As filed with the Securities and Exchange Commission on July 2, 2020February 7, 2022

Registration No.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

H-CYTE, INC.

(Exact name of registrant as specified in its charter)

3841

Primary Standard Industrial Classification Code Number

201 E Kennedy Blvd., BlvdSuite 700

Tampa, FL 33602

(844) (844) 633-6839

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

William HorneMichael Yurkowsky

Chief Executive Officer

201 E Kennedy Blvd., Suite 700

Tampa, FL33602

(844) (844) 633-6839

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a copyCopies to:

Arthur S. Marcus, Esq.

Sichenzia Ross Ference LLP

1185 Avenue of the Americas, 37th31^st Floor

New York, NYNew York 10036

Phone: (212) 930-9700

Approximate date of commencement of proposed sale of the securities to the public:From time to time after the effective date of this registration statement.

As soon as practicable after this Registration Statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X]box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.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 7(a)(2)(B) of the Securities Act. [  ]☐

CALCULATION OF REGISTRATION FEE

(1) This registration statement on Form S-1 relates to the offering described herein of: (a) subscription rights to purchase Series A Preferred Shares, par value $0.001 per share; (b) the Series A Preferred Shares deliverable upon exercise of the subscription rights; and (c) shares of common stock deliverable upon conversion of the Series A Preferred Shares.

(2) Estimated pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”), based on the proposed maximum aggregate offering price.

(3) The subscription rights are being issued without consideration. Pursuant to Rule 457(g), no separate registration fee is payable with respect to the subscription rights being offered hereby.

(4) No additional consideration will be paid in connection with the issuance of the shares of common stock upon conversion of the Series A Preferred Shares. Accordingly, pursuant to Rule 457(i), no separate registration fee is payable with respect to the common stock shares being offered hereby. Pursuant to Rule 416 under the Securities Act, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.

(5) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, based on an estimated proposed maximum aggregate offering of $5,650,123.

The Registrantregistrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrantregistrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 as amended, or until thethis Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission acting pursuantis effective. This prospectus is not an offer to Section 8(a), may determine.sell and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Non-transferable Rights Offering to Purchase

Up to Series A Preferred363,146,765 Shares

Convertible into of Common Stock Offered by the Selling Stockholders

H-CYTE Inc. (the “Company” or “we”) isdistributingThis prospectus relates to holdersthe offering and resale by the selling stockholders identified herein of our common stock, at no charge, non-transferable subscription rightsup to subscribe for our Series A Preferred Stock for each share363,146,765 shares, including 350,996,043 shares of common stock heldissuable upon the exercise of outstanding unregistered warrants previously issued by us on April 14, 2020 at 5:00 p.m., New York City time, on [____________], 2020, the record date for the rights offering (the “Record Date”). Each whole subscription right entitles a holder to subscribe for one sharean exercise price of Series A preferred stock (“Series A Preferred Share”) at a subscription price (the “Subscription Price”) that is expected to be approximately $0.014 per Series A Preferred Share. This price is subject to board approval to be obtained prior toshare, and 12,150,722 shares of common stock. Please see “Private Placement of Shares of Common Stock, Warrants” beginning on page 49 of this prospectus.

We will not receive any proceeds from the commencementsale of the rights offering. Each Series A Preferred Share initially will be convertible into one shareshares of common stock subject to adjustments to reflect stock splits, reclassifications and certain other events.

Asby the selling stockholders. Upon the cash exercise of the record datewarrants however, we will receive the exercise price of such warrants, for an aggregate of approximately $4,913,945 upon exercise of such warrants by the rights offering, [_________]investors.

The selling stockholders may sell all or a portion of the shares of our common stock beneficially owned by them and nooffered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. Please see the section entitled “Plan of Distribution” on page 52 of this prospectus for more information. For information on the selling stockholders, see the section entitled “Selling Stockholders” on page 49 of this prospectus. We will bear all fees and expenses incident to our obligation to register the shares of our Series A preferred stock were outstanding. Holders of these shares on the Record Date are eligible to receive the subscription rights. We will not issue any fractional Series A Preferred Shares in this offering, and therefore you will need to hold at least one (1) subscription right in order to be eligible to subscribe for our new Series A Preferred Shares. We believe the rights offering will provide every stockholder on the Record Date the right to subscribe for and purchase Series A Preferred Shares on the same terms.common stock.

In connection with the rights offering, certain creditors (the “Standby Purchasers”) who purchased secured convertible notes and warrants in the aggregate principal amount of $3,842,695 pursuant to a note purchase agreement dated April 17, 2020 agreed (a) not to exercise any subscription rights they may receive as stockholders of the Company and (b) instead to purchase any Series A Preferred Shares corresponding to the unexercised rights in the rights offering up to an aggregate amount of $2,842,695 (the “Standby Commitment Amount”) at the same Subscription Price. We refer to such agreement as the “Standby Commitment.” However, if the aggregate gross proceeds from the exercise of subscription rights in this rights offering exceeds the Standby Commitment Amount, the Standby Commitment Amount that the Standby Purchasers will be required to invest in us will be reduced on a proportional basis by the number of Series A Preferred Shares purchased by subscription rights holders in this rights offering. See “Description of the Rights Offering— Standby Commitments.”

The aggregate dollar amount of Series A Preferred Shares purchased in this rights offering, when aggregated with the purchase of Series A Preferred Shares by the Standby Purchasers under the Standby Commitment, will be at least $2,842,695. If all of the rights offered hereby are exercised, the aggregate offering amount in the rights offering would be $5,650,123. In addition, holders of promissory notes in the aggregate amount of $4,349,877 (based on accrued interest through June 22, 2020) are expected to convert such debt into Series A Preferred Shares on terms substantially similar to the terms of this offering provided certain conditions are met.

The subscription rights will expire if they are not exercised by 5:00 p.m., New York City time, on [_________], unless the time for exercise is extended. We refer to this deadline, as extended (if applicable), as the “Expiration Time.” We reserve the right, in our sole discretion, to cancel, extend or otherwise amend the terms of this rights offering for any reason prior to the Expiration Time. Subscription rights that are not exercised by the Expiration Time of this rights offering will expire and will have no value. You should carefully consider whether or not to exercise your subscription rights before the Expiration Time for this rights offering, and in doing so you should consider all of the information about us and this rights offering contained or incorporated by reference in this prospectus, including the risk factors set forth herein.

The rights offering will dilute the ownership interest and voting power of the common stock owned by stockholders who do not fully exercise their subscription rights. Stockholders who do not fully exercise their subscription rights should expect, upon completion of the rights offering, to own a smaller proportional interest of our common stock than before the rights offering.

Our common stock is quoted on the OTCQB under the symbol “HCYT.” On June 23, 2020,January 27, 2022, the last reported sale price forper share of our common stock onwas $0.046.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the OTCQB was $0.074 per share.entire prospectus and any amendments or supplements carefully before you make your investment decision.

There is no established trading market for the subscription rights and Series A preferred stock and we do not expect an active trading market to develop. We do not intend to list or quote the subscription rights or Series A preferred stock on any securities exchange or other trading market. Without an active trading market, the liquidity of the subscription rights and Series A preferred stock will be limited. Subject to very limited exceptions, the subscription rights are not transferrable.

Our business and an investmentInvesting in our securities involvecommon stock involves a high degree of risk. See “Risk Factors” beginning on page 93 of this prospectus for a discussion of information that you should consider before investing in our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The securities are not being offered in any jurisdiction where the offer is not permitted.

The date of this prospectus is [__________], 2020February 7, 2022

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

You shouldmay only rely only on the information contained in this prospectus.prospectus or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any informationsecurities other than that contained inthe common stock offered by this prospectus. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may only be used where itdoes not constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances in which such offer or solicitation is legal to offer and sell our securities. The information inunlawful. Neither the delivery of this prospectus is accurate only as ofnor any sale made in connection with this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and the placement agent is not, making an offer of these securities in any jurisdiction where the offer is not permitted.

prospectus. For investors outside the United States: WeNeither we nor the selling stockholders have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securitiesshares of common stock and the distribution of this prospectus outside the United States.

Unless the context otherwise requires, references to “we,” “our,” “us,” or the “Company” in this prospectus mean H-Cyte, Inc., a Nevada corporation.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities,common stock, you should carefully read this entire prospectus, including our financial statements and the related notes and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each case included elsewhere in this prospectus.

Unless Overview

H-CYTE, Inc (“the context otherwise requires, referencesCompany”) is a hybrid-biopharmaceutical company dedicated to “we,” “our,” “us,” “H-CYTE” ordeveloping and delivering new treatments for patients with chronic respiratory and pulmonary disorders. During the “Company” in this prospectus mean collectively, H-CYTE, Inc.andlast two years, the Company has evolved into two separate divisions with its subsidiaries.

H-CYTE, INC.

Overview

On July 11, 2019, MedoveX Corp. (“MedoveX”) changed its named to H-CYTE, Inc. (“H-CYTE,”entrance into the “Company,” or “we”biologics development space (“Biologics Division”) by filing a Certificate of Amendment (the “Amendment”). This new division is complementary to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Secretary of the State of Nevada. The name change and the Company’s new symbol, HCYT, became effective with FINRA on July 15, 2019. H-CYTE was incorporated in Nevada on July 30, 2013 as SpineZ Corp.

On October 18, 2018, H-CYTE entered into an Asset Purchase Agreement, as amended by the amendment to Asset Purchase Agreement dated January 8, 2019 (as amended, the “APA”) with Regenerative Medicine Solutions, LLCcurrent Lung Health Institute (LHI) autologous infusion therapy business (“RMS”), RMS Shareholder, LLC (“RMS Shareholder”), Lung Institute LLC (“LI”), RMS Lung Institute Management LLC (“RMS LI Management”Infusion Division”) and Cognitiveis focused on underserved disease states. On September 8, 2021, the Company announced that its Lung Health Institute Tampa, LLC (“CHIT,”facilities changed its name to Centers for Respiratory Health as the clinics continue to deliver treatments for patients with chronic respiratory and collectively with RMS, RMS Shareholder, LI, RMS LI Management, “RMS Group”), pursuant to which it acquired certain assets and assumed certain liabilities of RMS Group, as reported in the 8-K/A filed in March of 2019 (the “RMS Transaction”). Based on the terms of the APA, the former RMS members had voting control of the combined company as of the closing of the RMS Transaction. For accounting purposes, the RMS Transaction was treated as a reverse acquisition whereby the Company is deemed to have been acquired by RMS and the historical financial statements prior to the acquisition date of January 8, 2019 now reflect the historical financial statements of RMS.pulmonary disorders.

Prior to the completion of the RMS Transaction, theThe consolidated results for H-CYTE includedinclude the financial activities of RMS, LI, RMS Nashville,following wholly-owned subsidiaries: H-CYTE Management, LLC, (“RMS Nashville”), RMS Pittsburgh,Medovex Corp, Cognitive Health Institute, LLC, (“RMS Pittsburgh”), RMS Scottsdale,and Lung Institute Tampa, LLC (“RMS Scottsdale”), RMS Dallas, LLC (“RMS Dallas”), State, LLC (���RMS State”), CHIT, RMS LI Management, and RMS Shareholder. H-CYTE includedthe results include Lung Institute Dallas, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”).

Beginning with the completion of the RMS Transaction, the consolidated results for H-CYTE include the following wholly-owned subsidiaries: H-CYTE Management, LLC (formerly Blue Zone Health Management, LLC), MedoveX Corp. (not to be confused with the Company under its prior name), CHIT, and Lung Institute Tampa, LLC (formerly Blue Zone Lung Tampa, LLC) and the results of the aforementioned VIE’s. Additionally, H-CYTE Management, LLC is 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.

TheOn September 11, 2020, with the closing of the Rights Offering, FWHC, LLC, FWHC Bridge, LLC, and FWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company has two divisions:by subsequently owning approximately 61% of the medical biosciences division (“Biosciences division”)fully diluted shares of the Company (for further discussion, see Notes 8 and 9-”Equity Transactions” to the DenerveX medical device division (“DenerveX division”). The Company has decided to focus its available resources on the Biosciences division as it believes that it represents a significantly greater opportunity than the DenerveX division as explained belowconsolidated financial statements in the section titled “Business.” Company’s 2020 Annual Report on Form 10-K).

Autologous Infusion Therapy (“Infusion Division”)

The Company is no longer manufacturing or selling the DenerveX device and continues to explore possible opportunities to monetize such technology.

BiosciencesInfusion Division

The Company’s Biosciences division is a medical biosciences company that develops and implements innovative treatment options in regenerative medicineautologous cellular therapy (PRP-PBMC) to treat chronic lung disease.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, Scottsdale, Pittsburgh, and Dallas, while producing positive medical outcomes.outcomes following the strictest Centers for Disease Control and Prevention (the “CDC”) guidelines.

Biotech Development (“Biologics Division”)

On June 21, 2019, H-CYTE entered into an exclusive product supply agreement with Rion, LLC (“Rion”) to develop and distribute a therapy approved by the(post U.S. Food and& Drug Administration, the “FDA”, approval) a biologic combining its PRP-PBMC technology with Rion’s exosomes (“FDA”EV”) (known as L-CYTE-01)technology for the treatment of chronic obstructive pulmonary disease (“COPD”), the fourth leading cause of death in the U.S. Rion has established a novel EV technology to harness the healing power of the body. Rion’s innovative exosome technology, based on science developed at Mayo Clinic, provides an off-the-shelf platform to enhance healing in soft tissue, musculoskeletal, cardiovascular, and neurological organ systems. This agreement provides for a 10-year exclusive and extendable supply agreement with Rion to enable H-CYTE to develop combined proprietary biologics. The Company is evaluating alternate EV technologies to determine the most favorable path forward.

On October 9, 2019, the Company entered into a services agreement with Rion which provides the Company the benefit of Rion’s resources and expertise for the limited purpose of (i) consulting with and assisting H-CYTE in the further research and development for the generation of a new cellular therapy (L-CYTE-01)biologic and (ii) subsequently assisting H-CYTE in seeking and obtaining FDA Phase 1 IND clearance for L-CYTE-01. Whilethis biologic as necessary. Rion has completed the current LHI cellular therapy for chronic lung disease does not require FDA approval due to its biologic nature, the L-CYTE-01 therapy will need to be approved or clearedresearch and development work which is under review by the FDA before itCompany. The Company is marketed inassessing if the U.S. Rion also agreedcombined proprietary biologic is a more viable solution than potentially progressing with a single entity biologic from an alternative commercial source.

On April 2, 2021, the Company entered into a series of agreements with Medovex, LLC to consult with H-CYTE in its arrangement for services from third parties unaffiliated with Rion to support research,pursue a joint venture regarding the continued development regulatory approval, and commercialization of L-CYTE-01.the DenerveX device for business outside of the U.S. The Company has determined that the transactions resulting from the series of agreements with Medovex, LLC are immaterial. The Company will assess the progress of the joint venture on a quarterly basis for materiality.

With these agreements, Rion serves as the product supplier and co-developer of L-CYTE-01 with H-CYTE for the treatment of chronic lung diseases. H-CYTE controls the commercial development and facilitates the clinical trial investigation. After conducting joint research and development of these biologics, H-CYTE intends to pursue submission of an investigational new drug application for review by the FDA for treatment of COPD.

Summary of the OfferingTHE OFFERING

RISK FACTORS

AnyAn investment in our securitiesthe Company’s common stock involves a high degree of risk. InvestorsIn determining whether to purchase the Company’s common stock, an investor should carefully consider all of the material risks described below, and all oftogether with the other information contained in this prospectus before deciding whethermaking a decision to purchase ourthe Company’s securities. Our business, financial condition and resultsAn investor should only purchase the Company’s securities if he or she can afford to suffer the loss of operations could be materially adversely affected by these risks. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere in this prospectus.his or her entire investment.

Risks Related to Our Financial Condition

We will be required to raise additional funds to finance our operations and remain a going concern; we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.

Our operations to date have consumed substantial amounts of cash and we have sustained negative cash flows from our operations for the last several years. We will require future additional capital infusions including public or private financing, strategic partnerships or other arrangements with organizations that have capabilities and/or products that are complementary to our own capabilities and/or products, in order to continue the development ofexecute our product candidates, including L-CYTE-01 protocol.strategic vision. However, there can be no assurances that we will complete any financings, strategic alliances or collaborative development agreements, and the terms of such arrangements may not be advantageous to us. Our auditors have indicated in their audit opinion that there is substantial doubt about our ability to continue as a going concern, which will affect our ability to raise capital or borrow money. In addition, any additional equity financing will be dilutive to our current stockholders and debt financing, if available, may involve restrictive covenants. If we raise funds through collaborative or licensing arrangements, we may be required to relinquish, on terms that are not favorable to us, rights to some of our technologies or drug candidates that we would otherwise seek to develop or commercialize. Our failure to raise capital when needed could materially harm our business, financial condition, and results of operations.

We have a history of losses, will incur additional losses, and may never achieve profitability.

Historically, we have been a clinical development company with a limited line of medical services and products in the markets. We offer two types of cellular therapy treatments to our patients and collect payments for these services. In the past, we generated revenue from the sales of the DenerveX product, the business line of which we discontinued in 2019. While we have begun todo generate revenues,revenue, we are still operating at a loss, and there is no guarantee that we will be able to grow the revenues enough to offset our costs to realize profitability.

To date, we have not been profitable and our accumulated deficit was approximately $39.8 million$47,911,000 and $37.4 million$43,859,000 at March 31, 2020September 30, 2021 and December 31, 2019,2020, respectively. Our losses have resulted principally from costs incurred in research and development, including clinical trials,the operations of the Lung Health Clinics, and from general and administrative costs associated with our operations and being a public company. In order to commercialize our assets, we will need to conduct substantial additional research, development and clinical trials. We will also need to receive necessary regulatory clearances in the United States and obtain meaningful patent protection for and establish freedom to commercialize each of our product candidates. We must also complete further clinical trials and seek regulatory approvals for any new product candidates we discover, in-license, or acquire. We cannot be sure whether and when we will obtain required regulatory approvals, or successfully research, develop, commercialize, manufacture and market any other product candidates. We expect that these activities, together with future general and administrative activities, will result in significant expenses for the foreseeable future. We may never achieve profitability.

Our research and development and commercialization efforts may depend on entering into agreements with corporate collaborators.

Because we have limited resources, we have sought to enter into collaboration agreements with other companies that will assist us in developing, testing, obtaining governmental approval for and commercializing products. We may be unable to achieve commercialization of any of our product candidates until we obtain a large partner to assist us in such commercialization efforts. In November 2019, we entered into a long-term service agreement with Rion, pursuant to which Rion conducts process development research and development for L-CYTE-01 to further our treatment of chronic obstructive pulmonary disease (“COPD”). Because of our reliance on Rion as the sole research contractor for L-CYTE-01 at this stage, any delay in or failure of Rion’s research services will substantially and adversely affect our development of L-CYTE-01.

Moving forward, we intend to seek out additional collaborations in order to commercialize our products. We will continue to seek research collaborations, co-development and marketing agreements, and licensing deals for our products in development, however, there is no guarantee that we will be successful in our efforts.

Any collaborator with whom we may enter into such collaboration agreements may not support fully our research and commercial interests since our program may compete for time, attention and resources with such collaborator’s internal programs. Therefore, these future collaborators may not commit sufficient resources to our program to move it forward effectively, or that the program will advance as rapidly as it might if we had retained complete control of all research, development, regulatory and commercialization decisions.

Our disclosure controls and procedures and internal control over financial reporting may not be effective in future periods as a result of existing or newly identified material weaknesses in internal controls.

Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to effectively prevent fraud. If we cannot provide reasonable assurance with respect to our financial reports and effectively prevent fraud, our reputation and operating results could be harmed. Pursuant to the Sarbanes-Oxley Act of 2002, we are required to furnish a report by management on internal control over financial reporting, including management’s assessment of the effectiveness of such control. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be adversely impacted, we could fail to meet our reporting obligations, and our business and stock price could be adversely affected.

At March 31, 2020,September 30, 2021, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and concluded that, subject to the inherent limitations, our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal control over financial reporting because of inadequate segregation of duties over authorization, review and recording of transactions, as well as the financial reporting of such transactions.

We believe we have taken appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies, however we cannot be certain that our remediation efforts will ensure that our management designs, implements and maintains adequate controls over our financial processes and reporting in the future or that the changes made will be sufficient to address and eliminate the material weaknesses previously identified. The audit committee has requested a plan be prepared with the steps necessary to remedy such deficiencies and is waiting the preparation of such plan. Our inability to remedy any additional deficiencies or material weaknesses that may be identified in the future could, among other things, have a material adverse effect on our business, results of operations and financial condition, as well as impair our ability to meet our quarterly, annual and other reporting requirements under the Exchange Act in a timely manner, and require us to incur additional costs or to divert management resources.

Risks Related to Our Business

We have reorganized our business model to transform us from a medical device manufacturer to an investigational drug research and development biotechnology company. There is no guarantee that this business transformation will be successful.

Our management switchedDuring the primarylast two years, the Company has evolved into two separate divisions with its entrance into the biologics development space (“Biologics Division”). This new division is complementary to the Company’s current Lung Health Institute (LHI) autologous infusion therapy business focus from(“Infusion Division”) and is focused on underserved disease states. During the year ended 2021, the company completed a medical device manufacturing companyreview 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 cellular therapy providerbiologic combining its PRP-PBMC (“PRP”) technology with Rion’s exosomes (“EV”) technology for the treatment of COPD in January 2019. We ceased carrying our medical device DenerveX atchronic 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 the end of 2019, which wascompany is progressing alternate biologics and therapeutic devices to meet the primary source of revenue prior to the change of business. In the fiscal year ended December 31, 2019 and the first quarter ended March 31, 2020, we generated revenue primarily from providing cellular therapy to COPD patients. During 2019, the Company partnered with Rion to begin the research and development of an investigational new drug for COPD, know as L-CYTE-01. This lack of historical revenue may make it more difficult for you to evaluate our business, financial condition and prospects. Asneeds of the date of this prospectus, we were still in the process of switching to the new business model in various aspects, such as information infrastructure, pharmacies and laboratories, qualified personnel and physicians, collaborative contractors and other ancillary health service providers.business. There are a number of risks associated with an investigational druga biologics development business model, and there is no guarantee that the new model will deliver the expected revenues and profits going forward as expected or at all.

We may not be able to unlock the intrinsic value of our historical development pipeline, because we may encounter difficulties in financing and operating our commercial development programs successfully.

As we advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, marketing and sales capabilities, and may need to further contract with third parties to provide these capabilities. As our operations expand, we likely will need to manage additional relationships with such third parties, as well as additional collaborators, distributors, marketers, and suppliers.

Maintaining third party relationships for these purposes will impose significant added responsibilities on members of our management and other personnel. We must be able to: manage our development efforts effectively; recruit and train sales and marketing personnel; manage our participation in the clinical trials in which our product candidates are involved effectively; and improve our managerial, development, operational and finance systems, all of which may impose a strain on our administrative and operational infrastructure.

If we enter into arrangements with third parties to perform sales, marketing, or distribution services, any product revenues that we receive, or the profitability of these product revenues to us, are likely to be lower than if we were to market and sell any products that we develop without the involvement of these third parties. In addition, we may not be successful in entering into arrangements with third parties to sell and market our products or in doing so on terms that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our products.

Regulatory actions may affect our ability to operate.

Our L-CYTE-01 therapy research and development businessBiologics Division operates in thea field that is highly regulated by the U.S. foodFood and drug administrationDrug Administration (the “FDA”). During the clearance and approval FDA process, the Company’s L-CYTE-01 therapyCompany will be subject to extensive regulations by the FDA under the Federal Food, Drug, and Cosmetic Act and/or the Public Health Service Act, as well as by other regulatory bodies. Adverse decisions by the FDA or other applicable regulatory bodies could materially and adversely affect our ability to continue and grow the development of L-CYTE-01 therapy.future products. Failure to comply with the applicable FDA regulations 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.

We have no history in obtaining regulatory approval for, or commercializing, any new therapy candidate.

With limited operating history, we have never obtained regulatory approval for, or commercialized, any new therapy candidate. It is possible that the FDA may refuse to accept our investigational new drug (“IND”) applicationbiologics or therapeutic device applications for substantive review or may conclude after review of our data that our application is insufficient to obtain regulatory approval of the new therapy candidate. If the FDA does not accept or approve our IND for phase Ibiologics or therapeutic device clinical trial of L-CYTE-01,trials, it may require that we conduct additional preclinical or manufacturing validation studies, which may be costly. Depending on the FDA required studies, approval of any IND application that we submit may be significantly delayed, possibly for several years, or may require us to expend more resources than we have. Any delay in obtaining, or inability to obtain, regulatory approvals of any of our therapy candidate will prevent us from sublicensing or commercializing such product. It is also possible that additional studies, if performed and completed, may not be considered sufficient by the FDA. If any of these outcomes occurs, we may be forced to abandon our planned clinical trial for such therapy candidate, which will materially adversely affect our business and could potentially cause us to cease operations. We face similar regulatory risks in a foreign jurisdiction.

If the statutes and regulations in our industry change, our business could be adversely affected.

The U.S. healthcare industry has undergone significant changes designed to improve patient safety, improve clinical outcomes, and increase access to medical care. These changes include enactments and repeals of various healthcare related laws and regulation. Our operations and economic viability may be adversely affected by the changes in such regulations, including: (i) federal and state fraud and abuse laws; (ii) federal and state anti-kickback statutes; (iii) federal and state false claims laws; (iv) federal and state self-referral laws; (v) state restrictions on fee splitting; (vi) laws regarding the privacy and confidentiality of patient information; and (vii) other laws and government regulations.

If there are changes in laws, regulations, or administrative or judicial interpretations, we may have to change our business practices, or our existing business practices could be challenged as unlawful, which could have a material adverse effect on our business, financial condition, and results of operations.

We may encounter difficulties in managing our growth, and the nature of our business and rapid changes in the healthcare industry makes it difficult to reliably predict future growth and operating results.

We may not be able to successfully grow and expand. Successful implementation of our business plan will require management of growth, including potentially rapid and substantial growth, which could result in an increase in the level of responsibility for management personnel and strain on our human and capital resources. To manage growth effectively, we will be required, among other things, to continue to implement and improve our operating and financial systems, procedures and controls and to expand, train and manage our employee base. If we are unable to implement and scale improvements to our existing systems and controls in an efficient and timely manner or if we encounter deficiencies, we will not be able to successfully execute our business plans.

Failure to attract and retain sufficient numbers of qualified personnel could also impede our growth.

If we are unable to manage our growth effectively, it will have a material adverse effect on our business, results of operations and financial condition. The evolving nature of our business and rapid changes in the healthcare industry make it difficult to anticipate the nature and amount of medical reimbursements, third-party private payments, and participation in certain government programs and thus to reliably predict our future growth and operating results. Our growth strategy may incur significant costs, which could adversely affect our financial condition. Our growth by strategic transactions strategy involves significant costs, including financial advisory, legal and accounting fees, and may include additional costs for items such as fairness opinions and severance payments. These costs could put a strain on our cash flows, which in turn could adversely affect our overall financial condition.

Our majority stockholders may take actions that conflict with our public stockholders’ best interests.

AsOn September 11, 2020, with the closing of the date of this prospectus, RMS ShareholderRights Offering, FWHC, LLC, FWHC Bridge, LLC, and FWHC Holdings,Bridge Friends, LLC (“FWHC”(collectively known as “FWHC”) collectively owned approximately 56% of the outstanding voting power of the Company. The ownership interest and voting power in the Company held by FWHC, its affiliates, and its Section 13(d) group members (collectively, the “FWHC Group”) will increase substantially as a result of this offering and the Standby Commitment, as convertible notes held by the Standby Purchasers, some of whom are members of the FWHC Group, will be converted into Series A Preferred Shares and the Standby Purchasers may acquire additional Series A Preferred Shares as part of the Standby Commitment. Based on security ownership as of June 23, 2020 and assuming the Standby Commitment is utilized in full, the FWHC Group will hold approximately [*]% of the voting powergained control of the Company immediately after the completionby subsequently owning approximately 61% of the rights offering. fully diluted shares of the Company.

The members of the FWHC Group may own or operate companies that may conflict with those of the Company. We cannot assure you that our large stockholders will not take any actions that impair our ability to conduct our business competitively or conflict with the best interests of our other stockholders.

We are regulated by federal Anti-Kickback Statutes.

The federalFederal Anti-Kickback Statute is a provision of the Social Security Act of 1972 that prohibits as a felony offense the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, (1) the referral of a patient for items or services for which payment may be made in whole or part under Medicare, Medicaid, or other federal healthcare programs, (2) the furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid, or other federal healthcare programs or (3) the purchase, lease, or order or arranging or recommending the purchasing, leasing or ordering of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. The Patient Protection and Affordable Care Act (“ACA”) amended section 1128B of the Social Security Act to make it clear that a person need not have actual knowledge of the statute, or specific intent to violate the statute, as a predicate for a violation. The OIG, which has the authority to impose administrative sanctions for violation of the statute, has adopted as its standard for review a judicial interpretation which concludes that the statute prohibits any arrangement where even one purpose of the remuneration is to induce or reward referrals. A violation of the Anti-Kickback Statute is a felony punishable by imprisonment, criminal fines of up to $25,000, civil fines of up to $50,000 per violation, and three times the amount of the unlawful remuneration. A violation also can result in exclusion from Medicare, Medicaid or other federal healthcare programs. In addition, pursuant to the changes of the ACA, a claim that includes items or services resulting from a violation of the Anti-Kickback Statute is a false claim for purposes of the False Claims Act.

We cannot assure that the applicable regulatory authorities will not determine that some of our arrangements with physicians violate the federal Anti-Kickback Statute or other applicable laws. An adverse determination could subject us to different liabilities, including criminal penalties, civil monetary penalties and exclusion from participation in Medicare, Medicaid or other health care programs, any of which could have a material adverse effect on our business, financial condition or results of operations.

We are regulated by the federalFederal Stark Law.

The federal Stark Law, 42 U.S.C. 1395nn, also known as the physician self-referral law, generally prohibits a physician from referring Medicare and Medicaid patients to an entity (including hospitals) providing ‘‘designated‘designated health services,’’ if the physician or a member of the physician’s immediate family has a ‘‘financial‘financial relationship’’ with the entity, unless a specific exception applies. Designated health services include, among other services, inpatient hospital services, outpatient prescription drug services, clinical laboratory services, certain imaging services (e.g., MRI, CT, ultrasound), and other services that our affiliated physicians may order for their patients. The prohibition applies regardless of the reasons for the financial relationship and the referral; and therefore, unlike the federalFederal Anti-Kickback Statute, intent to violate the law is not required. Like the Anti-Kickback Statute, the Stark Law contains statutory and regulatory exceptions intended to protect certain types of transactions and arrangements. Unlike safe harbors under the Anti-Kickback Statute with which compliance is voluntary, an arrangement must comply with every requirement of a Stark Law exception or the arrangement is in violation of the Stark Law.

Because the Stark Law and implementing regulations continue to evolve and are detailed and complex, while we attempt to structure its relationships to meet an exception to the Stark Law, there can be no assurance that the arrangements entered into by us with affiliated physicians and facilities will be found to be in compliance with the Stark Law, as it ultimately may be implemented or interpreted. The penalties for violating the Stark Law can include the denial of payment for services ordered in violation of the statute, mandatory refunds of any sums paid for such services, and civil penalties of up to $15,000 for each violation, double damages, and possible exclusion from future participation in the governmental healthcare programs. A person who engages in a scheme to circumvent the Stark Law’s prohibitions may be fined up to $100,000 for each applicable arrangement or scheme.

Some states have enacted statutes and regulations against self-referral arrangements similar to the federal Stark Law, but which may be applicable to the referral of patients regardless of their payorpayer source and which may apply to different types of services. These state laws may contain statutory and regulatory exceptions that are different from those of the federal law and that may vary from state to state. An adverse determination under these state laws and/or the federal Stark Law could subject us to different liabilities, including criminal penalties, civil monetary penalties and exclusion from participation in Medicare, Medicaid or other health care programs, any of which could have a material adverse effect on our business, financial condition or results of operations.

We must comply with Health Information Privacy and Security StandardsStandards.

The privacy regulations Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended, contain detailed requirements concerning the use and disclosure of individually identifiable patient health information (“PHI”) by various healthcare providers, such as medical groups. HIPAA covered entities must implement certain administrative, physical, and technical security standards to protect the integrity, confidentiality and availability of certain electronic health information received, maintained, or transmitted. HIPAA also implemented standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including billing and claim collection activities. Violations of the HIPAA privacy and security rules may result in civil and criminal penalties, including a tiered system of civil money penalties that range from $100 to $50,000 per violation, with a cap of $1.5 million per year for identical violations. A HIPAA covered entity must also promptly notify affected individuals where a breach affects more than 500 individuals and report breaches affecting fewer than 500 individuals annually. State attorneys general may bring civil actions on behalf of state residents for violations of the HIPAA privacy and security rules, obtain damages on behalf of state residents, and enjoin further violations.

Many states also have laws that protect the privacy and security of confidential, personal information, which may be similar to or even more stringent than HIPAA. Some of these state laws may impose fines and penalties on violators and may afford private rights of action to individuals who believe their personal information has been misused. We expect increased federal and state privacy and security enforcement efforts.

A cyber security incident could cause a violation of HIPAA, breach of customer and patient privacy, or other negative impacts.

We rely extensively on our information technology (or IT) systems to manage scheduling and financial data, communicate with customers and their patients, vendors, and other third parties, and summarize and analyze operating results. In addition, we have made significant investments in technology, including the engagement of a third-party IT provider. A cyber-attack that bypasses our IT security systems could cause an IT security breach, a loss of protected health information, or other data subject to privacy laws, a loss of proprietary business information, or a material disruption of our IT business systems. This in turn could have a material adverse impact on our business and result of operations. In addition, our future results of operations, as well as our reputation, could be adversely impacted by theft, destruction, loss, or misappropriation of public health information, other confidential data, or proprietary business information.

Computer malware, viruses, and hacking and phishing attacks by third parties have become more prevalent in our industry, have occurred on our systems in the past, and may occur on our systems in the future. Because techniques used to obtain unauthorized access to or sabotage systems change frequently and generally are not recognized until successfully launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. As cyber-security threats develop and grow, it may be necessary to make significant further investments to protect data and infrastructure. If an actual or perceived breach of our security occurs, (i) we could suffer severe reputational damage adversely affecting customer or investor confidence, (ii) the market perception of the effectiveness of our security measures could be harmed, (iii) we could lose potential sales and existing customers, our ability to deliver our services or operate our business may be impaired, (iv) we may be subject to litigation or regulatory investigations or orders, and (v) we may incur significant liabilities. Our insurance coverage may not be adequate to cover the potentially significant losses that may result from security breaches. We are currently reviewing our needs for cybersecurity policy as we continue our research and development on L-CYTE-01 and medical services for COPD patients.

We must comply with Environmental and Occupational Safety and Health Administration RegulationsRegulations.

We are subject to federal, state and local regulations governing the storage, use and disposal of waste materials and products. Although we believe that our safety procedures for storing, handling and disposing of these materials and products comply with the standards prescribed by law and regulation, we cannot eliminate the risk of accidental contamination or injury from those hazardous materials. In the event of an accident, we could be held liable for any damages that result and any liability could exceed the limits or fall outside the coverage of our insurance coverage, which we may not be able to maintain on acceptable terms, or at all. We could incur significant costs and attention of our management could be diverted to comply with current or future environmental laws and regulations. Federal regulations promulgated by the Occupational Safety and Health Administration impose additional requirements on us, including those protecting employees from exposure to elements such as blood-borne pathogens. We cannot predict the frequency of compliance, monitoring, or enforcement actions to which we may be subject as those regulations are being implemented, which could adversely affect our operations.

Risks associated with the variable interest entity (the “VIE”) structure.

Upon consummation of the RMS Transaction, theThe consolidated results for H-CYTE includedinclude the financial activitiesfollowing 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, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC is the operator and manager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale, all of which maintain a group of variable interest entity agreements with H-CYTE and/or its wholly-owned subsidiaries. LI Dallas, LI Nashville, LI Pittsburgh and LI Scottsdale are collectively referred to as variable interest entities or VIEs.Scottsdale.

We believe that the VIE contractual arrangements with VIEs and their respective shareholders are in compliance with the U.S. federal and state laws and regulations and are legally enforceable. However, uncertainties in the legal system could limit our ability to enforce the VIE contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of the federal or state laws and regulations, the related regulatory agencies could:

● revoke the business and operating licenses of any or all of the VIEs;

● discontinue or restrict the operations of any related-party transactions between any of the VIEs and H-CYTE or its affiliates;

● impose fines or other requirements which may adversely affect the operations of the VIEs; or

● require the Company and any or all of its VIEs to restructure the relevant ownership structure or operations.

Our ability to conduct our business through the VIE structure may be negatively affected if the federal or state government were to carry out of any of the aforementioned actions. In such event, H-CYTE may not be able to consolidate any or all of the VIEs in its consolidated financial statements as it may lose the ability to exert effective control over any or all of the VIEs and their respective shareholders and it may lose the ability to receive economic benefits from its VIE structure.

We must comply with a range of other Federal and State Healthcare Laws.

We are also subject to other federal and state healthcare laws that could have a material adverse effect on our business, financial condition or results of operations. The Health Care Fraud Statute prohibits any person from knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, which can be either a government or private payorpayer plan. Violation of this statute, even in the absence of actual knowledge of or specific intent to violate the statute, may be charged as a felony offense and may result in fines, imprisonment, or both. The Health Care False Statement Statute prohibits, in any matter involving a federal health care program, anyone from knowingly and willfully falsifying, concealing or covering up, by any trick, scheme or device, a material fact, or making any materially false, fictitious or fraudulent statement or representation, or making or using any materially false writing or document knowing that it contains a materially false or fraudulent statement. A violation of this statute may be charged as a felony offense and may result in fines, imprisonment or both. Under the Civil Monetary Penalties Law of the Social Security Act, a person (including an organization) is prohibited from knowingly presenting or causing to be presented to any United States officer, employee, agent, or department, or any state agency, a claim for payment for medical or other items or services where the person knows or should know (a) the items or services were not provided as described in the coding of the claim, (b) the claim is a false or fraudulent claim, (c) the claim is for a service furnished by an unlicensed physician, (d) the claim is for medical or other items or service furnished by a person or an entity that is in a period of exclusion from the program, or (e) the items or services are medically unnecessary items or services. Violations of the law may result in penalties of up to $10,000 per claim, treble damages, and exclusion from federal healthcare programs.

In addition, the office of inspector general (“OIG”) may impose civil monetary penalties against any physician who knowingly accepts payment from a hospital (as well as against the hospital making the payment) as an inducement to reduce or limit medically necessary services provided to Medicare or Medicaid program beneficiaries. Further, except as permitted under the Civil Monetary Penalties Law, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider of Medicare or Medicaid payable items or services may be liable for civil money penalties of up to $10,000 for each wrongful act.

In addition to the state laws previously described, we may also be subject to other state fraud and abuse statutes and regulations if we expand our operations nationally. Many states have adopted a form of anti-kickback law, self-referral prohibition, and false claims and insurance fraud prohibition. The scope of these laws and the interpretations of them vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion. Generally, state laws reach to all healthcare services and not just those covered under a governmental healthcare program. A determination of liability under any of these laws could result in fines and penalties and restrictions on our ability to operate in these states. We cannot assure that our arrangements or business practices will not be subject to government scrutiny or be found to violate applicable fraud and abuse laws.

Changes in healthcare laws could create an uncertain environment and materially impact us.

We cannot predict the effect that the ACA (also known as Obamacare) and its implementation, amendment, or repeal and replacement, may have on our business, results of operations or financial condition. Any changes in healthcare laws or regulations that reduce, curtail or eliminate payments, government-subsidized programs, government-sponsored programs, and/or the expansion of Medicare or Medicaid, among other actions, could have a material adverse effect on our business, results of operations and financial condition. For example, the ACA dramatically changed how healthcare services are covered, delivered, and reimbursed. The ACA requires insurers to accept all applicants, regardless of pre-existing conditions, cover an extensive list of conditions and treatments, and charge the same rates, regardless of pre-existing condition or gender.

The ACA and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Care Reform Acts”) also mandated changes specific to home health and hospice benefits under Medicare. In 2012, the U.S. Supreme Court upheld the constitutionality of the ACA, including the “individual mandate” provisions of the ACA that generally require all individuals to obtain healthcare insurance or pay a penalty. However, the U.S. Supreme Court also held that the provision of the ACA that authorized the Secretary of the U.S. Department of Health and Human Services to penalize states that choose not to participate in the expansion of the Medicaid program by removing all of its existing Medicaid funding was unconstitutional. In response to the ruling, a number of state governors opposed its state’s participation in the expanded Medicaid program, which resulted in the ACA not providing coverage to some low-income persons in those states. In addition, several bills have been, and are continuing to be, introduced in U.S. Congress to amend all or significant provisions of the ACA, or repeal and replace the ACA with another law. In December 2017, the individual mandate was repealed via the Tax Cuts and Jobs Act of 2017. Afterwards, legal and political challenges as to the constitutionality of the remaining provisions of the ACA resumed.

Our operations are subject to the nation’s healthcare laws, as amended, repealed, or replaced from time to time.

The net effect of the ACA on our business is subject to numerous variables, including the law’s complexity, lack of complete implementing regulations and interpretive guidance, gradual and potentially delayed implementation or possible amendment, as well as the uncertainty as to the extent to which states will choose to participate in the expanded Medicaid program. The continued implementation of provisions of the ACA, the adoption of new regulations thereunder and ongoing challenges thereto, also added uncertainty about the current state of U.S. healthcare laws and could negatively impact our business, results of operations and financial condition. Healthcare providers could be subject to federal and state investigations and payorpayer audits.

Due to our and our affiliates’ participation in government and private healthcare programs, we are from time to time involved in inquiries, reviews, audits, and investigations by governmental agencies and private payorspayers of our business practices, including assessments of our compliance with coding, billing and documentation requirements. Federal and state government agencies have active civil and criminal enforcement efforts against healthcare companies, and their executives and managers. The Deficit Reduction Act, which provides a financial incentive to states to enact their own false claims acts, and similar laws encourage investigations against healthcare companies by different agencies. These investigations could also be initiated by private whistleblowers.

Responding to audit and investigative activities are costly and disruptive to our business operations, even when the allegations are without merit. If we are subject to an audit or investigation, a finding could be made that we or our affiliates erroneously billed or were incorrectly reimbursed, and we may be required to repay such agencies or payors,payer, may be subjected to pre-payment reviews, which can be time-consuming and result in non-payment or delayed payments for the services we or our affiliates provide, and may be subject to financial sanctions or required to modify our operations.

Product pricing may be subject to regulatory control.

The pricing and profitability of the products we sell may be subject to control by third-party payors.payer. As of the date of this prospectus, we do not receive reimbursements from insurance companies for our therapeutic products but we may in the future. In that case, the continuing efforts of governmental and other third-party payorspayer to contain or reduce the cost of healthcare through various means may adversely affect our ability to successfully commercialize our products. We anticipate that there will continue to be federal and state proposals to implement similar governmental control, although it is unclear which proposals will ultimately become law, if any. Direct or indirect changes in prices, including any mandated pricing, could impact our revenues, profitability, and financial performance in the future if and when we receive reimbursements from third party payors.payer.

Our revenues may depend on our customers’ receipt of adequate reimbursement from private insurers and government sponsored healthcare programs.

Political, economic, and regulatory influences continue to change the healthcare industry in the United States. If and when we start receiving reimbursements from third parties, the ability of hospitals to pay fees for our products will partially depend on the extent to which reimbursement for the costs of such materials and related treatments will continue to be available from private health coverage insurers and other similar organizations. We may have difficulty gaining market acceptance for the products we sell if third-party payorspayer do not provide adequate coverage and reimbursement to hospitals.

Major third-party payorspayer of hospitals, such as private healthcare insurers, periodically revise their payment methodologies based, in part, upon changes in government sponsored healthcare programs. We cannot predict these periodic revisions with certainty, and such revisions may result in stricter standards for reimbursement of hospital charges for certain specified products, potentially adversely impacting our business, results of operations, and financial conditions when we start receiving reimbursement from third party payors.payer.

When we start receiving reimbursement from third party payors,payer, the sales of our therapies will depend in part on the availability of reimbursement by third-party payors,payer, such as government health administration authorities, private health insurers and other organizations. Third-party payorspayer often challenge the price and cost-effectiveness of medical treatments and services. Governmental approval of health care products does not guarantee that these third-party payers will pay for the products. Even if third-party payers do accept our therapeutic treatments, the amounts they pay may not be adequate to enable us to realize a profit. Legislation and regulations affecting the pricing of therapies may change before our products and services are approved for marketing, and any such changes could further limit reimbursement, if any.

Future regulatory action remains uncertain.

We operate in a highly regulated and evolving environment with rigorous regulatory enforcement. Any legal or regulatory action could be time-consuming and costly. If we or the manufacturers or distributors that supply our products fail to comply with all applicable laws, standards, and regulations, action by the FDA or other regulatory agencies could result in significant restrictions, including restrictions on the marketing or use of the products we sell or the withdrawal of the products we sell from the market. Any such restrictions or withdrawals could materially affect our reputation, business and operations.

Our product candidates will remain subject to ongoing regulatory review even after they receive marketing approval, and if we fail to comply with continuing regulations, we could lose these approvals and the sale of any of our approved commercial products could be suspended.

Even as we receive regulatory approval to market a particular product candidate, such as L-CYTE-01 therapy, the manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, and record keeping related to the product will remain subject to extensive regulatory requirements. If we fail to comply with the regulatory requirements of the FDA and other applicable domestic and foreign regulatory authorities or discover any previously unknown problems with any approved product, manufacturer, or manufacturing process, we could be subject to administrative or judicially imposed sanctions, including:

If physicians and patients do not accept our current and future products or if the market for indications for which any product candidate is approved is smaller than expected, we may be unable to generate significant revenue, if any.

Even when any of our product candidates obtain regulatory approval, they may not gain market acceptance among physicians, patients, and third-party payers. Physicians may decide not to recommend our treatments for a variety of reasons including:

If any of our product candidates are approved, but fail to achieve market acceptance or such market is smaller than anticipated, we may not be able to generate significant revenue and our business would suffer.

Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products.

The medical device and pharmaceutical industries are characterized by extensive intellectual property litigation and, from time to time, we may become the subject of claims of infringement or misappropriation. Regardless of outcome, such claims are expensive to defend and divert management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringement against us could result in payment of significant monetary damages and/or royalty payments or negatively impact our ability to sell current or future products in the affected category.

We depend extensively on our patents and proprietary technology and the patents and proprietary technology we license from others, and we must protect those assets in order to preserve our business.

Although we expect to seek patent protection for any compounds, devices, biologics, systems, and processes we discover and/or for any specific use we discover for new or previously known compounds, devices, biologics, systems, or processes, any or all of which may not be subject to effective patent protection. In addition, our issued patents may be declared invalid or our competitors may find ways to avoid the claims in the patents.

Our success will depend, in part, on our ability to obtain patents, protect our trade secrets and proprietary knowledge and operate without infringing on the proprietary rights of others. We are the exclusive licensee, sole assignee or co-assignee of numerous granted United States patents, pending United States patent applications and international patents. The patent position of pharmaceutical and biotechnology firms like us are generally highly uncertain and involves complex legal and factual questions, resulting in both an apparent inconsistency regarding the breadth of claims allowed in United States patents and general uncertainty as to their legal interpretation and enforceability. Accordingly, patent applications assigned or exclusively licensed to us may not result in patents being issued, any issued patents assigned or exclusively licensed to us may not provide us with competitive protection or may be challenged by others, and the current or future granted patents of others may have an adverse effect on our ability to do business and achieve profitability.

Moreover, because some of the basic research relating to one or more of our patent applications and/or patents were performed at various universities and/or funded by grants, one or more universities, employees of such universities and/or grantors could assert that they have certain rights in such research and any resulting products. Further, others may independently develop similar products, may duplicate our products, or may design around our patent rights. In addition, as a result of the assertion of rights by a third-party or otherwise, we may be required to obtain licenses to patents or other proprietary rights of others in or outside of the United States. Any licenses required under any such patents or proprietary rights may not be made available on terms acceptable to us, if at all. If we do not obtain such licenses, we could encounter delays in product market introductions during our attempts to design around such patents or could find that the development, manufacture or sale of products requiring such licenses is foreclosed. In addition, we could incur substantial costs in defending suits brought against us or in connection with patents to which we hold licenses or in bringing suit to protect our own patents against infringement.

We depend on license agreements with third-parties for certain intellectual property rights relating to our products and product candidates. In general, our license agreements require us to make payments and satisfy performance obligations in order to keep these agreements in effect and retain our rights under them. These payment obligations can include upfront fees, maintenance fees, milestones, royalties, patent prosecution expenses, and other fees. These performance obligations typically include diligence obligations. If we fail to pay, be diligent or otherwise perform as required under our license agreements, we could lose the rights under the patents and other intellectual property rights covered by these agreements. If disputes arise under any of our in-licenses, we could lose our rights under these agreements. Any such dispute may not be resolvable on favorable terms, or at all. Whether or not any disputes of this kind are favorably resolved, our management’s time and attention and our other resources could be consumed by the need to attend to these disputes and our business could be harmed by the emergence of such a dispute.

If we lose our rights under these agreements, we might not be able to develop any related product candidates further, or following regulatory approval, if any, we might be prohibited from marketing or commercializing these product candidates. In particular, patents previously licensed to us might, after termination of an agreement, be used to stop us from conducting these activities.

Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other proprietary rights, we may not have meaningful protection from competition.

Our long-term success will substantially depend upon our ability to protect our proprietary technologies from infringement, misappropriation, discovery and duplication, and avoid infringing the proprietary rights of others. Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. Because of this, our pending patent applications may not be granted. These uncertainties also mean that any patents that we own or will obtain in the future could be subject to challenge, and even if not challenged, may not provide us with meaningful protection from competition. Due to our financial uncertainties, we may not possess the financial resources necessary to enforce our patents. Patents already issued to us or our pending applications may become subject to dispute, and any dispute could be resolved against us. Because a substantial number of patents have been issued in the field of cellular therapy and because patent positions can be highly uncertain and frequently involve complex legal and factual questions, the breadth of claims obtained in any application or the enforceability of our patents cannot be predicted. Consequently, we do not know whether any of our pending or future patent applications will result in the issuance of patents or, to the extent patents have been issued or will be issued, whether these patents will be subject to further proceedings limiting their scope, will provide significant proprietary protection or competitive advantage, or will be circumvented or invalidated. Several of our currently issued patents have expired or will expire in the next twelve months.

Also, because of these legal and factual uncertainties, and because pending patent applications are held in secrecy for varying periods in the United States and other countries, even after reasonable investigation, we may not know with certainty whether any products that we (or a licensee) may develop will infringe upon any patent or other intellectual property right of a third party. For example, we are aware of certain patents owned by third parties that such parties could attempt to use in the future in efforts to affect our freedom to practice some of the patents that we own or have applied for. Based upon the science and scope of these third-party patents, we believe that the patents that we own or have applied for do not infringe any such third-party patents; however, we cannot know for certain whether we could successfully defend our position, if challenged. We may incur substantial costs if we are required to defend our intellectual property in patent suits brought by third parties. These legal actions could seek damages and seek to enjoin testing, manufacturing and marketing of the accused product or process. In addition to potential liability for significant damages, we could be required to obtain a license to continue to manufacture or market the accused product or process.

We may not be able to compete with treatments now being marketed and developed, or which may be developed and marketed in the future by other companies.

Our products will compete with existing and new therapies and treatments for COPD. We are aware of a number of companies currently seeking to develop alternative therapies or treatment for COPD and other related chronic lung diseases at least in part. Numerous pharmaceutical, biotechnology and drug delivery companies, hospitals, research organizations, individual scientists, and nonprofit organizations are engaged in the development of alternatives to our technologies. Some of these companies have greater research and development capabilities, experience, manufacturing, marketing, financial, and managerial resources than we do. Collaborations or mergers between large pharmaceutical or biotechnology companies with competing treatment technologies could enhance our competitors’ financial, marketing, and other resources. Developments by other drug companies could make our products or technologies uncompetitive or obsolete. Accordingly, our competitors may succeed in developing competing technologies, obtaining FDA approval for products or gaining market acceptance more rapidly than we can.

Due in part to our limited financial resources, we may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates or those that are in-licensed, and/or we may be unable to pursue the clinical trials that we would like to pursue.

We have limited technical, managerial, and financial resources to determine the indications on which we should focus the development efforts related to our product candidates. Due to our limited available financial resources, we may have curtailed clinical development programs and activities that might otherwise have led to more rapid progress of our product candidates through the regulatory and development processes.

We may make incorrect determinations with regard to the indications and clinical trials on which to focus the available resources that we do have. Furthermore, we cannot assure you that we will be able to retain adequate staffing levels to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish. Our decisions to allocate our research, management, and financial resources toward particular indications or therapeutic areas for our product candidates may not lead to the development of viable commercial products and may divert resources from better opportunities. Similarly, our decisions to delay or terminate drug development programs may also cause us to miss valuable opportunities.

If the third parties on which we rely for the conduct of our clinical trials and results do not perform our clinical trial activities in accordance with good clinical practices and related regulatory requirements, we may be unable to obtain regulatory approval for or commercialize our product candidates.

We use independent clinical investigators and other third-party service providers to conduct and/or oversee the clinical trials of our product candidates, and expect to continue to do so for the foreseeable future. As of the date of this prospectus, we rely heavily on Rion for its successful execution of our research on L-CYTE-01 in preparation for the IND application to the FDA for the phase I study of L-CYTE-01. Nonetheless, we are responsible for confirming that each of our preclinical studies and clinical trials is conducted in accordance with the FDA’s requirements and our general investigational plan and protocol.

The FDA requires us and our clinical investigators to comply with regulations and standards, commonly referred to as good clinical practices, for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate, and that the trial participants are adequately protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. Third parties may not complete activities on schedule or may not conduct our clinical trials in accordance with regulatory requirements or the respective trial plans and protocols. The failure of these third parties to carry out their obligations could delay or prevent the development, approval, and commercialization of our product candidates or result in enforcement action against us.

Risks Related to Manufacturing & Distribution

We have limited manufacturing capacity and have relied on, and expect to continue to rely on, third-party contract manufacturers to produce our products and clinical development candidates.

We do not own or operate manufacturing facilities for the production of clinical or commercial quantities of our products and candidates, and we currently lack the resources and the capabilities to build our own manufacturing facilities. As a result, we currently rely, and expect to rely for the foreseeable future, on third-party contract manufacturers to supply our products and clinical trial supplies. Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured our product candidates or products ourselves, including:

If we do not maintain our key manufacturing relationships, we may fail to find replacement manufacturers or develop our own manufacturing capabilities, which could delay or impair our ability to obtain regulatory approval for our products and substantially increases our costs or deplete profit margins, if any. If we do find replacement manufacturers, we may not be able to enter into agreements with them on terms and conditions favorable to us, and there could be a substantial delay before new facilities could be qualified and registered with the FDA and other foreign regulatory authorities.

The FDA and other foreign regulatory authorities require manufacturers to register manufacturing facilities. The FDA and corresponding foreign regulators also inspect these facilities to confirm compliance with current FDA Good Manufacturing Procedures (“cGMP”). Contract manufacturers may face manufacturing or quality control problems, leading to drug substance production and shipment delays or a situation where the contractor may not be able to maintain compliance with the applicable cGMP requirements. Any failure to comply with cGMP requirements or other FDA, EMA, and comparable foreign regulatory requirements could adversely affect our clinical research activities and our ability to develop our product candidates and market our products following approval.

Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop our product candidates and commercialize any products that receive regulatory approval on a timely basis.

Interruption of manufacturing operations could adversely affect our business.

Our suppliers have manufacturing facilities for certain product lines that may be concentrated in one (1) or more plants. Damage to these facilities or issues in our manufacturing arising from a failure to follow specific internal protocols and procedures, compliance concerns relating to quality systems regulations, equipment breakdown or malfunction, among other factors, could adversely affect the availability of our products. In the event of an interruption in manufacturing of certain products, we may be unable to quickly shift to alternate means of production to meet customer demand. In the event of a significant interruption, we may experience lengthy delays in resuming production of affected products due to the need for regulatory approvals. We may experience loss of market share, additional expense, or harm to our reputation.

Additionally, we contract with a limited number of suppliers for the raw materials that we use to produce certain products. While we have not experienced a shortage of raw materials in the past and believe that it is unlikely that there will be one in the future, if there were a shortage of raw materials, it could either increase the cost of production or prevent us from being able to produce some of our products, which could adversely affect future results of our operations and financial condition.

We may be adversely affected by product liability claims, unfavorable court decisions or legal settlements.

We are exposed to potential product liability risks inherent in the design, manufacturing, and marketing of pharmaceuticals and medical devices, many of which are administered to or implanted in the human body for long periods of time or indefinitely. These matters are subject to many uncertainties and outcomes are not predictable. In addition, we may incur significant legal expenses regardless of whether we are found to be liable.

While we maintain product liability insurance, there can be no assurance that such coverage is sufficient to cover all product liabilities that we may incur. We are not currently subject to any product liability proceedings, and we have no reserves for product liability disbursements. However, we may incur material liabilities relating to product liability claims in the future, including product liability claims arising out of the usage and delivery of our products. Should we incur product-related liabilities exceeding our insurance coverage, we would be required to use available cash or raise additional cash to cover such liabilities.

Because we may not be able to obtain or maintain the necessary regulatory approvals for our products, we may not generate revenues in the amounts we expect, or in the amounts necessary to continue our business. Our existing products as well as our manufacturing facility must meet quality standards and are subject to inspection by a number of domestic regulatory and other governmental and non-governmental agencies.

Our primary product L-CYTE-01 isbiologics and therapeutic devices will be subject to regulation in the U.S. by the FDA and/or other domestic and international governmental, public health agencies, regulatory bodies or non-governmental organizations. In particular, we are subject to strict governmental controls on the development, manufacturing, labeling, distribution, and marketing of our products. The process of obtaining required approvals or clearances varies according to the nature of, and uses for, a specific product. These processes can involve lengthy and detailed laboratory testing, human or animal clinical trials, sampling activities, and other costly, time-consuming procedures. The submission of an application to a regulatory authority does not guarantee that the authority will grant an approval or clearance for that product. Each authority may impose its own requirements and can delay or refuse to grant approval or clearance, even though a product has been approved in another country.

The time required to obtain approval or clearance varies depending on the nature of the application and may result in the passage of a significant period of time from the date of submission of the application. Delays in the approval or clearance processes increase the risk that we will not succeed in introducing or selling the subject products, and we may determine to devote our resources to different products.

Changes in government regulations could increase our costs and could require us to undergo additional trials or procedures or could make it impractical or impossible for us to market our products for certain uses, in certain markets, or at all.

Changes in government regulations may adversely affect our financial condition and results of operations because we may have to incur additional expenses if we are required to change or implement new testing, manufacturing, and control procedures. If we are required to devote resources to develop such new procedures, we may not have sufficient resources to devote to research and development, marketing, or other activities that are critical to our business.

We may not have sufficient resources to effectively introduce and market our products, which could materially harm our operating results.

Introducing and achieving market acceptance for our products will require substantial marketing efforts and will require us and/or our contract partners, sales agents, and/or distributors to make significant expenditures of time and money. In some instances, we will be significantly or totally reliant on the marketing efforts and expenditures of our contract partners, sales agents, and/or distributors. If they do not have or commit the expertise and resources to effectively market the products that we manufacture, our operating results will be materially harmed.

In addition to the market success of our products, the success of our business depends on our ability to raise additional capital through the sale of debt or equity or through borrowing, and we may not be able to raise capital or borrow funds on attractive terms and/or in amounts necessary to continue our business, or at all.

General Risks

The recent coronavirus outbreak (“COVID-19”) has adversely affected the Company’s financial condition and results of operations and we cannot provide any certainty when and whether our operations will reach the normal level prior to the COVID-19 pandemic.

The recent COVID-19coronavirus outbreak (“COVID-19”) has adversely affected the Company’s financial condition and results of operations, and is expected to continue affecting the Company’s financial condition and results of operations in 2020 and possibly beyond.operations. The impact of the outbreak of COVID-19 on the businesses and the economy in the United States and the rest of the world is and is expected to continue to be significant. The extent to which COVID-19 outbreak will continue to impact business and the economy is highly uncertain and cannot be predicted. Accordingly, wethe Company cannot predict the extent to which ourits financial condition and results of operation will be affected. We recently have taken steps

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 protect our vulnerable patient base (elderly patients suffering from chronic lung disease) by cancelling all treatments effectivethe international community as the virus spread globally. In March 23, 2020, through at least the end of July. This decision has put significant financial strainWHO classified the COVID-19 outbreak as a pandemic based on the Company. We maderapid increase in exposure globally. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the decision in late March to lay off approximately 40%spread of our employee base, including corporate and clinical employees, and to cease operations at the LHI clinics in Tampa, Scottsdale, Pittsburgh, and Dallas. We will reevaluate at the appropriate time when operations will recommence at these clinics as more information about COVID-19 becomes available. There is no guarantee or certaintyvirus, especially as to whentravel and whether wecongregating 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 be able to treat patientshave on it for the longer term since the scope and our operations will go back toduration of the pandemic is unknown, and evolving factors such as the level priorand 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 COVID-19.

With our revenue-generating activities suspended, we will need to raise cashits operations resulting from debtchanges in government policy or guidance; quarantines of employees, customers and equity offerings to continue with the efforts to take the L-CYTE-01 protocol to the FDA for treatment of chronic lung diseases. There can be no assurance that we will be successfulsuppliers in either raising capital or having L-CYTE-01 protocol approvedareas affected by the FDA.pandemic; and closures of businesses or manufacturing facilities critical to its business.

General economic conditions may adversely affect demand for our products and services.

Poor or deteriorating economic conditions in the U.S. could adversely affect the demand for healthcare services and consequently, the demand for our products and services. Poor economic conditions also could lead our suppliers to offer less favorable terms of purchase, which would negatively affect our cash flows and profitability. These and other possible consequences of financial and economic decline could have material adverse effect on our business, results of operations, and financial condition.

We operate our business in regions subject to natural disasters and other catastrophic events, and any disruption to our business resulting from natural disasters would adversely affect our revenue and results of operations.

We operate our business in regions subject to severe weather and natural disasters, including hurricanes, floods, fires, earthquakes, and other catastrophic events. Any natural disaster could adversely affect our ability to conduct business and provide products and services to our customers, and the insurance we maintain may not be adequate to cover our losses resulting from any business interruption resulting from a natural disaster or other catastrophic event.

Although we have an ethics and anti-corruption policy in place, and have no knowledge or reason to know of any practices by our employees, agents, or distributors that could be construed as in violation of such policies, our business includes sales of products to countries where there is or may be widespread corruption.

We have a policy in place prohibiting employees, distributors and agents from engaging in corrupt business practices, including activities prohibited by the United States Foreign Corrupt Practices Act. Nevertheless, because we work through independent sales agents and distributors outside the United States, we do not have control over the day-to-day activities of such independent agents and distributors. In addition, in the donor-funded markets in Africa where we may sell our products, there is significant oversight from the President’s Emergency Plan for AIDS Relief, or PEPFAR, the Global Fund, and advisory committees comprised of technical experts concerning the development and establishment of national testing protocols. This is a process that includes an overall assessment of a product which includes extensive product performance evaluations including five active collaborations and manufacturer’s quality systems, as well as price and delivery.

We depend heavily on our executive officers, directors, and principal consultants and the loss of their services would materially harm our business.

We believe that our success depends, and will likely continue to depend, upon our ability to retain the services of our current executive officers, directors, principal consultants, and others. In addition, we have established relationships with universities, hospitals, and research institutions, which have historically provided, and continue to provide, us with access to research laboratories, clinical trials, facilities, and patients. The loss of the services of any of these individuals or institutions would have a material adverse effect on our business.

Risks Related to Our Common Stock

Our common stock is a “penny stock,” which places restrictions on broker-dealers recommending the stock for purchase.

Our common stock is defined as “penny stock” under the Exchange Act, and the rules promulgated thereunder. The SEC has adopted regulations that define “penny stock” to include common stock that has a market price of less than $5.00 per share, subject to certain exceptions. These rules include the following requirements:

Additional sales practice requirements are imposed on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and must have received the purchaser’s written consent to the transaction prior to sale. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. As a result, fewer broker-dealers may be willing to make a market in our stock, which could make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

There is a limited trading market for our common stock.

Our common stock is not listed on any national securities exchange. Accordingly, investors may find it more difficult to buy and sell our shares than if our common stock was traded on an exchange. Although our common stock is quoted on the OTCQB, it is an unorganized, inter-dealer, over-the-counter market which provides significantly less liquidity than the Nasdaq Capital Market or other national securities exchange. These factors may have an adverse impact on the trading and price of our common stock.

Provisions of our Restated Certificate of Incorporation could delay or prevent the acquisition or sale of our business.

Our to-become-effective second Amended and Restated Articles of Incorporation permit our Board of Directors to designate new series of preferred stock and issue those shares without any vote or action by our stockholders, subject to certain approval rights by the holders of Series A Preferred Shares. Such newly authorized and issued shares of preferred stock could contain terms that grant special voting rights to the holders of such shares that make it more difficult to obtain stockholder approval for an acquisition of our business or increase the cost of any such acquisition.

We do not intend to pay dividends on our Common Stock for the foreseeable future.

We have paid no cash dividends on our common stock to date and we do not anticipate paying any dividends to holders of our common stock in the foreseeable future. While our future dividend policy will be based on the operating results and capital needs of the business, we currently anticipate that we will retain any earnings to finance our future expansion and for the implementation of our business plan. Investors should take note of the fact that a lack of a dividend can further affect the market value of our common stock, and could significantly affect the value of any investment in the Company.

Our issuance of Common Stock upon exercise of warrants or options may depress the price of our Common Stock.

As of June 23, 2020,January 25, 2022, we had 104,246,357167,857,522 shares of common stock issued and outstanding, outstanding warrants to purchase 49,984,796350,996,043 shares of common stock, and outstanding options to purchase 425,00015,385,000 shares of common stock. The issuance of shares of common stock upon exercise of outstanding warrants or options could result in substantial dilution to our stockholders, which may have a negative effect on the price of our common stock. The Company also had 498,229,802 shares of Preferred A Stock outstanding as of January 25, 2022.

Risks Related to the Rights Offering

The Subscription Price will be set by our board of directors and does not necessarily indicate the actual or market value of our new Series A Preferred Shares.

The Subscription Price for each share of our Series A Preferred Share is expected to be approximately $0.014 per share. Our board of directors will approve the Subscription Price after considering, among other things: the belief that all shareholders should be offered the opportunity to purchase Series A preferred stock like those being purchased by the Standby Purchasers; the Standby Commitment Amount that the Standby Purchasers agreed to purchase; the number of authorized Series A Preferred Shares set forth in the Second Amended Charter; and the availability of and likely cost of capital of other potential sources of capital. The Subscription Price is not intended to bear any relationship to the book value of our assets or our past operations, cash flows, losses, financial condition, net worth or any other established criteria used to value securities. The Subscription Price may not be indicative of the fair value of the Series A Preference Shares.

The rights offering may be terminated under certain circumstances prior to the expiration of the offering period, and neither we nor the rights agent will have any obligation to you except to return your subscription payments.

We may decide not to continue with the rights offering or terminate the rights offering prior to the Expiration Time. If the rights offering is terminated, all subscription payments will be returned as soon as practicable, without interest.

You must act promptly and follow instructions carefully if you want to exercise your rights.

If you desire to purchase new Series A Preferred Shares in the rights offering, you must act promptly to ensure that all required rights exercise forms and payments are actually received by the rights agent prior to the Expiration Time. The time period to exercise rights is limited. If you or your broker, bank or other nominee fail to complete and sign the required rights exercise forms, send an incorrect payment amount or otherwise fail to follow the procedures that apply to the exercise of your rights, we may reject your exercise of rights or accept it only to the extent of the payment received. Neither we nor the rights agent undertake to attempt to correct or contact you concerning an incomplete or incorrect rights exercise form or payment or to contact you concerning whether a broker, bank or other nominee holds rights on your behalf. We have the sole discretion to determine whether an exercise properly follows the procedures that apply to the exercise of your rights.

There is no trading market for Series A Preferred Shares or subscription rights, making it difficult to sell any Series A Preferred Shares you receive upon exercise of the subscription rights.

Because there currently is no market for the Series A Preferred Shares and we do not intend to list or quote the Series A Preferred Shares and subscription rights on any securities exchange or automated quotation system, it will be difficult for you to sell your Series A Preferred Shares. The liquidity of, and trading market for, the Series A Preferred Shares also may be adversely affected by other factors, including:

The price of our Common Stock is volatile and it may decline before or after the subscription rights expire or after you exercise your subscription rights.

The market price of our common stock historically has experienced and may continue to experience significant price fluctuations. We cannot assure you that the public trading market price of our common stock will not decline after you elect to exercise your subscription rights. Moreover, we cannot assure you that, following the exercise of your subscription rights, you will be able to sell your Series A Preferred Shares or the shares of common stock converted from your Series A preferred stock at a price equal to or greater than the Subscription Price per share. As a result, you may lose all or part of your investment in our Series A Preferred Shares.

If you do not exercise your subscription rights in the rights offering, you may suffer dilution in your percentage ownership of the company.

If you do not exercise any of your subscription rights in the rights offering, the number of our common stock that you own will not change. However, because our Series A Preferred Shares will be convertible into an increasing number of our common stock shares, your percentage ownership will be diluted, and the percentage ownership of the Standby Purchasers may be increased, after completion of the rights offering and fulfillment of the Standby Commitment Amount if you do not exercise any of your subscription rights.

The receipt of subscription rights may be treated as a taxable distribution to you.

The distribution of the subscription rights should be a non-taxable distribution under Section 305(a) of the Internal Revenue Code, and we expect to treat the distribution as such. However, this position is not free from doubt and is not binding on the Internal Revenue Service or the courts. If this distribution of subscription rights is part of a “disproportionate distribution” under Section 305(b) of the Internal Revenue Code, your receipt of subscription rights may be treated as the receipt of a taxable distribution to you equal to the fair market value of the subscription rights. Any such distribution would be treated as dividend income to the extent of our current or accumulated earnings and profits, if any, with any excess being treated as a return of capital to the extent thereof and then as capital gain. Each holder of ordinary shares is urged to consult their own tax advisor with respect to the particular tax consequences of the distribution of subscription rights. See “Material U.S. Federal Income Tax Considerations.”

If you make payment of the Subscription Price by uncertified check, your check may not clear in sufficient time to enable you to purchase shares in the rights offering.

Any uncertified check used to pay for shares to be issued in this rights offering must clear prior to the Expiration Time of this rights offering, and the clearing process may require five or more business days. If you choose to exercise your subscription rights, in whole or in part, and to pay for shares by uncertified check and your check has not cleared prior to the expiration of the rights offering, you will not have satisfied the conditions to exercise your subscription rights and will not receive the shares you attempted to purchase and you will lose the value of your subscription rights.

Our management will have broad discretion over the use of any net proceeds from the sale of Series A Preferred Shares in this offering, you may not agree with how we use the proceeds, and we may not use the proceeds successfully.

Our management will have broad discretion as to the use of any net proceeds from this subscription of Series A preferred stock and could use them for purposes other than those contemplated at the time of this offering. Accordingly, you will be relying on the judgment of our management with regard to the use of any proceeds from the sale of securities in this offering, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that we will use the proceeds in a way that does not yield a favorable, or any, return for you.

Additional stock offerings in the future may dilute then-existing stockholders’ percentage ownership of the Company.

Given our plans and expectations that we will need additional capital and personnel, we anticipate that we will need to issue additional shares of common stock or securities convertible into or exercisable for shares of common stock, including convertible preferred stock, convertible notes, stock options or warrants. The issuance of additional securities in the future will dilute the percentage ownership of then current stockholders.

CAUTIONARYSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This prospectus contains forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements.

In some cases, you can identify forward-looking statements by terminology, such as “expects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “possible,” “probable,” “believes,” “seeks,” “may,” “will,” “should,”“expects”, “anticipates”, “intends”, “estimates”, “plans”, “potential”, “possible”, “probable”, “believes”, “seeks”, “may”, “will”, “should”, “could” or the negative of such terms or other similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this prospectus.

You should read this prospectus and the documents that we reference herein and therein and have filed as exhibits to the registration statement, of which this prospectus is part, completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only. Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. These risks and uncertainties, along with others, are described above under the heading “Risk Factors” of this prospectus. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as may be required under applicable law.events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this prospectus, and particularly our forward-looking statements, by these cautionary statements.

This prospectus also includes estimates of market size and industry data that we obtained from industry publications and surveys and internal company sources. The industry publications and surveys used by management to determine market size and industry data contained in this prospectus have been obtained from sources believed to be reliable.

USE OF PROCEEDS

We estimate thatwill not receive any of the net proceeds from the sale of Series A preferred stock offered pursuant to the exercise of subscription rights set forth in this prospectus, including the proceeds received from the Standby Purchasers, will be up to approximately $5.0 million, assuming the sale of the maximum offering amount, and after deducting the estimated offering expenses that are payable by us. We will not receive any gross or net proceeds from the offering of the subscription rights to the holdersshares of our common stock onbeing offered for sale by the Record Date. In addition, holdersselling stockholders. Upon the exercise of the warrants for an aggregate of $4,349,877350,996,043 shares of common stock assuming all payments are made by cash and there is no reliance on cashless exercise provisions however, we will receive the exercise price of the warrants, or an aggregate of approximately $4,913,945, from the investors in debt (based on the accrued interest through June 22, 2020) are expectedApril 14, 2020 Private Placement. We will bear all fees and expenses incident to convert such debt into Series A Preferred Shares on substantiallyour obligation to register the same terms, subjectshares of common stock. Brokerage fees, commissions and similar expenses, if any, attributable to certain conditions.the sale of shares offered hereby will be borne by the selling stockholder.

There is no assurance the warrants will be exercised for cash. We currently intend to use the netsuch proceeds, that we receive in this offeringif any, for general corporate and working capital purposes while beginning to execute our plan of acquiring assets in the biologics and general corporate purposes, including proceeds should be for working capital and development and approval of our treatment program and marketing of our facilities development and enhancement of our products, capital expenditures, expansion of our operations, and new product development.The precise amount and timing of the application of such proceeds will depend upon our funding requirements and the availability and cost of other funds.medical device spaces.

Until we use the net proceeds of this offering for the above purposes, we intend to invest the funds in short-term, investment grade, interest-bearing securities. We cannot predict whether the proceeds invested will yield a favorable return. We have not yet determined the amount or timing of the expenditures for the categories listed above, and these expenditures may vary significantly depending on a variety of factors. As a result, we will retain broad discretion over the use of the net proceeds from this offering.DIVIDENDS POLICY

DIVIDEND POLICY

We have not paid cash dividends on our common stock in the past and have no present intention of paying cash dividends on our common stock in the foreseeable future. Future dividends, if any, on our common stock will be at the discretion of our board of directors and will depend on, among other things, our results of operations, any restrictions set forth in our second Amended and Restated Articles of Incorporation, cash requirements and surplus, financial condition, contractual restrictions and other factors that our board of directors may deem relevant, as well as our ability to pay dividends in compliance with the laws of the State of Nevada.

OUR BUSINESS

Overview

H-CYTE, Inc (“the Company”) is a hybrid-biopharmaceutical company dedicated to developing and delivering new treatments for patients with chronic respiratory and pulmonary disorders. During the last two years, the Company has evolved into two separate divisions with its entrance into 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 its name to Centers for Respiratory Health as the clinics continue to deliver treatments for patients with chronic respiratory and pulmonary disorders.

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, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC is 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.

Autologous Infusion Therapy (“Infusion Vertical”)

The Company’s Biosciences Division includes the Infusion Vertical that develops and implements 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.

Biotech Development Division (“Biotech Vertical”)

During the year ended 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 the company is progressing alternate biologics and therapeutic devices to meet the needs of the business.

Impact of COVID-19

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

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.

DILUTION

If you invest in our common stock, your interestIn addition, the Company is uncertain of the full effect the pandemic will be immediatelyhave on it for the longer term since the scope and substantially diluted toduration 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 difference betweenvirus or emergence of new variants of the Subscription Price per Series A Preferred Share, which is convertible into shares of common stock atvirus, such as the initial ratio of 1:1,Delta variant and the pro forma net tangible book value per shareOmicron variant, will impact the stability of our common stock after giving effecteconomic recovery and growth. The Company may experience long-term disruptions to this offering.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.

Our as adjusted net tangible book value asCompetition

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 March 31, 2020 was $0.001 per share of common stock, based upon 429,324,686 shares outstanding. After giving effect to the salenew products. Most of the Series A Preferred SharesCompany’s existing and potential competitors have substantially greater financial, sales and marketing, manufacturing and distribution, and technological resources. These competitors may also be in this offering at the anticipated Subscription Priceprocess of seeking FDA (or other regulatory approvals) and full conversion of allpatent protection for new products. The Company’s biologics product lines also face competition from numerous existing products and procedures, which currently are considered part of the Series A Preferred Shares soldstandard of care. The Company believes that the principal competitive factors in this offering into our common stock at a ratio of 1:1 at March 31, 2020, and after deducting the estimated offering expenses payable by us, our pro forma as adjusted net tangible book value at March 31, 2020 would have been approximately $0.008 per share. This represents an immediate dilution in pro forma net tangible book value of approximately $0.006 per share to investors purchasing shares of Series A preferred stockits markets are:

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

DilutionThe Company is aware that several of its competitors are developing technologies in pro forma net tangible book value per share representsits current and future products areas. There are numerous regenerative medicine 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 such as the difference betweenMayo Clinic, begin to develop therapies for multiple diseases using regenerative medicine through the amount per share paid by purchasersmore stringent regulatory pathway of our common stock in this offering and the pro forma net tangible book value per sharea BLA.

Customers

The Company’s customer base consists of our common stock immediately after this offering.

The following table illustrates the per share dilution to investors purchasing sharesindividuals who are 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 offering:past.

Intellectual Property

The information aboveCompany’s Infusion Vertical is based on 121,682,672 as adjustedcurrently a direct care service provider and pro forma as adjusted sharesdoes not own any intellectual property around its current procedure. The development of our common stock outstanding as of March 31, 2020a biologic is ongoing and 307,642,014 as adjusted shares outstandingis projected to start the FDA approval process in 2022. H-CYTE has a ten-year exclusive licensing agreement with Rion and 747,985,319 pro forma as adjusted shares outstanding assuming exercise of all subscription rights of our Series A preferred stock as of March 31, 2020 or a combined total of common stock and Series A preferred stock of 429,324,686 shares outstanding as adjusted and 869,667,991 shares outstanding pro forma as adjusted assuming exercise of all subscription rights as of March 31, 2020.will therefore be protected by Rion’s intellectual property filings.

CAPITALIZATIONGovernment Regulations

The following table sets forth our cash and cash equivalents and capitalization as of March31, 2020:

The following four events we assume to have occurred on March 31, 2020 for the purposes of the terms “as adjusted” and “pro forma as adjusted”Governmental authorities in the tableU.S. (at the federal, state and local levels) and abroad, extensively regulate, among other things, the research and development, testing, manufacture, quality control, 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 as follows:developing.

This table shouldFDA Regulation

The Infusion Vertical’s current cellular therapy for chronic lung disease does not require FDA approval due to it being an autologous therapy. The Company’s future biologic biologic therapies will need to be readapproved by the FDA before they are marketed in conjunction with ‘‘Use of Proceeds’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and our financial statements and related notes thereto included in this prospectus.

DESCRIPTION OF THE RIGHTS OFFERING

Terms of the Rights Offering

We are distributing to eligible holders of our common stock one or more non-transferable subscription right to purchase our new Series A Preferred Shares for each share of common stock held on [____________] , 2020,U.S. During the Record Date forFDA’s approval process, the rights offering. Each subscription right entitles the holder to subscribe for one Series A Preferred Share at the expected Subscription Price of $0.014 per Series A Preferred Share. Each Series A Preferred Share initiallyCompany’s therapies will be convertible into one share of common stock, subject to adjustments to reflect stock splits, reclassificationsextensive regulation by the FDA under the Federal Food, Drug, and certainCosmetic Act and/or the Public Health Service Act, as well as by other events.regulatory bodies.

The Subscription Price for each share of our Series A Preferred Share is expected to be approximately $0.014 per share. Our board of directors will approve the Subscription Price after considering,FDA regulations govern, among other things:things, the belief that all shareholders should be offereddevelopment, testing, manufacturing, labeling, safety, storage, record-keeping, market clearance or approval, advertising and promotion, import and export, sales and marketing, and distribution of medical devices and products.

In the opportunityU.S., the FDA subjects pharmaceutical and biologic products to purchase Series A preferred stock like those being purchased by the Standby Purchasers; the Standby Commitment Amount that the Standby Purchasers agreed to purchase; the number of authorized Series A Preferred Shares set forth in the Second Amended Charter; and the availability of and likely cost of capital of other potential sources of capital. The Subscription Price is not intended to bear any relationship to the book value of our assets or our past operations, cash flows, losses, financial condition, net worth or any other established criteria used to value securities. The Subscription Price may not be indicative of the fair value of the Series A Preference Shares.

As of the Record Date for the rights offering, [________] shares of common stock, [________] shares of Series B preferred stock, and [________] shares of Series D preferred stock were issued and outstanding. Each outstanding share of Series B preferred stock automatically converts into shares of Common Stock upon the occurrence of a “Series D Mandatory Conversion Event” under the Certificate of Designation of Preferences, Rights and Limitations of the Series D preferred stock. A “Series D Mandatory Conversion Event” is deemed to occur upon the written consent of the holders of a majority of Series D preferred stock then outstanding, voting as a separate class. In connection with and prior to the effectiveness of its Second Amended Charter, the Company expects the holders of a majority of the Series D preferred stock to initiate such a Series D Mandatory Conversion Event, causing all outstanding shares of Series D preferred stock and Series B preferred stock to be converted into shares of Common Stock, such that prior to the commencement of the rights offering, all outstanding shares of Series B preferred stock and Series D preferred stock will have converted into shares of common stock and no such shares of preferred stock will be outstanding.

We have not employed any brokers, dealers or underwriters in connection with the solicitation or exercise of subscription rights in this rights offering, and no commissions, fees or discounts will be payable or paid to brokers, dealers or underwriters in connection therewith.

Purpose of the Rights Offering

On April 17, 2020, the Standby Purchasers purchased secured convertible notes (“April Secured Notes”) and warrants (“April Warrants”) from the Company pursuant to a secured convertible note and warrant purchase agreement (the “April SPA”) and in consideration, the Company received an aggregate amount of $2,842,695 in proceeds which includes $7,500 from an additional investor in a subsequent closing. As part of the April Offering, the FWHC Note previously issued by the Company was amended and superseded by an April Secured Note in the amount of $1,000,000 issued to FWHC Bridge. According to the April SPA, the Standby Purchasers agreed to purchase shares of the newly created Series A preferred stock corresponding to the Standby Commitment Amount in connection with an offering of Series A Preferred Shares at the same subscription price paid by other investors in such offering. In addition, it is expected that the April Secured Notes will convert into shares of Series A preferred stock at the completion of this rights offering, upon satisfaction of certain conditions set forth in the April SPA.

Our board of directors (the “Board”) determined that all holders of our common stock should have the opportunity to subscribe for Series A preferred stock on the same terms as the Standby Purchasers and concluded that a rights offering provided the best means of providing that opportunity to all holders. Each Series A Preferred Share initially will be convertible into one share of common stock, subject to adjustments to reflect stock splits and reclassifications.

The aggregate gross proceeds of Series A preferred stock offered in this rights offering, inclusive of amounts raised by the Company under the April SPA through the issuance of April Secured Notes and April Warrants thereunder and through the conversion of debt will be $10.0 million if all subscription rights are exercised. However, management ofrigorous review. If the Company does not expect that all stockholders will exercise their subscription rights in this rights offering.

First,comply with applicable requirements, it may be fined, the Standby Purchasers have agreed notgovernment may refuse to exercise any subscription rights they have as stockholders ofapprove its marketing applications or to allow it to manufacture or market its products, and the Company and have instead agreed to purchase shares of Series A preferred stock corresponding to the unexercised rights up to the Standby Commitment Amount at the same Subscription Price. However, if the aggregate gross proceeds from the exercise of subscription rights in this rights offering exceeds the Standby Commitment Amount, the Standby Commitment Amount that the Standby Purchasers will be required to invest in us will be reduced on a proportional basis by the number of Series A Preferred Shares purchased by subscription rights holders in this rights offering. As a result, the minimum amount that we will raise from the sale of Series A Preferred Shares in this rights offering and under the Standby Commitment will be $2,842,695.

Second, the Company understands that RMS Shareholder, a holder of approximately 42% of the outstanding voting power as of June 23, 2019, does not intend to exercise its subscription rights.

We plan to use the proceeds of this offering for general corporate and working capital purposes and for the further development of our L-CYTE technology. See “Use of Proceeds” for more information.

No Board Recommendation

The exercise of your subscription rights and an investment in the Series A Preferred Shares must be made according to your own evaluation of your own best interests and after considering all of the information included in or incorporated by reference in this prospectus, including the risk factors under “Risk Factors.” Neither we nor our Board nor any Standby Purchaser or their affiliates makes any recommendation to subscription rights holders regarding whether or not they should exercise their subscription rights.

The Rights

We will distribute to each holder of our common stock who was a record holder of our common stock at 5:00 p.m., New York City time, on the Record Date, at no charge, one non-transferable subscription right for each share of common stock owned, for a total of approximately [________] subscription rights. Stockholders who own common stock in book-entry form through DTC will receive beneficial ownership of their subscription rights in accordance with DTC’s procedures. All other stockholders will receive subscription rights in certificated form.

Each subscription right will allow holders to purchase one Series A Preferred Share. We will not issue fractional Series A Preferred Shares upon the exercise of these subscription rights. The Subscription Price for each Series A Preferred Share is expected to be $0.014, subject to approval by our Board prior to the commencement of the rights offering. If you hold your shares in a brokerage account or through a dealer or other nominee, please see the information under “Information for Beneficial Holders and Brokers, Banks and Other Nominees.”

Subscription Right

Subject to certain earlier deadlines described under “Expiration, Extension, Amendment and Cancellation of the Rights Offering,” you may purchase one convertible Series A Preferred Share per subscription right exercised by delivering all required documents and paying the Subscription Price prior to the Expiration Time. You are not required to exercise any of your subscription rights.

Standby Commitment

The Standby Purchasers, led by FWHC Bridge, LLC (“FWHC Bridge”), have each agreed to purchase their proportional share of Series A Preferred Shares corresponding to the unexercised rights up to the Standby Commitment Amount at the same Subscription Price as other holders of common stock would by exercising their subscription rights. However, if the aggregate gross proceeds from the exercise of subscription rights in this rights offering exceeds the Standby Commitment Amount, the Standby Commitment Amount that the Standby Purchasers will be required to invest in us will be reduced on a proportional basis by the number of Series A Preferred Shares purchased by subscription rights holders in this rights offering.

The ownership interest and voting power in the Company held by FWHC Bridge, its affiliates, and its Section 13(d) Group members (collectively, the “FWHC Group”) will increase substantially as a result of this offering and the Standby Commitment, as convertible notes held by the Standby Purchasers, some of whom are members of the FWHC Group, will be converted into Series A Preferred Shares and the Standby Purchasers may acquire additional Series A Preferred Shares as part of the Standby Commitment. Based on security ownership as of June 23, 2020 and assuming the Standby Commitment is utilized in full, the FWHC Group will hold approximately [*]% of the voting power of the Company immediately after the completion of the rights offering. See “Security Ownership of Certain Beneficial Owners and Management.”

The Standby Purchasers have not received, and will not receive, compensation for their commitment to purchase Series A Preferred Shares.

Modification and Cancellation of the Rights Offering

Cancellation of the Rights Offering

Our Board may cancel this rights offering, in whole or in part, in its sole discretion at any time prior to the Expiration Time for any reason, including a change in the market price of our common stock, or for no reason. If we terminate this rights offering, in whole or in part, all affected subscription rights will expire without value and all subscription payments received by the rights agent will be returned promptly, without interest or deduction.

Expiration, Extension, Amendment and Cancellation of the Rights Offering

You may exercise your subscription rights at any time before the Expiration Time. Your full payment of the Subscription Price must be received by the rights agent on or prior to the Expiration Time for the rights offering. We recommend that you use an insured overnight courier that provides delivery tracking or use registered mail, with return receipt requested.

We may, in our sole discretion, extend the time for exercising the subscription rights. We will extend the duration of the rights offering as required by applicable law and may choose to extend it if we decide to give investors more time to exercise their subscription rights. In the event that we extend the rights offering, we do not expect to extend the rights offering beyond [________]. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., New York City time, on the next business day after the most recently announced Expiration Time.

We reserve the right, in our sole discretion, to amend or modify the terms of this rights offering. In the event of a material change in the rights offering, including the waiver of a material condition, we will extend the duration of the rights offering if necessary to ensure that at least five business days remain in the rights offering following notice of the material change.

If you do not exercise your subscription rights before the Expiration Time, your unexercised subscription rights will be null and void and will have no value.

Issuance of Series A Preferred Shares upon Valid Exercise

If you validly exercise your subscription rights in accordance with the procedures set forth under “Summary of Procedures to Follow” and the “Instructions of Exercise of Subscription Rights” provided to you, we will issue to you the Series A Preferred Shares for which you have validly subscribed as soon as practical after the expiration of the rights offering. If you hold your common stock shares in book-entry form through DTC you will receive beneficial ownership of your rights in accordance with DTC’s procedures. If you hold your common stock shares in any other form, your rights will be distributed to you in certificated form. Series A Preferred Shares issued in the rights offering upon the exercise of subscription rights will be registered in the name of the subscription rights holder of record.

Summary of Procedures to Follow

Exercise of Rights

Rights certificates, which will evidence the subscription rights, will be mailed to stockholders of record as of the Record Date. Rights may be exercised by stockholders who are record owners by delivering the following to the rights agent for actual receipt, at or prior to the Expiration Time for the rights offering:

● a properly completed and executed subscription rights certificate with any required signature guarantees or other supplemental documentation; and

● payment of the full Subscription Price in the manner described below under “Payment of Subscription Price.”

Rights also may be exercised by a stockholder whose shares are registered in the name of a broker, bank or other nominee by contacting the broker, bank or other nominee, which can arrange, on the stockholder’s behalf, delivery of the properly completed and executed subscription rights certificate and the applicable subscription price. A fee may be charged by such broker, bank or other nominee for this service. The broker, bank or other nominee must actually receive, by the beneficial holder exercise deadline, instructions to exercise the subscription rights so that the rights agent may receive, prior to the Expiration Time, all required documents the subscription payment. Your subscription rights will not be considered exercised unless the rights agent actually receives from you or your broker, bank or nominee, as the case may be, all of the required documents and payment of your full Subscription Price prior to the Expiration Time for the rights offering.

Payment of Subscription Price

The anticipated Subscription Price is $0.014 per Series A Preferred Share, subject to board approval to be obtained prior to the commencement of the rights offering. Each subscription right entitles a holder to purchase one Series A Preferred Share. Fractional shares will not be issued. For more information with respect to how we determined the Subscription Price, see “[*].” Your payment of the Subscription Price must be made in U.S. dollars for the full number of our Series A Preferred Shares for which you are subscribing by:

Your payment will be considered received by the rights agent only upon, as applicable,

If you are paying by uncertified check, please note that uncertified checks may take five or more business days to clear. If you wish to pay the total Subscription Price by uncertified check, we urge you to make payment sufficiently in advance of the time this rights offering expires to ensure that your payment is received by the rights agent and clears by the Expiration Time. We urge you to consider using a wire transfer, certified or cashier’s check or U.S. postal money order to help avoid missing the opportunity to exercise your subscription rights should you decide to exercise your subscription rights. The rights agent will hold your payment of the Subscription Price in a segregated account with other payments received from other subscription rights holders until we issue Series A Preferred Shares to you upon completion of the rights offering.

Signature Guarantee May Be Required

Your signature on each subscription rights certificate must be guaranteed by an eligible institution, such as a member firm of a registered national securities exchange, or a member of the Financial Industry Regulatory Authority, or a commercial bank or trust company having an office or correspondent in the United States, subject to standards and procedures adopted by the rights agent, unless:

Delivery of Subscription Materials and Payment

You should deliver your subscription rights documents and payment of the total Subscription Price to the rights agent by one of the methods described below:

By hand, mail or courier to:

Rights Agent:Issuer Direct Corporation

Attn: [*]

Address: 1981 Murray Holladay Road, Suite 100, SLC UT, 84117

You may call the rights agent at 801.272.9294. Delivery to an address or by any method other than as set forth above will not constitute valid delivery.

Revocation of Exercise

Your exercise of rights may be withdrawn at any time prior to the revocation deadline, which will be 5:00 p.m., New York City time, on the business day prior to the Expiration Time, but not thereafter, subject to applicable law. Following the revocation deadline, your exercise of rights may not be revoked in whole or in part for any reason, including a decline in our common stock price, even if we have not already issued the shares of Series A preferred stock to you. For a revocation to be effective, a written or facsimile transmission notice of revocation must be received by the rights agent prior to the deadline for revocation at the address listed above.

You are responsible for all commissions, fees and other expenses, including brokerage commissions and transfer taxes, incurred in connection with the purchase or exercise of your subscription rights, except that we will pay any fees of the rights agent associated with this rights offering.

Information for Beneficial Holders and Brokers, Banks and Other Nominees

Procedures For DTC Participants and Other Beneficial Owners

If you are a beneficial owner of our common stock or will receive your subscription rights through a broker, bank or other nominee, we will ask your broker, bank or other nominee to notify you of this rights offering. If you wish to exercise your subscription rights, you will need to have your broker, bank or other nominee act for you. To indicate your decision to exercise, or not to exercise, your subscription rights, you should complete and return to your broker, bank or other nominee the form entitled “Beneficial Owner Election Form,” or any alternative form that your nominee provides to you, such that it will be received by the beneficial holder exercise deadline, which is 5:00 p.m., New York City time, on [________] , 2020, which is the last business day prior to the Expiration Time, unless the Expiration Time is extended. You should receive this form from your broker, bank or other nominee with the other rights offering materials. You should contact your broker, bank or other nominee if you do not receive this form, but you believe you are entitled to participate in this rights offering. We are not responsible if you do not receive the form from your broker, bank or nominee or if you receive it without sufficient time to respond.

If your subscription rights are held of record through DTC, you may exercise your subscription right by instructing DTC to transfer your subscription rights from your account to the account of the rights agent, together with a certification as to the aggregate number of subscription rights you are exercising and the number of Series A Preferred Shares you are subscribing for along with payment of the applicable amount of Subscription Price.

Notice and Certification to be Provided by Brokers, Bank and Other Nominees

If you are a broker, bank or other nominee who holds our common stock for the account of others as of the Record Date, you should notify the respective beneficial owners of such shares of this rights offering as soon as possible to find out their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial owners with respect to their subscription rights. We have provided a “Beneficial Owner Election Form” that you may provide to beneficial holders to obtain their instructions with respect to their subscription rights. If the beneficial owner so instructs, you should complete the appropriate subscription rights certificates and submit them to the rights agent with the proper payment. If you hold our common stock for the account(s) of more than one beneficial owner, you may exercise the number of subscription rights to which all such beneficial owners in the aggregate otherwise would have been entitled had they been direct record holders of our common stock as of the Record Date, provided that you, as a nominee record holder, make a proper showing to the rights agent by submitting the form entitled “Nominee Holder Certification” that we will provide to you with your rights offering materials. If you did not receive this form, you should contact the rights agent to request a copy.

Foreign Restrictions

Stockholders whose records addresses are outside the United States (for these purposes, the United States includes its territories and possessions and the District of Columbia) will receive written notice of the rights offering; however, rights certificates will not be mailed to such stockholders. The rights to which those certificates relate will be held by the rights agent for such foreign stockholders’ accounts until instructions are received to exercise the rights. If no instructions are received by the Expiration Date, such rights will expire.

Employee Plan Considerations

If you are a stockholder that is an employee benefit plan, including corporate savings plans and 401(k) plans, profit sharing/retirement plans for self-employed individuals and individual retirement accounts, which we collectively refer to as retirement plans, that is subject to the Employee Retirement Income Security Act of 1974, which we refer to as ERISA, you should be aware that additional contributions of cash to the retirement plan (other than rollover contributions or trustee-to-trustee transfers from other retirement plans) in order to exercise rights would be treated as retirement plan contributions and, therefore, when taken together with other contributions previously made, may be treated as excess or nondeductible contributions subject to excise taxes. In the case of retirement plans qualified under Section 401(a) of the Internal Revenue Code, additional cash contributions could cause violations of the maximum contribution limitation of Section 415 of the Internal Revenue Code or other qualification rules. Retirement plans in which contributions are so limited should consider whether there is an additional source of funds available within the retirement plan, including the liquidation of assets, with which to exercise the subscription rights. Because the rules governing retirement plans are extensive and complex, retirement plans contemplating the exercise of rights should consult with their counsel prior to such exercise.

Retirement plans and other tax exempt entities, including governmental plans, also should be aware that if they borrow in order to finance their exercise of subscription rights, they may become subject to the tax on unrelated business taxable income under Section 511 of the Internal Revenue Code. If any portion of an individual retirement account is used as security for a loan, the portion so used it treated as a distribution to the individual retirement account depositor.

ERISA contains fiduciary responsibility requirements, and ERISA and the Internal Revenue Code contain prohibited transaction rules that may affect the exercise of the subscription rights. Due to the complexity of these rules and the penalties for noncompliance, retirement plans should consult with their counsel regarding the consequences of their exercise of subscription rights under ERISA and the Internal Revenue Code.

Determinations Regarding Exercise and Revocation

Determinations Regarding the Exercise or Subscription Rights

We will decide all questions concerning the timeliness, validity, form and eligibility of the exercise or revocation of exercise of your subscription rights, and any such determinations by us will be final and binding. We, in our sole discretion, may waive, in any particular instance, any defect or irregularity, or permit, in any particular instance, a defect or irregularity to be corrected within such time as we may determine. We will not be required to make uniform determinations in all cases. We may reject the exercise or revocation of exercise of any of your subscription rights because of any defect or irregularity. We will not accept an exercise of subscription rights or revocation of exercise until all irregularities have been waived by us or cured by you within such time as we decide, in our sole discretion.

Neither we nor the rights agent will be under any duty to notify you of any defect or irregularity in connection with your exercise of subscription rights or revocation of exercise, and we will not be liable for failure to notify you of any defect or irregularity. We reserve the right to reject your exercise of subscription rights or revocation of exercise if such exercise or revocation is not in accordance with the terms of this rights offering or not in proper form. We will also not accept the exercise of your subscription rights if our issuance of our preference or common stock to you could be deemed unlawful under applicable law.

Calculation of Subscription Rights Exercised

If you do not indicate the number of subscription rights being exercised, or do not forward full payment of the total Subscription Price payment for the number of subscription rights that you indicate are being exercised, then we may treat you as having exercised your subscription right with respect to the maximum number of subscription rights that may be exercised with the aggregate Subscription Price payment you delivered to the rights agent. If we do not apply your full Subscription Price payment to your purchase of Series A Preferred Shares, we or the rights agent will return the excess amount to you by mail, without interest or deduction, as soon as practicable after the Expiration Time for this rights offering.

Regulatory Limitation

We will not be required to issue any Series A Preferred Share to you pursuant to this rights offering if, in our opinion, you would be required to obtain prior clearance or approval from any governmental regulatory authorities to own or control such shares and if, at the Expiration Time, you have not obtained such clearance or approval.

Compliance with Law

We are not making this rights offering in any country, state or other jurisdiction in which it is unlawful to do so, nor are we distributing or accepting any offers to purchase any of our Series A Preferred Shares from subscription rights holders who are residents of those countries, states or other jurisdictions or who are otherwise prohibited by applicable laws or regulations from accepting or exercising the subscription rights. We may delay the commencement of this rights offering in those jurisdictions, or change the terms of this rights offering, in whole or in part, in ordercriminally prosecuted. Failure to comply with the securitieslaw 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.

Proprietary Medical Device Business (DenerveX division)

The Company’s business of designing and marketing proprietary medical devices for commercial use in the U.S. and Europe began operations in late 2013. The Company received CE marking in June 2017 for the DenerveX System and it became commercially available throughout the European Union and several other countries that accept CE marking. The Company’s first sale of the DenerveX System occurred in July 2017. The Company marketed the DenerveX Device as a disposable, single-use kit which includes all components of the DenerveX device product. In addition to the DenerveX device itself, the Company developed a dedicated Electro Surgical Generator, the DenerveX Pro-40, to power the DenerveX device. There is currently no finished product of the DenerveX device in inventory as commercial production has been suspended since the first quarter of 2019. There was minimal revenue from the DenerveX product in 2020.

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 legal requirements of those jurisdictions. We may declineremuneration intended to make modifications to the terms of this rights offering requested by those jurisdictions, in which case, if you are a resident of such jurisdictions, or if you are otherwise prohibited by applicable laws or regulations from accepting or exercising the subscription rights, you will not be eligible to participate in this rights offering.

Effects of the Rights Offering

Common Stock Outstanding

As of the Record Date, we had [_________] shares of common stock, [_________] shares of Series B preferred stock and [_________] shares of Series D preferred stock, issued and outstanding. All of the outstanding shares of Series B preferred stock and Series D preferred stock are expected to convert into shares of common stock prior to the commencement of the rights offering in the manner described above under the subsection “Terms of the Rights Offering.” We expect to have [_________] shares of common stock and [_________] shares of Series A preferred stock outstanding and no shares of Series B preferred stock or Series D preferred stock outstanding immediately after the rights offering.

Beneficial Ownership of Standby Purchasers

For a description of the beneficial ownership of the Standby Purchasers after the rights offering, see “Security Ownership of Certain Beneficial Owners and Management.”

Shares of Common Stock Issuable upon Exercise of Warrants and Options

As of the Record Date, we had warrants and options to purchase a total of 46,041,518 shares of common stock at various exercise prices, either fixed or variable. The warrants and options with variable exercise prices may contain anti-dilution provisions that adjust the exercise price of shares issuable upon exercise of the warrants whenever we issue additional equity shares.

Getting Additional Information about the Rights Offering

Questions About Exercising Subscription Rights

If you have any questions or require assistance regarding the method of exercising your subscription rights or requests for additional copies of this prospectus, please contact Jeremy Daniel, the Chief Financial Officer of the Company by email at jdaniel@thelunghealthinstitute.com or phone at 813-280-1243x123.

Rights Agent

We have appointed Issuer Direct Corporation to act as rights agent for this rights offering. We will pay all fees and expenses of the rights agent related to its roles in connection with this rights offering and have also agreed to indemnify the rights agent from liabilities that they may incur in connection with this rights offering. However, all commissions, fees and expenses (including brokerage commission and fees and transfer taxes) incurred in connection withinduce the purchase or exerciserecommendation of rights willhealthcare 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 accountCompany 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 holderCompany’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 January 25, 2022, the Company had 8 total full-time employees. None of its employees are represented by a union.

Available Information

The Company’s website, www.hcyte.com, provides 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 rights,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 none of such commissions, fees or expenses will be paid by us orinformation statements, and other information regarding our company that we file electronically with the rights agent.SEC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read together with our financial statements and accompanying notes appearing elsewhere in this prospectus. This Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” set forth in the beginning of this prospectus, and see “Risk Factors” beginning on page 93 for a discussion of certain risk factors applicable to our business, financial condition, and results of operations. Operating results are not necessarily indicative of results that may occur in future periods.

The following discussionOverview

H-CYTE, Inc (“the Company”) is a hybrid-biopharmaceutical company dedicated to developing and analysis by management provides informationdelivering new treatments for patients with respect to our financial conditionchronic respiratory and results of operations forpulmonary disorders. During the fiscallast two years, ended December 31, 2019 and 2018 and for the quarterly period ended March 31, 2020.

Overview

On October 18, 2018, H-CYTE enteredCompany has evolved into an Asset Purchase Agreement, as amended bytwo separate divisions with its entrance into the amendment to Asset Purchase Agreement date January 8, 2019 (as amended, the “APA”) with RMS Group, pursuant to which its acquired certain assets and assumed certain liabilities of RMS Group, as reported in the 8-K/A filed in March of 2019 (the “RMS Transaction”biologics development space (“Biologics Division”). BasedThis new 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 termsCompany announced that its Lung Health Institute facilities changed its name to Centers for Respiratory Health as the clinics continue to deliver treatments for patients with chronic respiratory and pulmonary disorders.

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, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC is the operator and manager of the APA,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 former RMS members had voting controltemporary closure of the combined company as ofall LI clinics due to COVID-19. These two clinics will remain permanently closed.

On September 11, 2020, with the closing of the RMS Transaction. For accounting purposes, the RMS Transaction has been treatedRights Offering, FWHC, LLC, FWHC Bridge, LLC, and FWHC Bridge Friends, LLC (collectively known as a reverse acquisition whereby“FWHC”) gained control of the Company is deemedby subsequently owning approximately 61% of the fully diluted shares of the Company (for further discussion, see Notes 8 and 9-”Equity Transactions” to have been acquired by the RMS Group and the historicalconsolidated financial statements priorin the Company’s 2020 Annual Report on Form 10-K).

Autologous Infusion Therapy (“Infusion Division”)

The Infusion Division develops and implements innovative treatment options in autologous cellular therapy (PRP-PBMC) to treat chronic lung disorders. Committed to an individualized patient-centric approach, this division provides oversight and management of the highest quality to the acquisition date of January 8, 2019 now reflectLHI clinics, while producing positive medical outcomes following the historical financial statements of the RMS Group.strictest Centers for Disease Control and Prevention (the “CDC”) guidelines.

Biotech Development (“Biologics Division”)

On June 21, 2019, H-CYTE entered into an exclusive product supply agreement with Rion, LLC (“Rion”) to develop and distribute an FDA-approved therapy (known as L-CYTE-01)(post U.S. Food & Drug Administration, the “FDA”, approval) a biologic combining its PRP-PBMC technology with Rion’s exosomes (“EV”) technology for the treatment of chronic obstructive pulmonary disease (“COPD”), the fourth leading cause of death in the U.S. Rion has established a novel EV technology to harness the healing power of the body. Rion’s innovative exosome technology, based on science developed at Mayo Clinic, provides an off-the-shelf platform to enhance healing in soft tissue, musculoskeletal, cardiovascular, and neurological organ systems. This agreement provides for a ten-year10-year exclusive and extendable supply agreement with Rion to enable H-CYTE to develop combined proprietary biologics. The Company is evaluating alternate EV technologies to determine the most favorable path forward.

On October 9, 2019, the Company entered into a services agreement with Rion (the “Rion Services Agreement”) which provides the Company the benefit of Rion’s resources and expertise for the limited purpose of (i) consulting with and assisting H-CYTE in the further research and development for the generation of a new cellular therapy (L-CYTE-01)biologic and (ii) subsequently assisting H-CYTE in seeking and obtaining FDA Phase 1 IND clearance for L-CYTE-01. Whilethis biologic as necessary. Rion has completed the current LHI cellular therapy for chronic lung disease does not require FDA approval due to its biologic nature, the L-CYTE-01 therapy will need to be approved or clearedresearch and development work which is under review by the FDA before itCompany. The Company is marketed inassessing if the U.S. Rion also agreescombined proprietary biologic is a more viable solution than potentially progressing with a single entity biologic from an alternative commercial source.

On April 2, 2021, the Company entered into a series of agreements with Medovex, LLC to consult with H-CYTE in its arrangement for services from third parties unaffiliated with Rion to support research,pursue a joint venture regarding the continued development regulatory approval, and commercialization of L-CYTE-01.

With these agreements, Rion will serve as the product supplier and co-developer of L-CYTE-01 with H-CYTEDenerveX device for the treatment of chronic lung diseases. H-CYTE will control the commercial development and facilitate the clinical trial investigation. After conducting joint research and development of these biologics, H-CYTE intends to pursue submission of an IND application for review by the FDA for treatment of COPD.

Due to COVID-19, allbusiness outside of the LHI clinicsU.S. The Company has determined that the transactions resulting from the series of agreements with Medovex, LLC are currently closed.immaterial. The Company will evaluate reopeningassess the progress of the joint venture on a quarterly basis for materiality.

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 United States generally accepted accounting principles. The preparation of these clinicsconsolidated 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 appropriate time. date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods.

The Company is not expecting to be able to generate revenue until, atbases our estimates on historical experience and on various other factors that it believes are reasonable under the earliest, August 2020. The Company has contacted its patientscircumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are scheduled for treatment, both first time patients and recurring patients, and have reschedulednot readily apparent from other sources. Actual results may differ from these patients for August 2020. However, there is no guarantee that the Company will be able to treat patients as soon as August 2020; as such, the Company cannot estimate when it will be safe to treat patients and generate revenue. Future quarters’ revenue is dependent on the timing of being able to treat patients again. The Company will continue to focus on its goal of taking the L-CYTE-01 protocol to the FDA for treatment of chronic lung diseases. The Company is currently evaluating whetherestimates under different assumptions or not its protocol has the potential to help people affected by COVID-19, but more research will need to be completed before a definitive conclusion can be reached. With the Company’s revenue-generating activities suspended, the Company will need to raise cash from debt and equity offerings to continue with its efforts to take the L-CYTE-01 protocol to the FDA for treatment of chronic lung diseases. There can be no assurance that the Company will be successful in doing so.conditions.

Results of Operations

– Three and nine months ended March 31,September 30, 2021 and 2020 compared to three months ended March 31, 2019

Revenue, Cost of Sales and Gross Profit

The Company recorded revenue of approximately $460,000 and $1,287,000 for the three and nine months ended March 31, 2020 and 2019September 30, 2021, respectively. The Company recorded revenue of approximately $1,017,000$650,000 and $1,324,000,$1,686,000, for the three and nine months ended September 30, 2020, respectively. The decrease in revenue for the three months ended March 31, 2020September 30, 2021, as compared to the prior year is mainly attributable to a decrease in the numbereconomic impact that COVID-19 has had on the Company due to its vulnerable patient base being unable or unwilling to travel due to the virus. The Company suspended operations of treatments provided by the Biosciences division partially because of cancelling all treatmentsInfusion Vertical due to COVID-19 effective March 23, 2020 and did not reopen until August 2020.

For The Company had pent up demand for the three months ended March 31,September 30, 2020 from patients who were not able to come in for treatment due to suspension of operations. The Company experienced higher revenue during the three months ended September 30, 2020 than the three months ended September 30, 2021 due to this pent up demand even though the clinics were only open August and 2019, theSeptember 2020.

The Company incurred approximately $377,000 and $559,000 inrecorded cost of sales of approximately $139,000 and $553,000 for the three and nine months ended September 30, 2021, respectively. The Company recorded cost of sales of approximately $161,000 and $608,000 for the three and nine months ended September 30, 2020, respectively. The decrease in cost of sales for the three months ended March 31, 2020September 30, 2021, as compared to the prior year, is mainly attributable to a decrease in the number of treatments provided byeconomic impact that COVID-19 has had on the Biosciences division.Company. The Company’s cost of sales is comprised of two main components: medical supplies and personnel costs for the Biosciences division.Infusion Vertical. Medical supplies are predominantly variable costs and based on the number of treatments provided; personnel expenses are also variable as these are hourly positions. The number of treatments provided, wereduring normal operations, can be handled adequately with the Company’s current level of personnel. The Company possesses the opportunity to increase the number of treatments performed without increasing personnel costs as it can leverage the current personnel’s availability until the Company’s treatment volume reaches critical mass. However, upon an increase in treatment volume beyond that capacity, the Company will need to hire additional personnel.

ForThe Company generated gross profit of approximately $321,000 and $733,000 for the three and nine months ended March 31, 2020 and 2019 theSeptember 30, 2021, respectively. The Company generated a gross profit totalingof approximately $640,000 (63%)$489,000 and $765,000 (58%),$1,078,000 for the three and nine months ended September 30, 2020, respectively. The decrease in gross profit, was dueas compared to the reduction in revenue, net ofprior year, is attributable to the cost of sales efficiencies. The increase in gross margin percentage foreconomic impact that COVID-19 has had on the three months ended March 31, 2020, is due to a greater proportionate reduction in cost of sales from cost controls for medical supply purchases and the ability to perform treatments using fewer staff members than the reduction in revenue.Company.

Operating Expenses

For the three months ended March 31, 2020Salaries and 2019, theRelated Costs

The Company incurred approximately $1,224,000 and $1,533,000 in salaries and related costs of approximately $535,000 and $1,783,000 for the three and nine months ended September 30, 2021, respectively. The decrease inCompany incurred salaries and related costs is mainly attributable to a reduction in executive compensation. The Company anticipates that salariesof approximately $606,000 and related costs will be further reduced in$2,425,000 for the three and nine months ended September 30, 2020, as the company shifts its business model in its pursuit of becoming a leading biomedical services company and due to its recent cost reduction measures effective in March 2020.respectively.

For the three months ended March 31, 2020

Other General and 2019, theAdministrative

The Company incurred approximately $1,230,000 and $1,488,000 in other general and administrative costs of approximately $789,000 and $2,229,000 for the three and nine months ended September 30, 2021, respectively. The Company incurred other general and administrative costs of approximately $542,000 and $2,807,000 for the three and nine months ended September 30, 2020, respectively. The decrease, as compared to the prior year, is primarily attributable to reduction in operating activities in the DenerveX division.economic impact that COVID-19 has had on the Company.

Of the total other general and administrative costs, approximately $332,000 and $813,000 were related to professional fees for the three and nine months ended March 31, 2020 and 2019, professionalSeptember 30, 2021. Professional fees were approximately $316,000$393,000 and $369,000, respectively.$1,179,000 for the three and nine months ended September 30, 2020. Professional fees consist primarily of accounting, legal, patent and public company compliance costs as well as regulatory costs incurred in 2019 to maintain CE Mark in Europe.costs.

Research and Development

The Company anticipates that the other general and administrative expenses will continue at a comparable rate in the future and include the continued costs of operating as a public company.

For the three months ended March 31, 2020 and 2019, the Company incurred approximately $750,000 and $0 in research and development expenses of approximately $3,000 for the three and nine months ended September 30, 2021. The Company incurred research in development expenses of approximately $202,000 and $1,152,000 for the three and nine months ended September 30, 2020, respectively. The $1,152,000 expense in 2020 was in connection with the Rion Services Agreement. An additional $750,000 in expense will beagreements.

Advertising

The Company incurred uponadvertising costs of approximately $59,000 and $224,000 for the achievementthree and nine months ended September 30, 2021, respectively. The Company incurred advertising costs of certain milestones inapproximately $52,000 and $222,000 for the Rion Services Agreement. At this time,three and nine months ended September 30, 2020, respectively. The increase, as compared to the prior year, is attributable to the economic impact that COVID-19 had on the Company is not able to estimate when these milestones will occur.

Forin 2020 as the clinics were temporarily closed during the three months ended March 31,September 30, 2020, and 2019,resulting in a reduction in marketing spend during the Company had approximately $145,000 and $1,136,000, respectively, in advertising costs. The decrease is attributable mainly to the Company determining that its marketing channels were not yielding the expected results for promoting the Company’s Biosciences division. The Company expects these expenses will continue at these reduced rates until the LHI clinics are reopened and patients are being treated again.temporary closure.

For the three months ended March 31, 2020 and 2019, the Company recognized approximately $22,000 and $211,000 respectively, in depreciation and amortization expense. The decrease is mainly attributable to amortization expense declining from $184,000 in the three months ended March 31, 2019 to $0 in the three months ended March 31, 2020 due to the complete write-off of intangibles at fiscal year-end 2019.

Interest expense for the three months ended March 31, 2020 and 2019 was approximately $56,000 and $92,000, respectively. The decrease is attributable to the inclusion of debt instrument accretion for the period ended March 31, 2019 in the amount of $64,000.

The change in fair value of redemption put liability and change in fair value of the derivative liability - warrants for the three months ended March 31, 2020 were approximately $194,000 and $175,000, respectively. The redemption put liability is related to the Series D preferred stock financing in the fourth quarter of 2019. The Series B preferred stock’s derivative liability-warrants was recorded as a measurement period adjustment to the purchase price allocation related to the RMS Transaction in the third quarter of 2019.

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

On February 29, 2020, the Company accepted the resignations of Briley Cienkosz, Chief Marketing Officer, and Gary Mancini, Chief Relationship Officer, for personal reasons and not as a result of any disputes or disagreements.

On May 7, 2020,January 12, 2021, Mr. William Horne the Company’s CEO and Chairman tendered his resignation as CEO effective when the Company finds a suitable replacement with more FDA experience. Until such successor is retained, Mr. Horne will remain as the CEO. Mr. Horne’s resignation does not go to his positionstepped down as Chairman of the Board orof directors (the “Board”) of the Company. Mr. Horne will remain a member of the Board.

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

On September 28, 2021, Mr. Robert Greif’s employment agreement with H-Cyte, Inc. (the “Company”) expired, ending his term as the Company’s Chief Executive Officer. The Company chose not to renew his employment agreement. Ms. Tanya Rhodes, the Company’s Chief Technology Officer, will serve as interim Chief Executive Officer of the Company. She will continue to receive a Director. The resignation was not asconsulting fee of $253,000 per year pursuant to her existing consulting arrangement. Ms. Rhodes is an innovative, growth-oriented leader in the healthcare industry with a resultbroad base of any disagreement withinternational experience in all aspects of operational business including R&D, clinical and regulatory, and business development. Ms. Rhodes has a demonstrated record of accomplishment for bringing new technologies from concept through commercialization and possesses an in-depth knowledge of biological tissues, enzymes, stem cells, antimicrobials, and natural products. Prior to joining the Company or its policieson June 15, 2020, Ms. Rhodes held various C-level positions in many sectors, including wound care, dermatology, aesthetics and practices.plastic surgery. Ms. Rhodes was the Vice President of Innovation for Smith & Nephew and a global executive team member driving a $450 million dollar business. Ms. Rhodes has served as President of Rhodes & Associates since 2016 through which, Ms. Rhodes has held long-term contracts with medical device and drug companies as well as private equity companies. Ms. Rhodes completed her PhD in molecular orbital computational chemistry in the United Kingdom and received a Masters degree in the Management of Technology in the United States.

Funding Requirements

The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as the Company’s generating activities are temporarily suspended and as the Company implements its business plan to focus on taking the L-CYTE-01 protocol to the FDA for treatment of chronic lung diseases.Biologics Division. The Company will need to raise cash from debt and equity offerings following the closing of this rights offerings to continue its operations. There can be no assurance that the Company will be successful in doing so.

Going Concern

The Company incurredreported net losses of approximately $2,416,000 and $3,695,000$4,052,000 for the threenine months ended March 31, 2020 and 2019,September 30, 2021, respectively.

The Company’s independent registered public accounting firm has included an explanatory paragraph with respect to the Company’s ability to continue as a going concern in its report on the Company’s consolidated financial statements for the year ended December 31, 2019.2020. The presence of the going concern explanatory paragraph suggests that the Company may not have sufficient liquidity or minimum cash levels to operate the business. Since its inception, the Company has incurred losses and anticipates that the Company will continue to incur losses until its products can generate enough revenue to offset its operating expenses. The present level of cash is insufficient to satisfy our current operating requirements.requirements and Biologics Division business model.

There can be no assurance that the Company will be able to raise additional funds or that the terms and conditions of any future financings will be workable or acceptable to the Company or its shareholders. If the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings, or raising equity capital, the Company may be forced to discontinue 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 the event the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings or raising equity capital, the Company may be forced to reduce our expenses, or discontinue 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.

Liquidity and Sources of Liquidity

With the Company historically having experienced losses, the primary source of liquidity has been raising capital through debt and equity offerings, as described below.

Recent Financing DevelopmentsDebt

On March 27, 2020, the Company issued a demand note in the principal amount of $500,000 to FWHC Bridge, in exchange for a loan in such amount. On April 9, 2020, the Company and FWHC Bridge amended and restated the demand note (as so amended and restated, the “FWHC Note”) to reflect the funding by FWHC Bridge of an additional advance of $500,000, bringing the aggregate amount of indebtedness funded by FWHC Bridge to $1,000,000. The FWHC Note bears simple interest at a rate of 12% per annum. FWHC Bridge is an affiliate of FWHC, a pre-existing stockholder of the Company, who served as lead investor in the Company’s recent offering of Series D preferred stock. FWHC Bridge also served as the lead purchaser under the April SPA referenced above. At the closing of the April SPA, the FWHC Note was converted into an April Secured Note in the original principal amount of $1,000,000 and issued to FWHC Bridge and such April Secured Note was deemed by all parties to be an amended and substitution of the original FWHC Note.

On April 29, 2020, the Company issued a promissory note (the “PPP Note”) in the principal amount of $809,082 to the Bank of Tampa in connection with a loan in such amount made by the Bank of Tampa under the Payroll Protection Program (the “PPP”). The PPP Note bears interest at a rate of 1% per annum. The PPP Note is payable in 18 monthly payments of $45,533.23 commencing 6 months from the date of the PPP Note. While the PPP Note is dated April 29, 2020, the loan was not formally approved and funded until May 7, 2020.

The loan is re-payable in 18 monthly payments commencing November 29, 2020. The Company can apply for loan forgiveness in an amount equal to the sum of the following costs incurred by the Company:

1) payroll costs;

2) any payment of interest on covered mortgage obligations;

3) any payment on a covered rent obligation; and

4) any covered utility payment

The amount forgiven will be calculated (and may be reduced) in accordance with the PPP. Not more than 40% of the amount forgiven can be attributed to non-payroll costs.

Debt

On April 17, 2020, and in subsequent April closings, the Company entered into the April SPAa Secured Convertible Note and Warrant Purchase Agreement (the “April SPA”) with the Purchasersthirty three investors (the “Purchasers”) pursuant to which the Company received an aggregate of $2,842,695 in gross proceeds through the sale to the Purchasers of Secured Convertible Promissory Notes (the “April Secured Notes”) and warrants (the “April Warrants”) to purchase shares of common stock of the April Secured Notes and April Warrants (which number includes a subsequent investor for $7,500)Company (the “April Offering”). After taking into account subsequent closings occurring after April 17, 2020, an aggregate of thirty-three Purchasers participated in the April Offering by purchasing April Secured Notes and April Warrants. The proceeds of the April Offering will be used for working capital and general corporate purposes. The April Offering resulted in the issuance of April Secured Notes to Purchasers in gross proceedsan aggregate principal amount of $2,842,695. As part of$3,842,695. This sum included the April Offering, the FWHC Note previously issuedissuance by the Company was amended and superseded byto FWHC Bridge, LLC (the “Investor) of an April Secured Note in the amount of $1,000,000 to amend and supersede the A&R Note (see below “Short-term Notes, Related Parties”) previously issued by the Company to the Investor on April 9, 2020. The Investor is an affiliate of FWHC Bridge.Holdings, LLC, a pre-existing shareholder of the Company, which served as lead investor in the Company’s recent Series D Convertible Preferred Stock Offering. Additionally, in connection with the April Offering, the Company entered into an amendment with FWHC Bridgethe Investor with respect to the outstanding 12% Senior Secured Convertible Note due September 30, 2020, which was originally issued in 2018 and assumed in the RMS TransactionMerger and which was purchased by FWHC Bridgethe Investor from its original holder, George Hawes, on March 27, 2020 (the “Hawes Note”). The Hawes Notes had a principal amount of $424,615 as of March 31, 2020 and December 31, 2019.2020. The amendment to the Hawes Note among other things, eliminateseliminated the requirement that the Company make monthly payments of accrued interest. The Hawes Note is expected to convert into shares of Series A preferred stock of the Company at the closing of this rights offering.

As part of the April Offering, the holders of certain existing warrants issued by the Company which contained anti-dilution price protection entered into agreements terminating all anti-dilution price protection in their warrants. The Company intends to implement a one-time reduction of the exercise price of such warrants to be equal to the Subscription Price in connection with this rights offering.price per share at which shares of preferred stock are offered for purchase at the Qualified Financing once that price has been established.

The short-term notes, related parties, as of March 31, 2020 totaling $2,135,000 is comprised of loans made to the Company during 2019, by Horne Management, LLC, controlled by Chief Executive Officer, William E. Horne aggregating $1,635,000 and a Note in the FWHC Note.amount of $500,000 from the Investor. On April 17, 2020, Mr. Horne agreed to convert the notes plus accrued interest owed to Horne Management, LLC, convertedat the loanstime of the Qualified Offering, into 4,368,278 shares of common stock and a ten-year warrant to purchase up to an equivalent number of shares of the Company’s common stock at the Subscription Price. AsQualified Offering price of $0.014.

On September 11, 2020, the right to participate in the registered rights offering (Registration No. 333-239629) of the Company expired. Pursuant to the rights offering, on September 24, 2020, the Company issued (i) 15,235,381 shares of its Series A preferred stock at a price of $0.014 per share to holders of its common stock who validly exercised their subscription rights prior to the expiration time and (ii) 203,049,643 shares of its Series A preferred stock to the standby purchasers as part of the standby commitment. The rights offering, including the standby component, resulted in gross proceeds to the Company of $3,055,985. While the rights offering expired on September 11, 2020, it was not consummated until September 24, 2020 while logistical closing conditions including the calculation and clearance of funds were being processed.

In addition, on September 24, 2020, the Company issued an aggregate of 323,844,416 shares of its Series A preferred stock to the holders of outstanding promissory notes in the aggregate principal amount and accrued interest of $4,483,617. The notes were converted pursuant to a mandatory conversion triggered by the completion of the rights offering. Such shares were issued under an exemption from registration in reliance on Section 3(a)(9) of the Securities Act. The original notes were issued in reliance on Section 4(a)(2) of the Securities Act.

On April 1, 2021, the Company, entered into a Secured Convertible Note Purchase Agreement (the “April 2021 Note Purchase Agreement”) with five (5) 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, 2022 with an annual interest 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 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, provided $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 Offering,2021 Note Purchase Agreement.

On October 14, 2021, H-Cyte, Inc. (the “Company”) entered into the Second Closing Bring Down Agreement (the “October 2021 Note Purchase Agreement”) whereby the five (5) 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, 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 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 $7,500 as part of the October 2021 Note was converted into an April Secured Note andPurchase Agreement.

Interest expense is no longer a short-term note.

Cash activities forbeing accreted to the principal balance using the effective interest method. For the three months ended March 31, 2020 and 2019 is summarized as follows:

Working Capital Deficit

Cash Flows

Cash activity for the threenine months ended March 31, 2020 and 2019 is summarized as follows:

As of March 31, 2020,September 30, 2021, the Company had approximately $122,000recorded interest expense of cash on hand.$30,445 for related party convertible notes payable and $20,962 for convertible notes payable and $59,665 for related party convertible notes payable and $41,080 for convertible notes payable, respectively.

Contractual Obligations

Equity

On September 11, 2020, the right to participate in the registered rights offering (Registration No. 333-239629) of the Company expired. Pursuant to the rights offering, on September 24, 2020, the Company issued (i) 15,235,381 shares of its Series A preferred stock at a price of $0.014 per share to holders of its common stock who validly exercised their subscription rights prior to the expiration time and Commercial Commitments

(ii) 203,049,643 shares of its Series A preferred stock to the standby purchasers as part of the standby commitment. The short-term notes, related parties, as of March 31, 2020 totaling $2,135,000 is comprised of loans maderights offering, including the standby component, resulted in gross proceeds to the Company during 2019,of $3,055,985. While the rights offering expired on September 11, 2020, it was not consummated until September 24, 2020 while logistical closing conditions including the calculation and clearance of funds were being processed.

On September 24, 2020, the Company issued an aggregate of 323,844,416 Preferred A shares to holders of outstanding promissory notes in the aggregate principal amount, accrued interest, and conversion of certain warrants totaling $4,483,617. The notes were converted pursuant to mandatory conversion triggered by Horne Management, LLC, controlled by Chief Executive Officer, William E. Horne aggregating $1,635,000the completion of the rights offering. Such shares were issued under an exemption from registration in reliance on Section 3(a)(9) of the Securities Act. The original notes were issued in reliance on Section 4(a)(2) of the Securities Act. As a result of their participation in the backstop portion of the rights offering and the conversion of their promissory notes, FWHC Note. On April 17, 2020, Mr. Horne agreed to convert the notes plus accrued interest owed to Horne Management.Holdings, LLC into 4,368,278 sharesbecame beneficial owners of common stock and a ten-year warrant to purchase up to an equivalent number of sharesapproximately 61% of the Company’s outstanding common stock at the Subscription Price. Asstock. This percentage includes shares owned by FWHC Bridge, LLC and FWHC Bridge Friends, LLC who have indicated that they are part of a group with FWHC Holdings, LLC.

Working Capital Deficit

Working capital as of September 30, 2021 and December 31, 2020 is summarized as follows:

Cash Flows

Cash activity for the April Offering,nine months ended September 30, 2021 and 2020 is summarized as follows:

As of September 30, 2021, the FWHC Note was converted into an April Secured Note and is no longerCompany had approximately $307,000 of cash on hand.

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 short-term note.party to any derivative contracts or synthetic leases.

Years

Result of Operations – Year Ended December 31, 20192020 Compared to Year Ended December 31, 20182019

The following table sets forth certain operational data including their respective percentages of revenues for the years ended December 31, 20192020 and 2018:2019:

H-Cyte, Inc

Statement of Operations

Revenue and Gross Profit

Revenue is derived predominantly from the Company’s Biosciences division, which resulted in revenue, net of allowance for refunds, for the year ended December 31, 20192020 and December 31, 2018,2019, of approximately $8,347,000$2,151,000 and $7,883,00,$8,347,000, respectively. The increasedecrease in revenue is mainly attributable to an increase in the number of treatments provided to the Company’s patients. The additional patient volume is directly related to an increase in advertising expenditures in year ended December 31, 2019 compared to year ended December 31, 2018 as discussed below in the advertising section.

Forfor the year ended December 31, 20192020, as compared to the prior year is attributable to suspending operations, the permanent closure of two of the five LHI clinics, and the ongoing effects due to COVID-19 to the Biosciences division.

For the years ended December 31, 2020 and December 31, 2018,2019, the Company generated a gross profit totaling approximately $6,294,000 (75%$1,384,000 (64% of revenue) and $5,517,000 (70%$6,294,000 (75% of revenue), respectively. The improvementdecrease in gross marginrevenue is primarily attributabledue to the Company’s reductioneffects of COVID-19. Gross profit decreased in 2020 compared to 2019 due to the Company using part-time medical staff to treat its patients in Tampa and Scottsdale causing cost of sales coupled with an increase in revenues. In 2019, the Company performed more treatments with fewer clinical staff resulting in higher revenuefor patient care to increase.

Salaries and lower personnel expenses. The Company possesses the opportunity to increase the number of treatments performed without increasing personnel costs as it can leverage the current level of personnel until the Company’s treatment volume reaches critical mass. However, upon an increase in treatment volume beyond that capacity, the Company will need to hire additional personnel.Related Costs

Operating Expenses

We classify our operating expenses into the following categories: salaries and related costs, other general and administrative, advertising, loss on impairment and depreciation and amortization.

For the yearyears ended December 31, 20192020 and December 31, 2018,2019, the Company incurred approximately $8,646,000$3,199,000 and $3,779,000,$8,646,000, respectively, in salaries and related costs. Included in salaries and related costs for the year ended December 31, 2019 was approximately $1,690,000 in compensation expense related to the common stock issued to Mr. William E. Horne, former Chief Executive Officer (“CEO”), on April 25, 2019. These shares were fully vested upon the issuance of a restricted stock award. The remaining increase in salaries and related costs is primarily attributable to the year ended December 31, 2018 reflecting only the expenses of the RMS Group and 2019 reflecting the consolidated costs for H-CYTE. Excluding the non-recurring stock compensation expense of approximately $1,690,000, the Company anticipates thatrealized a decrease in salaries and related costs will decrease infor the periods ending December 31, 2020 as the company shifts its business model in its pursuit of becoming a leading biomedical services company andcompared to December 31, 2019, due to its recent cost reduction measures effective in March 2020 primarily in response to the COVID-19 pandemic. The Company made the decision in late March 2020, to layoff approximately 40% of its employee base, including corporate and clinical employees and to cease operations at the LHI clinics in Tampa, Nashville, Scottsdale, Pittsburgh, and Dallas. The Company reopened operations in August 2020 at its clinics in Tampa, Nashville, and Scottsdale. The clinics in Pittsburgh and Dallas did not reopen and were closed permanently.

Other General and Administrative

For the yearyears ended December 31, 20192020 and December 31, 2018,2019, the Company incurred approximately $6,954,000$3,747,000 and $3,352,000,$6,847,000, respectively, in other general and administrative costs. The increasedecrease is attributable to the year ended December 31, 2018 reflecting only the expenses of RMS and 2019 reflecting the consolidated costs for H-CYTE. Other general and administrative cost increases are attributable to increases in professional fees, contractors, and insurance expenses. Professional fees consist primarily of accounting, legal, patent and public company compliance costs as well as regulatory costs incurred to maintain CE Mark in Europe. The Company has incurred additional accounting, consulting and legal fees due to the cost of being a public company and costs related to the reverse acquisition accounting in 2019. Contractor expenses consist primarily of advertising contractors and other professionals utilized for public company administrative expenses. Insurance expenses increased mainly to the additional Directors and Officers insurance which RMS, as a private company, did not have. The Company anticipates that the other general and administrative expenses will decrease in 2020 as the company shifts its business model in its pursuit of becoming a biomedical services company and due to its recent cost reductionsaving measures effective in March 2020 due to a change in the business model and in response to the COVID-19 pandemicpandemic. The Company made the decision in late March 2020, to layoff approximately 40% of its employee base, including corporate and clinical employees and to cease operations at the LHI clinics in Tampa, Nashville, Scottsdale, Pittsburgh, and Dallas. The Company reopened operations in August 2020 at its clinics in Tampa, Nashville, and Scottsdale. The clinics in Pittsburgh and Dallas did not reopen and were closed permanently.

Advertising

For the yearyears ended December 31, 20192020 and December 31, 2018,2019, the Company had approximately $4,910,000$297,000 and $1,876,000,$4,910,000, respectively, in advertising costs. The increases weredecrease is attributable to increased marketing efforts to promotea shift in the Company’s Biosciences division.marketing plan and cost saving measures in response to the COVID-19 pandemic. The Company expects these expensesre-evaluated its marketing plan in 2020 and decided to decrease significantly asreduce marketing spend during the Company was not receiving the expected returnCOVID-19 pandemic.

Loss on investment related to marketing expense and changed its strategy in 2020.Impairment

The Company recorded a loss on impairment for its DenerveX technology of approximately $2,944,000 and its goodwill totaling approximately $2,944,000 and $12,564,000 respectively, for the year ended December 31, 2019.As the Company has determined that the DenerveX System no longer represents part of its strategic plans for the future, the loss on impairment of the technology was recorded. The Company also determined the fair value of the reporting unit was less than the carrying amount of goodwill. As a result, during the fourth quarter of 2019 the Company recorded a goodwill impairment charge.

For the year ended December 31, 2018,2020, the Company did not have impairment losses.

Depreciation & Amortization

For the year ended December 31, 2020, the Company recognized approximately $607,000 in impairment loss related to the write-off of capitalized costs for the design and development of an application to be sold on the iOS and Android store platforms.

During year ended December 31, 2019, the Company recognized approximately $834,000$81,000 in depreciation and amortization expense, compared to approximately $95,000$834,000 in 2018.2019. The increasedecrease is primarily attributable to amortization of the technology intangible asset acquired in the RMS Transaction. The expense for 2020 will be significantly lower due to the loss on impairment recorded for year ended December 31, 2019.

Interest expenseMerger for the year ended December 31, 2019. The expense for 2020 was significantly lower due to no amortization recorded in 2020.

Other Income (Expense)

For the years ended December 31, 2020 and 2019, and 2018interest expense was approximately $299,000$1,463,000 and $184,000,$299,000 respectively. The increase is attributable to new financing being arranged for the debt assumed inyear ended December 31, 2020 along with the RMS Transaction as well asclosing of the additional debt financing in 2019. This expense may grow in 2020 as a result of potential incremental debt financing.Rights Offering on September 11, 2020.

The change in fair value of redemption put liability and change in fair value of the derivative liability -– warrants for the year ended December 31, 2019 were approximately $347,000 and $827,000, respectively, and was a result of the assumption of the Series B Convertible Preferred Stock in the RMS TransactionMerger and the Series D Convertible Preferred Stock financing in 2019, respectively.

Cash Flows

Net cash used The change in operating activities was approximately $12,291,00 duringfair value of redemption put liability and change in fair value of the derivative liability – warrants for the year ended December 31, 2019, compared2020 were approximately $273,000 and $2,987,000, respectively, and was a result of the change in fair value at the end of each reporting period and was subsequently reclassified to approximately $3,545,000 in 2018. Net cash used by investing activities was approximately $393,000 duringequity at the year ended December 31, 2019, compared to approximately $23,000 duringclose of the year ended December 31, 2018. Net cash provided by financing activities was approximately $14,039,000 during the year ended December 31, 2019, compared to approximately $3,386,000 in 2018.Rights Offering (see Note 12).

Liquidity, Sources of Liquidity, and Going Concern

The Company had approximately $1,424,000$1,641,000 and $70,000$1,424,000 of cash on hand at December 31, 2020 and 2019, and 2018, respectively.

Liquidity and Sources of Liquidity

With the Company historically having experienced losses, the primary source of liquidity has been raising capital through debt and equity offerings, as described below.

Equity

During the first quarter of 2019, the Company entered into a securities purchase agreement (the “SPA”) with purchasers pursuant to which the purchasers invested in the Company an aggregate amount of $7,200,000, with $7,000,000 in cash and $200,000 by cancellation of debt. All the convertible notes from the SPA were automatically converted into shares of common stock.

In July 2019, the Company raised $100,000 by selling 200,000 shares of common stock at $0.50 per share.

On November 21, 2019, H-CYTE entered into a securities purchase agreement (the “Series D SPA”) with FWHC, an accredited investor, for the purchase of 146,998 shares of Series D preferred stock, par value $0.001 per share and a ten-year warrant to purchase up to 14,669,757 shares of common stock at an exercise price of $0.75 per share (the “Warrant”) resulting in $6.0 million in gross proceeds to the Company (the “FWHC Investment”). In January 2020, the Company closed on an additional $100,000 in the Series D SPA with an unrelated investor.

Short-term Notes, Related Party

The short-term note, related party, as of December 31, 2019, totaling $1,635,000 is comprised of four loans made to the Company during 2019, by Horne Management, LLC, controlled by Chief Executive Officer, William E. Horne. These were advanced for working capital purposes. In connection with the April Offering, these loans were converted into 4,368,278 shares of common stock and a ten-year warrant to purchase up to an equivalent number of shares of the Company’s common stock at the Subscription Price and such loans are no longer outstanding.

A loan for $900,000 was made on July 25, 2019. This loan accrues interest at 5.5% and is due and payable upon demand of the creditor.

Three loans were made between September and December 2019 totaling $735,000, with interest rates of 12% increasing to 15% if not repaid by maturity (six months after advance) and if not repaid within two months of advance, warrant coverage of approximately 1.14 warrants per $1 advanced. As part of the April Offering (as defined herein), Mr. Horne subordinated his notes to the April Secured Notes. YPH Holdings, LLC, which is controlled by Michael Yurkowsky, purchased a $25,000 April Secured Note in the April Offering.

Other Debt Acquired in the RMS Transaction

The $750,000 convertible notes payable assumed in the RMS Transaction, had a fair value of approximately $598,000 on the acquisition date. Subsequently, on February 6, 2019, $100,000 of the outstanding convertible notes was converted into an aggregate of 250,000 shares of common stock. The $650,000 remaining principal balance of these convertible notes matured in August and September 2019.

In November 2019 the Company redeemed $350,000 of convertible notes payable in principal, and $52,033 and $80,225 in accrued interest and penalties, respectively, for three of the noteholders.

The Company also reached an extension with the remaining noteholder which extended the maturity date of the loan for one year, until September 30, 2020. This note had a principal balance of $300,000 plus penalties of approximately $85,000 and accrued interest of approximately $40,000 for a total adjusted principal balance upon renewal of approximately $425,000 for the year ending December 31, 2019. Additionally, approximately 424,000 warrants were issued in connection with the extension of the note. The convertible notes are secured by all the assets of the Company.

On March 27, 2020, this remaining outstanding note was acquired from the noteholder by FWHC Bridge, an affiliate of FWHC, a pre-existing stockholder of the Company, which served as lead investor in the Series D SPA described above.

The Company also has certain notes payable with outstanding balances of approximately $78,000 and $0 at December 31, 2019 and 2018, respectively. The notes had a maturity date of August 1, 2019, but the Company successfully reached an agreement on August 12, 2019 for an eighteen-month extension on the notes.

Funding Requirements, Liquidity and Going Concern

The Company incurred net losses of approximately $29,808,000$6,459,000 and $4,394,000$29,808,000 for the years ending December 31, 20192020 and 2018,2019, respectively. The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as the Company’s generatingrevenue activities are temporarily suspended and as the Company implements its business plan to focus on taking the L-CYTE-01 protocol to the FDA for treatment of chronic lung diseases.plan. The consolidated financial statements are prepared using United States generally accepted accounting principles in the United States (“U.S. GAAP”) as applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.concern.

The Biosciences division will continue to incur losses until sufficient revenue is attained utilizing the infusion of financialcapital resources to expand marketing and sales initiatives along with the development of a L-CYTE-01biologics protocol as well asand taking thethat protocol through the FDA process.

The recent coronavirus outbreak (“COVID-19”)COVID-19 has adversely affected the Company’s financial condition and results of operations. The impactIn the first quarter of the outbreak of COVID-19 on the businesses and the economy in the U.S. and the rest of the world is and is expected to continue to be significant. The extent to which the COVID-19 outbreak will impact business and the economy is highly uncertain and cannot be predicted. Accordingly,2020, the Company cannot predict the extent to which its financial condition and results of operation will be affected. The Company recently has takentook steps to protect its vulnerable patient base (elderly patients suffering from chronic lung disease) by cancelling all treatments effective March 23, 2020 through at least the end of July. This decision has put significant financial strain on the Company.July 2020. The Company also made the decision in late March, to layoff approximately 40% of its employee base, including corporate and clinical employees, and to cease operations at the LHI clinics located in Tampa, Scottsdale, Pittsburgh, Nashville, and Dallas. The Company will reevaluate whenresumed operations will recommencein August at these clinics as more information about COVID-19 becomes available.

the Tampa, Nashville, Scottsdale, and Pittsburgh clinics. The Pittsburgh clinic ceased operations permanently at the end of October 2020. The Dallas clinic did not re-open and was closed permanently. The Company believesbelieved these expense reductions arewere necessary during the unexpected COVID-19 pandemic. Due to COVID-19, the Company is not expecting to be able to generate revenue until, at the earliest, August 2020.

The Company has contactedupdated its patients that are scheduledbusiness model to come in for treatment, both first time patientsdecrease corporate overhead and recurring patients, and have rescheduled these patientsmarketing expense to August 2020. There is no guarantee that the Company will be able to treat patients as soon as August 2020; as such, the Company cannot estimate when it will be safe to treat patients and generate revenue.significantly reduce expenses. The Company’s fourth quarter 2019 revenue was approximately $1.8 million. The Company’s revenue in the first quarter of 2020 was substantially less than that of the fourth quarter in 2019 and the Company believes that future quarters’ revenue is dependent onas COVID-19 begins to dissipate due to vaccinations being administered nationwide, that patients will again feel comfortable traveling to one of the timingLHI clinics for being able to treat patients again.treatment. The Company will continuecontinues to focus on its goal of takingdeveloping a new FDA approved cellular therapy for the L-CYTE-01 protocol to the FDA for treatment of chronic lung diseases.disease.