What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-13 · 121 added, 193 removed, 140 unchanged (69% of the section changed)

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of Financial Condition and Results of Operations

You should read the following discussion and

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

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

notes as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed on March 24, 2025.

This discussion

contains forward-looking statements that involve risks and uncertainties.

As a result of many factors, such as those set forth in the

section of this report captioned “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q as well as the risk factors

set forth in the section titled “Risk Factors” included in our most recent Annual Report on Form 10-K, our actual results

may differ materially from those anticipated in these forward-looking statements.

For convenience of presentation some of the numbers

have been rounded in the text below.

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, Pasithea Clinics Inc., Alpha-5 Integrin, LLC (“Alpha-5”),

AlloMek Therapeutics, LLC (“AlloMek”) and Pasithea MacroMEK Pty Ltd.

Pasithea Therapeutics Limited (U.K.), legally dissolved

as of January 2, 2024, was a private limited company, registered in the United Kingdom (U.K.).

Pasithea Clinics Inc., legally dissolved

as of September 3, 2025, was incorporated in Delaware.

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

company, registered in Portugal.

Alpha-5 and AlloMek are both Delaware limited liability companies.

You should read the following discussion

and analysis of financial condition and operating results together with our financial statements and the related notes thereto and

other financial information included elsewhere in this quarterly report on Form 10-Q, as well as our audited consolidated financial

statements and related notes thereto as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed

on March 30, 2026.

This discussion contains forward-looking statements that involve risks and uncertainties.

As a result of many

factors, such as those set forth in the section of this report captioned “Risk Factors” and elsewhere in this Quarterly

Report on Form 10-Q as well as the risk factors set forth in the section titled “Risk Factors” included in our most

recent Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking

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

Throughout this report, the terms

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

subsidiaries, Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, Pasithea Clinics Inc., Alpha-5 Integrin, LLC, AlloMek

Therapeutics, LLC and Pasithea MacroMEK Pty Ltd.

Pasithea Clinics Inc., legally dissolved as of September 3, 2025, was incorporated

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

Integrin, LLC and AlloMek Therapeutics, LLC are both Delaware limited liability companies.

Pasithea MacroMEK Pty Ltd is registered

in Australia.

The operations of Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, and Pasithea

have been discontinued.

The operations of Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, and Pasithea Clinics Inc.

discontinued.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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our plans to develop and commercialize our product candidates involve a lengthy and expensive process, with an uncertain outcome;

the initiation, enrollment, timing, progress, results, and cost of our research and development programs and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available;

the initiation, enrollment, timing, progress, results, and cost of our research and development programs and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, and the period during which the results of the trials will become available;

the timing of interim data and final results from our clinical trials for PAS-004;

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You should review the factors and risks and other

information we describe in the reports we will file from time to time with the SEC.

information we describe in the reports we file from time to time with the SEC.

Company Summary

We are a clinical-stage biotechnology company

primarily focused on the discovery, research and development of innovative treatments for CNS disorders, RASopathies, MAPK pathway-driven

tumors and other diseases.

We are a clinical-stage biotechnology company focused on the discovery,

research and development of innovative treatments for RASopathies, MAPK pathway-driven tumors and other diseases, including central nervous

system (CNS) disorders.

Our primary operations (the “Therapeutics”

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escalation trial of PAS-004 in patients with MAPK pathway-driven advanced tumors with a documented RAS, NF1 or RAF mutation or patients

who have failed BRAF/MEK inhibition (the “FIH Phase 1 Dose Escalation Study”).

who have failed BRAF/MEK inhibition (the “FIH Phase 1 Advanced Cancer Study”).

We are currently conducting the FIH Phase 1

Dose Escalation Study at four clinical sites in the United States and three additional sites in Eastern Europe and expect to complete

the FIH Phase 1 Dose Escalation Study in 2026.

In May 2025, we initiated our Phase 1/1b multicenter, open-label, dose escalation trial of PAS-004 in adult patients with neurofibromatosis

type 1 (“NF1”) with symptomatic and inoperable, incompletely resected, or recurrent plexiform neurofibromas (“PN”).

We are currently conducting the trial at a total of five sites in Australia, South Korea and the United States in up to 24 patients in

a dose escalation phase followed by approximately 24 patients in an expansion phase.

Advanced Cancer Study at four clinical sites in the United States and three additional sites in Eastern Europe.

We have completed the

initial eight cohorts through 45 mg capsule and have not reached the maximum tolerated dose.

We have filed a protocol amendment to continue

dose escalation in the FIH Phase 1 Advanced Cancer Study using our tablet formulation of PAS-004 in an effort to continue to explore the

safety, PK, and early signals of efficacy at higher dose levels of PAS-004.

Simultaneously, a pilot food effect assessment is planned

in a subset of patients who agree to participate in this optional component of the study.

As such, we expect to complete the trial in

In May 2025, we initiated our Phase 1/1b multicenter,

open-label, dose escalation trial of PAS-004 in adult patients with neurofibromatosis type 1 (“NF1”) with symptomatic and

inoperable, incompletely resected, or recurrent plexiform neurofibromas (“PN”).

We are currently conducting the trial at

a total of five sites in the United States, Australia, and South Korea.

The initial indication we plan to seek FDA marketing

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1 trial for pediatric NF1-PN patients and ultimately complete registrational clinical trials in both adult and pediatric NF1-PN populations.

Additionally, we have two programs that are in

the discovery stage, which we believe address limitations in the treatment paradigm of the indications we plan to address with these programs,

which are currently amyotrophic lateral sclerosis (“ALS”) for PAS-003 and schizophrenia for PAS-001.

Additionally, we have one program, PAS-001, in

the discovery stage, which we believe addresses limitations in the treatment paradigm for schizophrenia.

During the year ended December

31, 2025, we determined to cease further development of our PAS-003 program for ALS due to several factors including the significant capital,

resources and time required to develop the program.

Our ability to generate product revenue will depend

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acquire or in-license or invent other product candidates or technologies.

Recent Developments

Clinical Updates

On April 29, 2025, we announced completion of

enrollment and initial dosing of three subjects in cohort 6 with 30mg capsules of PAS-004 from our ongoing FIH Phase 1 Dose Escalation

On May 6, 2025, we announced pharmacodynamics results demonstrating robust target engagement from our ongoing FIH Phase 1 Dose

Escalation Study of PAS-004.

On May 14, 2025, we announced the initiation of our Phase 1/1b clinical trial to assess PAS-004 in adult

NF1-PN patients.

On July 31, 2025, we announced the completion of enrollment and initial dosing of the first cohort of three patients

from our Phase 1/1b clinical trial in adult NF1-PN patients.

On September 16, 2025, we announced the activation

of two clinical trial sites in South Korea—Asan Medical Centre and Severance Hospital Yonsei University Health System—in connection

with the Phase 1/1b clinical trial of PAS-004 in adult NF1-PN patients.

On November 4, 2025, we announced the activation

of a new U.S.

clinical trial site at the University of Alabama at Birmingham in connection with the Phase 1/1b clinical trial of PAS-004

in adult NF1-PN patients.

Amendment to the 2023 Stock Incentive Plan

On September 3, 2025, at our 2025 Annual Meeting

of Stockholders, our stockholders approved an amendment (the “Plan Amendment”) to our 2023 Stock Incentive Plan (the “2023

Incentive Plan”) increasing the number of shares of Common Stock authorized for issuance under the 2023 Incentive Plan by 1,750,000

shares to 2,014,221 shares.

The Plan Amendment became effective following its approval by our stockholders.

Impact of Inflation

We have recently experienced higher costs across

our business as a result of inflation, including higher costs related to employee compensation and outside services.

Although we anticipate

a decline in the rate of inflation throughout 2025, we expect inflation to continue to have a negative impact throughout 2025, and it

is uncertain whether we will be able to offset the impact of inflationary pressures in the near term.

We have recently experienced

higher costs across our business as a result of inflation, including higher costs related to employee compensation and outside services.

We expect inflation to continue to have a negative impact throughout 2026, and it is uncertain whether we will be able to offset the

impact of inflationary pressures in the near term.

Results of Operations

Comparison of the Three and Nine Months Ended

September 30, 2025 and 2024

Our financial results for the three and nine months

ended September 30, 2025 and 2024 are summarized as follows:

For the Three Months Ended September 30,

General and administrative

Research and development

Loss from operations

Other income, net

$ (3,037,420 )

$ (2,999,834 )

For the Nine Months Ended September 30,

Comparison of the Three Months Ended March

31, 2026, and 2025

Our financial results for the three months ended

March 31, 2026, and 2025 are summarized as follows:

For the Three Months Ended March 31,

General and administrative

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Loss from operations

(10,601,133 )

(10,990,412 )

Other income, net

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General and Administrative

General and administrative expenses increased

by approximately $329,000, or 23%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The increase was primarily driven by increases in (i) legal expenses of approximately $157,000, (ii) corporate expenses including asset

write-off of approximately $114,000, (iii) public company expenses of approximately $46,000, (iv) accounting and business development

expenses of approximately $43,000, (v) other income of approximately $41,000, (vi) personnel and other expense of approximately $14,000

and (vii) consulting costs of approximately $10,000.

These increases were partially offset by decreases in (i) non-cash stock-based expense

of approximately $87,000 and (ii) gain on asset disposal of approximately $9,000.

General and administrative expenses increased

by approximately $63,000, or 1%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

increase was primarily driven by increases in (i) accounting and business development expenses of approximately $160,000, (ii) other income

of approximately $135,000, (iii) personnel and other expense of approximately $108,000, (iv) corporate expenses including asset write-off

of approximately $77,000 and (v) consulting expenses of approximately $19,000.

These increases were partially offset by decreases in (i)

non-cash stock-based expense of approximately $297,000, (ii) legal expenses of approximately $88,000 and (iii) public company expenses

of approximately $51,000.

We expect general and administrative expenses

to increase throughout fiscal year 2025 as compared to fiscal year 2024 primarily due to increased non-cash stock-based compensation expenses.

General and administrative expenses

decreased by approximately $16,000, or 0.8%, for the three months ended March 31, 2026, compared to the three months ended March 31,

The decrease was primarily driven by (i) a decrease in income tax expenses and tax credits of approximately $165,000, (ii) a

decrease in accounting and business development expenses of approximately $24,000, (iii) a decrease in legal expenses of

approximately $154,000, (iv) a decrease in insurance costs of approximately $22,000 and (v) a decrease in board fees of

approximately $40,000, offset by (vi) an increase of approximately $240,000 in personnel costs, (vii) an increase in office expenses

of approximately $49,000, (viii) an increase in stock-based compensation expense for employees and consultants of approximately

$42,000, and (ix) an increase in public company and corporate communication costs of approximately $62,000.

We expect general and administrative expenses to continue to decrease

in fiscal year 2026 as compared to fiscal year 2025 primarily due to a decrease in impairment expenses offset by a ramp up in operational

activity, public company and corporate communications expenses, and non-cash stock-based compensation.

Research and Development

Research and development expenses relate to activities

primarily focused on the development of PAS-004 for the three and nine months ended September 30, 2025, and PAS-004, PAS-003, and PAS-001

for the three and nine months ended September 30, 2024.

Research and development

expenses decreased by approximately $224,000, or 14%, for the three months ended September 30, 2025 compared to the three months ended

September 30, 2024.

The decrease was primarily driven by decreases in (i) preclinical research and development expenses related to de-prioritization

of our discovery programs of approximately $365,000, (ii) consulting expense of approximately $61,000 and (iii) other expense of approximately

These decreases were partially offset by an increase in clinical trials expense of approximately $419,000 related to the ongoing

FIH Phase 1 Dose Escalation Study of PAS-004 and the initiation of the Phase 1/1b clinical trial of PAS-004 in adult NF1-PN patients.

Research and development

expenses decreased by approximately $452,000, or 8%, for the nine months ended September 30, 2025 compared to the nine months ended September

The decrease was primarily driven by decreases in (i) preclinical research and development expenses related to our discovery

programs of approximately $1,690,000, (ii) manufacturing and CMC expenses of approximately $347,000, (iii) other expense of approximately

$338,000, (iv) consulting expense of approximately $190,000 and (v) stock compensation expense of approximately $135,000.

These decreases

were partially offset by an increase in clinical trials expense of approximately $2,248,000 related to the ongoing FIH Phase 1 Dose Escalation

Study of PAS-004 and the initiation of the Phase 1/1b clinical trial of PAS-004 in adult NF1-PN patients.

primarily focused on the development of PAS-004 for the three months ended March 31, 2026 and 2025.

Research and development expenses increased by

approximately $1,212,000, or 70.1%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

increase was primarily due to (i) an increase in clinical trial and regulatory expenses of approximately $472,000, (ii) an increase in

chemistry, manufacturing and controls (“CMC”) expenses of approximately $507,000, (iii) an increase in preclinical research

expense of approximately $130,000, and (iv) an increase in non-clinical research and development expense of approximately $109,000, offset

by (vi) a decrease in other expenses of approximately $5,000.

We expect research and development expenses to

increase throughout fiscal year 2025 as compared to fiscal year 2024 primarily due to (i) an increase in clinical research for PAS-004

related to the ongoing FIH Phase 1 Dose Escalation Study and the Phase 1/1b clinical trial of PAS-004 in adult NF1-PN patients, and (ii)

an increase in manufacturing costs related to the drug supply for our clinical trials, offset by decreases in pre-clinical research and

the reduction in workforce related to the closure of our research laboratory.

continue to increase in fiscal year 2026 as compared to fiscal year 2025 primarily due to (i) an increase in clinical trial and regulatory

expenses related to our ongoing clinical trials for PAS-004, (ii) an increase in CMC costs related to PAS-004 drug product and drug supply

for our clinical trials, as well as the development of a liquid formation of PAS-004, (iii) the initiation of non-clinical absorption,

distribution, metabolism and excretion (“ADME”) studies, non-clinical developmental and reproductive toxicology studies, and

clinical human ADME studies, (iv) an increase in preclinical research for PAS-004, and (v) an increase in personnel costs related to anticipated

new workforce hires to support our research and development activities.

Other Income, Net

For the three months ended September 30, 2025, other income, net increased

by approximately $68,000, or 1,423%, compared to the three months ended September 30, 2024.

The increase in other income, net is primarily

due to (i) increases in fair value of the Public Warrants and the Representative Warrants (as such terms are defined in “Note 2

– Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part

I, Item 1 of this Form 10-Q) of approximately $117,000 and (ii) other income of approximately $9,000, partially offset by (i) a decrease

in interest and dividends, net of approximately $32,000 and (ii) foreign currency transactions gain of approximately $26,000.

For the nine months ended September 30, 2025, other income, net increased

by approximately $21,000, or 8%, compared to the nine months ended September 30, 2024.

The increase in other income, net is due primarily

to increases in (i) fair value of the Public Warrants and the Representative Warrants of approximately $195,000, (ii) other income of

approximately $28,000 and (iii) foreign currency transactions gain of approximately $3,000.

These increases were partially offset by decreases

in (i) interest and dividends, net of approximately $198,000 and (ii) a realized foreign currency translation loss from dissolution of

subsidiaries of approximately $7,000.

For the three months ended March 31, 2026, other income, net increased

by approximately $1,890,000, or 1,616.4%, as compared to the three months ended March 31, 2025.

The increase during the three months ended

March 31, 2026, was primarily driven by (i) an approximate $1,465,000 increase in the change of the fair value of warrant liabilities

during the three months ended March 31, 2026, (ii) an increase in interest and dividends, net of approximately $403,000, (iii) a decrease

in foreign currency gain of approximately $9,000, (iv) an increase in other income of approximately $24,000, and (v) an increase in realized

foreign currency translation loss from dissolution of subsidiaries of approximately $7,000 due to the fact that it did not exist this

Working Capital

September 30,

Current assets

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Working capital decreased by approximately $245,000

million between September 30, 2025 and December 31, 2024 primarily due to cash flow used to fund operations, partially offset by cash

received from the May 2025 Public Offering.

Liquidity and Financial Condition

For the Nine Months Ended

September 30,

from December 31, 2025, to March 31, 2026, due primarily to net cash used to fund operations for the three months ended March 31, 2026,

offset by the December 2025 Placement Agents Warrant liabilities reclassified to equity.

Liquidity and Capital Resources

For the Three Months Ended

$ (2,869,482 )

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$ (1,581,451 )

Cash, cash equivalents and restricted cash decreased

by approximately $2.7 million for the nine months ended September 30, 2025 compared to a decrease of approximately $7.0 million for the

nine months ended September 30, 2024.

The decrease in cash, cash equivalents and restricted cash for the nine months ended September 30,

2025 was primarily attributable to cash provided by financing activities related to net loss of approximately $10.3 million, which was

partially offset by proceeds from at-the-market sales of Common Stock of $2.0 million, proceeds from the issuance of Common Stock through

a May 2025 Public Offering of $4.2 million and proceeds from the exercise of warrants of $1.3 million.

The decrease in cash, cash equivalents

and restricted cash of approximately $7.0 million for the nine months ended September 30, 2024 was primarily attributable to cash used

to fund operations of approximately $11.5 million, which was partially offset by net proceeds from the sale of warrants for the September

2024 Offering of approximately $4.5 million.

Cash, cash equivalents and restricted cash decreased by approximately

$4.8 million for the three months ended March 31, 2026, compared to a decrease of approximately $1.6 million for the three months ended

March 31, 2025.

The decrease for the three months ended March 31, 2026, was primarily attributable to cash used to fund operations and

an increase in prepaid expenses.

The decrease for the three months ended March 31, 2025, was primarily attributable to cash used to fund

operations which was partially offset by at-the-market sales of common stock of approximately $1.7 million.

Liquidity & Capital Resources Outlook

As of September 30, 2025, we had approximately

As of March 31, 2026, we had approximately $50.4

million in operating bank accounts and money market funds, with working capital of approximately $51.2 million.

We are dependent on

obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute our development

plans and continue operations.

Subsequent to the consummation of the Initial Public Offering, our liquidity was and continues to be satisfied

through the net proceeds from the Initial Public Offering, the private placements we consummated in November 2021 and September 2024,

the public offering we consummated in May 2025, the receipt of cash upon the prior exercise of our outstanding warrants and the sale of

Common Stock pursuant to the ATM Agreement.

Based on the foregoing, management believes that we will not have sufficient working capital

to meet our needs through twelve months from the issuance date of the financial statements included in this Quarterly Report, without

raising additional capital.

We are able to sell securities on a shelf registration

statement pursuant to the ATM Agreement with H.C.

Wainwright & Co., LLC.

Under current Securities and Exchange Commission regulations,

if at any time our public float is less than $75.0 million, and for so long as our public float remains less than $75.0 million, the amount

we can raise through primary public offerings of securities in any twelve-month period using shelf registration statements is limited

to an aggregate of one-third of our public float, which is referred to as the baby shelf rules.

As of September 30, 2025, our calculated

public float is below $75.0 million and we will be restricted from selling more than an aggregate of one-third of our public float pursuant

to a shelf registration statement in any twelve-month period, so long as the aggregate market value of our Common Stock held by non-affiliates

is less than $75.0 million.

Our primary use of cash is to fund operating expenses,

primarily general and administrative and research and development expenditures.

Cash used to fund operating expenses is impacted by the

timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.

We are dependent on obtaining

additional working capital funding from the sale of equity and/or debt securities in order to continue to execute our development plans

and continue operations.

Our primary use of cash is to fund operating

expenses, primarily general and administrative and research and development expenditures.

Cash used to fund operating expenses is impacted

by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid

Because of the numerous risks and uncertainties

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revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.

We will need significant additional funds to meet

operational needs and capital requirements for clinical trials, other research and development expenditures, and business development

We believe that our current available cash and

cash equivalents will be sufficient to meet our working capital needs for at least the next twelve months and beyond.

However, we will

need significant additional funds to meet operational needs and capital requirements for clinical trials, other research and development

expenditures, and business development activities.

We currently have no credit facility or committed sources of capital.

Because of the numerous risks and uncertainties associated

with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays

and operating expenditures associated with our current and anticipated clinical studies.

Because of the

numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate

the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.

Contractual Obligations

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Off-Balance Sheet Arrangements

During the periods presented, we did not have

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

We did not have any off-balance sheet arrangements as of March 31,

2026, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act.

Critical Accounting Estimates

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(1) stock-based compensation and (2) fair value measurements, are more fully described in the Notes to our Consolidated Financial Statements

included in our Form 10-K for the fiscal year ended December 31, 2024, as filed on March 24, 2025.

During the three months ended September

30, 2025, there were no material changes to our critical accounting policies and estimates from those described in our Form 10-K.

included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed on March 30, 2026.

During the three months

ended March 31, 2026, there were no material changes to our critical accounting policies and estimates from those described in our most

recent Annual Report on Form 10-K.

Recent Accounting Pronouncements

See Note 2 – Summary of Significant Accounting

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

of recent accounting pronouncements applicable to our financial statements.

See Note 2 - Summary of Significant Accounting Policies in the Notes

to our Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a description of recent accounting

pronouncements applicable to our financial statements.

Quantitative and Qualitative Disclosures about Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis