UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON,~~Washington, D.C. 20549

FORM 10-Q

~~(Mark One)~~

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, ~~2019~~2020

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~transition period~~Transition Period from _________ to _________

Commission file number: ~~000-54402~~001-37603

BIORESTORATIVE THERAPIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

91-1835664

(State or ~~Other~~other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

40 Marcus Drive,

Melville, New York

11747

(Address of Principal Executive Offices)

(Zip Code)

(631) 760-8100

(Registrant’s telephone number, including area ~~code: (631) 760-8100~~code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading ~~Symbol(s)~~symbol(s)		Name of ~~each~~ exchange on which registered
None		N/A		N/A

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. Yes ~~[X]~~[ ] No ~~[ ]~~[X]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ~~[X]~~[ ] No ~~[ ]~~[X]

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

Large accelerated filer	[ ]		Accelerated filer	[ ]

Non-accelerated filer	[X]	]	Smaller reporting company	[X]


	Emerging growth company	[X]			]

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~~Section 13(a) of the Exchange ~~Act.~~Act: [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):. Yes [ ] No [X]

As of ~~November 11, 2019,~~April 7, 2021, there were ~~30,761,527~~3,175,977,710 shares of the registrant’s common stock outstanding.

BIORESTORATIVE THERAPIES, INC. AND SUBSIDIARY

(DEBTOR-IN-POSSESSION)

FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

TABLE OF CONTENTS

		Page

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~FORM 10-Q~~

~~FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019~~

~~TABLE OF CONTENTS~~

PART ~~I -~~ I.	FINANCIAL INFORMATION

ITEM 1.	Financial ~~Statements.~~Statements	3


Condensed Consolidated Balance Sheets as of September 30, ~~2019 (Unaudited)~~2020 (unaudited) and December 31, ~~2018~~2019	3

	~~Unaudited~~ Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 ~~and 2018~~(unaudited)	4

	~~Unaudited~~ Condensed Consolidated Statements of Changes in Stockholders’ ~~Deficiency~~Deficit for the Three and Nine Months Ended September 30, 2020 and 2019 ~~and 2018~~(unaudited)	5

~~Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficiency for the Nine Months Ended September 30, 2019 and 2018~~	6

~~Unaudited~~ Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 ~~and 2018~~(unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

~~Notes to Unaudited Condensed Consolidated Financial Statements~~	9

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations	2728

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	38

ITEM 4.	Controls and Procedures	39

~~ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.~~PART II.	35

~~ITEM 4. Controls and Procedures.~~	35

~~PART II -~~ OTHER INFORMATION

ITEM 1.	Legal ~~Proceedings.~~Proceedings	3640

ITEM 1A.	Risk ~~Factors.~~Factors	3640

ITEM 2.	Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds	3640

ITEM 3.	Defaults Upon Senior Securities	40

ITEM 4.	Mine Safety Disclosures	40

ITEM 5.	Other Information	40

ITEM 6.	Exhibits	41

~~ITEM 3. Defaults Upon Senior Securities.~~SIGNATURES		36

~~ITEM 4. Mine Safety Disclosures.~~	36

~~ITEM 5. Other Information.~~	36

~~ITEM 6. Exhibits.~~	37

~~SIGNATURES~~	3842

PART I – FINANCIAL INFORMATION

~~ITEM~~Item 1. Financial ~~Statements.~~Statements

BIORESTORATIVE THERAPIES, INC. &AND SUBSIDIARY

(DEBTOR-IN-POSSESSION)

~~Condensed~~CONDENSED Consolidated Balance Sheets

September 30, 2019 December 31, 2018
(unaudited)
Assets
Current Assets:
Cash $ 98,113 $ 117,523
Accounts receivable 38,000 29,000
Prepaid expenses and other current assets 64,741 34,464
Total Current Assets 200,854 180,987

Property and equipment, net 105,619 175,235
Intangible assets, net 757,888 814,059
Security deposit 22,100 22,100
Deferred offering costs 371,725 -
Total Assets $ 1,458,186 $ 1,192,381

Liabilities and Stockholders’ Deficiency

Current Liabilities:
Accounts payable $ 1,743,596 $ 1,893,827
Accrued expenses and other current liabilities 2,625,423 2,302,176
Accrued interest 628,976 338,619
Current portion of notes payable, net of debt discount of $733,886 and $936,866 at September 30, 2019 and December 31, 2018, respectively 7,526,128 3,625,659
Derivative liabilities 1,191,108 1,094,607
Total Current Liabilities 13,715,231 9,254,888
Accrued expenses, non-current portion - 36,500
Accrued interest, non-current portion 14,345 18,137
Notes payable, non-current portion, net of debt discount of $78,919 and $75,497 at September 30, 2019 and December 31, 2018, respectively 157,143 523,894
Total Liabilities 13,886,719 9,833,419

Commitments and contingencies (See Note 6)

Stockholders’ Deficiency:
Preferred stock, $0.01 par value;
Authorized, 20,000,000 shares;
None issued and outstanding at September 30, 2019 and
December 31, 2018
- -
Common stock, $0.001 par value;
Authorized, 300,000,000 shares;
Issued and outstanding 23,717,754 and 11,728,394 shares
at September 30, 2019 and December 31, 2018, respectively
23,717 11,728
Additional paid-in capital 64,567,341 55,269,490
Accumulated deficit (77,019,591 ) (63,922,256 )
Total Stockholders’ Deficiency (12,428,533 ) (8,641,038 )
Total Liabilities and Stockholders’ Deficiency $ 1,458,186 $ 1,192,381

	September 30,			December 31,
	2020			2019
	(Unaudited)
ASSETS

Current Assets:
Cash	$	175,994		$	1,664
Accounts receivable		15,000			32,000
Prepaid expenses		23,440			35,199
Total Current Assets		214,434			68,863

Equipment, net		28,657			68,402
Right of use asset		502,860			589,894
Intangible assets, net		682,992			739,164

Total Assets	$	1,428,943		$	1,466,323

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities:
Accounts payable	$	50,672		$	1,954,427
Accrued expenses and other current liabilities		86,164			2,921,164
Accrued interest		25,849			697,658
Lease liability		97,081			85,465
Notes payable, net of debt discount of $0 and $1,247,422, respectively		-			7,145,906
Debtor-in-possession financing		1,114,713			-
Derivative liabilities		-			915,959
Total Current Liabilities		1,374,479			13,720,579

Lease liability, net of current portion		447,142			521,890

Liabilities subject to compromise		14,700,000			-

Total Liabilities		16,521,621			14,242,469

Commitments and Contingencies

Stockholders’ Deficit:
Preferred stock, $0.01 par value; Authorized, 20,000,000 shares; none issued and outstanding at September 30, 2020 and December 31, 2019		-			-
Common stock, $0.0001 par value; Authorized, 300,000,000,000 shares; Issued and outstanding 1,594,651,383 and 77,851,633, respectively		159,467			7,787
Additional paid in capital		68,829,376			65,786,213
Accumulated deficit		(84,081,521	)		(78,570,146	)

Total Stockholders’ Deficit		(15,092,678	)		(12,776,146	)

Total Liabilities and Stockholders’ Deficit	$	1,428,943		$	1,466,323

~~See Notes to~~The accompanying footnotes are an integral part of these ~~Condensed~~unaudited condensed consolidated financial statements.

BIORESTORATIVE THERAPIES, INC. AND SUBSIDIARY

(DEBtor-in-possession)

CONDENSED Consolidated ~~Financial Statements~~STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019

Revenues	$	15,000		$	38,000		$	60,000		$	98,000

Operating expenses:
Marketing and promotion		150			156,179			28,281			280,865
Consulting		33,594			373,975			101,195			1,507,582
Research and development		251,036			409,815			698,917			1,306,544
General and administrative		340,485			917,027			1,129,218			3,279,145
Total operating expenses		625,265			1,856,996			1,957,611			6,374,136

Loss from operations		(610,265	)		(1,818,996	)		(1,897,611	)		(6,276,136	)

Other expense:
Interest expense		(42,611	)		(394,816	)		(345,936	)		(1,039,727	)
Amortization of debt discount		-			(1,487,501	)		(1,066,526	)		(3,221,904	)
Loss on extinguishment of notes payable, net		-			(1,290,623	)		(658,152	)		(2,291,218	)
Change in fair value of derivative liabilites		-			(65,037	)		(2,141,069	)		(268,350	)
Reorganization items, net		(183,387	)		-			597,919			-
Total other expense		(225,998	)		(3,237,977	)		(3,613,764	)		(6,821,199	)

Net loss	$	(836,263	)	$	(5,056,973	)	$	(5,511,375	)	$	(13,097,335	)

Net Loss Per Share
- Basic and Diluted	$	(0.00	)	$	(0.23	)	$	(0.00	)	$	(0.74	)

Weighted Average Number of Common Shares Outstanding
- Basic and Diluted		1,594,651,383			21,520,371			1,383,898,879			17,601,908

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

BIORESTORATIVE THERAPIES, INC. AND SUBSIDIARY

(debtor-inpossession)

CONDENSED Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Shareholders’
	Shares		Amount		Capital		Deficit			Deficit

Balance at January 1, 2020		77,851,633	$	7,787	$	65,786,213	$	(78,570,146	)	$	(12,776,146	)

Shares and warrants issued for cash		1,000,000		100		9,900		-			10,000
Shares issued in exchange of notes payable and accrued interest		1,515,799,750		151,580		2,407,352		-			2,558,932
Stock-based compensation:
- options		-		-		221,881		-			221,881
Net loss		-		-		-		(7,550,772	)		(7,550,772	)
Balance as of March 31, 2020		1,594,651,383		159,467		68,425,346		(86,120,918	)		(17,536,105	)

Stock-based compensation:
- options		-		-		219,264		-			219,264
Net income		-		-		-		2,875,660			2,875,660
Balance as of June 30, 2020		1,594,651,383		159,467		68,644,610		(83,245,258	)		(14,441,181	)

Stock-based compensation:
- options		-		-		184,766		-			184,766
Net loss		-		-		-		(836,263	)		(836,263	)

Balance as of September 30, 2020		1,594,651,383	$	159,467	$	68,829,376	$	(84,081,521	)	$	(15,092,678	)

Balance at January 1, 2019		11,728,394	$	1,173	$	55,280,045	$	(63,922,256	)	$	(8,641,038	)

Shares and warrants issued for cash		1,000,000		100		99,900		-			100,000
Shares issued in satisfaction of accrued consulting services		10,000		1		7,199		-			7,200
Shares issued in exchange for notes payable and accrued interest		1,984,017		198		1,510,084		-			1,510,282
Shares issued and recorded as debt discount in connection with a note payable issuances and extensions		10,000		1		7,051		-			7,052
Reclassification of derivative liabilities to equity		-		-		2,517,254		-			2,517,254
Stock-based compensation:
- options		-		-		729,678		-			729,678
Net loss		-		-		-		(3,883,172	)		(3,883,172	)
Balance as of March 31, 2019		14,732,411		1,473		60,151,211		(67,805,428	)		(7,652,744	)

Shares and warrants issued for cash		1,191,111		119		156,192		-			156,311
Shares issued in exchange for notes payable and accrued interest		3,726,082		373		2,063,065		-			2,063,438
Shares issued and recorded as debt discount in connection with a note payable issuances		68,873		7		54,161		-			54,168
Reclassification of derivative liabilities to equity		-		-		120,742		-			120,742
Stock-based compensation:
- common stock		75,000		8		29,993		-			30,000
- options		-		-		442,804		-			442,804
Net loss		-		-		-		(4,157,190	)		(4,157,190	)
Balance as of June 30, 2019		19,793,477		1,979		63,018,168		(71,962,618	)		(8,942,471	)

Shares issued and recorded as debt discount in connection with a note payable issuances		3,924,277		392		1,164,905		-			1,165,297
Reclassification of derivative liabilities to equity		-		-		171,569		-			171,569
Stock-based compensation:
- options		-		-		234,045		-			234,045
Net loss		-		-		-		(5,056,973	)		(5,056,973	)

Balance as of September 30, 2019		23,717,754	$	2,371	$	64,588,687	$	(77,019,591	)	$	(12,428,533	)

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

BIORESTORATIVE THERAPIES, INC. &AND SUBSIDIARY

(debtor-in-possession)

~~Condensed~~CONDENSED Consolidated ~~Statements of Operations~~STATEMENTS OF CASH FLOWS

(Unaudited)

~~(unaudited)~~

For The Three Months Ended For The Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Revenues $ 38,000 $ 26,000 $ 98,000 $ 82,000

Operating Expenses:
Marketing and promotion 156,179 155,161 280,865 213,715
Consulting 373,975 417,601 1,507,582 1,268,485
Research and development 409,815 357,436 1,306,544 1,137,381
General and administrative 917,027 284,472 3,279,145 2,932,162
Total Operating Expenses 1,856,996 1,214,670 6,374,136 5,551,743
Loss From Operations (1,818,996 ) (1,188,670 ) (6,276,136 ) (5,469,743 )

Other Expense:
Interest expense (394,816 ) (257,298 ) (1,039,727 ) (648,940 )
Amortization of debt discount (1,487,501 ) (540,488 ) (3,221,904 ) (1,884,116 )
Loss on extinguishment of notes payable, net (1,290,623 ) (320,383 ) (2,291,218 ) (384,171 )
Change in fair value of derivative liabilities (65,037 ) (615,322 ) (268,350 ) (557,274 )
Warrant modification expense - (3,100 ) - (3,100 )
Total Other Expense (3,237,977 ) (1,736,591 ) (6,821,199 ) (3,477,601 )
Net Loss $ (5,056,973 ) $ (2,925,261 ) $ (13,097,335 ) $ (8,947,344 )

Net Loss Per Share
- Basic and Diluted $ (0.23 ) $ (0.39 ) $ (0.74 ) $ (1.32 )

Weighted Average Number of
Common Shares Outstanding
- Basic and Diluted 21,520,371 7,410,350 17,601,908 6,796,761

	Nine Months Ended
	September 30, 2020			September 30, 2020
Cash flows from operating activities:
Net Loss	$	(5,511,375	)	$	(13,097,335	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		1,066,526			3,221,904
Accretion of interest expense		2,810,973			375,344
Depreciation and amortization		95,917			161,418
Stock-based compensation		625,911			1,492,527
Loss on extinguishment of note payables, net		658,152			2,291,218
Gain on settlement of payables		-			(29,300	)
Write-off of derivative liabilities		(4,375,231	)		-
Change in fair value of derivative liabilities		2,141,069			268,350
Non-cash effect of righ of use asset		23,902			-
Changes in operating assets and liabilities:
Accounts receivable		17,000			(9,000	)
Prepaid assets and other current assets		11,759			(30,277	)
Accounts payable		145,020			(379,028	)
Accrued interest, expenses and other current liabilities		898,232			626,436

Net cash used in operating activities		(1,392,145	)		(5,107,743	)

Cash flows from investing activities:

Purchases of property and equipment		-			(35,631	)

Net cash used in investing activities		-			(35,631	)

Cash flows from financing activities:
Offering costs incurred		-			(14,428	)
Proceeds from notes payable		441,762			8,332,727
Payments on notes payable - principal		-			(3,536,605	)
Payments on notes payable - prepayment premiums		-			(813,730	)
Proceeds from DIP financiing		1,114,713			-
Sales of common stock and warrants for cash		10,000			1,156,000

Net cash provided by financing activities		1,566,475			5,123,964

Net increase in cash and cash equivalents		174,330			(19,410	)

Cash and cash equivalents - beginning of period		1,664			117,523

Cash and cash equivalents - end of period	$	175,994		$	98,113

Supplemental cash flow information:
Cash paid for:
Interest	$	-		$	232,693
Non-cash investing and financing activities:
Shares issued and recorded as debt discount in connection with notes payable issuances and extensions	$	-		$	61,220
Shares issued in exchange for notes payable and accrured interest	$	2,558,932		$	4,739,017
Shares and warrants issued in satisfaction of accrued consulting services	$	-		$	7,200
Reclassification of derivative liabilities to equity	$	-		$	2,809,565
Bifurcated embedded conversion options and warrants recorded as derivative liability and debt discount	$	2,377,818		$	3,680,226
Sale of warrants recorded as derivative liabilities	$	10,000		$	-
Offering costs in accounts payable and accrued expenses	$	-		$	357,297
Original issue discount in connection with notes payable	$	-		$	547,348
Warrants and options issued for consulting services recorded as derivative liabilities	$	-		$	56,000
Accrued interest reclassified to notes payable principal	$	-		$	23,013

~~See Notes to~~The accompanying footnotes are an integral part of these ~~Condensed Consolidated Financial Statements~~unaudited condensed consolidated financial statements.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Condensed Consolidated Statements of Changes in Stockholders’ Deficiency~~

~~(unaudited)~~

Three Months Ended September 30, 2019
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
Balance - July 1, 2019 19,793,477 $ 19,793 $ 63,000,354 $ (71,962,618 ) $ (8,942,471 )

Shares issued in exchange for notes
payable and accrued interest
3,924,277 3,924 1,161,373 - 1,165,297

Reclassification of derivative liabilities to equity - - 171,569 - 171,569

Stock-based compensation:
- options - - 234,045 - 234,045

Net loss - - - (5,056,973 ) (5,056,973 )
Balance - September 30, 2019 23,717,754 $ 23,717 $ 64,567,341 $ (77,019,591 ) $ (12,428,533 )

Three Months Ended September 30, 2018
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
Balance - July 1, 2018 6,747,501 $ 6,747 $ 47,551,776 $ (57,426,536 ) $ (9,868,013 )

Shares and warrants issued for cash 60,000 60 74,940 - 75,000

Conversion of notes payable and accrued
interest into common stock
70,406 70 57,662 - 57,732

Shares issued in exchange for notes
payable and accrued interest
1,785,599 1,786 3,696,803 - 3,698,589

Shares issued and recorded as debt
discount inconnection with notes payable issuances or extensions
23,333 23 33,973 - 33,996

Beneficial conversion features related to
convertible notes payable
- - 47,876 - 47,876

Warrant modifications - - 3,100 - 3,100

Reclassification of derivative liabilities to equity - - 105,187 - 105,187

Stock-based compensation:
- common stock 35,000 35 52,465 - 52,500
- options and warrants - - (218,853 ) - (218,853 )

Net loss - - - (2,925,261 ) (2,925,261 )
Balance - September 30, 2018 8,721,839 $ 8,721 $ 51,404,929 $ (60,351,797 ) $ (8,938,147 )

~~See Notes to these Condensed Consolidated Financial Statements~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Condensed Consolidated Statements of Changes in Stockholders’ Deficiency - Continued~~

~~(unaudited)~~

Nine Months Ended September 30, 2019
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
Balance - January 1, 2019 11,728,394 $ 11,728 $ 55,269,490 $ (63,922,256 ) $ (8,641,038 )

Shares and warrants issued for cash 2,191,111 2,191 254,120 - 256,311

Shares issued in satisfaction of accrued
consulting services
10,000 10 7,190 - 7,200

Shares issued in exchange for notes
payable and accrued interest
9,634,376 9,634 4,729,383 - 4,739,017

Shares issued and recorded as debt
discount in connection with notes payable issuances or extensions
78,873 79 61,141 - 61,220

Reclassification of derivative liabilities to equity
- - 2,809,565 - 2,809,565

Stock-based compensation:
- common stock 75,000 75 29,925 - 30,000
- options - - 1,406,527 - 1,406,527

Net loss - - - (13,097,335 ) (13,097,335 )
Balance - September 30, 2019 23,717,754 $ 23,717 $ 64,567,341 $ (77,019,591 ) $ (12,428,533 )

Nine Months Ended September 30, 2018
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
Balance - January 1, 2018 6,112,473 $ 6,112 $ 44,561,773 $ (51,404,453 ) $ (6,836,568 )

Shares and warrants issued for cash 70,000 70 99,930 - 100,000

Exercise of warrant for purchase of
common stock
207,084 207 413,961 - 414,168

Shares and warrants issued in satisfaction
of accrued consulting services
19,000 19 37,981 - 38,000

Conversion of notes payable and accrued
interest into common stock
97,424 97 110,539 - 110,636

Shares and warrants issued in exchange
for notes payable and accrued interest
2,106,525 2,107 4,338,074 - 4,340,181

Shares issued and recorded as debt
discount in connection with notes payable issuances or extensions
74,333 74 121,379 - 121,453

Warrant modifications - - 3,100 - 3,100

Beneficial conversion features related to
convertible notes payable
- - 69,394 - 69,394

Reclassification of derivative liabilities to equity - - 105,187 - 105,187

Stock-based compensation:
- common stock 35,000 35 52,465 - 52,500
- options and warrants - - 1,491,146 - 1,491,146

Net loss - - - (8,947,344 ) (8,947,344 )
Balance - September 30, 2018 8,721,839 $ 8,721 $ 51,404,929 $ (60,351,797 ) $ (8,938,147 )

~~See Notes to these Condensed Consolidated Financial Statements~~

BIORESTORATIVE THERAPIES, INC. ~~& SUBSIDIARY~~

(DEBTOR-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Condensed Consolidated Statements of Cash Flows~~(Unaudited)

~~(unaudited)~~

For The Nine Months Ended
September 30,
2019 2018
Cash Flows From Operating Activities
Net loss $ (13,097,335 ) $ (8,947,344 )
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount 3,221,904 1,884,116
Accretion of interest expense 375,344 427,908
Depreciation and amortization 161,418 183,070
Stock-based compensation 1,492,527 1,579,046
Loss on extinguishment of note payables, net 2,291,218 384,171
Gain on settlement of payables (29,300 ) -
Change in fair value of derivative liabilities 268,350 557,274
Consulting services provided in exchange for notes payble - 131,935
Warrant modification expense - 3,100
Changes in operating assets and liabilities:
Accounts receivable (9,000 ) 12,000
Prepaid expenses and other current assets (30,277 ) (20,637 )
Accounts payable (379,028 ) (342,725 )
Accrued interest, expenses and other current liabilities 626,436 596,544
Total adjustments 7,989,592 5,395,802
Net Cash Used In Operating Activities (5,107,743 ) (3,551,542 )

Cash Flows From Investing Activities
Purchases of property and equipment (35,631 ) (12,869 )
Net Cash Used In Investing Activities (35,631 ) (12,869 )

Cash Flows From Financing Activities
Offering costs incurred (14,428 ) -
Proceeds from notes payable 8,332,727 3,062,217
Repayments of notes payable - principal (3,536,605 ) (351,571 )
Repayments of notes payable - prepayment premiums (813,730 ) (81,709 )
Advances from officers and a family member of an officer - 38,500
Repayments of advances from officers and a family member of an officer - (38,500 )
Proceeds from exercise of warrants - 414,168
Sales of common stock and warrants for cash 1,156,000 175,000
Net Cash Provided By Financing Activities 5,123,964 3,218,105

Net Decrease In Cash (19,410 ) (346,306 )

Cash at beginning of period 117,523 451,680
Cash at end of period $ 98,113 $ 105,374

~~See Notes to these Condensed Consolidated Financial Statements~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

~~Condensed Consolidated Statements of Cash Flows - Continued~~

~~(unaudited)~~

For The Nine Months Ended
September 30,
2019 2018
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 232,693 $ 21,625
Income tax $ - $ -

Non-cash investing and financing activities:
Warrant modifications $ - $ 3,100
Shares issued and recorded as debt discount in connection with notes payable issuances or extensions $ 61,220 $ 121,453
Shares issued in exchange for notes payable and accrued interest $ 4,739,017 $ 4,340,181
Conversion of notes payable and accrued interest into common stock $ - $ 110,636
Shares and warrants issued in satisfaction of accrued consulting services $ 7,200 $ 38,000
Bifurcated embedded conversion options and warrants recorded as derivative liability and debt discount $ 3,680,226 $ 1,938,759
Beneficial conversion features recorded as debt discount $ - $ 69,394
Reclassification of derivative liabilities to equity $ 2,809,565 $ 105,187
Warrants issued for consulting services recorded as derivative liabilities $ 56,000 $ -
Accrued interest reclassified to notes payable principal $ 23,013 $ -
Offering costs in accounts payable and accrued expenses $ 357,297 $ -
Original issue discount in connection with notes payable $ 547,348 $ 309,729
Consulting services provided in exchange for notes payable $ - $ 131,935

~~See Notes to these Condensed Consolidated Financial Statements~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~Corporate History

~~(unaudited)~~

~~Note 1 – Business Organization and Nature of Operations~~

BioRestorative Therapies, Inc. has one wholly-owned subsidiary, Stem Pearls, LLC (“Stem Pearls”). BioRestorative Therapies, Inc. and its subsidiary are referred to collectively as “BRT” or the “Company” ~~(See~~.

On March 20, 2020 (the “Petition Date”), the Company filed a voluntary petition commencing a case (the “Chapter 11 Case”) under chapter 11 of title 11 of the U.S. Code in the United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy Court”).

On August 7, 2020 the Company and Auctus Fund, LLC (“Auctus”), the Company’s largest unsecured creditor and a stockholder as of the Petition Date, filed an Amended Joint Plan of Reorganization (the “Plan”) and on October 30, 2020, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan, as amended. Amendments to the Plan are reflected in the Confirmation Order. On November 16, 2020 (the “Effective Date”), the Plan became effective. See Note 310 – ~~Summary~~Subsequent Events for additional information.

Nature of ~~Significant Accounting Policies – Principles of Consolidation).~~ the Business

BRT develops therapeutic products and medical therapies using cell and tissue protocols, primarily involving adult stem cells. BRT’s website is at~~www.biorestorative.com~~. www.biorestorative.com. BRT is currently developing a Disc/Spine Program referred to as “brtxDISC”. Its lead cell therapy candidate,BRTX-100, is a product formulated from autologous (or a person’s own) cultured mesenchymal stem cells collected from the patient’s bone marrow. The product is intended to be used for the non-surgical treatment of painful lumbosacral disc ~~disorders.~~disorders or as a complimentary therapeutic to a surgical procedure. BRT is also engaging in research efforts with respect to a platform technology utilizing brown adipose (fat) for therapeutic purposes to treat type 2 diabetes, obesity and other metabolic disorders and has labeled this initiative its ThermoStem Program. Further, BRT has licensed a patented curved needle device that is a needle system designed to deliver cells and/or other therapeutic products or material to the spine and discs or other potential sites.

Liquidity

The accompanying unaudited condensed consolidated financial statements have been prepared ~~in accordance with accounting principles generally accepted~~on the basis that the Company will continue as a going concern, which contemplates realization of assets and satisfying liabilities in the ~~United States~~normal course of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements ofbusiness. At September 30, 2020, the Company ashad an accumulated deficit of ~~September 30, 2019~~approximately $84,082,000 and ~~for~~working capital deficiency of approximately $15,860,000, which includes liabilities subject to compromise. For the ~~three and~~ nine months ended September 30, 2019 and 2018. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the operating results for the full year ending December 31, 2019 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2018 and for the year then ended, which were filed with the Securities and Exchange Commission on Form 10-K on March 29, 2019.

~~Note 2 – Going Concern and Management’s Plans~~

~~As of September 30, 2019,~~2020, the Company had a ~~working capital deficiency~~loss from operations of approximately $1,898,000 and ~~a stockholders’ deficiency~~negative cash flows from operations of ~~$13,514,377~~approximately $1,392,000. The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans for 2021, as well as other potential strategic and ~~$12,428,533, respectively. During the three and nine months ended September 30, 2019,~~business development initiatives. In addition, the Company ~~incurred net~~has had and expects to have negative cash flows from operations, at least into the near future. The Company has previously funded, and plans to continue funding, these losses primarily through current cash on hand received subsequent to quarter end and additional infusions of ~~$5,056,973~~cash from equity and ~~$13,097,335, respectively. These conditions indicate that there is substantial doubt about~~debt financing.

The Company believes the ~~Company’s~~following has been able to mitigate the above factors with regards to its ability to continue as a going ~~concern within~~concern: (i) as part of its Chapter 11 reorganization approximately $14,700,000 in outstanding debt and other liabilities were exchanged for (a) shares of common stock, (b) new convertible notes or (c) new convertible notes and warrants to purchase shares of common stock; (ii) the ~~next~~Company secured DIP financing during its Chapter 11 Case in the amount of $1,189,413, of which $1,114,713 was received prior to September 30, 2020, as well as an aggregate amount of $3,848,548 in debt financing from Auctus and others as part of the Company’s Chapter 11 reorganization, to sustain operations; and (iii) pursuant to the plan of reorganization, Auctus is required to loan to the Company, as needed and subject to the Company becoming current in its SEC reporting obligations, an additional amount equal to $3,500,000, less the amount of Auctus’ DIP financing ($1,226,901, inclusive of accrued interest) and its DIP costs. As a result of the above, the Company believes it has sufficient cash to fund operations for the twelve months ~~from~~subsequent to the filing ~~date~~date. In addition, the Company is seeking further funding to commence and complete a Phase 2 clinical study of ~~this report.~~the use of BRTX-100.

~~The Company’s primary source of operating funds since inception has been equity and debt financings. The Company intends to continue to raise additional capital through debt and equity financings.~~ There is no assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable operations. If the Company is unable to obtain such additional financing on a timely basis ~~or, notwithstanding any request the Company may make, the Company’s debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes,~~ the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate.

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with ~~U.S. GAAP,~~accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The accompanying unaudited condensed consolidated financial statements do not include any ~~adjustment~~adjustments that might ~~result from the outcome of this uncertainty.~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Subsequent to September 30, 2019,~~be necessary should the Company has received aggregate equity financings and debt proceeds of $500,000 and $1,363,625, respectively, debt (inclusive of accrued interest) of $250,571 has been exchanged for common stock, $1,412,202 of debt (inclusive of accrued interest) has been repaid, and the due date for the repayment of $91,539 of debt has been extendedbe unable to ~~July 2020. As~~continue as a result, the Company expects to have the cash required to fund its operations through December 2019 while it continues to apply efforts to raise additional capital, including through a contemplated public offering of its equity securities. While there can be no assurance that it will be successful, the Company is seeking to raise additional capital. As of the filing date of this report, the Company has notes payable with an aggregate principal balance of $593,400 which are past due. See Note 7 – Stockholders’ Deficiency and Note 9 – Subsequent Events for details.going concern.

Between May 2019 and August 2019, holders of the Company’s notes in the aggregate principal amount of $1,565,000 entered into agreements with the Company pursuant to which the parties have agreed to exchange such notes for shares of the Company’s common stock and warrants in connection with the closing of the contemplated public offering. See Note 5 – Notes Payable – Related Party Notes; and – Convertible Notes.

~~Note 3~~NOTE 2 – ~~Summary of Significant Accounting Policies~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial information as of and for the three and nine months ended September 30, 2020 and 2019 has been prepared in accordance with GAAP for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such dates and the operating results and cash flows for such periods. Operating results for the three months and nine ended September 30, 2020 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (the “SEC”). These unaudited financial statements and related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2021.

Principles of Consolidation

The unaudited condensed consolidated financial statements ~~of the Company~~include include the accounts of the Company and its wholly-owned subsidiary Stem Pearls. ~~All significant intercompany~~Intercompany accounts and transactions have been eliminated ~~in the~~upon consolidation.

Reclassifications

During the nine months ended September 30, 2020, the Company reclassified $2,580,110 related to the write-off of unamortizaed debt discount on convertible notes to reorganization items on the unaudited condensed consolidated statements of operations. This amount was previously recorded as interest expense in the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 29, 2021. This reclassification had no effect on net loss or cash flows as previously reported.

Chapter 11 Cases

Chapter 11 Accounting

The unaudited condensed consolidated financial statements included herein have been prepared as if we were a going concern and in accordance with Accounting Standards Codification (“ASC”) 852, Reorganizations.

Weak industry conditions in 2019 negatively impacted the Company’s results of operations and cash flows and may continue to do so in the future. In order to decrease the Company’s indebtedness and maintain the Company’s liquidity levels suifficient to meet its commitments, the Company undertook a number of actions, including minimizing capital expendtiures and further reducing its recurring operating expenses. The Company believed that even after taking these actions, it would not have sufficient liquidity to satisfy its debt service obligations and meet its other financial obligations. On March 20, 2020 (the “Petition Date”), the Company filed a voluntary petition commencing a case under chapter 11 of title 11 of the U.S. Code in the United States Bankruptcy Court for the Eastern District of New York. On August 7, 2020, the Company and Auctus, the Company’s largest unsecured creditor and a stockholder as of the Petition Date, filed an Amended Joint Plan of Reorganization (the “Plan”).

Reorganization Items, Net

The Company incurred costs after the Petition Date associated with the reorganization, primarily unamortized debt discount and postpetition professional fees. In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as reorganization items, net within the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2020. Reorganization items, net for the three and nine months ended September 30, 2020, were ($183,387) and $597,919, respectively, representing cash used in operating activities.

Reorganization items, net for the three and nine months ended September 30, 2020, consisted of the following:

	Three Months Ended September 30, 2020			Nine Months Ended September 30, 2020

Professional fees	$	(183,387	)	$	(333,077	)
Write-off of derivative liability		-			4,375,231
Default interest and penalties		-			(864,125	)
Unamortized debt discount on convertible notes		-			(2,580,110	)
Total reorganization items, net	$	(183,387	)	$	597,919

Liabilities Subject To Compromise

Prepetition unsecured and secured obligation that may be impacted by the Chapter 11 case have been classified as liabilities subject to compromise on the Company’s unaudited condensed consolidated balance sheets. These liabilities are reported at the amounts allowed as claims by the Bankruptcy Court.

Liabilities subject to compromise as of September 30, 2020 were $14,700,000, which consisted of:

	September 30, 2020

Accounts payable	$	2,125,473
Accrued expenses and other current liabilites		3,523,075
Unsecured notes payable		8,021,695
Accrued interest, default interest, default principal		1,029,757
Total liabilities subject to compromise	$	14,700,000

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with ~~U.S.~~ GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions, revenue and ~~liabilities~~expenses and disclosure of contingent liabilities at the ~~dates~~date of the unaudited condensed consolidated financial ~~statements and the reported amounts of revenue and expenses during the periods.~~statements. The ~~Company’s significant~~Company bases its estimates and assumptions ~~include the recoverability~~on historical experience, known or expected trends and ~~useful lives of long-lived assets, the fair value of~~various other assumptions that it believes to be reasonable. As future events and their effects cannot be determined with precision, actual results could differ from these estimates which may cause the Company’s stock, stock-based compensation, warrants issued in connection with notes payable, derivative liabilities and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actualfuture results to ~~differ from those estimates.~~

~~Deferred Offering Costs~~

Deferred offering costs, which primarily consist of direct, incremental professional fees incurred in connection with preparing for a contemplated public offering of the Company’s equity securities (as described in Note 7 – Stockholders’ Deficiency), are capitalized as non-current assets on the balance sheet. Upon a consummation of such contemplated offering (as to which no assurances can be given), the deferred offering costs will be offset against the equity offering proceeds. As of September 30, 2019, the Company incurred deferred offering costs in the amount of $371,725, of which $265,297 and $92,000 are included in accounts payable and accrued expenses, respectively, on the September 30, 2019 condensed consolidated balance sheet, in connection with such contemplated public offering.

~~Revenue Recognition~~

On January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~The five-step process outlined in the ASC 606 is as follows:~~

Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation.

Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur.

Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception.

Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from, an asset. It includes the ability to prevent other entities from directing the use of, and obtaining the benefits from, an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset. Performance obligations can be satisfied at a point in time or over time.affected.

The Company ~~recognizes~~believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements. Significant estimates include the carrying value of intangible assets, deferred tax asset and valuation allowance, estimated fair value of derivative liabilities stemming from convertible debt securities, and assumptions used in the Black-Scholes-Merton pricing model, such as expected volatility, risk-free interest rate, and expected divided rate.

Revenue

The Company derives all of its revenue pursuant to a license agreement between the Company and a stem cell treatment company (“SCTC”) entered into in January 2012, as amended in November 2015. Pursuant to the license agreement, the SCTC granted to the Company a license to use certain intellectual property related to, among other things, stem cell disc procedures and the Company has granted to the SCTC a ~~non-exclusive~~ sublicense to use, and the right to sublicense to third parties the right to use, in certain locations in the United States and the Cayman Islands, certain of the licensed intellectual property. In consideration of the sublicenses, the SCTC has agreed to pay the Company royalties on a per disc procedure basis.

~~The~~Practical Expedients

As part of ASC Topic 606, the Company ~~recognizes sublicensing~~has adopted several practical expedients including:

●	Significant Financing Component – the Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to the customer and when the customer pays for that good or service will be one year or less.
●	Unsatisfied Performance Obligations – all performance obligations related to contracts with a duration for less than one year, the Company has elected to apply the optional exemption provided in ASC Topic 606 and therefore, is not required to disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of the reporting period.
●	Right to Invoice – the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. The Company may recognize revenue in the amount to which the entity has a right to invoice.

Contract Modifications

There were no contract modifications during the three and ~~royalty revenue on a per disc procedure basis when the third-party sale occurs. All sales have fixed pricing and there~~nine months ended September 30, 2020. Contract modifications are ~~currently no variable components included~~not routine in the ~~Company’s revenue. The timing~~performance of the Company’s ~~revenue recognition may differ from~~contracts.

Cash

The Company considers all highly liquid investments with maturities of three months or less at the ~~timing~~time of ~~receiving royalty payments. A~~purchase to be cash equivalents. There were no cash equivalents as of September 30, 2020 or December 31, 2019.

Accounts Receivable

Accounts receivable ~~is recorded when revenue is recognized prior to receipt~~are reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts. The Company periodically assesses its accounts and other receivables for collectability on a ~~royalty payment~~specific identification basis. The Company provides for allowances for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. Payments are generally due within 30 days of invoice. The Company writes off accounts receivable against the ~~Company has an unconditional right to the royalty payment. Alternatively,~~allowance for doubtful accounts when a ~~royalty payment precedes~~balance is determined to be uncollectible. The Company did not record an allowance for doubtful accounts as of September 30, 2020 and December 31, 2019, respectively.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using straight-line method over the ~~provision~~estimated useful lives of the related ~~services,~~assets, generally three to fifteen years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated. Computer equipment costs are capitalized, as incurred, and depreciated on a straight-line basis over a range of 3 – 5 years.

Leasehold improvements are amortized over the lesser of (i) the useful life of the asset, or (ii) the remaining lease term. Maintenance and repairs are charged to expense as incurred. The Company ~~records deferred revenue until~~capitalizes cost attributable to the ~~performance obligations~~betterment of property and equipment when such betterment extends the useful life of the assets. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are ~~satisfied.~~ written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. During the three and nine months ended September 30, 2020 and 2019, the Company ~~recognized $38,000~~did not record a loss on impairment.

Intangible Assets

The Company records its intangible assets at cost in accordance with ASC 350, Intangibles – Goodwill and ~~$98,000, respectively, of revenue related~~Other. Definite lived intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated.

Advertising and Marketing Costs

The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were $28,281 and $280,865 for the ~~Company’s sublicenses. During the three and~~ nine months ended September 30, ~~2018,~~2020 and 2019, respectively. Advertising and marketing expenses were $150 and $156,179 for the ~~Company recognized $26,000~~three months ended September 30, 2020 and ~~$82,000, respectively,~~2019, respectively. The above advertising and marketing expenses are recorded in marketing and promotion on the unaudited condensed consolidated statements of ~~revenue related to the Company’s sublicenses.~~operations.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~Fair Value Measurements

~~Notes~~As defined in ASC 820, “Fair Value Measurements and Disclosures,” fair value is the price that would be received to ~~Condensed Consolidated Financial Statements~~sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

Level 1:	Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2:	Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

Level 3:	Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

See Note 7 – Derivative Liabilities for additional details regarding the valuation technique and assumptions used in valuing Level 3 inputs.

~~(unaudited)~~Net Loss per Common Share

The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s unaudited condensed consolidated financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required.

Net ~~Loss Per Common Share~~

~~Basic~~ loss per ~~common~~ share is computed by dividing net loss by the weighted average number of ~~vested~~shares of common ~~shares~~stock outstanding during the ~~period. Diluted earnings per share reflects~~year. All vested outstanding options and warrants are considered potential common stock. The dilutive effect, if any, of stock options and warrants are calculated using the ~~potential dilution that could occur if securities or other instruments to issue~~treasury stock method. All outstanding convertible notes are considered common stock ~~were exercised~~at the beginning of the period or ~~converted into~~at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common ~~stock.~~stock equivalents is anti-dilutive with respect to losses, options, warrants, and convertible notes have been excluded from the Company’s computation of net loss per common share for the nine months ended September 30, 2020 and 2019.

The following table summarizes the securities ~~are~~that were excluded from the diluted per share calculation because the effect of ~~weighted average dilutive common~~including these potential shares ~~because their inclusion would have been anti-dilutive:~~was antidilutive:

					Three Months Ended
					September 30,
	September 30,				2020		2019
	2019		2018
Options		4,909,618		3,588,451		4,874,617		4,909,618
Warrants		5,804,891		3,413,403		7,984,791		5,804,891
Convertible notes - common stock [1]		35,373,991		2,986,487
Convertible notes – common stock						-		35,373,991	⁽¹⁾
Convertible notes - warrants		2,776,450		-		-		2,776,450
Total potentially dilutive shares		48,864,950		9,988,341
Total						12,859,408		48,864,950

	Nine Months Ended
	September 30,
	2020		2019

Options		4,874,617		4,909,618
Warrants		7,984,791		5,804,891
Convertible notes – common stock		-		35,373,991	⁽¹⁾
Convertible notes - warrants		-		2,776,450
Total		12,859,408		48,864,950

(1) As of September 30, 2019, many of the convertible notes had variable conversion prices and the shares issuable were estimated based on the market conditions. Pursuant to the note agreements, there were 110,370,828 shares of common stock reserved for future note conversions as of September 30, 2019, respectively.

~~[1]~~

As of September 30, 2019 and 2018, many of the convertible notes had variable conversion prices and the shares were estimated based on market conditions. Pursuant to the note agreements, on September 30, 2019 and September 30, 2018 there were 110,370,828 and 24,710,731 shares of common stock reserved for future note conversions, respectively. See Note 9 – Subsequent Events regarding the Board of Directors approval to increase the number of authorized shares of common stock, subject to shareholder approval.

~~Stock-Based~~Stock-based Compensation

The Company ~~measures~~applies the ~~cost~~provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.

For stock options issued to employees and members of the board of directors for their services, ~~received in exchange for an award of equity instruments based on~~ the Company estimates the grant date fair value of each option using the ~~award.~~Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of ~~the award is measured~~stock options on ~~the grant date and is then recognized~~a straight-line basis over the requisite service period, ~~during~~ which ~~services are required to be provided in exchange for the award, usually~~is generally the vesting ~~period.~~term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

Pursuant to Accounting Standards Update (“ASU”) 2018-07 Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options noted above.

Since the shares underlying the Company’s 2010 Equity Participation Plan (the “Plan”) are registered, the Company estimates the fair value of the awards granted under the Plan based on the market value of its freely tradable common stock as reported on the OTC Markets. On February 3, 2020, the Company was advised by OTC Markets Group that, based upon the closing bid price of the Company’s common stock being less than $0.001 per share for five consecutive trading days, the Company’s common stock was moved from the OTCQB ~~market.~~Market to the Pink Market effective at market open on February 10, 2020. The fair value of the Company’s restricted equity instruments was estimated by management based on observations of the cash sales prices of both restricted shares and freely tradable shares. Awards granted to directors are treated on the same basis as awards granted to employees. Upon the exercise of an option or warrant, the Company issues new shares of common stock out of its authorized shares.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company utilizes ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely than not” that a deferred tax asset will not be realized. At September 30, 2020 and December 31, 2019, the Company’s net deferred tax asset has been fully reserved.

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations when a determination is made that such expense is likely.

Derivative Financial Instruments

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards Board (“FASB”) ASC. The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options (“ECOs”) and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. Conversion options are recorded as a discount to the host instrument and are amortized as amortization of debt discount on the unaudited condensed consolidated financial statements over the life of the underlying instrument. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

The Multinomial Lattice Model and Black-Scholes Model were used to estimate the fair value of the ECOs of convertible notes payable, ~~the~~ warrants, and stock options that are classified as derivative liabilities on the unaudited condensed consolidated balance sheets. The models include subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the actual volatility during the most recent historical period of time equal to the weighted average life of the instruments.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Sequencing Policy

Under ASC 815-40-35 (“ASC 815”), the Company has adopted a sequencing policy, whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities to the Company’s employees and directors, or to compensate grantees in a share-based payment arrangement, are not subject to the sequencing policy.

~~Reclassification~~

~~Certain amounts in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net loss.~~

~~Subsequent Events~~

The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements, except as disclosed.

~~Recently Issued Accounting Pronouncements~~Leases

In February 2016, the FASB issued ~~Accounting Standards Update (“ASU”)~~ASU No. 2016-02, ~~“Leases (Topic 842)”~~Leases (“ASU 2016-02”)). ~~ASU 2016-02~~The standard requires all leases that have a ~~lessee recognize~~term of over 12 months to be recognized on the ~~assets and liabilities that arise from operating leases. A lessee should recognize in~~balance sheet with the ~~statement of financial position a~~ liability ~~to make~~for lease payments ~~(the~~and the corresponding right-of-use (“ROU”) asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease ~~liability) and~~will continue to be recognized as a ~~right-of-use asset representing its right to use the underlying asset for~~single operating expense on a straight-line basis over the lease term. ~~For~~Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the ROU asset) and interest expense (for interest on the lease liability). This standard, which the Company adopted on January 1, 2019, was applied on a modified retrospective basis to leases ~~with a term of 12 months~~existing at, or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases atentered into after, the beginning of the earliest comparative period presented using a modified retrospective approach. This amendment will be effective for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. The FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) in July 2018, and ASU No. 2018-20 “Leases (Topic 842) - Narrow Scope Improvements for Lessors” (“ASU 2018-20”) in December 2018. ASU 2018-10 and ASU 2018-20 provide certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the ~~period of adoption. The Company is currently evaluating these ASUs and their impact on its~~ unaudited condensed consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments”. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2018. The Company has adopted this standard as of January 1, 2019. The adoption of ~~this standard~~ASU 2016 - 02 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and ~~financial statement~~related disclosures.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~A lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASC 842 and it primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

In ~~June 2018,~~accordance with ASC 842, Leases, the ~~FASB issued ASU No. 2018-07, “Compensation — Stock Compensation (Topic 718)” (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost~~Company recognized an ROU asset and ~~complexity and to improve financial reporting~~corresponding lease liability on its balance sheets for ~~nonemployee share-based payments. Currently,~~its office space lease agreement. See Note 9 for further discussion, including the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019 and including interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted this accounting standard as of January 1, 2019. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements and ~~financial statement~~related disclosures.

ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

~~In March 2019,~~Leases in which the ~~FASB issued ASU 2019-01, “Leases (Topic 842): Codification Improvements” (“Topic 842”) (“ASU 2019-01”). These amendments align~~Company is the ~~guidance for fair value~~lessee are comprised of office rental. All of the ~~underlying asset by lessors that~~leases are classified as operating leases. The Company has a lease agreement for office space with a remaining term of 4.25 years as of September 30, 2020.

Recently Issued Accounting Standards

All newly issued but not ~~manufacturers~~yet effective accounting pronouncements have been deemed to be not applicable or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied. (Issue 1). The ASU also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities. (Issue 2). Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. (Issue 3). The transition and effective date provisions apply to Issue 1 and Issue 2. They do not apply to Issue 3 because the amendments for that Issue areimmaterial to the original transition requirements in Topic 842. This amendment will be effective for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. Company.

NOTE 3 – INTANGIBLE ASSETS

The Company is ~~currently evaluating ASU 2019-01~~a party to a license agreement with the SCTC (as amended) (the “SCTC Agreement”). Pursuant to the SCTC Agreement, the Company obtained, among other things, a worldwide, exclusive, royalty-bearing license from the SCTC to utilize or sublicense a certain medical device patent for the administration of specific cells and/or cell products to the disc and/or spine (and other parts of the body) and a worldwide (excluding Asia and Argentina), exclusive, royalty-bearing license to utilize or sublicense a certain method for culturing cells. Pursuant to the license agreement with the SCTC, unless certain performance milestones had been or are satisfied, the Company would have been required to pay to the SCTC $150,000 by April 2017 and an additional $250,000 by April 2019 in order to maintain its ~~impact on~~exclusive rights with regard to the disc/spine technology. In February 2017, the Company received authorization from the Food and Drug Administration (the “FDA”) to proceed with a Phase 2 clinical trial. Based upon such authorization, the Company has satisfied a performance milestone such that the Company was not required to pay to the SCTC a minimum amount of $150,000 by April 2017 to retain exclusive rights with regard to the disc/spine technology. In addition, the Company believes that it has until February 2022 to complete the Phase 2 clinical trial in order to satisfy the final performance milestone such that the Company was not required to pay the additional $250,000 by April 2019 pursuant to the SCTC Agreement to maintain its ~~unaudited condensed consolidated financial statements and financial statement disclosures.~~exclusive rights.

In July 2019, the FASB issued ASU 2019-07, “Codification Updates to SEC Sections — Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates (SEC Update)” (“ASU 2019-07”). ASU 2019-07 aligns the guidance in various SEC sectionsIntangible assets consist of the ~~Codification with~~following:

	Patents and Trademarks		Licenses		Accumulated Amortization			Total
Balance as of January 1, 2019	$	3,676	$	1,301,500	$	(491,117	)	$	814,059
Amortization expense		-		-		(74,895	)		(74,895	)
Balance as of December 31, 2019		3,676		1,301,500		(566,012	)		739,164
Amortization expense		-		-		(56,172	)		(56,172	)
Balance as of September 30, 2020	$	3,676	$	1,301,500	$	(622,184	)	$	682,992
Weighted average remaining amortization period at September 30, 2020 (in years)		0.25		9.15

Amortization of intangible assets consists of the requirements of certain SEC final rules. ASU 2019-07 is effective immediately. The adoption of ASU 2019-07 did not have a material impact on the Company’s unaudited condensed consolidated financial statements.following:

	Patents and Trademarks		Licenses		Accumulated Amortization
Balance as of January 1, 2019	$	2,944	$	488,173	$	491,117
Amortization expense		368		74,527		74,895
Balance as of December 31, 2019		3,312		562,700		566,012
Amortization expense		276		55,896		56,172
Balance as of September 30, 2020	$	3,588	$	618,596	$	622,184

~~Note~~NOTE 4 – ~~Accrued Expenses and Other Current Liabilities~~ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities ~~are comprised of the following:~~consist of:

September 30, 2019 December 31, 2018
Accrued payroll and other accrued expenses $ 43,779 $ 91,560
Accrued research and development expenses 746,175 646,175
Accrued general and administrative expenses 1,320,104 1,084,831
Accrued director compensation 507,500 482,500
Deferred rent 7,865 33,610
Total accrued expenses 2,625,423 2,338,676
Less: accrued expenses, current portion 2,625,423 2,302,176
Accrued expenses, non-current portion $ - $ 36,500

	September 30, 2020		December 31, 2019

Accrued payroll⁽¹⁾	$	-	$	152,308
Accrued research and development expenses⁽¹⁾		-		806,175
Accrued general and administrative expenses⁽¹⁾		86,164		1,392,743
Accrued director compensation⁽¹⁾		-		557,500
Accrued rent⁽¹⁾		-		12,438
Total accrued expenses	$	86,164	$	2,921,164

During the nine months ended September 30, 2019, the Company entered into a settlement agreement with a certain consultant, pursuant to which $46,500 of previously accrued consulting fees were exchanged for 10,000 shares of the Company’s common stock and a $10,000 cash payment. The value of the shares was $7,200, and accordingly the Company recorded a gain on settlement of payables of $29,300 which is reflected within general and administrative expenses in the unaudited condensed consolidated statements of operations.

(1)

Pursuant to ASC 852, Reorganizations, as of September 30, 2020, the Company reclassified all allowable prepetition claims to liabilities subject to compromise on the consolidated balance sheets.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Note~~NOTE 5 – ~~Notes Payable~~NOTES PAYABLE

A summary of the notes payable activity during the nine months ended September 30, ~~2019~~2020 is presented below:

Related Party Convertible Other Debt
Notes Notes Notes Discount Total
Outstanding, January 1, 2019 $ 720,000 $ 4,309,415 $ 132,501 $ (1,012,363 ) $ 4,149,553
Issuances 485,000 8,543,089 [1] - - 9,028,089
Exchanges for equity - (2,032,323 ) - 455,969 (1,576,354 )
Repayments (45,000 ) (3,484,105 ) (7,500 ) 428,939 (3,107,666 )
Extinguishment of notes payable - - (148,014 )[1] 6,196 (141,818 )
Recognition of debt discount - - - (4,288,794 ) (4,288,794 )
Accretion of interest expense - - - 375,344 375,344
Accrued interest reclassified to notes payable principal
- - 23,013 - 23,013
Amortization of debt discount - - - 3,221,904 3,221,904
Outstanding, September 30, 2019 [2] $ 1,160,000 $ 7,336,076 [3] $ - $ (812,805 ) $ 7,683,271

	~~[1]~~	During the nine months ended September 30, 2019, a convertible note in the principal amount of $148,014 was issued concurrently with the extinguishment of a certain note payable in the same aggregate principal amount. See below within Note 5 – Notes Payable – Convertible Notes - Conversions, Exchanges and Other for additional details.

	~~[2]~~	As of September 30, 2019, outstanding related party notes, convertible notes and other notes in the aggregate principal amounts of $450,000, $508,000 and $0, respectively, were considered past due (which excludes aggregate principal amounts of $25,000 and $150,000 of related party and convertible notes, respectively, which were extended to October 2019, effective as of September 30, 2019). See Note 9 – Subsequent Events for details regarding the repayment of certain past due notes payable.

	~~[3]~~	As of September 30, 2019, a portion of convertible notes with an aggregate principal balance of $4,381,076 were convertible into shares of common stock at the election of the holder any time until the balance has been paid in full. As of September 30, 2019, a portion of convertible notes with an aggregate principal balance of $2,955,000, which are not currently convertible, will become convertible into shares of the Company’s common stock at the election of the respective holder subsequent to September 30, 2019. As of September 30, 2019, outstanding related party notes and convertible notes in the aggregate principal amounts of $1,150,000 and $990,000, respectively, provided for a mandatory conversion into common stock of the Company and warrants to purchase common stock of the Company in the same ratio upon the completion of an underwritten public offering by the Company. See Note 9 – Subsequent Events.

	Related Party Notes			Convertible Notes			Other Notes			Debt Discount			Total
Outstanding, January 1, 2020	$	1,285,000		$	6,768,326		$	340,000		$	(1,247,420	)	$	7,145,906
Issuances		353,762			88,000			-			-			441,762
Third-party purchases		(287,041	)		287,041			-			-			-
Exchanges for equity		-			(813,393	)		-			253,654			(559,739	)
Conversions to equity		-			-			-			-			-
Repayments		-			-			-			-			-
Extinguishment of notes payable		-			-			-			-			-
Recognition of debt discount		-			-			-			(2,958,796	)		(2,958,796	)
Accretion of interest expense		-			-			-			2,886,036			2,886,036
Amortization of debt discount		-			-			-			1,066,526			1,066,526
Reclassification to liabilities subject to compromise		(1,351,721	)		(6,329,974	)		(340,000	)		-			(8,021,695	)
Outstanding, September 30, 2020	$	-		$	-		$	-		$	-		$	-

~~Related Party Notes~~

During the nine months ended September 30, 2019, the Company issued to family members of officers of the Company and a Scientific Advisory Board member (the “SAB Member”) notes payable in the aggregate principal amount of $485,000, which bear interest at the rate of 12% per annum and provide for original maturity dates between July 2019 and December 2019.

~~During the nine months ended September 30, 2019, the Company partially repaid a certain related party note in the principal amount of $45,000.~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~Chapter 11 Reorganization

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~During~~On March 20, 2020, the ~~nine months ended September 30, 2019,~~Company filed a voluntary petition commencing a case under chapter 11 of title 11 of the ~~holders of certain related party notes~~U.S. Code in the ~~aggregate principal amount~~United States Bankruptcy Court for the Eastern District of ~~$505,000 entered into agreements with~~New York. On August 7, 2020, the Company ~~pursuant to which~~and Auctus, the ~~parties agreed that the maturity~~Company’s largest unsecured creditor and a stockholder as of the ~~promissory notes held by such holders will be extended or further extended from dates from December 2018~~Petition Date, filed an Amended Joint Plan of Reorganization (the “Plan”). Pursuant to the Bankruptcy (see Note 10 – Subsequent Events), for any outstanding principal and ~~August 2019 to dates between July 2019 and December 2019. In consideration of~~interest at the extensions, such notes in the aggregate principal amount of $475,000 provided for an exchange of such notes for an exchange of such notes for shares of common stock and warrants, as described below, in connection with a public offeringdate of the Company’s ~~securities (the “Public Offering”). The exchange price~~Chapter 11 petition (except for the indebtedness will be equal to the lesser of (i) 75% of the public offering price of the common stock, or units of common stock and warrants, as the case may be, offered pursuant to the Public Offering or (ii) $0.60 per share (subject to adjustment for reverse stock splits and the like) (the “Exchange Price”). The number of shares of common stock issuable pursuant to the warrants to be issued to such holders will be equal to the number of shares of common stock issuable to them upon conversion of the principal amount of their respective notes. The exchange price of the warrants to be issued to such holders will be the lesser of (i) 125% of the Exchange Price or (ii) $0.80 per share (subject to adjustment for reverse stock splits and the like). Since the fair value of the new ECO exceeded 10% of the carrying amount of thecreditors who provided additional debt ~~the note extensions were accounted for as extinguishments, and accordingly the Company recognized an aggregate net loss on extinguishment of $145,066~~financing in connection with the ~~derecognition~~Bankruptcy), 100 shares of the ~~net carrying amount~~Company’s common stock were issued for each dollar of allowed claim, with such shares subject to leak-out restrictions prohibiting the ~~extinguished debt of $510,887 (inclusive of $475,000 of principal and $35,887 of accrued interest) and~~holder from selling, without the ~~issuance of the new convertible notes in the same amount, plus the fair value of the new notes’ ECOs of an aggregate of $145,066. See Note 9 – Subsequent Events.~~

In October 2019, the Company and a certain related party lender agreed to further extend the maturity date of a certain related party note with a principal balance of $25,000 from a maturity date in September 2019 to a new maturity date in October 2019, effective September 30, 2019.

~~During the nine months ended September 30, 2019, the Company, a director~~consent of the Company, more than 33% of the issued shares during each of the three initial 30 day periods following the Effective Date. As a result of the Chapter 11 petition, the conversion rights for the notes described in this Note 5 – Notes Payable – Convertible Notes – Embedded Conversion options and ~~a trust related~~Note Provisions were rescinded and were subject to the ~~director (the “Trust”) agreed that promissory notes held by~~conversion rights outlined above. As a result of the ~~director and~~chapter 11 reorganization, pursuant to ASC 852, Reorganizations, the ~~Trust~~Company has recorded all prepetition liabilities at the expected allowable claim amounts as of September 30, 2020. This resulted in the ~~outstanding principal amounts~~Company amortizing the remaining debt discount of ~~$175,000 and $500,000, respectively, will be exchanged for shares~~$2,583,107 to interest expense on the unaudited condensed consolidated statements of common stock and warrants, as described below, in connection with the Public Offering. The exchange price for the indebtedness will be equal to 75% of the public offering price of the common stock, or units of common stock and warrants, as the case may be, offeredoperations. In addition, pursuant to ASC 852, Reorganizations, as of September 30, 2020, the ~~Public Offering (the “Director/Trust Exchange Price”). The number of shares of common stock issuable pursuant~~Company has reclassified the outstanding prepetition notes payable to the warrants to be issued to the director and the Trust will be in the same ratio to the number of shares of common stock issued upon exchange of their indebtedness as the number of shares of common stockliabilities subject to ~~any warrants included as part of units offered pursuant to~~compromise on the Public Offering (the “Public Warrants”) bears to the number of shares of common stock issued as part of the Public Offering units. The exercise price of the warrants to be issued to the director and the Trust will be 125% of the Director/Trust Exchange Price and the term of the warrants will be the same term as the Public Warrants. Concurrently with the exchange, the exercise prices of outstanding warrants held by the director and the Trust for the purchase of an aggregate of 1,377,842 shares of common stock of the Company will be reduced from between $1.50 and $4.00 per share to $0.75 per share and the expiration dates of such warrants will be extended from between December 2019 and March 2022 to December 2023. The exchange agreements were submitted for approval by the shareholders of the Company, which was obtained in August 2019.consolidated balance sheets.

Related Party Notes

As of September 30, 2020 and December 31, 2019, related party notes consisted of notes payable issued to certain directors of the Company, family members of ~~officers~~an officer of the Company, ~~the SAB Member,~~ and the ~~Trust.~~Tuxis Trust (the “Trust”). A former director and principal ~~shareholder~~stockholder of the Company (the “Director/Principal Stockholder”) serves as a trustee of the Trust, which was established for the benefit of his immediate family.

~~As of~~During the nine months ended September 30, ~~2019, certain related party~~2020, the Company issued to a former board member notes payable in the aggregate principal amount of ~~$485,000 were convertible into shares~~$353,762, which bore interest at the rate of ~~common stock~~12% per annum and provided for original maturity date of ~~the Company at a conversion price~~March 10, 2020. As of ~~$0.60 per share, subject~~September 30, 2020, these notes are in default. Subsequent to ~~adjustment, and a five year warrant (the “Warrant”) for the purchase of a number of shares equal~~September 30, 2020, pursuant to the ~~number of shares issued upon the conversion of the~~Bankruptcy (See Note 10 - Subsequent Events), these notes were exchanged for a Secured Convertible Note in a principal amount of ~~the note. The Warrant provides for an exercise price of $0.80 per share, subject to adjustment.~~$490,698.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~Convertible Notes

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Convertible Notes~~

Issuances

During the nine months ended September 30, ~~2019,~~2020, the Company issued to a certain ~~lenders~~lender a convertible ~~notes~~note payable in the ~~aggregate~~ principal amount of ~~$8,395,075~~$88,000 for aggregate cash proceeds of ~~$7,847,727.~~$85,000 The difference ~~of $547,348~~ was recorded as a debt discount and will be amortized over the ~~terms~~term of the ~~respective notes.~~note. The convertible ~~notes bear~~note bore interest at ~~rates ranging between 8% to 15%~~10% per annum payable at maturity with an original maturity ~~dates ranging between July 2019 through September 2020. In connection with~~date of January 31, 2021. The outstanding principal and accrued interest was convertible after 180 days at a conversion price of 61% of the ~~issuance of a certain~~lowest daily volume weighted average price over the twenty days prior to the conversion date. The convertible note contained a cross-default provision and was in default as of September 30, 2020. As a result, the ~~Company issued~~convertible note bore a default interest of 22% per annum. Subsequent to September 30, 2020, pursuant to the ~~lender 68,873 shares~~Bankruptcy (see Note 10 - Subsequent Events), the convertible note, in the aggregate amount of $155,000 (including principal and accrued interest), was exchanged for 15,500,000 chares of the Company’s common stock and the relative fair value of $54,168 was recorded as debt discount and is being amortized over the term of the note. In connection with the issuance of certain convertible notes, the Company issued the lenders five-year warrants to purchase an aggregate of 295,000 shares of the Company’s common stock at exercise prices ranging from $0.45 per share to $1.00 per share. The aggregate grant date value of the warrants was $104,198, which was recorded as debt discount and is being amortized over the terms of the respective convertible notes. The warrants were subject to the Company’s sequencing policy and, as a result, were initially recorded as derivative liabilities.stock. See below within ~~this~~ Note ~~5 – Notes Payable – Convertible Notes – Conversions, Exchanges and Other and Note 8 –~~7- Derivative Liabilities for additional details regarding the ~~ECOs~~ECO of the convertible ~~notes.~~note.

During the nine months ended September 30, 2019, a certain convertible note in the principal amount of $148,014 was issued concurrently with the extinguishment of a certain other note payable in the same principal amount. See below within this Note 5 – Notes Payable – Convertible Notes – Conversions, Exchanges and Other ~~for additional details.~~

~~Embedded Conversion Options and Note Provisions~~

As of September 30, 2019, outstanding convertible notes in the aggregate principal amount of $4,381,076 were convertible into shares of common stock of the Company as follows: (i) $2,355,076 of aggregate principal amount of convertible notes were convertible at a fixed price ranging from $0.25 to $2.00 per share for the first six months following the respective issue date, and thereafter at a conversion price generally equal to 58% of the fair value of the Company’s stock, subject to adjustment, until the respective note has been paid in full, (ii) 1,046,000 of aggregate principal amount of convertible notes were convertible generally at a range of 58% to 65% of the fair value of the Company’s stock, subject to adjustment, depending on the note, and (iii) $980,000 of aggregate principal amount of convertible notes were convertible into shares of common stock of the Company at a conversion price ranging from $0.50 to $0.60 per share, subject to adjustment, and five-year warrants to purchase common stock of the Company in the same ratio. The warrants provide for an exercise price ranging from $0.75 to $0.80 per share, subject to adjustment. Convertible notes in the aggregate principal amount of $990,000 provide for a mandatory conversion into common stock of the Company and warrants to purchase common stock of the Company in the same ratio upon the completion of an underwritten public offering by the Company of its securities whereby the conversion price shall be equal to the lower of the respective original conversion terms, or 75% of the offering price for the shares of common stock of the Company, or units of shares of common stock of the Company and warrants, as the case may be, sold pursuant to the public offering. The Company analyzes the ECOs of its convertible notes at issuance to determine whether the ECO should be bifurcated and accounted for as a derivative liability or if the ECO contains a beneficial conversion feature. See below within this Note 5 – Notes Payable – Convertible Notes – Embedded Conversion Options and Note Provisions and Note 8 – Derivative Liabilities for additional details regarding the ECOs of the convertible notes. Also see Note 9 – Subsequent Events.

As of September 30, 2019, a portion of convertible notes with an aggregate principal balance of $2,955,000, which were not yet convertible, will become convertible into shares of the Company’s common stock subsequent to September 30, 2019 at a conversion price generally equal to 58% of the fair value of the Company’s stock, subject to adjustment, until the respective notes have been paid in full.

As of September 30, 2019, outstanding convertible notes in the aggregate principal amount of $4,325,075 have prepayment premiums, whereby, in the event that the Company elects to prepay certain notes during the one hundred eighty-day period following the issue date, the respective holder is entitled to receive a prepayment premium of up to 35%, depending on the note, on the then outstanding principal balance including accrued interest.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

As of September 30, 2019, outstanding convertible notes in the aggregate principal amount of $4,252,688 have most favored nation (“MFN”) provisions, whereby, so long as such respective note is outstanding, upon any issuance by the Company of any security with certain identified provisions more favorable to the holder of such security, then at the respective holder’s option, those more favorable terms shall become a part of the transaction documents with the holder. As of September 30, 2019, notes with applicable MFN provisions were convertible using MFN conversion prices equal to 58% of the fair market value of the Company’s stock, as defined.

During the nine months ended September 30, 2019, the Company determined that certain ECOs of issued or extended convertible notes were derivative liabilities. The aggregate issuance date value of the bifurcated ECOs was $3,990,135, of which $3,576,028 was recorded as a debt discount and is being amortized over the terms of the respective convertible notes and $414,108 was recognized as part of an extinguishment loss as described below. See Note 8 – Derivative Liabilities for additional details.

~~Conversions, Exchanges and Other~~

During the nine months ended September 30, ~~2019,~~2020, the Company and certain lenders exchanged ~~certain~~ convertible notes with bifurcated ECOs with an ~~aggregate~~aggegate net carrying amount of ~~$4,255,838~~$1,580,587 (including an aggregate of ~~$2,032,323~~$523,516 of principal less debt discount of ~~$455,969, $122,111~~$234,301, $126,043 of accrued interest and ~~$2,557,373~~$1,165,329 related to the separated ECOs accounted for as derivative liabilities) for an aggregate of ~~9,634,376~~1,515,799,750 shares of the Company’s common stock at conversion prices ranging from ~~$0.11 to $0.43~~$0.0001 and $0.01 per share. The common stock had an aggregate exchange date value of $4,739,017 and, as a result, the Company recorded a loss on extinguishment of notes payable of $483,179. See Note 8 – Derivative Liabilities for additional details.

During the nine months ended September 30, 2019, the Company repaid an aggregate principal amount of $3,484,105 of convertible notes payable, $209,486 of the respective aggregate accrued interest and an aggregate of $813,730 of prepayment premiums. As a result of the repayments, the Company recorded a loss on extinguishment of notes payable of $1,242,669 and an aggregate of $428,939 of the related debt discounts were extinguished.

~~During the nine months ended September 30, 2019, a certain lender~~In addition, prior to the ~~Company acquired a promissory note (classified in Other Notes) issued by the Company in the~~Petition Date, certain lenders intended to exchange outstanding ~~amount of $148,014~~debt (inclusive of accrued ~~interest reclassified~~interest) for shares of the Company’s common stock; however, the Company did not have sufficient shares authorized or reserved to ~~principal~~effect the exchanges. As such, the outstanding debt was exchanged as part of ~~$23,013) from a certain lender to~~ the ~~Company. The Company exchanged the acquired note for a new convertible note in the principal amount of $148,014 which accrues interest~~Plan at a rate of ~~12% per annum, payable on the maturity date in March 2020. The ECO~~100 shares for each dollar of the ~~note was subject to sequencing and~~allowable claim at the issuance date fair value of $84,798 was accounted for as a derivative liability (see Note 8 – Derivative Liabilities for additional details). Since the fair value of the new ECO exceeded 10% of the principal amount of the new note, the note exchange was accounted for as an extinguishment, and accordingly the Company recognized a net loss on extinguishment of $90,994 in connection with the derecognition of the net carrying amount of $141,818 of the extinguished debt and the issuance of the new convertible notes in the aggregate principal amount $148,014 plus the fair value of the new note’s ECO of an aggregate of $84,798.

During the nine months ended September 30, 2019, the Company and certain lenders agreed to extend or further extend the maturity dates of certain convertible notes payable with an aggregate principal balance of $678,102 from maturity dates ranging from June 2019 to July 2019 to new maturity dates ranging from July 2019 to July 2020. In consideration of the extensions of certain convertible notes with an aggregate principal balance of $650,000, the Company modified the conversion terms of the lenders’ notes to provide for a mandatory conversion into common stock of the Company and a five-year warrant to purchase common stock of the Company in the same ratio upon the completion of an underwritten public offering by the Company of its securities, whereby, the conversion price shall be equal to the lower of the respective original conversion terms, or 75% of the offering price for the shares of common stock of the Company, or units of shares of common stock of the Company and warrants, as the case may be, sold pursuant to the public offering. Since the fair value of the new ECO exceeded 10% of the carrying amount of the debt, the note extensions were accounted for as extinguishments, and accordingly the Company recognized an aggregate net loss on extinguishment of $329,310 in connection with the derecognition of the net carrying amount of the extinguished debt of $702,387 (inclusive of $650,000 of principal and $52,387 of accrued interest) and the issuance of the new convertible notes in the same amount, plus the fair value of the new notes’ ECOs of an aggregate of $329,310. See Note 9 – Subsequent Events.

In October 2019, the Company and certain lenders agreed to further extend the maturity dates of certain convertible notes payable with an aggregate principal balance of $150,000 from maturity dates in September 2019 to new maturity dates in October 2019, effective September 30, 2019.

Effective Date.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Other Notes~~

~~Exchange and Other~~Debtor-in-Possession Financing

During the nine months ended September 30, ~~2019,~~2020, and subsequent to the Petition Date, in connection with the Chapter 11 Case, the Company received debtor-in-possession loans of $1,114,713 in the aggregate from Auctus.

The proceeds from the DIP Funding were used (a) for working capital and other general purposes of the Company; (b) United States Trustee fees; (c) Bankruptcy Court approved professional fees and other administrative expenses arising in the Chapter 11 Case; and (d) interest, fees, costs and expenses incurred in connection with the DIP Funding, including professional fees.

The maturity date of the DIP Funding was to be the earliest to occur of (a) July 6, 2020; (b) ten days following entry of an order confirming a ~~certain lender agreed~~chapter 11 plan in the Chapter 11 Case; (c) ten days following the entry of an order approving the sale of the Company or the Company’s assets; or (d) the occurrence of an event of default under the promissory note evidencing the DIP Funding (the “DIP Note”) following any applicable grace or cure periods.

Interest on the outstanding principal amount of the DIP Note was to ~~an extension of~~be payable in arrears on the maturity date at the rate of 8% per annum. Upon the occurrence and during the continuance of an event of default, all obligations under the DIP Note were to bear interest at a ~~certain note payable with a principal balance of $125,000 from a maturity date in January 2019~~rate equal to ~~a new maturity date in December 2019. In consideration of~~ the extension, the Company issued the lender 10,000 shares of the Company’s common stock. The issuance date fair value of the common stock of $7,052 was recorded as debt discount and is being amortized over the remaining term of the note.then current rate plus an additional 2% per annum.

During the nine months ended September 30, 2019, a convertible promissory note in the principal amount of $148,014 was issued concurrently with the extinguishment of a certain other note payable in the same principal amount. See above within Note 5 – Notes Payable – Convertible Notes – Conversions, Exchanges and Other for additional details.

~~During the nine months ended September 30, 2019, the Company partially repaid a certain promissory note in the principal amount of $7,500.~~

~~Note 6 – Commitments and Contingencies~~

~~Consulting Agreements~~

~~Business Advisory Services~~

In January 2019, an agreement for business advisory services that had expired on December 31, 2018 was further extended and now provides for an expiration date of December 31, 2019. In consideration of the extension of the term of the consulting agreement, the Company issued to the consultant a five-year, immediately vested warrant for the purchase of 100,000 shares of the Company’s common stock at an exercise price of $1.00 per share. The grant date value of the warrant of $56,000 was recognized immediately as stock-based compensationInterest expense which is reflected as consulting expense in the unaudited condensed consolidated financial statements. The warrant was subject to the Company’s sequencing policy and, as a result, was originally recorded as a derivative liability. See Note 8 – Derivative Liabilities for additional details.

~~Operating Lease~~

The Company is a party to a lease for 6,800 square feet of space located in Melville, New York (the “Melville Lease”) with respect to its corporate and laboratory operations. The Melville Lease was scheduled to expire in March 2020 (subject to extension at the option of the Company for a period of five years) and calls for an annual base rental during the initial term ranging between $132,600 and $149,260. In June 2019, the Company exercised its option to extend the Melville Lease and entered into a lease amendment with the lessor whereby the five-year extension term will commence on January 1, 2020 with annual base rent ranging between $153,748 and $173,060.

~~The Company’s rent expense amounted to approximately $20,000 and $74,000~~ for the three and nine months ended September 30, ~~2019,~~2020, related to the DIP Funding was $19,080 and $25,849, respectively.

Pursuant to the Plan, the obligation to Auctus with respect to the DIP Funding has been exchanged for a Second Convertible Note (See Note 10 – Subsequent Events).

NOTE 6 – Stockholders’ DEFICIT

Authorized Capital

Subsequent to September 30, 2020 and pursuant to the Chapter 11 plan of reorganization (see Note 10 - Subsequent Events), the Company filed a Certificate of Amendment to its Certificate of Incorporation pursuant to which, among other things, the number of shares of common stock authorized to be issued by the Company has been increased to 300,000,000,000 and the par value of the shares of its common stock has been reduced to $0.0001 per share. The ~~Company’s rent expense amounted to approximately $31,000 and $92,000~~effect of the change in par value has been reflected in the statement of changes in stockholders’ deficit for the three and nine months ended September 30, ~~2018, respectively. Rent expense is reflected in general~~2020 and ~~administrative expenses and research and development expenses in the unaudited condensed consolidated statements of operations.~~2019.

~~Litigations, Claims and Assessments~~

In the normal course of business, the Company may be involved in legal proceedings, claims or assessments arising from the ordinary course of business, and as of September 30, 2019, none are expected to materially impact the Company’s financial position.

~~The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Bonus Accruals~~

As of December 31, 2018, the Company had remaining accruals of approximately $91,000 for bonus milestones that were achieved in prior years and remained unpaid. As of September 30, 2019, the remaining accruals for bonus milestones achieved in prior years had been paid in full. In April 2019, the Company’s Compensation Committee and Board of Directors approved performance goals associated with cash bonuses payable to certain officers for the year ending December 31, 2019 and, as a result, the Company accrued $39,114 for 2019 cash bonuses as of September 30, 2019 which were probable to be achieved.

~~Arena Investors~~

In July 2019, the Company entered into a securities purchase agreement (the “Arena Purchase Agreement”) with Arena Investors LP (“Arena”) pursuant to which Arena had agreed to acquire 5,500,000 shares of Series A preferred stock, par value $0.01 per share, of the Company, a warrant for the purchase of 6,000,000 shares of common stock, par value $0.001 per share, of the Company and a convertible promissory note of the Company in the principal amount of $500,000, in consideration of a payment by Arena to the Company of an aggregate of $5,400,000. The closing of the Arena Purchase Agreement was subject to, among other things, approval by the shareholders of the Company of the Arena Purchase Agreement (which was obtained in August 2019) and the transactions contemplated thereby, the concurrent execution of an underwriting agreement with regard to the Public Offering and approval by the Nasdaq Stock Market of the Company’s pending listing application with respect to its shares of common stock. The Arena Purchase Agreement provided that it could be terminated by either party if the closing did not occur by October 31, 2019. On November 1, 2019, the Arena Purchase Agreement was terminated.

~~Note 7 – Stockholders’ Deficiency~~

~~Authorized Capital and 2010 Equity Plan~~

In March 2019, the Board of Directors of the Company approved an increase in the number of authorized shares of common stock to 150,000,000, subject to shareholder approval. Additionally, the Board of Directors approved an increase in the number of authorized shares issuable under the Company’s 2010 Equity Participation Plan to 20,000,000, subject to shareholder approval. In May 2019, such shareholder approval was obtained.

In March 2019, the Board of Directors determined to submit to the Company’s shareholders for their approval amendments to the Certificate of Incorporation of the Company (with the Board of Directors having the authority to select and file one such amendment) to effect a reverse split of the Company’s common stock at a ratio of not less than 1-for-2 and not more than 1-for-20, with the Board of Directors having the discretion as to whether or not the reverse stock split is to be effected, and with the exact ratio of any reverse stock split to be set at a whole number within the above range as determined by the Board of Directors in its discretion. Concurrently, the Board of Directors determined to submit to the Company’s shareholders for their approval a proposal to authorize the Board of Directors, in the event the reverse stock split proposal is approved by the shareholders, in its discretion, to reduce the number of authorized shares of common stock in proportion to the percentage decrease in the number of outstanding shares of common stock resulting from the reverse split (or a lesser decrease in authorized shares of common stock as determined by the Board of Directors in its discretion). In May 2019, the Company’s shareholders approved the foregoing proposals.

See Note 9 – Subsequent Events regarding the approval by the Board of Directors and shareholders of an increase in the number of authorized shares of common stock to 300,000,000, as well as the grant to the Board of Directors of authority to adopt an amendment to the Certificate of Incorporation of the Company to effect a reverse split of the Company’s common stock at a ratio of not less than 1-for-2 and not more than 1-for-100.

~~Compensatory Common Stock Issuance~~

~~During the nine months ended September 30, 2019, the Company issued 75,000 shares of immediately vested common stock valued at $30,000 to a consultant for services rendered.~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Warrant and Option Valuation

The Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model. The expected term used for warrants and options issued to non-employees is the contractual life and the expected term used for options issued to employees and directors is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

Common Stock and Warrant ~~Offerings~~Offering

During the nine months ended September 30, ~~2019,~~2020, the Company issued ~~an aggregate of 2,191,111~~1,000,000 shares of the Company’s common stock ~~of the Company,~~and a five-year immediately vested ~~warrants to~~warrant for the purchase ~~an aggregate~~ of ~~1,135,556~~1,000,000 shares of the Company’s common stock of the Company at exercise prices ranging from $0.85 per share to $1.00 per share and one-year immediately vested warrants to purchase an aggregate of 1,055,555 shares of common stock of the Company atwith an exercise price of ~~$0.70~~$0.015 per share to a certain ~~investors~~investor for ~~aggregate~~ gross proceeds of ~~$1,156,000.~~$10,000. The warrants had an aggregate grant date fair value of ~~$899,689.~~$10,000. The warrants were subject to the Company’s sequencing policy and, as a result, were initially recorded as derivative liabilities. See Note ~~8 –~~7 - Derivative Liabilities for additional details. ~~Also see Note 9 – Subsequent Events.~~

~~Stock Warrants~~

~~Warrant Compensation~~

~~See Note 6 – Commitments and Contingences for additional details associated with the issuance of a warrant in connection with a consulting agreement extension.~~

The Company recorded stock–based compensation expense of $0 and $56,000 for the three and nine months ended September 30, 2019, respectively, related to stock warrants issued as compensation, which is reflected as consulting expense in the unaudited condensed consolidated statements of operations. For the three and nine months ended September 30, 2018, the Company recorded stock–based compensation expense of $43,105 and $91,297 respectively, related to stock warrants issued as compensation.

Warrant Activity Summary

In applying the Black-Scholes option pricing model to warrants granted or issued, the Company used the following assumptions:

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Risk free interest rate		1.79% - 1.83	%		2.73% - 2.83	%		1.79% - 2.62	%		1.92% - 2.83	%		0	%		1.79% - 1.83	%		1.63% - 1.63	%		1.79% - 2.62	%
Contractual term (years)		5.00			5.00			1.00 - 5.00			1.98 - 5.00			0.00			5.00			5.00 – 5.00			1.00 - 5.00
Expected volatility		133	%		139	%		133% - 150	%		128% - 139	%		0	%		139	%		202% - 202	%		133% - 150	%
Expected dividends		0.00	%		0.00	%		0.00	%		0.00	%

The weighted average estimated fair value of ~~the~~ warrants granted during the three ~~and nine~~ months ended September 30, 2020 and 2019 was ~~approximately~~$- and $0.28 ~~and $0.41~~ per share, respectively. The weighted average estimated fair value of the warrants granted during the ~~three and~~ nine months ended September 30, ~~2018~~2020 and 2019 was approximately ~~$1.24~~$0.01 and ~~$1.23~~$0.41 per share, respectively.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

A summary of the warrant activity during the nine months ended September 30, ~~2019~~2020 is presented below:

Weighted
Weighted Average
Average Remaining Aggregate
Number of Exercise Life Intrinsic
Warrants Price In Years Value
Outstanding, January 1, 2019 3,483,403 $ 3.63
Issued 2,586,111 0.77
Expired (264,623 ) 5.41
Outstanding, September 30, 2019 5,804,891 $ 2.27 2.1 $ -

Exercisable, September 30, 2019 5,804,891 $ 2.27 2.1 $ -

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Life		Intrinsic
	Warrants			Price		In Years		Value
Outstanding, January 1, 2020		8,379,177		$	1.43
Granted		1,000,000			0.01
Exercised		-			-
Forfeited		(1,394,386	)		1.74
Outstanding, September 30, 2020		7,984,791		$	1.20		3.3	$	-

Exercisable, September 30, 2020		7,984,791		$	1.20		3.3	$	-

The following table presents information related to stock warrants at September 30, ~~2019:~~2020:

Warrants Outstanding Warrants Exercisable
Weighted
Outstanding Average Exercisable
Exercise Number of Remaining Life Number of
Price Warrants In Years Warrants
$ 0.45 - $0.99 2,586,111 2.9 2,586,111
$ 1.00 - $1.99 844,444 0.3 844,444
$ 2.00 - $2.99 75,000 4.1 75,000
$ 3.00 - $3.99 70,000 3.8 70,000
$ 4.00 - $4.99 1,965,457 1.7 1,965,457
$ 5.00 - $5.99 182,667 1.7 182,667
$ 6.00 - $7.99 40,000 0.8 40,000
$ 8.00 - $9.99 2,500 0.2 2,500
$ 10.00 - $15.00 38,712 0.6 38,712
5,804,891 2.1 5,804,891

~~See Note 9 – Subsequent Events.~~

Warrants Outstanding			Warrants Exercisable
			Weighted
	Outstanding		Average		Exercisable
Exercise	Number of		Remaining Life		Number of
Price	Warrants		In Years		Warrants
$0.00 - $0.015		1,000,000		4.3		1,000,000
$0.20 - $1.99		5,106,746		3.7		5,106,746
$2.00 - $2.99		75,000		3.1		75,000
$3.00 - $3.99		70,000		2.8		70,000
$4.00 - $4.99		1,535,378		1.1		1,535,378
$5.00 - $5.99		182,667		0.7		182,667
$6.00 - $7.99		15,000		0.2		15,000
		7,984,791		3.3		7,984,791

Stock Options

In applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Risk free interest rate		1.47	%		2.74	%		1.47% - 2.72%			2.44% - 2.74	%		0	%		1.47	%		0	%		1.47% - 2.72	%
Expected term (years)		10.00			5.01			10.00			5.01 - 9.69
Contractual term (years)														0.00			10.00			0.00			10.00
Expected volatility		133	%		139	%		133% - 140%			129% - 139	%		0	%		133	%		0	%		133% - 140	%
Expected dividends		0.00	%		0.00	%		0.00	%		0.00	%

The Company did not issue stock options during the nine months ended September 30, 2020.

The weighted average estimated fair value of the stock options granted during the ~~three and~~ nine months ended September 30, 2019 was approximately $0.25 and $0.36 per share, respectively. The weighted average estimated fair value of the stock options granted during the three and nine months ended September 30, 2018 was approximately $1.42 and $2.92 per share, respectively.

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

In January 2019, the Company issued the Chairman of the Disc Committee of its Scientific Advisory Board (the “Disc Committee Chairman”) a ten-year option to purchase up to 70,000 shares of the Company’s common stock at an exercise price of $1.00 per share. The options vest ratably over three years on the issuance date anniversaries. The grant date value of the option of $44,247 will be recognized over the expected vesting period as consulting expense in the unaudited condensed consolidated statements of operations.

In March 2019, the Board of Directors reduced the exercise price of outstanding stock options for the purchase of an aggregate of 4,631,700 shares of common stock of the Company (with exercise prices ranging between $1.00 and $4.70 per share) to $0.75 per share, which was the closing price for the Company’s common stock on the day prior to determination, as reported by the OTCQB market. The exercise price reduction related to options held by, among others, the Company’s officers, directors, advisors and employees. The incremental value of the modified options compared to the original options, both valued as of the respective modification date, of $452,637 is being recognized over the vesting term of the options, which will be reflected as consulting, research and development, and general and administrative expenses in the amounts of $187,861, $56,856 and $207,920, respectively, in the unaudited condensed consolidated statements of operations.

In August 2019, the Company issued the Disc Committee Chairman an immediately vested ten-year option to purchase up to 175,000 shares of the Company’s common stock at an exercise price of $0.26 per share. The grant date value of the option of $43,141 was immediately recognized as consulting expense in the unaudited condensed consolidated statements of operations.$44,247.

A summary of the option activity during the nine months ended September 30, ~~2019~~2020 is presented below:

Weighted
Weighted Average
Average Remaining Aggregate
Number of Exercise Life Intrinsic
Options Price In Years Value
Outstanding, January 1, 2019 4,703,785 $ 1.04
Granted 245,000 0.40
Forfeited (39,167 ) 1.49
Outstanding, September 30, 2019 4,909,618 $ 1.01 7.4 $ -

Exercisable, September 30, 2019 3,532,455 $ 1.11 6.7 $ -

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Life		Intrinsic
	Options			Price		In Years		Value
Outstanding, January 1, 2020		4,879,617		$	0.99
Granted		-			-
Forfeited		(12,000	)		1.98
Outstanding, September 30, 2020		4,867,617		$	0.98		6.4	$	-

Exercisable, September 30, 2020		4,122,956		$	1.03		6.1	$	-

The following table presents information related to stock options at September 30, ~~2019:~~2020:

Options Outstanding Options Exercisable
Weighted
Outstanding Average Exercisable
Exercise Number of Remaining Life Number of
Price Options In Years Options
$ 0.26 - $0.74 175,000 9.9 175,000
$ 0.75 - $0.99 4,623,367 6.7 3,246,204
$ 1.00 - $5.99 38,751 0.6 38,751
$ 6.00 - $19.99 37,500 4.3 37,500
$ 20.00 - $30.00 35,000 2.5 35,000
4,909,618 6.7 3,532,455

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Options Outstanding			Options Exercisable
			Weighted
	Outstanding		Average		Exercisable
Exercise	Number of		Remaining Life		Number of
Price	Options		In Years		Options
$0.26 - $0.74		175,000		8.9		175,000
$0.75 - $0.99		4,615,117		6.1		3,863,456
$1.00 - $5.99		5,000		3.7		5,000
$6.00 - $19.99		37,500		3.3		37,500
$20.00 - $30.00		35,000		1.5		35,000
		4,867,617		6.1		4,115,956

The following table presents information related to stock option expense:

																								Weighted
												Weighted												Average
												Average												Remaining
	For the Three Months Ended					For the Nine Months Ended				Unrecognized at		Remaining Amortization		For the Three Months Ended				For the Nine Months Ended				Unrecognized at		Amortization
	September 30,					September 30,				September 30,		Period		September 30,				September 30,				September 30,		Period
	2019		2018			2019		2018		2019		(Years)		2020		2019		2020		2019		2020		(Years)
Consulting	$	34,021	$	163,757		$	505,669	$	669,574	$	147,392		1.1	$	33,594	$	34,021	$	100,772	$	505,669	$	11,190		0.1
Research and development		106,085		98,148			352,017		242,586		329,604		1.6		32,669		106,085		154,226		352,017		110,038		1.0
General and administrative		93,939		(488,463	)		548,840		523,089		539,921		1.1		118,503		93,939		370,913		548,840		42,224		0.5
	$	234,045	$	(226,558	)	$	1,406,526	$	1,435,249	$	1,016,917		1.3	$	184,766	$	234,045	$	625,911	$	1,406,526	$	163,452		0.8

~~Contemplated Public Offering~~NOTE 7 – DERIVATIVE LIABILITIES

The following table sets forth a summary of the changes in the fair value of Level 3 derivative liabilities that are measured at fair value on a recurring basis:

Beginning balance as of January 1, 2020	$	915,959
Issuance of derivative liabilities		2,483,532
Extinguishment of derivative liabilities in connection with convertible note repayments and exchanges		(1,165,329	)
Change in fair value of derivative liabilities		2,141,069
Write-off of derivative liabilities pursuant to ASC 852		(4,375,231	)
Ending balance as of September 30, 2020	$	-

In applying the Multinomial Lattice and Black-Scholes option pricing models to derivatives issued and outstanding during the three and nine months ended September 30, 2020 and 2019, the Company ~~has filed a registration statement~~used the following assumptions:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Risk free interest rate		0.00	%		1.54% - 2.16	%		0.06% – 2.16	%		1.54% - 2.62	%
Contractual term (years)		0			0.08 - 5.00			0.12 – 5.00			0.02 - 5.00
Expected volatility		0.00	%		91% - 133	%		101% - 133	%		91% - 156	%

During the nine months ended September 30, 2020, the Company recorded new derivative liabilities in the aggregate amount of $2,473,532 and $10,000 related to the ECOs of certain convertible notes payable and warrants subject to sequencing, respectively. See Note 5 – Notes Payable – Convertible Notes for additional details. See Note 6 – Stockholders’ Deficit for warrants issued and deemed to be derivative liabilities.

During the nine months ended September 30, 2020, the Company extinguished an aggregate of $1,165,329 of derivative liabilities in connection with the ~~Securities~~exchanges of certain convertible notes payable into shares of the Company’s common stock. See Note 5 – Notes Payable – Conversions, Exchanges and ~~Exchange Commission with regard to~~Other for additional details.

During the ~~contemplated public offering of its equity securities. The registration statement has not yet become effective. These securities may not be sold nor may offers to buy be accepted~~nine months ended September 30, 2020 and prior to the ~~time~~Petition Date, the ~~registration statement becomes effective. This Form 10-Q shall not constitute an offer~~Company recomputed the fair value of ECOs recorded as derivative liabilities to ~~sell or~~be $4,375,231. The Company recorded a loss on the ~~solicitation of an offer to buy, nor shall there be any sale~~change in fair value of these ~~securities~~derivative liabilities of $2,141,069.

During the nine months ended September 30, 2020 and subsequent to the Petition Date, pursuant to ASC 852, Reorganziations, the Company wrote-off $4,375,231 of derivative liabilities related to the convertible notes included in ~~any state or jurisdiction~~the Chapter 11 Reorganization allowable claims. The Company recorded the write-off in ~~which such offer, solicitation or sale would be unlawful prior to registration or qualification under~~reorganization items, net on the ~~securities laws~~unaudited condensed consolidated statement of ~~any such state or jurisdiction. The contemplated public offering~~operations as of ~~the Company’s securities will be made only by means of a prospectus. No assurances can be given that the contemplated public offering will be completed on reasonable terms or otherwise.~~September 30, 2020.

Note 8 ~~– Derivative Liabilities~~- COMMITMENTS AND CONTINGENCIES

Litigation, Claims and Assessments

Coventry Enterprises, LLC

On February 11, 2020, pursuant to an Order to Show Cause of the United States District Court of the Eastern District of New York (the “Court”), in the matter of Coventry Enterprises, LLC vs. BioRestorative Therapies, Inc., pending the hearing of the plaintiff’s application for a preliminary injunction, the Court issued a temporary restraining order enjoining the Company from issuing any additional shares of stock except for purposes of fulfilling the plaintiff’s share reserve requests or conversion requests until such reserve requests were fulfilled and enjoining the Company from reserving authorized shares for any other party until the plaintiff’s reserve requests were fulfilled. Pursuant to a hearing held on February 13, 2020, the temporary restraining order with regard to the Company issuing shares of common stock was not continued.

On March 11, 2020, the Court ordered that the Company (i) convene and hold a special meeting, by no later than March 18, 2020, of the Board of Directors of the Company (the “Board”), for approval of certain changes to the shares of the Company, as set forth below; (ii) approve a reverse split and/or a stock consolidation, solely of the Company’s outstanding shares, at a ratio of 1,000 to 1, (iii) approve of the continuation of the Company’s then total authorized shares of common stock at 2,000,000,000 shares; and (iv) to call a special meeting of stockholders of the Company, within ten days of the special meeting of the Board and by not later than March 25, 2020, to approve the foregoing. On March 18, 2020, the Board considered the matter, and, based upon the Court order, determined to approve the foregoing items, including the 1,000 to 1 reverse split, subject to the Company having available funds to effectuate such items. As discussed above in this Note 13 under “Chapter 11 Reorganization,” on March 20, 2020, the Company filed a petition commencing its Chapter 1 Case. As of the date of this report, the Company has not effected the reverse split.

The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

Bonus Accruals

As of September 30, 2020 and December 31, 2019, the Company had remaining accruals of approximately $0 and $39,000, respectively, for bonus milestones which were achieved in prior years and remain unpaid.

Appointment or Departure of Directors and Certain Officers

The ~~following table sets forth a summary~~Company and Mark Weinreb, its former Chief Executive Officer (“Former CEO”), were parties to an employment agreement that, as amended, was to expire on December 31, 2019. Pursuant to the employment agreement, as amended, in the event that (a) the Former CEO’s employment was terminated by the Company without cause, or (b) the Former CEO terminated his employment for “good reason” (each as defined in the employment agreement), or (c) the term of the ~~changes~~Former CEO’s employment agreement was not extended beyond December 31, 2019 and within three months of such expiration date, his employment was terminated by the Company without “cause” or the Former CEO terminated his employment for any reason, the Former CEO was to be entitled to receive severance in an amount equal to his then annual base salary and certain benefits, plus $100,000 (in lieu of bonus). Further, in the ~~fair value~~event that the Former CEO’s employment was terminated by the Company without cause, or the Former CEO terminated his employment for “good reason”, following a “change in control” (as defined in the employment agreement), the Former CEO would be entitled to receive severance in an amount equal to one and one-half times his then annual base salary and certain benefits, plus $300,000 (in lieu of ~~Level 3 derivative liabilities~~bonus). Additionally, as part of the amended employment agreement, the Former CEO was entitled to new performance-based cash bonuses payable for the years ending December 31, 2018 and 2019, such that ~~are measured at fair value~~an aggregate of up to 50% of the Former CEO’s then annual base salary per annum could be earned for such year pursuant to the satisfaction of such goals. The Former CEO resigned his employment with the Company on November 16, 2020, the effective date of the Chapter 11 reorganization. Based upon such termination of employment, the Former CEO was entitled to receive his severance of $400,000 and certain benefits plus $100,000, and the option accelerations as discussed above. The severance amount was generally considered an unsecured claim in the Company’s Chapter 11 Case and the Former CEO received shares of the Company’s common stock in exchange for such claim in a ~~recurring basis:~~manner consistent with other unsecured creditors.

Beginning balance as of January 1, 2019 $ 1,094,607
Issuance of derivative liabilities 5,195,089
Extinguishment of derivative liabilities in connection with convertible note repayments and exchanges (2,557,373 )
Change in fair value of derivative liabilities 268,350
Reclassification of derivative liabilities to equity (2,809,565 )
Ending balance as of September 30, 2019 $ 1,191,108

On March 16, 2020, the Company and Mark Weinreb, its Chief Executive Officer, entered into an agreement pursuant to which, among other matters, the term of his employment agreement with the Company was extended to the earlier of (i) September 30, 2020 or (ii) the effective date of a plan of liquidation of the Company.

In applying the Multinomial Lattice and Black-Scholes option pricing models to derivatives issued and outstanding during the three and nine months ended September 30, 2019 and 2018, the Company used the following assumptions:Conversion of Convertible Notes

For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Risk free interest rate 1.54% - 2.16 % 1.93% - 2.94 % 1.54% - 2.62 % 1.22% - 2.94 %
Expected term (years) 0.08 - 5.00 0.25 - 5.00 0.02 - 5.00 0.25 - 5.00
Expected volatility 91% - 133 % 120% - 208 % 91% - 156 % 100% - 208 %
Expected dividends 0.00 % 0.00 % 0.00 % 0.00 %

During the nine months ended September 30, 2020, certain lenders requested to exchange a portion of their outstanding convertible note principal and accrued interest for shares of the Company’s common stock. As of the Petition Date these shares had yet to be issued to the lenders; however, the shares of the Company’s common stock issued for unsecured claims as part of the Plan to the certain lenders represented the aggregate unsecured claims less the principal and accrued interest that was represented in the uneffected exchanges. The Company believes that there may be a potential contingency related to the non-issued shares that would be settled in shares of the Company’s common stock and not monetary compensation.

Note 9 - LEASES

With the adoption of ASC 842, operating lease agreements are required to be recognized on the balance sheet as ROU assets and corresponding lease liabilities.

The Company is a party to a lease for 6,800 square feet of space located in Melville, New York (the “Melville Lease”) with respect to its corporate and laboratory operations. The Melville Lease was scheduled to expire in March 2020 (subject to extension at the option of the Company for a period of five years) and provided for an annual base rental during the initial term ranging between $132,600 and $149,260. In June 2019, the Company ~~recorded new derivative~~exercised its option to extend the Melville Lease and entered into a lease amendment with the lessor whereby the five-year extension term commenced on January 1, 2020 with annual base rent ranging between $153,748 and $173,060.

On August 1, 2019, the Company recognized ROU assets and lease liabilities inof $638,246. The Company elected to not recognize ROU assets and lease liabilities arising from short-term office leases (leases with initial terms of twelve months or less, which are deemed immaterial) on the ~~aggregate amounts~~balance sheets. On June 1, 2019, the Company exercised its right to extend its existing lease of ~~$4,135,200 and $1,059,889 related to the ECOs of certain convertible notes payable and warrants subject to sequencing, respectively. See Note 5 – Notes Payable – Convertible Notes~~office space for an additional ~~details. See Note 6 – Commitments and Contingencies and Note 7 – Stockholders’ Deficiency for warrants issued and deemed to be derivative liabilities.~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~five years.

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at August 1, 2019. The weighted average incremental borrowing rate applied was 12%.

~~During~~The following table presents net lease cost and other supplemental lease information:

	Nine Months Ended September 30 2020
Lease cost
Operating lease cost (cost resulting from lease payments)	$	115,311
Short term lease cost		-
Sublease income		-
Net lease cost	$	115,311

Operating lease – operating cash flows (fixed payments)	$	115,311
Operating lease – operating cash flows (liability reduction)	$	63,132
Non-current leases – right of use assets	$	502,861
Current liabilities – operating lease liabilities	$	97,081
Non-current liabilities – operating lease liabilities	$	447,142

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the nine months ended September 30, 2019, the Company extinguished an aggregate of $2,557,373 of derivative liabilities in connection with repayments and exchanges of certain convertible notes payable into shares of the Company’s common stock. See Note 5 – Notes Payable – Convertible Notes for additional details.2020:

~~During the nine months ended September 30, 2019, the Company reclassified an aggregate of $2,809,565 of derivative liabilities to equity as a result of a change in the sequencing status.~~

On September 30, 2019, the Company recomputed the fair value of ECOs recorded as derivative liabilities to be $1,142,942. The Company recorded a loss on the change in fair value of these derivative liabilities of $145,238 and $584,840 for the three and nine months ended September 30, 2019, respectively.

On September 30, 2019, the Company recomputed the fair value of the derivative liabilities related to outstanding warrants to be $48,166. These warrants are either redeemable for cash equal to the Black-Scholes value, as defined, at the election of the warrant holder upon a fundamental transaction pursuant to the warrant terms or were issued subsequent to the commencement of sequencing. The Company recorded a gain on the change in fair value of these derivative liabilities of $80,201 and $316,490 for the three and nine months ended September 30, 2019, respectively.

Fiscal Year	Operating Leases
Remainder of 2020	$	38,437
2021		158,372
2022		163,132
2023		168,028
2024		173,060
Total future minimum lease payments		701,029
Amount representing interest		(156,806	)
Present value of net future minimum lease payments	$	544,223

Note 910 – ~~Subsequent Events~~SUBSEQUENT EVENTS

~~Authorized Capital~~Chapter 11 Reorganization

~~Subsequent~~On October 30, 2020, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan, as amended. Amendments to ~~September 30, 2019,~~ the ~~Board~~Plan are reflected in the Confirmation Order. On November 16, 2020 (the “Effective Date”), the Plan became effective.

The material features of ~~Directors~~the Plan, as amended and confirmed by the Confirmation Order, are as follows:

Treatment of the financing to the Company by Auctus of up to $7,000,000 which Auctus has provided or committed to provide consisting of the debtor-in-possession loans made to the Company by Auctus during the Chapter 11 Case (the “DIP Funding”) and additional funding as described below.

ii.

Auctus has provided $3,500,000 in funding to the Company (the “Initial Auctus Funding”) and is to provide, subject to certain conditions, additional funding to the Company, as needed, in an amount equal to $3,500,000, less the sum of the debtor-in-possession loans made to the Company by Auctus during the Chapter 11 Case (inclusive of accrued interest) (approximately $1,227,000 as of the Effective Date) and the costs incurred by Auctus as the debtor-in-possession lender (the “DIP Costs”). In addition, four other persons and entitles (collectively, the “Other Lenders”) who held allowed general unsecured claims provided funding to the Company in the aggregate amount of approximately $348,000 (the “Other Funding” and together with the Initial Auctus Funding, the “Funding”). In consideration of the Funding, the Company has issued the following:

Secured convertible notes of the Company (each, a “Secured Convertible Note”) in the principal amount equal to the Funding; the payment of the Secured Convertible Notes is secured by the grant of a security interest in substantially all of the Company’s assets; the Secured Convertible Notes have the following features:

	●	Maturity date of three years following the Effective Date;
	●	Interest at the rate of 7% per annum;
	●	The right of the holder to convert the indebtedness into shares of common stock of the Company at a price equal to the volume weighted average price for the common stock over the five trading days immediately preceding the conversion; and
	●	Mandatory conversion of all indebtedness at such time as the common stock is listed on the Nasdaq Capital Market or another senior exchange on the same terms as provided to investors in connection with a public offering undertaken in connection with such listing;

	b.	Warrants (each, a “Class A Warrant”) to purchase a number of shares of common stock equal to the amount of the Funding provided divided by $0.0005 (a total of 7,000,000,000 Class A Warrants in consideration of the Initial Auctus Funding and a total of approximately 697,000,000 Class A Warrants in the aggregate in consideration of the Other Funding), such Class A Warrants having an exercise price of $0.0005 per share; and

	c.	Warrants (each, a “Class B Warrant” and together with the Class A Warrants, the “Plan Warrants”) to purchase a number of shares of common stock equal to the Funding provided divided by $0.001 (a total of 3,500,000,000 Class B Warrants in consideration of the Initial Auctus Funding and a total of approximately 348,500,000 Class B Warrants in the aggregate in consideration of the Other Funding), such Class B Warrants having an exercise price of $0.001 per share.

iii.

The obligation to Auctus with respect to the DIP Funding has been exchanged for the following:

	a.	A Secured Convertible Note in the principal amount of approximately $1,349,591 (110% DIP Funding) with a maturity date of November 16, 2023;

	b.	A Class A Warrant to purchase 2,453,802,480 shares of common stock; and

	c.	A Class B Warrant to purchase 1,226,901,240 shares of common stock (as to which 382,226,703 shares of common stock have been exercised on a net exercise basis, pursuant to the terms of the Class B Warrant, with respect to the issuance of 361,176,200 shares of common stock).

In addition, Auctus shall be entitled to receive a Secured Convertible Note, a Class A Warrant and a Class B Warrant in exchange for its allowed DIP Costs and allowed Plan costs in a manner in which the DIP Funding was treated.

The claim arising from the secured promissory notes of the Company, ~~approved~~dated February 20, 2020 and February 26, 2020, in the original principal amounts of $320,200 and $33,562, respectively, issued to John Desmarais (“Desmarais”) (collectively, the “Desmarais Notes”), was treated as an ~~increase~~allowed secured claim in the aggregate amount of $490,699 and was exchanged for a Secured Convertible Note in such amount.

	iv.	The claim arising from the promissory note issued in June 2016 by the Company to Desmarais in the original principal amount of $175,000 was treated as an allowed general unsecured claim in the amount of $245,192 and was satisfied and exchanged for 24,519,200 shares of common stock.

	v.	The claim arising from the promissory note issued in June 2016 by the Company to Tuxis Trust, an entity related to Desmarais, in the original principal amount of $500,000 was treated as follows:

	a.	$444,534,43 was treated as an allowed general unsecured claim in such amount and exchanged for 44,453,400 shares of common stock; and

	b.	$309,301 was treated as an allowed secured claim in such amount and exchanged for a Secured Convertible Note in such amount with a maturity date of November 16, 2023.

	vi.	Holders of allowed general unsecured claims (other than Auctus and the Other Lenders) received an aggregate of 1,049,726,797 shares of common stock (in book entry form) in exchange for approximately $10,497,268 in outstanding accounts payable and convertible debt (including accrued interest), with such shares being subject to a leak-out restriction prohibiting each holder from selling, without consent of the Company, more than 33% of its shares during each of the three initial 30 day periods following the Effective Date.

	vii.	Auctus and the Other Lenders have been issued, in respect of their allowed general unsecured claims ($3,261,819 in the case of Auctus and an aggregate of approximately $382,400 in the case of the Other Lenders), a convertible promissory note of the Company (each, an “Unsecured Convertible Note”) in the allowed amount of the claim, which Unsecured Convertible Notes have the following material features:

	a.	Maturity date of three years from the Effective Date;

	b.	Interest at the rate of 5% per annum;

	c.	The right of the holder to convert the indebtedness into shares of common stock at a price equal to the volume weighted average for the common stock over the five trading days immediately preceding the conversion;

	d.	Mandatory conversion of all outstanding indebtedness at such time as the common stock listed on the Nasdaq Capital Market or another senior exchange on the same terms as provided to investors in connection with a public offering undertaken in connection with such listing; and

	e.	A leak-out restriction prohibiting each holder from selling, without the consent of the Company, more than 16.6% of the underlying shares received upon conversion during each of the six initial 30 day periods following the Effective Date.

viii.

The issuance of (a) the shares of common stock and the Unsecured Convertible Notes to the holders of allowed general unsecured claims and (b) the Secured Convertible Notes and Plan Warrants to Auctus in exchange for the DIP Funding and any common stock into which those Secured Convertible Notes and those Plan Warrants may be converted is exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to the Bankruptcy Code Section 1145. Such securities shall be freely transferrable subject to Section 1145(b)(i) of the Bankruptcy Code.

Pursuant to the Plan, on the Effective Date, the Company filed a Certificate of Amendment to its Certificate of Incorporation pursuant to which, among other things, the number of shares of common stock authorized to be issued by the Company has been increased to 300,000,000,000 and the par value of the shares of common stock has been reduced to $0.0001 per share.

Debtor-in-Possession Financing

In connection with the Chapter 11 Case, the Company received debtor-in-possession loans of $75,000 in the aggregate from Auctus.

The maturity date of the DIP Funding was to be the earliest to occur of (a) July 6, 2020; (b) ten days following entry of an order confirming a chapter 11 plan in the Chapter 11 Case; (c) ten days following the entry of an order approving the sale of the Company or the Company’s assets; or (d) the occurrence of an event of default under the promissory note evidencing the DIP Funding (the “DIP Note”) following any applicable grace or cure periods.

Interest on the outstanding principal amount of the DIP Note was to be payable in arrears on the maturity date at the rate of 8% per annum. Upon the occurrence and during the continuance of an event of default, all obligations under the DIP Note were to bear interest at a rate equal to the then current rate plus an additional 2% per annum.

As discussed above, pursuant to the Plan, the obligation to Auctus with respect to the DIP Funding has been exchanged for a Second Convertible Note.

Exercise of Warrants

During March 2021, the Company issued an aggregate of 159,233,719 shares of common stock to ~~300,000,000, subject to shareholder approval. On November 13, 2019, such shareholder approval was obtained and~~certain investors, with a fair value of $0.01 per share, as a result of the ~~Company filed an amendment to its Certificate~~exercise of ~~Incorporation to increase its authorized common stock to 300,000,000 shares.~~warrants associated with the Plan.

~~Subsequent to September 30, 2019,~~Appointment or Departure of Directors and Certain Officers

On November 16, 2020, as contemplated by the Plan, Mr. Weinreb, A. Jeffrey Radov, Paul Jude Tonna and Robert B. Catell resigned as directors of the Company and Mr. Weinreb resigned as the Company’s President, Chief Executive Officer and Chairman of the Board.

Effective as of the Effective Date, as contemplated by the Plan, Lance Alstodt was elected President, Chief Executive Officer, Chairman of the Board and a director of the Company and Francisco Silva, the Company’s Vice President, Research and Development, was elected a director of the Company.

On March 18, 2021, Nickolay Kukekov was elected a director of the Company.

On March 18, 2021, the Company’s Board of Directors ~~determined to submit~~adopted the BioRestorative Therapies, Inc. 2021 Stock Incentive Plan (the “Plan”). Pursuant to the ~~Company’s shareholders for their approval, amendments~~Plan, a total of 4,700,000,000 shares of common stock are authorized to be issued pursuant to the ~~Certificate~~grant of ~~Incorporation~~stock options, restricted stock units, restricted stock and stock appreciation rights.

On March 18, 2021, the Company and Lance Alstodt, its President, Chief Executive Officer and Chairman of the ~~Company (with~~Board, entered into an employment agreement (the “Alstodt Employment Agreement”) which provides for a term ending on March 18, 2026. Pursuant to the ~~Board~~Alstodt Employment Agreement, Mr. Alstodt is entitled to receive initially an annual salary of ~~Directors having~~$250,000. Mr. Alstodt’s annual salary will increase by $50,000 per year. In addition, in the ~~authority~~event certain performance goals are met, Mr. Alstodt’s salary will increase by $150,000. The Alstodt Employment Agreement also provides for the grant to ~~select and file one such amendment)~~Mr. Alstodt pursuant to ~~effect~~the Plan of (i) a ~~reverse split~~ten year option for the purchase of the Company’s common stock at a ratio of not less than 1-for-2 and not more than 1-for-100, with the Board of Directors having the discretion as to whether or not the reverse stock split is to be effected, and with the exact ratio of any reverse stock split to be set at a whole number within the above range as determined by the Board of Directors in its discretion. On November 13, 2019, such shareholder approval was obtained.

~~Common Stock and Warrant Offering~~

~~Subsequent to September 30, 2019, the Company issued 3,333,333~~1,173,917,974 shares of common stock of the Company and (ii) 586,958,987 restricted stock units of the Company (“RSUs”).

On March 18, 2021, the Company and Francisco Silva, its Vice President, Research and Development, entered into an employment agreement (the “Silva Employment Agreement”) which provides for a ~~five-year immediately vested warrant~~term ending on March 18, 2026. Pursuant to the Silva Employment Agreement, Mr. Silva is entitled to receive initially an annual salary of $225,000. Mr. Silva’s annual salary will increase by $50,000 per year. In addition, in the event certain performance goals are met, Mr. Silva’s salary will increase by $150,000. The Silva Employment Agreement also provides for the grant to Mr. Silva pursuant to the Plan of (i) a ten year option for the purchase of ~~3,333,333~~1,173,917,974 shares of common stock of the Company at an exercise price of $0.20 per share to an investor for gross proceeds of $500,000. In consideration of the purchase, the parties agreed to reduce the exercise prices of an aggregate of 2,111,111 outstanding warrants previously issued to the investor with original exercise prices of $0.70 and $0.85 per share to an exercise price of $0.15 per share and extend certain expiration dates of such outstanding warrants from dates between February 2020 and May 2020 to new expiration dates between February 2024 and May 2024.

~~Related Party Notes~~

Subsequent to September 30, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $150,000 to certain related parties. The convertible notes bear interest at a rate of 12% per annum, payable at maturity, with original maturity dates ranging from April 2020 to May 2020. The notes and the respective accrued interest are convertible at the election of the holder at any time at a conversion price equal to 60% of the fair value of the Company’s common stock.

~~Subsequent to September 30, 2019, the Company repaid a related party note in the principal amount of $25,000 and $3,164 of accrued interest.~~

~~BIORESTORATIVE THERAPIES, INC. & SUBSIDIARY~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Convertible Notes~~

Subsequent to September 30, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $1,144,500 to certain lenders for aggregate cash proceeds of $1,038,625. The difference of $105,875 was recorded as a debt discount and will be amortized over the terms of the respective notes. The convertible notes bear interest at a rate of 12% per annum, payable at maturity, with original maturity dates ranging from May 2020 to October 2020. The notes are convertible as follows: (i) $921,500 of aggregate convertible notes and the respective accrued interest are convertible into shares of the Company’s common stock at the election of the holder after the 180th day following the issue date at a conversion price equal to the lower of the closing price on the issuance date or generally 58% of the fair value of the Company’s common stock; (ii) ~~$55,000 of convertible notes and the respective accrued interest are convertible into shares of the Company’s common stock at the election of the holder after the 180~~^th day following the issue date at a conversion price generally equal to 58% of the fair value of the Company’s common stock, and (iii) $168,000 of aggregate convertible notes are convertible at a fixed price ranging from $0.25 to $1.00 per share for the first six months following the respective issue date, and thereafter at a conversion price equal to 58% of the fair value of the Company’s stock, subject to adjustment, until the respective note has been paid in full. In connection with the issuance of a certain convertible promissory note, the Company issued to the lender a warrant for the purchase of 100,000 shares of the Company’s common stock. In the event that the Company elects to prepay certain notes during the 180-day period following the issue date, the holder is entitled to receive a prepayment premium up to 35%, depending on the note, of the then outstanding principal balance plus accrued interest.586,958,987 RSUs.

Subsequent to September 30, 2019, the Company and certain lenders agreed to exchange an aggregate principal amount of $236,062 and aggregate accrued interest of $14,510 of certain convertible notes payable for an aggregate of 3,710,440 shares of the Company’s common stock at exchange prices ranging between $0.05 to $0.12 per share.

~~Subsequent to September 30, 2019, the Company repaid an aggregate principal amount of $1,275,000 of convertible notes payable and $109,038 of the respective aggregate accrued interest.~~

Subsequent to September 30, 2019, the Company and a certain lender agreed to extend the maturity date of a certain convertible promissory note with a principal balance of $91,539 from January 2020 to July 2020. In consideration of the extension, the parties agreed to reduce the conversion price floor of the note from $0.10 per share to $0.01 per share.

~~Other Notes~~

Subsequent to September 30, 2019, the Company issued a lender a note payable in the principal amount of $175,000. The note bears interest at a rate of 15% per annum, payable at maturity, with an original maturity date in November 2019.

~~Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition of BioRestorative Therapies, Inc. (together with its subsidiary, “BRT”) for the three and nine months ended September 30, 2019 and 2018 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in thisNote Regarding Forward-Looking Statements

This Quarterly Report on Form ~~10-Q. References in this Management’s Discussion and Analysis~~10-Q includes a number of ~~Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to BRT. This Quarterly Report contains~~ forward-looking statements as that ~~term is defined~~reflect management’s current views with respect to future events and financial performance.Forward-looking statements are projections in ~~the federal securities laws. The~~respect of future events ~~described in~~or our future financial performance. In some cases, you can identify forward-looking statements ~~contained in this Quarterly Report may not occur. Generally~~by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these ~~statements relate to business plans or strategies, projected or anticipated benefits~~terms or other ~~consequences~~comparable terminology. These statements include statements regarding the intent, belief or current expectations of us and members of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions,management team, as well as the assumptions on which such statements are ~~intended to identify~~based. Prospective investors are cautioned that any such forward-looking ~~statements. We caution you that these~~ statements are not guarantees of future performance ~~or events~~ and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are ~~subject to a number of~~only predictions and involve known and unknown risks, uncertainties ~~risks~~ and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that may affect our results include, but are not limited to,factors, including the risks ~~and uncertainties discussed~~set forth in ~~Item 7 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Factors That May Affect Future Results and Financial Condition”) of~~the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March ~~29, 2019.~~18, 2021, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements. These risks and factors include, by way of example and without limitation:

●	our ability to obtain financing needed to commence and complete our clinical trials;
●	our ability to achieve and sustain profitability of the existing lines of business through expansion;
●	our ability to attract and retain world-class research and development talent;
●	our ability to identify potential acquisition targets within predetermined parameters;
●	our ability to successfully execute acquisitions, integrate the acquired businesses and create synergies;
●	our ability to attract and retain key science, technology or management personnel and to expand our management team;
●	the accuracy of estimates regarding expenses, future revenue, capital requirements, profitability, and needs for additional financing;
●	business interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as the recent outbreak of COVID-19);
●	our ability to attract and retain clients; and
●	our ability to navigate through the increasingly complex therapeutic regulatory environment.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes in the future operating results over time, except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to BioRestorative Therapies, Inc., a Delaware corporation (“BRT”), and its wholly owned subsidiary, Stem Pearls, LLC, a Delaware limited liability company (“Stem Pearls”). Unless otherwise specified, all dollar amounts are expressed in United States dollars.

Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.Intellectual Property

This ~~Quarterly Report on Form 10-Q~~report includes references to our federally registered trademarks, BioRestorative Therapies ~~the~~and Dragonfly ~~Logo, brtxDISC,~~design, BRTX-100, ThermoStem ~~Stem Cellutrition Stem Pearls~~ and Stem ~~the Tides of Time.~~Pearls. We also own an allowed trademark application for BRTX. The Dragonfly Logo is also registered with the U.S. Copyright Office. This ~~Quarterly Report on Form 10-Q may~~report also ~~include~~includes references to trademarks, trade names and service marks that are the property of other organizations. Solely for convenience, trademarks and trade names referred to in this ~~Quarterly Report on Form 10-Q~~report appear without the ®, ^SM or ™ symbols, and copyrighted content appears without the use of the symbol ©, but the absence of use of these symbols does not reflect upon the validity or enforceability of the intellectual property owned by us or third ~~parties.~~parties

Corporate History

~~Overview~~BioRestorative Therapies, Inc. has one wholly-owned subsidiary, Stem Pearls. BioRestorative Therapies, Inc. and its subsidiary are referred to collectively as “BRT” or the “Company”.

On March 20, 2020 (the “Petition Date”), the Company filed a voluntary petition commencing a case (the “Chapter 11 Case”) under Chapter 11 of title 11 of the U.S. Code in the United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy Court”).

On August 7, 2020 the Company and Auctus Fund, LLC (“Auctus”), the Company’s largest unsecured creditor and a stockholder as of the Petition Date, filed an Amended Joint Plan of Reorganization (the “Plan”) and on October 30, 2020, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan, as amended. Amendments to the Plan are reflected in the Confirmation Order. On November 16, 2020 (the “Effective Date”), the Plan became effective. See Note 10 – Subsequent Events in Party I, Item I of this report for additional information.

Business Overview

We develop therapeutic products and medical therapies using cell and tissue protocols, primarily involving adult ~~(non-embryonic)~~ stem cells. We are currently pursuing ourDisc/Spine Program with our initial investigational therapeutic product and lead cell therapy candidate being calledBRTX-100. We submitted an IND application to the FDA to obtain authorization to commence a Phase 2 clinical trial investigating the use ofBRTX-100 in the treatment of chronic lower back pain arising from degenerative disc disease. We have received such authorization from the FDA. We intend to commence such clinical trial during the ~~first~~third quarter of ~~2020~~2021 (assuming the receipt of necessary funding). We have obtained a license to ~~utilize or sublicense a method~~use technology for ~~the hypoxic (low oxygen) culturing~~investigational adult stem cell treatment of ~~cells for use in treating~~ disc and spine conditions, including protruding and bulging lumbar discs. The technology is an advanced stem cell injection procedure that may offer relief from lower back pain, buttock and leg pain, and numbness and tingling in the leg and foot. We are also developing our ThermoStem ~~Program.~~Program. This pre-clinical program involves the use of brown adipose (fat) in connection with the cell-based treatment of type 2 diabetes and obesity as well as hypertension, other metabolic disorders and cardiac deficiencies. United States patents related to theThermoStem Programwere issued in September 2015, ~~and~~ January 2019, and March 2020; a notice of allowance was issued in November 2020 for a United States patent application in the ThermoStem Program and is expected to issue in 2021; Australian patents related to theThermoStem Program were issued in April 2017 and October ~~2019,~~2019; a Japanese patent related to theThermoStem Program was issued in December ~~2017 and an~~2017; Israeli ~~patent~~patents related to theThermoStem Program ~~was~~were issued in October ~~2019.~~2019 and May 2020; and European patents related to the ThermoStem Program were issued in April 2020 and January 2021.

We have licensed a patented curved needle device that is a needle system designed to deliver cells and/or other therapeutic products or materials to the spine and discs or other potential sites.

Our offices are located in Melville, New York where we have established a laboratory facility in order to increase our capabilities for the further development of possible cellular-based treatments, products and protocols, stem cell-related intellectual property and translational research applications.

As of September 30, 2019, our accumulated deficit was $77,019,591, our stockholders’ deficiency was $12,428,533 and our working capital deficiency was $13,514,377. We have historically only generated a modest amount of revenue, and our losses have principally been operating expenses incurred in research and development, marketing and promotional activities in order to commercialize our products and services, plus costs associated with meeting the requirements of being a public company. We expect to continue to incur substantial costs for these activities over at least the next year. These conditions indicate that there is substantial doubt about our ability to continue as a going concern within one year after the financial statement issuance date.

Based upon our working capital deficiency as of September 30, 2019, and our forecast for continued operating losses, we require equity and/or debt financing to continue our operations. As of September 30, 2019, our outstanding debt of $8,496,076, with interest at rates ranging between 8% and 15% per annum, was due on various dates through September 2020. Subsequent to September 30, 2019, we have received aggregate equity financings and debt proceeds of $500,000 and $1,363,625, respectively, debt (inclusive of accrued interest) of $250,571 has been exchanged for common stock, $1,412,202 of debt (inclusive of accrued interest) has been repaid, and the due date for the repayment of $91,539 of debt has been extended to July 2020. Giving effect to the above actions, we currently have notes payable in the aggregate outstanding principal amount of $593,400 which are past due. Based upon our working capital deficiency and outstanding debt, we expect to be able to fund our operations through December 2019 while we continue to apply efforts to raise additional capital. We anticipate that weFDA approval or clearance will ~~require approximately $20,000,000~~be necessary for this device prior to commercialization. We do not intend to utilize this device in ~~financing to commence and complete a~~connection with our contemplated Phase 2 clinical trial with regard to ~~our Disc/Spine Program. We anticipate that we will require approximately $45,000,000 in further additional funding to complete our clinical trials using~~BRTX-100 ~~(assuming the receipt of no revenues)~~. We will also require a substantial amount of additional funding if we determine to establish a manufacturing operation with regard to our Disc/Spine Program (as opposed to utilizing a third-party manufacturer) and to implement our other programs, including our metabolic ThermoStem Program. No assurance can be given that the anticipated amounts of required funding are correct or that we will be able to accomplish our goals within the timeframes projected. In addition, no assurance can be given that we will be able to obtain any required financing on commercially reasonable terms or otherwise.

~~We have filed~~Revenue

The Company derives all of its revenue pursuant to a ~~registration statement with~~license agreement between the ~~Securities~~Company and ~~Exchange Commission with regard~~a stem cell treatment company (“SCTC”) entered into in January 2012, as amended in November 2015. Pursuant to the ~~contemplated public offering of our equity securities. The registration statement has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior~~license agreement, the SCTC granted to the ~~time~~Company a license to use certain intellectual property related to, among other things, stem cell disc procedures and the ~~registration statement becomes effective. This Form 10-Q shall not constitute an offer~~Company has granted to ~~sell or~~ the ~~solicitation of an offer~~SCTC a sublicense to ~~buy, nor shall there be any sale of these securities~~use, and the right to sublicense to third parties the right to use, in ~~any state or jurisdiction~~certain locations in ~~which such offer, solicitation or sale would be unlawful prior to registration or qualification under~~ the ~~securities laws of any such state or jurisdiction. The contemplated public offering~~United States and the Cayman Islands, certain of the ~~Company’s securities will be made only by means~~licensed intellectual property. In consideration of ~~a prospectus. No assurances can be given that~~ the ~~contemplated public offering will be completed on reasonable terms or otherwise.~~

~~We are currently seeking several different financing alternatives~~sublicenses, the SCTC has agreed to ~~support our future operations and are currently in~~pay the ~~process of negotiating extensions or discussing conversions to equity with respect to our outstanding indebtedness. If we are unable to obtain such additional financing~~Company royalties on a timely basis or, notwithstanding any request we may make, our debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, we may have to curtail our development, marketing and promotional activities, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately we could be forced to discontinue our operations and liquidate. See “Liquidity and Capital Resources” below.

Between May 2019 and August 2019, holders of our notes in the aggregate principal amount of $1,565,000 entered into agreements with us pursuant to which the parties have agreed to exchange such notes for shares of our common stock and warrants in connection with the closing of the Public Offering.per disc procedure basis.

~~Consolidated~~ Results of Operations

Comparison of the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019 ~~Compared with Three Months Ended September 30, 2018~~

~~The following table presents selected items in our unaudited condensed consolidated statements of operations~~Our financial results for the three months ended September 30, ~~2019 and 2018, respectively:~~2020 are summarized as follows in comparison to the three months ended September 30, 2019:

	For The Three Months Ended
	September 30,						For The Three Months Ended
	2019			2018			September 30,
							2020			2019
Revenues	$	38,000		$	26,000		$	15,000		$	38,000

Operating Expenses:
Marketing and promotion		156,179			155,161			150			156,179
Consulting		373,975			417,601			33,594			373,975
Research and development		409,815			357,436			251,036			409,815
General and administrative		917,027			284,472			340,485			917,027
Total Operating Expenses		1,856,996			1,214,670			625,265			1,856,996
Loss From Operations		(1,818,996	)		(1,188,670	)		(610,265	)		(1,818,996	)

Other Expense:
Interest expense		(394,816	)		(257,298	)		(42,611	)		(394,816	)
Amortization of debt discount		(1,487,501	)		(540,488	)		-			(1,487,501	)
Loss on extinguishment of notes payable, net		(1,290,623	)		(320,383	)		-			(1,290,623	)
Change in fair value of derivative liabilities		(65,037	)		(615,322	)		-			(65,037	)
Warrant modification expense		-			(3,100	)
Reorganization items, net								(183,387	)		-
Total Other Expense		(3,237,977	)		(1,736,591	)		(225,998	)		(3,237,977	)
Net Loss	$	(5,056,973	)	$	(2,925,261	)	$	(836,263	)		(5,056,973	)

Revenues

For the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we generated ~~$38,000~~$15,000 and ~~$26,000,~~$38,000, respectively, of royalty revenue in connection with our sublicense agreement.

Marketing and ~~promotion~~Promotion

Marketing and promotion expenses include advertising and promotion, marketing and seminars, meals, entertainment and travel expenses. For the three months ended September 30, ~~2019,~~2020, marketing and promotion expenses ~~increased~~decreased by ~~$1,018,~~$156,029, or 1%99%, from ~~$155,161~~$156,179 to ~~$156,179~~$150 as compared to the three months ended September 30, ~~2018.~~2019. The decrease is primarily due to the Company eliminating its marketing plan as a result of reduced spending during the Company’s Chapter 11 reorganization.

We expect that marketing and promotion expenses will increase in the future as we increase our marketing activities following full commercialization of our products and services.

Consulting

Consulting expenses consist of consulting fees and stock-based compensation to consultants. For the three months ended September 30, ~~2019,~~2020, consulting expenses decreased ~~$43,626,~~by $340,381, or ~~10%~~91%, from ~~$417,601~~$373,975 to ~~$373,975,~~$33,594, as compared to the three months ended September 30, ~~2018.~~2019. The decrease is primarily due to the Company eliminating the use of consultants as a ~~decrease~~result of ~~approximately $130,000 of stock-based compensation expense partially offset by an increase of approximately $90,000 in cash consulting fees.~~

reduced spending during the Company’s Chapter 11 reorganization.

Research and development

Research and development expenses include cash and non-cash compensation of (a) our Vice President of Research and Development; (b) our Scientific Advisory Board members; and (c) laboratory staff and costs related to our brown fat and disc/spine initiatives. Research and development expenses are expensed as they are incurred. For the three months ended September 30, ~~2019,~~2020, research and development expenses ~~increased~~decreased by ~~$52,379,~~$158,779, or ~~15%~~39%, from ~~$357,436~~$409,815 to ~~$409,815,~~$251,036, as compared to the three months ended September 30, ~~2018.~~2019. The ~~increase was~~decrease is primarily due to the Company eliminating costs as a result of an increase of approximately $26,000 in laboratory staffing, an increase of approximately $21,000 in lab testing and research, and an increase of approximately $8,000 in stock-based compensation expense primarily related to an option issued to our Disc Committee Chairman.reduced spending during the Company’s Chapter 11 reorganization.

We expect that our research and development expenses will increase with the ~~continuation~~recommencement of our research and development initiatives during the ~~aforementioned initiatives.~~year ending December 31, 2021, following our emergence from Chapter 11.

General and administrative

General and administrative expenses consist primarily of salaries, bonuses, payroll taxes, severance costs and stock-based compensation to employees (excluding any cash or non-cash compensation of our Vice President of Research and Development and our laboratory staff), as well as corporate expenses such as legal and professional fees, investor relations and occupancy related expenses. For the three months ended September 30, ~~2019,~~2020, general and administrative expenses ~~increased~~decreased by ~~$632,555,~~$576,542, or ~~222%~~63%, from ~~$284,472~~$917,027 to ~~$917,027,~~$340,485, as compared to the three months ended September 30, ~~2018.~~2019. The ~~increase was~~decrease is primarily due to the Company eliminating certain costs as a ~~$644,000 nonrecurring reversal~~result of compensation expense related to performance milestones of an option granted to a former Senior Vice President becoming not probable in 2018 and an increase of approximately $108,000 of legal expense due to increased legal matters regarding fundings, conversions, intellectual property and patent issuance costs, partially offset by a decrease of approximately $64,000 in legal expense and financial services expense related to work performed for a contemplated public offering classified as deferred offering costs and a decrease of approximately $62,000 in stock-based compensation expense relating to fewer unvested options outstanding in 2019.reduced spending during the Company’s Chapter 11 reorganization.

We expect that our general and administrative expenses will increase as we expand our staff, develop our infrastructure and incur additional costs to support the growth of our ~~business.~~business during the year ending December 31, 2021, following our emergence from Chapter 11.

Interest expense

For the three months ended September 30, ~~2019,~~2020, interest expense ~~increased $137,518,~~decreased $352,205, or ~~53%~~89%, as compared to the three months ended September 30, ~~2018.~~2019. The ~~increase~~decrease was due to ~~an increase in interest-bearing short-term borrowings~~the prepetition outstanding notes payable being reclassified to liabilities subject to compromise and as ~~compared~~a result, pursuant to ASC 852, Reorganizations, and new accrued interest is related to the ~~three months ended September 30, 2018.~~debtor-in-possession financing.

Amortization of debt discount

For the three months ended September 30, ~~2019,~~2020, amortization of debt discount ~~increased $947,013,~~decreased $1,487,501, or ~~175%~~100%, as compared to the three months ended September 30, ~~2018.~~2019. The ~~increase~~decrease was ~~primarily~~ due to the ~~timing~~prepetition outstanding notes payable being reclassified to liabilities subject to compromise and as a result, pursuant to ASC 852, Reorganizations, the remaining debt discount was written off to reorganization items on the unaudited condensed consolidated statements of ~~the recognition of expense related to the bifurcated embedded conversion options of convertible notes.~~operations.

Loss on extinguishment of notes payable, net

For the three months ended September 30, ~~2019, the~~2020, we did not record a loss on extinguishment of notes payable, net ~~increased by $970,240, or 303% from $320,383 to $1,290,623,~~ as compared to a loss on extinguishment of notes payable, net of $1,290,623 for the three months ended September 30, ~~2018.~~2019. The ~~increase is associated with debt repayments, debtholders’ exchanges of debt into equity securities, and extinguishments of debt, resulting in a loss on~~decrease was due to the ~~exchange.~~prepetition outstanding notes payable being reclassified to liabilities subject to compromise pursuant to ASC 852, Reorganizations.

Change in fair value of derivative liabilities

For the three months ended September 30, ~~2019,~~2020, we did not record a gain (loss) related to the ~~net~~change in fair value of derivative liabilities due to the Company writing off derivative liabilities related to the convertible notes included in the Chapter 11 Reorganization allowable claims, pursuant to ASC 852, Reorganizations, as compared to a loss related to the change in fair value of derivative liabilities ~~decreased by $550,285,~~of $65,037 for the three months ended September 30, 2019.

Reorganization items, net

Reorganization items, net consists primarily of costs associated the post-petition Chapter 11 bankruptcy. For the three months ended September 30, 2020, reorganization items, net increased $183,387, or ~~89%~~100%, ~~from $615,322 to $65,037,~~ as compared to the three months ended September 30, ~~2018.~~2019. The ~~decrease~~increase was due to, pursuant to ASC 852, Reorganizations¸ legal fees associated with the ~~decrease in time value~~Chapter 11 reorganization and the write-off of ~~embedded conversion options within certain convertible notes payable.~~

~~Warrant modification expense~~

~~During the three months ended September 30, 2019 and 2018, we recorded expense~~derivative liabilities related to the ~~modification of~~convertible notes included in the ~~expiration dates and exercise prices of certain outstanding warrants of $0 and $3,100, respectively.~~Chapter 11 Reorganization allowable claims.

Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019 ~~Compared with Nine Months Ended September 30, 2018~~

~~The following table presents selected items in our unaudited condensed consolidated statements of operations~~Our financial results for the nine months ended September 30, ~~2019 and 2018, respectively:~~2020 are summarized as follows in comparison to the nine months ended September 30, 2019:

	For The Nine Months Ended
	September 30,						For The Nine Months Ended
	2019			2018			September 30,
							2020			2019
Revenues	$	98,000		$	82,000		$	60,000		$	98,000

Operating Expenses:
Marketing and promotion		280,865			213,715			28,281			280,865
Consulting		1,507,582			1,268,485			101,195			1,507,582
Research and development		1,306,544			1,137,381			698,917			1,306,544
General and administrative		3,279,145			2,932,162			1,129,218			3,279,145
Total Operating Expenses		6,374,136			5,551,743			1,957,611			6,374,145
Loss From Operations		(6,276,136	)		(5,469,743	)		(897,611	)		(6,276,136	)

Other Expense:
Interest expense		(1,039,727	)		(648,940	)		(345,936	)		(1,039,727	)
Amortization of debt discount		(3,221,904	)		(1,884,116	)		(1,066,526	)		(3,221,904	)
Loss on extinguishment of notes payable, net		(2,291,218	)		(384,171	)		(658,152	)		(2,291,218	)
Change in fair value of derivative liabilities		(268,350	)		(557,274	)		(2,141,069	)		(268,350	)
Warrant modification expense		-			(3,100	)
Reorganization items, net								597,919			-
Total Other Expense		(6,821,199	)		(3,477,601	)		(3,613,764	)		(6,821,199	)
Net Loss	$	(13,097,335	)	$	(8,947,344	)	$	(5,511,375	)		(13,097,335	)

Revenues

For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we generated ~~$98,000~~$60,000 and ~~$82,000,~~$98,000, respectively, of royalty revenue in connection with our sublicense agreement.

Marketing and ~~promotion~~Promotion

Marketing and promotion expenses include advertising and promotion, marketing and seminars, meals, entertainment and travel expenses. For the nine months ended September 30, ~~2019,~~2020, marketing and promotion expenses ~~increased~~decreased by ~~$67,150,~~$252,584, or ~~31%~~90%, from ~~$213,715~~$280,865 to ~~$280,865~~$28,281 as compared to the nine months ended September 30, ~~2018.~~2019. The ~~increase~~decrease is primarily due to the ~~hiring~~Company eliminating its marketing plan as a result of ~~a public awareness firm.~~reduced spending prior to and during the Company’s Chapter 11 reorganization.

We expect that marketing and promotion expenses will increase in the future as we increase our marketing activities following full commercialization of our products and services.

Consulting

Consulting expenses consist of consulting fees and stock-based compensation to consultants. For the nine months ended September 30, ~~2019,~~2020, consulting expenses ~~increased $239,097,~~decreased by $1,406,387, or ~~19%~~93%, from ~~$1,268,485~~$1,507,582 to ~~$1,507,582,~~$101,195, as compared to the nine months ended September 30, ~~2018.~~2019. The ~~increase~~decrease is primarily due to ~~an increase~~the Company eliminating the use of ~~approximately $370,000~~consultants as a result of ~~cash consulting fees in connection with clinical trials~~reduced spending prior to and ~~strategic planning, partially offset by a reduction of approximately $156,000 of stock-based compensation related to fewer unvested outstanding options in 2019.~~during the Company’s Chapter 11 reorganization.

Research and development

Research and development expenses include cash and non-cash compensation of (a) our Vice President of Research and Development; (b) our Scientific Advisory Board members; and (c) laboratory staff and costs related to our brown fat and disc/spine initiatives. Research and development expenses are expensed as they are incurred. For the nine months ended September 30, ~~2019,~~2020, research and development expenses ~~increased~~decreased by ~~$169,163,~~$607,627, or ~~15%~~47%, from ~~$1,137,381~~$1,306,544 to ~~$1,306,544,~~$698,917, as compared to the nine months ended September 30, ~~2018.~~2019. The ~~increase was~~decrease is primarily due to the Company eliminating costs as a result of ~~an increase of approximately $109,000 in stock-based compensation expense primarily related~~reduced spending prior to ~~options issued to our Scientific Advisory Board members, incremental modification expense related to an option repricing in 2019,~~ and ~~an increase in laboratory staffing.~~during the Company’s Chapter 11 reorganization.

General and administrative

Interest expense

For the nine months ended September 30, 2020, interest expense decreased $693,791, or 67%, as compared to the nine months ended September 30, 2019. The decrease was primarily due to the prepetition outstanding notes payable being reclassified to liabilities subject to compromise during and as a result, pursuant to ASC 852, Reorganizations, and new accrued interest is related to the debtor-in-possession financing.

Amortization of debt discount

For the nine months ended September 30, 2020, amortization of debt discount decreased $2,155,378, or 67%, as compared to the nine months ended September 30, 2019. The decrease was due to the prepetition outstanding notes payable being reclassified to liabilities subject to compromise and as a result, pursuant to ASC 852, Reorganizations, the remaining debt discount was written off to reorganization items on the unaudited condensed consolidated statements of operations.

Loss on extinguishment of notes payable, net

For the nine months ended September 30, 2019, interest expense increased $390,787, or 60%, as compared to the nine months ended September 30, 2018. The increase was due to an increase in interest-bearing short-term borrowings as compared to the nine months ended September 30, 2018.

~~Amortization of debt discount~~

For the nine months ended September 30, 2019, amortization of debt discount increased $1,337,788, or 71%, as compared to the nine months ended September 30, 2018. The increase was primarily due to increased issuances of convertible notes and the timing of the recognition of expense related to the bifurcated embedded conversion options of convertible notes.

~~Loss on extinguishment of notes payable, net~~

~~For the nine months ended September 30, 2019,~~2020, we recorded a loss on extinguishment of notes payable ~~net,~~ of ~~$2,291,218,~~$658,152 as compared to a loss on extinguishment of notes payable ~~net~~ of ~~$384,171~~$2,291,2185 for the nine months ended September 30, ~~2018.~~2019. The ~~increase~~decrease is associated with ~~debt repayments and debt holders’~~debtholders’ exchanges of debt into equity ~~securities resulting in a loss on the exchange.~~securities.

Change in fair value of derivative liabilities

For the nine months ended September 30, ~~2019, the net~~2020, we recorded a loss related to the change in fair value of derivative liabilities ~~decreased by $288,924, or 52%, from $557,274 to $268,350, as compared to the nine months ended September 30, 2018. The decrease was~~of $2,141,069 due to the decrease in time value of embedded conversion options within certain convertible notes ~~payable.~~payable, as compared to a loss related to the change in fair value of derivative liabilities of $268,350 for the nine months ended September 30, 2019.

Reorganization items, net

Reorganization items, net consists primarily of costs associated the post-petition Chapter 11 bankruptcy. For the nie months ended September 30, 2020, reorganization items, net increased $597,919, or 100%, as compared to the nine months ended September 30, 2019. The increase was due to, pursuant to ASC 852, Reorganizations¸ legal fees associated with the Chapter 11 reorganization, the write-off of the outstanding debt discount at the date of the bankruptcy, and the write-off of derivative liabilities related to the convertible notes included in the Chapter 11 Reorganization allowable claims.

Liquidity and Capital Resources

Liquidity

We measure our liquidity in a number of ways, including the following:

							September 30,			December 31,
							2020			2019
	September 30, 2019			December 31, 2018
Cash	$	98,113		$	117,523		$	175,994		$	1,664

Working Capital Deficiency	$	(13,514,377	)	$	(9,073,901	)	$	(15,860,045	)⁽¹⁾	$	(13,651,716	)

Notes Payable (Gross)	$	8,496,076		$	5,161,916
Notes Payable and DIP financing (Gross)							$	1,114,713		$	8,393,327

(1)

Working capital deficiency at September 30, 2020, includes $14,700,000 of liabilities subject to compromise.

Availability of Additional Funds

Based upon our working capital deficiency and stockholders’ ~~deficiency~~deficit of ~~$13,514,377~~$15,860,045 and ~~$12,428,533,~~$15,092,678, respectively, as of September 30, ~~2019,~~2020, as of such date, we ~~require~~required additional equity and/or debt financing to continue our operations. ~~These conditions raise substantial doubt about our ability to continue as a going concern within the next twelve months from the date of this filing.~~

As of September 30, ~~2019,~~2020, our outstanding debt of ~~$8,496,076,~~$1,114,713, together with a daily interest ~~at rates ranging between~~rate of 8% ~~and 15% per annum,~~, was due on various dates through September 2020. Subsequent to September 30, 2019, we have received aggregate equity financings and debt proceeds of $500,000 and $1,363,625, respectively, debt (inclusive of accrued interest) of $250,571 has been exchanged for common stock, $1,412,202 of debt (inclusive of accrued interest) has been repaid, and the due date for the repayment of $91,539 of debt has been extended to July 2020. Giving effect to the above actions, we currently have notes payable in the aggregate outstanding principal amount of $593,400 which are past due. As of the date of filing, our outstanding debt was as follows:

Principal
Maturity Date Amount
Past Due $ 593,400
QE 12/31/2019 2,810,000
QE 3/31/2020 1,120,000
QE 6/30/2020 2,118,638
QE 9/30/2020 1,698,227
QE 12/31/2020 89,250
$ 8,429,515
We have filed a registration statement with the Securities and Exchange Commission with regard to the contemplated public offering of our equity securities. The registration statement has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This Form 10-Q shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The contemplated public offering of the Company’s securities will be made only by means of a prospectus. No assurances can be given that the contemplated public offering will be completed on reasonable terms or otherwise.
November 16, 2023.

Between May 2019 and August 2019, holders of our notes in the aggregate principal amount of $1,565,000 entered into agreements with us pursuant to which the parties have agreed to exchange such notes for shares of our common stock and warrants in connection with the closing of our contemplated Public Offering.
Based upon our working capital deficiency, outstanding debt and forecast for continued operating losses we expect that the cash we currently have available will fund our operations through December 2019. Thereafter, we will need to raise further capital, through the sale of additional equity securities (including pursuant to our contemplated Public Offering as to which no assurances can be given) or debt securities, to support our future operations and to repay our debt (unless, if requested, the debt holders agree to convert their notes into equity or extend the maturity dates of their notes). Our operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings.

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We may be unable to raise sufficient additional capital when we need it or raise capital on favorable terms. ~~Debt~~We have granted a security interest in all of our assets to certain lenders, including Auctus, in connection with our Chapter 11 plan of reorganization. This may impede our ability to raise additional debt financing. In addition, future financing may require us to pledge certain assets and enter into covenants that could restrict certain business activities or our ability to incur further indebtedness and may contain other terms that are not favorable to our stockholders or us. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms.
Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

The following has been able to mitigate the above factors with regards to our ability to continue as a going concern: (i) as part of our Chapter 11 reorganization approximately $14,700,000 in outstanding debt and other liabilities were exchanged for (a) shares of common stock, (b) new convertible notes or (c) new convertible notes and warrants to purchase shares of common stock; (ii) we secured DIP financing during our Chapter 11 reorganization in the aggregate amount of $1,189,413, and $3,848,548 in debt financing as part of our Chapter 11 reorganization to sustain operations; and (iii) pursuant to the plan of reorganization, Auctus is required to loan to us, as needed and subject to our becoming current in our SEC reporting obligations, an additional amount equal to $3,500,000, less the amount of Auctus’ DIP financing ($1,226,901, inclusive of accrued interest) and its DIP costs. As a result of the above, we have sufficient cash to fund operations for the twelve months subsequent to the filing date. In addition, the Company will need to obtain further funding of at least $12,000,000 to commence and complete a Phase 2 clinical study of the use of BRTX-100.
Cash Flows
During the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, our sources and uses of cash were as follows:

Nine Months Ended September 30,
2020 2019
Net cash used in operating activities $ (1,392,145 ) $ (5,107,743 )
Net cash used in investing activities - (35,631 )
Net cash provided by financing activities 1,566,475 5,123,964
Increase (decrease) in cash $ 174,330 $ (19,410 )
~~Net Cash Used in~~ Operating Activities

~~We experienced negative~~Net cash ~~flows from~~used in operating activities was $1,392,145 for the nine months ended September 30, ~~2019 and 2018 in the amounts of $5,107,743 and $3,551,542, respectively. The net cash used in operating activities for the nine months ended September 30, 2019 was~~2020, primarily due to ~~cash used to fund a~~the net loss of ~~$13,097,335, adjusted for non-cash expenses in the aggregate amount of $7,781,461~~$5,511,375 which was partially offset by ~~$208,131~~non-cash expenses of $3,047,219 related to amortization of debt discount, accretion of interest expense, stock-based compensation, change in fair value of derivative liabilities, write-off of derivative liabilities related to allowable claims and loss on extinguishment of notes payable and loss on extinguishment of notes payable and $1,072,011 of cash ~~generated~~provided by changes in the levels of operating assets and liabilities, primarily as a result of decreases in accounts payable and increases in prepaid expenses and other current assets, partially offset by an increase in accrued interest, expenses and other current ~~liabilities, partially offset by a decrease in accounts payable. The net~~liabilities. Net cash used in operating activities was $5,107,743 for the nine months ended September 30, ~~2018 was~~2019, primarily due to ~~cash used to fund a~~ net loss of ~~$8,947,344, adjusted for non-cash expenses in the aggregate amount of $5,150,620~~$13,097,335, which was partially offset by ~~$245,182~~non-cash expenses of $7,781,461 related to amortization of debt discount, accretion of interest expense, stock-based compensation, change in fair value of derivative liabilities, and loss on extinguishment of notes payable and $208,131 of cash ~~generated~~provided by changes in the levels of operating assets and liabilities, primarily as a result of decreases in accounts payable and increases in prepaid expenses and other current assets, partially offset by an increase in accrued interest, expenses and other current ~~liabilities, partially offset by a decrease in accounts payable.~~liabilities.

~~Cash Used in~~ Investing Activities

During the nine months ended September 30, 2020 and 2019, ~~and 2018,~~net cash used in investing activities was ~~$35,631~~$0 and ~~$12,869,~~$35,631, respectively, due to cash used for the purchase of office ~~medical~~ and computer equipment.

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~~Net Cash Provided by~~ Financing Activities

Net cash provided by financing activities ~~during~~for the nine months ended September 30, 2020 was $1,566,475, which was due to $441,762 of net proceeds from debt financings, $1,114,713 of net proceeds from DIP financing, and $10,000 of net proceeds from an equity financing. Net cash provided by financing activities for the nine months ended September 30, 2019 ~~and 2018~~ was $5,123,964, ~~and $3,218,105, respectively.~~which was primarily due to ~~During the nine months ended September 30, 2019, $3,982,392~~$3,982,392 of net proceeds were from debt financings, $1,156,000 of proceeds were from equity financings and $14,428 was used for incurred offering costs. ~~During~~
We anticipate that the ~~nine~~costs to commence and complete our Phase 2 clinical trials with regard to our Disc/Spine Program will be at least $12,000,000. In addition, we anticipate approximately $45,000,000 in additional funding will be needed to complete the clinical trials using BRTX-100 (assuming the receipt of no revenues). As noted above in “Availability of Additional Funds” we secured additional funding as part of Chapter 11 reorganization in the aggregate amount of $5,037,961 as well as approximately $14,700,000 in outstanding debt and other liabilities being exchanged for (a) shares of common stock, (b) new convertible notes or (c) new convertible notes and warrants to purchase shares of common stock. Additionally, pursuant to the plan of reorganization, Auctus is required to loan to us, as needed and subject to our becoming current in our SEC reporting obligations, an additional amount equal to $3,500,000, less the amount of Auctus’ DIP financing ($1,226,901, inclusive of accrued interest) and its DIP costs. As a result of the above, we have sufficient cash to fund operations for the twelve months subsequent to the filing date.
Effects of Inflation
We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.
Significant Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our unaudited condensed consolidated financial statements included herein for the quarter ended September 30, ~~2018, $2,628,937 of net proceeds were from debt financings~~2020 and ~~other borrowings and $589,168 of proceeds were from equity financings (including proceeds received~~ in ~~connection with~~ the ~~exercise of common stock purchase warrants).~~
~~Critical Accounting Policies and Estimates~~
~~There are no material changes from the critical accounting policies set forth~~notes to our consolidated financial statements included in ~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of~~ our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019, as filed with the SEC on March ~~29,~~18, 2021.
Fair Value Measurement
The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in the valuation of an asset or liability. It establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;
Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; or
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the periods. Our significant estimates and assumptions include the recoverability and useful lives of long-lived assets, the fair value of our common stock, stock-based compensation, warrants issued in connection with notes payable, derivative liabilities and the valuation allowance related to our deferred tax assets. Certain of our estimates, including the carrying amount of the intangible assets, could be affected by external conditions, including those unique to us and general economic conditions. It is reasonably possible that these external factors could have an effect on our estimates and could cause actual results to differ from those estimates.
36
Chapter 11 Cases
Chapter 11 Accounting
The unaudited condensed consolidated financial statements included herein have been prepared as if we were a going concern and in accordance with Accounting Standards Codification (“ASC”) 852, Reorganizations.
Weak industry conditions in 2019 ~~except~~negatively impacted the Company’s results of operations and cash flows and may continue to do so in the future. In order to decrease the Company’s indebtedness and maintain the Company’s liquidity levels suifficient to meet its commitments, the Company undertook a number of actions, including minimizing capital expendtiures and further reducing its recurring operating expenses. The Company believed that even after taking these actions, it would not have sufficient liquidity to satisfy its debt service obligations and meet its other financial obligations. On March 20, 2020 (the “Petition Date”), the Company filed a voluntary petition commencing a case under chapter 11 of title 11 of the U.S. Code in the United States Bankruptcy Court for the Eastern District of New York.
Reorganization Items
The Company incurred costs after the Petition Date associated with the reorganization, primarily unamortized debt discount and postpetition professional fees. In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as ~~follows:~~reorganization items, net within the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2020.
Liabilities Subject To Compromise
Prepetition unsecured and secured obligation that may be impacted by the Chapter 11 case have been classified as liabilities subject to compromise on the Company’s unaudited condensed consolidated balance sheets. These liabilities are reported at the amounts allowed as claims by the Bankruptcy Court.
Intangible Assets
Intangible assets are comprised of trademarks and licenses with original estimated useful lives of 10 and 17.7 years, respectively. Once placed into service, we amortize the cost of the intangible assets over their estimated useful lives on a straight-line basis.
Impairment of Long-lived Assets
We review for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. While our near term liquidity is tight, historically we have been successful in raising capital as needed (although there can be no assurance that we will continue to be successful in raising capital as needed). We continue to progress our scientific agenda and meet related milestones. We have not identified any impairment losses.
Income Taxes
We recognize deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in our unaudited condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts, or temporary differences, at enacted tax rates in effect for the years in which the temporary differences are expected to reverse.
We adopted the provisions of Accounting Standards Codification (“ASC”) Topic 740-10, which prescribes a recognition threshold and measurement process for unaudited condensed consolidated financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return.
Stock-Based Compensation
We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Since the shares underlying our Equity Participation Plan were registered on May 27, 2014, we estimate the fair value of the awards granted under the Plan based on the market value of our freely tradable common stock as reported on the OTC. The fair value of our restricted equity instruments was estimated by management based on observations of the cash sales prices of both restricted shares and freely tradable shares. Awards granted to directors are treated on the same basis as awards granted to employees.
New and Recently Adopted Accounting Pronouncements
Any new and recently adopted accounting pronouncements are more fully described in Note 2 to our unaudited condensed consolidated financial statements herein for the quarter ended September 30, 2020.

~~Revenue Recognition~~
Effective January 1, 2019, we adopted Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). ASC 606 will require management to make significant judgments and estimates. As a result, we implemented changes to our internal controls related to revenue recognition for the quarter ended March 31, 2019. These changes include updated accounting policies affected by ASC 606, redesigned internal controls over financial reporting related to ASC 606, expanded data gathering to comply with the additional disclosure requirements, and ongoing contract review requirements.
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~~Deferred Offering Costs~~
Deferred offering costs, which primarily consist of direct, incremental professional fees incurred in connection with preparing for our contemplated public offering of our equity securities, are capitalized as non-current assets on the balance sheet. Upon the consummation of a public offering, the deferred offering costs will be offset against the equity offering proceeds.
~~Recently Issued Accounting Pronouncements~~
~~For a description of relevant recently issued accounting pronouncements, see Note 3 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.~~
Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to ~~investors.~~stockholders.

Item 3:3. Quantitative and Qualitative Disclosures ~~About~~about Market Risk

Not ~~applicable.~~Applicable. As a smaller reporting company, we are not required to provide the information required by this Item.
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Item 4:4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Disclosure~~We maintain disclosure controls ~~are~~and procedures (as that ~~are designed with the objective of ensuring that information required to be disclosed~~term is defined in ~~our reports filed~~Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)~~, such as this Quarterly Report,~~) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms. Disclosure controls are also designed with the objective of ensuring~~forms, and that such information is accumulated and communicated to our management, including ~~the Principal Executive~~our principal executive officer and ~~Financial Officer,~~principal financial officer, as appropriate, to allow timely decisions regarding required ~~disclosure. Internal~~disclosures. In designing disclosure controls ~~are~~and procedures, ~~which are designed with~~our management necessarily was required to apply its judgment in evaluating the ~~objective~~cost-benefit relationship of ~~providing reasonable~~possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that ~~(1) our transactions are properly authorized, recorded~~any design will succeed in achieving its stated goals under all potential future conditions. Any controls and ~~reported;~~procedures, no matter how well designed and ~~(2) our assets are safeguarded against unauthorized or improper use, to permit~~operated, can provide only reasonable, not absolute, assurance of achieving the ~~preparation of our unaudited condensed consolidated financial statements in conformity with United States generally accepted accounting principles.~~desired control objectives.

~~In connection with~~Under the ~~preparation of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, management,~~supervision and with the participation of our ~~Principal Executive and Financial Officer, has evaluated the effectiveness of the design and operation~~management, including our principal executive officer, who is also our principal financial officer, we are required to perform an evaluation of our disclosure controls and procedures, ~~(as~~as such term is defined in Rule 13a-15(e) under the Exchange Act, ~~Rule 13a-15(e) and 15d-15(e)). Based upon that evaluation, our Principal Executive and Financial Officer concluded that,~~ as of ~~the end of the period covered by this Quarterly Report on Form 10-Q,~~September 30, 2020. Management has not completed such evaluation and, as such, has concluded that our disclosure controls and procedures were not effective to provide reasonable assurance 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 is accumulated and communicated to our management, including our principal executive officer, who is also our principal financial officer, as appropriate to allow timely decisions regarding required disclosures. As a result of the material weakness in internal controls over financial reporting described below, we concluded that our disclosure controls and procedures as of September 30, 2020 were not effective.

Management’s Annual Report on Internal Control Over Financial Reporting
Management and the Company’s consolidated subsidiaries are responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of its principal executive and principal financial officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its unaudited condensed consolidated financial statements for external reporting purposes in accordance with GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Material Weaknesses in Internal Control over Financial Reporting
Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2020 based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting as of September 30, 2020 was not effective.
A material weakness, as defined in the standards established by the Sarbanes-Oxley, is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim unaudited condensed consolidated financial statements will not be prevented or detected on a timely basis.
The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses:
● Inadequate segregation of duties due to limited personnel consistent with control objectives;
● Adherence to formal policies and procedures post-bankruptcy; and
● Lack of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner.
Changes in Internal ~~Controls~~Control Over Financial Reporting

~~There were~~Other than described above there have been no changes in our internal control over financial reporting ~~(as defined in Rule 13a-15(f) and 15d-15(f))~~that occurred during ~~the~~our thrid quarter ~~ended September 30, 2019~~of 2020 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
~~Limitations of the Effectiveness of Control~~
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations of any control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.
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PART II -– OTHER INFORMATION

Item 1. Legal ~~Proceedings.~~Proceedings

~~Not applicable.~~We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

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

~~Not applicable. See, however, Item 7 (“Management’s Discussion and Analysis~~An investment in our common stock involves a number of ~~Financial Condition and Results of Operations - Factors That May Affect Future Results and Financial Condition”)~~very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, as filed with the SEC on March ~~29, 2019.~~18, 2021, in addition to other information contained in those reports and in this quarterly report in evaluating the Company and its business before purchasing shares of our common stock. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks.

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

During the three months ended September 30, ~~2019, we issued~~2020, there were no issuances of equity securities during the ~~following securities in transactions~~period covered by this Report that were not ~~involving any public offering. For each of the following transactions, we relied upon Section 4(a)(2) of~~registered under the Securities Act ~~of 1933, as amended (the “Securities Act”) as transactions by an issuer~~and were not ~~involving any public offering or Section 3(a)(9) of the Securities Act as~~previously reported in a security exchanged by an issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. For each such transaction, we did not use general solicitation or advertising to market the securities, the securities were offered to a limited number of persons, the investors had access to information regarding us (including information contained in our AnnualCurrent Report ~~on Form 10-K for the year ended December 31, 2018, our Quarterly Report on Form 10-Q for the periods ended March 31, 2019 and June 30, 2019, Current Reports~~ on Form 8-K filed ~~with~~by the Securities and Exchange Commission, and press releases made by us), and we were available to answer questions by prospective investors. We reasonably believe that each of the investors is an accredited investor. The proceeds were used to reduce our working capital deficiency and for other corporate purposes.Company.
Warrants
Date Issued Common Stock Shares Exercise Price Term
(Years) Purchaser(s) Consideration (1)
7/2/19-7/31/19 143,103 - $ - - (2 ) $ 80,002 (3)
7/11/19-7/15/19 461,663 - $ - - (2 ) $ 27,140 (3)
7/17/19-7/25/19 27,472 - $ - - (2 ) $ 65,896 (3)
7/25/19 405,764 - $ - - (2 ) $ 5,000 (3)
7/29/19-8/1/19 297,375 - $ - - (2 ) $ 45,017 (3)
8/8/19 71,556 - $ - - (2 ) $ 10,000 (3)
8/12/19-9/30/19 1,973,381 - $ - - (2 ) $ 237,614 (3)
8/21/19-9/10/19 543,963 - $ - - (2 ) $ 60,056 (3)
~~(1)~~ ~~The value of the non-cash consideration was estimated by management based on observations of the cash sales prices of freely tradable shares.~~
~~(2)~~ ~~Accredited investor.~~
~~(3)~~ ~~Issued in connection with the exchange of convertible notes payable.~~

Item 3. Defaults ~~Upon~~upon Senior ~~Securities.~~Securities

~~See “Liquidity and Capital Resources” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”~~None.

Item 4. Mine Safety ~~Disclosures.~~Disclosures

Not ~~applicable.~~Applicable.

Item 5. Other ~~Information.~~Information

None.
36
Item 6. ~~Exhibits.~~Exhibits
Incorporated by Reference
Exhibit
Number
Exhibit Description Form Exhibit Filing Date
3.1 Certificate of Incorporation, as amended 10-K 3.1 03/18/2021
3.2 Bylaws 8-K 3.4 12/23/2014
31.1* Certification of Principal Executive Officer
31.2* Ceritfication of Principal Financial Officer
32.1** Section 1350 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 Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

~~Exhibit~~* ~~Description~~Filed herewith.
~~3.1~~ Certificate of Incorporation, as amended*
~~10.1~~
Amended and Restated Exchange Agreement, dated as of July 26, 2019, between BioRestorative Therapies, Inc. and John M. Desmarais (incorporated by reference to the Company’s Current Report on Form 8-K for an event dated July 26, 2019, wherein such document is identified as Exhibit 10.2)
~~10.2~~
Amended and Restated Exchange Agreement, dated as of July 26, 2019, between BioRestorative Therapies, Inc. and Tuxis Trust (incorporated by reference to the Company’s Current Report on Form 8-K for an event dated July 26, 2019, wherein such document is identified as Exhibit 10.3)
~~31.1~~ ** Chief Executive Officer Certification *In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
~~31.2~~ Chief Financial Officer Certification *
32 Section 1350 Certification **
~~101.INS~~ XBRL Instance Document *
~~101.SCH~~ XBRL Schema Document *
~~101.CAL~~ XBRL Calculation Linkbase Document *
~~101.DEF~~ XBRL Definition Linkbase Document *
~~101.LAB~~ XBRL Label Linkbase Document *
~~101.PRE~~ XBRL Presentation Linkbase Document *
* ~~Filed herewith~~
** ~~Furnished herewith~~
37
SIGNATURES

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

BIORESTORATIVE THERAPIES, INC.
~~Date: November 13, 2019~~By: ~~BIORESTORATIVE THERAPIES, INC.~~/s/ Lance Alstodt

~~By:~~ ~~/s/ Mark Weinreb~~
Lance Alstodt ~~Mark Weinreb~~
Chief Executive Officer, President, and Chairman of the Board
(Principal Executive Officer and Principal Financial Officer)
Date:
April 12, 2021

38 42

	Three Months Ended September 30, 2019
					Additional
	Common Stock				Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance - July 1, 2019		19,793,477	$	19,793	$	63,000,354	$	(71,962,618	)	$	(8,942,471	)

Shares issued in exchange for notes payable and accrued interest		3,924,277		3,924		1,161,373		-			1,165,297

Reclassification of derivative liabilities to equity		-		-		171,569		-			171,569

Stock-based compensation:
- options		-		-		234,045		-			234,045

Net loss		-		-		-		(5,056,973	)		(5,056,973	)
Balance - September 30, 2019		23,717,754	$	23,717	$	64,567,341	$	(77,019,591	)	$	(12,428,533	)

	Three Months Ended September 30, 2018
					Additional
	Common Stock				Paid-In			Accumulated
	Shares		Amount		Capital			Deficit			Total
Balance - July 1, 2018		6,747,501	$	6,747	$	47,551,776		$	(57,426,536	)	$	(9,868,013	)

Shares and warrants issued for cash		60,000		60		74,940			-			75,000

Conversion of notes payable and accrued interest into common stock		70,406		70		57,662			-			57,732

Shares issued in exchange for notes payable and accrued interest		1,785,599		1,786		3,696,803			-			3,698,589

Shares issued and recorded as debt discount inconnection with notes payable issuances or extensions		23,333		23		33,973			-			33,996

Beneficial conversion features related to convertible notes payable		-		-		47,876			-			47,876

Warrant modifications		-		-		3,100			-			3,100

Reclassification of derivative liabilities to equity		-		-		105,187			-			105,187

Stock-based compensation:
- common stock		35,000		35		52,465			-			52,500
- options and warrants		-		-		(218,853	)		-			(218,853	)

Net loss		-		-		-			(2,925,261	)		(2,925,261	)
Balance - September 30, 2018		8,721,839	$	8,721	$	51,404,929		$	(60,351,797	)	$	(8,938,147	)

	Nine Months Ended September 30, 2019
					Additional
	Common Stock				Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance - January 1, 2019		11,728,394	$	11,728	$	55,269,490	$	(63,922,256	)	$	(8,641,038	)

Shares and warrants issued for cash		2,191,111		2,191		254,120		-			256,311

Shares issued in satisfaction of accrued consulting services		10,000		10		7,190		-			7,200

Shares issued in exchange for notes payable and accrued interest		9,634,376		9,634		4,729,383		-			4,739,017

Shares issued and recorded as debt discount in connection with notes payable issuances or extensions		78,873		79		61,141		-			61,220

Reclassification of derivative liabilities to equity		-		-		2,809,565		-			2,809,565

Stock-based compensation:
- common stock		75,000		75		29,925		-			30,000
- options		-		-		1,406,527		-			1,406,527

Net loss		-		-		-		(13,097,335	)		(13,097,335	)
Balance - September 30, 2019		23,717,754	$	23,717	$	64,567,341	$	(77,019,591	)	$	(12,428,533	)

	Nine Months Ended September 30, 2018
					Additional
	Common Stock				Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance - January 1, 2018		6,112,473	$	6,112	$	44,561,773	$	(51,404,453	)	$	(6,836,568	)

Shares and warrants issued for cash		70,000		70		99,930		-			100,000

Exercise of warrant for purchase of common stock		207,084		207		413,961		-			414,168

Shares and warrants issued in satisfaction of accrued consulting services		19,000		19		37,981		-			38,000

Conversion of notes payable and accrued interest into common stock		97,424		97		110,539		-			110,636

Shares and warrants issued in exchange for notes payable and accrued interest		2,106,525		2,107		4,338,074		-			4,340,181

Shares issued and recorded as debt discount in connection with notes payable issuances or extensions		74,333		74		121,379		-			121,453

Warrant modifications		-		-		3,100		-			3,100

Beneficial conversion features related to convertible notes payable		-		-		69,394		-			69,394

Reclassification of derivative liabilities to equity		-		-		105,187		-			105,187

Stock-based compensation:
- common stock		35,000		35		52,465		-			52,500
- options and warrants		-		-		1,491,146		-			1,491,146

Net loss		-		-		-		(8,947,344	)		(8,947,344	)
Balance - September 30, 2018		8,721,839	$	8,721	$	51,404,929	$	(60,351,797	)	$	(8,938,147	)

	September 30, 2019		December 31, 2018
Accrued payroll and other accrued expenses	$	43,779	$	91,560
Accrued research and development expenses		746,175		646,175
Accrued general and administrative expenses		1,320,104		1,084,831
Accrued director compensation		507,500		482,500
Deferred rent		7,865		33,610
Total accrued expenses		2,625,423		2,338,676
Less: accrued expenses, current portion		2,625,423		2,302,176
Accrued expenses, non-current portion	$	-	$	36,500

	Related Party			Convertible			Other			Debt
	Notes			Notes			Notes			Discount			Total
Outstanding, January 1, 2019	$	720,000		$	4,309,415		$	132,501		$	(1,012,363	)	$	4,149,553
Issuances		485,000			8,543,089	[1]		-			-			9,028,089
Exchanges for equity		-			(2,032,323	)		-			455,969			(1,576,354	)
Repayments		(45,000	)		(3,484,105	)		(7,500	)		428,939			(3,107,666	)
Extinguishment of notes payable		-			-			(148,014	)[1]		6,196			(141,818	)
Recognition of debt discount		-			-			-			(4,288,794	)		(4,288,794	)
Accretion of interest expense		-			-			-			375,344			375,344
Accrued interest reclassified to notes payable principal		-			-			23,013			-			23,013
Amortization of debt discount		-			-			-			3,221,904			3,221,904
Outstanding, September 30, 2019 [2]	$	1,160,000		$	7,336,076	[3]	$	-		$	(812,805	)	$	7,683,271

Beginning balance as of January 1, 2019	$	1,094,607
Issuance of derivative liabilities		5,195,089
Extinguishment of derivative liabilities in connection with convertible note repayments and exchanges		(2,557,373	)
Change in fair value of derivative liabilities		268,350
Reclassification of derivative liabilities to equity		(2,809,565	)
Ending balance as of September 30, 2019	$	1,191,108

	Principal
Maturity Date	Amount
Past Due	$	593,400
QE 12/31/2019		2,810,000
QE 3/31/2020		1,120,000
QE 6/30/2020		2,118,638
QE 9/30/2020		1,698,227
QE 12/31/2020		89,250
	$	8,429,515

	Nine Months Ended September 30,
	2020			2019
Net cash used in operating activities	$	(1,392,145	)	$	(5,107,743	)
Net cash used in investing activities		-			(35,631	)
Net cash provided by financing activities		1,566,475			5,123,964
Increase (decrease) in cash	$	174,330		$	(19,410	)

●	Inadequate segregation of duties due to limited personnel consistent with control objectives;
●	Adherence to formal policies and procedures post-bankruptcy; and
●	Lack of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner.

			Warrants
Date Issued	Common Stock		Shares		Exercise Price		Term (Years)		Purchaser(s)			Consideration (1)
7/2/19-7/31/19		143,103		-	$	-		-		(2	)	$	80,002	(3)
7/11/19-7/15/19		461,663		-	$	-		-		(2	)	$	27,140	(3)
7/17/19-7/25/19		27,472		-	$	-		-		(2	)	$	65,896	(3)
7/25/19		405,764		-	$	-		-		(2	)	$	5,000	(3)
7/29/19-8/1/19		297,375		-	$	-		-		(2	)	$	45,017	(3)
8/8/19		71,556		-	$	-		-		(2	)	$	10,000	(3)
8/12/19-9/30/19		1,973,381		-	$	-		-		(2	)	$	237,614	(3)
8/21/19-9/10/19		543,963		-	$	-		-		(2	)	$	60,056	(3)

~~(1)~~	~~The value of the non-cash consideration was estimated by management based on observations of the cash sales prices of freely tradable shares.~~
~~(2)~~	~~Accredited investor.~~
~~(3)~~	~~Issued in connection with the exchange of convertible notes payable.~~

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date
3.1	Certificate of Incorporation, as amended	10-K	3.1	03/18/2021
3.2	Bylaws	8-K	3.4	12/23/2014
31.1*	Certification of Principal Executive Officer
31.2*	Ceritfication of Principal Financial Officer
32.1**	Section 1350 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 Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

~~Exhibit~~*		~~Description~~Filed herewith.
~~3.1~~		Certificate of Incorporation, as amended*
~~10.1~~		Amended and Restated Exchange Agreement, dated as of July 26, 2019, between BioRestorative Therapies, Inc. and John M. Desmarais (incorporated by reference to the Company’s Current Report on Form 8-K for an event dated July 26, 2019, wherein such document is identified as Exhibit 10.2)
~~10.2~~		Amended and Restated Exchange Agreement, dated as of July 26, 2019, between BioRestorative Therapies, Inc. and Tuxis Trust (incorporated by reference to the Company’s Current Report on Form 8-K for an event dated July 26, 2019, wherein such document is identified as Exhibit 10.3)
~~31.1~~	**	Chief Executive Officer Certification *In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
~~31.2~~		Chief Financial Officer Certification *
32		Section 1350 Certification **
~~101.INS~~		XBRL Instance Document *
~~101.SCH~~		XBRL Schema Document *
~~101.CAL~~		XBRL Calculation Linkbase Document *
~~101.DEF~~		XBRL Definition Linkbase Document *
~~101.LAB~~		XBRL Label Linkbase Document *
~~101.PRE~~		XBRL Presentation Linkbase Document *

*		~~Filed herewith~~
**		~~Furnished herewith~~

~~Date: November 13, 2019~~By:	~~BIORESTORATIVE THERAPIES, INC.~~/s/ Lance Alstodt

	~~By:~~	~~/s/ Mark Weinreb~~
Lance Alstodt		~~Mark Weinreb~~
		Chief Executive Officer, President, and Chairman of the Board
		(Principal Executive Officer and Principal Financial Officer)
Date:	April 12, 2021