# EDGAR Filing Document

**Accession Number:** 0001362703
**File Stem:** 0001493152-23-005641
**Filing Date:** 2023-2
**Character Count:** 301928
**Document Hash:** 4b626d1589020099518abcf92c69d9e8
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-23-005641.hdr.sgml**: 20230221

**ACCESSION NUMBER**: 0001493152-23-005641

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 69

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230221

**DATE AS OF CHANGE**: 20230221

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** THERALINK TECHNOLOGIES, INC.
- **CENTRAL INDEX KEY:** 0001362703
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **IRS NUMBER:** 202590810
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-52218
- **FILM NUMBER:** 23648011

**BUSINESS ADDRESS:**
- **STREET 1:** 8000 INNOVATION PARK
- **STREET 2:** DR, BATON ROUGE
- **CITY:** BATON ROUGE
- **STATE:** LA
- **ZIP:** 70820
- **BUSINESS PHONE:** 225-578-7555

**MAIL ADDRESS:**
- **STREET 1:** 8000 INNOVATION PARK
- **STREET 2:** DR, BATON ROUGE
- **CITY:** BATON ROUGE
- **STATE:** LA
- **ZIP:** 70820

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** OncBioMune Pharmaceuticals, Inc
- **DATE OF NAME CHANGE:** 20150903

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** QUINT MEDIA INC.
- **DATE OF NAME CHANGE:** 20130807

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PediatRx Inc.
- **DATE OF NAME CHANGE:** 20101230

?xml version="1.0" encoding="utf-8"?

**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: December 31, 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**

**<u>Theralink Technologies, Inc.</u>**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Nevada** | **20-2590810** |
| (State or other jurisdiction<br> of incorporation or organization) | (IRS Employer<br> Identification No.) |
| **15000 W. 6th Avenue, Suite 400**<br> **Golden, CO 80401** | <br> **(720) 420-0074** |
| (Address of principal executive offices, including zip code) | (Registrant's telephone number, including area code) |

---

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 <br> ☐ ☐ ☒ ☒ ☐

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 ☒

The registrant had 6,151,499,919 shares of its common stock, $0.0001 par value per share, outstanding as of February 21, 2023.

**THERALINK TECHNOLOGIES, INC.**

**FORM 10-Q**

**DECEMBER 31, 2022**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| | | **Page** |
|  | **[PART I - FINANCIAL INFORMATION](#ay_001)** |  |
| Item 1. | [Financial Statements](#ay_002) |  |
|  | [Balance Sheets - As of December 31, 2022 (unaudited) and September 30, 2022](#ay_003) | 4 |
|  | [Statements of Operations for the Three Months Ended December 31, 2022 and 2021 (unaudited)](#ay_004) | 5 |
|  | [Statements of Changes in Stockholder's Deficit for the Three Months Ended December 31, 2022 and 2021 (unaudited)](#ay_005) | 6 |
|  | [Statements of Cash Flows for the Three Months Ended December 31, 2022 and 2021 (unaudited)](#ay_006) | 7 |
|  | [Condensed Notes to Unaudited Financial Statements](#ay_008) | 8 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#ay_009) | 46 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#ay_010) | 56 |
| Item 4. | [Controls and Procedures](#ay_011) | 56 |
|  | **[PART II - OTHER INFORMATION](#ay_012)** |  |
| Item 1. | [Legal Proceedings](#ay_013) | 57 |
| Item 1A. | [Risk Factors](#ay_014) | 57 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#ay_015) | 57 |
| Item 3. | [Defaults Upon Senior Securities](#ay_016) | 57 |
| Item 4. | [Mine Safety Disclosures](#ay_017) | 58 |
| Item 5. | [Other Information](#ay_018) | 58 |
| Item 6. | [Exhibits](#ay_019) | 58 |
| [Signatures](#ay_020) | [Signatures](#ay_020) | 59 |

---

**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 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 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 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-Q and in our Annual Report on Form 10-K filed on December 29, 2022 with the Securities and Exchange Commission ("SEC"), particularly in the 'Risk Factors" section of such reports, 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 <sup>®</sup> or <sup>TM</sup> symbols, 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.** 

**BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2022** | **September 30,**<br>**2022** |
|  | **(Unaudited)** | |
| **ASSETS** |  |  |
| CURRENT ASSETS: |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $1130902 | $393460 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 48295 | 32125 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 197723 | 217699 |
| &nbsp;&nbsp;&nbsp;Marketable securities | 1700 | 3700 |
| &nbsp;&nbsp;&nbsp;Total Current Assets | 1378620 | 646984 |
| OTHER ASSETS: |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 655220 | 686127 |
| &nbsp;&nbsp;&nbsp;Finance right-of-use assets, net | 53362 | 64954 |
| &nbsp;&nbsp;&nbsp;Operating right-of-use asset, net | 1142419 | 1154861 |
| &nbsp;&nbsp;&nbsp;Deferred offering costs |  | 27270 |
| &nbsp;&nbsp;&nbsp;Security deposits | 18715 | 18715 |
| Total Assets | $3248336 | $2598911 |
| **LIABILITIES AND STOCKHOLDERS' DEFICIT** |  |  |
| CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $675358 | $730923 |
| &nbsp;&nbsp;&nbsp;Accounts payable - related parties | 6000 | 16223 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities | 156925 | 268021 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities - related parties | 82043 | 76927 |
| &nbsp;&nbsp;&nbsp;Accrued compensation | 561472 | 383295 |
| &nbsp;&nbsp;&nbsp;Accrued director compensation | 207500 | 192500 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 177050 | 156550 |
| &nbsp;&nbsp;&nbsp;Convertible notes, net of discount | 676584 |  |
| &nbsp;&nbsp;&nbsp;Convertible notes - related parties, net of discount | 771444 | 1000000 |
| &nbsp;&nbsp;&nbsp;Notes payable - related party | 350000 | 350000 |
| &nbsp;&nbsp;&nbsp;Notes payable - current | 1000 | 1000 |
| &nbsp;&nbsp;&nbsp;Financing lease liability - current | 52037 | 53995 |
| &nbsp;&nbsp;&nbsp;Operating lease liability - current | 26960 | 25551 |
| &nbsp;&nbsp;&nbsp;Insurance payable | 86497 | 122295 |
| &nbsp;&nbsp;&nbsp;Derivative liabilities | 42466252 |  |
| &nbsp;&nbsp;&nbsp;Contingent liabilities | 80240 | 78440 |
| &nbsp;&nbsp;&nbsp;Total Current Liabilities | 46377362 | 3455720 |
| LONG-TERM LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Financing lease liability | 23469 | 34390 |
| &nbsp;&nbsp;&nbsp;Operating lease liability | 1150424 | 1157761 |
| &nbsp;&nbsp;&nbsp;Convertible notes - related parties net of discount, net of current portion |  | 1305814 |
| &nbsp;&nbsp;&nbsp;Convertible notes, net of discount | - | 446281 |
| Total Liabilities | 47551255 | 6399966 |
| Commitments and Contingencies (Note 10) |  |  |
| &nbsp;&nbsp;&nbsp;Series E preferred stock; $0.0001 par value; 2,000 shares designated; nil and 1,000 issued and outstanding at December 31, 2022 and September 30, 2022, respectively; liquidation value of $0 and $2,040,329 at December 31, 2022 and September 30, 2022, respectively | <br>- | <br>2000000 |
| &nbsp;&nbsp;&nbsp;Series F preferred stock; $0.0001 par value; 2,000 shares designated; nil and 500 issued and outstanding at December 31, 2022 and September 30, 2022; liquidation value of $0 and $1,020,164 at December 31, 2022 and September 30, 2022, respectively | <br>- | <br>1000000 |
| STOCKHOLDERS' DEFICIT: |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock: $0.0001 par value; 26,667 authorized; |  |  |
| &nbsp;&nbsp;&nbsp;Series A Preferred stock: $0.0001 par value; 1,333 shares designated; 667 issued and outstanding at December 31, 2022 and September 30, 2022 |  |  |
| &nbsp;&nbsp;&nbsp;Series C-1 Preferred stock: $0.0001 par value; 3,000 shares designated; 141 and 1,043 issued and outstanding at December 31, 2022 and September 30, 2022, respectively |  |  |
| &nbsp;&nbsp;&nbsp;Series C-2 Preferred stock: $0.0001 par value; 6,000 shares designated; nil and 3,037 issued and outstanding at December 31, 2022 and September 30, 2022, respectively |  |  |
| &nbsp;&nbsp;&nbsp;Series D-1 Preferred stock: $0.0001 par value; 1,000 shares designated; nil issued<br> and outstanding at December 31, 2022 and September 30, 2022 |  |  |
| &nbsp;&nbsp;&nbsp;Series D-2 Preferred stock: $0.0001 par value; 4,360 shares designated; nil issued and outstanding at December 31, 2022 and September 30, 2022 |  |  |
| &nbsp;&nbsp;&nbsp;Common stock: $0.0001 par value, 100,000,000,000 shares authorized; 6,151,499,919 and 6,151,499,919 issued and outstanding at December 31, 2022 and September 30, 2022, respectively | <br> 615150 | <br> 615150 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 54385547 | 55391612 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (99303616) | (62807817) |
| Total Stockholders' Deficit | (44302919) | (6801055) |
| Total Liabilities and Stockholders' Deficit | $3248336 | $2598911 |

---

See accompanying condensed notes to unaudited financial statements.

**THERALINK TECHNOLOGIES, INC.** 

**STATEMENTS OF OPERATIONS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| REVENUES, NET | $55295 | $78975 |
| COST OF REVENUE | 10818 | 43565 |
| GROSS PROFIT | 44477 | 35410 |
| OPERATING EXPENSES: |  |  |
| &nbsp;&nbsp;&nbsp;Professional fees | 387438 | 217823 |
| &nbsp;&nbsp;&nbsp;Compensation expense | 1752699 | 625855 |
| &nbsp;&nbsp;&nbsp;Licensing fees | 31637 | 36092 |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 448493 | 537656 |
| &nbsp;&nbsp;&nbsp;Total Operating Expenses | 2620267 | 1417426 |
| LOSS FROM OPERATIONS | (2575790) | (1382016) |
| OTHER (EXPENSES) INCOME: |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense, net | (1847035) | (135651) |
| &nbsp;&nbsp;&nbsp;Loss on debt extinguishment, net | (5434447) |  |
| &nbsp;&nbsp;&nbsp;Unrealized (loss) gain on marketable securities | (2000) | 5400 |
| &nbsp;&nbsp;&nbsp;Settlement expense | (200000) |  |
| &nbsp;&nbsp;&nbsp;Derivative expense | (26397075) | - |
| &nbsp;&nbsp;&nbsp;Total Other Expenses, net | (33880557) | (130251) |
| NET LOSS | (36456347) | (1512267) |
| &nbsp;&nbsp;&nbsp;Series E preferred stock dividend | (26301) | (40329) |
| &nbsp;&nbsp;&nbsp;Series F preferred stock dividend | (13151) | (20164) |
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $(36495799) | $(1572760) |
| NET LOSS PER COMMON SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS: |  |  |
| &nbsp;&nbsp;&nbsp;Basic and Diluted | $(0.01) | $(0.00) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |  |  |
| &nbsp;&nbsp;&nbsp;Basic and Diluted | 6151499846 | 5555474165 |

---

See accompanying condensed notes to unaudited financial statements.

**THERALINK TECHNOLOGIES, INC.** 

**STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT**

**FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021**

**(Unaudited)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | |
|  | **Series A # of Shares** | **Series C-1 # of Shares** | **Series C-2 # of Shares** | **Amount** | **# of Shares** | **Amount** |<br>**Additional Paid-in Capital** |<br>**Accumulated Deficit** |<br>**Total<br> Stockholders' Deficit** |
| **Balance on September 30, 2022** | **667** | **1043** | **3037** | $**-** | **6151499919** | $**615150** | $**55391612** | $**(62807817)** | $**(6801055)** |
| Accretion of stock option expense | **-** | **-** | **-** | **-** | **-** | **-** | 612173 |  | 612173 |
| Exchange of preferred stock to convertible debt |  | (902) | (3037) |  |  |  | (1618238) |  | (1618238) |
| Series E preferred stock dividend |  |  |  |  |  |  |  | (26301) | (26301) |
| Series F preferred stock dividend |  |  |  |  |  |  |  | (13151) | (13151) |
| Net loss | - | - | - | - | - | - | - | (36456347) | (36456347) |
| **Balance on December 31, 2022** | **667** | **141** | **-** | $**-** | **6151499919** | $**615150** | $**54385547** | $**(99303616)** | $**(44302919)** |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | |
|  | **Series A # of Shares** | **Series C-1 # of Shares** | **Series C-2 # of Shares** | **Amount** | **# of Shares** | **Amount** |<br>**Additional Paid-in Capital** |<br>**Accumulated Deficit** |<br>**Total<br> Stockholders' Deficit** |
| **Balance at September 30, 2021** | **667** | **2966** | **4917** | $**-** | **5124164690** | $**512416** | $**44368077** | $**(49825855)** | $**(4945362)** |
| Relative fair value of warrant issued in connection with convertible notes - related party recorded as debt discount |  |  |  |  |  |  | 661088 |  | 661088 |
| Relative fair value of warrant issued in connection with convertible notes recorded as debt discount |  |  |  |  |  |  | 991120 |  | 991120 |
| Series E preferred stock dividend |  |  |  |  |  |  |  | (40329) | (40329) |
| Series F preferred stock dividend |  |  |  |  |  |  |  | (20164) | (20164) |
| Correction for rounding error |  |  |  |  | (1436) |  |  |  |  |
| Net loss | - | - | - | - | - | - | - | (1512267) | (1512267) |
| **Balance on December 31, 2021** | **667** | **2966** | **4917** | $**-** | **5124163254** | $**512416** | $**46020285** | $**(51398615)** | $**(4865914)** |

---

See accompanying condensed notes to unaudited financial statements.

**THERALINK TECHNOLOGIES, INC.** 

**STATEMENTS OF CASH FLOWS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(36456347) | $(1512267) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation on property and equipment and finance ROU assets | 50479 | 47557 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-cash lease cost | 6514 | 7379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accretion of stock option expense | 612173 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount | 1602646 | 92019 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on debt extinguishment | 5434447 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized loss (gain) on marketable securities | 2000 | (5400) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-cash settlement expense | 200000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative expense | 26397075 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on modification of operating lease |  | (8229) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (16170) | (49725) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 19976 | (25318) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Laboratory supplies |  | 49356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (65788) | (139398) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities and other liabilities | 416146 | 28484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | 20500 | 20750 |
| NET CASH USED IN OPERATING ACTIVITIES | (1776349) | (1494792) |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | (7980) | - |
| NET CASH USED IN INVESTING ACTIVITIES | (7980) | - |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible debt - related parties, net | 536562 | 667000 |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible debt, net | 2118088 | 1000000 |
| &nbsp;&nbsp;&nbsp;Proceeds of notes payable - related parties |  | 150000 |
| &nbsp;&nbsp;&nbsp;Repayment of convertible notes payable |  | (150000) |
| &nbsp;&nbsp;&nbsp;Repayment of convertible notes payable - related parties | (120000) |  |
| &nbsp;&nbsp;&nbsp;Repayment of financed lease | (12879) | (11389) |
| &nbsp;&nbsp;&nbsp;Payments for preferred stock dividends | - | (59988) |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 2521771 | 1595623 |
| NET CHANGE IN CASH | 737442 | 100831 |
| CASH, beginning of the period | 393460 | 314151 |
| CASH, end of the period | $1130902 | $414982 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |  |  |
| Cash paid during the period for: |  |  |
| &nbsp;&nbsp;&nbsp;Interest | $3574 | $21228 |
| &nbsp;&nbsp;&nbsp;Income taxes | $- | $- |
| Non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Series E preferred stock dividend | $26301 | $40329 |
| &nbsp;&nbsp;&nbsp;Series F preferred stock dividend | $13151 | $20164 |
| &nbsp;&nbsp;&nbsp;Initial amount of operating ROU asset and related liability | $- | $1212708 |
| &nbsp;&nbsp;&nbsp;Relative fair value of warrant issued in connection with convertible notes - related party recorded as debt discount | $- | $661088 |
| &nbsp;&nbsp;&nbsp;Relative fair value of warrant issued in connection with convertible notes recorded as debt discount | $- | $991120 |
| &nbsp;&nbsp;&nbsp;Initial fair value of derivative liabilities recorded as debt discount - related parties | $8837284 | $- |
| &nbsp;&nbsp;&nbsp;Initial fair value of derivative liabilities recorded as debt discount | $7231893 | $- |
| &nbsp;&nbsp;&nbsp;Initial amount of financing lease payables | $- | $231841 |
| &nbsp;&nbsp;&nbsp;Exchange of preferred stock and accrued dividends for convertible debt - related parties | $3099945 | $- |
| &nbsp;&nbsp;&nbsp;Exchange of preferred stock for convertible debt | $1618238 | $- |
| &nbsp;&nbsp;&nbsp;Exchange of accrued interest payable for convertible debt - related parties | $129079 | $- |
| &nbsp;&nbsp;&nbsp;Exchange of accrued interest payable for convertible debt | $173375 | $- |

---

See accompanying condensed notes to unaudited financial statements.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

**NOTE 1 - <u>ORGANIZATION AND NATURE OF OPERATIONS</u>**

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 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 5,081,549,184 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. All share and per share data in the accompanying 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.

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 – <u>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</u>**

**Basis of Presentation**

The accompanying interim 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 unaudited financial statements of the Company as of December 31, 2022. The interim 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 September 30, 2022 audited financial statements on Form 10-K filed on December 29, 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 statements. The results for the interim period are not necessarily indicative of the results to be expected for the year ending September 30, 2023.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

**Going Concern**

These 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 unaudited financial statements, the Company had net loss and net cash used in operations of $36,456,347 and $1,776,349, respectively, for the three months ended December 31, 2022. Additionally, the Company had an accumulated deficit, stockholders' deficit and working capital deficit of $99,303,616, $44,302,919 and $44,998,742 on December 31, 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 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 the issuance of promissory notes, convertible notes and convertible debentures, 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 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.

**Use of Estimates**

The preparation of 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 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 periods ended December 31, 2022 and 2021 include, but are not necessarily limited to, 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, the fair value of derivative liabilities, 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 December 31, 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. |

---

The carrying amounts reported in the balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, contract liabilities, and accrued compensation approximate their fair market value based on the short-term maturity of these instruments.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

Assets or liabilities measured at fair value or a recurring basis included embedded conversion options in convertible debt (see Note 6) and were as follows on December 31, 2022 and September 30, 2022:

SCHEDULE OF FAIR VALUE MEASURED ON RECURRING BASIS

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** |
| <br>**Description** | **Level 1** | **Level 2** | **Level 3** | **Level 1** | **Level 2** | **Level 3** |
| Derivative liabilities | $— | $— | $42466252 | $— | $— | $— |

---

A roll forward of the level 3 valuation financial instruments is as follows:

SCHEDULE OF VALUATION ON DERIVATIVE INSTRUMENTS

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended**<br> **December 31,** | **For the Three Months Ended**<br> **December 31,** |
|  | **2022** | **2021** |
| Balance at beginning of period | $- | $- |
| Initial valuation of derivative liabilities included in debt discount | 16069178 |  |
| Initial valuation of derivative liabilities included in derivative expense | 25891917 |  |
| Change in fair value included in derivative expense | 505158 | - |
| Balance at end of period | $42466252 | $- |

---

ASC 825-10 "Financial Instruments" allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding equity instruments.

**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.

**Prepaid Assets**

Prepaid assets are carried at amortized cost. Significant prepaid assets as of December 31, 2022 and September 30, 2022 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 assets and reflected in the accompanying balance sheets 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 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.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

**Stock-Based Compensation**

Stock-based compensation is accounted for based on the requirements of ASC 718 – *"Compensation –Stock Compensation*", which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee 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, director, and non-employee services received in exchange for an award be based on the grant-date fair value of the award. The Company has elected to recognize forfeitures as they occur as permitted under the FASB's Accounting Standards Update ("ASU") 2016-09 *Improvements to Employee Share-Based Payment*.

**Revenue Recognition and Contract Assets and Liabilities**

In accordance with ASU Topic 606 - *Revenue from Contracts with Customers*, the Company recognizes revenue in accordance with that core principle by applying the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a 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 which is reflected as contract liabilities on the accompanying 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 under non-cancellable contracts, 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 three months ended December 31, 2022 and 2021 were minimal and therefore were 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.

For the three months ended December 31, 2022 and 2021, contract liabilities activity is as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **December 31,**<br> **2021** |
| Contract liabilities beginning balance | $156550 | $135150 |
| Billings and cash receipts on uncompleted contracts | 24000 | 43000 |
| Less: revenues recognized during the period | (3500) | (22250) |
| &nbsp;&nbsp;&nbsp;Total contract liabilities | $177050 | $155900 |

---

During the three months ended December 31, 2022, the Company recognized $3,500 of the contract liabilities into revenue, of which $3,500 was related to the uncompleted contracts from the prior period.

**Cost of Revenue**

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

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

**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 does 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.

**Research and Development**

In fiscal 2022, the Company joined and made an investment in an investigator-initiated study. As part of that investment, the Company obtained rights/access to various retrospective biobank clinical samples for research and product development purposes. In addition, the Company received active patient clinical samples for the following disease sites: ovarian, endometrial, and head & neck cancers. These samples were tested to provide RUO (Research Use Only) results reports for research and product validation efforts. The transaction term is for 5-years, starting in September 2021. During the three months ended December 31, 2022 and 2021, the Company had spent $50,000 and $25,000 on this research and development project, which is included in general and administrative expenses on the accompanying unaudited statements of operations.

**Derivative Liabilities**

The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 *- Derivative and Hedging - Contract in Entity's Own Equity*. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.

**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 December 31, 2022 and September 30, 2022, the cash balances were in excess of the FDIC insured limit by $898,012 and $186,466, respectively. The Company has not experienced any losses in such accounts through December 31, 2022.

***Concentration of Revenues***

For the three months ended December 31, 2022, the Company generated total revenue of $55,295 of which 72% was from one of the Company's customers. During the three months ended December 31, 2021, the Company generated total revenue of $78,975 of which 56% and 35% were from two of the Company's customers.

***Concentration of Accounts Receivable***

As of December 31, 2022, the Company had net accounts receivable of $48,295 of which 82% was from one of the Company's customers. As of September 30, 2022, the Company had net accounts receivable of $32,125 of which 59% and 41% were from two of the Company's customers, respectively.

***Concentration of Contract Liabilities***

As of December 31, 2022, the Company had deferred revenue reflected as contract liabilities of $177,050 of which 73% and 21% were from two of the Company's customers. As of September 30, 2022, the Company had deferred revenue reflected as contract liabilities of $156,550 of which 65% and 24% were from two of the Company's customers.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

***Concentration of Vendors***

Historically, the Company relied 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. The Company discontinued using this vendor in June 2022 as the patient reporting function has been moved in-house.

During the three months ended December 31, 2022 and 2021, the Company incurred $0 and $113,295, respectively, or 100%, of its 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, conversion of preferred stock, and common stock issuable. These common stock equivalents may be dilutive in the future. The following potentially dilutive equity securities outstanding as of December 31, 2022 and 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

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| Stock warrants | 6862673594 | 1075563017 |
| Stock options | 1901410519 |  |
| Series C-1 preferred stock | 212431 | 445301289 |
| Series C-2 preferred stock |  | 733542619 |
| Series E preferred stock |  | 638977636 |
| Series F preferred stock |  | 319488818 |
| Convertible notes | 8765180181 | 780807641 |
|  | 17529476725 | 3993681020 |

---

**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.

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 December 31, 2022 and 2021, the Company had no 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, no such interest and penalties were recorded as of December 31, 2022 and 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.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

**Leases**

The Company accounts for its leases using the method prescribed by ASC 842 – *Lease Accounting*. The Company assess whether a contract is, or contains, a lease at the inception of the contract which is based on (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. The Company 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 ROU assets and lease liabilities for short-term leases that have a term of 12 months or less.

Operating and financing lease ROU assets represent 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 unaudited statements of operations.

**Recent Accounting Pronouncements**

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

**NOTE 3 – <u>MARKETABLE SECURITIES</u>**

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 balance sheets. Its fair value is adjusted every reporting period and the change in fair value is recorded in the statements of operations as unrealized gain or (loss) on marketable securities. During the three months ended December 31, 2022 and 2021, the Company recorded $(2,000) and $5,400 of unrealized (loss) gain on marketable securities, respectively. As of December 31, 2022 and September 30, 2022, the fair value of these shares was $1,700 and $3,700, respectively.

**NOTE 4 – <u>ACCOUNTS RECEIVABLE</u>**

On December 31, 2022 and September 30, 2022, accounts receivable consisted of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **September 30,**<br> **2022** |
| Accounts receivable | $52127 | $35957 |
| Less: allowance for doubtful accounts | (3832) | (3832) |
| Accounts receivable, net | $48295 | $32125 |

---

For the three months ended December 31, 2022 and 2021, bad debt expense amounted to $0.

**NOTE 5 – <u>PROPERTY AND EQUIPMENT</u>**

Property and equipment are recorded at 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. Property and equipment consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

---

| | | | |
|:---|:---|:---|:---|
|  | **Estimated**<br> **Useful Life in**<br> **Years** | **December 31,**<br> **2022** | **September 30,**<br> **2022** |
| Laboratory equipment | 5 | $597059 | $597059 |
| Furniture | 5 | 24567 | 24567 |
| Leasehold improvements | 5 | 353826 | 353826 |
| Computer equipment | 3 | 76470 | 68490 |
|  |  | 1051922 | 1043942 |
| Less accumulated depreciation |  | (396702) | (357815) |
| Property and equipment, net |  | $655220 | $686127 |

---

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

For the three months ended December 31, 2022 and 2021, depreciation expense related to property and equipment amounted to $38,887 and $35,965, 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 – <u>DEBT</u>**

On December 31, 2022 and September 30, 2022, convertible notes payable (third parties and related parties) consisted of the following:

SCHEDULE OF CONVERTIBLE NOTES PAYABLE

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **September 30,**<br> **2022** |
| Principal amount | $7941605 | $2475000 |
| &nbsp;&nbsp;&nbsp;Less: debt discount | (7265021) | (2028719) |
| Convertible notes payable, net | 676584 | 446281 |
| Less: current portion of convertible notes payable - related parties | (676584) | - |
| Convertible notes payable, net – long-term | $- | $446281 |
| Principal amount – related parties | $8975192 | $4150000 |
| &nbsp;&nbsp;&nbsp;Less: debt discount – related parties | (8203748) | (1844186) |
| Convertible notes payable - related parties, net | 771444 | 2305814 |
| Less: current portion of convertible notes payable - related parties | (771444) | (1000000) |
| Convertible notes payable - related parties, net – long-term | $- | $1305814 |
| Total convertible notes payable, net | $1448028 | $2752095 |

---

***Convertible Debt – Related Parties***

On May 12, 2021, the Company entered into a Securities Purchase Agreement ("May 2021 SPA") with a related party, who is an affiliate stockholder ("May 2021 Investor") to purchase a convertible note ("May 2021 Note") and accompanying 63,897,764 warrants ("May 2021 Warrants") for an aggregate investment amount of $1,000,000 (see Note 8). The May 2021 Note had a principal value of $1,000,000 and bore an interest rate of 8% per annum and was to 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 was 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 May 2021 Note and May 2021 Warrants included 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. As of September 30, 2022, the May 2021 Note had an outstanding principal balance of $1,000,000 and accrued interest of $20,164 and is included in the accompanying balance sheet at $267,521 as a long-term convertible note payable – related party, net of discount in the amount of $732,479 (see Note 8). The May 2021 Warrants had an exercise price of $0.00313 per share (subject to adjustment) until May 12, 2026 and was exercisable for cash at any time. The May 2021 Warrants were valued at $984,200 using the relative fair value method which was recorded as a debt discount which was 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 was being amortized over the life of the May 2021 Note. The debt discount totaled $1,000,000 which was being amortized over the life of the May 2021 Notes. On November 29, 2022, the May 2021 Note was exchanged for a new convertible debenture (see below).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

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 bore interest rate of 8% per annum and was to 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 included a down-round provision under which the conversion price and exercise price were 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. 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 cashless-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 $34,620 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 September 30, 2022, the First November 2021 Notes had an outstanding principal of $1,000,000 and accrued interest of $20,164 and are included in the accompanying balance sheet at $140,093 as a long-term convertible note payable – related party, net of discount in the amount of $859,907 (see Note 8) as of September 30, 2022. On November 29, 2022, the First November 2021 Notes were exchanged for a new convertible debenture (see below).

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 a principal balance 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 bore interest rate of 8% per annum and was to mature on April 1, 2027. The First April 2022 Note and First April 2022 Warrants were 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 included 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. 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. As of September 30, 2022, the First April 2022 Note had an outstanding principal balance of $100,000 and accrued interest of $3,901 and is reflected in the accompanying balance sheet at $18,959 as a long-term convertible note payable – related party, net of discount in the amount of $81,041 (see Note 8) as of September 30, 2022. On November 29, 2022, the First April 2022 Note was exchanged for a new convertible debenture (see below).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

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 fourth note issued on July 1, 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 $1,000,000 in aggregate proceeds from the May 2022 Notes. The May 2022 Notes bore an interest rate of 8% per annum and were to 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 $178,449 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 were 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 included 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. 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 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. As of September 30, 2022, the May 2022 Notes had an aggregate outstanding principal balance of $1,000,000 and accrued interest of $20,110 and are included in the accompanying balance sheet at $834,803 as a long-term convertible note payable – related party, net of discount in the amount of $165,197 (see Note 8) as of September 30, 2022. On November 29, 2022, the May 2022 Note was exchanged for a new convertible debenture (see below).

On June 15, 2022, the Company entered into a Securities Purchase Agreement ("June 2022 SPA") with a related party, Danica Holley, 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 bore interest rate of 8% per annum and was to mature on April 1, 2027. The June 2022 Note and June 2022 Warrants were 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. 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 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. As of September 30, 2022, the June 2022 Note had an outstanding principal balance of $50,000 and accrued interest of $1,173. The June 2022 Note are included in the accompanying balance sheet at $44,438 as a long-term convertible note payable – related party, net of discount in the amount of $5,562 (see Note 8) as of September 30, 2022. On November 29, 2022, the June 2022 Note was exchanged for a new convertible debenture (see below).

On July 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 a related party, for a principal balance of $125,000, and on September 2, 2022, the Company entered into a second Demand Promissory Note Agreement with Jeffrey Busch for a principal balance of $150,000 (collectively referred to as the "Busch Notes"). The Busch Notes bore an annual interest rate of 8% and were payable on demand. The outstanding principal and accrued interest on the Busch Notes were contingently convertible, in full, at the option of the lender, into the same security issued by the Company in its next private placement of equity or equity backed securities at any time after the inception date. As of September 30, 2022, the Busch Notes had an outstanding principal balance of $275,000 and accrued interest of $2,683 and are included in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, the Busch Notes were exchanged for a new convertible debenture (see below).

On August 11, 2022, the Company entered into a Demand Promissory Note Agreement with a related party, who is an affiliate stockholder, for a principal balance of $375,000. The note bore annual interest rate of 8% and was payable on demand. The outstanding principal and accrued interest of the note was contingently convertible, in full, at the option of the lender, into the same security issued by the Company in its next private placement of equity or equity backed securities at any time after the inception date. As of September 30, 2022, this note had an outstanding principal balance of $375,000 and accrued interest of $4,110 and is included in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, this note was exchanged for a new convertible debenture (see below).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

On September 2, 2022, the Company entered into a Demand Promissory Note Agreement with a related party, who is an affiliate stockholder, for a principal balance of $350,000. The note bore an annual interest rate of 8% and was payable on demand. The outstanding principal and accrued interest of the note was contingently convertible, in full, at the option of the lender, into the same security issued by the Company in its next private placement of equity or equity backed securities at any time after the inception date. As of September 30, 2022, this note had an outstanding principal balance of $350,000 and accrued interest of $2,148 and is included in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, this note was exchanged for a new convertible debenture (see below).

On November 1, 2022, the Company entered into a Demand Promissory Note Agreements with two related parties, who are affiliate stockholders, for a principal balance of $120,000. The notes bore an annual interest rate of 8% and were payable on demand. The outstanding principal and accrued interest of the notes was contingently convertible, in full, at the option of the lender, into the same security issued by the Company in its next private placement of equity or equity backed securities at any time after the inception date. In December 2022, these short-term loans were repaid.

On November 29, 2022, in connection with the Share Exchange Agreements and New Convertible Debt discussed below, the May 2021 Warrants, First November 2021 Warrants, First April 2022 Warrants, May 2022 Warrants, and June 2022 Warrants, aggregating 385,441,138 warrants, were amended to reduce the exercise price to $0.003 per share. Additionally, 63,897,764 warrants issued in connection with Series F preferred stock were amended to reduce the exercise price to $0.003 per share. In conjunction with the price reduction, the price protection feature for all these warrants was eliminated. All other terms of the warrants remained the same. As a result of the November 29, 2022 amendment to the exercise price, the Company calculated the difference between the warrants fair values on November 29, 2022, the date of the amendment, using the then current exercise price ranging from $0.00366 to $0.00476 and the new exercise price of $0.003 and determined that the difference was insignificant.

Share Exchange Agreements and New Related Party Convertible Debentures and Warrants dated November 29, 2022

On November 29, 2022, the Company consummated the initial closing (the "Initial Closing") of a private placement offering (the "Offering") pursuant to the terms and conditions of that certain Securities Purchase Agreement, dated as of November 29, 2022 (the "Purchase Agreement"), by and among the Company, certain related party accredited investors (the "Related Party Purchasers") and Cavalry Fund I Management LLC, a Delaware limited liability company, in its capacity as collateral agent (the "Collateral Agent"). At the Initial Closing, the Company sold the related party Purchasers (i) 10% Original Issue Discount Senior Secured Convertible Debentures (the "New Related Party Debentures") in an aggregate principal amount of $550,000 and (ii) warrants (the "New Related Party Warrants") to purchase up to 157,142,857 shares of common stock of the Company (the "Common Stock"), subject to adjustments provided by the Warrants, which represents 100% warrant coverage. The Company received a total of $412,092 in net proceeds at the Initial Offering from the Related Party Purchasers, net of the Original Issue Discount of $50,000, commissions of $58,200 and other offering costs of $29,708.

On November 29, 2022, the Company entered into Securities Exchange Agreements with the above related party investors, whereby the May 2021 Note, the First November 2021 Notes, the First April 2022 Note, the May 2022 Notes, the June 2022 Note, the Busch Notes, the August 11, 2022 Demand Promissory Note, and the September 2, 2022 Demand Promissory Note with an aggregate principal amount of $4,150,000 (the "Exchanged Related Party Notes") and accrued interest payable of $120,750 were exchanged for New Related Party Debentures. Additionally, on November 29, 2022, in order to induce the related party investors to exchange the respective convertible notes into the Related Party Debentures, the aggregate principal amount of the Exchanged Related Party Notes and accrued interest payable was increased by 15% (and the August 11, 2022 and September 2, 2022 Demand Promissory Notes were issued with 10% OID), or $589,505, for new Related Party Debentures with an aggregate principal amount of $4,860,255.

On November 29, 2022, the Company entered into Securities Exchange Agreements with related party preferred stockholders, whereby related party holders of 1,000 shares of Series E preferred stock with a stated value of $2,000,000 and accrued dividends payable of $66,630, and related party holders of 500 shares of Series F preferred stock with a stated value of $1,000,000 and accrued dividends payable of $33,315 were exchanged for the New Related Party Debentures. Additionally, on November 29, 2022, in order to induce the related party preferred stockholders to exchange their respective preferred shares into the New Related Party Debentures, the aggregate stated value and accrued dividends payable were increased by 15%, or $464,992, for new Related Party Debentures with an aggregate principal amount of $3,564,937.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

The November 29, 2022 New Related Party Debentures mature on November 29, 2023, subject to a three-month extension at the sole discretion of the Company. The New Related Party Debentures bear interest at 10% per annum payable upon conversion or maturity. The New Related Party Debentures are convertible into shares of the Company's common stock at any time after the maturity date and prior to Mandatory Conversion (as defined below) at the conversion price equal to the lesser of: (i) $0.003 per share and (ii) 70% of the average of the VWAP (as defined in the Debentures) (or 50% of the average of such VWAP if an event of default has occurred and has not been cured) of the Common Stock during the ten Trading Day (as defined in the Debentures) period immediately prior to the applicable conversion date. The New Related Party Debentures are subject to mandatory conversion ("Mandatory Conversion") in the event the Company closes a registered public offering of its Common Stock and receives gross proceeds of not less than $5,000,000, with such offering resulting in the listing for trading of the Common Stock on a national exchange ("Qualified Offering"). The conversion price per share of Common Stock in the case of a Mandatory Conversion shall be the lesser of (i) $0.003 per share and (ii) 70% of the offering price per share in the Qualified Offering (the "Qualified Offering Price"). Alternatively, upon a Mandatory Conversion, the holders of the Debentures may elect to exchange their Debentures for newly issued convertible preferred securities at a price per share equal to the Qualified Offering Price or the five-day VWAP of the Common Stock prior to the date that is 181 days after the closing of the Qualified Offering.

Notwithstanding the preceding, holders of New Related Party Debentures shall have the right to require satisfaction of up to 40% of all amounts outstanding under the Debentures, in cash, at the time of a Qualified Financing. Investors that are exchanging securityholders shall have the right to require satisfaction of up to 10% of all amounts outstanding under the Debentures, in cash, at the time of a Qualified Financing. The New Related Party Debentures also contain certain price protection provisions providing for adjustment of the number of shares of Common Stock issuable upon conversion of the Debentures in case of certain future dilutive events or stock-splits and dividends.

The Company's obligations under the New Related Party Debentures are secured by a first priority lien on all of the assets of the Company pursuant to that certain Security Agreement, dated November 29, 2022 (the "Security Agreement") by and among the Company, the Debenture holders and the Collateral Agent.

The Purchase Agreement contains customary representations, warranties, and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company without the prior written consent of the Debenture holders, to incur additional indebtedness, and repay outstanding indebtedness, create or permit liens on assets, redeem its Common Stock, settle outstanding litigation, or enter into transactions with affiliates.

If the Company or any Subsidiary shall default on any of its obligations under any mortgage credit agreement or other facility indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $250,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, the New Related Party Debenture shall be deemed in default and the default provisions shall apply.

In connection with the Securities Exchange Agreements with related parties for the exchange of the convertible notes and preferred shares for the New Related Party Debentures discussed above, the Company issued an aggregate of 2,564,340,702 warrants. The New Related Party Warrants are exercisable for five years and six months from the earlier of the maturity date of the New Related Party Debentures and the closing of the Qualified Financing, at an exercise price equal to (i) in the event that a Qualified Offering is consummated prior to the exercise of the New Related Party Warrant, the price per share at which the Qualified Offering is made ("Qualified Offering Price"), or (ii) in the event that no Qualified Offering has been consummated, the lower of: (A) $0.003 per share and (B) an amount equal to 70% of the average of the VWAP (or 50% of the average of the VWAP if an event of default has occurred and has not been cured) for the Common Stock over the ten Trading Days preceding the date of the delivery of the applicable exercise notice. If there is no effective registration statement covering the resale of the shares underlying the New Related Party Warrants within 180 days following the closing of the Qualified Offering: (i) exercise may be via cashless exercise, and (ii) 5% additional Warrants will be issued by the Company to the holders for any portion of each month without such effective registration statement, up to a maximum of 25%. The New Related Party Warrants contain certain price protection provisions providing for adjustment of the amount of securities issuable upon exercise of the New Related Party Warrants in case of certain future dilutive events or stock-splits and dividends.

As discussed above, on November 29, 2022, in order to induce the related party investors to exchange their respective convertible notes and preferred stock into the New Related Party Debentures, the aggregate principal amount and accrued interest payable of the exchanged convertible notes, and the stated value and accrued dividends of exchanged preferred stock was increased by 15% (the August 11, 2022 and September 2, 2022 Demand Promissory Notes were issued with 10% OID), or an aggregate amount of $1,046,167. This inducement fee was included in loss from debt extinguishment on the accompanying unaudited statement of operations during the three months ended December 31, 2022. Additionally, the remaining debt discount on exchanged related party notes of $1,768,379 was written off and included in loss from debt extinguishment on the accompanying unaudited statement of operations during the three months ended December 31, 2022.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 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 bore an interest rate of 8% per annum and was to 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 was 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 included 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. At the election of the Second November 2021 Investor, the Second November 2021 Notes was convertible in whole or in part at any time and from time to time. 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% to 100% of the common stock issuable upon conversion of the notes purchased. As a result, the Second November 2021 Investor received additional cashless-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. This was 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 September 30, 2022, the Second November 2021 Notes had an outstanding principal balance of $500,000 and accrued interest of $34,520. The Second November 2021 Notes are included in the accompanying balance sheet at $69,417 as a long-term convertible note payable, net of discount in the amount of $430,583 as of September 30, 2022. On November 29, 2022, the Second November 2021 Notes were exchanged for a new convertible debenture (see below).

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 bore an interest rate of 8% per annum was to 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 was being amortized over the life of the Third November 2021 Notes. The Third November 2021 Notes and Third November 2021 Warrants were 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 included 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. At the election of the Third November 2021 Investor, the Third November 2021 Notes were convertible in whole or in part at any time and from time to time. 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% to 100% of the common stock issuable upon conversion of the notes purchased. As a result, the Third November 2021 Investor received additional cashless-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. This was 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 September 30, 2022, the Third November 2021 Notes had an outstanding principal balance of $500,000 and accrued interest of $34,411 and are included in the accompanying balance sheet at $69,417 as a long-term convertible note payable, net of discount in the amount of $430,583 as of September 30, 2022. On November 29, 2022, the Third November 2021 Notes were exchanged for a new convertible debenture (see below).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

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 bore an interest rate of 8% per annum and was to 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 $498,428 using the relative fair value method and were recorded as a debt discount which was being amortized over the life of the First January 2022 Note. The First January 2022 Note and First January 2022 Warrants were 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 included 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 are reduced equal to the lower conversion and exercise price of the new issuance or amended securities. At the election of the First January 2022 Investor, the First January 2022 Note was convertible in whole or in part at any time and from time to time. As of September 30, 2022, the First January 2022 Note had an outstanding principal balance of $500,000 and accrued interest of $26,959 and is included in the accompanying balance sheet at $72,081 as a long-term convertible note payable, net of discount in the amount of $427,919 as of September 30, 2022. On November 29, 2022, the First January 2022 Note was exchanged for a new convertible debenture (see below).

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 bore an interest rate of 8% per annum and was to mature on November 1, 2026. The 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 $498,428 using the relative fair value method and recorded as a debt discount which was being amortized over the life of the Second January 2022 Note. The Second January 2022 Note and Second January 2022 Warrants were 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 January 2022 Note and Second January 2022 Warrants included 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. At the election of the Second January 2022 Investor, the Second January 2022 Note was convertible in whole or in part at any time and from time to time. As of September 30, 2022, the Second January 2022 Note had an outstanding principal balance of $500,000 and accrued interest of $26,520 and is included in the accompanying balance sheet at $71,221 as a long-term convertible note payable, net of discount in the amount of $428,779. On November 29, 2022, the Second January 2022 Note was exchanged for a new convertible debenture (see below).

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 Company receiving $425,000 of proceeds and accompanying warrants to purchase up to an aggregate of 17,857,144 shares of common stock (collectively as "Second April 2022 Warrants"). The Second April 2022 Warrants were valued at $335,593 using the relative fair value method and were recorded as debt discount which was being amortized over the life of the Second April 2022 Notes. The Second April 2022 Notes bore an interest rate of 8% per annum and was to 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 were 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 included 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 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. At the election of the Investors, the Second April 2022 Notes was convertible in whole or in part at any time and from time to time. As of September 30, 2022, the Second April 2022 Notes had an aggregate outstanding principal balance of $425,000 and accrued interest of $15,710 and are included in the accompanying balance sheet at $120,808 as a long-term convertible note payable, net of discount in the amount of $304,192 as of September 30, 2022. On November 29, 2022, the Second April 2022 Notes were exchanged for a new convertible debenture (see below).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

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 bore an interest rate of 8% per annum and was to mature 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 $7,037 using the relative fair value method and was recorded as debt discount to be amortized over the life of the July 2022 Note. The July 2022 Note and July 2022 Warrants were 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 included 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 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. As of September 30, 2022, the July 2022 Note had an outstanding principal balance of $50,000 and accrued interest of $953 and is included in the accompanying balance sheet at $43,337 as a long-term convertible note payable, net of discount in the amount of $6,663. On November 29, 2022, the July 2022 Note was exchanged for a new convertible debenture (see below).

On October 22, 2022, the Company issued a new convertible note for $200,000 to an existing investor for the settlement of claims (the "Settlement Note"). In connection with issuance of the Settlement Note, the Company recorded settlement expense of $200,000. On November 29, 2022, the Settlement Note was exchanged for a new convertible debenture (see below).

On November 29, 2022, in connection with the Share Exchange Agreements and New Convertible Debentures discussed below, the Second November 2021 Warrants, Third November 2021 Warrants, January 2022 Warrants, Second January 2022 Warrants, Second April 2022 Warrants, and the July 2022 Warrants, aggregating 566,406,072 warrants, were amended to reduce the exercise price to $0.003 per share. Additionally, 16,393,443 warrants issued to a placement agent in January 2022 were amended to reduce the exercise price to $0.003 per share. In conjunction with the price reduction, the price protection feature for all these warrants was eliminated. All other terms of the warrants remained the same. As a result of the November 29, 2022 amendment to the exercise price, the Company calculated the difference between the warrants fair values on November 29, 2022, the date of the amendment, using the then current exercise price ranging from $0.00366 to $0.00476 and the new exercise price of $0.003 and determined that the difference was insignificant.

**Share Exchange Agreements and New Convertible Debentures and Warrants dated November 29, 2022**

On November 29, 2022, the Company consummated the Initial Closing of the Offering pursuant to the terms and conditions of the Purchase Agreement, by and among the Company, certain accredited investors (the "Purchasers") and Cavalry Fund I Management LLC, a Delaware limited liability company, in its capacity as collateral agent (the "Collateral Agent"). At the Initial Closing, the Company sold the Purchasers (i) 10% Original Issue Discount Senior Secured Convertible Debentures (the "New Debentures") in an aggregate principal amount of $2,805,000 and (ii) warrants (the "Warrants" and together with the New Debentures, the "Underlying Securities") to purchase up to 801,428,569 shares of common stock of the Company (the "Common Stock"), subject to adjustments provided by the Warrants, which represents 100% warrant coverage. The Company received a total of $2,095,288 in net proceeds at the Initial Offering, net of the Original Issue Discount of $255,000, commissions of $296,800 and other offering costs of $157,912.

The Purchase Agreement contains customary representations, warranties, and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company without the prior written consent of the Debenture holders, to incur additional indebtedness, and repay outstanding indebtedness, create or permit liens on assets, redeem its Common Stock, settle outstanding litigation, or enter into transactions with affiliates.

On November 29, 2022, the Company entered into Securities Exchange Agreements with the above investors, whereby the Second November 2021 Notes, the Third November 2021 Notes, the First January 2022 Note, the Second January 2022 Note, the Second April 2022 Notes, the July 2022 Note, and the Settlement Note, with an aggregate principal amount of $2,675,000 (the "Exchanged Convertible Notes") and accrued interest payable of $173,375 were exchanged for New Debentures. Additionally, on November 29, 2022, in order to induce the investors to exchange their respective convertible notes into the New Debentures, the aggregate principal amount and accrued interest payable was increased by 15%, or $427,256, for the New Debentures with an aggregate principal amount of $3,275,631.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

On November 29, 2022, the Company entered into Securities Exchange Agreements with preferred stockholders, whereby holders of 902 shares of Series C-1 preferred stock with a stated value of $372,303, and holders of 3,037 shares of Series C-2 preferred stock with a stated value of $1,245,935 were exchanged for the New Debentures. Additionally, on November 29, 2022, in order to induce the preferred stockholders to exchange their respective preferred shares into the New Debentures, the aggregate stated value of the preferred shares was increased by 15%, or $242,736, for New Debentures with an aggregate principal amount of $1,860,974.

The New Debentures mature on November 29, 2023, subject to a three-month extension at the sole discretion of the Company. The New Debentures bear interest at 10% per annum payable upon conversion or maturity. The New Debentures are convertible into shares of Common Stock at any time after the maturity date and prior to Mandatory Conversion at the conversion price equal to the lesser of: (i) $0.003 per share and (ii) 70% of the average of the VWAP (as defined in the Debentures) (or 50% of the average of such VWAP if an event of default has occurred and has not been cured) of the Common Stock during the ten Trading Day (as defined in the Debentures) period immediately prior to the applicable conversion date. The New Debentures are subject to Mandatory Conversion in the event the Company closes a Qualified Offering. The conversion price per share of Common Stock in the case of a Mandatory Conversion shall be the Qualified Offering Price. Alternatively, upon a Mandatory Conversion, the holders of the New Debentures may elect to exchange their Debentures for newly issued convertible preferred securities at a price per share equal to the Qualified Offering Price or the five-day VWAP of the Common Stock prior to the date that is 181 days after the closing of the Qualified Offering.

Notwithstanding the preceding, holders of New Debentures shall have the right to require satisfaction of up to 40% of all amounts outstanding under the Debentures, in cash, at the time of a Qualified Financing. Investors that are exchanging securityholders shall have the right to require satisfaction of up to 10% of all amounts outstanding under the Debentures, in cash, at the time of a Qualified Financing. The New Debentures also contain certain price protection provisions providing for adjustment of the number of shares of Common Stock issuable upon conversion of the New Debentures in case of certain future dilutive events or stock-splits and dividends.

The Company's obligations under the New Debentures are secured by a first priority lien on all of the assets of the Company pursuant to that certain Security Agreement, dated November 29, 2022 (the "Security Agreement") by and among the Company, the Purchasers and the Collateral Agent.

The Company had the right to hold one or more subsequent closings at any time prior to December 31, 2022, unless otherwise extended, to sell additional Underlying Securities in an aggregate principal amount up to $6,600,000, which was subject to adjustment. The subsequent closing deadline was extended, and a subsequent raise was consummated on January 27, 2023 (See Note 11).

If the Company or any Subsidiary shall default on any of its obligations under any mortgage credit agreement or other facility indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $250,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, the New Debenture shall be deemed in default and the default provisions shall apply.

In connection with the Securities Exchange Agreements with investors for the exchange of the convertible notes and preferred shares for the New Debentures discussed above, the Company issued an aggregate of 2,269,030,092 warrants to investors. The Warrants are exercisable for five years and six months from the earlier of the maturity date of the New Debentures and the closing of the Qualified Financing, at an exercise price equal to (i) in the event that a Qualified Offering is consummated prior to the exercise of the Warrant, the Qualified Offering Price, or (ii) in the event that no Qualified Offering has been consummated, the lower of: (A) $0.003 per share and (B) an amount equal to 70% of the average of the VWAP (or 50% of the average of the VWAP if an event of default has occurred and has not been cured) for the Common Stock over the ten Trading Days preceding the date of the delivery of the applicable exercise notice. If there is no effective registration statement covering the resale of the shares underlying the Warrants within 180 days following the closing of the Qualified Offering: (i) exercise may be via cashless exercise, and (ii) 5% additional Warrants will be issued by the Company to the holders for any portion of each month without such effective registration statement, up to a maximum of 25%. The Warrants contain certain price protection provisions providing for adjustment of the amount of securities issuable upon exercise of the Warrants in case of certain future dilutive events or stock-splits and dividends.

As discussed above, on November 29, 2022, in order to induce the investors to exchange their respective convertible notes and preferred stock into the New Debentures, the aggregate principal amount and accrued interest payable of the exchanged convertible notes, and the stated value of exchanged preferred stock was increased by 15%, or an aggregate amount of $669,992. This inducement fee was included in loss from debt extinguishment on the accompanying unaudited statement of operations during the three months ended December 31, 2022. Additionally, the remaining debt discount on Exchanged Convertible Notes of $1,949,909 was written off and included in loss from debt extinguishment on the accompanying unaudited statement of operations during the three months ended December 31, 2022.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

In connection with the Initial Closing of the private placement, the Company and Joseph Gunnar & Co. LLC, a U.S. registered broker-dealer ("Gunnar"), entered into a placement agency agreement (the "Placement Agency Agreement"), pursuant to which Gunnar agreed to act as the placement agent for the Offering (the "Placement Agent"). Pursuant to the terms of the Placement Agency Agreement, the Company agreed to (i) pay Gunnar a cash placement fee of 10% of the gross cash proceeds raised in the Offering, and (ii) issue to Gunnar warrants (the "PA Warrants") on the terms identical to the Warrants sold in the Offering in an amount equal to 10% of the Underlying Securities sold to investors. As a result of the foregoing, the Company paid Gunnar an aggregate commission of $305,000 in connection with the Initial Closing. The Company also paid $50,000 in fees to Gunnar's legal counsel and paid Gunnar a financial advisory fee of $50,000. In addition, Gunner received 124,489,795 warrants. Additionally, the Company issued 16,000,000 warrants to a consultant in connection with the private placement offering.

Analysis of Exchange Agreements, Related Party Debenture and New Debentures, and Related Warrants

In accordance with ASC 470-50, Debt Modifications and Extinguishments, the Company performed an assessment of whether the Exchange Agreement transactions with related parties and investors was deemed to be new debt, a modification of existing debt, or an extinguishment of existing debt. The Company evaluated the November 29, 2022 Exchange Agreements for debt modification and concluded that the debt exchanges qualified for debt extinguishment. The Company determined the transactions were considered a debt extinguishment because the change in debt, the inducement premiums (related parties and third parties) discussed previously totaling $1,724,489, and the issuance of new warrants was substantial. Upon extinguishment, the Company had an aggregate of $3,718,288 of unamortized initial debt discount recorded which was written off and included in loss on debt extinguishment on the accompanying unaudited statement of operations during the three months ended December 31, 2022.

Derivative Liabilities Pursuant to Related Party Debentures and New Debentures and Related Warrants

Pursuant to the provisions of ASC 815-40 – *Derivatives and Hedging – Contracts in an Entity's Own Stock*, the New Related Party Debentures, the New Debenture, and the New warrants issued in connection with the Exchange Agreements were analyzed and it was determined that the terms of the New Related Party Debentures, New Debentures and the related warrants contained terms that were considered derivatives due to the variable conversion of the Debentures and exercise price of the warrants, and other provisions which includes events not within the control of the Company. In accordance with ASC 815-40, the embedded conversion option contained in the Notes and the Warrants were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through earnings at each reporting date. The fair value of the embedded conversion options and warrants was determined using the Binomial Lattice valuation model. At the end of each period and on the date notes convert or are repaid, the Company revalues the derivative liabilities resulting from the embedded options and warrants.

In connection with the issuance of the New Related Party Debentures and the New Debentures and related warrants, on November 29, 2022, the initial measurement date, the aggregate fair values of the embedded conversion option derivatives and warrant derivatives of $41,961,095 was recorded as derivative liabilities and was attributable to the following: 1) $21,986,653 of derivative liabilities was attributable to the New Related Party Debentures and related warrants which was allocated to debt discount up to the net principal amount of the New Related Party Debentures of $8,837,284, with the remainder of $13,149,369 charged to current period operations as initial derivative expense, and 2) $19,974,442 of derivative liabilities was attributable to the New Debentures and related warrants which was allocated to debt discount up to the net principal amount of the New Debentures of $7,231,894, with the remainder of $12,742,548 charged to current period operations as initial derivative expense. At the end of the period, the Company revalued the embedded conversion option derivative liabilities and warrant derivative liabilities and recorded a derivative expense of $505,158. In connection with the revaluation and the initial derivative expense, the Company recorded an aggregate derivative expense of $26,397,075 during the three months ended December 31, 2022.

The Company uses the Binomial Valuation Model to determine the fair value of its conversion options and new stock warrants which requires the Company to make several key judgments including:

● the value of the Company's common stock;

● the expected life of issued stock warrants;

● the expected volatility of the Company's stock price;

● the expected dividend yield to be realized over the life of the stock warrants; and

● the risk-free interest rate over the expected life of the stock warrants.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

On November 29, 2022 (the Exchange Agreement date) and December 31, 2022, the fair value of the embedded options and stock warrants were estimated at issuance using the Binomial Valuation Model with the following assumptions:

SCHEDULE OF FAIR VALUE OF EMBEDDED OPTIONS AND STOCK WARRANTS

---

| | |
|:---|:---|
|  | **2023** |
| Dividend rate | —% |
| Term (in years) | 1 to 6.5 years |
| Volatility | 270.0% to 364.2 |
| Risk—free interest rate | 3.92% to 4.78 |

---

The Company's computation of the expected life of issued stock warrants was based on the simplified method as the Company does not have adequate exercise experience to determine the expected term. The interest rate was based on the U.S. Treasury yield curve in effect at the time of grant. The computation of volatility was based on the historical volatility of the Company's common stock.

During the three months ended December 31, 2022 and 2021, amortization of debt discounts related to the convertible notes payable and Debentures amounted to $1,602,646 and $92,019, respectively, which has been included in interest expense on the accompanying unaudited statements of operations.

***Notes Payable - Related Party***

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 year ended September 30, 2022, the Company fully paid the outstanding balance on the note. As of September 30, 2022, the note had no outstanding balance (see Note 8).

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 amount of $100,000. The Company received proceeds of $100,000. The note bears an annual interest rate of 1%, matures on April 1, 2022 and can be 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 charge a late payment fee equal to 1% of the outstanding principal balance and cost of collection, including legal fees. On May 5, 2022, the Company and Jeffrey Busch (collectively as "Parties") amended the April 26, 2021 note with principal amount of $100,000 ("Original Note") pursuant to which the Parties increased the principal amount to $350,000 ("New Note") with the Company receiving an 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 December 31, 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 $3,356 (see Note 8). As of September 30, 2022, the New Note had an outstanding principal balance of $350,000, reflected as *notes payable – related party* in the accompanying balance sheet since the conditions for its contingent conversion has not yet been met, and accrued interest of $2,474 (see Note 8).

***Note Payable***

In September 2017, the Company entered into a note agreement with a third-party investor. Pursuant to the note, the Company borrowed a principal amount of $1,000. The 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 December 31, 2022, the note had principal and accrued interest balances of $1,000 and $1,772, respectively. As of September 30, 2022, the note had principal and accrued interest balances of $1,000 and $1,689, respectively.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

**NOTE 7 –<u>LEASE LIABILITIES</u>**

**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 $379 for a period of 60 months commencing in November 2018 through October 2023. At the effective date of the financing agreement, the Company recorded a financing lease payable of $16,065.

Effective November 2018, the Company entered into a financing agreement with a second lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $1,439 for a period of 60 months commencing in November 2018 through October 2023. At the effective date of the financing agreement, the Company recorded a financing lease payable of $62,394.

Effective March 2019, the Company entered into a financing agreement with a third lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $1,496 for a period of 60 months commencing in March 2019 through February 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 a fourth lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $397 for a period of 60 months commencing in August 2019 through July 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 a fifth lessor to finance the purchase of equipment. Pursuant to the financing agreement, the Company shall make a monthly payment of $1,395 for a period of 60 months commencing in January 2020 through December 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 was the discount rate which ranged from 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 FINANCIAL LEASE RIGHT-OF-USE ASSETS

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **September 30,<br> 2022** |
| Financing ROU assets | $231841 | $231841 |
| Less accumulated depreciation | (178479) | (166887) |
| Balance of Financing ROU assets | $53362 | $64954 |

---

For the three months ended December 31, 2022 and 2021, depreciation expense related to Financing ROU assets amounted to $11,592 and $11,592, respectively.

***Financing lease liability related to the Financing ROU assets is summarized below:***

 ****

SCHEDULE OF FINANCING LEASE LIABILITY RELATED TO FINANCING RIGHT-OF-USE ASSETS

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **September 30,<br> 2022** |
| Financing lease payables for equipment | $231841 | $231841 |
| Total financing lease payables | 231841 | 231841 |
| Payments of financing lease liabilities | (156335) | (143456) |
| Total | 75506 | 88385 |
| Less: short term portion | (52037) | (53995) |
| Long term portion | $23469 | $34390 |

---

 ****

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

***Future minimum lease payments under the financing lease agreements on December 31, 2022 are as follows:***

 **

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER FINANCING LEASE

---

| | |
|:---|:---|
| **Years ending December 31,** | **Amount** |
| 2023 | $57631 |
| 2024 | 24403 |
| Total minimum financing lease payments | 82034 |
| Less: discount to fair value | (6528) |
| Total financing lease payable on December 31, 2022 | $75506 |

---

**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 61 months, with an option to extend, commencing in February 2020 and expiring in February 2025. Pursuant to the lease agreement, the lease requires the Company to pay a monthly base rent of; (i) $4,878 in the first year; (ii) $5,026 in the second year; (iii) $5,179 in the third year; (iv) $5,335 in the fourth year and; (v) $5,495 in the fifth year, plus a pro rata share of operating expenses beginning February 2020.

In February 2020, pursuant to ASC 842 *– Leases,* the Company calculated the present value of the total lease 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.

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 (see Note 10). The Lease Amendment provided for: (i) 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) 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) an annual base rent modification; (iv) an increase to the security deposit; (v) tenant improvement allowance; (vi) additional parking and; (vii) two renewal options, each for five year terms, for a total of ten years.

Pursuant to the Lease Amendment, the Company must pay a total annual base rent of; (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.

In October 2021, pursuant to ASC 842 *– Leases*, the Company 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 gain on lease modification in the amount of $8,229, which was included in general and administrative expense in the accompanying statement of operation. The Company calculated the present value of the total lease payments in the 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 three months ended December 31, 2022, lease costs related to operating lease ROU asset and operating lease liabilities amounted to $50,311 which included base lease costs of $29,554 and other expenses such as common area maintenance and taxes of $20,757, all of which were expensed during the period and included in general and administrative expenses on the accompanying statements of operations. For the three months ended December 31, 2021, lease costs amounted to $56,867, which included base lease costs of $28,690 and other expenses of $28,177, all of which were expensed during the period and included in general and administrative expenses on the accompanying statements of operations.

***Operating Right-of-use asset ("ROU") is summarized below:***

 ****

SCHEDULE OF OPERATING RIGHT-OF-USE ASSET

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **September 30,**<br> **2022** |
| Operating office lease | $1212708 | $1212708 |
| Less accumulated reduction | (70289) | (57847) |
| Balance of Operating ROU asset | $1142419 | $1154861 |

---

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

***Operating lease liability related to the ROU asset is summarized below:***

 ****

SCHEDULE OF OPERATING LEASE LIABILITY RELATED TO RIGHT-OF-USE ASSETS

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **September 30,<br> 2022** |
| Operating office lease | $1212708 | $1212708 |
| Total operating lease liability | 1212708 | 1212708 |
| Reduction of operating lease liability | (35324) | (29396) |
| Total | 1177384 | 1183312 |
| Less: short term portion | (26960) | (25551) |
| Long term portion | $1150424 | $1157761 |

---

***Future base lease payments under the non-cancellable operating lease on December 31, 2022 are as follows:***

 ****

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF OPERATING LEASE

---

| | |
|:---|:---|
| **Years ending December 31,** | **Amount** |
| 2023 | $120199 |
| 2024 | 123806 |
| 2025 | 127520 |
| 2026 | 131871 |
| 2027 and thereafter | 1515340 |
| Total minimum non-cancellable operating lease payments | 2018736 |
| Less: discount to fair value | (841352) |
| Total operating lease liability on December 31, 2022 | $1177384 |

---

**NOTE 8 – <u>RELATED-PARTY TRANSACTIONS</u>**

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 in accordance with the agreement. Pursuant to the agreement, Mr. Kucharchuk shall be paid $2,000 per month. As of December 31, 2022 and September 30, 2022, the Company had an accounts payable – related party balance of $6,000 and $12,000 related to this consulting agreement, respectively.

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, for a principal amount of $100,000 (see Note 6). On May 5, 2022, the parties amended the April 26, 2021 note into the New Note with the Company receiving an 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 December 31, 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 $3,356 (see Note 6). As of September 30, 2022, the New Note had an outstanding principal balance of $350,000, reflected as *notes payable – related party* in the accompanying balance sheet since the conditions for its contingent conversion has not yet been met, and accrued interest of $2,474 (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 September 30, 2022, the May 2021 Note had an outstanding principal balance of $1,000,000 and accrued interest of $20,164. On November 29, 2022, the May 2021 Note was exchanged for a new convertible debenture (see Note 6).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

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 year ended September 30, 2022, the Company fully paid the outstanding balance on the note. As of September 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 September 30, 2022, the First November 2021 Notes had an outstanding principal balance of $1,000,000 and accrued interest of $20,164. On November 29, 2022, the First November 2021 Notes were exchanged for a new convertible debenture (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% to 100% of the common stock issuable upon conversion of the notes purchased. As a result, the First November 2021 Investor received additional cashless-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).

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 amount 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 September 30, 2022, the First April 2022 Note had an outstanding principal balance of $100,000 and accrued interest of $3,901. On November 29, 2022, the First April 2022 Note was exchanged for a new convertible debenture (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 year ended September 30, 2022, the Company received an aggregate of $1,000,000 of proceeds and issued an aggregate of 42,016,808 of the May 2022 Warrants. As of September 30, 2022, the May 2022 Notes had an aggregate outstanding principal balance of $1,000,000 and accrued interest of $20,110. On November 29, 2022, the May 2022 Note was exchanged for a new convertible debenture (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 September 30, 2022, the June 2022 Note had an outstanding principal balance of $50,000 and accrued interest of $1,173. On November 29, 2022, the June 2022 Note was exchanged for a new convertible debenture (see Note 6).

On July 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 a related party, for a principal balance of $125,000, and on September 2, 2022, the Company entered into a second Demand Promissory Note Agreement with Jeffrey Busch for a principal balance of $150,000 (collectively referred to as called the "Busch Notes"). The Busch Notes bear an annual interest rate of 8% and are payable on demand. The outstanding principal and accrued interest on the Busch Note is contingently convertible, in full, at the option of 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. As of September 30, 2022, the Busch Notes had an outstanding principal balance of $275,000 and accrued interest of $2,683 and are reflected in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, the Busch Notes were exchanged for a new convertible debenture (see Note 6).

On August 11, 2022, the Company entered into a Demand Promissory Note Agreement with a related party, who is an affiliate stockholder, for a principal balance of $375,000. The note bears an annual interest rate of 8% and is payable on demand. The outstanding principal and accrued interest of the note is contingently convertible, in full, at the option of 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. As of September 30, 2022, this note had an outstanding principal balance of $375,000 and accrued interest of $4,110 and is reflected in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, this note was exchanged for a new convertible debenture (see Note 6).

On September 2, 2022, the Company entered into a Demand Promissory Note Agreement with a related party, who is an affiliate stockholder, for a principal balance of $350,000. The note bears an annual interest rate of 8% and is payable on demand. The outstanding principal and accrued interest of the note is contingently convertible, in full, at the option of 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. As of September 30, 2022, this note had an outstanding principal balance of $350,000 and accrued interest of $2,148 and is reflected in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, this note was exchanged for a new convertible debenture (see Note 6).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

During the year ended September 30, 2022, the Company advanced a total of $13,883 to a related party, which is an affiliate entity and a majority shareholder of the Company. During the year ended September 30, 2022, the Company recorded bad debt expense of $35,594 related to the write off of related party advances. As of December 31, 2022 and September 30, 2022, the Company had related party receivable balances of $0.

On November 1, 2022, the Company entered into a Demand Promissory Note Agreements with two related parties, who are affiliate stockholders, for a principal balance of $120,000. The notes bore an annual interest rate of 8% and were payable on demand. The outstanding principal and accrued interest of the notes was contingently convertible, in full, at the option of the lender, into the same security issued by the Company in its next private placement of equity or equity backed securities at any time after the inception date. In December 2022, these short-term loans were repaid.

On November 29, 2022, in connection with the Share Exchange Agreements and New Related Party Convertible Debentures discussed in Note 6, the May 2021 Warrants, First November 2021 Warrants, First April 2022 Warrants, May 2022 Warrants, and June 2022 Warrants, aggregating 385,441,138 warrants, were amended to reduce the exercise price to $0.003 per share. Additionally, 63,897,764 warrants issued in connection with Series F preferred stock were amended to reduce the exercise price to $0.003 per share. In conjunction with the price reduction, the price protection feature for all these warrants was eliminated. All other terms of the warrants remained the same. (See Note 6).

On November 29, 2022, the Company consummated the Initial Closing of the Offering pursuant to the terms and conditions of the Purchase Agreement, by and among the Company the Related Party Purchasers and the Collateral Agent. At the Initial Closing, the Company sold the related party Purchasers (i) the New Related Party Debentures in an aggregate principal amount of $550,000 and (ii) the New Related Party Warrants to purchase up to 157,142,857 shares of Common Stock, subject to adjustments provided by the Warrants, which represents 100% warrant coverage. The Company received a total of $412,092 in net proceeds at the Initial Offering from the Related Party Purchasers, net of the Original Issue Discount of $50,000, commissions of $58,200 and other offering costs of $29,708. (See Note 6).

On November 29, 2022, the Company entered into Securities Exchange Agreements with the Exchanged Related Party Notes and accrued interest payable of $120,750 were exchanged for New Related Party Debentures. Additionally, on November 29, 2022, in order to induce the related party investors to exchange the respective convertible notes into the Related Party Debentures, the aggregate principal amount of the Exchanged Related Party Notes and accrued interest payable was increased by 15% (those issued for the August 11, 2022 and September 2, 2022 Demand Promissory Notes were issued with 10% OID), or $589,505, for new Related Party Debentures with an aggregate principal amount of $4,860,255. (See Note 6).

On November 29, 2022, the Company entered into Securities Exchange Agreements with related party preferred stock holders, whereby related party holders of 1,000 shares of Series E preferred stock with a stated value of $2,000,000 and accrued dividends payable of $66,630, and related party holders of 500 shares of Series F preferred stock with a stated value of $1,000,000 and accrued dividends payable of $33,315 were exchanged for the New Related Party Debentures. Additionally, on November 29, 2022, in order to induce the related party preferred stockholders to exchange their respective preferred shares into the New Related Party Debentures, the aggregate stated value and accrued dividends payable were increased by 15%, or $464,992, for new Related Party Debentures with an aggregate principal amount of $3,564,937. (See Note 6).

As of December 31, 2022 and September 30, 2022, the Company owed several executives and directors for expense reimbursements and consulting fees in the aggregate amount of $6,000 and $16,223, respectively, which is reflected on the accompanying balance sheet as accounts payable – related parties.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

On December 31, 2022 and September 30, 2022, net amount due to related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **September 30,**<br> **2022** |
| Convertible notes principal – related parties | $8975192 | $4150000 |
| Discount on convertible notes - related parties | (8203748) | (1844186) |
| Note payable principal – related parties | 350000 | 350000 |
| Accrued liabilities - related parties | 82043 | 76927 |
| Accounts payable – related parties | 6000 | 16223 |
| &nbsp;&nbsp;&nbsp;Total | $1209487 | $2748964 |

---

**NOTE 9 – <u>STOCKHOLDERS' DEFICIT</u>**

**Shares Authorized**

On September 22, 2020, the Company filed with the Nevada Secretary of State, an amendment to its 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 August 20, 2015, the Company filed the Certificate of Designation with the Nevada Secretary of State, designating 1,333 shares of the authorized 26,667 Preferred Stock as Series A Preferred Stock. Each holder of Series A Preferred Stock is entitled to 500 votes for each share of Series A Preferred Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company. The holders of Series A Preferred Stock shall have no special voting rights and their consent is not required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for the taking of any corporate action.

As of December 31, 2022 and September 30, 2022, 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.

**Series C-1 Preferred Stock**

On May 18, 2020, the Company filed a certificate of designation, preferences and rights of Series C-1 Preferred Stock (the "Series C-1 Certificate of Designation"), as amended on June 9, 2021, with the Nevada Secretary of State to designate 3,000 shares of its previously authorized preferred stock as Series C-1 Preferred Stock, par value $0.0001 per share and a stated value of $4,128.42 per share. The Series C-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. The holders of shares of Series C-1 Preferred Stock have the following preferences and rights:

On June 9, 2021, the Company filed an Amendment (the "CoD Amendment") to the Series C-1 Certificate of Designation with the Nevada Secretary of State. The filing of the CoD Amendment was approved by the Board on June 8, 2021, and by the holders of the majority of the outstanding shares of Series C-1 Preferred Stock on June 8, 2021.

The CoD Amendment sets the triggering price for the anti-dilution price protection at $0.00275 per share, the same price as the Series C-2 Certificate of Designation. All other terms of the Series C-1 Certificate of Designation remain unchanged and in full force and effect.

● Holders of shares of Series C-1 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.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

● Each share of Series C-1 Preferred Stock is convertible into shares of common stock any time after the Initial Issuance Date at a conversion price of $0.0275 per share. The number of shares of common stock issuable upon conversion shall be determined by dividing *(x)* the conversion amount (determined by the sum of the stated value thereof plus any additional amount thereon which consist of all dividends, whether declared or not) of such share of Series C-1 by *(y)* the conversion price of $0.0275 per share (subject to temporary adjustment upon a triggering event as defined by the Series C-1 Certificate of Designation, to 80 % of the conversion price). The adjusted conversion price is only in effect until the triggering event is cured. The convertibility of shares of Series C-1 Preferred Stock is limited such that a holder of Series C-1 Preferred Stock may not convert Series C-1 Preferred Stock to common stock to the extent that the number of shares of common stock to be issued pursuant to such conversion, when aggregated with all other shares of common stock owned by the holder at such time, would result in the holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934) more than 4.99 % of all of the Company's common stock outstanding.

● 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 C-1 Certificate of Designation), at a price of or with an exercise price or conversion price of less than $0.0275 per share (see amendment discussed above), then upon such issuance or sale, the Series C-1 Preferred Stock conversion price shall be reduced to the sale price, the exercise price or conversion price of the securities sold. In addition, these preferred shareholders have the right to participate in future equity offerings from the company for twenty-four months from the effective date.

● In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Company, the holders of the Series C-1 Preferred Stock shall be entitled to receive, in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders ("Liquidation Funds") before any amount shall be paid to the holders of any shares of Junior Stock, but pari passu with any Parity Stock (as defined in the Series C-1 Certificate of Designation) then outstanding, an amount per shares of the Series C-1 Preferred Stock equal to the greater of (A) the conversion amount thereof on the date of such payment or (B) the amount per share such holder of Series C-1 Preferred Stock would receive if such holder converted such Series C-1 into common stock immediately prior to the date of the payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the holders of Series C-1 Preferred Stock and holders of the shares of Parity Stock, then each holder of Series C-1 Preferred Stock and each holder of Parity Stock shall receive a percentage of the Liquidation Funds equal to the full amount of the Liquidation Funds payable to such holder of Series C-1 Preferred Stock and such holder of the Parity Stock as a liquidation preference, in accordance with their respective certificate of designation (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of Series C-1 Preferred Stock and all holders of Parity Stock.

During the year ended September 30, 2022, various holders of the Series C-1 Preferred Stock converted an aggregate of 1,923 shares of Series C-1 Preferred Stock into 288,637,529 shares of the Company's common stock (see below – *Common Stock Issued Upon Conversion of Series C-1 Preferred Stock*).

On November 29, 2022, the Company entered into Securities Exchange Agreements with preferred stockholders, whereby holders of 902 shares of Series C-1 preferred stock with a stated value of $372,303 were exchanged for the New Debentures (See Note 6).

As of December 31, 2022 and September 30, 2022, the Company had 141 and 1,043 shares of Series C-1 Preferred Stock issued and outstanding, respectively.

**Series C-2 Preferred Stock**

On May 18, 2020, the Company filed a certificate of designation, preferences and rights of Series C-2 Preferred Stock (the "Series C-2 Certificate of Designation") with the Nevada Secretary of State to designate 6,000 shares of its previously authorized preferred stock as Series C-2 Preferred Stock, par value $0.0001 per share and a stated value of $410.27 per share. The Series C-2 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. The holders of shares of Series C-2 Preferred Stock have the following preferences and rights:

● Holders of shares of Series C-2 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.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

● Each share of Series C-2 Preferred Stock is convertible into shares of common stock any time after the initial issuance date at a conversion price of $0.00275 per share. The number of shares of common stock issuable upon conversion shall be determined by dividing *(x)* the conversion amount (determined by the sum of the stated value thereof plus any additional amount thereon) of such share of Series C-2 by *(y)* the conversion price of $0.00275 per share (subject to temporary adjustment upon a triggering event as defined by the Series C-2 Certificate of Designation to 80 % of the conversion price). The adjusted conversion price is only in effect until the triggering event is cured. The convertibility of shares of Series C-2 Preferred Stock is limited such that a holder of Series C-2 Preferred Stock may not convert Series C-2 Preferred Stock to common stock to the extent that the number of shares of common stock to be issued pursuant to such conversion, when aggregated with all other shares of common stock owned by the holder at such time, would result in the holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934) more than 4.99 % of all of the Company's common stock outstanding.

● 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 C-2 Certificate of Designation), at a price of or with an exercise price or conversion price of less than the conversion price, then upon such issuance or sale, the Series C-2 Preferred Stock conversion price shall be reduced to the sale price, the exercise price or conversion price of the securities sold. In addition, these preferred shareholders have the right to participate in future equity offerings from the company for twenty-four months from the effective date.

● In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Company, the holders of the Series C-2 Preferred Stock shall be entitled to receive, in cash out of the Liquidation Funds before any amount shall be paid to the holders of any shares of Junior Stock, but pari passu with any Parity Stock (as defined in the Series C-2 Certificate of Designation) then outstanding, an amount per shares of the Series C-2 Preferred Stock equal to the greater of (A) the conversion amount thereof on the date of such payment or (B) the amount per share such holder would receive if such holder converted such Series C-2 into common stock immediately prior to the date of the payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the holders of Series C-2 Preferred Stock and holders of the shares of Parity Stock, then each holder of Series C-2 Preferred Stock and each holder of Parity Stock shall receive a percentage of the Liquidation Funds equal to the full amount of the Liquidation Funds payable to such holder of Series C-2 Preferred Stock and such holder of the Parity Stock as a liquidation preference, in accordance with their respective certificate of designation (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of Series C-2 Preferred Stock and all holders of Parity Stock.

During the year ended September 30, 2022, a holder of the 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 below – *Common Stock Issued Upon Conversion of Series C-2 Preferred Stock*).

On November 29, 2022, the Company entered into Securities Exchange Agreements with preferred stockholders, whereby holders of 3,037 shares of Series C-2 preferred stock with a stated value of $1,245,935 were exchanged for the New Debentures (See Note 6).

As of December 31, 2022 and September 30, 2022, the Company had 0 and 3,037 shares of Series C-2 Preferred Stock, respectively, issued and outstanding.

**Series E Preferred Stock**

On September 15, 2020, the Company filed a Certificate of Designation, Preferences and 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 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 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 % per annum on the 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.

● 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.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

● 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 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, however, the 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 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 E (including any fraction of a share) shall automatically convert into an aggregate number of shares of 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 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.

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

On September 16, 2020, the Company entered into a Securities Purchase Agreement (the "SPA") with an affiliated investor, who is a beneficial shareholder, to purchase an aggregate amount of 1,000 shares of the newly created Series E Convertible Preferred Stock of the Company (the "Series E Preferred") for an aggregate investment amount of $2,000,000.

Pursuant to the Series E Certificate of Designation, Series E Preferred Stock is redeemable at the option of the holder in the event that the Company is prohibited from issuing shares of common stock to a holder upon any conversion due to insufficient shares of common stock available ("Authorized Failure Shares") and therefore meets the criteria of a contingently redeemable instrument in accordance with ASC 480-10-25-7 – *Distinguishing Liabilities from Equity*. The Series E Preferred Stock is contingently redeemable upon the occurrence of an event that is outside of the issuer's control and is classified as temporary equity pursuant to ASC 480-10-S99.

Further the Series E Preferred Stock is an equity host instrument since it has more features that align with an equity instrument than a debt instrument pursuant to ASC 815-15-25-17A – *Derivatives and Hedging*, which states in part that "*the nature of the host contract depends on the economic characteristics and risks of the entire hybrid financial instrument."* All of the contractual and implied terms of the preferred share, such as the existence of a redemption feature or conversion option, should be considered when determining the nature of the host instrument as debt or equity. The Series E Preferred Stock embedded conversion feature (call option) is considered clearly and closely related to the equity host. Accordingly, further analysis under ASC 815-40-15 is not necessary and the embedded conversion feature should not be bifurcated from the host instrument. The Series E Preferred Stock redemption feature (put option) does not meet all the criteria under ASC 815-10-15-83, therefore it does not qualify as a derivative.

To determine whether the Series E Preferred Stock contains a BCF, we compared the effective conversion price and the Company's stock price on the commitment date. The effective conversion price was calculated by dividing the proceeds from Series E Preferred Stock by the number of common shares issuable upon conversion of the Series E Preferred Stock. The BCF is measured as the difference between the commitment date stock price and the effective conversion price multiplied by the number of common stock issuable upon conversion of Series E. The BCF is limited to the total cash proceeds received if the amount of the BCF exceeds the cash proceeds received. In connection with the issuance of Series E Preferred Stock, during the year ended September 30, 2020, the Company recognized a beneficial conversion feature in the amount of $2,000,000 which was accounted for as a deemed dividend.

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.

On November 29, 2022, the Company entered into Securities Exchange Agreements with related party preferred stockholders, whereby related party holders of 1,000 shares of Series E preferred stock with a stated value of $2,000,000 and accrued dividends payable of $66,630 were exchanged for the New Related Party Debentures. (See Note 6).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

During the three months ended December 31, 2022 and 2021, the Company incurred $26,301 and $40,329 of Series E dividends. As of December 31, 2022 and September 30, 2022, dividend payable balances were $0 and $40,329, respectively, reflected in the accompanying unaudited balance sheets as accrued liabilities instead of temporary equity.

As of December 31, 2022 and September 30, 2022, the Company had 0 and 1,000 shares of Series E Preferred Stock issued and outstanding classified as temporary equity in the accompanying unaudited balance sheets, respectively.

**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.

● 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.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

On July 30, 2021, the Company entered into a Securities Purchase Agreement (the "SPA") with an affiliated investor, who is a beneficial shareholder, to purchase an aggregate amount of 500 shares of Series F Convertible Preferred Stock (the "Series F Preferred") with accompanying warrant for 63,897,764 of common stock (the "Warrant"), for total proceeds of $1,000,000 (see Note 9). The Series F Preferred Stock has a stated value of $2,000 per share and shall accrue monthly in arrears, dividends at the rate of 8% per annum on the stated value. The dividends shall be paid monthly at the option of the holder of 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 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 63,897,764 Warrant was valued using the relative fair value method at $957,192 and the Series F Preferred stock had a grant date fair value $42,808 which was recorded as a BCF.

In accordance with ASC 470 – Debt, the proceeds of $1,000,000 was allocated based on the relative fair values of the Series F preferred stock and the Warrant of $42,808 and $957,192, respectively. Although ASC 470 is for debt instruments issued with warrants, preferred shares issued with warrants should be accounted for in a similar manner.

Pursuant to the Series F Certificate of Designation, Series F Preferred Stock is redeemable at the option of the holder in the event that the Company is prohibited from issuing shares of common stock to a holder upon any conversion due to insufficient shares of common stock available ("Authorized Failure Shares") and therefore meets the criteria of a contingently redeemable instrument in accordance with ASC 480-10-25-7 – *Distinguishing Liabilities from Equity*. The Series F Preferred Stock is contingently redeemable upon the occurrence of an event that is outside of the issuer's control and should be classified as temporary equity pursuant to ASC 480-10-S99. Further the Series F Preferred Stock is an equity host instrument since it has more features that align with an equity instrument than a debt instrument pursuant to ASC 815-15-25-17A – *Derivatives and Hedging*, which states in part that "*the nature of the host contract depends on the economic characteristics and risks of the entire hybrid financial instrument."* All of the contractual and implied terms of the preferred share, such as the existence of a redemption feature or conversion option, should be considered when determining the nature of the host instrument as debt or equity. The Series F Preferred Stock embedded conversion feature (call option) is considered clearly and closely related to the equity host. Accordingly, further analysis under ASC 815-40-15 is not necessary and the embedded conversion feature should not be bifurcated from the host instrument. The Series F Preferred Stock redemption feature (put option) does not meet all the criteria under ASC 815-10-15-83, therefore it does not qualify as a derivative.

To determine whether the Series F Preferred Stock contains a BCF, we compared the effective conversion price and the Company's stock price on the commitment date. The effective conversion price was calculated by dividing the proceeds from Series F Preferred Stock by the number of common shares issuable upon conversion of the Series F Preferred Stock. The BCF is measured as the difference between the commitment date stock price and the effective conversion price multiplied by the number of common stock issuable upon conversion of Series F. The BCF is limited to the total cash proceeds received if the amount of the BCF exceeds the cash proceeds received. In connection with the issuance of Series F Preferred Stock, during the year ended September 30, 2021, the Company recognized a BCF in the amount of $42,808 which was accounted for as a deemed dividend.

The relative fair value of the warrant of $957,192 was recorded as a discount associated with the Series F preferred stock and was fully amortized immediately because the Series F preferred stock was convertible on the date of issuance. The Company recorded the $957,192 as deemed dividend.

On November 29, 2022, the Company entered into Securities Exchange Agreements with related party preferred stockholders, whereby related party holders of 500 shares of Series F preferred stock with a stated value of $1,000,000 and accrued dividends payable of $33,315 were exchanged for the New Related Party Debentures (See Note 6).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

During the three months ended December 31, 2022 and September 30, 2022, the Company also recorded dividends related to the Series F Preferred Stock in the amount of $13,151 and $20,164. As of December 31, 2022 and September 30, 2022, dividend payable balances were $0 and $20,164, respectively, reflected in the accompanying unaudited balance sheets as accrued liabilities instead of temporary equity.

As of December 31, 2022 and September 30, 2022, the Company had 0 and 500 shares of Series F Preferred Stock issued and outstanding classified as temporary equity in the accompanying unaudited balance sheets, respectively.

**Stock Options**

On April 28, 2020, the Board approved the 2020 Equity Incentive Plan ("2020 Plan"), as amended on May 29, 2020. On April 18, 2022, the Board terminated the 2020 Plan and any shares reserved thereunder are no longer subject to reservation and the Company had no options issued and outstanding under the 2020 Plan.

On April 18, 2022, the Company's Board and the shareholders approved the 2022 Equity Incentive Plan ("2022 Plan") at which time the plan became effective. Upon the effective date of the 2022 Plan, 1,915,000,000 shares of the Company's common stock were reserved for issuance under the 2022 Plan ("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) shall be at least the fair market value of a share on the grant date; provided, however, that in the event that a grantee is a 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, in no case shall the option price of any option be less than the par value of a share.

On May 26, 2022, the Company's Board of Directors ("Board") approved the future granting of stock options under the 2022 Equity Incentive Plan, to various employees and consultants. On August 16, 2022, the Company granted stock options to purchase 1,901,410,519 common shares of the Company to various employees and consultants with an exercise price of $0.0036 per share. The options expire on August 15, 2032 and vest over varying vesting terms through August 2026. The fair value of these option grants was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 365.1%; risk-free interest rate of 2.82%; and an estimated holding period of 10 years. The Company valued these stock option at a fair value of $7,985,924 and will record stock-based compensation expense over the vesting periods.

During the three months ended December 31, 2022, in connection with the accretion of stock-based option expense over the vesting period, the Company recorded stock option expense of $612,173. As of December 31, 2022, there were 1,901,410,519 options outstanding and 1,380,407,725 options vested, subject to the filing of a registration on Form S-8 for the registration of the shares underlying such options. As of December 31, 2022, there was $1,358,129 of unvested stock-based compensation expense to be recognized through August 2026. The aggregate intrinsic value on December 31, 2022 was $0 and was calculated based on the difference between the quoted share price on December 31, 2022 of $0.0034 and the exercise price of the underlying options.

Stock option activities for the three months ended December 31, 2022 are summarized as follows:

SCHEDULE OF STOCK OPTION ACTIVITY

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br> Options** | **Weighted<br> Average<br> Exercise Price** | **Weighted Average<br> Remaining<br> Contractual<br> Term (Years)** | **Aggregate<br> Intrinsic<br> Value** |
| Balance Outstanding September 30, 2022 | 1901410519 | $0.0036 | 9.88 | $- |
| Granted | - | - |  | - |
| Balance Outstanding December 31, 2022 | 1901410519 | $0.0036 | 9.63 | $0 |
| Exercisable, December 31, 2022 | 1380407725 (a) | $0.0036 | 9.63 | $0 |
| Balance Non-vested on September 30, 2022 | 547666344 | $0.0036 | 9.88 | $- |
| Granted |  |  |  |  |
| Vested during the period | (26663550) | 0.0036 | - | - |
| Balance Non-vested on December 31, 2022 | 521002794 | $0.0036 | 9.63 | $0 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(a) These
 vested options are only exercisable upon the company filing an S-8 to register the underlying shares.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

**Warrants**

*Legacy Warrants* 

On May 12, 2021, in connection with the issuance of a convertible note, the Company issued a Warrant to purchase up to 63,897,764 shares of common stock at an exercise price of $0.00313 per share (subject to adjustment as provided therein) until May 12, 2026 (see Note 6). The Warrants are exercisable for cash at any time. The Warrant was valued at $984,200 using the relative fair value method was recorded as debt discount which was being amortized over the life of the convertible note.

On July 30, 2021, the Company, in connection with the issuance of 500 shares of Series F preferred stock, issued a Warrant to purchase up to 63,897,764 shares of common stock 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 Warrant was valued at $957,192 using the relative fair value method and was recorded as deemed dividend.

On November 1, 2021, the Company issued the First November 2021 Warrants to purchase an aggregate of 54,644,811 shares of common stock. The First 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 First November 2021 Warrants were valued at $990,048 using the relative fair value method and were recorded as a debt discount which was 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 was 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 was 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 cashless-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 was being amortized over the life of the First November 2021 Notes (see Note 6). These warrants were 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 cashless-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 was being amortized over the life of the Second November 2021 Notes (see Note 6). These warrants were 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 cashless-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 was being amortized over the life of the Third November 2021 Notes (see Note 6). These warrants were 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 was being amortized over the life of the First January 2022 Note (see Note 6).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

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 was being amortized over the life of the Second January 2022 Note (see Note 6).

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 was 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 was being amortized over the life of the First April 2022 Note (see Note 6 and Note 8).

During April 2022, the Company issued the Second April 2022 Warrants to purchase an aggregate of 17,857,144 shares of common stock. The Second April 2022 Warrants are exercisable 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 was 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 aggregate of 42,016,808 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 $178,449 using the relative fair value method and were recorded as debt discount which was being amortized over the life of the May 2022 Notes (see Note 6 and Note 8).

On June 15, 2022, the Company issued the June 2022 Warrants to purchase 2,100,840 shares of common stock. The June 2022 Warrants are exercisable at any time at a price equal to $0.00476 per share (subject to adjustment) until April 1, 2027. 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 (see Note 6 and Note 8).

On July 1, 2022, the Company issued the July 2022 Warrants to purchase an aggregate of 2,100,840 shares of common stock. The July 2022 Warrants are exercisable at any time at a price equal to $0.00476 per share (subject to adjustment) until April 1, 2027. The July 2022 Warrants were valued at $8,190 using the relative fair value method and were recorded as debt discount which was being amortized over the life of the July 2022 Notes (see Note 6).

On November 29, 2022, in connection with the Share Exchange Agreements and New Convertible Debt discussed below, the May 2021 Warrants, First November 2021 Warrants, First April 2022 Warrants, May 2022 Warrants, and June 2022 Warrants, aggregating 385,441,138 warrants, were amended to reduce the exercise price to $0.003 per share. Additionally, 63,897,764 warrants issued in connection with Series F preferred stock were amended to reduce the exercise price to $0.003 per share. All other terms of the warrants remained the same. As a result of the November 29, 2022 amendment to the exercise price, the Company calculated the difference between the warrants fair values on November 29, 2022, the date of the amendment, using the then current exercise price ranging from $0.00366 to $0.00476 and the new exercise price of $0.003 and determined that the difference was insignificant. (See Note 6).

On November 29, 2022, in connection with the Share Exchange Agreements and New Convertible Debentures discussed in Note 6, the Second November 2021 Warrants, Third November 2021 Warrants, January 2022 Warrants, Second January 2022 Warrants, Second April 2022 Warrants, and the July 2022 Warrants, aggregating 566,406,072 warrants, were amended to reduce the exercise price to $0.003 per share. Additionally, 16,393,443 warrants issued to a placement agent in January 2022 were amended to reduce the exercise price to $0.003 per share. In conjunction with the price reduction, the price protection feature for all these warrants was eliminated. All other terms of the warrants remained the same. As a result of the November 29, 2022 amendment to the exercise price, the Company calculated the difference between the warrants fair values on November 29, 2022, the date of the amendment, using the then current exercise price ranging from $0.00366 to $0.00476 and the new exercise price of $0.003 and determined that the difference was insignificant. (See Note 6).

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

*New Warrants*

In connection with the Securities Exchange Agreements with related parties for the exchange of the convertible notes and preferred shares for the New Related Party Debentures, as discussed in Note 6, the Company issued an aggregate of 2,564,340,702 warrants. The Warrants are exercisable for five years and six months from the earlier of the maturity date of the New Related Party Debentures and the closing of the Qualified Financing, at an exercise price equal to (i) in the event that a Qualified Offering is consummated prior to the exercise of the Warrant, the Qualified Offering Price, or (ii) in the event that no Qualified Offering has been consummated, the lower of: (A) $0.003 per share and (B) an amount equal to 70% of the average of the VWAP (or 50% of the average of the VWAP if an event of default has occurred and has not been cured) for the Common Stock over the ten Trading Days preceding the date of the delivery of the applicable exercise notice. If there is no effective registration statement covering the resale of the shares underlying the Warrants within 180 days following the closing of the Qualified Offering: (i) exercise may be via cashless exercise, and (ii) 5% additional Warrants will be issued by the Company to the holders for any portion of each month without such effective registration statement, up to a maximum of 25%. The Warrants contain certain price protection provisions providing for adjustment of the amount of securities issuable upon exercise of the Warrants in case of certain future dilutive events or stock-splits and dividends.

In connection with the Securities Exchange Agreements with investors for the exchange of the convertible notes and preferred shares for the New Debentures, as discussed in Note 6, the Company issued an aggregate of 2,269,030,092 warrants to investors. The Warrants are exercisable for five years and six months from the earlier of the maturity date of the New Debentures and the closing of the Qualified Financing, at an exercise price equal to (i) in the event that a Qualified Offering is consummated prior to the exercise of the Warrant, the Qualified Offering Price, or (ii) in the event that no Qualified Offering has been consummated, the lower of: (A) $0.003 per share and (B) an amount equal to 70% of the average of the VWAP (or 50% of the average of the VWAP if an event of default has occurred and has not been cured) for the Common Stock over the ten Trading Days preceding the date of the delivery of the applicable exercise notice. If there is no effective registration statement covering the resale of the shares underlying the Warrants within 180 days following the closing of the Qualified Offering: (i) exercise may be via cashless exercise, and (ii) 5% additional Warrants will be issued by the Company to the holders for any portion of each month without such effective registration statement, up to a maximum of 25%. The Warrants contain certain price protection provisions providing for adjustment of the amount of securities issuable upon exercise of the Warrants in case of certain future dilutive events or stock-splits and dividends.

In connection with the Initial Closing of the private placement, the Company and Gunnar, entered into the Placement Agency Agreement, pursuant to which Gunnar agreed to act as the Placement Agent. Pursuant to the terms of the Placement Agency Agreement, Gunner received 124,489,795 warrants. Additionally, the Company issued 16,000,000 warrants to a consultant in connection with the private placement offering.

Warrants activities for the three months ended December 31, 2022 is summarized as follows:

SCHEDULE OF WARRANTS

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |<br>**Number of**<br>**Warrants** | **Weighted**<br>**Average**<br>**Exercise**<br>**Price** | **Weighted**<br> **Average Remaining**<br>**Contractual**<br>**Term**<br>**(Years)** |<br>**Aggregate**<br>**Intrinsic**<br>**Value** |
| Balance Outstanding on September 30, 2022 | 1888813005 | $0.003 | 3.26 | $1140362 |
| Issued in connection with a New Related Party Debentures (see Note 6) | 2564340702 | 0.003 |  |  |
| Issued in connection with a New Debentures (see Note 6) | 2269030092 | 0.003 |  |  |
| Issued to placement agent and consultant in connection with New Related Party and New Debentures (see Note 6) | 140489795 | 0.003 |  |  |
| Balance Outstanding on December 31, 2022 | 6862673594 | $0.0025 | 5.48 | $8731840 |
| Exercisable on December 31, 2022 | 6662673594 | $0.0025 | 5.56 | $8551840 |

---

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

**NOTE 10 – <u>COMMITMENTS AND CONTINGENCIES</u>**

**Employment Agreements**

***Michael Ruxin, M.D.***

On June 5, 2020, the Company and Dr. Michael 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.

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 $300,000 and will be eligible for an annual discretionary bonus of 150% of such base salary. In the Ruxin Employment Agreement, Dr. Ruxin is entitled to, subject to the approval of the Board or a committee thereof, and under the 2022 Plan (i) a one-time grant of 49,047,059 Restricted Stock Units ("RSUs") and (ii) a one-time grant of options to purchase 420,691,653 shares of common stock, In lieu of 49,047,059 RSU's, on August 16, 2022, the Company granted 49,047,059 stock option plus the one-time grant of 420,691,653 stock options for an aggregate amount of 469,738,712 stock options with an exercise price of $0.0036 and an expiration date of August 15, 2032 and subject to vesting terms. 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. For the period of May 2021 through November 2021 and from August 15, 2022 to September 30, 2022, Dr. Ruxin deferred 50% of his salary. As of December 31, 2022 and September 30, 2022, the Company had accrued payroll related to Dr. Ruxin's salary deferment of $125,000 and $112,500, respectively.

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 by* his 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 Company and in such other positions as may be assigned from time to time by the board of 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 $60,000 and will be eligible for an annual discretionary bonus. In the Busch Employment Agreement, Mr. Busch is entitled to, subject to the approval of the Board or committee thereof, and under the 2020 Plan (i) a one-time grant of 49,047,059 Restricted Stock ("RSUs") and (ii) a one-time grant of options to purchase 420,691,653 shares of common stock. In lieu of 49,047,059 RSU's, on August 16, 2022, the Company granted 49,047,059 stock option plus the one-time grant of 420,691,653 stock options for an aggregate amount of 469,738,712 stock options with an exercise price of $0.0036 and an expiration date of August 15, 2032 and subject to vesting terms. 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 December 31, 2022 and September 30, 2022, the Company had accrued director compensation of $207,500 and $192,500, respectively.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

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 by* his 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.

***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 $225,000 per year. 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 which were granted on August 16, 2022 with an exercise price of $0.0036 and an expiration date of August 15, 2032 and subject to vesting terms.

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 was 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. On December 6, 2022, the Board approved a bonus compensation plan pursuant to which Thomas E. Chilcott, III, the Company's Chief Financial Officer, was eligible for: (i) a $150,000 bonus payable upon the successful filing of the Company's report on Form 10-K for the annual period ended September 30, 2022 (the " Annual Report ") on or before December 29, 2022; or (ii) a $100,000 bonus payable upon the successful filing of the Company's Annual Report on or before January 13, 2023 (collectively, the "Bonus"). During the three months ended December 31, 2022, an aggregate bonus of $150,000 was paid to Mr. Chilcott.

***Faith Zaslavsky***

On December 5, 2022, the Company appointed Faith Zaslavsky, age 48, as President and Chief Operating Officer of the Company, effective December 5, 2022 (the "Effective Date"). In connection with her appointment, on December 5, 2022, the Company and Ms. Zaslavsky entered into an offer letter (the "Offer Letter") which provides that Ms. Zaslavsky's base salary will be $400,000 per year, and that beginning in calendar year 2023 she will be eligible to receive an annual incentive cash bonus of up to 35% of base salary at the discretion of the Board for the achievement of certain milestones to be agreed upon by Ms. Zaslavsky and the Company within 90 days of the Effective Date. Upon the Company's creation of a new equity incentive plan or an increase in the number of shares available under the Company's existing equity incentive plan, Ms. Zaslavsky will be granted 150,000,000 employee stock options vesting at 20% annually, beginning on the Effective Date. The employee stock options will have a strike price equal to the closing price of the Company's common stock on the day that the Board approves Ms. Zaslavsky's stock option package. Ms. Zaslavsky is eligible to participate in the benefit plans and programs generally available to the Company's employees. Ms. Zaslavsky will also be entitled to reimbursement of reasonable business expenses incurred or paid by her in the performance of her duties and responsibilities for the Company, subject to any restrictions set by the Company from time to time and to such reasonable substantiation and documentation as may be specified by the Company from time to time. Ms. Zaslavsky's employment with the Company is "at-will", and either party can terminate the employment relationship at any time, for or without cause, with or without notice. The Offer Letter also contains standard restrictive covenants prohibiting Ms. Zaslavsky from engaging in competition with the Company within the United States during her employment and for a period of 24 months following the termination of her employment with the Company.

**Consulting Agreements**

On July 5, 2020, the Company and a consultant entered into a Scientific Advisory Board Service Agreement ("Scientific Advisory Agreement") which provides for; (i) $2,000 monthly compensation; (ii) 88,786,943 stock options under the 2022 Plan, which were granted on August 16, 2022 with an exercise price of $0.0036 and an expiration date of August 15, 2032 and subject to vesting terms and; (iii) $1,500 per 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' written notice to the other party unless either party neglects or fails to perform its obligations under the Scientific Advisory Agreement; then the termination notice shall be effective upon receipt of the same.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

On July 5, 2020, the Company and a consultant entered into a Pathology Advisory Board Service Agreement (the "Pathology Advisory Agreement") which provides for; (i) $272 monthly compensation; (ii) 77,972,192 stock options under the 2022 Plan, which were granted on August 16, 2022 with an exercise price of $0.0036 and an expiration date of August 15, 2032 and subject to vesting terms and; (iii) $1,500 per 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' written notice to the other party unless either party neglects or fails to perform its obligations under the Pathology Advisory Agreement; then the termination notice shall be effective upon receipt of the same.

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 December 31, 2022 and September 30, 2022, the Company had an accounts payable – related payable balance of $6,000 and $12,000 related to this consulting agreement, respectively (See Note 8).

**License Agreements**

***GMU License Agreement***

In September 2006, the Company entered into an exclusive 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' prior notice. In addition, the Company is required to make an annual payment of $50,000 to 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 December 31, 2022 and September 30, 2022, the Company has accrued royalty fees of $2,526 and $2,443, respectively, reflected in the accompanying unaudited balance sheet in accrued liabilities.

***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 $1,000 to the NIH as well as pay the NIH a royalty equal to the net sales multiplied by three percent (3.0%) every June 30<sup>th</sup> and December 31<sup>st</sup>. Commencing on January 1<sup>st</sup> of the year following the year of the first commercial sale, the Company is subject to a non-refundable minimum annual royalty of $5,000. In addition, a sublicense royalty equal to the net revenue multiplied by ten percent (10%) will be payable upon sublicensing. As of December 31, 2022 and September 30, 2022, the Company has accrued royalty fees of $0.

**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 61 months, with an option to extend, commencing in February 2020 and expiring in February 2025 (see Note 7).

On June 10, 2021, the Company entered into an amendment to its existing Warehouse Lease ("Lease Amendment"), effective October 3, 2021, for its laboratory facility in Golden, CO (see Note 7). The Lease Amendment provided for: (i) 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) an expansion of the premises to include the premises located at Unit 404, Building F, 15000 West 6<sup>th</sup> Avenue, Golden, Colorado 80401, consisting of approximately 4,734 rentable square feet (the "Expansion Premises"); (iii) an annual base rent modification; (iv) an increase to the security deposit; (v) tenant improvement allowance; (vi) additional parking and; (vii) two renewal options, each for five year terms, for a total of ten years.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

Pursuant to the Lease Amendment, the Company must pay a total annual base rent of; (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.

**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 December 31, 2022 and September 30, 2022, the Company has recorded a contingent liability of $80,240 and $78,440, respectively, resulting from certain liabilities of Avant prior to the asset sale and recapitalization transaction (see Note 1). The contingent liabilities consisted of two notes payables with a total outstanding principal balance of $40,000 as of December 31, 2022 and September 30, 2022 and accrued interest payable of $40,240 and $38,440 as of December 31, 2022 and September 30, 2022, respectively.

**Legal Action**

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.

On August 16, 2022, Erika Singleton filed a complaint against the Company in the Eighth Judicial District Court, Clark County, Nevada, Case No. A-22-857038-C. Plaintiff alleges that the Company did not provide her with physical stock certificates for 200,000 shares of common stock Plaintiff purchased for $2,000 in 2017. Based on these and other allegations, Plaintiff asserts claims against the Company for breach of contract, violation of Florida securities law, fraud, and unjust enrichment. The court has set the hearing on our motion to dismiss for <u>March 23, 2022.</u> The Plaintiff has until March 2, 2023 to file her opposition to our motion to dismiss and we will then have until March 16, 2023 to file our reply.

**NOTE 11 – <u>SUBSEQUENT EVENTS</u>**

On January 27, 2023, the Company consummated the second closing (the "Second Closing") of the Offering pursuant to the terms and conditions of that certain Purchase Agreement, dated as of November 29, 2022, by and among the Company, certain accredited investors (the "Second Closing Purchasers") and Cavalry Fund I Management LLC, a Delaware limited liability company, in its capacity as Collateral Agent. At the Second Closing, the Company sold the Purchasers (i) New Debentures in an aggregate principal amount of $1,045,000 and (ii) Warrants to purchase up to 298,571,429 shares of Common Stock, subject to adjustments provided by the Warrants, which represents 100% warrant coverage. The Company received a total of $950,000 in gross proceeds at the Second Offering, taking into account the 10% original issue discount, before deducting offering expenses and commissions.

The Purchase Agreement contains customary representations, warranties, and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company without the prior written consent of the Debenture holders, to incur additional indebtedness, and repay outstanding indebtedness, create or permit liens on assets, redeem its Common Stock, settle outstanding litigation, or enter into transactions with affiliates.

Pursuant to the terms of the Placement Agency Agreement, the Company agreed to (i) pay Gunnar a cash placement fee of 10% of the gross cash proceeds raised in the Second Offering, and (ii) issue to Gunnar additional PA Warrants on the terms identical to the Warrants sold in the Second Offering in an amount equal to 10% of the New Debentures sold to Second Closing Purchasers. As a result of the foregoing, the Company paid Gunnar an aggregate commission of $95,000 in connection with the Second Closing. The Company also paid $7,500 in fees to Gunnar's legal counsel.

**THERALINK TECHNOLOGIES, INC.** 

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022** 

**(UNAUDITED)**

The New Debentures mature on November 29, 2023, subject to a three-month extension at the sole discretion of the Company. The New Debentures bear interest at 10% per annum payable upon conversion or maturity. The Debentures are convertible into shares of Common Stock at any time after the maturity date and prior to Mandatory Conversion (as defined below) at the conversion price equal to the lesser of: (i) $0.003 per share and (ii) 70% of the average of the VWAP (as defined in the Debentures) (or 50% of the average of such VWAP if an event of default has occurred and has not been cured) of the Common Stock during the ten Trading Day (as defined in the New Debentures) period immediately prior to the applicable conversion date. The New Debentures are subject to Mandatory Conversion in the event the Company closes a Qualified Offering. The conversion price per share of Common Stock in the case of a Mandatory Conversion shall be the Qualified Offering Price. Alternatively, upon a Mandatory Conversion, the holders of the New Debentures may elect to exchange their Debentures for newly issued convertible preferred securities at a price per share equal to the Qualified Offering Price or the five-day VWAP of the Common Stock prior to the date that is 181 days after the closing of the Qualified Offering.

Notwithstanding the preceding, holders of New Debentures shall have the right to require satisfaction of up to 40% of all amounts outstanding under the New Debentures, in cash, at the time of a Qualified Financing. Investors that are exchanging shareholders shall have the right to require satisfaction of up to 10% of all amounts outstanding under the Debentures, in cash, at the time of a Qualified Financing. The New Debentures also contain certain price protection provisions providing for adjustment of the number of shares of Common Stock issuable upon conversion of the Debentures in case of certain future dilutive events or stock-splits and dividends.

The Company's obligations under the Purchase Agreement and the New Debentures are secured by a first priority lien on all of the assets of the Company pursuant to that certain Security Agreement, dated November 29, 2022 (the "Security Agreement") by and among the Company, the Purchasers and the Collateral Agent.

In connection with the issuance of the Underlying Securities discussed above, the Company determined that the terms of the Debentures and Warrants contain an embedded conversion option to be accounted for as derivative liabilities due to the holder having the potential to gain value upon conversion and provisions which includes events not within the control of the Company. In accordance with ASC 815-40 -*Derivatives and Hedging - Contracts in an Entity's Own Stock*, the embedded conversion option contained in the Debentures and the Warrants shall be accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through earnings at each reporting date. The fair value of the embedded conversion options will be determined using the Binomial Lattice valuation model. At the end of each period and on Debenture conversion date or repayment, the Company revalues the derivative liabilities resulting from the embedded option.

**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, 2022, Annual Report on Form 10-K.*

***Overview***

The Company is a commercial-stage, precision medicine, molecular data-generating company that focuses on the development and commercialization of a series of proprietary data-generating assays that may provide important actionable information for physicians, patients and biopharmaceutical companies, in the area of oncology. The Company's objective is to commercialize the technology originally developed by Theranostics Health, Inc. This technology is differentiated due to:

● An exclusive license agreement with George Mason University ("GMU").

● A patent portfolio licensed from GMU and the National Institute of Health ("NIH").

● Access to GMU's well-published subject matter experts and their pioneering work in phosphoproteomic-based biomarker diagnostics.

● Expertise in cancer biomarker and data-generating laboratory testing data.

● Development of proprietary, cutting-edge assays focused on precision oncology care.

● Building revenue streams based on our proprietary technology.

Theralink is advancing proprietary technology in the field of phosphoproteomic research, a sector which has emerged as one of the most exciting new components in the high-growth field of precision molecular diagnostics. This technology is intended to make it possible to generate an accurate and comprehensive portrait of protein pathway activation in diseased cells from each patient, which may enable providers to identify and match individuals with optimal targeted molecular therapies. This technology enables the quantitative measurement of the active protein(s) in cancer cells and their level of activation. We believe the technology's measurement sensitivity is many times greater than conventional mass spectrometry and other protein immunoassays. Initially spun-out from GMU in 2006, and subsequently elevated to the federal government's Center for Medicare & Medicaid Services' ("CMS") and Clinical Laboratory Improvement Amendments ("CLIA") standards, Theralink's assay may prove highly useful for oncology patient management by improving (i) chemotherapy drug selection; (ii) immunotherapy drug selection; and (iii) optimizing combination therapy selection.

The biomarker and data-generating tests provide biopharmaceutical companies, clinical scientists and physicians with molecular-based guidance as to which patients may benefit from new molecular targeted therapeutics being developed for use in treating various life-threatening oncology diseases. These tests may also provide guidance to physicians on existing treatment standards that are recognized as the standard of care in the oncology treatment community. This addresses the core aspect of precision oncology treatment by 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 precision medicine. Theralink benefits 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"), which provides the Company 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 phosphoproteomics products.

Theralink is committed to advancing the technology from GMU and the NIH as a platform for the development of new clinical biomarkers. These biomarkers and monitoring products may have the ability to provide biopharmaceutical companies and doctors with critical molecular-based knowledge to potentially 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:***

● Hiring additional lab techs and sales consultants;

● Choosing members to sit on our Clinical and Scientific Advisory Boards;

● Continuing to validate additional Theralink cancer biomarker technology under CAP/CLIA standards for a pan tumor assay to provide personalized medicine regarding treatment options for biopharmaceutical companies, clinical oncologists and their cancer patients;

● Continuing to partner with pharmaceutical companies to perform oncology-related data-generating testing services which may generate additional revenues and

● Continuing to seek financing to grow the Company.

***Appointment of New Directors and Officers***

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.

On December 5, 2022, we appointed Faith Zaslavsky as President and Chief Operating Officer of the Company. Prior to joining the Company, Ms. Zaslavsky served as the President of Oncology of Myriad Genetics, Inc. Ms. Zaslavsky served Myriad in several roles for the past 22 years, and prior to serving as Myriad's President of Oncology, Ms. Zaslavsky served as Myriad's National Sales Director of Oncology from 2017 to 2019 and a Regional Sales Director of Women's Health from 2015 to 2017.

**Results of Operations**

**Comparison for the Three Months Ended December 31, 2022 and 2021**

***Revenue***

● During
 the three months ended December 31, 2022 and 2021, we generated revenues of $55,295 and $78,975, respectively, a decrease of
 $23,680, or 30%. The decrease was primarily attributable to a decrease in services performed under research and development
 contracts for pharmaceutical companies.

***Costs of Revenues***

● During the three months ended December 31, 2022 and 2021, we incurred cost
of revenue of $10,818 and $43,565, respectively, a decrease of $32,747, or 75%. The decrease in the fiscal 2023 period cost of revenue
as a percentage of revenue over the fiscal 2022 period was because in the fiscal 2022 period, the Company was required to purchase expensive
third-party samples for certain pharmaceutical contracts. This increased cost significantly decreased the gross profit for the fiscal
2022 period.

***Gross Margin***

● For the three months ended December 31, 2022 and 2021, gross profit was
$44,477 and $35,410, respectively, an increase of $9,067, or 26% which represents a gross margin of 80% in the fiscal 2023 period versus
45% in the fiscal 2022 period. The increase was primarily attributable to the decrease in revenue and decrease in cost of revenue discussed
above.

***Operating Expenses***

For the three months ended December 31, 2022 and 2021, operating expenses consisted of the following:

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| | | |
|:---|:---|:---|
|  | **For the Three Months Ended**<br> **December 31,** | **For the Three Months Ended**<br> **December 31,** |
|  | **2022** | **2021** |
| Professional fees | $387438 | $217823 |
| Compensation expense | 1752699 | 625855 |
| Licensing fees | 31637 | 36092 |
| General and administrative expenses | 448493 | 537656 |
| Total | $2620267 | $1417426 |

---

Professional fees:

● For the three months ended December 31, 2022, professional fees increased by $169,615, or 78%, as compared to the three months ended December 31, 2021. The increase was primarily attributable to an increase in stock-based consulting fees of $64,946 related to accretion of stock option expense from the issuance of stock options to consultants in August 2022, an increase in legal fees of $31,073, an increase in accounting fees of $10,162, an increase in consulting fees of $54,129, and an increase in other professional fees of $9,305.

Compensation expense:

● For the three months ended December 31, 2022, compensation expense increased by $1,126,844, or 180%, as compared to the three months ended December 31, 2021. The increase was primarily attributable to an increase in stock-based compensation of $547,227 related to accretion of stock option expense from the issuance of stock options to employees in August 2022, and an increase in administrative compensation and related employee benefits and expenses resulting from additional employees being hired and a bonus paid to our CFO.

Licensing fees:

● For the three months ended December 31, 2022, licensing fees decreased by $4,455, or 12%, as compared to the three months ended December 31, 2021. Licensing fees are mainly for the lab software, the GMU license and state licenses. During 2022, the Company obtained licenses from numerous states to conduct business as a certified lab. The expanded national footprint is the driving force behind the fluctuations in licensing fees.

General and administrative expenses:

● For the three months ended December 31, 2022, general and administrative expenses decreased by $89,163, or 17%, as compared to the three months ended December 31, 2021. The decrease was primarily due to a decrease in laboratory and biological supplies expense of approximately $20,900 due to a decrease in breast cancer research and development, and a decrease in sample analysis services expense of approximately $113,295 due to the termination of our relationship with our service provider and bringing this function in-house. These decreases were offset by an increase in samples expense of $25,000 for research and development, an increase in travel expense of $13,979, and increases in other general and administrative expenses.

***Loss from Operations***

For the three months ended December 31, 2022, loss from operations amounted to $2,575,790 as compared to $1,382,016 for the three months ended December 31, 2021, an increase of $1,193,774, or 86%. The increase was primarily a result of the increase in operating expenses discussed above.

***Other Income (Expenses), net***

For the three months ended December 31, 2022 and 2021, total other expenses, net amounted to $33,880,557 and $130,251, respectively, an increase of $33,750,306. The change was primarily due to an increase in interest expense of $1,713,534 resulting from additional debt incurred in 2023 and an increase in amortization of debt discount, an increase in unrealized loss on market securities of $7,400, an increase in loss on debt extinguishment of $5,434,447 resulting from the exchange of convertible notes and preferred stock to new debentures on November 29, 2022, an increase in settlement expense of $200,000, and an increase in derivative expense of $26,397,075 resulting from the treatment of the new debentures and warrants as derivative liabilities.

***Preferred Stock Dividend and Deemed Dividend***

For the three months ended December 31, 2022, we recorded dividends for the Series E Preferred stock and Series F Preferred stock in the amount of $26,301 and $13,151, respectively, for a total of $39,452 of preferred stock dividends.

For the three months ended December 31, 2021, we recorded dividends for the Series E Preferred stock and Series F Preferred stock in the amount of $40,329 and $20,164, respectively, for a total of $60,493 of preferred stock dividends.

***Net Loss Attributed to Common Stockholders***

For the three months ended December 31, 2022, net loss attributed to common stockholders amounted to $36,495,799, or $(0.01) per share (basic and diluted) compared to net loss attributed to common stockholders of to $1,572,760, or $(0.00) per share (basic and diluted), for the three months ended December 31, 2021, an increase of $34,923,039. The increase was a result of the changes in operating expenses and other expenses, net discussed above.

**Liquidity and Capital Resources**

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had a working capital deficit of $44,998,742 and $1,130,902 in cash as of December 31, 2022 and a working capital deficit of $2,808,736 and $393,460 in cash as of September 30, 2022.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,**<br> **2022** | **September 30,**<br> **2022** | **Net Change** | **Percentage**<br> **Change** |
| **Working capital (deficit):** |  |  |  |  |
| Total current assets | $1378620 | $646984 | $731636 | 113% |
| Total current liabilities | (46377362) | (3455720) | (42921642) | 1242% |
| Working capital (deficit): | $(44998742) | $(2808736) | $(42190006) | 1502% |

---

The decrease in working capital deficit was primarily attributable to the increase in current liabilities of $42,921,642 primarily related to an increase in derivative liabilities (non-cash) offset by an increase in current assets of $731,636.

**Cash Flows**

The following table sets forth a summary of changes in cash flows for the three months ended December 31 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**<br> **December 31,** | **Three Months Ended**<br> **December 31,** |
|  | **2022** | **2021** |
| Cash used in operating activities | $(1776349) | $(1494792) |
| Cash used in investing activities | (7980) |  |
| Cash provided by financing activities | 2521771 | 1595623 |
| Net change in cash | $737442 | $100831 |

---

***Net Cash Used in Operating Activities:***

Net cash used in operating activities was $1,776,349 for the three months ended December 31, 2022 as compared to $1,494,792 for the three months ended December 31, 2021, an increase of $281,557, or 19%.

● Net cash used in operating activities for the three months ended December 31, 2022 primarily reflected our net loss of $36,456,347 adjusted for the add-back of non-cash items such as depreciation expense of $50,479, non-cash lease cost of $6,514, accretion of stock options expense of $612,173, amortization of debt discount of $1,602,646, loss on debt extinguishment of $5,434,447, non-cash settlement expense of $200,000, and derivative expense of $26,397,075, and changes in operating assets and liabilities consisting primarily of an increase in accounts receivable of $16,170, a decrease in prepaid expenses and other current assets of $19,976, a decrease in accounts payable of $65,788, an increase in accrued liabilities and other liabilities of $416,146, and an increase in contract liabilities of $20,500.

● Net cash used in operating activities for the three months ended December 31, 2021 primarily reflected our net loss of $1,512,267 adjusted for the add-back of non-cash items such as depreciation expense of $47,557, non-cash lease cost of $7,379, amortization of debt discount of $92,019, gain on operating lease modification of $8,229, unrealized gain on marketable securities of $5,400 and changes in operating asset and liabilities consisting primarily of an increase in accounts receivable of $49,725, an increase in prepaid expenses and other current assets of $25,318, an increase in accrued liabilities and other liabilities of $28,484, and an increase in deferred revenue of $20,750 offset by a decrease in laboratory supplies of $49,356 and a decrease in accounts payable of $139,398.

***Net Cash Used in Investing Activities***

Net cash used in investing activities was $7,980 for the three months ended December 31, 2022 as compared to net cash used in investing activities of $0 for the three months ended December 31, 2021, an increase of $7,980, or 100%.

● Net cash used in investing activities for the three months ended December 31, 2022, resulted from the purchase of property and equipment of $7,980.

***Cash Provided by Financing Activities:***

Net cash provided by financing activities was $2,521,771 for the three months ended December 31, 2022 as compared to $1,595,623 for the three months ended December 31, 2021, an increase of $926,148, or 58%.

● Net cash provided by financing activities for the three months ended December 31, 2022 consisted of $416,562 of net proceeds from related party debentures, $2,118,088 of net proceeds from debentures, offset by repayment of $12,879 of financed leases.

● Net cash provided by financing activities for the three months ended December 31, 2021 consisted of proceeds from convertible debt – related party of $667,000 and convertible debt of $1,000,000 offset by payments of accrued dividends payable of $59,988 and repayment of financed lease of $11,389.

**Cash Requirements**

Our 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 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 unaudited financial statements, the Company had net loss and net cash used in operations of $36,456,347 and $1,776,349, respectively, for the three months ended December 31, 2022. Additionally, the Company had an accumulated deficit, stockholders' deficit and working capital deficit of $99,303,616, $44,302,919 and $44,998,742 on December 31, 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 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, convertible notes and convertible debentures, 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 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.

**Recent Financings**

***Convertible Debt – Related Parties***

On November 1, 2021, the Company entered into the First November 2021 SPA with the First November 2021 Investor, an affiliate stockholder, to purchase the First November 2021 Notes and the First November 2021 Warrants, for an aggregate investment amount of $1,000,000. The Company received $1,000,000 in aggregate proceeds from the First November 2021 Notes. As of September 30, 2022, the First November 2021 Notes had an outstanding principal of $1,000,000 and accrued interest of $20,164. On November 29, 2022, the First November 2021 Notes were exchanged for a new convertible debenture (see below).

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 September 30, 2022, the First April 2022 Note had an outstanding principal balance of $100,000 and accrued interest of $3,901. On November 29, 2022, the First April 2022 Note was exchanged for a new convertible debenture (see below).

On May 9, 2022, the Company entered into the May 2022 SPA with the May 2022 Investor, an affiliate stockholder, to purchase the May 2022 Notes and the May 2022 Warrants. The Company received $1,000,000 in aggregate proceeds from the May 2022 Notes. As of September 30, 2022, the May 2022 Notes had an aggregate outstanding principal balance of $1,000,000 and accrued interest of $20,110. On November 29, 2022, the May 2022 Note was exchanged for a new convertible debenture (see below).

On June 15, 2022, pursuant to the June 2022 SPA, Danica Holley, a member of the Board of Directors and a related party, purchased the June 2022 Note with a principal balance of $50,000 and 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. As of September 30, 2022, the June 2022 Note had an outstanding principal balance of $50,000 and accrued interest of $1,173. On November 29, 2022, the June 2022 Note was exchanged for a new convertible debenture (see below).

On July 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 a related party, for a principal balance of $125,000, and on September 2, 2022, the Company entered into a second Demand Promissory Note Agreement with Jeffrey Busch for a principal balance of $150,000 (collectively referred to as called the "Busch Notes"). As of September 30, 2022, the Busch Notes had an outstanding principal balance of $275,000 and accrued interest of $2,683 and are included in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, the Busch Notes were exchanged for a new convertible debenture (see below).

On August 11, 2022, the Company entered into a Demand Promissory Note Agreement with a related party, who is an affiliate stockholder, for a principal balance of $375,000. As of September 30, 2022, this note had an outstanding principal balance of $375,000 and accrued interest of $4,110 and is included in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, this note was exchanged for a new convertible debenture (see below).

On September 2, 2022, the Company entered into a Demand Promissory Note Agreement with a related party, who is an affiliate stockholder, for a principal balance of $350,000. As of September 30, 2022, this note had an outstanding principal balance of $350,000 and accrued interest of $2,148 and is included in the accompanying balance sheet as a short-term convertible note payable – related party. On November 29, 2022, this note was exchanged for a new convertible debenture (see below).

On November 29, 2022, the Company consummated the Initial Closing of the Offering pursuant to the terms and conditions of the Purchase Agreement, by and among, the Company, the , by and among the Company, the Related Party Purchasers and the Collateral Agent. At the Initial Closing, the Company sold the related party Purchasers (i) the New Related Party Debentures and (ii) the New Related Party Warrants to purchase up to 157,142,857 shares of Common Stock, subject to adjustments provided by the Warrants, which represents 100% warrant coverage. The Company received a total of $412,092 in net proceeds at the Initial Offering from the Related Party Purchasers, net of the Original Issue Discount of $50,000, commissions of $58,200 and other offering costs of $29,708.

On November 29, 2022, the Company entered into Securities Exchange Agreements, with the above related party investors, whereby the Exchanged Related Party Notes and accrued interest payable of $120,750 were exchanged for New Related Party Debentures. Additionally, on November 29, 2022, in order to induce the related party investors to exchange the respective convertible notes into the Related Party Debentures, the aggregate principal amount of the Exchanged Related Party Notes and accrued interest payable was increased by 15% (10% for the August 11, 2022 and September 2, 2022 Demand Promissory Notes), or $589,505, for new Related Party Debentures with an aggregate principal amount of $4,860,255.

On November 29, 2022, the Company entered into Securities Exchange Agreements, with related party preferred stockholders, whereby related party holders of 1,000 shares of Series E preferred stock with a stated value of $2,000,000 and accrued dividends payable of $66,630, and related party holders of 500 shares of Series F preferred stock with a stated value of $1,000,000 and accrued dividends payable of $33,315 were exchanged for the New Related Party Debentures. Additionally, on November 29, 2022, in order to induce the related party preferred stockholders to exchange their respective preferred shares into the New Related Party Debentures, the aggregate stated value and accrued dividends payable were increased by 15%, or $464,992, for new Related Party Debentures with an aggregate principal amount of $3,564,937.

The November 29, 2022 New Related Party Debentures mature on November 29, 2023, subject to a three-month extension at the sole discretion of the Company. The Related Party Debentures bear interest at 10% per annum payable upon conversion or maturity. The New Related Party Debentures are convertible into shares of the Company's common stock at any time after the maturity date and prior to Mandatory Conversion (as defined below) at the conversion price equal to the lesser of: (i) $0.003 per share and (ii) 70% of the average of the VWAP (as defined in the Debentures) (or 50% of the average of such VWAP if an event of default has occurred and has not been cured) of the Common Stock during the ten Trading Day (as defined in the Debentures) period immediately prior to the applicable conversion date. The New Related Party Debentures are subject to Mandatory Conversion in the event the Company closes a Qualified Offering. The conversion price per share of Common Stock in the case of a Mandatory Conversion shall be the Qualified Offering Price. Alternatively, upon a Mandatory Conversion, the holders of the Debentures may elect to exchange their Debentures for newly issued convertible preferred securities at a price per share equal to the Qualified Offering Price or the five-day VWAP of the Common Stock prior to the date that is 181 days after the closing of the Qualified Offering.

Notwithstanding the preceding, holders of New Related Party Debentures shall have the right to require satisfaction of up to 40% of all amounts outstanding under the Debentures, in cash, at the time of a Qualified Financing. The New Related Party Debentures also contain certain price protection provisions providing for adjustment of the number of shares of Common Stock issuable upon conversion of the Debentures in case of certain future dilutive events or stock-splits and dividends.

The Company's obligations under the New Related Party Debentures are secured by a first priority lien on all of the assets of the Company pursuant to the Security Agreement.

The Purchase Agreement contains customary representations, warranties, and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company without the prior written consent of the Debenture holders, to incur additional indebtedness, and repay outstanding indebtedness, create or permit liens on assets, redeem its Common Stock, settle outstanding litigation, or enter into transactions with affiliates.

If the Company or any Subsidiary shall default on any of its obligations under any mortgage credit agreement or other facility indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $250,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, the New Related Party Debenture shall be deemed in default and the default provisions shall apply.

***Convertible Debt***

On January 27, 2022, the Company entered into the First January 2022 SPA with the First January 2022 Investor to purchase the First January 2022 Note in the principal amount of $500,000 with the Company receiving $500,000 in proceeds and First January 2022 Warrants to purchase up to 136,612,022 shares of common stock. As of September 30, 2022, the First January 2022 Note had an outstanding principal balance of $500,000 and accrued interest of $26,959. On November 29, 2022, the First January 2022 Note was exchanged for a new convertible debenture (see below).

On January 31, 2022, the Company entered into the Second January 2022 SPA with the Second January 2022 Investor to purchase the Second January 2022 Note with principal balance of $500,000 with the Company receiving $500,000 in proceeds and the Second January 2022 Warrants to purchase up to 136,612,022 shares of common stock. As of September 30, 2022, the Second January 2022 Note had an outstanding principal balance of $500,000 and accrued interest of $26,520. On November 29, 2022, the Second January 2022 Note was exchanged for a new convertible debenture (see below).

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. As of September 30, 2022, the Second April 2022 Notes had an aggregate outstanding principal balance of $425,000 and accrued interest of $15,710. On November 29, 2022, the Second April 2022 Notes were exchanged for a new convertible debenture (see below).

On July 1, 2022, the Company entered into a Securities Purchase Agreement with the July 2022 Investor, to purchase the July 2022 Note for a principal amount of $50,000 with the Company receiving $50,000 of proceeds and the July 2022 Warrants to purchase 2,100,840 shares of common stock. As of September 30, 2022, the July 2022 Note had an outstanding principal balance of $50,000 and accrued interest of $953. On November 29, 2022, the July 2022 Note was exchanged for a new convertible debenture (see below).

On October 22, 2022, the Company issued the "Settlement Note. In connection with issuance of the Settlement Note, the Company recorded settlement expense of $200,000. On November 29, 2022, the Settlement Note was exchanged for a new convertible debenture (see below).

On November 29, 2022, the Company consummated the Initial Closing of the Offering pursuant to the terms and conditions of the Purchase Agreement, by and among the Company, the Purchasers and the Collateral Agent. At the Initial Closing, the Company sold the Purchasers the Underlying Securities. The Company received a total of $2,095,288 in net proceeds at the Initial Offering, net of the Original Issue Discount of $255,000, commissions of $296,800 and other offering costs of $157,912.

The Purchase Agreement contains customary representations, warranties, and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company without the prior written consent of the Debenture holders, to incur additional indebtedness, and repay outstanding indebtedness, create or permit liens on assets, redeem its Common Stock, settle outstanding litigation, or enter into transactions with affiliates.

On November 29, 2022, the Company entered into Securities Exchange Agreements with the above investors, whereby the Exchanged Convertible Notes with an aggregate principal amount of $2,675,000 and accrued interest payable of $173,375 were exchanged for New Debentures. Additionally, on November 29, 2022, in order to induce the investors to exchange their respective convertible notes into the New Debentures, the aggregate principal amount and accrued interest payable was increased by 15%, or $427,256, for the New Debentures with an aggregate principal amount of $3,275,631.

On November 29, 2022, the Company entered into Securities Exchange Agreements with preferred stockholders, whereby holders of 902 shares of Series C-1 preferred stock with a stated value of $372,303, and holders of 3,037 shares of Series C-2 preferred stock with a stated value of $1,245,935 were exchanged for the New Debentures. Additionally, on November 29, 2022, in order to induce the preferred stockholders to exchange their respective preferred shares into the New Debentures, the aggregate stated value of the preferred shares was increased by 15%, or $242,736, for New Debentures with an aggregate principal amount of $1,860,974.

The New Debentures mature on November 29, 2023, subject to a three-month extension at the sole discretion of the Company. The New Debentures bear interest at 10% per annum payable upon conversion or maturity. The New Debentures are convertible into shares of Common Stock at any time after the maturity date and prior to Mandatory Conversion (as defined below) at the conversion price equal to the lesser of: (i) $0.003 per share and (ii) 70% of the average of the VWAP (as defined in the Debentures) (or 50% of the average of such VWAP if an event of default has occurred and has not been cured) of the Common Stock during the ten Trading Day (as defined in the Debentures) period immediately prior to the applicable conversion date. The New Debentures are subject to Mandatory Conversion in the event the Company closes a Qualified Offering. The conversion price per share of Common Stock in the case of a Mandatory Conversion shall be the Qualified Offering Price. Alternatively, upon a Mandatory Conversion, the holders of the New Debentures may elect to exchange their Debentures for newly issued convertible preferred securities at a price per share equal to the Qualified Offering Price or the five-day VWAP of the Common Stock prior to the date that is 181 days after the closing of the Qualified Offering.

Notwithstanding the preceding, holders of New Debentures shall have the right to require satisfaction of up to 40% of all amounts outstanding under the Debentures, in cash, at the time of a Qualified Financing. The New Debentures also contain certain price protection provisions providing for adjustment of the number of shares of Common Stock issuable upon conversion of the New Debentures in case of certain future dilutive events or stock-splits and dividends.

The Company's obligations under the New Debentures are secured by a first priority lien on all of the assets of the Company pursuant to the Security Agreement.

If the Company or any Subsidiary shall default on any of its obligations under any mortgage credit agreement or other facility indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $250,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, the New Debenture shall be deemed in default and the default provisions shall apply.

The Company may hold one or more subsequent closings at any time prior to December 31, 2022, unless otherwise extended, to sell additional Underlying Securities in an aggregate principal amount up to $6,600,000, which may be adjusted upward to mean an aggregate principal amount of $8,000,000 upon written consent of the Company and the Placement Agent. The subsequent closing deadline was extended, and a subsequent raise was consummated on January 27, 2023 (See Note 11 in unaudited notes to financial statements).

 ****

***Note Payable - Related Party***

On May 5, 2022, the Company and Jeffrey Busch amended the 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 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 December 31, 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 $3,356.

***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 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 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 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 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 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 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 periods ended December 31, 2022 and 2021 include, but are not necessarily limited to, estimates of contingent liabilities, valuation of marketable securities, useful life of property and equipment, valuation of 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, the fair value of derivatives 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 results of operation will be affected.

***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 December 31, 2022. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on 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. |

---

***Stock-Based Compensation***

Stock-based compensation is accounted for based on the requirements of ASC 718 – *"Compensation –Stock Compensation*", which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee 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, director, and non-employee services received in exchange for an award based on the grant-date fair value of the award. The Company has elected to recognize forfeitures as they occur as permitted under the FASB's Accounting Standards Update ("ASU") 2016-09 *Improvements to Employee Share-Based Payment*.

***Revenue Recognition***

In accordance with ASU Topic 606 - *Revenue from Contracts with Customers*, the Company recognizes revenue in accordance with that core principle by applying the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a 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 which is reflected as contract liabilities on the accompanying 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 under non-cancellable contracts, 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 three months ended December 31, 2022 and 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.

***Leases***

The Company accounts for its leases using the method prescribed by ASC 842 – *Lease Accounting*. The Company assess whether the contract is, or contains, a lease at the inception of a contract which is based on (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. The Company 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 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 statements of operations.

**Derivative Liabilities**

The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 *- Derivative and Hedging - Contract in Entity's Own Equity*. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.

**Recent Accounting Pronouncements**

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company's 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.

**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 December 31, 2022, our disclosure controls and procedures were not effective due to our material weaknesses in internal control over financial reporting discussed below.

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 December 31, 2022. Our management's evaluation of our internal control over financial reporting was based on the 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 December 31, 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:

&nbsp;&nbsp;&nbsp;&nbsp;(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 processing and accounting
 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:

&nbsp;&nbsp;&nbsp;&nbsp;(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.

Management believes that despite our material weaknesses set forth above, our unaudited financial statements for the quarter ended December 31, 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 December 31, 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 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.

On August 16, 2022, Erika Singleton filed a complaint against the Company in the Eighth Judicial District Court, Clark County, Nevada, Case No. A-22-857038-C. Plaintiff alleges that the Company did not provide her with physical stock certificates for 200,000 shares of common stock Plaintiff purchased for $2,000 in 2017. Based on these and other allegations, Plaintiff asserts claims against the Company for breach of contract, violation of Florida securities law, fraud, and unjust enrichment. The court has set the hearing on our motion to dismiss for <u>March 23, 2022.</u> The Plaintiff has until March 2, 2023 to file her opposition to our motion to dismiss and we will then have until March 16, 2023 to file our reply.

**ITEM 1A. RISK FACTORS**

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, 2022. There have been no material changes to the disclosures relating to this item from those set forth in our 2022 Form 10-K.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

None.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

**ITEM 5. OTHER INFORMATION**

None.

**ITEM 6. EXHIBITS**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | |
| **Exhibit**<br>**Number** | <br>**Exhibit Description** | **Form** | **Exhibit** | **Filing Date** | **Filed or Furnished**<br>**Herewith** |
| 3.1 | [Amended and Restated Articles of Incorporation, as amended](https://www.sec.gov/Archives/edgar/data/1362703/000149315222001167/ex3-1.htm) | 10-K | 3.1 | 01/13/2022 |  |
| 3.2 | [Certificate of Amendment as filed on July 1, 2022](https://www.sec.gov/Archives/edgar/data/1362703/000149315222018800/ex3-1.htm) | 8-K | 3.1 | 07/07/2022 |  |
| 3.3 | [Amended and Restated Bylaws](https://www.sec.gov/Archives/edgar/data/1362703/000106299313005317/exhibit3-1.htm) | 8-K | 3.1 | 11/01/2013 |  |
| 4.1 | [Form of 10% Original Issue Discount Senior Secured Convertible Debentures](https://www.sec.gov/Archives/edgar/data/1362703/000149315222034199/ex4-1.htm) | 8-K | 4.1 | 12/01/2022 |  |
| 4.2 | [Form of Common Stock Purchase Warrant](https://www.sec.gov/Archives/edgar/data/1362703/000149315222034199/ex4-2.htm) | 8-K | 4.2 | 12/01/2022 |  |
| 4.3 | [Form of 10% Original Issue Discount Senior Secured Convertible Debentures (Exchanged Debentures)\*](https://www.sec.gov/Archives/edgar/data/1362703/000149315222034199/ex4-3.htm) | 8-K | 4.3 | 12/01/2022 |  |
| 10.1 | [Placement Agency Agreement by and between the Company and Joseph Gunnar & Co.](https://www.sec.gov/Archives/edgar/data/1362703/000149315222034199/ex10-1.htm) | 8-K | 10.1 | 12/01/2022 |  |
| 10.2 | [Form of Securities Purchase Agreement](https://www.sec.gov/Archives/edgar/data/1362703/000149315222034199/ex10-2.htm) | 8-K | 10.2 | 12/01/2022 |  |
| 10.3 | [Form of Security Agreement](https://www.sec.gov/Archives/edgar/data/1362703/000149315222034199/ex10-3.htm) | 8-K | 10.3 | 12/01/2022 |  |
| 10.4 | [Offer Letter between the Company and Faith Zaslavsky, dated December 5, 2022](https://www.sec.gov/Archives/edgar/data/1362703/000149315222034967/ex10-1.htm) | 8-K | 10.1 | 12/09/2022 |  |
| 31.1 | [Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.](ex31-1.htm) |  |  |  | X |
| 31.2 | [Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.](ex31-2.htm) |  |  |  | X |
| 32.1 | [Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002.](ex32-1.htm) |  |  |  | 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 |

---

**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.** | **THERALINK TECHNOLOGIES, INC.** |
| Date: February 21, 2023 | By: | */s/ Mick Ruxin, MD* |
|  |  | Mick Ruxin, MD |
|  |  | Chief Executive Officer |
| Date: February 21, 2023 | By: | */s/ Thomas E. Chilcott, III* |
|  |  | Thomas E. Chilcott, III |
|  |  | Chief Financial Officer, Treasurer and Secretary |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATIONS**

I, Mick Ruxin, MD, certify that:

1. I
 have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended December 31, 2022 of Theralink Technologies, Inc. (the
 "registrant");

2. Based
 on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
 to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
 the period covered by this report;

3. Based
 on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
 respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
 this report;

4. The
 registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
 (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
 Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed
 such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
 to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly
 during the period in which this report is being prepared;

b. Designed
 such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
 supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
 for external purposes in accordance with generally accepted accounting principles;

c. Evaluated
 the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
 and

d. Disclosed
 in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
 or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The
 registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
 financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
 persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All
 significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
 reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
 and

b. Any
 fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
 internal control over financial reporting.

---

| | |
|:---|:---|
| Date: February 21, 2023 | */s/ Mick Ruxin, MD* |
|  | Mick Ruxin, MD |
|  | Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATIONS**

I, Thomas E. Chilcott, III, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended December 31, 2022 of Theralink Technologies, Inc. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: February 21, 2023 | */s/ Thomas E. Chilcott, III* |
|  | Thomas E. Chilcott, III |
|  | Chief Financial Officer, Treasurer and Secretary |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report on Form 10-Q of Theralink Technologies, Inc. (the "Company") for the quarter ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mick Ruxin, MD, Chief Executive Officer of the Company and I, Thomas E. Chilcott, III, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;1. The
 Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The
 information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of
 the Company.

---

| | | |
|:---|:---|:---|
|  | **THERALINK TECHNOLOGIES, INC.** | **THERALINK TECHNOLOGIES, INC.** |
| Date: February 21, 2023 | By: | */s/ Mick Ruxin, MD* |
|  |  | Mick Ruxin, MD |
|  |  | Chief Executive Officer |
| Date: February 21, 2023 | By: | */s/ Thomas E. Chilcott, III* |
|  |  | Thomas E. Chilcott, III |
|  |  | Chief Financial Officer, Treasurer and Secretary |

---

*A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.*