What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-17 compared with 2021-04-12 · 794 added, 1090 removed, 501 unchanged (79% of the section changed)

3 unchanged sentences

AND SUBSIDIARY

(DEBTOR-IN-POSSESSION)

Consolidated Balance Sheets

12 unchanged sentences

Lease liability

Notes payable, net of debt discount of $0 and $1,247,422, respectively

Debtor-in-possession financing

Derivative liabilities

PPP loan payable

Total Current Liabilities

Lease liability, net of current portion

Liabilities subject to compromise

Notes payable, net of debt discount of $4,949,709 and $5,366,869, respectively

PPP loan payable, net of current portion

Total Liabilities

3 unchanged sentences

Authorized, 20,000,000 shares;

none issued and outstanding at June 30, 2020 and December 31, 2019

none issued and

outstanding at March 31, 2021 and December 31, 2020

Common stock, $0.0001 par value;

Authorized, 300,000,000,000 shares;

Issued and outstanding 1,594,651,383 and 77,851,633, respectively

and outstanding 3,175,911,955 and 2,862,174,380, respectively

Additional paid in capital

3 unchanged sentences

Total Stockholders’

(14,441,181 )

(12,776,146 )

Total Liabilities and Stockholders’

3 unchanged sentences

AND SUBSIDIARY

(DEBtor-in-possession)

Consolidated STATEMENTS OF OPERATIONS

For the Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

March 31, 2021

March 31, 2020

Operating expenses:

4 unchanged sentences

Loss from operations

Other income (expense):

(15,054,656 )

Other expense:

Interest expense

3 unchanged sentences

Reorganization items, net

Total other income (expense)

Net income (loss)

$ (4,157,190 )

Total other expense

$ (15,653,330 )

$ (7,550,772 )

Net Income (Loss) Per Share

Net Loss Per Share

- Basic and Diluted

Weighted Average Number of Common Shares Outstanding

1,594,651,383

1,277,364,646

1,594,651,383

- Basic and Diluted

2,919,719,282

3 unchanged sentences

AND SUBSIDIARY

(debtor-inpossession)

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’

Shareholders’

Balance at January 1, 2020

at January 1, 2021

2,862,174,380

$ (89,842,833 )

Shares and warrants issued for cash

Shares issued in exchange of notes payable and accrued interest

$ (1,331,492 )

Stock-based compensation:

Balance as of March 31, 2020

issued in exchange of notes payable and accrued interest

issued in cashless exercise of warrants

compensation:

restricted share units

(15,653,330 )

as of March 31, 2021

3,175,911,955

Stock-based compensation:

Balance as of June 30, 2020

$ 102,484,188

1 unchanged sentence

$ (2,694,382 )

Balance at January 1, 2019

at January 1, 2020

$ (78,570,146 )

$ (12,776,146 )

Shares and warrants issued for cash

Shares issued in satisfaction of accrued consulting services

Shares issued in exchange for notes payable and accrued interest

Shares issued and recorded as debt discount in connection with a note payable issuances and extensions

Reclassification of derivative liabilities to equity

Stock-based compensation:

Balance as of March 31, 2019

and warrants issued for cash

issued in exchange for notes payable and accrued interest

1,515,799,750

Shares and warrants issued for cash

Shares issued in exchange for notes payable and accrued interest

Shares issued and recorded as debt discount in connection with a note payable issuances

Reclassification of derivative liabilities to equity

Stock-based compensation:

- common stock

Balance as of June 30, 2019

compensation:

as of March 31, 2020

1,594,651,383

$ (86,120,918 )

$ (17,536,105 )

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

AND SUBSIDIARY

(debtor-in-possession)

Consolidated STATEMENTS OF CASH FLOWS

Six Months Ended

June 30, 2020

June 30, 2019

Three Months Ended

March 31, 2021

March 31, 2020

Cash flows from operating activities:

7 unchanged sentences

Loss on extinguishment of note payables, net

Gain on settlement of payables

Write-off of derivative liabilities

Change in fair value of derivative liabilities

Non-cash effect of righ of use asset

Non-cash effect of right of use asset

Changes in operating assets and liabilities:

1 unchanged sentence

Prepaid assets and other current assets

Security deposit

Accounts payable

1 unchanged sentence

Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Offering costs incurred

Proceeds from notes payable

Payments on notes payable - principal

Payments on notes payable - prepayment premiums

Proceeds from DIP financing

Proceeds from PPP Loan

Sales of common stock and warrants for cash

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents - beginning of period

3 unchanged sentences

Non-cash investing and financing activities:

Shares issued and recorded as debt discount in connection with notes payable issuances and extensions

Shares issued in exchange for notes payable and accrured interest

Shares and warrants issued in satisfaction of accrued consulting services

Reclassification of derivative liabilities to equity

Bifurcated embedded conversion options and warrants recorded as derivative liability and debt discount

Bifurcated embedded conversion options and warrants recorded as derivative liability

and debt discount

Sale of warrants recorded as derivative liabilities

Warrants and options issued for consulting services recorded as derivative liabilities

Accrued interest reclassified to notes payable principal

Offering costs in accounts payable and accrued expenses

Original issue discount in connection with notes payable

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

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THERAPIES, INC.

(DEBTOR-IN-POSSESSION)

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF THE ORGANIZATION AND BUSINESS

NATURE OF THE ORGANIZATION, LIQUIDITY, AND BUSINESS

BioRestorative

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BioRestorative Therapies, Inc.

and its subsidiary are referred to collectively as “BRT”

subsidiary are referred to collectively as “BRT”

or the “Company”.

March 20, 2020 (the “Petition Date”), the Company filed a voluntary petition commencing a case (the “Chapter

11 Case”) under chapter 11 of title 11 of the U.S.

Code in the United States Bankruptcy Court for the Eastern District of

New York (the “Bankruptcy Court”).

March 20, 2020 (the “Petition Date”), the Company filed a voluntary petition commencing a case (the “Chapter 11 Case”)

under chapter 11 of title 11 of the U.S.

Code in the United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy

Court”).

August 7, 2020 the Company and Auctus Fund, LLC (“Auctus”), the Company’s largest unsecured creditor and a stockholder

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Court entered an order (the “Confirmation Order”) confirming the Plan, as amended.

Amendments to the Plan are reflected

in the Confirmation Order.

Amendments to the Plan are reflected in

the Confirmation Order.

On November 16, 2020 (the “Effective Date”), the Plan became effective.

See Note 5 –

Subsequent Events for additional information.

Payable –

Chapter 11 Reorganization.

of the Business

2 unchanged sentences

BRT is currently developing a Disc/Spine Program referred to as “brtxDISC”.

Its lead cell therapy candidate, BRTX-100 , is a product formulated from autologous (or a person’s own) cultured mesenchymal

stem cells collected from the patient’s bone marrow.

The product is intended to be used for the non-surgical treatment of

painful lumbosacral disc disorders or as a complimentary therapeutic to a surgical procedure.

BRT is also engaging in research

efforts with respect to a platform technology utilizing brown adipose (fat) for therapeutic purposes to treat type 2 diabetes,

obesity and other metabolic disorders and has labeled this initiative its ThermoStem Program.

Further, BRT has licensed a patented

curved needle device that is a needle system designed to deliver cells and/or other therapeutic products or material to the spine

and discs or other potential sites.

accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue

as a going concern, which contemplates realization of assets and satisfying liabilities in the normal course of business.

30, 2020, the Company had an accumulated deficit of approximately $83,245,000 and working capital deficiency of approximately

$15,237,000, which includes liabilities subject to compromise.

For the six months ended June 30, 2020, the Company had

a loss from operations of approximately $1,281,000 and negative cash flows from operations of approximately $869,000.

cell therapy candidate, BRTX-100 , is a product formulated from autologous (or a person’s own) cultured mesenchymal stem

cells collected from the patient’s bone marrow.

The product is intended to be used for the non-surgical treatment of painful lumbosacral

disc disorders or as a complimentary therapeutic to a surgical procedure.

BRT is also engaging in research efforts with respect to a

platform technology utilizing brown adipose (fat) for therapeutic purposes to treat type 2 diabetes, obesity and other metabolic disorders

and has labeled this initiative its ThermoStem Program.

Further, BRT has licensed a patented curved needle device that is a needle system

designed to deliver cells and/or other therapeutic products or material to the spine and discs or other potential sites.

accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as

a going concern, which contemplates realization of assets and satisfying liabilities in the normal course of business.

At March 31, 2021,

the Company had an accumulated deficit of approximately $105,496,000 and working capital surplus of approximately $1,303,000.

three months ended March 31, 2021, the Company had a loss from operations of approximately $15,055,000 (of which, approximately $14,077,000

was attributable to non-cash stock-based compensation) and negative cash flows from operations of approximately $814,000.

The Company’s

operating activities consume the majority of its cash resources.

The Company anticipates that it will continue to incur operating

losses as it executes its development plans for 2021, as well as other potential strategic and business development initiatives.

In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future.

has previously funded, and plans to continue funding, these losses primarily through current cash on hand received subsequent

to quarter end and additional infusions of cash from equity and debt financing.

Company believes the following has been able to mitigate the above factors with regards to its ability to continue as a going

(i) as part of its Chapter 11 reorganization approximately $14,700,000 in outstanding debt and other liabilities were

exchanged for (a) shares of common stock, (b) new convertible notes or (c) new convertible notes and warrants to purchase shares

of common stock;

(ii) the Company secured DIP financing during its Chapter 11 Case in the amount of $1,189,413, of which $713,000

was received prior to June 30, 2020, as well as an aggregate amount of $3,848,548 in debt financing from Auctus and others as

part of the Company’s Chapter 11 reorganization, to sustain operations;

and (iii) pursuant to the plan of reorganization,

Auctus is required to loan to the Company, as needed and subject to the Company becoming current in its SEC reporting obligations,

an additional amount equal to $3,500,000, less the amount of Auctus’

DIP financing ($1,226,901, inclusive of accrued interest)

and its DIP costs.

As a result of the above, the Company believes it has sufficient cash to fund operations for the twelve months

subsequent to the filing date.

In addition, the Company is seeking further funding to commence and complete a Phase 2 clinical

study of the use of BRTX-100.

is no assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain

profitable operations.

If the Company is unable to obtain such additional financing on a timely basis the Company may have to

curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s

business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations

and liquidate.

accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles

generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going

concern and the realization of assets and satisfaction of liabilities in the normal course of business.

The carrying amounts of

assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent

realizable or settlement values.

The accompanying unaudited condensed consolidated financial statements do not include any adjustments

that might be necessary should the Company be unable to continue as a going concern.

The Company anticipates that it will continue to incur operating losses

as it executes its development plans for 2021, as well as other potential strategic and business development initiatives.

the Company has had and expects to have negative cash flows from operations, at least into the near future.

The Company has previously

funded, and plans to continue funding, these losses primarily through current cash on hand received subsequent to quarter end and additional

infusions of cash from equity and debt financing.

Company believes the following has been able to mitigate the above factors with regards to its ability to continue as a going concern:

(i) as part of its Chapter 11 reorganization approximately $14,700,000 in outstanding debt and other liabilities were exchanged for (a)

shares of common stock, (b) new convertible notes or (c) new convertible notes and warrants to purchase shares of common stock;

the Company secured DIP financing during its Chapter 11 Case in the amount of $1,189,413, as well as an aggregate amount of $3,848,548

in debt financing from Auctus and others as part of the Company’s Chapter 11 reorganization, to sustain operations;

and (iii) pursuant

to the plan of reorganization, Auctus is required to loan to the Company, as needed, an additional amount equal to $3,500,000, less the

amount of Auctus’

DIP financing ($1,226,901, inclusive of accrued interest) and its DIP costs not to exceed approximately $650,000.

As a result of the above, and cash on hand of approximately $2,248,000 as of May 11, 2021, the Company believes it has sufficient cash

to fund operations for the twelve months subsequent to the filing date.

In addition, the Company is seeking further funding to commence

and complete a Phase 2 clinical study of the use of BRTX-100.

is no assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable

If the Company is unable to obtain such additional financing on a timely basis the Company may have to curtail its development,

marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition

and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate.

accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally

accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and the

realization of assets and satisfaction of liabilities in the normal course of business.

The carrying amounts of assets and liabilities

presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement

The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary

should the Company be unable to continue as a going concern.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying unaudited condensed consolidated financial information as of and for the three and six months ended June 30, 2020

and 2019 has been prepared in accordance with GAAP for interim financial information and with the instructions to Quarterly Report

on Form 10-Q and Article 10 of Regulation S-X.

In the opinion of management, such financial information includes all adjustments

(consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such

dates and the operating results and cash flows for such periods.

Operating results for the three months and six ended June 30,

2020 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim

information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted

pursuant to the rules of the U.S.

accompanying unaudited condensed consolidated financial information as of and for the three months ended March 31, 2021 and 2020 has

been prepared in accordance with GAAP for interim financial information and with the instructions to Quarterly Report on Form 10-Q and

Article 10 of Regulation S-X.

In the opinion of management, such financial information includes all adjustments (consisting only of normal

recurring adjustments) considered necessary for a fair presentation of the Company’s financial position at such dates and the operating

results and cash flows for such periods.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of

the results that may be expected for the entire year or for any other subsequent interim period.

information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant

to the rules of the U.S.

Securities and Exchange Commission (the “SEC”).

These unaudited financial statements

and related notes should be read in conjunction with the Company’s audited financial statements for the year ended December

31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2021.

These unaudited condensed consolidated financial

statements and related notes should be read in conjunction with the Company’s audited financial statements for the year ended December

31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 30, 2021.

of Consolidation

unaudited condensed consolidated financial statements include include the accounts of the Company and its wholly-owned subsidiary

unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Stem Pearls.

Intercompany accounts and transactions have been eliminated upon consolidation.

Reclassifications

the six months ended June 30, 2020, the Company reclassified $2,580,110 related to the write-off of unamortizaed debt discount

on convertible notes to reorganization items on the unaudited condensed consolidated statements of operations.

This amount was

previously recorded as interest expense in the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 29, 2021.

This reclassification had no effect on net loss or cash flows as previously reported.

the three months ended March 31, 2020, the Company reclassified $2,580,110 related to the write-off of unamortizaed debt discount on

convertible notes to reorganization items on the unaudited condensed consolidated statements of operations.

This amount was previously

recorded as interest expense in the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 29, 2021.

This reclassification

had no effect on net loss or cash flows as previously reported.

11 Accounting

unaudited condensed consolidated financial statements included herein have been prepared as if we were a going concern and in

accordance with Accounting Standards Codification (“ASC”) 852, Reorganizations .

industry conditions in 2019 negatively impacted the Company’s results of operations and cash flows and may continue to do

so in the future.

In order to decrease the Company’s indebtedness and maintain the Company’s liquidity levels suifficient

to meet its commitments, the Company undertook a number of actions, including minimizing capital expendtiures and further reducing

its recurring operating expenses.

The Company believed that even after taking these actions, it would not have sufficient liquidity

to satisfy its debt service obligations and meet its other financial obligations.

On March 20, 2020 (the “Petition Date”),

the Company filed a voluntary petition commencing a case under chapter 11 of title 11 of the U.S.

Code in the United States Bankruptcy

Court for the Eastern District of New York.

unaudited condensed consolidated financial statements included herein have been prepared as if we were a going concern and in accordance

with Accounting Standards Codification (“ASC”) 852, Reorganizations .

industry conditions in 2019 negatively impacted the Company’s results of operations and cash flows and may continue to do so in

In order to decrease the Company’s indebtedness and maintain the Company’s liquidity levels suifficient to meet

its commitments, the Company undertook a number of actions, including minimizing capital expendtiures and further reducing its recurring

operating expenses.

The Company believed that even after taking these actions, it would not have sufficient liquidity to satisfy its

debt service obligations and meet its other financial obligations.

On March 20, 2020 (the “Petition Date”), the Company filed

a voluntary petition commencing a case under chapter 11 of title 11 of the U.S.

Code in the United States Bankruptcy Court for the Eastern

District of New York.

On August 7, 2020, the Company and Auctus, the Company’s largest unsecured creditor and a stockholder as

of the Petition Date, filed an Amended Joint Plan of Reorganization (the “Plan”).

On November 16, 2020 (the “Effective

Date”), the Plan became effective.

Reorganization

1 unchanged sentence

professional fees.

In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded

as reorganization items, net within the accompanying unaudited condensed consolidated statements of operations for the three and

six months ended June 30, 2020.

Reorganization items, net for the three and six months ended June 30, 2020, were $3,361,416 and

$781,306, respectively, representing non-cash items and cash used in operating activities.

In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as reorganization

items, net within the accompanying unaudited condensed consolidated statements of operations for the three months ended March 31, 2021

Reorganization items, net for the three months ended March 31, 2021 and 2020, were $- and $2,580,110, respectively, representing

cash used in operating activities.

Reorganization

items, net for the three and six months ended June 30, 2020, consisted of the following:

Three Months Ended June 30, 2020

Six Months Ended June 30, 2020

Professional fees

Write-off of derivative liability

Default interest and penalties

items, net for the three months ended March 31, 2021 and 2020, consisted of the following:

Three Months Ended March 31, 2021

Unamortized debt discount on convertible notes

Total reorganization items, net

Subject To Compromise

unsecured and secured obligation that may be impacted by the Chapter 11 case have been classified as liabilities subject to compromise

on the Company’s unaudited condensed consolidated balance sheets.

These liabilities are reported at the amounts allowed

as claims by the Bankruptcy Court.

subject to compromise as of June 30, 2020 were $14,700,000, which consisted of:

June 30, 2020

Accounts payable

Accrued expenses and other current liabilites

Unsecured notes payable

Accrued interest, default interest, default principal

Total liabilities subject to compromise

preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates

1 unchanged sentence

of contingent liabilities at the date of the unaudited condensed consolidated financial statements.

The Company bases its estimates

and assumptions on historical experience, known or expected trends and various other assumptions that it believes to be reasonable.

As future events and their effects cannot be determined with precision, actual results could differ from these estimates which

may cause the Company’s future results to be affected.

The Company bases its estimates and

assumptions on historical experience, known or expected trends and various other assumptions that it believes to be reasonable.

events and their effects cannot be determined with precision, actual results could differ from these estimates which may cause the Company’s

future results to be affected.

Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation

of the accompanying unaudited condensed consolidated financial statements.

Significant estimates include the carrying value of

intangible assets, deferred tax asset and valuation allowance, estimated fair value of derivative liabilities stemming from convertible

debt securities, and assumptions used in the Black-Scholes-Merton pricing model, such as expected volatility, risk-free interest

rate, and expected divided rate.

Significant estimates include the carrying value of intangible

assets, deferred tax asset and valuation allowance, estimated fair value of derivative liabilities stemming from convertible debt securities,

and assumptions used in the Black-Scholes-Merton pricing model, such as expected volatility, risk-free interest rate, and expected divided

Company derives all of its revenue pursuant to a license agreement between the Company and a stem cell treatment company (“SCTC”)

entered into in January 2012, as amended in November 2015.

Pursuant to the license agreement, the SCTC granted to the Company

a license to use certain intellectual property related to, among other things, stem cell disc procedures and the Company has granted

to the SCTC a sublicense to use, and the right to sublicense to third parties the right to use, in certain locations in the United

States and the Cayman Islands, certain of the licensed intellectual property.

In consideration of the sublicenses, the SCTC has

agreed to pay the Company royalties on a per disc procedure basis.

Pursuant to the license agreement, the SCTC granted to the Company a license

to use certain intellectual property related to, among other things, stem cell disc procedures and the Company has granted to the SCTC

a sublicense to use, and the right to sublicense to third parties the right to use, in certain locations in the United States and the

Cayman Islands, certain of the licensed intellectual property.

In consideration of the sublicenses, the SCTC has agreed to pay the Company

royalties on a per disc procedure basis.

part of ASC Topic 606, the Company has adopted several practical expedients including:

Financing Component –

the Company does not adjust the promised amount of consideration for the effects of a significant

financing component since the Company expects, at contract inception, that the period between when the Company transfers a

promised good or service to the customer and when the customer pays for that good or service will be one year or less.

the Company does not adjust the promised amount of consideration for the effects of a significant financing

component since the Company expects, at contract inception, that the period between when the Company transfers a promised good or

service to the customer and when the customer pays for that good or service will be one year or less.

Performance Obligations –

all performance obligations related to contracts with a duration for less than one year, the

Company has elected to apply the optional exemption provided in ASC Topic 606 and therefore, is not required to disclose the

aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially satisfied at

the end of the reporting period.

all performance obligations related to contracts with a duration for less than one year, the Company

has elected to apply the optional exemption provided in ASC Topic 606 and therefore, is not required to disclose the aggregate amount

of transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of the reporting

to Invoice –

the Company has a right to consideration from a customer in an amount that corresponds directly with the

value to the customer of the Company’s performance completed to date.

The Company may recognize revenue in the amount

to which the entity has a right to invoice.

the Company has a right to consideration from a customer in an amount that corresponds directly with the value

to the customer of the Company’s performance completed to date.

The Company may recognize revenue in the amount to which the

entity has a right to invoice.

Modifications

were no contract modifications during the three and six months ended June 30, 2020.

Contract modifications are not routine in

the performance of the Company’s contracts.

were no contract modifications during the three months ended March 31, 2021.

Contract modifications are not routine in the performance

of the Company’s contracts.

Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

There were no cash equivalents as of June 30, 2020 or December 31, 2019.

There were no cash equivalents as of March 31, 2021 or December 31, 2020.

receivable are reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts.

2 unchanged sentences

The Company provides for allowances

for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and

any other factors considered appropriate.

for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other

factors considered appropriate.

Payments are generally due within 30 days of invoice.

The Company writes off accounts

receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible.

The Company did not record

an allowance for doubtful accounts as of June 30, 2020 and December 31, 2019, respectively.

The Company writes off accounts receivable against

the allowance for doubtful accounts when a balance is determined to be uncollectible.

The Company did not record an allowance for doubtful

accounts as of March 31, 2021 and December 31, 2020, respectively.

and Equipment

and equipment are recorded at cost.

Depreciation is computed using straight-line method over the estimated useful lives of the

related assets, generally three to fifteen years.

Expenditures that enhance the useful lives of the assets are capitalized and

Computer equipment costs are capitalized, as incurred, and depreciated on a straight-line basis over a range of 3

Depreciation is computed using straight-line method over the estimated useful lives of the related

assets, generally three to fifteen years.

Expenditures that enhance the useful lives of the assets are capitalized and depreciated.

equipment costs are capitalized, as incurred, and depreciated on a straight-line basis over a range of 3 –

improvements are amortized over the lesser of (i) the useful life of the asset, or (ii) the remaining lease term.

and repairs are charged to expense as incurred.

The Company capitalizes cost attributable to the betterment of property and equipment

when such betterment extends the useful life of the assets.

At the time of retirement or other disposition of property and equipment,

the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected

in operations.

Maintenance and repairs

are charged to expense as incurred.

The Company capitalizes cost attributable to the betterment of property and equipment when such betterment

extends the useful life of the assets.

At the time of retirement or other disposition of property and equipment, the cost and accumulated

depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

of Long-Lived Assets

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indicate that the carrying amount of such assets may not be recoverable.

Recoverability of these assets is determined by comparing

the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount.

If the operation

is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by

other long-lived assets of the operation to fair value.

Fair value is determined based on discounted cash flows or appraised values,

depending on the nature of the assets.

the three and six months ended June 30, 2020 and 2019, the Company did not record a loss on impairment.

Recoverability of these assets is determined by comparing the

forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount.

If the operation is determined

to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets

of the operation to fair value.

Fair value is determined based on discounted cash flows or appraised values, depending on the nature

of the assets.

During the three months ended March 31, 2021 and 2020, the Company determined that there was no impairment charge for

intangible assets.

Company records its intangible assets at cost in accordance with ASC 350, Intangibles –

Goodwill and Other.

Definite lived

intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying

the period over which the cash flows from the asset are expected to be generated.

Definite lived intangible

assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying the period over

which the cash flows from the asset are expected to be generated.

and Marketing Costs

Company expenses advertising and marketing costs as they are incurred.

Advertising and marketing expenses were $28,131 and $124,686

for the six months ended June 30, 2020 and 2019, respectively.

Advertising and marketing expenses were $2,600 and $22,008 for

the three months ended June 30, 2020 and 2019, respectively.

the three months ended March 31, 2021 and 2020, respectively.

The above advertising and marketing expenses are recorded in marketing

2 unchanged sentences

defined in ASC 820, “Fair Value Measurements and Disclosures,”

fair value is 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 (exit price).

The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including

assumptions about risk and the risks inherent in the inputs to the valuation technique.

These inputs can be readily observable,

market corroborated, or generally unobservable.

ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to

measure fair value.

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).

This fair value measurement

framework applies at both initial and subsequent measurement.

fair value is 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 (exit price).

Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions

about risk and the risks inherent in the inputs to the valuation technique.

These inputs can be readily observable, market corroborated,

or generally unobservable.

ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value.

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).

This fair value measurement framework applies at both initial and subsequent

prices are available in active markets for identical assets or liabilities as of the reporting date.

Active markets are those

in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on

an ongoing basis.

Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities

and listed equities.

inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable

as of the reported date.

Active markets are those in

which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing

Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed

inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as

of the reported date.

Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for

commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well

as other relevant economic measures.

Substantially all of these assumptions are observable in the marketplace throughout the

full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions

are executed in the marketplace.

Instruments in this category generally include non-exchange-traded derivatives such as commodity

swaps, interest rate swaps, options and collars.

These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities,

time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant

economic measures.

Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument,

can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options

inputs include significant inputs that are generally less observable from objective sources.

These inputs may be used with

internally developed methodologies that result in management’s best estimate of fair value.

Note 7 –

Derivative Liabilities for additional details regarding the valuation technique and assumptions used in valuing

Level 3 inputs.

Income (Loss) per Common Share

loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the

These inputs may be used with internally

developed methodologies that result in management’s best estimate of fair value.

Loss per Common Share

loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

All vested outstanding options and warrants are considered potential common stock.

The dilutive effect, if any, of stock

options and warrants are calculated using the treasury stock method.

All outstanding convertible notes are considered common stock

at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method.

Since the effect of

common stock equivalents is anti-dilutive with respect to losses, options and warrants have been excluded from the Company’s

computation of net loss per common share for the three months ended June 30, 2020 and the three and six months ended June 30,

Since no outstanding options or warrants were deemed to be in the money outstanding options and warrants have been excluded

from the Company’s computation of net income per share for the three months ended June 30, 2020.

following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including

these potential shares was antidilutive:

The dilutive effect, if any, of stock options, warrants,

and unvested restricted stock units (“RSUs”) are calculated using the treasury stock method.

All outstanding convertible

notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method.

Since the effect of common stock equivalents is anti-dilutive with respect to losses, options, warrants, RSUs and convertible notes have

been excluded from the Company’s computation of net loss per common share for the three months ended March 31, 2021 and 2020.

following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these

potential shares was antidilutive:

Three Months Ended

Convertible notes –

2,352,695,565

Convertible notes - warrants

Six Months Ended

14,689,060,954

Unvested RSUs

1,173,917,974

Convertible notes –

804,326,396 (1)

Convertible notes - warrants

As of June 30, 2019, many of the convertible notes had variable conversion prices and the shares issuable were estimated

based on the market conditions.

Pursuant to the note agreements, there were 105,349,305 shares of common stock reserved for

future note conversions as of June 30, 2019, respectively.

20,614,707,544

19,020,000,889

20,628,405,651

of Marh 31, 2021 all of the convertible notes had variable conversion prices and the shares issuable were estimated based on the

market conditions.

Pursuant to the note agreements, there were 6,078,578,968 shares of common stock reserved for future note

conversions as of March 31, 2021.

of March 31, 2020 many of the convertible notes had variable conversion prices and the shares issuable were estimated based on the

market conditions.

Pursuant to the note agreements, there were 360,7963,730 shares of common stock reserved for future note conversions

as of March 31, 2020.

Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement

and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the

statements of operations.

stock options issued to employees and members of the board of directors for their services, the Company estimates the grant date

fair value of each option using the Black-Scholes option pricing model.

The use of the Black-Scholes option pricing model requires

management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent

with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock.

For awards subject

to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation

expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which

is generally the vesting term.

Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant

and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements

of operations.

stock options issued to employees and members of the board of directors for their services, the Company estimates the grant date fair

value of each option using the Black-Scholes option pricing model.

The use of the Black-Scholes option pricing model requires management

to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the

expected life of the option, risk-free interest rates and expected dividend yields of the common stock.

For awards subject to service-based

vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to

the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting

Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

to Accounting Standards Update (“ASU”) 2018-07 Compensation –

Stock Compensation (Topic 718):

Improvements to

Nonemployee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services

in accordance ASC 718.

The Company uses valuation methods and assumptions to value the stock options that are in line with the

process for valuing employee stock options noted above.

the shares underlying the Company’s 2010 Equity Participation Plan (the “Plan”) are registered, the Company

estimates the fair value of the awards granted under the Plan based on the market value of its freely tradable common stock as

reported on the OTC Markets.

On February 3, 2020, the Company was advised by OTC Markets Group that, based upon the closing bid

price of the Company’s common stock being less than $0.001 per share for five consecutive trading days, the Company’s

Improvements to Nonemployee

Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance ASC 718.

The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee

stock options noted above.

the shares underlying the Company’s 2010 Equity Participation Plan and the 2021 Stock Incentive Plan (the “Plans”)

are registered, the Company estimates the fair value of the awards granted under the Plans based on the market value of its freely tradable

common stock as reported on the OTC Markets.

On February 3, 2020, the Company was advised by OTC Markets Group that, based upon the closing

bid price of the Company’s common stock being less than $0.001 per share for five consecutive trading days, the Company’s

common stock was moved from the OTCQB Market to the Pink Market effective at market open on February 10, 2020.

The fair value

of the Company’s restricted equity instruments was estimated by management based on observations of the cash sales prices

of both restricted shares and freely tradable shares.

Awards granted to directors are treated on the same basis as awards granted

to employees.

Upon the exercise of an option or warrant, the Company issues new shares of common stock out of its authorized shares.

The fair value of the

Company’s restricted equity instruments was estimated by management based on observations of the cash sales prices of both restricted

shares and freely tradable shares.

Awards granted to directors are treated on the same basis as awards granted to employees.

exercise of an option or warrant, the Company issues new shares of common stock out of its authorized shares.

tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed

consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply

to taxable income in the years in which 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 includes the enactment date.

Deferred tax assets,

including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income

in the years in which 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 includes the enactment date.

Company utilizes ASC 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected

future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax

The Company accounts for income taxes using the asset and liability method to compute the differences between the tax

basis of assets and liabilities and the related financial amounts, using currently enacted tax rates.

A valuation allowance is

recorded when it is “more likely than not”

future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns.

The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets

and liabilities and the related financial amounts, using currently enacted tax rates.

A valuation allowance is recorded when it is “more

likely than not”

that a deferred tax asset will not be realized.

At June 30, 2020 and December

31, 2019, the Company’s net deferred tax asset has been fully reserved.

At March 31, 2021 and December 31, 2020, the Company’s net

deferred tax asset has been fully reserved.

uncertain tax positions that meet a “more likely than not”

threshold, the Company recognizes the benefit of uncertain

tax positions in the unaudited condensed consolidated financial statements.

The Company’s practice is to recognize interest

and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements

of operations when a determination is made that such expense is likely.

threshold, the Company recognizes the benefit of uncertain tax

positions in the unaudited condensed consolidated financial statements.

The Company’s practice is to recognize interest and penalties,

if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations when

a determination is made that such expense is likely.

Financial Instruments

Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify

as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards

Board (“FASB”) ASC.

The accounting treatment of derivative financial instruments requires that the Company record

embedded conversion options (“ECOs”) and any related freestanding instruments at their fair values as of the inception

date of the agreement and at fair value as of each subsequent balance sheet date.

Any change in fair value is recorded as non-operating,

non-cash income or expense for each reporting period at each balance sheet date.

Conversion options are recorded as a discount

to the host instrument and are amortized as amortization of debt discount on the unaudited condensed consolidated financial statements

over the life of the underlying instrument.

The Company reassesses the classification of its derivative instruments at each balance

If the classification changes as a result of events during the period, the contract is reclassified as of the date

of the event that caused the reclassification.

Multinomial Lattice Model and Black-Scholes Model were used to estimate the fair value of the ECOs of convertible notes payable,

warrants, and stock options that are classified as derivative liabilities on the unaudited condensed consolidated balance sheets.

The models include subjective input assumptions that can materially affect the fair value estimates.

The expected volatility is

estimated based on the actual volatility during the most recent historical period of time equal to the weighted average life of

the instruments.

ASC 815-40-35 (“ASC 815”), the Company has adopted a sequencing policy, whereby, in the event that reclassification

of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate

it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares

will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving

the first allocation of shares.

Pursuant to ASC 815, issuances of securities to the Company’s employees and directors, or

to compensate grantees in a share-based payment arrangement, are not subject to the sequencing policy.

Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative

financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards Board (“FASB”)

The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options (“ECOs”)

and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each

subsequent balance sheet date.

Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period

at each balance sheet date.

Conversion options are recorded as a discount to the host instrument and are amortized as amortization of

debt discount on the unaudited condensed consolidated financial statements over the life of the underlying instrument.

The Company reassesses

the classification of its derivative instruments at each balance sheet date.

If the classification changes as a result of events during

the period, the contract is reclassified as of the date of the event that caused the reclassification.

Multinomial Lattice Model and Black-Scholes Model were used to estimate the fair value of the ECOs of convertible notes payable, warrants,

and stock options that are classified as derivative liabilities on the unaudited condensed consolidated balance sheets.

The models include

subjective input assumptions that can materially affect the fair value estimates.

The expected volatility is estimated based on the actual

volatility during the most recent historical period of time equal to the weighted average life of the instruments.

ASC 815-40-35 (“ASC 815”), the Company has adopted a sequencing policy, whereby, in the event that reclassification of contracts

from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient

authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the

basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares.

Pursuant to ASC 815, issuances of securities to the Company’s employees and directors, or to compensate grantees in a share-based

payment arrangement, are not subject to the sequencing policy.

February 2016, the FASB issued ASU No.

2016-02, Leases (“ASU 2016-02”)).

The standard requires all leases that have

a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use

(“ROU”) asset initially measured at the present value of amounts expected to be paid over the term.

Recognition of

the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing

Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over

the lease term.

Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization

of the ROU asset) and interest expense (for interest on the lease liability).

This standard, which the Company adopted on January

1, 2019, was applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest

comparative period presented in the unaudited condensed consolidated financial statements.

The adoption of ASU 2016 - 02 did not

have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period

of time in exchange for consideration.

On January 1, 2019, the Company adopted ASC 842 and it primarily affected the accounting

treatment for operating lease agreements in which the Company is the lessee.

accordance with ASC 842, Leases , the Company recognized an ROU asset and corresponding lease liability on its balance sheets

for its office space lease agreement.

See Note 9 for further discussion, including the impact on the Company’s unaudited

condensed consolidated financial statements and related disclosures.

The standard requires all leases that have a term

of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use (“ROU”)

asset initially measured at the present value of amounts expected to be paid over the term.

Recognition of the costs of these leases

on the income statement will be dependent upon their classification as either an operating or a financing lease.

Costs of an operating

lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term.

Costs for a financing

lease will be disaggregated and recognized as both an operating expense (for the amortization of the ROU asset) and interest expense

(for interest on the lease liability).

lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time

in exchange for consideration.

accordance with ASC 842, Leases , the Company recognized an ROU asset and corresponding lease liability on its balance sheets for

its office space lease agreement.

See Note 8 - Leases for further discussion, including the impact on the Company’s unaudited condensed

consolidated financial statements and related disclosures.

assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred.

Lease expense for

minimum lease payments is recognized on a straight-line basis over the lease term.

The lease terms may include options to extend

or terminate the lease if it is reasonably certain that the Company will exercise that option.

Lease expense for minimum

lease payments is recognized on a straight-line basis over the lease term.

The lease terms may include options to extend or terminate

the lease if it is reasonably certain that the Company will exercise that option.

in which the Company is the lessee are comprised of office rental.

All of the leases are classified as operating leases.

has a lease agreement for office space with a remaining term of 4.50 years as of June 30, 2020.

has a lease agreement for office space with a remaining term of 3.75 years as of March 31, 2021.

Subsequent Events

There were no

subsequent events or transactions requiring recognition or disclosure in the unaudited condensed consolidated financial statements,

and noted thereto, through the date the financial statements were issued.

Issued Accounting Standards

newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

March 2021, the FASB issued ASU 2021-03, Intangibles –

Goodwill and Other (Topic 350) (“ASU 2021-03”) which requires

an entity to identify and evaluate goodwill impairment triggering events when they occur to determine whether it is more likely than

not that the fair value of a reporting unit (or entity, if the entity has elected the accounting alternative for amortizing goodwill

and chosen that option) is less than its carrying amount.

If an entity determines that it is more likely than not that the goodwill is

impaired, it must test goodwill for impairment using the triggering event date as the measurement date.

An entity is required to disclose

the amount assigned to goodwill in total and by major business combination, or by reorganization event resulting in fresh-start-start

Also, the weighted average amortization period in total and the amortization period by major business combination, or by reorganization

event resulting in fresh-start reporting.

ASU 2021-03 was effective for the Company on January 1, 2021 and did not have a significant

impact on its unaudited condensed consolidated financial statement.

May 2021, the FASB issued ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50),

Compensation—

Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic

815- 40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options”

which clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified

written call options (for example, warrants) that remain equity classified after modification or exchange.

An entity should measure the

effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after

modification or exchange as follows:

i) for a modification or an exchange that is a part of or directly related to a modification or

an exchange of an existing debt instrument or line-of-credit or revolving-debt arrangements (hereinafter, referred to as a “debt”

or “debt instrument”), as the difference between the fair value of the modified or exchanged written call option and the

fair value of that written call option immediately before it is modified or exchanged;

ii) for all other modifications or exchanges,

as the excess, if any, of the fair value of the modified or exchanged written call option over the fair value of that written call option

immediately before it is modified or exchanged.

The amendments in this Update are effective for all entities for fiscal years beginning

after December 15, 2021, including interim periods within those fiscal years.

An entity should apply the amendments prospectively to

modifications or exchanges occurring on or after the effective date of the amendments.

The Company is currently evaluating the impact

of this standard on its unaudited condensed consolidated financial statements.

other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

INTANGIBLE ASSETS

Company is a party to a license agreement with the SCTC (as amended) (the “SCTC Agreement”).

Pursuant to the SCTC

Agreement, the Company obtained, among other things, a worldwide, exclusive, royalty-bearing license from the SCTC to utilize

or sublicense a certain medical device patent for the administration of specific cells and/or cell products to the disc and/or

spine (and other parts of the body) and a worldwide (excluding Asia and Argentina), exclusive, royalty-bearing license to utilize

or sublicense a certain method for culturing cells.

Pursuant to the license agreement with the SCTC, unless certain performance

milestones had been or are satisfied, the Company would have been required to pay to the SCTC $150,000 by April 2017 and an additional

$250,000 by April 2019 in order to maintain its exclusive rights with regard to the disc/spine technology.

In February 2017, the

Company received authorization from the Food and Drug Administration (the “FDA”) to proceed with a Phase 2 clinical

Based upon such authorization, the Company has satisfied a performance milestone such that the Company was not required

to pay to the SCTC a minimum amount of $150,000 by April 2017 to retain exclusive rights with regard to the disc/spine technology.

In addition, the Company believes that it has until February 2022 to complete the Phase 2 clinical trial in order to satisfy the

final performance milestone such that the Company was not required to pay the additional $250,000 by April 2019 pursuant to the

SCTC Agreement to maintain its exclusive rights.

Pursuant to the SCTC Agreement,

the Company obtained, among other things, a worldwide, exclusive, royalty-bearing license from the SCTC to utilize or sublicense a certain

medical device patent for the administration of specific cells and/or cell products to the disc and/or spine (and other parts of the

body) and a worldwide (excluding Asia and Argentina), exclusive, royalty-bearing license to utilize or sublicense a certain method for

culturing cells.

Pursuant to the license agreement with the SCTC, unless certain performance milestones had been or are satisfied, the

Company would have been required to pay to the SCTC $150,000 by April 2017 and an additional $250,000 by April 2019 in order to maintain

its exclusive rights with regard to the disc/spine technology.

In February 2017, the Company received authorization from the Food and

Drug Administration (the “FDA”) to proceed with a Phase 2 clinical trial.

Based upon such authorization, the Company has

satisfied a performance milestone such that the Company was not required to pay to the SCTC a minimum amount of $150,000 by April 2017

to retain exclusive rights with regard to the disc/spine technology.

In addition, the Company believes that it has until February 2022

to complete the Phase 2 clinical trial in order to satisfy the final performance milestone such that the Company was not required to

pay the additional $250,000 by April 2019 pursuant to the SCTC Agreement to maintain its exclusive rights.

assets consist of the following:

5 unchanged sentences

Amortization expense

Balance as of June 30, 2020

Weighted average remaining amortization period at June 30, 2020 (in years)

of intangible assets consists of the following:

Balance as of March 31, 2021

Weighted average remaining amortization period at March 31, 2021 (in years)

Amortization of intangible

assets consists of the following:

Patents and Trademarks

4 unchanged sentences

Amortization expense

Balance as of June 30, 2020

Balance as of March 31, 2021

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

3 unchanged sentences

Accrued general and administrative expenses

Accrued director compensation (1)

Accrued rent (1)

DIP and Plan costs related to DIP Funding and Plan (1)

Total accrued expenses

to ASC 852, Reorganizations , as of June 30, 2020, the Company reclassified all

allowable prepetition claims to liabilities subject to compromise on the consolidated

balance sheets.

NOTES PAYABLE AND DEBTOR-IN-POSSESSION FINANCING

summary of the notes payable activity during the six months ended June 30, 2020 is presented below:

Related Party Notes

represents DIP and Plan costs associated with the Auctus DIP Funding and the Plan.

NOTES PAYABLE

summary of the notes payable activity during the three months ended March 31, 2021 is presented below:

Convertible Notes

2 unchanged sentences

$ (5,366,869 )

Third-party purchases

Exchanges for equity

Conversions to equity

Extinguishment of notes payable

Recognition of debt discount

Accretion of interest expense

Amortization of debt discount

Reclassification to liabilities subject to compromise

Outstanding, June 30, 2020

Chapter 11 Reorganization

On March 20, 2020,

the Company filed a voluntary petition commencing a case under chapter 11 of title 11 of the U.S.

Code in the United States Bankruptcy

Court for the Eastern District of New York.

Pursuant to the Bankruptcy (see Note 10 –

Subsequent Events), for any outstanding

principal and interest at the date of the Company’s Chapter 11 petition (except for creditors who provided additional debt

financing in connection with the Bankruptcy), 100 shares of the Company’s common stock were issued for each dollar of allowed

claim, with such shares subject to leak-out restrictions prohibiting the holder from selling, without the consent of the Company,

more than 33% of the issued shares during each of the three initial 30 day periods following the Effective Date.

As a result of

the Chapter 11 petition, the conversion rights for the notes described in this Note 5 –

Notes Payable –

Notes –

Embedded Conversion Options and Note Provisions were rescinded and were subject to the conversion rights outlined

As a result of the chapter 11 reorganization, pursuant to ASC 852, Reorganizations , the Company has recorded all

prepetition liabilities at the expected allowable claim amounts as of June 30, 2020.

This resulted in the Company amortizing the

remaining debt discount of $2,583,107 to interest expense on the unaudited condensed consolidated statements of operations.

addition, pursuant to ASC 852, Reorganizations , as of June 30, 2020, the Company has reclassified the outstanding prepetition

notes payable to liabilities subject to compromise on the consolidated balance sheets.

of June 30, 2020 and December 31, 2019, related party notes consisted of notes payable issued to certain directors of the Company,

family members of an officer of the Company, and the Tuxis Trust (the “Trust”).

A former director and principal stockholder

of the Company (the “Director/Principal Stockholder”) serves as a trustee of the Trust, which was established for

the benefit of his immediate family.

the six months ended June 30, 2020, the Company issued to a former board member notes payable in the aggregate principal amount

of $353,762, which bore interest at the rate of 12% per annum and provided for original maturity date of March 10, 2020.

June 30, 2020, these notes are in default.

Subsequent to June 30, 2020, pursuant to the Bankruptcy (See Note 10 - Subsequent Events),

these notes were exchanged for a Secured Convertible Note in a principal amount of $490,698.

the six months ended June 30, 2020, the Company issued to a certain lender a convertible note payable in the principal amount

of $88,000 for aggregate cash proceeds of $85,000 The difference was recorded as a debt discount and will be amortized over the

term of the note.

The convertible note bore interest at 10% per annum payable at maturity with an original maturity date of January

The outstanding principal and accrued interest was convertible after 180 days at a conversion price of 61% of the lowest

daily volume weighted average price over the twenty days prior to the conversion date.

The convertible note contained a cross-default

provision and was in default as of June 30, 2020.

As a result, the convertible note bore a default interest of 22% per annum.

Subsequent to June 30, 2020, pursuant to the Bankruptcy (see Note 10 - Subsequent Events), the convertible note, in the aggregate

amount of $155,000 (including principal and accrued interest), was exchanged for 15,500,000 chares of the Company’s common

See below within Note 7- Derivative Liabilities for additional details regarding the ECO of the convertible note.

Exchanges and Other

the six months ended June 30, 2020, the Company and certain lenders exchanged convertible notes with bifurcated ECOs with an aggegate

net carrying amount of $1,580,587 (including an aggregate of $523,516 of principal less debt discount of $234,301, $126,043 of

accrued interest and $1,165,329 related to the separated ECOs accounted for as derivative liabilities) for an aggregate of 1,515,799,750

shares of the Company’s common stock at conversion prices ranging from $0.0001 and $0.01 per share.

In addition, prior to

the Petition Date, certain lenders intended to exchange outstanding debt (inclusive of accrued interest) for shares of the Company’s

common stock;

however, the Company did not have sufficient shares authorized or reserved to effect the exchanges.

outstanding debt was exchanged as part of the Plan at a rate of 100 shares for each dollar of the allowable claim at the Effective

Debtor-in-Possession

the six months ended June 30, 2020, and subsequent to the Petition Date, in connection with the Chapter 11 Case, the Company received

debtor-in-possession loans of $713,575 in the aggregate from Auctus.

proceeds from the DIP Funding were used (a) for working capital and other general purposes of the Company;

(b) United States Trustee

interest, fees, costs and expenses incurred in connection with the DIP Funding, including professional fees.

maturity date of the DIP Funding was to be the earliest to occur of (a) July 6, 2020;

(b) ten days following entry of an order

confirming a chapter 11 plan in the Chapter 11 Case;

or the Company’s assets;

or (d) the occurrence of an event of default under the promissory note evidencing the DIP Funding

(the “DIP Note”) following any applicable grace or cure periods.

on the outstanding principal amount of the DIP Note was to be payable in arrears on the maturity date at the rate of 8% per annum.

Upon the occurrence and during the continuance of an event of default, all obligations under the DIP Note were to bear interest

at a rate equal to the then current rate plus an additional 2% per annum.

expense for the three and six months ended June 30, 2020, related to the DIP Funding was $6,769.

to the Plan, the obligation to Auctus with respect to the DIP Funding has been exchanged for a Second Convertible Note (See Note

Subsequent Events).

Stockholders’

to June 30, 2020 and pursuant to the Chapter 11 plan of reorganization (see Note 10 - Subsequent Events), the Company filed a

Certificate of Amendment to its Certificate of Incorporation pursuant to which, among other things, the number of shares of common

stock authorized to be issued by the Company has been increased to 300,000,000,000 and the par value of the shares of its common

stock has been reduced to $0.0001 per share.

The effect of the change in par value has been reflected in the statement of changes

in stockholders’

deficit for the three and six months ended June 30, 2020 and 2019.

and Option Valuation

Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model.

term used for warrants and options issued to non-employees is the contractual life and the expected term used for options issued

to employees and directors is the estimated period of time that options granted are expected to be outstanding.

The Company utilizes

the “simplified”

method to develop an estimate of the expected term of “plain vanilla”

employee option

The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period

of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry.

The risk-free interest rate was determined from the implied yields from U.S.

Treasury zero-coupon bonds with a remaining term

consistent with the expected term of the instrument being valued.

Stock and Warrant Offering

the six months ended June 30, 2020, the Company issued 1,000,000 shares of the Company’s common stock and a five-year immediately

vested warrant for the purchase of 1,000,000 shares of the Company’s common stock with an exercise price of $0.015 per share

to a certain investor for gross proceeds of $10,000.

The warrants had an aggregate grant date fair value of $10,000.

were subject to the Company’s sequencing policy and, as a result, were initially recorded as derivative liabilities.

Note 7 - Derivative Liabilities for additional details.

Activity Summary

applying the Black-Scholes option pricing model to warrants granted or issued, the Company used the following assumptions:

For the Three Months Ended

For the Six Months Ended

Risk free interest rate

1.89% - 2.37 %

1.63% - 1.63 %

Contractual term (years)

Expected volatility

weighted average estimated fair value of the warrants granted during the three months ended June 30, 2020 and 2019 was approximately

$0 and $0.34, respectively.

The weighted average estimated fair value of the warrants granted during the six months ended

June 30, 2020 and 2019 was approximately $0.01 and $0.42 per share, respectively.

summary of the warrant activity during the six months ended June 30, 2020 is presented below:

Outstanding, January 1, 2020

Forfeited/Expired

Outstanding, June 30, 2020

Exercisable, June 30, 2020

following table presents information related to stock warrants at June 30, 2020:

Warrants Outstanding

Warrants Exercisable

Remaining Life

$0.00 - $0.015

$0.20 - $1.99

$2.00 - $2.99

$3.00 - $3.99

$4.00 - $4.99

$5.00 - $5.99

$6.00 - $7.99

$10.00 - $15.00

applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:

For the Three Months Ended

For the Six Months Ended

Risk free interest rate

1.71% - 2.42 %

1.71% - 2.62 %

Contractual term (years)

Expected volatility

Company did not issue stock options during the six months ended June 30, 2020.

weighted average estimated fair value of the stock options granted during the six months ended June 30, 2019 was approximately

summary of the option activity during the six months ended June 30, 2020 is presented below:

Outstanding, January 1, 2020

Outstanding, June 30, 2020

Exercisable, June 30, 2020

following table presents information related to stock options at June 30, 2020:

Options Outstanding

Options Exercisable

Remaining Life

$0.26 - $0.74

$0.75 - $0.99

$1.00 - $5.99

$6.00 - $19.99

$20.00 - $30.00

following table presents information related to stock option expense:

For the Three Months

For the Six Months

Research and development

General and administrative

DERIVATIVE LIABILITIES

following table sets forth a summary of the changes in the fair value of Level 3 derivative liabilities that are measured at fair

value on a recurring basis:

Beginning balance as of January 1, 2020

Issuance of derivative liabilities

Extinguishment of derivative liabilities in connection with convertible note repayments and exchanges

Change in fair value of derivative liabilities

Write-off of derivative liability pursuant to ASC 852

Ending balance as of June 30, 2020

applying the Multinomial Lattice and Black-Scholes option pricing models to derivatives issued and outstanding during the three

and six months ended June 30, 2020 and 2019, the Company used the following assumptions:

For the Three Months Ended

For the Six Months Ended

Risk free interest rate

1.71% - 2.42 %

0.10% –

1.71% - 2.62 %

Contractual term (years)

Expected volatility

Outstanding, March 31, 2021

$ (4,949,709 )

the six months ended June 30, 2020, the Company recorded new derivative liabilities in the aggregate amount of $2,473,532 and

$10,000 related to the ECOs of certain convertible notes payable and warrants subject to sequencing, respectively.

Notes Payable –

Convertible Notes for additional details.

See Note 6 –

Stockholders’

Deficit for warrants

issued and deemed to be derivative liabilities.

the six months ended June 30, 2020, the Company extinguished an aggregate of $1,165,329 of derivative liabilities in connection

with the exchanges of certain convertible notes payable into shares of the Company’s common stock.

See Note 5 –

Payable –

Conversions, Exchanges and Other for additional details.

the six months ended June 30, 2020 and prior to the Petition Date, the Company recomputed the fair value of ECOs recorded as derivative

liabilities to be $4,375,231.

The Company recorded a loss on the change in fair value of these derivative liabilities of $2,141,069.

the three months ended June 30, 2020 and subsequent to the Petition Date, pursuant to ASC 852, Reorganziations , the Company

wrote-off $4,375,231 of derivative liabilities related to the convertible notes included in the Chapter 11 Reorganization allowable

The Company recorded the write-off in reorganization items, net on the unaudited condensed consolidated statement of operations

as of June 30, 2020.

8 - COMMITMENTS AND CONTINGENCIES

Claims and Assessments

Enterprises, LLC

February 11, 2020, pursuant to an Order to Show Cause of the United States District Court of the Eastern District of New York

(the “Court”), in the matter of Coventry Enterprises, LLC vs.

BioRestorative Therapies, Inc., pending the hearing

of the plaintiff’s application for a preliminary injunction, the Court issued a temporary restraining order enjoining the

Company from issuing any additional shares of stock except for purposes of fulfilling the plaintiff’s share reserve requests

or conversion requests until such reserve requests were fulfilled and enjoining the Company from reserving authorized shares for

any other party until the plaintiff’s reserve requests were fulfilled.

Pursuant to a hearing held on February 13, 2020,

the temporary restraining order with regard to the Company issuing shares of common stock was not continued.

March 11, 2020, the Court ordered that the Company (i) convene and hold a special meeting, by no later than March 18, 2020, of

the Board of Directors of the Company (the “Board”), for approval of certain changes to the shares of the Company,

as set forth below;

(ii) approve a reverse split and/or a stock consolidation, solely of the Company’s outstanding shares,

at a ratio of 1,000 to 1, (iii) approve of the continuation of the Company’s then total authorized shares of common stock

at 2,000,000,000 shares;

and (iv) to call a special meeting of stockholders of the Company, within ten days of the special meeting

of the Board and by not later than March 25, 2020, to approve the foregoing.

On March 18, 2020, the Board considered the matter,

and, based upon the Court order, determined to approve the foregoing items, including the 1,000 to 1 reverse split, subject to

the Company having available funds to effectuate such items.

As discussed above in this Note 13 under “Chapter 11 Reorganization,”

on March 20, 2020, the Company filed a petition commencing its Chapter 1 Case.

As of the date of this report, the Company has

not effected the reverse split.

Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

of June 30, 2020 and December 31, 2019, the Company had remaining accruals of approximately $0 and $27,000, respectively, for

bonus milestones which were achieved in prior years and remain unpaid.

or Departure of Directors and Certain Officers

Company and Mark Weinreb, its former Chief Executive Officer (“

Former CEO”), were parties to an employment agreement

that, as amended, was to expire on December 31, 2019.

Pursuant to the employment agreement, as amended, in the event that (a)

the Former CEO’s employment was terminated by the Company without cause, or (b) the Former CEO terminated his employment

for “good reason”

(each as defined in the employment agreement), or (c) the term of the Former CEO’s employment

agreement was not extended beyond December 31, 2019 and within three months of such expiration date, his employment was terminated

by the Company without “cause”

or the Former CEO terminated his employment for any reason, the Former CEO was to be

entitled to receive severance in an amount equal to his then annual base salary and certain benefits, plus $100,000 (in lieu of

Further, in the event that the Former CEO’s employment was terminated by the Company without cause, or the Former

CEO terminated his employment for “good reason”, following a “change in control”

(as defined in the employment

agreement), the Former CEO would be entitled to receive severance in an amount equal to one and one-half times his then annual

base salary and certain benefits, plus $300,000 (in lieu of bonus).

Additionally, as part of the amended employment agreement,

the Former CEO was entitled to new performance-based cash bonuses payable for the years ending December 31, 2018 and 2019, such

that an aggregate of up to 50% of the Former CEO’s then annual base salary per annum could be earned for such year pursuant

to the satisfaction of such goals.

The Former CEO resigned his employment with the Company on November 16, 2020, the effective

date of the Chapter 11 reorganization.

Based upon such termination of employment, the Former CEO was entitled to receive his severance

of $400,000 and certain benefits plus $100,000, and the option accelerations as discussed above.

The severance amount was generally

considered an unsecured claim in the Company’s Chapter 11 Case and the Former CEO received shares of the Company’s

common stock in exchange for such claim in a manner consistent with other unsecured creditors.

March 16, 2020, the Company and Mark Weinreb, its Chief Executive Officer, entered into an agreement pursuant to which, among

other matters, the term of his employment agreement with the Company was extended to the earlier of (i) September 30, 2020 or

(ii) the effective date of a plan of liquidation of the Company.

of Convertible Notes

the six months ended June 30, 2020, certain lenders requested to exchange a portion of their outstanding convertible note principal

and accrued interest for shares of the Company’s common stock.

As of the Petition Date these shares had yet to be issued

to the lenders;

however, the shares of the Company’s common stock issued for unsecured claims as part of the Plan to the

certain lenders represented the aggregate unsecured claims less the principal and accrued interest that was represented in the

uneffected exchanges.

The Company believes that there may be a potential contingency related to the non-issued shares that would

be settled in shares of the Company’s common stock and not monetary compensation.

the adoption of ASC 842, operating lease agreements are required to be recognized on the balance sheet as ROU assets and corresponding

lease liabilities.

The Company is a party

to a lease for 6,800 square feet of space located in Melville, New York (the “Melville Lease”) with respect to its

corporate and laboratory operations.

The Melville Lease was scheduled to expire in March 2020 (subject to extension at the option

of the Company for a period of five years) and provided for an annual base rental during the initial term ranging between $132,600

and $149,260.

In June 2019, the Company exercised its option to extend the Melville Lease and entered into a lease amendment with

the lessor whereby the five-year extension term commenced on January 1, 2020 with annual base rent ranging between $153,748 and

August 1, 2019, the Company recognized ROU assets and lease liabilities of $638,246.

The Company elected to not recognize ROU

assets and lease liabilities arising from short-term office leases (leases with initial terms of twelve months or less, which

are deemed immaterial) on the balance sheets.

On June 1, 2019, the Company exercised its right to extend its existing lease of

office space for an additional five years.

measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated

incremental borrowing rate at August 1, 2019.

The weighted average incremental borrowing rate applied was 12%.

following table presents net lease cost and other supplemental lease information:

Six Months Ended June 30 2020

Operating lease cost (cost resulting from lease payments)

Short term lease cost

Sublease income

Net lease cost

Operating lease –

operating cash flows (fixed payments)

Operating lease –

operating cash flows (liability reduction)

Non-current leases –

right of use assets

Current liabilities –

operating lease liabilities

Non-current liabilities –

operating lease liabilities

minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the six months ended

June 30, 2020:

Operating Leases

Remainder of 2020

Total future minimum lease payments

Amount representing interest

Present value of net future minimum lease payments

SUBSEQUENT EVENTS

11 Reorganization

August 7, 2020, the Company and Auctus, the Company’s largest unsecured creditor and a stockholder as of the Petition Date, filed

an Amended Joint Plan of Reorganization (the “Plan”) and on October 30, 2020, the Bankruptcy Court entered an order (the

“Confirmation Order”) confirming the Plan, as amended.

Amendments to the Plan are reflected in the Confirmation Order.

November 16, 2020 (the “Effective Date”), the Plan became effective.

March 20, 2020, the Company filed a voluntary petition commencing a case under chapter 11 of title 11 of the U.S.

Code in the United

States Bankruptcy Court for the Eastern District of New York.

On August 7, 2020, the Company and Auctus, the Company’s largest

unsecured creditor and a stockholder as of the Petition Date, filed an Amended Joint Plan of Reorganization (the “Plan”).

Pursuant to the Bankruptcy, for any outstanding principal and interest at the date of the Company’s Chapter 11 petition (except

for creditors who provided additional debt financing in connection with the Bankruptcy), 100 shares of the Company’s common stock

were issued for each dollar of allowed claim, with such shares subject to leak-out restrictions prohibiting the holder from selling,

without the consent of the Company, more than 33% of the issued shares during each of the three initial 30 day periods following the

Effective Date.

As a result of the Chapter 11 petition, the conversion rights for the then outstanding notes were rescinded and were

subject to the conversion rights outlined above.

October 30, 2020, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan, as amended.

to the Plan are reflected in the Confirmation Order.

On November 16, 2020 (the “Effective Date”), the Plan became effective.

material features of the Plan, as amended and confirmed by the Confirmation Order, are as follows:

6 unchanged sentences

Effective Date) and the costs incurred by Auctus as the debtor-in-possession lender (the “DIP Costs”).

In addition, four

other persons and entitles (collectively, the “Other Lenders”) who held allowed general unsecured claims provided funding

to the Company in the aggregate amount of approximately $348,000 (the “Other Funding”

and together with the Initial Auctus

Funding, the “Funding”).

In consideration of the Funding, the Company has issued the following:

As of March 31,

2021, the DIP Costs and additional Plan costs were not finalized and recorded.

The DIP Costs and the additional Plan costs in the

aggregate are estimated to total $657,598, of which $500,000 and $157,598 were recorded in debt discount and accrued expenses, respectively,

on the consolidated balance sheets.

In addition, four other persons and entitles (collectively, the “Other Lenders”)

who held allowed general unsecured claims provided funding to the Company in the aggregate amount of approximately $348,000 (the

“Other Funding”

and together with the Initial Auctus Funding, the “Funding”).

In consideration of the Funding,

the Company has issued the following:

convertible notes of the Company (each, a “Secured Convertible Note”) in the principal amount equal to the Funding;

17 unchanged sentences

obligation to Auctus with respect to the DIP Funding has been exchanged for the following:

Secured Convertible Note in the principal amount of approximately $1,349,591 (110% DIP Funding) with a maturity date of November

Secured Convertible Note in the principal amount of approximately $1,349,591 (110% of the DIP Funding) with a maturity date of November

Class A Warrant to purchase 2,453,802,480 shares of common stock;

1 unchanged sentence

on a net exercise basis, pursuant to the terms of the Class B Warrant, with respect to the issuance of 512,124,200 shares of common

addition, Auctus shall be entitled to receive a Secured Convertible Note, a Class A Warrant and a Class B Warrant in exchange for its

allowed DIP Costs and allowed Plan costs in a manner in which the DIP Funding was treated.

claim arising from the secured promissory notes of the Company, dated February 20, 2020 and February 26, 2020, in the original

principal amounts of $320,200 and $33,562, respectively, issued to John Desmarais (“Desmarais”) (collectively,

the “Desmarais Notes”), was treated as an allowed secured claim in the aggregate amount of $490,699 and was

exchanged for a Secured Convertible Note in such amount.

stock, of which 217,796,200 and 294,328,000 were issued during 2020 and 2021, respectively).

addition, Auctus shall be entitled to receive a Secured Convertible Note in exchange for its allowed DIP Costs and allowed Plan costs

in a manner in which the DIP Funding was treated and may be entitled to a Class A Warrant and a Class B Warrant in consideration of such

claim arising from the secured promissory notes of the Company, dated February 20, 2020 and February 26, 2020, in the original principal

amounts of $320,200 and $33,562, respectively, issued to John Desmarais (“Desmarais”) (collectively, the “Desmarais

Notes”), was treated as an allowed secured claim in the aggregate amount of $490,699 and was exchanged for a Secured Convertible

Note in such amount.

claim arising from the promissory note issued in June 2016 by the Company to Desmarais in the original principal amount of $175,000

$175,000 was treated as an allowed general unsecured claim in the amount of $245,192 and was satisfied and exchanged

for 24,519,200 shares of common stock.

was treated as an allowed general unsecured claim in the amount of $245,192 and was satisfied and exchanged for 24,519,200 shares

of common stock.

claim arising from the promissory note issued in June 2016 by the Company to Tuxis Trust, an entity related to Desmarais, in the

1 unchanged sentence

was treated as an allowed general unsecured claim in such amount and exchanged for 44,453,400 shares of common stock;

was treated as an allowed secured claim in such amount and exchanged for a Secured Convertible Note in such amount with

a maturity date of November 16, 2023.

was treated as an allowed secured claim in such amount and exchanged for a Secured Convertible Note in such amount with a maturity

date of November 16, 2023.

of allowed general unsecured claims (other than Auctus and the Other Lenders) received an aggregate of 1,049,726,797 shares of common

stock (in book entry form) in exchange for approximately $10,497,268 in outstanding accounts payable and convertible debt (including

accrued interest), with such shares being subject to a leak-out restriction prohibiting each holder from selling, without consent

of the Company, more than 33% of its shares during each of the three initial 30 day periods following the Effective Date.

stock where were valued at the fair market value of the stock at issuance date of $14,381,259 with an associated loss of $3,883,991

recognized in Reorganization Items, net on the accompanying consolidated statement of operations in exchange for approximately $10,497,268

outstanding accounts payable and convertible debt (including accrued interest), with such shares being subject to a leak-out restriction

prohibiting each holder from selling, without consent of the Company, more than 33% of its shares during each of the three initial

30 day periods following the Effective Date.

and the Other Lenders have been issued, in respect of their allowed general unsecured claims ($3,261,819 in the case of Auctus and

19 unchanged sentences

and the par value of the shares of common stock has been reduced to $0.0001 per share.

Company recorded $142,692 and $362,041 of interest expense related to notes payable and convertible note payable for the three

months ended March 31, 2021 and 2020, respectively.

Exchanges and Other

the three months ended March 31, 2021, certain lenders converted unsecured convertible notes with with an aggegate amount of $213,673

(including $2,611 of accrued interest) for an aggregate of 19,409,575 shares of the Company’s common stock at a conversion

price of $0.01 per share.

Debtor-in-Possession

connection with the Chapter 11 Case, the Company received debtor-in-possession loans of $475,838 in the aggregate from Auctus.

the year ended December 31, 2020, and subsequent to the Petition Date, in connection with the Chapter 11 Case, the Company received debtor-in-possession

loans of $1,189,413 in the aggregate from Auctus.

proceeds from the DIP Funding were used (a) for working capital and other general purposes of the Company;

3 unchanged sentences

fees, costs and expenses incurred in connection with the DIP Funding, including professional fees.

maturity date of the DIP Funding was to be the earliest to occur of (a) July 6, 2020;

(b) ten days following entry of an order confirming

a chapter 11 plan in the Chapter 11 Case;

or (d) the occurrence of an event of default under the promissory note evidencing the DIP Funding (the “DIP Note”)

following any applicable grace or cure periods.

on the outstanding principal amount of the DIP Note was to be payable in arrears on the maturity date at the rate of 8% per annum.

the occurrence and during the continuance of an event of default, all obligations under the DIP Note were to bear interest at a rate

equal to the then current rate plus an additional 2% per annum.

discussed above, pursuant to the Plan, the obligation to Auctus with respect to the DIP Funding has been exchanged for a Second Convertible

Exercise of Warrants

During March 2021,

the Company issued an aggregate of 159,233,719 shares of common stock to certain investors, with a fair value of $0.01 per share,

as a result of the exercise of warrants associated with the Plan.

or Departure of Directors and Certain Officers

November 16, 2020, as contemplated by the Plan, Mr.

Jeffrey Radov, Paul Jude Tonna and Robert B.

Catell resigned as directors

of the Company and Mr.

Weinreb resigned as the Company’s President, Chief Executive Officer and Chairman of the Board.

as of the Effective Date, as contemplated by the Plan, Lance Alstodt was elected President, Chief Executive Officer, Chairman of the

Board and a director of the Company and Francisco Silva, the Company’s Vice President, Research and Development, was elected a

director of the Company.

March 18, 2021, Nickolay Kukekov was elected a director of the Company.

to the Plan, the obligation to Auctus with respect to the DIP Funding has been exchanged for two Secured Convertible Notes (See Note

Notes Payable –

Chapter 11 Reorganization) for an aggregate principal amount of $1,349,591 which bear interest at 7%

per annum with a maturity date of November 16, 2023.

In connection with the Secured Convertible Notes, Auctus received warrants to purchase

an aggregate of 3,680,703,720 shares of Company’s commons stock with exercise prices ranging between $0.0005 and $0.001 per share.

expense for the two Secured Convertible Notes was $23,294 for the three months ended March 31, 2021.

March 14, 2021, under the U.S.

Small Business Administration’s Paycheck Protection Program, the Company entered into a note payable

with a financial institution for $250,000 at an interest rate of 1% per annum and a maturity date of March 14, 2026.

Pursuant to the

note, principal and interest payments are deferred for ten months, which, at that time the Company may apply for loan forgiveness.

the Company does not apply for loan forgiveness, or if the loan forgiveness is denied, the Company will be required to make monthly payments

of $5,100 starting on January 14, 2022.

As of March 31, 2021, the Company has not applied for loan forgiveness.

All remaining unpaid

principal and interest is due and payable at the maturity date.

At March 31, 2021, $250,000 was outstanding.

minimum payments under the above notes payable following the three months ended March 31, 2021, are as follows:

Total future minimum payments

Stockholders’

Incentive Plan

March 18, 2021, the Company’s Board of Directors adopted the BioRestorative Therapies, Inc.

2021 Stock Incentive Plan (the “Plan”).

Pursuant to the Plan, a total of 4,700,000,000 shares of common stock are authorized to be issued pursuant to the grant of stock options,

restricted stock units, restricted stock and stock appreciation rights.

2021 Stock Incentive Plan (the “2021

Plan”).

Pursuant to the 2021 Plan, a total of 4,700,000,000 shares of common stock are authorized to be issued pursuant to the

grant of stock options, restricted stock units, restricted stock, stock appreciation rights and other incentive awards.

and Option Valuation

Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model.

The expected term used

for warrants and options issued to non-employees is the contractual life and the expected term used for options issued to employees and

directors is the estimated period of time that options granted are expected to be outstanding.

The Company utilizes the “simplified”

method to develop an estimate of the expected term of “plain vanilla”

employee option grants.

The Company is utilizing an

expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of

the instrument being valued, of similarly positioned public companies within its industry.

The risk-free interest rate was determined

from the implied yields from U.S.

Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument

being valued.

Activity Summary

applying the Black-Scholes option pricing model to warrants granted or issued, the Company used the following assumptions:

the Three Months Ended

free interest rate

weighted average estimated fair value of warrants granted during the three months ended March 31, 2020 was $0.01 per

the three months ended March 31, 2021, the Company issued an aggregate of 294,328,000 shares of the Company’

common stock, as a

result of the cashless exercise of 313,019,749 warrants to Auctus.

summary of the warrant activity during the three months ended March 31, 2021 is presented below:

January 1, 2021

15,002,388,203

(313,019,749 )

March 31, 2021

14,689,060,954

$ 165,904,440

March 31, 2021

14,689,060,954

$ 165,904,440

following table presents information related to stock warrants at March 31, 2021:

14,682,649,518

14,689,060,954

applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:

For the Three Months Ended

Risk free interest rate

Expected term (years)

Expected volatility

Expected dividends

Company granted options for the purchase of 2,347,835,948 shares of common stock during the three months ended March 31, 2021.

Company did not issue stock options during the three months ended March 31, 2020.

The grant date fair value of options issued during the three months ended March 31, 2021 was $27,736,052.

summary of the option activity during the three months ended March 31, 2021 is presented below:

January 1, 2021

2,347,835,948

March 31, 2021

2,352,695,565

March 31, 2021

1,178,636,261

following table presents information related to stock options at March 31, 2021:

2,347,835,948

1,173,917,974

2,352,695,565

1,178,636,261

March 18, 2021, the Company, pursuant to two employment agreements, granted to its Chief Executive Officer and Chairman of the Board

and its Vice President, Research and Development options to purchase an aggregate of 2,347,835,948 shares of the Company’s common

stock (See Note 7 –

Commitments and Contingencies).

The options have an exercise price of $0.0119 per share and vest to the extent

of 50% on the date of grant, 25% on the one-year anniversary of the grant date, and 25% on the two-year anniversary of the grant date.

to the 2021 Plan, the Company grants RSUs to employees, consultants, or non-employee directors (“Eligible Individuals”).

The number, terms, and conditions of the RSUs that are granted to Eligible Individuals are determined on an individual basis by the plan

administrator.

On the distribution date, the Company shall issue to the Eligible Individual one unrestricted, fully transferable

share of the Company’s common stock (or the fair market value of one such share in cash) for each vestded and nonforfeitable RSU.

March 18, 2021, the Company, pursuant to two employment agreements, granted an aggregate of 1,173,917,974 RSUs to its Chief Executive

Officer and Chairman of the Board and its Vice President, Research and Development (See Note 7 –

Commitments and Contingencies)

with a fair value of $0.0119 per share.

The RSUs vest to the extent of one-third on the one-year anniversary of the grant date, one-third

on the two-year anniversary of the grant date, and one-third on the three-year anniversary of the grant date.

summary of our unvested RSUs as of March 31, 2021 is as follows:

January 1, 2021

1,173,917,974

March 31, 2021

1,173,917,974

following table presents information related to stock compensation expense:

the Three Months Ended

and development

and administrative

7 - COMMITMENTS AND CONTINGENCIES

Claims and Assessments

Enterprises, LLC

February 11, 2020, pursuant to an Order to Show Cause of the United States District Court of the Eastern District of New York (the “Court”),

in the matter of Coventry Enterprises, LLC vs.

BioRestorative Therapies, Inc., pending the hearing of the plaintiff’s application

for a preliminary injunction, the Court issued a temporary restraining order enjoining the Company from issuing any additional shares

of stock except for purposes of fulfilling the plaintiff’s share reserve requests or conversion requests until such reserve requests

were fulfilled and enjoining the Company from reserving authorized shares for any other party until the plaintiff’s reserve requests

were fulfilled.

Pursuant to a hearing held on February 13, 2020, the temporary restraining order with regard to the Company issuing shares

of common stock was not continued.

March 11, 2020, the Court ordered that the Company (i) convene and hold a special meeting, by no later than March 18, 2020, of the Board

of Directors of the Company (the “Board”), for approval of certain changes to the shares of the Company, as set forth below;

(ii) approve a reverse split and/or a stock consolidation, solely of the Company’s outstanding shares, at a ratio of 1,000 to 1,

(iii) approve of the continuation of the Company’s then total authorized shares of common stock at 2,000,000,000 shares;

to call a special meeting of stockholders of the Company, within ten days of the special meeting of the Board and by not later than March

25, 2020, to approve the foregoing.

On March 18, 2020, the Board considered the matter, and, based upon the Court order, determined to

approve the foregoing items, including the 1,000 to 1 reverse split, subject to the Company having available funds to effectuate such

As discussed above in Note 5 –

Notes Payable –

Chapter 11 Reorganization on March 20, 2020, the Company filed a petition

commencing its Chapter 11 Case.

As of the date of this report, the Company has not effected the reverse split.

Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

or Departure of Directors and Certain Officers

March 18, 2021, the Company and Lance Alstodt, its President, Chief Executive Officer and Chairman of the Board, entered into an employment

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Alstodt pursuant to the Plan of (i) a ten year option for

the purchase of 1,173,917,974 shares of common stock of the Company and (ii) 586,958,987 restricted stock units of the Company (“RSUs”).

the purchase of 1,173,917,974 shares of common stock of the Company and (ii) 586,958,987 RSUs of the Company (See Note 6 –

Stockholders’

Deficit) for additional information.

March 18, 2021, the Company and Francisco Silva, its Vice President, Research and Development, entered into an employment agreement (the

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Silva pursuant to the Plan of (i) a ten year option for the purchase of 1,173,917,974 shares

of common stock of the Company and (ii) 586,958,987 RSUs.

of common stock of the Company and (ii) 586,958,987 RSUs of the Company (See Note 6 –

Stockholders’

Deficit) for additional

of Convertible Notes

the year ended December 31, 2020 and prior to the Petition Date, certain lenders requested to exchange a portion of their outstanding

convertible note principal and accrued interest for shares of the Company’s common stock.

As of the Petition Date these shares

had yet to be issued to the lenders;

however, the shares of the Company’s common stock issued for unsecured claims as part of the

Plan to the certain lenders represented the aggregate unsecured claims less the principal and accrued interest that was represented in

the uneffected exchanges.

The Company believes that there may be a potential contingency related to the non-issued shares that would

be settled in shares of the Company’s common stock and not monetary compensation.

the adoption of ASC 842, operating lease agreements are required to be recognized on the balance sheet as ROU assets and corresponding

lease liabilities.

Company is a party to a lease for 6,800 square feet of space located in Melville, New York (the “Melville Lease”) with respect

to its corporate and laboratory operations.

The Melville Lease was scheduled to expire in March 2020 (subject to extension at the option

of the Company for a period of five years) and provided for an annual base rental during the initial term ranging between $132,600 and

In June 2019, the Company exercised its option to extend the Melville Lease and entered into a lease amendment with the lessor

whereby the five-year extension term commenced on January 1, 2020 with annual base rent ranging between $153,748 and $173,060.

measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated

incremental borrowing rate at August 1, 2019.

The weighted average incremental borrowing rate applied was 12%.

following table presents net lease cost and other supplemental lease information:

Months Ended March 31, 2021

Months Ended March 31, 2020

lease cost (cost resulting from lease payments)

term lease cost

lease –

operating cash flows (fixed payments)

lease –

operating cash flows (liability reduction)

leases –

right of use assets

liabilities –

operating lease liabilities

liabilities –

operating lease liabilities

minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the three months ended

March 31, 2021:

(excluding the three months ended March 31, 2021)

future minimum lease payments

representing interest

value of net future minimum lease payments

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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to future events and financial performance.

Forward-looking

statements are projections in respect of future events or our future financial performance.

In some cases, you can identify forward-looking

statements by terminology such as “may,”

Forward-looking statements are projections in respect of future events or our future financial

In some cases, you can identify forward-looking statements by terminology such as “may,”

“should,”

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or “continue”

or the negative

of these terms or other comparable terminology.

These statements include statements regarding the

intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements

Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and

involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks

set forth in the section entitled “Risk Factors”

in our Annual Report on Form 10-K for the fiscal year ended December 31,

2019, as filed with the U.S.

Securities and Exchange Commission (the “SEC”) on March 18, 2021, any of which may cause our

company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from

any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements.

and factors include, by way of example and without limitation:

or the negative of these terms or other comparable terminology.

These statements include

statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions

on which such statements are based.

Prospective investors are cautioned that any such forward-looking statements are not guarantees of

future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such

forward-looking statements.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors,

including the risks set forth in the section entitled “Risk Factors”

in our Annual Report on Form 10-K for the fiscal year

ended December 31, 2020, as filed with the U.S.

Securities and Exchange Commission (the “SEC”) on April 30, 2021, any of

which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially

different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements.

These risks and factors include, by way of example and without limitation:

ability to obtain financing needed to commence and complete our clinical trials;

ability to achieve and sustain profitability of the existing lines of business through expansion;

ability to successfully develop and commercialize BRTX-100, our lead product candidate for the treatment of chronic lumbar disc disease;

ability to retain exclusive rights with regard to our licensed technology;

ability to protect our proprietary rights;

ability to achieve and sustain profitability of the existing lines of business;

ability to attract and retain world-class research and development talent;

ability to identify potential acquisition targets within predetermined parameters;

ability to successfully execute acquisitions, integrate the acquired businesses and create synergies;

ability to attract and retain key science, technology or management personnel and to expand our management team;

ability to attract and retain key science, technology and management personnel and to expand our management team;

accuracy of estimates regarding expenses, future revenue, capital requirements, profitability, and needs for additional financing;

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of COVID-19);

ability to attract and retain clients;

ability to attract and retain customers;

ability to navigate through the increasingly complex therapeutic regulatory environment.

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refer to BioRestorative Therapies, Inc., a Delaware corporation (“BRT”), and its wholly-owned subsidiary,

Stem Pearls, LLC, a Delaware limited liability company (“Stem Pearls”).

Stem Pearls, LLC, a New York limited liability company (“Stem Pearls”).

Unless otherwise specified, all dollar amounts are

28 unchanged sentences

See Note 5 –

Events in Party I, Item I of this report for additional information.

develop therapeutic products and medical therapies using cell and tissue protocols, primarily involving adult stem cells.

We are currently

pursuing our Disc/Spine Program with our initial investigational therapeutic product and lead cell therapy candidate being called

We submitted an IND application to the FDA to obtain authorization to commence a Phase 2 clinical trial investigating

the use of BRTX-100 in the treatment of chronic lower back pain arising from degenerative disc disease.

We have received such

authorization from the FDA.

We intend to commence such clinical trial during the third quarter of 2021 (assuming the receipt of necessary

We have obtained a license to use technology for investigational adult stem cell treatment of disc and spine conditions, including

protruding and bulging lumbar discs.

The technology is an advanced stem cell injection procedure that may offer relief from lower back

pain, buttock and leg pain, and numbness and tingling in the leg and foot.

Payable in Part I, Item I of this report for additional information.

develop therapeutic products and medical therapies using cell and tissue protocols, primarily involving adult (non-embryonic) stem cells.

We are currently pursuing our Disc/Spine Program with our initial investigational therapeutic product being called BRTX-100 .

We submitted an IND application to the FDA to obtain authorization to commence a Phase 2 clinical trial investigating the use of BRTX-100 ,

our lead cell therapy candidate, in the treatment of chronic lower back pain arising from degenerative disc disease.

We have received

such authorization from the FDA.

We intend to commence such clinical trial during 2021 (assuming the receipt of necessary funding).

have obtained a license to use technology for investigational adult stem cell treatment of disc and spine conditions, including protruding

and bulging lumbar discs.

The technology is an advanced stem cell injection procedure that may offer relief from lower back pain, buttock

and leg pain, and numbness and tingling in the leg and foot.

We are also developing our ThermoStem Program .

pre-clinical program involves the use of brown adipose (fat) in connection with the cell-based treatment of type 2 diabetes and obesity

as well as hypertension, other metabolic disorders and cardiac deficiencies.

United States patents related to the ThermoStem Program

were issued in September 2015, January 2019, and March 2020;

a notice of allowance was issued in November 2020 for a United States

patent application in the ThermoStem Program and is expected to issue in 2021;

Australian patents related to the ThermoStem

Program were issued in April 2017 and October 2019;

a Japanese patent related to the ThermoStem Program was issued in December

This pre-clinical

program involves the use of brown adipose (fat) in connection with the cell-based treatment of type 2 diabetes and obesity as well as

hypertension, other metabolic disorders and cardiac deficiencies.

United States patents related to the ThermoStem Program were

issued in September 2015, January 2019, March 2020 and March 2021;

a notice of allowance was also issued in March 2021 for a separate

United States patent application in the ThermoStem Program and is expected to issue in the next few months;

Australian patents

related to the ThermoStem Program were issued in April 2017 and October 2019;

a Japanese patent related to the ThermoStem Program

was issued in December 2017;

Israeli patents related to the ThermoStem Program were issued in October 2019 and May 2020;

and European patents related

to the ThermoStem Program were issued in April 2020 and January 2021.

European patents related to the ThermoStem Program were issued in April 2020 and January 2021.

have licensed a patented curved needle device that is a needle system designed to deliver cells and/or other therapeutic products or

13 unchanged sentences

of Operations

of the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

financial results for the three months ended June 30, 2020 are summarized as follows in comparison to the three months ended June 30,

For The Three Months Ended

Operating Expenses:

Marketing and promotion

Research and development

General and administrative

Total Operating Expenses

Loss From Operations

Other Income (Expense):

Interest expense

Amortization of debt discount

Loss on extinguishment of notes payable, net

Change in fair value of derivative liabilities

Reorganization items, net

Total Other Income (Expense)

Net Income (Loss)

the three months ended June 30, 2020 and 2019, we generated $19,000 and $31,000, respectively, of royalty revenue in connection with

our sublicense agreement.

of the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

financial results for the three months ended March 31, 2021 are summarized as follows in comparison to the three months ended March 31,

The Three Months Ended

and promotion

and promotion expenses include advertising and promotion, marketing and seminars, meals, entertainment and travel expenses.

For the three

months ended June 30, 2020, marketing and promotion expenses decreased by $102,726, or 94%, from $108,849 to $6,123 as compared to the

three months ended June 30, 2019.

The decrease is primarily due to the Company eliminating its marketing plan as a result of reduced

spending during the Company’s Chapter 11 reorganization.

expect that marketing and promotion expenses will increase in the future as we increase our marketing activities following full commercialization

of our products and services.

expenses consist of consulting fees and stock-based compensation to consultants.

For the three months ended June 30, 2020, consulting

expenses decreased by $500,284, or 94%, from $533,873 to $33,589, as compared to the three months ended June 30, 2019.

The decrease is

primarily due to the Company eliminating the use of consultants as a result of reduced spending during the Company’s Chapter 11

reorganization.

and development

and development expenses include cash and non-cash compensation of (a) our Vice President of Research and Development;

(b) our Scientific

Advisory Board members;

and (c) laboratory staff and costs related to our brown fat and disc/spine initiatives.

Research and development

expenses are expensed as they are incurred.

For the three months ended June 30, 2020, research and development expenses decreased by

$180,170, or 41%, from $441,723 to $261,553, as compared to the three months ended June 30, 2019.

The decrease is primarily due to the

Company eliminating costs as a result of reduced spending during the Company’s Chapter 11 reorganization.

expect that our research and development expenses will increase with the recommencement of our research and development initiatives during

the year ending December 31, 2021, following our emergence from Chapter 11.

and administrative

and administrative expenses consist primarily of salaries, bonuses, payroll taxes, severance costs and stock-based compensation to employees

(excluding any cash or non-cash compensation of our Vice President of Research and Development and our laboratory staff), as well as

corporate expenses such as legal and professional fees, investor relations and occupancy related expenses.

For the three months ended

June 30, 2020, general and administrative expenses decreased by $896,036, or 83%, from $1,075,359 to $179,323, as compared to the three

months ended June 30, 2019.

The decrease is primarily due to the Company eliminating certain costs as a result of reduced spending during

the Company’s Chapter 11 reorganization.

expect that our general and administrative expenses will increase as we expand our staff, develop our infrastructure and incur additional

costs to support the growth of our business during the year ending December 31, 2021, following our emergence from Chapter 11.

the three months ended June 30, 2020, interest expense decreased $303,799, or 93%, as compared to the three months ended June 30, 2019.

The decrease was due to the prepetition outstanding notes payable being reclassified to liabilities subject to compromise and as a result,

pursuant to ASC 852, Reorganizations , and new accrued interest is related to the debtor-in-possession financing.

Operating Expenses

From Operations

(15,054,656 )

of debt discount

the three months ended June 30, 2020, amortization of debt discount decreased $991,261, or 100%, as compared to the three months ended

June 30, 2019.

The decrease was due to the prepetition outstanding notes payable being reclassified to liabilities subject to compromise

and as a result, pursuant to ASC 852, Reorganizations , the remaining debt discount was written off to reorganization items on

the unaudited condensed consolidated statements of operations.

on extinguishment of notes payable, net

the three months ended June 30, 2020, we did not record a loss on extinguishment of notes payable, net as compared to a loss on extinguishment

of notes payable, net of $552,109 for the three months ended June 30, 2019.

The decrease was due to the prepetition outstanding notes

payable being reclassified to liabilities subject to compromise pursuant to ASC 852, Reorganizations .

in fair value of derivative liabilities

the three months ended June 30, 2020, we did not record a gain (loss) related to the change in fair value of derivative liabilities due

to the Company writing off derivative liabilities related to the convertible notes included in the Chapter 11 Reorganization allowable

claims, pursuant to ASC 852, Reorganizations , as compared to a loss related to the change in fair value of derivative liabilities

of $157,049 for the three months ended June 30, 2019.

Reorganization

items, net consists primarily of costs associated the post-petition Chapter 11 bankruptcy.

For the three months ended June 30, 2020,

reorganization items, net increased $3,361,416, or 100%, as compared to the three months ended June 30, 2019.

The increase was due to,

pursuant to ASC 852, Reorganizations ¸

legal fees associated with the Chapter 11 reorganization and the write-off of derivative

liabilities related to the convertible notes included in the Chapter 11 Reorganization allowable claims.

of the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

financial results for the six months ended June 30, 2020 are summarized as follows in comparison to the six months ended June 30, 2019:

For The Six Months Ended

Operating Expenses:

Marketing and promotion

Research and development

General and administrative

Total Operating Expenses

Loss From Operations

Other Expense

Interest expense

Amortization of debt discount

Loss on extinguishment of notes payable, net

Change in fair value of derivative liabilities

Reorganization items, net

Total Other Expense

$ (15,653,330 )

the six months ended June 30, 2020 and 2019, we generated $45,000 and $60,000, respectively, of royalty revenue in connection with our

sublicense agreement.

the three months ended March 31, 2021 and 2020, we generated $18,000 and $26,000, respectively, of royalty revenue in connection with

our sublicense agreement.

and Promotion

and promotion expenses include advertising and promotion, marketing and seminars, meals, entertainment and travel expenses.

months ended June 30, 2020, marketing and promotion expenses decreased by $96,555, or 77%, from $124,686 to $28,131 as compared to the

six months ended June 30, 2019.

The decrease is primarily due to the Company eliminating its marketing plan as a result of reduced spending

prior to and during the Company’s Chapter 11 reorganization.

For the three

months ended March 31, 2021, marketing and promotion expenses decreased by $19,408, or 88%, from $22,008 to $2,600 as compared to the

three months ended March 31, 2020.

The decrease is primarily due to the Company’s reduced marketing plan as the Company continues

to emerge from its Chapter 11 reorganization.

expect that marketing and promotion expenses will increase in the future as we increase our marketing activities following full commercialization

1 unchanged sentence

expenses consist of consulting fees and stock-based compensation to consultants.

For the six months ended June 30, 2020, consulting expenses

decreased by $1,066,006, or 94%, from $1,133,607 to $67,601, as compared to the six months ended June 30, 2019.

The decrease is primarily

due to the Company eliminating the use of consultants as a result of reduced spending prior to and during the Company’s Chapter

11 reorganization.

For the three months ended March 31, 2021, consulting

expenses decreased by $25,623, or 75%, from $34,012 to $8,389, as compared to the three months ended March 31, 2020.

The decrease is

primarily due to the Company’s reduced usage of consultants as the Company continues to emerge from its Chapter 11 reorganization.

and Development

5 unchanged sentences

expenses are expensed as they are incurred.

For the six months ended June 30, 2020, research and development expenses decreased by $448,8484,

or 50%, from $896,729 to $447,881, as compared to the six months ended June 30, 2019.

The decrease is primarily due to the Company eliminating

costs as a result of reduced spending prior to and during the Company’s Chapter 11 reorganization.

For the three months ended March 31, 2021, research and development expenses decreased by

$21,075, or 11%, from $186,328 to $165,254, as compared to the three months ended March 31, 2020.

The decrease is primarily due to the

decrease of approximately $35,000 in stock compensation allocated to the Company’s research and development activities.

expect that our research and development expenses will increase with the recommencement of our research and development initiatives during

the year ending December 31, 2021, following our emergence from Chapter 11.

the year ending December 31, 2021.

and Administrative

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corporate expenses such as legal and professional fees, investor relations and occupancy related expenses.

For the six months ended June

30, 2020, general and administrative expenses decreased by $1,580,154, or 67%, from $2,362,118 to $781,964, as compared to the six months

ended June 30, 2019.

The decrease is primarily due to the Company eliminating certain costs as a result of reduced spending prior to

and during the Company’s Chapter 11 reorganization.

expect that our general and administrative expenses will increase as we expand our staff, develop our infrastructure and incur additional

costs to support the growth of our business during the year ending December 31, 2021, following our emergence from Chapter 11.

the six months ended June 30, 2020, interest expense decreased $334,817, or 52%, as compared to the six months ended June 30, 2019.

decrease was primarily due to the prepetition outstanding notes payable being reclassified to liabilities subject to compromise during

and as a result, pursuant to ASC 852, Reorganizations , and new accrued interest is related to the debtor-in-possession financing.

For the three months ended

March 31, 2021, general and administrative expenses increased by $14,293,772, or 2,372%, from $602,641 to $14,896,413, as compared to

the three months ended March 31, 2020.

The increase is primarily due to an increase of approximately $14,077,000 in stock-based compensation

resulting from the issuances of 2,347,835,948 stock options and 1,173,917,974 RSUs.

expect that our general and administrative expenses will further increase as we expand our staff, develop our infrastructure and incur

additional costs to support the growth of our business.

the three months ended March 31, 2021, interest expense decreased $104,412, or 37%, as compared to the three months ended March 31, 2020.

The decrease was due to the decrease in outstanding notes payable as a result of our restructuring under our Chapter 11 reorganization.

of debt discount

the six months ended June 30, 2020, amortization of debt discount decreased $667,877, or 39%, as compared to the six months ended June

The decrease was due to the prepetition outstanding notes payable being reclassified to liabilities subject to compromise and

as a result, pursuant to ASC 852, Reorganizations , the remaining debt discount was written off to reorganization items on the

unaudited condensed consolidated statements of operations.

the three months ended March 31, 2021, amortization of debt discount decreased $649,366, or 61%, as compared to the three months ended

March 31, 2020.

The decrease was due to the decrease in outstanding notes payable as a result of our restructuring under our Chapter

11 reorganization.

on extinguishment of notes payable, net

the six months ended June 30, 2020, we recorded a loss on extinguishment of notes payable of $658,152 as compared to a loss

on extinguishment of notes payable of $1,000,595 for the six months ended June 30, 2019.

The decrease is associated with

debtholders’

exchanges of debt into equity securities.

the three months ended March 31, 2021, we did not record a loss on extinguishment of notes payable, as compared to a loss on extinguishment

of notes payable of $658,152 for the three months ended March 31, 2020.

in fair value of derivative liabilities

the six months ended June 30, 2020, we recorded a loss related to the change in fair value of derivative liabilities of $2,141,069 due

to the decrease in time value of embedded conversion options within certain convertible notes payable, as compared to a loss related

to the change in fair value of derivative liabilities of $203,313 for the six months ended June 30, 2019.

the three months ended March 31, 2021, we did not record a gain (loss) related to the change in fair value of derivative liabilities,

as compared to a loss related to the change in fair value of derivative liabilities of $2,141,069 for the three months ended March 31,

Reorganization

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items, net consists primarily of costs associated the post-petition Chapter 11 bankruptcy.

For the six months ended June 30, 2020, reorganization

items, net increased $781,306, or 100%, as compared to the six months ended June 30, 2019.

The increase was due to, pursuant to ASC 852,

Reorganizations ¸

legal fees associated with the Chapter 11 reorganization, the write-off of the outstanding debt discount

at the date of the bankruptcy, and the write-off of derivative liabilities related to the convertible notes included in the Chapter 11

Reorganization allowable claims.

For the three months ended March 31, 2021,

we did not record reorganization items, net as compared to reorganization costs, net of $2,580,110 for the three months ended March

and Capital Resources

measure our liquidity in a number of ways, including the following:

Working Capital Deficiency

$ (15,237,364 ) (1)

$ (13,651,716 )

Notes Payable and DIP financing (Gross)

capital deficiency at June 30, 2020, includes $14,700,000 of liabilities subject to compromise.

Capital Surplus

Payable (Gross)

of Additional Funds

upon our working capital deficiency and stockholders’

deficit of $15,237,364 and $14,441,181, respectively, as of June 30, 2020,

as of such date, we required additional equity and/or debt financing to continue our operations.

of June 30, 2020, our outstanding debt of $713,575, together with a daily interest rate of 8%, was due on November 16, 2023.

upon our accumulated deficit and stockholders’

deficit of $105,496,163 and $2,694,382, respectively, as of March 31, 2021, along

with our forecast for continued operating losses and our need for financing to fund our contemplated clinical trials, as of such date,

we required additional equity and/or debt financing to continue our operations.

of March 31, 2021, our outstanding debt of $9,426,039, together with interest at rates ranging between 5% and 7% per annum, was

due on November 16, 2023, except for the PPP loan.

As of March 31, 2021, the outstanding debt amount of $9,426,039 did

not include $657,598 of estimated DIP and Plan costs associated with the DIP Funding and the Plan (the “Auctus Costs”).

As of March 31, 2021, the Auctus Costs were not finalized.

Of the Auctus Costs, $500,000 and $157,598 are recorded in debt discount

and accrued expenses, respectively, on the unaudited condensed consolidated balance sheets.

operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures.

11 unchanged sentences

significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms.

unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared in

conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going

concern and the realization of assets and satisfaction of liabilities in the normal course of business.

The carrying amounts of assets

and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable

or settlement values.

The unaudited condensed consolidated financial statements do not include any adjustment that might result from

the outcome of this uncertainty.

following has been able to mitigate the above factors with regards to our ability to continue as a going concern:

(i) as part of our

Chapter 11 reorganization approximately $14,700,000 in outstanding debt and other liabilities were exchanged for (a) shares of common

stock, (b) new convertible notes or (c) new convertible notes and warrants to purchase shares of common stock;

(ii) we secured DIP financing

during our Chapter 11 reorganization in the aggregate amount of $1,189,413, and $3,848,548 in debt financing as part of our Chapter 11

reorganization to sustain operations;

and (iii) pursuant to the plan of reorganization, Auctus is required to loan to us, as needed and

subject to our becoming current in our SEC reporting obligations, an additional amount equal to $3,500,000, less the amount of Auctus’

DIP financing ($1,226,901, inclusive of accrued interest) and its DIP costs.

As a result of the above, we have sufficient cash to fund

operations for the twelve months subsequent to the filing date.

In addition, the Company will need to obtain further funding of at least

$12,000,000 to commence and complete a Phase 2 clinical study of the use of BRTX-100 .

the six months ended June 30, 2020 and 2019, our sources and uses of cash were as follows:

Six Months Ended June 30,

Net cash used in operating activities

$ (3,397,117 )

Net cash used in investing activities

Net cash provided by financing activities

Increase in cash

cash used in operating activities was $869,084 for the six months ended June 30, 2020, primarily due to the net loss of $4,675,112 which

was partially offset by non-cash expenses of $2,829,648 related to amortization of debt discount, accretion of interest expense, stock-based

compensation, change in fair value of derivative liabilities, write-off of derivative liabilities related to allowable claims and loss

on extinguishment of notes payable and $976,380 of cash provided by changes in the levels of operating assets and liabilities, primarily

as a result of decreases in accounts payable and increases in prepaid expenses and other current assets, partially offset by an increase

in accrued interest, expenses and other current liabilities.

Net cash used in operating activities was $3,397,117 for the six months

ended June 30, 2019, primarily due to net loss of $8,040,362, which was partially offset by non-cash expenses of $4,508,262 related to

amortization of debt discount, accretion of interest expense, stock-based compensation, change in fair value of derivative liabilities,

and loss on extinguishment of notes payable and $134,983 of cash provided by changes in the levels of operating assets and liabilities,

primarily as a result of decreases in accounts payable and increases in prepaid expenses and other current assets, partially offset by

an increase in accrued interest, expenses and other current liabilities.

the six months ended June 30, 2020 and 2019, net cash used in investing activities was $0 and $29,371, respectively, due to cash used

for the purchase of office and computer equipment.

cash provided by financing activities for the six months ended June 30, 2020 was $1,165,517, which was due to $441,762 of net proceeds

from debt financings, $713,715 of net proceeds from DIP financing, and $10,000 of net proceeds from an equity financing.

Net cash provided

by financing activities for the six months ended June 30, 2019 was $4,592,631, which was primarily due to $3,449,560

of net proceeds were from debt financings, $1,156,000 of proceeds were from equity financings and $12,929 was used for incurred offering

anticipate that the costs to commence and complete our Phase 2 clinical trials with regard to our Disc/Spine Program will be at least

In addition, we anticipate approximately $45,000,000 in additional funding will be needed to complete the clinical trials

using BRTX-100 (assuming the receipt of no revenues).

unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report have been prepared in conformity with

accounting principles generally accepted in the United States of America (“U.S.

GAAP”), which contemplate our continuation

as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business.

The carrying amounts

of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values.

The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

following events have mitigated the above factors with regards to our ability to continue as a going concern:

(i) as part of our Chapter

11 reorganization approximately $14,700,000 in outstanding debt and other liabilities were exchanged for (a) shares of common stock,

(b) new convertible notes with three year terms or (c) new convertible notes with three year terms and warrants to purchase shares of

common stock;

(ii) we secured DIP financing during our Chapter 11 reorganization in the aggregate amount of $1,189,413, and $3,848,548

in debt financing as part of our Chapter 11 reorganization to sustain operations;

and (iii) pursuant to the plan of reorganization, Auctus

is required to loan to us, as needed, an additional amount equal to $3,500,000, less the amount of Auctus’

DIP financing ($1,226,901,

inclusive of accrued interest) and its DIP costs.

As a result of the above, we have sufficient cash to fund operations for the twelve

months subsequent to the filing date.

In addition, the Company will need to obtain further funding of at least $12,000,000 to complete

a Phase 2 clinical study of the use of BRTX-100 .

the three months ended March 31, 2021 and 2020, our sources and uses of cash were as follows:

Months Ended March 31,

cash used in operating activities

cash provided by financing activities

(decrease) in cash

cash used in operating activities was $813,702 for the three months ended March 31, 2021, primarily due to the net loss of $15,653,330

which was partially offset by non-cash expenses of $14,519,965 related to amortization of debt discount and stock-based compensation

and $319,663 of cash provided by changes in the levels of operating assets and liabilities, primarily as a result of increases in accounts

payable and accrued interest, expenses and other current liabilities, partially offset by a decrease in prepaid assets and other current

Net cash used in operating activities was $448,646 for the three months ended March 31, 2020, primarily due to the net loss of

$7,550,772, which was partially offset by non-cash expenses of $6,950,957 related to amortization of debt discount, accretion of interest

expense, stock-based compensation, change in fair value of derivative liabilities, and loss on extinguishment of notes payable and $151,169

of cash provided by changes in the levels of operating assets and liabilities, primarily as a result of increases in accounts payable

and decreases in prepaid expenses and other current assets.

cash provided by financing activities for the three months ended March 31, 2021 was $250,000, which was due to $250,000 of net proceeds

from a loan received under the U.S.

Small Business Administration’s Paycheck Protection Program.

Net cash provided by financing

activities for the three months ended March 31, 2020 was $451,762, which was primarily due to $441,762 of net proceeds were debt financings

and $10,000 of proceeds from equity financings.

anticipate that the costs to complete our Phase 2 clinical trials with regard to our Disc/Spine Program will be at least $12,000,000.

In addition, we anticipate approximately $45,000,000 in additional funding will be needed to complete the clinical trials using BRTX-100

(assuming the receipt of no revenues).

As noted above in “Availability of Additional Funds”

we secured additional

funding as part of Chapter 11 reorganization in the aggregate amount of $5,037,961 as well as approximately $14,700,000 in outstanding

debt and other liabilities being exchanged for (a) shares of common stock, (b) new convertible notes or (c) new convertible notes and

warrants to purchase shares of common stock.

Additionally, pursuant to the plan of reorganization, Auctus is required to loan to us,

as needed and subject to our becoming current in our SEC reporting obligations, an additional amount equal to $3,500,000, less the amount

of Auctus’

DIP financing ($1,226,901, inclusive of accrued interest) and its DIP costs.

As a result of the above, we have sufficient

cash to fund operations for the twelve months subsequent to the filing date.

we secured additional funding

as part of Chapter 11 reorganization in the aggregate amount of $5,037,961 as well as approximately $14,700,000 in outstanding debt and

other liabilities being exchanged for (a) shares of common stock, (b) new convertible notes with three year terms or (c) new convertible

notes with three year terms and warrants to purchase shares of common stock.

Additionally, pursuant to the plan of reorganization, Auctus

is required to loan to us, as needed, an additional amount equal to $3,500,000, less the amount of Auctus’

DIP financing ($1,226,901,

inclusive of accrued interest) and its DIP costs.

As a result of the above, we have sufficient cash to fund operations for the twelve

months subsequent to the filing date.

do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.

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significant accounting policies are more fully described in the notes to our unaudited condensed consolidated financial statements included

herein for the quarter ended June 30, 2020 and in the notes to our consolidated financial statements included in our Annual Report on

Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 18, 2021.

herein for the quarter ended March 31, 2021 and in the notes to our consolidated financial statements included in our Annual Report on

Form 10-K for the year ended December 31, 2020, as filed with the SEC on April 30, 2021.

Value Measurement

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estimates and could cause actual results to differ from those estimates.

11 Accounting

unaudited condensed consolidated financial statements included herein have been prepared as if we were a going concern and in accordance

with Accounting Standards Codification (“ASC”) 852, Reorganizations .

industry conditions in 2019 negatively impacted the Company’s results of operations and cash flows and may continue to do so in

In order to decrease the Company’s indebtedness and maintain the Company’s liquidity levels suifficient to meet

its commitments, the Company undertook a number of actions, including minimizing capital expendtiures and further reducing its recurring

operating expenses.

The Company believed that even after taking these actions, it would not have sufficient liquidity to satisfy its

debt service obligations and meet its other financial obligations.

On March 20, 2020 (the “Petition Date”), the Company filed

a voluntary petition commencing a case under chapter 11 of title 11 of the U.S.

Code in the United States Bankruptcy Court for the Eastern

District of New York.

Reorganization

Company incurred costs after the Petition Date associated with the reorganization, primarily unamortized debt discount and postpetition

professional fees.

In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as reorganization

items, net within the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June

Subject To Compromise

unsecured and secured obligation that may be impacted by the Chapter 11 case have been classified as liabilities subject to compromise

on the Company’s unaudited condensed consolidated balance sheets.

These liabilities are reported at the amounts allowed as claims

by the Bankruptcy Court.

assets are comprised of trademarks and licenses with original estimated useful lives of 10 and 17.7 years, respectively.

14 unchanged sentences

at enacted tax rates in effect for the years in which the temporary differences are expected to reverse.

adopted the provisions of Accounting Standards Codification (“ASC”) Topic 740-10, which prescribes a recognition threshold

and measurement process for unaudited condensed consolidated financial statements recognition and measurement of a tax position taken

or expected to be taken in a tax return.

adopted the provisions of Accounting Standards Codification Topic 740-10, which prescribes a recognition threshold and measurement process

for unaudited condensed consolidated financial statements recognition and measurement of a tax position taken or expected to be taken

in a tax return.

measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award.

4 unchanged sentences

recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period.

the shares underlying our Equity Participation Plan were registered on May 27, 2014, we estimate the fair value of the awards granted

under the Plan based on the market value of our freely tradable common stock as reported on the OTC.

The fair value of our restricted

equity instruments was estimated by management based on observations of the cash sales prices of both restricted shares and freely tradable

Awards granted to directors are treated on the same basis as awards granted to employees.

the shares underlying our 2010 Equity Participation Plan and the 2021 Stock Incentive Plan (the “Plans”) were registered,

we estimate the fair value of the awards granted under the Plans based on the market value of our freely tradable common stock as reported

The fair value of our restricted equity instruments was estimated by management based on observations of the cash sales prices

of both restricted shares and freely tradable shares.

Awards granted to directors are treated on the same basis as awards granted to

and Recently Adopted Accounting Pronouncements

new and recently adopted accounting pronouncements are more fully described in Note 2 to our unaudited condensed consolidated financial

statements herein for the quarter ended June 30, 2020.

statements herein for the quarter ended March 31, 2021.

Sheet Arrangements

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements