~~(The accompanying notes are an integral part of these condensed consolidated financial statements)~~

Note 1. Basis of Presentation, Organization, ~~Nature~~Liquidity and ~~Continuance of Operations,~~Going Concern, Recent Accounting Standards and Earnings (Loss) Per Share

The accompanying ~~interim~~ unaudited ~~condensed~~interim consolidated financial statements ~~and related disclosures~~ of RenovaCare, Inc. and Subsidiary ~~(the “Company”~~(“RenovaCare” or the “Company”) as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“~~SEC”~~SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. These Consolidated Financial Statements should therefore be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements and ~~notes~~Notes thereto for the fiscal year ended December 31, 2020 included in ~~the Company’s~~our Annual Report on Form 10-K ~~for~~filed with the ~~year ended December~~SEC on March 31, ~~2019, filed on May 14, 2020. Certain information and footnote disclosures normally included in the financial statements~~2021.

The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with ~~generally accepted accounting principles~~U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the ~~United States of America (“GAAP”)~~Consolidated Financial Statements and accompanying disclosures. Actual results may differ from those estimates. The accompanying unaudited interim consolidated financial statements have been ~~condensed or omitted.~~

Inprepared on the same basis as the audited financial statements and include all adjustments (including normal recurring adjustments) that are, in the opinion of management, ~~the interim condensed consolidated financial statements reflect all adjustments considered~~ necessary for a fair ~~statement~~presentation of the ~~interim periods. All such adjustments are~~Company’s consolidated financial position as of ~~a normal, recurring nature.~~September 30, 2021, results of operations and stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for ~~the~~any interim ~~periods~~period are not necessarily indicative of the results of operations ~~to be expected~~ for the ~~year ended December 31, 2020.~~

RenovaCare, Inc., formerly Janus Resources, is a Nevada corporation. RenovaCare, Inc. was incorporated under the laws of the State of Utah on July 14, 1983 ~~in the State of Utah under the name~~as Far West Gold, Inc., and changed its domicile to Nevada in 1997. On January 7, 2014, the Company changed its name at the time from “Janus Resources, Inc.” to “RenovaCare, Inc.” so as to more fully reflect its current operations and business, and changed its trading symbol from “JANI” to “RCAR” effective as of January 9, 2014.Inc..

~~RenovaCare~~The Company has an authorized capital of 500,000,000 shares of ~~$0.00001~~$0.00001 par value common stock, of which 87,352,364 shares are outstanding as of September 30, ~~2020,~~2021, and 10,000,000 shares of ~~$0.0001~~$0.0001 par value preferred stock, of which ~~none~~NaN are outstanding.

~~The Company focuses~~RenovaCare, Inc., through its wholly owned subsidiary, RenovaCare Sciences Corp. is a development-stage company focusing on the research, development and commercialization of autologous (using a ~~patient's~~patient’s own cells) cellular therapies that can be used for medical and aesthetic applications.

On July 12, 2013, the Company ~~through its wholly owned subsidiary, RenovaCare Sciences Corp.,~~ completed the acquisition of its flagship technologies (collectively, the “CellMist^TMSystem”) ~~along with associated United States patent applications and two foreign patent applications, all of which have been granted. In August 2019,~~. The CellMist™ System is a cell isolation procedure that enzymatically renders stem cells from the ~~Company was awarded a continuation of a patent allowing~~ patient’s own skin or other tissues. The resulting stem cell suspension is administered topically from the Company’s novel solution sprayer device (the “SkinGun^TM”) as a cell therapy onto wounds including burns to ~~be used to spray all varieties of tissues and cells, thus allowing for its potential application in the regeneration of tissues and organs, beyond skin.~~facilitate healing.

~~The~~ ~~CellMist~~^TM ~~System~~ ~~is comprised~~Currently, our proprietary technologies are the subject of ~~(a) a treatment methodology for cell isolation for~~and 43 U.S. and international patents or patent applications and 14 U.S. and international trademarks. Of the ~~regeneration of human skin cells (the “~~~~CellMist~~^TM ~~Solution~~”)issued patents, five are U.S. patents and ~~(b)~~twelve have issued or are allowed in Australia, Canada, Europe, Germany, France, Italy, Japan, Korea, Netherlands, Spain, Switzerland/Lichenstein, and United Kingdom.

On May 6, 2021 the~~SkinGun~~^TM ~~for delivering the cells to the treatment area. In August 2020, the Company announced that the US~~ Food and Drug Administration ~~(FDA) conditionally approved~~gave full-approval of the Company’s Investigational Device Exemption (IDE) application to ~~conduct a~~proceed with initial clinical ~~trial to evaluate~~testing of the ~~safety~~CellMist™ System and ~~feasibility of autologous skin and pluripotent stem cells rendered by its manual CellMist™ System from donor skin and applied topically with the electronic SkinGun™~~SkinGun™ spray device ~~for treatment of acute~~in adult burn wounds. The clinical trial protocol is an open-label single-arm clinical study that will enroll 14 adult human burn subjects with partial-thickness, second-degree thermal burn wounds covering between 10 and 30% total body surface area. The Company expects to conduct the clinical study at four (4) U.S. burn centers commencing in 2021.patients.

Improvements in the design and efficiency of the CellMist™ System including a closed, ~~self-contained, semi-automated sterile~~automated cell isolation device and the SkinGun™ spray device are in development with StemCell Systems (Berlin, Germany), the Company’s R&D innovation partner. The Company is adapting its core technologies for possible use in other clinical indications. The Company is also developing the cell isolation and spray gun devices as stand-alone ~~510 (k)~~510(k)-cleared products for isolation of cells from other tissues and spraying other solutions of medical importance.

~~The Company does not have any commercialized products.~~ The Company's activities have consisted principally of performing research and development activities and raising capital to support such activities. The Company has enlisted the assistance of several Contract Manufacturing Organizations (CMO) to manufacture clinical supplies including components of the CellMist System™ and the electronic SkinGun™ spray devices in compliance with FDA’s guidance for current Good Manufacturing Practices (cGMP) and Contract Research Organizations (CRO) to test and validate the Company’s products and processes and to conduct clinical trials tothat evaluate initially the safety and feasibility of an autologous skin cell therapy using the Company’s products to facilitate burn wound healing. These development activities are subject to significant risks and uncertainties, including possible failure of preclinical and clinical testing. The Company has not generated any revenue and has sustained recurring losses and negative cash flows from operations since inception. The Company expects to incur losses as it continues development of its products and technologies and expects that it will need to raise additional capital through partnerships or the sale of its securities to accomplish its business plan. Failing to secure such additional funding before achieving sustainable revenue and profit from operations poses a significant risk. The Company's ability to fund the development of its cellular therapies depends on the amount and timing of cash receipts from future financing activities. There can be no assurance as to the availability or terms upon which such financing and capital might be available. ~~Additionally, there is~~

The Company has prepared its consolidated financial statements on a “going concern” basis, which presumes that it will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Since Inception, the Company has incurred net operating losses and operating cash flow deficits. The Company does not currently generate revenues and will continue to incur losses from operations and operating cash flow deficits in the future. The Company's activities are subject to significant ~~uncertainty relating~~risks and uncertainties due to the ~~full impact~~stage of the ~~COVID-19 pandemic~~development of the Company's cellular therapies.

At September 30, 2021, the Company had approximately $3,400,000 in cash on hand. The Company estimates cash will be depleted in less than one year from the ~~Company’s operations and capital requirements. Should financing when needed~~date that these financial statements are available to be ~~unavailable or prohibitively expensive or~~issued, if the ~~COVID-19 pandemic continue, it may adversely affect~~Company does not generate sufficient cash to support operations.

The future of the ~~Company’s~~Company will depend on its ability to ~~(i) retain employees and consultants; (ii) obtain additional financing on terms acceptable~~successfully raise capital from external sources to fund operations. If the Company is unable to obtain adequate funds, or if ~~at all; (iii) delay regulatory submissions and approvals; (iv) delay, limit or preclude~~such funds are not available to it on acceptable terms, the Company from securing clinical study sites; (v) delay, limit or preclude the Company from achieving technology or product development goals, milestones, or objectives; and (vi) preclude or delay entry into joint venture or partnership arrangements. The occurrence of any one or more of such events may affect the Company’sCompany's ability to continue on its ~~pathway~~business to ~~commercialization of~~develop its ~~technology or products.~~cellular therapies will be significantly impaired and it may cause the Company to curtail operations.

The matters described above raise substantial doubt about the Company's ability to continue as a going concern within one year after the date these condensed consolidated financial statements were issued.

As of September 30, 2020, the Company had $8,671,295 of cash on hand and cash equivalents, and working capital of $8,182,984. As a result, the Company believes it currently has sufficient cash to meet its funding requirements over the next twelve months following the issuance of this Quarterly Report on Form 10-Q. However, the Company has experienced and continues to experience negative cash flows from operations, as well as an ongoing requirement for substantial additional capital investment. The Company expects that it may need to raise additional capital to accomplish its business plan over the next several years. There can be no assurance as to the availability or terms upon which such financing and capital might be available. See “Overview of Operations” above.

Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative non-governmental ~~U.S.~~US GAAP as found in the Financial Accounting Standards Board's Accounting Standards Codification.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning in fiscal 2021. The Company is currently assessing the impact that this pronouncement will have on its consolidated financial statements.

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable, the Company has not identified any standards that the Company believes merit further discussion other than as discussed above. The Company believes that none of the new standards will have a significant impact on the financial statements.

The Company presents both basic and diluted earnings per share ("~~EPS"~~EPS") ~~amounts.~~. Basic EPS is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period presented. Diluted EPS amounts are based upon the weighted average number of common and common equivalent shares outstanding during the period presented. The Company has not included the effects of warrants or stock options on net loss per share because to do so would be antidilutive.

Following is the computation of basic and diluted net loss per share for the three and nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:

~~The shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented:~~

On ~~July 12,~~June 20, 2013, the ~~Company, together with its wholly owned subsidiary, RenovaCare Sciences, entered into an asset purchase agreement (“APA”~~Company’s Board of Directors (the “Board”) ~~with Dr. Jörg Gerlach, MD, PhD, pursuant to which RenovaCare Sciences purchased all of Dr. Gerlach’s rights, title~~adopted the 2013 Long-Term Incentive Plan (the “2013 Plan”) and ~~interest in the CellMist~~^TM ~~System. Acquisition-related costs amounted to $52,852 and were capitalized together with the cash payment upon the closing~~on November 15, 2013, a stockholder owning a majority of the ~~transaction~~Company’s issued and outstanding stock approved adoption to the 2013 Plan. Pursuant to the terms of the 2013 Plan, an aggregate of 20,000,000 shares of the Company’s common stock have been reserved for issuance to the Company’s officers, directors, employees and consultants in ~~July~~order to attract and hire key technical personnel and management. Options granted to employees under the 2013 ~~of $100,002. Intangible assets amounted~~Plan, including directors and officers who are employees, may be incentive stock options or non-qualified stock options; options granted to ~~$152,854 at~~others under the 2013 Plan are limited to non-qualified stock options. As of September 30, ~~2020 and December 31, 2019.~~2021, there were 16,618,266 shares available for future grants.

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

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

At September 30, ~~2020,~~2021, the Company had 500,000,000 authorized shares of common stock with a par value of ~~$0.00001~~$0.00001 per share and 87,352,364 shares of common stock outstanding and 20,000,000 shares reserved for issuance under the Company’s 2013 Long-Term Incentive Plan (the “2013 Plan”) as adopted and approved by the Company’s Board of Directors (the “Board”) on June 20, 2013 that provides for the grant of stock options to employees, directors, officers and consultants. outstanding.

During the three and nine months ended September 30, 2021 and 2020, the Company ~~granted options to purchase an aggregate 3,565,570 shares of the Company’s~~did not have any common stock ~~to employees and consultants. See “Note 5. Stock Options” for further discussion.~~transactions.

The Company has issued warrants to purchase common stock at various exercise prices in connection with loan agreements and private placements. The following table summarizes information about warrants outstanding at September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

During the three months ended September 30, 2021, all the Series E Warrants expired unexercised.

The following table summarizes stock option activity for the ~~period~~six months ended September 30, ~~2020:~~2021:

~~On January 2, 2020, the Company granted Alan L. Rubino, the Company’s President and Chief Executive Officer, an option~~The valuation methodology used to purchase up to 620,571 shares of the Company’s common stock at an exercise price of $3.23. The option was granted in fulfillment of the Company’s obligation under the terms of Mr. Rubino’s employment agreement dated November 15, 2019. On May 22, 2020, the Board of Directors approved the modification of these 620,571 options to accelerate the vesting from November 14, 2023 to November 14, 2022. The Company calculateddetermine the fair value of ~~the~~stock options ~~immediately before and after the modification using~~is the Black-Scholes ~~model. There was no incremental consideration due to~~Model. The Black-Scholes Model requires the ~~modification.~~use of a number of assumptions including volatility of the stock price, the risk-free interest rate, and the expected term of the stock options. The ranges of assumptions used in the Black-Scholes Model during the nine months ended September 30, 2021 and 2020 is set forth in the table below:

On May 22, 2020, the Company granted options to two consultants and a board member to purchase an aggregate 1,550,000 shares of the Company’s common stock at an exercise price of $1.40. On June 1, 2020, pursuant to his employment agreement, the Company granted Dr. Robin Robinson, the Company’s Chief Scientific Officer, an option to purchase up to 200,000 shares of the Company’s common stock at an exercise price of $1.65. On June 22, 2020, pursuant to his employment agreement, the Company granted Robert Cook, the Company’s Chief Financial Officer, an option to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $1.96.

On August 1, 2020, in connection with her appointment to the Board of Directors, the Company granted Lydia M. Evans, M.D. an option to purchase up to 20,000 shares of the Company’s common stock at an exercise price of $3.17 per share. 10,000 of the options vested immediately with the balance vesting on August 3, 2021.

In consideration of entering into a Right of First Refusal and Corporate Opportunities Agreement (the “ROFR Agreement”) dated July 1, 2020, the Company granted StemCell Systems GmbH (“SCS”), an option to purchase 999,999 shares of the Company’s common stock. The option grant vests as follows: (i) 99,999 on July 29, 2020, (ii) 900,000 in 36 equal monthly installments beginning on August 31, 2020. Concurrent with the option grant, SCS assigned and transferred its rights in the options to ~~Jörg~~ ~~Gerlach, MD, PhD.~~

~~The fair value of the options was estimated at the date of grant using the Black-Scholes option pricing model. Assumptions regarding volatility, expected term, dividend yield and~~ risk-free interest rate ~~are required under~~assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the ~~Black-Scholes model.~~expected term. Estimated volatility is a measure of the amount by which the stock price is expected to fluctuate each year during the term of an award. Our calculation of estimated volatility is based on historical stock prices over a period equal to the term of the awards. The ~~volatility assumption~~average expected life is based on the ~~Company’s historical experience. The risk-free interest rate is~~contractual terms of the stock option using the simplified method. We utilize a dividend yield of zero based on ~~a U.S. Treasury note with maturity similar~~the fact that we have never paid cash dividends and have no current intention to pay cash dividends. Future stock-based compensation may significantly differ based on changes in the ~~option award’s~~fair value of our Common Stock and our estimates of expected ~~life. The expected life represents~~volatility and the ~~average period of time that options granted are expected to be outstanding.~~

~~The assumptions for volatility, expected life, dividend yield and risk-free interest rate for the options granted are as follows:~~

The following table sets forth the share-based compensation cost resulting from stock option grants, including those previously granted and vesting over time, ~~is expensed ratably over~~that were recorded in the ~~respective vesting periods.~~Company’s Statements of Operations for the three and nine months ended September 30, 2021 and 2020:

On July 26, 2021, in connection with an Executive Services Consulting Agreement of the same date, the Company granted Justin Frere, the Company’s Chief Financial Officer, an option to purchase up to 50,000 shares of the Company’s common stock at an exercise price of $1.72 and with a term of 10 years.

During the first half of 2021, certain individuals resigned from the Company resulting in the forfeiture and cancellation of 2,805,571 options. Compensation expense was recorded on some of these options prior to their full vesting. As a result, during the nine months ended September 30, 2021, the Company recognized $1,314,705 of reversals of the prior recognized compensation expense related to the cancelled options. During the three and nine months ended September 30, ~~2020,~~2021, the ~~Company~~expense recognized ~~$1,463,969~~on options still in their vesting period totaled $268,000 and $3,172,000, respectively, in stock-based compensation expense. Compensation costs for consultant option grants are recognized in the same period and in the same manner as if the Company had paid cash for the services. The Company recognized a prepaid expense in the amount of $260,997 for the 99,999 vested options granted to SCS for entering into the ROFR Agreement. During the three and nine months ended September 30, 2019, the Company recognized $832 and $191,275 respectively, in stock-based compensation. As of September 30, 2020, the Company’s unrecognized compensation cost related to unvested stock options was $5,416,522 to be amortized through 2023. Stock-based compensation has been included in the consolidated statement of operations as follows:

~~The following table summarizes information about stock options outstanding and exercisable as of September 30, 2020:~~

The Company determines if an arrangement is a lease, or contains a lease, at the inception of an arrangement. If the Company determines that the arrangement is a lease, or contains a lease, at lease inception, it then determines whether the lease is an operating lease or finance lease. Operating and finance leases result in recording a right-of-use (“ROU”) asset and lease liability on the consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and operating lease liabilities, the Company uses the non-cancellable lease term plus options to extend that it is reasonably certain to exercise. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company’s leases generally do not provide an implicit rate. As such, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. The Company has elected not to separate lease and non-lease components for any class of underlying asset.

In February 2020, the Company entered into a two-year lease for office premises located at 4 Becker Farm Road, Suite 105, Roseland, New Jersey. Monthly base rent in year one of the lease is ~~$4,356;~~$4,356; and ~~$4,459~~$4,459 in year 2 of the lease. The term (and payment of the monthly rent) ~~commences~~commenced upon ~~substantial~~ completion of the landlord’s work ~~which was expected to occur on or before May 31, 2020. Due to the COVID-19 pandemic the lease term commenced~~ on August 1, 2020.

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

As of September 30, ~~2020:~~2021, the Company has not entered into any leases which have not yet commenced which would entitle the Company to significant rights or create additional obligations.

Supplemental cash flow information for the nine months ended September 30, ~~2020:~~2021:

Cash paid for amount included in the measurement of lease liabilities for operating lease

10$

39,410

The Company leases office space under a non-cancellable operating lease expiring in 2022. Future lease payments included in the measurement of lease liabilities on the balance sheet at September 30, ~~2020~~2021 for future periods are as follows:

In connection with the Company’s anticipated regulatory filings, the Company has engaged StemCell Systems GmbH (“StemCell ~~Systems”~~Systems”) to provide it with prototypes and related documents ~~related~~under various agreements. On July 1, 2020, the Company and StemCell Systems entered into a Strategic R&D Agreement (the “Strategic Agreement”) having an initial term of three years with successive one-year extensions unless earlier terminated. The Strategic Agreement includes a $27,000 monthly fee to be paid to StemCell Systems along with any additional expenses incurred. The Company, StemCell Systems and certain affiliates of StemCell Systems entered into a Rights of First Refusal and Corporate Opportunities Agreement (the “ROFR Agreement”). Pursuant to the ~~CellMist™ system~~ROFR Agreement, (i) in the event a StemCell Systems stockholder receives an offer from a third party to acquire the StemCell Systems stockholders ownership interest, the Company shall have ten business days to purchase such ownership, and (ii) if during the ~~SkinGun™ under various agreements.~~terms of the Strategic Agreement, any StemCell Systems inventions, with respect to skin, burns and wounds, designs, inventions and among other things, whether or not patentable, copyrightable or otherwise legally protectable are discovered by StemCell Systems, the Company shall have the first option to negotiate mutually agreeable terms for the Company’s acquisition or licensing of the StemCell Systems inventions. Pursuant to these engagements the Company incurred expenses of ~~$125,655~~approximately $142,000 and ~~$400,612~~$133,000 during the three months ended September 30, 2021 and 2020, respectively; and $391,000 and $401,000 during the nine months ended September 30, 2021 and 2020, ~~and, $100,000 and $223,175 during~~respectively. Pursuant to the ~~three and nine months ended~~Strategic Agreement, as of September, 30, ~~2019, respectively. Dr. Gerlach, from whom~~2021, the Company ~~purchased~~is obligated to pay for services totaling approximately $819,000 through July 1, 2023.

On May 28, 2021 the ~~CellMist~~^TM ~~System~~SEC filed a civil complaint (the “Complaint”) naming the Company and ~~SkinGun~~^TM ~~technologies,~~Harmel S. Rayat, RenovaCare Chairman (the “Defendants”) as defendants. The Complaint charges Mr. Rayat and the Company with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and also charges Mr. Rayat with aiding and abetting the Company's violations of those provisions. The complaint also charges the Company with violating the reporting provisions of Exchange Act Section 15(d) and Rules 15d-11 and 12b-20 thereunder. The SEC seeks permanent injunctions and civil penalties against the Defendants, and officer-and-director and penny stock bars against Mr. Rayat. On August 31, 2021 the Defendants filed a response to the Complaint. On September 21, 2021, the SEC filed a motion to strike Defendants equitable affirmative defenses which motion was granted by the court on October 18, 2021.

The Company believes that the claims asserted in the Complaint are without merit and intends to defend this matter vigorously. However, because of the inherent uncertainty as to the outcome of this proceeding, the Company is ~~a principal~~unable, at this time, to estimate the possible impact of ~~StemCell Systems.~~the outcome of this matter nor provide assurance that the available insurance coverage will be sufficient to see the Complaint through to resolution.

On ~~June 3, 2019,~~July 16 and July 21, 2021, two purported shareholders of the Company ~~entered into~~filed putative class actions in the United States District Court for the District of New Jersey against the Company and certain of its current and former executive officers (captioned Gabrielle A. Boller, Individually and On Behalf of All Others Similarly Situated v. RenovaCare, Inc., Harmel Rayat, and Thomas Bold, No. 2:21-cv-13766-SDW-ESK (“Boller”), and Michael Solakian, Individually and On Behalf of All Others Similarly Situated v. RenovaCare, Inc., Harmel Rayat, and Thomas Bold, No. 2:21-cv-13930 (“Solakian”), respectively)(the “Class Action Complaints”). The Class Action Complaints in Boller and Solakian were brought both individually and on behalf of a ~~Charitable Gift Agreement~~putative class of the Company’s stockholders, claiming that in connection with the ~~University of Pittsburgh (“University”), pursuant to which~~facts and circumstances underlying the allegations in the SEC Complaint, the Company ~~committed~~engaged in fraudulent conduct and made false and misleading statements of material fact or omitted to ~~provide a charitable donation~~state material facts necessary to make the ~~University~~statements made not misleading. The class period identified in the ~~amount~~Class Action Complaints is August 13, 2017 through May 28, 2021 Both Boller and Solakian seek to declare the action to be a class action and monetary damages, including costs and expenses, and award of ~~$250,000 (the “Grant”).~~ reasonable attorneys’ fees, expert fees, and other costs, and such other relief as the Court may deem just and proper.

The Company ~~paid~~believes that the ~~Grant~~claims asserted in ~~four installments with~~Boller and Solakian and any other Class Actions derived from the ~~first payment made in July 2019. During each~~SEC Complaint are without merit and intends to defend itself vigorously. Based on the early stages of these legal proceedings, and the ~~three and nine months ended September 30, 2020~~inherent uncertainty as to their outcome, at this time, the Company ~~made payments totaling $62,500 and $62,500, respectively.~~ is not able to reasonably estimate a possible range of loss, if any, that may result from the allegations set forth in the Class Action Complaints filed in the Class Actions.

During the three and ~~nine months ended September 30, 2019 the Company made payments totaling $0 and $62,500, respectively. As of September 30, 2020, the Company’s obligation under the Grant has been satisfied.~~

~~During the~~ nine months ended September 30, 2020, Talia Jevan Properties, Inc. made payments totaling ~~$10,811~~$0 and $10,811, respectively, to Stephen Yan-Klassen, former CFO who resigned in 2020, for his salary on behalf of the Company. Talia Jevan Properties, Inc. is a related party of Harmel S. Rayat, ~~former~~ Chairman of the Board. The total compensation Talia Jevan Properties, Inc. made to Stephen Yan-Klassen during the three and nine months ended September 30, 2020 was $0 and $10,811, respectively. Subsequent to the period ended September 30, 2020 the $10,811 owed was paid to Talia Jevan Properties, Inc.

On August 1, 2013, the Company entered into a consulting agreement, as amended on May 1, 2016, with Jatinder Bhogal, an individual owning in excess of 5% of the Company’s issued and outstanding shares of common stock, to provide consulting services to the Company through his wholly owned company, Vector Asset Management, Inc. (“~~VAM”~~VAMI”). Pursuant to the consulting agreement, ~~VAM~~VAMI assisted the Company with identifying subject matter experts in the medical device and biotechnology industries and assisted the Company with its ongoing research, development and eventual commercialization of its Regeneration Technology. Pursuant to an amendment dated May 1, 2016, the ~~VAM~~VAMI monthly consulting fee was increased from $5,000 to $6,800. On June 22, 2018, the Company and VAM entered into an Executive Consulting Agreement ~~(“ECA”~~(the “ECA”) pursuant to which Mr. Bhogal served as the Company’s Chief Operating Officer. The ECA supersedes the prior consulting agreement. Pursuant to the ECA, ~~VAM will receive~~VAMI received compensation of ~~$120,000~~ $120,000per year. On July 1, 2020 the ~~company~~Company amended the ~~agreement~~ECA and ~~will pay VAM~~paid VAMI $4,000 ~~monthly~~per month through ~~December 31,~~November 30, 2020 and ~~$2,000~~$200 per month thereafter until May 31, 2021 at which time the ~~agreement will expire. During~~ECA as amended expired. For consulting services provided by VAMI, during the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company recognized expenses of ~~$12,000~~$0 and ~~$30,000~~$12,000, respectively; and $1,000 and $72,000 during the nine months ended September 30, 2021 and 2020, ~~and 2019 the Company recognized $72,000 and $90,000 respectively, in expenses and for consulting services provided by VAM.~~respectively. Jatinder Bhogal resigned as the Company’s COO effective June 30, 2020.

Kalen Capital Corp (“KCC”) is wholly owned by Mr. Harmel Rayat, the former Chairman of the Board. On April 1, 2020 KCC provided a short-term advance of $50,000 to the Company. The short-term advance was repaid by the Company to KCC in July 2020. The Company paid KCC $65,156 for reimbursable expenses in October 2020.

Management has reviewed ~~for~~ material events subsequent of the period ended September 30, ~~2020,~~2021 and prior to the filing of financial statements in accordance with FASB ASC 855 “Subsequent Events”.

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

Cautionary Note Regarding Forward-Looking Statements

This discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with the unaudited interim consolidated financial statements of RenovaCare, Inc. (“RenovaCare”) and its wholly-owned subsidiary (collectively with RenovaCare, “we,” “our,” “us,” or the “Company”), appearing elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments, are outlined below in “Critical Accounting Policies,” and have not changed significantly since ~~2019.~~2020.

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

	·	our ability to meet requisite regulations or receive regulatory approvals in the United States, and our ability to retain any regulatory approvals that we may obtain; and the absence of adverse regulatory developments in the United States and abroad;
	·	new entrance of competitive products or further penetration of existing products in our markets;
	·	results of our clinical trials;
	·	failure of our products to gain market acceptance;
	·	the cost and success of our development programs;
	·	our failure to obtain financing as, if and when needed, on commercially acceptable terms;
	·	our failure to attract and retain qualified personnel;
	·	our failure to adequately manage our growth and expansion;
	·	the effect on us from adverse publicity related to our products or the Company itself; and
	·	our failure to defend against any adverse claims relating to our intellectual property.

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

~~Background~~Overview

RenovaCare, Inc. was incorporated on July 14, 1983 in the State of Utah under the name Far West Gold, Inc., and changed its domicile to Nevada in 1997. On January 7, 2014, the Company changed its name at the time from “Janus Resources, Inc.” to “RenovaCare, Inc.” so as to more fully reflect its current operations and business; and changed its trading symbol from “JANI” to “RCAR” effective as of January 9, 2014.”

RenovaCare has an authorized capital of 500,000,000 shares of $0.00001 par value common stock, of which 87,352,364 shares are outstanding as of September 30, 2020, and 10,000,000 shares of $0.0001 par value preferred stock, of which none are outstanding.

~~Description of Business~~

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

The Company, through its wholly owned subsidiary, RenovaCare Sciences Corp., owns the CellMist™ System which is ~~comprised of (a)~~ a ~~treatment methodology for~~ cell isolation ~~for~~procedure that enzymatically renders stem cells from the ~~regeneration of human~~patient’s own skin ~~cells (the “CellMist™ Solution”) and (b)~~or other tissues. The resulting stem cell suspension is administered topically with our SkinGun™ spray device as a ~~solution sprayer device (the (SkinGun™”) for delivering cells~~cell therapy onto wounds including burns to ~~the treatment area.~~facilitate healing.

~~We have filed additional patent applications related~~In May 2021, the Company announced that the US Food and Drug Administration (FDA) fully approved the Company’s Investigational Device Exemption (IDE) application to conduct a clinical trial, designated CELLMIST 1, that will evaluate the safety and feasibility of autologous skin and pluripotent stem cells rendered by its manual CellMist™ System from donor skin and ~~other technologies.~~applied topically with the electronic SkinGun™ spray device for treatment of acute burn wounds. The clinical trial protocol is an open-label, single-arm clinical study that is enrolling 14 adult human burn subjects with partial-thickness, second-degree deep thermal burn wounds covering between 10% and 30% total body surface area. The Company may engage up to four (4) U.S. burn centers to conduct the clinical study. Currently, the clinical trial is activated, enrolling and treating patients. The CELLMIST 1 clinical study is expected to reach completion in late 2022.

Our proprietary CellMist™ System, and its component technologies were the subject of six trademarks and applications and over 37 U.S. and international granted or in-process patents in eight patent families. Our patent filings include three granted patents in the United States, two granted international patents, and two allowed international patents, while all in-process patent filings include the U.S. and multiple foreign jurisdictions. Our issued patents are scheduled to expire between 2026 and 2036 and may or may not be the basis for filing continuations. We continually assess opportunities to seek patent protection for those aspects of our technology, designs, and methodologies and processes that we believe may provide us with significant competitive advantages or additional commercial opportunities.

~~The development of our~~unique new closed, ~~semi-automated~~automated cell isolation device ~~for~~to harvest stem cells from tissues using the CellMist^TM System is in ~~the early stage and we anticipate that we will be required to expend~~prototype development. We expect significant time and resources will be devoted to ~~further~~ develop our novel technology and determine ~~whether a commercially viable product can be developed.~~the commercial feasibility of the product. Research and development of new technologies ~~involves~~involve a high degree of risk, and there is no assurance that our development activities will result in a commercially viable product. The long-term profitability of our operations will be, in part, directly related to the cost and success of our development programs, which may be affected by a number of factors.

~~We are currently evaluating the potential of our CellMist~~^TM ~~System in the treatment of tissue that has been subject to severe trauma such as second-degree burns. The CellMist~~^TM ~~System utilizes the patient’s own skin stem cells and can reduce the size of the donor site and significantly decrease scarring. Furthermore, we believe the CellMist~~^TM ~~System could enable treatment of other skin disorders with minimal scarring.~~

In August 2020, the Company announced that the US Food and Drug Administration (“FDA”) conditionally approved the Company’s Investigational Device Exemption (IDE) application to conduct a clinical trial to evaluate the safety and feasibility of autologous stem cells rendered by its CellMist™ System from donor skin and applied topically with the SkinGun™ spray device for treatment of burn wounds. The clinical trial protocol is for an open-label single-arm clinical study that will enroll 14 human burn subjects with partial-thickness second- or- third degree thermal burn wounds. The Company expects to conduct the clinical study at four (4) U.S. burn centers.

~~Our Mission and Strategy~~

~~Our ultimate goal is to leverage the potential of our CellMist~~^TM ~~System with the SkinGun~~^TM ~~spray device, as next generation cell therapy for burns and other acute and chronic wounds and skin disorders. Before we can do so, however, there are a number of steps we must first take, including:~~

~~initiating a series of clinical trials to determine the safety and efficacy of the CellMist~~^TM ~~System with the SkinGun~~^TM ~~spray device for treating partial-thickness second-degree thermal burns;~~

~~formalizing collaborations with academic, scientific, and/or commercial partners;~~

~~creating a network of clinical research partners;~~

~~achieving FDA and/or other regulatory approval and clearance; and~~

~~expanding the range of possible clinical applications for unmet health needs.~~

We believe that we now have an experienced leadership team which has come together to achieve our mission of improving the lives of burn patients by creating potentially more effective, safer, efficient, and cost-saving treatments. To achieve our goal, we have established the following strategic priorities:

~~Obtain marketing approval and prepare to commercialize our CellMist~~^TM ~~System with the SkinGun~~^TM ~~spray device.~~

We have received conditional approval and we continue to pursue our efforts to secure regulatory (FDA) approval of our IDE in 2020, and if ultimately approved, commence our feasibility study in the United States.

~~Selectively pursue strategic partnerships, joint ventures, and licensing opportunities to complement and expand our existing operations.~~

We intend to continue to pursue strategic licensing, partnership, and joint venture opportunities. We will continue to target opportunities that will complement our existing technology and operations to create value for stockholders and support our business strategy and mission.

~~Secure additional financing as and when required.~~

Additionally, we will need to pursue financing opportunities, traditional and non-dilutive, and if available on acceptable terms, if at all, in order to raise sufficient capital to fund our ongoing research and development operations in order to expand the range of possible clinical applications of our ~~CellMist~~^TM ~~System~~.

~~Our Market Opportunity~~

~~Burns~~

Burns are one of the most common and devastating forms of trauma. Most burn injuries involve layers of the upper skin, the epidermis. Severe major trauma involves a complete loss of the entire thickness of the skin and often requires major surgery involving split-skin mesh-grafting. Skin grafting is a procedure where healthy skin is removed from one area of the body and transplanted to a wound site.

Patients with serious thermal injury require immediate specialized definitive care in order to minimize morbidity and mortality. Data from the National Center for Injury Prevention and Control in the U.S. show that approximately 2 million fires are reported each year which result in 1.2 million people with burn injuries (~~see~~ ~~American Burn Association~~ ~~Burn Incidence and Treatment in the US: 2000 Fact Sheet~~, available at: http://www.ameriburn.org). Moderate to severe burn injuries requiring hospitalization account for approximately 100,000 of these cases, and about 5,000 patients die each year from burn-related complications (see Church D, Elsayed S, Reid O, Winston B, Lindsay R “~~Burn wound infections~~~~” Clinical Microbiology Reviews 2006;19(2):403–34, available at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1471990).~~

The prevalence of patients with severe burns is even higher in emerging economies. For example, according to the World Health Organization over 1,000,000 people in India are moderately to severely burnt every year and approximately 180,000 people worldwide die from burn related injuries (see World Health Organization “~~Burns: Fact Sheet No. 365~~,” reviewed March 6, 2018, available at: http://www.who.int/mediacentre/factsheets/fs365/en/). According to Critical Care, an international clinical medical journal, burns are also among the most expensive traumatic injuries because of long and costly hospitalization, rehabilitation and wound and scar treatment (see Brusselaers, N., Monstrey, et al, “~~Severe Burn Injury in Europe: A systematic Review of the Incidence, Etiology, Morbidity, and Mortality~~~~” available at: http://ccforum.com/content/14/5/R188).~~

Burn injuries account for a significant cost to the health care system in North America and worldwide. In the U.S. there are currently 132 centers specializing in burn care. Recent estimates in the U.S. show that 40,000 patients are admitted annually for treatment with burn injuries, and over 60% of the estimated U.S. acute hospitalizations related to burn injury were admitted to burn centers. Such centers now average over 200 annual admissions each for burn injury and skin disorders requiring similar treatment. The other 4,500 U.S. acute care hospitals average less than 3 burn admissions each per year (see American Burn Association ~~Burn Incidence and Treatment in the US: 2013 Fact Sheet~~~~, available at: http://www.ameriburn.org).~~

According to the Agency for Healthcare Research and Quality, the annual costs for the treatment of burns is $1.5 billion, with another $5 billion in costs associated with lost work (see https://www.hcup-us.ahrq.gov/reports/statbriefs/sb217-Burn-Hospital-Stays-ED-Visits-2013.pdf). Initial hospitalization costs and physicians' fees for specialized care of a patient with a major burn injury are currently estimated to be $200,000. Overall, costs escalate for major burn cases because of repeated admissions for reconstruction and rehabilitation therapy. In the U.S., current annual estimates show that more than $18 billion is spent on specialized care of patients with major burn injuries (see Church D, Elsayed S, Reid O, Winston B, Lindsay R “~~Burn wound infections~~~~” Clinical Microbiology Reviews 2006;19(2):403–34, available at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1471990).~~

~~Wounds~~

According to The Wall Street Journal, 6.5 million people are affected by chronic wounds, and $25 billion is spent annually on treating chronic wounds on patients in the U.S. alone (see Järbrink, Krister et al. “Prevalence and incidence of chronic wounds and related complications: a protocol for a systematic review.” ~~Systematic reviews~~ ~~vol. 5,1 152. 8 Sep. 2016 doi:10.1186/s13643-016-0329-y).~~

The Wound Care Market Global Forecast to 2024 report issued by Markets & Markets states that in 2019, advanced wound care products accounted for the largest market share and is expected to have the highest growth projected at a compound annual growth rate of 4.6% to 2024. Major factors driving the growth of this market of hard-to-heal wounds are an increase in an aging population and greater prevalence of chronic disease, including diabetes and obesity. The development of regenerative medicine and healing capabilities allow for more effective treatment, quicker healing and improved health economic outcomes.

The healthcare facilities (hospitals and clinics) segment accounted for the largest market share in 2019 as these systems are used for critical cases, improve quality of care for patients, and have the infrastructure and resources to support treatment.

~~Our Technology~~

~~Our CellMist System is comprised of the CellMist~~^TM~~cell suspension derived by enzymatic digestion of a patient’s own skin tissue applied topically with our proprietary electronic SkinGun~~^TM ~~spray device to deliver a fine single-cell mist onto the patient’s burn wound.~~

The duration of the cell isolation and cell spraying procedure is approximately 1.5–2 hours. Published studies show that within days following the wound treatment procedure, complete wound closure occurs, and the skin cells generate a protective skin layer (re-epithelialization), and within weeks to months the skin regains its function, color and texture.

~~Our cell isolation and cell spraying procedure occur on the same day, in an on-site hospital setting. Because the skin cells sprayed using the SkinGun~~^TM spray device are actually the patient's own cells, the skin that is regenerated looks more natural than other skin replacement technologies. During recovery, the skin cells grow into fully functional skin layers, and the regenerated skin leaves minimal scarring in observational case studies. Additionally, our methods require substantially smaller donor areas than skin grafting, reducing donor area burden such as pain and the risk of complications.

In August 2019, the Company was awarded a continuation of a patent ~~continuation,~~ allowing the SkinGun^TM~~spray device~~ to be used to spray all varieties of tissues and cells, thus ~~opening the door~~allowing for its potential application in the regeneration of tissues and organs, beyond ~~skin.~~skin; and, in November 2020 and October 2021, the Company was issued a total of three new patents encompassing improvements to the SkinGun™, expanding its potential application beyond the surgical setting into the field, and allowing the use of liquid suspension solutions to include drugs, hormones, and other useful agents.

~~The CellMist~~^TMSystem remains an experimental, unproven methodology and we continue to evaluate its safety and efficacy. There is no guarantee that we will able to develop a commercially viable product based upon the CellMist^TM~~System and its underlying technology.~~

~~Competition~~

~~The biotechnology, medical device, and wound care industries~~Currently, our proprietary technologies are ~~characterized by intense competition, rapid product development and technological change. Our CellMist~~^TM ~~System competes with a variety of companies in the wound care markets, many of which offer substantially different treatments for similar problems.~~

Most of our competitors are larger, well-established companies with considerably greater financial, marketing, sales and technical resources than those available to us. Additionally, many of our present and potential competitors have research and development capabilities that may allow them to develop new or improved products that may compete with our product lines. Our potential products could be rendered obsolete or made uneconomical by the development of new products to treat the conditions addressed by our products, technological advances affecting the cost of production, or marketing or pricing actions by one or more of our competitors. Our closest direct competitor with their own skin cell therapy for burn wounds received FDA approval in September 2018 and launched its product in 2019; however our next generation skin cell therapy for burn wounds has multiple notable advantages including more cell types from both epidermal and dermal layers of the skin; greater cell yield and viability; smaller ratio of donor tissue to burn wound area; greater burn wound coverage; and single cells applied with the SkinGun™ spray device that rapidly adhere to the burn wound.

~~Intellectual Property~~

~~General~~

In the course of conducting our business, we from time to time create inventions. Obtaining, maintaining and protecting our inventions, including seeking patent protection, might be important depending on the nature of the invention. To that end, we seek to implement patent and other intellectual property strategies to appropriately protect our intellectual property. While we file and prosecute patent applications to protect our inventions, our pending patent applications might not result in the issuance of patents or issued patents might not provide competitive advantages. Also, our patent protection might not prevent others from developing competitive products using related or other technology.

The scope, enforceability and effective term of issued patents can be highly uncertain and often involve complex legal and factual questions. Moreover, the issuance of a patent in one country does not assure the issuance of a patent with similar claim scope in another country, and claim interpretation and infringement laws vary among countries, so we are unable to predict the extent of patent protection in any country. The patents we obtain and the unpatented proprietary technology we hold might not afford us significant commercial protection or advantage.

~~Our proprietary CellMist™ System and its component technologies were~~ the subject of ~~six trademarks~~ and ~~applications and over 37~~43 U.S. and international ~~granted~~patents or ~~in-process~~patent applications and 14 U.S. and international trademarks. Of the issued patents, five are U.S. patents and twelve have issued or are allowed in ~~eight patent families. Our patent filings include three granted patents~~Australia, Canada, Europe, Germany, France, Italy, Japan, Korea, Netherlands, Spain, Switzerland/Lichenstein, and United Kingdom. The Company has six allowed trademarks in the United States, two ~~granted international patents,~~European registered trademarks, two United Kingdom trademarks, two Japan trademarks, and two allowed international patents, while all in-process patent filings include the U.S. and multiple foreign jurisdictions. Our issued patents are scheduled to expire between 2026 and 2036, and may or may not be the basis for filing continuations. We continually assess opportunities to seek patent protection for those aspects of our technology, designs, and methodologies and processes that we believe may provide us with significant competitive advantages or additional commercial opportunities.pending in Canada.

~~In addition to issued patents describe above, we plan to file additional patent applications that, if issued, would provide further protection for~~ The ~~CellMist~~^TM System. Although we believe the bases for these patents and patent applications are sound, they are untested; and there is no assurance that they will not be successfully challenged. There can be no assurance that any patent previously issued will be of commercial value, that any patent applications will result in issued patents of commercial value, or that our technology will not be held to infringe patents held by others.

~~Operations~~

~~We expect to be engaged in research and development activities for the foreseeable future.~~

~~Results of Operations~~

~~Three Months Ended September 30, 2020 Compared with the Three Months Ended September 30, 2019~~

~~Operating Expenses~~

~~A summary of our operating expenses for the three months ended September 30, 2020 and 2019 follows:~~

Three Months Ended
September 30, Increase / Percentage
2020 2019 (Decrease) Change
Operating expenses
Research and development $ 1,551,989 $ 130,467 $ 1,421,522 1090 %
General and administrative 1,290,890 1,070,314 220,576 20 %
Total operating expenses $ 2,842,879 $ 1,200,781 $ 1,642,098 136 %

~~Research and Development~~

~~Research and development costs relate to the development of our CellMist~~^TM System. Our business model is dependent upon our company continuing to conduct a significant amount of research and development. Our research and development costs consist primarily of expenses incurred under agreements for preclinical and clinical support to our regulatory submissions, manufacturing of our clinical trial supplies, consultants that assist in research and development activities and employee-related expenses, which include salaries and benefits, and non-cash share-based compensation.

We make payments to consultants based on agreed upon terms that may include payments in advance of preclinical and clinical support. Advance payments for goods and services that will be used in future research and development activities are expensed when the activityCompany has been performed or when the goods have been received rather than when the payment is made. Advance payments to be expensed in future research and development activities are capitalized and amounted to $246,497 at September 30, 2020 and $0 at December 31, 2019. Research and development expenditures will continue to be significant as we continue development of our CellMist^TM ~~System.~~

Research and development costs for the three months ended September 30, 2020 increased $1,421,522, or 1,090%, to $1,551,989, compared with $130,467 for the three months ended September 30, 2019. Research and development costs increased as a result of a scale up of our clinical supply manufacturing, regulatory submissions, and product development activities for clinical trial support, and employee-related expenses. Costs related to the scale up of our manufacturing activities and product development for clinical trial support increased approximately $937,000 during the three months ended September 30, 2020 compared to the three months ended September 30, 2019. Employee-related expenses increased approximately $484,000 during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 primarily due to the additions of the Company’s new Chief Scientific Officer and Chief Medical Officer. Included in the $484,000 increase is share-based compensation of approximately $455,000.

~~General and Administrative~~

General and administrative costs for the three months ended September 30, 2020 increased $211,144 or 20%, to $1,290,890, compared with $1,070,314 for the three months ended September 30, 2019. General and administrative costs include employee-related expenses, which include salaries and benefits, and non-cash share-based compensation, professional fees for legal, accounting and consulting and other general operating expenses. Employee-related expenses increased approximately $1,235,000, including share-based compensation in the amount of approximately $1,120,000 during the three months ended September 30, 2020 compared to the three months ended September 30, 2019. The increase is primarily attributable to the addition of our new Chief Executive Officer in November 2019 and stock option grants to employees and consultants. Professional fees decreased approximately $595,000 during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due to decreased costs related to corporate compliance and governance matters. Other general operating expenses increased approximately $26,000 during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due primarily to increased insurance costs.

~~Other Income~~

Other income relates to interest earned on bank account deposits. Other income decreased approximately $59,800 to approximately $24,900 for the three months ended September 30, 2020 compared with the three months ended September 30, 2019 due to a lower average cash balance during the three months ended September 30, 2020 compared with September 30, 2019 and lower rates being earned on deposits.

~~Nine Months Ended September 30, 2020 Compared with the Nine Months Ended September 30, 2019~~

Nine Months Ended
September 30, Percentage
2020 2019 Increase Change
Operating expenses
Research and development $ 3,091,383 $ 504,169 $ 2,587,214 513 %
General and administrative 4,024,317 1,944,111 2,080,206 107 %
Total operating expenses $ 7,115,700 $ 2,448,280 $ 4,667,420 190 %

~~Research and Development~~

~~Research and development costs relate to the development of our CellMist~~^TM ~~System and SkinGun~~^TM spray device. Our business model is dependent upon our company continuing to conduct a significant amount of research and development activities. Current expenditures are primarily dedicated to (i) the development and validation of the SkinGun^TM spray devices at StemCell System (SCS); (ii) the development of a prototype cell isolation device at SCS; and (iii) the cGMP manufacturing of clinical supplies at CMOs for clinical trials to evaluate the safety, feasibility, and efficacy of our autologous skin cell therapy for burn wounds. Additionally, R&D expenses include consultants that assist in research and development activities and employee-related expenses, which include salaries and benefits, and non-cash share-based compensation.

We make payments to consultants based on agreed upon terms that may include payments in advance of preclinical support. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Advance payments to be expensed in future research and development activities are capitalized and amounted to $246,497 at September 30, 2020 and $0 at December 31, 2019. Research and development expenditures will continue to be significant as we continue development of the cell isolation device and SkinGun^TM ~~spray device for our CellMist~~^TM ~~System and the preparation and execution of clinical trials.~~

Research and development costs for the nine months ended September 30, 2020 increased $2,587,241, or 513%, to $3,091,383 compared with $504,169 for the nine months ended September 30, 2019. Research of development costs increased as a result of a scale up of our manufacturing activities for clinical trial support and employee-related expenses. Costs related to the scale up of our manufacturing activities for clinical trial support increased approximately $1,342,121 during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. Employee-related expenses increased approximately $1,204,279 during the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019 primarily due to the additions of the Company’s new Chief Scientific Officer and Chief Medical Officer. Included in the $1,204,279 increase is share-based compensation of approximately $1,087,000 to the Company’s new Chief Scientific Officer pursuant to his employment agreement and other research consultants.

~~General and Administrative~~

General and administrative costs for the nine months September 30, 2020 increased $2,070,773 or 107%, to $4,024,317, compared with $1,944,111 for the nine months ended September 30, 2019. General and administrative costs include employee-related expenses, which include salaries and benefits, and non-cash share-based compensation, professional fees for legal, accounting and consulting and other general operating expenses. Employee-related expenses increased approximately $2,439,000, including share-based compensation in the amount of approximately $2,084,000, during the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019. The increase is primarily attributable to the addition of our new Chief Executive Officer in November 2019 and stock option grants to employees and consultants. Professional fees decreased approximately $518,000 during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due to a large decrease in legal fees in the prior period. Other general operating expenses increased approximately $188,000 during the nine months ended September 30, 2020 compared with the nine months ended September 30, 2020 due primarily to increased insurance costs and the charitable gift agreement with the University of Pittsburgh entered into in June 2019.

~~Other Income~~

Other income relates to interest earned on bank account deposits. Other income decreased approximately $154,000 to approximately $111,000 for the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019 due to a lower average cash balance during the nine months ended September 30, 2020 compared with September 30, 2019 and lower rates being earned on deposits.

~~Liquidity and Capital Resources~~

~~We do not have any commercialized products, have~~ not generated any revenue ~~since acquiring the technology underlying the CellMist™ System~~ and ~~have~~has sustained recurring losses and negative cash flows from operations since inception. The Company expects to incur losses as it continues development of its products and technologies and expects that it will need to raise additional capital through partnerships or the sale of its securities to accomplish its business plan. Failing to secure such additional funding before achieving sustainable revenue and profit from operations poses a significant risk. The Company's ability to fund the development of its cellular therapies depends on the amount and timing of cash receipts from future financing activities. There can be no assurance as to the availability or terms upon which such financing and capital might be available.

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

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

Components of Our Results of Operations

Revenue

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

Research and Development

Research and development (“R&D”) expenses consist primarily of costs incurred for the development of our CellMist^TM System and include:

design, pilot-scale manufacturing and pre-clinical testing of our cell isolation and SkinGun^TMspray devices.

employee-related expenses associated with our research and development activities, including salaries, benefits, travel and non-cash stock-based compensation expenses.

costs associated with quality management systems including device verification and validation testing, and regulatory operations and regulatory compliance.

expenses incurred under agreements related to our clinical trials.

other research and development costs including contract consulting fees and non-cash stock-based compensation to contract research organizations (CROs) and other third parties.

We do not believe that it is possible at this time to accurately project total expenses required for us to reach commercialization of our CellMist^TM System. In the future, we expect that research and development expenses will increase due to our ongoing product development and approval efforts. We expense research and development costs as incurred.

General and Administrative

General and administrative expenses consist primarily of personnel costs, including non-cash stock-based compensation related to directors and employees, professional service costs including legal, accounting, and other consulting fees and other general and administrative expenses including investor relations, insurance, and facilities costs. We expect general and administrative expenses to increase in the future as we hire personnel and incur additional costs to support the expansion of our research and development activities and our operation as a public company.

Stock-Based Compensation

Expense associated with equity-based transactions is calculated and expensed in our financial statements as required pursuant to various accounting rules and is non-cash in nature. Stock compensation represents the expense associated with the amortization of our stock options.

Other Income (Expense)

Other income consists of interest income earned on our cash and cash equivalents and the reimbursement of legal fees from our Directors & Officers insurance policy.

Income Taxes

We have yet to generate taxable income. We have historically incurred operating losses resulting in carry forward tax losses totaling approximately $22.3 million as of December 31, 2020. We anticipate that we will continue to generate tax losses for the foreseeable future and that we will be able to carry forward these tax losses indefinitely to future taxable years. Accordingly, we do not expect to pay taxes until we have taxable income after the full utilization of our carry forward tax losses. We have provided a full valuation allowance with respect to the deferred tax assets related to these carry forward losses.

Results of Operations

Comparison of Three and Nine Months Ended September 30, 2021 and September 30, 2020

Research and Development Expenses

		Three Months Ended September 30,				Increase /			Nine Months Ended September 30,				Increase /
		2021		2020		(Decrease)			2021		2020		(Decrease)
Manufacturing clinical supplies⁽¹⁾	$	50,019	$	557,956	$	(507,937	)	$	298,090	$	940,021	$	(641,931	)
Personnel related⁽²⁾		113,248		81,667		31,581			382,926		253,216		129,710
Stock-based compensation⁽³⁾		224,000		455,271		(231,271	)		731,438		1,087,147		(355,709	)
Clinical trials⁽⁴⁾		243,030		29,500		213,530			768,987		33,900		735,087
Regulatory⁽⁵⁾		10,349		69,829		(59,480	)		32,253		158,716		(126,463	)
All other⁽⁵⁾		103,979		357,766		(253,787	)		289,793		618,383		(328,590	)
	$	744,625	$	1,551,989	$	(807,364	)	$	2,503,487	$	3,091,383	$	(587,896	)

(1)

Manufacturing clinical supplies decreased due to completion of the pilot-scale manufacturing and validation testing of the components of the CellMist™ System and the electronic SkinGun™ spray device to be used in our clinical trials.

(2)

Personnel related expenses increased due to the allocation of Stem Cell Systems personnel in support of the development of our CellMist™ System.

(3)

Stock compensation expense decreased due primarily to the completion of vesting in 2020 of prior issued stock options in excess of the amounts recognized in the current year upon the continued vesting of other R&D related stock option grants.

(4)

Clinical trial expenses increased due to the addition of clinical professionals, clinical site activation costs and costs related to the preparation of our clinical trials which began in the second quarter of 2021. We expect clinical trial expenses to increase moving forward due to patient enrollment, treatment, follow-up visits, clinical sample testing and medical site monitoring.

(5)

All other expenses decreased as validation testing for the electronic SkinGun ™ concluded and we transitioned to prototype development of the cell isolation device at StemCell Systems.

General and Administrative Expenses

		Three Months Ended September 30,				Increase /			Nine Months Ended September 30,					Increase /
		2021		2020		(Decrease)			2021			2020		(Decrease)
Personnel related⁽¹⁾	$	223,591	$	245,135	$	(21,544	)	$	691,954		$	681,823	$	10,131
Stock-based compensation⁽²⁾		44,000		664,544		(620,544	)		(1,138,601	)		2,084,953		(3,223,554	)
Professional and consultant fees⁽³⁾		644,077		246,062		398,015			1,069,550			790,826		278,724
All other⁽⁴⁾		44,231		135,149		(90,918	)		196,762			466,715		(269,953	)
Total G&A Expense	$	955,899	$	1,290,890	$	(334,991	)	$	819,665		$	4,024,317	$	(3,204,652	)

(1)

Personnel related costs are expected to decrease slightly due to lower headcount starting mid-year 2021.

(2)

Stock compensation expense decreased due to the forfeiture and cancellation of 2,805,571 stock options as a result of the resignation of the Company’s former Chairman, President and Chief Executive Officer, the Company’s former Chief Financial Officer, and two members of the Company’s Board of Directors. Compensation expense was recorded on these options prior to their full vesting. As a result, the Company recognized a $0 and $1,314,705 reversal of the prior recognized compensation expense related to the cancelled options for the three and nine months ended September 30, 2021, respectively. The G&A expense recognized for options still in their vesting period totaled $44,000 and $176,104 during the three and nine months ended September 30, 2021, respectively.

(3)

Professional and consultant fees increased primarily due to an increase in legal fees related to the SEC Complaint and fees related to our patents and trademarks offset by a decrease in accounting and consulting fees.

(4)

All other costs decreased primarily due to the absence of the charitable contribution to the Office of Research at the University of Pittsburgh which the Company recognized $125,000 during the nine months ended September 30, 2020 in addition to decreases in investor relations and insurance offset by an increase in rent.

Liquidity and Capital Resources

The Company does not have any commercialized products, has not generated any meaningful revenue since inception and has sustained recurring losses and negative cash flows since inception. The Company has incurred operating losses of ~~$7,115,700~~$3.3 million and ~~$2,448,280 for~~$7.1 million during the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively. ~~For the three months ended September 30, 2020 and 2019 we have incurred operating losses of $2,842,879 and $1,200,781, respectively. We expect~~The Company expects to incur losses as ~~we continue~~it continues development of ~~our~~its products and ~~technologies and prepare to commence~~technologies. Historically, the ~~clinical trial~~ ~~to evaluate the safety and feasibility of autologous stem cells rendered by our CellMist™ System from donor skin and applied topically with the SkinGun™ spray device for treatment of burn wounds.~~

~~We have~~Company has been funded through the sale of equity ~~securities. As of~~securities and debt financings. At September 30, ~~2020,~~2021, the Company had ~~$8,671,295~~approximately $3,400,000 in cash on hand and current liabilities of $713,000. The Company estimates cash ~~and cash equivalents. We believe~~will be depleted in less than one year from the date that ~~we currently have~~these financial statements are available to be issued, if the Company does not generate sufficient cash to ~~meet our funding requirements through~~support operations. The future of the ~~next fiscal year.~~Company will depend on its ability to successfully raise capital from external sources to fund operations. If the Company is unable to obtain adequate funds, or if such funds are not available to it on acceptable terms, the Company's ability to continue its business to develop its cellular therapies will be significantly impaired and it may cause the Company to curtail operations.

~~Cash~~Net cash used in ~~investing~~operating activities was ~~$49,268 for~~$4.0 million during the nine months ended September 30, ~~2020 compared with~~2021, primarily due to operating costs of $3.3 million and the payment of liabilities of approximately $600 thousand.

Net cash used in investing was $0 for the nine months ended September 30, ~~2019. The increase is due to~~2021 and $49 thousand for the ~~payment of a security deposit~~nine months ended September 30, 2020.

There was no net cash used in financing activities during the nine months ended September 30, 2021 and ~~office furniture for our new corporate headquarters located in Roseland, New Jersey.~~2020.

Fair Value of Financial Instruments and Risks

The carrying value of cash ~~and cash equivalents, prepaid expenses~~ and accounts payable approximate their fair value because of the short-term nature of these instruments and their liquidity. Management is of the opinion that ~~we are~~the Company is not exposed to significant interest or credit risks arising from these financial instruments.

~~Off-balance~~Market Risk Disclosures

We have not entered into derivative contracts either to hedge existing risks or for speculative purposes during the nine months ended September 30, 2021 or year ended December 31, 2020, and the subsequent period through the date of this report.

Off-Balance Sheet Arrangements and Contractual Obligations

We do not have any off-balance sheet arrangements or contractual obligations at September 30, ~~2020,~~2021, and the subsequent period to through the date of this annual report, that are likely to have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that have not been disclosed in our consolidated financial statements.

Recently ~~Issued~~ Accounting Standards

See Note 1 to our Consolidated Financial Statements for more information regarding recent accounting standards and their impact to our consolidated results of operations and financial position.

Transactions with Related ~~Party Transactions~~Persons

~~During the nine months ended September 30, 2020, Talia Jevan Properties, Inc. made a payment~~See Note 6 to our Consolidated Financial Statements for more information regarding transactions with related persons and their impact to our consolidated results of $10,811 to Stephen Yan-Klassen, former CFO, for his salary on our behalf. Talia Jevan Properties, Inc. is a related party of Harmel Rayat, Chairman of the Board. The total compensation Talia Jevan Properties, Inc. made to Stephen Yan-Klassen during the threeoperations and ~~nine months ended September 30, 2020 was $0 and $10,811, respectively. Subsequent to the period ended September 30, 2020 the $10,811 owed was paid to Talia Jevan Properties, Inc.~~financial position.

On August 1, 2013, we entered into a consulting agreement, as amended on May 1, 2016, with Jatinder Bhogal, an individual owning in excess of 5% of our issued and outstanding shares of common stock, to provide consulting services to the Company through his wholly owned company, Vector Asset Management, Inc. (“VAM”). Pursuant to the consulting agreement VAM assisted us with the identification of subject matter experts in the medical device and biotechnology industries and assisted the Company with its ongoing research, development and eventual commercialization of our Regeneration Technology. Pursuant to an amendment dated May 1, 2016, the VAM monthly consulting fee was increased from $5,000 to $6,800. On June 22, 2018, we entered into an Executive Consulting Agreement (“ECA”) pursuant to which Mr. Bhogal served as the Company’s Chief Operating Officer. The ECA supersedes the prior consulting agreement. Pursuant to the ECA, VAM will receive compensation of $120,000 per year. On July 1, 2020 we amended the agreement and will pay VAM $4,000 monthly through December 31, 2020 and $2,000 per month thereafter until May 31, 2021 at which time the agreement will expire. During the three months ended September 30, 2020 and 2019, we recognized expenses of $12,000 and $30,000 and during the nine months ended September 30, 2020 and 2019 we recognized $72,000 and $90,000 respectively, in expenses for consulting services provided by VAM. Jatinder Bhogal resigned as the Company’s COO effective June 30, 2020.

Kalen Capital Corp (“KCC”) is wholly owned by Mr. Harmel Rayat, the Chairman of the Board. On April 1, 2020 KCC provided us short-term advance of $50,000 to the Company. The short-term advance was repaid to KCC in July 2020. We also paid KCC $65,156 for reimbursable expenses in October 2020.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined as a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company maintains “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) and 15d-15(e) of the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that our internal control over financial reporting was not effective at September 30, ~~2020 because of the material weaknesses described below.~~

~~There is~~2021 due to inadequate segregation of duties consistent with control objectives. Our Company’s management is comprised of a very small number of individuals resulting in a situation where limitations of segregation of duties exist. In order to remedy this situation, we would need to hire additional staff to provide greater segregation of duties. ~~In addition, management has concluded~~Management believes that ~~there~~the material weaknesses set forth above were the result of the scale of our operations and are ~~ineffective monitoring controls related~~intrinsic to ~~the~~our small size and that this weakness did not have a material effect on our financial ~~close~~statements and ~~reporting process, including management’s risk assessment process and its identification, evaluation, and timely remediation~~results of ~~control deficiencies.~~operations.

Changes in Internal Control over Financial Reporting

~~During the period ended September 30, 2020 the Company hired additional personnel including a new Chief Financial Officer to work to remediate material weaknesses of~~There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), or in factors that could materially affect internal controls, during the ~~period~~three months ended September 30, ~~2020.~~2021, or subsequent to the date that management completed their evaluation, that materially affected, or are reasonably likely to materially affect, our internal control over financing reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

~~None.~~From time to time, we are involved in litigation and other proceedings, including matters related to intellectual property and regulatory claims. See Note 5 to our unaudited consolidated financial statements for information on certain legal proceedings, which is incorporated by reference herein.

Item 1A. Risk Factors

~~Smaller reporting companies~~Our results of operations and financial condition could be adversely affected by numerous risks. In addition to the other information in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for Fiscal 2020. These are not ~~required~~the only risks and uncertainties facing us. Additional risks not currently known to ~~provide the information required by this item.~~us or that we currently believe are immaterial may also negatively impact our business, financial condition, results of operations and future prospects.

~~Item 2. Unregistered Sales~~We are the subject of ~~Equity Securities and Use~~an SEC Complaint. Adverse developments in our ongoing proceeding and/or future legal proceedings could have a material adverse effect on our business, reputation, financial condition, results of ~~Proceeds~~operations or stock price.

~~None.~~

We are currently subject to an SEC Complaint. Refer to Note 5 to our Consolidated Financial Statements of this Quarterly Report for additional information regarding this specific matter. We may be subject to additional investigations, arbitration proceedings, audits, regulatory inquiries and similar actions, including matters related to intellectual property, employment, securities laws, disclosures, tax, accounting, class action and product liability, as well as regulatory and other claims related to our business and our industry, which we refer to collectively as legal proceedings. We cannot predict the outcome of any particular proceeding, or whether ongoing investigations, will be resolved favorably or ultimately result in charges or material damages, fines or other penalties, enforcement actions, bars against serving as an officer or director, or practicing before the SEC, or civil or criminal proceedings against us or members of our senior management.

Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, can be expensive and disruptive. Our insurance may not cover all claims that may be asserted against us, and we are unable to predict how long the legal proceedings to which we are currently subject will continue. An unfavorable outcome of any legal proceeding may have an adverse impact on our business, financial condition and results of operations or our stock price. Any proceeding could negatively impact our reputation among our stakeholders. Furthermore, publicity surrounding ongoing legal proceedings, even if resolved favorably for us, could result in additional legal proceedings against us, as well as damage our image.

Item 6. Exhibits

Exhibit No.		Description of Exhibit ~~No.~~
~~4.1~~31.1		Stock Option Agreement dated as of July 30, 2020 **
~~10.1~~		Director’s Offer Letter dated as of July 13, 2020 between the Company and Lydia Evans.**
~~10.2~~		Director’s Retention Letter dated as of October 8, 2020 between the Company and Kenneth Kirkland**
~~10.3~~		~~Strategic Research and Development Agreement dated as of July 1, 2020 by and between Renovacare, Inc. and StemCell Systems GmbH (incorporated by reference to Form 8-K filed on July 7, 2020).~~
~~10.4~~		Right of First Refusal and Corporate Opportunities Agreement dated as of July 29, 2020 by and among RenovaCare. Inc., StemCell Systems GmbH, Jörg Gerlach, and Reinhard Bornemann.**
~~31.1~~		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a).*
31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a).*
32.1		Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

~~101. INS~~101.INS		Inline XBRL Instance Document**
~~101. SCH~~101.SCH		Inline XBRL Taxonomy Extension - Schema Document**
~~101. CAL~~101.CAL		Inline XBRL Taxonomy Extension - Calculation Linkbase Document**
~~101. DEF~~101.DEF		Inline XBRL Taxonomy Extension - Definition Linkbase Document**
~~101. LAB~~101.LAB		Inline XBRL Taxonomy Extension - Label Linkbase Document**
~~101. PRE~~101.PRE		Inline XBRL Taxonomy Extension - Presentation Linkbase Document**
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_______________

Filed herewith.

Furnished herewith. ~~XBRL (eXtensible~~iXBRL (Inline eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RenovaCare, Inc.

(Registrant)

Date: November ~~13, 2020~~12, 2021	By:	/s/ ~~Alan L. Rubino~~Dr. Kaiyo Nedd
	Name:	~~Alan L. Rubino~~Dr. Kaiyo Nedd
	Title:	Chief Executive Officer
		(Principal Executive Officer)


Date: November ~~13, 2020~~12, 2021	By:	/s/ ~~Robert W. Cook~~Justin Frere, CPA
	Name:	~~Robert W. Cook~~Justin Frere, CPA
	Title:	Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

Nevada		~~98-0170247~~98-0384030
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	(Do not check if a smaller reporting company)
Smaller reporting company	☒	Emerging Growth Company	☐

		Page #
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Balance Sheets		1
	~~Condensed~~ Consolidated ~~Balance Sheets as~~Statements of ~~September 30, 2020 (unaudited) and December 31, 2019~~Operations		12
	Consolidated Statements of Stockholders’ Equity		3
	Consolidated Statements of Cash Flows		4
	Notes to Consolidated Financial Statements		5

Item 2.	~~Condensed Consolidated Statements~~Management's Discussion and Analysis of ~~Operations for the Three~~Financial Condition and ~~Nine Months Ended September 30, 2020 and 2019 (unaudited)~~Results of Operations		213

Item 3.	~~Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2020~~Quantitative and ~~2019 (unaudited)~~Qualitative Disclosures About Market Risk		318

Item 4.	~~Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020~~Controls and ~~2019 (unaudited)~~Procedures		418

PART II - OTHER INFORMATION

~~Notes to Condensed Consolidated Financial Statements~~Item 1.	Legal Proceedings		519

Item 2.1A.	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~Risk Factors		1219

Item 3.6.	~~Quantitative and Qualitative Disclosures About Market Risk~~Exhibits		2120

~~Item 4.~~	~~Controls and Procedures~~	21
Signatures
~~PART II - OTHER INFORMATION~~

~~Item 1.~~	~~Legal Proceedings~~	22

~~Item 1A.~~	~~Risk Factors~~	22

~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	22

~~Item 6.~~	~~Exhibits~~	23

~~Signatures~~		2421


	September 30,			December 31,
	2021			2020
ASSETS		(Unaudited)
Current assets
Cash	$	3,421,765		$	7,412,969
Prepaid expenses		464,315			566,275
Total current assets		3,886,080			7,979,244

Equipment, net of accumulated depreciation of $10,630 and $3,584, respectively		31,594			38,640
Intangible assets		152,854			152,854
Security Deposit		7,995			7,995
Right of Use Asset		41,171			79,462
Other Assets		72,497			137,749
Total assets	$	4,192,191		$	8,395,944

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable and accrued liabilities	$	670,125		$	1,237,437
Lease liability - current		43,192			51,125
Total current liabilities		713,317			1,288,562
Lease Liability - long term		-			28,607
Total liabilities		713,317			1,317,169

Commitments and contingencies		-			-

Stockholders' equity
Preferred stock: $0.0001 par value; 10,000,000 shares authorized, 0 shares issued and outstanding		-			-
Common stock: $0.00001 par value; 500,000,000 shares authorized, 87,352,364 shares issued and outstanding at September 30, 2021 and December 31, 2020		874			874
Additional paid-in capital		36,373,669			36,846,082
Retained deficit		(32,895,669	)		(29,768,181	)
Total stockholders' equity		3,478,874			7,078,775
Total liabilities and stockholders' equity	$	4,192,191		$	8,395,944


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenue	$	-		$	-		$	-		$	-

Operating expenses
Research and development		744,625			1,551,989			2,503,487			3,091,383
General and administrative		955,899			1,290,890			819,665			4,024,317
Total operating expenses, net		1,700,524			2,842,879			3,323,152			7,115,700
Loss from operations		(1,700,524	)		(2,842,879	)		(3,323,152	)		(7,115,700	)

Other income
Interest income		2,239			24,915			4,861			111,390
Other income		-			-			190,803			-
Total other income		2,239			24,915			195,664			111,390
Net loss	$	(1,698,285	)	$	(2,817,964	)	$	(3,127,488	)	$	(7,004,310	)

Basic and Diluted Loss per Common Share	$	(0.02	)	$	(0.03	)	$	(0.04	)	$	(0.08	)

Weighted average number of common shares outstanding - basic and diluted		87,352,364			87,352,364			87,352,364			87,352,364


						Additional						Total
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021	Common Stock					Paid-in			Retained			Stockholders'
	Shares			Amount		Capital			Deficit			Equity
Balance, December 31, 2020	87,352,364		$	874	$	36,846,082		$	(29,768,181	)	$	7,078,775
Stock based compensation due to common stock purchase options	-			-		352,063			-			352,063
Reversal of stock based compensation due to common stock purchase option cancellations	-			-		(1,248,575	)		-			(1,248,575	)
Net loss for the three months ended March 31, 2021	-			-		-			(517,242	)		(517,242	)
Balance, March 31, 2021	87,352,364			874		35,949,570			(30,285,423	)		5,665,021
Stock based compensation due to common stock purchase options	-			-		243,979			-			243,979
Reversal of stock based compensation due to common stock purchase option cancellations	-			-		(66,130	)		-			(66,130	)
Net loss for the three months ended June 30, 2021	-			-		-			(911,961	)		(911,961	)
Balance, June 30, 2021	87,352,364			874		36,127,419			(31,197,384	)		4,930,909
Stock based compensation due to common stock purchase options	-			-		246,250			-			246,250
Net loss for the three months ended September 30, 2021	-			-		-			(1,698,285	)		(1,698,285	)
Balance, September 30, 2021	87,352,364		$	874	$	36,373,669		$	(32,895,669	)	$	3,478,874

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

Balance, December 31, 2019	87,352,364		$	874	$	32,378,833		$	(20,219,845	)	$	12,159,862
Stock based compensation due to common stock purchase options	-			-		465,763			-			465,763
Net loss for the three months ended March 31, 2020	-			-		-			(1,174,753	)		(1,174,753	)
Balance, March 31, 2020	87,352,364			874		32,844,596			(21,394,598	)		11,450,872
Stock based compensation due to common stock purchase options	-			-		1,586,522			-			1,586,522
Net loss for the three months ended June 30, 2020	-			-		-			(3,011,593	)		(3,011,593	)
Balance, June 30, 2020	87,352,364	��		874		34,431,118			(24,406,191	)		10,025,801
Stock based compensation due to common stock purchase options	-			-		1,119,815			-			1,119,815
Stock based compensation issued for prepaid services	-			-		260,997			-			260,997
Net loss for the three months ended September 30, 2020	-			-		-			(2,817,964	)		(2,817,964	)
Balance, September 30, 2020	87,352,364		$	874	$	35,811,930		$	(27,224,155	)	$	8,588,649

Stock options	5,883,070	317,500	5,883,070	317,500
Warrants	12,296,912	13,106,912	12,296,912	13,106,912
Total shares not included in the computation of diluted losses per share	18,179,982	13,242,412	18,179,982	13,424,412

Summary of computation of basic and diluted net loss per share
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Basic and Diluted EPS Computation
Numerator:
Loss available to common stockholders'	$	(1,698,285	)	$	(2,817,964	)	$	(3,127,488	)	$	(7,004,310	)
Denominator:
Weighted average number of common shares outstanding		87,352,364			87,352,364			87,352,364			87,352,364
Basic and diluted EPS	$	(0.02	)	$	(0.03	)	$	(0.04	)	$	(0.08	)

The shares listed below were not included in the computation of diluted losses
per share because to do so would have been antidilutive for the periods presented:
Stock options		3,139,999			5,845,570			3,139,999			5,845,570
Warrants		11,712,496			12,296,912			11,712,496			12,296,912
Total shares not included in the computation of diluted losses per share		14,852,495			18,142,482			14,852,495			18,142,482

		Shares of Common Stock Issuable from Warrants Outstanding as of				Weighted
		September 30,		December 31,		Average
Description		2020		2019		Exercise Price		Expiration
	Series D		-		810,000	$	1.10	June 5, 2020
	Series E		584,416		584,416	$	1.54	September 8, 2021
	Series F		7,246		7,246	$	3.45	February 23, 2022 & March 9, 2022
	Series G		460,250		460,250	$	2.68	July 21, 2022
	Series H		910,000		910,000	$	2.75	October 16, 2022
	Series I		10,335,000		10,335,000	$	2.00	November 26, 2025
	Total		12,296,912		13,106,912

Summary of warrants outstanding
	Shares of Common Stock Issuable from Warrants Outstanding as of			Weighted
	September 30,	December 31,		Average
Description	2021	2020		Exercise Price	Expiration
Series E	-	584,416	$	1.54	September 9, 2021
Series F	7,246	7,246	$	3.45	February 23, 2022 & March 9, 2022
Series G	460,250	460,250	$	2.68	July 21, 2022
Series H	910,000	910,000	$	2.75	October 16, 2022
Series I	10,335,000	10,335,000	$	2.00	November 26, 2025
Total	11,712,496	12,296,912

	Number of Options			Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($)
Outstanding at December 31, 2019		2,317,500			2.68		5.68	$	1,460,507
Grants		3,565,570			2.30		-		-
Forfeited		(37,500	)		4.20		-		-
Outstanding at September 30, 2020		5,845,570			2.46		5.38	$	7,200,064
Vested and Exercisable at September 30, 2020		1,402,499			2.07		5.39		2,322,524
Available for grant at September 30, 2020		13,912,695

Summary of stock option activity
	Number of Options			Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($)
Outstanding at December 31, 2020		5,895,570			2.45		5.14		1,650
Granted		50,000			1.72		9.82		-
Forfeited		(2,805,571	)		2.74
Outstanding at September 30, 2021		3,139,999			2.17		4.79		1,650
Vested and exercisable at September 30, 2021		2,564,999			1.95		4.73		1,650

Summary of assumption of stock option activity
	Nine Months Ended September 30,
	2021			2020
Risk-free interest rate		0.73	%		0.021%	–	1.67%
Expected term in years		5.38			3.25	–	6.00
Weighted Avg. Expected Volatility		102.07			103.56%	–	110.71%
Expected dividend yield		0	%			0%

	Nine Months Ended
	September 30, 2020
Risk-free interest rate	0.21%	-	1.67%
Expected life in years	3.25	-	6.00
Expected Volatility	103.56%	-	110.71%
Expected dividend yield		0%

Summary of consolidated statement of operations
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021			2020
Research and development	$	224,000	$	455,271	$	731,438		$	1,087,147
General and administrative		44,000		664,544		(1,138,601	)		2,084,953
Total	$	268,000	$	1,119,815	$	(407,163	)	$	3,172,100

	Stock Options Outstanding						Stock Options Exercisable
Range of Exercise Prices	Number of Shares Subject to Outstanding Options		Weighted Average Contractual Life (years)		Weighted Average Exercise Price		Number of Shares Subject to Options Exercise		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
1.05		55,000		3.50		1.05		55,000		3.50		1.05
1.25		7,500		4.71		1.25		7,500		4.71		1.25
1.34		7,500		4.75		1.34		7,500		4.75		1.34
1.40		1,550,000		5.64		1.40		775,000		5.64		1.40
1.65		200,000		5.67		1.65		100,000		5.67		1.65
1.70		7,500		5.04		1.70		7,500		5.04		1.70
1.96		100,000		5.73		1.96		50,000		5.73		1.96
2.28		7,500		5.80		2.28		7,500		5.80		2.28
4.20		195,000		4.26		4.20		195,000		4.26		4.20
1.98		667,800		5.13		1.98		-		-		-
2.48		667,800		5.13		2.48		-		-		-
3.23		664,400		5.13		3.23		-		-		-
3.23		620,571		5.13		3.23		-		-		-
3.19		1,074,999		5.84		3.19		187,499		5.84		3.19
3.17		20,000		5.84		3.17		10,000		5.84		3.17

Total		5,845,570		5.38	$	2.44		1,402,499		5.39	$	2.07

Right-of-use asset	$	86,587
Short-term operating lease liability	$	44,458
Long-term operating lease liability	$	42,233
Remaining term (years)		1.9
Discount rate		7	%

Schedule of supplemental lease information
	As of September 30, 2021			As of December 31, 2020

Operating lease right-of-use asset	$	41,171		$	79,462

Current maturities of operating lease	$	43,192		$	51,125
Non-current operating lease		-			28,607
Total operating lease liabilities	$	43,192		$	79,732

Weighted Average remaining lease term (in years):		0.84			1.6
Discount rate:		7.0	%		7.0	%
Right-of-use asset obtained in exchange for lease obligation				$	98,402

Cash paid for amount included in the measurement of lease liabilities for operating lease		$	13,068
Right-of-use asset obtained in exchange for lease obligation		$	98,402

Years ending December 31, 2020,
2020 (remaining)	$	8,712
2021	$	52,787
Leases (Details 1)
Years ending December 31, 2021,
2021 (Remaining)			$	13,377
2022	$	31,213		31,213
Total future minimum lease payments	$	92,712		44,590
Less imputed interest	$	6,125		(1,398	)
Total	$	86,587	$	43,192

	Three Months Ended September 30,				Increase /		Percentage
	2020		2019		(Decrease)		Change
Operating expenses
Research and development	$	1,551,989	$	130,467	$	1,421,522		1090	%
General and administrative		1,290,890		1,070,314		220,576		20	%
Total operating expenses	$	2,842,879	$	1,200,781	$	1,642,098		136	%

	Nine Months Ended September 30,						Percentage
	2020		2019		Increase		Change
Operating expenses
Research and development	$	3,091,383	$	504,169	$	2,587,214		513	%
General and administrative		4,024,317		1,944,111		2,080,206		107	%
Total operating expenses	$	7,115,700	$	2,448,280	$	4,667,420		190	%