UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: June 30, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 000-52218

Theralink Technologies, Inc.

(Exact name of registrant as specified in its charter)

Nevada		20-2590810
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

15000 W. 6th Avenue, Suite 400 Golden, CO 80401		(720) 420-0074
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(b) of the Act: None

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

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

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

Large accelerated filer		Accelerated filer		Non-accelerated filer		Smaller reporting company		Emerging growth company
☐		☐		☒		☒		☒☐

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

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

The registrant had ~~5,555,474,594~~6,151,499,919 shares of its common stock, $0.0001 par value per share, outstanding as of ~~September 22, 2021.~~August 8, 2022.

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~

FORM 10-Q

JUNE 30, ~~2021~~2022

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements
	~~Condensed Consolidated~~ Balance Sheets - As of June 30, ~~2021~~2022 (unaudited) and September 30, ~~2020~~2021	4
	~~Condensed Consolidated~~ Statements of Operations for the Three and Nine Months Ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	5
	~~Condensed Consolidated~~ Statements of Changes in Stockholder’s Deficit for the Three and Nine Months Ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	6
	~~Condensed Consolidated~~ Statements of Cash Flows for the Nine Months Ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	87
	Condensed Notes to ~~Condensed Consolidated~~Unaudited Financial Statements	98
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2636
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3446
Item 4.	Controls and Procedures	3446

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	3547
Item 1A.	Risk Factors	3547
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3647
Item 3.	Defaults Upon Senior Securities	3647
Item 4.	Mine Safety Disclosures	3647
Item 5.	Other Information	3647
Item 6.	Exhibits	3748

Signatures		3849

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this report, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements appear in a number of places, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements represent our reasonable judgment about the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts, and use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “should,” “plan,” “potential,” “project,” “will,” “would” and other words of similar meaning, or the negatives of such terms or other variations. These include, but are not limited to, statements relating to the following:

●	projected operating or financial results, including anticipated cash flows used in operations;
●	expectations regarding capital expenditures, research and development expenses and other payments;
●	our beliefs and assumptions relating to our liquidity position, including our ability to obtain additional financing; and
●	our beliefs, assumptions and expectations about the regulatory approval for our technology including, but not limited to our ability to obtain regulatory approval in a timely ~~manner. Or~~manner or at all.

Any or all of our forward-looking statements may turn out to be wrong. They may be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors including, among others:

●	our ability to continue as a going concern;
●	our ability to ~~become~~remain current in filing all reports required to be filed by us under Section 13 or 15(d) of the Securities Exchange Act of 1934;
●	our ability to maintain pricing;
●	our ability to employ skilled and qualified workers;
●	the fact that we have incurred significant losses since inception, expect to incur net losses for at least the next several years and may never achieve or sustain profitability;
●	the loss of key management personnel upon whom we depend;
●	our ability to fund our operations;
●	inadequate insurance coverage for certain losses or liabilities;
●	our ability to navigate the regulatory approval process in the U.S. and other countries, and our success in obtaining required regulatory approvals on a timely basis;
●	commercial ~~developments~~development of technologies that compete with our technology;
●	the actual and perceived effectiveness of our technology, and how the technology compares to competitive technologies;
●	the rate and degree of market acceptance and clinical utility of our technology;
●	adverse effects of the recent and ongoing COVID-19 pandemic;
●	the strength of our intellectual property protection, and our success in avoiding infringement of the intellectual property rights of others;
●	regulations affecting the health care industry;
●	adverse developments in our research and development activities;
●	potential liability if our technology causes illness, injury or death, or adverse publicity from any such events;
●	our ability to operate our business efficiently, manage capital expenditures and costs (including general and administrative expenses) and obtain financing when required; and
●	our expectations with respect to future licensing, partnering or acquisition activity.

In addition, there may be other factors that could cause our actual results to be materially different from the results referenced in the forward-looking statements, some of which are included elsewhere in this report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have included important factors in the cautionary statements included in this Quarterly Report on Form ~~10-,~~10-Q, in our Annual Report on Form 10-K filed on ~~September 27, 2021~~January 13, 2022 with the Securities and Exchange Commission (“SEC”), particularly in the ‘Risk Factors” section of such report, that could cause results or events to differ materially from the forward-looking statements that we make herein. Many of these factors will be important in determining our actual future results. Consequently, no forward-looking statement should be relied upon. Our actual future results may vary materially from those expressed or implied in any forward-looking statements. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement. Forward-looking statements apply only as of the date they are made, and we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as otherwise required by applicable law.

This Quarterly Report on Form 10-Q includes trademarks for Theralink, which are protected under applicable intellectual property laws and are our property. Solely for convenience, our trademarks and trade names referred to in this Quarterly Report on Form 10-Q may appear without the ^® or ^TMsymbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and trade names.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED~~ BALANCE SHEETS

	June 30,			September 30			June 30,			September 30,
	2021			2020			2022			2021
		(Unaudited)					(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	79,677		$	1,779,283		$	125,417		$	314,151
Accounts receivable		149,938			-			109,380			-
Other receivable		18,854			15,000
Other receivable (related party $35,594 in 2022 and $21,711 in 2021)								35,594			23,044
Prepaid expenses and other current assets		141,534			191,253			181,258			219,496
Marketable securities		7,500			11,100			2,400			11,000
Laboratory supplies		34,868			71,335			-			71,062
Deferred financing cost		333,333			-

Total Current Assets		765,704			2,067,971			454,049			638,753

OTHER ASSETS:
Property and equipment, net		725,830			744,822			678,372			698,927
Finance right-of-use assets, net		122,915			157,691			76,546			111,323
Operating right-of-use asset, net		178,458			206,203			1,167,191			168,664
Security deposits		20,909			19,464			18,715			20,909

Total Assets	$	1,813,816		$	3,196,151		$	2,394,873		$	1,638,576

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	869,601		$	617,218		$	546,411		$	1,018,797
Accounts payable - related party								6,000			3,714
Accrued liabilities		93,342			56,728			145,194			71,077
Accrued liabilities - related party								-			18,000
Accrued compensation		143,309			32,791			343,865			186,177
Accrued director compensation		117,500			72,500			177,500			132,500
Deferred revenue		148,550			-
Convertible debt - related party, net of discount		14,116			-
Contract liabilities								302,672			135,150
Notes payable - related party		100,000			-			350,000			100,000
Notes payable - current		1,000			1,000			1,000			1,000
Financing lease liability - current		46,289			42,234			52,351			47,730
Operating lease liability - current		40,716			35,943			24,181			42,411
Insurance payable		6,654			63,675			12,271			118,294
Subscription payable		1,350,000			-
Subscriptions payable								-			1,350,000
Contingent liabilities		69,440			64,040			76,640			71,240
Assumed liabilities of discontinued operations		-			204,608

Total Current Liabilities		3,000,517			1,190,737			2,038,085			3,296,090

LONG-TERM LIABILITIES:
Financing lease liability		100,873			136,116			48,522			88,385
Operating lease liability		145,757			176,893			1,164,538			134,482
Convertible notes - related party, net of discount								974,762			64,981
Convertible notes, net of discount								282,467			-

Total Liabilities		3,247,147			1,503,746			4,508,374			3,583,938

Series E preferred stock; $0.0001 par value; 2,000 authorized; 1,000 issued and outstanding at June 30, 2021 and September 30, 2020		2,000,000			2,000,000
Commitments and Contingencies (Note 10)								-			-

Series E preferred stock; $0.0001 par value; 2,000 shares designated; 1,000 issued and outstanding at June 30, 2022 and September 30, 2021; liquidation value of $2,013,151 and $2,013,151 at June 30, 2022 and September 30, 2021, respectively								2,000,000			2,000,000

Series F preferred stock; $0.0001 par value; 2,000 shares designated; 500 and nil issued and outstanding at June 30, 2022 and September 30, 2021; liquidation value of $1,006,575 and $1,006,728 at June 30, 2022 and September 30, 2021, respectively								1,000,000			1,000,000
Temporary equity value								1,000,000			1,000,000

STOCKHOLDERS’ DEFICIT:
Preferred stock: $0.0001 par value; 26,667 authorized;
Series A Preferred stock: $0.0001 par value; 1,333 shares authorized; 667 issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series C-1 Preferred stock: $0.0001 par value; 3,000 shares authorized; 2,966 issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series C-2 Preferred stock: $0.0001 par value; 6,000 shares authorized; 4,917 issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series D-1 Preferred stock: $0.0001 par value; 1,000 shares authorized; nil issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series D-2 Preferred stock: $0.0001 par value; 4,360 shares authorized; nil issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series A Preferred stock: $0.0001 par value; 1,333 shares designated; 667 issued and outstanding at June 30, 2022 and September 30, 2021								-			-
Series C-1 Preferred stock: $0.0001 par value; 3,000 shares designated; 1,043 and 2,966 issued and outstanding at June 30, 2022 and September 30, 2021, respectively								-			-
Series C-2 Preferred stock: $0.0001 par value; 6,000 shares designated; 3,037 and 4,917 issued and outstanding at June 30, 2022 and September 30, 2021, respectively								-			-
Series D-1 Preferred stock: $0.0001 par value; 1,000 shares designated; nil issued and outstanding at June 30, 2022 and September 30, 2021								-			-
Series D-2 Preferred stock: $0.0001 par value; 4,360 shares designated; nil issued and outstanding at June 30, 2022 and September 30, 2021								-			-
Preferred stock value		-			-			-			-
Common stock: $0.0001 par value, 12,000,000,000 shares authorized; 5,124,164,690 issued and outstanding at June 30, 2021 and September 30, 2020		512,416			512,416
Common stock: $0.0001 par value, 100,000,000,000 shares authorized; 6,151,499,919 and 5,124,164,690 issued and outstanding at June 30, 2022 and September 30, 2021, respectively								615,150			512,416
Additional paid-in capital		43,368,077			42,367,577			49,333,767			44,368,077
Accumulated deficit		(47,313,824	)		(43,187,588	)		(55,062,418	)		(49,825,855	)

Total Stockholders’ Deficit		(3,433,331	)		(307,595	)		(5,113,501	)		(4,945,362	)

Total Liabilities and Stockholders’ Deficit	$	1,813,816		$	3,196,151		$	2,394,873		$	1,638,576

See accompanying condensed notes to ~~the~~ unaudited ~~condensed consolidated~~ financial statements.

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED~~ STATEMENTS OF OPERATIONS

(UNAUDITED)

	2021			2020			2021			2020			2022			2021			2022			2021
	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Nine Months Ended
	June 30,						June 30,						June 30,						June 30,
	2021			2020			2021			2020			2022			2021			2022			2021

REVENUES, NET	$	278,925		$	24,886		$	415,029		$	75,896		$	164,213		$	278,925		$	262,688		$	415,029

COST OF REVENUE		69,253			7,422			99,298			23,421			99,484			69,253			160,229			99,298

GROSS PROFIT		209,672			17,464			315,731			52,475			64,729			209,672			102,459			315,731

OPERATING EXPENSES:
Professional fees		243,517			322,921			654,736			470,638			162,164			243,517			677,740			654,736
Consulting fee - related party		-			8,650			-			64,125
Compensation expense		532,414			372,610			1,654,693			822,329			703,267			532,414			2,031,755			1,654,693
Licensing fees		39,172			12,750			100,364			38,920			30,377			39,172			105,432			100,364
General and administrative expenses		589,463			258,277			2,069,942			636,838			545,254			589,463			1,606,174			2,069,942

Total Operating Expenses		1,404,566			975,208			4,479,735			2,032,850			1,441,062			1,404,566			4,421,101			4,479,735

LOSS FROM OPERATIONS		(1,194,894	)		(957,744	)		(4,164,004	)		(1,980,375	)		(1,376,333	)		(1,194,894	)		(4,318,642	)		(4,164,004	)

OTHER INCOME (EXPENSE):
Interest expense		(26,993	)		(7,844	)		(43,679	)		(23,715	)
Interest expense, net														(326,961	)		(26,993	)		(729,814	)		(43,679	)
Gain on debt extinguishment, net		-			108,060			227,294			108,060			-			-			-			227,294
Unrealized loss on marketable securities		(3,900	)		(4,900	)		(3,600	)		(11,200	)
Unrealized (gain) loss on exchange rate		-			60,075			(22,686	)		60,075
Other income		-			10,000			-			10,000
Unrealized (loss) gain on marketable securities														(5,500	)		(3,900	)		(8,600	)		(3,600	)
Unrealized loss on exchange rate														-			-			-			(22,686	)

Total Other Income (Expense), net		(30,893	)		165,391			157,329			143,220
Total Other Income (Loss), net														(332,461	)		(30,893	)		(738,414	)		157,329

NET LOSS		(1,225,787	)		(792,353	)		(4,006,675	)		(1,837,155	)		(1,708,794	)		(1,225,787	)		(5,057,056	)		(4,006,675	)

Series E preferred stock dividend		39,890			-			119,561			-			(39,890	)		(39,452	)		(119,671	)		(119,561	)
Series F preferred stock dividend														(19,945	)		-			(59,836	)		-

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(1,185,897	)	$	(792,353	)	$	(3,887,114	)	$	(1,837,155	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS													$	(1,768,629	)	$	(1,265,239	)	$	(5,236,563	)	$	(4,126,236	)

NET LOSS PER COMMON SHARE:
Basic and Diluted	$	(0.00	)	$	(2.04	)	$	(0.00	)	$	(19.19	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and Diluted		5,550,559,312			388,333			5,306,754,829			95,753			6,062,411,449			5,550,559,312			5,732,126,399			5,306,754,829

See accompanying condensed notes to ~~the~~ unaudited ~~condensed consolidated~~ financial statements.

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED~~ STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2022 AND 2021

(UNAUDITED)

Preferred Stock Common Stock
Series A
# of Shares Series C-1
# of Shares Series C-2
# of Shares Series D-1
# of Shares Series D-2
# of Shares Amount # of Shares Amount
Additional
Paid-in Capital

Accumulated
Deficit

Total
Stockholders’ Deficit

Balance at September 30, 2020 667 2,966 4,917 - - $ - 5,124,164,690 $ 512,416 $ 42,367,577 $ (43,187,588 ) $ (307,595 )

Adjustment related to Series A preferred prior period redemption payment - - - - - - - - 500 500
Beneficial conversion feature related to a convertible note - related party recorded as debt discount
Relative fair value of warrant issued in connection with a convertible note - related party recorded as debt discount
Preferred stock issued for cash
Preferred stock issued for cash, shares
Preferred stock issued upon debt conversions
Preferred stock issued upon conversion of accounts payable and accrued liabilities
Preferred stock issued upon conversion of accounts payable and accrued liabilities, shares
Preferred stock issued upon conversion of accrued liabilities - related party
Recapitalization resulting from the Asset Sale Transaction (see Note 3)
Recapitalization resulting from the Asset Sale Transaction (see Note 3), shares

Series E preferred stock dividend - - - - - - - - - (40,219 ) (40,219 )

Net loss - - - - - - - - - (1,419,775 ) (1,419,775 )

Balance at December 31, 2020 667 2,966 4,917 - - - 5,124,164,690 512,416 42,368,077 (44,647,582 ) (1,767,089 )

Series E preferred stock dividend - - - - - - - - - (39,452 ) (39,452 )

Net loss - - - - - - - - - (1,361,113 ) (1,361,113 )

Balance at March 31, 2021 667 2,966 4,917 - - - 5,124,164,690 512,416 42,368,077 (46,048,147 ) (3,167,654 )

Beneficial conversion feature related to a convertible note - related party recorded as debt discount - - - - - - - - 15,800 - 15,800

Relative fair value of warrant issued in connection with a convertible note - related party recorded as debt discount - - - - - - - - 984,200 - 984,200

Series E preferred stock dividend - - - - - - - - - (39,890 ) (39,890 )

Net loss - - - - - - - - - (1,225,787 ) (1,225,787 )

Balance at June 30, 2021 667 2,966 4,917 - - $ - 5,124,164,690 $ 512,416 $ 43,368,077 $ (47,313,824 ) $ (3,433,331 )


	Preferred Stock														Common Stock
	Series A # of Shares		Series C-1 # of Shares			Series C-2 # of Shares			Series D-1 # of Shares		Series D-2 # of Shares		Amount		# of Shares			Amount		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit

Balance at September 30, 2021		667		2,966			4,917			-		-	$	-		5,124,164,690		$	512,416	$	44,368,077		$	(49,825,855	)	$	(4,945,362	)

Relative fair value of warrant issued in connection with convertible notes - related party recorded as debt discount		-		-			-			-		-		-		-			-		661,088			-			661,088

Relative fair value of warrant issued in connection with convertible notes recorded as debt discount		-		-			-			-		-		-		-			-		991,120			-			991,120

Series E preferred stock dividend		-		-			-			-		-		-		-			-		-			(40,329	)		(40,329	)

Series F preferred stock dividend		-		-			-			-		-		-		-			-		-			(20,164	)		(20,164	)

Correction for rounding error		-		-			-			-		-		-		(1,436	)		-		-			-			-

Net loss		-		-			-			-		-		-		-			-		-			(1,512,267	)		(1,512,267	)

Balance at December 31 2021		667		2,966			4,917			-		-		-		5,124,163,254			512,416		46,020,285			(51,398,615	)		(4,865,914	)

Issuance of common stock in connection with conversion of Series C-1 preferred stock		-		(1,090	)		-			-		-		-		163,637,529			16,364		(16,364	)		-			-

Issuance of common stock in connection with conversion of Series C-2 preferred stock		-		-			(1,880	)		-		-		-		280,475,491			28,048		(28,048	)		-			-

Issuance of common stock in connection with settlement of accounts payable		-		-			-			-		-		-		26,913,738			2,691		81,549			-			84,240

Issuance of common stock in connection with subscriptions payable		-		-			-			-		-		-		431,309,907			43,131		1,306,869			-			1,350,000

Relative fair value of warrants issued in connection with convertible notes - related party recorded as debt discount		-		-			-			-		-		-		-			-		331,969			-			331,969

Relative fair value of warrants issued in connection with convertible notes recorded as debt discount		-		-			-			-		-		-		-			-		996,708			-			996,708

Relative fair value of additional warrants issued in connection with modification of convertible notes - related party recorded as debt discount		-		-			-			-		-		-		-			-		34,620			-			34,620

Relative fair value of additional warrants issued in connection with modification of convertible notes recorded as debt discount		-		-			-			-		-		-		-			-		44,858			-			44,858

Series E preferred stock dividend		-		-			-			-		-		-		-			-		-			(39,452	)		(39,452	)

Series F preferred stock dividend		-		-			-			-		-		-		-			-		-			(19,727	)		(19,727	)

Net loss		-		-			-			-		-		-		-			-		-			(1,835,995	)		(1,835,995	)

Balance at March 31, 2022		667		1,876			3,037			-		-		-		6,026,499,919			602,650		48,772,446			(53,293,789	)		(3,918,693	)

Issuance of common stock in connection with conversion of Series C-1 preferred stock		-		(833	)		-			-		-		-		125,000,000			12,500		(12,500	)		-			-

Relative fair value of warrants issued in connection with convertible notes - related party recorded as debt discount		-		-			-			-		-		-		-			-		238,228			-			238,228

Relative fair value of warrants issued in connection with convertible notes - recorded as debt discount		-		-			-			-		-		-		-			-		335,593			-			335,593

Series E preferred stock dividend		-		-			-			-		-		-		-			-		-			(39,890	)		(39,890	)

Series F preferred stock dividend		-		-			-			-		-		-		-			-		-			(19,945	)		(19,945	)

Net loss																								(1,708,794	)		(1,708,794	)

Balance at June 30, 2022		667		1,043			3,037			-		-	$	-		6,151,499,919		$	615,150	$	49,333,767		$	(55,062,418	)	$	(5,113,501	)

	Preferred Stock												Common Stock
	Series A # of Shares		Series C-1 # of Shares		Series C-2 # of Shares		Series D-1 # of Shares		Series D-2 # of Shares		Amount		# of Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit

Balance at September 30, 2020		667		2,966		4,917		-		-	$	-		5,124,164,690	$	512,416	$	42,367,577	$	(43,187,588	)	$	(307,595	)

Adjustment related to Series A preferred prior period redemption payment		-		-		-		-		-		-		-		-		500		-			500

Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(40,219	)		(40,219	)

Net loss		-		-		-		-		-		-		-		-		-		(1,419,775	)		(1,419,775	)

Balance at December 31, 2020		667		2,966		4,917		-		-		-		5,124,164,690		512,416		42,368,077		(44,647,582	)		(1,767,089	)

Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(39,452	)		(39,452	)

Net loss		-		-		-		-		-		-		-		-		-		(1,361,113	)		(1,361,113	)

Balance at March 31, 2021		667		2,966		4,917		-		-		-		5,124,164,690		512,416		42,368,077		(46,048,147	)		(3,167,654	)

Beneficial conversion feature related to a convertible note - related party recorded as debt discount		-		-		-		-		-		-		-		-		15,800		-			15,800

Relative fair value of warrant issued in connection with a convertible note - related party recorded as debt discount		-		-		-		-		-		-		-		-		984,200		-			984,200

Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(39,890	)		(39,890	)

Net loss		-		-		-		-		-		-		-		-		-		(1,225,787	)		(1,225,787	)

Balance at June 30, 2021		667		2,966		4,917		-		-	$	-		5,124,164,690	$	512,416	$	43,368,077	$	(47,313,824	)	$	(3,433,331	)

See accompanying condensed notes to ~~the~~ unaudited ~~condensed consolidated~~ financial statements.

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENT~~STATEMENTS OF ~~CHANGES IN STOCKHOLDERS’ DEFICIT~~

~~FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2020~~CASH FLOWS

(UNAUDITED)

	2022			2021
	For the Nine Months Ended
	June 30,
	2022			2021
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss	$	(5,057,056	)	$	(4,006,675	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation on property and equipment and finance ROU assets		143,531			138,632
Non-cash lease cost		21,528			1,382
Amortization of debt discount		501,432			14,116
Gain on debt extinguishment		-			(227,294	)
Unrealized loss on exchange rate		-			22,686
Unrealized loss on marketable securities		8,600			3,600
Gain on modification of operating lease		(8,229	)		-
Change in operating assets and liabilities:
Accounts receivable		(109,380	)		(149,938	)
Prepaid expenses and other current assets		27,882			44,420
Laboratory supplies		71,062			36,467
Accounts payable		(385,860	)		252,383
Accrued liabilities and other liabilities		158,335			20,950
Contract liabilities		167,522			148,550

NET CASH USED IN OPERATING ACTIVITIES		(4,460,633	)		(3,700,721	)

CASH FLOWS FROM INVESTING ACTIVITIES
Adjustment related to Series A preferred prior period redemption payment		-			500
Purchase of property and equipment		(88,199	)		(116,052	)

NET CASH USED IN INVESTING ACTIVITIES		(88,199	)		(115,552	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock		-			1,350,000
Proceeds from convertible debt - related party		1,900,000			666,667
Proceeds from convertible debt		2,425,000			-
Proceeds of notes payable - related party		400,000			100,000
Repayment of notes payable - related party		(150,000	)		-
Repayment of financed lease		(35,242	)		-
Payments for preferred stock dividends		(179,660	)		-

NET CASH PROVIDED BY FINANCING ACTIVITIES		4,360,098			2,116,667

NET CHANGE IN CASH		(188,734	)		(1,699,606	)

CASH, beginning of the period		314,151			1,779,283

CASH, end of the period	$	125,417		$	79,677

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	100,025		$	-
Income taxes	$	-		$	-

Non-cash investing and financing activities:
Series E preferred stock dividend	$	119,671		$	119,561
Series F preferred stock dividend	$	59,836		$	-
Initial amount of operating ROU asset and related liability	$	1,212,708		$	-
Relative fair value of warrant issued in connection with convertible notes - related party recorded as debt discount	$	1,231,285		$	984,200
Relative fair value of warrant issued in connection with convertible notes recorded as debt discount	$	2,323,421		$	-
Relative fair value of additional warrants issued in connection with modification of convertible notes - related party recorded as debt discount	$	34,620		$	15,800
Relative fair value of additional warrants issued in connection with modification of convertible notes recorded as debt discount	$	44,858		$	-

See accompanying condensed notes to ~~the~~ unaudited ~~condensed consolidated~~ financial statements.

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~

CONDENSED ~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(UNAUDITED)~~

2021 2020
For the Nine Months Ended
June 30,
2021 2020
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss $ (4,006,675 ) $ (1,837,155 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 138,632 57,060
Lease cost 1,382 5,975
Amortization of debt discount 14,116 -
Gain on debt extinguishment, net (227,294 ) (108,060 )
Unrealized (gain) loss on exchange rate 22,686 (60,075 )
Unrealized loss on marketable securities 3,600 11,200
Change in operating assets and liabilities:
Accounts receivable (149,938 ) (20,975 )
Laboratory supplies 36,467 -
Prepaid expenses and other current assets 44,420 (116,219 )
Accounts payable 252,383 (212,840 )
Accrued liabilities and other liabilities 20,950 (70,734 )
Deferred revenue 148,550 -

NET CASH USED IN OPERATING ACTIVITIES (3,700,721 ) (2,351,823 )

CASH FLOWS FROM INVESTING ACTIVITIES
Adjustment related to Series A preferred prior period redemption payment 500 -
Cash acquired from the Asset Sale Transaction (see Note 3) - 675,928
Purchase of property and equipment (116,052 ) (495,557 )

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (115,552 ) 180,371

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of preferred stock - 2,590,000
Proceeds from deposits from sale of common stock 1,350,000 -
Proceeds from convertible debt - related party 666,667 -
Proceeds of notes payable - related party 100,000 -
Repayment of related party advances, net - (20,000 )
Repayment of convertible debt - (24,759 )

NET CASH PROVIDED BY FINANCING ACTIVITIES 2,116,667 2,545,241

NET CHANGE IN CASH (1,699,606 ) 373,789

CASH, beginning of the period 1,779,283 560,407

CASH, end of the period $ 79,677 $ 934,196

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -

Non-cash investing and financing activities:
Preferred stock issued upon debt conversions $ - $ 217,215
Preferred stock issued upon conversion of accounts payable and accrued liabilities $ - $ 299,154
Preferred stock issued upon conversion of accrued liabilities - related party $ - $ 160,000
Relative fair value of warrant issued in connection with a convertible note - related party recorded as debt discount $ 984,200 $ -
Beneficial conversion feature related to a convertible note - related party recorded as debt discount $ 15,800 $ -

Net assets acquired from Asset Sale Transaction (see Note 3)
Cash $ - $ 675,928
Prepaid expense and other current assets - 17,539
Accounts payable and other liabilities - (40,149 )
Liabilities of discontinued operations - (406,662 )
Net assets acquired $ - $ 246,656

~~See accompanying notes to the unaudited condensed consolidated financial statements.~~

~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~

NOTES TO ~~CONDENSED CONSOLIDATED~~UNAUDITED FINANCIAL STATEMENTS

JUNE 30, ~~2021~~2022

(UNAUDITED)

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

Theralink Technologies, Inc., formerly OncBioMune Pharmaceuticals, Inc. (the “Company”), was a clinical-stage biopharmaceutical company engaged in the development of novel cancer immunotherapy products, with a proprietary vaccine technology. On June 5, 2020, the Company acquired the assets (the “Asset Sale Transaction”) of Avant Diagnostics, Inc., a Nevada corporation established in 2009 (“Avant”) pursuant to the Asset Purchase Agreement dated May 12, 2020, between the Company and Avant (the “Asset Purchase Agreement”). Avant is a commercial-stage precision medicine and molecular data-generating company that focuses on the development and commercialization of a series of patented, proprietary data-generating assays that may provide important actionable information for physicians and patients, as well as biopharmaceutical companies, in the ~~areas~~area of oncology.

Pursuant to the Asset Purchase Agreement, the Company acquired substantially all of the assets of Avant and assumed certain of its liabilities. Upon the terms and subject to the conditions of the Asset Purchase Agreement, Avant sold to the Company, all of Avant’s title and interest in all the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible (including goodwill), wherever located and whether existing or hereafter acquired, except for the specific excluded assets, which relate to, or are used or held for use in connection with, Avant’s business. The Company also hired Avant’s employees upon consummation of the Asset Sale Transaction. As consideration for the Asset Sale Transaction, the Company issued to Avant 1,000 shares of a newly created Series D-1 Preferred Stock which held 54.55% of all voting rights on an as-converted basis with the common stock. Upon the effectiveness of an increase of the Company’s authorized shares of common stock from 6,666,667 shares to 12,000,000,000 shares, all such shares of Series D-1 Preferred Stock issued to Avant automatically converted into ~~5,081,550,620~~5,081,549,184 shares of the Company’s common stock. Avant possessed majority voting control of the Company immediately following the Asset Sale Transaction and controlled the Company’s Board of Directors after the termination of the ten-day waiting period required by Rule 14f-1 under the Exchange Act. Accordingly, the Asset Sale Transaction was accounted for, in substance, as an asset acquisition of the Company’s net asset by Avant and a recapitalization of Avant.Avant is considered the historical registrant and the historical operations presented are those of Avant since Avant obtained 54.55% majority voting control of the ~~Company (see Note 3).~~Company. All share and per share data in the accompanying ~~consolidated~~unaudited financial statements and footnotes has been retrospectively adjusted for the recapitalization.

On July 11, 2021, the Company’s wholly-owned subsidiary, OncBioMune, LLC, was administratively dissolved by the Louisiana Secretary of State for failing to meet its filing requirements and pay the associated fees (see Note 3).

In connection with the Asset Sale Transaction, the Company entered into an Exchange Agreement, effective June 5, 2020, by and among OncBioMune Pharmaceuticals, Inc. and the investors named therein, whereby the Company agreed to exchange certain convertible promissory notes and warrants outstanding for shares of Series C-1 Convertible Preferred Stock of the Company and options to purchase shares of the Company’s wholly-owned subsidiary, OncBioMune Sub Inc. OncBioMune Sub Inc. holds the patents used in the prior business of OncBioMune Pharmaceuticals, Inc. In July 2021, certain of those investors exercised their options to purchase the shares of OncBioMune Sub Inc. On July 26, 2021, the Company transferred all 10,000 shares of OncBioMune Sub Inc. held by the Company to the various investors for gross proceeds of $1,000 (see Note 3).

On February 25, 2022, FINRA recognized the Company’s name change to Theralink Technologies, Inc. and the related ticker symbol change from “OBMP” to “THER” went into effect.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation ~~and Principles of Consolidation~~

The accompanying interim ~~condensed consolidated~~unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information, which present the ~~consolidated~~unaudited financial statements of the Company ~~and its wholly-owned inactive subsidiaries, OncBioMune, Inc. and OncBioMune Sub, Inc.~~ as of June 30, ~~2021. All intercompany transactions and balances have been eliminated.~~2022. The interim ~~condensed consolidated~~unaudited financial statements do not include all the information and notes necessary for a comprehensive presentation of financial position and results of operations and should be read in conjunction with the audited financial statements of the Form 10-K filed on ~~September 27, 2021.~~January 13, 2022. It is management’s opinion that all material adjustments (consisting of normal recurring adjustments and non-recurring adjustments) have been made for the fair presentation of the unaudited financial ~~statement.~~statements. The results for the interim period are not necessarily indicative of the results to be expected for the year ending September 30, ~~2021.~~2022.

THERALINK TECHNOLOGIES, INC.

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

JUNE 30, 2022

(UNAUDITED)

Going Concern

These ~~consolidated~~unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying ~~condensed consolidated~~unaudited financial statements, the Company had net loss and net cash used in operations of $~~4,006,675~~5,057,056 and $~~3,700,721~~4,460,633, respectively, for the nine months ended June 30, ~~2021.~~2022. Additionally, the Company had an accumulated deficit, stockholders’ deficit and working capital deficit of $~~47,313,824~~55,062,418, $~~3,433,331~~5,113,501 and $~~2,234,813~~1,584,036 at June 30, ~~2021.~~2022. Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of this report.

~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2021~~

~~(UNAUDITED)~~

The Company cannot provide assurance that it will ultimately achieve profitable operations or become cash flow positive or raise additional debt or equity capital. Additionally, the current capital resources are not adequate to continue operating and maintaining the business strategy for a period of twelve months from the issuance date of this report. The Company will seek to raise capital through additional debt and equity financings to fund its operations in the future.

Although the Company has historically raised capital from sales of equity and ~~from~~ the issuance of promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These ~~condensed consolidated~~unaudited financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The global pandemic COVID-19, otherwise referred to as the Coronavirus, could impair our ability to raise additional funding or make such funding more costly. The ongoing global pandemic has caused cessation of normal business operations and initially caused capital markets to decline sharply. This could make it more difficult for the Company to access capital. It is currently difficult to estimate with any certainty how long the pandemic and resulting curtailment of business will continue, and its effect on capital markets and the Company’s ability to raise funds is, accordingly, difficult to quantify. In addition, to the extent that any of the Company’s personnel or consultants are affected by the virus, this could cause delays or disruption in our planned research and development activities.

Use of Estimates

The preparation of ~~consolidated~~ financial statements in conformity with U.S. GAAP requires management to make judgments, assumptions, and estimates that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ~~consolidated~~ financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Management bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates during the nine months ended June 30, ~~2021~~2022 and year ended September 30, ~~2020~~2021 include, but are not necessarily limited to, ~~the valuation of assets and liabilities of discontinued operations,~~ estimates of contingent liabilities, valuation of marketable securities, useful life of property and equipment, valuation of right-of-use (“ROU”) assets and lease liabilities, assumptions used in assessing impairment of long-lived assets, allowances for accounts receivable, estimates of current and deferred income taxes and deferred tax valuation allowances and the fair value of non-cash equity transactions.

Fair Value of Financial Instruments and Fair Value Measurements

FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on June 30, ~~2021.~~2022. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on the disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

	Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

	Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

	Level 3—Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

~~In August 2018, the FASB issued ASU 2018-13~~~~—Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement~~, to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU 2018-13 during the quarter ended March 31, 2020 and its adoption did not have any material impact on the Company’s consolidated financial statements.

109

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~

CONDENSED NOTES TO ~~CONDENSED CONSOLIDATED~~UNAUDITED FINANCIAL STATEMENTS

JUNE 30, ~~2021~~2022

(UNAUDITED)

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company’s investment policy is to preserve principal and maintain liquidity. The Company periodically monitors its positions with, and the credit quality of, the financial institutions with which it invests.

~~The Company maintains its cash in banks and financial institutions that at times may exceed federally insured limits. As of September 30, 2020, the cash balance of $1,538,951~~ ~~was in excess of FDIC insured levels. The Company has not experienced any losses in such accounts through June 30, 2021.~~

Prepaid Assets

Prepaid assets are carried at amortized cost. Significant prepaid assets as of June 30, ~~2021~~2022 and September 30, ~~2020~~2021 include, but are not necessarily limited to, prepaid insurance, prepaid consulting fees, prepaid equipment maintenance fees and retainers for professional services.

Laboratory Supplies

Laboratory supplies are normally consumed within a year from purchase and any unused laboratory supplies are classified as current ~~asset~~assets and reflected in the accompanying ~~condensed consolidated~~unaudited balance sheet as laboratory supplies.

Property and Equipment

Fixed assets are stated at cost and depreciated using the straight-line method over their estimated useful lives, which range from three to five years. Leasehold improvements are depreciated over the shorter of ~~the~~their useful life or the lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Impairment of Long-Lived Assets

In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC 505-50 - Equity-Based Payments to Non-Employees, all share-based payments to non-employees, including grants of stock options, were recognized in the ~~consolidated~~ financial statements as compensation expense over the service period of the consulting arrangement or until performance conditions are expected to be met. Using a Black Scholes valuation model, the Company periodically reassessed the fair value of non-employee options until service conditions are met, which generally aligns with the vesting period of the options, and the Company adjusts the expense recognized in the ~~consolidated~~ financial statements accordingly. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company early adopted ASU No. 2018-07 during the period September 30, 2018, and the adoption did not have any impact on its ~~consolidated~~ financial statements.

1110

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~

CONDENSED NOTES TO ~~CONDENSED CONSOLIDATED~~UNAUDITED FINANCIAL STATEMENTS

JUNE 30, ~~2021~~2022

(UNAUDITED)

Revenue Recognition and Contract Assets and Liabilities

In ~~May 2014, FASB issued an Accounting Standards Update,~~accordance with ASU ~~2014-09, establishing ASC~~Topic 606 - Revenue from Contracts with ~~Customers. ASU 2014-09, as amended~~Customers, the Company recognizes revenue in accordance with that core principle by ~~subsequent ASUs on~~applying the ~~topic, establishes~~following steps:

Step 1: Identify the contract(s) with a ~~single comprehensive model for entities~~customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to ~~use~~the performance obligations in ~~accounting for~~the contract.

Step 5: Recognize revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to whichwhen (or as) the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. The Company adopted this standard during the fiscal year ended September 30, 2018 using the modified retrospective approach, which requires applying the new standard to all existing contracts not yet completed as of the effective date and recordingsatisfies a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Based on an evaluation of the impact ASU 2014-09 will have on the Company’s sources of revenue, the Company has concluded that ASU 2014-09 did not have any impact on the process for, timing of, and presentation and disclosure of revenue recognition from customers and there was no cumulative effect adjustment.performance obligation.

The Company provides research and development support to biopharmaceutical companies to assist their drug development programs. In January 2021, the Company began performing tumor profiling to support clinical patient therapeutic intervention. The services provided by the Company are performance obligations under services contracts. These contracts are completed over time and may lead to deferred revenue for services not completed at the end of a ~~period.~~period which is reflected as contract liabilities on the accompanying unaudited balance sheet. The Company may include, in accounts receivable, amounts billed to customers in advance of services being initiated or completed. If the Company has a right to such consideration that is unconditional such as for contractually allowed billings, such amounts billed in advance would be offset by a contract liability. Management reviews the completion status of all jobs monthly to determine the appropriate amount of revenue to recognize. The Company offers these services to biopharmaceutical companies and to private individuals. The Company uses various output methods to recognize revenues. The revenue recognized from services provided to private individuals during the nine months ended June 30, 2022 and year ended September 30, 2021 were minimal and therefore was not disaggregated for disclosure purposes.

Contract Liabilities

Contract liabilities are cash deposits received from customers and advance billing included in accounts receivable on uncompleted contracts for which revenues have not been recognized as of the balance sheet date.

Contract liabilities as of June 30, 2022 and September 30, 2021 are as follows:

SCHEDULE OF CONTRACT LIABILITIES

	June 30, 2022			September 30, 2021
Contract liabilities beginning balance	$	135,150		$	—
Billings and cash receipts on uncompleted contracts		325,048			281,012
Less: revenues recognized during the period		(157,525	)		(145,862	)
Total contract liabilities	$	302,672		$	135,150

During the nine months ended June 30, 2022, the Company recognized $157,525 of the contract liabilities, of which $22,250 was related to the uncompleted contracts from the ~~tumor profiling services was not significant and management had not identified any disaggregation of revenue.~~prior period.

Cost of Revenue

The cost of revenue consists of the cost of labor, supplies and materials.

Accounts Receivable and Allowance for Doubtful Accounts

Trade receivables are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis and dodoes not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition.

Any charges to the allowance for doubtful accounts on accounts receivable are charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and the current status of accounts receivable. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired.

Concentrations

Concentration of Credit Risk

The Company maintains its cash in banks and financial institutions that at times may exceed the federally insured limit of $250,000. As of June 30, 2022 and September 30, 2021, the cash balances were in excess of the FDIC insured limit by $0 and $68,122, respectively. The Company has not experienced any losses in such accounts through June 30, 2022.

THERALINK TECHNOLOGIES, INC.

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

JUNE 30, 2022

(UNAUDITED)

Concentration of Revenues

For the three months ended June 30, 2022, the Company generated total revenue of $164,213 of which 52% and 13% were from two of the Company’s customers. For the three months ended June 30, 2021, the Company generated total revenue of $278,925 of which 56%, 18% and 14% were from three of the Company’s customers.

For the nine months ended June 30, ~~2020,~~2022, the Company generated total revenue of $~~24,886~~262,688 of which 32%, 23% and 17% were from ~~one customer.~~

three of the Company’s customers. For the nine months ended June 30, 2021, the Company generated total revenue of $415,029 of which 38%, 14% and 13% were from three of the Company’s customers. ~~For the nine months ended June 30, 2020, the Company generated total revenue of $75,896~~ ~~from one customer.~~

Concentration of Accounts Receivable

As of June 30, ~~2021,~~2022, the Company had accounts receivable of $~~149,938~~109,380 of which 5234%, 1619%, 1314%, 12%, 11% and 1310% were from six of the Company’s customers, respectively. As of September 30, 2021, the Company did not have any accounts receivable.

Concentration of Contract Liabilities

As of June 30, 2022, the Company had deferred revenue reflected as contract liabilities of $302,672 of which 42%, 25%, 15% and 10% were from four of the Company’s customers. As of September 30, ~~2020, the Company did~~ 0~~t have any accounts receivable.~~

~~Concentration of Deferred Revenue~~

~~As of June 30,~~ 2021, the Company had deferred revenue reflected as contract liabilities of $~~148,550~~135,150 of which 4856%, 2224% and 16% were from three of the Company’s customers. ~~As of September 30, 2020, the Company did~~ no~~t have any deferred revenue.~~

~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~Concentration of Vendor

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2021~~Generally, the Company relies on one vendor to perform the Company’s patient reporting and contract research (formerly called sample analysis) which is an integral part of the Company’s operation and revenue stream. Any disruption in this service could have a material adverse effect on the Company’s business, financial condition and results of operations.

~~(UNAUDITED)~~

During the nine months ended June 30, 2022 and 2021, the Company incurred $275,372 and $733,242, respectively, or 100% of it patient reporting and contract research (formerly called sample analysis) expense from one vendor.

Basic and Diluted Loss Per Share

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. The following potentially dilutive equity securities outstanding as of June 30, ~~2021~~2022 and ~~2020~~2021 were not included in the computation of dilutive loss per common share because the effect would have been anti-dilutive:

SCHEDULE OF ANTI-DILUTIVE SHARES OUTSTANDING

	June 30,				June 30,
	2021		2020		2022		2021
Stock warrants		920,572,535		856,674,588		1,876,207,963		920,572,535
Series C-1 preferred stock		445,301,289		445,301,289		156,626,175		445,301,289
Series C-2 preferred stock		733,542,619		733,542,619		453,067,129		733,542,619
Series D-1 preferred stock		—		5,081,550,620
Series D-2 preferred stock		—		41,216,000
Series E preferred stock		533,333,333		—		638,977,636		533,333,333
Series F preferred stock						319,488,818		—
Convertible notes						1,417,522,294		—
		2,632,749,776		7,158,285,116		4,861,890,015		2,632,749

Income Taxes

The Company accounts for income tax using the liability method prescribed by ASC 740 - Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

THERALINK TECHNOLOGIES, INC.

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

JUNE 30, 2022

(UNAUDITED)

The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company had 0 uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. However, 0 such interest and penalties were recorded as of June 30, 2022 and September 30, 2021.

Related Parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

Leases

~~In February 2016,~~The Company accounts for its leases using the ~~Financial~~method prescribed by ASC 842 – Lease Accounting ~~Standards Board (“FASB”) issued ASU 2016-02,~~ ~~Leases~~ ~~(Topic 842)~~. The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. The updated guidance is effective for interim and annual periods beginning after December 15, 2018.

~~On January 1, 2019, the~~ Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessedassess whether the contract is, or contains, a ~~lease. The Company’s assessment~~lease at the inception of a contract which is based ~~on: (1)~~on (i) whether the contract involves the use of a distinct identified asset, ~~(2)~~(ii) whether the Company ~~obtain~~obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and ~~(3)~~(iii) whether the Company has the right to direct the use of the asset. The Company ~~will allocate~~allocates the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right-of-use (“ROU”) assets and lease liabilities for short-term leases that have a term of 12 months or less.

Operating and financing lease ROU assets represents the right to use the leased asset for the lease term. Operating and financing lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the ~~condensed consolidated~~unaudited statements of operations.

~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2021~~

~~(UNAUDITED)~~

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and ~~edging—~~Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470- 20, Debt with Conversion and Other Options, for convertible instruments. Under the amendments in ASU 2020-06, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate when applying the guidance in Topic 835, Interest. The amendments in ASU 2020-06 provide financial statement users with a simpler and more consistent starting point to perform analyses across entities. The amendments also improve the operability of the guidance and reduce, to a large extent, the complexities in the accounting for convertible instruments and the difficulties with the interpretation and application of the relevant guidance. To further improve the decision usefulness and relevance of the information being provided to users of financial statements, amendments in ASU 2020-06 increased information transparency by making the following amendments to the disclosure for convertible instruments:

1.	~~Add~~Added a disclosure objective
2.	~~Add~~Added information about events or conditions that occur during the reporting period that cause conversion contingencies to be met or conversion terms to be significantly changed
3.	~~Add~~Added information on which party controls the conversion rights
4.	~~Align~~Aligned disclosure requirements for contingently convertible instruments with disclosure requirements for other convertible instruments
5.	~~Require~~Required that existing fair value disclosures in Topic 825, Financial Instruments, be provided at the individual convertible instrument level rather than in the aggregate.

THERALINK TECHNOLOGIES, INC.

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

JUNE 30, 2022

(UNAUDITED)

Additionally, for convertible debt instruments with substantial premiums accounted for as paid-in capital, amendments in ASU 2020-06 added disclosures about (1) the fair value amount and the level of fair value hierarchy of the entire instrument for public business entities and (2) the premium amount recorded as paid-in capital.

The amendments in ASU 2020-06 are effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of its annual fiscal year and are allowed to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. In applying the modified retrospective method, entities should apply the guidance to transactions outstanding as of the beginning of the fiscal year in which the amendments are adopted. Transactions that were settled (or expired) during prior reporting periods are unaffected. The cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings at the date of adoption. If an entity elects the fully retrospective method of transition, the cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings in the first comparative period presented. The Company ~~is evaluating the impact of the revised guidance~~early adopted ASU 2020-06 and ~~believes that it will~~its adoption did not have ~~a significant~~any material impact on the Company’s financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company early adopted ASU 2020-06 and its ~~consolidated~~adoption did not have any material impact on the Company’s financial statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company’s ~~consolidated~~ financial statements.

NOTE 3 – ~~ASSET SALE~~DISPOSAL OF SUBSIDIARIES AND RECAPITALIZATION ~~TRANSACTION~~

Avant provided personalized medical data through its Theralink assays, initially for breast cancer, to assist the treating physician in a data-driven process for treatment decision support and to help enable predictive biomarker-based patient therapy selection. Avant was a developerAdministrative Dissolution of phosphoproteomic technologies for measuring the activation state of therapeutic targets and signaling pathways, a key metric for biopharmaceuticals, with applications across multiple cancer types, including breast, non-small cell lung, gastrointestinal (“GI”), gynecologic and pancreatic, among others.

~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2021~~

~~(UNAUDITED)~~OncBioMune, LLC

On ~~June 5, 2020,~~July 11, 2021, the Company’s wholly-owned subsidiary OncBioMune, LLC was administratively dissolved by the Louisiana Secretary of State for failing to meet its filing requirements and pay the associated fees (see Note 1). The Company ~~closed the Asset Purchase Agreement entered into with Avant~~deconsolidated OncBioMune, LLC on ~~May 12, 2020. Pursuant to the Asset Purchase Agreement, the Company acquired substantially all~~July 11, 2021 and recognized a gain of ~~the assets and business of Avant and assumed certain of its liabilities~~$9,916 which was recorded in the ~~Asset Sale Transaction. Upon~~statement of operations as a gain on the terms and subject to the conditions of the Asset Purchase Agreement, Avant sold to the Company, all of Avant’s title and interest in all of the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible (including goodwill), wherever located and whether existing or hereafter acquired, except for the specific excluded assets, which relate to, or are used or held for use in connection with, Avant’s business. The Company also hired Avant’s employees upon consummation of the Asset Sale Transaction. As consideration for the Asset Sale Transaction, Avant was issued ~~1,000~~ ~~shares~~dissolution of a ~~newly created Series D-1 Preferred Stock which held~~ ~~54.55% of all voting rights on an as-converted basis with the common stock. Upon the increase of the Company’s authorized shares of common stock from~~ ~~6,666,667~~ ~~shares to~~ ~~12,000,000,000~~ ~~shares effective September 24, 2020, all such shares of Series D-1 Preferred Stock issued to Avant automatically converted into~~ ~~5,081,550,620~~ shares of the Company’s common stock. Avant possessed majority voting control of the Company immediately following the Asset Sale Transaction and controlled the Company’s Board of Directors after the termination of the ten-day waiting period required by Rule 14f-1 under the Exchange Act. Accordingly, the Asset Sale Transaction was accounted for, in substance, as an asset acquisition of the Company’s net assets by Avant and a recapitalization of Avant as discussed in detail below under ~~“Accounting for the Asset Sale Transaction”.~~ ~~Avant is considered the historical registrant and the historical operations presented are those of Avant since Avant obtained~~ ~~54.55% majority voting control of the Company.~~

On June 5, 2020, pursuant to the Asset Purchase Agreement, the Company: (i) entered into an employment agreement with Dr. Michael Ruxin to serve as the Company’s Chief Executive Officer, President and a director (see Note 10); (ii) entered into an employment agreement with Jeffery Busch to serve as the Company’s Chairman of the Board of Directors (see Note 10); and (iii) appointed Yvonne Fors to its Board of Directors.subsidiary.

~~Accounting for the Asset Sale Transaction~~

~~The Asset Sale Transaction was accounted for, in substance, as an asset acquisition~~Exercise of ~~the Company’s net assets by Avant and a recapitalization~~Options to Purchase Shares of ~~Avant as the Company did not meet the definition of a business under the framework provided under ASC 805-10-55-5D through 55-6 -~~ ~~Business Combination~~~~. Avant is considered the historical registrant and the historical operations presented are those of Avant since Avant obtained~~ ~~54.55% majority voting control of the Company where, in effect, the Company is the legal acquirer (accounting acquiree) and Avant is the accounting acquirer (legal acquiree).~~

~~The cost of the Asset Sale Transaction was determined in accordance with ASC 805-50-30-1 through 30-2~~ ~~Business Combinations~~, which states in part that assets are recognized based on their cost to the acquiring entity, which generally includes the transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of noncash assets given as consideration differs from the assets’ carrying amounts on the acquiring entity’s books. If the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or equity interests issued), measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable.OncBioMune Sub Inc.

In ~~accordance~~connection with ~~ASC 805-50-30-1, the fair value of the~~ ~~1,000~~ ~~shares of Series D-1 Preferred Stock, issued as consideration, was determined to be $246,656~~ ~~which was the fair value of the Company’s net assets that were acquired by Avant as of the closing date of the transaction. The cost of~~ the Asset Sale Transaction, ~~was allocated~~the Company entered into an Exchange Agreement, effective June 5, 2020, by and among OncBioMune Pharmaceuticals, Inc. and the investors named therein, whereby the Company agreed to exchange certain convertible promissory notes and warrants outstanding for shares of Series C-1 Convertible Preferred Stock of the Company and the option to purchase shares of the Company’s wholly-owned subsidiary, OncBioMune Sub Inc. OncBioMune Sub Inc. holds the patents used in the prior business of OncBioMune Pharmaceuticals, Inc. In July 2021, certain of those investors exercised their options to purchase the shares of OncBioMune Sub Inc. On July 26, 2021, the Company transferred all 10,000 shares of OncBioMune Sub Inc. held by the Company to the ~~acquired assets and assumed liabilities based on their estimated fair values.~~various investors for aggregate proceeds of $1,000

~~SCHEDULE OF ASSETS AND LIABILITIES IN TRANSACTION~~

. The ~~following assets and liabilities~~proceeds were ~~assumed~~recorded in the ~~transaction:~~

Cash $ 675,928
Prepaid expense and other current assets 17,539
Total assets acquired 693,467

Accounts payable and other liabilities (40,149 )
Liabilities of discontinued operations (406,662 )
Total liabilities assumed (446,811 )

Net assets acquired $ 246,656
~~The functional currency~~statement of ~~the former subsidiaries which operated in Mexico is the Mexican Peso (“Peso”). The assumed liabilities of discontinued~~ operations were translated to U.S. dollars using period end rates of exchange for liabilities. Net gains and losses resulting from foreign exchange transactions are reflected as unrealized gain (loss) on exchange rate in the consolidated statements of operations and is a non-cash loss. As a result of foreign currency translations, which are a non-cash adjustment, the Company reported unrealized (loss) on exchange rate of $0 ~~and $(22,686)~~ ~~during the three and nine months ended June 30, 2021, respectively.~~
15
~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~During the three and nine months ended June 30, 2021, $~~0 ~~and $227,294~~ ~~of the assumed liabilities of discontinued operations were written-off, in accordance with ASC 405-20-40-1b, were recorded~~ as a gain on ~~debt extinguishment on~~ the ~~accompanying condensed consolidated statement~~disposal of ~~operations.~~a subsidiary (see Note 1).

NOTE 4 – MARKETABLE SECURITIES

During the fiscal year ended 2017, the Company acquired 1,000,000 shares of common stock of Amarantus BioScience Holdings, Inc. (“AMBS”) with a fair value of $40,980. The AMBS common stock is recorded as marketable securities in the accompanying ~~condensed consolidated~~unaudited balance ~~sheets and its~~sheets. Its fair value is adjusted every reporting period and the change in fair value is recorded in the ~~condensed consolidated~~unaudited statements of operations as unrealized gain or (loss) on marketable securities. During the ~~three and~~ nine months ended June 30, 2022 and 2021, the Company recorded $~~3,900~~8,600 and $3,600 of unrealized loss on marketable securities, respectively. As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the fair value of these shares ~~were~~was $~~7,500~~2,400 and $~~11,100~~11,000, respectively.
14
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment are recorded at ~~cost and once~~cost. Once placed in service, they are depreciated on the straight-line method over their estimated useful lives. Leasehold improvements are accreted over the shorter of the estimated economic life or related lease terms. Fixed assets consist of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT
Estimated
Useful Life in
Years

June 30,
2021
September 30,
2020 Estimated
Useful Life in
Years
June 30,
2022
September 30,
2021
(Unaudited) (Unaudited)
Laboratory equipment 5 $ 470,158 $ 404,628 5 $ 553,648 $ 470,159
Furniture 5 24,567 13,367 5 24,567 24,567
Leasehold improvements 5 347,809 347,809 5 353,826 349,115
Computer equipment 3 61,194 53,060 3 68,490 68,490
Property and equipment, gross 903,728 818,864
Property and equipment gross 1,000,531 912,331
Less accumulated depreciation (177,898 ) (74,042 ) (322,159 ) (213,404 )
Property and equipment, net $ 725,830 $ 744,822 $ 678,372 $ 698,927

For the three ~~and nine~~ months ended June 30, 2022 and 2021, depreciation expense related to property and equipment amounted to $36,825 and $34,879, respectively.
For the nine months ended June 30, 2022 and 2021, depreciation expense related to property and equipment amounted to $108,754 and $103,856, respectively.
Leased equipment was not included in the table above as it was accounted for in accordance with ASU 842 – Leases. These leases are discussed in Note 7 under financing lease right-of-use (“ROU”) assets and financing lease liabilities.

NOTE 6 – DEBT
At June 30, 2022, the convertible notes payable consisted of the following:
SCHEDULE OF CONVERTIBLE NOTES PAYABLE

June 30,
2022

September 30,
2021

Principal amount $ 2,425,000 $ —
Less: debt discount (2,142,533 ) —
Convertible notes payable, net $ 282,467 $ —

Principal amount – related party $ 2,900,000 $ 1,000,000
Less: debt discount – related party (1,925,238 ) (935,019 )
Convertible note payable - related party, net $ 974,762 $ 64,981

Total convertible notes payable, net $ 1,257,229 $ 64,981

Convertible Debt – Related Party

On May 12, 2021, the Company entered into a Securities Purchase Agreement ~~(the “SPA”~~(“May 2021 SPA”) with a related party, who is an ~~affiliated investor (the “Investor”~~affiliate stockholder (“May 2021 Investor”) to purchase a convertible note ~~(the “Note”~~(“May 2021 Note”) and accompanying ~~warrant (the “Warrant”~~warrants (“May 2021 Warrants”) for an aggregate investment amount of $1,000,000 (see Note 8). The May 2021 Note has a principal value of $1,000,000 and bears an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the May 2021 Note)) and shall mature on May 12, 2026. The Company received the proceeds in three tranches with the first tranche of $333,334 received in May 2021, the second tranche of $333,333 received in June 2021 and the third tranche of $333,333 received in July 2021. The May 2021 Note is convertible at any time into shares of the Company’s common stock at a conversion price equal to $0.00313 per share for any amount of principal and accrued interest remaining outstanding (subject to adjustment). The Company may prepay the May 2021 Note at any time in an amount equal to 110% of the outstanding principal balance and accrued interest. In connection with the Company’s obligations under the May 2021 Note, the Company entered into a security agreement (“May 2021 Security Agreement”) with the May 2021 Investor as the agent pursuant to which the Company granted a lien on the laboratory equipment of the Company (“Collateral”), for the benefit of the May 2021 Investor, to secure the Company’s obligations under the May 2021 Note. Upon an Event of Default (as defined in the May 2021 Note), the May 2021 Investor may, among other things, collect or take possession of the Collateral, proceed with the foreclosure of the security interest in the Collateral or sell, lease or dispose of the Collateral. The May 2021 Note and May 2021 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the May 2021 Note and May 2021 Warrants. The conversion and exercise price of the May 2021 Note and May 2021 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. During the year ended September 30, 2021, the Company paid $19,142 of accrued interest. As of September 30, 2021, the May 2021 Note had an outstanding principal balance of $1,000,000 and accrued interest of $6,575. It is reflected in the accompanying balance sheet at $64,981, as a long-term convertible note payable – related party, net of discount. As of June 30, 2022, the May 2021 Note had an outstanding principal balance of $1,000,000 and accrued interest of $4,932. It is reflected in the accompanying unaudited balance sheet at $216,470 as a long-term convertible note payable – related party, net of discount in the amount of $783,530 (see Note 8).
15
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
The May 2021 Warrants has an exercise price of $0.00313 per share (subject to adjustment) until May 12, 2026 and is exercisable for cash at any time. The May 2021 Warrants was valued at $984,200 using the relative fair value method which was recorded as a debt discount which is being amortized over the life of the May 2021 Note. In addition, the May 2021 Note had a beneficial conversion feature (“BCF”) in the amount of $15,800 which was recorded as a debt discount which is being amortized over the life of the May 2021 Note. The debt discount totaled $1,000,000. During the nine months ended June 30, 2022, the Company amortized $151,489 of the debt discount which is included in interest expense in the accompanying unaudited statement of operations.
On November 1, 2021, the Company entered into a Securities Purchase Agreement (“First November 2021 SPA”) with a related party, who is an affiliate stockholder (“First November 2021 Investor”), to purchase three convertible notes (collectively as “First November 2021 Notes”) and three accompanying warrants (collectively as “First November 2021 Warrants”), for an aggregate investment amount of $1,000,000. The first note issued on November 1, 2021, had a principal balance of $334,000 and accompanying warrants to purchase up to 18,251,367 shares of common stock. The second note issued on December 1, 2021, had a principal balance of $333,000 and accompanying warrants to purchase up to 18,196,722 shares of common stock. The third note issued on January 1, 2022, had a principal balance of $333,000 and accompanying warrants to purchase up to 18,196,722 shares of common stock. The Company received $1,000,000 in aggregate proceeds from the First November 2021 Notes. The First November 2021 Notes bear an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the First November 2021 Notes)) and mature on November 1, 2026. The First November 2021 Warrants are exercisable at any time and expire on November 1, 2026. The First November 2021 Warrants were initially valued at $990,048 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the First November 2021 Notes. The First November 2021 Notes and First November 2021 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00366 per share (subject to adjustment). The First November 2021 Notes and First November 2021 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the First November 2021 Notes and First November 2021 Warrants. The conversion and exercise price of the First November 2021 Notes and First November 2021 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. The Company may prepay the First November 2021 Notes at any time in an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the First November 2021 Investor, the First November 2021 Notes can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company may pay the outstanding balance of the First November 2021 Notes in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the First November 2021 Notes), the Conversion Amount shall automatically be converted into fully-paid and non-assessable shares of common stock.
On January 26, 2022, a notice and request for consent regarding a change in offering terms was sent by the Company to the First November 2021 Investor. Upon the approval of the First November 2021 Investor, the Company modified the terms of the First November 2021 SPA which increased the warrants issuable from 20% to 100% of the common stock issuable upon conversion of the notes purchased. As a result, the First November 2021 Investor received additional cashlessly-exercisable warrants equal to 80% of the common stock issuable upon conversion of the First November 2021 Notes. The Company issued additional warrants to purchase up to 218,579,234 shares of common stock to the First November 2021 Investor which increased the total relative fair value of all warrants in total by $34,630 recorded as debt discount which is being amortized over the life of the First November 2021 Notes (see Note 8 and 9). The modification of the First November 2021 SPA did not meet the requirements of a debt extinguishment under ASC 470-50 - Debt Modifications and Exchanges; however it represented a substantial modification whereby the First November 2021 Investor received a substantial amount of additional warrants for the same principal amount of investment hence it was accounted for, in substance, as a debt modification ASC 470-50 and no gain or losses was recognized. As of June 30, 2022, the First November 2021 Notes had an outstanding principal of $1,000,000 and accrued interest of $6,575. The First November 2021 Notes are reflected in the accompanying unaudited balance sheet at $88,997 as a long-term convertible note payable – related party, net of discount in the amount of $911,003 (see Note 8) as of June 30, 2022.
16
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
On April 5, 2022, the Company entered into a Securities Purchase Agreement (“First April 2022 SPA”) with a related party, Matthew Schwartz, who is a member of the board of directors (“Investor”), to purchase a convertible note with principal of $100,000 (“First April 2022 Note”) with accompanying warrants to purchase 4,201,681 shares of common stock (“First April 2022 Warrants”). The Company received net proceeds of $100,000 on March 24, 2022. The First April 2022 Warrants were valued at $89,815 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the First April 2022 Note. The First April 2022 Warrants are exercisable at any time and expire on April 1, 2027. The First April 2022 Note bears an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the First April 2022 Note)) and matures on April 1, 2027. The First April 2022 Note and First April 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment). The First April 2022 Note and First April 2022 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the First April 2022 Note and First April 2022 Warrants. The conversion and exercise price of the First April 2022 Note and First April 2022 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. For so long as the First April 2022 Warrants remains outstanding and until the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the agreement); (i) if the Company issues warrants to investors in an offering of common stock or of any equity linked security (each a “Subsequent Offering”), and such warrants equal more than 20% warrant coverage, then a number of additional shares will be added to the First April 2022 Warrants such that the First April 2022 Warrants shall equal the same percentage of the warrant coverage offered to the investors in the Subsequent Offering and; (ii) if the Company issues warrants in a Subsequent Offering which may be exercised by means of a cashless exercises, then the First April 2022 Warrants shall be exercisable by the same cashless exercise feature of the warrants issued in the Subsequent Offering. The Company may prepay the First April 2022 Note at any time at an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the Investor, the First April 2022 Note can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company may pay the outstanding balance of the First April 2022 Note in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange, the conversion amount (as defined in the First April 2022 Note) shall automatically be converted into fully-paid and non-assessable shares of common stock. As of June 30, 2022, the First April 2022 Note had an outstanding principal balance of $100,000 and accrued interest of $1,885. The First April 2022 Note is reflected in the accompanying unaudited balance sheet at $14,424 as a long-term convertible note payable – related party, net of discount in the amount of $85,576 (see Note 8) as of June 30, 2022.
On May 9, 2022, the Company entered into a Securities Purchase Agreement (“May 2022 SPA”) with a related party, who is an affiliate stockholder (“May 2022 Investor”), to purchase four convertible notes for an aggregate investment amount of $1,000,000 (collectively as “May 2022 Notes”) and accompanying warrants to purchase shares of common stock equal to 20% of the number of the total shares of common stock issuable upon the conversion of the May 2022 Notes (collectively as “May 2022 Warrants”). The first note issued on May 9, 2022, had a principal balance of $250,000 and accompanying warrants to purchase up to 10,504,202 shares of common stock. The second note issued on May 24, 2022, had a principal balance of $250,000 and accompanying warrants to purchase up to 10,504,202 shares of common stock. The third note issued on June 10, 2022, had a principal balance of $250,000 and accompanying warrants to purchase up to 10,504,202 shares of common stock. The Company received $750,000 in aggregate proceeds from the May 2022 Notes. The May 2022 Notes bear an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the May 2022 Notes)) and mature on April 1, 2027. The May 2022 Warrants are exercisable at any time and expire on April 1, 2027. The May 2022 Warrants were valued at $142,489 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the May 2022 Notes. The May 2022 Notes and May 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment). The May 2022 Notes and May 2022 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the May 2022 Notes and May 2022 Warrants. The conversion and exercise price of the May 2022 Notes and May 2022 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. For so long as the May 2022 Warrants remains outstanding and until the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the agreement); (i) if the Company issues warrants to investors in an offering of common stock or of any equity linked security (each a “Subsequent Offering”), and such warrants equal more than 20% warrant coverage, then a number of additional shares will be added to the May 2022 Warrants such that the May 2022 Warrants shall equal the same percentage of the warrant coverage offered to the investors in the Subsequent Offering and; (ii) if the Company issues warrants in a Subsequent Offering which may be exercised by means of a cashless exercises, then the May 2022 Warrants shall be exercisable by the same cashless exercise feature of the warrants issued in the Subsequent Offering. The Company may prepay the May 2022 Notes at any time at an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the May 2022 Investor, the May 2022 Notes can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company may pay the outstanding balance of the May 2022 Notes in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange, the conversion amount (as defined in the May 2022 Notes) shall automatically be converted into fully-paid and non-assessable shares of common stock. As of June 30, 2022, the May 2022 Notes had an aggregate outstanding principal balance of $750,000 and accrued interest of $5,973. The May 2022 Notes are reflected in the accompanying unaudited balance sheet at $610,743 as a long-term convertible note payable – related party, net of discount in the amount of $139,257 (see Note 8) as of June 30, 2022.
On June 15, 2022, the Company closed a Securities Purchase Agreement (“June 2022 SPA”) with a related party, Danica Holly, who is a member of the board of directors (“Investor”), to purchase a convertible note with principal of $50,000 (“June 2022 Note”) with accompanying warrants to purchase 2,100,840 shares of common stock (“June 2022 Warrants”). The Company received net proceeds of $50,000 on June 15, 2022. The June 2022 Warrants were valued at $5,924 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the June 2022 Note. The June 2022 Warrants are exercisable at any time and expire on April 1, 2027. The June 2022 Note bears an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the June 2022 Note)) and matures on April 1, 2027. The June 2022 Note and June 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment). The June 2022 Note and June 2022 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the June 2022 Note and June 2022 Warrants. The conversion and exercise price of the June 2022 Note and June 2022 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. For so long as the June 2022 Warrants remains outstanding and until the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the agreement); (i) if the Company issues warrants to investors in an offering of common stock or of any equity linked security (each a “Subsequent Offering”), and such warrants equal more than 20% warrant coverage, then a number of additional shares will be added to the June 2022 Warrants such that the June 2022 Warrants shall equal the same percentage of the warrant coverage offered to the investors in the Subsequent Offering and; (ii) if the Company issues warrants in a Subsequent Offering which may be exercised by means of a cashless exercises, then the June 2022 Warrants shall be exercisable by the same cashless exercise feature of the warrants issued in the Subsequent Offering. The Company may prepay the June 2022 Note at any time at an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the Investor, the June 2022 Note can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company may pay the outstanding balance of the June 2022 Note in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange, the conversion amount (as defined in the June 2022 Note) shall automatically be converted into fully-paid and non-assessable shares of common stock. As of June 30, 2022, the June 2022 Note had an outstanding principal balance of $50,000 and accrued interest of $164. The June 2022 Note are reflected in the accompanying unaudited balance sheet at $44,127 as a long-term convertible note payable – related party, net of discount in the amount of $5,873 (see Note 8) as of June 30, 2022.
17
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
Convertible Debt
On November 1, 2021, the Company entered into a Securities Purchase Agreement (“Second November 2021 SPA”) with an investor (“Second November 2021 Investor”) to purchase two convertible notes (collectively as “Second November 2021 Notes”) and two accompanying warrants (collectively as “Second November 2021 Warrants”), for an aggregate investment amount of $500,000. The first note, issued on November 1, 2021, had a principal balance of $250,000 and accompanying warrants to purchase up to 13,661,203 shares of common stock. The second note issued on December 1, 2021, had a principal balance of $250,000 and accompanying warrants to purchase up to 13,661,203 shares of common stock. The Company received $500,000 in aggregate proceeds from the Second November 2021 Notes. The Second November 2021 Notes bear an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the Second November 2021 Notes)) and mature on November 1, 2026. The Second November 2021 Warrants are exercisable at any time and expire on November 1, 2026. The Second November 2021 Warrants to purchase up to 27,322,406 shares of common stock were valued at $495,560 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the Second November 2021 Notes. The Second November 2021 Notes and Second November 2021 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00366 per share (subject to adjustment). The Second November 2021 Notes and Second November 2021 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the Second November 2021 Notes and Second November 2021 Warrants. The conversion and exercise price of the Second November 2021 Notes and Second November 2021 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. The Company may prepay the Second November 2021 Notes at any time in an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the Second November 2021 Investor, the Second November 2021 Notes can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company may pay the outstanding balance of the Second November 2021 Notes in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the Second November 2021 Notes), the conversion amount shall automatically be converted into fully-paid and non-assessable shares of common stock. The Company shall not effect the conversion of any of the Second November 2021 Notes held by the Second November 2021 Investor, and the Second November 2021 Investor shall not have the right to convert any of the Second November 2021 Notes and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, such restricted holder would beneficially own in excess of 4.99% of the shares of common stock outstanding immediately after giving effect to such conversion (which provision may be increased to a maximum of 9.9% by written notice from the Second November 2021 Investor to the Company, which notice shall be effective 61 calendar days after the date of such notice).
On January 26, 2022, a notice and request for consent regarding a change in offering terms was sent by the Company to the Second November 2021 Investor. Upon the approval of the Second November 2021 Investor, the Company modified the terms of the Second November 2021 SPA which increased the warrants issuable from 20% to100% of the common stock issuable upon conversion of the notes purchased. As a result, the Second November 2021 Investor received additional cashlessly-exercisable warrants equal to 80% of the common stock issuable upon conversion of the Second November 2021 Notes. The Company issued additional warrants to purchase up to 109,289,616 shares of common stock to the Second November 2021 Investor which increased the total relative fair value of all warrants in total by $22,429 recorded as debt discount which is being amortized over the life of the Second November 2021 Notes (see Note 9). The modification of the Second November 2021 SPA did not meet the requirements of a debt extinguishment under ASC 470-50 - Debt Modifications and Exchanges; however it represented a substantial modification whereby the Second November 2021 Investor received a substantial amount of additional warrants for the same principal amount of investment hence it was accounted for, in substance, as a debt modification ASC 470-50 and no gain or losses was recognized. As of June 30, 2022, the Second November 2021 Notes had an outstanding principal balance of $500,000 and accrued interest of $24,438. The Second November 2021 Notes are reflected in the accompanying unaudited balance sheet at $44,087 as a long-term convertible note payable, net of discount in the amount of $455,913 as of June 30, 2022.
18
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
On November 1, 2021, the Company entered into a Securities Purchase Agreement (“Third November 2021 SPA”) with an investor (“Third November 2021 Investor”) to purchase two convertible notes (collectively as “Third November 2021 Notes”) and two accompanying warrants (collectively as “Third November 2021 Warrants”), for an aggregate investment amount of $500,000. The first note issued on November 1, 2021, had a principal balance of $250,000 and accompanying warrants to purchase up to 13,661,203 shares of common stock. The second note issued on December 1, 2021, had a principal balance of $250,000 and accompanying warrants to purchase up to 13,661,203 shares of common stock. The Company received $500,000 in aggregate proceeds from the Third November 2021 Notes. The Third November 2021 Notes bear an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the Third November 2021 Notes)) and mature on November 1, 2026. The Third November 2021 Warrants are exercisable at any time and expire on November 1, 2026. The Third November 2021 Warrants to purchase up to 27,322,406 shares of common stock were valued at $495,560 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the Third November 2021 Notes. The Third November 2021 Notes and Third November 2021 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00366 per share (subject to adjustment). The Third November 2021 Notes and Third November 2021 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the Third November 2021 Notes and Third November 2021 Warrants. The conversion and exercise price of the Third November 2021 Notes and Third November 2021 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. The Company may prepay the Third November 2021 Notes at any time in an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the Third November 2021 Investor, the Third November 2021 Notes can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company may pay the outstanding balance of the Third November 2021 Notes in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the Third November 2021 Notes), the Conversion Amount shall automatically be converted into fully paid and non-assessable shares of common stock. The Company shall not effect the conversion of any of the Third November 2021 Notes held by the Third November 2021 Investor, and the Third November 2021 Investor shall not have the right to convert any of the Third November 2021 Notes and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, such restricted holder would beneficially own in excess of 4.99% of the shares of common stock outstanding immediately after giving effect to such conversion (which provision may be increased to a maximum of 9.9% by written notice from the Third November 2021 Investor to the Company, which notice shall be effective 61 calendar days after the date of such notice).
On January 26, 2022, a notice and request for consent regarding a change in offering terms was sent by the Company to the Third November 2021 Investor. Upon the approval of the Third November 2021 Investor, the Company modified the terms of the Third November 2021 SPA which increased the warrants issuable from 20% to100% of the common stock issuable upon conversion of the notes purchased. As a result, the Third November 2021 Investor received additional cashlessly-exercisable warrants equal to 80% of the common stock issuable upon conversion of the Third November 2021 Notes. The Company issued additional warrants to purchase up to 109,289,616 shares of common stock to the Third November 2021 Investor which increased the total relative fair value of all warrants in total by $22,429 recorded as debt discount which is being amortized over the life of the Third November 2021 Notes (see Note 9). The modification of the Third November 2021 SPA did not meet the requirements of a debt extinguishment under ASC 470-50 - Debt Modifications and Exchanges; however it represented a substantial modification whereby the Third November 2021 Investor received a substantial amount of additional warrants for the same principal amount of investment, hence it was accounted for, in substance, as a debt modification ASC 470-50 and no gain or losses was recognized. As of June 30, 2022, the Third November 2021 Notes had an outstanding principal balance of $500,000 and accrued interest of $24,329. The Third November 2021 Notes are reflected in the accompanying unaudited balance sheet at $44,087 as a long-term convertible note payable, net of discount in the amount of $455,913 as of June 30, 2022.
On January 27, 2022, the Company entered into a Securities Purchase Agreement (“First January 2022 SPA”) with an investor (“First January 2022 Investor”) to purchase a convertible note with a principal balance of $500,000 (“First January 2022 Note”) with the Company receiving $500,000 in proceeds and accompanying warrants to purchase up to 136,612,022 shares of common stock (“First January 2022 Warrants”). The First January 2022 Note bears an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the First January 2022 Note)) and mature on November 1, 2026. The First January 2022 Warrants are exercisable at any time and expire on November 1, 2026. The First January 2022 Warrants to purchase up to 136,612,022 shares of common stock were valued at $472,403 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the First January 2022 Note. The First January 2022 Note and First January 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00366 per share (subject to adjustment). The First January 2022 Note and First January 2022 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the First January 2022 Note and First January 2022 Warrants include. The conversion and exercise price of the First January 2022 Note and First January 2022 Warrants include are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. The Company may prepay the First January 2022 Note at any time in an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the First January 2022 Investor, the First January 2022 Note can be converted in whole or in part at any time and from time to time). Further, upon maturity the Company may pay the outstanding balance of the First January 2022 Note in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the First January 2022 Note), the conversion amount shall automatically be converted into fully-paid and non-assessable shares of common stock. The Company shall not effect any conversion of the First January 2022 Note and the First January 2022 Investor shall not have the right to convert any amount of the First January 2022 Note and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, such restricted holder would beneficially own in excess of 4.99% of the shares of common stock outstanding immediately after giving effect to such conversion (which provision may be increased to a maximum of 9.9% by such First January 2022 Investor by written notice from the First January 2022 Investor to the Company, which notice shall be effective 61 calendar days after the date of such notice. As of June 30, 2022, the First January 2022 Note had an outstanding principal balance of $500,000 and accrued interest of $16,877. The First January 2022 Note is reflected in the accompanying unaudited balance sheet at $45,712 as a long-term convertible note payable, net of discount in the amount of $454,288 as of June 30, 2022.
19
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
On January 31, 2022, the Company entered into a Securities Purchase Agreement (“Second January 2022 SPA”) with an investor (“Second January 2022 Investor”) to purchase a convertible note with principal balance of $500,000 (“Second January 2022 Note”) with the Company receiving $500,000 in proceeds and accompanying warrants to purchase up to 136,612,022 shares of common stock (“Second January 2022 Warrants”). The Second January 2022 Note bears an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the Second January 2022 Note)) and ~~shall~~ mature on ~~May 12,~~November 1, 2026~~(the “Maturity Date”)~~. The ~~Company received the proceeds in three tranches with the first tranche of $333,334~~ ~~received in May 2021, the second tranche of $333,333~~ ~~received in June 2021 and the third tranche of $333,333~~ ~~received in July 2021 (see Note 11). The Note is convertible~~Second January 2022 Warrants are exercisable at any time and expire on November 1, 2026. The Second January 2022 Warrants to purchase up to 136,612,022 shares of common stock were valued at $469,810 using the relative fair value method and recorded as a debt discount which is being amortized over the life of the Second January 2022 Note. The Second January 2022 Note and Second January 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a ~~conversion~~ price equal to $~~0.00313~~0.00366 per share ~~for any amount of principal and accrued interest remaining outstanding~~ (subject to ~~adjustment as provided therein)~~adjustment). The Second January 2022 Note and Second January 2022 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the Second January 2022 Note and Second January 2022 Warrants. The conversion and exercise price of the Second January 2022 Note and Second January 2022 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. The Company may prepay the Second January 2022 Note at any time in an amount equal to 110% of the outstanding principal balance and accrued interest. ~~In connection with~~At the ~~Company’s obligations under~~election of the Second January 2022 Investor, the Second January 2022 Note can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company ~~entered~~may pay the outstanding balance of the Second January 2022 Note in cash or convert it into ~~a security agreement (the “Security Agreement”) with Ashton Capital Corporation as agent, pursuant to which~~shares of common stock. Upon the listing by the Company ~~granted a lien on certain pieces of laboratory equipment~~or the trading of the ~~Company (the “Collateral”), for the benefit of the Investor, to secure the Company’s obligations under the Note. Upon an Event of Default~~common stock on a Qualified National Exchange (as defined in the ~~Notes)~~Second January 2022 Note), the ~~Investor may, among other things, collect or take possession~~conversion amount shall automatically be converted into fully-paid and non-assessable shares of common stock. The Company shall not effect the conversion of any of the ~~Collateral, proceed with~~Second January 2022 Note held by the ~~foreclosure~~Second January 2022 Investor, and the Second January 2022 Investor shall not have the right to convert any of the ~~security interest~~Second January 2022 Note and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, such restricted holder would beneficially own in ~~the Collateral or sell, lease or dispose~~excess of 4.99% of the ~~Collateral.~~ shares of common stock outstanding immediately after giving effect to such conversion (which provision may be increased to a maximum of 9.9% by such Second January 2022 Investor by written notice from the Second January 2022 Investor to the Company, which notice shall be effective 61 calendar days after the date of such notice.As of June 30, ~~2021,~~2022, the Second January 2022 Note ~~has~~had an outstanding principal balance of $~~666,667~~500,000 and accrued interest of $~~5,626~~16,438. The Second January 2022 Note is reflected in the accompanying unaudited balance sheet at $44,799 as a long-term convertible note payable, net of discount in the amount of $455,201 as of June 30, 2022.

~~In connection~~During April 2022, the Company entered into a Securities Purchase Agreement (“Second April 2022 SPA”) with various investors (“Investors”), to purchase convertible notes for an aggregate investment amount of $425,000 (collectively as “Second April 2022 Notes”) with the ~~Note, the Investor was issued a Warrant~~Company receiving $425,000 of proceeds and accompanying warrants to purchase up to an aggregate of ~~63,897,764~~ 17,857,144shares of common stock ~~at an exercise price of $0.00313~~ ~~per share (subject to adjustment~~(collectively as ~~provided therein) until May 12, 2026 (see Note 9)~~“Second April 2022 Warrants”). The Second April 2022 Warrants ~~are exercisable for cash at any time. The Warrant was~~were valued at $~~984,200~~ 335,593using the relative fair value method ~~which was~~and were recorded as a debt discount which is being amortized over the life of the ~~Note. In addition,~~Second April 2022 Notes. The Second April 2022 Notes bear an interest rate of 8% per annum (which shall increase to 10% per year upon the ~~Note~~occurrence of an “Event of Default” (as defined in the Second April 2022 Notes)) and matures on April 1, 2027. The Second April 2022 Warrants are exercisable at any time and expire on April 1, 2027. The Second April 2022 Notes and Second April 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment). The Second April 2022 Notes and Second April 2022 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the Second April 2022 Notes and Second April 2022 Warrants. The conversion and exercise price of the Second April 2022 Notes and Second April 2022 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. For so long as the Second April 2022 Warrants remains outstanding and until the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the agreement); (i) if the Company issues warrants to investors in an offering of common stock or of any equity linked security (each a “Subsequent Offering”), and such warrants equal more than 20% warrant coverage, then a number of additional shares will be added to the Second April 2022 Warrants such that the Second April 2022 Warrants shall equal the same percentage of the warrant coverage offered to the investors in the Subsequent Offering and; (ii) if the Company issues warrants in a Subsequent Offering which may be exercised by means of a cashless exercises, then the Second April 2022 Warrants shall be exercisable by the same cashless exercise feature of the warrants issued in the Subsequent Offering. The Company may prepay the Second April 2022 Notes at any time at an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the Investors, the Second April 2022 Notes can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company may pay the outstanding balance of the Second April 2022 Notes in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange, the conversion amount (as defined in the Second April 2022 Notes) shall automatically be converted into fully-paid and non-assessable shares of common stock. As of June 30, 2022, the Second April 2022 Notes had an aggregate outstanding principal balance of $425,000 and accrued interest of $7,140. The Second April 2022 Notes are reflected in the accompanying unaudited balance sheet at $103,782 as a ~~beneficial conversion feature (“BCF”)~~long-term convertible note payable, net of discount in the amount of $~~15,800~~ 321,218~~which was recorded as a debt discount which is being amortized over the life of the Note. The debt discount totaled $1,000,000~~ ~~of which $666,667~~ ~~was recorded as a debt discount equal to the proceeds received~~ as of June 30, ~~2021 and the remaining $333,333~~ ~~was recorded as deferred financing cost which is equal to the proceeds received subsequent to June 30, 2021. During the three months ended June 30, 2021, the Company amortized $14,116~~ ~~of the debt discount which is included in interest expense in the accompanying condensed consolidated balance sheet.~~2022.

1620

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~
CONDENSED NOTES TO ~~CONDENSED CONSOLIDATED~~UNAUDITED FINANCIAL STATEMENTS
JUNE 30, ~~2021~~2022
(UNAUDITED)

~~Note~~Notes Payable - Related Party

On April 26, 2021, the Company entered into a Promissory Note Agreement ~~(the “Note”)~~ with Jeffrey Busch who serves as a member of the Board of Directors ~~(“Lender”)~~and a related party, for a principal amount of $100,000. The Company received proceeds of $100,000. The ~~Note~~note bears an annual interest rate of 1%, matures on April 1, 2022and can be prepaid in whole or in part without penalty. Pursuant to the ~~Note,~~note, the Company has a 90-day grace period following the maturity date after which the ~~Lender~~lender shall charge a late payment fee equal to 1% of the outstanding principal balance and cost of collection, including legal fees. As of ~~June~~September 30, 2021, the note had an outstanding principal balance of $100,000 and accrued interest of $428 (see Note 8 and see amendment below).
On October 21, 2021, the Company entered into a Promissory Note Agreement with Jeffrey Busch who serves as a member of the Board of Directors and a related party, for a principal amount of $150,000. The Company received proceeds of $150,000. The note bore an annual interest rate of 1%, matured on December 1, 2021 and could have been prepaid in whole or in part without penalty. Pursuant to the note, the Company has a 90-day grace period following the maturity date after which the lender was permitted to charge a late payment fee equal to 1% of the outstanding principal balance and cost of collection, including legal fees. During the nine months ended June 30, 2022, the Company fully paid the outstanding balance on the note. As of June 30, 2022, the note had no outstanding balance (see Note 8).
On May 5, 2022, the Company and Jeffrey Busch (collectively as “Parties”) amended the April 26, 2021 note (discussed above) with principal amount of $100,000 (discussed above) (“Original Note”) pursuant to which the Parties increased the principal amount to $350,000 (“New Note”) with the Company receiving additional $250,000 of proceeds and added a contingent conversion feature. The New Note bears an annual interest rate of 1% (which shall increase to 2% in an event of a default) and matures on May 5, 2024. The New Note may not be prepaid and is only convertible upon an occurrence of a public offering. The outstanding principal plus any unpaid accrued interest (“Conversion Amount”) of the New Note is convertible into shares of common stock at the price for which the common stock was sold in the public offering. Pursuant to ASC 470-50 - Debt Modifications and Exchanges, the amendment was accounted for as a debt extinguishment because the contingent conversion feature added to the New Note resulted in a substantial modification of the Original Note. No gain or loss was recognized in connection with the debt extinguishment. As of June 30, 2022, the New Note had an outstanding principal balance of $~~100,000~~ 350,000, reflected as notes payable – related party in the accompanying unaudited balance sheet since the conditions for its contingent conversion has not yet been met, and accrued interest of $~~178~~1,650 (see Note 8).

Note Payable

In September 2017, the Company entered into a ~~loan~~note agreement with a third-party ~~investor (the “Loan”).~~investor. Pursuant to the ~~loan agreement,~~note, the Company borrowed ~~the~~a principal amount of $1,000. The ~~Loan~~note bears an annual interest rate of 33.3%, is unsecured and in default due to non-payment of the balance pursuant to the repayment terms. As of June 30, ~~2021,~~2022, the ~~loan~~note had principal and accrued interest balances of $1,000 and $~~1,271~~1,604, respectively.

NOTE 7 –LEASE LIABILITIES

Financing Lease Right-of-Use (“ROU”) Assets and Financing Lease Liabilities

Effective November 2018, the Company entered into a financing agreement with the first lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $379for a period of 60months commencing in November 2018 through October ~~2023~~2023.. At the effective date of the financing agreement, the Company recorded a financing lease payable of $~~16,064~~16,065.

Effective November 2018, the Company entered into a financing agreement with ~~the~~a second lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $1,439for a period of 60months commencing in November 2018 through October ~~2023~~2023.. At the effective date of the financing agreement, the Company recorded a financing lease payable of $62,394.
.
21
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)

Effective March 2019, the Company entered into a financing agreement with ~~the~~a third lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $1,496for a period of 60months commencing in March 2019 through February 2024.~~April 2024~~. At the effective date of the financing agreement, the Company recorded a financing lease payable of $64,940.

Effective August 2019, the Company entered into a financing agreement with ~~the~~a fourth lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $397for a period of 60months commencing in August 2019 through July 2024.~~August 2024~~. At the effective date of the financing agreement, the Company recorded a financing lease payable of $19,622.

Effective January 2020, the Company entered into a financing agreement with ~~the~~a fifth lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $1,395for a period of 60months commencing in January 2020 through December ~~2024~~2025.. At the effective date of the financing agreement, the Company recorded a financing lease payable of $68,821.

The significant assumption used to determine the present value of the financing lease payables ~~with a~~was the discount rate which ranged from ~~between~~ 8% and 15% based on the Company’s estimated effective rate pursuant to the financing agreements.

Financing lease right-of-use assets (“Financing ROU”) is summarized below:
SCHEDULE OF ~~FINANCING~~FINANCIAL LEASE RIGHT-OF-USE ASSETS

June 30,
2022
September 30,
2021
(Unaudited)
Financing ROU assets $ 231,841 $ 231,841
Less accumulated depreciation (155,295 ) (120,518 )
Balance of Financing ROU assets $ 76,546 $ 111,323
June 30,
2021 September 30,
2020
(Unaudited)
Financing ROU assets $ 231,841 $ 231,841
Less accumulated depreciation (108,926 ) (74,150 )
Balance of Financing ROU assets $ 122,915 $ 157,691
For the three months ended June 30, 2022 and 2021, depreciation expense related to Financing ROU assets amounted to $11,593 for both periods.
For the nine months ended June 30, 2022 and 2021, depreciation expense related to Financing ROU assets amounted to $34,777 for both periods.
Financing lease liability related to the Financing ROU assets is summarized below:
SCHEDULE OF FINANCIAL LEASE LIABILITY

June 30,
2022
September 30,
2021
(Unaudited)
Financing lease payables for equipment $ 231,841 $ 231,841
Total financing lease payables 231,841 231,841
Payments of financing lease liabilities (130,968 ) (95,726 )
Total 100,873 136,115
Less: short term portion (52,351 ) (47,730 )
Long term portion $ 48,522 $ 88,385
Future minimum lease payments under the financing lease agreements at June 30, 2022 are as follows:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Years ending September 30, Amount
(Unaudited)
2022 $ 15,321
2023 53,787
2024 40,875
2025 4,185
Total minimum financing lease payments 114,168
Less: discount to fair value (13,295 )
Total financing lease payable at June 30, 2022 $ 100,873

1722

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~
CONDENSED NOTES TO ~~CONDENSED CONSOLIDATED~~UNAUDITED FINANCIAL STATEMENTS
JUNE 30, ~~2021~~2022
(UNAUDITED)
~~For the three and nine months ended June 30, 2021, depreciation expense related to Financing ROU assets amounted to $11,592~~ ~~and $34,776, respectively.~~
~~Financing lease liability related to the Financing ROU assets is summarized below:~~
~~SCHEDULE OF FINANCING LEASE LIABILITY~~
June 30, 2021 September 30, 2020
(Unaudited)
Financing lease payables for equipment $ 231,841 $ 231,841
Total financing lease payables 231,841 231,841
Payments of financing lease liabilities (84,679 ) (53,491 )
Total 147,162 178,350
Less: short term portion (46,289 ) (42,234 )
Long term portion $ 100,873 $ 136,116
~~Future minimum lease payments under the financing lease agreements at June 30, 2021 are as follows:~~
~~SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF FINANCING LEASE~~
Years ending September 30, Amount
2021 $ 15,315
2022 61,266
2023 53,787
2024 40,875
2025 4,185
Total minimum financing lease payments 175,428
Less: discount to fair value (28,266 )
Total financing lease payable at June 30, 2021 $ 147,162

Operating Lease Right-of-Use (“ROU”) Asset and Operating Lease Liabilities

In December 2019, the Company entered into a lease agreement for its corporate and laboratory facility in Golden, Colorado. The lease is for a period of 6061 months, with an option to extend, commencing in February 2020 and expiring in February ~~2025~~2025.. Pursuant to the lease agreement, the lease requires the Company to pay a monthly base rent of; (i) $4,878in the first year; (ii) $5,026in the second year; (iii) $5,179in the third year; (iv) $5,335in the fourth year and; (v) $5,495in the fifth year, plus a pro rata share of operating expenses beginning February 2020.

In ~~adopting~~February 2020, pursuant to ASC ~~Topic~~ 842 – Leases, ~~(Topic 842),~~ the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs (see Note 2). In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. At the effective date of the lease, the Company recorded right-of-use assets and lease liabilities of $~~231,337~~.
~~For the nine months ended June 30, 2021, lease costs amounted to $44,864~~ ~~which included base lease costs of $26,363~~ ~~and other expenses of $18,501, all of which were expensed during the period and included in general and administrative expenses on the accompanying condensed consolidated statements of operations.~~
~~The significant assumption used to determine~~calculated the present value of the total lease ~~liability was~~payments using a discount rate of 12% which was based on the Company’s estimated incremental borrowing rate. The Company recorded an operating right-of-use asset and lease liability of $231,337 in connection with the lease.

~~Right-of-use asset (“ROU”) is summarized below:~~
~~SCHEDULE OF OPERATING RIGHT-OF-USE ASSET~~

June 30,
2021

September 30,
2020

(Unaudited)
Operating office lease $ 231,337 $ 231,337
Less accumulated reduction (52,879 ) (25,134 )
Balance of Operating ROU asset $ 178,458 $ 206,203
18
~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Operating lease liability related to the ROU asset is summarized below:~~
~~SCHEDULE OF OPERATING LEASE LIABILITY~~
June 30,
2021 September 30,
2020
(Unaudited)
Operating office lease $ 231,337 $ 231,337
Total operating lease liability 231,337 231,337
Reduction of operating lease liability (44,864 ) (18,501 )
Total 186,473 212,836
Less: short term portion (40,716 ) (35,943 )
Long term portion $ 145,757 $ 176,893
~~Future base lease payments under the non-cancellable operating lease at June 30, 2021 are as follows:~~
~~SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF OPERATING LEASE~~
Years ending September 30, Amount
2021 $ 15,080
2022 61,382
2023 63,236
2024 65,137
2025 27,474
Total minimum non-cancellable operating lease payments 232,309
Less: discount to fair value (45,836 )
Total operating lease liability at June 30, 2021 $ 186,473
On June 10, 2021, the Company entered into an amendment to its existing Warehouse Lease (the “Lease Amendment”), effective October 3, 2021, for its laboratory facility in Golden, ~~CO.~~CO (see Note 10). The ~~amendment was entered into in order to:~~Lease Amendment provided for: (i) ~~extend~~an extension to the term of the original lease to five years following the completion of the Company’s improvements to the Expansion Premises (defined below);(ii) ~~expand~~an expansion of the premises to include the premises located at Unit 404, Building F, 15000 West 6th Avenue, Golden, Colorado 80401, consisting of approximately 4,734 rentable square feet (the “Expansion Premises”); (iii) ~~modify the~~an annual ~~basic rent;~~base rent modification; (iv) an increase to the security deposit; (v) ~~provide for a~~ tenant improvement allowance; (vi) ~~provide~~additional parking and; (vii) two renewal options, each for ~~additional parking; (vii) provide~~five year terms, for ~~renewal options; and (viii) make certain other modifications as more particularly set forth below.~~a total of ten years.

Pursuant to the Lease Amendment, the Company must pay a ~~monthly~~total annual base rent ~~of (i) $5,660~~of; (1) $115,823 for ~~the~~ year ~~from 3/1/25~~one; (2) $119,310 for year two; (3) $122,893 for year three; (4) $126,580 for year four; (5) $130,377 for year five; (6) $135,163 for year six; (7) $139,218 for year seven; (8) $143,394 for year eight; (9) $147,696 for year nine; (10) $152,127 for year ten; (11) $156,331 for year eleven; (12) $161,391 for year twelve; (13) $166,233 for year thirteen; (14) $171,220 for year fourteen and; (15) $176,357 for year fifteen.
In October 2021, pursuant to ~~2/28/26 and (ii) $5,829 for each year thereafter. In addition,~~ASC 842 – Leases, the Company ~~must pay~~wrote off the balances of the operating asset of $168,664 and operating liability of $176,893 related to the original lease and recognized a ~~monthly base rent for the Expanded Premises of: (i) $4,537~~gain on lease modification in the ~~first year; (ii) $4,673~~amount of $8,229 which was included in general and administrative expense in the ~~second year; (iii) $4,813~~accompanying unaudited statement of operation. The Company calculated the present value of the total lease payments in the ~~third year; (iv) $4,957~~Lease Amendment using a discount rate of 8% which was based on the Company’s incremental borrowing rate at the effective date and recorded an operating right-of-use asset and an operating lease liability of $1,212,708.
For the nine months ended June 30, 2022, lease costs amounted to $151,180 which included base lease costs of $86,677 and other expenses of $64,503, all of which were expensed during the period and included in general and administrative expenses on the ~~fourth year; and (v) $5,106 in the fifth year.~~accompanying unaudited statements of operations.
Operating Right-of-use asset (“ROU”) is summarized below:
SCHEDULE OF OPERATING RIGHT-OF-USE ASSET

June 30,
2022

September 30,
2021

(Unaudited)
Operating office lease $ 1,212,708 $ 231,337
Less accumulated reduction (45,517 ) (62,673 )
Balance of Operating ROU asset $ 1,167,191 $ 168,664
Operating lease liability related to the ROU asset is summarized below:
SCHEDULE OF OPERATING LEASE LIABILITY

June 30,
2022
September 30,
2021
(Unaudited)
Operating office lease $ 1,212,708 $ 231,337
Total operating lease liability 1,212,708 231,337
Reduction of operating lease liability (23,989 ) (54,444 )
Total 1,188,719 176,893
Less: short term portion (24,181 ) (42,411 )
Long term portion $ 1,164,538 $ 134,482
23
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
Future base lease payments under the non-cancellable operating lease at June 30, 2022 are as follows:
SCHEDULE OF FUTURE BASE LEASE PAYMENTS

Years ending September 30, Amount
(Unaudited)
2022 $ 29,146
2023 119,310
2024 122,893
2025 126,580
2026 130,377
2027 and thereafter 1,549,130
Total minimum non-cancellable operating lease payments 2,077,436
Less: discount to fair value (888,717 )
Total operating lease liability at June 30, 2022 $ 1,188,719

NOTE 8 – RELATED-PARTY TRANSACTIONS
 
~~On May 12,~~Effective January 1, 2021, the Company entered into a Securities Purchase Agreement (the “SPA”) with an affiliated investor (the “Affiliated Investor”) to purchase a convertible note (the “Note”) and accompanying warrant (the “Warrant”) for an aggregate investment amount of $~~1,000,000. The Note has a principal value of $1,000,000~~ ~~and bears an interest rate of~~ 8~~% per annum (which shall increase to~~ 10~~% per year upon the occurrence of an “Event of Default” (as defined in the Note)) and shall mature on~~ ~~May 12, 2026~~ ~~(the “Maturity Date”) (see Note 6).~~
~~On April 26, 2021, the Company entered into Promissory Note Agreement (the “Note”) with Jeffrey Busch who serves as a member of the Board of Directors (“Lender”) for a principal amount of $100,000~~ ~~(see Note 6). The Company received proceeds of $100,000~~.
~~On June 5, 2020,~~ the Company entered into a consulting agreement with Mr. Kucharchuk, a member of the Board of Directors, to serve as a strategic ~~advisor to the Company’s Chief Executive Officer.~~advisor. The agreement was effective for a period of ~~six-months,~~twelve months, commencing on ~~June 5, 2020. On August 14, 2020,~~January 1, 2021 and shall renew on a month-to month basis, subject to the right of the Company and Mr. Kucharchuk ~~was appointed as the acting Chief Financial Officer. Thereafter,~~to terminate the agreement ~~renewed on a month-to-month basis by mutual agreement of~~pursuant to the ~~parties. On September 24, 2020, Mr. Kucharchuk resigned as the acting Chief Financial Officer of the Company. Subsequently, his consulting contract was cancelled in November of 2020.~~agreement. Pursuant to the agreement, Mr. Kucharchuk ~~was compensation~~shall be paid $2,000 per month. As of June 30, 2022 and September 30, 2021, the Company recorded accrued consulting fees in the amount of $~~15,000~~ 0 and $18,000, respectively, reflected as accrued liabilities – related party in the accompanying unaudited balance sheet (see Note 10). As of June 30, 2022, the Company had an accounts payable – related payable balance of $~~per month.~~6,000 related to this consulting agreement.
On April 26, 2021, the Company entered into a Promissory Note Agreement with Jeffrey Busch who serves as a member of the Board of Directors and a related party, for a principal balance of $100,000 (see Note 6). On May 5, 2022, the parties amended the April 26, 2021 note pursuant to which the principal amount was increased to $350,000 (“New Note”) with the Company receiving additional $250,000 of proceeds and added a conversion feature. The New Note bears an annual interest rate of 1% (which shall increase to 2% in an event of a default) and matures on May 5, 2024. As of June 30, 2022, the New Note had an outstanding principal balance of $350,000, reflected as notes payable – related party in the accompanying unaudited balance sheet since the conditions for its contingent conversion has not yet been met, and accrued interest of $1,650 (see Note 6).
On May 12, 2021, the Company and the May 2021 Investor entered into a May 2021 SPA to purchase a convertible May 2021 Note and with principal value of $1,000,000 and accompanying May 2021 Warrants (see Note 6). In connection with the Company’s obligations under the May 2021 Note, the Company entered into a security agreement with the May 2021 Investor as agent, pursuant to which the Company granted a lien on the laboratory equipment of the Company, for the benefit of the related party. As of June 30, 2022, the May 2021 Note had an outstanding principal balance of $1,000,000 and accrued interest of $4,932 (see Note 6).
On October 21, 2021, the Company entered into a Promissory Note Agreement with Jeffrey Busch who serves as a member of the Board of Directors and a related party, for a principal balance of $150,000. During the nine months ended June 30, 2022, the Company fully paid the outstanding balance on the note. As of June 30, 2022, the note had no outstanding balance (see Note 6).
On November 1, 2021, pursuant to the First November 2021 SPA the First November 2021 Investor purchased three notes with aggregate principal of $1,000,000 with accompanying First November 2021 Warrants to purchase up to an aggregate of 54,644,811 shares of common stock. As of June 30, 2022, the First November 2021 Notes had an outstanding principal balance of $1,000,000 and accrued interest of $6,575 (see Note 6).
On January 26, 2022, a notice and request for consent regarding a change in offering terms was sent by the Company to the First November 2021 Investor. Upon the approval of the First November 2021 Investor, the Company modified the terms of the First November 2021 SPA which increased the warrants issuable from 20% to100% of the common stock issuable upon conversion of the notes purchased. As a result, the First November 2021 Investor received additional cashlessly-exercisable warrants equal to 80% of the common stock issuable upon conversion of the First November 2021 Notes. The Company issued additional warrants to purchase up to 218,579,234 shares of common stock to the First November 2021 Investor which increased the total relative fair value of all warrants in total by $34,630 recorded as debt discount which is being amortized over the life of the First November 2021 Notes (see Note 6 and 9).
24
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
On April 5, 2022, pursuant to the First April 2022 SPA, Matthew Schwartz, a member of the Board of Directors and a related party, purchased a convertible note with principal of $100,000 with accompanying First April 2022 Warrants to purchase 4,201,681 shares of common stock. The Company received net proceeds of $100,000 on March 24, 2022. As of June 30, 2022, the First April 2022 Note had an outstanding principal balance of $100,000 and accrued interest of $1,885 (see Note 6).
On May 9, 2022, pursuant to the May 2022 SPA the May 2022 Investor purchased four convertible notes for an aggregate investment amount of $1,000,000 with accompanying May 2022 Warrants to purchase shares of common stock equal to 20% of the number of the total shares of common stock issuable upon the conversion of the May 2022 Notes. During the nine months ended June 30, 2022, The Company received an aggregate of $750,000 of proceeds and issued an aggregate of 21,008,404 of the May 2022 Warrants. As of June 30, 2022, the May 2022 Notes had an aggregate outstanding principal balance of $750,000 and accrued interest of $5,973 (see Note 6).
On June 15, 2022, pursuant to the June 2022 SPA, Danica Holley, a member of the Board of Directors and a related party, purchased a convertible note with principal of $50,000 with accompanying June 2022 Warrants to purchase 2,100,840 shares of common stock. As of June 30, 2022, the June 2022 Note had an outstanding principal balance of $50,000 and accrued interest of $164 (see Note 6).

During the nine months ended June 30, ~~2020,~~2022, the Company advanced a total of $13,883 to a related party, which is an affiliate entity. As of June 30, 2022 and September 30, 2021, the Company had related party receivable balances of $35,594~~outstanding balance~~ and $21,711, respectively, reflected in the ~~amount of $160,000~~ ~~owed for consulting fee – related party was converted into~~ ~~0.24~~ ~~shares of Series D-1 Preferred (see Note 9).~~
~~During the nine months ended June 30, 2020, the Company repaid $20,000~~ ~~of outstanding advances to Dr. Ruxin.~~accompanying unaudited balance sheets as other receivable.

As of June 30, 2022 and September 30, 2021, the Company owed several executives and directors for expense reimbursements and consulting fees in the aggregate amount of $6,000
19
and $3,714, respectively, which is reflected on the accompanying unaudited balance sheet as accounts payable – related party.

~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~At June 30, 2022 and September 30, 2021, net amount due to related parties consisted of the following:
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~SCHEDULE OF RELATED PARTIES TRANSACTION
~~(UNAUDITED)~~

June 30,
2022

September 30,
2021

(Unaudited)
Convertible notes principal – related party $ 2,900,000 $ 1,000,000
Discount on convertible notes - related party (1,925,238 ) (935,019 )
Note payable principal – related party 350,000 100,000
Consulting fee – related party — 18,000
Accounts payable – related party 6,000 3,714
Other receivable - related party (35,594 ) (21,711 )
Total $ 1,295,168 $ 164,984

NOTE 9 – STOCKHOLDERS’ DEFICIT

Shares Authorized

On September 22, 2020, the Company filed with the Nevada Secretary of State, an amendment to its ~~Certificate~~Articles of Incorporation to change its name from “OncBioMune Pharmaceutical, Inc.” to “Theralink Technologies, Inc.” and increase its authorized shares of common stock from 6,666,667 shares of common stock at $0.0001 per share par value to 12,000,000,000 shares of common stock at $0.0001 per share par value, effective September 24, 2020.

On July 1, 2022, the Company filed with the Nevada Secretary of State, an amendment to its Articles of Incorporation to increase its authorized shares of common stock from 12,000,000,000 shares to 100,000,000,000 shares of common stock at $0.0001 per share par value.
Series A Preferred Stock

~~On June 5, 2020, pursuant to the asset sale transaction and recapitalization (see Note 3),~~ ~~667~~ ~~shares of Series A were deemed to have been issued.~~
As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, there were 667 shares of the Company’s Series A Preferred Stock issued and outstanding held by a former member of the Board of Directors.

25
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
Series C-1 Preferred Stock

OnDuring the nine months ended June ~~5, 2020, pursuant to~~30, 2022, various holders of the ~~asset sale and recapitalization transaction (see Note 3),~~ ~~2,966.2212~~Series C-1 Preferred Stock converted an aggregate of 1,923 shares of Series C-1 Preferred Stock ~~was deemed to have been issued.~~into 288,637,529 shares of the Company’s common stock (see below – Common Stock Issued Upon Conversion of Series C-1 Preferred Stock).

As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company had 1,043 and ~~2,966.2212~~2,966 shares of Series C-1 Preferred Stock, respectively, issued and outstanding.

Series C-2 Preferred Stock

OnDuring the nine months ended June ~~5, 2020, pursuant to~~30, 2022, a holder of the ~~asset sale and recapitalization transaction~~Series C-2 Preferred Stock converted 1,880 shares of Series C-1 Preferred Stock into 280,475,491 shares of the Company’s common stock (see ~~Note 3),~~ ~~4,916.865~~ ~~shares~~below – Common Stock Issued Upon Conversion of Series C-2 Preferred Stock ~~was deemed to have been issued.~~).

As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company had 3,037 and ~~4,916.865~~4,917 shares of Series C-2 Preferred Stock, respectively, issued and outstanding.
~~Series D-1 Preferred Stock~~
On May 18, 2020, the Company filed a certificate of designation, preferences and rights of Series D-1 Preferred Stock (the “Series D-1 Certificate of Designation”) with the Nevada Secretary of State to designate ~~1,000~~ ~~shares of its previously authorized preferred stock as Series D-1 Preferred Stock, par value $0.0001~~ ~~per share and a stated value of $9,104.89~~ per share. The Series D-1 Certificate of Designation and its filing was approved by the Company’s board of directors without shareholder approval as provided for in the Company’s articles of incorporation and under Nevada law.
~~On September 24, 2020, the Company converted~~ ~~1,000~~ ~~shares of Series D-1 Preferred Stock into~~ ~~5,081,550,620~~ ~~shares of common stock (see below~~ ~~Common Stock~~).
~~For the nine months ended June 30, 2020, the Company issued 7 shares of D-1 Preferred Stock for net proceeds of $2,590,000~~.
~~For the nine months ended June 30, 2020, the Company issued 1 share of D-1 Preferred Stock in exchange for the settlement of certain accrued compensation valued at $459,154~~ ~~of which $160,000~~ ~~was for a related party (see Note 8).~~
~~As of June 30, 2021 and September 30, 2020, the Company had~~ 0 ~~shares of Series D-1 Preferred Stock issued and outstanding.~~
~~Series D-2 Preferred Stock~~
~~On June 5, 2020, the Company is deemed to have issued~~ ~~4,121.64~~ ~~shares of Series D-2 Preferred Stock pursuant to the Asset Sale Transaction and recapitalization.~~
~~As of June 30, 2021 and September 30, 2020, there was~~ 0 ~~Series D-2 Preferred Stock issued and outstanding.~~
20
~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~

Series E Preferred Stock

On September 15, 2020, the Company filed a ~~certificate~~Certificate of ~~designation, preferences~~Designation, Preferences and ~~rights~~Rights of Series E Preferred Stock (the “Series E Certificate of Designation”) with the Nevada Secretary of the State to designate 2,000 shares of its previously authorized preferred stock as Series E Preferred Stock, par value $0.0001 per share and a stated value of $2,000 per share. The Series E Certificate of Designation and its filing ~~was~~were approved by the Company’s ~~board~~Board of ~~directors~~Directors without ~~shareholder~~stockholder approval as provided for in the Company’s ~~articles~~Articles of ~~incorporation~~Incorporation and under Nevada ~~law (see Note 1).~~law. The holders of shares of Series E Preferred Stock have the following preferences and rights:

● From the initial issuance date, cumulative dividends on each share of Series E shall accrue, on a quarterly basis in arrears (with any partial quarter calculated on a pro-rata basis), at the rate of 8%8% per annum on the ~~Stated Value,~~stated value, plus any additional amount thereon. Dividends shall be paid within 15 days after the end of each fiscal quarter (“Dividend Payment Date”), at the option of the Holder in cash or through the issuance of shares of common stock. In the event that the Holder elects to receive its dividends in shares of common stock the number of shares of common stock to be issued to each applicable Holder shall be determined by dividing the total dividend outstanding to such Holder by the average closing price of the common stock during the five trading days on the principal market prior to the ~~Dividend Payment Date.~~dividend payment date.

● Holders of shares of Series E Preferred Stock are entitled to dividends or distributions on each share on an “as converted” into common stock basis, if, as and when declared from time to time by the Board of Directors.

● Each share of Series E Preferred Stock is convertible into shares of common stock any time after the initial issuance date at the ~~Conversion Price~~conversion price which is the lesser of: (i) $0.00375 or (ii) 75% of the average closing price of the common stock during the prior five trading days on the principal market, subject to adjustment as provided in the Series E Certificate of Designation including a price protection provision for offerings below the conversion ~~price. Provided,~~price, provided, however, the ~~Conversion Price~~conversion price shall never be less than $0.0021. The number of shares of common stock issuable upon conversion shall be determined by multiplying the number of outstanding shares by the stated value per share of $2,000 plus accrued dividends and dividing that number by ~~(y)~~the ~~Conversion Price.~~conversion price.

● In connection with, (i) a Change of Control of the ~~Corporation~~Company or (ii) on the closing of, a Qualified Public Offering by the ~~Corporation,~~Company, all of the outstanding shares of Series E (including any fraction of a share) shall automatically convert into an aggregate number of shares of ~~Common Stock~~common stock (including any fraction of a share) by multiplying the number of outstanding shares by the stated value per share of $2,000 plus accrued dividends and dividing that number (including any fraction of a share) by the lesser of: (i) $0.00375 or (ii) 75% of the average closing price of the common stock during the prior five trading days on the ~~principle market.~~principal market, subject to adjustment as provided in the Series E Certificate of Designation including a price protection provision for offerings below the conversion price. However, the conversion price shall never be less than $0.0021. If a closing of a Change of Control transaction or a Qualified Public Offering occurs, such automatic conversion of all of the outstanding shares of Series E shall be deemed to have been converted into shares of Common Stock immediately prior to the closing of such transaction or Qualified Public Offering.

● In the event the Company issues or sells any securities including options or convertible securities, except for any Exempt Issuance (as defined in the Series E Certificate of Designation), at a price, an exercise price or conversion price of less than the conversion price, then upon such issuance or sale, the Series E Preferred Stock conversion price shall be reduced to the sale price or the exercise price or conversion price of the securities sold.

● ~~Holder~~Holders of Series E Preferred Stock have no voting rights.

26
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
During the year ended September 30, 2021, the issuance of Series F Preferred Stock triggered the price protection clause in the Series E Preferred Stock. Thus, the conversion price of the Series E Preferred Stock was reduced from $0.00375 to $0.00313 on that date.
During the three and nine months ended June 30, ~~2021,~~2022, the Company ~~also~~ recorded dividends related to the Series E Preferred Stock in the amount of $39,890 and $~~119,561~~119,671, respectively. ~~As of~~During the three and nine months ended June 30, 2021, ~~and September 30, 2020, dividend payable balances were~~the Company recorded dividends related to the Series E Preferred Stock in the amount of $~~39,998~~39,452 and $~~6,120~~119,561, ~~respectively, reflected in the accompanying~~ ~~condensed~~ ~~consolidated balance sheet in accrued liabilities.~~respectively.

As of June 30, 2022 and September 30, 2021, dividend payable balances were $13,151 and $13,151, respectively, reflected in the accompanying unaudited balance sheet in accrued liabilities instead of temporary equity.
As of June 30, 2022 and September 30, 2021, the Company had 1,000 shares of Series E Preferred Stock issued and outstanding classified as temporary equity in the accompanying ~~condensed consolidated~~unaudited balance ~~sheet.~~sheets.
Series F Preferred Stock
On July 30, 2021, the Company filed a Certificate of Designation, Preferences and Rights of Series F Preferred Stock (the “Series F Certificate of Designation”), with the Nevada Secretary of State to designate 1,000 shares of its previously authorized preferred stock as Series F Preferred Stock, par value $0.0001 per share and a stated value of $2,000 per share. The Series F Certificate of Designation and its filing were approved by the Company’s Board of Directors without stockholder approval as provided for in the Company’s Articles of Incorporation and under Nevada law. The holders of shares of Series F Preferred Stock have the following preferences and rights:
● From the Initial Issuance Date, cumulative dividends on each share of Series F shall accrue, on a monthly basis in arrears (with any partial month being made on a pro-rata basis), at the rate of 8% per annum on the stated value, plus any additional amount thereon. Dividends shall be paid within 15 days after the end of each month (“Dividend Payment Date”), at the option of the Holder in cash or through the issuance of shares of common stock. In the event that the Holder elects to receive its dividends in shares of common stock the number of shares of common stock to be issued to each applicable Holder shall be determined by dividing the total dividend payable to such Holder by the average closing price of the common stock during the five trading days on the principal market prior to the dividend payment date.
● Holders of shares of Series F Preferred Stock are entitled to dividends or distributions on each share on an “as converted” into common stock basis, if, as and when declared from time to time by the Board of Directors.
● Each share of Series F Preferred Stock is convertible into shares of common stock any time after the initial issuance date at the conversion price which is the lesser of: (i) $0.00313 or (ii) 75% of the average closing price of the common stock during the prior five trading days on the principal market, subject to adjustment as provided in the Series F Certificate of Designation including a price protection provision for offerings below the conversion price,provided, however, the conversion price shall never be less than $0.0016. The number of shares of common stock issuable upon conversion shall be determined by multiplying the number of outstanding shares by the stated value per share of $2,000 plus additional amount by the conversion price.
● In connection with, (i) a Change of Control of the Company or (ii) on the closing of, a Qualified Public Offering by the Company, all of the outstanding shares of Series F Preferred Stock (including any fraction of a share) shall automatically convert along with the additional amount into an aggregate number of shares of common stock (including any fraction of a share) as is determined by dividing the number of shares of Series F Preferred Stock (including any fraction of a share) by the automatic conversion price then in effect. If a closing of a Change of Control transaction or a Qualified Public Offering occurs, such automatic conversion of all of the outstanding shares of Series F Preferred Stock shall be deemed to have been converted into shares of common stock immediately prior to the closing of such transaction or Qualified Public Offering.
● In the event the Company issues or sells any securities including options or convertible securities, except for any Exempt Issuance (as defined in the Series F Certificate of Designation), at a price, an exercise price or conversion price of less than the conversion price, then upon such issuance or sale, the Series F Preferred Stock conversion price shall be reduced to the sale price, or the exercise price or conversion price of the securities sold.
27
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
● Series F Preferred Stock shall rank pari passu with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company with the Series C-1 Preferred Stock of the Company, the Series C-2 Preferred Stock of the Company, and the Series E Preferred Stock of the Corporation (the “Parity Stock”), and all other shares of capital stock of the Company shall be junior in rank to all Series F shares with respect to the preferences as to dividends (except for the common stock, which shall be pari passu as provided in the Series F Certificate of Designation), distributions and payments upon the liquidation, dissolution and winding up of the Company (such junior stock is referred to herein collectively as “Junior Stock”). The rights of all such Junior Stock shall be subject to the rights, powers, preferences and privileges of the Series F Preferred Stock. Without limiting any other provision of the Series F Certificate of Designation, without the prior express consent of the Required Holder, the Company shall not hereafter authorize or issue any additional or other shares of capital stock that is (i) of senior rank to the Series F Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (collectively, the “Senior Preferred Stock”), or (ii) Parity Stock. Except as provided for in the Certificate of Designation, in the event of the merger or consolidation of the Company into another corporation, the Series F Preferred Stock shall maintain their relative rights, powers, designations, privileges and preferences provided for in the Certificate of Designation for a period of at least two years following such merger or consolidation and no such merger or consolidation shall cause result inconsistent therewith.
During the three and nine months ended June 30, 2022, the Company recorded dividends related to the Series F Preferred Stock in the amount of $19,945 and $59,836, respectively. During the three and nine months ended June 30, 2021, there were 0 recorded dividends related to the Series F Preferred Stock.
As of June 30, 2022 and September 30, 2021, dividend payable balances were $6,575 and $6,728, respectively, which were reflected in the accompanying unaudited balance sheet in accrued liabilities instead of temporary equity.
As of June 30, 2022 and September 30, 2021, the Company had 500 shares of Series F Preferred Stock issued and outstanding classified as temporary equity in the accompanying unaudited balance sheets.

Common Stock

~~During the nine months ended June 30, 2021, the Company, entered into Subscription Agreements with several accredited investors to sell, in a private placement, an aggregate~~Common Stock Issued Upon Conversion of ~~431,309,904~~ ~~shares of its common stock, par value $0.0001~~ ~~per share, at a purchase price of $0.00313~~ ~~per share for an aggregate purchase price of $1,350,000~~. These shares of common stock were sold by the Company in reliance upon an exemption from the registration requirements of the Act afforded by Section 4(a)(2) of the Act and/or Rule 506 of Regulation D thereunder. The private placements were made directly by the Company and no underwriter or placement agent was engaged by the Company. The Company did not engage in general solicitation or advertising and did not offer securities to the public in connection with this offering. As of June 30, 2021, this common stock has not been issued as the Company is unable to issue shares of common stock until it is current with all its SEC reporting requirements. Accordingly, the $1,350,000 is reflected in the accompanying ~~condensed~~ ~~consolidated balance sheet in subscription payable.~~Series C-1 Preferred Stock

~~On September 24, 2020, the Company converted~~ ~~1,000~~
● During the nine months ended June 30, 2022, the Company issued an aggregate of 288,637,529 shares of the Company’s common stock to various investors upon their conversion of an aggregate of 1,923 shares of the Series C-1 Preferred Stock.
Common Stock Issued Upon Conversion of Series ~~D-1~~C-2 Preferred Stock ~~into~~ ~~5,081,550,620~~ ~~shares of common stock (see above~~ ~~Series D-1 Preferred Stock~~).

● During the nine months ended June 30, 2022, the Company issued an aggregate of 280,575,491 shares of the Company’s common stock to an investor upon conversion of 1,880 shares of the Series C-2 Preferred Stock.
~~On September 24, 2020, the Company converted~~
~~4,121.64~~ ~~shares of Series D-2 Preferred~~Common Stock ~~into~~ ~~41,216,000~~ ~~shares of common stock (see below~~ ~~Series D-2 Preferred Stock~~Issued Upon Accounts Payable Settlements).

● During the nine months ended June 30, 2022, the Company issued an aggregate of 26,913,738 shares of the Company’s common stock to two consultants upon the close of their respective settlement agreements, dated October 18, 2021, to settle accounts payable balances in aggregate amount of $84,240 or $0.00313 per share, valued with the share price of common stock sold in private placements during the same period (see Note 10).
~~On June 5, 2020, the Company is deemed to have issued~~ ~~1,398,070~~ ~~shares of common stock pursuant to the Asset Sale Transaction and recapitalization.~~
Common Stock Issued for Subscription Payable
● During the nine months ended June 30, 2022, the Company issued an aggregate of 431,309,907 shares of the Company’s common stock to various investors in connection with the subscription payable aggregate amount of $1,350,000. The subscription payable resulted from Subscription Agreements entered into by the Company with several accredited investors, during the year ended September 30, 2021, to sell, in a private placement, an aggregate of 431,309,907 shares of its common stock, at a purchase price of $1,350,000 or $0.00313 per share (see Note 10).

As of June 30, ~~2021 and September 30, 2020,~~2022, the Company had ~~5,124,164,690~~6,151,499,919 shares of common stock ~~outstanding.~~outstanding of which 47,923,323 have not yet been issued.

Stock ~~options~~Options

Effective February 18, 2011, the Company’s Board of Directors (“Board”) adopted and approved the 2011 stock option plan. A total of 57options to acquire shares of the Company’s common stock were authorized under the 2011 stock option plan. ~~During each twelve-month period thereafter, our board of directors is authorized to increase the number of options authorized under this plan by up to~~ 14 ~~shares.~~ NaNoptions were granted under the 2011 stock option plan and the plan has expired as of ~~June~~March 31, 2022.
28
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, ~~2021.~~2022
(UNAUDITED)

On April 28, 2020, the Board approved the 2020 Equity Incentive Plan ~~(the “Plan”~~(“2020 Plan”), as amended on May 29, 2020. ~~The~~On April 18, 2022, the Board terminated the 2020 Plan ~~shall be effective upon approval by~~and any shares reserved thereunder are no longer subject to reservation and the ~~Stockholders~~Company had no options issued and outstanding under the 2020 Plan.
On April 18, 2022, the Company’s Board of Directors (“Board”) and the shareholders approved the 2022 Equity Incentive Plan (“2022 Plan”) at which ~~shall be within twelve (12) months after~~time the ~~approval of the Board. No Incentive Stock Option shall be exercised unless and until the Plan has been approved by the Stockholders.~~plan became effective. Upon the effective date of the 2022 Plan, ~~and the effectiveness of the authorized share increase, which occurred on September 24, 2020,~~ ~~3,043,638,781~~1,915,000,000 shares of the Company’s common stock were reserved for issuance under the 2022 Plan ~~(the “Reserved~~(“Reserved Share Amount”), subject to the adjustments described in the 2022 Plan, and such Reserved Share Amount, when issued in accordance with the 2022 Plan, shall be validly issued, fully paid, and non-assessable. Pursuant to the 2022 Plan, the option price of each incentive stock option (except those that constitute substitute ~~awards under the Plan)~~awards) shall be at least the fair market value of a share ~~of common stock~~ on the ~~respective~~ grant date; provided, however, that in the event that a grantee is a ~~ten-percent~~ten percent stockholder as of the grant date, the option price of an incentive stock option shall be not less than 110% of the fair market value of a share on the grant ~~date.~~date, in no case shall the option price of any option be less than the par value of a share. As of June 30, ~~2021, the 2020 Equity Incentive Plan has not yet been approved by the shareholders and~~2022, the Company had 0no options issued and outstanding ~~(see Note 10).~~
21
~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~under the 2022 Plan.

Warrants

~~In connection with the convertible note,~~On November 1, 2021, the Company issued ~~a Warrant~~the First November 2021 Warrants to purchase ~~up to~~an aggregate of ~~63,897,764~~54,644,811 shares of common ~~stock~~stock. The First November 2021 Warrants are exercisable at ~~an exercise~~any time at a price ofequal to $~~0.00313~~0.00366 per share (subject to ~~adjustment as provided therein)~~adjustment) until ~~May 12, 2026 (see Note 6).~~November 1, 2026. The First November 2021 Warrants ~~are exercisable for cash at any time. The Warrant was~~were valued at $~~984,200~~990,048 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the First November 2021 Notes (see Note 6 and Note 8).
On November 1, 2021, the Company issued the Second November 2021 Warrants to purchase an aggregate of 27,322,406 shares of common stock. The Second November 2021 Warrants are exercisable at any time at a price equal to $0.00366 per share (subject to adjustment) until November 1, 2026. The Second November 2021 Warrants were valued at $495,560 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the Second November 2021 Notes (see Note 6).
On November 1, 2021, the Company issued the Third November 2021 Warrants to purchase an aggregate of 27,322,406 shares of common stock. The Third November 2021 Warrants are exercisable at any time at a price equal to $0.00366 per share (subject to adjustment) until November 1, 2026. The Third November 2021 Warrants were valued at $495,560 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the Third November 2021 Notes (see Note 6).
On January 26, 2022, the Company, upon the approval of the First November 2021 Investor, amended the First November 2021 SPA whereby the Company issued additional cashlessly-exercisable warrants to purchase 218,579,234 shares of common stock. As a result, the total relative fair value of all warrants in total increased by $34,630, recorded as debt discount, which is being amortized over the life of the First November 2021 Notes (see Note 6). These warrants are exercisable at a price equal to $0.00366 per share (subject to adjustment) until November 1, 2026.
On January 26, 2022, the Company, upon the approval of the Second November 2021 Investor, amended the Second November 2021 SPA whereby the Company issued additional cashlessly-exercisable warrants to purchase 109,289,616 shares of common stock. As a result, the total relative fair value of all warrants in total increased by $22,429, recorded as debt discount, which is being amortized over the life of the Second November 2021 Notes (see Note 6). These warrants are exercisable at a price equal to $0.00366 per share (subject to adjustment) until November 1, 2026.
On January 26, 2022, the Company, upon the approval of the Third November 2021 Investor, amended the Third November 2021 SPA whereby the Company issued additional cashlessly-exercisable warrants to purchase 109,289,616 shares of common stock. As a result, the total relative fair value of all warrants in total increased by $22,429, recorded as debt discount, which is being amortized over the life of the Third November 2021 Notes (see Note 6). These warrants are exercisable at a price equal to $0.00366 per share (subject to adjustment) until November 1, 2026.
On January 27, 2022, the Company issued the First January 2022 Warrants to purchase an aggregate of 136,612,022 shares of common stock. The First January 2022 Warrants are exercisable at any time at a price equal to $0.00366 per share (subject to adjustment) until November 1, 2026. The First January 2022 Warrants were valued at $472,403 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the First January 2022 Note (see Note 6).
On January 31, 2022, the Company issued the Second January 2022 Warrants to purchase an aggregate of 136,612,022 shares of common stock. The Second January 2022 Warrants are exercisable at any time at a price equal to $0.00366 per share (subject to adjustment) until November 1, 2026. The Second January 2022 Warrants were valued at $469,810 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the Second January 2022 Note (see Note 6).
29
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
On January 31, 2022, the Company issued to two consultants an aggregate of 16,393,443 warrants as a placement fee in connection with the First January 2022 Note and Second January 2022 Note (collectively as “January 2022 Notes”) (see Note 6). These warrants are exercisable at a price equal to $0.00366 per share until November 1, 2024. These warrants were valued at $54,595 using the relative fair value method and were recorded as a debt discount which is being amortized over the life of the January 2022 Note.
On April 5, 2022, the Company issued the First April 2022 Warrants to purchase 4,201,681 shares of common stock. The First April 2022 Warrants are exercisable at any time at a price equal to $0.00476 per share (subject to adjustment) until April 1, 2027. The First April 2022 Warrants were valued at $89,815 using the relative fair value method and was recorded as debt discount which is being amortized over the life of the ~~convertible note.~~First April 2022 Note (see Note 6 and Note 8).

~~In November 2019, in connection with the sale of series D-1 preferred stock,~~During April 2022, the Company issued ~~certain warrants~~the Second April 2022 Warrants to ~~a subscriber. On June 5, 2020, in connection with the Asset Sale Transaction and recapitalization, the company issued~~purchase an aggregate of ~~656,674,588~~17,857,144 ~~new warrants to the same subscriber in exchange for the previously issued warrants.~~shares of common stock. The ~~new warrants~~Second April 2022 Warrants are exercisable ~~immediately~~ at any time at price equal to $0.00476 per share (subject to adjustment) until April 1, 2027. The Second April 2022 Warrants were valued at $335,593 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the Second April 2022 Notes (see Note 6).
On May 9, 2022, the Company issued the May 2022 Warrants to purchase an ~~exercise~~aggregate of 31,512,606 shares of common stock. The May 2022 Warrants are exercisable at any time at a price equal to $0.00476 per share (subject to adjustment) until April 1, 2027. The May 2022 Warrants were valued at $142,489 using the relative fair value method and were recorded as debt discount which is being amortized over the life of $~~0.00214~~the May 2022 Notes (see Note 6 and ~~expire on~~ ~~November 27, 2024~~Note 8).

On June ~~5, 2020 in connection with the Asset Sale Transaction and the recapitalization transaction,~~15, 2022, the Company issued ~~200,000,000~~ ~~warrants~~the June 2022 Warrants to ~~two investors.~~purchase 2,100,840 shares of common stock. The ~~warrants~~June 2022 Warrants are ~~not~~ exercisable at any time at a price equal to $0.00476 per share (subject to adjustment) until ~~sixty (60) days after~~April 1, 2027. The June 2022 Warrants were valued at $5,924 using the ~~Company effectuates a reverse stock split~~relative fair value method and were recorded as debt discount which is being amortized over the ~~Company achieves~~life of the June 2022 Note (see Note 6 and ~~maintains a Market Capitalization of $50,000,000~~ ~~for thirty (~~30~~) consecutive days at an exercise price of $0.0025~~ ~~and expire on~~ ~~September 5, 2025~~Note 8).

As of June 30, ~~2021,~~2022, the Company had ~~920,572,535~~1,876,207,963 warrants issued and outstanding.

Warrants activities for the nine months ended June 30, ~~2021~~2022 is summarized as follows:

SCHEDULE OF ~~WARRANT ACTIVITIES~~WARRANTS
Weighted
Weighted Average
Average Remaining Aggregate
Number of Exercise Contractual Intrinsic
Warrants Price Term (Years) Value
Balance Outstanding at September 30, 2020 856,674,588 $ 0.0020 4.59 $ —
Issued in connection with a convertible debt – related party (see Note 6 and Note 8) 63,897,764 0.0031 4.87 —
Balance Outstanding at June 30, 2021 920,572,535 $ 0.0023 3.68 $ —

Exercisable at June 30, 2021 720,572,535 $ 0.0022 3.54 $ —
Weighted
Weighted Average
Average Remaining Aggregate
Number of Exercise Contractual Intrinsic
Warrants Price Term (Years) Value
Balance Outstanding at September 30, 2021 984,470,116 $ 0.0023 3.50 $ —
Issued in connection with a convertible debt – related party (see Note 6 and Note 8) 311,039,172 $ 0.0038 4.39 $ —
Issued in connection with a convertible debt (see Note 6) 580,698,675 0.0037 4.31 $ —
Balance Outstanding at June 30, 222 1,876,207,963 $ 0.0030 3.51 $ —
Exercisable at June 30, 222 1,672,006,282 $ 0.0031 3.56 $ —

NOTE 10 – ~~COMMITMENT~~COMMITMENTS AND CONTINGENCIES

Employment Agreements

Michael Ruxin, M.D.

On June 5, 2020, the Company and Dr. Michael ~~Ruxin.~~Ruxin entered into an employment agreement (the “Ruxin Employment Agreement”) for Dr. Ruxin to serve as the Company’s Chief Executive Officer, President and a ~~director (see Note 3).~~director.

The Ruxin Employment Agreement provides that Dr. Ruxin will be employed for a five-year term commencing on June 5, 2020. The term will be automatically extended for one additional year upon the fifth anniversary of the effective date without any affirmative action, unless either party to the agreement provides at least sixty (60) days’ advance written notice to the other party that the employment period will not be extended. Dr. Ruxin will be entitled to receive an annual base salary of $300,000and will be eligible for an annual discretionary bonus of 150% of such base salary. In the Ruxin Employment Agreement, Dr. Ruxin is ~~also promised,~~entitled to, subject to the approval of the Board or a committee thereof, and under the 2020 ~~Equity Incentive~~ Plan (i) a one-time grant of 49,047,059Restricted Stock Units (“RSUs”) and (ii) a one-time grant of options to purchase 420,691,653shares of ~~Common Stock,~~common stock, both of which will be subject to the terms and conditions of the applicable award ~~agreement~~agreements when executed. Dr. Ruxin is entitled to participate in any and all benefit plans, from time to time, in effect for senior management, along with vacation, sick and holiday pay in accordance with the Company’s policies established and in effect from time to time. As of June 30, ~~2021,~~2022, the RSUs and options have not yet been granted or issued ~~since~~as the Board ~~has not yet approved the grants and the 2020 Equity Incentive Plan has not been approved by the shareholders. Further, the board~~ and Dr. Ruxin have not yet agreed on the terms of the options. For the period of May 2021 through November 2021, Dr. Ruxin deferred 50% of his salary. As of June 30, 2022 and September 30, 2021, the Company had accrued payroll related to Dr. Ruxin’s salary deferment of $87,500 and $62,500, respectively.

2230

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~
CONDENSED NOTES TO ~~CONDENSED CONSOLIDATED~~UNAUDITED FINANCIAL STATEMENTS
JUNE 30, ~~2021~~2022
(UNAUDITED)

Dr. Ruxin is an “at-will” employee and his employment may be terminated by the Company at any time, with or without cause. In the event Dr. Ruxin’s employment is terminated by the Company without Cause (as defined in the Ruxin Employment Agreement), with Good Reason (as defined in the Ruxin Employment Agreement) or as a result of a non-renewal of the term of employment under the Ruxin Employment Agreement, Dr. Ruxin shall be entitled to receive the sum of (I) the Severance Multiple (as defined below), multiplied byhis base salary immediately prior to such termination and (II) a pro-rata portion of his bonus for the year in which such termination occurs equal to (a) his bonus for the most recently completed calendar year (if any), multiplied by (b) a fraction, the numerator of which is the number of days that have elapsed from the beginning of such calendar year through the date of termination and the denominator of which is the total number of days in such calendar year. “Severance Multiple” shall mean 3.0; provided, however, that if the date of termination occurs on or at any time during the twelve (12)-month period following a Change in Control, the Severance Multiple shall mean 4.0. In addition, the Company shall accelerate the vesting of any outstanding, unvested equity awards granted to Dr. Ruxin prior to the date of termination. Dr. Ruxin shall be entitled to reimbursement of any COBRA payment made during the 18-month period following the date of termination.

The Ruxin Employment Agreement also contains covenants (a) restricting the executive from engaging in any activity competitive with our business during the term of the employment agreement and in the event of termination, for a period of one year thereafter, (b) prohibiting the executive from disclosing confidential information regarding the Company, and (c) soliciting employees, customers and prospective customers during the term of the employment agreement and for a period of one year thereafter.

Jeffrey Busch

On June 5, 2020, the Company and Jeffrey Busch entered into an employment agreement (the “Busch Employment Agreement”) for Mr. Busch to serve as the Company’s Chairman of the Board of ~~Directors (see Note 3).~~Directors.

The Busch Employment Agreement provides that Mr. Busch will be employed for a five-year term commencing on June 5, 2020. The term will be automatically extended for one additional year upon the fifth anniversary of the effective date without any affirmative action, unless either party to the agreement provides at least sixty (60) days’ advance written notice to the other party that the employment period will not be extended. Mr. Busch will be entitled to receive an annual base salary of $60,000and will be eligible for an annual discretionary bonus. In the Busch Employment Agreement, Mr. Busch is ~~also promised,~~entitled to, subject to the approval of the Board or committee thereof, and under the 2020 ~~Equity Incentive~~ Plan (i) a one-time grant of 49,047,059Restricted Stock (“RSUs”) and (ii) a one-time grant of options to purchase 420,691,653shares of ~~Common Stock,~~common stock, both of which will be subject to the terms and conditions of the applicable award ~~agreement~~agreements when executed. Mr. Busch is entitled to participate in any and all benefit plans, from time to time, in effect for senior management, along with vacation, sick and holiday pay in accordance with the Company’s policies established and in effect from time to time. As of June 30, ~~2021,~~2022, the RSUs and options have not yet been granted or issued ~~since~~as the Board ~~has not yet approved the grants and the 2020 Equity Incentive Plan has not been approved by the shareholders. Further, the board~~ and Mr. Busch have not yet agreed on the terms of the options. As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company ~~has~~had accrued director compensation of $~~117,500~~ 177,500and $~~72,500~~132,500, respectively.

Mr. Busch is an “at-will” employee and his employment may be terminated by the Company at any time, with or without cause. In the event Mr. Busch’s employment is terminated by the Company without Cause (as defined in the Busch Employment Agreement), with Good Reason (as defined in the Busch Employment Agreement) or as a result of a non-renewal of the term of employment under the Busch Employment Agreement, Mr. Busch shall be entitled to receive the sum of (I) the Severance Multiple (as defined below), multiplied byhis base salary immediately prior to such termination and (II) a pro-rata portion of his bonus for the year in which such termination occurs equal to (a) his bonus for the most recently completed calendar year (if any), multiplied by (b) a fraction, the numerator of which is the number of days that have elapsed from the beginning of such calendar year through the date of termination and the denominator of which is the total number of days in such calendar year. “Severance Multiple” shall mean 3.0; provided, however, that if the date of termination occurs on or at any time during the twelve (12)-month period following a Change in Control, the Severance Multiple shall mean 4.0. In addition, the Company shall accelerate the vesting of any outstanding, unvested equity awards granted to Mr. Busch prior to the date of termination.

The Busch Employment Agreement also contains covenants (a) restricting the executive from engaging in any activity competitive with our business during the term of the employment agreement and in the event of termination, for a period of one year thereafter, (b) prohibiting the executive from disclosing confidential information regarding the Company, and (c) soliciting employees, customers and prospective customers during the term of the employment agreement and for a period of one year thereafter.

2331

THERALINK TECHNOLOGIES, INC. ~~AND SUBSIDIARIES~~
CONDENSED NOTES TO ~~CONDENSED CONSOLIDATED~~UNAUDITED FINANCIAL STATEMENTS
JUNE 30, ~~2021~~2022
(UNAUDITED)

Thomas E. Chilcott, III

On September 24, 2020, the Company appointed Thomas E. Chilcott, III, to serve as the Chief Financial Officer. The Company entered into an offer letter with Mr. Chilcott which provides that his base salary will be $225,000per ~~year and that~~year. he will be eligible to receive the following bonuses: $5,000 if the Company’s next Annual Report on Form 10-K is filed on or prior to December 12, 2020; $5,000 if the Company files a registration statement on Form S-1 on or prior to January 15, 2021; $5,000 if the Company completes a capital raise of at least $3,000,000 on or prior to Apri1 15, 2021; $20,000 if the Company completes a capital raise of at least $10,000,000 on or prior to September 30, 2021; and $15,000 if the Company successfully lists on the Nasdaq stock market on or before December 31, 2021. Mr. Chilcott is entitled to participate in all medical and other benefits that the Company has established for its employees. The offer letter also provides that Mr. Chilcott will be granted an option to purchase up to 94,545,096 shares of the Company’s common stock subject to terms including exercise price to be set by the Board of Directors of the Company. As of ~~June 30, 2021,~~ March 31, 2022, no bonus was due and no options have been granted to Mr. Chilcott.
On December 31, 2021, the Company’s Board approved an increase in the base salary of Thomas E. Chilcott, III, the Company’s Chief Financial Officer, from $225,000 to $300,000 per year. The increase was effective January 1, 2022. The Board also approved two new bonuses for which Mr. Chilcott will be eligible: (i) a $37,500 bonus payable upon the Company’s completion of a capital raise of at least $1,000,000; and (ii) a $37,500 bonus payable upon the Company’s completion of a capital raise of at least $2,000,000 in the aggregate. During the nine months ended June 30, 2022, an aggregate bonus of $75,000 was paid to Mr. Chilcott.

Consulting Agreements

On July 5, 2020, the Company and a consultant entered into a Scientific Advisory Board Service Agreement ~~(the “Advisory~~(“Scientific Advisory Agreement”) which provides for; (i) $2,000monthly compensation; (ii) 88,786,943stock options under the 2020 ~~Equity Incentive~~ Plan and; (iii) $1,500per day for any special project requiring more than six hours of advisory service in a single day performed upon a written request from the Company. Either party may terminate the Scientific Advisory Agreement at any time upon ten ~~days~~days’ written notice to the other party unless either party neglects or fails to perform its obligations under the Scientific Advisory ~~Agreement~~Agreement; then the termination notice shall be effective upon receipt of the same. As of June 30, ~~2021,~~2022, the Company and the consultants have not agreed on the terms of the 88,786,943stock options and therefore these stock options are not considered granted by the Company. ~~Further, as of June 30, 2021, the 2020 Equity Incentive Plan has not yet been approved by the shareholders.~~

On July 5, 2020, the Company and a consultant entered into a Pathology Advisory Board Service Agreement (the ~~“Advisory~~“Pathology Advisory Agreement”) which provides for; (i) $272monthly compensation; (ii) 77,972,192stock options under the 2020 ~~Equity Incentive~~ Plan and; (iii) $1,500per day for any special project requiring more than six hours of advisory service in a single day performed upon a written request from the Company. Either party may terminate the Pathology Advisory Agreement at any time upon ten ~~days~~days’ written notice to the other party unless either party neglects or fails to perform its obligations under the Pathology Advisory ~~Agreement~~Agreement; then the termination notice shall be effective upon receipt of the same. As of June 30, ~~2021,~~2022, the Company and the consultants have not agreed on the terms of the 77,972,192stock options and therefore these stock options are not considered granted by the Company. ~~Further,~~
Effective January 1, 2021, the Company entered into a consulting agreement with Mr. Kucharchuk, a member of the Board of Directors, to serve as a strategic advisor. The agreement was effective for a period of twelve months, commencing on January 1, 2021 and shall renew on a month-to month basis, subject to the right of the Company and Mr. Kucharchuk to terminate the agreement pursuant to the agreement. Pursuant to the agreement, Mr. Kucharchuk shall be paid $2,000 per month. As of June 30, 2022 and September 30, 2021, the ~~2020 Equity Incentive Plan has not yet been approved by~~Company recorded accrued consulting fees in the ~~shareholders.~~amount of $0 and $18,000, respectively, reflected under accrued liabilities – related party in the accompanying unaudited balance sheets (see Note 8).

License Agreements

GMU License Agreement

In September 2006, the Company entered into an exclusive license agreement ~~(“License Agreement”)~~ with George Mason Intellectual Properties (“GMU License Agreement”), a non-profit corporation formed for the benefit of George Mason University (“GMU”) which: (1) grants an exclusive worldwide license, with the right to grant sublicenses, under the licensed inventions to make, have made, import, use, market, offer for sale and sell products designed, manufactured, used and/or marketed for all fields and for all uses, subject to the exclusions as defined in the GMU License Agreement; (2) grants an exclusive option to license past, existing, or future inventions in the Company’s field, from inventors that are obligated to assign to GMU and who have signed a memorandum of understanding acknowledging that developed intellectual property will be offered, subject to the exclusions as defined in the GMU License Agreement; (3) the license and option granted specifically excludes biomarkers for lung, ovarian, and breast cancers in a diagnostic field of use and GMU inventions developed using materials obtained from third parties under agreements granting rights to inventions made using said materials and; (4) grants right to assign or otherwise transfer the license so long as such assignment or transfer is accompanied by a change of control transaction and GMU is given 14 ~~days~~days’ prior notice. In addition, the Company is required to make an annual payment of $50,000to GMU as well as pay GMU a quarterly royalty equal to the net revenue multiplied by one and one-half percent (1.5%), due on a quarterly basis or a quarterly sublicense royalty equal to the net revenue multiplied by fifteen percent (15%). Further, the Company has the right of first refusal for all technology associated with RPPA technology from GMU. As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company has accrued royalty fees of $~~1,455~~ 1,985and $~~832~~1,591, respectively, reflected in the accompanying ~~condensed~~ ~~consolidated~~unaudited balance sheet in accrued liabilities.

32
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
NIH License Agreement

In March 2018, the Company entered into two license agreements (“NIH License Agreements”) with the National Institutes of Health (“NIH”) which grants the Company an exclusive and a nonexclusive United States license for certain patents. Pursuant to the NIH License Agreements, the Company is required to make an annual payment of $~~6,000~~ 1,000to the NIH as well as pay the NIH a royalty equal to the net sales multiplied by three percent (3.0%) every June 30^th and December 31^st. Commencing on January 1^stof the year following the year of the first commercial sale, the Company is subject to a non-refundable minimum annual royalty of ~~$5,000.~~$5,000. In addition, a sublicense royalty equal to the net revenue multiplied by ten percent (10%) will be payable upon sublicensing. As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company has accrued royalty fees of $~~23,580~~ 0and $~~19,834~~24,830, respectively, reflected in the accompanying ~~condensed~~ ~~consolidated~~unaudited balance sheet in accrued liabilities.

24
~~THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
Employee ~~Incentive~~ Stock Options

In June 2020, in connection with the Asset Sale Transaction (see Note 3)1), the Company planned to issue approximately 1.8billion stock options to employees, which ~~include~~includes the options in the employment agreements discussed above. As of June 30, ~~2021,~~2022, these stock options had not yet been granted by the Company.

Lease

In December 2019, the Company entered into a lease agreement for its corporate and laboratory facility in Golden, Colorado. The lease is for a period of 6061 months,, with an option to extend, commencing in February 2020 and expiring in February 2025~~(see~~ (see Note 7).

On June 10, 2021, the Company entered into an amendment to its existing Warehouse Lease ~~(the “Lease~~(“Lease Amendment”), effective October 3, 2021, for its laboratory facility in Golden, ~~CO.~~CO (see Note 7). The ~~amendment was entered into in order to:~~Lease Amendment provided for: (i) ~~extend~~an extension to the term of the original lease to five years following the completion of the Company’s improvements to the Expansion Premises (defined below);(ii) ~~expand~~an expansion of the premises to include the premises located at Unit 404, Building F, 15000 West ~~6th~~6^th Avenue, Golden, Colorado 80401, consisting of approximately 4,734rentable square feet (the “Expansion Premises”); (iii) ~~modify the~~an annual ~~basic rent;~~base rent modification; (iv) an increase to the security deposit; (v) ~~provide for a~~ tenant improvement allowance; (vi) ~~provide~~additional parking and; (vii) two renewal options, each for ~~additional parking; (vii) provide~~five year terms, for ~~renewal options; and (viii) make certain other modifications as more particularly set forth below in the Lease Amendment.~~a total of ten years.

Pursuant to the Lease Amendment, the Company must pay a ~~monthly~~total annual base rent of; ~~(i) $5,660~~(1) $115,823 for year one; (2) $119,310 for year two; (3) $122,893 for year three; (4) $126,580 for year four; (5) $130,377 for year five; (6) $135,163 for year six; (7) $139,218 for year seven; (8) $143,394 for year eight; (9) $147,696 for year nine; (10) $152,127 for year ten; (11) $156,331 for year eleven; (12) $161,391 for year twelve; (13) $166,233 for year thirteen; (14) $171,220 for year fourteen and; (15) $176,357 for year fifteen.
Subscriptions Payable
During the year ended September 30, 2021, the Company, entered into Subscription Agreements with several accredited investors to sell, in a private placement, an aggregate of 431,309,907 shares of its common stock, par value $0.0001 per share, at a purchase price of $0.00313 per share for an aggregate purchase price of $1,350,000. These shares of common stock were sold by the Company in reliance upon an exemption from ~~3/1/~~the registration requirements of the Securities Act of 1933 (the “Act”) afforded by Section 4(a)(2) of the Act and/or Rule 506 of Regulation D thereunder. The private placements were made directly by the Company and no underwriter or placement agent was engaged by the Company. As of September 30, 2021, these shares of common stock have not yet been issued as the Company is unable to issue shares of common stock until FINRA approved the Company’s name change to Theralink Technologies, Inc. and the related ticker symbol change. Accordingly, the $1,350,000 was reflected in the unaudited consolidated balance sheet as subscription payable. On February 25, 2022, FINRA recognized the Company’s name change to ~~2/28/26~~Theralink Technologies, Inc. and ~~(ii) $5,829~~the related ticker symbol change from “OBMP” to “THER” (see Note 1). During the nine months ended June 30, 2022, the Company issued 431,309,907 shares of its common stock to the investors (see Note 9). Accordingly, there was no subscription payable balance as of June 30, 2022.
Settlement of Accounts Payable
On October 18, 2021, the Company entered into separate agreements with two consultants (collectively as “Parties”), to settle $42,120 in accounts payable balances for each ~~year thereafter. In addition,~~consultant for an aggregate amount of $84,240 and convertible into 26,913,738 shares of common stock. During the nine months ended June 30, 2022, the Company ~~must pay a monthly base rent for the Expanded Premises of; (i) $4,537~~issued 26,913,738 shares of its common stock to these two consultants (see Note 9) to settle accounts payable balances in ~~the first year; (ii) $4,673~~an aggregate amount of $84,240 in ~~the second year; (iii) $4,813 in the third year; (iv) $4,957 in the fourth year and; (v) $5,106 in the fifth year.~~(see Note 9).
33
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)

Other Contingencies

Pursuant to ASC 450-20 - – Loss Contingencies, liabilities for contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. As of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company has recorded a contingent liability of $~~69,440~~76,640 and $~~64,040~~71,240, respectively, resulting from certain liabilities of Avant prior to the asset sale and recapitalization transaction (see Note 3)1). The contingent liabilities consisted of two notes payables with a total outstanding principal balance of $40,000 as of June 30, ~~2021~~2022 and September 30, ~~2020~~2021 and accrued interest payable of $~~29,440~~36,640 and $~~24,040~~31,240 as of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively.
Legal Action
In August 2017, numerous purported plaintiffs brought an action against Avant Diagnostics and its previous executive team in the District Court of Harris County Texas. The action alleges the plaintiffs were engaged by Avant to perform services prior to 2018, which they were not compensated for, and were issued certain restricted shares of Avant as payment of those services and Avant did not remove the restrictive legend from said shares. The plaintiffs are seeking $1,000,000 in monetary relief. On July 1, 2021, the Company and Dr. Ruxin were added as defendants in the lawsuit. On March 7, 2022, the Court granted the Company and Dr. Ruxin’s Motion to Dismiss for lack of personal jurisdiction. On January 7, 2022, the plaintiffs filed an amended complaint adding Jeffrey Busch and Andrew Kucharchuk as defendants. Mr. Busch and Mr. Kucharchuk filed a motion to dismiss for lack of personal jurisdiction. On July 7, 2022, plaintiffs filed a Notice of Non-Suit and dismissed the amended complaint against Mr. Busch and Mr. Kucharchuk. The remaining claims against Avant Diagnostics are still pending.
On December 10, 2021, YPH LLC filed a complaint against the Company in the District Court for the Southern District of New York alleging that Theralink breached its Certificate of Designation for Series C-1 Convertible Preferred Stock by failing to honor a conversion notice submitted to it by YPH. Based on these and other allegations, Plaintiff asserted a breach of contract claim claiming that it has damages in excess of $100 million. The case continues to be in the pleadings stage with Theralink filing its last response on March 30, 2022. The Company believes these claims are without merit and intends to defend plaintiffs’ lawsuits vigorously. The Company currently believes the likelihood of a loss contingency related to these matters is remote and, therefore, no provision for a loss contingency is required.
NOTE 11 – SUBSEQUENT EVENTS

~~Subsequent to June 30, 2021, the Company received the third tranche of the convertible debt in the amount of $333,333~~ ~~(see Note 6).~~Convertible Debt

On July 1, 2022, Company issued the fourth note of the May 2022 Notes (see Note 6) with the Company receiving proceeds of $250,000 and issued accompanying warrants to purchase up to 10,504,202 shares of common stock. These warrants are exercisable any time at $0.00476 until on April 1, 2027. These warrants were valued at $35,186 using the relative fair value method and shall be recorded as debt discount to be amortized over the life of the May 2022 Notes.
On July 1, 2022, the Company entered into a Securities Purchase Agreement with an investor (“July 2022 Investor”), to purchase a convertible note for a principal amount of $50,000 (“July 2022 Note”) with the Company receiving $50,000 of proceeds and accompanying warrants to purchase 2,100,840 shares of common stock (“July 2022 Warrants”). The July 2022 Note bear an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the July 2022 Note)) and matures on April 1, 2027. The July 2022 Warrants are exercisable at any time and expire on April 1, 2027. The July 2022 Warrants were valued at $8,190 using the relative fair value method and shall be recorded as debt discount to be amortized over the life of the July 2022 Note. The July 2022 Note and July 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment). The July 2022 Note and July 2022 Warrants include a down-round provision under which the conversion price and exercise price are reduced if the Company sells or issues any securities including options, convertible securities, with the exception of exempt issuance (as defined in the agreements), or amended outstanding securities, at a lower conversion or exercise price than that of the July 2022 Note and July 2022 Warrants. The conversion and exercise price of the July 2022 Note and July 2022 Warrants are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. For so long as the July 2022 Warrants remains outstanding and until the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the agreement); (i) if the Company issues warrants to investors in an offering of common stock or of any equity linked security (each a “Subsequent Offering”), and such warrants equal more than 20% warrant coverage, then a number of additional shares will be added to the July 2022 Warrants such that the July 2022 Warrants shall equal the same percentage of the warrant coverage offered to the investors in the Subsequent Offering and; (ii) if the Company issues warrants in a Subsequent Offering which may be exercised by means of a cashless exercises, then the July 2022 Warrants shall be exercisable by the same cashless exercise feature of the warrants issued in the Subsequent Offering. The Company may prepay the July 2022 Note at any time at an amount equal to 110% of the outstanding principal balance and accrued interest. At the election of the July 2022 Investor, the July 2022 Note can be converted in whole or in part at any time and from time to time. Further, upon maturity the Company may pay the outstanding balance of the July 2022 Note in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange (as defined in the July 2022 Note), the conversion amount shall automatically be converted into fully-paid and non-assessable shares of common stock.
34
~~Legal Action~~
THERALINK TECHNOLOGIES, INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2022
(UNAUDITED)
Related Party Promissory Notes

On July ~~1, 2021, numerous purported plaintiffs brought an action against Avant~~29, 2022, the Company entered into a Demand Promissory Note Agreement with Jeffrey Busch who serves as a member of the Board of Directors and ~~their previous executive team in the District Court of Harris County Texas. The action alleges the plaintiffs were engaged by Avant to perform services prior to 2018. The plaintiffs are seeking~~ a $1 million award. The Company and Dr. Ruxin were named it the lawsuit. The Company believes these claims are without merit and intends to defend these lawsuits vigorously. The Company currently believes the likelihood of a loss contingency related ~~to these matters is remote and, therefore, no provision~~party, for a ~~loss contingency~~principal balance of $125,000. The note bears an annual interest rate of 8% and is ~~required.~~
~~Certificate~~payable on demand. The outstanding principal and accrued interest of ~~Designation~~the note is contingently convertible, in full, at the option of ~~Series F Preferred Stock~~the lender, into the same security which is being issued by the Company in its next private placement of equity or equity backed securities at any time after the inception date.

On July 30, 2021, the Company filed a certificate of designation, preferences and rights of Series F Preferred Stock (the “Series F Certificate of Designation”), with the Nevada Secretary of State to designate ~~1,000~~ ~~shares of its previously authorized preferred stock as Series F Preferred Stock, par value $0.0001~~ ~~per share and a stated value of $2,000~~ per share. The Series F Certificate of Designation and its filing was approved by the Company’s board of directors without shareholder approval as provided for in the Company’s articles of incorporation and under Nevada law (see Note 1). The holders of shares of Series F Preferred Stock have the following preferences and rights:
● ~~From the Initial Issuance Date, cumulative dividends on each share of Series F shall accrue, on a monthly basis in arrears (with any partial month being made on a pro-rata basis), at the rate of~~ 8% per annum on the Stated Value, plus the Additional Amount thereon. Dividends shall be paid within 15 days after the end of each month (“Dividend Payment Date”), at the option of the Holder in cash or through the issuance of shares of Common Stock. In the event that the Holder elects to receive its dividends in shares of Common Stock the number of shares of Common Stock to be issued to each applicable Holder shall be dividing the total dividend then being paid to such Holder by the average closing price of the Common Stock during the five trading days on the Principal Market prior to the Dividend Payment Date.
● Holders of shares of Series F Preferred Stock are entitled to dividends or distributions on each share on an “as converted” into common stock basis, if, as and when declared from time to time by the Board of Directors.
● Each share of Series F Preferred Stock is convertible into shares of common stock any time after the initial issuance date at the Conversion Price which is the lesser of: (i) $0.00313 or (ii) 75% of the average closing price of the common stock during the prior five trading days on the principal market, subject to adjustment as provided in the Series F Certificate of Designation including a price protection provision for offerings below the conversion price. Provided, however, the Conversion Price shall never be less than $0.0016. The number of shares of common stock issuable upon conversion shall be determined by multiplying the number of outstanding shares by the stated value per share of $2,000 plus additional amount by the Conversion Price.
● In connection with, (i) a Change of Control of the Corporation or (ii) on the closing of, a Qualified Public Offering by the Corporation, all of the outstanding shares of Series F Preferred Stock (including any fraction of a share) shall automatically convert along with the Additional Amount into an aggregate number of shares of Common Stock (including any fraction of a share) as is determined by dividing the number of shares of Series F Preferred Stock (including any fraction of a share) by the Automatic Conversion Price then in effect. If a closing of a Change of Control transaction or a Qualified Public Offering occurs, such automatic conversion of all of the outstanding shares of Series F Preferred Stock shall be deemed to have been converted into shares of Common Stock as of immediately prior to the closing of such transaction or Qualified Public Offering.
● In the event the Company issues or sells any securities including options or convertible securities, except for any Exempt Issuance (as defined in the Series F Certificate of Designation), at a price, an exercise price or conversion price of less than the conversion price, then upon such issuance or sale, the Series F Preferred Stock conversion price shall be reduced to the sale price, or the exercise price or conversion price of the securities sold.
● Series F Preferred Stock shall rank pari passu with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation with the Series C-1 Preferred Stock of the Corporation, the Series C-2 Preferred Stock of the Corporation, and the Series E Preferred Stock of the Corporation (the “Parity Stock”), and all other shares of capital stock of the Corporation shall be junior in rank to all Series F with respect to the preferences as to dividends (except for the Common Stock, which shall be pari passu as provided in the Series F Certificate of Designation), distributions and payments upon the liquidation, dissolution and winding up of the Corporation (such junior stock is referred to herein collectively as “Junior Stock”). The rights of all such Junior Stock shall be subject to the rights, powers, preferences and privileges of the Series F Preferred Stock. Without limiting any other provision of the Series F Certificate of Designation, without the prior express consent of the Required Holder, the Corporation shall not hereafter authorize or issue any additional or other shares of capital stock that is (i) of senior rank to the Series F Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation (collectively, the “Senior Preferred Stock”), or (ii) Parity Stock. Except as provided for herein, in the event of the merger or consolidation of the Corporation into another corporation, the Series F Preferred Stock shall maintain their relative rights, powers, designations, privileges and preferences provided for herein for a period of at least two years following such merger or consolidation and no such merger or consolidation shall cause result inconsistent therewith.
~~Sale of Series F Preferred Stock~~
~~On July 30, 2021,~~29, 2022, the Company entered into a ~~Securities Purchase~~Demand Promissory Note Agreement ~~(the “SPA”)~~ with related party, who is an ~~investor to purchase an aggregate amount of~~ ~~500~~ ~~shares of~~affiliate stockholder, for a ~~newly created Series F Convertible Preferred Stock of the Company (the “Series F Preferred”) and accompanying warrant (the “Warrant”) for an aggregate investment amount~~principal balance of $~~1,000,000~~375,000. The ~~Series F Preferred Stock has a stated value of $2,000~~ ~~per share and shall accrue monthly in arrears, dividends at the~~note bears an annual interest rate of 8% ~~per annum~~and is payable on demand. The outstanding principal and accrued interest of the ~~stated value. The dividends shall be paid monthly~~note is contingently convertible, in full, at the option of the ~~holder of~~lender, into the ~~Series F Preferred in either cash or shares of common stock of the Company.~~ ~~The number of shares of common stock issuable upon conversion of the Series F Preferred~~same security which is ~~determined by dividing the stated value of the number of shares~~ being converted, plus any accrued and unpaid dividends, by the lesser of: (i) $0.00313 and (ii) 75% of the average closing price of the Company’s common stock during the prior five trading days; provided, however, the conversion price shall never be less than $0.0016. In addition, the investor was issued a Warrant to purchase an amount of common stock equal to 20% of the shares of common stock issuable upon conversion of the Series F Preferred at an exercise price of $0.00313 per share (subject to adjustment as provided therein) until July 30, 2026.~~The Warrants are exercisable for cash at any time. The Warrants shall be valued using the relative fair value method.~~
~~Series E Price Reduction~~
The Series F Preferred Stock, that was issued on July 30, 2021, triggered the price protection clause in the Series E Preferred Stock. Thus, the conversion price of the Series E Preferred Stock was reduced from $~~0.00375~~ ~~to $0.00313~~ ~~on that date.~~
~~Exercise of Options to Purchase Shares of OncBioMune Sub Inc.~~
In connection with the Asset Sale Transaction, the Company entered into an Exchange Agreement, effective June 5, 2020, by and among OncBioMune Pharmaceuticals, Inc. and the investors named therein, whereby the Company agreed to exchange certain convertible promissory notes and warrants outstanding for shares of Series C-1 Convertible Preferred Stock of the Company and options to purchase shares of the Company’s wholly-owned subsidiary, OncBioMune Sub Inc. OncBioMune Sub Inc. holds the patents used in the prior business of OncBioMune Pharmaceuticals, Inc. In July of 2021, certain of those investors exercised their options to purchase the shares of OncBioMune Sub Inc. On July 26, 2021, the Company transferred all 10,000 shares of OncBioMune Sub Inc. held by the Company toin its next private placement of equity or equity backed securities at any time after the ~~investors.~~inception date.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with our historical financial statements. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. For additional information regarding these risks and uncertainties, please see Part II, Item 1A of this Quarterly Report on Form 10-Q, “Risk Factors,” and the risk factors included in our September 30, ~~2020,~~2021, Annual Report on Form 10-K.

Special Note Regarding COVID-19

In December 2019, a novel strain of coronavirus known as COVID-19 was reported to have surfaced in China, and by March 2020 the spread of the virus had resulted in a world-wide pandemic. The U.S. economy was largely shut down by mass quarantines and government mandated stay-at-home orders (the “Orders”) to halt the spread of the virus. These Orders have required some of our employees to work from home when possible, and other employees ~~have been entirely~~were prevented from performing their job duties until the Orders ~~are~~were relaxed or lifted. The COVID-19 pandemic has required alternative selling approaches such as through social media. We may be unable to avoid future reductions in net revenue using these alternative selling approaches that avoid direct contact with our customers. The ~~world-wide~~worldwide response to the pandemic has resulted in a significant downturn in economic activity and there is no assurance that government stimulus programs will successfully restore the economy to the levels that existed before the pandemic. If an economic recession or depression is sustained, it could have a material adverse effect on our business as demand for our technology could decrease.
While some of these Orders were relaxed or lifted in different jurisdictions at various times during the nine months ended June 30, ~~2021,~~2022, the overall impact of COVID-19 continues to have an adverse impact on business activities around the world. There is no assurance that Orders that were previously relaxed or lifted will not be reinstated as the spread of COVID-19 continues. For example, many jurisdictions have recently reinstated masking orders after test results have showed a resurgence of the pandemic. ~~Resurgence of the pandemic in some markets has slowed the reopening process of businesses in those areas, including Europe where additional lockdowns have been recently reinstated.~~ If COVID-19 infection trends continue to reverse and the pandemic intensifies and expands geographically, its negative impacts on our sales could be more prolonged and may become more severe. The long-term financial impact on our business cannot be reasonably estimated at this time.

Overview

Theralink is a commercial-stage precision medicine and molecular data-generating company that focuses on the development and commercialization of a series of patented, proprietary data-generating assays that may provide important actionable information for physicians and patients, as well as biopharmaceutical companies, in the ~~areas~~area of oncology. Our near-term goal is to continue to commercialize the technology originally developed by Theranostics Health, a company whose assets we acquired in May 2016. The ~~company~~Company differentiates itself by:

● An exclusive license agreement with George Mason University (“GMU”), that has well-published scientists in our area of ~~expertise;~~expertise.
● Having access to the Ph.D.’s at GMU who have completed pioneering work in phosphoproteomic-based biomarkers ~~diagnostics;~~diagnostics.
● Domain expertise in cancer biomarker and data-generating laboratory testing ~~data;~~data.
● Development of proprietary, ~~cutting edge~~cutting-edge assays focused on precision oncology ~~care;~~care.
● Building revenue streams based on our proprietary technology, ~~Theralink®.~~Theralink.
● Having a patent portfolio licensed from GMU and the ~~NIH.~~National Institutes of Health (“NIH”).

Theralink is advancing its patented, proprietary technology in the field of phosphoproteomic research, a sector ~~which~~that has emerged as one of the most exciting new components in the high-growth field of precision molecular diagnostics. The ~~Theralink®~~Theralink platform makes it possible to generate an accurate and comprehensive portrait of protein pathway activation in diseased cells from each patient, and thereby determining which individuals may be better responders to certain targeted molecular therapies. The platform enables the quantitative measurement of the level of activation. Moreover, the sensitivity is many times greater than conventional mass spectrometry and other protein immunoassays. Initially spun-out of GMU in 2006, and subsequently ~~brought~~elevated to the federal government’s Center for Medicare & Medicaid Services’ (“CMS”) Clinical Laboratory Improvement Amendments (“CLIA”) standards, ~~the diagnostics~~our precision medicine suite ismay be highly relevant for oncology patient management today that may improve (i) chemotherapy drug selection; (ii) immunotherapy drug selection; and (iii) optimization of combination therapy selection.

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The biomarker and data-generating tests may provide biopharmaceutical companies, clinical scientists and physicians with molecular-based guidance as to which patients may benefit from the new, molecular targeted therapeutics being developed and used to treat various life-threatening oncology diseases, as well as existing treatment standards that are recognized as the standard of care in the oncology treatment community. This addresses the core aspect of precision treatment today – identifying which individuals are more likely to respond to specific targeted molecular therapies, thus forming the basis for personalized medicine.

The technology is based upon the pioneering work of three noted scientists, Drs. Lance Liotta, Emanuel Petricoin and Virginia Espina in proteomic-based diagnostics. ~~Avant benefits~~We benefit from a portfolio of intellectual property derived from licensing agreements with:

● The US Public Health Service (“PHS”), the federal agency that supervises the ~~National Institutes of Health (“NIH”),~~NIH, which provides us with broad protection around its technology platform; and

● GMU which provides access to additional intellectual property around improvements to the technology platform and biomarker signatures that form the basis for future diagnostic products.

Theralink is committed to advancing the technologies from GMU and the NIH as a platform for the development of new clinical biomarkers and ~~diagnostics.~~precision medicine. These ~~diagnostic~~precision medicine and monitoring products have the potential to provide biopharmaceutical companies and doctors with critical molecular-based knowledge to make the best therapeutic decisions based on a patient’s unique, individual medical needs.

Our plan of operation over the next 12 months is to:
● Establish Laboratory Standard Operating Procedures (SOP’s) to comply with New York, Washington, D.C., and the College of American Pathologists (“CAP”) standards;
● Hire an Assistant Laboratory Director and additional lab techs and sales consultants;
● Choose members to sit on our Medical and Scientific Advisory Boards;
● Continue to validate ~~the~~additional Theralink cancer biomarker technology potentially for GYN, head and neck, lung, GI, pancreatic, prostate and liver cancer under CAP/CLIA standards which may to provide personalized medicine ~~regarding~~ treatment options for biopharmaceutical companies, clinical oncologists and their cancer patients;
● ~~Grow revenue generated from pharmaceutical companies.~~
● ~~Complete partnerships~~Continue to partner with pharmaceutical companies to perform oncology-related data-generating testing services ~~to create revenue; and~~which generate additional revenues;
● Continue to seek financing to grow the ~~company.~~Company and
● Begin billing Medicare and other third-party payors in January of 2023 for our advanced breast cancer assay.
Appointment of New Directors
On April 1, 2022, the Board of Directors (“Board”) of the Company, voted to appoint Danica Holley and Matthew M. Schwartz, M.D. to serve as members of the Board, effective April 4, 2022. Ms. Holley and Dr. Schwartz will serve as members of the Board until the next annual meeting of shareholders of the Company or until his or her resignation or removal and otherwise until his or her successor is elected. The Board determined that Ms. Holley and Dr. Schwartz each meet the independence standards of the NASDAQ Stock Market Rules and the applicable rules of the SEC.

Results of Operations

Comparison for Three and Nine Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Revenue

● For the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, total revenue was $164,213 and $278,925, ~~and $24,886,~~ respectively, ~~an increase~~a decrease of ~~$254,039~~$114,712 or ~~1,021%~~41%. The ~~increase~~decrease was primarily attributable to ~~performance under~~a decrease in research and development contracts ~~for~~from pharmaceutical companies during the three months ended June 30, ~~2021.~~2022.
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● For the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, total revenue was $262,688 and $415,029, ~~and $75,896,~~ respectively, ~~an increase~~a decrease of ~~$339,133~~$152,341 or ~~447%~~37%. The ~~increase~~decrease was primarily attributable to ~~performance under~~decrease in research and development contracts ~~for~~from pharmaceutical companies during the ~~six~~nine months ended June 30, ~~2021.~~2022.

Costs of Revenues

● For the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, cost of revenue was ~~$69,253~~$99,484 and ~~$7,422,~~$69,253, respectively, an increase of ~~$61,831~~$30,231 or ~~833%~~44%. The increase in current cost of revenue as a percentage of revenue was ~~primarily attributable~~greater during the 2022 period because the Company was required to purchase expensive third-party samples for certain pharmaceutical contracts. This increased cost significantly decreased the ~~increase in revenue discussed above.~~gross margins for the 2022 period.
● For the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, cost of revenue was ~~$99,298~~$160,229 and ~~$23,421,~~$99,298, respectively, an increase of ~~$75,877~~$60,931 or ~~324%~~61%. The increase in current cost of revenue as a percentage of revenue was ~~primarily attributable~~greater during the 2022 period because the Company was required to purchase expensive third-party samples for certain pharmaceutical contracts. This increased cost significantly decreased the ~~increase in revenue discussed above.~~gross margins for the 2022 period.
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Gross Margin

● For the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, gross margin was $64,729 and $209,672, ~~and $17,464,~~ respectively, ~~an increase~~a decrease of ~~$191,208~~$144,943 or ~~1,101%~~69%. The ~~increase~~decrease was primarily attributable to the ~~increase~~decrease in revenue and cost of revenue discussed above.
● For the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, gross margin was $102,459 and $315,731, ~~and $52,475,~~ respectively, ~~an increase~~a decrease of ~~$263,256~~$213,272 or ~~502%~~68%. The ~~increase~~decrease was primarily attributable to the ~~increase~~decrease in revenue and increase in cost of revenue discussed above.
Operating Expenses

For the three months ended June 30, 2022 and 2021, ~~expenses from operations~~total operating expense amounted to $1,441,062 and $1,404,566, ~~as compared to $975,208 for the three months ended June 30, 2020,~~ an increase of ~~$429,358,~~$36,496, or ~~44%~~3%.
For the nine months ended June 30, 2022 and 2021, ~~expenses from operations~~total operating expense amounted to $4,421,101 and $4,479,735, ~~as compared to $2,032,850 for the nine months ended June 30, 2020, an increase~~a decrease of ~~$2,446,885,~~$58,634, or ~~120%~~1%.

For the three and nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, operating expenses consisted of the following:

Three Months Ended
June 30,

Nine Months Ended
June 30,

Three Months Ended
June 30,

Nine Months Ended
June 30,

2021 2020 2021 2020 2022 2021 2022 2021
Professional fees $ 243,517 $ 322,921 $ 654,736 $ 470,638 $ 162,164 $ 243,517 $ 677,740 $ 654,736
Consulting fee - related party — 8,650 — 64,125
Compensation expense 532,414 372,610 1,654,693 822,329 703,267 532,414 2,031,755 1,654,693
Licensing fees 39,172 12,750 100,364 38,920 30,377 39,172 105,732 100,364
General and administrative expenses 589,463 258,277 2,069,942 639,838 545,254 589,463 1,606,174 2,069,942
Total $ 1,404,566 $ 975,208 $ 4,479,735 $ 2,032,850 $ 1,441,062 $ 1,404,566 $ 4,421,101 $ 4,479,735

Professional fees

● For the three months ended June 30, 2022 and 2021, professional fees ~~decreased by $79,404~~were $162,164 and $243,517, respectively, a decrease of $81,353 or ~~25%, compared to the three months ended June 30, 2020.~~33%. The decrease was primarily attributable to a decrease in ~~legal~~accounting fees of ~~$83,271,~~$20,089, a decrease in ~~talent search~~consulting fees of ~~$63,000~~$88,168 offset by an increase in ~~accounting~~legal fees of ~~$65,492, an increase in consulting fees of $3,023~~$26,265 and an increase in IT services of ~~$1,445.~~$639. The increase in legal fees during the 2022 period can be primarily attributed to the issuance of additional convertible notes and defending multiple lawsuits during the three months ended June 30, 2022. There were minimal legal fees incurred for lawsuits during the 2021 period.
● For the nine months ended June 30, 2022 and 2021, professional fees ~~increased by $184,098~~were $677,740 and $654,736, respectively, an increase of $23,004 or ~~39%, compared to the nine months ended June 30, 2020.~~4%. The increase was primarily attributable to an increase in ~~accounting~~legal fees of ~~$119,958, an increase in consulting fees of $145,355, an increase in IT services of $25,979~~$224,300 offset by a decrease in ~~legal~~accounting fees of ~~$17,194~~$8,312, a decrease in consulting fees of $169,700 and a decrease in ~~talent search~~IT services of $23,284. The increase in legal fees ~~of $90,000.~~
~~Consulting fees - related party~~
● ~~For~~during the ~~three months ended June 30, 2021, consulting fees - related party decreased by $8,650 or 100%, compared~~2022 period can be primarily attributed to the ~~three months ended June 30, 2020. The decrease was the result~~issuance of ~~the Company terminating the consulting agreements with AVDX Investors Group, whose partner is on our board of directors, in May 2019~~additional convertible notes and ~~International Infusion whose principal owner served as an officer of the Company in December 2019.~~
● ~~For~~defending multiple lawsuits during the nine months ended June 30, 2022. There were minimal legal fees incurred for lawsuits during the 2021 consulting fees - related party decreased by $64,125 or 100%, compared to the nine months ended June 30, 2020. The decrease was the result of the Company terminating the consulting agreements with AVDX Investors Group, whose partner is on our board of directors, in May 2019 and International Infusion whose principal owner served as an officer of the Company in December 2019.period.
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Compensation expense

● For the three months ended June 30, 2022 and 2021, compensation expense ~~increased by $159,804~~was $703,267 and $532,414, respectively, an increase of $170,853 or ~~43%, as compared the three months ended June 30, 2020.~~32%. The increase was attributable to an increase in administrative compensation and related expenses of ~~$146,396~~$163,097 and an increase in employee benefits of ~~$13,408~~$7,756 resulting from ~~an increase of~~additional employees ~~in 2021.~~being hired and a bonus paid to the CFO.
● For the nine months ended June 30, 2022 and 2021, compensation expense ~~increased by $832,364~~was $2,031,755 and $1,654,693, respectively, an increase of $377,062 or ~~101%, as compared the nine months ended June 30, 2020.~~23%. The increase was attributable to an increase in administrative compensation and related expenses of ~~$790,056~~$346,015 and an increase in employee benefits of ~~$42,308~~$31,047 resulting from ~~an increase of~~additional employees ~~in 2021.~~being hired and a bonus paid to the CFO.
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Licensing fees

● For the three months ended June 30, 2022 and 2021, licensing fees ~~increased by $26,422~~were $30,377 and $39,172, respectively, a decrease of $8,795 or ~~207%, as compared~~22%. The decrease was attributable to a decrease in the ~~three months ended June 30, 2020.~~minimum royalties payable to NIH.
● For the nine months ended June 30, 2022 and 2021, licensing fees ~~increased by $61,444~~were $105,432 and $100,364, respectively, a decrease of $5,068 or ~~158%, as compared~~5%. The decrease was attributable to a decrease in the ~~nine months ended June 30, 2020.~~minimum royalties payable to NIH.

General and administrative expenses

● For the three months ended June 30, 2022 and 2021, general and administrative expenses ~~increased by $331,186~~were $545,254 and $589,463, respectively, a decrease of $44,209 or ~~128%, as compared to the three months ended June 30, 2020.~~7%. The ~~increase~~decrease was primarily due to a decrease in patient reporting and contract research (formerly called sample analysis) of $132,320 because the Company reduced the amount of contract research work the vendor was providing during the 2022 period, a decrease in laboratory supplies of $24,171 and a decrease in biological supply expenses of $49,680, a decrease in royalty fee of $25,436, offset by an increase in sample ~~analysis~~validation expense of ~~$208,826,~~$50,000, an increase in ~~depreciation expense~~repairs and maintenance of ~~$25,160,~~$31,938, an increase in ~~laboratory supplies~~rent expense of ~~$108,762,~~$28,497, an increase in ~~insurance~~business development expense of ~~$28,384 offset by a decrease~~$33,833, an increase in ~~biological~~filing fees of $9,739 and an increase in other office expense of ~~$31,860 and a decrease in office expenses of 7,046. The increase was a result of increase in revenue producing activities in 2021.~~$33,391.
● For the nine months ended June 30, 2022 and 2021, general and administrative expenses ~~increased by $1,433,104~~were $1,606,174 and $2,069,942, respectively, a decrease of $463,768 or ~~225%, as compared to the nine months ended June 30, 2020.~~22%. The ~~increase~~decrease was primarily due to a decrease in patient reporting and contract research (formerly called sample analysis) of $457,870 because the Company reduced the amount of contract research work the vendor was providing during the 2022 period, a decrease in laboratory supplies of $132,583 and a decrease in biological supply expenses of $198,202, a decrease in royalty fee of $24,677, offset by an increase in sample ~~analysis~~validation expense of ~~$733,242,~~$100,000, an increase in ~~depreciation~~travel expense of ~~$81,571,~~$15,572, an increase in ~~laboratory supplies~~repairs and maintenance of ~~$436,033,~~$35,861, an increase in ~~biological~~rent expense of ~~$75,677,~~$84,963, an increase in business insurance of $27,091, an increase in business development expense of $48,612 and an increase in ~~insurance~~other office expense of ~~$87,604. The increase was a result of increase in revenue producing activities in 2021.~~$37,465.
Loss from Operations

● For the three months ended June 30, 2022 and 2021, the loss from operations amounted to $1,376,333 and $1,194,894, ~~as compared to $957,744 for the three months ended June 30, 2020,~~respectively, an increase of ~~$237,150~~$181,439 or ~~25%~~15%. The increase was primarily a result of ~~greater~~higher operating expenses as discussed ~~above.~~above offset by a decrease in revenue.
● For the nine months ended June 30, 2022 and 2021, the loss from operations amounted to $4,318,642 and $4,164,004, ~~as compared to $1,980,375 for the nine months ended June 30, 2020,~~respectively, an increase of ~~$2,183,629,~~$154,638 or ~~110%~~4%. The increase was primarily a result of ~~greater operating expenses as~~a decrease in revenue discussed above.
Other Income (Expense)

● For the three months ended June 30, 2022 and 2021, ~~we had~~the total other ~~(expense),~~expense, net amounted to $332,461 and $30,893, respectively, an increase of ~~$(30,893) as compared to total other income, net of $165,391 for the three months ended June 30, 2020, a change of $196,284~~$301,568 or ~~119%~~976%. ~~This change~~The increase was primarily due to an increase in interest expense of ~~$19,149 offset by a decrease on~~$299,968 resulting from additional debt incurred in 2022 and an increase in unrealized loss on market securities of ~~$1,000, a decrease in loss on debt extinguishment of $108,060, a decrease in unrealized gain on exchange rate of $60,075 and a decrease in other income of $10,000 from the EIDL stimulus check.~~$1,600.
● For the nine months ended June 30, 2022 and 2021, ~~we had~~the total other income (expense), net amounted to $(738,414) and $157,329, respectively, an increase in total other (expense), net of ~~$157,329 as compared to~~$(895,743) or 569%. The increase in total other ~~income,~~(expense), net ~~of $143,220 for the nine months ended June 30, 2020, an increase of $14,109 or 10%. This change~~ was primarily due to an increase in interest expense of ~~$19,964~~$(686,135) resulting from additional debt incurred in 2022 and an increase in unrealized loss on market securities of $(5,000) offset by a decrease in gain on debt extinguishment of ~~$119,234 offset by a decrease on unrealized loss on market securities of $7,600,~~$(227,294) as there was no debt extinguishment in 2022 and a decrease in unrealized ~~gain~~loss on exchange rate of ~~$82,761 and a decrease~~$22,686 as there was no unrealized loss on exchange rate in ~~other income of $10,000 from the EIDL stimulus check.~~2022.
~~Net Loss~~
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● For the three months ended June 30, 2021, net loss attributable to common stockholders amounted to $1,185,897, or $(0.00) per share (basic and diluted), compared to $792,353 or $(2.04) per share (basic and diluted) for the three months ended June 30, 2020, an increase of $433,434 or 55%.
● For nine months ended June 30, 2021, net loss attributable to common stockholders amounted to $3,887,114, or $(0.00) per share (basic and diluted), compared to $1,837,155 or $(19.19) per share (basic and diluted) for the nine months ended June 30, 2020, an increase of $2,169,520 or 118%.
Preferred Stock Dividend

● For the three months ended June 30, 2022 and 2021, the ~~Company recorded dividend~~dividends on preferred stocks amounted to $59,835 and $39,452, respectively, an increase of $20,383 or 52%. The increase was primarily a result of an increase in dividends of $19,945 on Series F preferred stock which were issued on July 30, 2021, therefore, there were no dividends related to the Series ~~E Preferred~~F preferred stock ~~of $39,890.~~during the three months ended June 30, 2021.
● For the nine months ended June 30, 2022 and 2021, the ~~Company recorded dividend~~dividends on preferred stocks amounted to $179,507 and $119,561, respectively, an increase of $59,946 or 50%. The increase was primarily a result of an increase in dividends of $59,836 on Series F preferred stock which were issued on July 30, 2021, therefore, there were no dividends related to the Series ~~E Preferred~~F preferred stock ~~of $119,561.~~during the nine months ended June 30, 2021.
Net Loss Attributed to Common Stockholders
29 ● For the three months ended June 30, 2022 and 2021, net loss attributable to common stockholders amounted to $1,768,629, or $(0.00) per share (basic and diluted) and $1,265,239 or $(0.00) per share (basic and diluted), respectively, an increase of $503,390 or 40%.
● For the nine months ended June 30, 2022 and 2021, net loss attributable to common stockholders amounted to $5,236,563, or $(0.00) per share (basic and diluted) and $4,126,236 or $(0.00) per share (basic and diluted), respectively, an increase of $1,110,327 or 27%.
Liquidity and Capital Resources

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its ~~needs for cash requirements.~~required needs. We had a working capital ~~(deficit)~~deficit of ~~$(2,234,813)~~$1,584,036 and cash of ~~$79,677~~$125,417 as of June 30, ~~2021~~2022 and working capital deficit of ~~$877,234~~$2,657,337 and ~~$1,779,283~~$314,151 of cash as of September 30, ~~2020.~~2021.

June 30,
2021
September 30, 2020 Change Percentage Change
June 30,
2022
September 30, 2021 Change Percentage Change
Working capital (deficit):
Working capital deficit:
Total current assets $ 765,704 $ 2,067,971 $ (1,302,267 ) 63 % $ 454,049 $ 638,753 $ (184,704 ) 29 %
Total current liabilities (3,000,517 ) (1,190,737 ) (1,809,780 ) 152 % (2,038,085 ) (3,296,090 ) 1,258,005 38 %
Working capital (deficit): $ (2,234,813 ) $ 877,234 $ (3,112,047 ) 355 %
Working capital deficit: $ (1,584,036 ) $ (2,657,337 ) $ 1,073,301 40 %

The decrease in working capital deficit was primarily attributed to ~~the~~a decrease in current assets of ~~$(1,302,267)~~$184,704 and ~~the increase~~a decrease in current liabilities of ~~$1,809,780.~~$1,258,005 primarily due to decrease in accounts payable and the issuance of common shares for the $1,350,000 subscription payable.

Cash Flows

The following table sets forth a summary of changes in cash flows for the nine months ended June 30, ~~2021~~2022 and 2021:

Nine Months Ended
June 30,

Nine Months Ended
June 30,

2021 2020 2022 2021
Net cash used in operating activities $ (3,700,721 ) $ (2,351,823 ) $ (4,460,633 ) $ (3,700,721 )
Net cash provided by (used in) investing activities (115,552 ) 180,371
Net cash used in investing activities (88,199 ) (115,552 )
Net cash provided by financing activities 2,116,667 2,545,241 4,360,098 2,116,667
Net change in cash $ (1,699,606 ) $ 373,789 $ (188,734 ) $ (1,699,606 )

Net Cash Used in Operating Activities

Net cash used in operating activities ~~was $3,700,721 for~~during the nine months ended June 30, 2022 and 2021 ~~as compared to $2,351,823 for the nine months ended June 30, 2020,~~were $4,460,663 and $3,700,721, respectively, an increase of ~~$1,348,898,~~$759,912, or ~~57%~~21%.
● Net cash used in operating activities for the nine months ended June 30, 2022 primarily reflected our net loss of $5,057,056 adjusted for the add-back of non-cash items such as depreciation expense of $143,531, non-cash lease cost of $21,528, amortization of debt discount of $501,432, gain on operating lease modification of $8,229, unrealized loss on marketable securities of $8,600 and changes in operating assets and liabilities consisting primarily of an increase in accounts receivable of $109,380, an increase in accounts payable of $385,860, offset by a decrease in prepaid expenses and other current assets of $27,882, a decrease in laboratory supplies of $71,062, a decrease in accrued liabilities and other liabilities of $158,335 and a decrease in contract liabilities of $167,522.
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● Net cash used in operating activities for the nine months ended June 30, 2021 primarily reflected our net loss of $4,006,675 adjusted for the add-back of non-cash items such as depreciation expense of $138,632, non-cash lease cost of $1,382, amortization of debt discount of $14,116, gain on debt extinguishment of $227,294, unrealized loss on exchange rate of $22,686, unrealized loss on marketable securities of $3,600 and changes in operating ~~asset~~assets and liabilities consisting primarily of an increase in accounts receivable of $149,938 offset by a decrease in laboratory supplies of $36,467, a decrease in prepaid expenses and other current assets of $44,420, a decrease in accounts payable of $252,383, a decrease in accrued liabilities and other liabilities of $20,950, and a decrease in deferred revenue of $148,550.
● Net cash flow used in operating activities for the nine months ended June 30, 2020 primarily reflected our net loss of $1,837,155 adjusted for the add-back of non-cash items such as depreciation expense of $57,060, lease cost of $5,975, gain on debt extinguishment of $108,060, foreign currency transaction gain of $60,075, unrealized loss on marketable securities of $11,200 and changes in operating asset and liabilities consisting primarily of an increase in accounts receivable of $20,975, an increase in prepaid expenses and other current assets of $116,219, an increase in accounts payable of $212,840 offset by a decrease in accrued liabilities and other liabilities of $70,734.

Net Cash ~~Provided by (Used in)~~Used in Investing Activities

Net cash ~~(used in)~~used in investing activities ~~was $(115,552) for~~during the nine months ended June 30, 2022 and 2021 ~~as compared to net cash provided by investing activities $180,371 for the nine months ended June 30, 2020,~~were $88,199 and $115,552, respectively, a ~~change~~decrease of ~~$295,923,~~$27,353, or ~~164%~~24%.
● Net cash used in investing activities for the nine months ended June 30, 2022, resulted from the purchase of property and equipment of $88,199.

● Net cash provided by investing activities for the nine months ended June 30, 2021, resulted from the purchase of property and equipment of $(116,052) offset by an adjustment related to a prior period redemption payment of $500.
● Net cash provided by investing activities for the nine months ended June 30, 2020, resulted from the cash acquired from the Asset Sale Transaction of $675,928 offset by the purchase of property and equipment of $(495,557).
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Net Cash Provided by Financing Activities

Net cash provided by financing activities ~~was $2,116,667 for~~during the nine months ended June 30, 2022 and 2021 ~~as compared to $2,545,241 for the nine months ended June 30, 2020, a decrease~~were $4,360,098 and $2,116,667, respectively, an increase of ~~$428,574,~~$2,243,431, or ~~17%~~106%.
● Net cash provided by financing activities for the nine months ended June 30, 2022, consisted of $1,900,000 of net proceeds from related party convertible debt, $2,425,000 of net proceeds from convertible debt, $400,000 of net proceeds from related party notes payable, offset by repayment of $150,000 of related party convertible note, repayment of $35,242 of financed leases and payments of $179,660 in preferred stock dividends.

● Net cash provided by financing activities for the nine months ended June 30, 2021, consisted of $1,350,000 of net proceeds from deposits from the sale of common stock, proceeds from convertible debt – related party of $666,667 and proceeds from a note payable – related party of $100,000.
● Net cash provided by financing activities for the nine months ended June 30, 2020, consisted of $2,590,000 of net proceeds from the sale of preferred stock offset by the repayment of a related party advance of $20,000 and the repayment of convertible debt of $24,759.

Cash Requirements

Management does not believe that our current capital resources will be adequate to continue operating our Company and maintaining our business strategy for more than 12 months from the date of this report. Accordingly, we will have to raise additional capital in the near future to meet our working capital requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to scale down or perhaps even cease the operation of our business.

Going Concern

These ~~consolidated~~unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying ~~condensed consolidated~~unaudited financial statements, the Company had net loss and net cash used in operations of ~~$4,006,675~~$5,057,056 and ~~$3,700,721,~~$4,460,633, respectively, for the nine months ended June 30, ~~2021.~~2022. Additionally, the Company had an accumulated deficit, stockholders’ deficit and working capital deficit of ~~$47,313,824, $3,433,331~~$55,062,418, $5,113,501 and ~~$2,234,813, respectively,~~$1,584,036 at June 30, ~~2021.~~2022. Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of this report.

The Company cannot provide assurance that weit will ultimately achieve profitable operations or become cash flow positive or raise additional debt or equity capital. Additionally, the current capital resources are not adequate to continue operating and maintaining the business strategy for a period of twelve months from the issuance date of this report. The Company will seek to raise capital through additional debt and equity financings to fund its operations in the future.

Although the Company has historically raised capital from sales of equity and from the issuance of promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These ~~condensed consolidated~~ financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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The global pandemic COVID-19, otherwise referred to as the Coronavirus, could impair our ability to raise additional funding or make such funding more costly. The ongoing global pandemic has caused cessation of normal business operations and initially caused capital markets to decline sharply. This could make it more difficult for the Company to access capital. It is currently difficult to estimate with any certainty how long the pandemic and resulting curtailment of business will continue, and its effect on capital markets and the Company’s ability to raise funds is, accordingly, difficult to quantify. In addition, to the extent that any of the Company’s personnel or consultants are affected by the virus, this could cause delays or disruption in our planned research and development activities.
Current Financings
Convertible Debt – Related Party
On April 5, 2022, pursuant to the First April 2022 SPA, Matthew Schwartz, a member of the Board of Directors and a related party, purchased a convertible note with principal of $100,000 with accompanying First April 2022 Warrants to purchase 4,201,681 shares of common stock. The Company received net proceeds of $100,000 on March 24, 2022. The First April 2022 Warrants were valued at $89,815 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the First April 2022 Note. The First April 2022 Warrants are exercisable at any time and expire on April 1, 2027. The First April 2022 Note bears an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the First April 2022 Note)) and matures on April 1, 2027. The First April 2022 Note and First April 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment as provided in the agreements). Upon maturity the Company may pay the outstanding balance of the First April 2022 Note in cash or convert it into shares of common stock. Upon the listing by the Company or the trading of the common stock on a Qualified National Exchange, the conversion amount (as defined in the First April 2022 Note) shall automatically be converted into fully-paid and non-assessable shares of common stock. As of June 30, 2022, the First April 2022 Note had an outstanding principal balance of $100,000 and accrued interest of $1,885.
On May 9, 2022, pursuant to the May 2022 SPA the May 2022 Investor purchased four convertible notes for an aggregate investment amount of $1,000,000 with accompanying May 2022 Warrants to purchase shares of common stock equal to 20% of the number of the total shares of common stock issuable upon the conversion of the May 2022 Notes. The first note issued on May 9, 2022, had a principal balance of $250,000 and accompanying warrants to purchase up to 10,504,202 shares of common stock. The second note issued on May 24, 2022, had a principal balance of $250,000 and accompanying warrants to purchase up to 10,504,202 shares of common stock. The third note issued on June 10, 2022, had a principal balance of $250,000 and accompanying warrants to purchase up to 10,504,202 shares of common stock. The Company received $750,000 in aggregate proceeds from the May 2022 Notes and issued an aggregate of 31,512,606 May 2022 Warrants. The May 2022 Notes bear an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the May 2022 Notes)) and mature on April 1, 2027. The May 2022 Warrants are exercisable at any time and expire on April 1, 2027. The May 2022 Warrants were valued at $142,489 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the May 2022 Notes. The May 2022 Notes and May 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment as provided in the agreements). As of June 30, 2022, the May 2022 Notes had an aggregate outstanding principal balance of $750,000 and accrued interest of $5,973.
On June 15, 2022, pursuant to the June 2022 SPA, Danica Holly, a member of the Board of Directors and a related party, purchased convertible note with principal of $50,000 with accompanying June 2022 Warrants to purchase 2,100,840 shares of common stock. The Company received net proceeds of $50,000 on June 15, 2022. The June 2022 Warrants were valued at $5,924 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the June 2022 Note. The June 2022 Warrants are exercisable at any time and expire on April 1, 2027. The June 2022 Note bears an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the June 2022 Note)) and matures on April 1, 2027. The June 2022 Note and June 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment as provided in the agreements). As of June 30, 2022, the June 2022 Note had an outstanding principal balance of $50,000 and accrued interest of $164.
Convertible Debt
During April 2022, pursuant to the Second April 2022 SPA various investors purchased convertible notes for an aggregate investment amount of $425,000 with the Company receiving $425,000 of proceeds with accompanying Second April 2022 Warrants to purchase up to an aggregate of 17,857,144 shares of common stock. The Second April 2022 Warrants were valued at $335,593 using the relative fair value method and were recorded as debt discount which is being amortized over the life of the Second April 2022 Notes. The Second April 2022 Notes bear an interest rate of 8% per annum (which shall increase to 10% per year upon the occurrence of an “Event of Default” (as defined in the Second April 2022 Notes)) and mature on April 1, 2027. The Second April 2022 Warrants are exercisable at any time and expire on April 1, 2027. The Second April 2022 Notes and Second April 2022 Warrants are convertible and exercisable, respectively, into shares of the Company’s common stock at a price equal to $0.00476 per share (subject to adjustment as provided in the agreements). As of June 30, 2022, the Second April 2022 Notes had an aggregate outstanding principal balance of $425,000 and accrued interest of $7,140.
42
Note Payable - Related Party
On May 5, 2022, the Company and Jeffrey Busch amended the April 26, 2021 note with principal amount of $100,000 (“Original Note”) pursuant to which the principal amount was increased to $350,000 (“New Note”) with the Company receiving additional $250,000 of proceeds and added a conversion feature. The New Note bears an annual interest rate of 1% (which shall increase to 2% in an event of a default) and matures on May 5, 2024. The New Note may not be prepaid and is only convertible upon an occurrence of a public offering. The outstanding principal plus any unpaid accrued interest (“Conversion Amount”) of the New Note is convertible into shares of common stock at the price for which the common stock was sold in the public offering. Pursuant to ASC 470-50 - Debt Modifications and Exchanges; the amendment was accounted for as a debt extinguishment because the contingent conversion feature added to the New Note resulted in a substantial modification of the Original Note. No gain or loss was recognized in connection with the debt extinguishment. As of June 30, 2022, the New Note had an outstanding principal balance of $350,000, reflected as notes payable – related party in the accompanying unaudited balance sheet since the conditions for its contingent conversion has not yet been met, and accrued interest of $1,650.
Future Financings

We will require additional financing to fund our planned operations. We currently do not have committed sources of additional financing and may not be able to obtain additional financing, ~~particularly~~ if the volatile conditions of the stock and financial markets, and more particularly, the market for ~~early~~early-stage development ~~stage~~ company stocks persist.

There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to further delay or further scale down some or all of our activities or perhaps even cease the operations of the business.

Since inception we have funded our operations primarily through equity and debt financings and we expect that we will continue to fund our operations through ~~the~~ equity and debt financing, either alone or through strategic alliances. If we are able to raise additional financing by issuing equity securities, our existing stockholders’ ownership will be diluted. Obtaining commercial or other loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

Critical Accounting Policies

We have identified the following policies as critical to ~~the~~our business and results of operations. Our reported results are impacted by the application of the following accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact ~~the~~ quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the following paragraphs.

Use of Estimates
The preparation of ~~consolidated~~ financial statements in conformity with U.S. GAAP requires management to make judgments, assumptions, and estimates that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ~~condensed consolidated~~ financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Management bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates during the nine months ended June 30, ~~2021~~2022 and year ended September 30, ~~2020~~2021 include, but are not necessarily limited to, ~~the valuation of assets and liabilities of discontinued operations,~~ estimates of contingent liabilities, valuation of marketable securities, useful life of property and equipment, valuation of right-of-use (“ROU”) assets and lease liabilities, assumptions used in assessing impairment of long-lived assets, allowances for accounts receivable, estimates of current and deferred income taxes and deferred tax valuation allowances and the fair value of non-cash equity transactions.

Additionally, the full impact of COVID-19 is unknown and cannot be reasonably estimated. However, the Company has made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are material differences between the Company’s estimates and the actual results, the Company’s future ~~consolidated~~ results of operation will be affected.

3143

Fair Value of Financial Instruments and Fair Value Measurements

FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on June 30, ~~2021.~~2022. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on the disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3—Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

~~In August 2018, the FASB issued ASU 2018-13~~~~—Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement~~, to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU 2018-13 during the quarter ended March 31, 2020 and its adoption did not have any material impact on the Company’s consolidated financial statements.
Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC 505-50 - Equity-Based Payments to Non-Employees, all share-based payments to non-employees, including grants of stock options, ~~were~~are recognized in the ~~consolidated~~ financial statements as compensation expense over the service period of the consulting arrangement or until performance conditions are expected to be met. Using a Black Scholes valuation model, the Company periodically reassessed the fair value of non-employee options until service conditions are met, which generally aligns with the vesting period of the options, and the Company adjusts the expense recognized in the ~~consolidated~~ financial statements accordingly. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company early adopted ASU No. 2018-07 during the period September 30, 2018, and the adoption did not have any impact on its ~~consolidated~~ financial statements.

Revenue Recognition and Contract Assets and Liabilities

In ~~May 2014, FASB issued an Accounting Standards Update,~~accordance with ASU ~~2014-09, establishing ASC~~Topic 606 - Revenue from Contracts with ~~Customers. ASU 2014-09, as amended~~Customers, the Company recognizes revenue in accordance with that core principle by ~~subsequent ASUs on~~applying the ~~topic, establishes~~following steps:
Step 1: Identify the contract(s) with a ~~single comprehensive model for entities~~customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to ~~use~~the performance obligations in ~~accounting for~~the contract.
Step 5: Recognize revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to whichwhen (or as) the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. The Company adopted this standard during the fiscal year ended September 30, 2018 using the modified retrospective approach, which requires applying the new standard to all existing contracts not yet completed as of the effective date and recordingsatisfies a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Based on an evaluation of the impact ASU 2014-09 will have on the Company’s sources of revenue, the Company has concluded that ASU 2014-09 did not have any impact on the process for, timing of, and presentation and disclosure of revenue recognition from customers and there was no cumulative effect adjustment.performance obligation.
The Company provides research and development support to biopharmaceutical companies to assist their drug development programs. In January 2021, the Company began performing tumor profiling to support clinical patient therapeutic intervention. The services provided by the Company are performance obligations under services contracts. These contracts are completed over time and may lead to deferred revenue for services not completed at the end of a ~~period.~~period which is reflected as contract liabilities in the accompanying unaudited balance sheets. The Company may include, in accounts receivable, amounts billed to customers in advance of services being initiated or completed. If the Company has a right to such consideration that is unconditional such as for contractually allowed billings, such amounts billed in advance would be offset by a contract liability. Management reviews the completion status of all jobs monthly to determine the appropriate amount of revenue to recognize. The Company offers these services to biopharmaceutical companies and to private individuals. The Company uses various output methods to recognize revenues. The revenue recognized from services provided to private individuals during the ~~tumor profiling services~~nine months ended June 30, 2022 and year ended September 30, 2021 were minimal and therefore was not ~~significant and management had not identified any disaggregation of revenue.~~disaggregated for disclosure purposes.
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Contract Liabilities
Contract liabilities are cash deposits received from customers and advance billing included in accounts receivable on uncompleted contracts for which revenues have not been recognized as of the balance sheet date.

Leases

~~In February 2016,~~The Company accounts for its leases using the ~~Financial~~method prescribed by ASC 842 – Lease Accounting ~~Standards Board (“FASB”) issued ASU 2016-02,~~ ~~Leases~~ ~~(Topic 842)~~. The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. The updated guidance is effective for interim and annual periods beginning after December 15, 2018.
~~On January 1, 2019, the~~ Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessedassesses whether the contract is, or contains, a ~~lease. The Company’s assessment~~lease at the inception of a contract which is based ~~on: (1)~~on (i) whether the contract involves the use of a distinct identified asset, ~~(2)~~(ii) whether the Company ~~obtain~~obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and ~~(3)~~(iii) whether the Company has the right to direct the use of the asset. The Company ~~will allocate~~allocates the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right-of-use (“ROU”) assets and lease liabilities for short-term leases that have a term of 12 months or less.

Operating and financing lease ROU assets represents the right to use the leased asset for the lease ~~term,~~term. Operating and financing lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most leases do not provide an implicit rate, the Company ~~use~~uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the ~~condensed consolidated~~unaudited statements of operations.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and ~~edging—~~Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470- 20, Debt with Conversion and Other Options, for convertible instruments. Under the amendments in ASU 2020-06, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate when applying the guidance in Topic 835, Interest. The amendments in ASU 2020-06 provide financial statement users with a simpler and more consistent starting point to perform analyses across entities. The amendments also improve the operability of the guidance and reduce, to a large extent, the complexities in the accounting for convertible instruments and the difficulties with the interpretation and application of the relevant guidance. To further improve the decision usefulness and relevance of the information being provided to users of financial statements, amendments in ASU 2020-06 increased information transparency by making the following amendments to the disclosure for convertible instruments:

1. ~~Add~~Added a disclosure objective
2. ~~Add~~Added information about events or conditions that occur during the reporting period that cause conversion contingencies to be met or conversion terms to be significantly changed
3. ~~Add~~Added information on which party controls the conversion rights
4. ~~Align~~Aligned disclosure requirements for contingently convertible instruments with disclosure requirements for other convertible instruments
5. ~~Require~~Required that existing fair value disclosures in Topic 825, Financial Instruments, be provided at the individual convertible instrument level rather than in the aggregate.

Additionally, for convertible debt instruments with substantial premiums accounted for as paid-in capital, amendments in ASU 2020-06 added disclosures about (1) the fair value amount and the level of fair value hierarchy of the entire instrument for public business entities and (2) the premium amount recorded as paid-in capital.

The amendments in ASU 2020-06 are effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of its annual fiscal year and are allowed to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. In applying the modified retrospective method, entities should apply the guidance to transactions outstanding as of the beginning of the fiscal year in which the amendments are adopted. Transactions that were settled (or expired) during prior reporting periods are unaffected. The cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings at the date of adoption. If an entity elects the fully retrospective method of transition, the cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings in the first comparative period presented. The Company ~~is evaluating the impact of the revised guidance~~early adopted ASU 2020-06 and ~~believes that it will~~its adoption did not have ~~a significant~~any material impact on the Company’s financial statements.
45
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company early adopted ASU 2020-06 and its ~~consolidated~~adoption did not have any material impact on the Company’s financial statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company’s ~~consolidated~~ financial statements.
~~Off-Balance Sheet Arrangements~~
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.
33
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officer and principal financial officer, evaluated our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of June 30, ~~2021,~~2022, our disclosure controls and procedures were not effective.

Our management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting as of June 30, ~~2021.~~2022. Our management’s evaluation of our internal control over financial reporting was based on the ~~framework in~~ Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that as of June 30, ~~2021,~~2022, our internal control over financial reporting was not effective.

The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which we identified in our internal controls over financial reporting:

(1) The lack of multiple levels of management review on complex accounting and financial reporting issues, and business transactions,

(2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting ~~process~~processing and accounting ~~function~~functions as a result of our limited financial resources to support the hiring of the necessary personnel and the implementation of more robust accounting systems,

A material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Management’s Remediation Plan

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes in the future:

(i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and

(ii) adopt sufficient written policies and procedures for accounting and financial reporting.

The remediation efforts set out in (i) are largely dependent upon our company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes.

3446

Management believes that despite our material weaknesses set forth above, our ~~condensed consolidated~~unaudited financial statements for the quarter ended June 30, ~~2021~~2022 are fairly stated, in all material respects, in accordance with US GAAP.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) during the quarter ended June 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~On July 1, 2021,~~In August 2017, numerous purported plaintiffs brought an action against Avant Diagnostics and ~~their~~its previous executive team in the District Court of Harris County Texas. The action alleges the plaintiffs were engaged by Avant to perform services prior to ~~2018.~~2018, which they were not compensated for, and were issued certain restricted shares of Avant as payment of those services and Avant did not remove the restrictive legend from said shares. The plaintiffs are seeking ~~a $1 million award. The~~$1,000,000 in monetary relief. On July 1, 2021, the Company and Dr. Ruxin were ~~named~~added as defendants in the lawsuit. On March 7, 2022, the Court granted the Company and Dr. Ruxin’s Motion to Dismiss for lack of personal jurisdiction. On January 7, 2022, the plaintiffs filed an amended complaint adding Jeffrey Busch and Andrew Kucharchuk as defendants. Mr. Busch and Mr. Kucharchuk filed a motion to dismiss for lack of personal jurisdiction. On July 7, 2022, plaintiffs filed a Notice of Non-Suit and dismissed the amended complaint against Mr. Busch and Mr. Kucharchuk. The remaining claims against Avant Diagnostics are still pending.
On December 10, 2021, YPH LLC filed a complaint against the Company in the District Court for the Southern District of New York alleging that Theralink breached its Certificate of Designation for Series C-1 Convertible Preferred Stock by failing to honor a conversion notice submitted to it by YPH. Based on these and other allegations, Plaintiff asserted a breach of contract claim claiming that it has damages in excess of $100 million. The case continues to be in the ~~lawsuit.~~pleadings stage with Theralink filing its last response on March 30, 2022. The Company believes these claims are without merit and intends to defend ~~these~~plaintiffs’ lawsuits vigorously. The Company currently believes the likelihood of a loss contingency related to these matters is remote and, therefore, no provision for a loss contingency is required.
ITEM 1A. RISK FACTORS

~~There have been no material changes to the risk~~Risk factors that may affect our business and financial results are discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2020 except for the following new risk:~~
~~The recent COVID-19 pandemic has negatively affected and will continue to negatively affect our business, financial condition and results of operations.~~
~~The public health crisis caused by the COVID-19 pandemic and the measures that~~2021. There have been taken or that may be taken in the future by governments, businesses, including us, and the public at large to limit COVID-19’s spread have had, and we expect will continue to materially negatively effect on our business, financial condition, and results of operation. The extent of the impact of the COVID-19 pandemic on our business and financial results will depend on numerous evolving factors that we are not able to accurately predict and which will vary by market, including the duration and scope of the pandemic, global economic conditions during and after the pandemic, governmental actions that have been taken, or may be taken in the future, in responseno material changes to the ~~pandemic, and changes in consumer behavior in response~~disclosures relating to ~~the pandemic, some of which may be more than just temporary.~~
COVID-19 has spread across the globe. Authorities in many markets have implemented numerous measures to stall the spread of COVID-19, including travel bans and restrictions, quarantines, curfews, shelter in place orders, and business shutdowns. These measures have impacted and will further impact us, our customers, consumers, employees, contract manufacturers, distributors, suppliers and other third parties with whom we do business.
~~Stay-at-home and social distancing orders have required some of our employees to work~~this item from home when possible, and other employees have been entirely prevented from performing their job duties until the orders are relaxed or lifted. The world-wide response to the pandemic has resulted in a significant downturn in economic activity and there is no assurance that government stimulus programs will successfully restore the economy to the levels that existed before the pandemic. If an economic recession or depression is sustained, it would likely have a material adverse effect on our business.
In certain jurisdictions, the stay-at-home orders have been relaxed but considerable uncertainty remains about the ultimate impact on our business. Even if the orders are lifted, there is no assurance that they will not be reinstated if the spread of COVID-19 resumes. For example, many jurisdictions have recently reinstated orders requiring people to wear masks in public after test results have showed a resurgence of the pandemic. Resurgence of the pandemic in some markets has slowed the reopening process of businesses in those areas, including Europe where additional lockdowns have been recently reinstated. If COVID-19 infection trends continue to reverse and the pandemic intensifies and expands geographically, its negative impacts on our sales could be more prolonged and may become more severe. The long-term financial impact on our business cannot be reasonably estimated at this time.
The COVID-19 pandemic has required alternative selling approaches that are less effective, such as through social media. We may continue to experience reductions in revenue using these alternative selling approaches that avoid direct contact with our customers.
There is considerable uncertainty regarding how these measures and future measures in response to the pandemic will impact our business, including whether they will result in further changes in demand for our technology, further increases in operating costs whether as a result of increases in employee costs or otherwise. Compliance with governmental measures imposed in response to COVID-19 has caused and may continue to cause us to incur additional costs, and any inability to comply with such measures can subject us to restrictions on our business activities, fines, and other penalties, any of which can adversely affect our business. In addition, the increase in certain of our employees working remotely has amplified certain risks to our business, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks as cybercriminals try to exploit the uncertainty surrounding the COVID-19 pandemic, and an increase in the number of points of potential attacks, such as laptops and mobile devices (both of which are now being used in increased numbers), to be secured, and any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyberattacks, may adversely affect our business. Further, we experienced, and will continue to experience, costs associated with continuing to pay certain employees who are limited in their ability to work due to the travel bans and restrictions, quarantines, curfews, shelter in place orders and, therefore, do not generate corresponding revenue.
35
In addition, economic uncertainty associated with the COVID-19 pandemic has resulted in volatility in the global capital and credit markets which can impair our ability to access these markets on terms commercially acceptable to us, or at all.
~~There can be no assurance that we will be successful~~set forth in our efforts to mitigate the negative impact of COVID-19, and as a result, our business, financial condition and results of operations and the prices of our publicly traded securities may be adversely affected.2021 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.
On April 14, 2021, the Company agreed to sell 15,974,441 shares (the “Shares”) of its common stock, par value $0.0001 per share, at a purchase price of $0.00313 per share in a private placement for an aggregate purchase price of $50,000.
In connection with the private placement, the investor executed a subscription agreement in the form of Exhibit 10.1 attached hereto (the “Subscription Agreement”). In the Subscription Agreement, each investor represented to the Company, among other things, that they were an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933 (the “Act”)). The Shares are being sold by the Company under the Subscription Agreement in reliance upon an exemption from the registration requirements of the Act afforded by Section 4(a)(2) of the Act and/or Rule 506 of Regulation D thereunder. The private placement was made directly by the Company and no underwriter or placement agent was engaged by the Company. The Company did not engage in general solicitation or advertising and did not offer securities to the public in connection with such issuance.
Concurrently with the execution of the Subscription Agreement, the Company entered into a registration rights agreement with the investor in the form of Exhibit 10.2 attached hereto (the “Registration Rights Agreement”). The Registration Rights Agreement provides the investor piggyback registration rights for a period of six months following the issuance of the Shares.
The foregoing is only a summary of the Subscription Agreement and Registration Rights Agreement and does not purport to be complete descriptions thereof. Such descriptions are qualified in their entirety by reference to the Subscription Agreement and Registration Rights Agreement, copies of which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 10-Q and are incorporated by reference herein.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

3647

ITEM 6. EXHIBITS

Exhibit Incorporated by Reference Filed or Furnished
Number Exhibit Description Form Exhibit Filing Date Herewith

3.1 Amended and Restated Articles of Incorporation, as amended 10-Q 3.1 06/11/2021

3.2 Amended and Restated Bylaws 8-K 3.1 11/01/2013

3.3 Amendment to Certificate of Designation for Series C-1 Convertible Preferred Stock 10-Q 3.3 06/11/2021

3.4 Designation for Series E Convertible Preferred Stock 8-K 3.1 09/22/2020

3.5 Designation for Series F Convertible Preferred Stock 8-K 3.1 08/06/2021

10.1 Form of Subscription Agreement 8-K 10.1 04/20/2021

10.2 Form of Registration Rights Agreement 8-K 10.2 04/20/2021

10.3 Convertible Secured Promissory Note, dated May 12, 2021 8-K 4.1 05/19/2021

10.4 Common Stock Purchase Warrant, issued May 12, 2021 8-K 4.2 05/19/2021

10.5 Securities Purchase Agreement, dated May 12, 2021 8-K 10.1 05/19/2021

10.6 Security Agreement, dated May 12, 2021 8-K 10.2 05/19/2021

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002. X

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002. X

32.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002. X

101.INS INLINE XBRL INSTANCE DOCUMENT X
101.SCH INLINE XBRL TAXONOMY EXTENSION SCHEMA X
101.CAL INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE X
101.DEF INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE X
101.LAB INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE X
101.PRE INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE X
104 Cover Page Interactive Data File (embedded within the Inline XBRL document) X
~~+ Management contract or compensatory plan or arrangement.~~
Exhibit Incorporated by Reference Filed or Furnished
Number Exhibit Description Form Exhibit Filing Date Herewith

3.1 Amended and Restated Articles of Incorporation, as amended 8-K 3.1 07/07/2022

3.2 Amended and Restated Bylaws 8-K 3.1 11/01/2013

4.1 Form of Convertible Promissory Note for April 2022 10-Q 4.1 05/23/2022

4.2 Form of Common Stock Purchase Warrant for April 2022 10-Q 4.2 05/23/2022

10.1 Form of Securities Purchase Agreement for April 2022 10-Q 10.1 05/23/2022

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002. X

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002. X

32.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002. X

101.INS INLINE XBRL INSTANCE DOCUMENT X
101.SCH INLINE XBRL TAXONOMY EXTENSION SCHEMA X
101.CAL INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE X
101.DEF INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE X
101.LAB INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE X
101.PRE INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE X
104 COVER PAGE INTERACTIVE DATA FILE (EMBEDDED WITHIN THE INLINE XBRL DOCUMENT) X

3748

SIGNATURES

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

THERALINK TECHNOLOGIES, INC.

~~Dated: September 28, 2021~~Date: August 15, 2022 By: /s/ Mick Ruxin, MD
Mick Ruxin, MD
Chief Executive Officer

~~Dated: September 28, 2021~~Date: August 15, 2022 By: /s/ Thomas E. Chilcott, III
Thomas E. Chilcott, III
Chief Financial Officer, Treasurer and Secretary

3849


	Preferred Stock												Common Stock
	Series A # of Shares		Series C-1 # of Shares		Series C-2 # of Shares		Series D-1 # of Shares		Series D-2 # of Shares		Amount		# of Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit

Balance at September 30, 2020		667		2,966		4,917		-		-	$	-		5,124,164,690	$	512,416	$	42,367,577	$	(43,187,588	)	$	(307,595	)

Adjustment related to Series A preferred prior period redemption payment		-		-		-		-		-		-		-		-		500					500
Beneficial conversion feature related to a convertible note - related party recorded as debt discount
Relative fair value of warrant issued in connection with a convertible note - related party recorded as debt discount
Preferred stock issued for cash
Preferred stock issued for cash, shares
Preferred stock issued upon debt conversions
Preferred stock issued upon conversion of accounts payable and accrued liabilities
Preferred stock issued upon conversion of accounts payable and accrued liabilities, shares
Preferred stock issued upon conversion of accrued liabilities - related party
Recapitalization resulting from the Asset Sale Transaction (see Note 3)
Recapitalization resulting from the Asset Sale Transaction (see Note 3), shares

Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(40,219	)		(40,219	)

Net loss		-		-		-		-		-		-		-		-		-		(1,419,775	)		(1,419,775	)

Balance at December 31, 2020		667		2,966		4,917		-		-		-		5,124,164,690		512,416		42,368,077		(44,647,582	)		(1,767,089	)

Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(39,452	)		(39,452	)

Net loss		-		-		-		-		-		-		-		-		-		(1,361,113	)		(1,361,113	)

Balance at March 31, 2021		667		2,966		4,917		-		-		-		5,124,164,690		512,416		42,368,077		(46,048,147	)		(3,167,654	)

Beneficial conversion feature related to a convertible note - related party recorded as debt discount		-		-		-		-		-		-		-		-		15,800		-			15,800

Relative fair value of warrant issued in connection with a convertible note - related party recorded as debt discount		-		-		-		-		-		-		-		-		984,200		-			984,200

Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(39,890	)		(39,890	)

Net loss		-		-		-		-		-		-		-		-		-		(1,225,787	)		(1,225,787	)

Balance at June 30, 2021		667		2,966		4,917		-		-	$	-		5,124,164,690	$	512,416	$	43,368,077	$	(47,313,824	)	$	(3,433,331	)


Cash	$	675,928
Prepaid expense and other current assets		17,539
Total assets acquired		693,467

Accounts payable and other liabilities		(40,149	)
Liabilities of discontinued operations		(406,662	)
Total liabilities assumed		(446,811	)

Net assets acquired	$	246,656

	Estimated Useful Life in Years	June 30, 2021			September 30, 2020			Estimated Useful Life in Years	June 30, 2022			September 30, 2021
		(Unaudited)								(Unaudited)
Laboratory equipment	5	$	470,158		$	404,628		5	$	553,648		$	470,159
Furniture	5		24,567			13,367		5		24,567			24,567
Leasehold improvements	5		347,809			347,809		5		353,826			349,115
Computer equipment	3		61,194			53,060		3		68,490			68,490
Property and equipment, gross			903,728			818,864
Property and equipment gross										1,000,531			912,331
Less accumulated depreciation			(177,898	)		(74,042	)			(322,159	)		(213,404	)
Property and equipment, net		$	725,830		$	744,822			$	678,372		$	698,927

	June 30, 2022			September 30, 2021
Principal amount	$	2,425,000		$	—
Less: debt discount		(2,142,533	)		—
Convertible notes payable, net	$	282,467		$	—

Principal amount – related party	$	2,900,000		$	1,000,000
Less: debt discount – related party		(1,925,238	)		(935,019	)
Convertible note payable - related party, net	$	974,762		$	64,981

Total convertible notes payable, net	$	1,257,229		$	64,981


Years ending September 30,	Amount
	(Unaudited)
2022	$	15,321
2023		53,787
2024		40,875
2025		4,185
Total minimum financing lease payments		114,168
Less: discount to fair value		(13,295	)
Total financing lease payable at June 30, 2022	$	100,873

	June 30, 2021			September 30, 2020
	(Unaudited)
Financing lease payables for equipment	$	231,841		$	231,841
Total financing lease payables		231,841			231,841
Payments of financing lease liabilities		(84,679	)		(53,491	)
Total		147,162			178,350
Less: short term portion		(46,289	)		(42,234	)
Long term portion	$	100,873		$	136,116

	June 30, 2021			September 30, 2020
	(Unaudited)
Operating office lease	$	231,337		$	231,337
Less accumulated reduction		(52,879	)		(25,134	)
Balance of Operating ROU asset	$	178,458		$	206,203

	●	From the initial issuance date, cumulative dividends on each share of Series E shall accrue, on a quarterly basis in arrears (with any partial quarter calculated on a pro-rata basis), at the rate of 8%8% per annum on the ~~Stated Value,~~stated value, plus any additional amount thereon. Dividends shall be paid within 15 days after the end of each fiscal quarter (“Dividend Payment Date”), at the option of the Holder in cash or through the issuance of shares of common stock. In the event that the Holder elects to receive its dividends in shares of common stock the number of shares of common stock to be issued to each applicable Holder shall be determined by dividing the total dividend outstanding to such Holder by the average closing price of the common stock during the five trading days on the principal market prior to the ~~Dividend Payment Date.~~dividend payment date.

	●	Holders of shares of Series E Preferred Stock are entitled to dividends or distributions on each share on an “as converted” into common stock basis, if, as and when declared from time to time by the Board of Directors.

	●	Each share of Series E Preferred Stock is convertible into shares of common stock any time after the initial issuance date at the ~~Conversion Price~~conversion price which is the lesser of: (i) $0.00375 or (ii) 75% of the average closing price of the common stock during the prior five trading days on the principal market, subject to adjustment as provided in the Series E Certificate of Designation including a price protection provision for offerings below the conversion ~~price. Provided,~~price, provided, however, the ~~Conversion Price~~conversion price shall never be less than $0.0021. The number of shares of common stock issuable upon conversion shall be determined by multiplying the number of outstanding shares by the stated value per share of $2,000 plus accrued dividends and dividing that number by ~~(y)~~the ~~Conversion Price.~~conversion price.

	●	In connection with, (i) a Change of Control of the ~~Corporation~~Company or (ii) on the closing of, a Qualified Public Offering by the ~~Corporation,~~Company, all of the outstanding shares of Series E (including any fraction of a share) shall automatically convert into an aggregate number of shares of ~~Common Stock~~common stock (including any fraction of a share) by multiplying the number of outstanding shares by the stated value per share of $2,000 plus accrued dividends and dividing that number (including any fraction of a share) by the lesser of: (i) $0.00375 or (ii) 75% of the average closing price of the common stock during the prior five trading days on the ~~principle market.~~principal market, subject to adjustment as provided in the Series E Certificate of Designation including a price protection provision for offerings below the conversion price. However, the conversion price shall never be less than $0.0021. If a closing of a Change of Control transaction or a Qualified Public Offering occurs, such automatic conversion of all of the outstanding shares of Series E shall be deemed to have been converted into shares of Common Stock immediately prior to the closing of such transaction or Qualified Public Offering.

	●	In the event the Company issues or sells any securities including options or convertible securities, except for any Exempt Issuance (as defined in the Series E Certificate of Designation), at a price, an exercise price or conversion price of less than the conversion price, then upon such issuance or sale, the Series E Preferred Stock conversion price shall be reduced to the sale price or the exercise price or conversion price of the securities sold.

	●	~~Holder~~Holders of Series E Preferred Stock have no voting rights.

	●	From the Initial Issuance Date, cumulative dividends on each share of Series F shall accrue, on a monthly basis in arrears (with any partial month being made on a pro-rata basis), at the rate of 8% per annum on the stated value, plus any additional amount thereon. Dividends shall be paid within 15 days after the end of each month (“Dividend Payment Date”), at the option of the Holder in cash or through the issuance of shares of common stock. In the event that the Holder elects to receive its dividends in shares of common stock the number of shares of common stock to be issued to each applicable Holder shall be determined by dividing the total dividend payable to such Holder by the average closing price of the common stock during the five trading days on the principal market prior to the dividend payment date.

	●	Holders of shares of Series F Preferred Stock are entitled to dividends or distributions on each share on an “as converted” into common stock basis, if, as and when declared from time to time by the Board of Directors.

	●	Each share of Series F Preferred Stock is convertible into shares of common stock any time after the initial issuance date at the conversion price which is the lesser of: (i) $0.00313 or (ii) 75% of the average closing price of the common stock during the prior five trading days on the principal market, subject to adjustment as provided in the Series F Certificate of Designation including a price protection provision for offerings below the conversion price,provided, however, the conversion price shall never be less than $0.0016. The number of shares of common stock issuable upon conversion shall be determined by multiplying the number of outstanding shares by the stated value per share of $2,000 plus additional amount by the conversion price.

	●	In connection with, (i) a Change of Control of the Company or (ii) on the closing of, a Qualified Public Offering by the Company, all of the outstanding shares of Series F Preferred Stock (including any fraction of a share) shall automatically convert along with the additional amount into an aggregate number of shares of common stock (including any fraction of a share) as is determined by dividing the number of shares of Series F Preferred Stock (including any fraction of a share) by the automatic conversion price then in effect. If a closing of a Change of Control transaction or a Qualified Public Offering occurs, such automatic conversion of all of the outstanding shares of Series F Preferred Stock shall be deemed to have been converted into shares of common stock immediately prior to the closing of such transaction or Qualified Public Offering.

	●	In the event the Company issues or sells any securities including options or convertible securities, except for any Exempt Issuance (as defined in the Series F Certificate of Designation), at a price, an exercise price or conversion price of less than the conversion price, then upon such issuance or sale, the Series F Preferred Stock conversion price shall be reduced to the sale price, or the exercise price or conversion price of the securities sold.

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Term (Years)		Value
Balance Outstanding at September 30, 2020		856,674,588	$	0.0020		4.59	$	—
Issued in connection with a convertible debt – related party (see Note 6 and Note 8)		63,897,764		0.0031		4.87		—
Balance Outstanding at June 30, 2021		920,572,535	$	0.0023		3.68	$	—

Exercisable at June 30, 2021		720,572,535	$	0.0022		3.54	$	—

	●	~~From the Initial Issuance Date, cumulative dividends on each share of Series F shall accrue, on a monthly basis in arrears (with any partial month being made on a pro-rata basis), at the rate of~~ 8% per annum on the Stated Value, plus the Additional Amount thereon. Dividends shall be paid within 15 days after the end of each month (“Dividend Payment Date”), at the option of the Holder in cash or through the issuance of shares of Common Stock. In the event that the Holder elects to receive its dividends in shares of Common Stock the number of shares of Common Stock to be issued to each applicable Holder shall be dividing the total dividend then being paid to such Holder by the average closing price of the Common Stock during the five trading days on the Principal Market prior to the Dividend Payment Date.

	●	Holders of shares of Series F Preferred Stock are entitled to dividends or distributions on each share on an “as converted” into common stock basis, if, as and when declared from time to time by the Board of Directors.

	●	Each share of Series F Preferred Stock is convertible into shares of common stock any time after the initial issuance date at the Conversion Price which is the lesser of: (i) $0.00313 or (ii) 75% of the average closing price of the common stock during the prior five trading days on the principal market, subject to adjustment as provided in the Series F Certificate of Designation including a price protection provision for offerings below the conversion price. Provided, however, the Conversion Price shall never be less than $0.0016. The number of shares of common stock issuable upon conversion shall be determined by multiplying the number of outstanding shares by the stated value per share of $2,000 plus additional amount by the Conversion Price.

	●	In connection with, (i) a Change of Control of the Corporation or (ii) on the closing of, a Qualified Public Offering by the Corporation, all of the outstanding shares of Series F Preferred Stock (including any fraction of a share) shall automatically convert along with the Additional Amount into an aggregate number of shares of Common Stock (including any fraction of a share) as is determined by dividing the number of shares of Series F Preferred Stock (including any fraction of a share) by the Automatic Conversion Price then in effect. If a closing of a Change of Control transaction or a Qualified Public Offering occurs, such automatic conversion of all of the outstanding shares of Series F Preferred Stock shall be deemed to have been converted into shares of Common Stock as of immediately prior to the closing of such transaction or Qualified Public Offering.

	●	In the event the Company issues or sells any securities including options or convertible securities, except for any Exempt Issuance (as defined in the Series F Certificate of Designation), at a price, an exercise price or conversion price of less than the conversion price, then upon such issuance or sale, the Series F Preferred Stock conversion price shall be reduced to the sale price, or the exercise price or conversion price of the securities sold.

	●	Series F Preferred Stock shall rank pari passu with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation with the Series C-1 Preferred Stock of the Corporation, the Series C-2 Preferred Stock of the Corporation, and the Series E Preferred Stock of the Corporation (the “Parity Stock”), and all other shares of capital stock of the Corporation shall be junior in rank to all Series F with respect to the preferences as to dividends (except for the Common Stock, which shall be pari passu as provided in the Series F Certificate of Designation), distributions and payments upon the liquidation, dissolution and winding up of the Corporation (such junior stock is referred to herein collectively as “Junior Stock”). The rights of all such Junior Stock shall be subject to the rights, powers, preferences and privileges of the Series F Preferred Stock. Without limiting any other provision of the Series F Certificate of Designation, without the prior express consent of the Required Holder, the Corporation shall not hereafter authorize or issue any additional or other shares of capital stock that is (i) of senior rank to the Series F Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation (collectively, the “Senior Preferred Stock”), or (ii) Parity Stock. Except as provided for herein, in the event of the merger or consolidation of the Corporation into another corporation, the Series F Preferred Stock shall maintain their relative rights, powers, designations, privileges and preferences provided for herein for a period of at least two years following such merger or consolidation and no such merger or consolidation shall cause result inconsistent therewith.

	●	An exclusive license agreement with George Mason University (“GMU”), that has well-published scientists in our area of ~~expertise;~~expertise.
	●	Having access to the Ph.D.’s at GMU who have completed pioneering work in phosphoproteomic-based biomarkers ~~diagnostics;~~diagnostics.
	●	Domain expertise in cancer biomarker and data-generating laboratory testing ~~data;~~data.
	●	Development of proprietary, ~~cutting edge~~cutting-edge assays focused on precision oncology ~~care;~~care.
	●	Building revenue streams based on our proprietary technology, ~~Theralink®.~~Theralink.
	●	Having a patent portfolio licensed from GMU and the ~~NIH.~~National Institutes of Health (“NIH”).

	●	The US Public Health Service (“PHS”), the federal agency that supervises the ~~National Institutes of Health (“NIH”),~~NIH, which provides us with broad protection around its technology platform; and

	●	GMU which provides access to additional intellectual property around improvements to the technology platform and biomarker signatures that form the basis for future diagnostic products.

	●	Establish Laboratory Standard Operating Procedures (SOP’s) to comply with New York, Washington, D.C., and the College of American Pathologists (“CAP”) standards;

	●	Hire an Assistant Laboratory Director and additional lab techs and sales consultants;

	●	Choose members to sit on our Medical and Scientific Advisory Boards;

	●	Continue to validate ~~the~~additional Theralink cancer biomarker technology potentially for GYN, head and neck, lung, GI, pancreatic, prostate and liver cancer under CAP/CLIA standards which may to provide personalized medicine ~~regarding~~ treatment options for biopharmaceutical companies, clinical oncologists and their cancer patients;

	●	~~Grow revenue generated from pharmaceutical companies.~~

	●	~~Complete partnerships~~Continue to partner with pharmaceutical companies to perform oncology-related data-generating testing services ~~to create revenue; and~~which generate additional revenues;

	●	Continue to seek financing to grow the ~~company.~~Company and

	●	Begin billing Medicare and other third-party payors in January of 2023 for our advanced breast cancer assay.

	●	For the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, cost of revenue was ~~$69,253~~$99,484 and ~~$7,422,~~$69,253, respectively, an increase of ~~$61,831~~$30,231 or ~~833%~~44%. The increase in current cost of revenue as a percentage of revenue was ~~primarily attributable~~greater during the 2022 period because the Company was required to purchase expensive third-party samples for certain pharmaceutical contracts. This increased cost significantly decreased the ~~increase in revenue discussed above.~~gross margins for the 2022 period.

	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Professional fees	$	243,517	$	322,921	$	654,736	$	470,638	$	162,164	$	243,517	$	677,740	$	654,736
Consulting fee - related party		—		8,650		—		64,125
Compensation expense		532,414		372,610		1,654,693		822,329		703,267		532,414		2,031,755		1,654,693
Licensing fees		39,172		12,750		100,364		38,920		30,377		39,172		105,732		100,364
General and administrative expenses		589,463		258,277		2,069,942		639,838		545,254		589,463		1,606,174		2,069,942
Total	$	1,404,566	$	975,208	$	4,479,735	$	2,032,850	$	1,441,062	$	1,404,566	$	4,421,101	$	4,479,735

	●	~~For~~during the ~~three months ended June 30, 2021, consulting fees - related party decreased by $8,650 or 100%, compared~~2022 period can be primarily attributed to the ~~three months ended June 30, 2020. The decrease was the result~~issuance of ~~the Company terminating the consulting agreements with AVDX Investors Group, whose partner is on our board of directors, in May 2019~~additional convertible notes and ~~International Infusion whose principal owner served as an officer of the Company in December 2019.~~

	●	~~For~~defending multiple lawsuits during the nine months ended June 30, 2022. There were minimal legal fees incurred for lawsuits during the 2021 consulting fees - related party decreased by $64,125 or 100%, compared to the nine months ended June 30, 2020. The decrease was the result of the Company terminating the consulting agreements with AVDX Investors Group, whose partner is on our board of directors, in May 2019 and International Infusion whose principal owner served as an officer of the Company in December 2019.period.

	●	For the three months ended June 30, 2021, net loss attributable to common stockholders amounted to $1,185,897, or $(0.00) per share (basic and diluted), compared to $792,353 or $(2.04) per share (basic and diluted) for the three months ended June 30, 2020, an increase of $433,434 or 55%.

	●	For nine months ended June 30, 2021, net loss attributable to common stockholders amounted to $3,887,114, or $(0.00) per share (basic and diluted), compared to $1,837,155 or $(19.19) per share (basic and diluted) for the nine months ended June 30, 2020, an increase of $2,169,520 or 118%.

	June 30, 2021			September 30, 2020			Change			Percentage Change			June 30, 2022			September 30, 2021			Change			Percentage Change
Working capital (deficit):
Working capital deficit:
Total current assets	$	765,704		$	2,067,971		$	(1,302,267	)		63	%	$	454,049		$	638,753		$	(184,704	)		29	%
Total current liabilities		(3,000,517	)		(1,190,737	)		(1,809,780	)		152	%		(2,038,085	)		(3,296,090	)		1,258,005			38	%
Working capital (deficit):	$	(2,234,813	)	$	877,234		$	(3,112,047	)		355	%
Working capital deficit:													$	(1,584,036	)	$	(2,657,337	)	$	1,073,301			40	%

	●	Net cash used in operating activities for the nine months ended June 30, 2022 primarily reflected our net loss of $5,057,056 adjusted for the add-back of non-cash items such as depreciation expense of $143,531, non-cash lease cost of $21,528, amortization of debt discount of $501,432, gain on operating lease modification of $8,229, unrealized loss on marketable securities of $8,600 and changes in operating assets and liabilities consisting primarily of an increase in accounts receivable of $109,380, an increase in accounts payable of $385,860, offset by a decrease in prepaid expenses and other current assets of $27,882, a decrease in laboratory supplies of $71,062, a decrease in accrued liabilities and other liabilities of $158,335 and a decrease in contract liabilities of $167,522.

	●	Net cash used in operating activities for the nine months ended June 30, 2021 primarily reflected our net loss of $4,006,675 adjusted for the add-back of non-cash items such as depreciation expense of $138,632, non-cash lease cost of $1,382, amortization of debt discount of $14,116, gain on debt extinguishment of $227,294, unrealized loss on exchange rate of $22,686, unrealized loss on marketable securities of $3,600 and changes in operating ~~asset~~assets and liabilities consisting primarily of an increase in accounts receivable of $149,938 offset by a decrease in laboratory supplies of $36,467, a decrease in prepaid expenses and other current assets of $44,420, a decrease in accounts payable of $252,383, a decrease in accrued liabilities and other liabilities of $20,950, and a decrease in deferred revenue of $148,550.

	●	Net cash flow used in operating activities for the nine months ended June 30, 2020 primarily reflected our net loss of $1,837,155 adjusted for the add-back of non-cash items such as depreciation expense of $57,060, lease cost of $5,975, gain on debt extinguishment of $108,060, foreign currency transaction gain of $60,075, unrealized loss on marketable securities of $11,200 and changes in operating asset and liabilities consisting primarily of an increase in accounts receivable of $20,975, an increase in prepaid expenses and other current assets of $116,219, an increase in accounts payable of $212,840 offset by a decrease in accrued liabilities and other liabilities of $70,734.

	●	Net cash provided by investing activities for the nine months ended June 30, 2021, resulted from the purchase of property and equipment of $(116,052) offset by an adjustment related to a prior period redemption payment of $500.

	●	Net cash provided by investing activities for the nine months ended June 30, 2020, resulted from the cash acquired from the Asset Sale Transaction of $675,928 offset by the purchase of property and equipment of $(495,557).

	(1)	The lack of multiple levels of management review on complex accounting and financial reporting issues, and business transactions,

	(2)	a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting ~~process~~processing and accounting ~~function~~functions as a result of our limited financial resources to support the hiring of the necessary personnel and the implementation of more robust accounting systems,

	(i)	appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and

	(ii)	adopt sufficient written policies and procedures for accounting and financial reporting.

Exhibit		Incorporated by Reference			Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith

3.1	Amended and Restated Articles of Incorporation, as amended	10-Q	3.1	06/11/2021

3.2	Amended and Restated Bylaws	8-K	3.1	11/01/2013

3.3	Amendment to Certificate of Designation for Series C-1 Convertible Preferred Stock	10-Q	3.3	06/11/2021

3.4	Designation for Series E Convertible Preferred Stock	8-K	3.1	09/22/2020

3.5	Designation for Series F Convertible Preferred Stock	8-K	3.1	08/06/2021

10.1	Form of Subscription Agreement	8-K	10.1	04/20/2021

10.2	Form of Registration Rights Agreement	8-K	10.2	04/20/2021

10.3	Convertible Secured Promissory Note, dated May 12, 2021	8-K	4.1	05/19/2021

10.4	Common Stock Purchase Warrant, issued May 12, 2021	8-K	4.2	05/19/2021

10.5	Securities Purchase Agreement, dated May 12, 2021	8-K	10.1	05/19/2021

10.6	Security Agreement, dated May 12, 2021	8-K	10.2	05/19/2021

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.				X

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.				X

32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002.				X

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	THERALINK TECHNOLOGIES, INC.

~~Dated: September 28, 2021~~Date: August 15, 2022	By:	/s/ Mick Ruxin, MD
		Mick Ruxin, MD
		Chief Executive Officer

~~Dated: September 28, 2021~~Date: August 15, 2022	By:	/s/ Thomas E. Chilcott, III
		Thomas E. Chilcott, III
		Chief Financial Officer, Treasurer and Secretary