CARMELL THERAPEUTICS CORPORATION CONDENSED FINANCIAL STATEMENTS TABLE OF CONTENTS Page Condensed Balance Sheets at

CARMELL THERAPEUTICS CORPORATION

CONDENSED FINANCIAL STATEMENTS

CARMELL THERAPEUTICS CORPORATION

CONDENSED BALANCE SHEETS

The accompanying notes are an integral part of these condensed financial statements.

CARMELL THERAPEUTICS CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these condensed financial statements.

CARMELL THERAPEUTICS CORPORATION

CONDENSED STATEMENT OF STOCKHOLDERS DEFICIT

For the Six Months Ended June 30, 2023 and 2022

The accompanying notes are an integral part of these condensed financial statements.

CARMELL THERAPEUTICS CORPORATION

CONDENSED STATEMENT OF CASH FLOWS

The accompanying notes are an integral part of these condensed financial statements.

CARMELL THERAPEUTICS CORPORATION

NOTES TO FINANCIAL STATEMENTS

THE ORGANIZATION AND BUSINESS

Carmell Therapeutics Corporation ( Carmell or the Company ) was incorporated in the State of

Delaware in November 2008. With operations in Pittsburgh, Pennsylvania, its mission is to expand and commercialize technology developed jointly at Carnegie Mellon University and Allegheny General Hospital. The proprietary technology enables the

manufacture of biologically active plastics from blood plasma for treating injuries to bone and soft tissue and to promote hair growth and collagen production. These plastics are sterile, off-the-shelf, easy to handle, shape, and suture, have controlled degradation rates, and contain known bioactivity levels.

The Company is focused on products designed to enhance and accelerate healing and produce better clinical outcomes in orthopedic trauma, dental bone graft

substitutes, advanced wound care, and aesthetic medicine. The Company is currently conducting research and development activities to operationalize certain patented technology that the Company owns and licenses. The Company is initiating and

assessing regulatory efforts and pathways in Europe and the United States.

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic and the Russia-Ukraine war on the economy and the

capital markets. It has concluded that while it is reasonably possible that such events could adversely affect the Company s financial position, the specific impacts are not readily determinable as of the date of these financial statements. The

financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The current challenging economic climate

may lead to adverse changes in cash flows, working capital levels, and/or debt balances, which may also directly impact the Company s future operating results and financial position. The ultimate duration and magnitude of the impact and the

efficacy of government interventions on the economy and the financial effect on the Company is not known at this time. The extent of such impact will depend on future developments, which are highly uncertain and not in the Company s control.

NOTE 2 BUSINESS COMBINATION AGREEMENT

January 4, 2023, Alpha Healthcare Acquisition Corp. III, a Delaware corporation ( Alpha and, after the Business Combination, New Carmell ), entered into a business combination agreement (the Business Combination

Agreement ) by and among Alpha, Candy Merger Sub, Inc., a Delaware corporation ( Merger Sub ), and the Company. The Business Combination Agreement provides, among other things, that on the terms and subject to the conditions set forth

therein, Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of Alpha (the Business Combination ).

Under the Business Combination Agreement, Alpha will acquire all of the outstanding equity interests of the Company in exchange for shares of Class A

common stock of Alpha, par value $0.0001 per share (the Class A Common Stock ), based on the Company s implied equity value of $150,000,000, to be paid to the Company s stockholders at the effective time of the Business

Under the Business Combination Agreement, at or prior to the effective time of the Business Combination, each option and warrant exercisable

for the Company s equity that is outstanding immediately prior to the effective time of the Business Combination shall be assumed by Alpha and continue in full force and effect on the same terms and conditions as are currently applicable to

such options and warrants, subject to adjustments to exercise price and number of shares of Class A Common Stock issued upon exercise.

July 11, 2023, at a special meeting of stockholders, the stockholders of Alpha approved the merger and other transactions contemplated by the Business Combination Agreement. The Business Combination closed on July 14, 2023, and the shares

of New Carmell commenced trading on the Nasdaq Capital Market on July 17, 2023.

NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited financial statements

have been prepared in accordance with U.S. Generally Accepted Accounting Principles ( GAAP ) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial

statements. These financial statements should be read in conjunction with the Company s audited financial statements for the year ended December 31, 2022. The accompanying unaudited condensed financial statements include all adjustments of

a normal recurring nature and necessary for the fair presentation of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year.

The preparation of financial statements

in conformity with GAAP requires the Company s management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions, and disclosure of contingent assets and liabilities at the date of

the financial statement and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise

significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existed at the date of the financial statements, which management considered in formulating its

estimate, could change in the near term due to one or more future events. Accordingly, actual results could differ significantly from the estimates included in these financial statements.

The Company considers all short-term investments

with an original maturity of three months or less when purchased to be cash equivalents. The Company has no cash equivalents as of June 30, 2023 and December 31, 2022.

Property and Equipment

Property and equipment are stated

at cost less accumulated depreciation. Maintenance and repair charges are expensed as incurred. The assets are depreciated using the straight-line method using the following useful lives:

Lab equipment 5-7 years

Leasehold improvements - The lesser of 10 years or the remaining life of the lease

Furniture and fixtures 7 years

Intangible assets consist entirely of

patent costs. The Company capitalizes legal costs directly associated with the submission of Company patent applications. Gross patent costs of $70,746 as of June 30, 2023 and December 31, 2022 are amortized on a straight-line basis over

the patent term and are stated net of accumulated amortization of $44,301 and $42,044, respectively. No asset impairment was recognized during the six months ended June 30, 2023 and 2022. Amortization expense for the six months ended

June 30, 2023 and 2022, was $2,257 and $2,239, respectively. Costs billed to the Company as reimbursement for third parties patent submissions are considered as license fees and expensed as incurred.

Offering Costs Associated with a Public Offering

Company complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin ( SAB ) Topic 5A -

Expenses of Offering. ASC 340-10-S99-1 states that specific incremental costs directly attributable to a proposed or

actual offering of equity securities incurred prior to the effective date of the offering

may be deferred and charged against the gross proceeds of the offering when the offering occurs. The costs of an aborted offering may not be deferred and charged against the proceeds of a

subsequent offering. In October 2022, the Company aborted an S-1 IPO Offering and started pursuing an acquisition by a SPAC. In October 2022, the Company wrote off the costs capitalized relating to the S-1 IPO. As of June 30, 2023 and December 31, 2022, the Company had capitalized deferred offering costs relating to the SPAC acquisition of $1,317,369 and $394,147, respectively.

Impairment of Long-Lived Assets

long-lived assets for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is present when the sum of estimated undiscounted future cash flow expected to result from use

of the assets is less than the carrying value. If impairment is present, the carrying value of the impaired asset is reduced to its fair value. Fair value is determined based on discounted cash flow or appraised values, depending on the nature of

the assets. No impairment losses were recognized for long-lived assets for the six months ended June 30, 2023 and 2022.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement

carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years those temporary differences are expected to

be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax

assets to the amount expected to be realized.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement

recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company

recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2023 and December 31, 2022. The

Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities for tax years ended

Fair Value Measurements and Fair Value of Financial Instruments

Our financial instruments consist primarily of accounts payable, accrued expenses, and short-term debt. The carrying value of accounts payable and accrued

expenses approximates fair value because of the short-term maturity of such instruments.

We have categorized our assets and liabilities that are valued

at fair value on a recurring basis into a three-level fair value hierarchy in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or

most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and

liabilities (Level 1) and lowest priority to unobservable inputs (Level 3).

Assets and liabilities recorded in the balance sheet at fair value as of

June 30, 2023 and December 31, 2022 are categorized based on a hierarchy of inputs as follows: