately $ 21,000 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.

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

selling, general and administrative expense.

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

approximately $ 451,000 and approximately $ 307,000 , respectively.

For the nine months ended September 30, 2023, the Company recognized

approximately $ 349,000 of stock-based compensation related to its options within selling, general and administrative expense, and approximately

$ 102,000 within research and development expense.

For the nine months ended September 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 six months ended June 30, 2023:

(in thousands)

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

Number of Options

Weighted average

exercise price per

Weighted average

contractual term

intrinsic value (in

Outstanding, January 1, 2023

Expired/Cancelled

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 .

Outstanding, September 30, 2023

Exercisable, September 30, 2023

As of September

30 , 2023, the remaining unamortized stock-based compensation expense related to the stock options was approximately $ 479,000 .

NOTE 8 – 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.

As of September 30 , 2023,

the fair value of the Public Warrants was approximately $ 0.01 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 $ 0.01 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 and

six months ended June 30 , 2023.

No warrants were granted, expired/cancelled, or

exercised during the three and nine months ended September 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, 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 .

of June 30, 2023, we sold and disposed of our assets associated with the Clinics operations in Los Angeles, CA and disposed of our services

The lease associated with the related property in Los Angeles was assumed by the buyer in the transaction.

As of September 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 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:

the three and nine months ended September 30 , 2023 and 2022, have been reflected in the condensed

consolidated statements of operations and consist of the following:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of services

Selling, general and administrative

Research and Development

Loss from discontinued operations

Gain on forgiveness of accounts payable

( 1,189,283 )

Gain on sale of accounts payable

Gain on sale of assets

Loss from discontinued operations, before income tax

Gain (loss) from discontinued operations, before income tax

( 1,144,283 )

Income tax expense

Net loss from discontinued operations, net of tax

$ ( 395,089 )

$ ( 437,015 )

$ ( 1,144,283 )

Weighted-average common shares outstanding, basic and diluted

Basic and diluated loss per share from discontinued operations

Basic and diluted loss per share from discontinued operations

The following table presents the gain on the sale

of assets in Los Angeles, CA:

September 30,

Cash proceeds

7 unchanged sentences

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

Six months ended

September 30,

Cash Flows From Operating Activities:

9 unchanged sentences

The balance due

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.

under this financing agreement was $ 0 at September 30 , 2023 and December 31, 2022, respectively.

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