Note 2. Prepaid Expenses

Prepaid expenses and other current assets consist of the following:

Note 3. EquityRelated Party Convertible Promissory Note

2013 Long-Term Incentive Plan

On June 20, 2013,March 18, 2022, the Company’s Board of DirectorsCompany issued an Unsecured Convertible Promissory Note (the “BoardUnsecured Note”) adopted the 2013 Long-Term Incentive Plan (the “2013 Plan”) and on November 15, 2013, a stockholder owning a majority of the Company’s issued and outstanding stock approved adoption to the 2013 Plan.Kalen Capital. Pursuant to the terms of the 2013 Plan,Unsecured Note, Kalen Capital loaned the Company $800,000 at an aggregateannual interest rate of 20,000,000 1% per year, compounded daily. The Note, including any interest due thereon, may be prepaid at any time without penalty. The Unsecured Note, and any balance thereunder, automatically converts into securities of the Company upon receipt of an equity financing from third-party(s) of not less than ten million dollars ($10,000,000) at a conversion price equal to 80% of the price paid in such a financing. Also, after June 23, 2023, Kalen Capital may convert all or any portion of the balance into shares of common stock at a conversion price of $0.45shares per share, representing a fifty 50% percent premium to the closing price of the Company’s common stock have been reservedon March 17, 2022. There is no commitment from Kalen Capital for issuance toany additional funding.

During the Company’s officers, directors, employeesthree months ended March 31, 2022, the Company recognized $289 of interest expense.

Note 4. Accounts Payable and consultants in order to attractAccrued Liabilities

Accounts payable and hire key technical personnel and management. Options granted to employees under the 2013 Plan, including directors and officers who are employees, may be incentive stock options or non-qualified stock options; options granted to others under the 2013 Plan are limited to non-qualified stock options. As of June 30, 2021, there were 16,668,266 shares available for future grants.

The 2013 Plan is administered by the Board or a committee designated by the Board. Subject to the provisionsaccrued expenses consists of the 2013 Plan, the Board has the authority to determine the officers, employees and consultants to whom options will be granted, the number of shares covered by each option, vesting rights and the terms and conditions of each option that is granted to them; however, no person may be granted options to purchase more than 2,000,000 shares in any one fiscal year under the 2013 Plan, and the aggregate fair market value (determined at the time the option is granted) of the shares with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year cannot exceed $100,000. Options granted pursuant to the 2013 Plan are exercisable no later than ten years after the date of grant.following:

Note 5. Equity

The exercise price per share of common stock for options granted under the 2013 Plan is the fair market value of the Company's common stock on the date of grant, using the closing price of the Company's common stock on the last trading day prior to the date of grant, except for incentive stock options granted to a holder of ten percent or more of the Company's common stock, for whom the exercise price per share will not be less than 110% of the fair market value.No option can be granted under the 2013 Plan after June 20, 2023.

Common Stock

At June 30, 2021,March 31, 2022, the Company had 500,000,000 authorized shares of common stock with a par value of $0.00001per share and 87,352,364shares of common stock outstanding.

During the three and six months ended June 30, 2021 and 2020, the Company did not have any common stock transactions.

Warrants

The Company has issued warrants to purchase common stock at various exercise prices in connection with loan agreements and private placements. The following table summarizes information about warrants outstanding at June 30, 2021March 31, 2022 and December 31, 2020:

During the three months ended March 31, 2022, all the Series F Warrants expired unexercised.

Stock Options

The following table summarizes stock option activity for the sixthree months ended June 30, 2021:March 31, 2022:

The valuation methodology used to determine the fair value of stock options is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the risk-free interest rate, and the expected term of the stock options. The ranges of assumptions used in the Black-Scholes Model during the six months ended June 30, 2020 is set forth in the table below:

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the expected term. Estimated volatility is a measure of the amount by which the stock price is expected to fluctuate each year during the term of an award. Our calculation of estimated volatility is based on historical stock prices over a period equal to the term of the awards. The average expected life is based on the contractual terms of the stock option using the simplified method. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and have no current intention to pay cash dividends. Future stock-based compensation may significantly differ based on changes in the fair value of our Common Stock and our estimates of expected volatility and the other relevant assumptions.

The following table sets forth the share-based compensation cost resulting from stock option grants, including those previously granted and vesting over time, that were recorded in the Company’s Statements of Operations for the three and six months ended June 30, 2021March 31, 2022 and 2020:2021:

Three and Six Months Ended June 30, 2021

During the first half of 2021, certain individuals resigned from the Company resulting in the forfeiture and cancellation of 2,805,571 options. Compensation expense was recorded on some of these options prior to their full vesting. As a result, during the three and six months ended June 30, 2021, the Company recognized $66,130 and $1,248,575, respectively, of reversals of the prior recognized compensation expense related to the cancelled options. During the three and six months ended June 30, 2021, the expense recognized for options still in their vesting period totaled $265,726 and $639,541, respectively.

Note 4.6. Leases

In February 2020, the Company entered into a two-year lease for office premises located at 4 Becker Farm Road, Suite 105, Roseland, New Jersey.Jersey (the “Premises”). Monthly base rent in year one of the lease is $4,356; and $4,459in year 2of the lease. The term (and payment of the monthly rent) commenced upon completion of the landlord’s work on August 1, 2020. The Company vacated the premises in May of 2021 and relocated its corporate offices to 9375 E. Shea Blvd., Suite 107-A, Scottsdale, AZ 85260.

The Company’s existing Leaselease is not subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing, or enter into additional Lease’s.

As of June 30, 2021,March 31, 2022, the Company has not entered into any leases which have not yet commenced which would entitle the Company to significant rights or create additional obligations.

The Company does not have any finance leases.

Supplemental lease information as of June 30, 2021:information:

Supplemental cash flow information for the sixthree months ended June 30,March 31, 2022 and 2021:

The Company leases office space under a non-cancellable operating lease expiring in 2022. Future lease payments included in the measurement of lease liabilities on the balance sheet at June 30, 2021March 31, 2022 for future periods are as follows:

Note 5.7. Commitments and Contingencies

Stem Cell Systems

In connection with the Company’s anticipated future regulatory filings, the Company has engaged StemCell Systems GmbH (“StemCell Systems”) to provide it with medical device prototypes and related design documents and data under various agreements. On July 1, 2020, the Company and StemCell Systems entered into a Strategic R&D Agreement (the “Strategic Agreement”) having an initial term of three years with successive one-year extensions unless earlier terminated. The Strategic Agreement includes a $27,000 39,000monthly fee to be paid to StemCell Systems along with any additional expenses incurred. The Company, StemCell Systems and certain affiliates of StemCellsStemCell Systems entered into a Rights of First Refusal and Corporate Opportunities Agreement (the “ROFR Agreement”). Pursuant to the ROFR Agreement, (i) in the event a StemCell Systems stockholder receives an offer from a third party to acquire the StemCell Systems stockholders ownership interest, the Company shall have ten business days to purchase such ownership, and (ii) if during the terms of the Strategic Agreement, any StemCell Systems inventions, with respect to skin, burns and wounds, designs, inventions and among other things, whether or not patentable, copyrightable or otherwise legally protectable are discovered by StemCell Systems, the Company shall have the first option to negotiate mutually agreeable terms for the Company’s acquisition or licensing of the StemCell Systems inventions. Pursuant to these engagements the Company incurred expenses of approximately $128,000 125,931and $122,000 120,377during the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively; andrespectively. As of March 31, 2022, the Company had a balance due to StemCell Systems of $248,00083,700and $199,000during. On April 28, 2022 the six months ended June 30, 2021 and 2020, respectively.Company provided StemCell Systems with notice of termination of the Strategic Agreement. See “Note 8. Subsequent Events.”

Legal Proceedings

SEC Civil Complaint

On May 28, 2021 the SEC filed a civil complaint (the “SEC Action”), in the United States District Court for the Southern District of New York, naming the Company and Harmel S. Rayat, RenovaCare Chairmanthe Company’s current President, Chief Executive Officer, Chief Financial Officer and Sole Director as defendants (the “ComplaintDefendants”). The Complaint chargesSEC Action alleges among other things that Mr. Rayat and the Company with violatingviolated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and also chargesalleges that Mr. Rayat with aidingaided and abettingabetted the Company's violations of those provisions.provisions by the Company. The complaintSEC Action also chargesalleges that the Company with violatingviolated the reporting provisions of Exchange Act Section 15(d) and Rules 15d-11 and 12b-20 thereunder. The SEC seeks, among other relief, permanent injunctions and civil penalties against Mr. Rayat and the Company,Defendants, and officer-and-director and penny stock bars against Mr. Rayat.

On August 31, 2021 the Defendants filed an answer to the Complaint. On September 21, 2021, the SEC filed a motion to strike Defendants equitable affirmative defenses which motion was granted by the court on October 18, 2021. The Company believes thatcontinues to defend itself and the claims assertednamed individuals against the allegations set forth in the Complaint are without meritSEC Action. Due to the nature and intends to defend this matter vigorously. Most, if not all,early stage of the cost to defend the Company and Mr. Rayat is expected to be covered by insurance. However, because of the inherent uncertainty as to the outcome of this proceeding,SEC Action, the Company is unable at this time, to estimate the possible impact oftotal costs to defend itself or the outcome of this matter nor provide assurancepotential costs to the Company in the event that the available insurance coverage will be sufficient to see the Complaint through to resolution.it is not successful in its defense.

Class Action Complaints

On July 16, and July 21, 2021, two purported shareholders of the CompanyGabrielle A. Boller filed putativea class actionsaction lawsuit in the United StatesU.S. District Court for the District of New Jersey (the “Boller Lawsuit”), against the Company and certain of itspast and current officers and former executive officers (captioned Gabrielle A. Boller, Individually and On Behalf of All Others Similarly Situated v. RenovaCare, Inc., Harmel Rayat, and Thomas Bold, No. 2:21-cv-13766-SDW-ESK (“Boller”), and Michael Solakian, Individually and On Behalf of All Others Similarly Situated v. RenovaCare, Inc., Harmel Rayat, and Thomas Bold, No. 2:21-cv-13930 (“Solakian”), respectively). The complaints in Boller and Solakian were brought both individually and on behalf of a putative classmembers of the Company’s stockholders, claimingboard of directors (collectively, the “Boller Defendants”). The Boller Lawsuit alleges, among other things, that in connection with the facts and circumstances underlying the allegations in the SEC Complaint,Action, the CompanyBoller Defendants engaged in fraudulent conduct and made false and misleading statements of material fact or omitted to state material facts necessary to make the statements made not misleading. BothThe plaintiff seeks a determination that the Boller and Solakian seek to declare the action to beLawsuit is a proper class action, compensatory damages in favor of the plaintiff and monetary damages, includingother class members, reasonable costs and expenses incurred in the Boller Lawsuit, including counsel fees and award of reasonable attorneys’ fees, expert fees, and other costs, and such other relief as the Court may deem just and proper.

The Company believes thatdisputes the plaintiffs’ claims asserted in the Boller and Solakian  and any other Class Actions derived from the SEC Complaint are without meritLawsuit and intends to defend itselfthese matters vigorously. BasedTo that end, the Company has engaged counsel to defend the Boller Defendants. Given the uncertainty of litigation, the preliminary stage of these cases, the legal standards that must be met for, among other things, class certification and success on the early stages of these legal proceedings, and the inherent uncertainty as to their outcome, at this time,merits, the Company is not able tocannot estimate the reasonably estimate a possible loss or range of loss if any, that may result from these actions.

On July 21, 2021, Michael Solakian, filed a class action lawsuit in the U.S. District Court for the District of New Jersey (the “Solakian Lawsuit”), against the Company and certain past and current officers and members of the Company’s board of directors (collectively, the “Solakian Defendants”). The Solakian Lawsuit alleges, among other things, that in connection with the facts and circumstances underlying the allegations set forth in the complaints filedSEC Action, the Solakian Defendants engaged in fraudulent conduct and made false and misleading statements of material fact or omitted to state material facts necessary to make the statements made not misleading. The plaintiff seeks a determination that the Solakian Lawsuit is a proper class action, compensatory damages in favor of the plaintiff and other class members, reasonable costs and expenses incurred in the Class Actions.Solakian Lawsuit, including counsel fees and expert fees, and such other relief as the Court may deem proper.

The Company disputes the plaintiffs’ claims in the Solakian Lawsuit and intends to defend these matters vigorously. To that end, the Company has engaged counsel to defend the Solakian Defendants. Given the uncertainty of litigation, the preliminary stage of these cases, the legal standards that must be met for, among other things, class certification and success on the merits, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions.

Note 6. Related Party Transactions

Shareholder Derivative Complaints

During the three

On December 20, 2021, Melvin Emberland (“Emberland”), derivatively and six months ended June 30, 2020, Talia Jevan Properties, Inc. made payments totaling $5,287 and $10,811, respectively, to Stephen Yan-Klassen, former CFO who resigned in 2020, for his salary on behalf of nominal defendant Renovacare, Inc. filed a lawsuit (the “Emberland Lawsuit”) in the Company. Talia Jevan Properties, Inc. is a related partyUnited States District Court for the District of Harmel S. Rayat, ChairmanNew Jersey against the Company and certain of its current and former executive officers (the “Emberland Defendants”). In the complaint, Emberland’s allegations, relating to the facts and circumstances underlying the allegations in the SEC Action include, but are not limited to (i) breach of fiduciary duties by the individual Emberland Defendants, (ii) unjust enrichment and (iii) violation of Section 10(b) and 21D of the Board.

On August 1, 2013,Securities Exchange Act of 1934. Emberland did not quantify any alleged damages in his complaint but, in addition to attorneys’ fees and costs, Emberland seeks (i) a declaration that the Company entered into a consulting agreement, as amended on May 1, 2016, with Jatinder Bhogal, an individual owning in excessEmberland Defendants have breached and/or aided and abetted the breach of 5% of the Company’s issued and outstanding shares of common stock, to provide consulting servicestheir fiduciary duties to the Company, through his wholly owned company, Vector Asset Management, Inc. (“VAMI”). Pursuant(ii) a determination awarding to the consulting agreement, VAMI assistedCompany restitution from the Company with identifying subject matter experts inMeyer Defendants, and each of them, and ordering disgorgement of all profits, benefits and other compensation obtained by the medical device and biotechnology industries and assisted the Company with its ongoing research, development and eventual commercialization of its Regeneration Technology. PursuantEmberland Defendants, (iii) a directive to an amendment dated May 1, 2016, the VAMI monthly consulting fee was increased from $5,000 to $6,800. On June 22, 2018, the Company and VAM entered into an Executive Consulting Agreement (the “ECA”) pursuantthe Emberland Defendants to which Mr. Bhogal served astake all necessary actions to reform and improve the Company’s Chief Operating Officer. corporate governance and internal procedures to comply with applicable laws, and (iv) Plaintiff is seeking, among other things, restitution from the individual Emberland Defendants and disgorgement of profits, benefits and other compensation obtained by such Emberland Defendants, costs and disbursements of the action including reasonable attorney’s fees, accountants’ and expert fees and expenses, an order directing the taking of certain corporate actions relating to its board of directors and corporate governance.

The ECA supersedesCompany disputes Emberland’s claims and intends to defend these matters vigorously. To that end, the prior consulting agreement. PursuantCompany has engaged counsel to defend the Emberland Defendants. Given the uncertainty of litigation, the preliminary stage of the Emberland Lawsuit, the legal standards that must be met for success on the merits, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions.

On January 6, 2022, Zoser Vargas (“Vargas”), derivatively and on behalf of nominal defendant Renovacare, Inc. filed a lawsuit (the “Vargas Lawsuit”) in the United States District Court for the District of New Jersey against the Company and certain of its current and former executive officers (the “Vargas Defendants”). In the complaint Vargas’ allegations relating to the ECA, VAMI received compensationfacts and circumstances underlying the allegations in the SEC Action include but are not limited to, (i) breach of $120,000 per year. On July 1, 2020fiduciary duties, (ii) waste of corporate assets, (iii) violation of law, and (iii) unjust enrichment. Vargas did not quantify any alleged damages in his complaint but, in addition to attorneys’ fees and costs, Meyer seeks, in addition to other things, (i) against the Vargas Defendants and in favor of the Company amended the ECA and paid VAMI $4,000 per month through November 30, 2020 and $200 per month thereafter until May 31, 2021 at which time the ECA as amended expired. For consulting services providedamount of damages sustained by VAMI, during the three months ended June 30, 2021 and 2020, the Company recognized expensesas a result of $400 the Vargas Defendants’ breaches of fiduciary duties, waste of corporate assets and $30,000unjust enrichment, (ii) directive for the Company to take all necessary actions to improve its corporate governance and internal procedures to comply with applicable law and (iii) awarding to the Company restitution from the Vargas Defendants, and each of them, and ordering disgorgement of all profits, benefits and other compensation obtained by the Vargas Defendants.

The Company disputes Vargas’ claims and intends to defend these matters vigorously. To that end, the Company has engaged counsel to defend the Vargas Defendants. Given the uncertainty of litigation, the preliminary stage of these cases, the legal standards that must be met for success on the merits, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions.

On January 28, 2022, Aviva Meyer (“Meyer”), respectively;derivatively and $1,000 on behalf of nominal defendant Renovacare, Inc. filed a lawsuit (the “Meyer Lawsuit”) in the United States District Court for the District of New Jersey against the Company and $60,000 duringcertain of its current and former executive officers (the “Meyer Defendants”). In the six months ended June 30, 2021complaint Meyer’s allegations relating to the facts and 2020, respectively. Jatinder Bhogal resignedcircumstances underlying the allegations in the SEC Action include but are not limited to, (i) breach of fiduciary duties, (ii) waste of corporate assets, (iii) violation of law, and (iii) unjust enrichment. Vargas did not quantify any alleged damages in his complaint but, in addition to attorneys’ fees and costs, Meyer seeks, in addition to other things, (i) against the Vargas Defendants and in favor of the Company the amount of damages sustained by the Company as a result of the Company’s COO effective June 30, 2020.Vargas Defendants’ breaches of fiduciary duties, waste of corporate assets and unjust enrichment, (ii) directive for the Company to take all necessary actions to improve its corporate governance and internal procedures to comply with applicable law and (iii) awarding to the Company restitution from the Meyer Defendants, and each of them, and ordering disgorgement of all profits, benefits and other compensation obtained by the Meyer Defendants.

The Company disputes Meyer’s claims and intends to defend these matters vigorously. To that end, the Company has engaged counsel to defend the Meyer Defendants Given the uncertainty of litigation, the preliminary stage of these cases, the legal standards that must be met for success on the merits, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions.

The Company believes that the claims asserted in the SEC Action, the Boller Lawsuit, the Solakian Lawsuit, the Emberland Lawsuit, the Vargas Lawsuit, and the Meyer Lawsuit (collectively, the “Lawsuits”) are without merit and intends to vigorously defend each Lawsuit.

Note 7.8. Subsequent Events

Management has reviewed material events subsequent of the period ended June 30, 2021March 31, 2022 and prior to the filing of financial statements in accordance with FASB ASC 855 “Subsequent Events”.

On April 21, 2022, the Company made retainer payments to its attorneys in the amount of $1,180,000.

On April 28, 2022, the Company terminated the Strategic Agreement with StemCell Systems.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

This discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with the unaudited interim consolidated financial statements of RenovaCare, Inc. (“RenovaCare”) and its wholly-owned subsidiary (collectively with RenovaCare, “we,” “our,” “us,” or the “Company”), appearing elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments, are outlined below in “Critical Accounting Policies,” and have not changed significantly since 2020.

This Quarterly Report on Form 10-Q also contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, as well as information relating to the Company that is based on management's exercise of business judgment and assumptions made by and information currently available to management. Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. When used in this document and other documents, releases and reports released by us, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “the facts suggest” and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect our current view of future events and are subject to certain risks and uncertainties as noted below. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results could differ materially from those anticipated in these forward-looking statements. Actual events, transactions and results may materially differ from the anticipated events, transactions or results described in such statements. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize. Many factors could cause actual results to differ materially from our forward-looking statements and unknown, unidentified or unpredictable factors could materially and adversely impact our future results. We undertake no obligation and do not intend to update, revise or otherwise publicly release any revisions to our forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events. Several of these factors include, without limitation:

The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by us. The reader is cautioned that no statements contained in this Form 10-Q should be construed as a guarantee or assurance of future performance or results. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks described in this report and matters described in this report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur.

Overview

We are a development-stage biotechnology and medical device company focusing on the research, development and commercialization of autologous (using a patient's own cells) cellular therapies that can be used for medical and aesthetic applications. The Company does not have any commercialized products. The Company's activities have consisted principally of performing research and development activities, business development efforts, and raising capital to support such activities.

The Company, through its wholly owned subsidiary, RenovaCare Sciences Corp., owns the CellMist™ System which is a cell isolation procedure that enzymatically renders stem cells from the patient’s own skin or other tissues. The resulting stem cell suspension is administered topically with our SkinGun™ spray device as a cell therapy onto wounds including burns to facilitate healing. The CellMist™ System also includes our unique, closed, automated cell isolation device (the “CID”) to harvest stem cells from tissues which is in prototype development.

Currently, our proprietary technologies are the subject of forty-four (44) U.S. and foreign granted or pending patents or patent applications and seventeen (17) U.S. and foreign trademarks. Of the issued patents, five (5) are U.S. patents and seventeen (17) have issued or are allowed in Australia, Canada, China, Europe, Germany, France, Italy, Japan, Korea, Netherlands, Spain, Switzerland/Lichtenstein, and the United Kingdom. The Company has six (6) allowed trademarks in the United States, two (2) European registered trademarks, two (2) United Kingdom trademarks, two (2) Japan trademarks, and two (2) pending in Canada.

In May 2021, the Company announced that the US Food and Drug Administration (FDA) fully approved the Company’s Investigational Device Exemption (IDE) application to conduct a clinical trial, that willdesignated CELLMIST 1, designed to evaluate the safety and feasibility of autologous skin and pluripotent stem cells rendered by its manual CellMist™ System from donor skin and applied topically with the electronic SkinGun™ spray device for treatment of acute burn wounds. The clinical trial protocol is an open-label, single-arm clinical study that willdesignated to enroll 14 adult human burn subjects with partial-thickness, second-degree deep thermal burn wounds covering between 10% and 30% total body surface area. The Company expects to conduct the clinical study atmay engage up to four (4) U.S. burn centers. Currently,centers to conduct the clinical study.

During the three months ended March 31, 2022, the Board decided to stop enrollment of patients into the clinical trial is activated and screening patients at its first burn center.

The developmenttake other measures to reduce the Company’s overhead in an effort to conserve financial resources as it continues to defend against the Lawsuits; however, medical evaluation of our new closed, automated cell isolation device for the CellMist^TM System istreated subjects will continue periodically as scheduled in the early stage,clinical protocol at the clinical study site until October 2022, when the study concludes. The Company hopes to restart the clinical trial at a future date upon the occurrence of a favorable outcome against the Lawsuits and we expect significant timeadditional financing. 

Research, development and resources will be devoted to develop our technology and determine the commercial feasibility of the product. Research and developmentcommercialization of new technologies involvegenerally requires significant financial resources, involves a high degree of risk, and there is no assurance that our development activities will result in a commercially viable product. The long-term profitability of our operations will be, in part, directly related to the cost and success of our development programs, which may be affected by a number of factors.

The Company has four United States patents and patents in Germany, Australia, Canada, and Europe, with the European patent being validated in France, Germany, Italy, Netherlands, Spain, Switzerland/Lichtenstein, and United Kingdom. The Company also has patent applications pending in the United States and in multiple countries.

The Company has six allowed trademarks in the United States and two pending applications. Globally, the Company has two European registered trademarks, two United Kingdom trademarks, two pending in Canada, and one allowed and one pending in Japan.

The Company has not generated any revenue and has sustained recurring losses and negative cash flows from operations since inception. The Company expects to incur losses as it continues development of its products and technologies and expects that itdefends itself against the Lawsuits (as defined in “Part 2-Other Information, Item 1. Legal Proceedings”). The Company will need to raise additional capital through partnerships or the sale of its securities to accomplish its business plan. Failing to secure such additional funding before achieving sustainable revenue and profit from operations poses a significant risk. The Company's ability to meet its financial obligations, including to fund the development of its cellular therapies depends on the amount and timing of cash receipts from future financing activities. There can be no assurance as to the availability or terms upon which such financing and capital might be available.

Additionally, there is significant uncertainty relating to the full impact of the COVID-19 pandemic on the Company’s operations and capital requirements. Should financing when needed be unavailable or prohibitively expensive or the COVID-19 pandemic continue, it may adversely affect the Company’s ability to (i) retain employees and consultants; (ii) obtain additional financing on terms acceptable to the Company, if at all; (iii) delay regulatory submissions and approvals; (iv) delay, limit or preclude the Company from the operation of clinical study sites and testing laboratories; (v) delay, limit or preclude the Company from achieving technology or product development goals, milestones, or objectives; and (vi) preclude or delay entry into joint venture or partnership arrangements. The occurrence of any one or more of such events may affect the Company’s ability to continue its pathway to commercialization of its technology or products.

Although the Company continues to monitor the situation and may adjust policies as more information and public health guidance become available, the COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the ultimate spread of the virus, the severity of the disease, the duration of the outbreak and actions that may be taken by governmental authorities to contain the outbreak or to treat its impact, makes it difficult to assess whether there will be further impact on the development and commercialization of the Company’s technology which could have a material adverse effect on the Company’s results of operations and cash flows.

Components of Our Results of Operations

Revenue

To date we have not generated any product revenues and do not expect to generate any revenue for the foreseeable future. Our ability to generate revenue and become profitable depends upon our ability to obtain marketing approval and successfully commercialization of our CellMist^TM System.

Operating Expenses