BioRestorative Therapies, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, which was filed with the Securities and Exchange Commission (the “SEC”) on March 28, 2025. Note Regarding Forward-Looking Statements This 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 for the fiscal year ended December 31, 2024, as filed with the SEC on March 28, 2025, 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: ● our ability to obtain financing needed to complete our clinical trials and implement our business plan; ● our 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 and commercial biocosmeceuticals platform; ● our ability to protect our proprietary rights; ● our ability to achieve and sustain profitability of the existing lines of business; ● our ability to attract and retain world-class research and development talent; ● our ability to attract and retain key science, technology and management personnel and to expand our management team; ● the accuracy of estimates regarding expenses, future revenue, capital requirements, profitability, and needs for additional financing; ● business interruptions resulting from geo-political actions, including war and terrorism or disease outbreaks; ● our ability to attract and retain customers; ● our ability to navigate through the increasingly complex therapeutic regulatory environment; ● our ability to successfully engage in any new business lines that we pursue; and ● risks related to the restatement of our previously issued financial statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. 19 Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time, except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us” and “our” refer to BioRestorative Therapies, Inc., a Nevada corporation (“BRT”), and its wholly-owned subsidiary, Stem Pearls, LLC, a New York limited liability company (“Stem Pearls”). Unless otherwise specified, all dollar amounts are expressed in United States dollars. Intellectual Property This report includes references to our federally registered trademarks, BioRestorative Therapies and Dragonfly design, BRTX-100, ThermoStem, and BRTX . The Dragonfly logo is also registered with the U.S. Copyright Office. 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. Corporate History Our offices are located in Melville, New York where we have established a laboratory facility in order to increase our capabilities for the further development of possible cellular-based treatments, products and protocols, stem cell-related intellectual property and translational research applications. As of September 30, 2025, our accumulated deficit was $166,713,054. 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. Business Overview We 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 being called BRTX-100 . In March 2022, a United States patent issued in our Disc/Spine Program . We have received authorization from the FDA 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 commenced such clinical trial through the execution of a CRO agreement with Professional Research Consulting, Inc., d/b/a PRC Clinical, the execution of clinical trial site agreements, patient enrollment, the commencement of patient procedures, the purchase of manufacturing equipment and the expansion of our laboratory to include capabilities for clinical production. We have received a license from the New York State Department of Health to act as a tissue bank for mesenchymal stem cell processing. In June 2023, we received a unanimous recommendation from the Data Safety Monitoring Board to continue our Phase 2 clinical trial without any changes. We have obtained a worldwide (excluding Asia and Argentina) exclusive 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 investigating the expansion of the clinic application of BRTX-100 to other indications within the body. 20 We are also developing our ThermoStem Program . 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, March 2021, July 2021, June 2023 and December 2023; Australian patents related to the ThermoStem Program were issued in April 2017, October 2019, and August 2021; Japanese patents related to the ThermoStem Program were issued in December 2017, June 2021, February 2022, June 2023, July 2024 and September 2025; Israeli patents related to our ThermoStem Program were issued in October 2019, May 2020, March 2022, and March 2025; European patents related to the ThermoStem Program were issued in April 2020, January 2021, July 2023, and March 2025. We have obtained a license for a patented curved needle device that is a needle system designed to deliver cells and/or other therapeutic products or materials to the spine and discs or other potential sites. We anticipate that FDA approval or clearance will be necessary for this device prior to commercialization. We do not intend to utilize this device in connection with our Phase 2 clinical trial with regard to BRTX-100 . In addition, in continuation of our mission of developing and commercializing cell-based biologics, we are seeking to develop a biologics-based cosmetic products business. Pursuant to such business, we would formulate, manufacture and sell products designed for cosmetic and aesthetic uses. In April 2024, we announced that we 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. Revenue We derive 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 has 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 sublicense, the SCTC has agreed to pay us royalties on a per disc procedure basis. We have also derived product revenue from our five-year exclusive supply agreement with Cartessa entered into in April 2024. 21 Common Stock Repurchase Program On June 16, 2025, our Board of Directors authorized a common stock repurchase program under which we may repurchase up to $2,000,000 of our outstanding common stock through June 16, 2026. No repurchases have been made as of September 30, 2025. Results of Operations Comparison of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024 Our financial results for the three months ended September 30, 2025 are summarized as follows in comparison to the three months ended September 30, 2024: For the Three Months Ended September 30, 2025 2024 Revenues $ 11,800 $ 233,600 Cost of goods sold 10,570 18,243 Gross profit 1,230 215,357 Operating Expenses: Research and development 2,594,750 1,453,363 General and administrative 1,115,491 1,048,987 Total Operating Expenses 3,710,241 2,502,350 Loss From Operations (3,709,011 ) (2,286,993 ) Other Income: Interest income 57,740 158,547 Other income 930 566 Change in fair value of warrant liabilities 612,064 1,036,464 Total Other Income 670,734 1,195,577 Net Loss $ (3,038,277 ) $ (1,091,416 ) Revenues For the three months ended September 30, 2025 and 2024, we generated $11,800 and $2,900, respectively, of royalty revenue in connection with our sublicense agreement with the SCTC. The increase was primarily due to an increase in disc procedures. For the three months ended September 30, 2025 and 2024, we generated $0 and $230,700, respectively, of cosmetic product sales revenue in connection with our exclusive supply agreement with Cartessa. The decrease is primarily related to the timing of orders for this new developing revenue stream. 22 Research and Development Research 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 and biocosmeceuticals program. Research and development expenses are expensed as they are incurred. For the three months ended September 30, 2025, research and development expenses increased by $1,141,387 or 78.5%, as compared to the three months ended September 30, 2024. The increase was primarily the result of an increase in recruitment and other costs for our Phase 2 clinical trial of $850,037, an increase in lab supply expense of $247,664 and an increase in stock-based compensation expense of $42,065 partially offset by a decrease in headcount costs of $26,025 and a decrease in bonus expense of $17,625. We expect that our research and development expenses will continue to increase in subsequent fiscal periods. General and Administrative General 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 September 30, 2025, general and administrative expenses increased by $66,504, or 6.3%, as compared to the three months ended September 30, 2024, primarily driven by an increase in stock-based compensation expense of $73,623, an increase in payroll of $58,546, and an increase in consulting expense of $16,655, partially offset by a decrease in professional fees of $79,744. Interest Income For the three months ended September 30, 2025, interest income was $57,740 as compared to interest income of $158,547 for the three months ended September 30, 2024. The change was primarily due to a decrease in interest income from the investments held in marketable securities due to a lower average balance of the marketable securities during the 2025 period as compared to the 2024 period. Other Income For the three months ended September 30, 2025, other income was $930, as compared to other income of $566 for the three months ended September 30, 2024. The change was primarily due to an increase in dividend income from investments held in marketable securities. Change in Fair Value of Warrant Liabilities For the three months ended September 30, 2025, we recognized a gain on the change in fair value of warrant liabilities of $612,064, related to the decrease in fair value of warrants that are accounted for as warrant liabilities. For the three months ended September 30, 2024, we recognized a gain on the change in fair value of warrant liabilities of $1,036,464, related to the decrease in fair value of warrants that are accounted for as warrant liabilities. 23 Comparison of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024 Our financial results for the nine months ended September 30, 2025 are summarized as follows in comparison to the nine months ended September 30, 2024: For the Nine Months Ended September 30, 2025 2024 Revenues $ 340,100 $ 357,700 Cost of goods sold 22,208 24,733 Gross profit 317,892 332,967 Operating Expenses: Research and development 7,467,532 5,004,794 General and administrative 4,672,192 4,193,225 Total Operating Expenses 12,139,724 9,198,019 Loss From Operations (11,821,832 ) (8,865,052 ) Other (Expense) Income: Interest income 231,621 497,089 Other income 3,336 150,498 Gain on exchange of warrants - 1,711,698 Change in fair value of warrant liabilities 552,536 (837,466 ) Total Other Income 787,493 1,521,819 Net Loss $ (11,034,339 ) $ (7,343,233 ) Revenues For the nine months ended September 30, 2025 and 2024, we generated $40,100 and $57,700, respectively, of royalty revenue in connection with our sublicense agreement with the SCTC. The decrease was primarily due to a decrease in disc procedures. For the nine months ended September 30, 2025 and 2024, we generated $300,000 in each period of cosmetic product sales revenue in connection with our exclusive supply agreement with Cartessa. Research and Development Research 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 and biocosmeceuticals program. Research and development expenses are expensed as they are incurred. For the nine months ended September 30, 2025, research and development expenses increased by $2,462,738, or 49.2%, as compared to the nine months ended September 30, 2024. The increase was primarily the result of an increase in recruitment and other costs for our Phase 2 clinical trial of $2,010,122, an increase in lab supply expense of $438,183, and an increase in headcount costs of $19,290, partially offset by a decrease in bonus expense of $86,372 and a decrease in stock-based compensation expense of $5,976. We expect that our research and development expenses will continue to increase in subsequent fiscal periods. 24 General and Administrative General 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 nine months ended September 30, 2025, general and administrative expenses increased by $478,967, or 11.4%, as compared to the nine months ended September 30, 2024, primarily driven by an increase in stock-based compensation expense of $246,803 related to the vesting of awards, an increase in consulting expense of $127,621, and an increase in payroll of $91,274, partially offset by a decrease in professional fees of $20,748. Interest Income For the nine months ended September 30, 2025, interest income was $231,621, as compared to interest income of $497,089 for the nine months ended September 30, 2024. The change was primarily due to a decrease in interest income from the investments held in marketable securities due to a lower average balance of the marketable securities during the 2025 period as compared to the 2024 period. Other Income For the nine months ended September 30, 2025, other income was $3,336, as compared to other income of $150,498 for the nine months ended September 30, 2024. The change was primarily due to a one-time payment received in the 2024 period in connection with the development of our biocosmeceuticals product line. Gain on Exchange of Warrants For the nine months ended September 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. There was no gain on exchange of warrants for the nine months ended September 30, 2025. Change in Fair Value of Warrant Liabilities For the nine months ended September 30, 2025, we recognized a gain on the change in fair value of warrant liabilities of $552,536 related to the decrease in fair value of warrants that are accounted for as warrant liabilities. For the nine months ended September 30, 2024, we recognized a loss on the change in fair value of warrant liabilities of $837,466 related to the increase in fair value of warrants that are accounted for as warrant liabilities. 25 Liquidity and Capital Resources Liquidity We measure our liquidity in a number of ways, including the following: September 30, 2025 December 31, 2024 Cash and cash equivalents $ 602,444 $ 547,890 Investments held in marketable securities $ 3,887,383 $ 10,184,701 Working capital $ 1,271,781 $ 7,395,815 Working capital decreased by $6,124,034 primarily due to $8,373,790 of cash used to fund our operations and the $6,297,318 decrease in marketable securities, offset by $6,496,796 of cash provided by investing activities and the $1,931,548 of cash provided by financing activities. Availability of Additional Funds For the nine months ended September 30, 2025, we had a net loss of $11,034,339 and negative cash flows from operations of $8,373,790, and as of September 30, 2025, we had working capital of $1,271,781. We anticipate that we will continue to incur net losses and negative cash flows from operations as we execute our development plans during 2025 and beyond, as well as other potential strategic and business development initiatives. Based on these conditions, we believe we may not have sufficient cash for at least twelve months after the issuance date of the financial statements included in this Quarterly Report which raises substantial doubt about our ability to continue as a going concern. Our operating needs include the planned costs to operate our business, including amounts required to fund our clinical trials, working capital and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings. We may be unable to raise sufficient additional capital when we need it or raise capital on favorable terms. Future financing may require us to pledge certain assets and enter into covenants that could restrict certain business activities or our ability to incur further indebtedness and may contain other terms that are not favorable to our stockholders or us. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. Cash Flows During the nine months ended September 30, 2025 and 2024, our sources and uses of cash were as follows: Nine Months Ended Septemer 30, 2025 2024 Net Cash Used In Operating Activities $ (8,373,790 ) $ (5,882,501 ) Net Cash Provided By (Used In) Investing Activities $ 6,496,796 $ (1,018,078 ) Net Cash Provided By Financing Activities $ 1,931,548 $ 7,505,646 Net Increase in Cash $ 54,554 $ 605,067 26 Operating Activities Net cash used in operating activities was $8,373,790 for the nine months ended September 30, 2025, primarily due to cash used to fund the net loss of $11,034,339, adjusted for net non-cash expenses of $2,246,501, and $414,048 of cash provided by changes in operating assets and liabilities. Net cash used in operating activities was $5,882,501 for the nine months ended September 30, 2024 , primarily due to cash used to fund the net loss of $7,343,233, adjusted for net non-cash expenses of $1,520,670, and $59,938 of cash used in changes in operating assets and liabilities. Investing Activities Net cash provided by investing activities was $6,496,796 for the nine months ended September 30, 2025 primarily due to a sale of marketable securities which provided $9,212,343 of cash, offset by a purchase of marketable securities which used $2,679,147 of cash and a purchase of equipment which used $36,400 of cash. Net cash used in investing activities was $1,018,078 for the nine months ended September 30, 2024 primarily due to a purchase of marketable securities which used $18,294,566 of cash and a purchase of equipment which used $93,755 of cash, offset by a sale of marketable securities which provided $17,370,243 of cash. Financing Activities Net cash provided by financing activities was $1,931,548 for the nine months ended September 30, 2025 due to net proceeds of $1,938,445 received in connection with the issuance of common stock for the 2024 ATM offering and $42,411 due to the exercise of stock options, partially offset by deferred offering costs of $49,308, compared to $7,505,646 net cash provided by financing activities for the nine months ended September 30, 2024 due to net proceeds of $7,528,027 received in connection with the exercise and issuance of warrants, partially offset by deferred offering costs of $22,381. Effects of Inflation We do not believe that inflation had a material impact on our business, revenues or operating results during the periods presented. Critical Accounting Policies and Estimates We 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. 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. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our unaudited condensed consolidated financial statements that require estimation but are not deemed critical, as defined above. For a detailed discussion of our significant accounting policies and related judgments, see Note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements in “Item 1. Financial Statements” of this report. 27 Item 3. Quantitative and Qualitative Disclosures about Market Risk Not applicable. As a smaller reporting company, we are not required to provide the information required by this Item.