What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-06-11 · 143 added, 87 removed, 159 unchanged (59% of the section changed)

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1 to the Annual

Report on Form 10-K/A, which was filed on June 11, 2024.

Report on Form 10-K/A, which was filed with the Securities and Exchange Commission (the “SEC”) on June 11, 2024.

Regarding Forward-Looking Statements

Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect management’s current views with

respect 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,”

“should,” “expects,” “plans,” “anticipates,” “believes,”

“estimates,” “predicts,” “potential” 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 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/A for the fiscal year ended December 31, 2023, as filed with

Securities and Exchange Commission (the “SEC”) on June 11, 2024, 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:

Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect management’s current views with respect

to future events and financial performance.

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,”

“expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”

“potential” 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 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/A for the fiscal year

ended December 31, 2023, as filed with the SEC on June 11, 2024, 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

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;

as well as our metabolic ThermoStem Program and commercial biocosmeceuticals platform;

ability to protect our proprietary rights;

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ability to successfully engage in any new business lines that we pursue;

risks related to the restatement of our previously issued financial statements.

related to the restatement of our previously issued financial statements.

we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels

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research applications.

of March 31, 2024, our accumulated deficit was $148,922,589.

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

losses have principally been operating expenses incurred in research and development, marketing and promotional activities in order to

commercialize our products and services, plus costs associated with meeting the requirements of being a public company.

continue to incur substantial costs for these activities over at least the next year.

of June 30, 2024, our accumulated deficit was $152,951,151.

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

have principally been operating expenses incurred in research and development, marketing and promotional activities in order to commercialize

our products and services, plus costs associated with meeting the requirements of being a public company.

We expect to continue to incur

substantial costs for these activities over at least the next year.

develop therapeutic products and medical therapies using cell and tissue protocols, primarily involving adult stem cells.

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Pursuant to such business, we would formulate, manufacture and sell products designed for cosmetic and aesthetic

In April 2024.

we announced that we have entered into a five-year exclusive supply agreement with Cartessa Aesthetics, LLC (“Cartessa”),

In April 2024, we announced that we have entered into a five-year exclusive supply agreement with Cartessa Aesthetics, LLC (“Cartessa”),

a leading North American based aesthetic company, to supply to Cartessa our first commercial product.

derived all of our revenue pursuant to a license agreement with the SCTC entered into in January 2012, as amended in November 2015 and

November 2022.

Pursuant to the license agreement, the SCTC granted to us an exclusive license to use certain intellectual property related

to, among other things, stem cell disc procedures and we have 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

In consideration of the sublicenses, the SCTC has agreed to pay us royalties on a per disc procedure basis.

derived some of our revenue pursuant to a license agreement with a stem cell treatment company (the “SCTC”) entered into

in January 2012, as amended in November 2015 and November 2022.

Pursuant to the license agreement, the SCTC granted to us an exclusive

license to use certain intellectual property related to, among other things, stem cell disc procedures and we have 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 us royalties

on a per disc procedure basis.

also derived our initial product revenue from our five-year exclusive supply agreement with Cartessa entered into in April 2024.

of Operations

of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

financial results for the three months ended March 31, 2024 are summarized as follows in comparison to the three months ended March 31,

of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

financial results for the three months ended June 30, 2024 are summarized as follows in comparison to the three months ended June 30,

For the Three Months Ended

(As Restated)

Cost of goods sold

Operating Expenses:

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Interest income

Change in fair value of derivative liabilities

Total Other Expense

the three months ended June 30, 2024 and 2023, we generated $19,800 and $64,500, respectively, of royalty revenue in connection with

our sublicense agreement with the SCTC primarily due to a decrease in disc procedures which we expect will increase in future periods.

the three months ended June 30, 2024 and 2023, we generated $69,300 and $0, respectively, of cosmetic product sales revenue in connection

with our exclusive supply agreement with Cartessa.

We expect that our product sales revenue will increase in future periods as we execute

on our contract with Cartessa.

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, 2024, research and development expenses increased by

$389,291, or 43%, compared to the three months ended June 30, 2023.

The increase was primarily the result of an increase in lab supply

expense of $208,374, an increase in payroll expense of $129,348, an increase in consulting expense of $23,482 and an increase in equipment

deprecation related to new equipment of $20,319.

We expect that our research and development expenses will continue to increase in subsequent

fiscal periods.

and Administrative

and administrative expenses consist primarily of salaries, bonuses, payroll taxes and stock-based compensation to employees, as well

as corporate expenses such as legal and professional fees, investor relations and occupancy-related expenses.

For the three months ended

June 30, 2024, general and administrative expenses decreased by $1,018,925, or 45%, as compared to the three months ended June 30, 2023,

primarily driven by a decrease in stock-based compensation expense of $1,161,346 related to vesting of awards, partially offset by an

increase in professional fees of approximately $111,711 primarily related to the recent restatement of our historical financial statements.

the three months ended June 30, 2024, interest income was $175,945, compared to interest income of $96,187 for the three months ended

June 30, 2023.

The change was primarily due to interest and dividend income on the investments held in marketable securities.

the three months ended June 30, 2024 and 2023, other income primarily related to gains from settlements of certain accrued expenses and

realized and unrealized gain on investments.

in Fair Value of Derivative Liabilities

the three months ended June 30, 2024 and 2023, we recognized a loss on the change in fair value of derivative liabilities of $1,736,611

and $2,728,847, respectively, related to the increase in fair value of warrants that are accounted for as derivative liabilities.

of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

financial results for the six months ended June 30, 2024 are summarized as follows in comparison to the six months ended June 30, 2023:

For the Six Months Ended

(As Restated)

Cost of goods sold

Operating Expenses:

Research and development

General and administrative

Total Operating Expenses

Loss From Operations

Other (Income) Expense:

Interest income

Gain on exchange of warrants

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Total Other (Income) Expense

$ (2,223,255 )

$ (7,172,572 )

the three months ended March 31, 2024 and 2023, we generated $35,000 and $31,300, respectively, of royalty revenue in connection with

our sublicense agreement.

the six months ended June 30, 2024 and 2023, we generated $54,800 and $95,800, respectively, of royalty revenue in connection with our

sublicense agreement with the SCTC primarily due to a decrease in disc procedures which we expect will increase in future periods.

the six months ended June 30, 2024 and 2023, we generated $69,300 and $0, respectively, of cosmetic product sales revenue in connection

with our exclusive supply agreement with Cartessa.

We expect that our product sales revenue will increase in future periods as we execute

on our contract with Cartessa.

and Development

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expenses are expensed as they are incurred.

For the three months ended March 31, 2024, research and development expenses decreased by

$173,614, or 14%, compared to the three months ended March 31, 2023.

The decrease was primarily the result of a decrease in compensation

costs of $237,383 related to a discretionary bonus during the 2023 period partially offset by an increase in laboratory expenses related

to our Phase II clinical trial of $74,005.

We expect that our research and development expenses will increase in subsequent fiscal periods.

For the six months ended June 30, 2024, research and development expenses increased by $215,677,

or 10%, compared to the six months ended June 30, 2023.

The increase was primarily the result of increased lab supply expense of $285,883

and increased payroll expense of $145,380, all partially offset by a decrease in bonus expense of $210,878.

We expect that our research

and development expenses will continue to increase in subsequent fiscal periods.

and Administrative

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as corporate expenses such as legal and professional fees, investor relations and occupancy-related expenses.

For the three months

ended March 31, 2024, general and administrative expenses decreased by $1,492,532, or 33%, as compared to the three months ended

March 31, 2023, primarily driven by a decrease in stock-based compensation expense of $1,350,121 due to options granted in 2021 and

2022 that became fully vested in 2023 and a decrease in headcount costs of $243,171, partially offset by an increase in legal and

professional fees expense of $64,628 primarily related to our warrant exercise program.

the three months ended March 31, 2024, interest income was $162,597, compared to interest income of $18,216 for the three months ended

March 31, 2023.

For the six months ended

June 30, 2024, general and administrative expenses decreased by $2,511,457, or 37%, as compared to the six months ended June 30, 2023,

primarily driven by a decrease in stock-based compensation expense of $2,511,470 related to the vesting of awards and a decrease in payroll

expense of $210,981 all partially offset by an increase in professional fees of $176,339 primarily related to the recent restatement

of our historical financial statements.

the six months ended June 30, 2024, interest income was $338,542, compared to interest income of $114,403 for the six months ended June

The change was primarily due to interest and dividend income on the investments held in marketable securities.

the three months ended March 31, 2024, other income primarily related to gains from settlements of certain accrued expenses and realized

and unrealized gain on investments.

For the three months ended March 31, 2023, other income primarily related to gains from settlements

of certain accrued expenses and unrealized gain on investments.

(Income) Expense

the six months ended June 30, 2024 and 2023, other (income) expense was primarily related to gains from settlements of certain accrued expenses and

realized and unrealized gain on investments.

on Exchange of Warrants

For the three months ended March 31, 2024, we recognized a gain on exchange of $1,711,698 related to the issuance

of warrants and common stock in exchange for the cancellation of existing warrants.

the six months ended June 30, 2024, we recognized a gain on exchange of $1,711,698 related to the issuance of warrants and common stock

in exchange for the cancellation of existing warrants.

in Fair Value of Derivative Liabilities

the three months ended March 31, 2024 and 2023, we recognized a loss on the change in fair value of derivative liabilities of $137,319

the six months ended June 30, 2024 and 2023, we recognized a loss on the change in fair value of derivative liabilities of $1,873,930

and $4,217,197, respectively, related to the increase in fair value of warrants that are accounted for as derivative liabilities.

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

June 30, 2024

December 31, 2023

(As Restated)

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capital increased by $900,754 primarily due to the $7,505,646 of cash provided by financing activities which was partially offset by

$2,317,780 of cash used to fund our operations.

$4,182,945 of cash used to fund our operations and $1,954,831 of cash used to fund our investments.

of Additional Funds

upon our accumulated deficit of $148,922,589 as of March 31, 2024, along with our forecast for continued operating losses and our need

upon our accumulated deficit of $152,951,151 as of June 30, 2024, along with our forecast for continued operating losses and our need

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

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agreements on unattractive terms.

the three months ended March 31, 2024 and 2023, our sources and uses of cash were as follows:

Three months Ended March 31,

the six months ended June 30, 2024 and 2023, our sources and uses of cash were as follows:

Six Months Ended June 30,

(As Restated)

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Net Cash (Used In) Provided By Investing Activities

$ (1,954,831 )

Net Cash Provided By Financing Activities

Net increase in cash

cash used in operating activities was $2,317,780 for the three months ended March 31, 2024, primarily due to cash used to fund the

net loss of $2,223,255, adjusted for net non-cash expenses of $381,174, and $475,699 of cash used in changes in operating assets and

Net cash used in operating activities was $2,379,277 for the three months ended

March 31, 2023, primarily due to cash used to fund the net loss of $7,172,572, adjusted for net non-cash expenses of $4,871,267, and

$77,972 of cash used in changes in operating assets and liabilities.

cash used in investing activities was $4,928,006 for the three months ended March 31, 2024 compared to net cash provided by investing

activities of $2,539,169 for the three months ended March 31, 2023, primarily due to a sale of marketable securities, which provided

cash used in operating activities was $4,182,945 for the six months ended June 30, 2024, primarily due to cash used to fund the net loss

of $6,251,817, adjusted for net non-cash expenses of $2,351,582, and $282,710 of cash used in changes in operating assets and liabilities.

Net cash used in operating activities was $3,662,831 for the six months ended June 30, 2023, primarily

due to cash used to fund the net loss of $12,881,971, adjusted for non-cash expenses of $9,014,104, and $205,036 of cash provided by changes

in operating assets and liabilities.

cash used in investing activities was $1,954,831 for the six months ended June 30, 2024 primarily due to a purchase of marketable securities

which used $12,784,535 of cash and a sale of marketable securities which provided $10,865,000 of cash.

Net cash provided by investing

activities was $3,358,199 for the six months ended June 30, 2023 primarily due to a sale of marketable securities which provided $10,982,932

of cash and a purchase of marketable securities which used $7,535,662 of cash.

cash provided by financing activities was $7,518,489 for the three months ended March 31, 2024 compared to no cash provided by financing

activities for the three months ended March 31, 2023, due to net proceeds received in connection with the exercise and issuance of warrants.

cash provided by financing activities was $7,505,646 for the six months ended June 30, 2024 due to net proceeds received in connection

with the exercise and issuance of warrants, compared to $411,701 net cash provided by financing activities for the six months ended June

30, 2023 due to the net proceeds from the at-the-market offering of our Common Stock.

do not believe that inflation had a material impact on our business, revenues or operating results during the periods presented.

Accounting Estimates

prepare our consolidated financial statements in accordance with U.S.

generally accepted accounting principles, which require our management

to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the

balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.

To the extent that there

are material differences between these estimates and actual results, our financial condition or results of operations would be affected.

We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our

circumstances and expectations for the future based on available information.

We evaluate these estimates on an ongoing basis.

Accounting Policies and Estimates

prepare our unaudited condensed consolidated financial statements in accordance with U.S.

generally accepted accounting principles, which

require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets

and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.

the extent that there are material differences between these estimates and actual results, our financial condition or results of operations

would be affected.

We base our estimates on our own historical experience and other assumptions that we believe are reasonable after

taking account of our circumstances and expectations for the future based on available information.

We evaluate these estimates on an

ongoing basis.

consider an accounting estimate to be critical if:

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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