UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended: June 30, 2021

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

For the transition period from ______________ to ______________

Commission File Number: 000-52218

Theralink Technologies, Inc.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

The registrant had 5,555,474,594 shares of its common stock, $0.0001 par value per share, outstanding as of September 22, 2021.

THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES

FORM 10-Q

JUNE 30, 2021

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets - As of June 30, 2021 (unaudited) and September 30, 2020	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2021 and 2020 (unaudited)	5
	Condensed Consolidated Statements of Changes in Stockholder’s Deficit for the Three and Nine Months Ended June 30, 2021 and 2020 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2021 and 2020 (unaudited)	8
	Condensed Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
Signatures		38

2

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 become current in filing all reports required to be filed by us under Section 13 or 15(d) of the Securities Exchange Act of 1934;

● our ability to maintain pricing;

● our ability to employ skilled and qualified workers;

● the fact that we have incurred significant losses since inception, expect to incur net losses for at least the next several years and may never achieve or sustain profitability;

● the loss of key management personnel upon whom we depend;

● our ability to fund our operations;

● inadequate insurance coverage for certain losses or liabilities;

● our ability to navigate the regulatory approval process in the U.S. and other countries, and our success in obtaining required regulatory approvals on a timely basis;

● commercial developments 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-, in our Annual Report on Form 10-K filed on September 27, 2021 with the Securities and Exchange Commission (“SEC”), particularly in the ‘Risk Factors” section of such report, that could cause results or events to differ materially from the forward-looking statements that we make herein. Many of these factors will be important in determining our actual future results. Consequently, no forward-looking statement should be relied upon. Our actual future results may vary materially from those expressed or implied in any forward-looking statements. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement. Forward-looking statements apply only as of the date they are made, and we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as otherwise required by applicable law.

This Quarterly Report on Form 10-Q includes trademarks for Theralink, which are protected under applicable intellectual property laws and are our property. Solely for convenience, our trademarks and trade names referred to in this Quarterly Report on Form 10-Q may appear without the ^® or ^TM 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.

3

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			September 30
	2021			2020
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	79,677		$	1,779,283
Accounts receivable		149,938			-
Other receivable		18,854			15,000
Prepaid expenses and other current assets		141,534			191,253
Marketable securities		7,500			11,100
Laboratory supplies		34,868			71,335
Deferred financing cost		333,333			-
Total Current Assets		765,704			2,067,971
OTHER ASSETS:
Property and equipment, net		725,830			744,822
Finance right-of-use assets, net		122,915			157,691
Operating right-of-use asset, net		178,458			206,203
Security deposits		20,909			19,464
Total Assets	$	1,813,816		$	3,196,151
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	869,601		$	617,218
Accrued liabilities		93,342			56,728
Accrued compensation		143,309			32,791
Accrued director compensation		117,500			72,500
Deferred revenue		148,550			-
Convertible debt - related party, net of discount		14,116			-
Notes payable - related party		100,000			-
Notes payable - current		1,000			1,000
Financing lease liability - current		46,289			42,234
Operating lease liability - current		40,716			35,943
Insurance payable		6,654			63,675
Subscription payable		1,350,000			-
Contingent liabilities		69,440			64,040
Assumed liabilities of discontinued operations		-			204,608
Total Current Liabilities		3,000,517			1,190,737
LONG-TERM LIABILITIES:
Financing lease liability		100,873			136,116
Operating lease liability		145,757			176,893
Total Liabilities		3,247,147			1,503,746
Series E preferred stock; $0.0001 par value; 2,000 authorized; 1,000 issued and outstanding at June 30, 2021 and September 30, 2020		2,000,000			2,000,000
STOCKHOLDERS’ DEFICIT:
Preferred stock: $0.0001 par value; 26,667 authorized;
Series A Preferred stock: $0.0001 par value; 1,333 shares authorized; 667 issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series C-1 Preferred stock: $0.0001 par value; 3,000 shares authorized; 2,966 issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series C-2 Preferred stock: $0.0001 par value; 6,000 shares authorized; 4,917 issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series D-1 Preferred stock: $0.0001 par value; 1,000 shares authorized; nil issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Series D-2 Preferred stock: $0.0001 par value; 4,360 shares authorized; nil issued and outstanding at June 30, 2021 and September 30, 2020		-			-
Common stock: $0.0001 par value, 12,000,000,000 shares authorized; 5,124,164,690 issued and outstanding at June 30, 2021 and September 30, 2020		512,416			512,416
Additional paid-in capital		43,368,077			42,367,577
Accumulated deficit		(47,313,824	)		(43,187,588	)
Total Stockholders’ Deficit		(3,433,331	)		(307,595	)
Total Liabilities and Stockholders’ Deficit	$	1,813,816		$	3,196,151

See accompanying notes to the unaudited condensed consolidated financial statements.

4

THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended						For the Nine Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
REVENUES, NET	$	278,925		$	24,886		$	415,029		$	75,896
COST OF REVENUE		69,253			7,422			99,298			23,421
GROSS PROFIT		209,672			17,464			315,731			52,475
OPERATING EXPENSES:
Professional fees		243,517			322,921			654,736			470,638
Consulting fee - related party		-			8,650			-			64,125
Compensation expense		532,414			372,610			1,654,693			822,329
Licensing fees		39,172			12,750			100,364			38,920
General and administrative expenses		589,463			258,277			2,069,942			636,838
Total Operating Expenses		1,404,566			975,208			4,479,735			2,032,850
LOSS FROM OPERATIONS		(1,194,894	)		(957,744	)		(4,164,004	)		(1,980,375	)
OTHER INCOME (EXPENSE):
Interest expense		(26,993	)		(7,844	)		(43,679	)		(23,715	)
Gain on debt extinguishment, net		-			108,060			227,294			108,060
Unrealized loss on marketable securities		(3,900	)		(4,900	)		(3,600	)		(11,200	)
Unrealized (gain) loss on exchange rate		-			60,075			(22,686	)		60,075
Other income		-			10,000			-			10,000
Total Other Income (Expense), net		(30,893	)		165,391			157,329			143,220
NET LOSS		(1,225,787	)		(792,353	)		(4,006,675	)		(1,837,155	)
Series E preferred stock dividend		39,890			-			119,561			-
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(1,185,897	)	$	(792,353	)	$	(3,887,114	)	$	(1,837,155	)
NET LOSS PER COMMON SHARE:
Basic and Diluted	$	(0.00	)	$	(2.04	)	$	(0.00	)	$	(19.19	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and Diluted		5,550,559,312			388,333			5,306,754,829			95,753

See accompanying notes to the unaudited condensed consolidated financial statements.

5

THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021

(UNAUDITED)

	Preferred Stock												Common Stock
	Series A # of Shares		Series C-1 # of Shares		Series C-2 # of Shares		Series D-1 # of Shares		Series D-2 # of Shares		Amount		# of Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance at September 30, 2020		667		2,966		4,917		-		-	$	-		5,124,164,690	$	512,416	$	42,367,577	$	(43,187,588	)	$	(307,595	)
Adjustment related to Series A preferred prior period redemption payment		-		-		-		-		-		-		-		-		500					500
Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(40,219	)		(40,219	)
Net loss		-		-		-		-		-		-		-		-		-		(1,419,775	)		(1,419,775	)
Balance at December 31, 2020		667		2,966		4,917		-		-		-		5,124,164,690		512,416		42,368,077		(44,647,582	)		(1,767,089	)
Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(39,452	)		(39,452	)
Net loss		-		-		-		-		-		-		-		-		-		(1,361,113	)		(1,361,113	)
Balance at March 31, 2021		667		2,966		4,917		-		-		-		5,124,164,690		512,416		42,368,077		(46,048,147	)		(3,167,654	)
Beneficial conversion feature related to a convertible note - related party recorded as debt discount		-		-		-		-		-		-		-		-		15,800		-			15,800
Relative fair value of warrant issued in connection with a convertible note - related party recorded as debt discount		-		-		-		-		-		-		-		-		984,200		-			984,200
Series E preferred stock dividend		-		-		-		-		-		-		-		-		-		(39,890	)		(39,890	)
Net loss		-		-		-		-		-		-		-		-		-		(1,225,787	)		(1,225,787	)
Balance at June 30, 2021		667		2,966		4,917		-		-	$	-		5,124,164,690	$	512,416	$	43,368,077	$	(47,313,824	)	$	(3,433,331	)

See accompanying notes to the unaudited condensed consolidated financial statements.

6

THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2020

(UNAUDITED)

	Preferred Stock												Common Stock
	Series A # of Shares		Series C-1 # of Shares		Series C-2 # of Shares		Series D-1 # of Shares		Series D-2 # of Shares		Amount		# of Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance at September 30, 2019		-		-		-		992		-	$	-		-	$	-	$	37,378,841	$	(38,011,201	)	$	(632,360	)
Preferred stock issued for cash		-		-		-		6		-		-		-		-		2,200,000		-			2,200,000
Preferred stock issued upon debt conversions		-		-		-		-		-		-		-		-		217,215		-			217,215
Preferred stock issued upon conversion of accounts payable and accrued liabilities		-		-		-		1		-		-		-		-		299,154		-			299,154
Net loss		-		-		-		-		-		-		-		-		-		(541,372	)		(541,372	)
Balance at December 31, 2019		-		-		-		999		-		-		-		-		40,095,210		(38,552,573	)		1,542,637
Preferred stock issued for cash		-		-		-		1		-		-		-		-		390,000		-			390,000
Preferred stock issued upon conversion of accrued liabilities - related party		-		-		-		-		-		-		-		-		160,000		-			160,000
Net loss		-		-		-		-		-		-		-		-		-		(503,430	)		(503,430	)
Balance at March 31, 2020		-		-		-		1,000		-		-		-		-		40,645,210		(39,056,003	)		1,589,207
Recapitalization resulting from the Asset Sale Transaction (see Note 3)		667		2,966		4,917		-		4,121		-		1,398,070		140		246,516					246,656
Net loss		-		-		-		-		-		-		-		-		-		(792,353	)		(792,353	)
Balance at June 30, 2020		667		2,966		4,917		1,000		4,121	$	-		1,398,070	$	140	$	40,891,726	$	(39,848,356	)		1,043,510

See accompanying notes to the unaudited condensed consolidated financial statements.

7

THERALINK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended
	June 30,
	2021			2020
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss	$	(4,006,675	)	$	(1,837,155	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		138,632			57,060
Lease cost		1,382			5,975
Amortization of debt discount		14,116			-
Gain on debt extinguishment, net		(227,294	)		(108,060	)
Unrealized (gain) loss on exchange rate		22,686			(60,075	)
Unrealized loss on marketable securities		3,600			11,200
Change in operating assets and liabilities:
Accounts receivable		(149,938	)		(20,975	)
Laboratory supplies		36,467			-
Prepaid expenses and other current assets		44,420			(116,219	)
Accounts payable		252,383			(212,840	)
Accrued liabilities and other liabilities		20,950			(70,734	)
Deferred revenue		148,550			-
NET CASH USED IN OPERATING ACTIVITIES		(3,700,721	)		(2,351,823	)
CASH FLOWS FROM INVESTING ACTIVITIES
Adjustment related to Series A preferred prior period redemption payment		500			-
Cash acquired from the Asset Sale Transaction (see Note 3)		-			675,928
Purchase of property and equipment		(116,052	)		(495,557	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(115,552	)		180,371
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of preferred stock		-