BioRestorative Therapies Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Amendment No. 1 to the Annual Report on Form 10-K/A, which was filed on June 11, 2024.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Amendment No. 1 to the Annual Report on Form 10-K/A, which was filed with the Securities and Exchange Commission (the “SEC”) on June 11, 2024.

Previous wording

This Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 11, 2024, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements. These risks and factors include, by way of example and without limitation:

Current wording

This Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023, as filed with the SEC on June 11, 2024, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements. These risks and factors include, by way of example and without limitation:

Previous wording

As of March 31, 2024, our accumulated deficit was $148,922,589. We have historically only generated a modest amount of revenue, and our losses have principally been operating expenses incurred in research and development, marketing and promotional activities in order to commercialize our products and services, plus costs associated with meeting the requirements of being a public company. We expect to continue to incur substantial costs for these activities over at least the next year.

Current wording

As of June 30, 2024, our accumulated deficit was $152,951,151. We have historically only generated a modest amount of revenue, and our losses have principally been operating expenses incurred in research and development, marketing and promotional activities in order to commercialize our products and services, plus costs associated with meeting the requirements of being a public company. We expect to continue to incur substantial costs for these activities over at least the next year.

Previous wording

We derived all of our revenue pursuant to a license agreement with the SCTC entered into in January 2012, as amended in November 2015 and November 2022. Pursuant to the license agreement, the SCTC granted to us an exclusive license to use certain intellectual property related to, among other things, stem cell disc procedures and we have granted to the SCTC a sublicense to use, and the right to sublicense to third parties the right to use, in certain locations in the United States and the Cayman Islands, certain of the licensed intellectual property. In consideration of the sublicenses, the SCTC has agreed to pay us royalties on a per disc procedure basis.

Current wording

We derived some of our revenue pursuant to a license agreement with a stem cell treatment company (the “SCTC”) entered into in January 2012, as amended in November 2015 and November 2022. Pursuant to the license agreement, the SCTC granted to us an exclusive license to use certain intellectual property related to, among other things, stem cell disc procedures and we have granted to the SCTC a sublicense to use, and the right to sublicense to third parties the right to use, in certain locations in the United States and the Cayman Islands, certain of the licensed intellectual property. In consideration of the sublicenses, the SCTC has agreed to pay us royalties on a per disc procedure basis.

Previous wording

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

Current wording

For the three months ended June 30, 2024 and 2023, we generated $19,800 and $64,500, respectively, of royalty revenue in connection with our sublicense agreement with the SCTC primarily due to a decrease in disc procedures which we expect will increase in future periods.

Previous wording

General and administrative expenses consist primarily of salaries, bonuses, payroll taxes and stock-based compensation to employees, as well as corporate expenses such as legal and professional fees, investor relations and occupancy-related expenses. For the three months ended March 31, 2024, general and administrative expenses decreased by $1,492,532, or 33%, as compared to the three months ended March 31, 2023, primarily driven by a decrease in stock-based compensation expense of $1,350,121 due to options granted in 2021 and 2022 that became fully vested in 2023 and a decrease in headcount costs of $243,171, partially offset by an increase in legal and professional fees expense of $64,628 primarily related to our warrant exercise program.

Current wording

General and administrative expenses consist primarily of salaries, bonuses, payroll taxes and stock-based compensation to employees, as well as corporate expenses such as legal and professional fees, investor relations and occupancy-related expenses. For the three months ended June 30, 2024, general and administrative expenses decreased by $1,018,925, or 45%, as compared to the three months ended June 30, 2023, primarily driven by a decrease in stock-based compensation expense of $1,161,346 related to vesting of awards, partially offset by an increase in professional fees of approximately $111,711 primarily related to the recent restatement of our historical financial statements.

Previous wording

For the three months ended March 31, 2024, interest income was $162,597, compared to interest income of $18,216 for the three months ended March 31, 2023. The change was primarily due to interest and dividend income on the investments held in marketable securities.

Current wording

For the three months ended June 30, 2024, interest income was $175,945, compared to interest income of $96,187 for the three months ended June 30, 2023. The change was primarily due to interest and dividend income on the investments held in marketable securities.

Previous wording

For the three months ended March 31, 2024, other income primarily related to gains from settlements of certain accrued expenses and realized and unrealized gain on investments. For the three months ended March 31, 2023, other income primarily related to gains from settlements of certain accrued expenses and unrealized gain on investments.

Current wording

For the three months ended June 30, 2024 and 2023, other income primarily related to gains from settlements of certain accrued expenses and realized and unrealized gain on investments.

Previous wording

For the three months ended March 31, 2024 and 2023, we recognized a loss on the change in fair value of derivative liabilities of $137,319 and $1,488,350, respectively, related to the increase in fair value of warrants that are accounted for as derivative liabilities.

Current wording

For the three months ended June 30, 2024 and 2023, we recognized a loss on the change in fair value of derivative liabilities of $1,736,611 and $2,728,847, respectively, related to the increase in fair value of warrants that are accounted for as derivative liabilities.

Previous wording

Research and development expenses include cash and non-cash compensation of (a) our Vice President of Research and Development; (b) our Scientific Advisory Board members; and (c) laboratory staff and costs related to our brown fat and disc/spine initiatives. Research and development expenses are expensed as they are incurred. For the three months ended March 31, 2024, research and development expenses decreased by $173,614, or 14%, compared to the three months ended March 31, 2023. The decrease was primarily the result of a decrease in compensation costs of $237,383 related to a discretionary bonus during the 2023 period partially offset by an increase in laboratory expenses related to our Phase II clinical trial of $74,005. We expect that our research and development expenses will increase in subsequent fiscal periods.

Current wording

Research and development expenses include cash and non-cash compensation of (a) our Vice President of Research and Development; (b) our Scientific Advisory Board members; and (c) laboratory staff and costs related to our brown fat and disc/spine initiatives. Research and development expenses are expensed as they are incurred. For the six months ended June 30, 2024, research and development expenses increased by $215,677, or 10%, compared to the six months ended June 30, 2023. The increase was primarily the result of increased lab supply expense of $285,883 and increased payroll expense of $145,380, all partially offset by a decrease in bonus expense of $210,878. We expect that our research and development expenses will continue to increase in subsequent fiscal periods.

Previous wording

For the three months ended March 31, 2024, we recognized a gain on exchange of $1,711,698 related to the issuance of warrants and common stock in exchange for the cancellation of existing warrants.

Current wording

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

Previous wording

Working capital increased by $4,538,943 primarily due to the $7,518,489 of cash provided by financing activities which was partially offset by $2,317,780 of cash used to fund our operations.

Current wording

Working capital increased by $900,754 primarily due to the $7,505,646 of cash provided by financing activities which was partially offset by $4,182,945 of cash used to fund our operations and $1,954,831 of cash used to fund our investments.

Previous wording

Based upon our accumulated deficit of $148,922,589 as of March 31, 2024, along with our forecast for continued operating losses and our need for financing to fund our current and contemplated clinical trials, we will eventually require additional equity and/or debt financing to continue our operations. However, based on cash and cash equivalents and investments on hand, we believe we have sufficient cash to fund operations for at least 12 months after the issuance date of these financial statements.

Current wording

Based upon our accumulated deficit of $152,951,151 as of June 30, 2024, along with our forecast for continued operating losses and our need for financing to fund our current and contemplated clinical trials, we will eventually require additional equity and/or debt financing to continue our operations. However, based on cash and cash equivalents and investments on hand, we believe we have sufficient cash to fund operations for at least 12 months after the issuance date of these financial statements.

Previous wording

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

Current wording

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

Previous wording

Net cash used in operating activities was $2,317,780 for the three months ended March 31, 2024, primarily due to cash used to fund the net loss of $2,223,255, adjusted for net non-cash expenses of $381,174, and $475,699 of cash used in changes in operating assets and liabilities. Net cash used in operating activities was $2,379,277 for the three months ended March 31, 2023, primarily due to cash used to fund the net loss of $7,172,572, adjusted for net non-cash expenses of $4,871,267, and $77,972 of cash used in changes in operating assets and liabilities.

Current wording

Net cash used in operating activities was $4,182,945 for the six months ended June 30, 2024, primarily due to cash used to fund the net loss of $6,251,817, adjusted for net non-cash expenses of $2,351,582, and $282,710 of cash used in changes in operating assets and liabilities. Net cash used in operating activities was $3,662,831 for the six months ended June 30, 2023, primarily due to cash used to fund the net loss of $12,881,971, adjusted for non-cash expenses of $9,014,104, and $205,036 of cash provided by changes in operating assets and liabilities.

Previous wording

Net cash used in investing activities was $4,928,006 for the three months ended March 31, 2024 compared to net cash provided by investing activities of $2,539,169 for the three months ended March 31, 2023, primarily due to a sale of marketable securities, which provided $5,800,00 of cash and a purchase of marketable securities which used $10,728,006 of cash.

Current wording

Net cash used in investing activities was $1,954,831 for the six months ended June 30, 2024 primarily due to a purchase of marketable securities which used $12,784,535 of cash and a sale of marketable securities which provided $10,865,000 of cash. Net cash provided by investing activities was $3,358,199 for the six months ended June 30, 2023 primarily due to a sale of marketable securities which provided $10,982,932 of cash and a purchase of marketable securities which used $7,535,662 of cash.

Previous wording

Net cash provided by financing activities was $7,518,489 for the three months ended March 31, 2024 compared to no cash provided by financing activities for the three months ended March 31, 2023, due to net proceeds received in connection with the exercise and issuance of warrants.

Current wording

Net cash provided by financing activities was $7,505,646 for the six months ended June 30, 2024 due to net proceeds received in connection with the exercise and issuance of warrants, compared to $411,701 net cash provided by financing activities for the six months ended June 30, 2023 due to the net proceeds from the at-the-market offering of our Common Stock.

Previous wording

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

Current wording

We prepare our unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.