UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 20212022.

OR

For the transition period from ________________ to ________________

Commission file number 001-36763

H-CYTE, INC

(Exact Name of Registrant as Specified in Its Charter)

(844(844)) 633-6839

(Registrant’s Telephone Number, Including Area Code)

Securities registered under section 12(b) of the Exchange Act: Common stock, par value $0.001 per share

Securities registered under section 12(g) of the Exchange Act: Not applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the fi ling reflect the correction of an error to previously issued fi nancial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of February 25, 2022,May 9, 2023, 245,115,033628,122 shares of the registrant’s common stock were outstanding.

Documents incorporated by reference: None.None.

TABLE OF CONTENTS

FORWARD-LOOKING INFORMATION

This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or the Company’s future financial performance. H-CYTE has attempted to identify forward-looking statements by using terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause the Company’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although H-CYTE believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance, or achievements. The Company’s expectations are as of the date this Annual Report is filed, and it does not intend to update any of the forward-looking statements after the date this Annual Report is filed to confirm these statements to actual results, unless required by law.

This Annual Report also contains estimates and other statistical data made by independent parties and by H-CYTE relating to market size and growth and other industry data. This data involves several assumptions and limitations, and you are cautioned not to give undue weight to such estimates. The Company has not independently verified the statistical and other industry data generated by independent parties and contained in this Annual Report and, accordingly, it cannot guarantee their accuracy or completeness, though it does generally believe the data to be reliable. In addition, projections, assumptions, and estimates of H-CYTE’s future performance and the future performance of the industries in which it operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. H-CYTE’s actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including, but not limited to, the possibility that it may fail to preserve its expertise in medical therapy and product research and development; that existing and potential partners may opt to work with, or favor the products of, competitors if its competitors offer more favorable products or pricing terms; that it may be unable to maintain or grow sources of revenue; that it may be unable to attain and maintain profitability; that it may be unable to attract and retain key personnel; that it may not be able to effectively manage, or to increase, its relationships with customers; that it may have unexpected increases in costs and expenses; the effect the current COVID-19 pandemic will have on the Company as further discussed herein. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by H-CYTE.

PART I

Overview

H-CYTE, Inc (“the Company”) has evolved from focusing on treating chronic lung conditions after the closure of its lung treatment clinics due to COVID-19. The Company is a hybrid-biopharmaceutical company dedicatedcurrently focusing on acquiring and developing early-stage companies or their technologies in the areas of therapeutics, medical devices, and diagnostics. The goal is to developingdevelop these companies and delivering new treatments for patients with chronic respiratory and pulmonary disorders. During the last three years,incubate their technologies to meaningful clinical inflection points.

On June 3, 2022, the Company closed its clinic in Scottsdale, Arizona. The Company has evolved into two separate divisions withnow closed all of its entrance intoclinical operations in the biologics and device development space (“Biotech Division”). This division is complementary to the Company’s current Lung Health Institute (LHI) autologous infusion therapy business (“Infusion Division”) and is focused on underserved disease states. On September 8, 2021, the Company announced that its Lung Health Institute facilities changed their names to Centers for Respiratory Health as the clinics continue to deliverwhich delivered treatments for patients with chronic respiratory and pulmonary disorders. The Company continues its efforts relatedwill continue to pursue Food and Drug Administration (“FDA”) approval of the development anddevice that was utilized in the treatment provided at the clinics. The Company also has a continued interest in the commercialization of the DenerveX device outside ofthrough a joint venture. The Company has implemented the U.S. As oftransition into a biologics and for the years ended December 31, 2021 and 2020, there has been no material activity.therapeutic device incubator company to bring new technologies to market.

The consolidated results for H-CYTE include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, PLLCLLC (“LI Dallas”), Lung Institute Nashville, PLLCLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLCLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC iswas the operator and manager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI Pittsburgh clinics did not reopen in 2020 after the temporary closure of all LI clinics due to COVID-19. These two clinics will remain permanently closed. During the first quarter of 2022, the Company decided to close the LI Tampa and LI Nashville clinics,clinics. During the second quarter of 2022, the Company closed the LI Scottsdale clinic will remain open.clinic. All LHI clinics are closed as of December 31, 2022.

On June 10, 2022, the Company amended (the “Amendment”) its Articles of Incorporation to effectuate a one-for-one thousand reverse stock split (the “Reverse Split”) of its common stock. The Reverse Split was approved by FINRA on June 10, 2022 and effectuated on June 13, 2022. Pursuant to the Amendment, the Company also reduced the authorized shares of common stock to 500,000,000. As a result of the Reverse Split, as of December 31, 2022, the Company has 618,506 shares of common stock outstanding and 438,776,170 shares of Series A Preferred Stock outstanding. As a result of the Reverse Stock Split, the Series A Preferred Stock conversion ratio is now one thousand shares of Series A Preferred Stock converts into one share of common stock. Accordingly, the 438,776,170 outstanding shares of Series A Preferred Stock are now convertible into an aggregate of 438,776 shares of common stock.

On September 11, 2020, with7, 2022, the closingCompany acquired all of the Rights Offering, FWHC,membership interests, with common stock, of Jantibody LLC FWHC Bridge, LLC,(“Jantibody”), a Nevada limited liability company. Jantibody is focused on the development of novel proprietary immunotherapies targeted towards ovarian cancer, pancreatic cancer, and FWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company by subsequently owning approximately 61% of the fully diluted shares of the Company (for further discussion, see Notes 8 and 9-“Equity Transactions” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K)mesothelioma (see Note 8).

On December 22, 2022, the Company acquired all the membership interests, with common stock, in Scion Solutions, LLC (“Scion”). Scion is a life sciences company that has developed a new technology in regenerative medicine specifically for limb salvage. Their proprietary product SkinDisc (patent pending) is a combination of stem cells and several other molecular components that stimulate tissue regeneration (see Note 8).

Impact of COVID-19

The coronavirus outbreak (“COVID-19”) has adversely affectedCOVID-19 was declared a global pandemic by the Company’s financial conditionWorld Health Organization on March 11, 2020 and results of operations. Thethe Company continues to monitor the impact on its operations of the COVID-19 outbreak on businessespandemic and its aftermath. The Company believes the economyeffect of the COVID-19 pandemic and certain public and governmental responses to it have negatively affected its results since the pandemic’s inception.

During the COVID-19 pandemic and its aftermath, the Company experienced material reductions in demand and net revenues at its lung treatment centers. This reduction in demand led to the Company shifting its focus from treating chronic lung disease to acquiring and developing early-stage companies or their technologies in the United States is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact businessesareas of therapeutics, medical devices, and the economy is highly uncertain. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected.diagnostics.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency caused by a new strain of the coronavirus and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain states and municipalities have enacted quarantining regulations which severely limit the ability of people to move and travel.

In addition, the Company is uncertain of the full effect the pandemic will have on it for the longer term since the scope and duration of the pandemic is unknown, and evolving factors such as the level and timing of the distribution of efficacious vaccines across the world and the extent of any resurgences of the virus or emergence of new variants of the virus, such as the Delta variant and the Omicron variant, will impact the stability of economic recovery and growth. The Company may experience long-term disruptions to its operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic; and closures of businesses or manufacturing facilities critical to its business.

Autologous Infusion Therapy (“Infusion Division”)

The Company’s Infusion Division developsdeveloped and implementsimplemented innovative treatment options in autologous cellular therapy (PRP-PBMC) to treat chronic lung disorders. Committed to an individualized patient-centric approach, this division consistently provides oversight and management of the highest quality care to the LHI clinics located in Tampa, Nashville, and Scottsdale, while producing positive medical outcomes following the strictest CDC guidelines. During the first quarter of 2022, the Company decided to close the clinics in Tampa and Nashville closed. During the second quarter of 2022, the clinic in Scottsdale clinic will remain open.closed. All clinical operations in the autologous infusion therapy division which delivered treatments for patients with chronic respiratory and pulmonary disorders have now closed.

Biotech Development (“Biotech Division”)

During the year ended December 31, 2021, the Company completed a review of the R&D status regarding the exclusive product supply and services agreements with Rion, LLC (“Rion”) to develop and distribute (post U.S. Food & Drug Administration, the “FDA”, approval) a biologic combining its PRP-PBMC (“PRP”) technology with Rion’s exosomes (“EV”) technology for the treatment of chronic obstructive pulmonary disease (“COPD”). The Company has decided to progress alternate technologies and has determined a single entity biologic from an alternative commercial source will be a more viable solution. To that end theThe Company has decided to move away from Rion’s PRP technology and is progressing towards alternate biologics and therapeutic devices to meet the needs of the business.

As of December 31, 2022, the Company has closed all of the LHI clinics and has moved away from the Infusion Division as part of its future plans. The Company has also decided that the Biotech Division will begin to transform into a medical biosciences incubator division focusing on bringing new biologics and therapeutic device technologies to market for various health conditions.

Competition

Developing and commercializing new FDA approved drugs and therapies is highly competitive. The market is characterized by extensive research and clinical efforts and rapid technological change. The Company faces intense competition worldwide from pharmaceutical, biomedical technology, medical therapy, and combination products companies, including major pharmaceutical companies. The Company may be unable to respond to technological advances through the development and introduction of new products. Most of the Company’s existing and potential competitors have substantially greater financial, sales and marketing, manufacturing and distribution, and technological resources. These competitors may also be in the process of seeking FDA (or other regulatory approvals) and patent protection for new products. The Company’s biologics and device product lines also face competition from numerous existing products and procedures, which currently are considered part of the standard of care. The Company believes that the principal competitive factors in its markets are:

The Company will also compete in the marketplace to recruit qualified scientific, management and sales personnel, as well as in acquiring technologies and licenses which it believes will be complementary to its products or advantageous to its business.

The Company is aware that several of its competitors are developing technologies in its current and future products areas. There are numerous autologous cellular therapy providers who make unsubstantiated claims that they are able to treat chronic lung disease. Most of these competitors are small clinics with little brand recognition. The landscape is changing as pharma and biologics companies, as well as academia, begin to develop therapies for multiple diseases using regenerative medicine through the more stringent regulatory pathway of a Biologics License Application (BLA).

Customers

The Company’s infusion division customer base consistsconsisted of individuals who arewere suffering from chronic lung disease that are searching for alternative or adjunct forms of treatment outside of traditional pharmaceutical care which has not been successful for them in the past.

Government Regulations

Governmental authorities in the United States (“U.S. (at” at the federal, state, and local levels) and abroad extensively regulate, among other things, the research and development, testing, manufacture, quality control, clinical research, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, and export and import of products such as those we are developing.

FDA Regulation

The Infusion Vertical’s current cellular therapy for chronic lung disease does not require FDA approval due to it being an autologous therapy which is not intended to suggest diagnosis, treatment, cure, or prevention of any disorder. The Company operates in compliance with CFR Title 21 Part 1271.15 (b) Regulation.

In the U.S., the FDA subjects pharmaceutical and biologic products to rigorous review. If the Company does not comply with applicable requirements, it may be fined, the government may refuse to approve its marketing applications or to allow it to manufacture or market its products, and the Company may be criminally prosecuted. Failure to comply with the law could result in, among other things, warning letters, civil penalties, delays in approving or refusal to approve a product, product recall, product seizure, interruption of production, operating restrictions, suspension or withdrawal of product approval, injunctions, or criminal prosecution.

Good Manufacturing Practices (“GMP”)

United States Anti-Kickback and False Claims Laws

In the U. S., there are Federal and State anti-kickback laws that prohibit the payment or receipt of kickbacks, bribes or other remuneration intended to induce the purchase or recommendation of healthcare products and services. Violations of these laws can lead to civil and criminal penalties, including exclusion from participation in Federal healthcare programs. These laws are potentially applicable to manufacturers of products regulated by the FDA as pharmaceuticals, biologics, medical devices, and hospitals, physicians, and other potential purchasers of such products. Other provisions of Federal and State laws provide civil and criminal penalties for presenting, or causing to be presented, to third-party payers for reimbursement, claims that are false or fraudulent, or which are for items or services that were not provided as claimed. In addition, certain states have implemented regulations requiring medical device and pharmaceutical companies to report all gifts and payments of over $50 to medical practitioners. This does not apply to instances involving clinical trials.

Although the Company intends to structure its future business relationships with clinical investigators and purchasers of its products to comply with these and other applicable laws, it is possible that some of the Company’s business practices in the future could be subject to scrutiny and challenged by Federal or State enforcement officials under these laws.

Research and Development Expense

Research and development costs and expenses consist primarily of fees paid to external service providers, laboratory testing, supplies, costs for facilities and equipment, and other costs for research and development activities. Research and development expenses are recorded in operating expenses in the period in which they are incurred.

Employees

As of February 25, 2022,April 30, 2023, the Company had eighttwo full-time employees. None of its employees are represented by a union.

Available Information

The Company’s website, www.hcyte.com,www.ir.hcyte.com, provides access, without charge, to its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (“SEC”). The information provided on the Company’s website is not part of this report and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this report.

Materials filed by the Company with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding our company that we file electronically with the SEC.

Not applicable to smaller reporting companies.

Not applicable to smaller reporting companies.

The Company did not renew its corporate office space lease in Tampa, FL which expired on March 31, 2021. TheOn June 3, 2022, the Company leases medicalclosed its clinic space in Tampa, FL, Nashville, TN, and Scottsdale, AZ. These clinic locations have various expiration dates through August 31, 2023. The leasing arrangements contain various renewal options that are adjusted for increases in the consumer price index or agreed upon rates. The Company also entered into a twelve-month lease extension for its Nashville location beginning November 1, 2021, totaling $94,500. The Dallas, TX lease expired on July 31, 2020, and the Pittsburgh, PA lease expired on October 31, 2020, neither of which were renewed as these clinic locations were permanently closed. The Company does not intend on renewing the clinic space lease in Tampa, FL which expires on March 31, 2022.Arizona. The Company has decided thatnow closed all of its corporate staff will continue working remotely.clinical operations in the autologous infusion therapy business which delivered treatments for patients with chronic respiratory and pulmonary disorders.

The Company’s corporate staff will continue to work remotely. The Company believesleases a shared office space in Tampa, FL which it uses as its existing facilities are suitable to meet current operational needs.legal address.

The Company is involved in a lawsuit with Sinclair Broadcast Group, Inc. (Sinclair)(“Sinclair”) which was filed on September 8, 2020, in the Circuit Court for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. Sinclair has filed suit allegingobtained a legal judgment for breach of contract for advertising services in the amount of approximately $75,000$72,000 plus interest and costs. The Company has retained legal counsel for its defense against the suit.guidance in this matter. The amount is recorded in accounts payable as of December 31, 2021.2022.

The Company is involved in a lawsuit with ITN Networks, LLC (ITN)(“ITN”) which was filed on July 22, 2021, in the Circuit Court for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. ITN has filed suit allegingobtained a legal judgment for breach of contract for advertising services in the amount of approximately $75,000$45,000 plus interest and costs. The Company has retained legal counsel for its defense against the suit.guidance in this matter. The amount is recorded in accounts payable as of December 31, 2021.2022.

Not Applicable.

PART II

Market Information

On February 23, 2022,May 8, 2023, the price per share of the Company’s common stock had a high of $0.04$1.95 per share, a low of $0.03$1.95 per share, and closed at $0.03.$1.95. The Company had 246264 holders of record of common stock as of February 23, 2022.

May 8, 2023.

Dividends

The Company has not declared or paid any cash dividends on its common stock and presently intends on retaining future earnings, if any, to fund the development and growth of the business. Therefore, the Company does not anticipate paying any cash dividends in the foreseeable future.

Securities Authorized for Issuance under Equity Compensation Plans

The Company has authorized 2,650,0002,650 options to be available under the Equity Compensation Plan (the “Plan”). As of December 31, 2021,2022, the Company had an outstanding aggregate of 385,000135 options to purchase common stock under the Plan at a weighted average price of $1.34$3,076 per share to certain employees, consultants, and outside directors.

On April 1, 2021, the Board of Directors of the Company approved and granted to certain directors and officers of the Company an aggregate of 54,750,00054,750 stock options of which 4,750,0004,750 were immediately vested on the date of grant. Each option granted has an exercise price of $0.07$70.00 per share and an expiration date of ten years from the date of grant. These options are not included in the Company’s current stock option plan as they were granted outside of the Plan.Plan (see Note 5).

Not required for smaller reporting company.

Overview

H-CYTE, Inc (“the Company”) has evolved from focusing on treating chronic lung conditions after the closure of its lung treatment clinics due to COVID-19. The Company is a hybrid-biopharmaceutical company dedicatedcurrently focusing on acquiring and developing early-stage companies or their technologies in the areas of therapeutics, medical devices, and diagnostics. The goal is to developingdevelop these companies and delivering newincubate their technologies to meaningful clinical inflection points.

On June 3, 2022, the Company closed its clinic in Scottsdale, Arizona. The Company has now closed all of its clinical operations in the autologous infusion therapy business which delivered treatments for patients with chronic respiratory and pulmonary disorders. DuringThe Company will continue to pursue Food and Drug Administration (“FDA”) approval of the last two years,device that was utilized in the treatment provided at the clinics. The Company also has a continued interest in the commercialization of the DenerveX device through a joint venture. The Company has evolvedimplemented the transition into two separate divisions with its entrance into thea biologics and therapeutic device development space (“Biotech Division”). This division is complementaryincubator company to the Company’s current Lung Health Institute (LHI) autologous infusion therapy business (“Infusion Division”) and is focused on underserved disease states. On September 8, 2021, the Company announced that its Lung Health Institute facilities changed their namesbring new technologies to Centers for Respiratory Health as the clinics continue to deliver treatments for patients with chronic respiratory and pulmonary disorders.market.

The consolidated results for H-CYTE include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, PLLCLLC (“LI Dallas”), Lung Institute Nashville, PLLCLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLCLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC iswas the operator and manager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI PittsburghScottsdale prior to their closure. All LHI clinics did not reopen in 2020 after the temporary closureare closed as of all LI clinics due to COVID-19. These two clinics will remain permanently closed. During the first quarter ofDecember 31, 2022.

On June 10, 2022, the Company decidedamended (the “Amendment”) its Articles of Incorporation to closeeffectuate a one-for-one thousand reverse stock split (the “Reverse Split”) of its common stock. The Reverse Split was approved by FINRA on June 10, 2022 and effectuated on June 13, 2022. Pursuant to the LI TampaAmendment, the Company also reduced the authorized shares of common stock to 500,000,000. As a result of the Reverse Split, as of December 31, 2022, the Company has 618,506 shares of common stock outstanding and LI Nashville clinics,438,776,170 shares of Series A Preferred Stock outstanding. As a result of the LI Scottsdale clinic will remain open.Reverse Stock Split, the Series A Preferred Stock conversion ratio is now one thousand shares of Series A Preferred Stock converts into one share of common stock. Accordingly, the 438,776,170 outstanding shares of Series A Preferred Stock are now convertible into an aggregate of 438,776 shares of common stock.

On September 11, 2020, with7, 2022, the closingCompany acquired all of the Rights Offering, FWHC,membership interests of Jantibody LLC FWHC Bridge, LLC,(“Jantibody”), a Nevada limited liability company. Jantibody is focused on the development of novel proprietary immunotherapies targeted towards ovarian cancer, pancreatic cancer, and FWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company by subsequently owning approximately 61% of the fully diluted shares of the Company (for further discussion, see Notes 8 and 9-“Equity Transactions” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K)mesothelioma (see Note 8).

TheOn December 22, 2022, the Company continues its efforts related to the development and commercializationacquired all of the DenerveX device outsidemembership interests in Scion Solutions, LLC (“Scion”). Scion is a life sciences company that has developed a new technology in regenerative medicine specifically for limb salvage. Their proprietary product SkinDisc (patent pending) is a combination of the U.S. As ofstem cells and for the years ended December 31, 2021 and 2020, there has been no material activity.several other molecular components that stimulate tissue regeneration (see Note 8).

Impact of COVID-19

COVID-19 has adversely affected the Company’s financial condition and results of operations. The impact of the COVID-19 outbreak on businesses and the economy in the United States is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact businesses and the economy is highly uncertain. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected.

On January 30, 2020,was declared a global pandemic by the World Health Organization (“WHO”) announced a global health emergency caused by a new strainon March 11, 2020 and the Company continues to monitor the impact on its operations of the coronavirusCOVID-19 pandemic and advisedits aftermath. The Company believes the effect of the risksCOVID-19 pandemic and certain public and governmental responses to it have negatively affected its results since the pandemic’s inception.

During the COVID-19 pandemic and its aftermath, the Company experienced material reductions in demand and net revenues at its lung treatment centers. This reduction in demand led to the international community asCompany shifting its focus from treating chronic lung disease to acquiring and developing early-stage companies or their technologies in the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The spreadareas of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to traveltherapeutics, medical devices, and congregating in large numbers. In addition, certain states and municipalities have enacted quarantining regulations which severely limit the ability of people to move and travel.diagnostics.

In addition, the Company is uncertain of the full effect the pandemic will have on it for the longer term since the scope and duration of the pandemic is unknown, and evolving factors such as the level and timing of the distribution of efficacious vaccines across the world and the extent of any resurgences of the virus or emergence of new variants of the virus, such as the Delta variant and the Omicron variant, will impact the stability of economic recovery and growth. The Company may experience long-term disruptions to its operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic; and closures of businesses or manufacturing facilities critical to its business.

RESULTS OF OPERATIONS

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

The following table sets forth certain operational data including their respective percentages of revenues for the years ended December 31, 2021 and 2020:

H-Cyte, Inc

Statement of Operations 

Results of Operations – For the years ended December 31, 2022 and 2021

H-CYTE, Inc

Statement of Operations

Revenue and Gross Profit

Revenue is derived predominantly from the Company’s Infusion Division, which resulted inThe Company recorded revenue net of allowance for refunds,approximately $453,000 and $1,612,000 for the years ended December 31, 20212022, and 2020, of approximately $1,612,000 and $2,151,000,2021, respectively. The decrease in revenue forCompany has closed all of the year endedLHI Clinics as of December 31, 2021, as compared to the prior year is attributable to the effect that COVID-19 continues to have on2022 which was the Company’s vulnerable patient base, sufferersonly current source of chronic lung disorders. Duerevenue. The Company has continued to the disruption caused by COVID-19, the Company did not reopen the Dallastransform itself into a biologics and Pittsburgh clinics after they were closed in March 2020.therapeutic device incubator company to bring new technologies to market.

For the years ended December 31, 20212022 and 2020,2021, the Company generated a gross profit totaling approximately $336,000 and $907,000, (56% of revenue) and $1,384,000 (64% of revenue), respectively. The gross profit percentage decreased in 2021 compared to 2020 due to the Company using higher priced part-time medical staff to treat its patients.

Operating Expenses

Salaries and Related Costs

For the years ended December 31, 20212022 and 2020,2021, the Company incurred approximately $2,214,000$1,054,000 and $3,199,000, respectively,$2,214,000 in salaries and related costs.costs, respectively. The Company adjusted itsdecrease in salaries and related costs, as compared to the prior year, is due to the adjustments to the Company’s corporate structure in 2021 in which it reduced headcountby reducing expenses in marketing, sales, and operations. This ledoperations due to lowerdecreased patient volume and closing of the LHI clinics. As of December 31, 2022, due to lack of financial resources, the Company has incurred $294,000 in unpaid salaries and related costs of approximately $985,000 in 2021 compared to 2020.wages.

Other General and Administrative

For the years ended December 31, 20212022 and 2020,2021, the Company incurred approximately $2,698,000$1,392,000 and $4,125,000, respectively,$2,700,000 in other general and administrative costs. The decrease is attributable to cost saving measures in response to the COVID-19 pandemic.costs, respectively. The Company made adjustments toadjusted its corporate structure by reducing expenses in marketing, sales, and operations due to decreased patient volume. The Company also closedvolume and closing of the Dallas and Pittsburgh clinics permanently in 2020 and reduced the Tampa and Scottsdale clinics to part-time in 2021.LHI clinics.

Other Income (Expense)Income/Expense

For the years ended December 31, 20212022 and 2020,2021, interest expense was approximately $177,000$368,000 and $1,463,000,$177,000 respectively. The decrease isincrease was related to debt and warrants attachedthe Company issuing additional convertible notes in 2022 compared to convertible debt outstanding during2021. For the year ended December 31, 2020 that were not applicable to 2021.2021 the Company received forgiveness of the PPP loan in the amount of approximately $699,000.

The changes in fair value of redemption put liability and fair value of the derivative liability - warrants forFor the year ended December 31, 2020, were2022, the Company incurred approximately $273,000 and $2,987,000, respectively, and were a result of$3,133,000 in inducement expense related to the change in fair value at the end of the reporting periodwarrant inducement (see Note 1)9).

Liquidity, Sources For the year ended December 31, 2022, the Company incurred approximately $377,000 in warrant expense related to the securities purchase agreements. For the year ended December 31, 2022, the Company incurred approximately $2,196,000, related to the loss on extinguishment of Liquidity, and Going Concernconvertible notes payable (see Note 4).

Liquidity, Going Concern, and Sources of Liquidity

The Company had a negative cash balance of approximately $95,000$4,000 as of December 31, 2022, which is included in current liabilities, and $1,641,000 of cash on hand at December 31, 2021of approximately $3,000 as of May 8, 2023. The Company’s cash is insufficient to fund its operations over the next year and 2020, respectively.the Company is currently working to obtain additional debt or equity financing to help support working capital needs.

The Company has historically incurred losses from operations and expects to continue acquisitions and generate negative cash flows as the Company implements its updated strategic business plan. The Company will need to raise cash from debt and equity offerings to continue its operations. There can be no assurance that the Company will be successful in doing so.

Going Concern

The Company incurred net losses of approximately $4,799,000$10,300,000 and $6,459,000$4,799,000 for the years ended December 31, 20212022 and 2020,2021, respectively. The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as the Company’s revenue activities are curtailed and as the Companyit implements its business plan.plan around the Biosciences Division. The consolidated financial statements are prepared using accounting principles generally accepted accounting principles in the United States (“U.S. GAAP”) as applicable to a going concern.

COVID-19 has adversely affected the Company’s financial condition and results of operations. The impact of the outbreak of COVID-19 on the economy in the U.S. and the rest of the world is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact the economy is highly uncertain and cannot be predicted. Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected.

Although cost reduction measures have been taken, the present level of cash is insufficient to satisfy the Company’s current operating requirements. The Company is seeking additional sources of funds from the sale of equity or debt securities or through a credit facility.

There can be no assurance that the Company will be able to raise additional funds or that the terms and conditions of any future financingsfinancing will be workable or acceptable to the Company or its shareholders. In the eventIf the Company is unable to fund its acquisitions and operations from existing cash on hand, operating cash flows, additional borrowings, or raising equity capital, there is substantial doubt about the Company’s ability toCompany may not continue as a going concern.operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In January 2022,Sources of Liquidity

With the Company offered certain warrant holdershistorically having experienced losses, the opportunity to receive an additional warrant to purchase the Company’s Common Stock at $0.014 per share, for a periodprimary source of five (5) years from issuance for the exercise of each existing warrant originally issued in April 2020 prior to March 31, 2021. As of February 23, 2022, the Company had ten warrant holders exercise an aggregate of 75,257,511 warrants at $0.014 per share resulting in cash proceeds of $1,053,605 to the Company.liquidity has been raising capital through debt and equity offerings, as described below.

The Company filed a Registration Statement on Form S-1 registering the resale of the shares of common stock issuable upon exercise of the warrants issued in the April 2020 financing. The registration statement was declared effective on February 14, 2022.Debt

Convertible Notes Payable

On April 1, 2021, the Company, entered into a Secured Convertible Note Purchase Agreement (the “April 2021 Note Purchase Agreement”) with five (5) related party investors (the “Holders”). Pursuant to the terms of the April 2021 Note Purchase Agreement, the Company sold promissory notes in the aggregate principal amount of $2,575,000 maturing on March 31,June 17, 2022 with an annual interest rate of 8%. The Notes plus accrued interest, are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next round of financing that meets the definition of Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by the assets of the Company under a security agreement with the Holders. The lead investor of the April 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $1,500,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $25,000 as part of the April 2021 Note Purchase Agreement.

On October 14, 2021, H-Cyte, Inc. (the “Company”)the Company entered into the Second Closing Bring Down Agreement (the “October 2021 Note Purchase Agreement”) whereby the five (5) related party investors who had entered into the April 2021 Note Purchase Agreement purchased new notes in the Company in the aggregate principal amount of $750,000. The Notes are due and payable on March 31,June 17, 2022 and bear interest at an annual rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next financing that meets the definition of a Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by all of the assets of the Company under a security agreement with the Holders. The lead investor of the October 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $437,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $7,000 as part of the October 2021 Note Purchase Agreement. The Company analyzed the debt instruments and determined the embedded conversion features did not qualify as derivatives as described in Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) 815-15-25 Derivatives and Hedging, because there was no market mechanism for net settlement, and they were not readily convertible into cash. Thus, the conversion features are not required to be bifurcated from the host instruments and accounted for separately. The Company chose early adoption of ASU 2020-06 Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity effective January 1, 2021, related to the April 2021 and October 2021 Note Purchase Agreements, which resulted in the Notes being accounted for solely as debt on the balance sheet.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods.

On February 22, 2022, the Company entered into a Debt Conversion Agreement (the “Amendment Agreement”) which i) provided for an ongoing basis, we evaluate our estimatesadditional round of convertible debt financing (“Tranche 2 Notes”) of up to $500,000 and judgments, including those describedii) amended the conversion price on the convertible notes issued April 1, 2021 and October 8, 2021 (Tranche 1 Notes”) from 80% of the price paid in greater detail below.

We base our estimates on historical experiencea Qualified Financing (proceeds of at least $15 million), to the lesser of (x) $0.002 and on various other factors that we believe are reasonable under(y) the circumstances, the resultsprice paid in a Qualified Financing (proceeds of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements included elsewhere in this report, we believe thatat least $10 million). The Amendment Agreement also provides the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations.

Fair Value Measurements

We measure certain non-financial assets at fair value on a non-recurring basis. These non-recurring valuations include evaluating assets such as long-lived assets and non-amortizing intangible assets for impairment; allocating value to assets in an acquired asset group; and applying accounting for business combinations and derivatives.

We use the fair value measurement framework to value these assets and report the fair values in the periods in which they are recorded or written down.

The fair value measurement framework includes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair values in their broad levels. These levels from highest to lowest priority are as follows:Milestone Payments:

The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. We may also engage external advisors to assist us in determining fair value, as appropriate.

Although we believe that the recorded fair value of our financial instruments is appropriate at December 31, 2021, these fair values may not be indicative of net realizable value or reflective of future fair values.

Revenue Recognition

The Company recognizes revenue in accordance with U.S. GAAP as outlined inMilestone Payments are not to exceed $2 million, and the FASB ASC 606, Revenue From Contracts with Customers, which requiresAmendment Agreement also specifies that five steps be completed to determine when revenue can be recognized: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfies a performance obligation. The Company records revenue under ASC 606 when control is transferredQualified Financing will not occur prior to the customer, which is consistent with past practice.closing of the acquisition of Jantibody, LLC.

The Company usesevaluated the Amendment Agreement under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that probability of having to pay a standard pricing modelMilestone payment was minimal and the change in the fair value of the conversion feature was not material. Since the Amendment did not cause a material change in cash flows, extinguishment accounting was not applicable.

On April 29, 2022, the Company entered into an Amended and Restated Note Conversion Agreement (the “Note Conversion Agreement”) with certain holders of its Tranche 1 Notes (i) providing for a conversion price equal to the typeslesser of (x) $0.002 per share (pre-split) and (y) the price per share paid by the investors in a Qualified Financing for such New Securities purchased for cash and not through conversion of Notes (as such terms are defined in the Note Conversion Agreement), in each case subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization, (ii) automatic conversion upon the occurrence of a Qualified Financing, and (iii) amendment of the maturity date from March 31, 2022 to June 17, 2022 (the “New Notes”). Upon the effectiveness of the Company’s 1,000-1 reverse split, the conversion price adjusted to the lesser of (a) the price in Qualified Financing or (b) $2.00 per share. The New Notes also provided the investors with Royalty Payments equal to 15% of all net sales generated by the Company with respect to the sale of products or services associated with the 510(k) Notification related to the Company’s autologous cellular therapy treatments(PRP-PBMC) to treat chronic lung disorder. The Royalty Payments are in lieu of the Milestone payments but are perpetual and there is no limit to the aggregate amount of Royalty Payments that is offeredmay be paid.

Due to its patients. The transactionchanges in key provisions of the Tranche 1 Notes, the Company analyzed the before and after cash flows between the (i) fair value of the New Notes and (ii) reacquisition price accounts for medical, surgical, facility,of the Tranche 1 Notes prior to the (A) change in the maturity date from March 31, 2022 to June 17, 2022, (B) change in the conversion price to the lesser of (x) $2.00 and office services rendered by LHI for consented procedures(y) the price paid in a Qualified Financing, and is recorded as revenue. The Company recognizes revenue when(C) the termsfair value of the potential Royalty Payments, to determine whether these changes resulted in a contract with a patient are satisfied.modification or extinguishment of the Tranche 1 Notes.

The Company offers two typesused a discounted cash flow method with Monte Carlo Simulation to value the Royalty Payments. Future Royalty Payments were estimated based on management’s best estimate of cellular therapy treatmentsfuture cash flows under various scenarios which were discounted to their patients:present value using a risk-adjusted rate of 70%.

Based on the before and after cash flows of each note, the change was considered significantly different. Consequently, the New Notes were accounted for as a debt extinguishment of the Tranche 1 Notes and a new debt issuance of the New Notes. The Company recorded approximately a $2,200,000 loss upon extinguishment of debt in the nine months ended December 31, 2022, which was comprised of the following:

The Note Conversion Agreement also provided for the consummation of a Tranche 2 Financing (the “Tranche 2 Notes”) subject to (i) the aggregate principal amount of indebtedness represented by the Tranche 2 Notes being capped at $500,000 and (ii) Tranche 2 Notes’ being an unsecured obligation of the Company and expressly subordinate in all respects to all indebtedness of the Company under the Notes and including language in which the holders of such Tranche 2 Notes acknowledge, confirm and agree to the foregoing subordination terms. Pursuant to the terms of the Note Conversion Agreement, the Investors have agreed not to sell any capital stock of the Company for a period of 12 months following the Qualified Financing. The Company is currently working with the noteholders on the extension of the maturity of the outstanding notes.

On June 9, 2022, the Company entered into a securities purchase agreement for a total of $272,500 with two accredited investors. The notes issued are convertible into common stock at a 65% discount to the lowest trading price in the 20-day period prior to conversion. The notes bear interest at 10% and are due one year from issuance. For the first six months, the Company has the right to prepay the notes at a premium of between 25% and 35% depending on when it is repaid.

The Company also issued a promissory note for $100,000, on June 9, 2022, to another accredited investor. This note bears interest at 15% (no matter when repaid) and converts at a discount of 25% of the price of a public offering or a 25% discount to the VWAP of the five (5) days prior to conversion.

Management performedThe embedded features in the convertible notes were analyzed under Accounting Standards Codification 815-“Derivatives and Hedging” (ASC 815) to determine if they required bifurcation as derivative instruments. To be a derivative, one of the criteria is that the embedded component must be net-settleable. While the Company’s Common Stock was traded on an analysisexchange at the time of its customer refund historythe transaction, the underlying shares are not readily convertible into cash since there is insufficient daily trading volume for refunds issuedthe holders to convert the convertible notes into Common Stock without significantly affecting the share price. Accordingly, the embedded derivatives, including the embedded conversion feature, did not meet the definition of a derivative, and therefore, did not require bifurcation from the host instrument. Certain default put provisions, including a default put and default interest, were not considered to be clearly and closely related to prior year’s revenue. Management used the resultshost instrument but the Company concluded that the value of this historical refund analysisthese provisions was de minimus at inception. The Company will reconsider the value of these provisions each reporting period to record a reserve for anticipated future refunds relateddetermine if the value becomes material to recognized revenue. At December 31, 2021 and 2020, the estimated allowance for refunds was approximately $9,000 and $77,000, respectively and is recorded as a contra revenue account.financial statements.

Off-Balance Sheet ArrangementsOn August 8, 2022, the Company entered into a securities purchase agreement for a total of $65,000 with an accredited investor. The note issued is convertible into common stock at a 65% discount to the lowest trading price in the 20-day period prior to conversion. The note bears interest at 10% and is due one year from issuance. For the first six (6) months, the Company has the right to prepay the notes at a premium of between 25% and 40% depending on when it is repaid.

On February 24, 2023, the Company and certain investors entered into a Securities Purchase Agreement (the “SPA”), whereby the Company sold and issued to the certain investors an aggregate of three hundred thousand dollars ($300,000) of the Company’s convertible promissory notes (the “Note” or “Notes”), which are convertible into the Company’s Common Stock, $0.001 par value (“Common Stock”). In connection with the aforementioned Notes, the Company also issued to the investors a warrant to purchase (the “Purchase Warrant”) a certain number of shares of Common Stock, which are equal to 20% of the shares of Common Stock issuable upon conversion of the Note, based on a price of $2.00 per share. These warrants have a term of five (5) years, with an exercise price of $2.00 per share. Unless the Company chooses to terminate earlier, the offering and the sale of the Notes shall terminate on the sooner of the sale of the maximum offering amount or April 30, 2023. However, the Company has the option to extend this offering to June 30, 2023.

The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company does notmoves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price.

Further, in connection with the SPA, the Company also issued a Common Stock Purchase Warrant to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial exercise date, to purchase up to a certain amount of shares of Common Stock, with 20% of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company, dated February 24, 2023. The Company issued Warrants to purchase an aggregate of 30,000 shares of Common Stock. The exercise price per share of the Common Stock under this Warrant is $2.00.

On February 28, 2023, the Company entered into a securities purchase agreement for a total of $128,250 with an accredited investor. The notes issued are convertible into common stock at a 65% discount to the lowest trading price in the 20-day period prior to conversion. The notes bear interest at 10% and are due one year from issuance. For the first six months, the Company has the right to prepay the notes at a premium of between 25% and 40% depending on when it is repaid.

On March 27, 2023, H-Cyte, Inc., (the “Company”) and three related party investors entered into a Securities Purchase Agreement (the “SPA”), whereby, the Company sold and issued to the certain investors, an aggregate of one hundred twenty five thousand dollars ($125,000) of the Company’s convertible promissory notes (the “Note” or “Notes”), which are convertible into the Company’s Common Stock, $0.001 par value (“Common Stock”). On April 12, 2023, the Company and an additional investor entered into the SPA, whereby, the Company sold and issued an aggregate of thirty five thousand dollars ($35,000) of the Company’s Notes. In connection with the aforementioned Notes, the Company also issued to the investors a warrant to purchase (the “Purchase Warrant”) a certain number of shares of Common Stock, which are equal to 20% of the shares of Common Stock issuable upon conversion of the Note, based on a price of $2.00 per share. These warrants have a term of five (5) years, with an exercise price of $2.00 per share. Unless the Company chooses to terminate earlier, the offering and the sale of the Notes shall terminate on the sooner of the sale of the maximum offering amount or April 30, 2023. However, the Company has the option to extend this offering to June 30, 2023.

The March 27, 2023 Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023 Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any off-balance sheet arrangementsaccrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price.

Further, in connection with the SPA, the Company also issued a Common Stock Purchase Warrant to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial exercise date, to purchase up to a certain amount of shares of Common Stock, with 20% of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company. The Company issued Warrants to purchase an aggregate of 13,500 shares of Common Stock. The exercise price per share of the Common Stock under this Warrant is $2.00.

Other Obligations

During the year ending December 31, 2022, Michael Yurkowsky, CEO, advanced the Company approximately $40,000 as defineda non-interest-bearing note with no established repayment terms. The balance owed is approximately $35,000 as of December 31, 2022.

Equity

In January 2022, the Company offered certain warrant holders the opportunity to receive an additional warrant to purchase the Company’s Common Stock at $14.00 per share, for a period of five (5) years from issuance for the exercise of each existing warrant originally issued in April 2020 prior to March 31, 2021. As of December 31, 2022, the Company had eleven warrant holders exercise an aggregate of 83,579 warrants at $14.00 per share resulting in cash proceeds of $1,170,110 to the Company.

The Company filed a Registration Statement on Form S-1 registering the resale of the shares of common stock issuable upon exercise of the warrants issued in the April 2020 financing. The registration statement was declared effective on February 14, 2022.

On September 29, 2022, the Company entered into a securities purchase agreement with two accredited investors for the sale of shares of Common Stock and warrants (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company sold an aggregate of 112,500 shares of common stock and warrants to purchase 56,250 shares of Common Stock exercisable at $2.50 per share for gross proceeds of approximately $225,000. All of the shares described in this Current Report on Form 8-K are being offered and issued to accredited investors in reliance upon exemptions from the registration requirements under Section 4(a)(2) under the Securities Act of 1933, as amended (“Securities Act”), and Rule 506 of Regulation S-K Item 303(a)(4) duringD promulgated thereunder.

On November 14, 2022, pursuant to the periods presented, investments in special-purpose entities or undisclosed borrowings or debt. Additionally, we are notPurchase Agreement, the Company sold an aggregate of 15,000 shares of common stock and warrants to purchase 7,250 shares of Common Stock exercisable at $2.50 per share for gross proceeds of $30,000.

Appointment of New Board Members and Officers.

On January 17, 2022, Mr. Richard Rosenblum was appointed as a party to any derivative contracts or synthetic leases.member of the Board.

On January 17, 2022, Mr. Matthew Anderer was appointed as a member of the Board.

Consulting Agreements

The Company entered into an agreement with Jesse Crowne, a former Director and Co-Chairman of the Board of the Company, to provide business development consulting services for a fee of $5,000 per month. The Company incurred expense of approximately $35,000 and $10,000 for the years ended December 31, 2021 and 2020, respectively, related to these agreements.

The Company entered into a consulting agreement with Tanya Rhodes of Rhodes & Associates, Inc, effective June 15, 2020, to serve as the Chief Science Officer of the Company. The agreement has a minimum term of six months with an average fee of $21,000 per month plus expenses which increases 5% per month on January 1 of each calendar year unless an alternative retainer amount is negotiated and agreed upon by both parties. The Company extended the contract on January 1, 2021, resulting in monthly expenses of $22,500 plus expenses for services rendered. TheAs of January 1, 2022, Ms. Rhodes is continuing to receive $22,500 and is engaged on a month-to-month basis. Due to lack of financial resources, the Company incurred expensewas unable to pay Ms. Rhodes for her services totaling $95.175, which has been accrued as part of approximately $252,000 and $122,000accrued liabilities for the yearsyear ended December 31, 2021 and 2020, respectively, related to this agreement.2022.

Departure of Directors and Certain Officers, Election of Directors, Appointment of New Board Members and Officers

On January 12, 2021, Mr. William Horne stepped down as Chairman of the board of directors (the “Board”) of H-Cyte, Inc. (the “Company”). Mr. Horne will remainThe Company entered into a member of the Board.

On January 12, 2021, Mr. Raymond Monteleone, a member of the Board, was appointed the new Chairman of the Board.

On September 28, 2021, Mr. Robert Greif’s employmentconsulting agreement with H-Cyte, Inc. (the “Company”) expired, ending his term asAlpha IR Group on March 1, 2022, to provide investor relations to the Company’s Chief Executive Officer.Company. The agreement is for twelve months with an average service fee of $9,750 per month, which is included in Accounts Payable. During 2023, the Company chose not to renew his employment agreement.

On September 28, 2021, Ms. Tanya Rhodes, the Company’s Chief Science Officer, was appointed as interim Chief Executive Officer.

On December 1, 2021, Mr. Michael Yurkowsky,paused this service for a member of the Board, was appointed the new Chief Executive Officer.

On January 17, 2022, Mr. Richard Rosenblum was appointed as a member of the Board.

On January 17, 2022, Mr. Matthew Anderer was appointed as a member of the Board.three month period.

Indemnification

We have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving, at our request, in such capacity, to the maximum extent permitted under the laws of the State of Nevada.

The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. However, we maintain directors and officers insurance coverage that may contribute, up to certain limits, a portion of any future amounts paid for indemnification of directors and officers. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal. Historically, we have not incurred any losses or recorded any liabilities related to performance under these types of indemnities.

Additionally, in the normal course of business, we have made certain guarantees, indemnities, and commitments under which we may be required to make payments in relation to certain transactions. These indemnities include intellectual property and other indemnities to our customers and distribution network partners in connection with the sales of our products and therapies, and indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease.

It is not possible to determine the maximum potential loss under these guarantees, indemnities, and commitments due to our limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial condition and results of operations are based on its consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods.

On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below. The Company bases its estimates on historical experience and on various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements included elsewhere in this report, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations.

Fair Value Measurements

The Company measures certain non-financial assets, liabilities, and equity issuances at fair value on a non-recurring basis. These non-recurring valuations include evaluating assets such as long-lived assets and non-amortizing intangible assets for impairment; allocating value to assets in an acquired asset group; and applying accounting for business combinations.

The Company classifies its stock warrants as either liability or equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity” (ASC 480) and ASC 815, “Derivatives and Hedging” (ASC 815), depending on the specific terms of the warrant agreement.

The Company uses the fair value measurement framework to value these assets and report the fair values in the periods in which they are recorded, adjusted above, or written down.

The fair value measurement framework includes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair values in their broad levels. These levels from highest to lowest priority are as follows:

The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist in determining fair value, as appropriate.

The Company evaluates its financial instruments subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. Although the Company believes that the recorded fair value of our financial instruments is appropriate at December 31, 2022, these fair values may not be indicative of net realizable value or reflective of future fair values.

Revenue Recognition

The Company recognizes revenue in accordance with U.S. GAAP as outlined in the FASB ASC 606, Revenue From Contracts with Customers, which requires that five steps be completed to determine when revenue can be recognized: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfies a performance obligation. The Company records revenue under ASC 606 as services are performed for the customer.

The Company uses a standard pricing model for the types of cellular therapy treatments that is offered to its patients. The transaction price accounts for medical, surgical, facility, and office services rendered by the Company for consented procedures and is recorded as revenue. The Company recognizes revenue when the terms of a contract with a patient are satisfied.

The Company offers two types of cellular therapy treatments to their patients:

The Company’s policy is to not offer refunds to patients. However, in limited instances the Company may make exceptions to this policy for extenuating circumstances. These instances are evaluated on a case-by-case basis and may result in a patient refund. Management performed an analysis of its customer refund history for refunds issued related to prior year’s revenue. Management used the results of this historical refund analysis to record a reserve for anticipated future refunds related to recognized revenue, which is not significant at December 31, 2022 and 2021. The Company has now closed all of its clinical operations in the autologous infusion therapy business which delivered treatments for patients with chronic respiratory and pulmonary disorders.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4) during the periods presented, investments in special-purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.

Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard allows exceptions to the use of the incremental approach for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment. Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. The Company adopted ASU 2019-12, as required, on January 1, 2021 and the adoption did not have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06. Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. Specifically, ASU 2020-06 revises the requirements to separately account for conversion features as a derivative under ASC Topic 815 and it removes the requirement to account for beneficial conversion features on such instruments. The Company chose early adoption of ASU 2020-06 effective January 1, 2021, related to the April 2021 and October 2021 Note Purchase Agreements. Thus, the Notes did not require consideration for a beneficial conversion feature under ASC 470-20 and the Notes were accounted for solely as debt on the balance sheet.

Not Applicable.

TABLE OF CONTENTS FOR THE FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

of H-CYTE, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of H-CYTE, Inc. (the “Company”) as of December 31, 20212022 and 2020,2021, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20212022 and 2020,2021, and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has negative working capital, has an accumulated deficit, has a history of significant operating losses and has a history of negative operating cash flow. These factorsflow that raise substantial doubt about the Company’sits ability to continue as a going concern. Management’s plans regardingin regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Frazier & Deeter, LLC

Tampa, Florida

February 25, 2022May 10, 2023

We have served as the Company’s auditor since 2018.

H-CYTE, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS