What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 80 added, 91 removed, 186 unchanged (48% of the section changed)

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These risks and factors include, by way of example and without limitation:

ability to obtain financing needed to complete our clinical trials and implement our business

ability to successfully develop and commercialize BRTX-100, our lead product candidate for

the treatment of chronic lumbar disc disease, as well as our metabolic ThermoStem Program;

ability to obtain financing needed to complete our clinical trials and implement our business plan;

ability to successfully develop and commercialize BRTX-100, our lead product candidate for the treatment of chronic lumbar disc disease,

as well as our metabolic ThermoStem Program;

possible lack of exclusive rights with regard to our licensed technology;

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ability to attract and retain world-class research and development talent;

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;

interruptions resulting from geo-political actions, including war and terrorism or disease

outbreaks (such as the recent outbreak of COVID-19);

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;

interruptions resulting from geo-political actions, including war and terrorism or disease outbreaks (such as the recent outbreak

of COVID-19);

ability to attract and retain customers;

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report includes references to our federally registered trademarks, BioRestorative Therapies and Dragonfly design , BRTX-100,

and ThermoStem .

We also own an allowed trademark application for BRTX .

ThermoStem and BRTX .

The Dragonfly Logo is also registered with the U.S.

This report may also include references to trademarks, trade names and service marks that are the property of other

organizations.

This report may also include references to trademarks, trade names and service marks that are the property of

other organizations.

Solely for convenience, trademarks and trade names referred to in this report appear without the ®, SM

or ™ symbols, and copyrighted content appears without the use of the symbol ©, but the absence of use of these symbols does

not reflect upon the validity or enforceability of the intellectual property owned by us or third parties.

or ™ symbols, and copyrighted content appears without the use of the symbol ©, but the absence of use of these symbols

does not reflect upon the validity or enforceability of the intellectual property owned by us or third parties.

offices are located in Melville, New York where we have established a laboratory facility in order to increase our capabilities for the

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research applications.

of June 30, 2022, our accumulated deficit was $143.6 million.

We have historically only generated a modest amount of revenue, and our

losses have principally been operating expenses incurred in research and development, non-cash expenses such as stock-based compensation,

of September 30, 2022, our accumulated deficit was $148.3 million.

We have historically only generated a modest amount of revenue, and

our losses have principally been operating expenses incurred in research and development, non-cash expenses such as stock-based compensation,

plus costs associated with meeting the requirements of being a public company.

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of Operations

of the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

financial results for the three months ended June 30, 2022 are summarized as follows in comparison to the three months ended June 30,

of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

financial results for the three months ended September 30, 2022 are summarized as follows in comparison to the three months ended September

For The Three Months Ended

September 30,

Operating Expenses:

Marketing and promotion

Research and development

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$ (4,184,232 )

the three months ended June 30, 2022 and 2021, we generated $71,000 and $15,000, respectively, of royalty revenue in connection with

the three months ended September 30, 2022 and 2021, we generated $29,000 and $8,000, respectively, of royalty revenue in connection with

our sublicense agreement.

We do not expect that such increased level of revenues related to this agreement will continue in future periods.

and Promotion

and promotion expenses include advertising and promotion, marketing and seminars, meals, entertainment and travel expenses.

For the three

months ended June 30, 2022 and 2021, marketing and promotion expenses were insignificant.

Marketing and promotion expenses for the prior

year period included expenditures related to an advertising consulting agreement which was no longer in effect during 2022.

expenses consist of consulting fees and stock-based compensation to consultants.

For the three months ended June 30, 2022, consulting

expenses increased by $33,802, from $1,648 to $35,450, as compared to the three months ended June 30, 2021, primarily due to stock-based

compensation of $23,210 issued to consultants during the three months ended June 30, 2022.

and Development

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For the three months

ended June 30, 2022, research and development expenses increased by $914,326, or 568%, from $160,898 to $1,075,224, as compared to the

three months ended June 30, 2021, as we recommenced our research and development initiatives, including the engagement of PRC Clinical

to serve as our CRO in connection with our clinical trials, following the completion of our public offering of common stock and warrants

in November 2021.

ended September 30, 2022, research and development expenses increased by $751,760, or 317%, from $237,410 to $989,170, as compared to

the three months ended September 30, 2021, as we recommenced our research and development initiatives, including the engagement of PRC

Clinical to serve as our CRO in connection with our clinical trials, following the completion of our public offering of common stock

and warrants in November 2021.

expect that our higher level of research and development expenses will continue in subsequent fiscal periods.

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For the three months ended

June 30, 2022, general and administrative expenses increased by $0.2 million, or 6%, from $3.4 million to $3.6 million, as compared to

the three months ended June 30, 2021.

The increase is primarily due to an increase in stock-based compensation related to various consultants

and executives during three months ended June 30, 2022.

September 30, 2022, general and administrative expenses increased by approximately $0.2 million, or 5%, from approximately $3.5 million

to approximately $3.7 million, as compared to the three months ended September 30, 2021.

The increase is primarily due to an increase

in stock-based compensation related to various consultants and executives during the three months ended September 30, 2022.

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.

the three months ended June 30, 2022, interest expense decreased $460,719, or 91%, as compared to the three months ended June 30, 2021.

The decrease was due to the exchange of our outstanding interest-bearing convertible debt for common and preferred shares and warrants

in connection with our public offering in November 2021.

of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

financial results for the six months ended June 30, 2022 are summarized as follows in comparison to the six months ended June 30, 2021:

For The Six Months Ended

the three months ended September 30, 2022, interest expense decreased $466,704, or 94%, as compared to the three months ended September

The decrease was due to the exchange of our outstanding interest-bearing convertible debt for common and preferred shares and

warrants in connection with our public offering in November 2021.

of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

financial results for the nine months ended September 30, 2022 are summarized as follows in comparison to the nine months ended September

For The Nine Months Ended

September 30,

Operating Expenses:

Marketing and promotion

Research and development

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(14,292,121 )

(22,298,606 )

Other (Income) Expense:

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Gain on PPP loan forgiveness

Other expense

Total Other (Income) Expense

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$ (23,900,157 )

the six months ended June 30, 2022 and 2021, we generated $87,100 and $33,000, respectively, of royalty revenue in connection with our

sublicense agreement.

We do not expect that such increased level of revenues related to this agreement will continue in future periods.

and Promotion

and promotion expenses include advertising and promotion, marketing and seminars, meals, entertainment and travel expenses.

months ended June 30, 2022 and 2021, marketing and promotion expenses were insignificant.

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 six months ended June 30, 2022, consulting expenses

increased by $111,484, from $10,037 to $121,521, as compared to the six months ended June 30, 2021, primarily due to stock-based compensation

of $96,030 issued to consultants who provided public relations services during the six months ended June 30, 2022.

the nine months ended September 30, 2022 and 2021, we generated $116,100 and $41,000, respectively, of royalty revenue in connection

with our sublicense agreement.

We do not expect that such increased level of revenues related to this agreement will continue in future

and Development

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and (c) laboratory staff and costs related to our brown fat and disc/spine initiatives.

For the six months ended

June 30, 2022, research and development expenses increased by $1,524,409, or 467%, from $326,152 to $1,850,561, as compared to the six

months ended June 30, 2021, as we recommenced our research and development initiatives, including the engagement of PRC Clinical to serve

as our CRO in connection with our clinical trials, following the completion of our public offering of common stock and warrants in November

For the nine months ended

September 30, 2022, research and development expenses increased by $2,276,169, or 404%, from $563,562 to $2,839,731, as compared to the

nine months ended September 30, 2021, as we recommenced our research and development initiatives, including the engagement of PRC Clinical

to serve as our CRO in connection with our clinical trials, following the completion of our public offering of common stock and warrants

in November 2021.

expect that our higher level of research and development expenses will continue in subsequent fiscal periods.

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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, 2022, general and administrative expenses decreased by $10.5 million, or 57%, from $18.3 million to $7.8 million, as compared to

the six months ended June 30, 2021.

The decrease is primarily due to a decrease of approximately $10.5 million in stock-based compensation

during the six months ended June 30, 2022 as compared to June 30, 2021, which related to grants issued to our executives.

For the nine months ended

September 30, 2022, general and administrative expenses decreased by approximately $10.2 million, or 47%, from approximately $21.8 million

to approximately $11.6 million, as compared to the nine months ended September 30, 2021.

The decrease is primarily due to a decrease

of approximately $10.5 million in stock-based compensation during the nine months ended September 30, 2022 as compared to September 30,

2021, which related to grants issued to our executives.

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.

the six months ended June 30, 2022, interest expense decreased $1,030,382, or 93%, as compared to the six months ended June 30, 2021.

The decrease was due to the exchange of our outstanding convertible debt for common and preferred shares and warrants in connection with

our public offering in November 2021.

the nine months ended September 30, 2022, interest expense decreased $1,497,086, or 93%, as compared to the nine months ended September

The decrease was due to the exchange of our outstanding convertible debt for common and preferred shares and warrants in connection

with our public offering in November 2021.

on PPP loan forgiveness

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Small Business Administration’s Paycheck Protection Program (“PPP”), our $250,000 PPP loan was

forgiven during the six months ended June 30, 2022.

income of $16,654 during the six months ended June 30, 2022 consists of funding received under a $256,000 National Institutes of Health

Small Business Technology Transfer (STTR) Phase 1 grant, which we were awarded in September 2021.

forgiven during the nine months ended September 30, 2022.

income of $16,654 during the nine months ended September 30, 2022 consists of funding received under a $256,000 National Institutes of

Health Small Business Technology Transfer (STTR) Phase 1 grant, which we were awarded in September 2021.

and Capital Resources

measure our liquidity in a number of ways, including the following:

September 30,

Cash and cash equivalents

Investments held in marketable securities

Working Capital

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of Additional Funds

upon our accumulated deficit of $143,637,519 as of June 30, 2022, along with our forecast for continued operating losses and our need

for financing to fund our contemplated clinical trials, we will eventually require additional equity and/or debt financing to continue

upon our accumulated deficit of $148,293,344 as of September 30, 2022, along with our forecast for continued operating losses and our

need for financing to fund our contemplated clinical trials, we will eventually require additional equity and/or debt financing to continue

our operations.

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agreements on unattractive terms.

the six months ended June 30, 2022 and 2021, our sources and uses of cash were as follows:

Six Months Ended June 30,

the nine months ended September 30, 2022 and 2021, our sources and uses of cash were as follows:

Nine Months Ended September 30,

Net cash used in operating activities

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Net cash used in investing activities

(10,156,204 )

Net cash provided by financing activities

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$ (1,934,894 )

cash used in operating activities was $2,845,756 for the six months ended June 30, 2022, primarily due to cash used to fund the net loss

of $9,491,391, which was partially offset by non-cash expenses of $6,595,602 related primarily to stock-based compensation and $300,033

of cash provided by changes in operating assets and liabilities.

Net cash used in operating activities was $1,555,530 for the six months

ended June 30, 2021, primarily due to cash used to fund the net loss of $19,715,925 which was partially offset by non-cash expenses of

$17,849,822 related primarily to stock-based compensation and $310,573 of cash provided by changes in operating assets and liabilities.

cash used in investing activities consisted of $247,247 of equipment purchases during the six months ended June 30, 2022.

no cash flows from investing activities during the six months ended June 30, 2021.

were no cash flows from financing activities during the six months ended June 30, 2022.

provided by financing activities during the six months ended June 30, 2021 was $250,000, which related entirely to a loan received under

cash used in operating activities was $4,297,412 for the nine months ended September 30, 2022, primarily due to cash used to fund the

net loss of $14,147,216, which was partially offset by non-cash expenses of $9,554,582 related primarily to stock-based compensation

and $349,543 of cash provided by changes in operating assets and liabilities.

Net cash used in operating activities was $2,184,894 for

the nine months ended September 30, 2021, primarily due to cash used to fund the net loss of $23,900,157 which was partially offset by

non-cash expenses of $19,929,696 related primarily to stock-based compensation and $541,424 of cash provided by changes in operating

assets and liabilities.

cash used in investing activities consisted of $10,156,204 of equipment and marketable securities purchases during the nine months

ended September 30, 2022.

There were no cash flows from investing activities during the nine months ended September 30,

were no cash flows from financing activities during the nine months ended September 30, 2022.

cash provided by financing activities during the nine months ended September 30, 2021 was $250,000, which related entirely to a loan

received under the U.S.

Small Business Administration’s Paycheck Protection Program.

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significant accounting policies are fully described in the notes to our unaudited condensed consolidated financial statements included

herein for the quarter ended June 30, 2022, and in the notes to our audited consolidated financial statements included in our Annual

herein for the quarter ended September 30, 2022, and in the notes to our audited consolidated financial statements included in our Annual

Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 30, 2022 (“Annual Report”).

30, 2022, t here were no changes to our critical accounting policies and estimates as disclosed

in the Annual Report.

September 30, 2022, t here were no changes to our critical accounting policies and estimates as

disclosed in the Annual Report.

Sheet Arrangements

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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 2. Management’s Discussion and Analysis