Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of August ~~10, 2018, 23,473,314~~12, 2019, 98,886,413 shares of the registrant’s common stock were outstanding.

This Quarterly Report on Form 10-Q contains “forward-looking statements”, as defined under United States federal securities laws. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. You should also refer to the section of our Annual report on Form 10-K entitled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us, or any other person, that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake to update any of the forward-looking statements after the date of this Quarterly Report, except to the extent required by applicable securities laws.

The “Risk Factors” included in the Company’s Annual Report on Form 10-K reflect the “Risk Factors” of H-CYTE (formerly MedoveX) business and do not include information relative to Regenerative Medicine Solutions, LLC, RMS Shareholder, LLC (“Shareholder”), Lung Institute LLC (“LI”), RMS Lung Institute Management LLC (“RMS LI Management”) and Cognitive Health Institute Tampa, LLC (“CHIT”), (collectively “RMS”).

							June 30, 2019 (Unaudited)			December 31, 2018
	June 30, 2018 (unaudited)			December 31, 2017
Assets

Current Assets
Cash	$	114,456		$	245,026		$	300,068		$	69,628
Accounts receivable		155,852			157,069			13,896			15,242
Other receivables		32,774			86,888			65,865			5,144
Inventory		293,946			294,714			129,264			—
Prepaid expenses		111,361			204,532			294,585			59,678
Short-term receivable		—			150,000
Total Current Assets		708,389			1,138,229			803,678			149,692
Property and Equipment, net of accumulated depreciation		73,279			87,173
Deposits		2,751			2,751

Right-of-use asset								973,386			—
Property and equipment, net								259,209			266,916
Intangibles, net								3,312,000			—
Goodwill								11,348,724			—
Other assets								29,239			38,288
Total Assets	$	784,419		$	1,228,153		$	16,726, 236		$	454,896
Liabilities and Stockholders’ (Deficit) Equity

Liabilities and Stockholders’ Equity (Deficit)

Current Liabilities
Interest payable	$	72,246		$	69,222		$	149,861		$	158,371
Accounts payable		492,822			196,171			717,079			851,604
Accounts payable to related parties		34,962			12,319			—			180,000
Accrued liabilities		189,833			64,000			422,458			183,183
Notes payable, current portion		88,170			132,294
Short-term note payable		100,000			—
Other current liabilities								733,111			462,856
Notes payable								193,445			30,852
Short-term note payable, net of debt discount								625,982			—
Dividend payable		7,707			—			97,315			—
Unearned revenue		—			1,048
Deferred revenue								838,377			326,064
Lease liability, current portion								482,632			—
Total Current Liabilities		985,740			475,054			4,260,260			2,192,930

Long-Term Liabilities
Notes payable, net of current portion		5,674			38,990
Lease liability, net of current portion								511,930			—
Convertible debt to related parties								—			4,306,300
Deferred rent		98			688			—			22,206
Total Long-Term Liabilities		5,772			39,678			511,930			4,328,506

Total Liabilities		991,512			514,732			4,772,190			6,521,436
Stockholders’ (Deficit) Equity
Series A Preferred stock - $.001 par value: 45,000 shares authorized, no shares issued and outstanding at June 30, 2018 (unaudited), 12,740 shares issued and outstanding and December 31, 2017		—			13
Series B Preferred stock - $.001 par value: 10,000 shares authorized, 9,250 shares issued and outstanding at June 30, 2018 (unaudited), no shares issued and outstanding at December 31, 2017		9			—
Common stock - $.001 par value: 49,500,000 shares authorized, 23,473,314 and 21,163,013 shares issued and outstanding at June 30, 2018 (unaudited) and December 31, 2017, respectively		23,473			21,163

Commitments and Contingencies (Note 10)

Stockholders’ Equity (Deficit)
Series A Convertible Preferred Stock - $.001 par value: 500,000 shares authorized, no shares issued and outstanding at June 30, 2019 and December 31, 2018								—			—
Series B Convertible Preferred Stock - $.001 par value: 10,000 shares authorized, 7,000 and 0 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively								7			—
Series C Convertible Preferred Stock - $.001 par value: 45,000 shares authorized, no shares issued and outstanding at June 30, 2019 and December 31, 2018								—			—
Common stock - $.001 par value: 199,000,000 and 49,500,000 shares authorized as of June 30, 2019 and December 31, 2018, respectively. 98,886,360 and 33,661,388 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively								98,887			33,661
Additional paid-in capital		34,926,514			33,509,648			25,705,975			3,566,339
Accumulated deficit		(35,157,089	)		(32,817,403	)		(13,480,691	)		(9,296,408	)
Total Stockholders’ (Deficit) Equity		(207,093	)		713,421
Total Liabilities and Stockholders’ (Deficit) Equity	$	784,419		$	1,228,153
Non-controlling interest								(370,132	)		(370,132	)
Total Stockholders’ Equity (Deficit)								11,954,046			(6,066,540	)

Total Liabilities and Stockholders’ Equity (Deficit)							$	16,726,236		$	454,896

See accompanying notes to ~~condensed~~the unaudited consolidated financial statements

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY (DEFICIT)

See accompanying notes to ~~condensed~~the unaudited consolidated financial statements

~~MedoveX Corp. (the “Company” or “MedoveX”) was incorporated in Nevada on~~On July ~~30, 2013 as SpineZ~~11, 2019, Medovex Corp. (“~~SpineZ”~~MedoveX”) ~~and~~ changed its ~~name~~named to ~~MedoveX Corp. on March 20, 2014. MedoveX is~~“H-CYTE, Inc.” (H-CYTE or the ~~parent company~~Company) by filing a Certificate of ~~Debride Inc. (“Debride”~~Amendment (the “Amendment”)~~, which was incorporated under~~ to the ~~laws~~Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Secretary of the State of Nevada. The name change and the Company’s new symbol, HCYT, became effective with FINRA on July 15, 2019.

On October 18, 2018, H-CYTE (formerly named MedoveX) entered into an Asset Purchase Agreement with Regenerative Medicine Solutions, LLC, RMS Shareholder, LLC (“Shareholder”), Lung Institute LLC (“LI”), RMS Lung Institute Management LLC (“RMS LI Management”) and Cognitive Health Institute Tampa, LLC (“CHIT”), (collectively “RMS”). On January 8, 2019, the Asset Purchase Agreement was amended and the Company acquired certain assets and assumed certain liabilities of RMS as reported in the 8-K/A filed in March of 2019. Based on the terms of the Asset Purchase Agreement and its amendment, the former RMS members had voting control of the combined company as of the closing of the RMS acquisition. For accounting purposes, the acquisition transaction has been treated as a reverse acquisition whereby the Company is deemed to have been acquired by RMS and the historical financial statements prior to the acquisition date of January 8, 2019 now reflect the historical financial statements of RMS.

Prior to the merger of H-CYTE and RMS on January 8, 2019, the consolidated results for H-CYTE included the financial activities of Regenerative Medicine Solutions, LLC, LI, RMS Nashville, LLC (“Nashville”), RMS Pittsburgh, LLC (“Pittsburgh”), RMS Scottsdale, LLC (“Scottsdale”), RMS Dallas, LLC (“Dallas”), State, LLC (“State”), CHIT, RMS LI Management, and Shareholder, H-CYTE included Lung Institute Dallas, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as VIEs.

As of the merger, the consolidated results for H-CYTE include the following wholly-owned subsidiaries: Debride Inc., Blue Zone Health Management, LLC (“BZHM”, changed in July to H-CYTE Management, LLC), Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC (formerly Blue Zone Lung Tampa, LLC). Additionally, H-CYTE has consolidated LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale, as VIEs.

The Company’s RMS division is a healthcare medical biosciences company that develops and implements advanced innovative treatment options in regenerative medicine to treat an array of debilitating medical conditions. In addition, the company is the operator and manager of the various Lung Health Institute clinics. Committed to an individualized patient-centric approach, RMS consistently provides oversight and management of the highest quality care while producing positive outcomes. RMS offices are located in Tampa, Florida. The Lung Health Institute located in Tampa, Florida ~~on October 1, 2012.~~ is a wholly owned subsidiary of RMS. RMS also provides oversight and management to the Lung Health Institutes located in Nashville, TN, Scottsdale AZ, Pittsburgh, PA, and Dallas, TX.

The Company is also in the business of designing and marketing proprietary medical devices for commercial use in the United States and Europe. The Company received CE marking in June 2017 for the DenerveX System and it is now commercially available throughout the European Union and several other countries that accept CE marking. The Company’s first sale of the DenerveX System occurred in July 2017. The Company plans to seek approval for the DenerveX System from the Food & Drug Administration (“FDA”) in the United States. The Company is presently reevaluating its approaches to revenue generation including the continuing use of its distribution channels and source of manufacturing.

Based on the terms of the Asset Purchase Agreement and its amendment, the former RMS members had voting control of the combined company as of the closing of the RMS acquisition. RMS is deemed to be the acquiring company for accounting purposes and the transaction is accounted for as a reverse acquisition under the acquisition method of accounting for business combinations in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The assets acquired and the liabilities assumed of RMS included as part of the purchase transaction are recorded at historical cost. Accordingly, the assets and liabilities of H-CYTE are recorded as of the merger closing date at their estimated fair values. (See Note 3.)

Further, the Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Stockholders’ Equity (Deficit), and the Consolidated Statements of Cash Flows do not reflect the historical financial information related to H-CYTE prior to the merger. The Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Stockholders’ Equity (Deficit), and the Consolidated Statements of Cash Flows only reflect the historical financial information related to RMS prior to the merger. For the Consolidated Statements of Stockholders’ Equity (Deficit), the common stock, preferred stock, and additional paid in capital reflect the accounting for the stock received by the RMS members as of the merger as if it was received as of the beginning of the periods presented. The Consolidated Statements of Stockholders’ Equity (Deficit) reflects the activity from March 31, 2019 to June 30, 2019 and December 31, 2018 to June 30, 2019. For the comparable period from December 31, 2017 to June 30, 2018, the only activity in the Consolidated Statement of Stockholders’ Equity (Deficit) were the losses of approximately $362,722 and $1,259,922 for the three and six months ended June 30, 2018, respectively.

The accompanying unaudited ~~condensed~~ consolidated financial statements have been prepared in accordance with ~~United States (“~~U.S.~~”) generally accepted accounting principles (“GAAP”)~~ GAAP and with the rules and regulations of the Securities and Exchange Commission (“SEC”) that permit reduced disclosure for interim periods. The unaudited interim ~~condensed~~ consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments which included only normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2019 and December 31, 2018 and the results of operations and cash flows for the three and six months ended June 30, ~~2018~~2019 and ~~2017, and cash flows for the six months ended June 30, 2018 and 2017.~~ 2018.

These unaudited ~~condensed~~ consolidated financial statements should be read in conjunction with the consolidated financial statements, and notes thereto for the fiscal year ended December 31, ~~2017,~~2018, included in the Company’s Annual Report on Form 10-K. The December 31, 2018 financial information included in the Company’s Annual Report on Form 10-K reflect the historical financial information of H-CYTE business and do not include the RMS financial information. With the reverse merger, historical financial information for periods prior to the merger on January 8, 2019, presented in the comparative financial information included in the 2019 Form 10-Q, will only reflect the historical financial information related to RMS prior to the merger. (See Note 3.)

The results for the three and six months ended June 30, ~~2018~~2019 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2018~~2019 or for any other interim period or for any future year.

~~These unaudited condensed~~U.S. GAAP requires that a related entity be consolidated with a company when certain conditions exist. An entity is considered to be a variable interest entity (VIE) when it has equity investors who lack the characteristics of having a controlling financial interest, or its capital is insufficient to permit it to finance its activities without additional subordinated financial support. Consolidation of a VIE by the Parent would be required if it is determined that the Parent will absorb a majority of the VIE’s expected losses or residual returns if they occur, retain the power to direct or control the VIE’s activities, or both.

Prior to the merger of H-CYTE and RMS on January 8, 2019, the consolidated results for H-CYTE include the financial activities of Regenerative Medicine Solutions, LLC, LI, Nashville, Pittsburgh, Scottsdale, Dallas, State, CHIT, RMS LI Management, and Shareholder. Additionally, H-CYTE has consolidated LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale, as VIEs.

The accompanying consolidated financial statements include the accounts of the parent, its wholly-owned subsidiaries, and its VIEs.

Accounts receivable primarily represent amounts due from customers for which revenue has been recognized. Generally, the Company does not require collateral or any other security to support its receivables. Trade accounts receivable are stated net of an estimate made for doubtful accounts, if any. Management evaluates the adequacy of the allowance for doubtful accounts regularly to determine if any account balances will potentially be uncollectible. Customer account balances are considered past due or delinquent based on the contractual agreement with each customer. Accounts are written off when, in management’s judgment, they are considered uncollectible. At June 30, 2019 and December 31, 2018, management believes no allowance is necessary. For the three month period ended June 30, 2019, the Company recorded bad debt expense of approximately $60,000.

Goodwill is recorded at fair value and not amortized but is reviewed for impairment at least annually or more frequently if impairment indicators arise. Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value is “more likely than not” less than the carrying amount or if significant changes related to the business have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required. The Company can elect to forego the qualitative assessment and perform the quantitative test.

If the carrying amount exceeds its fair value, “Step 1” is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. This step compares the implied fair value of goodwill with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

The implied fair value of goodwill is determined by assigning the fair value to all the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The Company has elected to perform the annual impairment assessment for goodwill in the fourth quarter.

Intangibles acquired in a business combination are recorded at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over the estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may be greater than fair value. The Company’s intangible assets are patents and related proprietary technology for the DenerveX System.

In February 2016, the Financial Accounting Standard Board (“FASB”) established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2019-01, Codification Improvements; ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.

The Company has not entered into significant lease agreements in which it is the lessor; however, the Company does have lease agreements in which it is the lessee. Under Topic 842, lessees are required to recognize a lease liability and right-of-use asset for all leases (with the exception of short-term leases) at the lease commencement date. Effective January 1, 2019, the Company adopted this guidance, applied the modified retrospective transition method and elected the transition option to use the effective date as the date of initial application. The Company recognized the cumulative effect of the transition adjustment on the consolidated balance sheet as of the effective date and did not provide any new lease disclosures for periods before the effective date. With respect to the practical expedients, the Company elected the package of transitional-related practical expedients and the practical expedient not to separate lease and non-lease components. At January 1, 2019, additional current lease liabilities of $475,000 and long-term lease liabilities of $713,000 with corresponding ROU assets of $1,167,000 were recognized based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

Other receivables totaling approximately $66,000 at June 30, 2019 include receivables from the non-acquired Lung Institute, LLC to Lung Institute Tampa, LLC (formerly Blue Zone Lung Tampa) for approximately $53,000 and approximately $9,000 reimbursement receivable for reimbursement of expenses from a joint study. The $53,000 receivable was a result of Lung Institute, LLC being a transitory entity for Lung Institute Tampa, LLC while general liability insurance and the merchant services accounts were being transferred. A portion of the $53,000 receivable totaling $20,000 was paid to Lung Institute Tampa, LLC in July 2019.

The Company recognizes revenue in accordance with generally accepted accounting principles as outlined in the FASB Accounting Standards Codification 606, Revenue From Contracts with Customers, which requires that five steps be completed to determine when revenue can be recognized: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation. The Company records revenue under ASC 606 at a single point in time, when control is transferred to the customer, which is consistent with past practice. The adoption of this standard did not have a material impact on the consolidated financial statements.

The Company sells the DenerveX System through a combination of direct sales and independent distributors in international markets. The Company recognizes revenue when title to the goods and risk of loss transfers to customers, provided there are no material remaining performance obligations required of the Company or any matters of customer acceptance. The Company only records revenue when collectability is reasonably assured. Utilizing the five-step method outlined in Topic 606 to determine when revenue should be recognized, the Company’s ~~results~~policy is to recognize revenue when product is shipped to the customer, whether that customer is a distributor or an end user, as is the case in Germany.

RMS wholly owns the Tampa, Florida Lung Health Institute (LHI) location and manages the other Lung Health Institute locations. The Lung Health Institute uses a standard pricing model for the types of ~~operations~~cellular therapy treatments that is offered to its patients. The transaction price accounts for medical, surgical, facility, and office services rendered by LHI for consented procedures and is recorded as revenue. The company recognizes revenue when the terms of a contract with a patient are satisfied.

LHI offers two types of cellular therapy treatments to their patients. The first type of treatment includes medical services rendered typically over a two-day period in which the patient receives cellular therapy. For this treatment type, revenue is recognized in full at time of service. LHI also offers a four-day treatment in which medical services are rendered typically over a two-day period and then again, approximately three months later, medical services are rendered for an additional two-days of treatment. Payment is collected in full for both service periods at the time the first treatment is rendered. Revenue is recognized when services are performed based on the related professional, facility, and diagnostic services for each session of treatment. The Company has deferred recognition of revenue amounting to approximately $838,000 and $326,000 at June 30, 2019 and December 31, 2018, respectively.

The Company expenses all advertising costs as incurred. For the three and six months ended June 30, 2019, the Company had approximately $1,585,000 and $2,720,000, respectively, in advertising costs, as compared to $419,000 and $1,157,000, respectively, for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017, include Debride and the accounts of the Company as well as its formerly wholly-owned subsidiary, Streamline Inc. (“Streamline”). All intercompany accounts and transactions have been eliminated in consolidation.2018.

In preparing the financial statements, U.S. GAAP requires disclosure regarding estimates and assumptions used by management that affect the amounts reported in financial statements and accompanying notes. The Company’s significant estimates include deferred revenue, the deferred income tax asset and the related valuation allowance, and the fair value of its share-based payment arrangements.

For those estimates that are sensitive to the outcome of future events, actual results could differ from those estimates.

The ~~Company’s revenues and expenses transacted~~Company transacts some of its operating activities in foreign currencies, ~~are recorded as they occur at exchange rates in effect at~~most notably the time of each transaction. Realized gains and losses on foreign currency transactions are recorded as a component of other income or expense, net on the Company’s consolidated statements of operations.Euro. The Company ~~recorded approximately $4,900~~also has certain assets and ~~$5,200, respectively,~~liabilities denominated in foreign ~~currency translation expense~~currencies that are translated to U.S. Dollars for reporting purposes as of and for the three and six months ended June 30, ~~2018. The Company did not incur any foreign currency transaction costs related to revenues~~2019. These amounts are immaterial and ~~expenses transacted~~are included in ~~foreign currencies~~other income (expense) for the three and six months ~~ending~~ended June 30, ~~2017.~~

~~Foreign currency denominated monetary assets and liabilities~~2019. Because of the ~~Company are measured at~~immaterial effect noted above, the end of each reporting period using the exchange rate as of the balance sheet date and are recorded as a component of other income or expense, net on the Company’s consolidated statements of operations. As of June 30, 2018, the Company recorded a net translation loss of approximately $5,900 in foreign currency denominated monetary assets and liabilities. The Company did not ~~incur any foreign currency translation costs related to foreign currency denominated monetary assets and liabilities for the three and six months ending June 30, 2017.~~present a separate statement of other comprehensive income.

The Company ~~considers~~maintains a stock option incentive plan and accounts for stock-based compensation in accordance with ASC 718,Compensation - Stock Compensation. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the ~~applicability~~requisite service period of the award to employees and ~~impact~~directors. As required by fair value provisions of ~~all ASUs issued, both effective~~share-based compensation, employee and ~~not yet effective.~~non-employee share-based compensation expense recognized is calculated over the requisite service period of the awards and reduced for estimated forfeitures.

From inception to June 30, 2019, the ~~FASB issued ASU 2014-09, “Revenue Recognition - Revenue from Contracts with Customers” (ASU 2014-09)~~Company has incurred net losses and, therefore, has no current income tax liability. The net deferred tax asset generated by these losses is fully reserved as of June 30, 2019 and December 31, 2018, respectively, since it is currently likely that ~~requires companies~~the benefit will not be realized in future periods.

As a result of the acquisition, the Company is required to ~~recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks~~file federal income tax returns and ~~rewards~~state income tax returns in the states of ~~a good~~Arizona, Florida, Georgia, Minnesota, Pennsylvania, Tennessee, and Texas. There are no uncertain tax positions at June 30, 2019 or ~~service. This update~~December 31, 2018. The Company has not undergone any tax examinations since inception.

Basic loss per share is ~~effective~~computed on the basis of the weighted average number of shares outstanding for ~~annual~~the reporting period. Diluted loss per share is computed on the basis of the weighted average number of common shares plus dilutive potential common shares outstanding using the treasury stock method. Any potentially dilutive securities are antidilutive due to the Company’s net losses.

For the periods ~~beginning on or after December 15, 2017~~presented, there is no difference between the basic and ~~interim periods therein~~diluted net loss per share: 30,108,743 warrants and ~~requires expanded disclosures. The adoption of this standard~~517,509 common stock options outstanding were considered anti-dilutive and excluded for the period ended June 30, 2019. For the six-month period ended June 30, 2018, there were no dilutive securities as the accounting acquirer did not historically have ~~a material impact on the consolidated financial statements.~~

In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842). The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. The Company is currently assessing the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.stock compensation programs.

~~Accounts receivable primarily~~On January 8, 2019, H-CYTE completed its business combination with RMS under which H-CYTE purchased certain assets and assumed certain liabilities of RMS. Pursuant to the terms of the Asset Purchase Agreement, H-CYTE issued to the shareholders of RMS 33,661 shares plus 6,111 additional exchange shares (based on closing the sale of $2 million of new securities) for a total of 39,772 shares of Series C Preferred Stock where each share of Series C Preferred stock will, at the date of closing, automatically convert into 1,000 shares of Common Stock and represent ~~amounts due from customers~~approximately fifty-five percent (55%) of the outstanding voting shares of the Company.

Under the terms of the Asset Purchase Agreement, the Company issued additional “Exchange Shares” to the shareholders of RMS to maintain the 55% ownership and not be diluted by the sale of convertible securities (“New Shares Sold”) until H-CYTE raised an additional $5.65 million via the issuance of new securities. On the date of closing the Company issued 6,111 additional Exchange Shares to RMS Shareholders as a result of the issuance of additional securities, which are included in the 39,772 shares above. Subsequent to the closing of the purchase transaction, an incremental 11,153 additional Exchange Shares were issued, for ~~which revenue~~a total of 17,264 additional Exchange Shares. All additional Exchange Shares have been issued to the shareholders of RMS and these Series C Preferred shares converted to 17,263,889 shares of Common Stock.

Because RMS shareholders own approximately 55% of the voting stock of H-CYTE after the transaction, RMS is deemed to be the acquiring company for accounting purposes (the “Acquirer”) and the transaction is accounted for as a reverse acquisition under the acquisition method of accounting for business combinations in accordance with U.S. GAAP. The assets acquired and the liabilities assumed of RMS included as part of the purchase transaction are recorded at historical cost. Accordingly, the assets and liabilities of H-CYTE (the “Acquiree”) are recorded as of the merger closing date at their estimated fair values.

Under the terms of the business combination with RMS, H-CYTE purchased certain assets and assumed certain liabilities of RMS. The assets of RMS reported on the H-CYTE consolidated balance sheet as of December 31, 2018 that were excluded in the January 8, 2019 transaction were cash of approximately $70,000. The liabilities of RMS reflected on the H-CYTE consolidated balance sheet as of December 31, 2018 but not assumed in the transaction included the following: convertible debt to a related party of approximately $4.3 million, interest payable of approximately $158,000, accounts payable of approximately $224,000 and other current liabilities of approximately $285,000. Additionally, there were certain on-going litigation matters that were not assumed as part of the January 8, 2019 RMS reverse acquisition.

The purchase price for the acquisition of the Acquiree has been ~~recognized. Generally,~~allocated to the assets acquired and liabilities assumed based on their estimated fair values. The purchase price allocation herein is preliminary. The final purchase price allocation will be determined after completion of a thorough analysis to determine the fair value of all assets acquired and liabilities assumed but in no event later than one year following completion of the acquisition. Accordingly, the final acquisition accounting adjustments could differ materially from the allocation reflected as of June 30, 2019 presented herein. Any increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could also materially change the portion of purchase price allocated to goodwill and could materially impact the operating results of the Company ~~does~~following the acquisition due to differences in purchase price allocation, depreciation and amortization related to some of these assets and liabilities.

During the three months ended June 30, 2019 the Company revised its purchase price allocation for the acquisition. As a result, the Company recorded a measurement period adjustment of $6,215,000 as an increase to goodwill adjusting the amount recorded as of March 31, 2019. The adjustment resulted in corresponding increase of $6,215,000 to additional paid in capital.

Just prior to the transaction, H-CYTE had 24.5 million shares of common stock outstanding at a market capitalization of $9.8 million. The estimated fair value of the net assets of H-CYTE was $8.4 million as of January 8, 2019. Measuring the fair value of the net assets to be received by RMS was readily determinable based upon the underlying nature of the net assets. The fair value of the H-CYTE common stock is above the fair value of its net assets. The H-CYTE net asset value is primarily comprised of definite-lived intangibles as of the closing and the RMS interest in the merger is significantly related to obtaining access to the public market. Therefore, the fair value of the H-CYTE stock price and market capitalization as of the closing date is considered to be the best indicator of the fair value and, therefore, the estimated purchase price consideration.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition on January 8, 2019:

Intangible assets are recorded as definite-lived assets and amortized over the estimated period of economic benefit. Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. Goodwill is not ~~require collateral~~expected to be deductible for income tax purposes. Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an annual basis or when indications of impairment exist.

Notes payable relate to promissory notes assumed by Aquiree in a 2015 acquisition, which was later divested in 2016, with the assumed promissory notes being retained by Aquiree. Payments on both of the notes are due in aggregate monthly installments of approximately $5,700 and carry an interest rate of 5%. Both of the notes have a maturity date of August 1, 2019. The Company is in the process of finalizing an eighteen month extension on the notes. The promissory notes had outstanding balances of approximately $99,000 plus accrued interest of approximately $3,000 at January 8, 2019. (See Note 11.)

Convertible notes were issued pursuant to a securities purchase agreement with select accredited investors, whereby the Acquiree offered up to 1,000,000 in units at a purchase price of $50,000 per unit. Each Unit consisted of (i) a 12% senior secured convertible note, initially convertible into shares of the Company’s common stock, par value $0.001 per share, at a conversion price equal to the lesser of $0.40 or ninety percent (90%) of the per share purchase price of any ~~other security~~shares of common stock or common stock equivalents issued in future private placements of equity and/or debt securities completed by the Company following this offering, and (ii) a three-year warrant to ~~support~~purchase such number of shares of the Company’s common stock equal to one hundred percent (100%) of the number of shares of common stock issuable upon conversion of the notes at $0.40. The Warrants are exercisable at a price equal to the lesser of $0.75 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of the debt and/or equity securities completed by the Company following the issuance of warrants. As a result of the price adjustment feature, the conversion price of the convertible notes was adjusted to $0.36 per share. The convertible notes have maturity dates between August and September 2019. The Company is in the process of negotiating a 30-day extension of the maturity dates. The notes are secured by all of the assets of the Company. (See Note 11.)

ASU 2017-11, Earnings Per Share (Topic 260), provided that when determining whether certain financial instruments should be classified as liability or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. If a down round feature on the conversion option embedded in the note is triggered, the Company will evaluate whether a beneficial conversion feature exists, and if one is determined to exist the Company will record the amount as a debt discount and will amortize it over the remaining term of the debt.

The down round feature embedded in the conversion option was triggered on January 8, 2019, as such, the Company recognized the down round as a deemed dividend of approximately $437,000 which reduced the income available to common stockholders.

In the offering, the Acquiree sold an aggregate of 15 units and issued to investors an aggregate of $750,000 in principal amount of convertible notes and 1,875,000 warrants to purchase common stock, resulting in total gross proceeds of $750,000 to the Company. If converted at $0.40 the convertible notes sold in the offering are convertible into an aggregate of 1,875,000 shares of common stock. The Acquiree recorded the proceeds from the notes and the accompanying warrants, which accrete over the period the notes are outstanding, on a relative fair value basis of approximately $505,000 and $245,000, respectively. At acquisition date, the value of the notes was approximately $598,000.

The following schedule represents the amounts of revenue and net loss attributable to the MedoveX acquisition which have been included in the consolidated statements of operations for the periods subsequent to the acquisition date:

The following unaudited pro forma financial information represents the consolidated financial information as if the acquisition had been included in the consolidated results beginning on the first day of the fiscal year prior to its ~~receivables.~~acquisition date. The pro forma results have been calculated after adjusting the results of the acquired entity to remove any intercompany transactions and transaction costs incurred and to reflect any additional depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment and intangible assets had been applied on the first day of the fiscal year prior to its acquisition date, together with the consequential tax effects. The pro forma results do not reflect any cost savings, operating synergies or revenue enhancements that the combined entities may achieve as a result of the acquisition; the costs to combine the companies’ operations; or the costs necessary to achieve these cost savings, operating synergies or revenue enhancements. The pro forma results do not necessarily reflect the actual results of operations of the combined companies’ under the current ownership and operation.

~~Other receivables include input and importation value added tax (VAT) paid by the Company for conducting business in the European Union (“EU”) and for importing goods from outside the EU.~~

~~Inventories consist~~Inventory consists only of finished goods and ~~are~~is valued at the lower of cost or net realizable value, using the first-in, first-out (FIFO) method. Inventories were acquired in the merger transaction from the H-CYTE business and therefore there were no inventories prior to January 8, 2019.

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company implemented the new standard effective January 1, 2019.

On adoption, additional current liabilities of approximately $475,000 and long-term liabilities of approximately $713,000 with corresponding ROU assets of approximately $1,167,000 were recognized, based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

The consolidated balance sheet at June 30, 2019 reflects current lease liabilities of approximately $483,000 and long-term liabilities of $512,000, with corresponding ROU assets of $973,000.

The Company leases corporate office space in Tampa, FL and Atlanta, GA. The Company also leases medical clinic space in Tampa, FL, Nashville, TN, Scottsdale, AZ, Pittsburgh, PA, and Dallas, TX. The leasing arrangements contain various renewal options that are adjusted for increases in the consumer price index or agreed upon rates.

As of June 30, ~~2018, and December 31, 2017:~~2019, maturities of lease liabilities are as follows:

Depreciation expense amounted to ~~$6,866~~approximately $25,000 and ~~$13,894,~~$52,000, respectively, for the three and six months ended June 30, ~~2018.~~2019. Depreciation expense amounted to ~~$6,671~~approximately $25,000 and ~~$12,892,~~$49,000 respectively, for the three and six months ended June 30, 2018.

The following table presents the changes in intangible assets during the period:

The following is a schedule of expected future amortization of intangible assets as of June 30, 2019:

As described in Note 10, the Company entered into an oral consulting agreement with Mr. Raymond Monteleone, Board Member and Chairman of the Audit Committee, in which Mr. Monteleone receives $10,000 per month for advisory services and $5,000 per quarter as Audit Committee Chair. This arrangement has no specified termination date. For the three and six months ended June 30, 2019, the Company has expensed $35,000 and $70,000 in compensation to Mr. Monteleone, respectively.

For the three and six months ended June 30, 2019, the Company paid $5,000 each for Board of Director fees to Michael Yurkowsky and to Raymond Monteleone for a total of $10,000 and $10,000 respectively.

The Company had various related party transactions in 2018. For the period of January 1, 2018 to March 13, 2018, the Company received $528,175 from one of its shareholders (RMS members) and $228,175 from its CEO (RMS CEO) as part of a line of credit that was established in 2017. The entire line of credit between the Member and the CEO in the amount of $1,856,350, including contributions from 2017, was transferred to the BioCell Capital, LLC debt instrument on March 13, 2018.

The BioCell Capital Line of Credit also consisted of related parties which contributed approximately $4,306,000, inclusive of the aforementioned $1,856,300, to the Company in 2018. The BioCell Capital Line of Credit was converted to equity as part of the APA on January 8, 2019.

The Company also received a short-term advance from one of its shareholders (RMS members), who was also the CEO of H-CYTE, in the amount of $180,000 in December 2018 for working capital needs. Approximately $114,000 of the advance was repaid in January 2019 and approximately $66,000 was converted to equity as part of the APA on January 8, 2019.

For the Consolidated Statements of Stockholders’ Equity (Deficit) as of December 31, 2018, the common stock, preferred stock and additional paid in capital reflect the accounting for the stock received by the RMS members as of the merger as if it was received as of the beginning of the periods presented and the historical accumulated deficit of RMS. As of the acquisition closing, before the contingent additional exchange shares impact from the sale of new securities, the stock received by RMS was 33,661 shares of Series C Preferred Stock, converted into approximately 33,661,000 shares of common stock, with common stock par value of approximately $33,700 and additional paid-in capital of approximately $3,566,000. The historical accumulated deficit of RMS as of the closing was approximately $9,296,000.

~~In November 2016,~~On January 8, 2019, the Company entered into a securities purchase agreement (the “SPA”) with four purchasers (the “Purchasers”) pursuant to which the four Purchasers invested in the Company an aggregate amount of $2,000,000, with $1,800,000 in cash and $200,000 by cancellation of debt as explained below, in exchange for forty (40) units (the “Units”), each consisting of a convertible note (the “Convertible Note”) with the principal amount of $50,000 and a warrant (the “Warrant”) to purchase common stock (the “Common Stock”) of the Company. Pursuant to this SPA, the Company initially offered a minimum of $1,000,000 and a maximum of $6,000,000, and subsequently increased to a maximum of $8,000,000 (the “Maximum Amount”) of Units at a price of $50,000 per Unit until the earlier of i) the closing of the subscription of the Maximum Amount and ii) March 31, 2019 (the “Termination Date”), subject to the Company’s earlier termination at its discretion. The SPA includes the customary representations and warranties from the Company and purchasers. Steve Gorlin, the Company’s former Chairman of the Board, ~~authorized~~converted a $200,000 promissory note owed to him by the ~~issuance~~Company in exchange for four (4) Units on the same terms as all other Purchasers. The promissory note was converted into an aggregate of 500,000 shares of common stock, eliminating the Company’s debt obligation.

Each Convertible Note offered by the Company as part of the Unit bears an interest rate of 12% per annum, had a principal amount of $50,000, shall mature in one year from the original issue date on January 8, 2019, and will be convertible into shares of Common Stock at a price of $0.40 subject to adjustment stated in the Convertible Note. Pursuant to the terms of the Convertible Note, each holder of the Convertible Notes shall not own more than 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of Common Stock issuable upon exercise of such Convertible Note. If defaulted, the penalty interest rate of the Convertible Note shall rise to 18% per annum. In addition, pursuant to the SPA, the Company offers, as part of the Unit, Warrants to purchase the Common Stock at a price of $0.75 per share (the “Exercise Price”), subject to adjustments stated therein. The holder of each Warrant may purchase the number of shares of Common Stock equal to the number of shares of Common Stock issuable upon conversion of each Convertible Note while the Warrant is exercisable. The Warrants have a term of three years and shall be exercised in cash or on a cashless basis as described in the Warrant. All of such notes have been converted into an aggregate of 18,000,000 shares of common stock.

As reported on Form 8-K filings on January 25, 2019, February 8, 2019, March 15, 2019 and April 5, 2019, the Company entered into other SPA’s with additional purchasers, which brought the aggregate amount of capital raised in all ~~Board members, both current and former, in an amount equivalent~~these offerings to ~~$240,000, representing their accrued but unpaid directors’ fees~~$7,200,000, as of ~~December 31, 2016.~~ that latest date.

As a result of the sales of new securities of at least $5.65 million, total additional Exchange shares of approximately 17,264 Series C Preferred Stock were issued and automatically converted to 17,263,889 shares of Common Stock.

All the Convertible Notes from the SPA as well as the shares of Series C Preferred Stock issued to RMS members were automatically converted into shares of Common Stock.

The foregoing description of the SPA, Convertible Note, and Warrant is qualified in its entirety by reference to the respective agreements.

In ~~January 2017,~~February 2019, 250,000 shares of common stock were issued pursuant to conversion of short-term debt and accrued interest.

In March 2019, the Company issued an aggregate of ~~173,911~~130,085 shares of common stock at $0.40 per share shares for consulting fees in an amount equivalent to $52,034.

On April 25, 2019, the Company issued 4,225,634 shares of common stock valued at $.40 per share to Mr. William Horne, the Company’s CEO, in a restricted stock award which was 100% vested when issued. This restricted stock award was issued pursuant to his employment agreement with the Company, which stated that this restricted stock award (as well as the incentive stock options issued in the quarter ended March 31, 2019) would be fully vested if not issued within fifteen days of the RMS merger transaction. Neither award was issued within that time frame and both awards became fully vested when issued. The aggregate number of shares of common stock from these two awards is 4,475,634 and was calculated based on 7% of the Company’s issued and outstanding common stock as of the closing of the RMS merger.

The Company recognized approximately $1,690,000 of compensation expense in the quarter ended June 30, 2019 related to the restricted stock award. This expense should have been recognized in the quarter ended March 31, 2019. Though the quantitative impact is material, the Company believes the qualitative aspects of this misstatement should be the primary driver in determining whether or not this misstatement is material. The Company believes this misstatement to be immaterial to the quarter ended March 31, 2019 and June 30, 2019 financial statements from a qualitative impact evaluation.

During the six months ended June 30, 2019, 636,480 shares were issued pursuant to convertible Preferred Series B Stock and accrued dividends conversion.

Preferred Series B Stockholders have the right to receive notice of any meeting of holders of Common Stock or Series B Preferred Stock and to vote upon any matter submitted to a vote of the holders of Common Stock or Series B Preferred Stock. Each holder of Series B Preferred Stock shall vote on each matter submitted to them with the holders of Common Stock.

Upon the liquidation, dissolution or winding up of the business of the Company, whether voluntary or involuntary, each holder of Series B Preferred Stock shall be entitled to receive, for each share thereof, out of assets of the Company legally available therefor, a preferential amount in cash equal to the stated value plus all accrued and unpaid dividends. All preferential amounts to be paid to the holders of Series B Preferred Stock in connection with such liquidation, dissolution or winding up shall be paid before the payment or setting apart for payment of any amount for, or the distribution of any assets of the Company’s to the holders of the Company’s Common Stock. The Company accrues these dividends as they are earned each period.

On January 8, 2019, the Company completed the issuance of convertible debt in the SPA transaction with a conversion price of $0.40. As a result, accordingly the exercise price on all of the warrants issued with the Series B Shares were adjusted downward to 90% of that conversion price or $0.36. In conjunction with the downward adjustment, the Company recorded a deemed dividend of approximately $117,000 representing the difference in the fair value of the warrants immediately before and after the adjustment to the exercise price.

The Company recognized a beneficial conversion feature related to the Series B Shares of approximately $33,000, which was credited to additional paid-in capital, and reduced the income available to common shareholders. Because the Series B Shares can immediately be converted by the holder, the beneficial conversion feature was immediately accreted and recognized as a deemed dividend to the preferred shareholders.

During the six months ended June 30, 2019, 9,250 Series B Preferred Stock with a par value of $.001 were assumed with the merger transaction and an aggregate of 2,250 shares of Series B Preferred Stock, and accrued dividends, were subsequently converted into an aggregate of 562,500 shares of authorized common stock, par value $0.001 per share.

The $750,000 convertible notes payable assumed in the acquisition transaction, had a fair value of approximately $598,000 on the acquisition date. Subsequently, on February 6, 2019, $100,000 of the outstanding convertible notes was converted into an aggregate of 250,000 shares of common stock, eliminating $100,000 of the Company’s debt obligation. The debt was converted into shares at ~~$1.38~~$0.40 per share, which was the ~~average closing~~conversion price per the SPA.

In connection with the Asset Purchase Agreement (“APA”) and APA Amendment, on January 8, 2019, Steve Gorlin, the Company’s former Chairman of the ~~Company’s stock during 2016,~~Board, converted a $200,000 promissory note owed to ~~fulfill this obligation. The closing price~~him by the Company pursuant to the same terms of the ~~Company’s stock~~SPA entered into by other investors to consummate the acquisition on January ~~17, 2017,~~8, 2019. The promissory note was converted into an aggregate of 500,000 shares of common stock, eliminating the ~~day the shares were issued, was $1.16 per share.~~Company’s debt obligation.

~~We utilize~~The Company utilizes the Black-Scholes valuation method to recognize stock-based compensation expense over the vesting period. The expected life represents the period that ~~our~~the stock-based compensation awards are expected to be outstanding.

For the three and six months ended June 30, ~~2018,~~2019, the Company recognized approximately ~~$34,000~~$3,000 and ~~$85,000, respectively,~~$92,000 as compensation expense with respect to vested stock options. ~~For~~No compensation expense was recorded prior to the RMS reverse merger transaction. Since these stock options were assumed on January 8, 2019 as part of the RMS reverse merger transaction, there were no historical costs related to this prior to January 8, 2019. The expense for the six months ended June 30, 2019 is related to an option for 250,000 shares that were awarded to the Company’s CEO that were 100% vested and were issued pursuant to his employment agreement. This option was granted pursuant to his employment agreement with the Company, which stated that this option grant would be fully vested if not issued within fifteen days of the RMS reverse merger transaction. The option was not granted within that time frame and was fully vested when issued.

Including the expense of approximately $1,690,000 related to the restricted stock award to the Company’s CEO, total stock-based compensation expense for the three and six months ended June 30, ~~2017,~~2019 were approximately $1,693,000 and $1,782,000, respectively. The three and six months ended June 30 include $1,690,254 related to the Company’s CEO restricted stock award which was 100% vested when issued. This restricted stock award was issued pursuant to his employment agreement with the Company, ~~recognized approximately $135,000~~which stated that this option grant would be fully vested if not issued within fifteen days of the RMS reverse merger transaction. The restricted stock award was not issued within that time frame and ~~$500,000, respectively, as compensation expense with respect to~~was fully vested ~~stock options.~~when issued.

As of June 30, ~~2018,~~2019, there were ~~179,074~~9,502 shares of ~~time-based, non-vested~~unvested stock ~~options outstanding. As~~options. Unrecognized compensation cost amounted to approximately $3,900 as of June 30, ~~2018, there was approximately $75,000 of total unrecognized stock-based compensation related to these non-vested stock options. That expense is expected to~~2019 and will be recognized as an expense on a straight-line basis over a remaining weighted average service period of ~~1.52 years.~~1 year.

The following is a summary of stock option activity atfor the six months ending June 30, ~~2018:~~

On February 26, 2018, the Company entered into a securities purchase agreement with selected accredited investors whereby the Company sold an aggregate of 770,000 shares of common stock and 385,000 warrants to purchase common stock. The offering resulted in $308,000 in gross proceeds to the Company. The warrants have a five-year term commencing six months from issuance with an exercise price of $0.75. The Company allocated $52,003 to the warrants and the remainder to the issuance of the common stock. The Company incurred $13,500 in legal expenses related to the offering.

On May 1, 2018, the Company entered into a securities purchase agreement with selected accredited investors whereby the Company offered up to $1,000,000 in units. Each unit had a purchase price of $100,000 and consisted of (i) 1,000 shares of the Company’s 5% Series B Convertible Preferred Stock (the “~~Series B Shares~~”) and (ii) warrants to purchase 250,000 shares of the Company’s common stock, par value $0.001 per share. Each Series B Share is convertible into 250 shares of Common Stock at a conversion price of $0.40 per share. The market value of the common stock on the date of the agreement was $0.44. The Series B Shares also entitle the holders to a 5% annual dividend. The Warrants are exercisable for a period of three (3) years from the date of issuance at an exercise price of $0.75 per share.

As a result of the offering, the Company sold an aggregate of 8.25 Units and issued to the Investors an aggregate of 8,250 Series B Shares and 2,062,500 warrants to purchase common stock, resulting in total $825,000 gross proceeds to the Company. The Company incurred $5,000 in legal fees related to the offering, which resulted in $820,000 net cash received from the offering. The 8,250 Series B Shares sold in the Offering are convertible into an aggregate of 2,062,500 shares of Common Stock.

The net proceeds of the offering of $820,000 were first allocated to the warrants issued to investors, and the Series B Shares based on their relative fair value. The Company recognized a beneficial conversion feature related to the Series B Shares of approximately $246,000, which was credited to additional paid-in capital. Because the Series B Shares can immediately be converted by the holder, the discount recognized by the allocation of proceeds to the beneficial conversion feature was immediately accreted and recognized as a dividend to the preferred shareholders.

~~On March 30, 2018, 12,740 shares of Series A Preferred Stock were converted into an aggregate of 1,274,000 restricted shares of authorized common stock, par value $0.001 per share.~~

On April 26, 2018, the Company’s $100,000 5% convertible debenture and unpaid accrued interest was converted into an aggregate of 266,301 shares of common stock, eliminating the Company’s debt obligation. The debt was converted into shares at $0.38 per share, which was 85% of the average closing price of the Company’s stock during the twenty trading days immediately preceding the delivery of the notice of conversion. The market value of the common stock on the date of the conversion was $0.40. This difference noted above lead to an immaterial amount related to a beneficial conversion feature.

On May 15, 2018, the Company entered into a modification agreement with Steve Gorlin whereby he agreed to convert $100,000 of the $200,000 outstanding promissory note into Series B Shares (Note 7). The conversion of $100,000 was converted under the terms of the May 1, 2018 securities purchase agreement. The $100,000 conversion was converted into an aggregate of 1,000 shares of the Company’s 5% Series B Shares and 250,000 warrants to purchase common stock, eliminating $100,000 of the Company’s $200,000 debt obligation. Each Series B Share is convertible into 250 shares of Common Stock at a conversion price of $0.40 per share. The Series B Shares also entitle the holders to a 5% annual dividend. The Warrants are exercisable for a period of three (3) years from the date of issuance at an exercise price of $0.75 per share.2019:

The converted $100,000 was first allocated to the warrants issued in conjunction with the conversion, and the Series B Shares based on their relative fair value. The Company recognized a beneficial conversion feature related to the Series B Shares of approximately $14,000, which was credited to additional paid-in capital. Because the Series B Shares can immediately be converted by the holder, the discount recognized by the allocation of proceeds to the beneficial conversion feature was immediately accreted and recognized as a dividend to the preferred shareholders.

The Company, pays TAG Aviation, a company owned by its Chief Executive Officer, Jarrett Gorlin (“Mr. Gorlin”) for office space that is currently being used as the Company’s principal business location plus utilities cost (see “Related-Party Transactions”) on a monthly basis. Base annual rent is $2,147 per month. Rent expense and utilities cost paid to TAG Aviation amounted to approximately $9,400 and $18,800, respectively, for the three and six months ended June ~~30, 2018. Rent expense and utilities cost paid to TAG Aviation amounted to approximately $6,300 and $15,700 for the three and six months ended June 30, 2017.~~

~~On July 8, 2015, the Company~~21, 2019, entered into a ~~3-year lease~~10-year exclusive and extendable product supply agreement with Rion LLC (“Rion”) that will enhance its existing cytotherapy product line, developing a disruptive technology for chronic obstructive pulmonary disease (“COPD”), the fourth leading cause of death in the U.S. Rion has established a ~~commercial building which commenced~~unique exosome technology to harness the healing power of the body. Rion’s novel exosome technology, based on ~~August 1, 2015. Base rent~~science developed at Mayo Clinic, provides an off-the-shelf platform to enhance healing in soft tissue, musculoskeletal, cardiovascular and neurological organ systems. With this agreement, Rion will serve as the product supplier and will co-develop a proprietary cellular platform with H-CYTE for the ~~three~~treatment of COPD. H-CYTE will control the commercial development and ~~six months ended June 30, 2018 was $2,948 per month. Total lease expense~~facilitate clinical trial investigation. After conducting joint research and development of these biologics, H-CYTE intends to pursue submission of an investigational new drug (IND) application for review by the ~~three~~U.S. Food and ~~six months ended June 30, 2018 was approximately $8,800 and $17,700, respectively related to this lease. Total lease expense~~Drug Administration (“FDA”) for ~~the three and six months ended June 30, 2017 was approximately $8,550 and $17,100, respectively related to this lease.~~treatment of COPD.

~~Future minimum lease payments under this rental agreement are approximately as follows:~~

The Company entered into a ~~non-cancelable 36-month operating lease~~sub-lease agreement for ~~equipment on March 23, 2018.~~the lease in Alpharetta, Georgia. The ~~agreement is renewable at the end~~period of the ~~term~~lease is from July 1, 2019 to December 31, 2020 and ~~requires the Company~~sublessee shall pay to maintain comprehensive liability insurance. Total lease expense was approximately $900 and $1,800, respectively, for the three and six months ended June 30, 2018. Total lease expense was approximately $700 and $1,400, respectively, for the three and six months ended June 30, 2017.sublessor a minimum rent, of two thousand dollars ($2,000) per month.

~~Future minimum lease payments under this operating lease agreement are approximately as follows:~~

The Company has an agreement with Jesse Crowne, a former Director and Co-Chairman of the Board of the Company, to provide business development consulting services for a fee of $13,333 per month. The Company is in the process of negotiating a new contract with Mr. Crowne. The Company incurred ~~$39,999~~expense of $0 and ~~$79,998, respectively,~~$39,999, for the three and six months ended June 30, ~~2018~~2019 related to this consulting agreement. Since this agreement was assumed January 8, 2019 as part of ~~which $13,333 was included in accounts payable at June 30, 2018. The monthly consulting fee was increased from a rate of $9,167 beginning in~~the RMS reverse merger transaction, there were no historical costs related to this prior to January ~~2018.~~ 8, 2019.

The Company ~~incurred approximately $27,500~~entered into a consulting agreement with LilyCon Investments, LLC effective February 1, 2019 for services related to evaluation and ~~$55,000, respectively,~~negotiation of future acquisitions, joint ventures, and site evaluations/lease considerations. The contract duration is for a period of twelve (12) months in the amount of $12,500 per month with a $15,000 signing bonus which was paid in full during the quarter ending March 31, 2019. The agreement also provides LilyCon Investments with $35,000 in stock (calculated using an annual Variable Weighted Average Price from February 2019 through January 2020) to be granted on the one year anniversary of this agreement, if the agreement has not been terminated prior to that date. Either party may terminate this agreement with or without cause upon 30 days written notice. For the three and six months ended June 30, ~~2017 related~~2019, the Company has expensed a total of $37,500 and $77,500 in compensation to ~~this consulting agreement.~~LilyCon Investments, respectively.

The Company ~~has a~~entered into an oral consulting agreement with ~~a sales, marketing,~~Mr. Raymond Monteleone, Board Member and ~~distribution consultant~~Chairman of the Audit Committee, in ~~Latin America at a fee of $7,000~~which Mr. Monteleone received $10,000 per month ~~through December 31, 2018. The Company incurred $21,000~~for advisory services and ~~$42,000, respectively, for~~$5,000 per quarter as Audit Committee Chair. This arrangement has no specified termination date. For the three and six months ended June 30, ~~2018 related~~2019, the Company has expensed $35,000 and $70,000 in compensation to ~~this consulting agreement.~~ Mr. Monteleone, respectively.

The Company ~~incurred $9,000 and $24,000, respectively,~~entered into an oral consulting arrangement with St. Louis Family Office, LLC, controlled by Jimmy St. Louis, former CEO of RMS, in January 2019 in the amount of $10,000 per month plus benefits reimbursement for advisory services. The Company terminated this agreement effective June 30, 2019. For the three and six months ended June 30, ~~2017 related~~2019, the Company has expensed $44,000 and $71,000 in consulting fees to ~~this consulting agreement.~~St. Louis Family Office, respectively.

The Company ~~has~~entered into a consulting ~~agreements~~agreement with Strategos Public Affairs, LLC (Strategos) on February 15, 2019 for a ~~varying team~~period of ~~sales, marketing,~~twelve (12) months, unless otherwise terminated by giving thirty (30) days prior written notice. Strategos will provide information to key policymakers in the legislature and ~~distribution consultants in Europe who provide consulting services~~executive branches of government on the benefits of the cellular therapies offered by the Lung Health Institute, advocate for ~~aggregate compensation amounting~~legislation that supports policies beneficial to ~~approximately €21,000 (approximately $25,000) per month. The consulting agreements, while subject~~patient access and oppose any legislation that negatively impacts the Company’s ability to ~~modifications, commenced at separate dates~~expand treatment opportunities, and ~~will also terminate at separate dates through April 30, 2019. The~~position the Company ~~incurred approximately $88,000~~ and ~~$160,000, respectively,~~its related entities as the expert for information and testimony. For the three and six months ended June 30, 2018 related to these consulting agreements. The Company incurred approximately $34,000 and $73,000, respectively, for the three and six months ended June 30, 2017 related to these consulting agreements.

The Company was obligated to reimburse Bovie Medical Corporation (“Bovie”) up to $295,000 for the development of the Pro-40 electrocautery generator. The Company did not incur any expenses to Bovie for the three and six months ended June 30, 2018 under this agreement. The Company incurred approximately $0 and $31,000, respectively, for the three and six months ended June 30, 2017 under this agreement. Through June 30, 2018,2019, the Company has ~~paid approximately $422,000~~expensed $26,000 and $26,000 to ~~Bovie related to this agreement.~~The original $295,000 agreement was a based number along the pathway of development. Additional requirements were added as the research and development process progressed and as a result certain prices increased and additional costs were added to further customize the DenerveX System.~~The Company is currently manufacturing the generator~~Strategos Group for ~~sales.~~consulting services.

The Company has a non-exclusive distribution center agreement with a logistics service provider in Berlin, Germany pursuant to which they manage and coordinate the DenerveX System products which the Company exports to the EU through June 2019. The Company pays a fixed monthly fee of ~~€2,900~~€4,500 (approximately ~~$3,500)~~$5,040) for all accounting, customs declarations and office support, and a variable monthly fee ranging from €1,900 to €6,900 (approximately $2,300 to $8,300), based off volume of shipments, for logistics, warehousing and customer support services.

Total expenses ~~paid~~incurred for the distribution center and logistics agreement ~~was~~were approximately ~~$44,000~~$22,500 and ~~$85,000,~~$45,000, respectively, for the three and six months ended June 30, ~~2018. The Company did not incur any expenses under~~2019. Since this agreement ~~for the three and six months ended June 30, 2017.~~

In September 2013, the Company executed a Co-Development Agreement with James R. Andrews, M.D. (“Dr. Andrews”) to further evaluate, test and advise on the development of products incorporating the usewas assumed January 8, 2019 as part of the ~~patented technology. In exchange for these services the Company is obligated~~RMS reverse merger transaction, there were no historical costs related to pay Dr. Andrews a royalty of 2% of revenues earned from applicable product sales over a period of 5 years. If Dr. Andrews is listed as inventor of any Improvement Patent on the DenerveX device during the 5-year term, he would continuethis prior to ~~receive a 1% royalty after the 2% royalty expires for the duration of the effectiveness of the Improvement Patent.~~

The Company incurred approximately $5,700 and $8,600, respectively, in royalty expense under the co-development agreement for the three and six months ended June 30, 2018, all of which was included in accounts payable at June 30, 2018. No royalties were paid to Dr. Andrews for the three and six months ended June 30, 2017.January 8, 2019.

~~On February 1, 2013, the Company issued 750,108 shares of common stock to Scott Haufe, M.D. (“Dr. Haufe”) pursuant to the~~The terms of a Contribution and Royalty Agreement dated January 31, 2013 ~~between~~with Dr. Scott Haufe, M.D was assumed in the ~~Company and Dr. Haufe.~~merger transaction as of January 8, 2019. This agreement provides for the Company to pay Dr. Haufe royalties equal to 1% of revenues earned from sales of any and all products derived from the use of the DenerveX technology. Royalties are payable to Dr. Haufe within 30 days after the close of each calendar quarter based on actual cash collected from sales of applicable products. The royalty period expires on September 6, 2030.

The Company incurred approximately ~~$2,800~~$0 and ~~$4,300,~~$1,100, respectively, in royalty expense under the Contribution and Royalty agreement for the three months and six months ended June 30, ~~2018,~~2019, all of which was included in accounts payable at June 30, 2019. Since this agreement was assumed January 8, 2019 as part of the RMS reverse merger transaction, there were no historical costs related to this prior to January 8, 2019.

From time to time, the Company may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect the Company’s financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect the Company due to legal costs and expenses, diversion of management attention and other factors. The Company expenses legal costs in the period incurred. The Company cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against it in the future, and these matters could relate to prior, current or future transactions or events.

The Company has guaranteed payments based upon the terms found in the management services agreements to two affiliated physicians related to LI Nashville, LI Scottsdale, LI Pittsburgh, and LI Dallas. For the three and six months ending June 30, 2019, payments totaling approximately $34,000 and $56,000, respectively were made to these affiliates. For the three and six months ending June 30, 2018, payments totaling approximately $20,000 and $59,000, respectively were made to these affiliates.

Short-term notes payable relates to financing arrangements for Directors and Officers and general liability insurance premiums that were financed at various points throughout 2018 and first quarter 2019 and two promissory notes assumed in the merger transaction.

These insurance financing arrangements require aggregate monthly payments of approximately $18,000 reflect interest rates ranging from 7% to 12.8% and are to be paid in full by April 2020 and had balances of approximately $95,000 at June 30, 2019 and $31,000 at December 31, 2018. ~~No royalties were paid~~Interest expense related to ~~Dr. Haufe~~these insurance financing arrangements was approximately $2,000 and $2,300 for the three and six months ended June 30, ~~2017.~~

~~The asset sale of Streamline Inc. resulted in the immediate receipt of $500,000 in cash,~~2019 and ~~a $150,000 note receivable that~~ was due to the Company on January 1, 2018. The $150,000 note receivable represents the non-contingent portion of the receivables due from the sale. The Company received the short-term receivable on January 2, 2018.

The terms of the sale also required that for each of the calendar years ending December 31, 2018 and December 31, 2019 (each such calendar year, a “Contingent Period”), a contingent payment in cash (each, a “Contingent Payment”) equal to five percent (5%) of the total net sales received by the acquiring party from the sale of “IV suspension system” products in excess of 100 units during each Contingent Period. Each such Contingent Payment is payable to the Company by the acquiring party by no later than March 31st of the subsequent year; provided, however, that the total aggregate amount of all Contingent Payments owed by the acquiring party to the Company for all Contingent Periods will not exceed $850,000. The Company is yet to receive any Contingent Payments and has no reason to expect it will receive any Contingent Payments.

The Company did not incur any Streamline related expenses for the three and six months ended June 30, 2018. The Company recorded a nominal amount in Streamline related expenses for the three and six months ended June 30, 2017.

The Company entered into a commercial insurance premium finance and security agreement in December 2017. The agreement finances the Company’s annual D&O insurance premium. Payments are due in quarterly installments of approximately $24,000 and carry an annual percentage interest rate of 5.98%.

The Company had an outstanding premium balance of approximately $22,000 at June 30, 2018 related to the agreement, which is included in notes payable, current portion in the consolidated balance sheets. The Company paid interest expense related to the finance agreement$0 for the three and six months ended June 30, 2018 ~~in the amount of approximately $700 and $1,400,~~ respectively. ~~The Company had paid the yearly premium in full and had no outstanding balance at June 30, 2017 related to the agreement.~~

On March 26, 2018 the Company issued a promissory note to Steve Gorlin, father of Jarrett Gorlin, the Company’s CEO, for the principal amount of $200,000, plus interest, at a rate of five percent per year. The outstanding principal and all accrued but unpaid interest was originally due on May 15, 2018. The Company issued warrants to purchase an aggregate of 133,333 shares of common stock par value $.001 per share in conjunction with the promissory note to Mr. Gorlin. Each warrant has an exercise price of $0.75 and is exercisable for a period of five years commencing from the date of issuance. The Company recorded the proceeds from the promissory note and the accompanying warrants, which accrete over the period the loan is outstanding, on a relative fair basis of approximately $174,000 and $26,000, respectively.

On May 15, 2018, the Company entered into a modification agreement with Steve Gorlin whereby he agreed to convert $100,000 of the outstanding promissory note into Series B Shares. (See Note 7). Additionally, the due date for the remaining $100,000 of the promissory ~~note was extended to August 31, 2018. The balance of~~notes payable assumed in the loan at June 30, 2018 was $100,000. The Company incurred approximately $140 and $2,100, respectively, in interest expense related to the promissory note for the three and six months ended June 30, 2018, which is exclusive of the amortization expense recognized in connection with the accompanying warrants issued with the note.

In conjunction with the consummation of the Streamline acquisition on March 25, 2015, the Company assumed two promissory notes for approximately $135,000 and $125,000 to the Bank of North Dakota New Venture Capital Program and North Dakota Development Fund, both outside non-related parties. Payments on both notesmerger are due in aggregate monthly installments of approximately $5,700 and carry an interest rate of 5%. The Promissory Notes had outstanding balances of approximately $99,000 at date of merger transaction and approximately $99,000 at June 30, 2019. No scheduled payments have been made on these notes since the scheduled payment for January 2018 except for a $5,700 payment made in June 2019. Both of the notes have a maturity date of August 1, 2019. The ~~promissory notes, including interest, had outstanding balances~~Company is in the process of ~~approximately $79,000 and $104,000 at June 30, 2018 and December 31, 2017, respectively.~~finalizing an eighteen month extension on the notes.

The Company incurred interest expense related to the promissory notes for the three and six months ended June 30, ~~2018~~2019 in the amount of approximately ~~$1,200~~$1,300 and ~~$2,300,~~$2,100, respectively; no interest expense was incurred during 2018 as these notes were assumed on January 8, 2019.

The Company’s interest expense of approximately $42,000 and $71,000 for the three and six months ended June 30, 2018 was related to convertible debt not assumed in the RMS acquisition as of January 8, 2019.

The Convertible notes payable represents a securities purchase agreement with select accredited investors, which were assumed in the merger transaction. The debt consisted of $750,000 in units at a purchase price of $50,000 per unit were assumed. Each Unit consists of (i) a 12% senior secured convertible note, initially convertible into shares of the Company’s common stock, par value $0.001 per share, at a conversion price equal to the lesser of $0.40 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of equity and/or debt securities completed by the Company following this offering, and (ii) a three-year warrant to purchase such number of shares of the Company’s common stock equal to one hundred percent (100%) of the number of shares of common stock issuable upon conversion of the notes at $0.40. The Warrants were initially exercisable at a price equal to the lesser of $0.75 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of the debt and/or equity securities completed by the Company following the issuance of warrants. The notes are secured by all of the assets of the Company.

The Company recorded the proceeds from the notes and the accompanying warrants, which accrete over the period the notes are outstanding, on a relative fair value basis of $505,424 and $244,576, respectively. Interest expense related to the discount on these convertible notes for the three and six month period ending June 30, 2019 was approximately $63,600 and $127,900, respectively. The Company ~~incurred~~recognized approximately $21,500 and $41,200, respectively, in unpaid accrued interest expense related to the ~~promissory~~ notes for the three and six months ended June 30, ~~2017~~2019.

The convertible notes sold in the ~~amount~~offering were initially convertible into an aggregate of 1,875,000 shares of common stock. The down round feature was triggered on January 8, 2019, and the conversion price of the convertible debt were adjusted to $0.36. The Company recognized the down round as a deemed dividend of approximately ~~$2,000 and $3,800, respectively. The Company had unpaid accrued interest in~~$288,000 which reduced the ~~amount of approximately $72,000 and $69,000 at June 30, 2018 and 2017, respectively, related~~income available to ~~the promissory notes.~~

~~Expected future payments related to the promissory notes as of June 30, 2018, are approximately as follows:~~

On January 31, 2018, the Company issued a 5% convertible debenture in exchange for $100,000. The debenture accrued interest at 5% per annum. Principal and interest were due on January 30, 2019. The debenture was convertible at the option of the holder into sharesFebruary 6, 2019, $100,000 of the Company’s ~~common stock at a conversion rate equivalent to 85% of the average closing price of the Company’s common stock for the 20 days preceding the conversion.~~

~~On April 26, 2018, the~~$750,000 outstanding convertible ~~debenture and unpaid~~notes plus accrued interest was converted into an aggregate of ~~266,301~~251,667 shares of common stock, eliminating $100,000 of the Company’s debt ~~obligation (Note 7). Prior~~obligation. The debt was converted into shares at $0.36 per share, which was the conversion price per the SPA subsequent to the ~~conversion,~~trigger of the down round feature. The convertible notes have maturity dates between August and September 2019. The Company is in the process of negotiating a 30-day extension of the maturity dates. If the Company ~~recognized approximately $400~~is unable to extend the maturity date, the notes will go into default until additional funding is received to payoff these notes and ~~$1,200, respectively, in interest expense related~~the mandatory default amounts will have to be paid. The mandatory default amount means the ~~convertible debenture during the three and six months ended June 30, 2018. The market value~~sum of (a) 120% of the ~~common stock on the date~~outstanding principal amount of ~~the conversion was $0.40. This difference lead to an immaterial amount related to a beneficial conversion feature.~~this Note, plus 100% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of these notes.

The ~~Company sells~~convertible debt to related parties was the ~~DenerveX System through a combination~~BioCell Capital Line of ~~direct sales and independent distributors in international markets. The Company recognizes revenue when title~~Credit which was converted to ~~the goods and risk of loss transfers to customers, provided there are no material remaining performance obligations required~~equity as part of the ~~Company or any matters of customer acceptance. We only record revenue when collectability is reasonably assured.~~APA on January 8, 2019. (See Note 8.)

Revenue recognition occurs at the time product is shipped to customers from the third-party distribution warehouse located in Berlin, Germany. Our stocking distributors, who sell the products to their customers or sub-distributors, contractually take title to the products and assume all risks of ownership at the time of shipment. Our stocking distributors are obligated to pay us the contractually agreed upon invoice price within specified terms regardless of when, if ever, they sell the products. Our direct customers do not have any contractual rights of return or exchange other than for defective product or shipping error.

Fair value measurement valuation techniques, to the extent possible, should maximize the use of observable inputs and minimize the use of unobservable inputs. The Company’s fair value measurements of all warrants are designated as Level 21 since all of the significant inputs are observable and quoted prices used for volatility were available ~~for the four comparative companies~~ in an active market.

A summary of the Company’s warrant issuance activity and related information for the six months ended June 30, ~~2018~~2019 is as follows:

The fair value of all warrants issued are determined by using the ~~Black-Scholes-Merton~~Black-Scholes valuation technique and were assigned based on the relative fair value of both the common stock and the warrants issued.

The inputs used in the ~~Black-Scholes-Merton~~Black-Scholes valuation technique to value each of the warrants issued at June 30, ~~2018~~2019 as of their respective issue dates are as follows:

⁽¹⁾Warrants issued with the May 2018 private placement and debt conversion had an initial exercise price of $0.75 and contain a contingent feature which would adjust the exercise price of the warrant in the event the Company issues any shares of common stock or common stock equivalents in a private placement of equity or debt securities at a price less than $0.75 per share. On August 8, 2018, the Company completed the issuance of convertible debt at an initial conversion price of $0.40. Accordingly, the exercise price on these warrants was adjusted downward to $0.40.

⁽²⁾Warrants issued with the August 8, 2018 and September 28, 2018 convertible notes had an initial exercise price of $0.75 and contain a contingent feature which would adjust the exercise price of the warrants in the event the Company issued any shares of common stock or common stock equivalents in a private placement of equity or debt securities to 90% of the issuance price if it is less than $0.75.

⁽³⁾On January 8, 2019, the Company completed the issuance of convertible debt in the SPA transaction with a conversion price of $0.40. As a result, accordingly the exercise price on all of the warrants issued with the Series B Shares were adjusted downward to 90% of that conversion price or $0.36. In conjunction with the downward adjustment, the Company recorded a deemed dividend of approximately $117,000 representing the difference in the fair value of the warrants immediately before and after the adjustment to the exercise price.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

For the period from February 1, 2013 (inception) to June 30, 2018, the Company has incurred net losses and, therefore, has no current income tax liability. The net deferred tax asset generated by these losses is fully reserved as of June 30, 2018 and December 31, 2017, since it is currently more likely than not that the benefit will not be realized in future periods.

The Company is required to file federal income tax returns and state income tax returns in the states of Florida, Georgia and Minnesota. There are no uncertain tax positions at June 30, 2018 or December 31, 2017. The Company has not undergone any tax examinations since inception.

The Company has a Contribution and Royalty Agreement with Dr. Haufe, a director of the Company. The agreement provides for the Company to pay Dr. Haufe royalties equal to 1% of revenues received by the Company from sales of all products derived from the use of the DenerveX technology. The Company incurred approximately $2,800 and $4,300, respectively, in royalty expense under the Contribution and Royalty agreement for the three and six months ended June 30, 2018, all of which was included in accounts payable at June 30, 2018. No royalties were earned or paid to Dr. Haufe for the three and six months ended June 30, 2017.

The Company entered into a Co-Development Agreement with Dr. Andrews, a director of the Company, in September 2013. The agreement provides for the Company to pay Dr. Andrews a royalty of 2% of the Company’s net sales earned from applicable product sales for at least 5 years from the effective date of the agreement. The Company incurred approximately $5,700 and $8,600 in royalty expense under the co-development agreement for the three and six months ended June 30, 2018, all of which was included in accounts payable at June 30, 2018. No royalties were earned or paid to Dr. Andrews for the three and six months ended June 30, 2017.

As described in Note 8, the Company pays TAG Aviation LLC, (“TAG”), a company owned by Mr. Gorlin, for month to month rental of office space at Dekalb-Peachtree Airport in Atlanta Georgia plus cost of utilities. Base rent payments under this arrangement is $2,147 per month. Rent expense and utilities expenses incurred by TAG Aviation amounted to approximately $9,400 and $18,800, respectively, for the three and six months ended June 30, 2018. Approximately $3,100 was included in accounts payable as of June 30, 2018. Rent expense and utilities expenses paid to TAG Aviation amounted to approximately $6,300 and $15,700, respectively, for the three and six months ended June 30, 2017.

As described in Note 8, the Company paid $39,999 and $79,998, respectively, for the three and six months ended June 30, 2018 to Jesse Crowne, a director and Co-Chairman of the Board of the Company, for business advisory services, of which $13,333 was included in accounts payable at June 30, 2018.

In November 2013, the Company accepted a proposal from Devicix, a Minneapolis, Minnesota based FDA registered contract designer and developer, to develop a commercially viable prototype of its product that could be used to receive regulatory approval from the FDA and other international agencies for use on humans to relieve pain associated with Facet Joint Syndrome. Through June 30, 2018, the Company has incurred approximately $1,905,000 in fees to Devicix, of which approximately $24,000 and $16,000, respectively, was included in accounts payable as of June 30, 2018 and 2017.

The development work commenced in December 2013. The total estimated cost of this work at contract signing was $960,000; however, the terms of the proposal allow either the Company or the designer and developer to cancel the development work with 10-days’ notice.

The Company incurred expenses of approximately $16,000 and $155,000, respectively, for the three and six months ended June 30, 2018. The Company incurred expenses of approximately $32,000 and $239,000, respectively, for the three and six months ended June 30, 2017.

The DenerveX device requires a custom electrocautery generator for power. As described in Note 8, in November 2014, the Company contracted with Bovie to customize one of their existing electrocautery generators for use with DenerveX Device, and then manufacture that unit on a commercial basis once regulatory approval for the DenerveX is obtained. The Bovie agreement required a base $295,000 development fee to customize the unit, plus additional amounts if further customization was necessary beyond predetermined estimates.

The Company did not incur any expenses to Bovie for the three and six months ended June 30, 2018. The Company incurred approximately $0 and $31,000, respectively, for the three and six months ended June 30, 2017. Through June 30, 2018, the Company has incurred approximately $422,000 to Bovie related to this agreement. The manufacturing agreement is complete as of June 30, 2018, and the Company does not expect to incur any more expenses related to the agreement.

In November 2014, the Company selected Nortech Systems Inc. (“Nortech”), a Minneapolis, Minnesota based FDA registered contract manufacturer, to produce 315 DenerveX devices from the prototype supplied by Devicix for use in final development and clinical trials. The agreement with Nortech includes agreed upon per unit prices for delivery of the devices. Actual work on development of the final units began in November 2014.

The Company incurred fees of approximately $4,200 and $107,000, respectively, to Nortech for the three and six months ended June 30, 2018. The Company incurred fees of approximately $6,800 and $140,000, respectively, to Nortech for the three and six months ended June 30, 2017. Through June 30, 2018, the Company has incurred expenses of approximately $997,000 to Nortech.

The Company incurred net losses of approximately ~~$2,340,000~~$8,992,000 and ~~$3,475,000~~$1,260,000 for the six months ended June 30, 2019 and 2018, respectively.

The RMS products and ~~2017, respectively.~~services division will incur losses until sufficient revenue volume and geographical coverage is attained utilizing the infusion of capital resources to expand marketing and sales initiatives.

In April 2019, the Company determined that their contract manufacturer was not able to meet the quality and quantity requirements for producing the DenerveX product. As a result, the manufacture of the DenerveX product has been temporarily suspended while the Company sources alternative manufacturing options. Additionally, in the Company’s review and evaluation of its current distribution channels, the Company has determined that many of these channels were not cost effective. As a result of the above evaluations, certain European distributor agreements were terminated, and all other representatives have been notified that the Company is temporarily suspending the manufacture and sale of the DenerveX product while the Company sources alternative manufacturing and distributor options as well as considers other product monetizing strategies. The MedoveX operations will continue to incur losses until the plan for the DenerveX System monetization is determined and executed.

The Company’s independent registered public accounting firm has included an explanatory paragraph with respect to our ability to continue as a going concern in its report on the Company’s consolidated financial statements for the year ended December 31, 2018. The presence of the going concern explanatory paragraph suggests that the Company may not have sufficient liquidity or minimum cash levels to operate the business. Since inception, the Company has incurred losses and anticipates that the Company will continue to incur losses until itits products can ~~sell a sufficient~~generate enough ~~volume~~revenue to offset its operating expenses. The Company through July 2019 has raised $7,100,000 (excluding $200,000 of debt conversions) year to date in additional cash to sustain the Company. Cash as of June 30, 2019 was approximately $300,000. The present level of cash is insufficient to satisfy the Company’s current operating requirements.

On July 25 and July 26, 2019, the Company issued two promissory notes (the “Notes”) in the aggregate principal amount of $900,000 to Horne Management, LLC, and controlled by Mr. William E. Horne, the Chief Executive Officer of the ~~DenerveX System with margins sufficient to offset expenses.~~

~~To date,~~Company. The Notes bear an interest rate of 5.5% per annum and are due on demand. The Company has received the ~~Company’s primary source of~~ funds ~~has been from~~represented by the ~~issuance of debt and equity.~~Notes.

The Company ~~will require additional cash~~has certain convertible promissory notes in ~~2018~~the aggregate principal amount of approximately $650,000 that mature in August and September 2019. The convertible notes are secured by all of the assets of the Company. The Company is currently ~~exploring other fundraising options. No assurances can be provided regarding~~negotiating a 30-day extension to the ~~success of such efforts. Furthermore, if~~maturity date. If the Company is unable to ~~raise sufficient~~extend the maturity date, the notes will go into default until additional funding is received to payoff these notes and the mandatory default amounts will have to be paid. The mandatory default amount means the sum of (a) 120% of the outstanding principal amount of this Note, plus 100% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of these notes.

The Company has certain promissory notes with outstanding balances of approximately $99,000 at June 30, 2019. The notes have a maturity date of August 1, 2019. The Company is in the process of finalizing an eighteen-month extension on the notes.

The Company is pursuing raising additional funds from the sale of equity securities. On June 7, 2019 the Board of Directors approved a new private placements securities offering up to $8,500,000 of Common Stock at a price of $0.50 per share, and a three-year warrant to purchase such number of shares of Common Stock equal to fifty percent (50%) of the number of shares of Common Stock issuable as part of this Agreement (the “Warrants”), at an exercise price of $1.00 per share. The Company has raised $100,000 from these new private placement securities since June 30, 2019. There can be no assurances that the Company will be able to obtain additional financing ~~in 2018, it could be~~on commercially reasonable terms, if at all. If the Company is required to undertake initiatives to conserve its capital resources, including delaying or suspending the launch of its product outside the United States and seeking FDA approval to sell its product in the United States. Delaying or suspending these initiativescurtail operations, there would ~~raise~~be substantial doubt about the Company’s ability to continue as a going concern.

The unaudited consolidated financial statements do not include any adjustments to the carrying value of amounts of its assets or liabilities that might be necessary should the Company be unable to continue as a going concern.

On July 11, 2019, MedoveX changed its named to H-CYTE by filing the Amendment to the Company’s Certificate of Incorporation with the Secretary of the State of Nevada. The name change and the Company’s new symbol, HCYT became effective with FINRA on July 15, 2019.

On July 25 and July 26, 2019, H-CYTE, Inc. issued two promissory notes (the “Notes”) in the principal amount (the “Principal Amount”) of an aggregate of $900,000 to Horne Management, LLC controlled by Mr. William E. Horne, the Chief Executive Officer of the Company. The Notes bear an interest rate of 5.5% per annum and are due on demand. The Company has received the funds represented by the Notes.

On July 29, 2019, the board of directors (the “Board”) of the Company appointed Dr. Andre Terzic to the Board. Dr. Andre Terzic, 57, has served as a director at the Center for Regenerative Medicine of Mayo Clinic in Rochester, Minnesota for the last five years. Dr. Andre Terzic is the Chair of the Pharmaceutical Science and Clinical Pharmacology Advisory Committee of Food and Drug Administration, the President of the American Society for Clinical Pharmacology & Therapeutics, and one of the co-founders of Rion LLC. Rion is a Minnesota Bio-tech Company focused on cutting-edge regenerative technologies. Dr. Terzic received his M.D. at University of Belgrade in Paris, France in 1985 and his Ph.D. from the Department of Pharmacology of University of Illinois in 1991.

On July 30, 2019, the Board appointed Dr. Atta Behfar as a member of the Board. Dr. Atta Behfar, 42, has worked as a cardiologist at the Department of Cardiovascular Medicine of Mayo Clinic for the last five years. Dr. Atta Behfar is a Director of the Van Cleve Cardiac Regenerative Medicine program at Mayo Clinic and one of the founders of Rion LLC. Dr. Behfar received a Bachelor of Science degree in Biochemistry from Marquette University in 1998 and a M.D. and Ph.D. from Mayo Clinic College of Medicine, Mayo Graduate School in 2006.

The Company has certain convertible promissory notes in the aggregate principal amount of approximately $650,000 that mature between August 8, ~~2018,~~2019 and September 28, 2019. The convertible notes are secured by all of the ~~Board approved~~assets of the ~~issuance~~Company. The Company is currently negotiating a 30-day extension to the maturity date. If the Company is unable to extend the maturity date, the notes will go into default until additional funding is received to payoff these notes and the mandatory default amounts will have to be paid. The mandatory default amount means the sum of ~~up to $600,000~~(a) 120% of ~~12% Senior Secured Convertible Notes (the “Notes”). The Notes~~the outstanding principal amount of this Note, plus 100% of accrued and unpaid interest ~~mature~~hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of these notes.

The company has certain promissory notes with outstanding balances of approximately $99,000 at June 30, 2019. The notes have a maturity date of August 1, ~~year from closing date.~~2019. The ~~Notes are convertible into the Company’s common stock at the option of the holder at the lesser of (a) $0.40, or (b) 90% of the price of the common stock~~Company is in the ~~Company’s next private placement. Each holder is also issued a warrant for number~~process of ~~shares equal to~~finalizing an eighteen-month extension on the number of common shares that would be received if the Notes were converted at $0.40. The warrants expire after 3 years and have an exercise price of $0.75 per share. Both the conversion price and warrant exercise price are subject to customary anti-dilution provisions.notes.

The Notes also contain a registration provision that requires the Company to file to register the underlying common stock and warrants no later than December 31, 2018, and use best efforts to have the registration statement effective by March 31, 2019. A cash penalty of 1% of the investment amount per month can be imposed by the holder if the registration statement is not filed by December 31, 2018 or declared effective by March 31, 2019, up to a maximum of 12%. As of August 10, 2018, the Company had sold all of the Notes.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report. Historical results and trends that might appear in this Quarterly Report should not be interpreted as being indicative of future operations.

~~MedoveX was incorporated in Nevada~~On July 11, 2019, Medovex Corp. (“MedoveX”) changed its named to “H-CYTE, Inc.” (H-CYTE or the Company) by filing a Certificate of Amendment (the “Amendment”) to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Secretary of the State of Nevada. The name change and the Company’s new symbol, HCYT, became effective with FINRA on July ~~30, 2013~~15, 2019.

On October 18, 2018, H-CYTE (formerly named MedoveX) entered into an Asset Purchase Agreement with Regenerative Medicine Solutions, LLC, RMS Shareholder, LLC (“Shareholder”), Lung Institute LLC (“LI”), RMS Lung Institute Management LLC (“RMS LI Management”) and Cognitive Health Institute Tampa, LLC (“CHIT”), (collectively “RMS”). On January 8, 2019, the Asset Purchase Agreement was amended and the Company acquired certain assets and assumed certain liabilities of RMS as ~~SpineZ Corp. MedoveX~~reported in the 8-K/A filed in March of 2019. Based on the terms of the Asset Purchase Agreement and its amendment, the former RMS members had voting control of the combined company as of the closing of the RMS acquisition. For accounting purposes, the acquisition transaction has been treated as a reverse acquisition whereby the Company is deemed to have been acquired by RMS and the historical financial statements prior to the acquisition date of January 8, 2019 now reflect the historical financial statements of RMS.

The Company’s RMS division is a healthcare medical biosciences company that develops and implements advance innovative treatment options in regenerative medicine to treat an array of debilitating medical conditions. In addition, the company is the ~~parent company~~operator and manager of ~~Debride, which was incorporated under~~ the ~~laws~~various Lung Health Institute clinics. Committed to an individualized patient-centric approach, RMS consistently provides oversight and management of the highest quality care while producing positive outcomes. RMS offices are located in Tampa, Florida. The Lung Health Institute located in Tampa, Florida ~~on October 1, 2012.~~ is a wholly owned subsidiary of RMS. RMS also provides oversight and management to the Lung Health Institutes located in Nashville, TN, Scottsdale AZ, Pittsburgh, PA, and Dallas, TX.

The Company is also in the business of designing and marketing proprietary medical devices for commercial use in the United States and Europe. The Company received CE marking in June 2017 for the DenerveX System and it is now commercially available throughout the European Union and several other countries that accept CE marking. The Company’s first sale of the DenerveX System occurred in July 2017. The Company ~~is currently seeking~~plans to seek approval for the DenerveX System from the ~~FDA~~Food & Drug Administration (“FDA”) in the ~~US.~~United States. The Company is presently reevaluating its approaches to revenue generation including the continuing use of distribution channels.

In April, the Company determined that their contract manufacturer was not able to meet the quality and quantity requirements for producing the DenerveX

~~The DenerveX® System consists~~ product. As a result, the manufacture of the DenerveX ~~Kit~~product has been temporarily suspended while the Company sources alternative manufacturing options. Additionally, in the Company’s review and evaluation of its current distribution channels, the ~~DenerveX Power Pro-40 generator. We believe~~Company has determined that many of these channels were not cost effective. As a result of the above evaluations, certain European distributor agreements were terminated, and all other representatives have been notified that the ~~DenerveX System can be developed in~~Company is temporarily suspending the ~~future to encompass a number of medical applications in addition to the current application for facet joint syndrome, including pain relief.~~

~~The Company acquired the DenerveX patent on January 31, 2013 from Scott Haufe, M.D. (“Dr. Haufe”), a director of the Company, in exchange for 750,108 shares of common stock in the Company~~manufacture and ~~a 1% royalty on all sales of any product sold based on the patent.~~

In September 2013, we entered into a Co-Development Agreement with James Andrews, M.D. (“Dr. Andrews”), a director of the Company, whereby Dr. Andrews committed to further evaluate the DenerveX System and to seek to make modifications and improvements to such technology. In exchange for such services, the Company agreed to pay Dr. Andrews a royalty equal to two (2%) percentsale of the DenerveX net sales during the five (5) year term of the Co-Development Agreement. Upon the termination of the term of the Co-Development Agreement, which has a minimum term of five (5) years, the royalty payable to Dr. Andrews shall be reduced to one (1%) percent of DenerveX net sales after such termination of products covered by any U.S. patent on which Dr. Andrews is listed as a co-inventor; if any such patents are obtained. Such one (1%) percent royalty shall continue during the effectiveness of such patent. Pursuant to the Co-Development Agreement, Dr. Andrews agreed to assign any modifications or improvements to the DenerveX toproduct while the Company ~~subject to the royalty rights described above.~~

~~We are marketing the~~sources alternative manufacturing and distributor options as well as considers other product as a disposable, single-use kit which includes all components of the DenerveX device product. In addition to the DenerveX device itself, we have developed a dedicated Electro Surgical Generator, the DenerveX Pro-40, to power the DenerveX device.

~~The generator is provided to customers agreeing to purchase the DenerveX device and cannot be used for any other purpose.~~

We accepted a proposal from Devicix, a Minneapolis, Minnesota third party design and development firm, in November 2013, to develop a prototype device. This proposal included a 5-phase development plan, culminating in the production ready prototype that could be used for validation purposes. We have recently completed the final stages of the build and test phase of the device, culminating in receiving CE marking to market the product in Europe. The DenerveX Kit and Pro-40 generator is now in commercial production. We anticipate very minimal, if any, additional build and test related expenses, which consists of product design verification activities, in the future as we launch the DenerveX System in Europe. Through June 30, 2018, we have incurred approximately $1,905,000 in fees to Devicix.

In November 2014, we selected Nortech Systems Inc. (“Nortech”), a Minneapolis, Minnesota based FDA registered contract manufacturer, to produce test DenerveX devices from the prototype supplied by Devicix for use in final development and non-clinical testing. The agreement with Nortech includes agreed upon per unit prices for delivery of the devices. Actual work on development of the final units began in November 2014. Through June 30, 2018, we have incurred approximately $997,000 in fees to Nortech. We are now in commercial production, however, the Company may still incur non-recurring expenses related to the DenerveX Kit under the agreement.

Also in November 2014, we engaged Bovie Medical Corporation (“Bovie”), a Delaware Corporation, to develop the Electro Surgical Generator and provide post production support services. Per our agreement with Bovie, we are invoiced based on deliverables produced by Bovie, which was originally supposed to amount to $295,000 upon completion of all the deliverables. Through June 30, 2018, we have incurred approximately $422,000 in fees to Bovie for production services.The original $295,000 agreement was a base number along the pathway of development. Additional requirements were incurred as the research and development process progressed and as a result certain prices increased and additional costs were incurred to further customize the DenerveX System. ~~Development of the generator is now complete and it is currently in commercial production.~~

~~The Company has completed the final stages of the development and verification of the DenerveX Device and the DenerveX Pro-40 power generator as a system.~~

~~The Company received CE marking in June 2017 for the DenerveX System. It is now being sold throughout the European Union and countries that accept CE Mark.~~

~~In March 2018, the Company receivedINVIMA registration approval in Columbiafor the Denervex System which allows the company to now market the product in Columbia.~~

~~The Company is currently seeking marketing clearance from the FDA for commercialization of the DenerveX System in the US.~~

Aside from the European Union, we may seek regulatory approval for commercialization of the DenerveX System from Peru, Argentina, Mexico, Turkey, Israel, New Zealand, Australia and other countries. The documentation required to accompany the CE Mark to obtain regulatory approval in the aforementioned countries may include copies of the ISO 13485 certification, the SGS certificate of approval and a statement of Good Manufacturing Practices (“GMP”).monetizing strategies.

Our discussion and analysis of our financial condition and results of operations are based on our ~~condensed~~ consolidated financial statements, which we have prepared in accordance with United States generally accepted accounting principles. The preparation of these ~~condensed~~ consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below.

We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in more detail in the notes to our consolidated financial statements for the fiscal year ended December 31, ~~2017,~~2018, included in the Company’s Annual Report on Form ~~10K.~~10K as well as in the notes to our unaudited consolidated financial statements for the six months ended June 30, 2019 included in this Quarterly Report on Form 10-Q. The December 31, 2018 financial information included in the Company’s Annual Report on Form 10K reflect the historical financial information of H-CYTE (formerly Medovex) business and do not include the RMS financial information. With the reverse merger, historical financial information for periods prior to the merger on January 8, 2019 presented in the comparative financial information included in the 2019 Quarterly Reports on Form 10-Q will only reflect the historical financial information related to RMS prior to the merger.

~~Factors Which May Influence Future~~ Results of Operations - Three and Six Months Ended June 30, 2019 and 2018

~~The following is a description of factors that may influence our future results of operations, and that we believe are important to an understanding of our business and results of operations.~~

The ~~Company’s first sale~~Company recorded gross revenue for the three and six months ended June 30, 2019 of ~~the DenerveX System occurred in July 2017. We~~approximately $2,432,000 and $3,756,000 respectively. The Company recorded gross revenue for the three and six months ended June 30, 2018 of approximately ~~$252,000~~$2,441,000 and ~~$396,000,~~$5,344,000 respectively.

The ~~Company sells~~decrease in revenue for the ~~DenerveX System through~~six-month period ended June 30, 2019 is mainly attributable to a ~~combination~~decrease in the number of ~~direct sales and independent distributors in international markets.~~treatments provided by the biomedical services business (RMS). The ~~Company recognizes~~ revenue atfor the ~~time product~~six months ended June 30, 2019 is ~~shipped to customers~~derived predominantly from the ~~third-party distribution warehouse in Berlin, Germany. We believe this action satisfies~~RMS and the ~~performance obligation as outlined in new~~ revenue ~~recognition standards.~~for the six months ended June 30, 2018 is exclusively RMS. As a result of the reverse merger accounting, the historical financials prior to January 8, 2019 represent the RMS only.

The DenerveX Device is manufactured by Nortech in Minneapolis, MN and subsequently shipped to the third-party warehouse in packages of five units per one package. Our independent distributors then order the DenerveX Devices as single units at specified prices as outlined in their distribution agreements. The international distribution agreements also specify the pricing for which the independent distributor is to sell the DenerveX Device to their end-user customers.

The Pro-40 Generator is manufactured in Bulgaria and shipped to the third-party warehouse as single units. The generators are typically provided for use to customers at no cost, however, demo units can be purchased by customers for which the Company records in revenue and cost of sales and removes the demo units from inventory.

Our independent distribution customers place initial purchase orders for minimum stocking quantities of both the DenerveX Devices and Pro-40 Generators as agreed upon per their signed international distribution agreements. Subsequent stocking orders are required to be placed initially at specified dates and quantities based upon projected end-user sales volumes. Stocking orders thereafter are required to be placed quarterly based off actual end-user sales volumes.

For the ~~period ending~~three and six months ended June 30, ~~2018, cost~~2019 the Company incurred approximately $492,000 and $989,000, in costs of sales, ~~as a percentage of revenue was approximately 76% resulting in a gross profit margin of approximately 24%.~~

~~We classify our operating expenses into four categories: research and development, sales and marketing, general and administrative, and depreciation.~~

Research and development costs and expenses consist primarily of fees paid to external service providers, laboratory supplies, costs for facilities and equipment, and other costs for regulatory, patent, and research and development activities.respectively. For the three and six months ended June 30, 2018 the Company incurred approximately ~~$16,000~~$644,000 and ~~$155,000, respectively,~~$1,475,000, in ~~research~~costs of sales, respectively. The cost of sales for the three and ~~development expenses.~~ six months ended June 30, 2019 is derived predominantly from RMS and the cost of sales for the three and six months ended June 30, 2018 is exclusively the RMS business.

The Company’s cost of sales is comprised of two main components: medical supplies and personnel costs for the biomedical services business, RMS. Medical supplies are variable costs and based on the number of treatments provided; personnel expenses are also variable as these are hourly positions. The number of treatments currently being provided can be handled adequately with the Company’s present level of personnel. The Company possesses the opportunity to increase the number of treatments performed without increasing personnel costs as it can leverage the current personnel’s availability until the Company’s treatment volume reaches critical mass. However, upon an increase in treatment volume beyond that capacity, the Company will need to hire additional personnel.

The decrease in cost of sales for the three months ending June 30, 2019 as compared to the prior year is attributable to reduced costs for medical supply purchases from cost control initiatives and the ability to perform treatments using fewer staff members. The decrease in cost of sales for the six months ending June 30, 2019 as compared to the prior year is attributable to reduced costs for medical supply purchases from cost control initiatives as well as reduced variable costs associated with reduced revenue volume and the ability to perform treatments using fewer staff members.

For the three and six months ended June 30, ~~2017,~~2019 the Company generated a gross profit totaling approximately $1,940,000 (80%) and $2,767,000 (74%), respectively. For the three and six months ended June 30, 2018, the Company generated a gross profit totaling $1,797,000 (74%) and $3,868,000 (72%), respectively. The increase in gross margin for the three months ending June 30, 2019 as compared to the prior year is attributable to reduced cost of sales from cost controls for medical supply purchases and the ability to perform treatments using fewer staff members. The decline in gross margin for the six months ended June 30, 2019 as compared to the prior year is attributable to the decline in revenue, net of the decline in cost of sales.

We classify our operating expenses into four categories: salaries and related costs, other general and administrative, advertising, and depreciation and amortization.

For the three and six months ended June 30, 2019, the Company incurred approximately, ~~$56,000~~$3,480,000 and ~~$392,000, respectively,~~$5,165,000 in ~~research~~salaries and ~~development expenses. Research and development expenses are recorded in operating expenses in the period in which they are incurred.~~

related costs, respectively. For the three and six months ended June 30, 2018, the Company incurred approximately ~~$441,000~~$889,000 and ~~$900,000, respectively,~~$2,178,000, in ~~personnel costs.~~ salaries and related costs, respectively. Included in salaries and related costs for the three and six months ended June 30, 2019 was approximately $1,690,000 in compensation expense related to the 4,225,634 shares of common stock valued at $.40 per share issued to Mr. William Horne on April 25, 2019. These shares were granted in a restricted stock award which was 100% vested when issued. This restricted stock award was issued pursuant to his employment agreement with the Company, which stated that this award would be fully vested if not issued within fifteen days of the RMS reverse merger transaction. The restricted stock award was not issued within that time frame and was fully vested when issued. The Company recognized approximately $1,690,000 million of compensation expense in the quarter ended June 30, 2019. The remaining increase in salaries and related costs is primarily attributable to the three and six months ended June 30, 2018 reflecting only the expenses of the RMS business and 2019 reflecting the consolidated costs for RMS and H-CYTE. Excluding the stock compensation expense of approximately $1,690,000, the Company anticipates that salaries and related costs will continue at a comparable rate in the future.

For the three and six months ended June 30, ~~2017,~~2019, the Company incurred approximately, ~~$461,000~~$1,885,000 and ~~$917,000, respectively,~~$3,284,000 in ~~personnel costs.~~other general and administrative costs, respectively. For the three and six months ended June 30, 2018, the Company incurred approximately $785,000 and $1,674,000, in other general and administrative costs, respectively. The increase is primarily attributable to the three and six months ended June 30, 2018 reflecting only the expenses of the RMS business and 2019 reflecting the consolidated business costs for RMS and H-CYTE.

Of the total other general and ~~$805,000, respectively,~~administrative costs, for the three and six months ended June 30, ~~2018. Professional~~2019, professional fees were approximately ~~$359,000~~$416,000 and ~~$802,000, respectively, for~~$856,000, respectively.

For the three and six months ended June 30, ~~2017.~~2018, professional fees were approximately $46,000 and $135,000, respectively. Professional fees consist primarily of accounting, legal, patent and public company compliance costs as well as regulatory costs incurred to maintain CE Mark in Europe. The Company has incurred additional accounting and legal fees due to the reverse acquisition in 2019 and 2018 did not reflect patent and public company compliance costs.

~~General and administrative related travel expenses were approximately $2,800 and $9,800, respectively, for~~The Company anticipates that the ~~three and six months ended June 30, 2018. General and administrative related travel expenses were approximately $29,000 and $51,000, respectively, for the three and six months ended June 30, 2017.~~

~~We anticipate that our~~other general and administrative expenses will continue at a comparable rate in the future ~~to support clinical trials, commercialization of our product candidate~~ and include the continued costs of operating as a public company.

For the three and six months ended June 30, ~~2018,~~2019, the Company ~~incurred~~had approximately ~~$201,000~~$1,585,000 and ~~$451,000,~~$2,720,000 respectively, in ~~sales~~advertising costs, as compared to $419,000 and $1,157,000 for the three and six months ended June 30, 2018. The increases were attributable to increased marketing ~~expenses.~~ efforts to promote the Company’s healthcare medical biosciences business. We expect these expenses will continue at a comparable rate as we expand penetration in existing markets.

For the three and six months ended June 30, ~~2017,~~2019, the Company incurred approximately $146,000 and $228,000, respectively, in sales and marketing expenses. Sales and marketing expenses consist primarily of travel related expenses and fees paid to vendors for tradeshows and consultants in correlation with the launch and commercialization of the DenerveX System in Europe. We expect these expenses will continue to increase as we launch the product in new markets and expand penetration in existing markets.

~~Depreciation and amortization expense are recorded in the period in which they are incurred. The~~ Company recognized approximately ~~$7,000~~$209,000 and ~~$14,000,~~$420,000 respectively, in depreciation and amortization expense. Of that, the Company recognized approximately $184,000 and $368,000 respectively, in amortization expense for the three and six months ended June 30, ~~2018. The Company recognized approximately $7,000 and $13,000, respectively, in depreciation and amortization expense for~~2019. For the three and six months ended June 30, ~~2017.~~2018, the Company recognized approximately $24,000 and $49,000 respectively, in depreciation and amortization expense. The 2019 amortization expense is related to the technology intangibles that arose as a result of the reverse merger by RMS of H-CYTE.

~~Results~~Departure of ~~Continued Operations~~Directors and Certain Officers, Election of Directors, Appointment of Certain Officer, Compensatory Agreement of Certain Officers

~~Three~~On January 8, 2019, in connection with the Asset Purchase Agreement and ~~Six Months Ended June 30, 2018 Compared~~APA Amendment, the Board of the Company appointed Michael Yurkowsky and Raymond Monteleone as additional members of the Board.

Mr. Michael Yurkowsky is to receive $5,000 per Board Meeting. Besides this arrangement, there are no arrangements or understandings between the Company and Mr. Yurkowsky and any other person or persons pursuant to which Mr. Yurkowsky was appointed as a member of the Board and there is no family relationship between Mr. Yurkowsky and any other director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer.

Mr. Raymond Monteleone is to receive $5,000 per Board Meeting. Besides this arrangement and the consulting agreement (see Note 11), there are no arrangements or understandings between the Company and Mr. Monteleone and any other person or persons pursuant to which Mr. Monteleone was appointed as a member of the Board and there is no family relationship between Mr. Monteleone and any other director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer.

On February 4, 2019, the board of directors of the Company accepted the resignation of Mr. Charles Farrahar as the Chief Financial Officer, effective immediately. Mr. Farrahar resigned as the Chief Financial Officer for personal reasons and not as a result of any disputes or disagreements between Mr. Farrahar and the Company on any matter relating to the ~~Three and Six Months Ended June 30, 2017.~~

~~Total operating expenses decreased approximately $143,000,~~Company’s operations, policies, accounting policies, or ~~12%, to approximately $1,092,000 for the three months ended June 30, 2018, as compared to approximately $1,235,000 for the three months ended June 30, 2017.~~practices.

~~Total operating expenses decreased approximately $696,000,~~On February 4, 2019, the board of directors of the Company appointed Mr. Jeremy Daniel as the Chief Financial Officer of the Company. There are no arrangements or ~~23%,~~understandings between the Company and Mr. Daniel and any other person or persons pursuant to ~~approximately $2,385,000~~which Mr. Daniel was appointed as the Chief Financial Officer of the Company and there is no family relationship between Mr. Daniel and any other director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer.

On February 15, 2019, Dennis Moon resigned from his position as the executive vice president of the Company, effective immediately. Mr. Moon resigned from his position at the Company for personal reasons, not as a result of or caused by any disagreements between Mr. Moon and the ~~six months ended June 30, 2018, as compared~~Company on any matter relating to ~~approximately $3,081,000 for~~ the ~~six months ended June 30, 2017.~~Company’s operations, policies, or practices.

~~The overall decrease in operating expenses is~~On June 7, 2019, the ~~result~~board of ~~intentional spending cut-backs in order to preserve working capital due to low cash balances. Additionally, research and development and regulatory expenses are lower as we completed the final stages~~directors of the ~~development~~Company appointed Briley Cienkosz as the Chief Marketing Officer, Ann Miller as the Chief Operating Officer, and ~~verification~~Gary Mancini as the Chief Relationship Officer. There are no arrangements or understandings and there is no family relationship with any other director or executive officer of the ~~DenerveX System~~Company or any person nominated or chosen by the Company to become a director or executive officer between the Company and ~~have received CE Mark certification. Sales & Marketing expenses increased as we entered commercial production~~Ann Miller, Briley Cienkosz, or Gary Mancini.

On July 29, 2019, the board of directors (the “Board”) of the ~~DenerveX System and launched our product in Europe. We continued to incur similar costs associated with being a public entity.~~

~~We did not incur any operating losses related~~Company appointed Dr. Andre Terzic to the ~~disposition~~Board. On July 30, 2019, the Board appointed Dr. Atta Behfar as a member of ~~Streamline for~~ the ~~three~~Board. There are no arrangements or understandings among the Company, Dr. Andre Terzic and ~~six months ended June 30, 2018. Our discontinued operations generated net losses~~Dr. Atta Behfar and any other person or persons pursuant to which Dr. Andre Terzic or Dr. Atta Behfar was appointed as a member of ~~approximately $0~~the Board of the Company and ~~$1,200, respectively for~~there is no family relationship between each of Dr. Andre Terzic and Dr. Atta Behfar and any other director or executive officer of the ~~three and six months ended June 30, 2017.~~Company or any person nominated or chosen by the Company to become a director or executive officer.

We anticipate our cash expenditures will ~~remain relatively consistent~~increase as we continue to operate as a publicly traded entity, ~~and~~ as we move forward with increased sales and marketing initiatives for the ~~recent commercialization~~RMS services and as we incur losses associated with temporarily suspending the manufacture and sale of the DenerveX ~~System onto clinical trial studies. We expect future cash flow expenditures~~product. In addition, the Company is pursuing the acquisition of new technologies to ~~increase if~~expand the ~~FDA requires a de novo regulatory path, instead~~business lines and with the intent of ~~a 510(k) approval.~~increasing profitability.

ToThe Company has certain convertible promissory notes in the ~~extent our available~~aggregate principal amount of approximately $650,000 that mature in August and September 2019. The convertible notes are secured by all of the assets of the Company. The Company is currently negotiating a 30 day extension to the maturity date. If the Company is unable to extend the maturity date, the notes will go into default until additional funding is received to payoff these notes and the mandatory default amounts will have to be paid. The mandatory default amount means the sum of (a) 120% of the outstanding principal amount of this note, plus 100% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of these notes.

The present level of cash is insufficient to satisfy our ~~long-term~~current operating ~~requirements, we~~requirements. The Company will need to seek additional sources of funds from the sale of equity or debt securities or through a credit ~~facility, or we will need to modify our current business plan.~~facility. There can be no assurances that we will be able to obtain additional financing on commercially reasonable terms, if at all.

The Company is pursuing raising additional funds from the sale of equity securities. On June 7, 2019 the Board of Directors approved a new private placements securities offering up to $8,500,000 of Common Stock at a price of $0.50 per share, and a three-year warrant to purchase such number of shares of Common Stock equal to fifty percent (50%) of the number of shares of Common Stock issuable as part of this Agreement (the “Warrants”), at an exercise price of $1.00 per share. The Company has raised $100,000 from these new private placement securities since June 30, 2019. There can be no assurances that the Company will be able to obtain additional financing on commercially reasonable terms, if at all.The sale of additional equity or convertible debt securities would likely result in dilution to ~~our~~ current stockholders.

~~Our~~The Company incurred net losses of approximately $8,992,000 and $1,260,000 for the six months ended June 30, 2019 and 2018, respectively.

The RMS products and services division will incur losses until sufficient revenue volume and geographical coverage is attained utilizing the infusion of capital resources to expand marketing and sales initiatives. The MedoveX operations will continue to incur losses until the plan for the DenerveX System commercialization is determined and executed.

The Company’s independent registered public accounting firm has included an explanatory paragraph with respect to ~~our~~the Company’s ability to continue as a going concern in its report on ~~our~~the Company’s consolidated financial statements for the ~~years~~year ended December 31, ~~2017 and 2016.~~2018. The presence of the going concern explanatory paragraph suggests that wethe Company may not have sufficient liquidity or minimum cash levels to operate the business. Since ~~our~~its inception, ~~we have~~the Company has incurred losses and ~~anticipate~~anticipates that wethe Company will continue to incur losses until ~~our~~its products can generate enough revenue to offset ~~our~~its operating expenses. WeThe Company through July 2019 has raised $7,100,000 (excluding $200,000 of debt conversions) year to date in additional cash to sustain the Company. Cash as of June 30, 2019 was approximately $300,000. The present level of cash is insufficient to satisfy our current operating requirements.

On July 25, 2019 and July 26, 2019, the Company issued two promissory notes in the aggregate principal amount of $900,000 to Horne Management, LLC controlled by Mr. William E. Horne, the Chief Executive Officer of the Company. The Notes bear an interest rate of 5.5% per annum and are due on demand. The Company has received ~~$820,000~~the funds represented by the Notes.

The Company has certain convertible promissory notes in the aggregate amount of ~~net proceeds~~$650,000 that mature in August and September 2019. The convertible notes are secured by all of the assets of the Company. The Company is currently negotiating a ~~private placement of 5% Series B Preferred Convertible Stock in May 2018. We believe these funds will be sufficient~~30 day extension to ~~maintain uninterrupted operations while we pursue our near term operational plans and pursue other fund-raising initiatives that will be required in 2018. No assurances can be provided regarding~~ the ~~success of such efforts. Furthermore, if~~maturity date. If the Company is unable to ~~raise sufficient~~extend the maturity date, the notes will go into default until additional funding is received to payoff these notes and the mandatory default amounts will have to be paid. The mandatory default amount means the sum of (a) 120% of the outstanding principal amount of the note, plus 100% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of these notes.

The Company is pursuing raising additional funds from the sale of equity securities. On June 7, 2019 the Board of Directors approved a new private placements securities offering up to $8,500,000 of Common Stock at a price of $0.50 per share, and a three-year warrant to purchase such number of shares of Common Stock equal to fifty percent (50%) of the number of shares of Common Stock issuable as part of this Agreement (the “Warrants”), at an exercise price of $1.00 per share. The Company has raised $100,000 from these new private placement securities since June 30, 2019. There can be no assurances that the Company will be able to obtain additional financing ~~in 2018, it could be~~on commercially reasonable terms, if at all. If the Company is required to ~~undertake initiatives to conserve its capital resources. If we are required to conserve resources or~~ curtail ~~production,~~operations, there ~~could~~would be substantial doubt about the Company’s ability to continue as a going concern.

Since ~~our~~its inception, ~~we have~~the Company has incurred losses and ~~anticipate~~anticipates that we will continue to incur losses in ~~the~~ foreseeable future.

While we expect our research and development costs for the DenerveX System to dissipate, we also anticipate increased expenditures for clinical trials to obtain FDA approval of the DenerveX System as well as expenses related to the commercial launch of the DenerveX system. We will need additional cash to fully fund these activities.

On ~~February 26, 2018,~~January 8, 2019, the Company entered into a securities purchase agreement (the “SPA”) with ~~selected accredited investors whereby~~four purchasers (the “Purchasers”) pursuant to which the four Purchasers invested in the Company ~~sold~~ an aggregate amount of ~~770,000 shares~~$2,000,000, with $1,800,000 in cash and $200,000 by cancellation of ~~common stock~~debt as explained below, in exchange for forty (40) units (the “Units”), each consisting of a convertible note (the “Convertible Note”) with the principal amount of $50,000 and ~~385,000 warrants~~a warrant (the “Warrant”) to purchase common ~~stock. The offering resulted in $308,000 in gross proceeds~~stock (the “Common Stock”) of the Company. Pursuant to this SPA, the Company initially offered a minimum of $1,000,000 and a maximum of $6,000,000, and subsequently increased to a maximum of $8,000,000 (the “Maximum Amount”) of Units at a price of $50,000 per Unit until the earlier of i) the closing of the subscription of the Maximum Amount and ii) March 31, 2019 (the “Termination Date”), subject to the ~~Company.~~Company’s earlier termination at its discretion. The ~~warrants have a five-year term commencing six months~~SPA includes the customary representations and warranties from ~~issuance with an exercise price of $0.75.~~

~~In May 2018,~~ the Company ~~entered into~~and purchasers. Steve Gorlin, the Company’s former Chairman of the Board, converted a ~~Unit Purchase Agreement with selected accredited investors whereby~~$200,000 promissory note owed to him by the Company ~~had~~in exchange for four (4) Units on the right to sell in a private placement up to $1,000,000 in units. Each unit had a purchase price of $100,000 and consisted of (i) 1,000 shares of 5% Series B Convertible Preferred Common Stock, $0.001 par value per share, and (ii) 250,000 warrants, $0.001 par value per share to purchase Common Stock at $0.75 per share for a period of three years.same terms as all other Purchasers.

Each ~~Series B Share is~~Convertible Note offered by the Company as part of the Unit bears an interest rate of 12% per annum, has a principal amount of $50,000, shall mature in one year from the original issue date on January 8, 2019, and will be convertible into ~~250~~ shares of Common Stock at a ~~conversion~~ price of $0.40 ~~per share. The Series B Shares also entitle~~subject to adjustment stated in the ~~holders~~Convertible Note. Pursuant to ~~a 5% annual dividend.~~

~~The offering resulted in net proceeds~~the terms of ~~$820,000 and resulted in~~the Convertible Note, each holder of the Convertible Notes shall not own more than 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of Common Stock issuable upon exercise of such Convertible Note. Upon default, the penalty interest rate of the Convertible Note shall rise to 18% per annum. In addition, pursuant to the SPA, the Company offers, as part of the Unit, Warrants to purchase the Common Stock at a price of $0.75 per share (the “Exercise Price”), subject to adjustments stated therein. The holder of each Warrant may purchase the number of shares of Common Stock equal to the number of shares of Common Stock issuable upon conversion of each Convertible Note while the Warrant is exercisable. The Warrants have a term of three years and shall be exercised in cash or on a cashless basis as described in the Warrant. All of such notes have been converted into an aggregate of ~~8,250~~18,000,000 shares of ~~5% Series B Convertible Preferred Stock and warrants to purchase 2,062,500~~ common ~~stock shares.~~

The $100,000 5% convertible debenture the Company issued on January 31, 2018 was converted on April 26, 2018 into common stock at $0.38 per share, which was 85% of the average closing price of the Company’s stock during the twenty trading days immediately preceding the delivery of the notice of conversion. The market value of the common stock on the date of the conversion was $0.40 which lead to an immaterial amount related to a beneficial conversion feature.

~~On March 26, 2018 the Company issued a promissory note to~~ Steve ~~Gorlin, father of Jarrett~~ Gorlin, the Company’s ~~CEO, for~~former Chairman of the ~~principal amount of $200,000, plus interest, at~~Board, converted a rate of five percent per year. The outstanding principal and all accrued but unpaid interest was due on May 15, 2018. The Company issued warrants to purchase an aggregate of 133,333 shares of common stock in conjunction with the promissory note. Each warrant has an exercise price of $0.75 and is exercisable for a period of five years commencing from the date of issuance.

~~On May 15, 2018, $100,000 of Steve Gorlin’s~~ $200,000 promissory note ~~was converted into equity~~owed to him by the Company pursuant to the same terms of the ~~securities purchase agreement dated May 1, 2018. Accordingly, $100,000 of~~SPA entered into by other investors to consummate the acquisition in January 8, 2019. The promissory note was converted into an aggregate of ~~1,000~~500,000 shares of common stock, eliminating the Company’s ~~5% Series B Shares~~debt obligation.

As reported on Form 8-K filings on January 25, 2019, February 8, 2019, March 15, 2019 and April 5, 2019 the Company entered into other SPA’s with additional purchasers, which brought the aggregate amount of capital raised in all these offerings to $7,200,000, as of that latest date.

The $750,000 convertible notes payable assumed in the acquisition transaction with RMS, had a fair value of approximately $598,000 on the acquisition date. Subsequently, on February 6, 2019, $100,000 of the outstanding convertible notes was converted into an aggregate of 250,000 ~~warrants to purchase~~shares of common stock, eliminating $100,000 of the Company’s debt obligation. The debt was converted into shares at $0.40 per share, which was the conversion price per the securities purchase agreement. The $650,000 remaining principal balance of these convertible notes, mature in August and September 2019. The convertible notes are secured by all of the assets of the Company.

The Company is currently negotiating a 30-day extension to the maturity date. If the Company is unable to extend the maturity date, the notes will go into default until additional funding is received to payoff these notes and the mandatory default amounts will have to be paid. The mandatory default amount means the sum of (a) 120% of the outstanding principal amount of the note, plus 100% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of these notes.

In connection with the Asset Purchase Agreement and APA Amendment, on January 8, 2019, Steve Gorlin, the Company’s former Chairman of the Board, converted a $200,000 promissory note owed to him by the Company pursuant to the same terms of the security purchase agreement entered into by other investors to consummate the acquisition in January 8, 2019. The promissory note was converted into an aggregate of 500,000 shares of common stock, eliminating the Company’s debt obligation.

Cash activity for the six months ended June 30, 2019 and 2018 is summarized as follows:

						Six Months Ended June 30,
	June 30, 2018			December 31, 2017		2019			2018
Current Assets	$	708,000		$	1,138,000	$	804,000		$	150,000
Current Liabilities		986,000			475,000		4,260,000			2,193,000
Working Capital (Deficit) Surplus	$	(278,000	)	$	663,000
Working Capital Deficit						$	(3,456,000	)	$	(2,043,000	)

Cash activity for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 is summarized as follows:

	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2019			2018
Cash used in operating activities	$	(1,617,000	)	$	(2,655,000	)	$	(6,592,000	)	$	(1,584,000	)
Cash provided by (used in) investing activities		150,000			(10,000	)
Cash used in investing activities								(386,000	)		(204,000	)
Cash provided by financing activities		1,337,000			2,521,000			7,208,000			1,973,000
Net decrease in cash and cash equivalents	$	(130,000	)	$	(144,000	)
Net increase in cash							$	230,000		$	185,000

As of June 30, ~~2018,~~2019, the Company had approximately ~~$114,000~~$300,000 of cash on hand.

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

Contractual debt obligations relate to financing arrangements for D&O and general liability insurance premiums that were financed at various points throughout 2018 and the first quarter of 2019, and two Promissory Notes and Convertible Notes assumed in the merger transaction.

These insurance financing arrangements require aggregate monthly payments of approximately $18,000, reflect interest rates ranging from 7% to 12.8% and are to be paid in full by April 2020 and had balances of approximately $251,000 June 30, 2019 and $31,000 at December 31, 2018. Interest expense related to these insurance financing arrangements was approximately $2,100 and $3,000 for the three and six months ended June 30, 2019 and was $0 for the three and six months ended June 30, 2018 respectively.

Payments on both of the promissory notes assumed are due in aggregate monthly installments of approximately $5,700 and carry an interest rate of 5%. Both of the notes have a maturity date of August 1, 2019. The Promissory Notes had outstanding balances of approximately $103,000 at date of merger transaction and approximately $99,000 at June 30, 2019. The notes have a maturity date of August 1, 2019. The Company is in the process of finalizing an eighteen-month extension on the notes.

The Convertible Notes represent a securities purchase agreement with select accredited investors, which were assumed in the reverse merger transaction. The debt consisted of $750,000 in units at a purchase price of $50,000 per Unit. Each Unit consists of (i) a 12% senior secured convertible note, initially convertible into shares of the Company’s common stock, par value $0.001 per share, at a conversion price equal to the lesser of $0.40 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of equity and/or debt securities completed by the Company following this offering, and (ii) a three-year warrant to purchase such number of shares of the Company’s common stock equal to one hundred percent (100%) of the number of shares of common stock issuable upon conversion of the notes at $0.40. The Warrants were initially exercisable at a price equal to the lesser of $0.75 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of the debt and/or equity securities completed by the Company following the issuance of warrants.

The $750,000 convertible notes payable assumed in the acquisition transaction with RMS, had a fair value of approximately $598,000 on the acquisition date. Subsequently, on February 6, 2019, $100,000 of the outstanding convertible notes was converted into an aggregate of 250,000 shares of common stock, eliminating $100,000 of the Company’s debt obligation. The debt was converted into shares at $0.40 per share, which was the conversion price per the securities purchase agreement. The $650,000 remaining principal balance of these convertible notes, mature in August and September 2019. The convertible notes are secured by all of the assets of the Company.

On February 6, 2019, $100,000 of the Company’s $750,000 outstanding convertible notes was converted into an aggregate of 277,778 shares of common stock, eliminating $100,000 of the Company’s debt obligation. The debt was converted into shares at $0.36 per share, which was the conversion price per the securities purchase agreement subsequent to the trigger of the down round feature.

On July 25, 2019 and July 26, 2019, H-CYTE, Inc. (the “Company”) issued two promissory notes (the “Notes”) in the principal amount (the “Principal Amount”) of an aggregate of $900,000 to Horne Management, LLC controlled by Mr. William E. Horne, the Chief Executive Officer of the Company. The Notes bear an interest rate of 5.5% per annum and are due on demand. The Company has ~~long term contractual obligations~~received the funds represented by the Notes.

The Company entered into a 10-year exclusive and extendable supply agreement with Rion LLC (“Rion”) that will enhance its existing cytotherapy product line, developing a disruptive technology for chronic obstructive pulmonary disease (“COPD”), the fourth leading cause of death in the U.S. Rion has established a novel technology to harness the healing power of the body. Rion’s novel exosome technology, based on science developed at Mayo Clinic, provides an off-the-shelf platform to enhance healing in soft tissue, musculoskeletal, cardiovascular and neurological organ systems. With this agreement, Rion will serve as the product supplier and will co-develop a proprietary cellular platform with H-CYTE for the ~~two promissory notes issued~~treatment of COPD. H-CYTE will control the commercial development and facilitate clinical trial investigation. After conducting joint research and development of these biologics, H-CYTE intends to pursue submission of an investigational new drug (IND) application for review by the ~~Bank~~U.S. Food and Drug Administration (“FDA”) for treatment of ~~North Dakota New Venture Capital Program and North Dakota Development Fund. Both Notes from~~COPD.

The Company entered into a sub-lease agreement for the ~~Bank of North Dakota New Venture Capital Program and North Dakota Development were assumed~~lease in ~~conjunction with the consummation~~Alpharetta, Georgia. The period of the ~~Streamline acquisition on March 25, 2015,~~lease is from July 1, 2019 to December 31, 2020 and ~~require combined monthly principal~~sublessee shall pay to sublessor a minimum rent, of two thousand dollars ($2,000) per month.

The Company has an agreement with Jesse Crowne, a former Director and ~~interest payments~~Co-Chairman of ~~$5,661 into~~ the ~~third quarter~~Board of the Company, to provide business development consulting services for a fee of $13,333 per month. The Company is in the process of negotiating a new contract with Mr. Crowne. The Company incurred expense of $0 and $39,999, for the three and six months ended June 30, 2019 related to this consulting agreement. Since this agreement was assumed January 8, 2019 as part of the RMS reverse merger transaction, there were no historical costs related to this prior to January 8, 2019.

The Company ~~issued~~entered into a ~~promissory note to Steve Gorlin, father~~consulting agreement with LilyCon Investments, LLC effective February 1, 2019 and shall continue for a period of ~~Jarrett Gorlin,~~twelve (12) months in the ~~Company’s CEO, for the principal~~ amount of ~~$200,000, plus interest, at~~$12,500 per month with a ~~rate of five percent per year. $100,000~~$15,000 signing bonus which was paid in full during the quarter ending March 31, 2019. The agreement also provides LilyCon Investments with $35,000 in stock (calculated using an annual Variable Weighted Average Price from February 2019 through January 2020) to be granted upon completion of the ~~promissory note was converted into preferred stock~~consulting services first year. Either party may terminate this agreement with without cause upon (30) days written notice. For the three and ~~warrants on May 15, 2018. The outstanding principal~~six months ended June 30, 2019, the Company has expensed a total of $37,500 and ~~all accrued but unpaid interest is due on August 31, 2018.~~

~~The Company rents commercial office space~~$77,500 in ~~Alpharetta, GA. Base annual rent is currently set at $2,948 per month and the lease term ends July 31, 2018.~~compensation to LilyCon Investments, respectively.

The Company ~~also currently reimburses its CEO, Jarrett Gorlin, for~~entered into an oral consulting agreement with Mr. Raymond Monteleone, Board Member and Chairman of the ~~lease of executive office space at a cost of $2,147~~Audit Committee, in which Mr. Monteleone received $10,000 per month ~~which it believes is at fair market value.~~for advisory services and $5,000 per quarter as Audit Committee Chair. This arrangement has no specified termination date. For the three and six months ended June 30, 2019, the Company has expensed $35,000 and $70,000 in compensation to Mr. Monteleone, respectively.

The Company entered into an oral consulting arrangement with St. Louis Family Office, LLC (Jimmy St. Louis, former CEO of RMS) in January 2019 in the amount of $10,000 per month plus benefits reimbursement for advisory services. The Company terminated this agreement effective June 30, 2019. For the three and six months ended June 30, 2019, the Company has expensed $34,000 and $71,000 in consulting ~~agreements~~fees to St. Louis Family Office, respectively.

The Company entered into a consulting agreement with Strategos Public Affairs, LLC (Strategos) on February 15, 2019 for a period of twelve (12) months, unless otherwise terminated by giving thirty (30) days prior written notice. Strategos will provide information to key policymakers in the legislature and executive branches of government on the benefits of the cellular therapies offered by the Lung Health Institute, advocate for legislation that supports policies beneficial to patient access and oppose any legislation that negatively impacts the Company’s ability to expand treatment opportunities, and position the Company and its related entities as the expert for information and testimony. For the three ~~sales, marketing,~~ and ~~distribution consultants in Europe who provide~~six months ended June 30, 2019, the Company has expensed $26,000 and $26,000 to Strategos Group for consulting services.

Distribution center and logistic services for aggregate compensation amounting to approximately €27,500 (approximately $33,000) per month. The consulting agreements, while subject to modifications, commenced at separate dates and will also terminate at separate dates through April 2019.agreement

The Company has a non-exclusive distribution center agreement with a logistics service provider in Berlin, Germany pursuant to which they ~~shall~~ manage and coordinate the DenerveX System products which the Company exports to the EU through June 2019. The Company pays a fixed monthly fee of ~~€2,900~~€4,500 (approximately ~~$3,500)~~$5,040) for all accounting, customs declarations and office support, and a variable monthly fee ranging from €1,900 to €6,900 (approximately $2,300 to $8,300), based off volume of shipments, for logistics, warehousing and customer support services.

Total expenses incurred for the distribution center and logistics agreement were approximately $22,500 and $43,000, respectively, for the three and six months ended June 30, 2019. Since this agreement was assumed January 8, 2019 as part of the RMS reverse merger transaction, there were no historical costs related to this prior to January 8, 2019.

The terms of a Contribution and Royalty Agreement dated January 31, 2013 with Dr. Scott Haufe, M.D was assumed in the merger transaction as of January 8, 2019. This agreement provides for the Company to pay Dr. Haufe royalties equal to 1% of revenues earned from sales of any and all products derived from the use of the DenerveX technology. Royalties are payable to Dr. Haufe within 30 days after the close of each calendar quarter based on actual cash collected from sales of applicable products. The royalty period expires on September 6, 2030.

The Company incurred approximately $0 and $1,100, respectively, in royalty expense under the Contribution and Royalty agreement for the three months and six month ended June 30, 2019, all of which was included in accounts payable at June 30, 2019. Since this agreement was assumed January 8, 2019 as part of the RMS reverse merger transaction, there were no historical costs related to this prior to January 8, 2019.

The Company maintains “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act 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 Chief Executive Officer, Chief Financial Officer, and Board of Directors, as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating the Company’s disclosure controls and procedures, management ~~assessed~~recognizes that disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and the Company necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of ~~our internal control over financial reporting~~the design and operation of the Company’s disclosure controls and procedures as of June 30, ~~2018. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in~~~~Internal Control-Integrated Framework~~~~. Based on our assessment, management~~2019 and concluded that ~~while there was sufficient segregation of routine duties,~~ the Company ~~lacked the~~has a material weakness in disclosure controls and procedures as of June 30, 2019.

The Company has an ineffective control environment due to a lack of internal resources with expertise to ~~retain experts who could assist in the preparation and calculation of~~determine entries and disclosures related to some of the Company’s more complex ~~equity~~ transactions. Management believes this lack of ~~expert advice amounts~~internal expertise has been somewhat mitigated by continuing to aretain consultants with this expertise in the quarter ended June 30, 2019. This material weakness in ~~our financial reporting~~the Company’s disclosure controls and ~~our disclosure controls.~~procedures will be further remediated in 2019.

During the ~~quarter~~six months ended June 30, ~~2018,~~2019, there were no changes in ~~our~~the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or that are reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

~~We are~~The Company is not a party to any pending legal proceeding, nor is ~~our~~the Company’s property the subject of a pending legal proceeding. None of ~~our~~the Company’s directors, officers or affiliates are involved in a proceeding adverse to our business or has a material interest adverse to ~~our~~the Company’s business.

We are a smaller reporting company as defined by 17 CFR 229.10(f)(1). Thus, we are not required to provide information under this item.

~~In May 2018,~~During the six month period ending June 30, 2019, the Company ~~sold~~issued an aggregate of ~~8.25 Units~~$7,200,000 of convertible promissory notes and ~~issued to the Investors~~ an aggregate of ~~8,250 Series B Shares and 2,062,500~~18,000,000 warrants to purchase common stock. The convertible notes automatically converted into common stock ~~resulting in total $825,000 gross proceeds~~at $0.40 per share and the warrants are exercisable at $0.75 per share to ~~the Company. Each Unit had a purchase price of $100,000 and consisted of (i) 1,000 shares~~certain accredited investors under Regulation D. As of the ~~Company’s 5% Series B Convertible Preferred Stock (the “Series B Shares”) and (ii) warrants to purchase 250,000 shares~~date hereof, all of ~~the Company’s common stock, par value $0.001 per share. Each Series B Share is~~such convertible into 250 shares of Common Stock at a conversion price of $0.40 per share. The 8,250 Series B Shares sold in the Offering are convertible into an aggregate of 2,062,500 shares of Common Stock. The Units were sold pursuant to the exemption from securities registration provided by Section 4(a)(2) under the Securities Act for transactions not involving a public offering.

During the ~~Company’s 5% Series B Shares and 250,000 warrants to purchase~~six month period ending June 30, 2019, the Company issued RMS Shareholders, LLC an aggregate of 50,925,277 shares of common stock ~~eliminating $100,000~~upon the conversion of Series C Preferred Stock issued to RMS in the Company’s $200,000 debt obligation. Each Series B Share is convertible into 250 shares of Common Stock at a conversion price of $0.40 per share. The Series B Shares also entitle the holders to a 5% annual dividend. The Warrants are exercisable for a period of three (3) years from the date of issuance at an exercise price of $0.75 per share.merger.

The exhibits listed in the accompanying Exhibit Index are filed, furnished or incorporated by reference as part of this Quarterly Report on Form 10-Q.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Nevada		46-3312262
(State or Other Jurisdiction of		(IRS Employer
of Incorporation or Organization)		Identification Number)

~~3060 Royal Boulevard S Ste 150~~201 East Kennedy Blvd, Suite 700
~~Alpharetta, Georgia~~Tampa, Florida		~~30022~~33602
(Address of Principal Executive Offices)		(Zip Code)

	Large accelerated filer[ ]	Accelerated filer[ ]
	Non-accelerated filer[ ]	Smaller Reporting Company [X]
	~~(Do not check if smaller reporting company)~~	Emerging ~~growth~~Growth Company [X]

		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements
	~~Condensed~~ Consolidated Balance Sheets ~~as of June 30, 2018 (unaudited) and December 31, 2017~~	4
	~~Condensed~~ Consolidated Statements of Operations ~~for the three and six months ended June 30, 2018 and 2017 (unaudited)~~	5
	~~Condensed~~ Consolidated Statements of ~~Cash Flows for the six months ended June 30, 2018 and 2017 (unaudited)~~Stockholders’ Equity (Deficit)	6
	~~Condensed~~ Consolidated ~~Statement~~Statements of ~~Stockholders’ (Deficit) Equity for the six months ended June 30, 2018 (unaudited)~~Cash Flows	7
	Notes to ~~Condensed~~ Consolidated Financial Statements ~~(unaudited)~~	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations	1823
Item 3.	Quantitative and Qualitative Disclosures About Market ~~Risk.~~Risks	2330
Item 4.	Controls and ~~Procedures.~~Procedures	2331

PART II – OTHER INFORMATION

Item 1.	Legal ~~Proceedings.~~Proceedings	2331
Item 1A.	Risk ~~Factors.~~Factors	2331
Item 2.	Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds	2331
Item 3.	Defaults Upon Senior ~~Securities.~~Securities	2331
Item 4.	Mine Safety ~~Disclosures.~~Disclosures	2331
Item 5.	Other ~~Information.~~Information	2331
Item 6.	~~Exhibits.~~Exhibits	2331

SIGNATURES		2432

	●	our ability to market, commercialize and achieve broader market acceptance for our products;

	●	our ability to successfully expand, and achieve full productivity from, our sales, clinical support, and marketing capabilities;

	●	our ability to successfully complete the development of, and obtain regulatory clearance or approval for, our products; and

	●	the estimates regarding the sufficiency of our cash resources, our ability to obtain additional capital or our ability to maintain or grow sources of revenue.

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenues	$	252,163		$	—		$	396,345		$	—
Less: Discounts Allowed		(2,738	)		—			(3,731	)		—
Cost of Goods Sold		(204,868	)		—			(302,963	)		—
Gross Profit		44,557			—			89,651			—

Operating Expenses
General and administrative		867,863			1,025,938			1,764,224			2,448,416
Sales and marketing		200,622			145,621			451,114			227,758
Research and development		16,185			56,333			155,310			391,774
Depreciation		6,866			6,671			13,894			12,892
Total Operating Expenses		1,091,536			1,234,563			2,384,542			3,080,840

Operating Loss		(1,046,979	)		(1,234,563	)		(2,294,891	)		(3,080,840	)

Other Expenses
Foreign currency transaction loss		11,641			—			12,034			—
Interest expense		27,280			1,438			32,761			392,235
Total Other Expenses		38,921			1,438			44,795			392,235

Total Loss from Continuing Operations		(1,085,900	)		(1,236,001	)		(2,339,686	)		(3,473,075	)

Discontinued Operations
Loss from discontinued operations		—			—			—			1,163
Total Loss from Discontinued Operations		—			—			—			(1,163	)

Net Loss	$	(1,085,900	)	$	(1,236,001	)	$	(2,339,686	)	$	(3,474,238	)

Dividend on outstanding Series B Preferred stock		(7,707	)					(7,707	)
Deemed dividend on beneficial conversion features		(259,350	)		—			(259,350	)		—
Net loss attributable to common shareholders	$	(1,352,957	)	$	(1,236,001	)	$	(2,606,743	)	$	(3,474,238	)

Loss per share – Basic:
Continuing Operations	$	(0.06	)	$	(0.07	)	$	(0.12	)	$	(0.20	)
Discontinued Operations		—			—			—			—
Net Loss per share	$	(0.06	)	$	(0.07	)	$	(0.12	)	$	(0.20	)

Loss per share – Diluted:
Continuing Operations	$	(0.06	)	$	(0.07	)	$	(0.12	)	$	(0.20	)
Discontinued Operations		—			—			—			—
Net Loss per share	$	(0.06	)	$	(0.07	)	$	(0.12	)	$	(0.20	)

Weighted average outstanding shares used to compute basic net loss per share		23,397,228			17,966,591			22,440,756			17,171,528
Weighted average outstanding shares used to compute diluted net loss per share		23,397,228			17,966,591			22,440,756			17,171,528

	SeriesA Preferred Stock						Series B Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Total Stockholders’ (Deficit)
	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance – December 31, 2017		12,740		$	13			—		—		21,163,013	$	21,163	$	33,509,648		$	(32,817,403	)	$	713,421
Issuance of common stock pursuant to a private placement completed in February 2018, net of offering costs		—			—			—		—		770,000		770		241,727			—			242,497
Issuance of warrants pursuant to a private placement completed in February 2018		—			—			—		—		—		—		52,003			—			52,003
Issuance of warrants in connection with short-term debt in March 2018		—			—			—		—		—		—		25,646			—			25,646
Issuance of common stock pursuant to preferred stock conversion in March 2018		(12,740	)		(13	)		—		—		1,274,000		1,274		(1,261	)		—			—
Issuance of common stock pursuant to conversion of convertible debt in April 2018		—			—			—		—		266,301		266		100,928			—			101,194
Issuance of preferred stock pursuant to a private placement completed in May 2018, net of offering costs		—			—			8,250		8		—		—		413,174			—			413,182
Issuance of warrants pursuant to a private placement completed in May 2018		—			—			—		—		—		—		161,206			—			161,206
Convertible preferred stock – beneficial conversion feature pursuant to a private placement completed in May 2018		—			—			—		—		—		—		245,612			—			245,612
Issuance of preferred stock pursuant to conversion of short-term debt in May 2018		—			—			1,000		1		—		—		68,773			—			68,774
Issuance of warrants pursuant to conversion of short-term debt in May 2018		—			—			—		—		—		—		17,488			—			17,488
Convertible preferred stock – beneficial conversion feature pursuant to conversion of short-term debt in May 2018		—			—			—		—		—		—		13,738			—			13,738
Dividend payable		—			—			—		—		—		—		(7,707	)		—			(7,707	)
Stock based compensation		—			—			—		—		—		—		85,539			—			85,539
Net loss		—			—			—		—		—		—		—			(2,339,686	)		(2,339,686	)
Balance – June 30, 2018		—		$	—			9,250	$	9		23,473,314	$	23,473	$	34,926,514		$	(35,157,089	)	$	(207,093	)

	Preferred Stock						Common Stock				Additional			Accumulated			Non-Controlling			Total Stockholders’ (Deficit)
	Shares			Amount			Shares		Amount		Capital			Deficit			Interest			Equity
For the Three Months Ended June 30, 2019
Balance - March 31, 2019		7,200		$	7			94,036,746	$	94,037	$	17,610,529		$	(8,183,420	)	$	(370,132	)	$	9,151,021
Purchase accounting entries due to the purchase transaction (Note 3)		—			—			—		—		6,215,000			—			—			6,215,000
Issuance of common stock in connection with private placement offering		—			—			500,000		500		123,977			—			—			124,477
Issuance of warrants in connection with private placement offering		—			—			—		—		75,523			—			—			75,523
Issuance of common stock to pay accrued dividends on Preferred Series B stock		—			—			32,313		32		12,894			—			—			12,926
Conversion of Preferred Series B Stock and accrued dividends		(200	)		—			91,667		92		(92	)		—			—			—
Issuance of common stock per restricted stock award to executive (Note 9)		—			—			4,225,634		4,226		1,686,028			—			—			1,690,254
Stock based compensation		—			—			—		—		3,116			—			—			3,116
Dividends payable		—			—			—		—		(21,000	)		—			—			(21,000	)
Net loss		—			—			—		—		—			(5,297,271	)		—			(5,297,271	)
Balance - June 30, 2019		7,000		$	7			98,886,360	$	98,887	$	25,705,975		$	(13,480,691	)	$	(370,132	)	$	11,954,046

For the Six Months Ended June 30, 2019
Balance - December 31, 2018		—		$	—			33,661,388	$	33,661	$	3,566,339		$	(9,296,408	)	$	(370,132	)	$	(6,066,540	)
Purchase accounting entries due to the purchase transaction		9,250			9			24,717,217		24,717		12,657,182			—			—			12,681,908
Adjustment for assets and liabilities not included in purchase transaction		—			—			—		—		—			5,244,780			—			5,244,780
Issuance of common stock in connection with private placement offering		—			—			17,500,000		17,500		4,324,923			—			—			4,342,423
Issuance of warrants in connection with private placement offering		—			—			—		—		2,641,161			—			—			2,641,161
Issuance of common stock for repayment of short-term debt		—			—			500,000		500		125,437			—			—			125,937
Issuance of warrants for repayment of short-term debt		—			—			—		—		74,063			—			—			74,063
Issuance of additional exchange shares (Note 3)		—			—			17,263,889		17,264		(17,264	)		—			—			—
Issuance of common stock pursuant to conversion of short-term debt		—			—			250,000		250		99,750			—			—			100,000
Conversion of Preferred Series B Stock and accrued dividends		(2,250	)		(2	)		604,167		605		(603	)		—			—			—
Issuance of common stock to pay accrued interest on convertible short-term debt		—			—			1,667		2		665			—			—			667
Issuance of common stock to pay accrued dividends on Preferred Series B stock		—			—			32,313		32		12,894			—			—			12,926
Issuance of common stock in exchange for consulting fees incurred		—			—			130,085		130		51,904			—			—			52,034
Adjustment of exercise price on convertible debt		—			—			—		—		287,542			(287,542	)		—			—
Adjustment of exercise price on certain warrants		—			—			—		—		116,842			(116,842	)		—			—
Beneficial conversion of Preferred Series B Stock		—			—			—		—		32,592			(32,592	)		—			—
Issuance of common stock per restricted stock award to executive (Note 9)		—			—			4,225,634		4,226		1,686,028			—			—			1,690,254
Stock based compensation		—			—			—		—		92,159			—			—			92,159
Dividends payable		—			—			—		—		(45,639	)		—			—			(45,639	)
Net loss		—			—			—		—		—			(8,992,087	)		—			(8,992,087	)
Balance - June 30, 2019		7,000		$	7			98,886,360	$	98,887	$	25,705,975		$	(13,480,691	)	$	(370,132	)	$	11,954,046

	Six Months Ended
	June 30, 2019			June 30, 2018
Cash Flows from Operating Activities
Net loss	$	(8,992,087	)	$	(1,259,922	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		419,837			48,888
Amortization of debt discount		127,863			—
Stock-based compensation		1,782,413			—
Common stock issued for consulting services		52,034			—
Changes in operating assets and liabilities, net of purchase transaction:
Accounts receivable		147,103			(19,169	)
Other receivables		(60,721	)		—
Accounts receivable from related parties		—			47,033
Inventory		2,191			—
Prepaid expenses and other assets		(41,667	)		73,422
Interest payable		4,838			49,574
Accounts payable		(691,635	)		26,283
Accounts payable to related parties		(180,000	)		—
Accrued liabilities		(222,778	)		(116,412	)
Other current liabilities		555,056			133,232
Dividend payable		(6,137	)		—
Deferred revenue		512,313			(567,063	)

Net Cash Used in Operating Activities		(6,591,377	)		(1,584,134	)

Cash Flows from Investing Activities
Purchases of property and equipment		(13,703	)		(203,695	)
Purchase of business, net of cash acquired		(302,710	)		—
Net assets not included in purchase transaction		(69,629	)		—
Net Cash Used in Investing Activities		(386,042	)		(203,695	)

Cash Flows from Financing Activities
Payments on notes payable obligations		(84,381	)		(2,424	)
Borrowings from notes payable obligations		8,656			8,081
Proceeds from issuance of preferred and common stock, net of offering costs		4,342,423			—
Proceeds from issuance of warrants, net of offering costs		2,641,161			—
Proceeds from issuance of note payable		—			1,967,724
Proceeds from contribution from stockholders		300,000			—
Net Cash Provided by Financing Activities		7,207,859			1,973,381

Net Increase in Cash		230,440			185,552

Cash - Beginning of period		69,628			251,330

Cash - End of period	$	300,068		$	436,882

Supplementary Cash Flow Information
Cash paid for interest	$	8,623		$	20,900

Non-cash investing and financing activities
Financing agreement for insurance policy	$	94,917		$	—
Conversion of convertible note and accrued interest to common stock	$	100,667		$	—
Conversion of note and accrued interest to common stock and warrants	$	200,000		$	—
Conversion of accrued dividends on Series B Preferred Stock to common stock	$	12,926		$	—
Issuance of common stock for Series B Preferred Stock and accrued dividends conversion	$	605		$	—
Dividends accrued	$	45,639		$	—

Common shares issued and outstanding		24,717,271
Common shares reserved for issuance upon conversion of the outstanding Series B Preferred Stock		2,312,500
Total Common shares		27,029,771
Closing price per share of MDVX Common stock on January 8, 2019	$	0.40
		10,811,908
Fair value of outstanding warrants and options		2,220,000
Cash consideration to RMS		(350,000	)
Total consideration	$	12,681,908

Notes payable	$	99,017
Convertible notes payable		598,119
Dividend payable		57,813
Deferred rent		267
Total interest-bearing and other liabilities	$	755,216

	Three Months Ended			Six Months Ended
	June 30, 2019			June 30, 2019
Revenues	$	-		$	35,505
Net loss attributable to H-CYTE		(894,585	)		(1,948,962	)

	For the Three Months Ending June 30, 2018
	RMS			MedoveX			Pro Forma
Revenues	$	2,441,007		$	249,425		$	2,690,432
Net loss		(362,722	)		(1,085,900	)	$	(1,448,622	)
Net loss attributable to common shareholders		(362,722	)		(1,352,957	)	$	(1,715,679	)

Loss per share- basic and diluted	$	(0.01	)				$	(0.03	)

	For the Six Months Ending June 30, 2018
	RMS			MedoveX			Pro Forma
Revenues	$	5,343,804		$	392,614		$	5,736,418
Net loss		(1,259,922	)		(2,339,686	)	$	(3,599,608	)
Net loss attributable to common shareholders		(1,259,922	)		(2,606,743	)	$	(3,866,665	)

Loss per share- basic and diluted	$	(0.01	)				$	(0.07	)

	June 30, 2019		December 31, 2018
DenerveX device	$	3,014	$	—
Pro-40 generator		126,250		—
Total	$	129,264	$	—

	June 30, 2018		December 31, 2017
Split Return Electrodes	$	—	$	1,868
Denervex device		153,946		111,596
Pro-40 generator		140,000		181,250
Total	$	293,946	$	294,714

Remainder of 2019	$	240,000
2020		454,000
2021		139,000
2022		94,000
2023		68,000
	$	995,000

	Useful Life	June 30, 2018			December 31, 2017
Furniture and fixtures	5 years	$	67,777		$	67,777
Computers and software	3 years		31,738			31,738
Leasehold improvements	5 years		35,676			35,676
			135,191			135,191
Less accumulated depreciation			(61,912	)		(48,018	)

Total		$	73,279		$	87,173

Balance at December 31, 2018	$	—
Acquisition during the period		3,680,000
Balance at June 30, 2019		3,680,000
Amortization during the six months ended June 30, 2019		(368,000	)
Intangible assets, net	$	3,312,000

	Amount
Remainder of 2019	$	368,000
2020		736,000
2021		736,000
2022		736,000
2023		736,000
Total	$	3,312,000

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (Years)
Outstanding at 12/31/2017		1,314,059		$	2.01		8.19

Forfeited		(136,035	)	$	1.69		—
Outstanding at 6/30/2018		1,178,024		$	2.04		7.70
Exercisable at 6/30/2018		998,950		$	2.14		7.64

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (Years)
Outstanding at December 31, 2018		—		$	—		—

Assumed with the RMS merger transaction		557,282		$	2.78		6.99
Other activity since January 8, 2019:
Granted		250,000		$	0.40		9.53
Cancelled		(289,774	)	$	2.59		—
Outstanding at June 30, 2019		517,508		$	1.81		7.87
Exercisable at June 30, 2019		508,006		$	1.81		7.87

December 31, 2018	$	1,000
December 31, 2019		1,900
December 31, 2020		1,900
December 31, 2021		500
	$	5,300

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Outstanding at 12/31/2017		7,194,215	$	1.74		3.40

Issued		2,830,833	$	0.75		3.18
Outstanding and exercisable at 6/30/2018		10,025,048	$	1.46		2.95

	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life
Assumed as of the January 8, 2019 merger		12,108,743	$	1.38			2.6

Issued		18,000,000	$	0.75			2.59
Outstanding and exercisable at June 30, 2019		30,108,743	$	0.95	⁽¹⁾⁽²⁾		2.38

Event Description	Date		H-CYTE Stock Price		Exercise Price of Warrant		Grant Date Fair Value		Life of Warrant	Risk Free Rate of Return (%)	Annualized Volatility Rate (%)
Private placement		1/8/2019	$	0.40	$	0.75	$	0.24	3 years	2.57		115.08
Private placement		1/18/2019	$	0.40	$	0.75	$	0.23	3 years	2.60		114.07
Private placement		1/25/2019	$	0.59	$	0.75	$	0.38	3 years	2.43		113.72
Private placement		1/31/2019	$	0.54	$	0.75	$	0.34	3 years	2.43		113.47
Private placement		2/7/2019	$	0.57	$	0.75	$	0.36	3 years	2.46		113.23
Private placement		2/22/2019	$	0.49	$	0.75	$	0.30	3 years	2.46		113.34
Private placement		3/1/2019	$	0.52	$	0.75	$	0.33	3 years	2.54		113.42
Private placement		3/8/2019	$	0.59	$	0.75	$	0.38	3 years	2.43		113.53
Private placement		3/11/2019	$	0.61	$	0.75	$	0.40	3 years	2.45		113.62
Private placement		3/26/2019	$	0.51	$	0.75	$	0.32	3 years	2.18		113.12
Private placement		3/28/2019	$	0.51	$	0.75	$	0.31	3 years	2.18		112.79
Private placement		3/29/2019	$	0.51	$	0.75	$	0.31	3 years	2.21		112.79
Private placement		4/4/2019	$	0.48	$	0.75	$	0.29	3 years	2.29		112.77

Event Description	Date	MDVX Stock Price		Exercise Price of Warrant		Grant Date Fair Value		Life of Warrant	Risk Free Rate of Return (%)		Annualized Volatility Rate (%)
Private placement	2/26/18	$	0.51	$	0.75	$	0.20	5 years		2.60		55.91
Short-term debt	3/26/18	$	0.53	$	0.75	$	0.22	5 years		2.64		56.57
Private placement	5/1/2018	$	0.44	$	0.75	$	0.11	3 years		2.66		56.92
Debt conversion	5/15/2018	$	0.39	$	0.75	$	0.08	3 years		2.75		57.03

	~~MEDOVEX CORP~~H-CYTE, INC

	By:	/s/ ~~Jarrett Gorlin~~William E. Horne
		~~Jarrett Gorlin~~William E. Horne
		Chief Executive Officer (Principal Executive Officer)

	By:	/s/ ~~Charles Farrahar~~Jeremy Daniel
		~~Charles Farrahar~~Jeremy Daniel
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

31.1		Section 302 Certification of Principal Executive Officer*
31.2		Section 302 Certification of Principal Financial Officer*
32.1		Section 906 Certification of Principal Executive Officer and Principal Financial Officer***
101.INS		XBRL Instance Document **
101.SCH		XBRL Taxonomy Extension Schema Document **
101.CAL		XBRL Taxonomy Calculation Linkbase Document **
101.LAB		XBRL Taxonomy Labels Linkbase Document **
101.PRE		XBRL Taxonomy Presentation Linkbase Document **
101.DEF		XBRL Definition Linkbase Document **

*	Filed herewith.

**	Pursuant to Rule 406T of Regulation S-T adopted by the SEC, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise are not subject to liability under these sections.

***	This certification is being furnished solely to accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, and it is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.