| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements and accompanying
notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and applicable rules and The financial statements are consolidated for the
years ended December 31, 2023 and 2022, and include the accounts of Jasper Therapeutics, Inc. and its wholly-owned subsidiary, Jasper
Tx Corp. All intercompany transactions and balances have been eliminated upon consolidation. Reverse Stock Split On January 4, 2024, the Company effected a 1-for-10
reverse stock split (the “Reverse Stock Split”) of its common stock. The par value per share and the number of authorized
shares were not adjusted as a result of the Reverse Stock Split. The shares of common stock underlying outstanding stock options, common
stock warrants and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately
increased in accordance with the terms of the agreements governing such securities. In addition, the shares available for grants under
the Company’s incentive plans were adjusted as a result of the Reverse Stock Split. All references to common stock, options to purchase
common stock, outstanding common stock warrants, common stock share data, per share data, and related information contained in the consolidated
financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.
Use of Estimates The preparation of consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates, assumptions and judgements that affect the reported amounts of
assets and liabilities and disclosure of contingent liabilities as of the date of the consolidated financial statements and the reported
amounts of income and expenses during the reporting periods. Significant estimates and assumptions made in the consolidated financial
statements include but are not limited to, the determination of the accrued research and development expenses, valuation of earnout liability
and the measurement of stock-based compensation expense. The Company evaluates its estimates and assumptions on an ongoing basis using
historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results
could materially differ from those estimates. Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of
cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total amount shown in the
consolidated statements of cash flows (in thousands):
December 31,
2023 2022
Cash and cash equivalents $ 86,887 $ 38,250
Restricted cash 417 417
Total cash, cash equivalents and restricted cash $ 87,304 $ 38,667 Cash and cash equivalents consist of cash held
in operating accounts and investments in money market funds. Restricted cash relates to the letter of credit secured in conjunction with
the operating lease (Note 8). Concentrations of Credit Risk and Other Risks and Uncertainties The Company’s cash and cash equivalents are
maintained with financial institutions in the United States of America. Cash balances are held at financial institutions and account
balances may exceed federally insured limits. To date, the Company has not experienced any losses on its cash, cash equivalents and marketable
securities’ balances and periodically evaluates the creditworthiness of its financial institutions. The Company is subject to risks common to companies
in the development stage, including, but not limited to, development and regulatory approval of new product candidates, development of
markets and distribution channels, dependence on key personnel, and the ability to obtain additional capital as needed to fund its product
plans. To achieve profitable operations, the Company must successfully develop and obtain requisite regulatory approvals for, manufacture,
and market its product candidates. There can be no assurance that any such product candidate can be developed and approved or manufactured
at an acceptable cost and with appropriate performance characteristics, or that such product will be successfully marketed. These factors
could have a material adverse effect on the Company’s future financial results. Products developed by the Company require approval
from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales.
There can be no assurance that the Company’s future products will receive the necessary clearances. If the Company were denied such
clearances or such clearances were delayed, it could have a materially adverse impact on the Company. Property and Equipment, Net Property and equipment, net is stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are recorded using the straight-line method over the estimated
useful lives of the assets, generally 3 to 5 years. Leasehold improvements are amortized over the shorter of the estimated useful
life of the asset or the remaining term of the lease. Upon the sale or retirement of assets, the cost and related accumulated depreciation
and amortization are removed from the balance sheets and the resulting gain or loss is reflected in the consolidated statements of operations
and comprehensive loss. Maintenance and repairs are charged to operations as incurred. Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment,
principally property and equipment, whenever events or changes in business circumstances indicate the carrying amount of an asset may
not be fully recoverable. Recoverability of assets held and used is measured by comparing the carrying amount of an asset to future net
cash flows expected to be generated by the asset. If the Company determines that the carrying value of long-lived assets may not be recoverable,
the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Fair value is determined through various valuation techniques, principally discounted cash flow models, to assess the fair values of long-lived
assets. The Company did not record any impairment of long-lived assets during the years ended December 31, 2023 and 2022. Leases The Company determines whether an arrangement is
or contains a lease at the inception of the arrangement and whether such a lease is classified as a financing lease or operating lease
at the commencement date of the lease. Leases with a term greater than one year are recognized on the balance sheet as operating right-of-use
assets, current portion of operating lease liabilities and non-current portion of operating lease liabilities. The Company elected not
to recognize the right-of-use assets and lease liabilities for leases with lease terms of 12 months or less (short-term leases). Lease
liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease
term. As the interest rate implicit in the Company’s lease contracts is not readily determinable, the Company utilizes a collateralized
incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments.
Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received and impairment
charges if the Company determines the right-of-use asset is impaired. The Company considers the lease term to be the
noncancelable period that it has the right to use the underlying asset, together with any periods where it is reasonably certain it will
exercise an option to extend (or not terminate) the lease. Periods covered by an option to extend (or not terminate) the lease in which
the exercise of the option is controlled by the lessor are included in the lease term. Rent expense for operating leases is recognized
on a straight-line basis over the lease term and is presented in operating expenses on the consolidated statements of operations and comprehensive
loss. The Company has elected to not separate lease and non-lease components for its real estate leases and has instead accounted for
each separate lease component and the non-lease components associated with that lease component as a single lease component. Variable
lease payments are recognized as lease expense as incurred and are presented in operating expenses on the consolidated statements of operations
and comprehensive loss. The Company has no finance leases as of December
31, 2023 and 2022. Fair Value of Financial Instruments The Company’s financial instruments consist
of cash and cash equivalents, other receivables, prepaid expenses and other current assets, accounts payable, accrued expenses and other
current liabilities, common stock warrant liability, earnout liability and other non-current liabilities. Fair value is defined 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. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants
would use in pricing an asset or liability. The carrying amounts of cash, other receivables, prepaid expenses and other current assets,
accounts payable, accrued expenses and other current liabilities, approximate fair value due to their short-term maturities. Common Stock Warrant Liability The Company has 4,999,863 outstanding warrants to
purchase an aggregate of 499,986 shares of its common stock (the “Common Stock Warrants”), all of which were issued in connection
with AMHC’s initial public offering and entitle a holder to purchase one share of the Company’s common stock for every ten
warrants at an exercise price of $115.00 per share. The Common Stock Warrants are publicly traded and exercisable during the exercise
period, which commenced on October 24, 2021 and ends on September 24, 2026, for cash or, in certain circumstances, on a cashless basis.
The Common Stock Warrants are accounted as derivative financial instruments. As long as the Company had shares of non-voting common stock
outstanding, the Common Stock Warrants did not meet the equity classification guidance and were accounted as liabilities at fair value.
The Common Stock Warrants were subsequently remeasured at each reporting date with changes in fair value recorded in the consolidated
statements of operations and comprehensive loss until exercise or expiration. On January 31, 2023, the 91,102 outstanding shares of the
Company’s non-voting common stock were converted into 91,102 shares of the Company’s voting common stock per the holder’s
request, leaving no shares of non-voting common stock remaining outstanding as of January 31, 2023. Upon conversion of all outstanding
shares of non-voting common stock into shares of voting common stock, the Common Stock Warrants met the equity classification guidance
and were reclassified to equity at the then-current fair value.
Earnout Liability At the closing of the Business Combination, the
Company recognized the earnout liability related to the Sponsor Support Agreement, dated May 5, 2021 and amended on September 24, 2021,
by and among the Company, Amplitude Healthcare Holdings LLC (the “Sponsor”) and Jasper Tx Corp. (as amended, the “Sponsor
Support Agreement”), pursuant to which 105,000 shares of common stock that were previously issued to the Sponsor were placed in
escrow (the “Earnout Shares”). These shares will be released from escrow upon achieving agreed upon common stock price targets
during the specified periods and in three tranches. Refer to Note 7 for additional details. In accordance with Accounting Standards Codification
(“ASC”) Topic 815-40, the Earnout Shares are not indexed to the common stock and therefore are accounted as a liability at
fair value and subsequently remeasured at each reporting date with changes in fair value recorded in the consolidated statements of operations
and comprehensive loss. The Company reassesses the classification of the Earnout Shares as triggering events are met or expire. Accrued Research and Development Expenses The Company has entered into various agreements
with outsourced vendors, contract manufacturing organizations and clinical research organizations. The Company makes estimates of accrued
research and development expenses as of each balance sheet date based on facts and circumstances known at that time. The Company periodically
confirms the accuracy of its estimates with the service providers and makes adjustments, if necessary. Research and development accruals
are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted
costs. The estimated costs of research and development services provided, but not yet invoiced, are included in accrued expenses on the
consolidated balance sheets. If the actual timing of the performance of services or the level of effort varies from the original estimates,
the Company will adjust the accrual accordingly. Payments made under these arrangements in advance of the performance of the related services
are recorded as prepaid expenses and other current assets until the services are rendered. To date, there have been no material differences
between estimates of such expenses and the amounts actually incurred. Research and Development The Company expenses research and development (“R&D”)
expenses as incurred. R&D expenses consist primarily of personnel-related expenses, clinical studies, engineering and product development
costs to support regulatory clearance of, and related regulatory compliance for, the Company’s products. Specifically, R&D expenses
that support regulatory approval of, and related regulatory compliance for, the Company’s products include costs associated with
the Company’s clinical studies, consisting of clinical trial design, clinical site establishment and management, clinical data management,
travel expenses and the costs of products used for the Company’s clinical trials. Personnel-related expenses include salaries, benefits,
bonuses and stock-based compensation of the Company’s R&D employees. Non personnel-related expenses include costs of outside
consultants, testing, materials and supplies, and allocated overhead. The Company allocates overheads related to rent, facility costs,
information technology and human resources costs. R&D expenses are charged to expense when incurred. General and Administrative General and administrative expenses include compensation,
employee benefits and stock-based compensation for executive management, finance administration and human resources, allocated facility
and information technology costs, professional service fees and other general overhead costs, including allocated depreciation to support
the Company’s operations. Stock-Based Compensation The Company measures its stock options granted
to employees and non-employees based on the estimated fair values of the awards as of the grant date using the Black-Scholes option-pricing
model. The model requires management to make a number of assumptions, including common stock fair value, expected volatility, expected
term, risk-free interest rate and expected dividend yield. For restricted stock unit awards, the estimated fair value is the fair market
value of the underlying stock on the grant date. The Company expenses the fair value of its equity-based compensation awards on a straight-line
basis over the requisite service period, which is the period in which the related services are received. The Company accounts for award
forfeitures as they occur. The expense for stock-based awards with performance conditions is recognized when it is probable that a performance
condition is met during the vesting period. Income Taxes The Company accounts for income taxes using the asset and liability
method. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included
in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between
the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. In evaluating the ability to recover its deferred
income tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning,
and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. In the event the Company determines that it would be able
to realize its deferred income tax assets in the future in excess of their net recorded amount, it would make an adjustment to the valuation
allowance that would reduce the provision for income taxes. Conversely, if all or part of the net deferred tax assets are determined not
to be realizable in the future, an adjustment to the valuation allowance would be charged to the provision of income taxes in the period
when such determination is made. As of December 31, 2023 and 2022, the Company has recorded a full valuation allowance on its deferred
tax assets. Tax benefits related to uncertain tax positions
are recognized when it is more likely than not that a tax position will be sustained during an audit. Interest and penalties related to
unrecognized tax benefits are included within the provision for income tax. To date, there have been no interest or penalties recorded
in relation to unrecognized tax benefits. Foreign Currency Transactions Transactions denominated in foreign currencies
are initially measured in U.S. dollars using the exchange rate on the date of the transaction. Foreign currency denominated monetary assets
and liabilities are subsequently re-measured at the end of each reporting period using the exchange rate at that date, with
the corresponding foreign currency transaction gain or loss recorded in the consolidated statements of operations and comprehensive loss
and consolidated statements of cash flows. Nonmonetary assets and liabilities are not subsequently re-measured. Comprehensive loss Comprehensive loss represents all changes in stockholders’
equity except those resulting from distributions to stockholders. There have been no items qualifying as other comprehensive income (loss)
during the years ended December 31, 2023 and 2022, and therefore, the Company’s comprehensive loss was the same as its reported
net loss. Net Loss per Share Attributable to Common Stockholders Basic net loss per common share is calculated by
dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during
the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss
attributable to common stockholders adjusted for income (expenses), net of tax, related to any diluted securities, by the weighted-average
number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss
per share calculation, the redeemable convertible preferred stock, common stock subject to repurchase, common stock subject to restricted
stock awards, the Earnout Shares, the Common Stock Warrants and stock options are considered to be potentially dilutive securities. Basic and diluted net loss attributable to common
stockholders per share is presented in conformity with the two-class method required for participating securities. The Company considers
all series of its redeemable convertible preferred stock, common stock subject to repurchase, common stock subject to restricted stock
awards and the Earnout Shares to be participating securities as the holders are entitled to receive dividends on a pari passu basis in
the event that a dividend is paid on common stock. The Company’s participating securities do not have a contractual obligation to
share in the Company’s losses. As such, the net loss is attributed entirely to common stockholders. For the years ended December
31, 2023 and 2022, the diluted net loss per common share was the same as basic net loss per share of common stock, as the impact of potentially
dilutive securities was antidilutive to the net loss per common share. The Earnout Shares and common stock subject to restricted stock
awards are contingently issuable shares and are not included in the diluted net loss per share calculation until contingencies are resolved. Segment Reporting The Company has determined it operates as a single
operating and reportable segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s
operations on a consolidated basis for the purposes of allocating resources. All long-lived assets are located in the United States. Recent Accounting Pronouncements In June 2022, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-03, Fair Value Measurement (Topic 820): Fair
Value Measurement of Equity Securities Subject to Contractual Sales Restrictions, which (1) clarifies the guidance in Topic 820 on the
fair value measurement of an equity security that is subject to contractual restrictions that prohibit the sale of an equity security
and (2) requires specific disclosures related to such an equity security. This guidance is effective for fiscal years beginning after
December 15, 2023, and interim periods within those fiscal years. The Company does not expect the adoption of this ASU to have a significant
impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional
expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate
reform if certain criteria are met. The amendments in this ASU were effective for all entities as of March 12, 2020 through December 31,
2022; however, in December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic
848, which extended the sunset date from December 31, 2022 to December 31, 2024. An entity may elect to apply the amendments for contract
modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March
12, 2020, or prospectively from the date that the financial statements are available to be issued. Once elected for a Topic or an Industry
Subtopic, the amendments must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The
Company does not expect the adoption of this ASU to have a significant impact on the Company’s consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires public entities to disclose information
about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with
a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures
and reconciliation requirements in ASC Topic 280 on an interim and annual basis. ASU No. 2023-07 is effective for fiscal years beginning
after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
The Company is currently evaluating the impact the adoption of this standard will have on the disclosures within our consolidated financial
statements. In December 2023, the FASB issued ASU No. 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires public entities, on an annual basis, to provide disclosure
of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU No. 2023-09
is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the
impact the adoption of this standard will have on the disclosures within our consolidated financial statements. |
