0001591165 HCYT:ProceedsAllocationMember HCYT:DerivativeLiabilityMember 2019-11-21

As filed with the Securities and Exchange Commission on June 17, 2016

February 10, 2022

Registration No. 333-[●]

333-262553

 


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,

WASHINGTON, D.C. 20549

Pre-Effective Amendment No. 1

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


MEDOVEX CORPORATION
(Exact name of registrant as specified in its charter)

Nevada3841

H-CYTE, INC

46-3312262
(Exact name of registrant as specified in its charter)

Nevada46-3312262

(State or other jurisdiction

of incorporation or organization)incorporation)

(Primary Standard Industrial Classification Code Number)

(I.R.S.IRS Employer

Identification No.)

3279 Hardee Avenue
Atlanta, Georgia 30341
(844)

3841

Primary Standard Industrial Classification Code Number

201 E Kennedy BlvdSuite 700

Tampa, FL 33602

(844) 633-6839

 (Address,

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

Jeff Wright

Michael Yurkowsky

Chief FinancialExecutive Officer

 MEDOVEX CORP.
 1735 Buford Hwy.

201 E Kennedy Blvd., Suite 215-113

Cumming, Georgia 30041
(844) 700

Tampa, FL33602

(844) 633-6839

 (Name,

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

Harvey Kesner, Esq.
Arthur S. Marcus, Esq.
Sichenzia Ross Friedman Ference LLP
61 Broadway, 32nd Floor
New York, NY 10006
(212) 930-9700

Copies to:

Arthur Marcus, Esq.

Sichenzia Ross Ference LLP

1185 Avenue of the Americas, 31st Floor

New York, New York 10036

Phone: (212) 930-9700

Approximate date of commencement of proposed sale of the securities to the public:  As soon as practicableFrom time to time after the effective date of this Registration Statement.

registration statement.

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

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

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

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

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

Act:

Large accelerated filer¨AcceleratedNon-accelerated filer¨
Non-acceleratedAccelerated filer¨Smaller reporting companyx
(Do not check if a smaller reporting company)Emerging growth company


CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF
SECURITIES TO BE REGISTERED
 
AMOUNT TO BE
REGISTERED(1)
  
PROPOSED MAXIMUM OFFERING PRICE
PER SHARE
  
PROPOSED MAXIMUM
AGGREGATE OFFERING PRICE(1)
  AMOUNT OF REGISTRATION FEE 
Shares Underlying Existing Series A Warrants, Common Stock, $0.001 par value(3)
  1,391,305   3.00   4,173,915  $420.31 
Shares Underlying Existing Warrants, Common Stock, $0.001 par value  500,000  $1.66  $830,000  $83.58 
Existing Stockholders Shares of common stock, $0. 001 par value  1,211,760  $1.66  $2,011,521.60  $202.56 
Shares of common stock, $0. 001 par value, underlying warrants  787,863  $1.66  $1,307,852,58  $131.70 
Total  3,890,928      $8,323,289.18  $838.15 
(1)Pursuant to Rule 416 under the Securities Act, the shares of common stock offered hereby also include an indeterminate number of additional shares of common stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions.
(2)  Estimated at $1.66 per share, the average of the high and low prices as reported on the NASDAQ Capital Market on June 13, 2016, for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act.
(3)
The shares of common stock underlying the Series A Public Warrants being registered hereby were previously registered on a Form S-1, as amended, originally filed by the Registrant with the Securities and Exchange Commission (the “SEC”) on September 8, 2014. The registration fees for these shares were previously paid (Registration #333-198621).

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

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

 

The information in this prospectus is not complete and may be changed. WeThese securities may not sell these securitiesbe sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.


EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be used in connection with a public offering of 1,391,305 shares of our common stock (the “Prospectus”), which underlie existing, previously registered Series A Warrants; and another prospectus to be used in connection with the potential resale by certain selling stockholders of an aggregate of 2,499,623 shares of our common stock (the “Selling Securityholder Prospectus”), consisting of (i) 1,287,863 shares of our common stock issuable upon exercise of warrants held by certain of the selling stockholders; and (ii) 1,211,760 shares of our common stock held by certain of the selling stockholders.  The Prospectus and Selling Securityholder Prospectus will be identical in all respects except for the alternate pages for the Selling Securityholder Prospectus included herein which are labeled “Alternate Page for Selling Securityholder Prospectus.”
The Selling Securityholder Prospectus is substantively identical to the Prospectus, except for the following principal points:
they contain different outside and inside front covers;
they contain different Offering sections in the Prospectus Summary section on page 3;
they contain different Use of Proceeds sections on page 21;
a Selling Securityholder section is included in the Selling Securityholder Prospectus beginning on page Alt-1;
The Company has included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the Selling Securityholder Prospectus as compared to the Prospectus.
-i-

We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any statejurisdiction where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED JUNE [●], 2016FEBRUARY 10, 2022


MEDOVEX CORPORATION

  1,391,305

363,146,765 Shares of Common stock


MedoveX Corporation (the “Company”) is registering 1,391,305Stock Offered by the Selling Stockholders

This prospectus relates to the offering and resale by the selling stockholders identified herein of up to 363,146,765 shares, underlying existing, previously registered Series A Warrants to purchaseincluding 350,996,043 shares of common stock issuable upon the exercise of outstanding unregistered warrants previously issued by us on April 14, 2020 at an exercise price of $0.014 per share, and 12,150,722 shares of common stock. Please see “Private Placement of Shares of Common Stock, Warrants” beginning on page 49 of this prospectus.

We will not receive any proceeds from the sale of shares of common stock by the selling stockholders. Upon the cash exercise of the Company at $3.00 per share.

warrants however, we will receive the exercise price of such warrants, for an aggregate of approximately $4,913,945 upon exercise of such warrants by the investors.

The selling stockholders may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. Please see the section entitled “Plan of Distribution” on page 52 of this prospectus for more information. For information on the selling stockholders, see the section entitled “Selling Stockholders” on page 49 of this prospectus. We will bear all fees and expenses incident to our obligation to register the shares of common stock.

Our common stock is quoted on the NASDAQ Capital MarketOTCQB under the symbol of “MDVX.“HCYT.Our Series A Warrants are traded onOn January 27, 2022, the NASDAQ Capital Market under the symbol of “MDVXW.”  The last reported sale price per share of our common stock on June 16, 2016, was $1.89 per share.

$0.046.

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

Investing in our common stock involves a high degree of risk. See “Risk Factors” withinbeginning on page 3 of this prospectus.

prospectus for a discussion of information that you should consider before investing in our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is February 10, 2022


Prospectus dated June [●], 2016.
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TABLE OF CONTENTS
 

TABLE OF CONTENTS

Page
1ii
Risk Factors
Prospectus Summary
51
2
Risk Factors3
Special Note Regarding Forward-Looking Statements and Information2119
2119
2119
Market Information
Our Business
2220
2324
Business
Management
2835
Management
Executive and Director Compensation
3540
4541
4743
4944
Experts
Private Placement of Shares of Common Stock, Warrants and Pre-Funded Warrants
5149
Legal Matters
Selling Stockholders
5149
52
Legal Matters53
Experts53
Where You Can Find More Information5153
F-1

i

ABOUT THIS PROSPECTUS

You shouldmay only rely only on the information contained in this prospectus.prospectus or that we have referred you to. We have not and the underwriters have not, authorized any other personanyone to provide you with different information. If anyone provides you with different or inconsistent information, you shouldThis prospectus does not rely on it.  We are not, and the underwriters are not, makingconstitute an offer to sell theseor a solicitation of an offer to buy any securities other than the common stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus. For investors outside the United States: Neither we nor the selling stockholders have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the offerUnited States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.

Unless the context otherwise requires, references to “we,” “our,” “us,” or sale is not permitted.  You should assume that the information appearing“Company” in this prospectus is accurate only as of the date on the front cover of this prospectus or other date stated in this prospectus.  Our business, financial condition, liquidity, results of operations, cash flows and prospects may have changed since that date.mean H-Cyte, Inc., a Nevada corporation.

ii

We obtained statistical data, market data and other industry data and forecasts used throughout this prospectus from market research, publicly available information and industry publications. Industry publications generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy and completeness of the information. Nevertheless, we are responsible for the accuracy and completeness of the historical information presented in this prospectus, as of the date of the prospectus.
-iii-

PROSPECTUS SUMMARY


This summary highlights information contained elsewhere in other parts of this prospectus. Because it is only a summary, itprospectus and does not contain all of the information that you should consider beforein making your investment decision. Before investing in our securitiescommon stock, you should carefully read this entire prospectus, including our financial statements and it is qualifiedthe related notes and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its entirety by, and should be read in conjunction with, the more detailed information appearingeach case included elsewhere in this prospectus. You should read

Overview

H-CYTE, Inc (“the entire prospectus carefully, especiallyCompany”) is a hybrid-biopharmaceutical company dedicated to developing and delivering new treatments for patients with chronic respiratory and pulmonary disorders. During the section entitled “Risk Factors”last two years, the Company has evolved into two separate divisions with its entrance into the biologics development space (“Biologics Division”). This new division is complementary to the Company’s current Lung Health Institute (LHI) autologous infusion therapy business (“Infusion Division”) and our consolidated financial statements and related notes, before deciding to buy our securities. Unless otherwise stated, all references to “us,” “our,” “we,” “MedoveX,”is focused on underserved disease states. On September 8, 2021, the “Company” and similar designations refer to MedoveX Corporation, and depending on the context,Company announced that its subsidiaries.


MEDOVEX CORPORATION
Overview
MedoveX was incorporated in Nevada on July 30, 2013 as Spinez Corp. MedoveX is the parent company of Debride, which was incorporated under the laws of Florida on October 1, 2012, but did not commence operations until February 1, 2013.  Spinez Corp.Lung Health Institute facilities changed its name to MedoveX Corp.Centers for Respiratory Health as the clinics continue to deliver treatments for patients with chronic respiratory and effected a 2-for-1 reverse splitpulmonary disorders.

The consolidated results for H-CYTE include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC is the operator and manager of its stockthe various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI Pittsburgh clinics did not reopen in March, 2014.


The goal2020 after the temporary closure of all LI clinics due to COVID-19. These two clinics will remain permanently closed.

On September 11, 2020, with the closing of the Rights Offering, FWHC, LLC, FWHC Bridge, LLC, and FWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company isby subsequently owning approximately 61% of the fully diluted shares of the Company (for further discussion, see Notes 8 and 9-”Equity Transactions” to obtain,the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

Autologous Infusion Therapy (“Infusion Division”)

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

Biotech Development (“Biologics Division”)

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

On October 9, 2019, the Company entered into a services agreement with Rion which provides the Company the benefit of medical devices. We intend to leverageRion’s resources and expertise for the extensive experiencelimited purpose of our board of directors(i) consulting with and management teamassisting H-CYTE in the medical industryfurther research and development for the generation of a new biologic and (ii) subsequently assisting H-CYTE in seeking and obtaining FDA Phase 1 IND clearance for this biologic as necessary. Rion has completed the research and development work which is under review by the Company. The Company is assessing if the Rion combined proprietary biologic is a more viable solution than potentially progressing with a single entity biologic from an alternative commercial source.

On April 2, 2021, the Company entered into a series of agreements with Medovex, LLC to seek out product candidates for licensing, acquisition or development. On March 25, 2015, we acquired Streamline, Inc. for approximately $1,325,000 in cashpursue a joint venture regarding the continued development and 1,875,000 sharescommercialization of our common stock.  


The DenerveX Device

Our first acquisition was the DenerveX device.  We believe that the DenerveX device can be developed to encompass a numberfor business outside of medical applications, including pain relief.  
the U.S. The Company acquiredhas determined that the DenerveX patent on January 31, 2013transactions resulting from Scott Haufe, M.D. (“Dr. Haufe”), a directorthe series of agreements with Medovex, LLC are immaterial. The Company will assess the progress of the Company, in exchangejoint venture on a quarterly basis for 750,108 shares of common stock in the Company and a 1% royalty on all sales of any product sold based on the patent. In September 2013, we entered into a Co-Development Agreement with James Andrews, M.D. (“Dr. Andrews”), a director of the Company, whereby Dr. Andrews committed to further evaluate the DenerveX device and to seek to make modifications and improvements to such technology.  In exchange for such services, the Company agreed to pay Dr. Andrews a royalty equal to two (2%) percent of the DenerveX net sales during the five (5) year term of the Co-Development Agreement. Upon the termination of the term of the Co-Development Agreement, which has a minimum term of five (5) years, then the royalty payable to Dr. Andrews shall be reduced to one (1%) percent of DenerveX net sales after such termination of products covered by any U.S. patent on which Dr. Andrews is listed as a co-inventor; if any such patents are obtained.  Such one (1%) percent royalty shall continue during the effectiveness of such patent.  Pursuant to the Co-Development Agreement, Dr. Andrews agreed to assign any modifications or improvements to the DenerveX to the Company subject to the royalty rights described above.
materiality.


Our intention is to market the product as a disposable, single-use kit which will include all components of the DenerveX product. In addition to the DenerveX device itself, we are developing a dedicated Electro Surgical Generator to power the DenerveX device. The generator would be provided to customers agreeing to purchase the DenerveX device, and could not be used for any other purpose.

We accepted a proposal from Devicix, a Minneapolis, Minnesota third party design and development firm, in November 2013, to develop a prototype device. This proposal included a 5 phase development plan, culminating in the production of a prototype that could be used for validation purposes. Currently we are in the build and test phase of the device, which focuses on completing the product design verification testing, design optimization as required, and the completion of manufacturing transfer. Through March 31, 2016, we have paid approximately $1,183,000 to Devicix.

In November 2014, we selected Nortech Systems Inc. (“Nortech”), a Minneapolis, Minnesota based FDA registered contract manufacturer, to produce 315 DenerveX devices from the prototype supplied by Devicix for use in final development and clinical trials. The agreement with Nortech includes agreed upon per unit prices for delivery of the devices. Actual work on development of the final units began in November 2014. Through March 31, 2016, we have paid approximately $318,000 to Nortech.

Also in November 2014, we engaged Bovie Medical Corporation (“Bovie”), a Delaware Corporation, to develop the Electro Surgical Generator and provide post production support services.  Per our agreement with Bovie, we are invoiced based on deliverables produced by Bovie, which will amount to $295,000 upon completion of all the deliverables. Through March 31, 2016, we have paid approximately $287,000 to Bovie towards the $295,000 total.  

-1-

Streamline, Inc. Merger

On March 9, 2015, the Board of Directors of MedoveX and Streamline, Inc., a Minnesota corporation (“Streamline”), approved an Agreement and Plan of Merger (the “Merger Agreement”). On March 24, 2015, Streamline shareholders approved the Merger Agreement and the transaction was closed immediately thereafter. Under the Merger Agreement, STML Merger Sub, Inc. a wholly-owned subsidiary of MedoveX, merged into Streamline, after which Streamline became a wholly-owned subsidiary of MedoveX. Streamline is in the business of designing, developing, manufacturing and marketing 510(k) exempt products for use in the medical field. MedoveX intends, although there can be no assurance, to enter into a marketing agreement with a leading hospital bed manufacturer to market Streamline’s patented IV Suspension System as an option with its hospital beds, and pursue other marketing opportunities for the product.  Our President and Chief Operating Officer, Patrick Kullmann, was formerly the Chief Executive Officer of Streamline.  However, Mr. Kullmann held no securities of Streamline.
All Streamline dilutive securities were either exercised or terminated prior to the closing, resulting in 4,709,491 shares of Streamline’s common stock outstanding immediately prior to closing. Net proceeds from these exercises (after statutory withholdings and certain transaction expenses) were included in the amount of cash available to Streamline stockholders. Each share of Streamline common stock may be exchanged by its holder for approximately $0.29 in cash and approximately 0.35 shares of MedoveX common stock after submitting properly executed documents to a 3rd  party paying agent. All Streamline holders have submitted the proper documents to the paying agent with the exception of 2 holders representing 2,596 shares of MedoveX stock. Additionally, 200,000 shares of MedoveX common stock is being held in escrow until September 24, 2016 to secure Streamline’s indemnification obligations under the Merger Agreement.

Assuming the remaining Streamline shareholders submit their documents, in aggregate, this transaction will have resulted in the issuance of 1,875,000 shares of MedoveX common stock, (including the (200,000 shares are being held in escrow) and the distribution of approximately $1,325,000 of cash to Streamline shareholders.  The terms of the Merger Agreement also required a commitment by MedoveX to supply a minimum of $750,000 in working capital to the Streamline subsidiary.
The IV Suspension System (“ISS”)

On March 24, 2015, we acquired the patent rights to the Streamline ISS product as part of the Company’s acquisition of Streamline. There are no royalties or other commitments associated with the sale of this product. The product has already been manufactured at a contract facility in North Dakota and requires no regulatory approval for sale. The ISS is a system designed to allow the transportation of IV poles secured to hospital beds such that one person could move a patient without fear of separating the IV pole from the patient during transport.

While there are several “bed and boom” transfer systems on the market, we are not aware of any that take the Streamline patented approach to addressing IV pole transportation. Nevertheless, other bed transportation products have been on the market longer and have larger organizations marketing their products. The hospital market in general is highly competitive, and introducing any new product is difficult and time consuming.

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1
THE OFFERING

THE OFFERING

IssuerH-Cyte, Inc
Common
Securities Offered by the Selling Stockholders12,150,722 shares of common stock and 350,996,043 shares of common stock issuable upon the exercise of warrants.
Trading MarketThe common stock offered by us in this offering:1,391,305 shares ofprospectus is quoted on the Company’s $0.001 par value common stock
Common stock outstanding before and after this offering:
12,855,803 shares(1) and 14,247,108(2)
Use of proceeds:Proceeds of any exercise of Series A Warrants will be used primarily for general corporate purposes. See “Use of Proceeds” below.
NASDAQ Market symbol:“MDVX” (with our Series A Warrants are tradedOTCQB under the symbol “MDVXW”)“HCYT”.
Risk factors:Common Stock Outstanding Before this OfferingYou should carefully consider167,857,522 shares
Common Stock Outstanding After this Offering531,004,2871 shares
Use of ProceedsWe will not receive any of the information set forth in this prospectus and, in particular,proceeds from the specific factors set forth insale of the “Risk Factors” section beginning on page 5 of this prospectus before deciding whether or not to invest in shares of our common stock.
(1) Based on 12,855,803 shares of our common stock issuedbeing offered for sale by the selling stockholders. Upon the exercise of the warrants for an aggregate of 350,996,043 shares of common stock by payment of cash however, we will receive the exercise price of the warrants, or an aggregate of approximately $4,913,945 from the investors.
Plan of DistributionThe selling stockholders may sell all or a portion of the shares of common stock beneficially owned by them and outstanding on June 16, 2016.offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. Registration of the common stock covered by this prospectus does not mean, however, that such shares necessarily will be offered or sold. See “Plan of Distribution.”
Risk FactorsPlease read “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in the securities offered in this prospectus.

(2) 1The number of shares of common stock shown above to be outstanding after thethis offering is based on (i) 12,855,803167,857,522 shares outstanding as of June 16, 2016January 25, 2022, prior to the closing of the offering, and assumes the exercise of the previously registered, publicly traded Series A Warrantswarrants into an aggregate of 1,391,305350,996,043 shares of common stock.

2
-3-

SUMMARY HISTORICAL FINANCIAL DATA
The following selected financial information is derived from our Financial Statements, which are included elsewhere

RISK FACTORS

An investment in this Prospectus and should be read in conjunction with our Financial Statements, including the notes thereto.

  
Fiscal Year Ended
December 31, 2015
(audited)
  
Fiscal Year Ended
December 31, 2014
(audited)
  
Three Months
Ended
March 31, 2016
(unaudited)
  
Three Months
Ended
March 31, 2015
(unaudited)
 
BALANCE SHEET:            
Total Assets $11,531,734  $6,865,756  $10,244,572  $15,680,568 
Total Liabilities $1,509,009  $360,107  $688,909  $1,060,348 
Stockholders’ Equity $10,022,725  $6,505,649  $9,555,663  $14,620,220 
                 
STATEMENT OF OPERATIONS:                
Revenues $33,045   -   -   - 
Net Loss $6,523,077  $2,937,032  $1,832,286  $1,454,442 
-4-

RISK FACTORS
There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of ourCompany’s common stock could decline and investors could loseinvolves a high degree of risk. In determining whether to purchase the Company’s common stock, an investor should carefully consider all or part of their investment.
Risks Related to Our Business
Discussion of our business and operations includedthe material risks described below, together with the other information contained in this prospectus should be read together with the risk factors set forth below. They describe various risks and uncertaintiesbefore making a decision to which we are or may become subject. These risks and uncertainties, together with other factors described elsewhere in this report, have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner.  New risks may emerge at any time, and we cannot predict those risks or estimate the extent to which they may affect our financial performance. Each of the risks described below could adversely impact the value of our securities.  These statements, like all statements in this report, speak only as of the date of this prospectus (unless another date is indicated), and we undertake no obligation to update or revise the statements in light of future developments.
We cannot assure you that we will be successful in commercializing any ofpurchase the Company’s productssecurities. An investor should only purchase the Company’s securities if he or if anyshe can afford to suffer the loss of our products are commercialized, that they will be profitable for the Company.
The Company generates limited revenue from operations upon which an evaluation of our prospects can be made.  The Company’s prospects must be considered keeping in mind the risks, expenses and difficulties frequently encountered in the establishment of a new business in a constantly changing industry.  There can be no assurance that the Company will be able to achieve profitable operations in the foreseeable future, if at all.
The Company has identified a number of specific risk areas that may affect our operations and results in the future:
his or her entire investment.

Risks Related to Our Financial PositionCondition

We will be required to raise additional funds to finance our operations and Capital Requirements

remain a going concern; we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.

Our operations to date have consumed substantial amounts of cash and we have sustained negative cash flows from our operations for the last several years. We will require future additional capital infusions including public or private financing, strategic partnerships or other arrangements with organizations that have capabilities and/or products that are a development stage company and face uncertainties associated with being an early stage venture.


Our operating subsidiary, Debride, was incorporatedcomplementary to our own capabilities and/or products, in October 2012.  MedoveX was incorporated on July 30, 2013.  As of December 31, 2015, we had material non-cash assets of goodwill, trademarks, and developed technology in connection withorder to execute our acquisition of Streamline Inc. Other material non-cash assets include the intellectual property relating to the DenerveX obtained from Scott M. W. Haufe, M.D. in connection with our acquisition of Debride.

We face all of the potential expenses, delays, uncertainties and complications typically encountered by development stage businesses, many of which may be beyond our control.  

These include, but are not limited to, lack of sufficient capital, unanticipated problems, delays or expenses relating to product development and licensing and marketing activities, competition, technological changes and uncertain market acceptance.  In addition, if we are unable to manage growth effectively, our operating results could be materially and adversely affected.

We are in the early stage of product development andstrategic vision. However, there can be no assuranceassurances that we will effectivelycomplete any financings, strategic alliances or collaborative development agreements, and successfullythe terms of such arrangements may not be advantageous to us. Our auditors have indicated in their audit opinion that there is substantial doubt about our ability to continue as a going concern, which will affect our ability to raise capital or borrow money. In addition, any additional equity financing will be dilutive to our current stockholders and debt financing, if available, may involve restrictive covenants. If we raise funds through collaborative or licensing arrangements, we may be required to relinquish, on terms that are not favorable to us, rights to some of our technologies or drug candidates that we would otherwise seek to develop or commercialize. Our failure to raise capital when needed could materially harm our business, financial condition, and results of operations.

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

Historically, we have been a clinical development company with a limited line of medical services and products in the markets. We offer two types of cellular therapy treatments to our patients and collect payments for commercialization.

these services. In the past, we generated revenue from the sales of the DenerveX product, the business line of which we discontinued in 2019. While we do generate revenue, we are still operating at a loss, and there is no guarantee that we will be able to grow the revenues enough to offset our costs to realize profitability.

To date, we have had immaterial sales related to the Streamline ISS Poles.  The Denervex device we are developing has had only limitednot been profitable and our accumulated deficit was approximately $47,911,000 and $43,859,000 at September 30, 2021 and December 31, 2020, respectively. Our losses have resulted principally from costs incurred in research and testing indevelopment, the fieldsoperations of usethe Lung Health Clinics, and from general and administrative costs associated with our operations and being a public company. In order to commercialize our assets, we are presently intendingwill need to exploreconduct substantial additional research, development and to commercialize.clinical trials. We will have to continue to go through extensive research and testing to develop the initial product and any additional products and to determine or demonstrate the safety and effectiveness of their proposed use.  Our products and our proposed testing of those products will require various regulatory approvals and clearances.  Accordingly, the products we intend to pursue are not presently marketable in the fields of use for which we hope to develop them, and it is possible that some or all of them may never become legally and commercially marketable.  The development and testing of medical devices and related treatments and therapies is difficult, time-consuming and expensive, and the successful development of any products based on innovative technologies is subject to inherent uncertainties and risks of failure.  These risks include the possibilities that any or all of the proposed products or procedures may be found to be ineffective, or may otherwise failalso need to receive necessary regulatory clearances; thatclearances in the proposed productsUnited States and obtain meaningful patent protection for and establish freedom to commercialize each of our product candidates. We must also complete further clinical trials and seek regulatory approvals for any new product candidates we discover, in-license, or procedures mayacquire. We cannot be uneconomical to producesure whether and when we will obtain required regulatory approvals, or successfully research, develop, commercialize, manufacture and market or may never achieve broad market acceptance;any other product candidates. We expect that third parties may hold proprietary rights that preclude the Company from marketing its intended products or procedures; or that third parties may developthese activities, together with future general and market superior or equivalent products and procedures.  We are unable to predict whether our research and development or acquisitionadministrative activities, will result in any commercially viable products or procedures.  Furthermore, due to the extended testing and regulatory review process required before marketing clearances can be obtained, the time frames for commercialization of any products or procedures are long and uncertain.

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We expect to continue to incur losses for the immediate future.
We have incurred losses since our inception.  We expect to continue to incur losses for the foreseeable future. The principal causes of our losses are likely to be personnel costs, working capital costs, research and development costs, intellectual property protection costs, brand development costs, marketing and promotion costs, and the lack of any significant revenue streamexpenses for the foreseeable future. We may never achieve profitability.

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

Because we have limited resources, we have sought to enter into collaboration agreements with other companies that will assist us in developing, testing, obtaining governmental approval for and commercializing products. We may be unable to achieve commercialization of any of our product candidates until we obtain a large partner to assist us in such commercialization efforts.

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

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

Our independent registered public accounting firm has included an explanatory paragraphdisclosure controls and procedures and internal control over financial reporting may not be effective in future periods as a result of existing or newly identified material weaknesses in internal controls.

Effective internal controls are necessary for us to provide reasonable assurance with respect to our abilityfinancial reports and to continue as a going concern in its report on our consolidated financial statements for the period ended December 31, 2015.

Our independent registered public accounting firm has included an explanatory paragrapheffectively prevent fraud. If we cannot provide reasonable assurance with respect to our abilityfinancial reports and effectively prevent fraud, our reputation and operating results could be harmed. Pursuant to continue asthe Sarbanes-Oxley Act of 2002, we are required to furnish a going concern in its report by management on our consolidatedinternal control over financial statements for the period ended December 31, 2015. The presencereporting, including management’s assessment of the going concern explanatory paragraph may have an adverse impact oneffectiveness of such control. If we fail to maintain the adequacy of our relationship with third parties with whominternal controls, including any failure to implement required new or improved controls, or if we do business, including our customers, vendors and employees and could make it challenging and difficult for us to raise additional debt or equity financing to the extent needed, all of which could have a material adverse impact onexperience difficulties in their implementation, our business results of operations, financial condition and prospects.   

Raising additional capital and carrying out further acquisitions may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or products.
We will likely seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect stockholder rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring debt, making capital expenditures or declaring dividends.
If we raise or expend additional funds through strategic partnerships, acquisitions, alliances and/or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies or products, or grant licenses on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves.
Our operating results may fluctuate significantly as a resultcould be adversely impacted, we could fail to meet our reporting obligations, and our business and stock price could be adversely affected.

At September 30, 2021, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of a variety of factors, many of which are outsidethe design and operation of our control, which could cause fluctuationsdisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the priceSecurities Exchange Act of our securities.

We are1934, as amended (the “Exchange Act”) and concluded that, subject to the following factorsinherent limitations, our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal control over financial reporting because of inadequate segregation of duties over authorization, review and recording of transactions, as well as the financial reporting of such transactions.

We believe we have taken appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies, however we cannot be certain that our remediation efforts will ensure that our management designs, implements and maintains adequate controls over our financial processes and reporting in the future or that the changes made will be sufficient to address and eliminate the material weaknesses previously identified. The audit committee has requested a plan be prepared with the steps necessary to remedy such deficiencies and is waiting the preparation of such plan. Our inability to remedy any additional deficiencies or material weaknesses that may negatively affect our operating results:

the announcement or introduction of new products by our competitors;
our ability to upgrade and develop our systems and infrastructure to accommodate growth;
our ability to attract and retain key personnel in a timely and cost effective manner;
technical difficulties;
the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure;
our ability to identify and enter into relationships with appropriate and qualified third-party providers such as Devicix, LLC for necessary testing, clinical trials and manufacturing services;
regulation by federal, state or local governments; and
general economic conditions, as well as economic conditions specific to the medical device and healthcare industries.

As a result of our lack of any operating history and the nature of the markets in which we compete, it is difficult for us to forecast our revenues or earnings accurately.  As a strategic response to changesbe identified in the competitive environment, we may from time to time make certain decisions concerning expenditures, pricing, service or marketing thatfuture could, among other things, have a material and adverse effect on our business, results of operations and financial condition.  Duecondition, as well as impair our ability to meet our quarterly, annual and other reporting requirements under the Exchange Act in a timely manner, and require us to incur additional costs or to divert management resources.

Risks Related to Our Business

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

During the last two years, the Company has evolved into two separate divisions with its entrance into the biologics development space (“Biologics Division”). This new division is complementary to the foregoing factors, our quarterlyCompany’s current Lung Health Institute (LHI) autologous infusion therapy business (“Infusion Division”) and is focused on underserved disease states. During the year ended 2021, the company completed a review of the R&D status regarding the exclusive product supply and services agreements with Rion, LLC (“Rion”) to develop and distribute (post U.S. Food & Drug Administration, the “FDA”, approval) a biologic combining its PRP-PBMC (“PRP”) technology with Rion’s exosomes (“EV”) technology for the treatment of chronic obstructive pulmonary disease (“COPD”). The Company has decided to progress alternate technologies and has determined a single entity biologic from an alternative commercial source will be a more viable solution. To that end the company is progressing alternate biologics and therapeutic devices to meet the needs of the business. There are a number of risks associated with a biologics development business model, and there is no guarantee that the new model will deliver the expected revenues and operating results are difficult to forecast.profits going forward as expected or at all.

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We may not be unableable to manage growth effectively.

unlock the intrinsic value of our historical development pipeline, because we may encounter difficulties in financing and operating our commercial development programs successfully.

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

Maintaining third party relationships for us.these purposes will impose significant added responsibilities on members of our management and other personnel. We anticipate thatmust be able to: manage our development efforts effectively; recruit and train sales and marketing personnel; manage our participation in the clinical trials in which our product candidates are involved effectively; and improve our managerial, development, operational and finance systems, all of which may impose a period of significant expansion will be required to address potential growth and to handle licensing and research activities.  This expansion will place a significant strain on our management, operational and financial resources.  To manage the expected growth of our operations and personnel, we must establish appropriate and scalable operational and financial systems, procedures and controls and must establish a qualified finance, administrative and operations staff. As a public company, we will have to implement internal controls to comply with government mandated regulations.  Our management may be unable to hire, train, retain, motivate and manage the necessary personnel or to identify, manage and exploit potential strategic relationships and market opportunities.  Our failure to manage growth effectively could have a material and adverse effect on our business, results of operations and financial condition.

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Risks Related to Development, Clinical Testing and Regulatory Approval of Our Products
Government regulation of our business is extensive and regulatory approvals are uncertain, expensive and time-consuming.
Our research, development, testing and clinical trials, manufacturing and marketing of most of our intended products are subject to an extensive regulatory approval process by the FDA and other regulatory agencies in the U.S. and abroad.  The process of obtaining FDA and other required regulatory approvals for medical device products, including the potential for being required to engage in pre-clinical and clinical testing, is lengthy, expensive and uncertain.  There can be no assurance that, even after such time and expenditures, the Company will be able to obtain necessary regulatory approvals for clinical testing or for the manufacturing or marketing of any products.  In addition, during the regulatory process, other companies may develop other technologies with the same intended use as our products.  Even if regulatory clearance is obtained, a marketed product is subject to continual review, and later discovery of previously unknown safety issues or failure to comply with the applicable regulatory requirements may result in restrictions on a product’s marketing or withdrawal of the product from the market, as well as possible civil or criminal sanctions.

The results of our clinical trials may not support our product claims or may result in the discovery of adverse side effects.
Even if the clinical trials that we may need to undertake are completed as planned, we cannot be certain that their results will support our product claims or that the FDA or foreign regulatory authorities will agree with our conclusions regarding the results of the trials.  

The clinical trial process may fail to demonstrate that a product is safe and effective for the proposed indicated use, which could cause us to abandon a product and could delay development of other products.  Any delay or termination of our clinical trials will delay the filing of our product submissions and, ultimately, our ability to commercialize a product and generate revenue. 

 It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product’s profile and not predicted or foreseen on the basis of prior experience.  Even if clinical trials are otherwise successful, we may be unable to develop a commercially viable product, treatment or therapy based on those trials.

Risks Related to Our Business and Industry

If our products and procedures do not gain market acceptance among physicians, patients and the medical community, we may be unable to generate significant revenues, if any.
Even if we obtain regulatory approval for our products, they may not gain market acceptance among physicians, healthcare payers, patients and the medical community. In particular, the U.S. government agency Center for Medicare/Medicaid Service or other private reimbursement agencies may decline to reimburse physicians and health care facilities whose patients are on Medicare or Medicaid or private insurance for use of our product, significantly reducing our potential market. Market acceptance will depend on our ability to demonstrate the benefits of our approved products in terms of safety, efficacy, convenience, ease of administration and cost effectiveness.  In addition, we believe market acceptance depends on the effectiveness of our marketing strategy, the pricing of our approved products and the reimbursement policies of government and third party payers with respect to our products.  Physicians may not utilize our approved products for a variety of reasons and patients may determine for any reason that our product is not useful to them.  If any of our approved products fail to achieve market acceptance, our ability to generate revenues will be limited.

The industry in which we plan to operate is highly competitive and there can be no assurances that we will be able to compete effectively.
We are engaged in a rapidly evolving industry.  Competition from other medical device companies and from other research and academic institutions is intense and expected to increase.  Many of these companies have substantially greater financial and other resources and development capabilities than we do, have substantially greater experience in undertaking pre-clinical and clinical testing of products, and are commonly regarded in the medical device industries as very aggressive competitors.  In addition to competing with universities and other research institutions in the development of products, technologies and processes, we compete with other companies in acquiring rights to products or technologies from universities.  There can be no assurance that we can develop products that are more effective or achieve greater market acceptance than competitive products, or that our competitors will not succeed in developing products and technologies that are more effective than those being developed by us and that would therefore render our products and technologies less competitive or even obsolete.
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Third parties may claim that we infringe on their proprietary rights and may prevent us from commercializing and selling our products.
There has been substantial litigation in the medical device industry with respect to the manufacture, use and sale of new products.  These lawsuits often involve claims relating to the validity of patents supporting the new products and/or the validity and alleged infringement of patents or proprietary rights of third parties.  We may be required to defend against challenges to the validity of our patents and against claims relating to the alleged infringement of patent or proprietary rights of third parties.
Litigation initiated by a third party claiming patent invalidity or patent infringement could:
require us to incur substantial litigation expense, even if we are successful in the litigation;
require us to divert significant time and effort of our management;
result in the loss of our rights to develop, make or market our products; and
require us to pay substantial monetary damages or royalties in order to license proprietary rights from third parties or to satisfy judgments or to settle actual or threatened litigation.
Although patent and intellectual property disputes within the medical device industry have often been settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and could include the long-term payment of royalties.  

Furthermore, the required licenses may not be made available to us on acceptable terms.  Accordingly, an adverse determination in a judicial or administrative proceeding or a failure to obtain necessary licenses could prevent us from manufacturing and selling our products or increase our costs to market our products.

Healthcare policy changes, including the recently enacted legislation to reform the United States healthcare system, may have a material adverse effect on us.
In March 2010, President Obama signed into law the PPACA, which substantially changes the way healthcare is financed by both governmental and private insurers, encourages improvements in the quality of healthcare items and services, and significantly impacts the medical device industry. The PPACA includes, among other things, the following measures:
a 2.3% excise tax on any entity that manufactures or imports medical devices offered for sale in the United States, with limited exceptions;
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities and conduct comparative clinical effectiveness research;
new reporting and disclosure requirements on device manufacturers for any “transfer of value” made or distributed to physicians and teaching hospitals, as well as reporting of certain physician ownership interests;
payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; and
an independent payment advisory board that will submit recommendations to reduce Medicare spending if projected Medicare spending exceeds a specified growth rate.

These provisions could meaningfully change the way healthcare is delivered and financed, and could have a material adverse impact on numerous aspects of our business.
In the future, there may continue to be additional proposals relating to the reform of the United States healthcare system. Certain of these proposals could limit the prices we are able to charge for our products or the amounts of reimbursement available for our products, and could limit the acceptance and availability of our products. The adoption of some or all of these proposals could have a material adverse effect on our business, results of operations and financial condition.
Additionally, initiatives sponsored by government agencies, legislative bodies and the private sector to limit the growth of healthcare costs, including price regulation and competitive pricing, are ongoing in markets where we do business. We could experience an adverse impact on our operating results due to increased pricing pressure in the United States and in other markets. Governments, hospitals and other third party payors could reduce the amount of approved reimbursement for our products or deny coverage altogether. Reductions in reimbursement levels or coverage or other cost-containment measures could adversely affect our future operating results.
We depend on key personnel.
We depend greatly on Dr. Scott M. W. Haufe, a member of the board of directors and the co-founder of Debride, Jarrett Gorlin, our Chief Executive Officer, and a member of the board of directors and Patrick Kullmann, our President and Chief Operating Officer, among others.  Our success will depend, in part, upon our ability to attract and retain additional skilled personnel, which will require substantial additional funds.  There can be no assurance that we will be able to find, attract and retain additional qualified employees, directors, and advisors having the skills necessary to operate, develop and grow our business.  Our inability to hire qualified personnel, the loss of services of Dr. Haufe, Mr. Gorlin or Mr. Kullmann, or the loss of services of other executive officers, key employees, or advisors that may be hired in the future, may have a material and adverse effect on our business.  We currently do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees.
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In the future, we could experience difficulties attracting and retaining qualified employees. Competition for qualified personnel in the medical products field is intense. We may need to hire additional personnel as we expand our clinical development and commercial activities. We may not be able to attract and retain quality personnel on acceptable terms or at all.
In addition, we may enter into arrangements with consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy.

Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

If we are unable to hire qualified personnel, our business and financial condition may suffer.
Our success and achievement of our growth plans depend on our ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. In this regard, we have limited resources and as such we may not able to provide an employee with the same amount of compensation that he or she would likely receive at a larger company and as a result we may face difficulty in finding qualified employees.  The inability to attract, retain and motivate any additional highly skilled employees required for the expansion of our activities, could have a materially adverse effect on our ability to conduct our business and as such can impair our operations.

If we obtain approval to commercialize our products outside of the United States, a variety of risks associated with international operations could materially adversely affect our business.
If our products are approved for commercialization outside the United States, we will likely seek to enter into agreements with third parties to market our products outside the United States. We expect that we will be subject to additional risks related to entering into or maintaining international business relationships, including:
different regulatory requirements for medical devices or treatments in foreign countries;
lack of adequate reimbursement for the use of our product;
differing United States and foreign import and export rules;
reduced protection for intellectual property rights in foreign countries;
unexpected changes in tariffs, trade barriers and regulatory requirements;
economic weakness, including inflation, or political instability in particular foreign economies and markets;
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
foreign taxes, including withholding of payroll taxes;
foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;
workforce uncertainty in countries where labor unrest is more common than in the United States;
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
potential liability resulting from development work conducted by these distributors; and
business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenues from our products.  
If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.
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We face substantial competition, which may result in others discovering, developing or commercializing products before, or more successfully, than we do.
Our future success depends on our ability to demonstrate and maintain a competitive advantage with respect to the design, development and commercialization of new and novel products.

Our competitors may succeed in developing competing products before we do for the same indications that we are pursuing, obtaining regulatory approval for products or gaining acceptance for the same markets that we are targeting. If we are not "first to market" with one of our products, our competitive position could be compromised because it may be more difficult for us to obtain marketing approval for that product and successfully market that product as a second competitor.
Many of our competitors have substantially greater commercial infrastructures and financial, technical and personnel resources than we have. We will not be able to compete successfully unless we successfully:
design and develop products that are superior to other products in the market;
attract qualified scientific, medical, sales and marketing and commercial personnel; 
obtain patent and/or other proprietary protection for our processes and products;
obtain required regulatory approvals; and
collaborate with others in the design, development and commercialization of new products.
Established competitors may invest heavily to quickly discover and develop novel treatments that could make our products obsolete. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful. If we are not able to compete effectively against our current and future competitors, our business will not grow and our financial condition and operations will suffer. 

If our future employees or third parties with whom we contract commit fraud or other misconduct, including noncompliance with regulatory standards and requirements, our business may experience serious adverse consequences.
We are exposed to the risk of employee or third party fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, to provide accurate information to the FDA, to comply with manufacturing standards we have established, to comply with federal and state health-care fraud and abuse laws and regulations, to report financial information or data accurately or to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of any products.
We face an inherent risk of product liability as a result of any clinical testing of our products and will face an even greater risk if we commercialize any products. We may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:
decreased demand for our products or products that we may develop;
injury to our reputation;
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withdrawal of clinical trial participants;
costs to defend the related litigation;
a diversion of management's time and our resources;
substantial monetary awards to trial participants or patients;
product recalls, withdrawals or labeling, marketing or promotional restrictions;
loss of revenue;
the inability to commercialize our products; and
a decline in our stock price.
Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop. We currently do not maintain product liability insurance because it is generally expensive, and in light of our developmental stage we do not believe it is cost effective to obtain at this time. Since we commenced sales, we secured product liability insurance; however, we may not be able to obtain or maintain product liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities, if at all.  If we are the subject of a successful product liability claim that exceeds the limits of any insurance coverage we obtain, we would incur substantial charges that would adversely affect our earnings and require the commitment of capital resources that might otherwise be available for the development and commercial launch of our products.

We may not be able to secure adequate clinical trial liability insurance for all of our products and a successful clinical trial liability claim against us could have an adverse effect on our financial condition even with such insurance coverage.
Our business will expose us to potential liability that results from risks associated with conducting clinical trials of our products. There is no guarantee that we will be able to procure clinical trial liability insurance at favorable rates, if at all, and even if procured that we will procure adequate coverage to satisfy any liability we may incur. A successful clinical trial liability claim, if any, brought against us could have a material adverse effect on our business, prospects, financial condition and results of operations even though clinical trial insurance is successfully maintained or obtained. The current and planned insurance coverages may only mitigate a small portion of a substantial claim against us.
Our relationships with customers and third-party payors in the United States and elsewhere will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and third-party payors in the United States and elsewhere play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our products for which we obtain marketing approval. Restrictions under applicable federal, state and foreign healthcare laws and regulations include the following:
the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid;
the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
the federal Health Insurance Portability and Accountability Act of 1996, or HIPPA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program. HIPAA and HITECH also regulate the use and disclosure of identifiable health information by health care providers, health plans and health care clearinghouses, and also impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of identifiable health information as well as requiring notification of regulatory breaches. HIPAA and HITECH violations may prompt civil and criminal enforcement actions as well as enforcement by state attorneys general;
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the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
the federal transparency requirements under the Health Care Reform Law requires manufacturers of drugs, devices, biologics and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests;
analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; and
analogous anti-kickback, fraud and abuse and healthcare laws and regulations in foreign countries.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.  

Risks Related to Commercialization of Our Products
If, in the future, we are unable to establish our own sales, marketing and distribution capabilities or enter into licensing or collaboration agreements for these purposes, we may not be successful in commercializing our products.
We currently have a relatively small number of employees and do not have a sales or marketing infrastructure, and we, do not have any significant sales, marketing or distribution experience. We intend to be opportunistic in seeking to either build our own commercial infrastructure to commercialize our products if and when they are approved, or enter into licensing or collaboration agreements to assist in the future development and commercialization of such products.
If we choose to develop internal sales, distribution and marketing capabilities, we will likely have to invest significant amounts of financial and management resources, some of which will be committed prior to any confirmation that any product will be approved. For products for which we decide to perform sales, marketing and distribution functions ourselves, we could face a number of additional risks, including:
our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to utilize our procedures;
the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
unforeseen costs and expenses associated with creating an independent sales and marketing organization.

Where and when appropriate, we may elect to utilize contract sales forces or strategic partners to assist in the commercialization of our products. operational infrastructure.

If we enter into arrangements with third parties to perform sales, marketing, andor distribution services, for our products, the resultingany product revenues that we receive, or the profitability fromof these product revenues to us, are likely to be lower than if we had sold, marketedwere to market and distributed oursell any products ourselves.that we develop without the involvement of these third parties. In addition, we may not be successful in entering into arrangements with third parties to sell market and distributemarket our products or may be unable to doin doing so on terms that are favorable to us. We likely will have limitedlittle control over such third parties, and any of these third partiesthem may fail to devote the necessary resources and attention to sell market and distributemarket our products effectively.

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If we do not establish sales marketing and distributionmarketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our products.

Regulatory actions may affect our ability to operate.

Our Biologics Division operates in a field that is highly regulated by the U.S. Food and Drug Administration (the “FDA”). During the clearance and approval FDA process, the Company will be subject to extensive regulations by the FDA under the Federal Food, Drug, and Cosmetic Act and/or the Public Health Service Act, as well as by other regulatory bodies. Adverse decisions by the FDA or other applicable regulatory bodies could materially and adversely affect our ability to continue and grow the development of future products. Failure to comply with the applicable FDA regulations could result in, among other things, warning letters, civil penalties, delays in approving or refusal to approve a product, product recall, product seizure, interruption of production, operating restrictions, suspension or withdrawal of product approval, injunctions, or criminal prosecution.

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

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

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

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

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

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Risks Related to Acquisitions

We may be unable to identify, acquire, close or integrate acquisition targets successfully.


A substantial partencounter difficulties in managing our growth, and the nature of our business strategy includes acquiring and integrating complementary businesses, products, technologies or other assets,rapid changes in the healthcare industry makes it difficult to reliably predict future growth and forming strategic alliances, joint ventures and other business combinations, to help drive future growth. We may also in-license new products. Acquisitions or similar arrangements may be complex, time consuming and expensive. In some cases, we move very rapidly to negotiate and consummate the transaction, once we identify the acquisition target. operating results.

We may not consummate some negotiations for acquisitions or other arrangements,be able to successfully grow and expand. Successful implementation of our business plan will require management of growth, including potentially rapid and substantial growth, which could result in significant diversionan increase in the level of responsibility for management personnel and other employee time, as well as substantial out-of-pocket costs. In addition, there are a number of risksstrain on our human and uncertainties relating to our closing transactions. If such transactions are not completed for any reason,capital resources. To manage growth effectively, we will be subjectrequired, among other things, to several risks, including the following: (i) the market pricecontinue to implement and improve our operating and financial systems, procedures and controls and to expand, train and manage our employee base. If we are unable to implement and scale improvements to our existing systems and controls in an efficient and timely manner or if we encounter deficiencies, we will not be able to successfully execute our business plans.

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

If we are unable to manage our growth effectively, it will have a material adverse effect on our business, results of operations and financial condition. The evolving nature of our common shares may reflect a market assumption that such transactions will occur,business and a failure to complete such transactions could result in a negative perception by the market of us generally and a declinerapid changes in the market pricehealthcare industry make it difficult to anticipate the nature and amount of medical reimbursements, third-party private payments, and participation in certain government programs and thus to reliably predict our common shares;future growth and (ii) manyoperating results. Our growth strategy may incur significant costs, relating towhich could adversely affect our financial condition. Our growth by strategic transactions strategy involves significant costs, including financial advisory, legal and accounting fees, and may include additional costs for items such as fairness opinions and severance payments. These costs could put a strain on our cash flows, which in turn could adversely affect our overall financial condition.

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

On September 11, 2020, with the such transactions may be payable by us whether or not such transactions are completed.

If an acquisition is consummated (such as our acquisition of Streamline, Inc.), the integrationclosing of the acquired business, product or other assets into our Company may also be complexRights Offering, FWHC, LLC, FWHC Bridge, LLC, and time-consuming and, if such businesses, products and assets are not successfully integrated, we may not achieve the anticipated benefits, cost-savings or growth opportunities. Potential difficulties that may be encountered in the integration process include the following:

integrating personnel, operations and systems, while maintaining focus on selling and promoting existing and newly-acquired products;
coordinating geographically dispersed organizations;
distracting management and employees from operations;
retaining existing customers and attracting new customers;
maintaining the business relationships the acquired company has established, including with healthcare providers; and
managing inefficiencies associated with integrating the operations of the Company.

We have incurred, and may incur in the future, restructuring and integration costs and a number of non-recurring transaction costs associated with these acquisitions, combining the operationsFWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company by subsequently owning approximately 61% of the fully diluted shares of the Company.

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

We are regulated by federal Anti-Kickback Statutes.

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

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

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We are regulated by the Federal Stark Law.

The federal Stark Law, 42 U.S.C. 1395nn, also known as the physician self-referral law, generally prohibits a physician from referring Medicare and Medicaid patients to an entity (including hospitals) providing ‘designated health services,’ if the physician or a member of the physician’s immediate family has a ‘financial relationship’ with the entity, unless a specific exception applies. Designated health services include, among other services, inpatient hospital services, outpatient prescription drug services, clinical laboratory services, certain imaging services (e.g., MRI, CT, ultrasound), and other services that our affiliated physicians may order for their patients. The prohibition applies regardless of the reasons for the financial relationship and the acquired companyreferral; and achieving desired synergies. These feestherefore, unlike the Federal Anti-Kickback Statute, intent to violate the law is not required. Like the Anti-Kickback Statute, the Stark Law contains statutory and costs may be substantial. Non-recurring transaction costs include, but are not limitedregulatory exceptions intended to fees paid to legal, financialprotect certain types of transactions and accounting advisors, filing fees and printing costs. Additional unanticipated costs may be incurredarrangements. Unlike safe harbors under the Anti-Kickback Statute with which compliance is voluntary, an arrangement must comply with every requirement of a Stark Law exception or the arrangement is in the integrationviolation of the businesses ofStark Law.

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

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

We must comply with Health Information Privacy and Security Standards.

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

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

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

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

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

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

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

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

The consolidated results for H-CYTE include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC is the operator and manager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale.

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

revoke the business and operating licenses of any or all of the VIEs;
discontinue or restrict the operations of any related-party transactions between any of the VIEs and H-CYTE or its affiliates;
impose fines or other requirements which may adversely affect the operations of the VIEs; or
require the Company and any or all of its VIEs to restructure the relevant ownership structure or operations.

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

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

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

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

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

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

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

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

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

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

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

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

Product pricing may be subject to regulatory control.

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

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

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

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

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

Future regulatory action remains uncertain.

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

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

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

restrictions on the products, manufacturers, or manufacturing processes;
warning letters;
civil or criminal penalties;
fines;
injunctions;
product seizures or detentions;
pressure to initiate voluntary product recalls;
suspension or withdrawal of regulatory approvals; and
refusal to approve pending applications for marketing approval of new products or supplements to approved applications.

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If physicians and patients do not accept our current and future products or if the incremental transaction-related costs over time. Therefore,market for indications for which any net benefitproduct candidate is approved is smaller than expected, we may be unable to generate significant revenue, if any.

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

timing of market introduction of competitive products;
demonstration of clinical safety and efficacy compared to other products;
cost-effectiveness;
limited or no coverage by third-party payers;
convenience and ease of administration;
prevalence and severity of adverse side effects;
restrictions in the label of the drug;
other potential advantages of alternative treatment methods; and
ineffective marketing and distribution support of its products.

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

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

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

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

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

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

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Moreover, because some of the basic research relating to one or more of our patent applications and/or patents were performed at various universities and/or funded by grants, one or more universities, employees of such universities and/or grantors could assert that they have certain rights in such research and any resulting products. Further, others may independently develop similar products, may duplicate our products, or may design around our patent rights. In addition, as a result of the assertion of rights by a third-party or otherwise, we may be required to obtain licenses to patents or other proprietary rights of others in or outside of the United States. Any licenses required under any such patents or proprietary rights may not be made available on terms acceptable to us, if at all.


These acquisitions and other arrangements, even if successfully integrated, may fail If we do not obtain such licenses, we could encounter delays in product market introductions during our attempts to furtherdesign around such patents or could find that the development, manufacture or sale of products requiring such licenses is foreclosed. In addition, we could incur substantial costs in defending suits brought against us or in connection with patents to which we hold licenses or in bringing suit to protect our business strategy as anticipated or to achieve anticipated benefits and success, expose us to increased competition or challengesown patents against infringement.

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

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

Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other asset or arrangement. Any one of these challenges or risks could impairproprietary rights, we may not have meaningful protection from competition.

Our long-term success will substantially depend upon our ability to realize any benefitprotect our proprietary technologies from infringement, misappropriation, discovery and duplication, and avoid infringing the proprietary rights of others. Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. Because of this, our acquisition or arrangement after we have expended resources on them.

Our strategic acquisitions, investments or alliancespending patent applications may not be successful.
As partgranted. These uncertainties also mean that any patents that we own or will obtain in the future could be subject to challenge, and even if not challenged, may not provide us with meaningful protection from competition. Due to our financial uncertainties, we may not possess the financial resources necessary to enforce our patents. Patents already issued to us or our pending applications may become subject to dispute, and any dispute could be resolved against us. Because a substantial number of patents have been issued in the field of cellular therapy and because patent positions can be highly uncertain and frequently involve complex legal and factual questions, the breadth of claims obtained in any application or the enforceability of our strategy to increase revenue growth,patents cannot be predicted. Consequently, we seek to supplementdo not know whether any of our internal growth through strategic acquisitions, investments and alliances. Such transactions are inherently risky. The successpending or future patent applications will result in the issuance of any acquisition, investment or alliance may be affected by a number of factors, including our ability to properly assess and value the potential business opportunitypatents or, to successfully integrate any business we may acquire into our existing business. There can be no assurance that any pastthe extent patents have been issued or future transaction will be successful.
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Our future growth is dependent upon the development or acquisition of new products, and there can be no assurance that such productsissued, whether these patents will be developed.
Asubject to further proceedings limiting their scope, will provide significant elementproprietary protection or competitive advantage, or will be circumvented or invalidated. Several of our strategy is to increase revenue growth by focusing on products that deliver greater benefits to physicians, healthcare payers, patients andcurrently issued patents have expired or will expire in the medical community. The development or acquisitionnext twelve months.

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Also, because of these products may require significant researchlegal and development, clinical trialsfactual uncertainties, and regulatory approvals. The results of our product development efforts may be affected by a number of factors, including our ability to innovate, develop and manufacture new products, complete clinical trials, obtain regulatory approvals and reimbursementbecause pending patent applications are held in secrecy for varying periods in the United States and abroad,other countries, even after reasonable investigation, we may not know with certainty whether any products that we (or a licensee) may develop will infringe upon any patent or gain and maintain market approval of our products. In addition, patents attained by others can preclude or delay our commercializationother intellectual property right of a product. There can be no assurancethird party. For example, we are aware of certain patents owned by third parties that any products now in development or that we may seeksuch parties could attempt to developuse in the future in efforts to affect our freedom to practice some of the patents that we own or have applied for. Based upon the science and scope of these third-party patents, we believe that the patents that we own or have applied for do not infringe any such third-party patents; however, we cannot know for certain whether we could successfully defend our position, if challenged. We may incur substantial costs if we are required to defend our intellectual property in patent suits brought by third parties. These legal actions could seek damages and seek to enjoin testing, manufacturing and marketing of the accused product or process. In addition to potential liability for significant damages, we could be required to obtain a license to continue to manufacture or market the accused product or process.

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

Our products will achieve technological feasibility, obtain regulatory approval or gain market acceptance.


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

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

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

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

The nature of clinical trials and our business strategy will likely requiredecisions to delay or terminate drug development programs may also cause us to rely on contract research organizations, independent clinical investigators and other third party service providers to assist us with clinical testing and certain research and development activities. Our success is dependent upon the success of these outside parties in performing their responsibilities. Although we believe our contractors are economically motivated to perform on their contractual obligations, we cannot directly control the adequacy and timeliness of the resources and expertise applied to these activities by our contractors. If our contractors do not perform their activities in an adequate or timely manner, the development and commercialization of our products could be delayed.
miss valuable opportunities.

If the third parties on which we may need to rely tofor the conduct anyof our clinical trials and to assist us with pre-clinical development or other key stepsresults do not perform as contractually required or expected,our clinical trial activities in accordance with good clinical practices and related regulatory requirements, we may not be ableunable to obtain regulatory clearance or approval for or commercialize our product.product candidates.

We use independent clinical investigators and other third-party service providers to conduct and/or oversee the clinical trials of our product candidates, and expect to continue to do so for the foreseeable future.

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

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Risks Related to Manufacturing & Distribution

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

We do not have (and do not expect to develop)own or operate manufacturing facilities for the independent ability to independently conduct pre-clinical andproduction of clinical trials foror commercial quantities of our products and to the extent we will need to conduct such trials, we will likely need to rely on third-parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct such trials.  We also do not have (and do not expect to develop) the independent ability to manufacture our proposed products, and will therefore need to rely on third parties such as contract manufacturing organizations.  If these various third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, or if the quality or accuracy of the data they obtain or the quality of the products they produce for us is compromised due to the failure to adhere to our clinical or manufacturing protocols or regulatory requirements or for any other reasons, we may have difficulty replacing them with other qualified third-party providers of the necessary services or products and in the meantime, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated,candidates, and we may not be ablecurrently lack the resources and the capabilities to obtain regulatory clearance or approval for, or successfully commercialize, a product on a timely basis, if at all.  As such,build our business, operating results and prospects may be adversely affected and may even fail entirely.  Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their (or our) control.


We rely on third parties to manufacture our products and as a result we may not be able to control our product development.
We do not currently own or operate any manufacturing facilities, and we lack sufficient internal staff to produce clinical and preclinical product supplies ourselves.facilities. As a result, we are working with acurrently rely, and expect to rely for the foreseeable future, on third-party contract manufacturermanufacturers to produce sufficient quantities ofsupply our products for futureand clinical trials, preclinical testing and commercialization.
trial supplies. Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured our product candidates or products ourselves, including including:

reliance on third-parties for manufacturing process development, regulatory compliance and quality assurance;
limitations on supply availability resulting from capacity and scheduling constraints of third-parties;
the possible breach of manufacturing agreements by third-parties because of factors beyond our control; and
the possible termination or non-renewal of the manufacturing agreements by the third-party, at a time that is costly or inconvenient to us.

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

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

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

Interruption of breach of the manufacturing agreement by the third party because of factors beyondoperations could adversely affect our control (includingbusiness.

Our suppliers have manufacturing facilities for certain product lines that may be concentrated in one (1) or more plants. Damage to these facilities or issues in our manufacturing arising from a failure to manufacture our products in accordance with our product specifications)follow specific internal protocols and procedures, compliance concerns relating to quality systems regulations, equipment breakdown or malfunction, among other factors, could adversely affect the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to us. We will be dependent on the ability of these third-party manufacturers to produce adequate supplies of medical products to support our clinical development programs and future commercializationavailability of our products. In addition, the FDA and other regulatory authorities require that ourevent of an interruption in manufacturing of certain products, we may be manufactured accordingunable to current good manufacturing practices and similar foreign standards. Any failure by our third-party manufacturerquickly shift to comply with cGMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of products in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of our products. In addition, such failure could be the basis for action by the FDA to withdraw approvals for products previously granted to us and for other regulatory action, including recall or seizure, fines, imposition of operating restrictions, total or partial suspensionalternate means of production to meet customer demand. In the event of a significant interruption, we may experience lengthy delays in resuming production of affected products due to the need for regulatory approvals. We may experience loss of market share, additional expense, or injunctions.

We have limited staffing and rely onharm to our third party manufacturer to purchase from third-party suppliers the materials necessary to produce our products. There arereputation.

Additionally, we contract with a limited number of suppliers for certain capital equipment andthe raw materials that we use to manufacture ourproduce certain products. Such suppliers mayWhile we have not sell theseexperienced a shortage of raw materials in the past and believe that it is unlikely that there will be one in the future, if there were a shortage of raw materials, it could either increase the cost of production or prevent us from being able to our manufacturer at the times we need them or on commercially reasonable terms. We do not have any control over the process or timing of the acquisition of these materials by our third party manufacturer. If our manufacturer or we are unable to purchase these materials after regulatory approval has been obtained for our products, the commercial launchproduce some of our products, wouldwhich could adversely affect future results of our operations and financial condition.

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

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

While we maintain product liability insurance, there wouldcan be a shortageno assurance that such coverage is sufficient to cover all product liabilities that we may incur. We are not currently subject to any product liability proceedings, and we have no reserves for product liability disbursements. However, we may incur material liabilities relating to product liability claims in supply, which would impair our ability to generate revenues from the salefuture, including product liability claims arising out of the usage and delivery of our products.


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In addition, Should we incur product-related liabilities exceeding our manufacturerinsurance coverage, we would be required to use available cash or raise additional cash to cover such liabilities.

Because we may not be able to manufacture our products at a costobtain or in quantities or in a timely mannermaintain the necessary to develop and commercialize them. If we successfully commercialize the DenerveX or any ofregulatory approvals for our products, we may not generate revenues in the amounts we expect, or in the amounts necessary to continue our business. Our existing products as well as our manufacturing facility must meet quality standards and are subject to inspection by a number of domestic regulatory and other governmental and non-governmental agencies.

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

The time required to establishobtain approval or access large-scale commercial manufacturing capabilities. In addition, asclearance varies depending on the nature of the application and may result in the passage of a significant period of time from the date of submission of the application. Delays in the approval or clearance processes increase the risk that we will not succeed in introducing or selling the subject products, and we may determine to devote our development pipeline increasesresources to different products.

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

Changes in government regulations may adversely affect our financial condition and results of operations because we may have a greater need for clinical trialto incur additional expenses if we are required to change or implement new testing, manufacturing, and commercial manufacturing capacity. To meetcontrol procedures. If we are required to devote resources to develop such new procedures, we may not have sufficient resources to devote to research and development, marketing, or other activities that are critical to our projected needs for commercial manufacturing the third party with whom we currently work will need to increase its scale of production or we will need to secure an alternate supplier.

business.

We may not be successful in establishinghave sufficient resources to effectively introduce and maintaining strategic partnerships,market our products, which could adversely affectmaterially harm our operating results.

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

In addition to the market success of our products, the success of our business depends on our ability to develop and commercialize products.

We may seek to enter into strategic partnerships inraise additional capital through the future, including alliances with other healthcare companies, to enhance and accelerate the development and commercializationsale of our products. We face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnershipdebt or other alternative arrangements for any future products and programs because our research and development pipeline may be insufficient, our products and programs may be deemed to be at too early of a stage of development for collaborative effort and/equity or third parties may not view our products and programs as having the requisite potential to demonstrate safety and efficacy. Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable to usthrough borrowing, and we may not be able to maintain such strategic partnerships if, for example, developmentraise capital or approval of a product is delayed borrow funds on attractive terms and/or sales of an approved product are disappointing.
If we ultimately determine that entering into strategic partnerships is in amounts necessary to continue our best interest but either fail to enter into, are delayed in entering intobusiness, or fail to maintain such strategic partnerships:
at all.

the development of certain of our current or future products may be terminated or delayed;
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our cash expenditures related to development of certain of our current or future products would increase significantly and we may need to seek additional financing;
we may be required to hire additional employees or otherwise develop expertise, such as sales and marketing expertise, for which we have not budgeted;
we will bear all of the risk related to the development of any such products; and
the competitiveness of any product that is commercialized could be reduced.

General Risks Related

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

We could be unsuccessful in obtaining adequate patent protection for one or morethe COVID-19 pandemic.

The coronavirus outbreak (“COVID-19”) has adversely affected the Company’s financial condition and results of our products.

We cannot be certain that our patents will not later be found to be invalid and/or unenforceable or that any new patents that we seek to obtain will be issued or granted.operations. The patent positionimpact of medical products companies is generally uncertain because it involves complex legalthe outbreak of COVID-19 on the businesses and factual considerations. The standards applied by the United States Patent and Trademark Office and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in medical product patents. Consequently, patents may not issue from our pending patent applications. As such, we do not know the degree of future protection that we will have on our proprietary products and technology.
We have obtained a patent with respect to our technology both domestically and internationally and anticipate potentially filing multiple patent applications, in the future.  While we believe that we will be able to secure adequate and enforceable patent protection for our products and technologies, there is no guarantee that patent protection can be obtained, and even if it is obtained that such patent protection will ultimately be deemed valid, sufficiently enforceable, sufficient to preclude competition or not infringe upon the rights of other parties.
Our commercial success may depend in part on our ability to obtain additional patents and protect our existing patent position as well as our ability to maintain adequate protection of other intellectual property for our technologies, products, and any future productseconomy in the United States and the rest of the world is and is expected to continue to be significant. The extent to which COVID-19 outbreak will continue to impact business and the economy is highly uncertain and cannot be predicted. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency caused by a new strain of the coronavirus and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain states and municipalities have enacted quarantining regulations which severely limit the ability of people to move and travel.

In addition, the Company is uncertain of the full effect the pandemic will have on it for the longer term since the scope and duration of the pandemic is unknown, and evolving factors such as the level and timing of the distribution of efficacious vaccines across the world and the extent of any resurgences of the virus or emergence of new variants of the virus, such as the Delta variant and the Omicron variant, will impact the stability of economic recovery and growth. The Company may experience long-term disruptions to its operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic; and closures of businesses or manufacturing facilities critical to its business.

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

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

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

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

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

We have a policy in place prohibiting employees, distributors and erode or negate any market exclusivity related competitive advantage we may have, which could harm ouragents from engaging in corrupt business and ability to achieve profitability. The laws of some foreign countries do not protect our proprietary rights to the same extent as the laws ofpractices, including activities prohibited by the United States Foreign Corrupt Practices Act. Nevertheless, because we work through independent sales agents and we may encounter significant problems in protecting our proprietary rights in these countries.


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Issued patents covering one or more of our products could be found invalid or unenforceable if challenged in court.
If we were to initiate legal proceedings against a third party to enforce a patent covering one of our products, the defendant could counterclaim that our patent is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. Patent and Trademark Office, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on one or more of our products. Such a loss of patent protection could have a material adverse impact on our business.
Claims that our products or the sale or use of our products infringe the patent rights of third parties could result in costly litigation or could require substantial time and money to resolve, even if litigation is avoided.
We cannot guarantee that our products or, the use of our products does not infringe any third party patents. Third parties might allege that we are infringing their patent rights or that we have misappropriated their trade secrets. Such third parties might resort to litigation against us. The basis of such litigation could be existing patents or patents that issue in the future. Our failure to successfully defend against any claims that our products infringe the rights of third parties could also adversely affect our business.
It is also possible that we failed to identify relevant patents or applications. For example, applications filed before November 29, 2000 and certain applications filed after that date that will not be fileddistributors outside the United States, remain confidential until patents issue. Patent applicationswe do not have control over the day-to-day activities of such independent agents and distributors. In addition, in the United States and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications coveringdonor-funded markets in Africa where we may sell our products, could have been filed by others withoutthere is significant oversight from the President’s Emergency Plan for AIDS Relief, or PEPFAR, the Global Fund, and advisory committees comprised of technical experts concerning the development and establishment of national testing protocols. This is a process that includes an overall assessment of a product which includes extensive product performance evaluations including five active collaborations and manufacturer’s quality systems, as well as price and delivery.

We depend heavily on our knowledge.

Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our products orexecutive officers, directors, and principal consultants and the useloss of our products.
In order to avoid or settle potential claims with respect to any patent rights of third parties, we may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or any future strategic partners were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing one or more of our products, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms. This couldtheir services would materially harm our business significantly.
Defending against claims of patent infringement or misappropriation of trade secrets could be costlybusiness.

We believe that our success depends, and time consuming, regardless of the outcome. Thus, even if we werewill likely continue to ultimately prevail, or to settle at an early stage, such litigation could burden us with substantial unanticipated costs. In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other Company business.


Unfavorable outcomes in intellectual property litigation could limit our research and development activities and/ordepend, upon our ability to commercialize certain products.
If third parties successfully assert intellectual property rights against us, we might be barred from using certain aspectsretain the services of our product technology, or we may be barred from developingcurrent executive officers, directors, principal consultants, and commercializing certain products. Prohibitions against using certain technologies, or prohibitions against commercializing certain products, could be imposed by a court or by a settlement agreement between us and a plaintiff.others. In addition, if we are unsuccessful in defending against allegationshave established relationships with universities, hospitals, and research institutions, which have historically provided, and continue to provide, us with access to research laboratories, clinical trials, facilities, and patients. The loss of patent infringementthe services of any of these individuals or misappropriation of trade secrets, we may be forced to pay substantial damage awards to the plaintiff. There is inevitable uncertainty in any litigation, including intellectual property litigation. There can be no assurance that weinstitutions would prevail in any intellectual property litigation, even if the case against us is weak or flawed. If litigation leads to an outcome unfavorable to us, we may be required to obtain a license from the patent owner, in order to continue our research and development programs or to market our product(s). It is possible that the necessary license will not be available to us on commercially acceptable terms, or at all. This could limit our research and development activities, our ability to commercialize certain products, or both.

Most of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our abilitybusiness.

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Risks Related to raiseOur Common Stock

Our common stock is a “penny stock,” which places restrictions on broker-dealers recommending the funds necessary to continue our operations, or enter into strategic partnerships that would help us bring our products to market.

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In addition, any future patent litigation, interference or other administrative proceedings will result in additional expense and distraction of our personnel. An adverse outcome in such litigation or proceedings may expose us or any future strategic partners to loss of our proprietary position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all.
Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of trade secrets and other proprietary information.
In addition to patents, we rely on trade secrets, technical know-how, and proprietary information concerning our business strategy in order to protect our competitive position. Instock for purchase.

Our common stock is defined as “penny stock” under the course of our research and development activities and our business activities, we often rely on confidentiality agreements to protect our proprietary information. Such confidentiality agreements are used, for example, when we talk to manufacturers or clinical development services or potential strategic partners. In addition, each of our employees is required to sign a confidentiality agreement upon joining us. We take steps to protect our proprietary information, and our confidentiality agreements are carefully drafted to protect our proprietary interests. Nevertheless, there can be no guarantee that an employee or an outside party will not make an unauthorized disclosure of our proprietary confidential information. This might happen intentionally or inadvertently. It is possible that a competitor will make use of such information, and that our competitive position will be compromised, in spite of any legal action we might take against persons making such unauthorized disclosures.

Trade secrets are difficult to protect. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or outside scientific collaborators might intentionally or inadvertently disclose our trade secret information to competitors. Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming,Exchange Act, and the outcome is unpredictable. In addition, courts outside the United States sometimes arerules promulgated thereunder. The SEC has adopted regulations that define “penny stock” to include common stock that has a market price of less willing than U.S. courts to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.
Our research and development strategic partners may have rights to publish data and other information to which we have rights. In addition, we may engage individuals or entities to conduct research relevant to our business. The ability of these individuals or entities to publish or otherwise publicly disclose data and other information generated during the course of their research is$5.00 per share, subject to certain contractual limitations.exceptions. These contractual provisions may be insufficient or inadequate to protect our confidential information. If we do not apply for patent protection prior to such publication, or if we cannot otherwise maintainrules include the confidentiality of our proprietary technology and other confidential information, then our ability to obtain patent protection or to protect our trade secret information may be jeopardized.

Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:
requirements:

others may be ablebroker-dealers must deliver, prior to make products that are the same as or similar to our products but that are not coveredtransaction, a disclosure schedule prepared by the claims ofSEC relating to the patents that we own or have exclusively licensed;penny stock market;
broker-dealers must disclose the commissions payable to the broker-dealer and its registered representative;
broker-dealers must disclose current quotations for the securities;
if a broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market; and
a broker-dealer must furnish its customers with monthly statements disclosing recent price information for all penny stocks held in the customer’s account and information on the limited market in penny stocks.
we or any future strategic partners might not have been the first to make the inventions covered by the issued patent or pending patent application that we own;
we or any future strategic partners might not have been the first to file patent applications covering certain of our inventions;
others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;
issued patents that we own may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;
our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;
we may not develop additional proprietary technologies that are patentable; and
the patents of others may have an adverse effect on our business.
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Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
As is the case with other medical products companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the medical products industry involve both technological complexity and legal complexity. Therefore, obtaining and enforcing medical industry patents is costly, time-consuming and inherently uncertain. In addition, Congress may pass patent reform legislation. The Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the U.S. Patent and Trademark Office, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
The U.S. Patent and Trademark Office and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.

Internationally, we may apply for patent protection relating to certain existing and proposed products and processes. While we will generally apply for patents in those countries where we intend to make, use or sell patented products, we may not accurately predict all of the countries where patent protection will ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so at a later date. Furthermore, we cannot assure you that any of our patent applications (domestic or international) will be approved. The rights granted to us under our patents, including prospective rights sought in our pending patent applications, may not be meaningful or provide us with any commercial advantage and they could be opposed, contested or circumvented by our competitors or be declared invalid or unenforceable in judicial or administrative proceedings. The failure of our patents to adequately protect our technology might make it easier for our competitors to offer the same or similar products or technologies. Competitors may be able to design around our patents or develop products that provide outcomes which are comparable to ours without infringing on our international intellectual property rights.  In the event of unauthorized use or disclosure or other breaches of such agreements, we may not be provided with meaningful protection for our trade secrets or other proprietary information. Due to differences between foreign and U.S. patent laws, our patented intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States. Even if patents are granted outside the United States, effective enforcement in those countries may not be available.  In countries where we do not have significant patent protection, we may not be able to stop a competitor from marketing products in such countries that are the same as or similar to our products. Moreover, we may not have sufficient resources or desire to defend our patents or trademarks against challenges or to enforce our intellectual property rights, especially if those rights are international in scope and venue.

Securities market risks
Our stock price and trading volume may be volatile, which could result in losses for our stockholders.
The equity markets may experience periods of volatility, which could result in highly variable and unpredictable pricing of equity securities. The market price of our Common stock could change in ways that may or may not be related to our business, our industry or our operating performance and financial condition and could negatively affect our share price or result in fluctuations in the price or trading volume of our Common stock.  We cannot predict the potential impact of these periods of volatility on the price of our Common stock. The Company cannot assure you that the market price of our Common stock will not fluctuate or decline significantly in the future.
If our Common stock is delisted from NASDAQ the Company would be subject to the risks relating to penny stocks.
If our Common stock were to be delisted from trading on the NASDAQ Capital Market and the trading price of the Common stock were below $5.00 per share on the date the Common stock were delisted, trading in our Common stock would also be subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These rules require additional disclosure by broker-dealers in connection with any trades involving a stock defined as a "penny stock" and impose various

Additional sales practice requirements are imposed on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally institutions.investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and must have received the purchaser’s written consent to the transaction prior to sale. These additionaldisclosure requirements may discourage broker-dealers from effecting transactions in securities that are classified as penny stocks, which could severely limithave the market price and liquidityeffect of such securities andreducing the abilitylevel of purchasers to sell such securitiestrading activity in the secondary market. A pennymarket for our common stock. As a result, fewer broker-dealers may be willing to make a market in our stock, which could make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

There is a limited trading market for our common stock.

Our common stock is defined generally asnot listed on any non-exchange listed equity security that has anational securities exchange. Accordingly, investors may find it more difficult to buy and sell our shares than if our common stock was traded on an exchange. Although our common stock is quoted on the OTCQB, it is an unorganized, inter-dealer, over-the-counter market which provides significantly less liquidity than the Nasdaq Capital Market or other national securities exchange. These factors may have an adverse impact on the trading and price of less than $5.00 per share,our common stock.

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

Our second Amended and Restated Articles of Incorporation permit our Board of Directors to designate new series of preferred stock and issue those shares without any vote or action by our stockholders, subject to certain exceptions.

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If we need additional capitalapproval rights by the holders of Series A Preferred Shares. Such newly authorized and issued shares of preferred stock could contain terms that grant special voting rights to fund the growthholders of such shares that make it more difficult to obtain stockholder approval for an acquisition of our operations, and cannot obtain sufficient capital, we may be forced to limitbusiness or increase the scope of our operations.
As we implement our growth strategies, we may experience increased capital needs. We may not, however, have sufficient capital to fund our future operations without additional capital investments. If adequate additional financing is not available on reasonable terms or at all, we may not be able to carry out our corporate strategy and we would be forced to modify our business plans (e.g., limit our expansion, limit our marketing efforts and/or decrease or eliminate capital expenditures), any of which may adversely affect our financial condition, results of operations and cash flow. Such reduction could materially adversely affect our business and our ability to compete.
Our capital needs will depend on numerous factors, including, without limitation, (i) our profitability or lack thereof, (ii) our ability to respond to a release of competitive products by our competitors, and (iii) the amount of our capital expenditures, including acquisitions. Moreover, the costs involved may exceed those originally contemplated. Cost savings and other economic benefits expected may not materialize as a resultcost of any cost overruns or changes in market circumstances. Failuresuch acquisition.

We do not intend to obtain intended economic benefits could adversely affectpay dividends on our business, financial conditionCommon Stock for the foreseeable future.

We have paid no cash dividends on our common stock to date and operating performances.

Wewe do not anticipate paying any dividends to holders of our common stock in the foreseeable future. While our future dividend policy will be based on the operating results and capital needs of the business, we currently anticipate that we will retain any earnings to finance our future expansion and for the implementation of our business plan. Investors should take note of the fact that a lack of a dividend can further affect the market value of our common stock, and could significantly affect the value of any investment in the Company.

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

As January 25, 2022, we had 167,857,522 shares of common stock issued and outstanding, outstanding warrants to purchase 350,996,043 shares of common stock, and outstanding options to purchase 15,385,000 shares of common stock. The issuance of shares of common stock upon exercise of outstanding warrants or options could result in substantial dilution to our stockholders, which may have a negative effect on the price of our common stock. The Company also had 498,229,802 shares of Preferred A Stock outstanding as of January 25, 2022.

18

SPECIAL NOTE REGARDING FORWARD-LOOKING

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

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

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

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares of our common stock being offered for sale by the selling stockholders. Upon the exercise of the warrants for an aggregate of 350,996,043 shares of common stock assuming all payments are made by cash and there is no reliance on cashless exercise provisions however, we will receive the exercise price of the warrants, or an aggregate of approximately $4,913,945, from the investors in the April 14, 2020 Private Placement. We will bear all fees and expenses incident to our obligation to register the shares of common stock. Brokerage fees, commissions and similar expenses, if any, attributable to the sale of shares offered hereby will be borne by the selling stockholder.

There is no assurance the warrants will be exercised for cash. We intend to use such proceeds, if any, for general corporate and working capital purposes while beginning to execute our plan of acquiring assets in the biologics and medical device spaces.

DIVIDENDS POLICY

We have not paid cash dividends on our common stock in the past and have no present intention of paying cash dividends on our common stock in the foreseeable future and our stock may not appreciate in value.

We have not declared or paid cashfuture. Future dividends, if any, on our common stock to date. We currently intend to retain our future earnings, if any, to fund the development and growth of our business. In addition, the terms of any existing or future debt agreements may preclude us from paying dividends. There is no guarantee that shares of our Common stock will appreciate in value or that the price at which our stockholders have purchased their shares will be able to be maintained.
If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research reports about our business, our share price and trading volume could decline.
The trading market for our Common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us should downgrade our shares or change their opinion of our business prospects, our share price would likely decline. If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price and volume to decline.
You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.
In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders.  We are authorized to issue an aggregate of 49,500,000 shares of common stock and 500,000 shares of “blank check” preferred stock. We may issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes.  The future issuance of any such additional shares of our common stock may create downward pressure on the trading price of the common stock. We will need to raise additional capital in the near future to meet our working capital needs, and there can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise or conversion prices) below the price an investor paid for stock.
An aggregate of 2,679,168 shares of common stock underlying certain of our warrants are being registered in this registration statement.  Upon exercise of these warrants, you will experience dilution.  As of June 16, 2016, we have 12,855,803 shares of common stock outstanding.  Assuming full exercise of these warrants, the number of shares of our common stock outstanding will increase by 2,679,168. Thus, assuming full exercise of the warrants, the number of shares of common stock outstanding post-offering will be 15,534,971.
You could lose all of your investment.
An investment in our securities is speculative and involves a high degree of risk. Potential investors should be aware that the value of an investment in the Company may go down as well as up. In addition, there can be no certainty that the market value of an investment in the Company will fully reflect its underlying value. You could lose your entire investment.
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The ability of our Board of Directors to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of the Company.
Our Board of Directors is authorized to issue up to 500,000 shares of preferred stock with powers, rights and preferences designated by it.  See “Preferred Stock” in the section of this prospectus titled “Description of Securities.” Shares of voting or convertible preferred stock could be issued, or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of the Company.  The ability of the Board of Directors to issue such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of the Company by tender offer or other means.  Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price that such an attempt could cause.  Moreover, the issuance of such additional shares of preferred stock to persons friendly to the Board of Directors could make it more difficult to remove incumbent officers and directors from office even if such change were to be favorable to stockholders generally.
Offers or availability for sale of a substantial number of shares of our common stock, for example, in connection with the 2,499,623 shares registered for resale herein, may cause the price of our common stock to decline.
If our stockholders sell substantial amounts of our common stock in the public market, including upon the expiration of any statutory holding period under Rule 144 or registration for resale, or issued upon the conversion of preferred stock or exercise of warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall.  The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.  As of June 16, 2016, we have 12,855,803 shares of common stock issued and outstanding. Following the effectiveness of the registration statement of which these prospectuses form a part and full exercise of the warrants to purchase up to shares held by the selling stockholders, 2,499,623 shares will be immediately available for resale. Even though the holders of the warrants may not exercise the warrants if they would own more than 9.99% or 4.99%, as applicable, of the then-outstanding common stock, this restriction does not prevent these holders from selling some of their holdings and then exercising the warrants for additional shares. In this way, the selling stockholders could sell more than these limits while never holding more than those limits.
Investor relations activities, nominal “float” and supply and demand factors may affect the price of our stock.
The Company may utilize various techniques such as non-deal road shows and investor relations campaigns in order to create investor awareness for the Company.  These campaigns may include personal, video and telephone conferences with investors and prospective investors in which our business practices are described.  The Company may provide compensation to investor relations firms and pay for newsletters, websites, mailings and email campaigns that are produced by third-parties based upon publicly-available information concerning the Company. The Company does not intend to review or approve the content of such analysts’ reports or other materials based upon analysts’ own research or methods.  Investor relations firms should generally disclose when they are compensated for their efforts, but whether such disclosure is made or complete is not under our control.   In addition, investors in the Company may, from time to time, also take steps to encourage investor awareness through similar activities that may be undertaken at the expense of the investors.  Investor awareness activities may also be suspended or discontinued which may impact the trading market our common stock.
The SEC and FINRA enforce various statutes and regulations intended to prevent manipulative or deceptive devices in connection with the purchase or sale of any security and carefully scrutinize trading patterns and company news and other communications for false or misleading information, particularly in cases where the hallmarks of “pump and dump” activities may exist, such as rapid share price increases or decreases.  We and our shareholders may be subjected to enhanced regulatory scrutiny due to the small number of holders who initially will own the registered shares of our common stock publicly available for resale. The Supreme Court has stated that manipulative action is a term of art connoting intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities.  Often times, manipulation is associated by regulators with forces that upset the supply and demand factors that would normally determine trading prices.  

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. Such statements include statements regarding our expectations, hopes, beliefs or intentions regarding the future, including but not limited to statements regarding our market, strategy, competition, development plans (including acquisitions and expansion), financing, revenues, operations, and compliance with applicable laws. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements include the risks described in greater detail in the following paragraphs. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement. Market data used throughout this prospectus is based on published third party reports or the good faith estimates of management, which estimates are based upon their review of internal surveys, independent industry publications and other publicly available information.
You should review carefully the section entitled “Risk Factors” within this prospectus for a discussion of these and other risks that relate to our business and investing in shares of our common stock.

All forward-looking statements speak only as of the date of this prospectus. We disclaim any obligation to update or revise these statements unless required by law, and you should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this prospectus are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” and elsewhere in this prospectus. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
USE OF PROCEEDS

We will not receive any immediate proceeds from the shares underlying our Series A Warrants being registered hereby. Assuming the exercise of all Series A Warrants, at an exercise price of $3.00 per shares, we would expect to receive proceeds of $4,173,915.

DIVIDEND POLICY
We do not expect to declare or pay any cash dividends in the foreseeable future on our common stock.  We may enter into debt arrangements in the future that also prohibit or restrict our ability to declare or pay cash dividends on our common stock. 
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MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
 Market information
Our Common stock is traded on the NASDAQ Capital Market (“NASDAQ”) under the symbol “MDVX.” 
The following table sets forth the high and low last reported sales prices of our Common stock for each quarterly period to date during 2015:
 2016  High   Low 
 First Quarter  $1.70    $0.85  
2015(1)
  High   Low 
Fourth quarter $4.23  $3.46 
Third quarter  4.00   3.85 
Second quarter  2.40   2.25 
First quarter  1.10   0.9504 

On June 16, 2016, the Company’s Common stock closed on NASDAQ at $1.89 per share.
As of June 16, 2016, there were 207 stockholders of record of our common stock.
(1)  The Company began trading on the NASDAQ Capital Market on February 2, 2015.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
As of March 31, 2016, we have granted an aggregate of 594,900 options to purchase common stock under the Company’s 2013 Stock Option Incentive Plan at a weighted average price of $2.87 per share to certain employees, consultants and our outside directors. Further reference is made to the information contained in the Equity Compensation Plan table contained in this prospectus.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
This discussion should be read in conjunction with the other sections of this prospectus, including “Risk Factors,” “Description of Business” and the Financial Statements attached hereto pursuant and the related exhibits. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this prospectus. See “Forward-Looking Statements.” Our actual results may differ materially. All amounts in this discussion are in thousands, except for share and per share data.
The following discussion and analysis of our results of operations and financial condition should be read in conjunction with (i) our unaudited interim condensed consolidated financial statements and related notes for the three months ended March 31, 2016 and 2015 (ii) audited financial statements for the fiscal years ended December 31, 2015 and 2014 and the notes thereto and (iii) the section entitled “Business,” included elsewhere in this prospectus. Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
PLAN OF OPERATIONS
The goal of the Company is to obtain, develop and commercialize various intellectual property rights (patents, patent applications, knowhow, etc.) in the medical technology area, with particular focus on the development of medical devices. We intend to leverage the extensive experiencediscretion of our board of directors and management teamwill depend on, among other things, our results of operations, any restrictions set forth in the medical industry to seek out product candidates for licensing, acquisition or development.

Financing Efforts
On April 29, 2016, the Company entered into a Unit Purchase Agreement (the “Unit Purchase Agreement”) with selected accredited investors (each an “Investor”our second Amended and collectively, the “Investors”). Pursuant to the termsRestated Articles of the Unit Purchase Agreement, the Company had the right to sell in a private placement (the “Offering”) a minimumIncorporation, cash requirements and surplus, financial condition, contractual restrictions and other factors that our board of $1,000,000 and up to a maximum of $2,000,000 of units (each a “Unit” and collectively, the “Units”).  Each Unit had a purchase price of $100,000 and consists of (i) 86,957 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $1.15 per share,  the trading price of the common stock was $1.28 on April 29, 2019, and (ii) a warrant to purchase 43,478 shares of Common Stock (each, a “Warrant” and together with the Units, the Common Stock and the Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”)). Each Warrant has an initial exercise price of $1.30 per share, subject to adjustment (the “Exercise Price”), and is initially exercisable six months following the date of issuance for a period of five (5) years from the date of issuance. The final closing constituted the completion of the Offering, which, in the aggregate, yielded $1,398,033.50 in gross proceeds to the Company and a total of 1,211,760 shares and warrants to purchase 605,880 shares to Investors. The shares of common stock sold as parts of the Units, including shares underlying the warrants in the Units are a part of the subject of this registration statement.

 Results of Operations

Three Months Ended March 31, 2016 Compared to the Three Months Ended March 31, 2015
  
Three Months Ended
March 31,
 
  2016  2015 
       
Revenues $--  $-- 
         
Operating Expenses        
General and administrative  1,130,711   1,149,723 
Sales and marketing  21,272   -- 
Research and development  189,283   304,719 
Depreciation and amortization  144,170   -- 
Total Operating Expenses  1,485,436   1,454,442 
         
Operating Loss  (1,485,436)  (1,454,442)
         
Other Expenses        
     Interest Expense
  346,850   -- 
Total Other Expenses  346,850   -- 
Net Loss $(1,832,286) $(1,454,442)
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Total operating expenses increased approximately $31,000, or 3%, to approximately $1,485,000 for the three months ended March 31, 2016, as compared to approximately $1,454,000 for the three months ended March 31, 2015. The increase in expenses is primarily the result of additional stock option expenses in the first quarter of 2016 as compared to the three months ended March 31, 2015. Additionally, the increase is attributable to the amortization of intangible assets acquired from Streamline. The decrease in professional expenses as compared to the prior year is due primarily to expenses we incurred as part of the consummation of the acquisition of Streamlinedirectors may deem relevant, as well as a decreaseour ability to pay dividends in certain consulting expenses. We continued to incur similar Product development costs associatedcompliance with the DenerveX device as well as costs incurred related to being a public entity.  We incurred approximately $374,000 in interest expense for the three months ended March 31, 2016, and did not occur any interest expense for the three months ended March 31, 2015.  The increase in interest expense is primarily related to debt conversion costs.

Liquidity and Capital Resources

Sources of Liquidity
To date our operations have been funded with the issuance of debt and equity. On November 9, 2015, we issued a convertible promissory note to Steve Gorlin, a related party, for up to $2,000,000, the principal to be advanced in two installments. We received $970,000 in cash and the reduction in obligation of $30,000 in directors’ fees on November 9, 2015. This $1,000,000 in debt was subsequently converted into equity in January 2016, ultimately in exchange for 552,041 shares of common stock. On March 1, 2016, the Board of Directors approved extending the date for the second installment of $1,000,000 to November 1, 2016. The debt presented on our March 31, 2016 balance sheet is comprised of two promissory notes issued by Streamline prior to our acquisition of that entity in March 2015 and a finance agreement for the Company’s annual D&O insurance premium. The two notes total approximately $208,000 at March 31, 2016, and the finance agreement totals approximately $51,000 at March 31, 2016. Payments on the finance agreement are due in equal quarterly installments. Our equity funding stems from both the private sale of common stock and an initial public offering of common stock.  Net of transaction costs, we raised approximately $6,732,000 in the initial public offering in December 2014, and approximately $1,084,000 from the exerciselaws of the underwriter’s overallotment in January 2015. In April 2016 State of Nevada.

19

OUR BUSINESS

Overview

H-CYTE, Inc (“the Company raised approximately $1,167,000 in net proceeds uponCompany”) is a hybrid-biopharmaceutical company dedicated to developing and delivering new treatments for patients with chronic respiratory and pulmonary disorders. During the closing of a private placement of common stock.  Since we believe that the likelihood of obtaining traditional debt financing at our stage of development is low, our source of funds in the foreseeable future will likely be from the sale of capital stock or some type of structured capital arrangement involving a combination of debt with an equity component.

Working Capital
  
March 31,
2016
  
December 31,
2015
 
Current Assets $629,000  $1,775,000 
Current Liabilities  538,000   590,000 
Working Capital $91,000  $1,185,000 
Cash Flows

Cash activity for the three months ended March, 2016 and 2015 is summarized as follows:

  
Three Months Ended March 31,
 
  
2016
  
2015
 
Cash used in operating activities
 $(1,055,000) $(1,239,000)
Cash used in investing activities
  (3,000)  (1,500,000)
Cash (used in) provided by financing activities
  (40,000  1,084,000 
Net decrease in cash and cash equivalents
 $(1,098,000 $(1,655,000) 
For the three months ended March 31, 2016 and 2015,last two years, the Company has used approximately $1,055,000,evolved into two separate divisions with its entrance into the biologics and $1,239,000, respectively, for operating activities. As of March 31, 2016,device development space (“Biotech Division”). This division is complementary to the Company’s current Lung Health Institute (LHI) autologous infusion therapy business (“Infusion Division”) and is focused on underserved disease states. On September 8, 2021, the Company had approximately $471,000 of cash on hand.

Funding Requirements
Whileannounced that its Lung Health Institute facilities changed its name to Centers for Respiratory Health as the DenerveX product is in the final stages of development and testing, we anticipate our cash expenditures willclinics continue to increasedeliver treatments for patients with chronic respiratory and pulmonary disorders.

The consolidated results for H-CYTE include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as we completeVariable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC is the Device Verification (DV) buildoperator and testingmanager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI Pittsburgh clinics did not reopen in 2020 after the temporary closure of all LI clinics due to COVID-19. These two clinics will remain permanently closed.

Autologous Infusion Therapy (“Infusion Vertical”)

The Company’s Biosciences Division includes the Infusion Vertical that develops and implements innovative treatment options in autologous cellular therapy (PRP-PBMC) to treat chronic lung disorders. Committed to an individualized patient-centric approach, this division consistently provides oversight and management of the highest quality care to the LHI clinics located in Tampa, Nashville, and Scottsdale, while producing positive medical outcomes following the strictest CDC guidelines.

Biotech Development Division (“Biotech Vertical”)

During the year ended 2021, the company completed a review of the R&D status regarding the exclusive product supply and services agreements with Rion, LLC (“Rion”) to develop and distribute (post U.S. Food & Drug Administration, the “FDA”, approval) a biologic combining its PRP-PBMC (“PRP”) technology with Rion’s exosomes (“EV”) technology for the DenerveX device and commencementtreatment of the Good Laboratory Practice (GLP) in live tissue testing on our path to submitting for CE mark and eventual FDA approval. Additionally, we anticipate an increase in expenditures of cash to support both a European clinical study to obtain additional clinical data to support marketing goals and to pursue a strategy for an anticipated U.S. clinical trial for eventual U.S. FDA clearance and to support our launch for the product into the European Union.


To the extent our available cash is insufficient to satisfy our long-term operating requirements, we will need to seek additional sources of funds from the sale of equity or debt securities or through a credit facility, or we will need to modify our current business plan. There can be no assurances that we will be able to obtain additional financing on commercially reasonable terms, if at all. The sale of additional equity or convertible debt securities would likely result in dilution to our current stockholders.
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Contractual Obligations and Commercial Commitments
chronic obstructive pulmonary disease (“COPD”). The Company has long term contractual obligations fordecided to progress alternate technologies and has determined a single entity biologic from an alternative commercial source will be a more viable solution. To that end the two promissory notes issuedcompany is progressing alternate biologics and therapeutic devices to meet the Bank of North Dakota New Venture Capital Program and North Dakota Development Fund. Both of the Bank of North Dakota New Venture Capital Program and North Dakota Development Fund notes were assumed in conjunction with the consummation of the Streamline acquisition on March 25, 2015, and require combined monthly payments of $5,661 into the third quarter of 2019. The Company has a commercial building lease agreement with Sugar Oak Kimball Royal, LLC for rent and utility costs for building space at a cost of approximately $3,000 per month through July 2018.

The Company does not have any other long term contractual obligations. The Company currently reimburses its CEO, Jarrett Gorlin, for the lease of executive office space at a cost of $1,800 per month, which it believes is at fair market value. The Company also has one consulting agreement with a monthly payment of $5,000 which either party can cancel with 30 days’ notice. We have employment agreements with each of our executive officers that commit us to a six month severance and benefits package if those employees separate under certain conditions, including a change in control of the Company.
For the Year Ended December 31, 2015 Compared to the Year Ended December 31, 2014

The following table sets forth our results of operation for the years ended December 31:
  2015  2014 
Revenues $33,045  $-- 
Cost of Goods Sold  25,383   -- 
Gross Profit  7,662   -- 
Operating expenses:      
General and administrative  5,000,727   1,913,648 
Sales and marketing  102,436   -- 
Research and development  940,179   1,020,703 
Depreciation and amortization  433,098   2,681 
Total operating expenses  6,476,440   2,937,032 
         
Operating loss  (6,468,778)  (2,937,032)
         
Other expenses:        
Interest expense  54,299   -- 
Total other expenses  54,299   -- 
         
Net loss $(6,523,077) $(2,937,032)

Revenue and Cost of Sales

The Company’s first sales of the Streamline ISS IV poles occurred in December 2015.  Customers place purchase orders for the IV Poles directly with the Company, which the Company subsequently places the order with Comdel to manufacture and assemble the IV Poles. Cost of sales as a percentage of revenue was approximately 75%. The Company expects cost of sales as a percentage of revenue to decrease as older inventory levels are depleted and sales of the IV Poles increase.

Operating Expenses

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

Research and Development Costs and Expenses
Research and development costs and expenses consist primarily of fees paid to external service providers, laboratory supplies, costs for facilities and equipment, and other costs for research and development activities. Research and development expenses are recorded in operating expenses in the period in which they are incurred. Estimates have been used in determining the expense liability of certain costs where services have been performed but not yet invoiced. We monitor levels of performance under each significant contract for external service providers, including the extent of patient enrollment and other activities through communications with the service providers to reflect the actual amount expended.

General and Administrative Expenses

During 2015, the Company paid approximately $1,390,000 in personnel costs, compared to approximately $823,000 in 2014. Professional fees were approximately $2,552,000 in 2015 and $1,097,000 in 2014 which was primarily a result of professional costs related to the development of the DenerveX device and the acquisition of Streamline in 2015. Travel expenses were approximately $295,000 during 2015 and $164,000 in 2014.

We anticipate that our general and administrative expenses will continue at a comparable rate in the future to support clinical trials, commercialization of our product candidate and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses.  
Additionally, we anticipate continued costs associated with being a public company including expenses related to services associated with maintaining compliance with exchange listing and Securities and Exchange Commission requirements, insurance, and investor relations costs.

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Sales & Marketing Expenses

During 2015, the Company paid approximately $102,000 in sales and marketing expenses compared to $1,000 in 2014. Sales and marketing expense consists primarily of fees paid to vendors for tradeshows and consultants in correlation with the pre-launch of the DenerveX in Europe.

Depreciation & Amortization

Depreciation and amortization expense are recorded in the period in which they are incurred.  During 2015, the Company recognized approximately $6,700 in depreciation expense, compared to approximately $2,600 in 2014.  During 2015, the Company recognized approximately $427,000 in amortization expense.  The Company did not recognize any amortization expense in 2014. The significant increase in amortization expense in 2015 compared to 2014 is a result of amortizing the intangible assets acquired in the Streamline acquisition.
Liquidity and Capital Resources
Since our inception, we have incurred losses and anticipate that we will continue to incur losses in the foreseeable future.

We expect our research and development, general and administrative and sales and marketing expenses will grow and, as a result, we will need to generate significant net sales to achieve profitability.
Our independent registered public accounting firm has included an explanatory paragraph with respect to our ability to continue as a going concern in its report on our consolidated financial statements as of and for the years ended December 31, 2015 and 2014. The presence of the going concern explanatory paragraph may suggest that we may not have sufficient liquidity or minimum cash levels to operate the business.   

Sources of Liquidity
Debt
On November 9, 2015, we issued a convertible promissory note to Steve Gorlin, a related party, for up to $2,000,000, the principal to be advanced in two installments. We received $970,000 in cash and the reduction in obligation of $30,000 in directors fees on November 9, 2015, This debt was subsequently converted into equity in January 2016, ultimately in exchange for 552,041 shares of common stock. On March 1, 2016, the Board of Directors approved extending the date for the second installment of $1,000,0000 to November 1, 2016.
In addition to the convertible promissory note, the debt presented on our December 31, 2015 balance sheet is comprised of two promissory notes issued by Streamline prior to our acquisition of that entity in March 2015 and a finance agreement for the Company’s annual D&O insurance premium.  The 2 notes, total approximately $223,000, andthe finance agreement totals approximately $76,000. Payments are due in equal quarterly installments.

Equity
We have received funding through the  private sale of common stock and an initial public offering of common stock. Net of transaction costs, we raised approximately $6,732,000 in the initial public offering in December 2014, and approximately $1,084,000 from the exercise of the underwriter’s overallotment in January 2015. The Company is exploring other fundraising options for 2016, however, since we believe that the likelihood of obtaining traditional debt financing at our stage of development is low, our source of funds in the foreseeable future will likely be from the sale of capital stock or some type of structured capital arrangement involving either equity or a combination of debt with an equity component. 

In March 2016, we commenced a private offering of up to $2 Million of Units, consisting of one share of our common stock and a Warrant exercisable for one share of our common stock (“the Unit Warrant.”)  We raised $ 1,398,033.50 from the sale of our Units.

Cash Flows
Net cash used in operating activities was approximately $6,002,000 during the year ended December 31, 2015, compared to approximately $2,760,000 in 2014. Net cash used in investing activities was approximately $1,159,000 during the year ended December 31, 2015, compared to approximately $24,000 in 2014.  Net cash provided by financing activities was approximately $2,047,000 during the year ended December 31, 2015, compared to approximately $6,862,000 in 2014.
The Company had $1,570,167 and $6,684,576 of cash on hand at December 31, 2015 and 2014, respectively.  The significant increase in cash expenditures in 2015 compared to 2014 is the result of increased research and development expenditures related the Denervex device as well as acquisition and capital commitment costs associated with the consummation of the Streamline acquisition.

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Funding Requirements
We anticipate our cash expenditures will increase as we develop the DenerveX product, especially if the FDA requires a de novo regulatory path, as opposed to 510(k) approval. We also anticipate an increase in cash expenditures due to the additional costs associated with being a public entity, and for funding the working capital needs of the ISS as we attempt to introduce it tobusiness.

Impact of COVID-19

The coronavirus outbreak (“COVID-19”) has adversely affected the marketplace.


Critical Accounting Policies and Estimates
Our discussion and analysis of ourCompany’s financial condition and results of operations are basedoperations. The impact of the outbreak of COVID-19 on our consolidated financial statements, which we have preparedthe businesses and the economy in accordance withthe United States generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the daterest of the financial statements, as well asworld is and is expected to continue to be significant. The extent to which COVID-19 outbreak will continue to impact business and the reported amounts of revenueseconomy is highly uncertain and expenses duringcannot be predicted. Accordingly, the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below.
We base our estimates on historical experience and on various other factors that we believe are reasonable underCompany cannot predict the circumstances, the results ofextent to which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements included elsewhere in this report, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating ourits financial condition and results of operations.
Controls and Procedures
We have taken certain measures in an effort to addressoperation will be affected.

On January 30, 2020, the lack of segregation of duties within the accounting functions inherent inWorld Health Organization (“WHO”) announced a small company.  We hiredglobal health emergency caused by a controller to perform certain accounting and reporting functions, and we also added John C. Thomas, Jr. to our board of directors in April 2014 as our financial expert and chairnew strain of the Audit Committee. Mr. Thomas is a certified public accountant with over 24 yearscoronavirus and advised of experiencethe risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a chief financial officer forpandemic based on the rapid increase in exposure globally. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and private companies.congregating in large numbers. In addition, certain states and municipalities have enacted quarantining regulations which severely limit the ability of people to move and travel.

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Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the 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 the period that includes the enactment date. Valuation allowances have been established as it is more likely than not that the deferred tax assets will not be realized.
We file income tax returns in the U.S. federal jurisdiction and certain state jurisdictions. The tax years that could be subject to audit are 2013, 2014 and 2015.
We have sustained losses since inception which has generally resulted in a zero percent effective tax rate; in

In addition, we have not incurred any interest or penalties. Our policy is to recognize interest and penalties accrued on tax matters as a component of income tax expense. 


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BUSINESS
General
Overview
MedoveX was incorporated in Nevada on July 30, 2013 as Spinez Corp. MedoveX is the parent company of Debride Inc., (“Debride”), which was incorporated under the laws of Florida on October 1, 2012, but did not commence operations until February 1, 2013.  Spinez Corp. changed its name to MedoveX Corp. and effected a 2-for-1 reverse split of its stock in March, 2014.

The goal of the Company is to obtain, develop and commercialize various intellectual property rights (patents, patent applications, knowhow, etc.) in the medical technology area, with particular focus on the development of medical devices. We intend to leverage the extensive experience of our board of directors and management team in the medical industry to seek out product candidates for licensing, acquisition or development.  On March 11, 2015, we filed a Form 8-K to disclose that we entered into an agreement to acquire Streamline, Inc., and on March 25, 2015, we consummated the acquisition.

The DenerveX Device

Our first acquisition was the DenerveX device.  We believe that the DenerveX device can be developed to encompass a number of medical applications, including pain relief.  
The Company acquired the DenerveX patent on January 31, 2013 from Scott Haufe, M.D. (“Dr. Haufe”), a directoruncertain of the Company, in exchangefull effect the pandemic will have on it for 750,108 shares of common stock in the Companylonger term since the scope and a 1% royalty on all sales of any product sold based on the patent. In September 2013, we entered into a Co-Development Agreement with James Andrews, M.D. (“Dr. Andrews”), a directorduration of the Company, whereby Dr. Andrews committed to further evaluatepandemic is unknown, and evolving factors such as the DenerveX devicelevel and to seek to make modifications and improvements to such technology.  In exchange for such services, the Company agreed to pay Dr. Andrews a royalty equal to two (2%) percenttiming of the DenerveX net sales during the five (5) year term of the Co-Development Agreement. Upon the termination of the term of the Co-Development Agreement, which has a minimum term of five (5) years, then the royalty payable to Dr. Andrews shall be reduced to one (1%) percent of DenerveX net sales after such termination of products covered by any U.S. patent on which Dr. Andrews is listed as a co-inventor; if any such patents are obtained.  Such one (1%) percent royalty shall continue during the effectiveness of such patent.  Pursuant to the Co-Development Agreement, Dr. Andrews agreed to assign any modifications or improvements to the DenerveX to the Company subject to the royalty rights described above.
Our intention is to market the product as a disposable, single-use kit which will include all components of the DenerveX product. In addition to the DenerveX device itself, we are developing a dedicated Electro Surgical Generator to power the DenerveX device. The generator would be provided to customers agreeing to purchase the DenerveX device, and could not be used for any other purpose.

We accepted a proposal from Devicix, a Minneapolis, Minnesota third party design and development firm, in November 2013, to develop a prototype device. This proposal included a 5 phase development plan, culminating in the production of a prototype that could be used for validation purposes. Currently we are in the build and test phase of the device, which focuses on completion of the product design verification testing, design optimization as required, and the completion of manufacturing transfer. Through December 31, 2015, we have paid approximately $1,066,000 to Devicix.

In November 2014, we selected Nortech Systems Inc. (“Nortech”), a Minneapolis, Minnesota based U.S. Food and Drug Administration (“FDA”) registered contract manufacturer, to produce 315 DenerveX devices from the prototype supplied by Devicix for use in final development and clinical trials. Our agreement with Nortech includes agreed-upon per unit prices for delivery of the devices. Actual work on development of the final units began in November 2014. Through December 31, 2015, we have paid approximately $289,000 to Nortech.

Also in November 2014, we engaged Bovie Medical Corporation (“Bovie”), a Delaware Corporation, to develop our Electro Surgical Generator and provide post production support services.  Per our agreement with Bovie, we are invoiced based on deliverables produced by Bovie, which will amount to $295,000 upon completion of all the deliverables. Through December 31, 2015, we have paid $287,000 to Bovie towards the $295,000 total.  

Streamline, Inc. Merger

On March 9, 2015, the Board of Directors of MedoveX and Streamline, Inc., a Minnesota corporation (“Streamline”), approved an Agreement and Plan of Merger (the “Merger Agreement”).

On March 24, 2015, Streamline shareholders approved the Merger Agreement and the transaction was closed immediately thereafter. Under the Merger Agreement, STML Merger Sub, Inc. a wholly-owned subsidiary of MedoveX, merged into Streamline, after which Streamline became a wholly-owned subsidiary of MedoveX. Streamline is in the business of designing, developing, manufacturing and marketing 510(k) and 510(k) exempt products for use in the medical field. MedoveX intends, although there can be no assurance, to enter into a marketing agreement with a leading hospital bed manufacturer to market Streamline’s patented IV Suspension System as an option with its hospital beds, and pursue other marketing opportunities for the product.  Our President and Chief Operating Officer, Patrick Kullmann, was formerly the Chief Executive Officer of Streamline.  However, Mr. Kullmann held no securities of Streamline.
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All Streamline dilutive securities were either exercised or terminated prior to the closing, resulting in 4,709,491 shares of Streamline’s common stock outstanding immediately prior to closing. Net proceeds from these exercises (after statutory withholdings and certain transaction expenses) were included in the amount of cash available to Streamline stockholders. Each share of Streamline common stock may be exchanged by its holder for approximately $0.29 in cash and approximately 0.35 shares of MedoveX common stock after submitting properly executed documents to a 3rd party paying agent. All Streamline holders have submitted the proper documents to the paying agent with the exception of 2 holders representing 2,596 shares of MedoveX stock. Additionally, 200,000 shares of MedoveX common stock is being held in escrow until September 24, 2016 to secure Streamline’s indemnification obligations under the Merger Agreement.

Assuming the remaining Streamline shareholders submit their documents,  this transaction resulted in the issuance of 1,875,000 shares of MedoveX common stock, (including the 200,000 shares being held in escrow) and the distribution of approximately $1,325,000efficacious vaccines across the world and the extent of cash to Streamline shareholders. The termsany resurgences of the Merger Agreement also required a commitment by MedoveX to supply a minimumvirus or emergence of $750,000 in working capital to the Streamline subsidiary.
The IV Suspension System ("ISS")

On March 24, 2015, we acquired the patent rights to the Streamline ISS product as partnew variants of the Company’s acquisitionvirus, such as the Delta variant and the Omicron variant, will impact the stability of Streamline. There are no royaltieseconomic recovery and growth. The Company may experience long-term disruptions to its operations resulting from changes in government policy or other commitments associated withguidance; quarantines of employees, customers and suppliers in areas affected by the salepandemic; and closures of this product. The product has already been manufactured at a contract facility in North Dakota and requires no regulatory approval for sale. The ISS is a system designedbusinesses or manufacturing facilities critical to allow the transportation of IV poles secured to hospital beds such that one person could move a patient without fear of separating the IV pole from the patient during transport.

While there are several “bed and boom” transfer systems on the market, we are not aware of any that take the Streamline patented approach to addressing IV pole transportation. Nevertheless, other bed transportation products have been on the market longer and have larger organizations marketing their products. The hospital market in general is highly competitive, and introducing any new product is difficult and time consuming.

its business.

Competition


Developing and commercializing new productsFDA approved drugs and therapies is highly competitive. The market is characterized by extensive research and clinical efforts and rapid technological change. We faceThe Company faces intense competition worldwide from medical device,pharmaceutical, biomedical technology, and medical productstherapy, and combination products companies, including major medical productspharmaceutical companies. WeThe Company may be unable to respond to technological advances through the development and introduction of new products. Most of ourthe Company’s existing and potential competitors have substantially greater financial, sales and marketing, sales,manufacturing and distribution, manufacturing and technological resources. These competitors may also be in the process of seeking FDA or(or other regulatory approvals, orapprovals) and patent protection for new products. Our competitors may commercialize new products in advance of our products.  Our productsThe Company’s biologics product lines also face competition from numerous existing products and procedures, which currently are considered part of the standard of care. We believeThe Company believes that the principal competitive factors in ourits markets are:

determining and progressing suitable biological therapies for specific disease states the quality of outcomes for medical conditions;
acceptance by surgeonsphysicians and the medical device market generally;community;
ease of use and reliability;
technical leadership and superiority;
effective marketing and distribution;
speed to market; and
product
price and qualification for insurance coverage and reimbursement.
We

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


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We are

The Company is aware that several of several companies that compete orits competitors are developing technologies in ourits current and future products areas. With regardThere are numerous regenerative medicine providers who make unsubstantiated claims that they are able to the DenerveX device, we believe that our principaltreat chronic lung disease. Most of these competitors include device manufacturers Cosman Medical Inc., Stryker Corporationare small clinics with little brand recognition. The landscape is changing as pharma and Spembly Medical Systems.  We may also face competition from developing, but potentially untested technologies such as Zyga’s GLYDER device. In order to compete effectively, our products will have to achieve widespread market acceptance, receive adequate insurance coverage and reimbursement, be cost effective and be simultaneously safe and effective.  


While there are several “bed and boom” transfer systems on the market, we are not aware of any that take the Streamline patented approach to addressing IV pole transportation. Nevertheless, other bed transportation products have been on the market longer and have larger organizations marketing their products. The hospital market in general is highly competitive, and introducing any new product is difficult and time consuming.

Customers

Healthcare providers, physicians and third-party payors in the United States and elsewhere play a primary role in the recommendation and prescription of any products for which we obtain marketing approval.  We estimate selling the DenerveX in Europe before the United States. We will utilize the experience of distributors in the countries we opt to market in to decide the best approach to selling the DenerveX within their respective countries. Information gleaned from the European sales should help finalize our approach for sales in the United States.

Initially we plan to market Streamline’s IV Suspension System to hospitals exclusively via a marketing agreement with a major hospital bed manufacturer. This arrangement will be evaluated over the course of the year to gauge its effectiveness.
Intellectual Property

A key element of our success depends on our ability to identify and create proprietary medical device technologies.  In order to proactively protect those proprietary technologies, we intend to continue to develop and enforce our intellectual property rights in patents, trademarks and copyrights, as available through registration in the United States and internationally,biologics companies, as well as academia such as the Mayo Clinic, begin to develop therapies for multiple diseases using regenerative medicine through the usemore stringent regulatory pathway of trade secrets, domain namesa BLA.

Customers

The Company’s customer base consists of individuals who are suffering from chronic lung disease that are searching for alternative or adjunct forms of treatment outside of traditional pharmaceutical care which has not been successful for them in the past.

Intellectual Property

The Company’s Infusion Vertical is currently a direct care service provider and contractual agreements such as confidentiality agreements and proprietary information agreements.

Currently, ourdoes not own any intellectual property rights includearound its current procedure. The development of a biologic is ongoing and is projected to start the FDA approval process in 2022. H-CYTE has a ten-year exclusive licensing agreement with Rion and will therefore be protected by Rion’s intellectual property acquired from Debride, Inc., which includes the U.S. Patent 8,167,879 B2 (the “Patent”). The Patent was originally filed in 2009 and was issued on May 1, 2012. We intend to leverage the Patent to the fullest extent possible through market development and prosecution of our rights under the Patent.filings.

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As a result of our acquisition of Streamline, we acquired the rights to U.S. Patents 7,497,407 B2 (issued March 3, 2009), 7,735,789 B2 (issued June 15, 2010), and 7,918,422 B2 (issued April 5, 2011), all related to Streamline's Transformable Intravenous Pole. We believe these patents provide intellectual property protection for the product line acquired from Streamline.    

In addition to filing and prosecuting patent applications in the United States, we intend to file counterpart patent applications in additional countries where we think such foreign filing is warranted.
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.  In most countries in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application.  In the United States, a patent’s term may be shortened if a patent is terminally disclaimed over another patent or as a result of delays in patent prosecution by the patentee, and a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in granting a patent.
We intend to continually re-assess and fine-tune our intellectual property strategy in order to fortify our position in our market space in the United States and internationally.  To that end, we are prepared to file additional patent applications should our intellectual property strategy require such filings and/or where we seek to adapt to competition or seize business opportunities.  Further, we are prepared to file patent applications relating to any other products that we develop or require soon after the experimental data necessary for a strong application become available and our cost-benefit analyses justifies filing such applications.

Many biotechnology companies and academic institutions are competing with us in the medical device field and filing patent applications potentially relevant to our business.  Internally, we have established business procedures designed to maintain the confidentiality of our proprietary information, including the use of confidentiality agreements with employees, independent contractors, consultants and companies with which we conduct business.  Also, we generally require employees to assign patents and other intellectual property to us as a condition of employment with us.

In order to contend with the inevitable possibility of third party intellectual property conflicts, from time to time, we will review and assess the third-party intellectual property landscape for competitive and other developments that may inform or impact our intellectual property development and commercialization strategies.  We may find it necessary or prudent to obtain licenses from third party intellectual property holders.  Where licenses are readily available at reasonable cost, such licenses are considered a normal cost of doing business.  In other instances, however, where a third party holds relevant property and is a direct competitor, a license might not be available on commercially reasonable terms or available at all.  We will attempt to manage the risk that such third party intellectual property may pose by conducting, among other measures, freedom-to-operate studies to guide our early-stage research away from areas where we are likely to encounter obstacles in the form of third party intellectual property.

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Government Regulations


Government

Governmental authorities in the United States, atU.S. (at the federal, state and local level,levels) and in other countriesabroad, extensively regulate, among other things, the research and development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, and export and import of products such as those we are developing. Any product that we develop must

FDA Regulation

The Infusion Vertical’s current cellular therapy for chronic lung disease does not require FDA approval due to it being an autologous therapy. The Company’s future biologic biologic therapies will need to be approved by the FDA before they may be legallyare marketed in the United States and byU.S. During the appropriate foreign regulatory agency before they may be legally marketed in foreign countries.


Opportunities Created by Healthcare Legislation

We anticipate that recent healthcare legislation will create greater opportunities for cost-effective providers of healthcare.  The Patient Protection and Affordable Care Act, as amended byFDA’s approval process, the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”) and other related healthcare reform activities seek to expand coverage to a broader range of patients.  Since insurance coverage reduces the out-of-pocket expense for physician visits, patientsCompany’s therapies will be better able to afford visits to the doctor and accordingly, the number of physician visits is projected to rebound as health insurance exchanges and subsidization of insurance premiums were established between roughly 2% and 9.5% of total house hold Modified Adjusted Gross Income (MAGI) for individuals with income less than 100% - 400% of the poverty line.

Additionally, PPACA accomplishes its proposed expansion of coverage to previously uninsured individuals through a significant loosening of the eligibility criteria for enrollment in Medicaid.  As Americans grow older and live longer, we expect there will be greater public and private spending on healthcare, which is expected to help hospitals afford to upgrade their equipment in order to speed surgical processes while lowering associated risks, such as infection and recovery time.  Consequently, areas of strongest growth in the hospital market will be in medical devices that treat age-related illnesses, such as those that are likely to seek reimbursement through Medicaid, and those devices that help hospitals achieve faster procedures while lowering the associated risks as discussed above.

FDA Regulation

The DenerveX and any other product we may develop must be approved or cleared by the FDA before it is marketed in the United States.  Before and after approval or clearance in the United States, our products are subject to extensive regulation by the FDA under the Federal Food, Drug, and Cosmetic Act and/or the Public Health Service Act, as well as by other regulatory bodies.

FDA regulations govern, among other things, the development, testing, manufacturing, labeling, safety, storage, record-keeping, market clearance or approval, advertising and promotion, import and export, marketingsales and sales,marketing, and distribution of medical devices and products.


In the United States,U.S., the FDA subjects medicalpharmaceutical and biologic products to rigorous review. If we dothe Company does not comply with applicable requirements, weit may be fined, the government may refuse to approve ourits marketing applications or to allow usit to manufacture or market ourits products, and wethe Company may be criminally prosecuted. Failure to comply with the law could result in, among other things, warning letters, civil penalties, delays in approving or refusal to approve a product, product recall, product seizure, interruption of production, operating restrictions, suspension or withdrawal of product approval, injunctions, or criminal prosecution.


FDA Approval or Clearance

Proprietary Medical Device Business (DenerveX division)

The Company’s business of Medical Devices


In the United States,designing and marketing proprietary medical devices are subject to varying degreesfor commercial use in the U.S. and Europe began operations in late 2013. The Company received CE marking in June 2017 for the DenerveX System and it became commercially available throughout the European Union and several other countries that accept CE marking. The Company’s first sale of regulatory control and are classifiedthe DenerveX System occurred in one of three classes depending onJuly 2017. The Company marketed the extent of controls the FDA determines are necessary to reasonably ensure their safety and efficacy:

Class I: general controls, such as labeling and adherence to quality system regulations;

Class II: special controls, pre-market notification (often referred to as a 510(k) application), specific controls such as performance standards, patient registries, post market surveillance, additional controls such as labeling and adherence to quality system regulations; and

Class III: special controls and approval of a pre-market approval (“PMA”) application.
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In general, the higher the classification, the greater the time and cost to obtain approval to market. There are no “standardized” requirements for approval, even within each class. For example, the FDA could grant 510(k) status, but require a human clinical trial, a typical requirement of a PMA. They could also initially assign a device Class III status, but end up approving a deviceDenerveX Device as a 510(k) device if certain requirements are met.  The rangedisposable, single-use kit which includes all components of the number and expense of the various requirements is significant. The quickest and least expensive pathway would be 510(k) approval with a just a review of existing data. The longest and most expensive path would be a PMA with extensive randomized human clinical trials. We cannot predict how the FDA will classify the DenerveX device nor predict what requirements will be placed upon us to obtain market approval, or even if they will approve the DenerveX device at all. However, we believe the pathway that will be required by the FDA will be somewhere between the two extremes described above.
We intend to apply to the FDA for 510(k) clearance for our DenerveX device. However, it is very possible the FDA will deny this request and require the more expensive PMA process. The Company has budgeted based on the assumption that the PMA process will be required.  To request marketing authorization by means of a 510(k) clearance, we must submit a pre-market notification demonstrating that the proposed device is substantially equivalent to another currently legally marketed medical device, has the same intended use, and is as safe and effective as a currently legally marketed device and does not raise different questions of safety and effectiveness than does a currently legally marketed device.  510(k) submissions generally include, among other things, a description of the device and its manufacturing, device labeling, medical devices to which the device is substantially equivalent, safety and biocompatibility information, and the results of performance testing.product. In some cases, a 510(k) submission must include data from human clinical studies.  We believe that other medical devices which have been approved by the FDA have many aspects that are substantially similaraddition to the DenerveX device which may make obtaining 510(k) clearance possible.  Marketing may commence only when the FDA issues a clearance letter finding substantial equivalence.  After a device receives 510(k) clearance, any product modification that could significantly affect the safety or effectiveness of the product, or that would constitute a significant change in intended use, requires a new  510(k) clearance or, if the device would no longer be substantially equivalent, would require PMA. In addition, any additional claimsitself, the Company wisheddeveloped a dedicated Electro Surgical Generator, the DenerveX Pro-40, to make at a later date, such aspower the permanent reliefDenerveX device. There is currently no finished product of pain, may require a PMA.  If the FDA determines that the product does not qualify for 510(k) clearance, they will issue a Not Substantially Equivalent letter, at which point the Company must submit and the FDA must approve a PMA before marketing can begin.

During the review of a 510(k) submission, the FDA may request more information or additional studies and may decide that the indications for which we seek approval or clearance should be limited.  In addition, laws and regulations and the interpretation of those laws and regulations by the FDA may change in the future. We cannot foresee what effect, if any, such changes may have on us.

European Union Approvals

The EU will require a CE mark certification or approval in order to market the DenerveX device in inventory as commercial production has been suspended since the various countriesfirst quarter of the European Union or other countries outside the United States.  To obtain CE mark certification of the device, we will be required to work with an accredited European notified body organization to determine the appropriate documents required to support certification in accordance with existing medical device directive.  The predictability of the length of time and cost associated with such a CE marketing may vary, or may include lengthy clinical trials to support such a marking. Once the CE mark is obtained, a company may market the device in the countries of the EU.  We have targeted the submission of our application for CE marketing in 2016. Management believes it will be able to obtain European CE mark approval to market2019. There was minimal revenue from the DenerveX device before it will obtain FDA approval. The Company has retained third party experts to assist with the European approval. Management will be interviewing potential European distributors and will likely retain a European sales manager to assist the distributor and promote the product in Europe.
2020.


Clinical Trials of Medical Devices

One or more clinical trials are becoming necessary to support an FDA submission. Clinical studies of unapproved or uncleared medical devices or devices being studied for uses for which they are not approved or cleared (investigational devices) must be conducted in compliance with FDA requirements.  If an investigational device could pose a significant risk to patients, the sponsor company must submit an Investigational Device Exemption, or "IDE" application to the FDA prior to initiation of the clinical study.  An IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device on humans and that the testing protocol is scientifically sound.  The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA notifies the company that the investigation may not begin.  Clinical studies of investigational devices may not begin until an institutional review board ("IRB") has approved the study.

During any study, the sponsor must comply with the FDA’s IDE requirements.  These requirements include investigator selection, trial monitoring, adverse event reporting, and record keeping.  The investigators must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of investigational devices, and comply with reporting and record keeping requirements. We, the FDA, or the IRB at each institution at which a clinical trial is being conducted, may suspend a clinical trial at any time for various reasons, including a belief that the subjects are being exposed to an unacceptable risk.  During the approval or clearance process, the FDA typically inspects the records relating to the conduct of one or more investigational sites participating in the study supporting the application.

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Post-Approval Regulation of Medical Devices

After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.  These include:

22
the FDA Quality Systems Regulation (“QSR”), which governs, among other things, how manufacturers design, test, manufacture, exercise quality control over, and document manufacturing of their products;

labeling and claims regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and
the Medical Device Reporting regulation, which requires reporting to the FDA of certain adverse experiences associated with use of the product.
We will continue to be subject to inspection by the FDA to determine our compliance with regulatory requirements.

Manufacturing cGMP Requirements

Manufacturers of medical devices are required to comply with FDA manufacturing requirements contained in the FDA’s current

Good Manufacturing Practices ("cGMP"(“GMP”) set forth in the quality system regulations promulgated under section 520 of the Food, Drug and Cosmetic Act.  cGMP regulations require, among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation.  Failure to comply with statutory and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including the seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations, and civil and criminal penalties.  Adverse experiences with the product must be reported to the FDA and could result in the imposition of marketing restrictions through labeling changes or in product withdrawal.  Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following the approval.


International Regulation

We are subject to regulations and product registration requirements in many foreign countries in which we may seek to sell our products, including in the areas of product standards, packaging requirements, labeling requirements, import and export restrictions and tariff regulations, duties and tax requirements. The time required to obtain clearance required by foreign countries may be longer or shorter than that required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements.

European Good Manufacturing Practices

In the European Union, the manufacture of medical devices is subject to good manufacturing practice ("GMP"), as set forth in the relevant laws and guidelines of the European Union and its member states. Compliance with GMP is generally assessed by the competent regulatory authorities.  Typically, quality system evaluation is performed by a Notified Body, which also recommends to the relevant competent authority for the European Community CE Marking of a device.  The Competent Authority may conduct inspections of relevant facilities, and review manufacturing procedures, operating systems and personnel qualifications.  In addition to obtaining approval for each product, in many cases each device manufacturing facility must be audited on a periodic basis by the Notified Body.  Further inspections may occur over the life of the product.  
Our third party manufacturer has ISO certification which is generally one of the requirements for approval under the guidelines established in the European Union.

United States Anti-Kickback and False Claims Laws


In the United States,U. S., there are Federal and stateState anti-kickback laws that prohibit the payment or receipt of kickbacks, bribes or other remuneration intended to induce the purchase or recommendation of healthcare products and services. Violations of these laws can lead to civil and criminal penalties, including exclusion from participation in Federal healthcare programs. These laws are potentially applicable to manufacturers of products regulated by the FDA as pharmaceuticals, biologics, medical devices, and hospitals, physicians and other potential purchasers of such products. Other provisions of Federal and stateState laws provide civil and criminal penalties for presenting, or causing to be presented, to third-party payers for reimbursement, claims that are false or fraudulent, or which are for items or services that were not provided as claimed. In addition, certain states have implemented regulations requiring medical device and pharmaceutical companies to report all gifts and payments of over $50 to medical practitioners. This does not apply to instances involving clinical trials.

Although we intendthe Company intends to structure ourits future business relationships with clinical investigators and purchasers of ourits products to comply with these and other applicable laws, it is possible that some of ourthe Company’s business practices in the future could be subject to scrutiny and challengechallenged by Federal or stateState enforcement officials under these laws.


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Research Productand Development and Technical Operations Expense


Research and development costs and expenses consist primarily of fees paid to external service providers, laboratory testing, supplies, costs for facilities and equipment, and other costs for research and development activities. Research and development expenses are recorded in operating expenses in the period in which they are incurred. Estimates have been used in determining the expense liability of certain costs where services have been performed but not yet invoiced. We monitor levels of performance under each significant contract for external service providers, including the extent of patient enrollment and other activities through communications with the service providers to reflect the actual amount expended.

Employees

As of December 31, 2015, weJanuary 25, 2022, the Company had 128 total employees, 11 of which were full-time employees. None of ourits employees are represented by a union and we believe our employee relations to be good.


Legal Proceedings
We anticipate that we will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and we cannot assure that their ultimate disposition will not have a materially adverse effect on theunion.

Available Information

The Company’s business, financial condition, cash flows or results of operations. The Company is not currently a party to any pending legal proceedings, nor is the Company aware of any civil proceeding or government authority contemplating any legal proceeding as of the date of this filing.

Available Information
Our website, www.MedoveX.com,www.hcyte.com, provides access, without charge, to our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (“SEC”). The information provided on ourthe Company’s website is not part of this report and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this Registration Statement on Form S-1.
report.

Materials filed by the Company with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.govwww.sec.gov that contains reports, proxy and information statements, and other information regarding our company that we file electronically with the SEC.

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MANAGEMENT

The following table provides information, as of the filing hereof, the directors and/or executive officers of the Company:

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NamePosition(s)Age
Steve GorlinDirector, Co-Chairman of the Board78
Major General C.A. “Lou” HenniesDirector (2) (3)78
James R. Andrews, M.D.Director74
Scott M. W. Haufe, M.D.Director (2)50
Thomas E. HillsDirector (1) (3)39
Randal R. Betz, M.D.Director64
John C. Thomas, Jr.Director (1)62
John BlankDirector65
Larry PapasanCo-Chairman of the Board (1) (2) (3)75
Jarrett GorlinChief Executive Officer and Director40
Patrick KullmannPresident and Chief Operating Officer60
Charles FarraharSecretary55
Jeffery WrightChief Financial Officer33
Dennis MoonSenior Vice President40
(1)   Member

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OPERATIONS

The following discussion and analysis of audit committee

(2)   Memberfinancial condition and results of compensation committee
(3)   Memberoperations should be read together with our financial statements and accompanying notes appearing elsewhere in this prospectus. This Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” set forth in the beginning of nominatingthis prospectus, and corporate governance committee
No Family Relationships
Theresee “Risk Factors” beginning on page 3 for a discussion of certain risk factors applicable to our business, financial condition, and results of operations. Operating results are not necessarily indicative of results that may occur in future periods.

Overview

H-CYTE, Inc (“the Company”) is no family relationship between any directora hybrid-biopharmaceutical company dedicated to developing and executive officer or among any directors or executive officers, exceptdelivering new treatments for patients with chronic respiratory and pulmonary disorders. During the last two years, the Company has evolved into two separate divisions with its entrance into the biologics development space (“Biologics Division”). This new division is complementary to the Company’s current Lung Health Institute (LHI) autologous infusion therapy business (“Infusion Division”) and is focused on underserved disease states. On September 8, 2021, the Company announced that Steve Gorlin is Jarrett Gorlin’s father.

Business Experienceits Lung Health Institute facilities changed its name to Centers for Respiratory Health as the clinics continue to deliver treatments for patients with chronic respiratory and Background of Directorspulmonary disorders.

The consolidated results for H-CYTE include the following wholly owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Executive Officers

BOARD OF DIRECTORS 
Steve Gorlin
Steve GorlinLung Institute Tampa, LLC and the results include Lung Institute Dallas, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC is the Co-founder of Debride Inc., the first company acquired by MedoveX. Over the past 40 years, Mr. Gorlin has founded several biotechnologyoperator and pharmaceutical companies, including HycorBiomedical, Inc. (acquired by Agilent), Theragenics Corporation (NYSE: TGX) , CytRx Corporation (NASDAQ: CYTR), Medicis Pharmaceutical Corporation (sold to Valeant for approximately $2.6 billion), EntreMed, Inc. (NASDAQ: ENMD), MRI Interventions (MRIC), DARA BioSciences, Inc. (NASDAQ: DARA), MiMedx (NASDAQ: MDXG), and Medivation, Inc. (NASDAQ: MDVN). Mr. Gorlin served for many years on the Business Advisory Council to the Johns Hopkins School of Medicine and on The Johns Hopkins BioMedical Engineering Advisory Board. He presently serves on the board of directorsmanager of the Andrews Institute. Mr. Gorlin founded a numbervarious Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI Pittsburgh clinics did not reopen in 2020 after the temporary closure of non-medical related companies, including Perma-Fix, Inc., Pretty Good Privacy, Inc. (soldall LI clinics due to Network Associates), and NTC China. He started The Touch Foundation, a nonprofit organization forCOVID-19. These two clinics will remain permanently closed.

On September 11, 2020, with the blind and was a principal financial contributor to the founding of Camp Kudzu for diabetic children. Presently, he serves as a memberclosing of the board of directorsRights Offering, FWHC, LLC, FWHC Bridge, LLC, and of the executive committee of DemeRx, Inc., NantKwest, Inc. (NASDAQ: NK), and is on the Board of NTC China, Inc.


Major General C.A. “Lou” Hennies
Mr. Hennies became a directorFWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company in September 2013.  Lou Hennies is a career soldier having served his country in uniform for 41 years where he rose through the ranks from enlisted status to that of a commissioned officer retiring in 2001 as a Major General.
He served a total of 37 months in combat in Republic of Vietnam as a Company/Troop commander of four units and as a battalion/squadron staff officer in the 4th Battalion, 23rd Infantry Regiment, 25th Infantry Division, Cu Chi, and the 7th Squadron, 17th Air Cavalry in II Corps. Stateside he commanded another Air Cavalry Troop followed by commandsubsequently owning approximately 61% of the 1st Squadron, 17th Air Cavalry in the 82nd Airborne Division.
Selected for Brigadier General in 1986, he subsequently served as the Army’s Deputy Chief of Public Affairs and Director of Army Safety and Commanding General of the U.S Army Safety Center. Initially retiring in 1991, he returned to service in 1995 as The Adjutant General (TAG) of the Alabama Army and Air National Guard and as a Cabinet Officer in the Administration of Governor Fob James Jr.

He is a graduate of the Army’s Command and General Staff College, The Army War College, and The Center for Creative Leadership. A graduate of the University of Nebraska-Omaha with a Bachelor Degree in Political Science, he also holds a Master of Arts Degree in Journalism from the University of Nebraska-Lincoln and a Master of Science in Public Administration from Shippensburg University, Pennsylvania.
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His awards and decorations include the Army Distinguished Medal with Oak Leaf Cluster, the Silver Star, the Legion of Merit with Oak Leaf Cluster, the Distinguished Flying Cross, the Soldiers Medal, the Bronze Star with “V” device and 5 Oak Leaf Clusters, the Purple Heart, the Air Medal with “V” (2) and numeral 29, and the Alabama Distinguished Medal with Oak Leaf Cluster. He is also a recipient of numerous foreign decorations from the Republic of Vietnam and the Republic of Korea.
He has been awarded the Army Aviation Order of Saint Michael (Gold), the Infantry’s Order of Saint Maurice (Primercius) and the Army Aviation Hall of Fame Medallion and has been inducted into the Infantry Officer Candidate Hall of Fame, the Army Aviation Hall of Fame, and the Air Force Gathering of Eagles Class of 2000.
James R. Andrews, M.D.
James R. Andrews, M.D., has served as a Directorfully diluted shares of the Company since September 2013.  Dr. Andrews(for further discussion, see Notes 8 and 9-”Equity Transactions” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

Autologous Infusion Therapy (“Infusion Division”)

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

Biotech Development (“Biologics Division”)

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

On October 9, 2019, the Company entered into a services agreement with Rion which provides the Company the benefit of Rion’s resources and expertise for his scientificthe limited purpose of (i) consulting with and clinicalassisting H-CYTE in the further research contributionsand development for the generation of a new biologic and (ii) subsequently assisting H-CYTE in knee, shoulderseeking and elbow injuries,obtaining FDA Phase 1 IND clearance for this biologic as necessary. Rion has completed the research and his skill as an orthopedic surgeon. Dr. Andrewsdevelopment work which is under review by the Company. The Company is assessing if the Rion combined proprietary biologic is a foundermore viable solution than potentially progressing with a single entity biologic from an alternative commercial source.

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On April 2, 2021, the Company entered into a series of agreements with Medovex, LLC to pursue a joint venture regarding the continued development and current Medical Directorcommercialization of the DenerveX device for business outside of the American Sports Medicine Institute,U.S. The Company has determined that the transactions resulting from the series of agreements with Medovex, LLC are immaterial. The Company will assess the progress of the joint venture on a non-profit organization dedicatedquarterly basis for materiality.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial condition and results of operations are based on its consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the prevention, educationreported amounts of assets and research in orthopaedicliabilities and sports medicine,the disclosure of assets and liabilities at the date of the financial statements, as well as the Andrews reported amounts of revenues and expenses during the reporting periods.

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

Results of Operations – Three and nine months ended September 30, 2021 and 2020

Revenue, Cost of Sales and Gross Profit

The Company recorded revenue of approximately $460,000 and $1,287,000 for the three and nine months ended September 30, 2021, respectively. The Company recorded revenue of approximately $650,000 and $1,686,000, for the three and nine months ended September 30, 2020, respectively. The decrease in revenue for the three months ended September 30, 2021, as compared to the prior year is attributable to the economic impact that COVID-19 has had on the Company due to its vulnerable patient base being unable or unwilling to travel due to the virus. The Company suspended operations of the Infusion Vertical due to COVID-19 effective March 23, 2020 and did not reopen until August 2020. The Company had pent up demand for the three months ended September 30, 2020 from patients who were not able to come in for treatment due to suspension of operations. The Company experienced higher revenue during the three months ended September 30, 2020 than the three months ended September 30, 2021 due to this pent up demand even though the clinics were only open August and September 2020.

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

The Company generated gross profit of approximately $321,000 and $733,000 for the three and nine months ended September 30, 2021, respectively. The Company generated gross profit of approximately $489,000 and $1,078,000 for the three and nine months ended September 30, 2020, respectively. The decrease in gross profit, as compared to the prior year, is attributable to the economic impact that COVID-19 has had on the Company.

Operating Expenses

Salaries and Related Costs

The Company incurred salaries and related costs of approximately $535,000 and $1,783,000 for the three and nine months ended September 30, 2021, respectively. The Company incurred salaries and related costs of approximately $606,000 and $2,425,000 for the three and nine months ended September 30, 2020, respectively.

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Other General and Administrative

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

Of the total other general and administrative costs, approximately $332,000 and $813,000 were related to professional fees for the three and nine months ended September 30, 2021. Professional fees were approximately $393,000 and $1,179,000 for the three and nine months ended September 30, 2020. Professional fees consist primarily of accounting, legal, and public company compliance costs as well as regulatory costs.

Research and Education Institute.

He is Clinical ProfessorDevelopment

The Company incurred research and development expenses of Orthopaedic Surgery at the University of Alabama Birmingham Medical School, the University of Virginia School of Medicine and the University of South Carolina Medical School. He is Adjunct Professor in the Department of Orthopaedic Surgery at the University of South Alabama and Clinical Professor of Orthopaedics at Tulane University School of Medicine.


He serves as Medical Director for Auburn University Intercollegiate Athletics and Team Orthopaedic Surgeon; Senior Orthopaedic Consultant at the University of Alabama; Orthopaedic Consultantapproximately $3,000 for the college athletic teams at Troy University, Universitythree and nine months ended September 30, 2021. The Company incurred research in development expenses of West Alabama, Tuskegee Universityapproximately $202,000 and Samford University. He serves$1,152,000 for the three and nine months ended September 30, 2020, respectively. The $1,152,000 expense in 2020 was in connection with the Rion agreements.

Advertising

The Company incurred advertising costs of approximately $59,000 and $224,000 for the three and nine months ended September 30, 2021, respectively. The Company incurred advertising costs of approximately $52,000 and $222,000 for the three and nine months ended September 30, 2020, respectively. The increase, as compared to the prior year, is attributable to the economic impact that COVID-19 had on the Tulane School of Medicine Board of Governors.

Dr. Andrews serves on the Medical and Safety Advisory Committee of USA Baseball and on the Board of Little League Baseball, Inc.  He has been a member of the Sports Medicine Committee of the United States Olympic Committee and served on the NCAA Competitive SafeguardsCompany in Medical Aspects of Sports Committee.
In the professional sports arena, Dr. Andrews is Senior Consultant for the Washington Redskins Football team; Medical Director for the Tampa Bay Rays Baseball team and Medical Director of the Ladies Professional Golf Association.
Dr. Andrews serves2020 as the National Medical Director for Physiotherapy Associates,clinics were temporarily closed during the three months ended September 30, 2020, resulting in a national outpatient rehabilitation provider.  He serves onreduction in marketing spend during the boardtemporary closure.

Departure of directorsDirectors and Certain Officers, Election of Fast Health CorporationDirectors, Appointment of New Board Members and Robins Morton Construction Company.  He has a Doctor of Laws Degree from Livingston University and Doctor of Science Degrees from Troy and Louisiana State Universities.  He has recently written a book, Any Given Monday, about sports injuries and how to prevent them for athletes, parents and coaches.

Scott M. W.  Haufe, M.D.
Scott M. W. Haufe, M.D., is a co-founder of Debride and has been a Director of the Company since September 2013.  Dr. Haufe is a board certified physician in the fields of Anesthesiology, Pain Medicine and Hospice /Palliative Medicine. He began his career in the field of Anesthesiology where he served as Chief of Anesthesiology and Pain Management with St. Lucie Anesthesia Associates until 1998 while continuing his passion for research.
Beginning in 1993, Dr. Haufe was first published and has since authored numerous peer reviewed journal articles. Specifically, in 2005, he was recognized for his publication on the endoscopic treatment for sacroilitis.

During 2006, he again authored the first paper on intradiscal stem cell therapy in an attempt to rejuvenate the human disc and in 2010 he developed a minimally invasive procedure for resolving spinal arthritis and subsequently published his findings in the Internal Journal of Med Sci. Additionally, he is named on multiple patents for treating pain related issues. Dr. Haufe earned his MD from the University of South Florida College Of Medicine in 1992 with honors and completed his residency in Anesthesiology in 1996.

He currently practices in Destin, FL with Anesthesia, Inc., and is affiliated with Sacred Heart Hospital, Destin Surgery Center, and Healthmark Medical Center. He is a member of the American Society of Anesthesiologists and the Florida Society of Anesthesiologists.
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Larry Papasan
Larry Papasan has served as Chairman of the board of directors of the Company since September 2013.  From July 1991 until his retirement in May 2002,Officers.

On January 12, 2021, Mr. Papasan served as President of Smith & Nephew Orthopedics. He has been a Director and Chairman of the board of directors of BioMimetic Therapeutics, Inc. [NasdaqGM:BMTI] since August 2005. BioMimetic Therapeutics is developing and commercializing bio-active recombinant protein-device combination products for the healing of musculoskeletal injuries and disease, including orthopedic, periodontal, spine and sports injury applications. Mr. Papasan has also served as a member of the board of directors of Reaves Utility Income Fund [NasdaqCM:UTG], a closed-end management investment company, since February 2003 and of Triumph Bancshares, Inc. (a bank holding company) since April 2005. Mr. Papasan also serves as a Director of SSR Engineering, Inc., AxioMed Spine Corporation, and MiMedx Group, Inc.


John C. Thomas, Jr.
John Thomas has been a director of the Company since September 2013 and currently serves as a director and the CFO/corporate secretary for CorMatrix Cardiovascular, Inc., a privately held medical device company which he joined in 2001. Over the past 24 years, Mr. Thomas has served as the CFO of numerous startup companies and managed their financing activities from the initial financing up to their initial public offering. Some of these companies are still private and some have become public entities. The companies in the health care industry that have gone public while Mr. Thomas was the CFO include CytRx Corporation (1986 – 1990), CytRx Biopool (1988 – 1991), Medicis Pharmaceutical Corporation (1988 –1991), EntreMed, Inc. (1991 – 1997), DARA BioSciences, Inc. (1998 – 2009) and, MiMedx, Inc. (2006 – 2009). He has also been the CFO of MRI Interventions, Inc., a private research company involved in MRI technology (1998 – 2010).  Mr. Thomas has also been the CFO of Motion Reality, Inc., a privately-held company with proprietary software that captures and analyzes motion data since 1991. Presently, he serves as a member of the board of directors of QLT, Inc., (QLT) a publicly traded medical company and NantKwest, Inc. (NASDAQ: NK) a public company focused on cellular immunotherapy for cancer. Mr. Thomas is a certified public accountant.

Thomas E. Hills
Thomas Hills has been a Director of the Company since September 2013. Mr. Hills is currently President and Chief Investment Officer of healthcare focused Hills Capital Management; the family office for the Paul F. Hills family in Barrington, IL which he joined in 2007. In addition to his experience in the asset management business and prior to founding Hills Capital Management, Tom was in sales and marketing at Sage Products, Inc. At Hills Capital, Tom leads the family’s public and private equity healthcare investment efforts. He is a board member of MedShape in Atlanta, Georgia and Chairman of Barrington Children’s Charities which he and his wife founded. Tom holds a BBA from St. Norbert College and an MBA from Loyola University of Chicago.
Randal R. Betz, M.D.
Dr. Randal Betz has been a director of the Company since September 2013. Dr. Betz is an orthopedic spine surgeon with a private practice in Princeton, New Jersey. Dr. Betz has held hospital positions as Chief of Staff at Shriners Hospitals for Children and Medical Director of Shriners’ Spinal Cord Injury Unit. Dr. Betz is also a Professor of Orthopedic Surgery at Temple University School of Medicine.
Dr. Betz earned a Medical Degree from Temple University School of Medicine and was awarded the Alpha Omega Alpha honor. His Internship in general surgery and Residency in Orthopedic Surgery were at Temple University Hospital. Dr. Betz’s Fellowship in Pediatric Orthopedics was at the Alfred I DuPont Institute. Since his graduate work, Dr. Betz has had postdoctoral fellowship experiences with ABC Traveling Fellowship, North American Traveling Fellowship, SRS Traveling fellowship and the Berg-Sloat Traveling Fellowship.  Many national and international professional societies count Dr. Betz as a member including: the Academic Orthopedic Society, American Academy for Cerebral Palsy and Developmental Medicine, American Academy of Orthopedic Surgeons, American Orthopedic Association, American Paraplegia Society, American Spinal Injury Association, British Scoliosis Society, International Functional Electrical Stimulation Society, North American Spine Society, Pediatric Orthopedic Society of North America, Scoliosis Research Society, and Spinal Deformity Education Group. For many of these organizations, Dr. Betz has fulfilled the roles of board of director member, committee member and President of the Scoliosis Research Society in 2005.
In addition to an active hospital practice in pediatric spinal surgery, research is an important area of Dr. Betz’s career. He is a recipient of many research grants and he has ten patents, including several involving research in spinal deformities: fusionless treatment of spinal deformities. Dr. Betz is author of several medical texts. He has contributed 45 chapters to medical books and written 280 peer-reviewed or invited articles. Worldwide, Dr. Betz has delivered hundreds of paper presentations and invited lectures. Dr. Betz is on the Editorial Board of the Journal of Pediatric Orthopedics  and a Reviewer for the  Journal of Bone and Joint SurgeryJournal of Pediatric Orthopedics , and  Spine .
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Jarrett Gorlin
Jarrett Gorlin has served as the Chief Executive Officer, President, and a Director of the Company since November, 2013.  Prior to joining the Company, Mr. Gorlin served as the President of Judicial Correction Services, Inc. (“JCS”), the largest provider of private probation services in the country, which he co-founded in 2001.  In 2011, he successfully negotiated the sale of JCS to Correctional Healthcare Companies (“CHC”), after which he has continued to serve as the President of JCS. Under Mr. Gorlin’s leadership, JCS made INC. Magazine’s list of the Fastest Growing Companies in America in 2010, 2011, and 2012.  Mr. Gorlin began his career by becoming the youngest rated commercial helicopter pilot at the age of 16, and becoming the chief pilot for the Fulton County Sheriff’s Office in Atlanta, Georgia. Mr. Gorlin has served a Captain and Commander at the Fulton County Sheriff’s Office where he has worked from 1996 to present.  He continues to serve his community through law enforcement as the commander of a reserve unit overseeing 90 deputy sheriffs, who work in the courts, jail and warrant divisions. Mr. Gorlin also serves as a political advisor and consultant to many elected officials in the Atlanta area, including the current sitting Sheriff of Fulton and Clayton County, Georgia.  He has also served on the campaign finance committee for the former Governor of Georgia Roy Barnes.

 John Paul Blank, M.D.

John Paul Blank, M.D., became a member of the board of directors on March 25, 2015 as a result of the Company’s acquisition of Streamline. Dr. Blank is a board certified physician in pediatrics and pediatric haematology/oncology. He currently servesWilliam Horne stepped down as Chairman of the Board of Directors of Treehouse Health, an innovation center formed to assist emerging companies gain customers and grow their business. He has an extensive career in the managed care and services sectorsdirectors (the “Board”) of the healthcare industry. Prior to joining Treehouse Health in 2013, Dr. Blank was Senior Vice PresidentCompany. Mr. Horne will remain a member of the Emerging Business Group at United Healthcare Group,Board.

On January 12, 2021, Mr. Ray Monteleone was appointed the new Chairman of the Board. Mr. Monteleone is a position held from 2011current member of the Board.

On September 28, 2021, Mr. Robert Greif’s employment agreement with H-Cyte, Inc. (the “Company”) expired, ending his term as the Company’s Chief Executive Officer. The Company chose not to 2012. From 2008 to 2011, he wasrenew his employment agreement. Ms. Tanya Rhodes, the Company’s Chief OperatingTechnology Officer, of AmeriChoice, a subsidiary of United Healthcare Group. He became employed by AmeriChoice after it acquired Unison Health Plans in 2008. Dr. Blank waswill serve as interim Chief Executive Officer of Unison Health Plansthe Company. She will continue to receive a consulting fee of $253,000 per year pursuant to her existing consulting arrangement. Ms. Rhodes is an innovative, growth-oriented leader in the healthcare industry with a broad base of international experience in all aspects of operational business including R&D, clinical and regulatory, and business development. Ms. Rhodes has a demonstrated record of accomplishment for 4 yearsbringing new technologies from concept through commercialization and possesses an in-depth knowledge of biological tissues, enzymes, stem cells, antimicrobials, and natural products. Prior to joining the Company on June 15, 2020, Ms. Rhodes held various C-level positions in many sectors, including wound care, dermatology, aesthetics and plastic surgery. Ms. Rhodes was the Vice President of Innovation for Smith & Nephew and a global executive team member driving a $450 million dollar business. Ms. Rhodes has served as President of Rhodes & Associates since 2016 through which, Ms. Rhodes has held long-term contracts with medical device and drug companies as well as private equity companies. Ms. Rhodes completed her PhD in molecular orbital computational chemistry in the United Kingdom and received a Masters degree in the Management of Technology in the United States.

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Funding Requirements

The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as the Company implements its business plan to focus on the Biologics Division. The Company will need to raise cash from debt and equity offerings to continue its operations. There can be no assurance that the Company will be successful in doing so.

Going Concern

The Company reported net losses of approximately $4,052,000 for the nine months ended September 30, 2021, respectively.

The Company’s independent registered public accounting firm included an explanatory paragraph with respect to the Company’s ability to continue as a going concern in its report on the Company’s consolidated financial statements for the year ended December 31, 2020. The presence of the going concern explanatory paragraph suggests that the Company may not have sufficient liquidity or minimum cash levels to operate the business. Since its inception, the Company has incurred losses and anticipates that the Company will continue to incur losses until its products can generate enough revenue to offset its operating expenses. The present level of cash is insufficient to satisfy our current operating requirements and Biologics Division business model.

There can be no assurance that the Company will be able to raise additional funds or that the terms and conditions of any future financings will be workable or acceptable to the Company or its shareholders. If the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings, or raising equity capital, the Company may be forced to discontinue operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In the event the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings or raising equity capital, the Company may be forced to reduce our expenses, or discontinue operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Liquidity and Sources of Liquidity

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

Debt

On April 17, 2020, and in subsequent April closings, the Company entered into a Secured Convertible Note and Warrant Purchase Agreement (the “April SPA”) with thirty three investors (the “Purchasers”) pursuant to which the Company received an aggregate of $2,842,695 in gross proceeds through the sale to the Purchasers of Secured Convertible Promissory Notes (the “April Secured Notes”) and warrants (the “April Warrants”) to purchase shares of common stock of the Company (the “April Offering”). The proceeds of the April Offering will be used for working capital and general corporate purposes. The April Offering resulted in the issuance of April Secured Notes to Purchasers in an aggregate principal amount of $3,842,695. This sum included the issuance by the Company to FWHC Bridge, LLC (the “Investor) of an April Secured Note in the amount of $1,000,000 to amend and supersede the A&R Note (see below “Short-term Notes, Related Parties”) previously issued by the Company to the Investor on April 9, 2020. The Investor is an affiliate of FWHC Holdings, LLC, a pre-existing shareholder of the Company, which served as lead investor in the Company’s recent Series D Convertible Preferred Stock Offering. Additionally, in connection with the April Offering, the Company entered into an amendment with the Investor with respect to the outstanding 12% Senior Secured Convertible Note due September 30, 2020, which was originally issued in 2018 and assumed in the Merger and purchased by the Investor from its original holder, George Hawes, on March 27, 2020 (the “Hawes Note”). The Hawes Notes had a principal amount of $424,615 as of March 31, 2020. The amendment to the Hawes Note eliminated the requirement that the Company make monthly payments of accrued interest.

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

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

On September 11, 2020, the right to participate in the registered rights offering (Registration No. 333-239629) of the Company expired. Pursuant to the rights offering, on September 24, 2020, the Company issued (i) 15,235,381 shares of its Series A preferred stock at a price of $0.014 per share to holders of its common stock who validly exercised their subscription rights prior to the expiration time and (ii) 203,049,643 shares of its Series A preferred stock to the standby purchasers as part of the standby commitment. The rights offering, including the standby component, resulted in gross proceeds to the Company of $3,055,985. While the rights offering expired on September 11, 2020, it was generating $950 millionnot consummated until September 24, 2020 while logistical closing conditions including the calculation and clearance of funds were being processed.

In addition, on September 24, 2020, the Company issued an aggregate of 323,844,416 shares of its Series A preferred stock to the holders of outstanding promissory notes in revenues. From 2001the aggregate principal amount and accrued interest of $4,483,617. The notes were converted pursuant to a mandatory conversion triggered by the completion of the rights offering. Such shares were issued under an exemption from registration in reliance on Section 3(a)(9) of the Securities Act. The original notes were issued in reliance on Section 4(a)(2) of the Securities Act.

On April 1, 2021, the Company, entered into a Secured Convertible Note Purchase Agreement (the “April 2021 Note Purchase Agreement”) with five (5) investors (the “Holders”). Pursuant to the terms of the April 2021 Note Purchase Agreement, the Company sold promissory notes in the aggregate principal amount of $2,575,000 maturing on March 31, 2022 with an annual interest rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next round of financing that meets the definition of Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by the assets of the Company under a security agreement with the Holders. The lead investor of the April 2021 Note Purchase Agreement, FWHC Bridge, LLC, provided $1,500,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $25,000 as part of the April 2021 Note Purchase Agreement.

On October 14, 2021, H-Cyte, Inc. (the “Company”) entered into the Second Closing Bring Down Agreement (the “October 2021 Note Purchase Agreement”) whereby the five (5) investors who had entered into the April 2021 Note Purchase Agreement purchased new notes in the Company in the aggregate principal amount of $750,000. The Notes are due and payable on March 31, 2022 and bear interest at an annual rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next financing that meets the definition of a Qualified Financing as defined in the Note Purchase Agreement. The Notes are secured by all of the assets of the Company under a security agreement with the Holders. The lead investor of the October 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $437,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $7,500 as part of the October 2021 Note Purchase Agreement.

Interest expense is being accreted to the principal balance using the effective interest method. For the three months and nine months ended September 30, 2021, the Company recorded interest expense of $30,445 for related party convertible notes payable and $20,962 for convertible notes payable and $59,665 for related party convertible notes payable and $41,080 for convertible notes payable, respectively.

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Equity

On September 11, 2020, the right to participate in the registered rights offering (Registration No. 333-239629) of the Company expired. Pursuant to the rights offering, on September 24, 2020, the Company issued (i) 15,235,381 shares of its Series A preferred stock at a price of $0.014 per share to holders of its common stock who validly exercised their subscription rights prior to the expiration time and (ii) 203,049,643 shares of its Series A preferred stock to the standby purchasers as part of the standby commitment. The rights offering, including the standby component, resulted in gross proceeds to the Company of $3,055,985. While the rights offering expired on September 11, 2020, it was not consummated until 2004, Dr. BlankSeptember 24, 2020 while logistical closing conditions including the calculation and clearance of funds were being processed.

On September 24, 2020, the Company issued an aggregate of 323,844,416 Preferred A shares to holders of outstanding promissory notes in the aggregate principal amount, accrued interest, and conversion of certain warrants totaling $4,483,617. The notes were converted pursuant to mandatory conversion triggered by the completion of the rights offering. Such shares were issued under an exemption from registration in reliance on Section 3(a)(9) of the Securities Act. The original notes were issued in reliance on Section 4(a)(2) of the Securities Act. As a result of their participation in the backstop portion of the rights offering and the conversion of their promissory notes, FWHC Holdings, LLC became beneficial owners of approximately 61% of the Company’s outstanding common stock. This percentage includes shares owned by FWHC Bridge, LLC and FWHC Bridge Friends, LLC who have indicated that they are part of a group with FWHC Holdings, LLC.

Working Capital Deficit

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

  As Of 
  September 30, 2021  December 31, 2020 
Current Assets $458,272   1,757,202 
Current Liabilities  4,729,248   2,892,686 
Working Capital Deficit $(4,270,976)  (1,135,484)

Cash Flows

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

  Nine Months Ended September 30, 
  2021  2020 
Cash used in operating activities $(3,988,115)  (5,461,140)
Cash used in investing activities  (7,832)  (2,285)
Cash provided by financing activities  2,662,515   7,476,576 
Net (decrease)/ increase in cash $(1,333,432)  2,013,151 

As of September 30, 2021, the Company had approximately $307,000 of cash on hand.

Off-Balance Sheet Arrangements

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

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Result of Operations – Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

The following table sets forth certain operational data including their respective percentages of revenues for the years ended December 31, 2020 and 2019:

H-Cyte, Inc

Statement of Operations

  2020  2019  Change  Change % 
Revenues $2,150,672  $8,346,858  $(6,196,186)  -74%
                 
Gross Profit  1,383,715   6,294,051   (4,910,336)  -78%
                 
Operating Expenses  8,476,059   36,852,436   (28,376,377)  -77%
                 
Operating Loss  (7,092,344)  (30,558,385)  23,466,041   77%
                 
Other Income  633,108   750,507   (117,399)  -16%
                 
Net Loss $(6,459,236) $(29,807,878) $23,348,642   78%
                 
Net Loss attributable to common stockholders $(6,781,411) $(33,196,029) $26,414,618   80%
                 
Loss per share – Basic and diluted $(0.06) $(0.34)        
                 
Weighted average outstanding shares basic and diluted  111,491,261   96,370,562         

Revenue and Gross Profit

Revenue is derived predominantly from the Company’s Biosciences division, which resulted in revenue, net of allowance for refunds, for the year ended December 31, 2020 and December 31, 2019, of approximately $2,151,000 and $8,347,000, respectively. The decrease in revenue for the year ended December 31, 2020, as compared to the prior year is attributable to suspending operations, the permanent closure of two of the five LHI clinics, and the ongoing effects due to COVID-19 to the Biosciences division.

For the years ended December 31, 2020 and December 31, 2019, the Company generated a gross profit totaling approximately $1,384,000 (64% of revenue) and $6,294,000 (75% of revenue), respectively. The decrease in revenue is due to the effects of COVID-19. Gross profit decreased in 2020 compared to 2019 due to the Company using part-time medical staff to treat its patients in Tampa and Scottsdale causing cost of sales for patient care to increase.

Salaries and Related Costs

For the years ended December 31, 2020 and December 31, 2019, the Company incurred approximately $3,199,000 and $8,646,000, respectively, in salaries and related costs. Included in salaries and related costs for the year ended December 31, 2019 was approximately $1,690,000 in compensation expense related to the common stock issued to Mr. William E. Horne, former Chief Executive Officer (“CEO”), on April 25, 2019. These shares were fully vested upon the issuance of Harmony Health Plan,a restricted stock award. Excluding the non-recurring stock compensation expense of approximately $1,690,000, the Company realized a decrease in salaries and related costs for the periods ending December 31, 2020 compared to December 31, 2019, due to its recent cost reduction measures effective in 2020 in response to the COVID-19 pandemic. The Company made the decision in late March 2020, to layoff approximately 40% of its employee base, including corporate and clinical employees and to cease operations at the LHI clinics in Tampa, Nashville, Scottsdale, Pittsburgh, and Dallas. The Company reopened operations in August 2020 at its clinics in Tampa, Nashville, and Scottsdale. The clinics in Pittsburgh and Dallas did not reopen and were closed permanently.

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Other General and Administrative

For the years ended December 31, 2020 and December 31, 2019, the Company incurred approximately $3,747,000 and $6,847,000, respectively, in other general and administrative costs. The decrease is attributable to cost saving measures in response to the COVID-19 pandemic. The Company made the decision in late March 2020, to layoff approximately 40% of its employee base, including corporate and clinical employees and to cease operations at the LHI clinics in Tampa, Nashville, Scottsdale, Pittsburgh, and Dallas. The Company reopened operations in August 2020 at its clinics in Tampa, Nashville, and Scottsdale. The clinics in Pittsburgh and Dallas did not reopen and were closed permanently.

Advertising

For the years ended December 31, 2020 and December 31, 2019, the Company had approximately $297,000 and $4,910,000, respectively, in advertising costs. The decrease is attributable to a shift in the Company’s marketing plan and cost saving measures in response to the COVID-19 pandemic. The Company re-evaluated its marketing plan in 2020 and decided to significantly reduce marketing spend during the COVID-19 pandemic.

Loss on Impairment

The Company recorded a loss on impairment for its DenerveX technology of approximately $2,944,000 and its goodwill totaling approximately $12,564,000 for the year ended December 31, 2019. As the Company has determined that the DenerveX System no longer represents part of its strategic plans for the future, the loss on impairment of the technology was recorded. The Company also determined the fair value of the reporting unit was less than the carrying amount of goodwill. As a result, during the fourth quarter of 2019 the Company recorded a goodwill impairment charge. For the year ended December 31, 2020, the Company did not have impairment losses.

Depreciation & Amortization

For the year ended December 31, 2020, the Company recognized approximately $81,000 in depreciation and amortization expense, compared to approximately $834,000 in 2019. The decrease is primarily attributable to amortization of the technology intangible asset acquired in the Merger for the year ended December 31, 2019. The expense for 2020 was significantly lower due to no amortization recorded in 2020.

Other Income (Expense)

For the years ended December 31, 2020 and 2019, interest expense was approximately $1,463,000 and $299,000 respectively. The increase is attributable to new financing being arranged for the year ended December 31, 2020 along with the closing of the Rights Offering on September 11, 2020.

The change in fair value of redemption put liability and change in fair value of the derivative liability – warrants for the year ended December 31, 2019 were approximately $347,000 and $827,000, respectively, and was a result of the assumption of the Series B Convertible Preferred Stock in the Merger and the Series D Convertible Preferred Stock financing in 2019, respectively. The change in fair value of redemption put liability and change in fair value of the derivative liability – warrants for the year ended December 31, 2020 were approximately $273,000 and $2,987,000, respectively, and was a result of the change in fair value at the end of each reporting period and was subsequently reclassified to equity at the close of the Rights Offering (see Note 12).

Liquidity, Sources of Liquidity, and Going Concern

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

The Company incurred net losses of approximately $6,459,000 and $29,808,000 for the years ending December 31, 2020 and 2019, respectively. The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as the Company’s revenue activities are suspended and as the Company implements its business plan. The consolidated financial statements are prepared using generally accepted accounting principles in the United States (“U.S. GAAP”) as applicable to a going concern.

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The Biosciences division will incur losses until sufficient revenue is attained utilizing the infusion of capital resources to expand marketing and sales initiatives along with the development of a biologics protocol and taking that protocol through the FDA process.

COVID-19 has adversely affected the Company’s financial condition and results of operations. In the first quarter of 2020, the Company took steps to protect its vulnerable patient base (elderly patients suffering from chronic lung disease) by cancelling all treatments effective March 23, 2020 through July 2020. The Company also made the decision in late March, to layoff approximately 40% of its employee base, including corporate and clinical employees, and to cease operations at the LHI clinics located in Tampa, Scottsdale, Pittsburgh, Nashville, and Dallas. The Company resumed operations in August at the Tampa, Nashville, Scottsdale, and Pittsburgh clinics. The Pittsburgh clinic ceased operations permanently at the end of October 2020. The Dallas clinic did not re-open and was closed permanently. The Company believed these expense reductions were necessary during the unexpected COVID-19 pandemic.

The Company has updated its business model to decrease corporate overhead and marketing expense to significantly reduce expenses. The Company believes that as COVID-19 begins to dissipate due to vaccinations being administered nationwide, that patients will again feel comfortable traveling to one of the LHI clinics for treatment. The Company continues to focus on developing a new FDA approved cellular therapy for the treatment of chronic lung disease.

Fair Value Measurements

We measure certain non-financial assets at fair value on a non-recurring basis. These non-recurring valuations include evaluating assets such as long-lived assets and non-amortizing intangible assets for impairment; allocating value to assets in an acquired asset group; and applying accounting for business combinations and derivatives.

We use the fair value measurement framework to value these assets and report the fair values in the periods in which they are recorded or written down.

The fair value measurement framework includes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair values in their broad levels. These levels from highest to lowest priority are as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities;
Level 2: Quoted prices in active markets for similar assets or liabilities or observable prices that are based on inputs not quoted on active markets, but corroborated by market data; and
Level 3: Unobservable inputs or valuation techniques that are used when little or no market data is available.

The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. We may also engage external advisors to assist us in determining fair value, as appropriate.

Although we believe that the recorded fair value of our financial instruments is appropriate at December 31, 2020, these fair values may not be indicative of net realizable value or reflective of future fair values.

Income Taxes

The Company uses the liability method of accounting for income taxes, which requires recognition of temporary differences between financial statement and income tax bases of assets and liabilities, measured by enacted tax rates. A valuation allowance will be recorded to reduce deferred tax assets when itnecessary.

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The Company files income tax returns in the U.S. federal jurisdiction and certain state jurisdictions. The tax years that could be subject to federal audit are 2017, 2018, and 2019.

Revenue Recognition

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

The Company uses a standard pricing model for the types of cellular therapy treatments that is offered to its patients. The transaction price accounts for medical, surgical, facility, and office services rendered by LHI for consented procedures and is recorded as revenue. The Company recognizes revenue when the terms of a contract with a patient are satisfied.

The Company offers two types of cellular therapy treatments to their patients.

1)The first type of treatment includes medical services rendered typically over a two-day period in which the patient receives cellular therapy. For this treatment type, revenue is recognized in full at time of service.
2)The Company also offers a four-day treatment in which medical services are rendered typically over a two-day period and then again, approximately three months later, medical services are rendered for an additional two days of treatment. Payment is collected in full for both service periods at the time the first treatment is rendered. Revenue is recognized when services are performed based on the estimated stand-alone selling price for each session of treatment. The Company has deferred recognition of revenue amounting to approximately $634,000 and $1,046,000 at December 31, 2020 and December 31, 2019, respectively.

Management performed an analysis of its customer refund history for refunds issued related to prior year’s revenue. Management used the results of this historical refund analysis to record a reserve for anticipated future refunds related to recognized revenue. At December 31, 2020 and 2019, the estimated allowance for refunds was acquired by WellCare Health Plans, Inc.approximately $77,000 and $63,000, respectively and is recorded as a contra revenue account.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements as defined in 2004.  Dr. BlankRegulation S-K Item 303(a)(4) during the periods presented, investments in special-purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.

Consulting Agreements

The Company entered into an agreement with Jesse Crowne, a former Director and Co-Chairman of the Board of the Company, to provide business development consulting services for a fee of $5,000 per month. Additionally, 62,500 shares of common stock at $0.29 per share was issued in connection with a separate agreement on August 29, 2019. The Company incurred expense of approximately $10,000 and $83,000 for the years ended December 31, 2020 and 2019, respectively, related to these agreements.

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The Company entered into a consulting agreement with LilyCon Investments, LLC effective February 1, 2019 for services related to evaluation and negotiation of future acquisitions, joint ventures, and site evaluations/lease considerations. The duration of the consulting agreement is for a period of twelve months in the amount of $12,500 per month with a $15,000 signing bonus. Either party may terminate this agreement with or without cause upon 30 days written notice. The agreement also provides LilyCon Investments with $35,000 in stock (to be calculated using an annual variable weighted average price from February 2019 through January 2020) to be granted on the one-year anniversary of this agreement, if the agreement has not been terminated prior to that date. For years ended December 31, 2020 and 2019, the Company expensed a total of approximately $65,000 and $153,000, respectively, in compensation to LilyCon Investments. In February 2020, the Company issued LilyCon Investments $35,000 in shares of H-CYTE stock at an average share price of $0.31 per share for a total of 106,061 shares per the terms of the agreement. In March 2020, this agreement was modified to lower the monthly payment amount to $5,000. This agreement was terminated effective April 1, 2020.

The Company entered into a consulting agreement with Goldin Solutions, effective August 4, 2019, for media engagement and related efforts, including both proactive public relations and crisis management services. The agreement has a medical degree from McGill Universityminimum term of six months, with a $34,650 monthly fee plus expenses payable each month, with the exception of a first month discount of $12,600. For year ended December 31, 2020 and did his fellowship at Childrens HospitalDecember 31, 2019, the Company expensed $99,000 and $162,000, respectively. The Company terminated this agreement in March 2020.

The Company entered Into a consulting agreement with Tanya Rhodes of Philadelphia.


NON-DIRECTOR EXECUTIVE OFFICERS
President and Chief Operating Officer – Patrick Kullmann
Patrick Kullmann has been our Chief Operating Officer since September, 2013.  Mr. Kullmann has served in a contract capacityRhodes & Associates, Inc, effective June 15, 2020, to serve as the Chief ExecutiveTechnology Officer (Research) of Streamline,the Company. The agreement has a minimum term of six months with an average fee of $20,000 per month plus expenses which increases 5% per month on January 1 of each calendar year unless an alternative retainer amount is negotiated and agreed upon by both parties. The Company extended the contract on January 1, 2021, resulting in monthly expenses of $22,500 plus expenses for services rendered. Ms. Rhodes is a meaningful member of the management group and serves as the Company’s Chief Technology Officer (Research). Ms. Rhodes is an innovative, growth-oriented leader in healthcare with a broad base of international experience in all aspects of operational business including R&D, clinical and regulatory, strategic marketing and business development. She brings a demonstrated track record for bringing new technologies from concept through commercialization, and brings an in-depth knowledge of biological tissues, enzymes, stem cells, antimicrobials and natural products.

Indemnification

We have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving, at our request, in such capacity, to the maximum extent permitted under the laws of the State of Nevada.

The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. However, we maintain directors and officers insurance coverage that may contribute, up to certain limits, a portion of any future amounts paid for indemnification of directors and officers. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal. Historically, we have not incurred any losses or recorded any liabilities related to performance under these types of indemnities.

Additionally, in the normal course of business, we have made certain guarantees, indemnities and commitments under which we may be required to make payments in relation to certain transactions. These indemnities include intellectual property and other indemnities to our customers and distribution network partners in connection with the sales of our products and therapies, and indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease.

It is not possible to determine the maximum potential loss under these guarantees, indemnities and commitments due to our limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision.

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Recently Adopted Accounting Standards

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

The Company has not entered into significant lease agreements in which it is the lessor. For the lease agreements in which the Company is the lessee, under Topic 842, lessees are required to recognize a lease liability and right-of-use asset for all leases (except for short-term leases) at the lease commencement date. Effective January 1, 2019, the Company adopted this guidance, applied the modified retrospective transition method and elected the transition option to use the effective date as the date of initial application. The Company recognized the cumulative effect of the transition adjustment on the consolidated balance sheet as of the effective date and did not provide any new lease disclosures for periods before the effective date. With respect to the practical expedients, the Company elected the package of transitional-related practical expedients and the practical expedient not to separate lease and non-lease components.

In June 2018, FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718)—Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The Company adopted ASU 2018-07 in the first quarter of 2019. The adoption of this standard did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard allows exceptions to the use of the incremental approach for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment. Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. The standard will be effective for the Company beginning January 1, 2021, with early adoption of the amendments permitted. The Company is currently evaluating the impact from the adoption of ASU 2019-12 on its consolidated financial statements.

MANAGEMENT

The following table sets forth information about our executive officers and directors:

NamePosition(s)Age
Jeremy DanielChief Financial Officer45
Raymond MonteleoneChairman of the Board (1)74
Michael YurkowskyChief Executive Officer and Director47
Tanya RhodesChief Science Officer61
William E HorneDirector67
Richard RosenblumDirector62
Matthew AndererDirector55

(1)Chairman of audit committee and compensation committee

Raymond Monteleone

Raymond Monteleone serves managerial and consultative roles at several enterprises. Mr. Monteleone currently serves as the chairman and president of Paladin Global Partners, LLC since 2007; a board member and vice president of Dannelly, Monteleone & Associates, LLC since 2010; sits on the board of Chenmoore Engineering Inc. since 2015; is a managing member at Diner Investment Partners, LLC since 2016 and Uyona Management, LLC since 2013; a managing member and the chief financial officer at HBRE, LLC since 2013 and Horne Management, LLC since 2011; and the president at Monteleone & Associates Consulting, Inc. since 2005. Mr. Monteleone received a college degree from the New York Institute of Technology and an MBA degree from Florida Atlantic University. Mr. Monteleone is until recently was the interim CFO of LVI Intermediate Holdings, Inc.

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A former partner with Arthur Young (now EY), Raymond Monteleone joined H-CYTE after working closely with several large and small companies serving as board member and/or advisor, specializing in strategic planning, health care, tax and financial planning and corporate management. Mr. Monteleone previously held officer positions with Sensormatic Electronics Corporation, a billion-dollar company listed in the New York Stock Exchange and was a member of the Board of Directors of Rexall Sundown, Inc., a medical technologylarge public entity. He also previously served as an officer working closely with the Board of Directors of Laser Spine Institute (“LSI”) and worked as deputy commissioner, chief operating officer, and chief financial officer with the Florida Department of Education. He attended an exclusive Arthur Young Harvard Business School program and earned his MBA from Florida Atlantic University. Considered an expert in financial analysis and business management, Mr. Monteleone is regularly featured as a lecturer at various universities and professional associations.

William E. Horne

William “Bill” Horne is a founder and former Chief Executive Officer and Chairman of the Board of Laser Spine Institute. From 2005 to 2015, Mr. Horne served as the company’s CEO, expanding the homegrown organization from one facility with nine employees, to seven state-of-the-art surgery centers with more than 1,000 employees across six states, while driving annual revenues as high as $288M during his tenure. In his role as Chairman of the Board, he led the strategic direction of the company, which has made it possible for more than 75,000 patients to take back their lives from chronic pain with its minimally invasive spine procedures.

Michael Yurkowsky

Michael Yurkowsky operates his own family office, YP Holdings LLC, which has an investment portfolio of 50 private companies and participated in over 100 financing transactions with public companies since 2012. He is alsoPreviously Mr. Yurkowsky managed his own hedge fund and worked as a broker at several national broker-dealer firms.

Michael Yurkowsky comes to H-CYTE with more than 25 years of experience in financial services. Mr. Yurkowsky spent the Founderfirst ten years of CG3 Consulting, LLC, a global medical technology advisory firm in Minneapolis, Boston and San Diego which he founded in 2008. CG3 Consulting provides consulting services to clients in the healthcare, scientific and technology industries. Prior to establishing CG3 Consulting, Mr. Kullmann was a senior director at Medtronic in their $2.3 billion Cardiovascular Division. He started his career working as a surgical sales representativebroker with several national broker-dealers and as a licensed investment banker. He went on to start and manage his own hedge fund, specializing in debt arbitrage. In 2012, he opened his own family office, YP Holdings LLC, which has invested in more than 50 private companies and participated in more than 100 public company financing transactions. Throughout his career, Mr. Yurkowsky has served on multiple public and private boards and has been involved in several M&A transactions.

Jeremy Daniel

Jeremy Daniel has been the Chief Financial Officer of Regenerative Medicine Solutions, LLC (“RMS”) since 2013. Prior to that, Mr. Daniel worked in the Texas Medical Centerprivate sector in Houston.the accounting and finance field for the past twenty years. Mr. KullmannDaniel is a Certified Public Accountant and received a college degree from the University of Cincinnati and an MBA degree from Xavier University. The Company currently does not have any employment agreement with Mr. Daniel.

Matthew Anderer

Mr. Anderer started his career in the United States Air Force as a fast jet and special operations pilot and instructor before taking operational and staff officer roles with Special Operations Command and NATO. He has servedcommanded worldwide airlift capability of the highest posts within the White House and from a technology perspective, he has directed a range of high-profile, high-value acquisition projects. Mr. Anderer was the Director of the US Air Force leadership and citizenship development program for 220,000 cadets before taking command of the busiest air mobility group in senior marketing, market developmentthe world, responsible for support to destinations world-wide. Among other contingency crisis operations in this capacity, Matt played a crucial role establishing robust, resilient, and sales leadership positions at Boston Scientific, Baxter, Johnson & Johnson,repeatable processes to prevent the potential spread of the Ebola Virus for aircraft, cargo and four start-up medical device companies – twopassengers that transited sub-Saharan West Africa. He is currently the training systems Country Integration Lead for Lockheed Martin’s F-35 International customers, a position that he has held since prior to 2017.

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Most recently, Mr. Anderer was also a member of which had successful liquidity eventsthe Board for Deverra Theraputics, a combined value of $220m.clinical stage cell therapy company headquartered in Seattle. He is a graduate of Northern MichiganVillanova University, Air Command and Staff College, Naval Staff College and the Geneva Center for Security Policy.

Richard Rosenblum

Mr. Rosenblum is a business veteran and entrepreneur in the areas of the financial services, capital markets, healthcare, technology and real estate. His experience ranges from serving as managing director at several investment merchant banks to heading companies as a C-suite executive. He also sits on the boards of public and private healthcare, life sciences and technology-sector companies.

Mr. Rosenblum is currently President, CFO and Board Member of Innovative Payment Solutions, Inc., a California-based FinTech company focused on building a 21st century universal digital payment and money remittance platform. As the founder of Harborview Capital Advisors, LLC, Mr. Rosenblum leads a team of strategic advisors in the areas of capital formation, merchant banking and management consulting, and has an MBA from California Coastal University.   The board believes thatraised more than $250 million in capital funding for companies. Since founding it over 20 years ago, Mr. Kullmann has the experience, qualifications, attributes and skills necessary to serve as President and Chief Operating Officer because of his years of experience in the medical technology field.

Chief Financial Officer and Treasurer – Jeffery Wright

Mr. Wright is a Certified Public Accountant, who was recently promoted from Controller to Chief Financial Officer in January, 2015. Prior to joining the Company in December, 2014, Mr. Wright was an audit senior at Ernst & Young within the Assurance Services division, where he had an opportunity to help manage audits of large ($2 billion to $10 billion annual revenue) publicly-traded companies.  He also has experience auditing medium size ($2 million - $200 million annual revenue) privately-held companies in multiple industries with other accounting firms. Prior to his career in public accounting, Mr. Wright worked as a trading analyst in the retirement trust services department at Reliance Trust Company, managing the institutional trading desk to settle mutual fund transactions with the National Securities Clearing Corporation. Mr. Wright holds Master of Professional Accountancy and Bachelor of Business Administration degrees from the Georgia State University Robinson College of Business and is a member of the Georgia Society of Certified Public Accountants.  

Senior Vice President – Dennis Moon
Dennis MoonRosenblum has served as manager and director of Harborview Property Management LLC, raising over $100 million while managing domestic and international commercial and multi-family real estate assets. From 2008 to 2014, Mr. Rosenblum was Director, President and Executive Chairman of Alliqua Biomedical Inc. (NASDAQ: ALQA), a leader in hydrogel manufacturing technology in the wound care sector.

Mr. Rosenblum received his B.A. in Finance & Accounting from the State University of New York at Buffalo in 1981, graduating summa cum laude.

Family Relationships

There are no family relationships among our Senior Vice President since November, 2013.  Prior to joiningexecutive officers and directors.

Election of Directors

All directors hold office until the next annual meeting of security holders or until their successors have been qualified. The officers of our Company he wasare appointed by our board of directors and hold office until their death, resignation or removal from office.

Involvement in Certain Legal Proceedings

During the Chief Operations Officer for Judicial Correction Services (2006 – 2013) supervisingpast ten years, our directors or executive officers have not been the day to day operationssubject of the JCS community supervision division, which supervised over 50,000 active probationers throughout the southeast United States.  He was responsible for supervision of over 400 employees and over 1.8 million financial transactions per year.  Dennis is a graduate of the University of Central Florida and has a degree in Psychology with an emphasis on Drug and Alcohol addiction.following events:

1.A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
2.Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities;

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After graduating high school, he joined the United States Army where he served for eight years as an Intelligence Analyst and received numerous awards and medals for various services.  The board believes that Mr. Moon has the experience, qualifications, attributes and skills necessary to serve as Senior Vice President because of his years of experience in the military and in management of employees.

Director Independence
The Company has determined that Major General C.A. “Lou” Hennies, Scott M. W. Haufe, M.D., Thomas E. Hills, John C. Thomas, Jr. and Larry Papasan are "independent" as defined by, and determined under, the applicable director independence standards of The NASDAQ Stock Market LLC.

4.Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
5.Engaging in any type of business practice; or
6.Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
7.The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
8.Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
9.Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
10.Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
11.Any Federal or State securities or commodities law or regulation; or
12.Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
13.Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

14.Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Liability and Indemnification of Directors and Officers

Our Articles of Incorporation provide that to the fullest extent permitted under Nevada law, our directors will not be personally liable to the Company or its stockholders for monetary damages for breach of the duty of care, breach of fiduciary duty or breach of any other duties as directors. Our Articles of Incorporation also provide for indemnification of our directors and officers by the Company to the fullest extent permitted by law. The Company maintains D&O insurance coverage.

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Role of Board in Risk Oversight Process

Our boardBoard of directorsDirectors has responsibility for the oversight of the Company’s risk management processes and, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process includes receiving regular reports from board committees and members of senior management to enable our board to understand the company’s risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk.

processes.

The audit committee reviews information regarding liquidity and operations and oversees our management of financial risks. Periodically, the audit committee reviews our policies with respect to risk assessment, risk management, loss prevention and regulatory compliance. Oversight by the audit committee includes direct communication with our external auditors, and discussions with managementthe CFO regarding significant risk exposures and the actions management has taken to limit, monitor or control such exposures. The compensation committee is responsible for assessing whether any of our compensation policies or programs has the potential to encourage excessive risk-taking. The nominating/corporate governance committee manages risks associated with the independence of the board, corporate disclosure practices, and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire board is regularly informed through committee reports about such risks. Matters of significant strategic risk are considered by our board as a whole.


Board Committees and Independence


Our boardBoard of directorsDirectors has established an audit committee, a nominating and corporate governance committee and a compensation committee, each of which operates under a charter that has been approved by our board.


Each

The corporate governance committee is in the process of the Company's current independent directors, Major General C.A. “Lou” Hennies, Scott M. W. Haufe, M.D., Thomas E. Hills, John C. Thornas Jr., and Larry Papasan, are independent under the rules of the NASDAQ Capital Market. Accordingly, our board has determined that all of the members of each of the board’s three standing committees are independent as defined under the rules of the NASDAQ Capital Market. In addition, all members of the audit committee meet the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, or the Exchange Act.


Audit Committee

The members of our audit committee are John C. Thomas, Jr., Thomas Hills and Larry Papasan. being formulated.

Mr. ThomasMonteleone chairs the audit committee. The audit committee’s main function is to oversee our accounting andthe financial reporting processes, internal systemshealth of control, independent registered public accounting firm relationships and the audits of our financial statements. This committee’s responsibilities include, among other things:


appointing, approving the compensation of and assessing the independence of our registered public accounting firm;

overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from such firm;

reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;

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monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;

overseeing our internal audit function;

overseeing our risk assessment and risk management policies;

establishing policies regarding hiring employees from the independent registered public accounting firm and procedures for the receipt and retention of accounting related complaints and concerns;

meeting independently with our internal auditing staff, independent registered public accounting firm and management;

reviewing and approving or ratifying any related person transactions; and

preparing the audit committee report required by the Securities and Exchange Commission, or SEC, rules.
All audit and non-audit services, other than  de minimis  non-audit services, to be provided to us by our independent registered public accounting firm must be approved in advance by our audit committee.

Our board of directors has determined that John C. Thomas, Jr. is an “audit committee financial expert” as defined in applicable SEC rules.
Nominating and Corporate Governance Committee

The members of our nominating and corporate governance committee are Major General C.A. “Lou” Hennies, Thomas Hills and Larry Papasan.Company. Mr. Hennies chairs the nominating and corporate governance committee. This committee’s responsibilities include, among other things:

identifying individuals qualified to become members of our board of directors;

recommending to our board of directors the persons to be nominated for election as directors and to each of our board’s committees;

developing, recommending to the board, and assessing corporate governance principles, codes of conduct and compliance mechanisms; and

overseeing the evaluation of our board of directors.

Compensation Committee

The members of our compensation committee are Larry Papasan, Major General C.A. “Lou” Hennies and Scott M. W. Haufe, M.D. Mr. PapasanMonteleone also chairs the compensation committee. This committee’s responsibilities include, among other things:

reviewing and recommending corporate goals and objectives relevant to the compensation of our chief executive officer and other executive officers;

making recommendations to our board of directors with respect to, the compensation level of our executive officers;

reviewing and recommending to our board of directors employment agreements and significant arrangements or transactions with executive officers;

reviewing and recommending to our board of directors with respect to director compensation; and

overseeing and administering our equity-based incentive plans;

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Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or our compensation committee. Mr. Gorlin, CEO and Director, will abstain on any board vote involving executive compensation by the board as a whole.

Board Diversity

Our nominating and corporate governance committee will be responsible for reviewing with the board of directors, on an annual basis, the appropriate characteristics, skills and experience required for the board of directors as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members), the nominating and corporate governance committee, in recommending candidates for election, and the board of directors, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including the following:
personal and professional integrity, ethics and values;

experience in corporate management, such as serving as an officer or former officer of a publicly-held company;

development or commercialization experience in large medical products companies;

experience as a board member or executive officer of another publicly-held company;

strong finance experience;

diversity of expertise and experience in substantive matters pertaining to our business relative to other board members;

diversity of background and perspective, including with respect to age, gender, race, place of residence and specialized experience;

conflicts of interest; and

practical and mature business judgment.

Currently, our board of directors evaluates each individual in the context of the board of directors as a whole, with the objective of assembling a group that can best maximize the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas.

Code of Business Conduct and Ethics


We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code will be posted on the Corporate Governance section of our website, www.MedoveX.com. www.hcyte.com.

In addition, we intend to post on our website all disclosures that are required by law or the listing standards of The NASDAQOTCQB Capital Market concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this Annual Report.

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EXECUTIVE COMPENSATION AND OTHER INFORMATION

Procedures for Security Holders to Recommend Nominees for Election as Directors

There have been no material changes to the procedures by which security holders may recommend nominees to the board of directors since the Company last described such procedures or any material changes thereto.

Company Policy as to Director Attendance at Annual Meetings of Stockholders

The following table sets forth the compensation paid to officers andCompany’s policy encourages board members during the fiscal years ended December 31, 2015 and 2014. The table sets forth this information for MedoveX Corporation including salary, bonus, and certain other compensation to the Board members and named executive officers for the past three fiscal years.

SUMMARY EXECUTIVES COMPENSATION TABLE
All amounts in this Executive Compensation section are in thousands, except for share and per share data.
Summary Compensation Table
The following table summarizes Fiscal Years 2015 and 2014 compensation for services in all capacitiesattend annual meetings of stockholders.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Company’s named executive officers and other individuals:

Name & Position Fiscal Year 
Salary
($)
  
Bonus
($)
  
Stock Awards
($)
  All Other Compensation ($)  
Total
($)
 
Jarrett Gorlin, CEO 2014  180,000   36,000   -   -   216,000 
  2015  272,000   -           272,000 
Patrick Kullmann, COO 2014  170,000   34,000           204,000 
  2015  231,000   -           231,000 
Charles Farrahar, Former CFO 2014  110,000   22,000           132,000 
  2015  -   -           - 
Jeffery Wright, CFO 2014  110,000   -           110,000 
  2015  130,000   -           130,000 
Dennis Moon, EVP 2014  120,000   24,000           144,000 
  2015  201,000   -           201,000 
Manfred Sablowski, SVP 2014  -   -           - 
  2015  150,000   -           150,000 
On January 27, 2015, Charles Farrahar resigned from his position as Chief Financial Officer and TreasurerExchange Act requires each person who is a director or officer or beneficial owner of the Company, and was replaced by Jeffery Wright. Mr. Farrahar remains with the Company on a part-time basis as its Secretary.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Equity awards granted to the named executive officers in 2014 and 2015 were 0 and 100,000, respectively.
2013 Stock Option Incentive Plan

On October 14, 2013, the Medovex Corp. Board of Directors approved the Medovex Corp. 2013 Stock Incentive Plan (the “Plan”).  The Company may grant incentive stock options to employees and non-statutory stock options to employees, consultants, and directors for up to 1,150,000 shares of common stock. The stock options are exercisable at a price equal to the market value on the date of the grant. The Plan gives full authority for granting options, determining the type of options granted, and determining the fair market value of the options to the Plan Administrator.

The Company has the right, but not obligation, to repurchase any shares obtained through exercise of an option from terminated Plan participants. The Company has 90 days from the date of termination to exercise it’s repurchase right. The Company must pay the Fair Market Value (“FMV”) of the shares if the termination was for any reason othermore than for cause, or the option price (if less than FMV of the shares) if the termination is for cause. The FMV is determined by the Plan Administrator on the date of termination.

For the year ended December 31, 2015, the following stock option grants were made;
Grant Date Options Granted  Exercise Price  Fair Value of Underlying Stock Intrinsic Value
1/27/2015  125,000   5.99   5.99 None
5/8/2015  50,000   3.61   3.61 None
8/11/2015  145,000   2.91   2.91 None
The option price was set at the estimated fair value10% of the common stock on the date of grant using the market approach. Under the market approach, the fair value of the common stock was determinedCompany to befile reports in connection with certain transactions. To the valueknowledge of the stock on the dateCompany, based solely upon a review of the grant.
We utilize the Black-Scholes valuation methodforms or representations furnished to recognize compensation expense over the vesting period. The expected life represents the period that our stock-based compensation awards are expected to be outstanding.

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We use a simplified method provided in Securities and Exchange Commission release, Staff Accounting Bulletin No. 110, which averages an award's weighted average vesting period and contractual term for "plain vanilla" share options. The expected volatility was estimated by analyzing the historic volatility of similar public biotech companies in an early stage of development. No dividend payouts were assumed as we have not historically paid, and do not anticipate paying, dividends in the foreseeable future. The risk-free rate of return reflects the weighted average interest rate offered for US treasury rates over the expected term of the options.
The significant assumptions used to estimate the fair value of the equity awards granted in 2015 are;
Grant date January 27  May 8  August 11 
Weighted Fair value of options granted $3.97  $2.31  $1.94 
Expected term (years)  6   6   6 
Risk-free interest rate  1.48%  1.70%  1.71%
Volatility  76%  72%  76%
Dividend yield None  None  None 
During 2015, the Company granted options to purchase 320,000 shares of common stock to certain employees and consultants. The stock options vest as follows: 25% on date of grant and 25% on each of the next three anniversaries. The options granted were at the market value of the common stock on the date of the grant.

For the years ended December 31, 2015 and 2014, the Company recognized $253,659 and $33,972, respectively, as compensation expenseduring or with respect to option grants.

Stock Option Activity

The following is a summary of stock option activity for 2014 and 2015:
  Shares  
Weighted
Average
Exercise
Price
  
Weighted
Average
Remaining Contractual Term
(Years)
  
Aggregate
Intrinsic Value
 
Outstanding at 12/31/2013  60,000  $2.50   9.8  $-- 
Exercisable at 12/31/2013  15,000  $2.50   9.8  $-- 
                 
  Granted  --   --   --  $-- 
  Exercised  --   --   --   -- 
  Cancelled  --   --   --   -- 
Outstanding at 12/31/2014  60,000  $2.50   8.8  $-- 
Exercisable at 12/31/2014  30,000  $2.50   8.8  $-- 
                 
  Granted  320,000  $4.22   9.3  $-- 
  Exercised  --   --   --   -- 
  Cancelled  --   --   --   -- 
Outstanding at 12/31/2015  380,000  $3.95   9.1  $-- 
Exercisable at 12/31/2015  125,000  $3.95   9.1  $-- 

As of December 31, 2015,the most recent completed fiscal year, there were 255,000a few isolated instances where the director purchased or received shares of time-based, non-vested stock. Unrecognized compensation cost amounts to approximately $679,468 as of December 31, 2015 and will be recognized as an expense on a straight-line basis over a remaining weighted average service period of 2.71 years.
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EMPLOYMENT AGREEMENTS WITH OFFICERS AND DIRECTORS OF MEDOVEX CORPORATION

From their first date of employment,was late filing under section 16(a). All the Company entered into Employment and Confidential Information and Inventions Assignment (“Confidentiality”) Agreements with each of its four officers. These agreements are identical with the exception of the salary amount in the Employment Agreement.

The Confidentiality Agreement, among other things, obligates each officer not to disclose Confidential Information (as defined in the Agreement) for a period of 5 years after their last date of employment. It commits the employee to assign any work product developed at MedoveX to the Company and assist with obtaining patents for that work as necessary. It contains a provision prohibiting employees from soliciting clients or hiring Company personnel for a period of 2 years after their separation.

The Employment Agreements are for a term of three years and define the compensation and benefits each employee will receive when they start employment. They also define the circumstances for and the effect on compensation and benefits under the following scenarios:
required filings have now been made.

a.Termination without cause39

b.Termination upon death or disability

c.Termination by the Company for cause

d.Termination by the employee for good reason, including material diminishment of position, demands to move or change in control of the Company

e.Termination by the Company without cause, upon disability or by employee with good reason

f.Termination for other reasons

If the Company terminates without cause or the employee terminates with good reason, the employee continues to collect his salary and benefits for 6 months after termination. The Employment Agreement also contains a non-compete clause prohibiting the employee from competing with the Company for 1 year after their separation.

EXECUTIVE AND DIRECTOR COMPENSATION

Name & Position Fiscal Year  Salary ($)  Bonus ($)  

Stock

Option

Awards ($)

  All Other Compensation ($)  Total ($) 
Robert Greif, former CEO  2021   316,438   -   1,872,125   -   2,188,563 
   2020   104,580   80,000   -   -   184,580 
Michael Yurkowsky, CEO  2021   15,000   -   191,833   -   206,833 
   2020   -   -       -   - 
Jeremy Daniel, CFO  2021   200,000   -   274,250   -   474,250 
   2020   200,000   -   -   -   200,000 
Tanya Rhodes, CSO  2021   252,000   -   275,313   -   527,313 
   2020   120,000   -   -   -   120,000 
William E. Horne, former CEO  2021   -   -   110,500   -   110,500 
   2020   144,786   -   -   -   144,786 

The current annualized salaries of our executive officers as of January 25, 2022 are as follows:


Name & Position Annual Salary 
Jarrett Gorlin, CEO $272,000 
Patrick Kullmann, President & COO $231,000 
Jeffery Wright, CFO $130,000 
Dennis Moon, VP $201,000 
Manfred Sublowski, Senior VP, Sales and Marketing $150,000 

DIRECTOR COMPENSATION

The board established a policy of paying outside (non-employee) directors $5,000

Name & Position Annual Salary 
Michael Yurkowsky, CEO $180,000 
Jeremy Daniel, CFO $200,000 
Tanya Rhodes, CSO $252,000 

Director Compensation

There are understandings between the Company and Mr. Michael Yurkowsky as follows: $4,167 per quarter for each full quarter of service.


In 2014, outside directors (totaling 8 persons) were paid $140,000 in director’s fees, but no equity compensation was issued.
In 2015, outside directors (totaling 9 persons) were paid $120,000 in director’s fees. On January 6th, 2016, the board voted that all non-employee members ofmonth to serve on the Board of Directors, willand $180,000 per year to serve as the Chief Executive Officer of the Company. In addition to his base salary, Mr. Yurkowsky may receive 3rdan one-time cash bonus in gross amount equal to $100,000 if (i) the Company’s stock is listed and 4th quoted on the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, or the New York Stock Exchange; or (ii) the Company secures and receives financing of at least $10,000,000. As additional compensation, Mr. Yurkowsky shall receive shares of common stock of the Company representing 1% of the Company’s fully diluted equity as of the grant date if the Company achieves a market capitalization of at least $250 million for 60 consecutive days during the Employment Period (the “Equity Award”). If the Company achieves a market capitalization of at least $500 million for 60 consecutive days during the Employment Period, the Executive shall receive an additional Equity Award of 1%, such that he has in the aggregate received shares of common stock of the Company representing 2% of the Company’s fully diluted equity as of the date of grant.

There are understandings between the Company and Mr. Raymond Monteleone as follows: $2,500 per quarter 2015 director’s fees as stock grants.  

Audit Committee Chair and Compensation Committee Chair, and $5,000 per month for advisory services and to serve as Chairman of the Board.

There are understandings between the Company and Mr. Richard Rosenblum as follows: $5,000 a month to serve on the Board of Directors.

There are understandings between the Company and Mr. Matthew Anderer as follows: $5,000 a month to serve on the Board of Directors.

40

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSOWNER AND MANAGEMENT

The information is presented for each person we know to be a beneficial owner of 5% or more of our securities, each of our directors and executive officers, and our officers and directors as a group.

The percentage of common equity beneficially owned is based upon 12,855,803167,857,522 shares of Common Stock and 498,229,802 shares of Series A Preferred Stock, which converts to Common Stock at a 1:1 ratio, issued and outstanding as of June 16, 2016, under the assumption that all Streamline shareholders submit their transmittal letters to receive their proportional interest in shares of MedoveX common stock.

January 25, 2022.

The number of shares beneficially owned by each stockholder is determined under the rules issued by the Securities and Exchange Commission and includes voting or investment power with respect to such securities.

Under these rules, beneficial ownership includes any shares as to which the individual or entity has sale or shared voting power or investment power. Unless otherwise indicated, the address of all listed stockholders is c/o MEDOVEX, 3279 Hardee Avenue, Atlanta, Georgia 30341.  H-CYTE, 201 E Kennedy Blvd, Suite 425, Tampa, Florida.

Unless otherwise indicated each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned, subject to community property laws where applicable.


  
Number of Shares Beneficially Owned(1)
  
Percentage of
common equity
beneficially owned
 
Scott M.W. Haufe, M.D., Director  774,110(2)(4)  6.0%
Jarrett Gorlin, Director and Officer  517,037(3)(10)  4.0%
Larry W. Papasan, Director  201,076(4)  1.6%
John C. Thomas, Jr., Director  75,400   0.6%
Patrick Kullmann, Officer  224,932(5)(8)  1.7%
Jeffery Wright, Officer  29,875(7)  0.2%
Major General C.A. “Lou” Hennies, Chairman  104,288(4)  0.8%
James R. Andrews, M.D., Director  104,288(4)  0.8%
Thomas E. Hills, Director  104,288(4)  0.8%
Steve Gorlin, Director and Co-Chairman  881,503(6)  6.9%
Randal R. Betz, M.D., Director  104,288(4)  0.8%
James R. Andrews, M.D., Director  104,288(4)  0.8%
Dennis Moon, Officer  204,864(9)  1.6%
Sablowski, Manfred, Officer  47,725(11)  0.4%
Officers and Directors as a Group (12 persons)      27.0%

  

Number of Shares

Beneficially Owned(1)

  

Percentage of

common equity

beneficially owned (2)

 
William E. Horne, Director and Officer (3)  29,850,111   4.43%
Michael Yurkowsky, Director and Officer (4)  6,208,979   0.93%
RMS Shareholder, LLC  50,925,276   7.65%
FWHC Holdings (5)  654,961,014   68.65%
Raymond Monteleone, Director  

3,000,000

   

0.45

%
Jeremy Daniel, Officer  

1,000,000

   

0.15

%
Officers and Directors as a Group (4 persons)  40,059,090   2.91%

(1)
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to shares beneficially owned and options and warrants exercisable within 60 days. Beneficial ownership is based on information furnished by the individuals or entities.
(2)
(2)Percentage calculated using for each person or entity the sum of that person’s or entity’s outstanding shares plus shares from exercisable options and warrants and shares from convertible securities divided by the sum of total outstanding shares plus that person’s or entity’s outstanding shares plus shares from exercisable options and warrants and shares from convertible securities.
(3)Includes 532,3358,443,207 common shares held by Morgan Stanley Smith Barney custodian for Nicole Haufe Roth IRA, 25,000with RMS Shareholder, LLC through Horne Management, LLC (of which Mr. Horne owns 96%), 829,664 common shares held by Haufe Family Limited Partnershipwith RMS Shareholder, LLC through Uyona Management (of which Mr. Horne owns 90%) and 209,2753,655,382 Series A Preferred Stock shares and 1,869,667 warrants through Uyona Management II, (of which Mr. Horne owns 33%). It also includes 44,368,278 common shares and 5,208,278 warrants held by Nicole Haufe. Mr. Haufe disclaims beneficial ownership ofHorne Management directly with the shares.

(3)
RepresentsCompany along with 4,725,634 common shares held by The Jarrett S. & Rebecca L. Gorlin Family Limited Partnership. Mr. Gorlin disclaims beneficial ownership of the shares.
(4)Includes 7,500 shares pursuant toand 750,000 options, exercisable within 60 days.

(5)
Includes 96,788 sharesdays of December 31, 2021, held personally by Pamela M.C. Kullmann. Mr. Kullmann disclaims beneficial ownership of Pamela M.C. Kullmann’s shares.
Horne.
(6)
Includes 125,000 shares held by Mr. Gorlin's spouse, Deborah Gorlin. Mr. Gorlin disclaims beneficial ownership of Deborah Gorlin’s shares.
(7)(4)
Includes 29,875Represents Mr. Yurkowsky’s 50% ownership in YPH, LLC which entitles him to 1,451,151 common shares, pursuant to1,825,343 Series A Preferred Shares, and 932,486 warrants which are exercisable within 60 days of December 31, 2021. It also included 2,000,000 options, exercisable within 60 days.
days, personally held by Mr. Yurkowsky.
(8)
Includes 17,413
(5)Represents 15,518,111 common shares, pursuant to options351,416,470 Series A Preferred Stock shares, and 288,026,433 warrants which are exercisable within 60 days.
days of December 31, 2021 held by FWHC Holdings, LLC, FWHC Bridge, LLC, and FWHC Bridge Friends, LLC.

(9)
Includes 11,288 shares pursuant to options exercisable within 60 days.
(10)
Includes 10,200 shares pursuant to options exercisable within 60 days.
(11)
Includes 43,125 shares pursuant to options exercisable within 60 days.
41

-45-

Equity Compensation Plan Information


In October 2013,the Merger, the Company adoptedassumed the 2013 Stock Option Incentive Plan (the “Plan”).  The Plan will also be submitted in due course for approval by our stockholders, to the extent required under federal tax laws or other applicable laws.


The Plan is intended to secure for us and our stockholders the benefits arising from ownership of our Common Stock by individuals we employ or retain who will be responsible for the future growth of the enterprise. The Plan is also designed to help attract and retain superior personnel for positions of substantial responsibility, including advisory relationships where appropriate, and to provide individuals with an additional incentive to contribute to our success.

The “Administrator” of the Plan is the Compensation Committee of the Board;CEO; however, the Administrator may also delegate to one or more officers of the Company the authority to make most determinations otherwise reserved for decision by the Administrator. Under the Plan, the Administrator has the flexibility to determine eligible participants and the type and amount of awards to grant to eligible participants.


The Administrator may make the following types of grants under the Plan, each of which will be an “Award”:


qualified incentive stock options (“QISOs”);
nonqualified stock options; and
awards of restricted stock and/or restricted stock units.

Our officers, key employees, directors, consultants and other independent contractors or agents who are responsible for or contribute to our management, growth or profitability will be eligible for selection by the Administrator to participate in the Plan, provided, however, that QISOs may be granted only to our employees.


We authorized and reserved for issuance under the Plan an aggregate of 1,150,0002,650,000 shares of our Common Stock. The Company’s only stock option grant in 2019 was a fully vested option to purchase 250,000 shares of the Company’s common stock that was issued to the Company’s CEO pursuant to his employment agreement, which stated that this option grant would be fully vested if it was not issued within fifteen days of the Merger. The option was not granted within that time frame and was fully vested when issued.

As of December 31, 2015,September 30, 2021, we have grantedoutstanding an aggregate of 380,000385,000 options to purchase common stock at a weighted average price of $3.95$1.39 per shareshare. In 2019 we granted an aggregate of 280,085 common stock shares from the Plan to certain employees,outside consultants and to outside directors.at the market price on the day of grant. If any of the awards granted under the Plan expire, terminate or are forfeited for any reason before they have been exercised, vested or issued in full, the unused shares allocable to or subject to those expired, terminated or forfeited awards will become available for further grants under the Plan.

On April 1, 2021, the Board of Directors of the Company approved a non-qualified stock option agreement and granted an aggregate of 54,750,000 stock options to certain directors and officers of the Company having an exercise price of $0.07 per share and an expiration date of ten years from the date of grant (The “Options). The Director’s Options vest over a period of three years, and the Chief Executive Officer and Chief Financial Officer’s Options vest over a period of four years. These options were granted outside of the Plan. The Board of Directors decided not to renew the former CEO’s (Robert Greif) employment contract, therefore, 25,500,000 unvested shares were forfeited.

42

-46-

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SEC rules require us to disclose any transaction or currently proposed transaction in which the Company is a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s common stock, or an immediate family member of any of those persons.
On January 25, 2016, the Company entered into a modification agreement (the “Modification Agreement”) between the Company and Steve Gorlin, a Director of the Company pursuant to which the Company and Mr. Gorlin agreed to immediately convert the promissory note into an aggregate of 571,429 shares of its Common Stock eliminating the Company’s $1,000,000 debt obligation to Mr. Gorlin. On February 16, 2016, the Company and Steve Gorlin entered into an amendment to the Modification Agreement in order to reduce the number of shares of Common Stock that Mr. Gorlin is to receive upon the conversion of the $1,000,000 promissory note from 571,429 shares to 552,041 shares. In consideration for reducing the amount of shares of Common Stock that he was to receive, the Company agreed to reduce the exercise price of Mr. Gorlin's 500,000 warrants (the "Warrants") from $2.00 per share to $1.825 per share. In addition, certain anti-dilution provisions in the Warrants that may have allowed for the issuance of additional warrants were eliminated and an absolute floor of $1.70 per share was added. The amendment to the Modification Agreement was made to address certain concerns of the NASDAQ Stock Market. 
The Company pays TAG Aviation (“TAG”), a company owned by CEO Jarrett Gorlin, for approximately 1,200 square feet of office space in Atlanta Georgia for executive office space at a rate of $1,800 per month plus related utilities. The rental rate is 90% of the amount billed to TAG Aviation by the owner of the property. The Company has also chartered aircraft from TAG Aviation. The total amount spent for chartered service with TAG Aviation was approximately $33,000 in 2014 and 26,000 in 2015. The Company believes that such aircraft charter is on terms no less favorable then it would receive from a third party.

In March 2016, we commenced a private offering of up to $2 Million of Units, consisting of one share of our common stock and a Warrant exercisable for one share of our common stock. Jarrett Gorlin, our Chief Executive Officer and member of the Board of Directors, participated in the offering, purchasing 43,028 shares of our common stock and warrants to purchase up to 21,514. Per NASDAQ regulations, Mr. Gorlin purchased his shares at a higher price of $1.255 per share.

Policies and Procedures for Related Person Transactions


Our boardBoard of directorsDirectors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which we are a participant, the amount involved exceeds $120,000 and one of our executive officers, directors, director nominees or 5% stockholders, or their immediate family members, each of whom we refer to as a “related person,” has a direct or indirect material interest.


If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related person transaction,” the related person must report the proposed related person transaction to our Chief Executive Officer.CEO. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by our audit committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction.

If advance review and approval is not practicable, the committee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the chairman of the committee to review and, if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to ratification by the committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually.

A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the committee after full disclosure of the related person’s interest in the transaction. As appropriate for the circumstances, the committee will review and consider:

the related person’s interest in the related person transaction;
 ●
the approximate dollar value of the amount involved in the related person transaction;
the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;
whether the transaction was undertaken in the ordinary course of our business;

whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third party; and

the purpose of, and the potential benefits to us of, the transaction.

-47-

The committee may approve or ratify the transaction only if the committee determines that, under all of the circumstances, the transaction is in our best interests. The committee may impose any conditions on the related person transaction that it deems appropriate.


In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, our board of directors has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:

interests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of such entity) that is a participant in the transaction, where (i) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, (ii) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction and (iii) the amount involved in the transaction is less than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction; and
a transaction that is specifically contemplated by provisions of our charter or bylaws.

The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by the compensation committee in the manner specified in its charter.


We did not have a written policy regarding the review and approval of related person transactions. Nevertheless, with respect to such transactions, it was our policy for our board of directors to consider the nature of and business reason for such transactions, how the terms of such transactions compared to those which might be obtained from unaffiliated third parties and whether such transactions were otherwise fair to and in the best interests of, or not contrary to, our best interests.

In addition, all related person transactions required prior approval, or later ratification, by our board of directors.

43

Indemnification Agreements

Our certificate of incorporation provides that we will indemnify our directors and officers to the fullest extent permitted by Nevada law. In addition, we have entered into indemnification agreements with our directors.

Stock Option Grants to Executive Officers and Directors

In October 2013, the Company adopted the Plan, which will also be submitted in due course for approval by our stockholders, to the extent required under federal tax laws or other applicable laws.

We authorized and reserved for issuance under the Plan an aggregate of 1,150,0002,650,000 shares of our Common Stock. In October 2013, we granted an aggregate of 60,000The Company did not grant stock options under the plan in 2020. The Company’s only stock option grant in 2019 was a fully vested option to purchase 250,000 shares of the Company’s common stock at $2.50 per sharethat was issued to our outside directors,the Company’s CEO pursuant to his employment agreement, which stated that this option grant would be fully vested if it was not issued within fifteen days of the Merger. The option was not granted within that time frame and in January 2015 we granted an aggregate of 125,000 options to purchase common stock at $5.99 to employees and consultants.was fully vested when issued. If any of the Awards granted under the Plan expire, terminate or are forfeited for any reason before they have been exercised, vested or issued in full, the unused shares allocable to or subject to those expired, terminated or forfeited awards will become available for further grants under the Plan.

On April 1, 2021, the Board of Directors of the Company approved a non-qualified stock option agreement and granted an aggregate of 54,750,000 stock options to certain directors and officers of the Company having an exercise price of $0.07 per share and an expiration date of ten years from the date of grant (The “Options). The Director’s Options vest over a period of three years, and the Chief Executive Officer and Chief Financial Officer’s Options vest over a period of four years. These options were granted outside of the Plan. The Board of Directors decided not to renew the former CEO’s (Robert Greif) employment contract, therefore, 25,500,000 unvested shares were forfeited.

Policies and Procedures for Approving Related Person Transactions


Our policy and procedure with respect to any related person transaction between the Company and any related person requiring disclosure under Item 404(a) of regulation S-K under the Exchange Act, is that the Company'sCompany’s audit committee reviews all such transactions.

This review covers any material transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which the Company was and is to be a participant, and a related party had or will have a direct or indirect material interest, including, purchases of goods or services by or from the related party or entities in which the related party has a material interest, indebtedness, guarantees of indebtedness and employment by the Company of a related party. The board of directors has adopted a written policy reflecting the policy and procedure identified above.


-48-

DESCRIPTION OF SECURITIES

General

The following descriptionCAPITAL STOCK

Authorized Capital Stock

As of the date of this prospectus, our authorized capital stock consists of 1,600,000,000 shares of common stock, $0.001 par value, and provisions1,000,000,000 shares of our certificatepreferred stock, $0.001 par value.

As of incorporation and bylaws are summaries and are qualified by reference to the certificate of incorporation and the bylaws that will be in effect upon the closingdate of this offering. We have filed copies of these documents with the SEC as exhibits to our registration statement, of which this prospectus, forms a part. The description of the capital stock reflects changes to our capital structure that will occur upon the closing of this offering.


We have two authorized classes of stock:  Preferred Stock (500,000 shares authorized), and Common Stock (49,500,000 million shares authorized).

Common Stock
As of June 16, 2016, we had 12,855,803there were 167,857,522 shares of our common stock issued and outstanding, 498,229,802 shares of Series A preferred stock issued and outstanding, 0 shares of Series B preferred stock issued and outstanding, and 0 shares of Series D preferred stock issued and outstanding.
As of the date of this prospectus, there were approximately 240 holders of record of our common stock.

Common Stock

Holders of our common stock are entitled to one vote for each share heldowned as of record on all matters submitted to a voteon which stockholders may vote. Holders of stockholders andcommon stock do not have cumulative voting rights. Anrights in the election of directors by our stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of outstanding preferred stock.


In the event of our liquidation or dissolution, thedirectors. The holders of common stock are entitled, upon liquidation or dissolution of the Company, to receive proportionatelypro rata all remaining assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders ofstockholders who may have preferential rights. The common stock havehas no preemptive or other subscription rights, and there are no conversion rights or redemption or conversion rights. The rights, preferences and privileges of holdersprovisions. All outstanding shares of common stock are validly issued, fully paid, and nonassessable.

Preferred Stock

Our Second Amended Charter authorizes our Board to issue preferred stock from time to time with such designations, preferences, conversion or other rights, voting powers, restrictions, dividends or limitations as to dividends or other distributions, qualifications or terms or conditions of redemption as shall be determined by the Board for each class or series of stock. Preferred stock is available for possible future financings or acquisitions and for general corporate purposes without further authorization of stockholders unless such authorization is required by applicable law, or the rules of any securities exchange or market on which our stock is then listed or admitted to trading.

44

Our Second Amended Charter permits our Board of Directors to designate new series of preferred stock and issue those shares without any vote or action by our stockholders, subject to and may be adversely affectedcertain approval rights by the holders of Series A Preferred Shares. Such newly authorized and issued shares of preferred stock could contain terms that grant special voting rights to the holders of such shares that make it more difficult to obtain stockholder approval for an acquisition of our business or increase the cost of any such acquisition.

As of the date of this prospectus, there were 498,229,802 shares of Series A preferred stock, 0 shares of Series B preferred stock and 0 shares of Series D preferred stock, issued and outstanding.

The Second Amended Charter, among other things, authorizes the Company to issue up to 1,000,000,000 shares of preferred stock, among which 800,000,000 shares shall be designated as the new Series A preferred stock. The following is a summary of the rights, preferences, powers, privileges and restrictions, qualifications and limitations as described in the Second Amended Charter:

1. Dividends.

From and after the date of the issuance of any shares of Series A preferred stock, dividends at the rate of eight percent (8%) per annum of Base Amount (as defined below) shall accrue on such shares of Series A preferred stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A preferred stock) (the “Series A Accruing Dividends”). “Base Amount” means, with respect to each share of Series A preferred stock at any time, the Series A Original Issue Price for such share plus all previously compounded Series A Accruing Dividends with respect to such share at such time. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on shares of common stock payable in shares of common stock) unless the holders of the Series A preferred stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A preferred stock in an amount at least equal to the sum of (i) the amount of the aggregate Series A Accruing Dividends then accrued on such share of Series A preferred stock and not previously paid and (ii) (A) in the case of a dividend on common stock or any class or series that is convertible into common stock, that dividend per share of Series A preferred stock as would equal the product of (1) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common stock and (2) the number of shares of common stock issuable upon conversion of a share of Series A preferred stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (B) in the case of a dividend on any class or series that is not convertible into common stock, at a rate per share of Series A preferred stock determined by (1) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (2) multiplying such fraction by an amount equal to the Series A Original Issue Price (as defined in the Second Amended Charter); provided that, if the Company declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Company, the dividend payable to the holders of Series A preferred stock pursuant to this section shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A preferred stock dividend.

2. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

Preferential Payments to Holders of Series A Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of any series ofSeries A preferred stock that we may designatethen outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders and, issue in the future.event of a Deemed Liquidation Event (as defined in the Second Amended Charter), the holders of shares of Series A preferred stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the consideration received by the Company for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Company), together with any other assets of the Company available for distribution to its stockholders, all to the extent permitted by Nevada law governing distributions to stockholders, as applicable, before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to one (1) times the Series A Original Issue Price for such share of Series A preferred stock, plus any Series A Accruing Dividends accrued but unpaid thereon, whether or not declared. If upon any such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A preferred stock the full amount to which they shall be entitled under subsection 2.1 of the Second Amended and Restated Articles of Incorporation, the holders of shares of Series A preferred stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

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Preferred Stock

Under

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after the payment in full of all Series A Liquidation Amounts (as defined in the Second Amended and Restated Articles of Incorporation) required to be paid to the holders of shares of Series A preferred stock the remaining assets of the Company available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Series A preferred stock shall be distributed among the holders of the shares of Series A preferred stock and common stock, pro rata based on the number of shares held by each such holder, treating for this purpose all shares of Series A preferred stock as if they had been converted to common stock pursuant to the terms of our certificatethe Second Amended and Restated Articles of incorporation, our boardIncorporation immediately prior to such liquidation, dissolution or winding up of directors is authorizedthe Company.

3. Voting.

On any matter presented to issuethe stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series A preferred stock in one or more series without stockholder approval.  Our boardshall be entitled to cast the number of directors hasvotes equal to the discretion to determinenumber of whole shares of common stock into which the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences,shares of each series of preferred stock.


The purpose of authorizing our board of directors to issueSeries A preferred stock and determination its rights and preferences isheld by such holder are convertible as of the record date for determining stockholders entitled to eliminate delays associated with a stockholder vote on specific issuances.  The issuancesuch matter. Except as provided by law or by the other provisions of the Second Amended and Restated Articles of Incorporation, holders of Series A preferred stock while providing flexibility in connectionshall vote together with possible acquisitions, future financingsthe holders of common stock as a single class and other corporate purposes, could haveon an as-converted to common stock basis.

The holders of record of the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock.  There will be no shares of Preferred Stock outstanding upon the closing of this offering.


Anti-Takeover Provisions

Because we are incorporated in Nevada, we are governed by the provisions of Nevada Revised Statutes, specifically 78.378Series A preferred stock, exclusively and as a separate class, shall be entitled to 78.3793, which prohibit a person who owns in excess of 10% of our outstanding voting stock from merging, consolidating or combining with us for a period of three years after the dateelect up to two (2) directors of the transactionCompany. Any director elected as provided in which the person acquired in excess of 10% of our outstanding voting stock, unless the merger, consolidation or combination is approved in a prescribed manner. Any provision in our corporate charter or our bylaws or Nevada law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Removal of Directors

A directorpreceding sentence may be removed only forwithout cause by, and only by, the affirmative vote of the majority of the outstanding shares of Series A preferred stock (the “Requisite Holders”), given either at a special meeting of such holders of at least 75%Series A preferred stock duly called for that purpose or pursuant to a written consent of the votes thatRequisite Holders. If the holders of shares of Series A preferred stock fail to elect a sufficient number of directors to fill all our stockholders would bedirectorships for which they are entitled to castelect directors, voting exclusively and as a separate class, then any directorship not so filled shall remain vacant until such time as the holders of the Series A preferred stock elect a person to fill such directorship by vote or written consent in an annual electionlieu of directors. Any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors,meeting; and no such directorship may be filled only by votestockholders of the Company other than by the stockholders of the Company that are entitled to elect a majorityperson to fill such directorship, voting exclusively and as a separate class.

4. Conversion.

The holders of our directors then in office.


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Authorized but Unissued Shares

The authorized but unissuedthe Series A preferred stock shall have conversion rights (the “Conversion Rights”) as follows:

Each share of Series A preferred stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of common stock as is determined by dividing the Series A Original Issue Price by the Series A Conversion Price (as defined below) in effect at the time of conversion. The “Series A Conversion Price” shall initially be equal to the Series A Original Issue Price. The Series A Conversion Price, and the rate at which shares of Series A preferred stock are available for future issuance without stockholder approval,may be converted into shares of common stock, shall be subject to adjustment as provided in the Second Amended and Restated Articles of Incorporation.

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In the event of a notice of redemption of any limitations imposedshares of Series A preferred stock, the Conversion Rights of the shares designated for redemption shall terminate at the close of business on the last full day preceding the date fixed for redemption, unless the redemption price is not fully paid on such redemption date, in which case the Conversion Rights for such shares shall continue until such price is paid in full. In the event of a liquidation, dissolution or winding up of the Company or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series A preferred stock.

Upon the vote or written consent of the Requisite Holders, all of the outstanding Series A preferred stock shall convert into shares of common stock of the Company in accordance with the Second Amended and Restated Articles of Incorporation.

5. Redemption.

Unless prohibited by Nevada law governing distributions to stockholders, each share of Series A preferred stock shall be redeemed by the listing standardsCompany at a price equal to at a price equal to the greater of (A) 100% of the NASDAQ Capital Market.Series A Original Issue Price per such share of Series A preferred stock, plus any Series A Accruing Dividends accrued but unpaid thereon, whether or not declared, together with any other dividends declared but unpaid thereon and (B) the fair market value of such share of Series A preferred stock (as determined in accordance with the Second Amended and Restated Articles of Incorporation) as of the date of the Company’s receipt of a request for redemption (the “Redemption Price”), in three (3) annual installments commencing not more than sixty (60) days after receipt by the Company at any time on or after the second (2nd) anniversary of the date on which the first share of Series A preferred stock was issued from the Requisite Holders of written notice requesting redemption of all shares of Series A preferred stock (the “Redemption Request”). Upon receipt of a Redemption Request, the Company shall apply all of its assets to any such redemption, and to no other corporate purpose, except to the extent prohibited by Nevada law governing distributions to stockholders.

We do not plan to list the Series A preferred stock or the subscription rights on any stock exchange or the over-the-counter stock exchange market.

Warrants and Options

As of the date of this prospectus, the Company had outstanding warrants exercisable to purchase 350,996,043 shares of common stock at an exercise price of $0.014 per share, subject to certain adjustments as described below, and outstanding options exercisable to purchase 15,385,000 shares of common stock at an exercise price of $0.07 per share. The exercise prices of such warrants are subject to adjustment based on varying anti-dilution provisions contained in such warrants but in no event will the exercise price of such warrants be below the offering price in the rights offering.

Anti-Takeover Provisions of Nevada State Law

Certain anti-takeover provisions of Nevada law could have the effect of delaying or preventing a third-party from acquiring us, even if the acquisition arguably could benefit our stockholders. Nevada’s “combinations with interested stockholders” statutes, NRS 78.411 through 78.444, inclusive, prohibit specified types of business “combinations” between certain Nevada corporations and any person deemed to be an “interested stockholder” for two years after such person first becomes an “interested stockholder” unless the corporation’s board of directors approves the combination, or the transaction by which such person becomes an “interested stockholder”, in advance, or unless the combination is approved by the board of directors and sixty percent of the corporation’s voting power not beneficially owned by the interested stockholder, its affiliates and associates. Further, in the absence of prior approval certain restrictions may apply even after such two-year period. However, these statutes do not apply to any combination of a corporation and an interested stockholder after the expiration of four years after the person first became an interested stockholder. For purposes of these statutes, an “interested stockholder” is any person who is (1) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (2) an affiliate or associate of the corporation and at any time within the two previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term “combination” is sufficiently broad to cover most significant transactions between a corporation and an “interested stockholder.” These additional sharesstatutes generally apply to Nevada corporations with 200 or more stockholders of record. However, a Nevada corporation may elect in its articles of incorporation not to be governed by these particular laws, but if such election is not made in the corporation’s original articles of incorporation, the amendment (1) must be approved by the affirmative vote of the holders of stock representing a majority of the outstanding voting power of the corporation not beneficially owned by interested stockholders or their affiliates and associates, and (2) is not effective until 18 months after the vote approving the amendment and does not apply to any combination with a person who first became an interested stockholder on or before the effective date of the amendment. We have made such an election in our original articles of incorporation.

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Nevada’s “acquisition of controlling interest” statutes, NRS 78.378 through 78.379, inclusive, contain provisions governing the acquisition of a controlling interest in certain Nevada corporations. These “control share” laws provide generally that any person that acquires a “controlling interest” in certain Nevada corporations may be useddenied voting rights, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights. Absent such provision in our bylaws, these laws would apply to us as of a particular date if we were to have 200 or more stockholders of record (at least 100 of whom have addresses in Nevada appearing on our stock ledger at all times during the 90 days immediately preceding that date) and do business in the State of Nevada directly or through an affiliated corporation, unless our articles of incorporation or bylaws in effect on the tenth day after the acquisition of a controlling interest provide otherwise. These laws provide that a person acquires a “controlling interest” whenever a person acquires shares of a subject corporation that, but for the application of these provisions of the NRS, would enable that person to exercise (1) one fifth or more, but less than one third, (2) one third or more, but less than a varietymajority or (3) a majority or more, of corporate finance transactions, acquisitionsall of the voting power of the corporation in the election of directors. Once an acquirer crosses one of these thresholds, shares which it acquired in the transaction taking it over the threshold and employee benefit plans.within the 90 days immediately preceding the date when the acquiring person acquired or offered to acquire a controlling interest become “control shares” to which the voting restrictions described above apply.

Nevada law also provides that directors may resist a change or potential change in control if the directors determine that the change is opposed to, or not in the best interests of, the corporation. The existence of authorized but unissuedthe foregoing provisions and unreservedother potential anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our Company, thereby reducing the likelihood that you could receive a premium for your common stock and preferred stock could make more difficult or discouragein an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

acquisition.

Transfer Agent and Registrar


The transfer agent and registrar for our common stock is Interwest TransferIssuer Direct Corporation. with its principal address at 1981 Murray Holladay Road, Suite 100, SLC UT, 84117. Its telephone number is 801.272.9294.

Stock Quotation

Our common stock is currently quoted on OTCQB and under the symbols “HCYT”.

Indemnification of Directors and Officers

Our Articles of Incorporation provide that to the fullest extent permitted under Nevada law, our directors will not be personally liable to the Company Inc. or its stockholders for monetary damages for breach of the duty of care, breach of fiduciary duty or breach of any other duties as directors. Our Articles of Incorporation also provide for indemnification of our directors and officers by the Company to the fullest extent permitted by law. The Company maintains D&O insurance coverage.

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NASDAQ Capital Market

Our Common Stock is listed

PRIVATE PLACEMENT OF WARRANTS

On April 17, 2020 (the “Signing Date”), we entered into a securities purchase agreement (the “Purchase Agreement”) with several institutional and accredited investors pursuant to which we sold to the investors in a private placement an aggregate of 363,146,765 warrants to purchase up to an aggregate of 363,146,765 shares of common stock for gross proceeds to the Company of approximately $5,084,000.

We intend to use the net proceeds primarily for working capital and general corporate purposes.

The Warrants are exercisable for a period of ten (10) years from the date of issuance and has an exercise price of $0.014 per share, subject to adjustment as set forth in the Warrant for stock splits, stock dividends, recapitalizations and similar customary adjustments. The investor may exercise the warrant on a cashless basis if the shares of common stock underlying the warrant (the “Warrant Shares”) are not then registered pursuant to an effective registration statement.

The Investors have contractually agreed to restrict their ability to exercise the Warrants such that the number of shares of the Company’s common stock held by the Investors and their respective affiliates after such exercise does not exceed the Beneficial Ownership Limitation set forth in the Warrant which may not exceed 4.99% (or 9.99%, at the election of each Investor) of the Company’s then issued and outstanding shares of common stock.

SELLING STOCKHOLDERS

The common stock being offered by the selling stockholders are those issuable to the investor upon exercise of the warrants. For additional information regarding the issuances of those warrants see “Private Placement of Warrants” above. We are registering the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the shares of common stock and warrants, unless otherwise indicated the selling stockholders have not had any material relationship with us within the past three years.

The table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of common stock by the selling stockholders. The second column lists the number of shares of common stock beneficially owned each of the by the selling stockholders, based on its ownership of the shares of common stock, preferred stock and warrants, as of January 25, 2022 assuming exercise of the warrants and preferred stock held by the selling stockholders on that date, without regard to any limitations on exercises. As of January 25, 2022, 167,857,522 shares of the Company’s common stock were issued and outstanding.

The third column lists the shares of common stock being offered by this prospectus by the selling stockholders.

This prospectus generally covers the resale of the maximum number of shares of common stock issuable upon exercise of the related warrants, determined as if the outstanding warrants were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration right agreement, without regard to any limitations on the NASDAQ Capital Marketexercise of the warrants. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.

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Unless indicated otherwise as set forth in the footnotes below, under the symbol “MDVX,”terms of the warrants the investors may not exercise the warrants to the extent such exercise would cause such investor, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 4.99% of our Series A Warrantsthen outstanding common stock following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of the warrants which have not been exercised (the “Beneficial Ownership Limitation”).

Name of Selling Stockholder Ownereship before the Offering  Maximum Number of shares of Common Stock to be Sold Pursuant to this Prospectus  Ownership after the Offering 
FWHC Bridge, LLC  602,654,164(1)  150,324,857   452,329,307 
FWHC Bridge Friends, LLC  22,118,983(2)  7,488,063   14,630,920 
CTS Equities, L.P. (f/ka/ Blue Zone Med)  57,984,955(3)  18,720,156   39,264,799 
CFRS Investments, LLC  77,416,438(4)  26,208,219   51,208,219 
Grammen Holdings, LLC  11,059,491(5)  3,744,031   7,315,460 
JEK SEP/Property, LP  5,529,746(6)  1,872,016   3,657,730 
EFO Breathe Easy, LP  1,105,949(7)  374,403   731,546 
Bronx Sox Partners, LP  3,317,847(8)  1,123,209   2,194,638 
Eminence Interests, LP  3,317,847(9)  1,123,209   2,194,638 
WPE Kids Partners, LP  11,059,491(10)  3,744,031   7,315,460 
James R. Tipps  829,461(11)  280,802   548,659 
Richard Molinsky  561,076   561,076   0 
John Vaughn Deasy  2,863,385(12)  842,407   2,020,978 
Lance McNeill  2,761,937(13)  934,540   1,827,397 
Tim Erensen  928,933(14)  280,538   648,395 
Julie Krupala  1,658,924(15)  561,605   1,097,319 
DB-BZ, LLC  31,398,729(16)  9,360,079   22,038,650 
Ralph Cioffi  953,757(17)  280,450   673,307 
Edward G. Gongola, Jr.  552,973(18)  187,201   365,772 
Rellie, LLC  1,105,949(19)  374,403   731,546 
Lee R. Weeks  828,757(20)  280,450   548,307 
Chaac Capital Group, LLC  828,757(21)  280,450   548,307 
G Capital Investments LLC  11,036,007(22)  3,732,289   7,303,718 
Curt J. Miller  1,859,524(23)  561,605   1,297,919 
NADG (US) Investments LLLP  11,803,418(24)  3,740,509   8,062,909 
Gregg Gagliardi  476,967(25)  140,269   336,698 
S. Adele Jones  1,907,514(26)  560,900   1,346,614 
Alexandra H. Jones  1,907,514(27)  560,900   1,346,614 
Uyona Management II, LLC*  16,575,147(28)  5,609,002   10,966,145 
Peter Jacobsen  3,814,325(29)  1,121,448   2,692,877 
Virginia E. Dadey  372,289   372,289   0 
John Lemak  1,160,260(30)  392,630   767,630 
YPH, LLC*  5,515,656(31)  1,864,971   3,650,685 

*Individual or entity is controlled by an officer and/or director of the Company.

(1)Comprised of 336,785,551 shares of preferred stock;
(2)Comprised of 14,630,920 shares of preferred stock;
(3)Comprised of 2,687,500 shares of common stock held under the name Blue Zone Med and 36,577,299 shares of preferred stock under the name CTD Equity;
(4)Comprised of 51,208,219 shares of preferred stock;
(5)Comprised of 7,315,460 shares of common stock;

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(6)Comprised of 3,657,730 shares of common stock;
(7)Comprised of 7,315,546 shares of common stock;
(8)Comprised of 2,194,638 shares of common stock;
(9)Comprised of 2,194,638 shares of common stock;
(10)Comprised of 7,315,460 shares of common stock;
(11)Comprised of 548,659 shares of preferred stock;
(12)Comprised of 2,020,978 shares of common stock;
(13)Comprised of 1,827,397 shares of preferred stock;
(14)Comprised of 100,000 shares of common stock and 548,395 shares of preferred stock;
(15)Comprised of 1,097,319 shares of common stock;
(16)Comprised of 3,750,000 shares of common stock and 18,288,650 shares of preferred stock;
(17)Comprised of 125,000 shares of common stock and 548,307 shares of preferred stock;
(18)Comprised of 365,772 shares of common stock;
(19)Comprised of 731,546 shares of common stock;
(20)Comprised of 548,307 shares of preferred stock;
(21)Comprised of 548,307 shares of preferred stock;
(22)Comprised of 7,303,718 shares of preferred stock;
(23)Comprised of 200,000 shares of common stock held jointly with his wife and 1,097,919 shares of preferred stock held individually;
(24)Comprised of 8,062,909 shares of common stock;
(25)Comprised of 62,500 shares of common stock and 274,198 shares of preferred stock;
(26)Comprised of 250,000 shares of common stock and 1,096,614 shares of preferred stock;
(27)Comprised of 250,000 shares of common stock and 1,096,614 shares of preferred stock;
(28)Comprised of 10,966,145 shares of preferred stock;
(29)Comprised of 500,000 shares of common stock and 2,192,877 shares of preferred stock;
(30)Comprised of 767,630 shares of common stock;
(31)Comprised of 3,650,685 shares of preferred stock;

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PLAN OF DISTRIBUTION

The Selling Stockholders (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the OTCQB or any other stock exchange, market or trading facility on which the securities are listedtraded or in private transactions. The selling stockholders may offer their shares at fixed or negotiated prices. Each Selling Stockholder may use any one or more of the following methods when selling securities:

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

an exchange distribution in accordance with the rules of the applicable exchange;

privately negotiated transactions;

settlement of short sales;

in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

a combination of any such methods of sale; or

any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the symbol “MDVXW.Securities Act of 1933, as amended (the “Securities Act

), if available, rather than under this prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each of the Selling Stockholders have informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

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The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholder or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

LEGAL MATTERS

The validity of the securities being offered by this prospectus has been passed upon for us by Sichenzia Ross Ference LLP, New York, New York. Sichenzia Ross Ference LLP or certain members or employees of Sichenzia Ross Ference LLP have been issued common stock of the Company.

EXPERTS

The consolidated balance sheetsfinancial statements of MedoveX Corporation and subsidiariesH-CYTE, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended wereDecember 31, 2020 and 2019 have been audited by Frazier & Deeter, LLC,, an independent registered public accounting firm, as stated in their report which appearsappearing herein. Such financial statements are included in this prospectus and registration statement in reliance upon the report (which report includes an explanatory paragraph relating to our ability to continue as a going concern) of Frazier & Deeter, LLC, appearing elsewhere herein, in reliance onand upon the reportauthority of such firm given upon their authority as experts in accounting and auditing.

LEGAL MATTERS

Sichenzia Ross Friedman Ference LLP of New York, New York has provided its opinion on the validity of the securities offered by this prospectus.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the information requirements of the Exchange Act, and in accordance therewith we are required

Federal securities laws require us to file periodicinformation with the SEC concerning our business and operations. Accordingly, we file annual, quarterly, and special reports, proxy statements and other information with the SEC. SuchCommission. The SEC maintains a web site (http://www.sec.gov) at which you can read or download our reports proxy statements and other informationinformation.

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities being offered hereby. As permitted by us can be inspectedthe rules and copies at the SEC's Public Reference Room located at 100 F Street, N.E. Washington, D.C. 20549 at the prescribed rates. The SEC also maintains a site on the World Wide Web that contains reports, proxy and information statements and other information regarding registrants that file electronically. The address of such site is http://www.sec.gov. Please call 1-800-SEC-0330 for further information on the operationregulations of the SEC's Public Reference Room.


ThisSEC, this prospectus omits certaindoes not contain all the information that is containedset forth in the registration statement on file withand the SEC, of which this prospectus is a part.exhibits and schedules thereto. For further information with respect to usthe Company and ourthe securities offered hereby, reference is made to the registration statement, including theand such exhibits incorporated therein by reference or filed therewith. Statements herein contained concerning the provisions of any document are not necessarily complete and in each instance, reference is made to the copy of such document filed as an exhibit or incorporated by reference to the registration statement. Each such statement is qualified in its entirety by such reference.schedules. The registration statement and the exhibits may be inspected without chargeaccessed at the offices of the SEC or copies thereof obtained at prescribed rates from the public reference section of the SEC at the addresses set forth above. SEC’s web site.

53

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MEDOVEX CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Balance Sheets September (unaudited) for the nine months ended September 30, 2020 and 2021PageF-2
Condensed Statements of Operations (unaudited) for the nine months ended September 30, 2020 and 2021F-3
Condensed Statement of Shareholders’ Deficit (unaudited) for the Nine Months Ended September 30, 2020 and 2021F-5
Condensed Statements of Cash Flows (unaudited) for the nine months ended September 30, 2020 and 2021F-6
Notes to Condensed Financial StatementsF-7
Report of Independent Registered Public Accounting FirmF-2F-20
Consolidated Balance Sheets as of December 31, 20152020 and 20142019F-3F-21
Consolidated Statements of Operations for the years ended December 31, 20152020 and 20142019F-4F-22
Redeemable Preferred StockConsolidated Statements of Stockholders’ Deficit for the years ended December 31, 2020 and Changes in Stockholders' Equity2019F-5F-23
Consolidated Statements of Cash Flows for the years ended December 31, 20152020 and 20142019F-6F-24
Notes to the Consolidated Financial StatementsF-7F-25

Condensed Consolidated Balance Sheets – March 31, 2016 (unaudited) and March 31, 2015F-22
Condensed Consolidated Statements of Operations – for the three months ended March 31, 2016 (unaudited) and 2015 (unaudited)F-23
Condensed Consolidated Statements of Cash Flows – for the three months ended March 31, 2016 (unaudited) and 2015 (unaudited)F-24
Notes to Condensed Consolidated Financial StatementsF-25F-1

H-Cyte, Inc

Consolidated Balance Sheets

(Expressed in U.S. Dollars)

(Unaudited)

     
  (Unaudited)  
  Sept 30, 2021 December 31, 2020
Assets        
         
Current Assets        
Cash $307,213  $1,640,645 
Accounts receivable  9,200   - 
Patient financing receivable, current portion  35,080   - 
Other receivables  551   22,123 
Prepaid expenses  106,228   94,434 
Total Current Assets  458,272   1,757,202 
         
Right-of-use asset  162,207   278,552 
Property and equipment, net  40,344   139,175 
Patient financing receivable, net of current portion  61,547   - 
Other assets  18,412   29,239 
Total assets $740,782  $2,204,168 
         
Liabilities and Stockholders’ Deficit        
         
Current Liabilities        
Accounts payable $1,044,727  $1,006,968 
Accrued liabilities  

187,119

   276,415 
Other current liabilities  

141,330

   154,812 
Short-term notes, related party        
Short-term convertible notes payable        
Notes payable, current portion  67,444   67,444 
Dividend payable        
Convertible notes payable, related parties  1,584,665   - 
Convertible notes payable  1,091,080   - 
PPP Loan, current portion  105,878   606,811 
Deferred revenue  410,031   634,149 
Lease liability, current portion  92,589   139,189 
Interest payable  

4,385

   6,898 
Total Current Liabilities  4,729,248   2,892,686 
         
Long-term Liabilities        
Lease liability, net of current portion  87,304   157,050 
Notes payable, net of current portion        
Derivative liability - warrants        
Redemption put liability        
PPP Loan, net of current portion  -   202,271 
Total Long-term Liabilities  87,304   359,321 
         
Total Liabilities  4,816,552   3,252,007 
Commitments and Contingencies (Note 10)        
Mezzanine Equity        
Total Mezzanine Equity        
         
Stockholders’ Equity (Deficit)        
Preferred Stock - $.001 par value: 1,000,000,000 shares authorized; Series A Preferred Stock - $.001 par value: 800,000,000 shares authorized, 515,874,354 and 538,109,409 shares issued and outstanding at September 30, 2021 and, December 31, 2020, respectively  515,874   538,109 
Common stock - $.001 par value: 1,600,000,000 shares authorized, 149,394,519 and 127,159,464 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively  149,394   127,159 
Additional paid-in capital  43,540,358   42,515,999 
Accumulated deficit  (47,911,264)  (43,858,974)
Non-controlling interest  (370,132)  (370,132)
Total Stockholders’ Deficit  (4,075,770)  (1,047,839)
         
Total Liabilities and Stockholders’ Deficit $740,782  $2,204,168 

The accompanying notes are an integral part of these consolidated financial statements

F-2

H-Cyte, Inc

Consolidated Statement of Operations

(Expressed in U.S Dollars)

(Unaudited)

         
  Three Months Ended Sept 30, Nine Months Ended Sept 30,
  2021 2020 2021 2020
         
Revenues $460,216  $649,892  $1,286,841  $1,686,168 
Cost of Sales  (138,786)  (161,252)  (553,454)  (608,079)
Gross Profit  321,430   488,640  733,387   1,078,089 
                 
Operating Expenses                
Salaries and related costs  534,752   606,294   1,782,646   2,425,094 
Share based compensation  

162,359

   -   1,024,359   643 
Loss on disposal of property and equipment     

-

   92,804   - 
Other general and administrative  789,365   542,317   2,229,120   2,806,707 
Research and development  3,285   201,658   3,285   1,151,658 
Advertising  58,643   51,643   223,871   222,196 
Loss on impairment                
Depreciation and amortization  300   30,095   13,859   69,447 
Total Operating Expenses  1,548,704   1,432,007   5,369,944   6,675,745 
                 
Operating Loss  (1,227,274)  (943,367)  (4,636,557)  (5,597,656)
                 
Other Income (Expense)                
Forgiveness of PPP loan  698,820   -   698,820   - 
Gain on extinguishment of debt  -   -   -   1,300,088 
Interest expense  (50,516)  (1,039,349)  (110,446)  (1,458,521)
Other income (expense)  (7,641)  (34,504  (4,107)  (25,182)
Change in fair value of redemption put liability  -   97,997  -   272,705 
Loss on derivative instrument  -   -  -   (2,306,121)
Warrant modification expense  

-

   -  -   (70,851)
Change in fair value of derivative liability - warrants  

-

   5,869,102  -   2,986,853
Total Other Income (Expense)  

640,663

   4,893,246  

584,267

   698,971
                 
Net Income (Loss) $(586,611) $3,949,879  $(4,052,290) $(4,898,685)
                 
Accrued dividends on outstanding Series B Convertible Preferred Stock  -   7,856   -   44,456 
Finance costs on issuance of Series D Convertible Preferred Stock                
Deemed dividend on adjustment to exercise price on convertible debt and certain warrants                
Deemed dividend on beneficial conversion features                
Deemed dividend on Series D Convertible Preferred Stock  -   36,450   -   277,719 
Net Income (Loss) attributable to common stockholders $(586,611) $3,905,573 $(4,052,290) $(5,220,860)
             
Net Income (Loss) per share                
Basic $(0.00) $0.03  $(0.03) $(0.05)
Diluted (0.00 $0.01  $(0.03) $(0.05)
                 
Weighted average outstanding shares - basic  

142,407,798

   116,970,322   140,074,271   106,691,185 
Weighted average outstanding shares - diluted  142,407,798    

664,244,972

   

140,074,271

   

106,691,185

 

The accompanying notes are an integral part of these consolidated financial statements

F-3

H-Cyte, Inc

Statements of Stockholders’ Equity (Deficit)

(Expressed in U. S. Dollars)

(Unaudited)

                               
Three months ended Preferred Series A Stock  Preferred Series B Stock  Common Stock  Additional
Paid-in
  Accumulated  Non-controlling  Total
Stockholders’
 
September 30, 2020 and 2021 Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Interest  

Deficit

 
Balances - June 30, 2020                                               -  $-   6,100  $6   104,246,357  $104,246  $27,761,076  $(46,248,302) $(370,132) $      (18,753,106)
Share based compensation                                        
 Conversion of Series A Preferred Stock to common stock                                        
 Conversion of Series A Preferred Stock to common stock, shares                                        
Purchase accounting adjustments                              
Purchase accounting adjustments, Shares                                        
Adjustment for assets and liabilities not included in Merger                                        
Issuance of common stock in connection with private placement offering                                        
Issuance of common stock in connection with private placement offering, shares                                        
 Finance costs on issuance of Series B Convertible Preferred Stock and related warrants                                        
Issuance of common stock pursuant to conversion of short-term debt                                        
Issuance of common stock pursuant to conversion of short-term debt, shares                                        
Issuance of warrants pursuant to conversion of short-term debt                                        
Issuance of additional exchange shares                                        
Issuance of additional exchange shares, shares                                        
Issuance of common stock pursuant to conversion of convertible short-term debt                                        
Issuance of common stock pursuant to conversion of convertible short-term debt, Shares                                        
Issuance of common stock pursuant to warrant exchange                                        
Issuance of common stock pursuant to warrant exchange, Shares                                        
Conversion of Series B Convertible Preferred Stock                                        
Conversion of Series B Convertible Preferred Stock, Shares                                        
Issuance of common stock per restricted stock award to executive                                        
Issuance of common stock per restricted stock award to executive,shares                                        
Repurchase of Series B Convertible Preferred Stock                                        
Repurchase of Series B Convertible Preferred Stock, Shares                                        
Issuance of common stock to pay accrued dividends on Series B Convertible Preferred Stock                                        
Issuance of common stock to pay accrued dividends on Series B Convertible Preferred Stock, Shares                                        
Issuance of common stock to pay accrued interest on convertible short-term debt                                        
Issuance of common stock to pay accrued interest on convertible short-term debt, Shares                                        
Deemed dividend on adjustment to exercise price on convertible debt and certain warrants                                        
Deemed dividend on beneficial conversion features                                        
Issuance of common stock per restricted stock award to executive                                        
Issuance of common stock per restricted stock award to executive, Shares                                        
Issuance of warrants pursuant to short-term notes, related party                                        
Deemed dividend on Series D Convertible Preferred Stock                                        
Beneficial conversion of Series D Convertible Preferred Stock                                        
Finance costs on issuance of Series D Convertible Preferred Stock and related warrants                                        
Accrued dividends on Series B Convertible Preferred Stock                                        
Conversion of Series B Convertible Preferred Stock to Common Stock                                        
Conversion of Series B Convertible Preferred Stock to Common Stock, Shares                                        
Conversion of Series D Convertible Preferred Stock to Common Stock                                        
Conversion of Series D Convertible Preferred Stock to Common Stock. shares                                        
Conversion of Short-term convertible notes payable - related party                                        
Conversion of Short-term convertible notes payable - related party, shares                                        
Conversion of April Advance notes - related parties                                        
Conversion of April Advance notes - related parties, shares                                        
Issuance of warrants pursuant to conversion of Short-term convertible notes                                        
Issuance of common stock in connection with extinguishment of short-term notes, related party                                        
Issuance of common stock in connection with extinguishment of short-term notes, related party, Shares                                        
Deemed dividend on Series D Convertible Preferred Stock at issuance                                        
Reclassification of related party warrants to equity                                        
 Issuance of warrants pursuant to extension of convertible short-term notes, related party                                        
Issuance of Series A Preferred Stock in Rights Offering, net of issuance costs                                        
Issuance of Series A Preferred Stock in Rights Offering, net of issuance costs, shares                                        
Conversion of warrants to Common Stock                                        
Conversion of warrants to Common Stock,shares                                        
Conversion of Series B Preferred Stock to Common Stock  -   -    (6,100)  (6)  2,119,713   2,120   150,983   -   -   153,097 
Accrued dividends on Series B Preferred Stock  -   -   -   -   -   -   (7,856)  -   -   (7,856)
Adjustment of exercise price on certain warrants                                        
Reclassification of Series B warrants to equity                                        
Reclassification of Series D warrants to equity                                        
Conversion of Series B Preferred Stock                                        
Conversion of Series B Preferred Stock, shares                                        
Conversion of Short-term related party convertible notes to Preferred Stock      35,860                   412,541           448,401 
Conversion of Short-term related party convertible notes to Preferred Stock, shares                                        
Issuance of Common Stock in connection with extinguishment of short term notes, related parties                                        
Issuance of Common Stock in connection with extinguishment of short term notes, related parties, shares                                        
Deemed dividend on Series D Preferred Stock  -   -   -   -   -   -   (36,450)  -   -   (36,450)
Deemed dividend on Series D Preferred Stock at issuance                                        
Issuance of Common Stock in exchange for consulting fees incurred                                        
Issuance of Common Stock in exchange for consulting fees incurred, shares                                        
Issuance of warrants pursuant to private placement of Series D Convertible Preferred Stock                                        
Conversion of Short-term convertible notes to Preferred Stock  287,984,337   287,984   -   -   -   -   4,751,484   -   -   5,039,468 
Issuance of warrants pursuant to extension of convertible short-term notes                                        
Issuance of warrants pursuant to extension of maturity date on convertible debt                                        
Conversion of related party warrants to equity  -   -   -   -   -   -   107,123   -   -   107,123 
Conversion of Series D Preferred Stock to Common Stock  -   -   -   -   15,773,363   15,773   6,422,441   -   -   6,438,214 
Reclassification of Series B warrants to Common Stock  -   -   -   -   -   -   73,805   -   -   73,805 
Reclassification of Series D warrants to Common Stock  -   -   -   -   -   -   337,400   -   -   337,400 
Issuance of Series A Preferred Stock in Rights Offering  218,285,024   218,285   -   -   -   -   2,517,451   -   -   2,735,736 
Conversion of Short-term related party convertible notes to Preferred Stock  35,860,079   35,860   -   -   -   -   412,541   -   -   448,401 
Stock based compensation                                        
Conversion of Series A Preferred Stock to common stock                                        
Conversion of Series A Preferred Stock to common stock, shares                                        
Issuance of share based compensation                                        
Net loss  -   -   -   -   -   -   -   3,949,879   -   3,949,879 
Balances – September 30, 2020  542,129,440  $542,129   -  $-   122,139,433  $122,139  $42,489,998  $(42,298,423) $(370,132) $485,711 

  Preferred Series A Stock  Preferred Series B Stock  Common Stock  Additional
Paid-in
  Accumulated   Non-controlling  Total Stockholders’ 
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Interest  Deficit 
Balances - June 30, 2021  520,305,884  $520,305   -   -   144,962,989  $144,963  $43,377,999  $(47,324,653) $(370,132) $(3,651,518)
Share based compensation  -   -   -   -   -   -   162,359   -   -   162,359 
Conversion of Series A Preferred Stock to common stock  (4,431,530)  (4,431)  -   -   4,431,530   4,431   -   -   -   - 
Net Loss  -   -   -   -   -   -   -   (586,611)  -   (586,611)
Balances – September 30, 2021  515,874,354  $515,874   -   -   149,394,519  $149,394  $43,540,358  $(47,911,264) $(370,132) $(4,075,770)

F-1
F-4

Nine months ended 

Preferred

Series A Stock

  

Preferred

Series B Stock

  Common Stock  

Additional

Paid-in

  Accumulated  Non-controlling  

Total

Stockholders’

 
September 30, 2020 and 2021 Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Interest  Deficit 
Balances - December 31, 2019                                             -  $-   6,100  $6   99,768,704  $99,769  $28,172,146  $(37,362,531) $(370,132) $   (9,460,742)
Accrued dividends on Series B Preferred Stock  -   -   -   -   -   -   (44,456)  -   -   (44,456)
Adjustment of exercise price on certain warrants  -   -   -   -   -   -   (438,913)  -   -   (438,913)
Reclassification of Series B warrants to equity  -   -   -   -   -   -   73,805   -   -   73,805 
Reclassification of Series D warrants to equity  -   -   -   -   -   -   337,400   -   -   337,400 
Conversion of Series B Preferred Stock  -   -   (6,100)  (6)  2,119,713   2,120   150,983   -   -   153,097 
Conversion of Series D Preferred Stock to Common Stock  -   -   -   -   15,773,363   15,773   6,422,441   -   -   6,438,214 
Conversion of Short-term related party convertible notes to Preferred Stock  35,860,079   35,860   -   -   -   -   412,541   -   -   448,401 
Issuance of Common Stock in connection with extinguishment of short term notes, related parties  -   -   -   -   4,368,278   4,368   214,046   -   -   218,414 
Deemed dividend on Series D Preferred Stock  -   -   -   -   -   -   (277,719)  -   -   (277,719)
Deemed dividend on Series D Preferred Stock at issuance  -   -   -   -   -   -   -   (37,207)  -   (37,207)
Conversion of related party warrants to equity  -   -   -   -   -   -   107,123   -   -   107,123 
Issuance of Common Stock in exchange for consulting fees incurred  -   -   -   -   109,375  109   34,891   -   -   35,000 
Issuance of warrants pursuant to private placement of Series D Convertible Preferred Stock  -   -   -   -   -   -   31,902   -   -   31,902 
Conversion of short-term convertible notes to Preferred Stock  287,984,337   287,984   -   -   -   -   4,751,484   -   -   5,039,468 
Issuance of warrants pursuant to extension of convertible short-term notes  -   -   -   -   -   -   17,636   -   -   17,636 
Issuance of warrants pursuant to extension of maturity date on convertible debt  -   -   -   -   -   -   6,595   -   -   6,595 
Issuance of Series A Preferred Stock in Rights Offering  218,285,024   218,285   -   -   -   -   2,517,451   -   -   2,735,736 
Share based compensation  -   -   -   -   -   -   643   -   -   643 
Net loss  -   -   -   -   -   -   -   (4,898,685)  -   (4,898,685)
Balances – September 30, 2020  542,129,440  $542,129   -  $-   122,139,433  $122,139  $42,489,998  $(42,298,423) $(370,132) $485,711 

  Preferred Series A Stock  Preferred Series B Stock  Common Stock  

Additional

Paid-in

  Accumulated  Non-controlling  

Total

Stockholders’

 
  Shares  Amount  Shares  Amount  Shares  Amount  
Capital
  Deficit  Interest  Deficit 
Balances - December 31, 2020  538,109,409  $538,109   -  $     -   127,159,464  $127,159  $42,515,999  $(43,858,974) $(370,132) $  (1,047,839)
Balance  538,109,409  $538,109   -  $     -   127,159,464  $127,159  $42,515,999  $(43,858,974) $(370,132) $(1,047,839)
Conversion of Series A Preferred Stock to common stock  (22,235,055)  (22,235)  -   -   22,235,055   22,235   -   -   -   - 
Share based compensation  -   -   -   -   -   -   1,024,359   -   -   1,024,359 
Net loss  -   -   -   -   -   -   -   (4,052,290)  -   (4,052,290)
Balances – September 30, 2021  515,874,354  $515,874   -  $-   149,394,519  $149,394  $43,540,358  $(47,911,264) $(370,132) $(4,075,770)
Ending balance  515,874,354  $515,874   -  $-   149,394,519  $149,394  $43,540,358  $(47,911,264) $(370,132) $(4,075,770)

The accompanying notes are an integral part of these financial statements

F-5

H-Cyte, Inc

Consolidated Statements of Cash Flows

(Expressed in U.S Dollars)

(Unaudited)

       
  Nine Months Ended Sept 30, 
  2021  2020 
Cash Flows from Operating Activities        
Net loss $(4,052,290) $(4,898,685)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  13,859   69,447 
Loss on impairment        
Loss on asset disposal  92,804     
Amortization of debt discount  -   1,395,007 
Interest and penalties on extension of short-term convertible notes        
Forgiveness of PPP loan  (698,820)  - 
Issuance of warrants to extend convertible debt  -   

17,636

 
Issuance of warrants pursuant to short-term notes, related party  -   (1,300,088)
Issuance of warrants to extend short-term debt  -   6,595 
Share based compensation expense  1,024,359   643 
Loss on write-off of inventory        
Common stock issued for consulting services  -   35,000 
Income from change in fair value adjustment of derivative liability - warrants        
Change in fair value of redemption put liability      (272,705)
Change in fair value of derivative liability - warrants  -   (2,986,853)
Change in fair value of derivative liability - warrants  -   

(272,705

)
Change in fair value of derivative liability - Day one derivative loss  -   2,306,121 
Issuance of warrants to extend short-term debt, related party        
Bad debt expense        
Issuance of warrants pursuant to extension of maturity date on convertible debt        
Issuance of Common Stock pursuant to warrant exchange        
Gain on extinguishment of short-term notes, related party      (1,300,088)
Warrant modification expense  -   70,851 
Loss on disposal of property and equipment  92,804   - 
Changes in operating assets and liabilities:        
Accounts receivable  (9,200)  20,167 
Patient financing receivable, current portion  (35,080)  - 
Other receivables  21,572   

16,372

 
Patient financing receivable, net of current portion  (61,547)  - 
Prepaid expenses and other assets  (968)  707,457 
Interest payable  6,333  35,565 
Accounts Payable  37,759   (237,409)
Accrued liabilities  (89,296)  (21,206)
Other current liabilities  (13,482)  (15,680
Deferred revenue  (224,118)  (409,375)
         
Net Cash Used in Operating Activities  (3,988,115)  (5,461,140)
         
Cash Flows from Investing Activities        
Purchase of property and equipment  (7,832)  

(2,285

Purchase of business, net of cash acquired        
Net assets not included in purchase transaction        
Net Cash Used in Investing Activities  (7,832)  

(2,285

         
Cash Flows from Financing Activities        
Proceeds from short-term related party notes  1,584,665     
Payment of dividends        
Proceeds from convertible notes payable, related parties  1,584,665   - 
Proceeds from convertible notes payable  1,091,080   - 
Proceeds from PPP loan  -   809,082 
Payment on debt obligations        
Proceeds from common stock, net of issuance costs        
Proceeds from Secured Convertible Promissory Notes        
Proceeds from issuance of Series D Convertible Preferred Stock, net of issuance costs        
Payments on PPP Loan  

(13,230

)  

(10,937

)
Proceeds from warrants, net of issuance costs  -   3,842,695 
Proceeds from issuance of Preferred Stock Series A, net of issuance costs  -   

2,735,736

 
Proceeds from Preferred stock Series A, net of issuance costs      2,735,736 
Payment on Preferred stock Series B Convertible Preferred Stock redemption        
Proceeds from issuance of Series D Convertible Preferred Stock  -   100,000 
Net Cash Provided by Financing Activities  

2,662,515

   7,476,576 
         
Net Change in Cash  (1,333,432)  2,013,151 
         
Cash - Beginning of period  1,640,645   1,424,096 
         
Cash - End of period $307,213  $3,437,247 
         
Supplementary Cash Flow Information        
Cash paid for interest $3,367  $17,066 
         
Non-cash investing and financing activities        
Deemed Dividend on Series D Convertible Preferred Stock $ -  $ 314,926 
Conversion of Series D Preferred Stock to Common Stock  -   6,438,214 
Conversion of related party (Horne) warrants to equity  -   

107,123

 
Reclassification of Series B warrants to equity  -   73,805 
Reclassification of Series D warrants to equity  -   337,400 
Issuance of Common Stock in exchange for consulting fees  -   35,000 
Issuance of warrants to extend short-term debt  -   6,595 
Issuance of warrants pursuant to extension of convertible short-term notes  -   

17,636

 
Conversion of Series B Preferred Stock to Common Stock  -   

153,097

 
Conversion of short-term related party convertible notes to Preferred Stock  -   

412,541

 
Conversion of short-term convertible notes to Preferred Stock  -   

4,751,484

 
Dividends accrued on Series B Preferred Stock  -   

44,456

 
Adjustment of exercise price on convertible debt  -   

438,913

 
Issuance of Common Stock in connection with extinguishment of short-term notes, related parties  -   

218,414

 
Issuance of Warrants in connection with Series D Convertible Preferred Stock  -   

31,902

 

The accompanying notes are an integral part of these consolidated financial statements

F-6

H-Cyte, Inc

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

(Unaudited)

Note 1 - Description of the Company

H-CYTE, Inc (“the Company”) is a hybrid-biopharmaceutical company dedicated to developing and delivering new treatments for patients with chronic respiratory and pulmonary disorders. During the last two years, the Company has evolved into two separate divisions with its entrance into the biologics development space (“Biologics Division”). This new division is complementary to the Company’s current Lung Health Institute (LHI) autologous infusion therapy business (“Infusion Division”) and is focused on underserved disease states. On September 8, 2021, the Company announced that its Lung Health Institute facilities changed its name to Centers for Respiratory Health as the clinics continue to deliver treatments for patients with chronic respiratory and pulmonary disorders.

The consolidated results for H-CYTE include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC is the operator and manager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI Pittsburgh clinics did not reopen in 2020 after the temporary closure of all LI clinics due to COVID-19. These two clinics will remain permanently closed.

On September 11, 2020, with the closing of the Rights Offering, FWHC, LLC, FWHC Bridge, LLC, and FWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company by subsequently owning approximately 61% of the fully diluted shares of the Company (for further discussion, see Notes 8 and 9-”Equity Transactions” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

Autologous Infusion Therapy (“Infusion Division”)

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

Biotech Development (“Biologics Division”)

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

On October 9, 2019, the Company entered into a services agreement with Rion which provides the Company the benefit of Rion’s resources and expertise for the limited purpose of (i) consulting with and assisting H-CYTE in the further research and development for the generation of a new biologic and (ii) subsequently assisting H-CYTE in seeking and obtaining FDA Phase 1 IND clearance for this biologic as necessary. Rion has completed the research and development work which is under review by the Company. The Company is assessing if the Rion combined proprietary biologic is a more viable solution than potentially progressing with a single entity biologic from an alternative commercial source.

F-7

On April 2, 2021, the Company entered into a series of agreements with Medovex, LLC to pursue a joint venture regarding the continued development and commercialization of the DenerveX device for business outside of the U.S. The Company has determined that the transactions resulting from the series of agreements with Medovex, LLC are immaterial. The Company will assess the progress of the joint venture on a quarterly basis for materiality.

Note 2 – Basis of presentation

The accompanying interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of the Company’s financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. The Company filed audited consolidated financial statements as of and for the fiscal years ended December 31, 2020 and 2019, which included all information and notes necessary for such complete presentation in conjunction with its 2020 Annual Report on Form 10-K.

The results of operations for the interim period ended September 30, 2021 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020, which are contained in the Company’s 2020 Annual Report on Form 10-K. For further discussion refer to Note 2 – “Basis Of Presentation And Summary of Significant Accounting Policies” to the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Principles of Consolidation

Note 3 - Liquidity, Going Concern and Management’s Plans

The Company incurred net losses of approximately $587,000and $4,052,000for the three and nine months ended September 30, 2021. The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as it implements its plan around the Biosciences Division. The interim consolidated financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) as applicable to a going concern.

COVID-19 has adversely affected the Company’s financial condition and results of operations. The impact of the outbreak of COVID-19 on the economy in the U.S. and the rest of the world is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact the economy is highly uncertain and cannot be predicted. Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected.

F-8

Convertible Notes Payable

On April 1, 2021, the Company, entered into a Secured Convertible Note Purchase Agreement (the “April 2021 Note Purchase Agreement”) with five (5) investors (the “Holders”). Pursuant to the terms of the April 2021 Note Purchase Agreement, the Company sold promissory notes in the aggregate principal amount of $2,575,000 maturing on March 31, 2022with an annual interest rate of 8%. The Notes, plus accrued interest, are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next round of financing that meets the definition of Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by the assets of the Company under a security agreement with the Holders. The lead investor of the April 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $1,500,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $25,000 as part of the April 2021 Note Purchase Agreement.

On October 14, 2021, H-Cyte, Inc. (the “Company”) entered into the Second Closing Bring Down Agreement (the “October 2021 Note Purchase Agreement”) whereby the five (5) investors who had entered into the April 2021 Note Purchase Agreement purchased new notes in the Company in the aggregate principal amount of $750,000. The Notes are due and payable on March 31, 2022and bear interest at an annual rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next financing that meets the definition of a Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by all of the assets of the Company under a security agreement with the Holders. The lead investor of the October 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $437,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $7,500as part of the October 2021 Note Purchase Agreement. The Company chose early adoption of ASU 2020-06 Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity effective January 1, 2021 related to the April 2021 and October 2021 Note Purchase Agreements.

The Company had cash on hand of approximately $307,000 as of September 30, 2021 and approximately $644,000 as of November 9, 2021. The Company’s cash is insufficient to fund its operations over the next year and the Company is currently working to obtain additional debt or equity financing to help support the Biosciences Division’s business model.

There can be no assurance that the Company will be able to raise additional funds or that the terms and conditions of any future financings will be workable or acceptable to the Company or its shareholders. If the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings, or raising equity capital, the Company may be forced to discontinue operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 – Right-of-use Asset And Lease Liability

The components of lease expense, which are included in other general and administrative expense, for the three and nine months ended September 30, 2021 and 2020, respectively, are as follows:

Schedule of Components of Lease Expense

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
   2021   2020   2021   2020 
Operating lease expense $69,582   140,381   253,233   442,409 

Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2021 and 2020, respectively, are as follows:

Schedule of Cash Paid for Amounts Included the Measurement of Lease Liabilities

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
   2021   2020   2021   2020 
Operating cash flows from operating leases $69,582   140,381   253,233   442,409 

Supplemental balance sheet and other information related to operating leases are as follows:

Schedule of Supplemental Balance Sheet and Other Information

  September 30, 2021  December 31, 2020 
       
Operating leases right-of-use assets $162,207   278,552 
Lease liability, current portion  92,589   139,189 
Lease liability, net of current portion  87,304   157,050 
Total operating lease liabilities $179,893   296,239 
Weighted average remaining lease term  1.92 years   2.32 years 
Weighted average discount rate  9.96%  10.31%

F-9

Future maturities of operating lease liabilities as of September 30, 2021 are as follows:

Schedule of Maturities of Lease Liabilities

  Operating leases 
    
Remainder of 2021 $25,584 
2022  102,891 
2023  69,333 
Due after two years through three years  69,333 
Total lease payments  197,808 
Total lease payments  197,808 
Less: Interest  17,915 
Total lease liability $179,893 

The Company did not renew its corporate office space lease in Tampa, FL which expired on March 31, 2021. The Company leases medical clinic space in Tampa, FL, Nashville, TN, and Scottsdale, AZ. These clinic locations have various expiration dates through August 31, 2023. The leasing arrangements contain various renewal options that are adjusted for increases in the consumer price index or agreed upon rates. The Company entered into a twelve-month lease extension for its Tampa location beginning April 1, 2021 totaling $71,775. The Company also entered into a twelve-month lease extension for its Nashville location beginning November 1, 2021 totaling $94,500. The Dallas, TX lease expired on July 31, 2020 and the Pittsburgh, PA lease expired on October 31, 2020, neither of which were renewed as these clinic locations were permanently closed. The Company decided that its corporate staff will continue working remotely but the Company will have a small corporate meeting room in the Tampa LHI clinic.

Note 5 - Property And Equipment

Property and equipment, net, consists of the following:

Schedule of Property and Equipment

  Useful Life September 30, 2021  December 31, 2020 
Furniture and fixtures 5-7 years $96,185  $231,222 
Computers and software 3-7 years  213,660   246,323 
Leasehold improvements 15 years  40,130   155,583 
Property and equipment     349,975   633,128 
Less: accumulated depreciation    (309,631)  (493,953)
           
Total   $40,344  $139,175 

Depreciation expense was approximately $300and $14,000for the three and nine months ended September 30, 2021, respectively. Depreciation expense was approximately $30,000 and $69,000 for the three and nine months ended September 30, 2020, respectively. The Company uses the straight-line depreciation method to calculate depreciation expense. The Company recorded a loss on disposal of approximately $0 and $93,000 for the three and nine months ended September 30, 2021, respectively.

Note 6 – Related Party Transactions

Board Members and Officers and Related Expenses

Effective February 1, 2019, the Company entered into an oral consulting agreement with Mr. Raymond Monteleone, Board Member and Chairman of the Audit Committee in which Mr. Monteleone received $10,000 per month for advisory services and $5,000 per quarter as Audit Committee Chair in addition to regular quarterly board meeting fees. Effective March 25, 2020, the Company reduced the advisory services to $5,000 per month and the fees per quarter as the Audit Committee Chair to $2,500 per quarter. On January 12, 2021, Mr. Monteleone was appointed as Chairman of the Board and Compensation Committee Chair. There are understandings between the Company and Mr. Monteleone for him to receive $5,000 per month to serve on the Board of Directors and an additional $2,500 per quarter to serve as Chairman of the Board, Audit Committee Chair, and Compensation Committee Chair. The Company expensed approximately $18,000 and $53,000 in compensation to Mr. Monteleone for the three and nine months ended September 30, 2021, respectively. The Company expensed approximately $18,000 and $65,000 in compensation to Mr. Monteleone for the three and nine months ended September 30, 2020, respectively.

F-10

Effective October 1, 2020, the Company entered into an oral agreement with Mr. Michael Yurkowsky in which Mr. Yurkowsky will receive $4,167 per month to serve on the Board of Directors. The Company expensed approximately $13,000 and $38,000 in compensation to Mr. Yurkowsky for the three and nine months ended September 30, 2021, respectively. For the three and nine months ended September 30, 2020, the Company expensed $0.

On January 12, 2021, Mr. William Horne stepped down as Chairman of the Board. Mr. Horne will remain a member of the Board. Effective March 1, 2021, the Company entered into an oral agreement with Mr. Horne in which Mr. Horne will receive $4,167 per month to serve on the Board of Directors. The Company expensed approximately $13,000 and $29,000 in Board fee compensation to Mr. Horne for the three and nine months ended September 30, 2021. For the three and nine months ended September 30, 2020, the Company expensed $0.

Debt and Other Obligations

The convertible notes payable and convertible notes payable, related parties are detailed in Note 3 - “Liquidity, Going Concern and Management’s Plans” in this Form 10-Q.

Change in Control

On September 11, 2020, with the closing of the Rights Offering, FWHC, LLC, FWHC Bridge, LLC, and FWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company by subsequently owning approximately 61% of the fully diluted shares of the Company. On July 28, 2020, the Company issued an aggregate of 15,518,111 shares of its common stock to FWHC upon the conversion of its issued Series D Convertible Preferred Stock. The Preferred Stock was converted pursuant to a mandatory conversion triggered by the majority holder of the Series D Convertible Preferred Stock as set forth in the Certificate of Designations for the Series D Convertible Preferred Stock. On September 11, 2020, with the closing of the Rights Offering, FWHC was issued 123,031,819 shares of Preferred A Stock for conversion of the outstanding promissory notes from April 2020, 75,162,429 shares of Preferred A Stock for conversion of the April Secured Note, 35,860,079 shares of Preferred A Stock for conversion of the Hawes Notes, and 117,362,143 shares of Preferred A Stock issued upon the closing of the Rights Offering. FWHC was also issued 273,356,67610-year warrants at $0.014 upon the closing of the Rights Offering.

Convertible Notes Payable

On April 1, 2021, the Company, entered into a Secured Convertible Note Purchase Agreement (the “April 2021 Note Purchase Agreement”) with five (5) investors (the “Holders”). Pursuant to the terms of the April 2021 Note Purchase Agreement, the Company sold promissory notes in the aggregate principal amount of $2,575,000 maturing on March 31, 2022 with an annual interest rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next round of financing that meets the definition of Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by the assets of the Company under a security agreement with the Holders. The lead investor of the April 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $1,500,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $25,000 as part of the April 2021 Note Purchase Agreement.

On October 14, 2021, H-Cyte, Inc. (the “Company”) entered into the Second Closing Bring Down Agreement (the “October 2021 Note Purchase Agreement”) whereby the five (5) investors who had entered into the April 2021 Note Purchase Agreement purchased new notes in the Company in the aggregate principal amount of $750,000. The Notes are due and payable on March 31, 2022and bear interest at an annual rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next financing that meets the definition of a Qualified Financing as defined in the Note Purchase Agreement. The Notes are secured by all of the assets of the Company under a security agreement with the Holders. The lead investor of the October 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $437,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $7,500 as part of the October 2021 Note Purchase Agreement. 

Note 7 - Equity Transactions

Common Stock Issuance

In February 2020, the Company issued LilyCon Investments $35,000 in shares of the Company’s common stock at a weighted average share price of $0.32 per share for a total of 109,375 shares per the terms of the consulting agreement executed in February 2019.

F-11

On April 23, 2020, Horne Management, LLC agreed to convert the related notes plus accrued interest into (i) 4,368,278 shares of common stock of the Company and (ii) a ten-year warrant to purchase up to an equivalent number of shares of the Company’s common stock with such conversion to be effective as of April 17, 2020. This warrant will have an exercise price equal to the price per share at which securities were offered to investors for purchase at the Qualified Financing, which was $0.014, and is exercisable beginning on the day immediately following the closing of the Rights Offering, which occurred on September 11, 2020.

On July 28, 2020, the Company issued an aggregate of 17,893,076 shares of its common stock upon the conversion of all of its issued and outstanding Series B and Series D Preferred Stock (the “Preferred Stock”) and accumulated dividends. The Preferred Stock was converted pursuant to a mandatory conversion triggered by the majority holder of the Series D Preferred Stock as set forth in the Certificate of Designations for the Series D Preferred Stock.

On July 29, 2020, the Company filed its Second Amended and Restated Certificate of Incorporation (the “Amended COI”). The Amended COI provides for the issuance of up to 1,600,000,000 shares of Common Stock and 1,000,000,000 shares of Preferred Stock, of which 800,000,000 shares are designated as Series A Preferred Stock and eliminates the previously authorized classes of preferred stock. The Amended COI also delineates the rights of the Series A Preferred Stock.

Series A Preferred Stock

On September 11, 2020, the registered Rights Offering (Registration No. 333-239629) of the Company expired. Pursuant to the Rights Offering, on September 24, 2020, the Company issued (i) 15,235,381 shares of its Series A preferred stock at a price of $0.014 per share to holders of its common stock who validly exercised their subscription rights prior to the expiration time and (ii) 203,049,643 shares of its Series A preferred stock to the standby purchasers as part of the standby commitment. The Rights Offering, including the standby component, resulted in gross proceeds to the Company of $3,055,985.

Additionally, on September 24, 2020, the Company issued an aggregate of 323,844,416 shares of its Series A Preferred Stock to the holders of outstanding promissory notes, issued in April 2020, in the aggregate principal amount and accrued interest of $4,483,617. The notes were converted pursuant to a mandatory conversion triggered by the completion of the Rights Offering (for further discussion, see Note 9 - “Equity Transactions” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

During the three and nine months ended September 30, 2021, 4,431,530 and 22,235,055 shares of Series A Preferred Stock were converted to Common Stock at the request of certain Series A Preferred Shareholders.

Voting Rights

Holders of Series A Preferred Stock (“Series A Holders”) have the right to receive notice of any meeting of holders of common stock and to vote upon any matter submitted to a vote of the holders of common stock. Each Series A Holder shall vote on each matter on an as converted basis submitted to them with the holders of common stock.

Conversion

Series A Preferred Stock converts to common stock at a 1:1 ratio immediately upon request of the Series A Holder.

Liquidation

Series A Preferred Stock does not have preferential treatment over common stock shareholders if the Company liquidates or dissolves.

F-12

Share-Based Compensation

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

Stock Option Activity

On April 1, 2021, the Board of Directors of the Company approved and granted to certain directors and officers of the Company an aggregate of 54,750,000 stock options of which 4,750,000 were immediately vested on the date of grant. Each option granted has an exercise price of $0.07 per share and an expiration date of ten years from the date of grant. These options are not included in the Company’s current stock option plan as they were granted outside of the plan.

The Board of Directors decided not to renew the former CEO’s (Robert Greif) employment contract; therefore, the unvested shares were forfeited resulting in a reduction of share-based compensation of approximately $205,000 for the period ending September 30, 2021 that was recognized during the period ending June 30, 2021.

For the nine months ended September 30, 2020, all outstanding stock options were fully vested, and related compensation expense recognized. For the nine months ended September 30, 2021, 29,635,000 options were outstanding and 14,801,667 were vested. For the three and nine months ended September 30, 2021 the Company recognized approximately $162,000 and $1,024,000 in stock-based compensation expense, respectively. The Company has approximately $574,000 of unrecognized compensation costs related to non-vested stock options, which is expected to be recognized over a weighted average period of approximately 3.12 years.

Inputs used in the valuation models are as follows:

Schedule of Assumptions Used to Calculate Fair Value of Stock Options

2021 Grants
Option value $0.054   to   0.056 
Risk Free Rate  0.90%  to   1.37%
Expected Dividend- yield  -   to   - 
Expected Volatility  173.99%  to   176.04%
Expected term (years)  5   to   7 

The following is a summary of stock option activity for the nine months ended September 30, 2020 and 2021:

Summary of Stock Option Activity

  Shares  

Weighted

Average

Exercise

Price

  Weighted Average Remaining Term (Years) 
Outstanding at December 31, 2019  425,000  $1.38   7.71 
Granted  -   0   - 
Expired/Cancelled  (15,000)  1.35   - 
Outstanding and exercisable at September 30, 2020  410,000  $1.39   7.23 
             
Outstanding at December 31, 2020  410,000  $1.39   6.72 
Granted  54,750,000   0.07   9.50 
Expired/Cancelled  (25,525,000)  0.07   - 
Outstanding at September 30, 2021  29,635,000  $0.10   9.41 
             
Exercisable at September 30, 2021  14,801,667  $0.10   9.41 

The following is a summary of the Company’s non-vested shares for the nine months ended September 30, 2021:

Summary of Stock Option Activity Non-vested

  Shares  Weighted
Average Grant
Date Fair Value
 
Non-vested at December 31, 2020  -   - 
Granted  54,750,000   0.03 
Vested  (14,416,667)  0.05 
Forfeited  (25,500,000)  0.07 
Non-vested at September 30, 2021  14,833,333   0.11 

Non-Controlling Interest

For the nine months ended September 30, 2021 and 2020, the Company consolidated the results for LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale as VIEs. The Company owns no portion of any of these four entities, however, the Company maintains control through their management role for each of the clinics, in accordance with each clinic’s respective management services agreement. Based on these agreements, the Company has the responsibility to run and make decisions on behalf of the clinics, except for medical care and procedures. Beginning in January 2018, the Company adopted the policy, for all of the VIEs, that the management fee charged by the Company would equal the amount of net income from each VIE on a monthly basis, bringing the amount of the net income to $0 each month for the VIEs. Due to this change in policy, there was no change in the non-controlling interest for the nine months ended September 30, 2021 or 2020 related to the net income (loss) as it was $0 each month through the management fee charged by the Company. The LI Dallas and LI Pittsburgh clinics did not reopen in 2020 after the temporary closure of all LI clinics due to COVID-19. These two clinics will remain permanently closed.

Net Loss Per Share

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

The Company excluded the following securities from the calculation of basic and diluted net loss per share as the effect would have been antidilutive:

Schedule of Anti-dilutive Securities of Basic and Diluted Net Loss Per Share

  2021  2020 
  For the Nine Months Ended September 30, 
  2021  2020 
Warrants to purchase common stock (in the money)  385,033,082   367,515,043 
Series A Preferred Stock convertible to common stock  515,874,354   542,129,440 
Total  900,907,436   909,644,483 

Excluded from the above table are 22,607,701 warrants and 29,635,000 stock options for the nine months ended September 30, 2021 as they are out of the money (exercise price greater than $0.04). Inclusion of such would be anti-dilutive.

F-13

Note 8 – Commitments & Contingencies

Litigation

From time to time, the Company may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect the Company’s financial condition, results of operations, and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect the Company due to legal costs and expenses, diversion of management attention, and other factors. The Company expenses legal costs in the period incurred. The Company cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against the Company in the future, and these matters could relate to prior, current, or future transactions or events. As of September 30, 2021, the Company had no litigation matters which required any accrual or disclosure.

Rion Agreements

On June 21, 2019, H-CYTE entered into an exclusive product supply agreement with Rion, LLC (“Rion”) to develop and distribute (post FDA approval) a biologic for chronic obstructive pulmonary disease (“COPD”), the fourth leading cause of death in the U.S. Rion has established a novel biologics technology to harness the healing power of the body. Rion’s innovative technology, based on science developed at Mayo Clinic, provides an off-the-shelf platform to enhance healing in soft tissue, musculoskeletal, cardiovascular and neurological organ systems. This agreement provides for a 10-year exclusive and extendable supply agreement with Rion to enable H-CYTE to develop proprietary biologics. The Company is currently evaluating the potential of a combined biologic and the utilization of this agreement.

On October 9, 2019, the Company entered into a services agreement with Rion which provides the Company the benefit of Rion’s resources and expertise for the limited purpose of (i) consulting with and assisting H-CYTE in the further research and development for the generation of a new biologic and (ii) subsequently assisting H-CYTE in seeking and obtaining FDA Phase 1 IND clearance for this biologic as necessary. Rion also agrees to consult with H-CYTE in its arrangement for services from third parties unaffiliated with Rion to support research, development, regulatory approval, and commercialization of the biologic. For the three and nine months ended September 30, 2021 the Company expensed $0. For the three and nine months ended September 30, 2020 the Company expensed $202,000 and $1,152,000, respectively. The Company is currently evaluating the potential of a combined biologic and the utilization of this agreement.

F-14

Note 9 – Short-term Debt

Convertible Notes Payable

Convertible Notes payable represents a securities purchase agreement with select accredited investors, which was assumed in the Asset Purchase Agreement between Medovex Corp and Regenerative Medicine Solutions, LLC (“Merger”) in 2019 (see Note 1 – “Description of the Company” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K). The debt assumed by the Company, as part of the merger, consisted of $750,000 of units (the “Units”) with a purchase price of $50,000 per Unit. Each Unit consists of (i) a 12% senior secured convertible note, initially convertible into shares of the Company’s common stock, par value $0.001 per share, at a conversion price equal to the lesser of $0.40 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of equity and/or debt securities completed by the Company following this offering, and (ii) a three-year warrant to purchase such number of shares of the Company’s common stock equal to one hundred percent (100%) of the number of shares of common stock issuable upon conversion of the notes at $0.40. The Convertible Notes were secured by all of the assets of the Company.

In 2019, $100,000 of the Convertible Notes were converted into shares of common stock, and $350,000 of the Convertible Notes were redeemed by the Company. The Company reached an extension with the remaining noteholder which extended the maturity date of the Hawes Notes for one year, until September 30, 2020. The notes had a principal balance of $300,000 plus penalties of approximately $85,000 and accrued interest of approximately $40,000 for a total adjusted principal balance upon renewal of $424,615 as of March 31, 2020. In connection with the April Offering, the Company entered into an amendment with the Investor with respect to the outstanding 12% Senior Secured Convertible Note due September 30, 2020, which was originally issued in 2018 and assumed in the Merger and which was purchased by the Investor from its original holder, George Hawes, on March 27, 2020 (see Note 11 –“Debt” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

On April 1, 2021, the Company, entered into a Secured Convertible Note Purchase Agreement (the “April 2021 Note Purchase Agreement”) with five (5) investors (the “Holders”). Pursuant to the terms of the April 2021 Note Purchase Agreement, the Company sold promissory notes in the aggregate principal amount of $2,575,000 maturing on March 31, 2022 with an annual interest rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next round of financing that meets the definition of Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by the assets of the Company under a security agreement with the Holders. The lead investor of the April 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $1,500,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $25,000 as part of the April 2021 Note Purchase Agreement.

Interest expense is being accreted to the principal balance using the effective interest method. For the three months and nine months ended September 30, 2021, the Company recorded interest expense of $30,445 for related party convertible notes payable and $20,962 for convertible notes payable and $59,665 for related party convertible notes payable and $41,080 for convertible notes payable, respectively.

Notes Payable

Notes payable were assumed in the Merger and are due in aggregate monthly installments of approximately $5,800 and carry an interest rate of 5%. Each note originally had a maturity date of August 1, 2019. The Company finalized an eighteen-month extension to March 1, 2021.The Company is working with the lender for an additional extension of the promissory notes. The promissory notes have an aggregate outstanding balance of approximately $67,000 at September 30, 2021 and December 31, 2020. The Company has not made payments on this note since February 10, 2020, due to COVID-19, resulting in accrued interest of approximately $5,000.

On March 27, 2020, the Company issued a demand note in the principal amount of $500,000 to FWHC Bridge, LLC (the “Investor”) in exchange for a loan made by the Investor in such amount to cover the Company’s working capital needs. Subsequently on April 9, 2020, in exchange for an additional loan of $500,000 made by the Investor to the Company, the Company amended and restated the demand note to reflect a new principal amount of $1,000,000, which became the A&R Note (see Note 11-”Debt” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

F-15

Paycheck Protection Program

On April 29, 2020, the Company issued a promissory note in the principal amount of $809,082 to the Bank of Tampa in connection with a loan in such amount made under the Paycheck Protection Program (“PPP Loan”). The PPP Loan bears an interest rate of 1% per annum and matures on April 29, 2022. The Company elected to use a 24-week Covered Period, per the SBA Paycheck Protection Program guidelines, which ended on October 14, 2020.

The Company could apply for loan forgiveness in an amount equal to the sum of the following costs incurred by the Company:

1) payroll costs;

2) any payment of interest on covered mortgage obligations;

3) any payment on a covered rent obligation; and

4) any covered utility payment

The Company received notification from the Small Business Administration (“SBA”), dated August 17, 2021, notifying it that $689,974 in principal and $8,847 in interest was forgiven under the guidelines of the Paycheck Protection Program. As of September 30, 2021, the current balance is $105,878 with $405 in interest payable.

Note 10 – Derivative Liabilities

The Company’s derivative liabilities are classified within Level 3 of the fair value hierarchy because certain unobservable inputs were used in the valuation models. These assumptions included estimated future stock prices, potential down-round financings for the Warrants, and potential redemptions for the Redemption Put Liability.

The following are rollforwards of the liabilities during the nine months ended September 30, 2020:

Schedule of Fair Value, Liabilities Measured On Recurring Basis

Derivative Liability - Warrants
Balance at December 31, 2019$315,855
Series D Warrant reclass from equity to liability classification509,762
Warrants issued with modification of Horne Note198,994
Warrants issued with April 17, 2020 financing6,148,816
Fair value adjustments(2,986,853)
Warrant reclassification from liability to equity classification(4,186,574)
Balance at September 30, 2020$

F-16

Redemption Put Liability   
    
Balance at December 31, 2019 $267,399 
Issuance of Series D Convertible Preferred Stock  5,306 
Fair value adjustments  (272,705)
Balance at September 30, 2020 $ 

(1)The Company did not have any assets or liabilities measured at fair value using Level 1 or 2 of the fair value hierarchy as of September 30, 2020.

(2)Upon the closing of a Qualified Financing on September 11, 2020, the Derivative Liability- Warrants were reclassed to stockholder’s equity.

(3)The Series D Preferred Stock was converted into common stock on July 28, 2020 at which time the Derivative Put Liability was no longer applicable, and its fair value as adjusted to zero and the extinguishment was recorded to income.

Derivative Liability- Warrants

Series B Warrants

As part of the April 2020 Offering, the holders of the Series B Warrants agreed to terminate anti-dilution price protection in their warrants and adjusted the exercise price to equal the price per share at which shares of preferred stock are offered for purchase in a Qualified Financing. The modification resulted in an increase of approximately $75,000 to the fair value of the derivative liability related to the Series B Warrants. In addition, the Company recorded a change in fair market value of approximately $317,000 to the fair value of the derivative liability before the reclass to equity.

Upon the closing of a Qualified Financing, which occurred on September 11, 2020, the exercise price of the Series B Warrants became fixed at $0.014 and the warrants then met the conditions for equity classification. Consequently, they were revalued as of the date of the Qualified Financing using a Black Scholes valuation technique with the following assumptions: Trading market price - $0.027, estimated exercise price - $0.014, volatility - 260%, risk free rate - 0.13% and an estimated remaining term of 1.33 years. The fair value of the Series B Warrants totaling $73,805 was then reclassed from a derivative liability to stockholders’ equity.

Series D Warrants

In conjunction with the Series D Preferred Financing, the Company originally issued Series D warrants to purchase 14,669,757 shares of Common Stock with an exercise price of $0.75 per share. At inception, the Series D warrants met all the criteria to be classified as equity. As part of the April 2020 Offering, the exercise price of the Series D Warrants was reduced to the price per share at which shares of preferred stock are offered for purchase in a Qualified Financing. The modification of the exercise price resulted in the warrants requiring liability classification. The Series D Warrants were measured at fair value before and after the modification, resulting in a fair market value of approximately $510,000 when the warrants were reclassified to a liability on July 28, 2020.

Upon the closing of a Qualified Financing, which occurred on September 11, 2020, the exercise price of the Series D Warrants became fixed at $0.014 and the warrants then met the conditions for equity classification. Consequently, the Series D Warrants were revalued as of the date of the Qualified Financing using a Black Scholes valuation technique with the following assumptions: Trading market price - $0.027, estimated exercise price - $0.014, volatility - 111%, risk free rate - 0.67% and an estimated term of 9.2 years. The fair value of the Series D Warrants totaling $337,400 was then reclassed from a derivative liability to stockholders’ equity.

Horne Warrants

On April 23, 2020, Horne Management, LLC agreed to convert the related notes plus accrued interest into (i) 4,368,278 shares of common stock of the Company and (ii) a ten-year warrant to purchase up to an equivalent number of shares of the Company’s common stock with such conversion to be effective as of April 17, 2020. The warrant will have an exercise price equal to the price per share at which securities are offered to investors for purchase at the Qualified Financing. The revised exercise price caused the warrants to require liability classification at fair value and the warrants were valued using a Lattice model with the following assumptions: Trading market price- $0.05, estimated exercise price- $0.014, volatility- 101%, risk free rate- 0.65% and an estimated term of 10 years. At inception, the estimated fair value of the Horne Warrants was approximately $199,000.

Upon the closing of a Qualified Financing, which occurred on September 11, 2020, the exercise price of the Series D Warrants became fixed at $0.014 and the warrants then met the conditions for equity classification. Consequently, the Horne Warrants were revalued as of the date of the Qualified Financing using a Lattice valuation technique with the following assumptions: Trading market price- $0.027, estimated exercise price- $0.014, volatility- 103%, risk free rate- 0.67% and an estimated term of 10 years. The fair value of the Horne Warrants totaling $107,123 was then reclassed from a derivative liability to stockholders’ equity.

April Bridge Loan and Converted Advance Warrants

The April 2020 Offering entitled the investors to warrants with the right to purchase up to 100% of the aggregate number of shares of Common Stock into which the Purchaser’s Note may ultimately be converted. The Company also received a $1,000,000 advance which was converted into a Converted Advance Note and Converted Advance Warrants in April 2020. The Converted Advance Warrants entitle the holder to purchase up to 200% of the aggregate number of shares of Common Stock into which the Converted Advanced Note may ultimately be converted.

The Company received an aggregate of $2,842,695 in gross proceeds through the April Offering and an advance of $1,000,000 (A&R Note) which was converted into an Advance Note on April 17, 2020. The Company expected the price per share at which securities would be offered for purchase in the Qualified Financing to be $0.014 resulting in the assumption there would be approximately 203,050,000 and 142,857,000 shares issuable upon exercise of the Purchaser Warrants and the Converted Advance Warrants, respectively. The warrants were valued using a Lattice model with the following assumptions: Trading market price - $0.05, estimated exercise price - $0.014, volatility - 103%, risk free rate- 0.65% and an estimated term of 10 years. At inception, the estimated fair value of the Purchaser Warrants and the Converted Advance Warrants was approximately $3,279,000 and $2,869,000, respectively for a total of approximately $6,149,000.

Upon the closing of a Qualified Financing, which occurred on September 11, 2020, the exercise price of the Purchaser and Converted Advance Warrants became fixed at $0.014 and the Company then had sufficient authorized and unissued shares available to satisfy all their commitments under their equity-linked contracts. There are 212,821,929 and 150,324,857 shares issuable upon exercise of the Purchaser and the Converted Advance Warrants, respectively. The Warrants were revalued as of the date of the Qualified Financing using a Lattice valuation technique with the following assumptions: Trading market price - $0.027, estimated exercise price - $0.014, volatility - 107%, risk free rate - 0.67% and an estimated term of 10 years. The fair value of the Warrants of $3,668,247 was then reclassed from a derivative liability to stockholders’ equity.

When the Company entered into the April Offering and revised the exercise price of their warrants to the price per share at which shares of preferred stock are offered for purchase in a Qualified Financing, they no longer had sufficient authorized and unissued shares available to satisfy all their commitments to issue shares under their equity-linked contracts. The Company adopted the sequencing approach based on the earliest issuance date. Therefore, warrants issued before the April Offering did not require liability classification, while Warrants issued with the April financing, or subsequently, were classified as liabilities until such time the Company had sufficient authorized shares.

At December 31, 2019, due to the down round provision contained in the warrants, which could provide for the issuance of additional warrant shares as well as a reduction in the exercise price, the model also considered subjective assumptions related to the shares that would be issued in a down-round financing and the potential adjustment to the exercise price. On April 17, 2020, the holders of the warrants agreed to terminate all anti-dilution price protections in their warrants.

F-17

The derivative liability has been remeasured to fair value at the end of each reporting period and the change in fair value, of approximately $5,869,102 and ($2,986,853), has been recorded as a component of other income (expense) in the Company’s consolidated statement of operations for the three and nine months ended September 30, 2020, respectively. For the three month period ended September 30, 2020, the derivative liability has been remeasured to fair value at September 11, 2020 and then converted to equity due to the Qualified Financing and fixed as all derivative liabilities were converted.

The fair value of the derivative liability included on the consolidated balance sheet was approximately $0 and $316,000 as of September 30, 2020 and December 31, 2019, respectively.

In conjunction with the Series D Preferred financing (See Note 12), the Company offered the Series B warrant holders the option to exchange their warrants on the basis of 1 warrant for 0.40 common shares. Warrant holders chose to exchange 1,007,813 warrants with a fair value of approximately $75,000 for 403,125 shares of common stock with a fair value of approximately $73,000. On the date of the exchange, the Series B Warrants were first adjusted to fair value with the change in fair value being recorded in earnings.

Redemption Put Liability

As described in Note 12, the redemption put provision embedded in the Series D financing required bifurcation and measurement at fair value as a derivative. If the redemption put provision is triggered, it allows either payment in cash or the issuance of “Trigger Event Warrants”. Accordingly, the fair value of the Redemption put liability considered management’s estimate of the probability of cash payment versus payment in Trigger Event Warrants and was valued using a Monte Carlo Simulation which uses randomly generated stock-price paths obtained through a Geometric Brownian Motion stock price simulation. The fair value of the redemption provision was significantly influenced by the fair value of the Company’s stock price, stock price volatility, changes in interest rates and management’s assumptions related to the redemption factor. On July 28, 2020, the Series D Preferred Stock was converted into Common Stock, at which time the redemption put was no longer applicable and the fair value of the redemption put was adjusted to zero.

The fair market value of the redemption put liability at inceptionwas approximately $614,000which was recorded as a liability and remeasured to fair value at the end of each reporting period. The change in fair value of approximately $98,000 and $273,000 has been recorded as a component of other income (expense) in the Company’s consolidated statement of operations for the three and nine months ended September 30, 2020, respectively. The fair value of the redemption put liability included on the consolidated balance sheet was approximately $0 and $267,000 as of September 30, 2020 and December 31, 2019, respectively.

The Company did not have any assets or liabilities measured at fair value using Level 1 or 2 of the fair value hierarchy as of December 31, 2020 (see Note 12- “Derivative Liability-Warrants and Redemption Put” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

Note 11 - Common Stock Warrants

A summary of the Company’s warrant issuance activity and related information for the period ended September 30, 2021 and 2020 is as follows:

Summary of Warrant Activity

   Shares  Weighted Average Exercise Price  Weighted Average Remaining Contractual Life 
Outstanding and exercisable at December 31, 2019  44,806,076  $0.78   4.59 
Issued  368,325,486   0.015   10.30 
Total outstanding at September 30, 2020  413,131,562   0.09   9.79 
             
Outstanding and exercisable at December 31, 2020  413,423,972  $0.015  10.30 
Expired  (5,783,189) $0.33    
Issued  0   0    
Total outstanding and exercisable at September 30, 2021  407,640,783  $0.58   8.42 

F-18

The fair value of all warrants issued are determined by using the Black-Scholes valuation technique and were assigned based on the relative fair value of both the common stock and the warrants issued. The inputs used in the Black-Scholes valuation technique to value each of the warrants as of their respective issue dates are as follows:

Schedule of Assumptions for Warrants

Event Description Date  Number of Warrants  H-CYTE Stock Price  Exercise Price of Warrant  Grant Date Fair Value  Life of Warrant  Risk Free Rate of Return (%)  Annualized Volatility Rate (%) 
Short-term note, related party  1/13/2020   268,571  $0.12  $0.75  $0.07   3 years   1.60   145.76 
Private placement of Series D Convertible Preferred Stock  1/17/2020   244,996  $0.15  $0.75  $0.13   10 years   1.84   144.30 
Granted for bridge financing  4/8/2020   296,875  $0.05  $0.40  $0.04   3 years   0.34   131.82 
Short-term note, related party conversion  4/17/2020   4,368,278  $0.05  $0.014  $0.05   10 years   0.65   100.64 
Granted for bridge financing  9/11/2020   364,439,176  $0.05  $0.014  $0.017   10 years   0.65   96.97 

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

Note 12 - Series D Convertible Preferred Stock

On November 15, 2019, the Company entered into a securities purchase agreement with selected accredited investors whereby the Company offered (i) up to 238,871 shares of Series D Convertible Preferred Stock the (“Series D Shares”) at a price of $40.817 per share and (ii) a ten-year warrant (the “Series D Warrant”) to purchase 14,669,757 shares of common stock. The Series D Warrants are exercisable for a period of 10 years from issuance at an initial exercise price of $0.75 per share, subject to adjustment for traditional equity restructurings and reorganizations.

On November 21, 2019, the Company entered into a securities purchase agreement with FWHC Holdings, LLC (“FWHC”) an accredited investor for the purchase of 146,998 shares of Series D Convertible Preferred Stock, par value $0.001 per share and the Series D Warrant (the “FWHC Investment”; see note 14 - “Mezzanine Equity and Series D Convertible Preferred Stock” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

For the nine months ended September 30, 2021 and 2020, the Company recorded $0 and $278,476, respectively, in deemed dividends on the Series D Convertible Preferred Stock in accordance with the 8% stated dividend resulting in a total balance of Series D Convertible Preferred stock of $6,281,433 at September 30, 2020. All outstanding shares of Series D Convertible Preferred Stock were converted into 15,773,363 shares of Common Stock on July 28, 2020. The conversion was pursuant to a mandatory conversion triggered by the majority holder of the Series D Convertible Preferred Stock as set forth in the Certificate of Designations.

As of December 31, 2020, the Company does not have any Series D Convertible Preferred Stock outstanding (see Note 9 - “Equity Transactions” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K).

Schedule of Shares Outstanding

Note 13 – Income Taxes

The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC Topic 740, “Income Taxes”. Under the liability method, deferred taxes are determined based on temporary differences between the financial statement and tax bases of assets and liabilities using tax rates expected to be in effect during the years in which the difference turns around. The Company accounts for interest and penalties on income taxes as income tax expense. A valuation allowance is recorded when it is more likely than not that a tax benefit will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies.

From inception to September 30, 2021, the Company has incurred net losses and, therefore, has no current income tax liability. The net deferred tax asset generated by these losses is fully offset by a valuation allowance as of September 30, 2021 and December 31, 2020. Management of the Company evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and determined that it is more likely than not that the Company will not recognize the full benefits of the deferred tax assets.

The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. There are 0 uncertain tax positions at September 30, 2021 and December 31, 2020. The Company has not undergone any tax examinations since inception.

Deferred tax assets and liabilities consist of the following at December 31:

Schedule of Deferred Tax Assets and Liabilities

Note 14 - Subsequent Events

The Company has evaluated subsequent events through November 11, 2021 and has determined that there have been no events that would require adjustments to or disclosure in the September 30, 2021 interim Consolidated Financial Statements other than those disclosed in this Form 10-Q.

On October 14, 2021, H-Cyte, Inc. (the “Company”) entered into the Second Closing Bring Down Agreement (the “October 2021 Note Purchase Agreement”) whereby the five (5) investors who had entered into the April 2021 Note Purchase Agreement purchased new notes in the Company in the aggregate principal amount of $750,000. The Notes bear an annual interest rate of 8% and are due and payable on March 31, 2022. The Notes are convertible into shares of Common Stock at a discount of 20% of the price paid for such New Securities in the next financing that meets the definition of a Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by all the assets of the Company under a security agreement with the Holders. The lead investor of the October 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $437,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $7,500 as part of the October 2021 Note Purchase Agreement.  

F-19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors and Shareholders of

Medovex Corporation and Subsidiary

H-CYTE, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Medovex Corporation and SubsidiaryH-CYTE, Inc. (the “Company”) as of December 31, 20152020 and 2014,2019, and the related consolidated statements of operations, changes in stockholders’ equitydeficit and cash flows for the years then ended. ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has negative working capital, has an accumulated deficit, has a history of significant operating losses, and has a history of negative operating cash flow. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding this matter are also discussed in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s consolidated financial statements based on our audits.


We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. OurAs part of our audits included considerationwe are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includesOur audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.


In our opinion,

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements referredthat were communicated or required to above present fairly, in allbe communicated to the audit committee and that: (1) relate to accounts or disclosures that are material respects,to the financial position of Medovex Corporation and Subsidiary, as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.


The accompanying consolidated financial statements have been prepared assuming thatand (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the Company will continueconsolidated financial statements, taken as a going concern. whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Debt and equity accounting considerations

As discusseddescribed in NoteNotes 9, 12 and 14 to the consolidated financial statements, the Company had various debt and equity transactions that required accounting considerations, significant estimates and judgements around certain features and the possibility of conversion or redemption, the valuation of certain components of the financings, including the valuation around certain freestanding and embedded derivatives.

The Company determined that warrants issued in connection with certain financings required derivative liability classification. These warrants were initially measured at fair value and subsequently have been remeasured to fair value at each reporting period, prior to their reclassification to equity in September 2020 at the close of the Company’s productsSeries A Preferred Stock Rights Offering.

The Company determined that due to the nature of the financing features, mezzanine equity classification was appropriate for the Series D Convertible preferred stock itself and the redemption put required derivative liability classification. The redemption put liability was initially measured at fair value and subsequently has been remeasured at fair value at each reporting period, prior to their reclassification to equity in July 2020 when the Series D Convertible Preferred Stock was called and converted to common stock.

There is no current observable market for these types of derivatives and, as such, the Company determined the fair value of the freestanding instruments or embedded derivatives using the Black-Scholes-Merton option pricing model or a binomial lattice model to measure the fair value of the debt and/or equity instrument both with and without the embedded feature.

We identified the accounting considerations and related valuations, including the related fair value determinations of the various debt and equity financings and classification of such as a critical audit matter. The principal considerations for our determination were: (1) the accounting consideration in determining the nature of the various features and weighting of evidence (2) the evaluation of the potential derivatives and potential bifurcation in the instruments, and (3) considerations related to the determination of the fair value of the various debt and equity instruments and the conversion and redemption features that include complex valuation models and assumptions utilized by management. Auditing these elements is especially challenging and requires auditor judgement due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

Changes in the accounting determinations and the related valuation assumptions can have a significant impact on the valuation of the embedded and freestanding derivative liabilities. For example, all other things being equal, generally, an increase in the Company’s stock price, change of control probability, risk-adjusted yields term to maturity/conversion or stock price volatility increases the value of the derivative liability.

Our audit procedures related to management’s conclusion on the evaluation and related valuation of freestanding and embedded derivatives, included the following, among others: (1) Utilized personnel with specialized knowledge and skill in technical accounting to assist in: (i) evaluating the relevant terms and conditions of the various financings, and (ii) assessing the appropriateness of conclusions reached by the Company with respect to the accounting for the convertible debt/equity, and the assessment and accounting for potential derivatives. (2) We used a valuation specialist to assist us in evaluating the Company’s models, valuation methodology, and significant assumptions used in the fair value estimates.

/s/ Frazier & Deeter, LLC

Tampa, Florida

March 25, 2021

We have served as the Company’s auditor since 2018.

F-20

H-Cyte, Inc

Consolidated Balance Sheets

(Audited)

  2020  2019 
  December 31, 
  2020  2019 
Assets        
         
Current Assets        
Cash $1,640,645  $1,424,096 
Accounts receivable  -   22,667 
Other receivables  22,123   18,673 
Prepaid expenses  94,434   810,143 
Total Current Assets  1,757,202   2,275,579 
         
Right -of-use asset  278,552   738,453 
Property and equipment, net  139,175   219,703 
Other assets  29,239   36,877 
Total Assets $2,204,168  $3,270,612 
         
Liabilities, Mezzanine Equity, and Stockholders’ Deficit        
         
Current Liabilities        
Interest payable $6,898  $53,198 
Accounts payable  1,006,968   1,485,542 
Accrued liabilities  276,415   324,984 
Other current liabilities  154,812   175,181 
Short-term notes, related party  -   1,635,000 
Short-term convertible notes payable  -   424,615 
Notes payable, current portion  67,444   66,836 
Dividend payable  -   108,641 
PPP Loan, current portion  606,811   - 
Deferred revenue  634,149   1,046,156 
Lease liability, current portion  139,189   453,734 
Total Current Liabilities  2,892,686   5,773,887 
         
Long-term Liabilities        
Lease liability, net of current portion  157,050   302,175 
Notes payable, net of current portion  -   11,545 
Derivative liability - warrants  -   315,855 
Redemption put liability  -   267,399 
PPP Loan, net of current portion  202,271   - 
Total Long-term Liabilities  359,321   896,974 
         
Total Liabilities  3,252,007   6,670,861 
         
Commitments and Contingencies (Note 10)  -   - 
         
Mezzanine Equity        
Series D Convertible Preferred Stock - $.001 par value: 238,871 shares authorized, 0 shares and 146,998 shares issued and outstanding at December 31, 2020 and 2019, respectively  -   6,060,493 
Total Mezzanine Equity        
         
Stockholders’ Equity (Deficit)        
Series A Preferred Stock - $.001 par value: 1,000,000,000 shares authorized, 538,109,409 and 0 shares issued and outstanding at December 31, 2020 and, 2019, respectively  538,109   - 
Series B Convertible Preferred Stock - $.001 par value: 10,000 shares authorized; 0 and 6,100 shares issued and outstanding at December 31, 2020 and 2019, respectively  -   6 
Common stock - $.001 par value: 1,600,000,000 shares authorized, 127,159,464 and 99,768,704 shares issued and outstanding at December 31, 2020 and  2019, respectively  127,159   99,769 
Additional paid-in capital  42,515,999   28,172,146 
Accumulated deficit  (43,858,974)  (37,362,531)
Non-controlling interest  (370,132)  (370,132)
Total Stockholders’ Deficit  (1,047,839)  (9,460,742)
         
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit $2,204,168  $3,270,612 

The accompanying notes are being developedan integral part of these financial statements.

F-21

H-Cyte, Inc

Consolidated Statements of Operations

  2020  2019 
  December 31, 
  2020  2019 
Revenues $2,150,672  $8,346,858 
Cost of Sales�� (766,957)  (2,052,807)
Gross Profit  1,383,715   6,294,051 
         
Operating Expenses        
Salaries and related costs $3,198,867  $8,646,471 
Other general and administrative  3,746,784   6,847,335 
Research and development  1,152,065   106,214 
Advertising  296,873   4,909,724 
Loss on impairment  -   15,508,401 
Depreciation and amortization  81,470   834,291 
Total Operating Expenses  8,476,059   36,852,436 
         
Operating Loss  (7,092,344)  (30,558,385)
         
Other Income (Expense)        
Other expense  (86,816)  (124,118)
Interest expense  (1,462,750)  (299,331)
Change in fair value of redemption put liability  272,704   346,696 
Change in fair value of derivative liability - warrants  2,986,854   827,260 
Gain on extinguishment of short-term notes, related party  1,300,088   - 
Warrant modification expense  (70,851)  - 
Loss on derivative instrument  (2,306,121)  - 
Total Other Income (Expense)  633,108   750,507 
         
Net Loss $(6,459,236) $(29,807,878)
         
Accrued dividends on Series B Convertible Preferred Stock  44,456   84,939 
Finance costs on issuance of Series D Convertible Preferred Stock  -   66,265 
Deemed dividend on adjustment to exercise price on convertible debt and certain warrants  -   287,542 
Deemed dividend on Series D Convertible Preferred Stock  277,719   2,916,813 
Deemed dividend on beneficial conversion features  -   32,592 
Net Loss attributable to common stockholders $(6,781,411) $(33,196,029)
         
Loss per share - Basic and diluted $(0.06) $(0.34)
Weighted average outstanding shares - basic and diluted  111,491,261   96,370,562 

The accompanying notes are an integral part of these financial statements.

F-22

H-Cyte, Inc

Consolidated Statements of Stockholders’ Deficit

For the years ended December 31, 2020 and have not generated material revenues2019

  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Interest  Deficit 
  

Preferred

Series A Stock

  

Preferred

Series B Stock

  Common Stock  

Additional

Paid-in

  Accumulated  Non-Controlling  

Total

Stockholders’

 
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Interest  Deficit 
Balances - December 31, 2018    $     $   33,661,388  $33,661  $3,566,339  $(9,296,408) $(370,132) $(6,066,540)
Purchase accounting adjustments        9,250   9   24,717,270   24,717   12,657,182         12,681,908 
Adjustment of exercise price on certain warrants                                        
Reclassification of Series B warrants to equity                                        
Reclassification of Series D warrants to equity                                      
Conversion of Series B Convertible Preferred Stock to Common Stock                                        
Conversion of Series B Convertible Preferred Stock to Common Stock, Shares                                        
Conversion of Series D Convertible Preferred Stock to Common Stock                                        
Conversion of Series D Convertible Preferred Stock to Common Stock, Shares                                        
Conversion of Short-term convertible notes payable - related party                                        
Conversion of Short-term convertible notes payable - related party, Shares                                        
Conversion of April Advance notes - related parties                                        
Conversion of April Advance notes - related parties, Shares                                        
Conversion of Short-term convertible notes to Preferred Stock                                        
Conversion of Short-term convertible notes to Preferred Stock, Shares                                        
Issuance of warrants pursuant to conversion of Short-term convertible notes                                        
Issuance of common stock in connection with extinguishment of short-term notes, related party                                        
Issuance of common stock in connection with extinguishment of short-term notes, related party, Shares                                        
Deemed dividend on Series D Convertible Preferred Stock at issuance                                        
Reclassification of related party warrants to equity                                        
Issuance of warrants pursuant to extension of convertible short-term notes, related party                                        
Issuance of Series A Preferred Stock in Rights Offering, net of issuance costs                                        
Issuance of Series A Preferred Stock in Rights Offering, net of issuance costs, Shares                                        
Conversion of Series A Preferred Stock to Common Stock                                       
Conversion of Series A Preferred Stock to Common Stock, Shares                                        
Conversion of warrants to Common Stock                          ��            
Conversion of warrants to Common Stock, Shares                                        
Adjustment for assets and liabilities not included in Merger                       5,258,300      5,258,300 
Issuance of common stock in connection with private placement offering              17,700,000   17,700   4,402,087         4,419,787 
Issuance of warrants in connection with private placement offering                    2,663,797         2,663,797 
Finance costs on issuance of Series B Convertible Preferred Stock and related warrants                    (132,513)        (132,513)
Issuance of common stock pursuant to conversion of short-term debt              500,000   500   125,437         125,937 
Issuance of warrants pursuant to conversion of short-term debt                    74,063         74,063 
Issuance of additional exchange shares              17,263,889   17,264   (17,264)         
Issuance of common stock pursuant to conversion of convertible short-term debt              250,000   250   99,750         100,000 
Issuance of common stock pursuant to warrant exchange              403,125   403   72,160         72,563 
Conversion of Series B Convertible Preferred Stock        (2,650)  (2)  715,279   716   (714)         
Repurchase of Series B Convertible Preferred Stock        (500)  (1)        (49,999)        (50,000)
Issuance of common stock to pay accrued dividends on Series B Convertible Preferred Stock              50,367   50   19,376         19,426 
Issuance of common stock to pay accrued interest on convertible short-term debt              1,667   2   665         667 
Issuance of common stock in exchange for consulting fees incurred              280,085   280   95,253         95,533 
Deemed dividend on adjustment to exercise price on convertible debt and certain warrants                    287,542   (287,542)      
Deemed dividend on beneficial conversion features                    32,592   (32,592)      
Issuance of common stock per restricted stock award to executive              4,225,634   4,226   1,686,028         1,690,254 
Issuance of warrants pursuant to short-term notes, related party                    56,378         56,378 
Issuance of warrants pursuant to extension of maturity date on convertible debt                    106,158         106,158 
Deemed dividend on Series D Convertible Preferred Stock                    (60,493)  (3,130,146)     (3,190,639)
Beneficial conversion of Series D Convertible Preferred Stock                    623,045         623,045 
Finance costs on issuance of Series D Convertible Preferred Stock and related warrants                    (37,618)  (66,265)     (103,883)
Issuance of warrants pursuant to private placement of Series D Convertible Preferred Stock                    1,893,006         1,893,006 
Stock based compensation                    94,828         94,828 
Accrued dividends on Series B Convertible Preferred Stock                    (84,939)        (84,939)
Net loss                       (29,807,878)     (29,807,878)
Balances – December 31, 2019    $-   6,100  $6   99,768,704  $99,769  $28,172,146  $(37,362,531) $(370,132) $(9,460,742)

  

Preferred

Series A Stock

  

Preferred

Series B Stock

  Common Stock  

Additional

Paid-in

  Accumulated  Non-Controlling  

Total

Stockholders’

 
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Interest  Deficit 
Balances - December 31, 2019    $-   6,100  $6   99,768,704  $99,769  $28,172,146  $(37,362,531) $(370,132) $  (9,460,742)
Beginning balance    $-   6,100  $6   99,768,704  $99,769  $28,172,146  $(37,362,531) $(370,132) $  (9,460,742)
Accrued dividends on Series B Convertible Preferred Stock                    (44,456)        (44,456)
Adjustment of exercise price on certain warrants                    (438,913)        (438,913)
Reclassification of Series B warrants to equity                    73,805          73,805 
Reclassification of Series D warrants to equity                    337,400         337,400 
Conversion of Series B Convertible Preferred Stock to Common Stock        (6,100)  (6)  2,119,713   2,120   150,983         153,097 
Conversion of Series D Convertible Preferred Stock to Common Stock              15,773,363   15,773   6,422,441         6,438,214 
Conversion of Short-term convertible notes payable - related party  35,860,079   35,860               412,541         448,401 
Conversion of April Advance notes - related parties  198,194,248   198,194               2,579,961         2,778,155 
Conversion of Short-term convertible notes to Preferred Stock  89,790,089   89,790               1,167,271         1,257,061 
Issuance of warrants pursuant to conversion of Short-term convertible notes                    1,004,252         1,004,252 
Issuance of common stock in connection with extinguishment of short-term notes, related party              4,368,278   4,368   214,046         218,414 
Deemed dividend on Series D Convertible Preferred Stock                    (277,719)        (277,719)
Deemed dividend on Series D Convertible Preferred Stock at issuance                       (37,207)     (37,207)
Reclassification of related party warrants to equity                    107,123         107,123 
Issuance of Common Stock in exchange for consulting fees incurred              109,375   109   34,891         35,000 
Issuance of warrants pursuant to private placement of Series D Convertible Preferred Stock                      31,902         31,902 
Issuance of warrants pursuant to extension of convertible short-term notes, related party                    17,636         17,636 
Issuance of warrants pursuant to extension of maturity date on convertible debt                    6,595         6,595 
Issuance of Series A Preferred Stock in Rights Offering, net of issuance costs  218,285,024   218,285               2,517,451         2,735,736 
Stock based compensation                    643         643 
Conversion of Series A Preferred Stock to Common Stock  (4,020,031)  (4,020)        4,020,031   4,020             
Conversion of warrants to Common Stock              1,000,000   1,000   26,000         27,000 
Net loss                       (6,459,236)     (6,459,236)
Balances - December 31, 2020�� 538,109,409  $538,109     $-   127,159,464  $127,159  $42,515,999  $(43,858,974) $(370,132) $(1,047,839)
Ending balance  538,109,409  $538,109     $-   127,159,464  $127,159  $42,515,999  $(43,858,974) $(370,132) $(1,047,839)

The accompanying notes are an integral part of these financial statements.

F-23

H-Cyte, Inc

Consolidated Statements of Cash Flows

  2020  2019 
  December 31, 
  2020  2019 
Cash Flows from Operating Activities        
Net loss $(6,459,236) $(29,807,878)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  81,470   834,291 
Loss on impairment     15,508,401 
Loss on asset disposal  1,342    
Amortization of debt discount  1,395,007   152,342 
Interest and penalties on extension of short-term convertible notes     85,365 
Stock-based compensation  643   1,785,082 
Loss on write-off of inventory     131,455 
Common stock issued for consulting services  35,000   95,533 
Income from change in fair value adjustment of derivative liability - warrants  (2,986,854)  (827,260)
Change in fair value of redemption put liability  (272,704)  (346,696)
Change in fair value of Derivative Liability - Day one derivative loss  2,306,121    
Issuance of warrants to extend short-term debt, related party  17,636    
Bad debt expense  6,000   90,137 
Issuance of warrants pursuant to extension of maturity date on convertible debt  6,595   106,158 
Issuance of Common Stock pursuant to warrant exchange  27,000    
Gain on extinguishment of short-term notes, related party  (1,300,088)   
Warrant modification expense  70,851    
Changes in operating assets and liabilities, net of purchase transaction:        
Accounts receivable  16,667   48,195 
Other receivables  (3,450)  (13,529)
Prepaid expenses and other assets  723,578   (697,529)
Interest payable  36,196   (10,592)
Accounts payable  (478,572)  121,907 
Accrued liabilities  (48,569)  (263,874)
Other current liabilities  (20,369)  (2,875)
Deferred revenue  (412,007)  720,092 
         
Net Cash Used in Operating Activities  (7,257,743)  (12,291,275)
         
Cash Flows from Investing Activities        
Purchase of property and equipment  (2,284)  (20,686)
Purchase of business, net of cash acquired     (302,710)
Net assets not included in purchase transaction     (69,629)
Net Cash Used in Investing Activities  (2,284)  (393,025)
         
Cash Flows from Financing Activities        
Proceeds from short-term related party notes     1,635,000 
Payment of dividends     (14,684)
Proceeds from Paycheck Protection Plan  809,082    
Payment on debt obligations  (10,937)  (370,636)
Proceeds from common stock, net of issuance costs     4,337,106 
Proceeds from Secured Convertible Promissory Notes  3,842,695   2,613,965 
Proceeds from issuance of Series D Convertible Preferred Stock, net of issuance costs  100,000   5,888,017 
Proceeds from Preferred stock Series A, net of issuance costs  2,735,736    
Payment on Preferred stock Series B Convertible Preferred Stock redemption     (50,000)
Net Cash Provided by Financing Activities  7,476,576   14,038,768 
         
Net Increase in Cash  216,549   1,354,468 
         
Cash - Beginning of period  1,424,096   69,628 
         
Cash - End of period $1,640,645  $1,424,096 
         
Supplementary Cash Flow Information        
Cash paid for interest $33,136  $197,500 
         
Non-cash investing and financing activities        
Common stock issued to pay accrued dividends     19,426 
Deemed dividend on adjustment to exercise price on convertible debt and certain warrants     287,542 
Deemed dividend on beneficial conversion feature     32,592 
Deemed dividend on Series D Convertible Preferred Stock  314,926   3,190,639 
Conversion of debt obligations to Common Stock     225,937 
Conversion of Series D Convertible Preferred Stock and accrued dividends to Common Stock  6,438,214   623,045 
Reclassification of related party warrants to equity  107,123    
Reclassification of Series B warrants to equity  73,805    
Reclassification of Series D warrants to equity  337,400    
Conversion of debt obligations to warrants     74,063 
Issuance of warrants pursuant to note payable, related party     56,378 
Conversion of Series B Convertible Preferred Stock and accrued dividends to Common Stock  153,097    
Conversion of Short-term convertible notes payable, related party  448,401    
Conversion of April Advance notes-related parties  2,778,155    
Conversion of Short-term convertible notes to Preferred Stock  1,257,061    
Issuance of warrants pursuant to conversion of short-term convertible notes  1,004,252    
Dividends accrued on Series B Convertible Preferred Stock  44,456   65,512 
Adjustment of exercise price on certain warrants  438,913    
Issuance of Common Stock in connection with extinguishment of short-term notes, related party  218,414    
Issuance of warrants pursuant to private placement of Series D Convertible Preferred Stock  31,902   1,893,006 
Right-of-use asset additions     1,165,785 
Right-of-use liability     1,187,991 

The accompanying notes are an integral part of these financial statements.

F-24

H-Cyte, Inc

Notes to date. AsConsolidated Financial Statements

Note 1 – Description of the Company

H-CYTE, Inc is a result,hybrid-biopharmaceutical company dedicated to developing and delivering new treatments for patients with chronic respiratory and pulmonary disorders. During the last 18 months, the Company has suffered losses sinceevolved into two separate verticals under its inception.Healthcare Medical Biosciences Division with its entrance into the biologics development space (“Biologics Vertical”). This raises substantial doubt aboutnew vertical is complementary to the Company’s abilitycurrent Lung Health Institute (LHI) autologous infusion therapy business (“Infusion Vertical”) and is focused on underserved disease states.

On July 11, 2019, MedoveX Corp. (“MedoveX”) changed its name to continue asH-CYTE, Inc. (“H-CYTE” or the “Company”) by filing a going concern. Management’s plans in regardCertificate of Amendment (the “Amendment”) to these matters are also described in Note 14.the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Secretary of the State of Nevada. The consolidated financial statements do not include any adjustments that might result fromname change and the outcome of this uncertainty.


/s/Frazier & Deeter, LLC
Atlanta, Georgia
April 14, 2016

F-2

MEDOVEX CORP. AND SUBSIDIARY 
CONSOLIDATED BALANCE SHEETS 
       
  December 31, 2015  December 31, 2014 
Assets      
Current Assets      
Cash $1,570,167  $6,684,576 
Accounts receivable, Net  33,045   -- 
Prepaid expenses  169,839   156,730 
Inventory  1,878   -- 
Total Current Assets  1,774,929   6,841,306 
         
Property and Equipment, net of accumulated depreciation  24,838   24,450 
Deposits  2,751   -- 
Developed Technology, net  2,678,571   -- 
Trademark, net  595,000   -- 
Goodwill  6,455,645   -- 
Total Assets $11,531,734  $6,865,756 
         
Liabilities and Stockholders' Equity        
Current Liabilities        
        Accounts payable $278,309  $-- 
Accrued liabilities  100,317   140,678 
Interest payable  76,712   219,429 
Notes payable  134,540   -- 
Total Current Liabilities  589,878   360,107 
Long-Term Liabilities        
        Convertible debt, net of debt discount
  753,914   -- 
Notes payable, net of current portion  164,726   -- 
Deferred rent  491   -- 
Total Long-Term Liabilities  919,131   -- 
Total Liabilities  1,509,009   360,107 
Stockholders' Equity        
Preferred stock - $.001 par value: 500,000 shares authorized, no shares outstanding
  --   -- 
Common stock - $.001 par value: 49,500,000 shares authorized, 11,256,175 and 9,172,480 shares issued at December 31, 2015 and December 31, 2014, respectively, 11,048,203 and 9,172,480 shares outstanding at December 31,  2015 and December 31, 2014, respectively
  11,256   9,173 
Additional paid-in capital  20,144,911   10,106,841 
Accumulated deficit  (10,133,442)  (3,610,365)
Total Stockholders' Equity  10,022,725   6,505,649 
Total Liabilities and Stockholders' Equity $11,531,734  $6,865,756 
See notes to consolidated financial statements
F-3

MEDOVEX CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
  
For the year ended
December 31,
 
  2015  2014 
       
Revenues $33,045  $-- 
Cost of Goods Sold  (25,383)  -- 
Gross Profit  7,662   -- 
         
Operating Expenses        
General and administrative  5,000,727   1,913,648 
Sales & Marketing  102,436   -- 
Research and development  940,179   1,020,703 
Depreciation and amortization  433,098   2,681 
Total Operating Expenses  6,476,440   2,937,032 
         
Operating Loss  (6,468,778)  (2,937,032)
         
Other Expenses        
Interest expense  54,299   -- 
Total Other Expenses  54,299   -- 
         
Net Loss $(6,523,077) $(2,937,032)
         
Basic and diluted net loss per common share $(0.60) $(0.37)
Shares used in computing basic and diluted net loss per share  10,943,675   7,897,117 

See notes to consolidated financial statements
F-4

MEDOVEX CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKEHOLDERS’ EQUITY
For the year ended December 31, 2015 and 2014
                Total 
  Common Stock  Common Stock  Additional  Accumulated Stockholders' 
  Shares  Amount  Subscriptions  Paid-in Capital  Deficit  Equity 
Balance - December 31, 2013
  7,781,175  $7,782  $(100,000) $3,341,991  $(673,333) $2,576,440 
Collection of subscription receivable  --   --   100,000   --   --   100,000 
Issuance of common stock in public offering at $5.75 per unit, completed on December 19,2014, net offering costs      1,391,305       1,391       --       6,730,878       --       6,732,269 
Stock based compensation  --   --   --   33,972   --   33,972 
Net loss  --   --   --   --   (2,937,032)  (2,937,032)
Balance – December 31, 2014  9,172,480  $9,173   --  $10,106,841  $(3,610,365) $6,505,649 
                         
Issuance of common stock to underwriters in January 2015  208,695   208   --   1,083,928   --   1,084,136 
Value of common stock to acquire Streamline on date of closing at $4.50 per share  1,875,000   1,875     --   8,435,625   --   8,437,500 
Stock based compensation  --   --   --   253,659   --   253,659 
Issuance of warrant to Steve                        
Gorlin on November 9 2015  --   --   --   284,858   --   284,858 
Due from shareholder                        
for issuance of convertible debt  --   --   --   (20,000)  --   (20,000)
Net loss  --   --   --   --   (6,523,077)  (6,523,077)
Balance – December 31, 2015
  11,256,175  $11,256   --  $20,144,911  $(10,133,442) $10,022,725 

See notes to consolidated financial statements
F-5

MEDOVEX CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

  
For the year ended
 December 31,
 
  2015  2014 
Cash Flows from Operating Activities      
    Net loss $(6,523,077) $(2,937,032)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation  6,669   2,681 
Amortization of intangibles  426,429   -- 
Amortization of debt discount  38,770     
Stock based compensation  253,659   33,972 
Straight-line rent adjustment  491   -- 
Changes in operating assets and liabilities, net of effects of acquisition:        
    Deposits  (2,751)  -- 
    Accounts receivable  (33,045)  -- 
Prepaid expenses  63,473   (157,478)
Interest payable  76,712   -- 
Accounts payable  (164,144)  104,553 
Accrued liabilities  (125,130)  189,429 
Net Cash Used in Operating Activities  (5,981,944)  (2,759,875)
         
Cash Flows from Investing Activities        
Acquisition of Streamline, Inc., net of cash received  (1,152,291)  -- 
Expenditures for property and equipment  (7,059)  (23,668)
Net Cash Used in Investing Activities  (1,159,350)  (23,668)
         
Cash Flows from Financing Activities        
    Principal payments under note payable obligation  (37,251)  -- 
    Deferred initial public offering costs
  --   29,775 
    Collection of subscription receivable
  --   100,000 
    Proceeds from issuance of warrant  284,858   -- 
    Proceeds from issuance of convertible debt
  695,142   -- 
    Proceeds from issuance of common stock from underwriter’s overallotment  1,084,136   -- 
Proceeds from issuance of common stock in public offering  --   6,732,269 
Net Cash Provided by Financing Activities  2,026,885   6,862,044 
         
Net Increase/(Decrease) in Cash  (5,114,409  4,078,501 
Cash - Beginning of period  6,684,576    2,606,075 
Cash - End of period $1,570,167  $6,684,576 
Non-cash investing and financing activities        
    Financing agreement for insurance policy
 $76,581  $-- 
    Due from shareholder for issuance of convertible debt  20,000     
    Issuance of common stock for acquisition of Streamline
  8,437,500   -- 
Net Non-Cash Investing and Financing Activities $8,534,081  $-- 
See notes to consolidated financial statements
F-6

Note 1 - Organization and Significant Accounting Policies

Description of Business

Medovex Corp. (the “Company” or “Medovex”),Company’s new symbol, HCYT, became effective with FINRA on July 15, 2019. H-CYTE was incorporated in Nevada on July 30, 2013 as SpineZ Corp. (“SpineZ”) and changed its name to Medovex Corp. on March 20, 2014.  Medovex is the parent company of Debride Inc. (“Debride”), which was incorporated under the laws of the State of Florida on

On October 1, 2012.


On September 3, 2013, Debride18, 2018, H-CYTE (formerly named MedoveX) entered into an Asset Purchase Agreement (“APA”) with Regenerative Medicine Solutions, LLC, RMS Shareholder, LLC (“Shareholder”), Lung Institute LLC (“LI”), RMS Lung Institute Management LLC (“RMS LI Management”) and Plan of Merger with SpineZ, a privately owned company with no operations (the “SpineZ Merger”Cognitive Health Institute Tampa, LLC (“CHIT”), (collectively “RMS”). The SpineZ MergerOn January 8, 2019, the APA was effectuatedamended, and the Company acquired certain assets and assumed certain liabilities of RMS as a share exchange transactionreported in whichthe 8-K/A filed in March of 2019. Based on the terms of the APA and its amendment (collectively the “APA”), the former stockholders of Debride exchanged each share that they owned of Debride for 1.936 shares of SpineZ.  As a resultRMS members had voting control of the SpineZ Merger,combined company as of the former ownersclosing of Debride became 53% majority owners of SpineZ.  The Company accounted for thisthe RMS acquisition. For accounting purposes, the acquisition transaction has been treated as a reverse acquisition whereby the Company is deemed to have been acquired by RMS and the historical financial statements prior to the acquisition date of January 8, 2019 now reflect the historical financial statements of RMS.

As of the merger, the consolidated results for H-CYTE include the following wholly-owned subsidiaries: H-CYTE Management, LLC (formerly Blue Zone Health Management, LLC), MedoveX Corp, Cognitive Health Institute, LLC, and recapitalizationLung Institute Tampa, LLC (formerly Blue Zone Lung Tampa, LLC) and the results included Lung Institute Dallas, PLLC (“LI Dallas”), Lung Institute Nashville, PLLC (“LI Nashville”), Lung Institute Pittsburgh, PLLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). H-CYTE Management, LLC is the operator and manager of Debride into SpineZ.the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale.

On September 11, 2020, with the closing of the Rights Offering, FWHC, LLC, FWHC, Bridge, LLC, and FWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company by subsequently owning approximately 61% of the fully diluted shares of the Company (see Notes 8 and 9).

Company’s Two Operating Divisions

The Company has two divisions: the Healthcare Medical Biosciences Division (“which includes the Infusion Vertical and the Biologics Vertical”) and the DenerveX medical device division (“DenerveX”). The Company has decided to focus its available resources on the Medical Biosciences Division as it represents a significantly greater opportunity than the DenerveX division. The Company is a development stage enterpriseno longer manufacturing or selling the DenerveX device but continues to explore possible opportunities to monetize such technology.

Healthcare Medical Biosciences Division (Biosciences Division)

Autologous Infusion Therapy (“Infusion Vertical”)

The Company’s Biosciences includes the Infusion Business that has acquired a patent, patent applicationsdevelops and other intellectual property rights relatingimplements innovative treatment options in autologous cellular therapy (PRP-PBMC) to treat chronic lung disorders. Committed to an individualized patient-centric approach, this division consistently provides oversight and management of the highest quality care to the use,LHI clinics located in Tampa, Nashville, and Scottsdale, while producing positive medical outcomes following the strictest CDC guidelines.

Biotech Development Division (“Biologics Vertical”)

On June 21, 2019, H-CYTE entered into an exclusive product supply agreement with Rion, LLC (“Rion”) to develop and distribute (post FDA approval) a biologic for chronic obstructive pulmonary disease (“COPD”), the fourth leading cause of death in the U.S. Rion has established a novel biologics technology to harness the healing power of the body. Rion’s innovative technology, based on science developed at Mayo Clinic, provides an off-the-shelf platform to enhance healing in soft tissue, musculoskeletal, cardiovascular and neurological organ systems. This agreement provides for a 10-year exclusive and extendable supply agreement with Rion to enable H-CYTE to develop proprietary biologics.

On October 9, 2019, the Company entered into a services agreement with Rion which provides the Company the benefit of Rion’s resources and expertise for the limited purpose of (i) consulting with and assisting H-CYTE in the further research and development for the generation of a new biologic and (ii) subsequently assisting H-CYTE in seeking and obtaining FDA Phase 1 IND clearance for this biologic as necessary. Rion also agrees to consult with H-CYTE in its arrangement for services from third parties unaffiliated with Rion to support research, development, regulatory approval, and commercialization of the DenerveX™ System which consistsbiologic.

With these agreements, Rion will serve as the product supplier and contracted preclinical development arm of the DenerveX Devicebiologic. H-CYTE will control the commercial development and the clinical trial investigation. After conducting the clinical efficacy trials of this biologic, H-CYTE intends to pursue submission of a Biologics License Application (“BLA”) for review by the FDA for treatment of COPD.

F-25

Proprietary Medical Device Business (DenerveX division)

In the first quarter of 2020, the Company made the decision to stop any further efforts to source alternative manufacturing and distributor options or other product relationships for the DenerveX Pro-40 power generator (“DenerveX”).product. Although the Company believes the DenerveX is a device that is intended to be usedtechnology has value, the Company did not believe it would realize value in the treatmentforeseeable future. The Company recorded an impairment charge for intangibles associated with the DenerveX intellectual property and wrote off related inventory balances as of conditions resulting fromDecember 31, 2019. The Company is no longer manufacturing or selling the degeneration of joints in the spine that cause back pain.


In March 2014, SpineZ changed its legal nameDenerveX device but continues to Medovex Corp. and effectuated a 1 for 2 reverse stock split. All share related amounts in the accompanying consolidated financial statements and notes thereto have been retroactively adjustedexplore possible opportunities to reflect this reverse split.

On March 9, 2015, the Board of Directors of MedoveX and Streamline, Inc., a Minnesota corporation (“Streamline”), approved an Agreement and Plan of Merger (the “Merger Agreement”). On March 24, 2015, Streamline shareholders approved the Merger Agreement and the transaction closed immediately thereafter. Under the Merger Agreement, STML Merger Sub, Inc. a wholly-owned subsidiary of MedoveX, merged with Streamline, and thus Streamline became a wholly-owned subsidiary of MedoveX. Streamline is in the business of designing, developing, manufacturing and marketing 510(k) and 510(k) exempt products for use in the medical field.

monetize such technology.

Note 2 -– Basis Of Presentation and Summary of Significant Accounting Policies


Basis of Presentationpresentation

Based on the terms of the APA, the former RMS members had voting control of the combined company as of the closing of the Merger. RMS is deemed to be the acquiring company for accounting purposes and the transaction is accounted for as a reverse acquisition under the acquisition method of accounting for business combinations in accordance with U.S. GAAP. The assets acquired and the liabilities assumed of RMS included as part of the purchase transaction are recorded at historical cost. Accordingly, the assets and liabilities of H-CYTE are recorded as of the Merger closing date at their estimated fair values.

The consolidated balance sheets, consolidated statements of operations, consolidated statements of stockholders’ deficit, and the consolidated statements of cash flows do not reflect the historical financial information related to H-CYTE prior to the Merger as they only reflect the historical financial information related to RMS. For the consolidated statements of stockholders’ deficit, the common stock, preferred stock, and additional paid in capital reflect the accounting for the stock received by the RMS members as of the Merger as if it was received at the beginning of the periods presented.

Principles of Consolidation


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

The accompanying audited consolidated financial statements include the accounts of Medovex Corp.the Parent, its wholly owned subsidiaries, and its wholly-owned subsidiary, Streamline.VIEs. All intercompany accounts and transactions have been eliminated in consolidation.


Use of Estimates


In preparing the financial statements, generally accepted accounting principles in the United States (“U.S. GAAP”)GAAP requires disclosure regarding estimates and assumptions used by management that affect the amounts reported in financial statements and accompanying notes. The Company’s significantSignificant estimates currently includewere made around the fair value, useful life andvaluation of embedded derivatives, which impacts gains or losses on such derivatives, the carrying amount of its patented technology, the deferred income tax asset and the related valuation allowance, and the fair value of its share based payment arrangements. For those estimates that are sensitive to the outcome of future events, actualdebt, interest expense, and deemed dividends. Actual results could differ from those estimates.

F-26

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist solely of cash. At times throughout the year, the Company may maintain certain bank account balances in excess of FDIC insured limits. At December 31, 2015 and 2014, the Company had cash deposits that exceeded federally insured deposit limits. The Company believes that its funds are deposited in high credit quality financial institutions. The Company has not experienced any losses in such accounts to date and believes it is not exposed to any significant credit risk associated with its cash deposits.

Cash


The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash balances at December 31, 20152020 and 20142019 consists of funds deposited in checking accounts with commercial banks.


Accounts Receivable & Allowance for Doubtful Accounts


Accounts receivable represent amounts due from customers for which revenue has been recognized. Generally, the Company does not require collateral or any other security to support its receivables.


F-7

The Company maintains allowances Trade accounts receivable are stated net of an estimate made for doubtful accounts, for estimated losses resulting fromif any. Management evaluates the inability of its customers to make required payments. This allowance is regularly evaluated by the Company for adequacy by taking into consideration factors such as past experience, credit quality of the customer base, age of the receivableallowance for doubtful accounts regularly to determine if any account balances both individually and in the aggregate, and current economic conditions that may affect a customer’s ability to pay. Accounts receivable over 60 days past duewill potentially be uncollectible. Customer account balances are considered past due.due or delinquent based on the contractual agreement with each customer. Accounts are written off when, in management’s judgment, they are considered uncollectible. At December 31, 2020 and 2019, management believes 0 allowance is necessary. For the year ended December 31, 2020 and 2019, the Company recorded bad debt expense of approximately $6,000 and $90,000, respectively.

Impairment of Long-Lived Assets

The Company reviews the values assigned to long-lived assets, including property and equipment and certain intangible assets, to determine whether events and circumstances have occurred which indicate that the remaining estimated useful lives may warrant revision or that the remaining balances may not be recoverable. The evaluation of asset impairment requires management to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment, and actual results may differ from estimated amounts. In such reviews, undiscounted cash flows associated with these assets are compared with their carrying value to determine if a write-down to fair value is required (see Note 7).

Goodwill

Goodwill represents the excess of purchase price over fair value of net identified tangible and intangible assets and liabilities acquired. The Company does not accrue interestamortize goodwill; it tests goodwill for impairment on past due accounts receivable.


Receivables are written off only after all collection attempts have failed and are based on individual credit evaluation andat least an annual basis. An impairment loss, if any, is measured as the specific circumstancesexcess of the customer. The Company did not have any bad debt expense for the years ended December 31, 2015 and 2014.

Inventory

Inventory consists of a finished goods unit of the Streamline IV Suspension System (IV Poles). Inventory is valued at the lower of cost or market, using the first–in, first-out (FIFO) method. The Company does not believe any inventory reserve is required as of December 31, 2015.
Goodwill And Purchased Intangible Assets

Goodwill is reviewed for impairment annually on December 31st or more frequently if changes in circumstances or the occurrence of events suggest impairment exists using a two-step process. In step 1, the fair value of each reporting unit is compared to its carrying value including goodwill. If the fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the fair value, the goodwill of the reporting unit is potentially impaired and the Company would then complete step 2 in order to measure the impairment loss. In step 2, the Company would calculate the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets (including unrecognized intangible assets) of the reporting unit fromover the fair value of the reporting unit. Ifunit (see Note 7).

Leases

In February 2016, the implied fair valueFinancial Accounting Standard Board (“FASB”) established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02 (as amended), which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than twelve months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of goodwillexpense recognition in the statement of operations.

The Company has not entered into significant lease agreements in which it is less than the carrying value of goodwill,lessor. For the lease agreements in which the Company wouldis the lessee, under Topic 842, lessees are required to recognize a lease liability and right-of-use asset for all leases (except for short-term leases) at the lease commencement date. Effective January 1, 2019, the Company adopted this guidance, applied the modified retrospective transition method and elected the transition option to use the effective date as the date of initial application. The Company recognized the cumulative effect of the transition adjustment on the consolidated balance sheet as of the effective date and did not provide any new lease disclosures for periods before the effective date. With respect to the practical expedients, the Company elected the package of transitional-related practical expedients and the practical expedient not to separate lease and non-lease components.

F-27

Other Receivables

Other receivables totaling approximately $22,000 and $19,000 at December 31, 2020 and 2019, respectively include receivables from the non-acquired Lung Institute, LLC due to Lung Institute Tampa, LLC for approximately $3,000 and $10,000. Other receivables totaling approximately $19,000 and $9,000 include reimbursement receivables for expenses from RMS at December 31, 2020 and 2019, respectively.

Revenue Recognition

The Company recognizes revenue in accordance with U.S. GAAP as outlined in the FASB ASC 606, Revenue From Contracts with Customers, which requires that five steps be completed to determine when revenue can be recognized: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfies a performance obligation. The Company records revenue under ASC 606 as services are performed for the customer.

The Company uses a standard pricing model for the types of cellular therapy treatments that is offered to its patients. The transaction price accounts for medical, surgical, facility, and office services rendered by the Company for consented procedures and is recorded as revenue. The Company recognizes revenue when the terms of a contract with a patient are satisfied.

The Company offers two types of cellular therapy treatments to their patients.

1)The first type of treatment includes medical services rendered typically over a two-day period in which the patient receives cellular therapy. For this treatment type, revenue is recognized in full at time of service.
2)The Company also offers a four-day treatment in which medical services are rendered typically over a two-day period and then again, approximately three months later, medical services are rendered for an additional two days of treatment. Payment is collected in full for both service periods at the time the first treatment is rendered. Revenue is recognized when services are performed based on the estimated standalone selling price of each service. The Company has deferred recognition of revenue amounting to approximately $634,000 and $1,046,000 at December 31, 2020 and 2019, respectively.

The Company’s policy is to not offer refunds to patients. However, in limited instances the Company may make exceptions to this policy for extenuating circumstances. These instances are evaluated on a case-by-case basis and may result in a patient refund. Management performed an impairment loss,analysis of its customer refund history for refunds issued related to prior year’s revenue. Management used the results of this historical refund analysis to record a reserve for anticipated future refunds related to recognized revenue. At December 31, 2020 and 2019, the estimated allowance for refunds was approximately $77,000 and $63,000, respectively and is recorded in a contra revenue account.

Research and development costs

Research and development expenses are recorded in operating expenses in the period identified, equal toin which they are incurred.

Advertising

Advertising costs are recorded in operating expenses in the difference. period in which they are incurred.

Stock-Based Compensation

The Company maintains a stock option incentive plan and accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award to employees and directors. As required by fair value provisions of share-based compensation, employee and non-employee share-based compensation expense recognized is calculated over the requisite service period of the awards and reduced for estimated forfeitures.

F-28

Income Taxes

The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC Topic 740, “Income Taxes”. Under the liability method, deferred taxes are determined based on temporary differences between the financial statement and tax bases of assets and liabilities using tax rates expected to be in effect during the years in which the difference turns around. The Company accounts for interest and penalties on income taxes as income tax expense. A valuation allowance is recorded when it is more likely than not that a tax benefit will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies.

From inception to December 31, 2020, the Company has concluded thatincurred net losses and, therefore, has no impairment of goodwill existedcurrent income tax liability. The net deferred tax asset generated by these losses is fully offset by a valuation allowance as of December 31, 2015,2020 and 2019 since it is currently likely that the year of acquisition,benefit will not be realized in future periods.

There are 0 uncertain tax positions at December 31, 2020 and thus did not conduct an impairment analysis as of that date.2019. The Company will commence impairment testing of goodwill in 2016.


Other intangible assets consist of developed technology and a trademark. The Company reviewed intangible assets for impairment as changes in circumstances or the occurrence of events suggested the remaining value washas not recoverable. Amortizationundergone any tax examinations since inception.

Net Loss Per Share

Basic loss per share is computed on the intangibles is provided on a straight-line basis over the estimated useful lives of the assets as follows:


Trademark                                        5 years
Developed technology                  7 years
weighted average number of shares outstanding for the reporting period. Diluted loss per share is computed on the basis of the weighted average number of common shares plus potentially dilutive common shares outstanding using the treasury stock method. Any potentially dilutive securities are antidilutive due to the Company’s net losses.

Fair Value Measurements


We measure

The Company measures certain non-financial assets, liabilities, and equity issuances at fair value on a non-recurring basis. These non-recurring valuations include evaluating assets such as long-lived assets and non-amortizing intangible assets for impairment; allocating value to assets in an acquired asset group; and applying accounting for business combinations. We use

The Company classifies its stock warrants as either liability or equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity” (ASC 480) and ASC 815, “Derivatives and Hedging” (ASC 815), depending on the specific terms of the warrant agreement.

The Company uses the fair value measurement framework to value these assets and report the fair values in the periods in which they are recorded, adjusted above, or written down.


The fair value measurement framework includes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair values in their broad levels. These levels from highest to lowest priority are as follows:


Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities;

Level 2: Quoted prices in active markets for similar assets or liabilities or observable prices that are based on inputs not quoted on active markets, but corroborated by market data; and
Level 3: Unobservable inputs or valuation techniques that are used when little or no market data is available.

F-29

The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include:include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. WeThe Company may also engage external advisors to assist us in determining fair value, as appropriate.


The Company evaluates its financial liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. Although we believethe Company believes that the recorded fair value of our non-financial assetsfinancial instruments is appropriate at December 31, 2015,2020, these fair values may not be indicative of net realizable value or reflective of future fair values.


F-8

Property

Note 3 - Liquidity, Going Concern and Equipment


Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets, generally three to five years. Repairs and maintenance are expensed as incurred. Improvements and betterments, which extend the lives of the assets, are capitalized.
Leases

Management’s Plans

The Company recognizes rent expense on a straight-line basis overincurred net losses of approximately $6,459,000 for the lease term.year ending December 31, 2020. The lease term commences onCompany used approximately $7,258,000 in net cash from operating activities for the date thatyear ending December 31, 2020 and has historically incurred losses from operations and expects to continue to generate negative cash flows as the Company takes possession of or controls the physical use of the property. Deferred rent is included in non-current liabilities on theimplements its business plan. The consolidated balance sheet.


Revenue Recognition

We recognize revenue in accordance withfinancial statements are prepared using generally accepted accounting principles as outlined in the Financial Accounting Standard Board’sUnited States (“FASB”U.S. GAAP”) Accounting Standards Codificationas applicable to a going concern.

COVID-19 has adversely affected the Company’s financial condition and results of operations. The impact of the outbreak of COVID-19 on the economy in the U.S. and the rest of the world is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact the economy is highly uncertain and cannot be predicted. Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected.

The Company has updated its business model to decrease corporate overhead and marketing expense to significantly reduce expenses. The Company believes that as COVID-19 begins to dissipate due to vaccinations being administered nationwide, patients will again feel comfortable traveling to one of the LHI clinics for treatment. The Company’s Biologics Vertical has commenced preclinical work in support of filing an Investigational New Drug Application (“ASC”IND”) 605-10-S99, Revenue Recognition, which requires that four basic criteria be met before revenuewith the U.S. Food and Drug Administration (“FDA”). The Company is anticipating an initial submission during the second half of 2021.

The Company had cash on hand of approximately $1,641,000 as of December 31, 2020 and approximately $436,000, as of March 24, 2021. The Company’s cash is insufficient to fund its operations over the next year and the Company is currently working to obtain additional debt or equity financing to help support short-term working capital needs.

F-30

There can be recognized: (i) persuasive evidenceno assurance that the Company will be able to raise additional funds or that the terms and conditions of an arrangement exists; (ii) the price is fixedany future financings will be workable or determinable; (iii) collectability is reasonably assured; and (iv) product delivery has occurred or services have been rendered. The Company sells its products primarily through direct sales. The Company recognizes revenue when titleacceptable to the goods and risk of loss transfers to customers, provided there are no material remaining performance obligations required of the Company or its shareholders. If the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings, or raising equity capital, the Company may be forced to discontinue operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4– Business Acquisition

On January 8, 2019, MedoveX completed its business combination with RMS under which MedoveX purchased certain assets and assumed certain liabilities of RMS, otherwise referred to as the Merger. Pursuant to the terms of the APA, MedoveX issued to the shareholders of RMS 33,661 shares plus 6,111 additional Exchange Shares (based on closing the sale of $2 million of new securities) for a total of 39,772 shares of Series C Preferred Stock where each share of Series C Preferred stock automatically converted into 1,000 shares of common stock and represent approximately 55% of the outstanding voting shares of the Company.

Under the terms of the APA, the Company issued additional “Exchange Shares” to the shareholders of RMS to maintain the 55% ownership and not be diluted by the sale of convertible securities (“New Shares Sold”) until MedoveX raised an additional $5.65 million via the issuance of new securities. On the date of closing the Company issued 6,111 additional Exchange Shares to RMS Shareholders as a result of the issuance of additional securities, which are included in the 39,772 shares above. Subsequent to the closing of the purchase transaction, an incremental 11,153 additional Exchange Shares were issued, for a total of 17,264 additional Exchange Shares. All additional Exchange Shares have been issued to the shareholders of RMS and these Series C Preferred shares converted to 17,263,889 shares of common stock; no additional equity will be issued to RMS.

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

Under the terms of the APA, MedoveX purchased certain assets and assumed certain liabilities of RMS. The assets of RMS reported on the MedoveX consolidated balance sheet as of December 31, 2018 that were excluded in the Merger on January 8, 2019 included the following: cash of approximately $70,000 convertible debt to a related party of approximately $4,300,000, interest payable of approximately $158,000, short-term notes, related party of approximately $180,000, accounts payable of approximately $398,000 and other current liabilities of approximately $285,000. Additionally, there were certain on-going litigation matters that were not assumed as part of customer acceptance.the January 8, 2019 Merger.

Purchase Price Allocation

The purchase price for the acquisition of the Acquiree has been allocated to the assets acquired and liabilities assumed based on their estimated fair values.

The acquisition-date fair value of the consideration transferred is as follows:

Schedule of Fair Value of Consideration Transferred

   1 
Common shares issued and outstanding  24,717,270 
Common shares reserved for issuance upon conversion of the outstanding Series B Preferred Stock  2,312,500 
Total Common shares  27,029,770 
Closing price per share of MedoveX Common stock on January 8, 2019 $0.40 
   10,811,908 
Fair value of outstanding warrants and options  2,220,000 
Cash consideration to RMS  (350,000)
Total consideration $12,681,908 

F-31

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

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

Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed

   1 
Cash $(302,710)
Accounts receivable  145,757 
Inventory  131,455 
Prepaid expenses  46,153 
Property and equipment  30,393 
Other  2,751 
Intangibles  3,680,000 
Goodwill  12,564,401 
Total assets acquired $16,298,200 
Accounts payable and other accrued liabilities  1,645,399 
Derivative liability  1,215,677 
Interest-bearing liabilities and other  755,216 
Net assets acquired $12,681,908 

Intangible assets are recorded as definite-lived assets and amortized over the estimated period of economic benefit. Intangible assets represent the fair value of patents and related proprietary technology for the DenerveX System. During the fourth quarter of 2019 the Company recorded an impairment charge of $2,944,000 related to the carrying value of its intangible assets (see Note 7).

Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. Goodwill is not expected to be deductible for income tax purposes. Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an annual basis or when indications of impairment exist. During the fourth quarter of 2019 the Company recorded an impairment charge of approximately $12,564,000 related to the carrying value of goodwill (see Note 7).

The derivative liability relates to the liability associated with warrants issued with the securities purchase agreements executed in May 2018, which liability was assumed in the Merger (see Note 12).

Total interest-bearing liabilities and other liabilities assumed are as follows:

Schedule of Interest Bearing and Other Liabilities Assumed

   1 
Notes payable $99,017 
Short-term convertible notes payable  598,119 
Dividend payable  57,813 
Deferred rent  267 
Total interest-bearing and other liabilities $755,216 

Notes payable relate to promissory notes assumed by Acquiree in a 2015 acquisition, which was later divested in 2016, with the assumed promissory notes being retained by Acquiree. The Company records estimated sales returns, discountsfinalized an eighteen-month extension on the notes extending the maturity date to March 1, 2021. Payments on both notes are due in aggregate monthly installments of approximately $5,800 and allowances ascarry an interest rate of 5%. The promissory notes had outstanding balances of approximately $99,000 plus accrued interest of approximately $3,000 at January 8, 2019 (see Note 11) and promissory notes had outstanding balances of approximately $67,000 and $78,000 at December 31, 2020 and 2019. The Company has not made payments on this note since February 10, 2020, due to COVID-19, resulting in accrued interest of approximately $1,900.

F-32

In the third quarter of 2018, convertible notes were issued pursuant to a reductionsecurities purchase agreement with select accredited investors, whereby the Acquiree offered up to 1,000,000 units (the “Units”) at a purchase price of net sales$50,000 per Unit. Each Unit consisted of (i) a 12% senior secured convertible note, initially convertible into shares of the Company’s common stock, par value $0.001 per share, at a conversion price equal to the lesser of $0.40 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of equity and/or debt securities completed by the Company following this offering of Units, and (ii) a three-year warrant to purchase such number of shares of the Company’s common stock equal to one hundred percent (100%) of the number of shares of common stock issuable upon conversion of the notes at $0.40. The warrants are exercisable at a price equal to the lesser of $0.75 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of the debt and/or equity securities completed by the Company following the issuance of warrants. As a result of the price adjustment feature, the conversion price of the convertible notes was adjusted to $0.36 per share.

In the offering, the Acquiree sold an aggregate of 15 Units and issued to investors an aggregate of $750,000 in principal amount of convertible notes and 1,875,000 warrants to purchase common stock, resulting in total gross proceeds of $750,000 to the Company. If converted at $0.40 the convertible notes sold in the sameoffering are convertible into an aggregate of 1,875,000 shares of common stock. The Acquiree recorded the proceeds from the notes and the accompanying warrants, which accrete over the period the notes are outstanding, on a relative fair value basis of approximately $505,000 and $245,000, respectively. At acquisition date, the value of the notes was approximately $598,000. Due to the notes maturing in 2019, the warrants have fully accreted as of December 31, 2019.

The convertible notes had maturity dates between August and September 2019 and were renegotiated or repaid during the third and fourth quarters of 2019 (see Note 11).

The following schedule represents the amount of revenue is recognized.


Research and Development

Researchnet loss attributable to the MedoveX acquisition which have been included in the consolidated statements of operations for the periods subsequent to the acquisition date:

Schedule of Revenue and development costs are expensed as incurred.

Advertising

Net Loss Attributable to Acquisition

  For the Year Ended 
  December 31, 2019 
Revenues $67,631 
Net loss attributable to MedoveX $(4,754,680)

Note 5 – Right-of-use Asset And Lease Liability

Upon adoption of ASU No. 2016-02 (as amended), additional current liabilities of approximately $475,000 and long-term liabilities of approximately $713,000 with corresponding ROU assets of approximately $1,167,000 were recognized, based on the present value of the remaining minimum rental payments under the new leasing standard for existing operating leases.

The Company expenses all advertising costs as incurred. Forconsolidated balance sheet at December 31, 2020 reflects current lease liabilities of approximately $139,000 and long-term liabilities of $157,000, with corresponding ROU assets of $279,000.

The components of lease expense, included in other general and administrative expense, for the years ended December 31, 20152020 and 2014, advertising costs were approximately $83,000 and $0, respectively.2019, respectively, are as follows:

Schedule of Components of Lease Expense

  December 31, 2020  December 31, 2019 
Operating lease expense $548,622  $579,770 

F-33

Income Taxes

The Company accounts

Cash paid for income taxes under ASC 740, Income Taxes (“ASC 740”), which requires recognitionamounts included in the measurement of deferred tax assets andlease liabilities for the expected future tax consequencesyears ended December 31, 2020 and 2019, respectively, are as follows:

Schedule of events that have beenCash Paid for Amounts Included the Measurement of Lease Liabilities

  December 31, 2020  December 31, 2019 
Operating cash flows from operating leases $548,622  $579,770 

Supplemental balance sheet and other information related to operating leases are as follows:

Schedule of Supplemental Balance Sheet and Other Information

  December 31, 2020  December 31, 2019 
Operating leases:        
Operating leases right-of-use assets $278,552  $738,453 
Lease liability, current  139,189   453,734 
Lease liability, net of current portion  157,050   302,175 
Total operating lease liabilities $296,239   755,909 
Weighted average remaining lease term  2.32 years   

2.2 years

 
Weighted average discount rate  10.31%  7.75%

Maturities of operating lease liabilities as of December 31, 2020 are as follows:

Schedule of Maturities of Lease Liabilities

  December 31, 2020 
Due in one year or less $154,559 
Due after one year through two years  102,891 
Due after two years through three years  69,333 
Total lease payments  326,783 
Less interest  (30,544)
Total $296,239 

Operating lease expense and cash flows from operating leases and short-term leases for years ended December 31, 2020 and 2019 totaled approximately $570,000 and $580,000, respectively, and are included in the financial statements“Other general and administrative” section of the consolidated statement of operations. Additionally, the Company entered into a short-term lease for its Nashville location beginning November 1, 2020 totaling $73,750 a with maturity date of October 31, 2021, and will be entering into a short-term lease for its Tampa location beginning April 1, 2021 totaling $71,775 with a maturity date of March 31, 2022.

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


Under this method, deferred tax assetsagreed upon rates. Each location has its own expiration date ranging from April 30, 2020 to August 31, 2023. The Company did not renew the leases in Dallas, TX, Pittsburgh, PA, and liabilities are basedAtlanta, GA as those leases all expired in 2020. The Company does not intend on renewing its corporate office space lease in Tampa, FL which expires on March 31, 2021 but will renew the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effectTampa, FL lease for the yearLHI clinic. The Company has decided that its corporate staff will continue working remotely but the Company will have a small corporate meeting room in which the differences are expectedTampa LHI clinic.

F-34

Note 6 - Property and Equipment

Property And Equipment

Property and equipment, net, consists of the following:

Schedule of Property and Equipment

  Useful Life December 31, 2020  December 31, 2019 
Furniture and fixtures 5-7 years $231,222  $231,222 
Computers and software 3-7 years  246,323   244,039 
Leasehold improvements 15 years  155,583   157,107 
     633,128   632,368 
Less accumulated depreciation    (493,953)  (412,665)
           
Total   $139,175  $219,703 

Depreciation expense was approximately $81,000 and $98,000, respectively, for the years ended December 31, 2020 and 2019. The Company uses the straight-line depreciation method to reverse. Deferred taxcalculate depreciation expense.

Note 7 - Intangible Assets and Goodwill

The Company’s intangible assets are reduced by a valuation allowancepatents and related proprietary technology for the DenerveX System. For the year ended December 31, 2019, total amortization expense related to acquisition-related intangible assets was $736,000 and included in operating expense in the accompanying consolidated statement of operations.

The Company decided to suspend the manufacturing and sale of the DenerveX product as it has been unsuccessful in its attempts to source cost effective alternative manufacturing and distributor options for the product. The Company has no future plans to commit any additional resources related to the extent management concludesfuture development or sales efforts for the product, as it has determined that the cost to relaunch the product back to market to be significant and indeterminable due to issues with the manufacturing and sterilization of the product. The DenerveX System no longer represents part of the Company’s core strategic plans for the future. The Company believes that it is more likely than not, that the assetcarrying value will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expectedrecoverable. As a result, during the fourth quarter of 2019 the Company recorded a charge of $2,944,000 to apply to taxable incomeimpair the carrying value of the technology related intangible. This charge was recorded within the caption, “Loss on impairment” in the accompanying consolidated statements of operations.

The Company’s goodwill balance was determined to be impaired as of the balance sheet date due to the adverse financial results for 2019, the negative projected cash results for 2020 and a significant decline in its market capitalization. The Company concluded that the fair value of the reporting unit was less than the carrying amount in excess of goodwill. As a result, during the fourth quarter of 2019 the Company recorded a $12,564,000 impairment charge, which is presented within the caption, “Loss on impairment” in the accompanying consolidated statements of operations. The Company is no longer manufacturing or selling the DenerveX device but continues to explore possible opportunities to monetize such technology.

Note 8 – Related Party Transactions

Consulting Expense

The Company entered into an oral consulting arrangement with St. Louis Family Office, LLC, controlled by Jimmy St. Louis, former CEO of RMS, in January 2019 in the amount of $10,000 per month plus benefits reimbursement for advisory services. The Company terminated this agreement effective June 30, 2019. For the year ended December 31, 2020 and December 31, 2019, the Company expensed approximately $0 and $68,000 respectively in consulting fees to St. Louis Family Office.

The Company entered into a consulting agreement with Strategos Public Affairs, LLC (Strategos) on February 15, 2019 for a period of twelve months, unless otherwise terminated by giving thirty days prior written notice. A close family member of the Company’s prior CEO is a partner in Strategos. The monthly fee started at $4,500 and increased to approximately $7,500 per month. Strategos provided information to key policymakers in the legislature and executive branches of government on the benefits of the cellular therapies offered by LHI, advocated for legislation that supports policies beneficial to patient access and opposed any legislation that negatively impacts the Company’s ability to expand treatment opportunities, and position the Company and its related entities as the expert for information and testimony. The Company terminated this agreement in March 2020. For years ended December 31, 2020 and December 31, 2019 the Company expensed approximately $15,000 and $71,000, respectively.

F-35

Officers and Board Members and Related Expenses

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

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

On November 18, 2019, Dr. Andre Terzic and Dr. Atta Behfar resigned from the Company’s Board of Directors to avoid any potential conflicts that could arise from the Company’s Service Agreement with Rion, pursuant to which Rion will supply exosomes to and support FDA-regulated clinical research for the Company. Drs. Terzic and Behfar are co-founders of Rion.

In connection with the April Offering, the Company’s former CEO, William Horne, entered into an amendment letter to his employment agreement which provides that his salary will be reduced to $0 per month. This agreement was amended on July 29, 2020 to provide that Mr. Horne will receive a monthly base salary of $12,500 effective on June 1, 2020 and that his base salary will increase to $20,833 per month upon the first day of the month when the Company completes a Qualified Financing. Mr. Horne agreed to continue to defer the $108,000 in base salary deferred by him in 2018 (the “Deferred Salary”) until such time as there is a positive cash flow to meet the Company’s financial obligations and then the Company and Mr. Horne will work together in good faith to negotiate a payment plan for such Deferred Salary. On September 29, 2020, Mr. William Horne resigned as the Company’s CEO and President but will remain on the Board of Directors.

Effective February 1, 2019, the Company entered into an oral consulting agreement with Mr. Raymond Monteleone, Board Member and Chairman of the Audit Committee, in which those temporary differencesMr. Monteleone received $10,000 per month for advisory services and $5,000 per quarter as Audit Committee Chair in addition to regular quarterly board meeting fees. Effective March 25, 2020, the Company reduced the advisory services to $5,000 per month and the fees per quarter as the Audit Committee Chair and the Compensation Committee Chair to $2,500. For the year ended December 31, 2020 and December 31, 2019, the Company expensed approximately $93,000 and $125,000 in compensation and Board of Director fees to Mr. Monteleone, respectively.

For the year ended December 31, 2020 and December 31, 2019, the Company expensed $12,500 and $5,000 for Board of Director fees to Michael Yurkowsky, respectively. Mr. Yurkowsky entered into an oral agreement with the Company on October 1, 2020 in which Mr. Yurkowsky will receive $4,167 per month to serve on the Board of Directors.

Debt and Other Obligations

The short-term related party notes as of December 31, 2019 of $1,635,000 is comprised of four loans made to the Company during 2019, by Horne Management, LLC, controlled by former CEO, William E. Horne. These were advanced for working capital purposes and had the terms as indicated below.

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

A loan for $350,000 was made on September 26, 2019 with the following terms:

12% interest rate with a maturity date of March 26, 2020.
The Company was unable to pay back the principal and interest by November 26, 2019; therefore, it issued to Lender a three-year warrant to purchase 400,000 shares of the Company’s common stock with a purchase price of $0.75 per share in accordance with the terms of the note.
The Company was unable to pay back the loan on March 26, 2020, therefore, the interest rate increased to 15%.

A loan for $150,000 was made on October 28, 2019 with the following terms:

12% interest rate with a maturity date of April 28, 2020.
The Company was unable to pay back the principal and interest by December 28, 2019; therefore, it issued to Lender a three-year warrant to purchase 171,429 shares of the Company’s common stock with a purchase price of $0.75 per share in accordance with the terms of the note.
If the Company is unable to pay the loan as of April 28, 2020, the interest rate increases to 15%.

A loan for $235,000 was made on November 13, 2019 with the following terms:

12% interest rate with a maturity date of May 13, 2020.
The Company was unable to pay back the principal and interest by January 13, 2020; therefore in January 2020 it issued to Lender a three-year warrant to purchase 268,571 shares of the Company’s common stock with a purchase price of $0.75 per share in accordance with the terms of the note.
If the Company is unable to pay the loan as of May 13, 2020, the interest rate increases to 15%.

F-36

In connection with the April Offering, Mr. Horne’s notes were extinguished for 4,368,278 common shares and 4,368,278 warrants resulting in a gain on extinguishment of approximately $1,300,000.

Change in Control

On September 11, 2020, with the closing of the Rights Offering, FWHC, LLC, FWHC, Bridge, LLC, and FWHC Bridge Friends, LLC (collectively known as “FWHC”) gained control of the Company by subsequently owning approximately 61% of the fully diluted shares of the Company. On July 28, 2020, the Company issued an aggregate of 15,518,111 shares of its common stock to FWHC upon the conversion of its issued Series D Convertible Preferred Stock. The Preferred Stock was converted pursuant to a mandatory conversion triggered by the majority holder of the Series D Convertible Preferred Stock as set forth in the Certificate of Designations for the Series D Convertible Preferred Stock. On September 11, 2020, with the closing of the Rights Offering, FWHC was issued 123,031,819 shares of Preferred A for conversion of the outstanding promissory notes from April 2020, 75,162,429 shares of Preferred A Stock for conversion of the April Secured Note, 35,860,079 shares of Preferred A Stock for conversion of the Hawes Notes, and 117,362,143 shares of Preferred A Stock issued at upon the closing Rights Offering. FWHC was also issued 273,356,67610-year warrants at $0.014 upon the closing of the Rights Offering.

Note 9 - Equity Transactions

For the consolidated statement of stockholders’ deficit as of January 1, 2019, the common stock, preferred stock and additional paid in capital reflect the accounting for the stock received by the RMS members as of the Merger as if it was received as of that date and the historical accumulated deficit of RMS. As of the closing of the Merger, before the contingent additional exchange shares impact from the sale of new securities, the stock received by RMS was 33,661 shares of Series C Preferred Stock, which was later converted into approximately 33,661,000 shares of common stock, with common stock par value of approximately $33,700 and additional paid-in capital of approximately $3,566,000. The historical accumulated deficit and non-controlling interest of RMS as of the closing was approximately $9,296,000 and $370,000, respectively. 

Rights Offering

The Company established July 28, 2020 as the Record Date for purposes of establishing a date for the Company’s Rights Offering whereby each holder of the Company’s Common stock on the Record Date will be entitled to three subscription rights, each to purchase one share of Series A Preferred Stock.

As mentioned below, the Company entered into a standby purchase agreement with certain creditors who had previously purchased secured convertible notes and warrants, pursuant to which such creditors agreed (a) not to exercise any subscription rights they may receive as stockholders of the Company in the registered rights offering (described below) and (b) instead to purchase any Series A Preferred Stock corresponding to the unexercised rights in the rights offering up to an aggregate amount of approximately $2.8 million at the same subscription price. The amounts due under the standby purchase agreements became calculable and payable upon the expiration of the rights offering as set forth below.

On September 11, 2020, the registered rights offering (Registration No. 333-239629) of the Company expired. Pursuant to the Rights Offering, on September 24, 2020, the Company issued (i) 15,235,381 shares of its Series A Preferred Stock at a price of $0.014 per share to holders of its common stock who validly exercised their subscription rights prior to the expiration time and (ii) 203,049,643 shares of its Series A Preferred Stock to the standby purchasers as part of the standby commitment. A total of 218,285,024 shares of Series A Preferred Stock were issued during the Rights Offering. The Rights Offering, including the standby component, resulted in gross proceeds to the Company of $3,055,985 excluding issuance costs of approximately $320,000. While the Rights Offering expired on September 11, 2020, it was not consummated until September 24, 2020 while logistical closing conditions including the calculation and clearance of funds were being processed.

Common Stock Issuance

On January 8, 2019, the Company entered into a securities purchase agreement (the “SPA”) with four purchasers (the “Purchasers”) pursuant to which the four Purchasers invested in the Company an aggregate amount of $2,000,000, with $1,800,000 in cash and $200,000 by cancellation of debt as explained below, in exchange for forty units (the “Units”), each consisting of a convertible note (the “Convertible Note”) with the principal amount of $50,000 and a warrant (the “Warrant”) to purchase common stock (the “common stock”) of the Company at a purchase price of $0.75 per share. For further discussion of the SPA, refer to Note 9 - “Equity Transactions” to the consolidated financial statements in the Company’s 2019 Annual Report on Form 10-K is incorporated by reference herein.

The Company entered into other SPA’s with additional purchasers, which brought the aggregate amount of capital raised in all these offerings to $7,000,000, as of April 5, 2019, excluding the shares issued for conversion of short-term debt, discussed below.

As a result of the sales of new securities of at least $5,650,000, the Company issued an additional 17,264 Series C Preferred Stock to RMS members in accordance with the provisions of the APA in the first quarter of 2019. These shares automatically converted to 17,263,889 shares of common stock. All the Convertible Notes from the SPA, as well as the shares of Series C Preferred Stock issued to RMS members, were automatically converted into shares of common stock at closing on January 8, 2019.

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

In March 2019, the Company issued an aggregate of 130,085 shares of common stock at $0.40 per share for consulting fees in an amount equivalent to $52,033. In August 2019, the Company issued 150,000 shares of common stock to consultants in consideration of consulting services rendered to the Company. At the time of issuance, the fair market value of the shares was $0.29, and, as a result, $43,500 was expensed for the year ending December 31, 2019.

F-37

On April 25, 2019, the Company issued 4,225,634 shares of common stock valued at $0.40 per share to Mr. William E. Horne, the Company’s former CEO, in a restricted stock award which was 100% vested when issued. The Company recognized approximately $1,690,000 of compensation expense during the year ended December 31, 2019 related to the restricted stock award. This restricted stock award was issued pursuant to his employment agreement with the Company, which stated that this restricted stock award (as well as the incentive stock options issued in the quarter ended March 31, 2019) would be fully vested if not issued within fifteen days of the Merger. Neither award was issued within that time frame and both awards became fully vested when issued. The aggregate number of shares of common stock from these two awards is 4,475,634 and was calculated based on 7% of the Company’s issued and outstanding common stock as of the closing of the Merger.

During the year ended December 31, 2019, 715,279 shares were issued pursuant to conversions of 2,650 shares of Series B Convertible Preferred Stock and 50,367 shares for accrued dividends thereunder.

In conjunction with the Series D Preferred financing (See Note 14), the Company offered the Series B warrant holders the option to exchange their warrants on the basis of 1 warrant for 0.40 common shares. Warrant holders chose to exchange 1,007,813 warrants with a fair value of approximately $75,000 for 403,125 shares of common stock in 2019. The Series B Warrants were adjusted to fair value on the date of the exchange with the change in fair value being recorded in earnings. The fair value of the common stock issued was $73,000 which approximated the fair value of the Series B Warrants exchanged.

In February 2020, the Company issued LilyCon Investments $35,000 in shares of the Company’s common stock at a weighted average share price of $0.32 per share for a total of 109,375 shares per the terms of the consulting agreement executed in February 2019.

On April 23, 2020, Horne Management, LLC agreed to convert its notes plus accrued interest into (i) 4,368,278 shares of common stock of the Company and (ii) a ten-year warrant to purchase up to an equivalent number of shares of the Company’s common stock with such conversion to be effective as of April 17, 2020. This warrant will have an exercise price equal to the price per share at which securities were offered to investors for purchase at the Rights Offering, which was $0.014, and is exercisable beginning on the day immediately following the closing of the Rights Offering.

On July 28, 2020, the Company issued an aggregate of 17,893,076 shares of its common stock upon the conversion of all of its issued and outstanding Series B and Series D Convertible Preferred Stock. The Series B and D Convertible Preferred Stock was converted pursuant to a mandatory conversion triggered by the majority holder of the Series D Convertible Preferred Stock as set forth in the Certificate of Designations for the Series D Convertible Preferred Stock.

On July 29, 2020, the Company filed its Second Amended and Restated Certificate of Incorporation (the “Amended COI”). The Amended COI provides for the issuance of up 1,600,000,000 shares of Common Stock and 1,000,000,000 shares of Preferred Stock, of which 800,000,000 shares are designated as Series A Preferred Stock and eliminates the previously authorized classes of preferred stock. The Amended COI also delineates the rights of the Series A Preferred Stock.

On September 11, 2020, 1,000,000 warrants were converted to common stock upon the closing of the Rights Offering for a certain warrant holder.

For the year ended December 31, 2020, 4,020,031 Series A Preferred Stock were converted to common stock at the request of certain Rights Offering participants.

Series A Preferred Stock

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

F-38

Additionally, on September 24, 2020, the Company issued an aggregate of 323,844,416 shares of its Series A Preferred Stock to the holders of outstanding promissory notes, issued in April 2020, in the aggregate principal amount and accrued interest of $4,483,617. Included in this issuance, FWHC was issued 123,031,819 shares of Preferred A for conversion of the outstanding promissory notes from April 2020, 75,162,429 shares of Preferred A Stock for conversion of the April Secured Note and 35,860,079 shares of Preferred A Stock for conversion of the Hawes Notes (see Note 11). The notes were converted pursuant to a mandatory conversion triggered by the completion of the rights offering. Such shares were issued under an exemption from registration in reliance on Section 3(a)(9) of the Securities Act. The original notes were issued in reliance on Section 4(a)(2) of the Securities Act.

Voting Rights

Holders of Series A Preferred Stock (“Series A Holders”) have the right to receive notice of any meeting of holders of common stock or Series A Preferred Stock and to vote upon any matter submitted to a vote of the holders of common stock or Series A Preferred Stock. Each Series A Holder shall vote on each matter submitted to them with the holders of common stock.

Conversion

Series A Preferred Stock converts to common stock at a 1:1 ratio immediately upon request of the Series A Holder.

Liquidation

Series A Preferred Stock does not have preferential treatment over common stock shareholders if the Company liquidates or dissolves.

Series B Convertible Preferred Stock

Voting Rights

Holders of Series B Convertible Preferred Stock (“Series B Holders”) have the right to receive notice of any meeting of holders of common stock or Series B Preferred Stock and to vote upon any matter submitted to a vote of the holders of common stock or Series B Preferred Stock. Each Series B Holder shall vote on each matter submitted to them with the holders of common stock.

Liquidation

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

On January 8, 2019, the Company completed the issuance of Convertible Notes with a conversion price of $0.40. As a result, the exercise price on all of the warrants issued with the Series B Convertible Preferred Stock was adjusted downward to $0.36.

In the first quarter of 2019, the Company recognized a beneficial conversion feature related to the Series B Preferred Stock of approximately $33,000, which was credited to additional paid-in capital, and reduced the income available to common shareholders. Since the Series B Preferred Stock can immediately be converted by the holder, the beneficial conversion feature was immediately accreted and recognized as a deemed dividend to the preferred shareholders.

F-39

Series B and Series D Convertible Preferred Stock Conversions and Repurchase

During the year ended December 31, 2019, 9,250 shares of Series B Convertible Preferred Stock, par value $0.001, and accrued dividends were assumed with the Merger and an aggregate of 2,650 shares of Series B Convertible Preferred Stock, and accrued dividends, were subsequently converted into an aggregate of 715,279 shares of the Company’s common stock.

On July 28, 2020, the Company issued an aggregate of 17,893,076 shares of its common stock upon the conversion of all of its issued and outstanding Series B and Series D Convertible Preferred Stock (the “Preferred Stock”). The Preferred Stock was converted pursuant to a mandatory conversion triggered by the majority holder of the Series D Convertible Preferred Stock as set forth in the Certificate of Designations for the Series D Convertible Preferred Stock. As of December 31, 2020, the Company does 0t have any Series B or Series D Convertible Preferred Stock outstanding.

Debt Conversion

Convertible Notes and Promissory Note to Related Party

The $750,000 convertible notes payable assumed in the Merger had a fair value of approximately $598,000 on the acquisition date. Subsequently, on February 6, 2019, $100,000 of the outstanding Convertible Notes was converted into an aggregate of 250,000 shares of common stock, eliminating $100,000 of the Company’s debt obligation. The debt was converted into shares of common stock at $0.40 per share, in accordance with the SPA (see Note 11).

On September 24, 2020, the Company issued an aggregate of 323,844,416 shares of its Series A Preferred Stock to the holders of outstanding promissory notes, issued in April 2020, in the aggregate principal amount and accrued interest of $4,483,617. Included in this issuance, FWHC was issued 123,031,819 shares of Preferred A for conversion of the outstanding promissory notes from April 2020, 75,162,429 shares of Preferred A Stock for conversion of the April Secured Note and 35,860,079 shares of Preferred A Stock for conversion of the Hawes Notes (see Note 11). The notes were converted pursuant to a mandatory conversion triggered by the completion of the Rights Offering.

Stock-Based Compensation Plan

The Company utilizes the Black-Scholes valuation method to recognize stock-based compensation expense over the vesting period. The expected life represents the period that the stock-based compensation awards are expected to be recovered or settled.

The standard addressesoutstanding.

Stock Option Activity

For the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.


Under ASC 740,years ended December 31, 2020 and 2019, the Company may recognizerecognized approximately $1,000 and $95,000 of stock option expense, respectively. The expense for the tax benefit fromyear ended December 31, 2019 is primarily related to an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical meritsoption to purchase 250,000 shares of the position.

The tax benefits recognized inCompany’s common stock that was issued to the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realizedCompany’s former CEO, William E. Horne, pursuant to his employment agreement. These options were immediately vested upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. issuance.

As of December 31, 2015, the Company does not have2020, all outstanding stock options were fully vested, and related compensation expense recognized.

The following is a liability for unrecognized tax uncertainties.


The Company’s policy is to record interest and penalties on uncertain tax positions as a componentsummary of income tax expense. As of December 31, 2015, the Company has not incurred any interest or penalties relating to uncertain tax positions.
The Company’s evaluation was performedstock option activity for the tax years ending December 31, 2015, 20142020 and 2013, which remain subject to examination by major tax jurisdictions as2019:

Summary of Stock Option Activity

  Shares  

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Term

(Years)

 
Outstanding at December 31, 2018         
Assumed with the RMS merger transaction  557,282  $2.78   6.06 
Granted  250,000   0.40   9.02 
Expired/Cancelled  (382,282)  2.86    
Outstanding at December 31, 2019  425,000  $1.38   7.71 
Granted         
Expired/Cancelled  (15,000)  1.35    
Outstanding and exercisable at December 31, 2020  410,000  $1.39   6.72 

F-40

Non-Controlling Interest

For the years ended December 31, 2015.2020 and 2019, the Company consolidated the results for LI Dallas, LI Nashville, LI Pittsburgh and LI Scottsdale as VIEs. The Company does not haveowns no portion of any tax years that are no longer subject to U.S. federal, state, and local, or non-US income tax examinations.

F-9

Stock-Based Compensation

Theof these four entities which own their respective clinics; however, the Company accountsmaintains control through their management role for stock-based compensationeach of the clinics, in accordance with each clinic’s respective management agreement. Based on these agreements, the ASC 718, Stock Compensation. ASC 718 addressesCompany has the responsibility to oversee and make decisions on behalf of the clinics, except for medical care and procedures. Beginning in January 2018, the Company adopted the policy for all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718, awards resultthe VIEs that the management fee charged by the Company would equal the amount of net income from each VIE on a monthly basis, bringing the amount of the net income each month for each VIE to a net of zero. Due to this policy, there was no change in a cost that is measured at fair value on the awards’ grant date, based onnon-controlling interest for the estimated number of awards that are expectedyears ended December 31, 2020 or 2019 related to vest and will result in a charge to operations.
the net income (loss) as it was $0 each month through the management fee charged by the Company.

Net Loss perPer Share


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

As of December 31, 2020, the years presented, thereCompany had 538,109,409 shares outstanding of Series A Preferred Stock which converts on a 1:1 ratio to common stock and would be considered dilutive upon conversion. There is no difference between the basic and diluted net loss per share when including 23,937,765 warrants (exercise price of $0.016 and higher) and 410,000 common stock options that are outstanding as they are considered anti-dilutive and excluded for the year ended December 31, 2020 due to the net loss. This does not consider 387,126,145 warrants outstanding at December 31, 2020 as their exercise price is below the current stock price. For the year ended December 31, 2019, there was no difference between the basic and diluted net loss per share: 1,974,78344,806,076 warrants and 380,000425,000 common stock options outstanding were considered anti-dilutive and excluded for the years presented.

Business combinations

were excluded.

Note 10 – Commitments & Contingencies

Consulting Agreements

The Company completedentered into an acquisition on March 25, 2015. This transaction was recorded using guidelines provided by ASC 805, Business Combinations. Following these guidelines, the consideration paid by Medovex for Streamline was measured on the date of acquisition. An independent valuation of Streamline was performed using the discounted cash flow method. Based on the estimated value of Streamline, the consideration paid by Medovexagreement with Jesse Crowne, a former Director and the tangible assets of Streamline, Management determined the intangible portionCo-Chairman of the purchase price should be assigned between developed technology, trademark, and goodwill. For the quarterly periods ended June 30, 2015 and September 30, 2015,Board of the Company, had assigned the entire intangible portion strictly to the technology based intangible asset called “Patent Acquired from Streamline.” For the quarterly periods ended June 30, 2015 and September 30, 2015 the Company assigned no value to the trademark or to goodwill. Refer to Note 5provide business development consulting services for the summarya fee of the purchase price allocation based on the completion of the valuation of the assets and liabilities assumed.


Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue Recognition - Revenue from Contracts with Customers” (ASU 2014-09) that requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service. This update is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods therein and requires expanded disclosures. The Company is currently assessing the impact the adoption of ASU 2014-09 will have on its consolidated financial statements.
In June 2014, FASB issued Accounting Standards Update, (“ASU”), No. 2014-10, Development Stage Entities, which eliminated certain financial reporting requirements for development stage entities included in ASC 915 Development Stage Entities by removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. The amendments eliminate the following requirement for development stage entities: 1) presentation of inception- to-date information in the statements of operations, cash flows and stockholders’ equity, 2) designation of the financial statements as those of a development stage entity, 3) disclosure of a description of the development stage activities in which the entity is engaged, and 4) disclosure in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. ASU 2014-10 was effective for fiscal years beginning after December 15, 2014. Early adoption was permitted. The Company elected to early adopt the provisions of ASU 2014-10, which are reflected in these consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” which requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. This update is effective  for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently assessing the impact the adoption of ASU No. 2014-15 will have on its consolidated financial statements.
In November 2015, FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. The Company is currently assessing the impact the adoption of ASU 2015-17 will have on its consolidated financial statements.

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

F-10

Note 3 - Property and Equipment

Property and equipment consists of the following:
 Useful Life 
December 31,
2015
  
December 31,
2014
 
Furniture and fixtures5 years $18,385  $16,016 
Computers and software3 years  16,275   11,587 
    34,660   27,603 
Less accumulated depreciation   (9,822)  (3,153)
          
Total  $24,838  $24,450 

Depreciation expense amounted to $6,669 for the year ended December 31, 2015 and $2,681 for the year ended December 31, 2014.

Note 4 – Patent Assignment and Contribution and Royalty Agreements

On February 1, 2013, the Company issued 750,108$5,000 per month. Additionally, 62,500 shares of common stock to Scott Haufe, M.D. (“Dr. Haufe”) pursuant to the terms ofat $0.29 per share was issued in connection with a Contribution and Royalty Agreement dated January 31, 2013 between the Company and Dr. Haufe. Thisseparate agreement provides for the Company to pay Dr. Haufe royalties equal to 1% of revenues earned from sales of any and all products derived from the use of the DenerveX technology. Royalties are payable to Dr. Haufe within 30 days after the close of each calendar quarter based on actual cash collected from sales of applicable products. The royalty period expires on September 6, 2030.

The Company executed a co-development agreement for the DenerveX technology with royalty provisions with James R. Andrews, M.D., as more fully described in Note 7.

Note 5 – Acquisitions

On March 25, 2015, the Company acquired Streamline Inc. pursuant to an Agreement and Plan of Merger dated March 9, 2015. As a result of this transaction, Streamline, Inc. is now a wholly owned subsidiary of the Company. Under the terms of the Agreement and Plan of Merger, the Company paid $1,397,466 cash and 1,875,000 shares of common stock.August 29, 2019. The Company incurred expense of approximately $344,000 in acquisition related legal fees.

Per the approved Agreement$10,000 and Plan of Merger with Streamline, the Company was to issue an aggregate of 1,875,000 shares of Medovex common stock upon receipt of a transmittal letter from each Streamline shareholder. As of December 31, 2015, the Company had received transmittal letters and issued shares for Streamline shareholders representing 1,667,028 shares of Medovex common stock. While the assumption is the remaining shareholders will return a letter, the agreement states that if a shareholder does not return a letter, no shares are issued. Additionally, 200,000 shares of Medovex common stock are being held in escrow until September 25, 2016 to secure Streamline’s indemnification obligations under the Merger Agreement. The terms of the Merger Agreement also require a commitment by Medovex to supply a minimum of $750,000 in working capital to the Streamline subsidiary, to fund the operations and product development of Streamline as needed. Of the $750,000 working capital commitment, approximately $521,000 has been funded during the year ended December 31, 2015. The closing price of the common stock on March 25, 2015 was $4.50 per share. Based on this price and cash consideration, the acquisition of Streamline was valued at $9,834,966.

The following is a summary of the allocation of the fair value of Streamline.

Assets acquired   
 Cash $245,174 
 Inventory  1,878 
 Other assets  165 
Developed technology  3,000,000 
Trademark  700,000 
 Goodwill  6,455,645 
     
Total assets acquired  10,402,862 
     
Liabilities assumed    
 Accounts payable  301,940 
 Accrued liabilities  6,018 
 Notes Payable  259,938 
     
Total  567,896 
     
Net assets acquired $9,834,966 

F-11

The results of operations of Streamline are included in the consolidated statements of operations beginning from the acquisition date. The following unaudited condensed pro forma financial information presents the results of operations as if the acquisition had taken place on January 1, 2014.
The unaudited condensed pro forma financial information was prepared for comparative purposes only and is not necessarily indicative of what would have occurred had the acquisition been made at that time or of results which may occur in the future.
  
For the year ended
December 31, 2015
  
For the year ended
December 31, 2014
 
Pro Forma Revenues $33,045  $19,250 
Pro Forma Net Loss $(6,896,189) $(3,818,501)
         
Loss per Share $(0.63) $(0.39)

Note 6 - Equity Transactions

Private Placements

Founders’ Shares
On February 1, 2013, the Company issued an aggregate of 2,624,892 shares of common stock to its founders in exchange for a contribution of $0.01 cent per share. Aggregate proceeds from this transaction amounted to $27,120. The Company concurrently issued 750,108 additional shares to another founding stockholder in exchange for $7,750 of cash and the transfer of patented technology to the Company pursuant to the terms of the Contribution and Royalty Agreement described in Note 4.

On August 28, 2013, the Company issued 3,050,000 shares of common stock to the initial SpineZ stockholders in exchange for a contribution of $0.04 cents per share. Aggregate proceeds from this transaction amounted to $122,000, which became available to the Company for its use as general working capital upon the completion of the SpineZ Merger.

Private Placement
On September 16, 2013, the Company commenced a private placement of its common stock at an offering price of $2.50 per share. This financing transaction was completed in December 2013 with an aggregate of 1,346,175 shares issued for proceeds amounting to $3,056,651, net of issuance costs of $208,786, and a $100,000 subscription receivable that was paid on January 24, 2014. The Company also issued 10,000 shares of common stock as a partial fee paid to the placement agent who represented the Company in this financing transaction. The shares sold in this private placement were issued with certain rights that provide for such shares to be registered by the Company under the Securities Act of 1933 in the event that the Company files a registration statement with the Securities and Exchange Commission (“SEC”).

Public Placements

On December 19, 2014, the Company completed its Initial Public Offering (“IPO”) of common stock by selling 1,391,305 units pursuant to SEC rule 424(b)(4). Each unit consists of one share of common stock and one warrant. The unit sold for $5.75, and the exercise price of the warrant is $6.90 per share. The units traded on the NASDAQ exchange under the ticker symbol MDVXU. On February 2, 2015, the unit ceased trading and the common stock (MDVX) and warrant (MDVXW) began trading separately. Net of transaction costs, the Company raised approximately $6,732,000 in the IPO. On January 16, 2015, the underwriter exercised its entire 15% overallotment of shares, resulting in the issuance of an additional 208,695 shares of common stock and proceeds of $1,084,136, net of transaction costs.

2013 Stock Option Incentive Plan
On October 14, 2013, the Medovex Corp. Board of Directors approved the Medovex Corp. 2013 Stock Incentive Plan (the “Plan”).  The Company may grant incentive stock options to employees and non-statutory stock options to employees, consultants, and directors for up to 1,150,000 shares of common stock. The stock options are exercisable at a price equal to the market value on the date of the grant. The Plan gives full authority for granting options, determining the type of options granted, and determining the fair market value of the options to the Plan Administrator.

The Company has the right, but not obligation, to repurchase any shares obtained through exercise of an option from terminated Plan participants. The Company has 90 days from the date of termination to exercise it’s repurchase right. The Company must pay the Fair Market Value (“FMV”) of the shares if the termination was for any reason other than for cause, or the option price (if less than FMV of the shares) if the termination is for cause. The FMV is determined by the Plan Administrator on the date of termination.

F-12

For the year ended December 31, 2015, the following stock option grants were made:

Grant Date Options Granted  Exercise Price  Fair Value of Underlying Stock Intrinsic Value
1/27/2015  125,000   5.99   5.99 None
5/8/2015  50,000   3.61   3.61 None
8/11/2015  145,000   2.91   2.91 None
The option price was set at the estimated fair value of the common stock on the date of grant using the market approach. Under the market approach, the fair value of the common stock was determined to be the value of the stock on the date of the grant.
We utilize the Black-Scholes valuation method to recognize compensation expense over the vesting period. The expected life represents the period that our stock-based compensation awards are expected to be outstanding.
We use a simplified method provided in Securities and Exchange Commission release, Staff Accounting Bulletin No. 110, which averages an award's weighted average vesting period and contractual term for "plain vanilla" share options. The expected volatility was estimated by analyzing the historic volatility of similar public biotech companies in an early stage of development. No dividend payouts were assumed as we have not historically paid, and do not anticipate paying, dividends in the foreseeable future. The risk-free rate of return reflects the weighted average interest rate offered for US treasury rates over the expected term of the options.

The significant assumptions used to estimate the fair value of the equity awards granted in 2015 are;
Grant date January 27  May 8  August 11 
Weighted Fair value of options granted $3.97  $2.31  $1.94 
Expected term (years)  6   6   6 
Risk-free interest rate  1.48%  1.70%  1.71%
Volatility  76%  72%  76%
Dividend yield None  None  None 
During 2015, the Company granted options to purchase 320,000 shares of common stock to certain employees and consultants. The stock options vest as follows: 25% on date of grant and 25% on each of the next three anniversaries. The options granted were at the market value of the common stock on the date of the grant.

For the years ended December 31, 2015 and 2014, the Company recognized $253,659 and $33,972, respectively, as compensation expense with respect to option grants.

Stock Option Activity

The following is a summary of stock option activity for 2014 and 2015:

  Shares  
Weighted
Average
Exercise
Price
  
Weighted
Average
Remaining Contractual Term
(Years)
  
Aggregate
Intrinsic Value
 
Outstanding at 12/31/2013  60,000  $2.50   9.8  $-- 
Exercisable at 12/31/2013  15,000  $2.50   9.8  $-- 
                 
    Granted  --   --   --  $-- 
    Exercised  --   --   --   -- 
    Cancelled  --   --   --   -- 
Outstanding at 12/31/2014  60,000  $2.50   8.8  $-- 
Exercisable at 12/31/2014  30,000  $2.50   8.8  $-- 
                 
    Granted  320,000  $4.22   9.3  $-- 
    Exercised  --   --   --   -- 
    Cancelled  --   --   --   -- 
Outstanding at 12/31/2015  380,000  $3.95   9.1  $-- 
Exercisable at 12/31/2015  125,000  $3.95   9.1  $-- 

F-13

As of December 31, 2015, there were 255,000 shares of time-based, non-vested stock. Unrecognized compensation cost amounts to approximately $679,468 as of December 31, 2015 and will be recognized as an expense on a straight-line basis over a remaining weighted average service period of 2.71 years.

Note 7 – Commitments

OperatingLeases

Office Space
The Company pays TAG Aviation, a company owned by its Chief Executive Officer, Jarrett Gorlin (“Mr. Gorlin”) for office space that is currently being used as the Company’s principal business location plus utilities cost (see “Related Party Transactions”) on a monthly basis. Payments under this arrangement are $1,800 per month. Rent expense and utilities cost paid to TAG Aviation amounted to approximately $28,400 and $29,000$83,000 for the years ended December 31, 20152020 and 2014, respectively.

On July 8, 2015, the Company entered into a commercial building lease agreement with Sugar Oak Kimball Royal, LLC. The thirty-six month lease, having commenced on August 1, 2015, provides for the lease by the Company of approximately 2,358 square feet of space in Alpharetta, GA.  Base annual rent is initially set at approximately $2,750 per month.

Total lease expense for the year ended December 31, 2015 was approximately $14,0002019, respectively, related to this lease.  Future minimum lease payments under this rental agreement are approximately as follows:
these agreements.

F-41

For the year ended:

December 31, 2016 $34,000 
December 31, 2017  35,000 
December 31, 2018  21,000 
  $90,000 

Equipment

The Company entered into a non-cancelable 36consulting agreement with LilyCon Investments, LLC effective February 1, 2019 for services related to evaluation and negotiation of future acquisitions, joint ventures, and site evaluations/lease considerations. The duration of the consulting agreement is for a period of twelve months in the amount of $12,500 per month operating leasewith a $15,000 signing bonus. Either party may terminate this agreement for equipment on April 22, 2015.  with or without cause upon 30 days written notice. The agreement is renewable atalso provides LilyCon Investments with $35,000 in stock (to be calculated using an annual variable weighted average price from February 2019 through January 2020) to be granted on the endone-year anniversary of this agreement, if the term and requires the Companyagreement has not been terminated prior to maintain comprehensive liability insurance.


Total lease expense for the year ended December 31, 2015 was approximately $1,800.  Future minimum lease payments under this operating lease agreement are approximately as follows:

that date. For the year ended:

December 31, 2016 $2,600 
December 31, 2017  2,600 
December 31, 2018  800 
  $6,000 
Purchase Orders

For the years ended December 31, 20152020 and 2014,2019, the Company hadexpensed a total of approximately $484,000$65,000 and $61,000,$153,000, respectively, in outstanding purchase order obligations relatedcompensation to the build of the DenerveX device to Nortech and Bovie Inc.

Consulting Agreements

On December 2, 2013,LilyCon Investments. In February 2020, the Company engaged oneissued LilyCon Investments $35,000 in shares of its founding stockholders, Lifeline Industries Inc., to provide business development consulting services overH-CYTE stock at an average share price of $0.31 per share for a one-year period at a feetotal of $10,000 per month. Effective January 1, 2015, this fee was increased to $35,000 per month. Either party can cancel this agreement upon 30 days’ notice.

On March 31, 2015, the Company engaged Laidlaw & Company Ltd. to provide financial advisory services over a one-year period at a fee of $125,000.  The fee is payable in quarterly installments of $31,250 beginning at the start of the advisory period and every three months thereafter. The engagement terminates on March 31, 2016106,061 shares per the terms of the agreement. All amounts due were paid at December 31, 2015.

F-14

On JulyIn March 2020, this agreement was modified to lower the monthly payment amount to $5,000. This agreement was terminated effective April 1, 2015, the Company engaged a sales manager in Europe to provide sales, marketing, and distribution consulting services over a six-month period for $55,000.  The fee is payable in monthly installments of $9,167 per month.

Employment Agreements

2020.

The Company entered into Employment Agreementsa consulting agreement with Goldin Solutions, effective August 4, 2019, for media engagement and related efforts, including both proactive public relations and crisis management services. The agreement has a minimum term of six months, with a $34,650 monthly fee plus expenses payable each month, with the exception of its four executive officers for aggregate compensation amounting to approximately $834,000 per annum, plus customary benefits.


These employment agreements are for termsa first month discount of three years$12,600. For year ended December 31, 2020 and provide forDecember 31, 2019, the Company expensed $99,000 and $162,000, respectively. The Company terminated this agreement in March 2020.

The Company entered into a consulting agreement with Tanya Rhodes of Rhodes & Associates, Inc, effective June 15, 2020, to payserve as the Chief Technology Officer (Research) of the Company. The agreement has a minimum term of six months with an average fee of severance$20,000 per month plus expenses which increases 5% per month on January 1 of each calendar year unless an alternative retainer amount is negotiated and agreed upon by both parties. The Company extended the contract on January 1, 2021, resulting in monthly expenses of $22,500 plus expenses for services rendered.

F-42

Litigation

From time to time, the Company may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the eventnormal course of (i)our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect the Company’s terminationfinancial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect the Company due to legal costs and expenses, diversion of management attention and other factors. The Company expenses legal costs in the period incurred. The Company cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against the Company in the future, and these matters could relate to prior, current or future transactions or events. As of December 31, 2020, the Company had no litigation matters in which the Company believes require any accrual or disclosure.

Guarantee

The Company has guaranteed payments based upon the terms found in the management services agreements to affiliated physicians related to LI Dallas, LI Nashville, LI Pittsburgh, LI Scottsdale, and LI Tampa. For the years ending December 31, 2020 and 2019 payments totaling approximately $36,000 and $141,000, respectively, were made to these physicians’ legal entities. Due to the Company ceasing operations effective March 23, 2020 in LI Dallas, LI Pittsburgh, LI Scottsdale, and LI Tampa, the guaranteed payments for these clinics were suspended due to COVID-19 in March 2020. The Company will resume these guaranteed payments in April 2021.

Rion Agreements

On June 21, 2019, H-CYTE entered into an executive’s employment withoutexclusive product supply agreement with Rion, LLC (“Rion”) to develop and distribute (post FDA approval) a biologic for chronic obstructive pulmonary   disease (“COPD”), the fourth leading cause (ii)of death in the resignation by an executive for good reason, (iii)U.S. Rion has established a change in controlnovel biologics technology to harness the healing power of the Company, (iv)body. Rion’s innovative technology, based on science developed at Mayo Clinic, provides an off-the-shelf platform to enhance healing in soft tissue, musculoskeletal, cardiovascular and neurological organ systems. This agreement provides for a material reduction in an executive’s duties, or (v) a requirement that an executive move their primary work location more than 50 miles.


ComDel Manufacturing, Development10-year exclusive and Services Contract

extendable supply agreement with Rion to enable H-CYTE to develop proprietary biologics.

On July 8, 2015,October 9, 2019, the Company entered into a manufacturingservices agreement with ComDel Innovation, Inc. (“ComDel”).  The termsRion which provides the Company the benefit of Rion’s resources and expertise for the limited purpose of (i) consulting with and assisting H-CYTE in the further research and development for the generation of a new biologic and (ii) subsequently assisting H-CYTE in seeking and obtaining FDA Phase 1 IND clearance for this biologic as necessary. Rion also agrees to consult with H-CYTE in its arrangement for services from third parties unaffiliated with Rion to support research, development, regulatory approval, and commercialization of the service contract state ComDel is to manufacture, assemblebiologic.

With these agreements, Rion will serve as the product supplier and test the Company’s Streamline IV Suspension System (“IV Poles”), the patented product acquired in the Streamline acquisition, and to develop future product line extensionscontracted preclinical development arm of the IV Suspension System.


Co-Development Agreement

In September 2013,biologic. H-CYTE will control the Company executedcommercial development and the clinical trial investigation. After conducting the clinical efficacy trials of this biologic, H-CYTE intends to pursue submission of a Co-Development Agreement with James R. Andrews, M.D.Biologics License Application (“Dr. Andrews”BLA”) for review by the FDA for treatment of COPD.

An additional $350,000 in expense is expected to further evaluate, test and advise onbe incurred per the development of products incorporating the use of the patented technology. In exchange for these servicesRion agreements. At this time, the Company is obligatednot able to pay Dr. Andrews a royalty of 2% of revenues earned from applicable product sales over a period of 5 years. If Dr. Andrews is listed as inventor of any Improvement Patent on the DenerveX device during the 5 year term, he would continue to receive a 1% royalty after the 2% royalty expires for the duration of the effectiveness of the Improvement Patent.

Generator development agreement

In November 2014, the Company executed an agreement with Bovie, Inc. to develop an electrocautery generator that would be used exclusively with the DenerveX System.estimate when this expense will occur. The Company is obligatedhas recorded research and development expense of $1,150,000 and $0 related to reimburse Bovie up to $295,000 under this agreementRion, for development of the generator. For the years ended December 31, 20152020 and 2014,2019, respectively.

Note 11 – Debt

Convertible Note

The Convertible Notes payable represents a securities purchase agreement with select accredited investors, which was assumed in the Merger. The debt assumed by the Company paid approximately $181,200 and $105,000, respectively, under this agreement.

Note 8 – Long Term Liabilities

Finance Agreement

The Company enteredconsisted of $750,000 of units (the “Units”) with a purchase price of $50,000 per Unit. Each Unit consists of (i) a 12% senior secured convertible note, initially convertible into a commercial insurance premium finance and security agreement in December 2015.  The agreement financesshares of the Company’s annual D&O insurance premium. Payments are due in quarterly installments of approximately $26,033 and carry an annual percentage interest rate of 4.65%.

The Company had an outstanding balance of approximately $76,000common stock, par value $0.001 per share, at December 31, 2015 relateda conversion price equal to the agreement.

Promissory Notes

In conjunction with the consummationlesser of $0.40 or ninety percent (90%) of the Streamline acquisition on March 25, 2015, the Company assumed two promissory notes for approximately $135,000 and $125,000 to the Bankper share purchase price of North Dakota New Venture Capital Program and North Dakota Development Fund, both outside non-related parties.  Payments on both of the notes are due in aggregate monthly installments of approximately $5,700 and carry an interest rate of 5%.  Both of the notes have a maturity date of August 1, 2019.  The promissory notes had outstanding balances of approximately $223,000 and $0 at December 31, 2015 and December 31, 2014.

Expected future payments related to the promissory notes as of December 31, 2015, are approximately as follows:   

For the year ended:

2016 $68,000 
2017  68,000 
2018  68,000 
2019  19,000 
  $223,000 

F-15

The Company paid interest expense related to the promissory notes for the year ended December 31, 2015 in the amount of approximately $8,000.  The Company had unpaid accrued interest in the amount of approximately $69,000 at December 31, 2015 related to the promissory notes.

Convertible Debt

On November 9, 2015, the Company issued a convertible promissory note to Steve Gorlin, a director and the father of Jarrett Gorlin, the Company’s CEO, for the principal amount of up to $2,000,000. The loan principal was to be advanced in two installments of $1,000,000 each, the first installment being made upon execution of the promissory note and the second installment to be made by March 1, 2016. The Convertible Note provided that the principal and accrued but unpaid interest could be converted into common stock at $2 per share. The outstanding principal was to earn interest at a rate of 5.5% per annum and was to be paid quarterly. The Company also issued a 3 year warrant to Mr. Steve Gorlin to purchase 500,000any shares of common stock at $2.20 per share.

On January 25, 2016,or common stock equivalents issued in future private placements of equity and/or debt securities completed by the Company entered intofollowing this offering, and (ii) a modification agreement (the “Modification Agreement”) with Mr. Steve Gorlin. Mr. Steve Gorlin agreedthree-year warrant to immediately convert the first advance of $1,000,000 into an aggregate of 571,429 shares of its Common Stock, thus eliminating the Company’s $1,000,000 debt obligation.  Mr. Gorlin had no obligation to convert the promissory note.

On February 16, 2016, the Company and Mr. Steve Gorlin entered into an amendment to the Modification Agreement, reducing thepurchase such number of shares of Common Stock that Mr. Steve Gorlin received upon the conversionCompany’s common stock equal to one hundred percent (100%) of the $1,000,000 from 571,429 shares to 552,041 shares. The amendment in the amountnumber of shares to be received was made to satisfy NASDAQ requirements.  As consideration for the reduction in the amount of shares to be received, the exercise price of the warrant was reduced to $1.825 share.

On March 15th, the Board of Directors approved a second amendment to the Modification Agreement. The date for making the second installment of $1,000,000 was extended to November 1, 2016.  Additionally, the language in the Note was changed to clarify that the consideration received by the Company on the first installment was in the form of $970,000 cash and $30,000 in directors’ fees due to Mr. Steve Gorlin of which $10,000 had been accrued prior to issuance of the note and reduced as consideration upon issuance of the note.  The remaining $20,000 that is to be received in directors’ fees was accounted for as a reduction in paid in capital and will be recognized on a straight line basis quarterly as the dues are earned.

The Company recorded both the convertible debt and the accompanying warrant on a relative fair value basis of approximately $715,000 and $285,000, respectively. The closing price of the Company’s stock on the day prior to entering into the amendment to the Modification Agreement was $1.75 per share.  See Note 13 for the inputs used to value the warrant as of the respective issue date. Steve Gorlin was also granted piggyback registration rights with respect to the shares of common stock issuable upon conversion of the notes at $0.40. The Warrants were initially exercisable at a price equal to the lesser of $0.75 or ninety percent (90%) of the per share purchase price of any shares of common stock or common stock equivalents issued in future private placements of the debt and/or equity securities completed by the Company following the issuance of warrants. The Convertible Notes are secured by all of the assets of the Company.

F-43

The Convertible Notes sold in the offering were initially convertible into an aggregate of 1,875,000 shares of common stock. The down round feature was triggered on January 8, 2019, and the conversion price of the Convertible Notes was adjusted to $0.36. The Company recognized the down round as a deemed dividend of approximately $288,000 which reduced the income available to common stockholders.

On February 6, 2019, $100,000 of the Company’s $750,000 outstanding Convertible Notes, plus accrued interest, was converted into an aggregate of 251,667 shares of common stock, eliminating $100,000 of the Company’s debt obligation. The debt was converted into shares at $0.36 per share, which was the conversion price per the SPA subsequent to the trigger of the down round feature. In 2019, the Company redeemed $350,000 of convertible notes payable in principal and $52,033 in interest payable for three of the noteholders.

The Company reached an extension with the remaining noteholder, George Hawes, which extended the maturity date of the Hawes Notes for one year, until September 30, 2020. The notes had a principal balance of $300,000 plus penalties of approximately $85,000 and accrued interest of approximately $40,000 for a total adjusted principal balance upon the September 30, 2019 extension of $424,615. In connection with the April Offering, the Company entered into an amendment with the Investor with respect to the outstanding 12% Senior Secured Convertible Note due September 30, 2020. The Hawes Notes were purchased by the Investor from its original holder, George Hawes, on March 27, 2020. The Hawes Notes had a principal balance of $424,615 as of December 31, 2019. The amendment to the Hawes Notes among other things, eliminates the requirement that the Company make monthly payments of accrued interest. The Company determined the proper classification of the amendment based on ASC 470-50, Debt Modifications and Extinguishments. Because the change in the present value of cash flows of the modified debt was less than 10% when compared to the present value of the cash flows of the original debt, extinguishment accounting did not apply. The effective interest rate was reassessed resulting in an effective interest rate of 11.90% and interest expense as of September 30, 2020, of approximately $10,000. The Company converted the Hawes Notes plus accrued interest into 35,860,079 shares of Preferred A shares on September 11, 2020, upon the closing of the Rights Offering.

Notes Payable

Notes payable were assumed in the Merger and are due in aggregate monthly installments of approximately $5,800 and carry an interest rate of 5%. Each note originally had a maturity date of August 1, 2019. The Company finalized an eighteen-month extension to March 1, 2021. The promissory notes have an aggregate outstanding balance of approximately $67,000 and $78,000 at December 31, 2020 and December 31, 2019. The Company has not made payments on this note since February 10, 2020, due to COVID-19, resulting in accrued interest of approximately $1,900.

The short-term notes with related party were issued by the Company during 2019, and as of March 31, 2020 consisted of four loans totaling $1,635,000, made to the Company by Horne Management, LLC, controlled by former CEO, William E. Horne for working capital purposes. The loans bore interest rates ranging from 5.5% to 12%, in some cases increasing to 15% if not paid by the respective maturity date ranging from March 26, 2020 to May 13, 2020. Some of these loans provided for the issuance of warrants at 114% warrant coverage if the loan was not repaid within two months. None of these loans were repaid and 840,000 warrants were issued at an exercise price of $0.75 per share in the fourth quarter of 2019 and the first quarter of 2020. On April 23, 2020, Horne Management, LLC agreed to convert the related notes plus accrued interest into (i) 4,368,278 shares of common stock of the Company and (ii) a ten-year warrant to purchase up to an equivalent number of shares of the Company’s common stock with such conversion to be effective as of April 17, 2020. This warrant will have an exercise price equal to the price per share at which securities were offered to investors for purchase at the Rights Offering totaling $0.014 and is exercisable beginning on the day immediately following the earlier to occur of (x) the closing of the Rights Offering and (y) November 1, 2020. The Rights Offering closed on September 11, 2020. On the date of the transaction, the carrying amount of the note and accrued interest was approximately $1,717,000. The fair value of the Common Stock was valued based on the trading market price on the date of the transaction and the warrants were valued using a Lattice model. The fair value of the Common Stock and warrants issued in the transaction was approximately $218,000 and $199,000, respectively. Since the fair value of the common stock and warrants was less than the carrying amount of the note, the Company recorded a gain on extinguishment of the debt of approximately $1,300,000.

F-44

On March 27, 2020, the Company issued a demand note (the “Note”) in the principal amount of $500,000 to FWHC Bridge, LLC (the “Investor”) in exchange for a loan made by the Investor in such amount to cover the Company’s working capital needs. Subsequently on April 9, 2020, in exchange for an additional loan of $500,000 made by the Investor to the Company, the Company amended and restated the Note to reflect a new principal amount of $1,000,000 (the “April Secured Note”). The April Secured Note bears simple interest at a rate of 12% per annum. The Investor is an affiliate of FWHC Holdings, LLC, a pre-existing shareholder of the Company, which served as lead investor in the Company’s recent Series D Convertible Preferred Stock Offering.

On September 24, 2020, the Company issued an aggregate of 323,844,416 shares of its Series A Preferred Stock to the holders of outstanding promissory notes, issued in April 2020, in the aggregate principal amount and accrued interest of $4,483,618. Included in this issuance, FWHC was issued 123,031,819 shares of Preferred A for conversion of the outstanding promissory notes from April 2020, 75,162,429 shares of Preferred A Stock for conversion of the April Secured Note and upon exercise35,860,079 shares of Preferred A Stock for conversion of the warrants.Hawes Notes (see Note 11). The notes were converted pursuant to a mandatory conversion triggered by the completion of the Rights Offering.

All notes payable, except the promissory note having an outstanding balance of $67,000, were extinguished during the year ended December 31, 2020.

Paycheck Protection Program

On April 29, 2020, the Company issued a promissory note in the principal amount of $809,082 to the Bank of Tampa in connection with a loan in such amount made under the Paycheck Protection Program (“PPP Loan”). The PPP Loan bears interest at a rate of 1% per annum and is payable in eighteen monthly payments of $45,533 beginning on approximately August 14, 2021. The Company elected to use a 24-week Covered Period, per the SBA Paycheck Protection Program guidelines, the Covered Period ended on October 14, 2020.

The Company can apply for loan forgiveness in an amount equal to the sum of the following costs incurred by the Company:

1) payroll costs;

2) any payment of interest on covered mortgage obligations;

3) any payment on a covered rent obligation; and

4) any covered utility payment

The amount forgiven will be calculated (and may be reduced) in accordance with the Paycheck Protection Program criteria set by the SBA. Not more than 40% of the amount forgiven can be attributed to non-payroll costs, as listed above. As long as a borrower submits its loan forgiveness application within ten months of the completion of the Covered Period (as defined below), the borrower is not required to make any payments until the forgiveness amount is remitted to the lender by SBA. If the loan is fully forgiven, the borrower is not responsible for any payments. If only a portion of the loan is forgiven, or if the forgiveness application is denied, any remaining balance due on the loan must be repaid by the borrower on or before the maturity date of the loan. Interest accrues during the time between the disbursement of the loan and SBA remittance of the forgiveness amount. The borrower is responsible for paying the accrued interest on any amount of the loan that is not forgiven. The lender is responsible for notifying the borrower of remittance by SBA of the loan forgiveness amount (or that SBA determined that no amount of the loan is eligible for forgiveness) and the date on which the borrower’s first payment is due, if applicable. The Company plans on filing its forgiveness application in early 2021. The Company believes that such termsa majority of the PPP loan will be forgiven.

Note 12 – Derivative Liability – Warrants And Redemption Put

Derivative Liabilities

The Company’s derivative liabilities are classified within Level 3 of the fair value hierarchy because certain unobservable inputs were used in the valuation models. These assumptions included estimated future stock prices, potential down-round financings for the Warrants, and potential redemptions for the Redemption Put Liability.

F-45

The following is a reconciliation of the beginning and ending balances for the liability measured at fair value on the Note are no less favorable than it would receive from a third, unrelated party.


The Company did not pay any interest expense related to the convertible debtrecurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2015. 2020:

Schedule of Fair Value, Liabilitiesn Measured On Recurring Basis

Derivative Liability - Warrants
Beginning balance as of December 31, 2018$
January 8, 2019 – date of dilutive financing1,215,678
Exchange for common stock(72,563)
Fair value adjustments(827,260)
Balance at December 31, 2019315,855
Series D Warrant reclass from equity to liability classification509,764
Warrants issued with modification of Horne Management Notes198,994
Warrants issued with April 17, 2020 financing6,148,816
Fair value adjustments(2,986,853)
Warrant reclassification from liability to equity classification(4,186,576)
Balance at December 31, 2020$

Redemption Put Liability   
    
Beginning balance as of December 31, 2018 $ 
November 15, 2019 – date of issuance 

614,095

 
Fair value adjustments  

(346,696

)
Balance at December 31, 2019 $267,399 
Issuance of Series D Convertible Preferred Stock  5,305 
Fair value adjustments  (272,704)
Balance at December 31, 2020 $ 

(1)The Company did not have any assets or liabilities measured at fair value using Level 1 or 2 of the fair value hierarchy as of December 31, 2020 and December 31, 2019.
(2)Upon the closing of the Rights Offering on September 11, 2020, the Derivative Liability- Warrants was no longer applicable, and its fair value was reclassed to stockholder’s equity.
(3)The Series D Convertible Preferred Stock was converted into common stock on July 28, 2020 at which time the Redemption Put Liability was no longer applicable, and its fair value was adjusted to zero and the extinguishment was recorded to income.

Derivative Liability- Warrants

Series B Warrants

In connection with the securities purchase agreements executed in May 2018 (which the Company assumed in the Merger), whereby 108,250 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Shares”) and warrants were issued to purchase 2,312,500 shares of the Company’s common stock (“Series B Warrants”). The Series B Warrants had a three-year term at an exercise price of $0.75. The Series B Warrants contain two features such that in the event of a downward price adjustment the Company is required to reduce the strike price of the existing warrants (first feature or “down round”) and issue additional warrants to the award holders such that the aggregate exercise price after taking into account the adjustment, will equal the aggregate exercise price prior to such adjustment (second feature or “anti-dilution”).

On January 8, 2019, the Company issued equity securities which triggered the down round and anti-dilution warrant features. As a result, the exercise price of the warrants was lowered from $0.75 to $0.40 and 2,023,438 additional warrants were issued. The inclusion of the anti-dilution feature caused the warrants to be accounted for as liabilities in accordance with ASC Topic 815. The fair market value of the warrants of approximately $1,200,000 was recorded as a derivative liability as a measurement period adjustment to the purchase price allocation in the third quarter of 2019.

As part of the April 2020 offering, the majority holders of the Series B Warrants agreed to terminate all anti-dilution price protection in their warrants and adjusted the exercise price to equal the price per share at which shares of preferred stock are offered for purchase in the Rights Offering. The Company had unpaid accrued interestissued an additional 296,875 warrants to a certain Series B holder as compensation to terminate their anti-dilution price protection. The Company also issued 1,292,411 warrants to a certain Series B holder who was non-responsive in the amountCompany’s request to terminate their anti-dilution price protection. The modification resulted in an increase of approximately $7,500 at December 31, 2015$71,000 to the fair value of the derivative liability related to the convertible debt.Series B Warrants. In addition, the Company recorded a change in fair market value of approximately $317,000 to the fair value of the derivative liability before the reclass to equity.

F-46

Upon the closing of the Rights Offering, which occurred on September 11, 2020, the exercise price of the Series B Warrants became fixed at $0.014 and the warrants then met the conditions for equity classification. Consequently, they were revalued as of the date of the Rights Offering using a Lattice valuation technique with the following assumptions: Trading market price- $0.027, estimated exercise price- $0.014, volatility- 222%-260%, risk free rate- 0.12%-0.13% and an estimated remaining term ranging from 0.7 to 1.33 years. The fair value of the Series B Warrants totaling $73,805 was then reclassed from a derivative liability to stockholders’ equity.

Series D Warrants

In conjunction with the Series D Preferred Financing, the Company originally issued Series D warrants to purchase 14,944,753 shares of Common Stock with an exercise price of $0.75 per share. At inception, the Series D warrants met all the criteria to be classified as equity. As part of the April Offering, the exercise price of the Series D Warrants was reduced to the price per share at which shares of preferred stock are offered for purchase in the Offering. The modification of the exercise price resulted in the warrants requiring liability classification. The Series D Warrants were measured at fair value before and after the modification, resulting in a fair market value of approximately $510,000 when the warrants were reclassified to a liability on July 28, 2020.

Upon the closing of the Rights Offering, which occurred on September 11, 2020, the exercise price of the Series D Warrants became fixed at $0.014 and the warrants then met the conditions for equity classification. Consequently, the Series D Warrants were revalued as of the date of the Rights Offering using a Lattice valuation technique with the following assumptions: Trading market price- $0.027, estimated exercise price- $0.014, volatility- 111%, risk free rate- 0.67% and an estimated term of 9.2 years. The fair value of the Series D Warrants totaling $337,400 was then reclassed from a derivative liability to stockholders’ equity.

Horne Warrants

On April 23, 2020, Horne Management, LLC agreed to convert the related notes plus accrued interest into (i) 4,368,278 shares of common stock of the Company and (ii) a ten-year warrant to purchase up to an equivalent number of shares of the Company’s common stock with such conversion to be effective as of April 17, 2020. The warrant will have an exercise price equal to the price per share at which securities are offered to investors for purchase at the Qualified Financing. The revised exercise price caused the warrants to require liability classification at fair value and the warrants were valued using a Lattice model with the following assumptions: Trading market price- $0.05, estimated exercise price- $0.014, volatility- 101%, risk free rate- 0.65% and an estimated term of 10 years. At inception, the estimated fair value of the Horne Warrants was approximately $199,000.

Upon the closing of the Rights Offering, which occurred on September 11, 2020, the exercise price of the Horne Warrants became fixed at $0.014 and the warrants then met the conditions for equity classification. Consequently, the Horne Warrants were revalued as of the date of the Qualified Financing using a Lattice valuation technique with the following assumptions: Trading market price- $0.027, estimated exercise price- $0.014, volatility- 103%, risk free rate- 0.67% and an estimated term of 10 years. The fair value of the Horne Warrants totaling $107,123 was then reclassed from a derivative liability to stockholders’ equity.

April Bridge Loan and Converted Advance Warrants

The April Offering entitled the investors to warrants with the right to purchase up to 100% of the aggregate number of shares of Common Stock into which the Purchaser’s Note may ultimately be converted. The Company also received a $1,000,000 advance which was converted into the April Secured Note and April Secured Note Warrants in April 2020. The April Secured Note Warrants entitle the holder to purchase up to 200% of the aggregate number of shares of Common Stock into which the April Secured Note may ultimately be converted.

The Company received an aggregate of $2,842,695 in gross proceeds through the April Offering and an advance of $1,000,000 from the April Secured Note. The Company expected the price per share at which securities would be offered for purchase in the Rights Offering to be $0.014 resulting in the assumption there would be approximately 203,050,000 and 142,857,000 shares issuable upon exercise of the Purchaser Warrants and the April Secured Note Warrants, respectively. The warrants were valued using a Lattice model with the following assumptions: Trading market price- $0.05, estimated exercise price- $0.014, volatility- 103%, risk free rate- 0.65% and an estimated term of 10 years. At inception, the estimated fair value of the Purchaser Warrants and the April Secured Note Warrants was approximately $3,279,000 and $2,869,000, respectively for a total of approximately $6,149,000.

F-47
As

Upon the closing of the Rights Offering which occurred on September 11, 2020, the exercise price of the Purchaser and April Secured Note Warrants became fixed at $0.014 and the Company then had sufficient authorized and unissued shares available to satisfy all their commitments under their equity-linked contracts. There are 212,821,929 and 150,324,857 shares issuable upon exercise of the Purchaser and the April Secured Note Warrants, respectively for a total of 363,146,786 warrants. The Warrants were revalued as of the date of the Rights Offering using a Lattice valuation technique with the following assumptions: Trading market price- $0.027, estimated exercise price- $0.014, volatility- 107%, risk free rate- 0.67% and an estimated term of 10 years. The fair value of the Warrants of $3,668,247 was then reclassed from a derivative liability to stockholders’ equity.

When the Company entered into the April Offering and revised the exercise price of the warrants to the price per share at which shares of preferred stock are offered for purchase in the Rights Offering, they no longer had sufficient authorized and unissued shares available to satisfy all their commitments to issue shares under their equity-linked contracts. The Company has adopted the sequencing approach based on the earliest issuance date. Therefore, warrants issued before the April Offering did not require liability classification, while Warrants issued with the April financing, or subsequently, will be classified as liabilities until such time the Company has sufficient authorized shares.

The derivative liability - warrants has been remeasured as a change in fair value, of approximately $2,987,000 and $827,000 has been recorded as a component of other income  in the Company’s consolidated statement of operations for the years ended December 31, 2020 and 2019, respectively.

The fair value of the derivative liability included on the consolidated balance sheets was approximately $0 and $316,000 as of December 31, 2015,2020 and 2019, respectively.

In conjunction with the Series D Preferred financing in 2019 (See Note is presented net14), the Company offered the Series B warrant holders the option to exchange their warrants on the basis of discount1 warrant for 0.40 common shares. Warrant holders chose to exchange 1,007,813 warrants with a fair value of approximately $246,000, which will acrete over$75,000 for 403,125 shares of common stock with a fair value of approximately $73,000.On the lifedate of the note, based onexchange, the effectiveSeries B Warrants were first adjusted to fair value with the change in fair value being recorded in earnings.

Redemption Put Liability

As described in Note 14, the redemption put provision embedded in the Series D financing required bifurcation and measurement at fair value as a derivative. If the redemption put provision is triggered, it allows either payment in cash or the issuance of “Trigger Event Warrants”. Accordingly, the fair value of the Redemption put liability considered management’s estimate of the probability of cash payment versus payment in Trigger Event Warrants and was valued using a Monte Carlo Simulation which uses randomly generated stock-price paths obtained through a Geometric Brownian Motion stock price simulation. The fair value of the redemption provision was significantly influenced by the fair value of the Company’s stock price, stock price volatility, changes in interest method. Accretion expenserates and management’s assumptions related to the redemption factor. On July 28, 2020, the Series D Preferred Stock was converted into Common Stock, at which time the redemption put was no longer applicable and the fair value of the redemption put was adjusted to $0.

F-48

The fair market value of the redemption put liability at inception was approximately $614,000 which was recorded as a liability and remeasured to fair value at the end of each reporting period. The change in fair value of approximately $273,000 and $347,000 was recorded as a component of other income (expense) in the Company’s consolidated statement of operations for the year ended December 31, 20152020 and 2019, respectively. The fair value of the redemption put liability included on the consolidated balance sheet was approximately $39,000.

Note 9 - Income Taxes

For the years ended December 31, 2015$0 and 2014, the Company has incurred net losses and, therefore, has no current income tax liability.  The net deferred tax asset generated by these losses, which principally consist of start-up costs deferred for income tax purposes, is fully reserved$267,000 as of December 31, 2015, since it currently more likely than not that the benefit will not be realized in future periods.

The provision for Federal income tax consists2020 and 2019, respectively.

Note 13 - Common Stock Warrants

A summary of the following at December 31,:

Current Income Tax Expense:
 2015  2014 
  Federal $--  $-- 
  State  --   -- 
         
Total Current Income Tax Expense  --   -- 
         
Deferred Income Tax Benefit        
  Federal  2,426,744   995,402 
  State  253,875   114,918 
         
Total Deferred Tax Benefit  2,706,908   1,110,320 
         
Valuation Allowance  (2,706,908)  (1,110,320)
         
Total $--  $-- 
F-16

A reconciliation of the statutory federal income tax expense (benefit) to the effective tax is as follows:

  2015  2014 
Statutory rate - federal   34.0%   34.0%
State taxes, net of federal benefit  4.0   4.0 
         
Income tax benefit  38.0%  38.0%
Less valuation allowance  (38.0)  (38.0)
         
Total  0.0%  0.0%

Deferred tax assetsCompany’s warrant issuance activity and liabilities consist of the following at December 31,:

  2015  2014 
Deferred Tax Assets:      
    Start-up costs $3,528,944  $1,336,486 
    Share-based compensation  122,834   26,633 
Total Deferred Tax Assets  3,651,778   1,363,119 
Valuation Allowance  (3,651,778)  (1,363,119)
Net Deferred Tax Asset $--  $-- 
         
The Company is required to file federal income tax returns and state income tax returns in the states of Florida, Georgia and Minnesota. There are no uncertain tax positions at December 31, 2015. The Company has not undergone any tax examinations since inception and is therefore not subject to examination by any applicable tax authorities.

Note 10 - Related-Party Transactions

Aviation Expense

Periodically the Company may charter general aviation aircraft from TAG Aviation LLC (“TAG”), a company owned by Jarrett Gorlin. The total amount of general aviation expense paid to TAG amounted to approximately $25,500 and $33,000 during the years ended December 31, 2015 and 2014, respectively.
Operating Lease

As described in Note 7, the Company pay TAG Aviation, a company owned by Jarrett Gorlin, for month to month rental of office space at Dekalb-Peachtree Airport in Atlanta Georgia plus cost of utilities. Payments under this arrangement are $1,800 per month. Rent expense and utilities cost paid to TAG Aviation amounted to approximately $28,400 and $29,000related information for the years ended December 31, 20152020 and 2014, respectively.

Consulting Expense

On December 2, 2013, the Company engaged Lifeline Industries Inc., a founding stockholder who owns 375,000 shares of its common stock, to provide the Company with business development advisory services. Fees under this arrangement include a $45,000 up-front payment that is non-refundable and $10,000 per month for each month of services provided to the Company under this arrangement.  Effective January 1, 2015, this fee was increased to $35,000 per month. This arrangement is cancelable by either party upon 30 days’ notice. The Company paid $420,000 and $120,000 of fees for the years ended December 31, 2015 and 2014, respectively, under this arrangement.2019:

Summary of Warrant Activity

  Shares  

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Contractual

Life

 
Assumed as of the January 8, 2019 merger  12,108,743  $1.38   1.53 
Exchanged  (1,007,813)  0.40    
Expired  (2,183,478)  2.73    
Issued  35,888,624  $0.73   5.36 
Outstanding and exercisable at December 31, 2019  44,806,076  $0.78   4.59 
             
Issued  369,617,896   0.01   10.05 
Exercised  (1,000,000)  0.01    
Total outstanding and exercisable at December 31, 2020  413,423,972   0.015   10.30 

F-49

F-17

Convertible Debt

As more fully described in Note 8, on November 9, 2015, the Company issued a convertible promissory note to Steve Gorlin, a related party, for the principal amount of up to $2,000,000.

Note 11 - Research and Development

Devicix Prototype Manufacturing Agreement

In November 2013, the Company accepted a proposal from Devicix, a Minneapolis Minnesota based FDA registered contract medical device designer and developer, to develop a commercially viable prototype of its product that could be used to receive regulatory approval from the FDA and other international agencies for use on humans to relieve pain associated with Facet Joint Syndrome.  Through December 31, 2015, we have paid approximately $1,066,000 to Devicix.

The development work commenced in December 2013. The total estimated cost of this work was initially established at $960,000; however, the terms of the proposal allow either the Company or the manufacturer to cancel the development work with 10 days’ notice. During 2015, the Company incurred approximately $399,000 of expense under this agreement, with approximately $22,000 of the amount in payables at December 31, 2015. During 2014, the Company incurred approximately $586,000 in expenses under the agreement, of which approximately $37,000 was included in accounts payable at December 31, 2014.

DenerveX Generator Manufacturing Agreement

The DenerveX device requires a custom electrocautery generator for power. As described in Note 7, in November 2014, the Company contracted with Bovie International to customize one of their existing electrocautery generators for use with DenerveX Device, and then manufacture that unit on a commercial basis once regulatory approval for the DenerveX was obtained.

The Bovie agreement requires a base $295,000 development fee to customize the unit, plus additional amounts if further customization is necessary beyond predetermined estimates. Through December 31, 2015, we have paid approximately $287,000 to Bovie towards the $295,000 total. 

Nortech Manufacturing Agreement

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

Actual work on development of the final units began in November 2014. During 2015, the Company incurred approximately $273,000 of expense under this agreement, with approximately $52,000 of the amount in payables at December 31, 2015.  Through December 31, 2015, we have paid approximately $289,000 to Nortech.

For 2014, the Company incurred approximately $16,000 in expenses under the agreement, of which approximately $1,000 was included in accounts payable at December 31, 2014.

Note 12 – Intangible Assets

Intangible assets are summarized as follows:
     December 31, 
  Amortization  2015  2014 
Amortized Lives  Cost  Cost 
Developed Technology  7  $3,000,000  $-- 
Trademark  5   700,000   -- 
Total      3,700,000   -- 
Less Accumulated Amortization      (426,429)  -- 
Net      3,273,571   -- 
             
Non Amortized            
Goodwill      6,455,645   -- 
             
Total     $9,729,216   -- 
Amortization expense related to intangible assets for the years ended December 31, 2015 and 2014 was $426,429 and $0, respectively.

F-18

Expected future amortization of intangible assets as of December 31, 2015, is as follows:

Year ending December 31, Estimated Amortization Expense 
2016 $569,000 
2017  569,000 
2018  569,000 
2019  569,000 
2020  464,000 
Thereafter  534,000 
  $3,274,000 

Note 13 – Common Stock Warrant

As described in Note 8, on November 9, 2015, the Company issued a warrant to Steve Gorlin to purchase 500,000 shares of common stock at an exercise price of $2.20 as additional incentive for making the loan. The warrant is exercisable for up to three years from the date of issuance.

The fair value of the warrant wasall warrants issued are determined to be approximately $398,000by using the Black-Scholes-MertonLattice and Black-Scholes valuation techniquetechniques (see Note 12) and were assigned based on the relative fair value of both the convertible debtcommon stock and the warrants issued. The inputs used in the Lattice and Black-Scholes valuation techniques (see Note 12) to value each of the warrants as of their respective issue dates are as follows:

Schedule of Assumptions for Warrants

Event Description Date Number of Warrants  H-CYTE Stock Price  Exercise Price of Warrant  Grant Date Fair Value  Life of Warrant Risk Free Rate of Return (%)  Annualized Volatility Rate (%) 
Private placement 1/8/2019  5,000,000  $0.40  $0.75  $0.24  3 years  2.57   115.08 
Antidilution provision(1) 1/8/2019  2,023,438  $0.40  $0.40  $0.28  3 years  2.57   115.08 
Private placement 1/18/2019  6,000,000  $0.40  $0.75  $0.23  3 years  2.60   114.07 
Private placement 1/25/2019  1,250,000  $0.59  $0.75  $0.38  3 years  2.43   113.72 
Private placement 1/31/2019  437,500  $0.54  $0.75  $0.34  3 years  2.43   113.47 
Private placement 2/7/2019  750,000  $0.57  $0.75  $0.36  3 years  2.46   113.23 
Private placement 2/22/2019  375,000  $0.49  $0.75  $0.30  3 years  2.46   113.34 
Private placement 3/1/2019  125,000  $0.52  $0.75  $0.33  3 years  2.54   113.42 
Private placement 3/8/2019  150,000  $0.59  $0.75  $0.38  3 years  2.43   113.53 
Private placement 3/11/2019  2,475,000  $0.61  $0.75  $0.40  3 years  2.45   113.62 
Private placement 3/26/2019  500,000  $0.51  $0.75  $0.32  3 years  2.18   113.12 
Private placement 3/28/2019  375,000  $0.51  $0.75  $0.31  3 years  2.18   112.79 
Private placement 3/29/2019  62,500  $0.51  $0.75  $0.31  3 years  2.21   112.79 
Private placement 4/4/2019  500,000  $0.48  $0.75  $0.29  3 years  2.29   112.77 
Private placement 7/15/2019  200,000  $0.53  $1.00  $0.31  3 years  1.80   115.50 
Convertible debt extension 9/18/2019  424,000  $0.40  $0.75  $0.25  3 years  1.72   122.04 
Private placement of Series D Convertible Preferred Stock 11/15/2019  14,669,757  $0.28  $0.75  $0.19  10 years  1.84   89.75 
Short-term note related party 11/26/2019  400,000  $0.20  $0.75  $0.13  3 years  1.58   144.36 
Short-term note, related party 12/30/2019  171,429  $0.14  $0.75  $0.08  3 years  1.59   145.29 
Short-term note, related party 1/13/2020  268,571  $0.12  $0.75  $0.07  3 years  1.60   145.76 
Private placement of Series D Convertible Preferred Stock 1/17/2020  244,996  $0.15  $0.75  $0.13  10 years  1.84   144.30 
Granted for bridge financing 4/8/2020  296,875  $0.05  $0.40  $0.02  3 years  0.34   131.82 
Short-term note, related party conversion 4/17/2020  4,368,278  $0.05  $0.014  $0.05  10 years  0.65   100.64 
Granted for bridge financing(2) 9/11/2020  364,439,176  $0.05  $0.014  $0.017  10 years  0.65   96.97 

(1) The Company had warrants that triggered the required issuance of an additional 2,023,438 warrants as a result of the Company’s capital raise that gave those new investors a $0.40 per share investment price which required the old warrant holders to receive additional warrants since their price was $0.75 per share.

(2) The Company had estimated on April 17, 2020 that the number of warrants to be granted for the bridge financing would be 354,836,286. The bridge financing closed on September 11, 2020 in which an additional 8,310,479 warrants were issued above the original estimate for a total of 363,146,765. The fair market value associated with the additional warrants issued was recorded at approximately $715,000 and $285,000, respectively. Fair value measurement valuation techniques, to the extent possible, should maximize the use of observable inputs and minimize the use of unobservable inputs.  The Company’schange in fair value measurementsof derivative liability – warrants prior to being reclassed to equity. Upon closing of the warrant are designated as Level 1 since allRights Offering on September 11, 2020, the Company issued warrants to one of the significant inputs were observable, and quoted prices were available forSeries B Preferred shareholders of 1,292,411 due to an anti-dilution feature embedded in the four comparative companies in an active market.


The inputs used to value the warrant as of the respective issue date are as follows:
The market price of the Company’s stock on November 9, 2015 of $1.7075
Exercise price of the warrant: $2.20
Life of the warrant: 3 years
Risk free return rate: 1.27%
Annualized volatility rate of four comparative companies: 81%

Series B warrant.

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


Note 14 – Liquidity, Going Concern and Management’s Plans

The Company incurred net losses of approximately $6,525,000 and $2,937,000 for the years ended December 31, 2015 and 2014, respectively. The Company will continue to incur losses until such time as it can bring a sufficient number of approved products to market and sell them with margins sufficient to offset expenses.   

To date, the Company’s sole source of funds has been from the issuance of debt and equity.

The Company was founded in February 2013 with an approximately $35,000 investment from founding shareholders in exchange for common stock.

In August 2013, the Company merged with Spinez.

The Spinez founders invested an additional $122,000 into the Company for common stock. In December 2013, a private placement of common stock was closed, netting approximately $3,157,000 for the Company. In December 2014, the Company raised approximately $6,732,000 net of expenses in a public offering of its common stock.

In January 2015, the underwriter for the public offering exercised the overallotment of shares pursuant to the initial public offering, netting another $1,084,000.

As discussed in Note 8, the Company  issued a promissory note for $2,000,000 of convertible debt on November 9, 2015 to Steve Gorlin, a director and father of Jarrett Gorlin, the Company’s CEO.   The Company received $970,000 in cash and the elimination of $30,000 of directors fees upon execution of the agreement. A second installment of $1,000,000 is to be made by Mr. Steve Gorlin by November 1, 2016.,

F-19

The Company is exploring other fundraising options for 2016. However, if the Company is unable to raise sufficient financing, it could be required to undertake initiatives to conserve its capital resources, including delaying or suspending the development of its technology. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

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

Note 15 - Subsequent Events

On January 1, 2016, the consulting agreement with Lifeline Industries Inc., the related party owning 375,000 shares of common stock, as discussed in Note 8, was modified to decrease the monthly compensation to $5,000 through March 31, 2016.

On January 1, 2016, the consulting agreement with the European sales manager, as discussed in Note 7, was modified to decrease the monthly compensation to $5,000 through June 30, 2016.

On January 6, 2016, the Company granted an aggregate of 214,900 stock options to purchase common stock at $0.95 to certain employees and consultants.

On January 6, 2016, the Board of Directors authorized a reduction in the exercise price of the Company’s 1,391,305 outstanding public warrants, traded under the symbol “MDXW”, from $6.90 per share to $3.00 per share for the life of the public warrants.

On January 25, 2016, the Company and Mr. Steve Gorlin agreed to amend the conversion price of the promissory note discussed in Note 8 from $2.00 per share to $1.75 per share.  In turn, Mr. Gorlin agreed to immediately convert the promissory note into an aggregate of 571,429 shares of its Common Stock, eliminating the Company’s debt obligation. Additionally, Mr. Gorlin also agreed to acquire 571,429 additional shares of Common Stock at a price of $1.75 per share for a total purchase price of $1,000,000 within two months from the date of the agreement.  The modification agreement also amended the exercise price of the warrant issued to Mr. Gorlin on November 9, 2015 from $2.20 per share to $2.00 per share.

On February 16, 2016, the Company and Steve Gorlin entered into an Amendment to the Modification Agreement in order to reduce the amount of shares of Common Stock that Mr. Gorlin was to receive upon the conversion of the $1,000,000 promissory note from 571,429 shares to 552,041 shares. In consideration for reducing the amount of shares of common stock that he was to receive, the Company agreed to reduce the exercise price of Steven Gorlin’s 500,000 share Warrant from $2.00 per share to $1.825 per share.  Additionally, certain anti-dilution provisions in the Warrant that may have allowed for the issuance of additional warrants were eliminated and an absolute floor of $1.70 per share was added. This amendment to the Modification Agreement was made to address certain concerns of the NASDAQ Stock Market.

Effective March 1st, the Board of Directors approved a modification to the convertible Note with Steve Gorlin wherein the date for making the second investment of $1,000,000 was moved to November 1, 2016.  Additionally, the language in the Note was changed to specify that the consideration received by the Company was in the form of $970,000 cash and $30,000 of directors’ fees due to Steve Gorlin.

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
F-50
The audit committee of our board of directors was notified by management of a request to use an independent registered public accounting firm with a more local presence with regard to the Company’s location in the metropolitan Atlanta, Georgia area.  The decision to change accountants was approved by the board, such that the board provided notice to Marcum, LLP (the “Former Auditor”) of its dismissal, effective January 27, 2015, as the Company’s independent registered public accounting firm at the request of the Company’s management.  The Former Auditor served as the auditors of the Company’s financial statements from inception through January 27, 2015.

The report of the Former Auditor on the Company’s consolidated financial statements for the period beginning February 1, 2013 (inception) and ending on December 31, 2013 did not contain any adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle, except that there was an explanatory paragraph describing conditions that raised substantial doubt about the Company’s ability to continue as a going concern.   

In connection with the audit of the Company's consolidated financial statements for the period beginning February 1, 2013 (inception) and ended December 31, 2013, and in the subsequent interim period preceding Marcum’s dismissal, there were no disagreements with the Former Auditor on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedures which, if not resolved to the satisfaction of the Former Auditor, would have caused the Former Auditor to make reference to the matter in their report. There were no reportable events (as that term is described in Item 304(a)(1)(v) of Regulation S-K) during the period beginning February 1, 2013 (inception) and ended December 31, 2013, or in the subsequent period prior to Marcum’s dismissal, except that the Former Auditor advised the Company of a material weakness in internal control over financial reporting.
The Company has provided the Former Auditor with a copy of the foregoing disclosure, and requested that the Former Auditor furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with such disclosure. A copy of the letter from the Former Auditor addressed to the Securities and Exchange Commission dated as of January 29, 2015 is filed as Exhibit 16.1 on Form 8-K filed on January 30, 2015.
F-20

On January 27, 2015, our audit committee recommended, and our board of directors appointed, Frazier & Deeter, LLC (the “New Auditor”) as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2014 and 2013.
During the period beginning February 1, 2013 (inception) and ended December 31, 2013, and the subsequent interim period prior to the engagement of the New Auditor, the Company had not consulted with the New Auditor with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that would have been rendered on the Company’s consolidated financial statements, or any other matters set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
F-21

MEDOVEX CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

  
March 31, 2016
(unaudited)
  December 31, 2015 
Assets      
Current Assets      
Cash $471,224  $1,570,167 
Accounts receivable, Net  --   33,045 
Prepaid expenses  155,622   169,839 
Inventory  1,878   1,878 
Total Current Assets  628,724   1,774,929 
         
Property and Equipment, Net  26,023   24,838 
Deposits  2,751   2,751 
Developed Technology, Net  2,571,429   2,678,571 
Trademark, Net  560,000   595,000 
Goodwill  6,455,645   6,455,645 
Total Assets $10,244,572  $11,531,734 
Liabilities and Stockholders' Equity        
Current Liabilities        
Accounts payable $210,812  $278,309 
Accrued liabilities  149,072   100,317 
Interest payable  69,222   76,712 
Notes payable  109,269   134,540 
Total Current Liabilities  538,375   589,878 
Long-Term Liabilities        
Convertible debt  --   753,914 
Notes Payable, net of current portion  149,748   164,726 
Deferred Rent  786   491 
Total Long-Term Liabilities  150,534   919,131 
Total Liabilities  688,909   1,509,009 
Stockholders' Equity        
Preferred stock - $.001 par value: 500,000 shares authorized, no shares outstanding
  --   -- 
Common stock - $.001 par value: 49,500,000 shares authorized, 11,808,216 and 11,256,175 shares issued at March 31, 2016 and December 31, 2015, respectively, 11,606,593 and 11,048,203 shares outstanding at March 31, 2016 (unaudited) and December 31, 2015, respectively
  11,808   11,256 
Additional paid-in capital  21,524,583   20,164,911 
Due from Stockholder  (15,000)  (20,000)
Accumulated deficit  (11,965,728)  (10,133,442)
Total Stockholders' Equity  9,555,663   10,022,725 
Total Liabilities and Stockholders' Equity $10,244,572  $11,531,734 
See notes to consolidated financial statements

F-22

 

MEDOVEX CORP. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended March 31, 
  2016  2015 
       
Revenues $--  $-- 
         
Operating Expenses        
General and administrative  1,130,711   1,149,723 
Sales and marketing  21,272   -- 
Research and development  189,283   304,719 
Depreciation and amortization  144,170   -- 
Total Operating Expenses  1,485,436   1,454,442 
         
Operating Loss  (1,485,436)  (1,454,442)
         
Other Expenses        
     Interest Expense
  346,850   -- 
Total Other Expenses  346,850   -- 
Net Loss $(1,832,286) $(1,454,442)
         
Basic and diluted net loss per common share $(0.16) $(0.16)
         
Shares used in computing basic and diluted net loss per share  11,624,202   9,381,175 

See notes

Note 14- Mezzanine Equity and Series D Convertible Preferred Stock

Series D Convertible Preferred Stock

Series D Convertible preferred Stock

On November 15, 2019, the Company entered into a securities purchase agreement with selected accredited investors whereby the Company offered (i) up to consolidated financial statements

F-23

MEDOVEX CORP. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For238,871 shares of Series D Convertible Preferred Stock the three months ended March 31, 2016
  Common Stock  
Additional
Paid-in
  Due From  Accumulated  Stockholders' 
  Shares  Amount  Capital  Stockholder  Deficit  Equity 
Balance - December 31, 2015
  11,256,175  $11,256  $20,164,911  $(20,000) $(10,133,442) $10,022,725 
Conversion of promissory note on January 25, 2016  552,041   552   1,071,961   --   --   1,072,513 
Warrant price modification on January 25, 2016  --   --   18,050   --   --   18,050 
Warrant price modification on February 16, 2016  --   --   7,670   --   --   7,670 
Repayment of due from stockholder through forgone director fees  --   --   --   5,000   --   5,000 
Stock based compensation  --   --   261,991   --   --   261,991 
Net loss  --   --   --   --   (1,832,286)  (1,832,286)
Balance - March 31, 2016
  11,808,216  $11,808  $21,524,583  $(15,000) $(11,965,728) $9,555,663 

See notes(“Series D Shares”) at a price of $40.817 per share and (ii) a ten-year warrant (the “Series D Warrant”) to consolidated financial statements
F-24

MEDOVEX CORP. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three Months Ended March 31, 
  2016  2015 
Cash Flows from Operating Activities      
  Net loss $(1,832,286) $(1,454,442)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation  2,028   1,485 
Amortization of intangible assets  142,142   -- 
Amortization of debt discount  246,086   -- 
            Debt conversion expense  68,694    -- 
Stock based compensation  261,991   47,377 
Straight-line rent adjustment  295   -- 
Non-cash directors fees  5,000   -- 
Adjustment of fair value of warrant modification  25,720   -- 
Changes in operating assets and liabilities, net of effects of acquisition:        
                Accounts receivable  33,045   -- 
Prepaid expenses  14,217   34,133 
Accounts payable  (67,497)  118,655 
Interest payable  (3,671)   -- 
Accrued liabilities  48,755   13,691 
Net Cash Used in Operating Activities  (1,055,481)  (1,239,101)
Cash Flows from Investing Activities        
Acquisition of Streamline, Inc., net of cash received  --   (1,496,478)
Expenditures for property and equipment  (3,213)  (4,022)
Net Cash Used in Investing Activities  (3,213)  (1,500,500)
         
Cash Flows from Financing Activities        
        Principal payments under note payable obligation  (40,249)  -- 
Proceeds from issuance of common stock from underwriter’s overallotment  --   1,084,136 
Net Cash (Used in) Provided by Financing Activities  (40,249)  1,084,136 
Net Decrease in Cash  (1,098,943)  (1,655,465)
Cash - Beginning of period  1,570,167   6,684,576 
Cash - End of period $471,224  $5,029,111 
Non-cash investing and financing activities        
         
Issuance of common stock for acquisition of Streamline $--  $8,437,500 
Repayment of due from stockholder through forgone director fees  5,000   -- 
Conversion of note and accrued interest to common stock  1,072,513   -- 
Non-cash investing and financing activities $1,077,513  $8,437,500 
See notespurchase 14,669,757 shares of common stock. The Series D Warrants are exercisable for a period of 10 years from issuance at an initial exercise price of $0.75 per share, subject to consolidated financial statements
F-25

MEDOVEX CORP.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organizationadjustment for traditional equity restructurings and Significant Accounting Policies

Descriptionreorganizations.

On November 21, 2019, the Company entered into a securities purchase agreement with FWHC HOLDINGS, LLC an accredited investor for the purchase of Business


MedoveX Corp.146,998 shares of Series D Preferred Stock, par value $0.001 per share and the Series D Warrant resulting in $6.0 million in gross proceeds to the Company (the “Company” or “MedoveX”“FWHC Investment”), was incorporated in Nevada on July 30, 2013 as SpineZ Corp. (“SpineZ”) and changed its name to MedoveX Corp. on March 20, 2014.  MedoveX is.

The Company determined that the parent company of Debride Inc. (“Debride”), which was incorporated under the lawsnature of the StateSeries D Shares was more analogous to an equity instrument, and that the economic characteristics and risks of Florida on October 1, 2012.


On March 9, 2015, the Board of Directors of MedoveXembedded conversion option was clearly and Streamline, Inc., a Minnesota corporation (“Streamline”), approved an Agreement and Plan of Merger (the “Merger Agreement”). On March 24, 2015, Streamline shareholders approved the Merger Agreement and the transaction closed immediately thereafter. Under the Merger Agreement, STML Merger Sub, Inc. a wholly-owned subsidiary of MedoveX, merged with Streamline, and thus Streamline became a wholly-owned subsidiary of MedoveX. Streamline is in the business of designing, developing, manufacturing and marketing 510(k) and 510(k) exempt products for use in the medical field.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

These consolidated financial statements include the accounts of MedoveX Corp. and its wholly-owned subsidiary, Streamline. All intercompany accounts and transactions have been eliminated in consolidation.

Unaudited interim results

The accompanying consolidated balance sheet as of March 31, 2016, consolidated statements of operations for the three months ended March 31, 2016 and 2015, statement of changes in stockholders’ equity for the three months ended March 31, 2016 and the statements of cash flows for the three months ended March 31, 2016 and 2015 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments which included only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2016 and results of operations and cash flows for the three months ended March 31, 2016 and 2015. The financial data and other information disclosed in the notes to the consolidated financial statementsclosely related to the three month periods are unaudited. The results forSeries D Shares. As such, the three months ended March 31, 2016 areconversion option was not necessarily indicative of the resultsrequired to be expected forbifurcated from the year ending December 31, 2016 or for any other interim period or for any future year.

host under ASC 815, Derivatives and Hedging. The accompanying unaudited consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. ForCompany recognized a more complete discussion of significant accounting policies and certain other information, please referbeneficial conversion feature related to the financial statements included in our Annual Report on Form 10-KSeries D Shares of approximately $623,000 for the year ended December 31, 2015. These financial statements reflect all adjustments that are necessary for2019, which was credited to additional paid-in capital, and reduced the income available to common shareholders. Because the Series D Shares can immediately be converted by the holder, the beneficial conversion feature was immediately accreted and recognized as a fair presentation of results of operations and financial condition for the interim periods shown, including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year.

Use of Estimates

In preparing the financial statements, generally accepted accounting principles in the United States (U.S. GAAP) requires disclosure regarding estimates and assumptions used by management that affect the amounts reported in financial statements and accompanying notes. The Company’s significant estimates include the fair value, useful life and carrying amount of its patented technology, the deferred income tax asset and the related valuation allowance, and the fair value of its share based payment arrangements.

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

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash balances at March 31, 2016 and December 31, 2015 consists of funds depositedpreferred shareholders. Since the Series D Shares are redeemable in checking accounts with commercial banks.

F-26

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist solely of cash. At times throughout the year, the Company may maintain certain bank account balances in excess of FDIC insured limits. At December 31, 2015 and March 31, 2016, the Company had cash deposits that exceeded federally insured deposit limits.

The Company believes that its funds are deposited in high credit quality financial institutions. The Company has not experienced any losses in such accounts to date and believes it is not exposed to any significant credit risk associated with its cash deposits.

Accounts Receivable & Allowance for Doubtful Accounts

Accounts receivable represent amounts due from customers for which revenue has been recognized. Generally, the Company does not require collateral or any other security to support its receivables.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. This allowance is regularly evaluated by the Company for adequacy by taking into consideration factors such as past experience, credit quality of the customer base, age of the receivable balances, both individually and in the aggregate, and current economic conditions that may affect a customer’s ability to pay. Accounts receivable over 60 days past due are considered past due. The Company does not accrue interest on past due accounts receivable.

Receivables are written off only after all collection attempts have failed and are based on individual credit evaluation and the specific circumstances of the customer. The Company did not have any bad debt expense for the three months ended March 31, 2016 and 2015.

Inventory

Inventory consists of a finished goods unit of the Streamline IV Suspension System (IV Poles). Inventory is valued at the lower of cost or market, using the first–in, first-out (FIFO) method. The Company does not believe any inventory reserve is required as of March 31, 2016.

Goodwill And Purchased Intangible Assets

Goodwill is reviewed for impairment annually on December 31st or more frequently if changes in circumstances orupon the occurrence of events suggest impairment exists usingan event that is not solely within the Company’s control, they have been classified as mezzanine equity in the consolidated balance sheets.

The Company determined that the economic characteristics and risks of the embedded redemption provision were not clearly and closely related to the Series D Shares. The Company assessed the embedded redemption provision further, and determined it met the definition of a two-step process. In step 1,derivative and required classification as a derivative liability at fair value. On July 28, 2020, the Series D Shares were converted into shares of the Company’s common stock, at which time the redemption put liability was no longer applicable and its fair value was adjusted to $0.

The Company’s approach to the allocation of each reporting unitthe proceeds to the financial instruments was to first allocate basis to the redemption put liability at its fair values and the residual value to the Series D Shares and the Series D Warrants. Based upon the amount allocated to the Series D Shares the Company was required to determine if a beneficial conversion feature (“BCF”) was present. A BCF represents the intrinsic value in the convertible instrument, adjusted for amounts allocated to other financial instruments issued in the financing. The effective conversion price is calculated as the amount allocated to the convertible instrument divided by the number of shares to which it is indexed. However, a BCF is limited to the basis initially allocated. After allocating a portion of the proceeds to the other instruments, the effective conversion price was $0.24 compared to its carrying value, including goodwill. If the fair value exceedsshare price of $0.28, resulting in a BCF of $623,045 or $0.04 per share for the carrying value, no further work is requiredyear ended December 31, 2019.

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Based upon the above accounting conclusions and no impairment loss is recognized. If the carrying value exceedsadditional information provided below, the fair value, the goodwillallocation of the reporting unit is potentially impaired and the Company would then complete step 2 in order to measure the impairment loss. In step 2, the Company would calculate the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets (including unrecognized intangible assets) of the reporting unitproceeds arising from the fair value of the reporting unit. If the implied fair value of goodwillSeries D Preferred financing transaction is less than the carrying value of goodwill, the Company would recognize an impairment loss,summarized in the period identified, equal totable below:

Schedule of Series D Convertible Preferred and Warrant Financing

November 21, 2019 Series D Convertible Preferred and warrant financing: Proceeds Allocation  Financing Cost Allocation  Total Allocation 
Gross proceeds $6,000,000  $  $6,000,000 
Financing costs paid in cash     (111,983)  (111,983)
  $6,000,000  $(111,983) $5,888,017 
             
Derivative Liability:            
Derivative Put Liability $(614,095) $  $(614,095)
Deferred Financing costs     8,100   8,100 
             
Redeemable preferred stock:            
Series D Convertible Preferred Stock  (2,869,854)     (2,869,854)
Financing costs (APIC)     1,106   1,106 
Financing costs (Retained Earnings)     66,265   66,265 
Beneficial Conversion Feature  (623,045)     (623,045)
             
Investor Warrants (equity classified):            
Proceeds allocation  (1,893,006)     (1,893,006)
Financing costs (APIC)     36,512   36,512 
  $(6,000,000) $111,983  $(5,888,017)

Since the difference.


Other intangible assets consistSeries D Convertible Preferred Stock is perpetual and convertible at any time, the resulting discount of developed technology and$3,130,146 was accreted as a trademark. The Company reviewed intangible assets for impairment as changes in circumstances or the occurrence of events suggested the remaining value was not recoverable. Amortization on the intangibles is provided on a straight-line basis over the estimated useful lives of the assets as follows:

Trademark                                              5 years
Developed technology                        7 years
Fair Value Measurements

We measure certain non-financial assets at fair value on a non-recurring basis. These non-recurring valuations include evaluating assets such as non-amortizing intangible assets for impairment; allocating value to assets in an acquired asset group; and applying accounting for business combinations. We use the fair value measurement framework to value these assets and report the fair values in the periods in which they are recorded or written down.

The fair value measurement framework includes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair values in their broad levels. These levels from highest to lowest priority are as follows:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities;
Level 2:   Quoted prices in active markets for similar assets or liabilities or observable prices that are based on inputs not quoted on active markets, but corroborated by market data; and
Level 3: Unobservable inputs or valuation techniques that are used when little or no market data is available.
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The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used.
Such assumptions could include: estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. We may also engage external advisors to assist us in determining fair value, as appropriate.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets, generally three to five years. Repairs and maintenance are expensed as incurred. Improvements and betterments, which extend the lives of the assets, are capitalized.

Leases

The Company recognizes rent expense on a straight-line basis over the lease term. The lease term commencesPreferred Stock dividend on the date thatof issuance to record the Series D Convertible Preferred Stock to its redemption value of $6,000,000.

On January 17, 2020, the Company takes possessionentered into a securities purchase agreement with an accredited investor for the purchase of or controls2,450 shares of Series D Convertible Preferred Stock, par value $0.001 per share and a Series D Warrant resulting in $100,000 in gross proceeds to the physical useCompany. The Series D Convertible Preferred Stock and Warrants had the same terms as the FWHC Investment. There was no BCF associated with this financing because the effective conversion price after allocating a portion of the property. Deferred rentproceeds to the other instruments was higher than the share price.

January 17, 2020 Series D Convertible Preferred and warrant financing: Proceeds Allocation 
Gross proceeds $100,000 
Financing costs paid in cash   
  $100,000 
     
Derivative Liability:    
Derivative Put Liability $(5,305)
     
Redeemable preferred stock:    
Series D Convertible Preferred Stock  (62,793)
     
Investor Warrants (equity classified):    
Proceeds allocation  (31,902)
     
  $(100,000)

Since the Series D Convertible Preferred Stock is included in non-current liabilitiesperpetual and convertible at any time, the resulting discount of $37,207 was accreted as a Preferred Stock dividend on the consolidated balance sheet.


Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined indate of issuance to record the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) 605-10-S99, Revenue Recognition, which requires that four basic criteria be met before revenue can be recognized: (i) persuasive evidenceSeries D Convertible Preferred Stock to its redemption value of an arrangement exists; (ii)$100,000.

For the price is fixed or determinable; (iii) collectability is reasonably assured; and (iv) product delivery has occurred or services have been rendered. The Company sells its products primarily through direct sales. The Company recognizes revenue when title to the goods and risk of loss transfers to customers, provided there are no material remaining performance obligations required ofyear ended December 31, 2020, the Company or any matters of customer acceptance. The Company records estimated sales returns, discounts and allowances as a reduction of net salesrecorded approximately $278,000 in deemed dividends on the same period revenue is recognized.

Research and Development

Research and development costs are expensed as incurred.

Advertising

The Company expenses all advertising costs as incurred. For the three months ended March 31, 2016 and 2015, advertising costs were approximately $21,000 and $0, respectively.

Stock-Based Compensation

The Company accounts for stock-based compensationSeries D Convertible Preferred Stock in accordance with the ASC 718, Stock Compensation. ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718, awards result8% stated dividend resulting in a cost that is measured at fairtotal balance of Series D Convertible Preferred stock of $6,401,762. All outstanding shares of Series D Convertible Preferred Stock were converted into 15,773,363 shares of Common Stock on July 28, 2020. The conversion was pursuant to a mandatory conversion triggered by the majority holder of the Series D Convertible Preferred Stock as set forth in the Certificate of Designations.

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Schedule of Shares Outstanding

Mezzanine Equity Rollforward (Series D Convertible Preferred Stock)
Balance at January 8, 2019$-
Issuance of Series D Convertible Preferred Stock2,869,853
Inception deemed dividend3,130,147
Deemed dividend (8%)60,493
Balance at December 31, 20196,060,493
Issuance of Series D Convertible Preferred Stock62,793
Inception deemed dividend37,207
Deemed dividend (8%)277,719
Mandatory conversion of Series D Convertible Preferred Stock to Common Stock(6,438,212)
Balance at December 31, 2020$-

Series D Convertible Preferred Stock Preferences

Voting Rights

Holders of our Series D Convertible Preferred Stock (“Series D Holders”) have the right to receive notice of any meeting of holders of common stock or Series D Convertible Preferred Stock and to vote upon any matter submitted to a vote of the holders of common stock or Series D Convertible Preferred Stock. Each Series D Holder shall vote on each matter submitted to them with the holders of common stock. There are no shares of Series D Convertible Preferred Stock outstanding as of December 31, 2020.

Liquidation

Upon the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, each Series D Holder shall be entitled to receive, for each share thereof, out of assets of the Company legally available therefore, a preferential amount in cash equal to the stated value onplus all accrued and unpaid dividends. All preferential amounts to be paid to the awards’ grant date, based onSeries D Holders in connection with such liquidation, dissolution or winding up shall be paid before the estimated numberpayment or setting apart for payment of awards that are expectedany amount for, or the distribution of any assets of the Company’s to vestthe holders of the Company’s Series B and will result in a charge to operations


Income Taxes

common stock. The Company accountsaccrues these dividends as they are earned each period.

Note 15 - Income Taxes

The Company utilizes the liability method of accounting for income taxes underas set forth in FASB ASC Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for“Income Taxes”. Under the expected future tax consequences of events that have been included in the financial statements or tax returns.


Under thisliability method, deferred tax assets and liabilitiestaxes are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect forduring the yearyears in which the differences are expected to reverse.

Deferredbasis difference reverses. The Company accounts for interest and penalties on income taxes as income tax assets are reduced by aexpense. A valuation allowance to the extent management concludesallowances is recorded when it is more likely than not that the asseta tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply toIn determining the need for valuation allowances the Company considers projected future taxable income inand the years in which those temporary differences are expected to be recovered or settled.

The standard addresses the determinationavailability of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

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Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2015, and March 31, 2016 the Company does not have a liability for unrecognized tax uncertainties.

planning strategies.

The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. As of MarchDecember 31, 2016,2020, the Company has not recorded any uncertain tax positions and, therefore, has not incurred any interest or penalties relating to uncertain tax positions.


penalties. The Company’s evaluation was performed for the tax years ending December 31, 2015, 2014 and 2013, which remain subject toCompany is not currently under examination by major tax jurisdictions as of March 31, 2016.  The Company does not have any tax years that areFederal or State authority and is no longer subject to U.S. federal or state and local, or non-USexamination for years prior to 2017.

A reconciliation of the statutory federal income tax examinations.


Basic loss per shareexpense (benefit) to the effective tax is computed on the basis of the weighted average number of shares outstandingas follows for the reporting period. Diluted loss per share is computed on the basisyears ended December 31:

Schedule of the weighted average numberComponents of common shares plus dilutive potential common shares outstanding using the treasury stock method. Any potentially dilutive securitiesIncome Tax Expense (Benefit)

  2020  2019 
Statutory rate – federal  21.0%  21.0%
Effect of:        
State income tax, net of federal benefit  5.1   3.0 
State NOL true-up  (1.1)  (2.0)
Goodwill impairment  -   (9.0)
Prior year true up  2.7   - 
Other permanent differences  3.0   (1.0)
Change in valuation allowances  (30.7)  (13.0)
Income taxes  0.0%  0.0%

The Company’s financial statements contain certain deferred tax assets which have arisen primarily as a result of losses incurred that are anti-dilutive dueconsidered start-up costs for tax purposes, as well as net deferred income tax assets resulting from other temporary differences related to the Company’s net losses. There is no differencecertain reserves and differences between the basicbook and diluted net loss per share. 1,974,783 warrantstax depreciation and 594,900 common stock options outstanding were considered anti-dilutive at March 31, 2016. 185,000 stock options were considered anti-dilutive at March 31, 2015.


Business combinations

amortization.

The Company completed an acquisition on March 25, 2015. This transaction was recorded using guidelines provided by ASC 805, Business Combinations. Following these guidelines,assesses the consideration paid by MedoveX for Streamline was measured on the daterealizability of acquisition. An independent valuation of Streamline was performed using the discounted cash flow method. Based on the estimated value of Streamline, the consideration paid by MedoveX and the tangibledeferred tax assets of Streamline, Management determined the intangible portion of the purchase price should be assigned between developed technology, trademark, and goodwill. Refer to Note 4 for the summary of the purchase price allocation based on the completionavailable evidence, including a history of the valuationtaxable income and estimates of the assets and liabilities assumed.


Recently Issued Accounting Pronouncements

future taxable income. In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue Recognition - Revenue from Contracts with Customers” (ASU 2014-09) that requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service. This update is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods therein and requires expanded disclosures. The Company is currently assessing the impact the adoptionrealizability of ASU 2014-09 will have on its consolidated financial statements.

In November 2015, FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets, and liabilities be classified as noncurrent on the balance sheet.

ASU 2015-17 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. The Company is currently assessing the impact the adoption of ASU 2015-17 will have on its consolidated financial statements.

In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842). The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. The Company is currently assessing the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.
Note 3 - Property and Equipment

Property and equipment, net, consists of the following:
 Useful Life 
March 31,
2016
  
December 31,
2015
 
Furniture and fixtures5 years $19,636  $18,385 
Computers and software3 years  18,237   16,275 
    37,873   34,660 
Less accumulated depreciation   (11,850)  (9,822)
          
Total  $26,023  $24,838 
Depreciation expense amounted to $2,028 and $1,485, for the three months ended March 31, 2016 and 2015, respectively.
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Note 4 - Acquisition

On March 25, 2015, the Company acquired Streamline Inc. pursuant to an Agreement and Plan of Merger dated March 9, 2015.  As a result of this transaction, Streamline, Inc. is now a wholly owned subsidiary of the Company. Under the terms of the Agreement and Plan of Merger, the Company paid $1,397,466 cash and 1,875,000 shares of common stock. The Company incurred approximately $344,000 in acquisition related legal fees.

Per the approved Agreement and Plan of Merger with Streamline, the Company was to issue an aggregate of 1,875,000 shares of MedoveX common stock upon receipt of a transmittal letter from each Streamline shareholder. As of March 31, 2016, the Company had received transmittal letters from Streamline shareholders representing 1,673,377 shares of MedoveX common stock. While the assumption is the remaining shareholders will return a letter, the agreement is structured such that if a shareholder does not return a letter, no shares are issued. Additionally, 200,000 shares of MedoveX common stock are being held in escrow until September 25, 2016 to secure Streamline’s indemnification obligations under the Merger Agreement.  The terms of the Merger Agreement also require a commitment by MedoveX to supply a minimum of $750,000 in working capital to the Streamline subsidiary, to fund the operations and product development of the Company as needed. Of the $750,000 working capital commitment, approximately $129,000 and $11,000, has been funded for the three month periods ended March 31, 2016 and 2015, respectively. Of the $750,000 working capital commitment, approximately $641,000 has been funded through March 31, 2016.

The closing price of the common stock on March 25, 2015 was $4.50 per share. Based on this price and cash consideration, the acquisition of Streamline was valued at $9,834,966.

The following is a summary of the allocation of the fair value of Streamline.

Assets acquired   
    Cash $245,174 
    Inventory  1,878 
    Other assets  165 
    Developed technology  3,000,000 
    Trademark  700,000 
    Goodwill  6,455,645 
     
Total assets acquired  10,402,862 
     
Liabilities assumed    
    Accounts payable  301,940 
    Accrued liabilities  6,018 
    Notes Payable  259,938 
     
Total  567,896 
     
Net assets acquired $9,834,966 
Note 5 - Equity Transactions

Public Placement

On December 19, 2014, the Company completed its Initial Public Offering (“IPO”) of common stock by selling 1,391,305 units pursuant to SEC rule 424(b)(4). Each unit consists of one share of common stock and one warrant. The unit sold for $5.75, and the exercise price of the warrant is $6.90 per share. The units traded on the NASDAQ exchange under the ticker symbol MDVXU. On February 2, 2015, the unit ceased trading and the common stock (MDVX) and warrant (MDVXW) began trading separately. Net of transaction costs, the Company raised $6,731,783 in the IPO. On January 16, 2015, the underwriter exercised its entire 15% overallotment of shares, resulting in the issuance of an additional 208,695 shares of common stock and proceeds of $1,084,136, net of transaction costs.

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Stock-Based Compensation Plan

2013 Stock Option Incentive Plan

On October 14, 2013, the MedoveX Corp. Board of Directors approved the MedoveX Corp. 2013 Stock Incentive Plan (the “Plan”).  The Company may grant incentive stock options to employees and non-statutory stock options to employees, consultants, and directors for up to 1,150,000 shares of common stock.

The stock options are exercisable at a price equal to the market value of the common stock on the date of the grant. The Plan gives full authority for granting options, determining the type of options granted, and determining the fair market value of the options to the Plan Administrator.

The Company has the right, but not obligation, to repurchase any shares obtained through exercise of an option from terminated Plan participants. The Company has 90 days from the date of termination to exercise its repurchase right. The Company must pay the Fair Market Value (“FMV”) of the shares if the termination was for any reason other than for cause, or the option price (if less than FMV of the shares) if the termination is for cause. The FMV is determined by the Plan Administrator on the date of termination.

On January 6, 2016, the Board of Directors authorized the Company to issue options to purchase an aggregate of 214,900 shares of common stock to certain employees and consultants. The stock options vest as follows: 25% on date of grant and 25% on each of the next three years after the grant date. The options issued are exercisable at a price of $0.95, which is equal to the market value of the common stock on the date of the grant.

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

We use a simplified method provided in Securities and Exchange Commission release, Staff Accounting Bulletin No. 110, which averages an award's weighted average vesting period and contractual term for "plain vanilla" share options. The expected volatility was estimated by analyzing the historic volatility of similar public biotech companies in an early stage of development. No dividend payouts were assumed as we have not historically paid, and do not anticipate paying, dividends in the foreseeable future. The risk-free rate of return reflects the weighted average interest rate offered for US treasury rates over the expected term of the options.

The significant assumptions used to estimate the fair value of the equity awards granted are;
Grant date 
January 6,
2016
 
Weighted Fair value of options granted $0.67 
Expected term (years)  6 
Risk-free interest rate  1.82%
Volatility  83%
Dividend yield None 
For the three months ended March 31, 2016 and 2015, the Company recognized approximately $262,000 and $47,000, respectively, as compensation expense with respect to the stock options.

Stock Option Activity

As of March 31, 2016, there were 384,925 shares of time-based, non-vested stock options. As of March 31, 2016 there was approximately $561,864 of total unrecognized stock-based compensation related to these non-vested stock options. That expense is expected to be recognized on a straight-line basis over a weighted average period of 2.51 years.

The following is a summary of stock option activity at March 31, 2016:

  Shares  
Weighted
Average
Exercise
Price
  
Weighted
Average
Remaining Term
(Years)
  
Aggregate
Intrinsic Value
 
Outstanding at 12/31/2015  380,000  $3.95   9.1  $-- 
                 
Granted  214,900  $0.95   9.8  $-- 
Exercised  --   --   --  $-- 
Cancelled  --   --   --  $-- 
Outstanding at 3/31/2016  594,900  $2.87   9.2  $-- 
Exercisable at 3/31/2016  209,975  $3.28   9.2  $-- 
F-31

Note 6 - Commitments

OperatingLeases

Office Space
The Company pays TAG Aviation, a company owned by its Chief Executive Officer, Jarrett Gorlin (“Mr. Gorlin”) for office space that is currently being used as the Company’s principal business location plus utilities cost (see “Related Party Transactions”) on a monthly basis. Rent expense and utilities cost paid to TAG Aviation amounted to approximately $7,500 and $7,900 for the three months ended March 31, 2016 and 2015, respectively.

On July 8, 2015, the Company entered into a commercial building lease agreement with Sugar Oak Kimball Royal, LLC. The thirty-six month lease, having commenced on August 1, 2015, provides for the lease by the Company of approximately 2,358 square feet of space in Alpharetta, GA. Base annual rent is initially set at approximately $2,750 per month.

Total lease expense for the three months ended March 31, 2016 was approximately $8,250 related to this lease.  Future minimum lease payments under this rental agreement are approximately as follows:

For the year ended:

December 31, 2016 $25,000 
December 31, 2017  35,000 
December 31, 2018  21,000 
  $81,000 

Equipment
The Company entered into a non-cancelable 36 month operating lease agreement for equipment on April 22, 2015.  The agreement is renewable at the end of the term and requires the Company to maintain comprehensive liability insurance.  Total lease expense for the three month period ended March 31, 2016 was approximately $700. Future minimum lease payments under this operating lease agreement are approximately as follows:

For the year ended:

December 31, 2016 $2,000 
December 31, 2017  2,600 
December 31, 2018  800 
  $5,400 
Purchase Orders

For the three months ended March 31, 2016 and 2015, the Company had approximately $514,000 and $409,000 respectively, in outstanding purchase order obligations related to the build of the DenerveX device to Nortech and Bovie Inc.

Consulting Agreements

On December 2, 2013, the Company engaged one of its founding stockholders to provide business development consulting services over a one-year period at a fee of $10,000 per month. The agreement was subsequently extended and increased to $35,000 per month in 2015. Effective January 1, 2016, the fee was modified to $5,000 per month through June 2016. Either party can cancel this agreement upon 30 days’ written notice.

On July 1, 2015, the Company engaged Dirk Kemmstedt to provide sales, marketing and distribution consulting services over a six-month period for $55,000. Effective January 1, 2016, this consulting agreement was modified to decrease the monthly compensation to $5,000 through June 30, 2016.

Employment Agreements

The Company entered into Employment Agreements with each of its four executive officers for aggregate compensation amounting to approximately $834,000 per annum, plus customary benefits. These employment agreements are for terms of three years and provide for the Company to pay six months of severance in the event of (i) the Company’s termination of an executive’s employment without cause, (ii) the resignation by an executive for good reason, (iii) a change in control of the Company, (iv) a material reduction in an executive’s duties, or (v) a requirement that an executive move their primary work location more than 50 miles.
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Co-Development Agreement

In September 2013, the Company executed a Co-Development Agreement with James R. Andrews, M.D. (“Dr. Andrews”) to further evaluate, test and advise on the development of products incorporating the use of the patented technology. In exchange for these services the Company is obligated to pay Dr. Andrews a royalty of 2% of revenues earned from applicable product sales over a period of 5 years. If Dr. Andrews is listed as inventor of any Improvement Patent on the DenerveX device during the 5 year term, he would continue to receive a 1% royalty after the 2% royalty expires for the duration of the effectiveness of the Improvement Patent.

ComDel Manufacturing, Development and Services Contract

On July 8, 2015, the Company entered into a manufacturing agreement with ComDel Innovation, Inc. (“ComDel”).  The terms of the service contract state ComDel is to manufacture, assemble and test the Company’s Streamline IV Suspension System (IV Poles), the patented product acquired in the Streamline acquisition, and to develop future product line extensions of the IV Suspension System.

Generator development agreement

In November 2014, the Company executed an agreement with Bovie, Inc. to develop an electrocautery generator that would be used exclusively with the DenerveX System.

The Company is obligated to reimburse Bovie up to $295,000 under this agreement for development of the generator. For the three months ended March 31, 2016 and 2015, the Company paid approximately $0 and $19,000, respectively, under this agreement.
Note 7 – Long Term Liabilities

Finance Agreement

The Company entered into a commercial insurance premium finance and security agreement in December 2015. The agreement finances the Company’s annual D&O insurance premium. Payments are due in quarterly installments of approximately $26,033 and carry an annual percentage interest rate of 4.65%.

The Company had an outstanding balance of approximately $51,000 at March 31, 2016 related to the agreement.

Promissory Notes

In conjunction with the consummation of the Streamline acquisition on March 25, 2015, the Company assumed two promissory notes for approximately $135,000 and $125,000 to the Bank of North Dakota New Venture Capital Program and North Dakota Development Fund, both outside non-related parties. Payments on both of the notes are due in aggregate monthly installments of approximately $5,700 and carry an interest rate of 5%. Both of the notes have a maturity date of August 1, 2019. The promissory notes had outstanding balances of approximately $208,000 and $223,000 at March 31, 2016 and December 31, 2015, respectively.

Expected future payments related to the promissory notes as of March 31, 2016, are approximately as follows:

For the year ended:

2016 $53,000 
2017  68,000 
2018  68,000 
2019  19,000 
  $208,000 

The Company paid interest expense related to the promissory notes for the three months ended March 31, 2016 in the amount of approximately $2,800. The Company did not pay any interest expense related to the promissory notes for the three months ended March 31, 2015. The Company had unpaid accrued interest in the amount of approximately $69,000 at March 31, 2016 and December 31, 2015 related to the promissory notes.

F-33

Convertible Debt

On November 9, 2015, the Company issued a convertible promissory note to Steve Gorlin, a director and the father of Jarrett Gorlin, the Company’s CEO, for the principal amount of up to $2,000,000. The loan principal was to be advanced in two installments of $1,000,000 each, the first installment being made upon execution of the promissory note and the second installment to be made by March 1, 2016.

The Convertible Note provided that the principal and accrued but unpaid interest could be converted into common stock at $2 per share. The outstanding principal was to earn interest at a rate of 5.5% per annum and was to be paid quarterly. The Company also issued a 3 year warrant to Mr. Steve Gorlin to purchase 500,000 shares of common stock at $2.20 per share (see Note 8).

On January 25, 2016, the Company entered into a modification agreement (the “Modification Agreement”) with Mr. Steve Gorlin.  Mr. Gorlin agreed to immediately convert the promissory note into an aggregate of 571,429 shares of its Common Stock, eliminating the Company’s $1,000,000 debt obligation and any accrued interest in exchange for amending the conversion price of the promissory note from $2.00 per share to $1.75 per share.  The closing price of the Common Stock was $1.32 on January 25, 2016.  The fair value of the difference between the shares Mr. Gorlin received (552,041) and the shares he would have received under the original conversion terms (500,000) amounts to approximately $69,000, which has been recorded as additional interest expense.
Additionally, Mr. Gorlin also agreed to acquire 571,429 additional shares of Common Stock at a price of $1.75 per share for a total purchase price of $1,000,000 within two months from the date of the agreement. The January 25, 2016 modification agreement also amended the exercise price of the warrant issued to Mr. Gorlin on November 9, 2015 from $2.20 per share to $2.00 per share (see note 8).

On February 16, 2016, the Company and Steve Gorlin entered into an Amendment to the Modification Agreement in order to reduce the amount of shares of Common Stock that Mr. Gorlin was to receive upon the conversion of the $1,000,000 promissory note from 571,429 ($1.75 per share) shares to 552,041 ($1.81 per share) shares. In consideration for reducing the amount of shares of common stock that he was to receive, the Company agreed to reduce the exercise price of Steven Gorlin’s 500,000 share warrant from $2.00 per share to $1.825 per share (see Note 8). This amendment to the Modification Agreement was made to address certain concerns of the NASDAQ.

On March 15th, the Board of Directors approved a second amendment to the Modification Agreement. The date for making the second installment of $1,000,000 was extended to November 1, 2016. Additionally, the language in the Note was changed to clarify that the consideration received by the Company on the first installment was in the form of $970,000 cash and $30,000 in directors’ fees due to Mr. Steve Gorlin. The $30,000 in directors’ fees was recorded as a reduction in equity and expensed as earned. $10,000 of directors fees were earned in 2015 after issuance of the note. For the three months ended March 31, 2016, $5,000 of directors’ fees were earned by Mr. Gorlin to reduce the balance outstanding to $15,000.

The Company originally recorded both the convertible debt and the accompanying warrant on a relative fair value basis of approximately $715,000 and $285,000, respectively. The closing price of the Company’s stock on the day prior to issuing the convertible debt was $1.75 per share. See Note 8 for the inputs used to value the warrant as of the respective issue date. Steve Gorlin was also granted piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Note and upon exercise of the warrants.

Note 8 – Common Stock Warrant

As described in Note 7, on November 9, 2015, the Company issued a warrant to Steve Gorlin to purchase 500,000 shares of common stock at an exercise price of $2.20 as additional incentive for making the loan. The warrant is exercisable for up to three years from the date of issuance. The fair value of the warrant at the date of issuance was determined to be approximately $398,000 using the Black-Scholes-Merton valuation technique and, based on the relative fair value of both the convertible debt and the warrant, was recorded at approximately $715,000 and $285,000, respectively. Fair value measurement valuation techniques, to the extent possible, should maximize the use of observable inputs and minimize the use of unobservable inputs. The Company’s fair value measurements of the warrant are designated as Level 1 since all of the significant inputs were observable, and quoted prices were available for the four comparative companies in an active market.

The inputs used to value the warrant as of the respective issue date are as follows:

The market price of the Company’s stock on November 9, 2015 of $1.71
Exercise price of the warrant: $2.20
Life of the warrant: 3 years
Risk free return rate: 1.27%
Annualized volatility rate of four comparative companies: 81%
As more fully described in Note 7, the Company entered into two modification agreements with Steve Gorlin related to the convertible debt. Both of the modification agreements amended the exercise price of the warrant issued to Mr. Gorlin.  For both modifications, the Company calculated the fair value of the warrants immediately before and after the modification and recorded the difference as an increase to additional paid in capital and interest expense.
F-34

The inputs used to value the warrants as of the January 25, 2016 modification dates are as follows:
The market price of the Company’s stock of $1.32
Life of the warrant: 3 years
Risk free return rate: 1.11%
Annualized volatility rate of four comparative companies: 99.66%
The inputs used to value the warrants as of the February 16, 2016 modification dates are as follows:

 The market price of the Company’s stock of $1.43
 Life of warrant: 3 years
 Risk free return rate: 0.93%
 Annualized volatility rate of four comparative companies: 100.34%

The Company recognized approximately $26,000 in expenses related to the changes in the fair value of the warrant for the three months ended March 31, 2016.

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

Note 9 – Intangible Assets

Intangible assets are summarized as follows:

Amortized Amortization Lives  
March 31, 2016
Cost
  
December 31, 2015
Cost
 
Developed Technology  7  $3,000,000  $3,000,000 
Trademark  5   700,000   700,000 
Total      3,700,000   3,700,000 
Less Accumulated Amortization      (568,572)  (426,429)
Net      3,131,428   3,273,571 
             
Non Amortized            
Goodwill      6,455,645   6,455,645 
             
Total     $9,587,073  $9,729,216 
Amortization expense related to intangible assets for the three months ended March 31, 2016 and 2015 was $142,143 and $0, respectively.

Expected future amortization of intangible assets as of March 31, 2016, is as follows:
Year ending December 31, Estimated Amortization Expense 
2016 $427,000 
2017  569,000 
2018  569,000 
2019  569,000 
2020  464,000 
Thereafter  534,000 
  $3,132,000 
F-35

Note 10 - Income Taxes

For the period from February 1, 2013 (inception) to March 31, 2016, the Company has incurred net losses and, therefore, has no current income tax liability.  The net deferred tax asset generated by these losses, which principally consist of start-up costs deferred for income tax purposes, is fully reserved as of December 31, 2015 and March 31, 2016, sinceconsiders whether it is currently more likely than not that the benefitall or some portion of deferred tax assets will not be realized in future periods.
The Company is required to file federal income tax returns and state income tax returns in the states of Florida, Georgia and Minnesota. There are no uncertain tax positions at December 31, 2015 or March 31, 2016. The Company has not undergone any tax examinations since inception.

Note 11 - Related-Party Transactions

Aviation Expense

Periodically the Company may charter general aviation aircraft from TAG Aviation LLC (“TAG”), a company owned by Mr. Jarrett Gorlin. The Company believes that such aircraft charter is on terms no less favorable then it would receive from a third party. No general aviation expenses were paid to TAG for the three months ended March 31, 2016, and March 31, 2015.

Operating Lease

As described in Note 6, the Company pays TAG Aviation LLC, (“TAG”), a company owned by Mr. Gorlin, for month to month rental of office space at Dekalb-Peachtree Airport in Atlanta Georgia plus cost of utilities. Rent payments under this arrangement are $1,800 per month.

Rent expense and utilities cost paid to TAG Aviation amounted to approximately $7,500 and $7,900 for the three months ended March 31, 2016 and 2015, respectively.

Consulting Expense

On December 2, 2013, the Company engaged a founding stockholder who owns 375,000 shares of its common stock to provide the Company with business development advisory services. Fees under this arrangement included a $45,000 up-front payment that was non-refundable and $10,000 per month for each month of services providedrealized. Due to the Company under this arrangement. On January 1, 2015, this consulting agreement was modified to increase the monthly compensation to $35,000 through December 2015. Effective January 1, 2016, the fee was modified again to $5,000 per month through June 2016. Either party can cancel this agreement upon 30 days’ written notice. The Company paid $15,000 and $105,000, respectively, for the three months ended March 31, 2016 and 2015, under this new arrangement.

Convertible Debt

As more fully described in Note 7, on November 9, 2015, the Company issued a convertible promissory note to Steve Gorlin, a related party, for the principal amounthistory of up to $2,000,000.
Note 12 - Research and Development

Devicix Prototype Manufacturing Agreement

In November 2013, the Company accepted a proposal from Devicix, a Minneapolis, Minnesota based FDA registered contract designer and developer, to develop a commercially viable prototype of its product that could be used to receive regulatory approval from the FDA and other international agencies for use on humans to relieve pain associated with Facet Joint Syndrome. Through March 31, 2016, we have paid approximately $1,183,000 to Devicix.

The development work commenced in December 2013. The total estimated cost of this work at contract signing was $960,000; however, the terms of the proposal allow either the Company or the designer and developer to cancel the development work with 10-days’ notice. The Company incurred expenses of approximately $117,000 and $156,000 for the three months ended March 31, 2016 and 2015, respectively, of which approximately $24,000 was included in accounts payable as of March 31, 2016.

Denervex Generator Manufacturing Agreement

The DenerveX device requires a custom electrocautery generator for power. As described in Note 6, in November 2014, the Company contracted with Bovie International to customize one of their existing electrocautery generators for use with DenerveX Device, and then manufacture that unit on a commercial basis once regulatory approval for the DenerveX was obtained. The Bovie agreement requires a base $295,000 development fee to customize the unit, plus additional amounts if further customization is necessary beyond predetermined estimates.

The Company paid approximately $0 and $19,000 for the three months ended March 31, 2016 and 2015, respectively, under this agreement. Through March 31, 2016, we have paid approximately $287,000 to Bovie.
F-36

Nortech Manufacturing Agreement

In November 2014, the Company selected Nortech Systems Inc. (“Nortech”), a Minneapolis, Minnesota based FDA registered contract manufacturer, to produce approximately 1,200 DenerveX devices from the prototype supplied by Devicix for use in final development and testing. The agreement with Nortech includes agreed upon per unit prices for delivery of the devices.

Actual work on development of the final units began in November 2014. The Company paid approximately $29,000 and $87,000 to Nortech for the three months ended March 31, 2016 and 2015, respectively. Through March 31, 2016, we have paid approximately $318,000 to Nortech, of which approximately $9,000 was included in accounts payable as of March 31, 2016.

Note 13– Liquidity, Going Concern and Management’s Plans

The Company incurred a net loss of approximately $1,832,000 and $1,454,000 for the three months ended March 31, 2016 and 2015, respectively. The Company will continue to incur losses until such time as it can bring a sufficient number of approved products to market and sell them with margins sufficient to offset expenses.   

To date, the Company’s sole source of funds has been from the issuance of debt and equity.

In January 2015, the underwriter for the public offering exercised the overallotment of shares pursuant to the initial public offering, netting another $1,084,000.

As discussed in Note 7, the Company issued a promissory note for up to $2,000,000 of convertible debt on November 9, 2015 to Steve Gorlin, a director and father of Jarrett Gorlin, the Company’s CEO. The Company received $970,000 in cash and the elimination of $30,000 of future directors’ fees upon execution of the agreement. A second installment of $1,000,000 is expected to be made by Mr. Steve Gorlin by November 1, 2016.
As discussed in Note 14, in April 2016, a private placement of common stock raised approximately $1,167,000 in cash for the Company, net of fees.

The Company is exploring additional fundraising options for the remainder of 2016. However, if the Company is unable to raise sufficient financing, it could be required to undertake initiatives to conserve its capital resources, including delaying or suspending the development of its technology. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

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

Note 14 - Subsequent Events

In April 2016, the Company entered into a unit purchase agreement with selected accredited investors whereby the Company had the right to sell in a private placement a minimum of $1,000,000 and up to a maximum of $2,000,000 of units. Each unit had a purchase price of $100,000 and consisted of (i) 86,957 shares of the Company’s common stock, par value $0.001 per share at a purchase price of $1.15 per share, and (ii) a warrant to purchase 43,478 shares of common stock. Each warrant has an initial exercise price of $1.30 per share and is exercisable six months following the date of issuance for a period of five (5) years from the date of issuance.

At the initial closing, the Company issued to the Investors 1,002,195shares of common stock and warrants to purchase 501,097 shares of common stock and received gross proceeds of $1,157,035.  In connection with the initial closing of the offering, the Company paid the placement agent a cash fee of $138,845 and will issue five year warrants to purchase up to 150,487 shares to the placement agent with an exercise price of $1.30 per share.  In addition, the Company reimbursed the placement agent for its expenses.
At the final closing, the Company issued to the investors an additional 209,565 shares of common stock and warrants to purchase 104,782 shares of Common Stock and received gross proceeds of $240,999.  In connection with the final closing of the offering, the Company paid the placement agent a cash fee of $28,920 and will issue five year warrants to purchase up to 20,956 shares to the placement agent with an exercise price of $1.30 per share.  
The final closing constituted the completion of the offering, which, in the aggregate, yielded $1,398,034 in gross proceeds to the Company and a total of 1,211,760 shares and warrants to purchase 605,880 shares to be issued to investors. The placement agent collected an aggregate of approximately $222,000 in total fees relating to the offering, and was also issued warrants to purchase an aggregate of 181,992 shares.
In May 2016, the Board of Directors authorized Management to seek buyers for Streamline, Inc., the Company’s wholly owned subsidiary acquired in March 2016. The Company seeks additional funds to complete the development and launch of the Company’s primary product, the DenerveX device. Selling this business unit could raise the necessary funds in a non-dilutive manner to existing shareholders.  The Company is presently carrying Streamline related debt of approximately $273,000, and approximately $9,600,000 in intangible assets related to developed technology, trademark and goodwill.  Streamline is immediately available for sale in its present condition.
F-37


1,391,305 
Shares of Common Stock

PROSPECTUS
JUNE [●], 2016

ALTERNATE “SELLING SECURITYHOLDER” PROSPECTUS
The information in this prospectus is not complete and may be changed.  The Selling Stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUSSUBJECT TO COMPLETIONDATED  JUNE [●], 2016

    MEDOVEX CORPORATION
This prospectus relates to the sale by the selling stockholders identified herein of up to 2,499,623 shares of common stock of MedoveX Corporation (the “Company”), which includes 1,287,863 shares of common stock issuable upon the exercise of outstanding warrants.
There are no underwriting arrangements to sell the shares of common stock that are being offered by the selling stockholders hereunder. The prices at which the selling stockholders may sell shares will be determined by the prevailing market price for the shares or in privately negotiated transactions. We will not receive any proceeds from the sale of these shares by the selling stockholders.  All expenses of registration incurred in connection with this offering are being borne by us, but all selling and other expenses incurred by the selling stockholders willCompany, management believes it is not more likely than not that all of the deferred tax assets can be borne byrealized. Accordingly, the selling stockholders.
Our common stock is quotedCompany established and recorded a full valuation allowance on the NASDAQ Capital Market (“NASDAQ”)its net deferred tax assets of $12.5 million and trades under the symbol “MDVX.”  Our Series A Warrants are quoted on NASDAQ$10.5 million as of December 31, 2020 and trade under the symbol “MDVXW.” On June 16, 2016, the last reported sale price of our common stock as reported on NASDAQ was $1.89 per share. All amounts herein are in thousands, except for share and per share data.
2019, respectively.

Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties in the section entitled “Risk Factors” within this prospectus before making a decision to purchase our stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is June [●], 2016.
Alternate Page for Selling Securityholder Prospectus - 1

TABLE OF CONTENTS
F-53
 Page
Prospectus Summary
Risk Factors
Special Note Regarding Forward-Looking Statements and Information
Use of Proceeds
Alt Pros - 3
Dividend Policy
Market Information
Selected Consolidated Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business
Management
Security Ownership of Certain Beneficial Owners and Management
Certain Relationships and Related Transactions
Description of Capital Stock
Plan of Distribution
Alt Pros - 4
Selling Securityholders
Experts
Legal Matters
Where You Can Find More Information
Index to Financial Statements
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The selling stockholders are offering to sell shares of our common stock

Deferred tax assets and seeking offers to buy shares of our common stock only in jurisdictions where such offers and sales are permitted. You should assume that the information appearing in this prospectus is accurate only asliabilities consist of the date on the front coverfollowing at December 31:

Schedule of this prospectus. Our business, financial condition, results of operationsDeferred Tax Assets and prospects may have changed since that date.


Alternate Page for Selling Securityholder Prospectus - 2

The Offering
Common stock offered by the selling stockholders:2,499,623 shares of the Company’s $0.001 par value common stock, which includes 1,287,863 shares of common stock underlying warrants.    
Common stock outstanding before and after this offering:
12,855,803(1) and 14,143,149(2)
Use of proceeds:We will not receive any proceeds from the sale of shares in this offering by the selling stockholders but we would receive $1,879,221.90 from the exercise of all of the warrants for which the underlying shares are being registered.
NASDAQ Market symbol:MDVX (our Series A Warrants are traded under the symbol “MDVXW”)
Risk factors:You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors” section beginning on page 5 of this prospectus before deciding whether or not to invest in shares of our common stock.
(1)
The number of outstanding shares before the offering is based upon 12,855,803 shares outstanding as of June 16, 2016.
(2)The number of shares after the offering is 14,143,149 shares outstanding assuming (i) 12,855,803 shares outstanding as of June 16, 2016 and (ii) the selling shareholders exercise their warrants into an aggregate of 1,287,863 shares of common stock. This figure assumes no exercise of our Series A Warrants.
USE OF PROCEEDS
We will not receive any proceeds from the sales of common stock offered by the selling stockholders.  We may receive proceeds from any exercise of outstanding warrants. If allLiabilities

  2020  2019 
Deferred Tax Assets:        
Federal and state net operating loss carry forwards $9,512,596  $7,302,375 
Capitalized start-up costs  2,210,392   2,483,736 
Capitalized research and development costs  462,768   424,390 
Patents  41,842   57,907 
Share-based compensation  241,177   242,437 
Other  112,376   25,405 
Total gross deferred tax assets  12,581,151   10,536,250 
Deferred Tax Liabilities        
Right-of-use asset  (70,914)   
Total gross deferred tax liabilities  (70,914)   
Valuation Allowance  (12,510,237)  (10,536,250)
Net deferred tax assets $    

Utilization of the warrants exercisable for shares of common stock being registered in this offering are exercised, we could receive net proceeds of upoperating loss carryforwards is subject to approximately $1,879,221.90. The holdersa substantial annual limitation due to the “ownership change” limitations provided by Section 382 and 383 of the warrants are not obligated to exercise the warrantsInternal Revenue Code of 1986, as amended, and we can provide no assurance that the holders of the warrants will choose to exercise all or any of the warrants.


We intend to use the estimated net proceeds received upon exercise of the warrants for working capital and general corporate purposes.
SECURITIES ISSUED TO THE SELLING STOCKHOLDERS
In March 2016, we commenced a private offering of up to $2 Million of Units, consisting of one share of our common stock and a Warrant exercisable for one share of our common stock (“the Unit Warrant.”)  We raised $ 1,398,033.50 from the sale of our Units.  Laidlaw & Co. (UK) Ltd. acted as the placement agent for the offering and has received a cash commission of an aggregate of $192,764.02. The shares of common stock sold in our recent private placement and the shares underlying the warrants soldother similar state provisions. Any annual limitation may result in the private placement are being included in this Registration Statement on Form S-1.
Alternate Page for Selling Securityholder Prospectus - 3

SELLING STOCKHOLDERS
The table below sets forth information concerning expiration of net operating loss carryforwards before utilization. As of December 31, 2020, the resale by the selling stockholdersCompany had $39.7 million of upU.S. federal net operating loss carryforwards available to 2,499,623 shares of our common stock, allreduce future taxable income, of which are being registered$32.5 million will be carried forward indefinitely for sale for the accountsU.S. federal tax purposes and $7.2 million will expire beginning in 2035 to 2037. The Company also has $26.0 million of the selling stockholdersU.S. state net operating loss carryforwards of which $25.3 million will be carried forward indefinitely and include (i) 787,863 shares of common stock issuable upon the exercise of the warrants previously issued with an exercise price of $1.30 per share (of which 21,514 shares underlie a warrant issued$.7 million that will expire beginning in 2035 to Jarrett Gorlin, our Chief Executive Officer), (ii) 500,000 shares of our common stock issuable upon exercise of warrants at an average exercise price of $1.71 per share held by Steve Gorlin, our2037.

Note 16 - Subsequent Events

On January 12, 2021, Mr. William Horne stepped down as Chairman of the Boardboard of Directors, and (iii) 1,211,760 sharesdirectors (the “Board”) of our common stock held by certain selling stockholders.  

The shares of common stock referred to above are being registered to permit public salesH-Cyte, Inc. (the “Company”). Mr. Horne will remain a member of the shares, andBoard.

On January 12, 2021, Mr. Raymond Monteleone was appointed the selling stockholders may offer the shares for resale from time to time pursuant to this prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirementsnew Chairman of the Securities Act or pursuant to another effective registration statement covering those shares. We may from time to time includeBoard. Mr. Monteleone is a current member of the Board.

As of March 24, 2021, an additional selling stockholders in supplements or amendments to this prospectus.

The selling stockholders, including our officers and directors, obtained their shares8,950,400 Series A Preferred Stock was converted into Common Stock at the request of our stock in the following transactions:
certain Series A Preferred Stockholders.

(i)787,863 shares of common stock issuable upon the exercise of the warrants previously issued with an exercise price of $1.30 per share issued in a private placement conducted in April 2016;F-54
 (ii)500,000 shares of our common stock issuable upon exercise at an average exercise price of $1.71 per share of warrants held by Steve Gorlin, our Chairman of the Board of Directors; and
(iii)1,211,760 shares of our common stock held by certain of the selling stockholders originally issued in a private placement conducted in April 2016. 
Other than the stock transactions discussed above, we have not entered into any transaction nor are there any proposed transactions in which any founder, director, executive officer, significant shareholder of our company or any member of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.

All of the securities listed below are being registered in this Registration Statement, which does not include all of the securities outstanding as of the date hereof.   
Beneficial ownership is determined in accordance with the rules of the SEC. The selling stockholders’ percentage of ownership of our outstanding shares in the table below is based upon 12,855,803 shares of common stock issued and outstanding as of June 16, 2016.
Name of Selling Stockholder 
Common Stock
Beneficially
Owned Prior to the
Offering(1)
  
Common Stock
Covered
by this
Prospectus
  
Common Stock
Beneficially
Owned Upon
Completion of
this Offering(1)(2)
  
Percentage of
Common
Stock Owned Upon
Completion of this
Offering(1)(3)
 
Barry Honig  1,129,138(4)  130,435   1,390,009 (4)  9.83%
Jarrett S. Gorlin  557,857   64,542   622,399   4.40%
Gerald De Jonge  -   21,131   21,131   0.15%
Andrew Armfelt  -   65,218   65,218   0.46%
Bruno Casatelli  -   16,956   16,956   0.12%
John R. & Linda L. Harrison  -   234,783   234,783   1.66%
Steven J. Henry  -   62,610   62,610   0.44%
Harry P. Keenan  -   15,000   15,000   0.11%
Justin McKenna  -   25,800   25,800   0.18%
Sean Meitner  -   15,652   15,652   0.11%
Arthur Pereless  -   13,043   13,043   0.09%
Steven Kaye  -   11,740   11,740   0.08%
James J. Regan  -   156,522   156,522   1.11%
Thomas J. Rutherford  -   231,522   231,522   1.64%
Daniel Wallach & Joyce Wallach  -   39,130   39,130   0.28%
Alan Barge  -   30,000   30,000   0.21%
Sterne Agee &Leach C/F Donald E. Goodin R/O IRA  -   34,899   34,899   0.25%
GRQ Consultants Inc. Roth 401K FBO Barry Honig  1,129,138(4)  130,436   1,390,009 (4)  9.83%
Alternate Page for Selling Securityholder Prospectus

PART II - 4


Stetson Capital Investments Inc. 166,250(5)65,218 231,468  1.64%
Sterne Agee & Leach Inc. C/F John H. Welsh Roth IRA - 30,000 30,000  0.21%
Richard Cotta - 39,130 39,130  0.28%
Bohdan Chaban - 78,261 78,261  0.55%
Roger Conan - 15,000 15,000  0.11%
Danny Sergeant - 29,349 29,349  0.21%
Charles J. Dehart & Madeleine Dehart - 21,914 21,914  0.15%
Nabil Yazgi MD PA Cash Balance Plan & Trust Nabil Yazgi Ttee - 15,000 15,000  0.11%
Manu Prasad Prikh - 32,608 32,608  0.23%
Frank Scott Rotruck - 26,086 26,086  0.18%
David P. Stein - 13,042 13,042  0.09%
Joseph A. D’Elia - 13,044 13,044  0.09%
DJ Management Investing LLC - 139,566 139,566  0.99%
Steve Gorlin 461,503 500,000 961,503  6.80%
Buff Trust   29,118 29,118  0.21%
Garnet Trust   29,118 29,118  0.21%
Laidlaw Holdings Ltd.   9,201 9,201  0.07%
Kevin R Wilson   6,649 6,649  0.05%
Stephen Hamilton   1,671 1,671  0.01%
Joseph M Fedorko   36,514 36,514  0.26%
Matthew D Eitner   25,000 25,000  0.18%
James Ahern   25,000 25,000    0.18%
High Regan   7,500 7,500  0.05%
Luke Kottke   7,500 7,500  0.05%
Francis R Smith   4,721 4,721  0.03%
           
TOTAL   2,314,748 2,499,623  4,814,377  34.06
* represents less than 1%.
(1)
Under applicable SEC rules, a person is deemed to beneficially own securities which the person as the right to acquire within 60 days through the exercise of any option or warrant or through the conversion of a convertible security. Also under applicable SEC rules, a person is deemed to be the “beneficial owner” of a security with regard to which the person directly or indirectly, has or shares (a) voting power, which includes the power to vote or direct the voting of the security, or (b) investment power, which includes the power to dispose, or direct the disposition, of the security, in each case, irrespective of the person’s economic interest in the security. Each listed selling stockholder has the sole investment and voting power with respect to all shares of common stock shown as beneficially owned by such selling stockholder, except as otherwise indicated in the footnotes to the table.
(2)
Represents the amount of shares that will be held by the selling stockholders after completion of this offering based on the assumptions that (a) all shares registered for sale by the registration statement of which this prospectus is part will be sold and (b) that no other shares of our common stock beneficially owned by the selling stockholders are acquired or are sold prior to completion of this offering by the selling stockholders.
(3)
In determining the percent of common stock beneficially owned by a selling stockholder following the offering, (a) the numerator is the number of shares of common stock beneficially owned by such selling stockholder (including shares that he has the right to acquire within 60 days of June 13, 2016), and (b) the denominator is 14,143,666 shares outstanding after offering based upon 12,855,803 shares of common stock outstanding on June 16, 2016 and (ii) the number of shares of common stock which such selling stockholders has the right to acquire within 60 days of June 16, 2016 after the offering.
(4)
This figure includes (i) 325,000 shares of common stock held by Mr. Honig’s spouse, Renee Honig, (ii) 379,427 shares of common stock held by Mr. Honig’s Roth 401K and (iii) 12,486 shares of common stock held by Marlin Capital Investments, LLC (“Marlin”). Mr. Honig is the trustee of his Roth 401K and the managing member of Marlin and in such capacities has voting and dispositive power over the securities held by such entities.
(5)This figure includes (i) 116,250 shares of common stock held by Stetson Capital Investments, Inc. (“Stetson”) and (ii) 50,000 shares of common stock held by Oban Investments, LLC (“Oban”). Mr. Stetson is controlling person of both Stetson and Oban, and in such capacities, has voting and dispositive power over the securities held by such entities.
Alternate Page for Selling Securityholder Prospectus - 5

PLAN OF DISTRIBUTION
We are registering up to 2,499,623 shares of common stock in order to permit the resale of these shares of common stock by our selling stockholders from time to time after the date of this prospectus, (i) 787,863 shares of common stock issuable upon the exercise of the warrants previously issued with an exercise price of $1.30 per share, (ii) 500,000 shares of our common stock issuable upon exercise at an average exercise price of $1.71 per share of warrants held by certain of the selling stockholders, and (iii) 1,211,760 shares of our common stock held by certain of the selling stockholders.   We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We may receive proceeds from any exercise of outstanding warrants. If all of the warrants exercisable for shares of common stock being registered in this offering are exercised, we could receive net proceeds of up to approximately $1,879,221.90. We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The selling stockholders may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents.  If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions.  The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices.  These sales may be effected in transactions, which may involve crosses or block transactions, on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

in the over-the-counter market;

in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
including ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

including block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

including purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

including an exchange distribution in accordance with the rules of the applicable exchange;

including privately negotiated transactions;

including short sales made after the date the registration statement is declared effective by the SEC, subject to any applicable limitations on short sales contained in any agreement between a selling stockholder and us;

including sales pursuant to Rule 144;

and broker-dealers may agree with the selling securityholders to sell a specified number of such shares at a stipulated price per share;

including a combination of any of the foregoing methods of sale; and

any other method permitted pursuant to applicable law.

If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved).  In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging the positions they assume.  The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales.  The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
Alternate Page for Selling Securityholder Prospectus - 6

The selling stockholders may pledge or grant a security interest in some or all of the shares of Series A Convertible Preferred Stock, Warrants or shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.  The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The selling stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act.  At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.
Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers.  In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.
The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person.  To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock.  All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.
Alternate Page for Selling Securityholder Prospectus - 7




2,499,623 
Shares of Common Stock

SELLING SECURITYHOLDER PROSPECTUS
JUNE [●], 2016

 PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

Distribution.

The following table sets forth all expenses to be paid by the costsregistrant in connection with the issuance and expenses,distribution of the securities to be registered, other than underwriting discounts and commissions, if any, payable by us relating to the sale of common stock being registered.commissions. All amounts shown are estimates except for the SEC registration fee.

Total expenses for this offering are estimated to be approximately $26,836.15, including:
We have expended, or will expend fees in relation to this registration statement as detailed below:
Expenditure Item Amount 
Legal and Accounting Fees $25,000 
Transfer Agent Fees $500 
SEC Registration fees (estimated) $838.15 
Printing Costs and Miscellaneous Expenses (estimated) $500 
Total $26,838.15 
All amounts are estimated except for the fees relating to SEC and blue sky registration.
fee:

SEC registration fee $1,549 
Legal fees and expenses $25,000 
Accounting fees and expenses $20,000 
Miscellaneous fees and expenses $3,451 
Total $50,000 

Item 14. Indemnification of Directors and Officers

Section 78.7502(1)Officers.

Neither our amended and restated articles of incorporation nor Bylaws prevent us from indemnifying our officers, directors and agents to the extent permitted under the Nevada Revised StatutesStatute (“NRS”). NRS Section 78.7502 provides that a corporation shall indemnify any director, officer, employee or agent of a corporation against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with any the defense to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to Section 78.7502(1) or 78.7502(2), or in defense of any claim, issue or matter therein.

NRS 78.7502(1) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, (except inexcept an action brought by or on behalfin the right of the corporation) ifcorporation, by reason of the fact that personhe is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys'attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by that personhim in connection with suchthe action, suit or proceeding if that personhe: (a) is not liable pursuant to NRS 78.138; or (b) acted in good faith and in a manner which that personhe reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceedings,proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, alone, does not create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in, or not opposed to, the best interests of the corporation, and that, with respect to any criminal action or proceeding, the person had reasonable cause to believe his action was unlawful.

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NRS Section 78.7502(2) of the Nevada Revised Statutes provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit brought by or on behalfin the right of the corporation to procure a judgment in its favor because the person acted in anyby reason of the capacities set forth above,fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys'attorneys’ fees actually and reasonably incurred by that personhim in connection with the defense or settlement of suchthe action or suit if the personhe: (a) is not liable pursuant to NRS 78.138; or (b) acted in accordance withgood faith and in a manner which he reasonably believed to be in or not opposed to the standard set forth above, except that no indemnificationbest interests of the corporation. Indemnification may not be made in respect offor any claim, issue or matter as to which such a person shall havehas been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefromthere from, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which suchthe action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, suchthe person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

NRS Section 78.7502(3) of the Nevada Revised Statutes further78.747 provides that to the extent aexcept as otherwise provided by specific statute, no director or officer of a corporation has been successful on the meritsis individually liable for a debt or otherwise in the defenseliability of any action, suit or proceeding referred to in subsections 1 and 2 thereof, or in the defense of any claim, issue or matter therein, that person shall be indemnified by the corporation, against expenses (including attorneys' fees) actually and reasonably incurred by that person in connection therewith.

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Section 78.751unless the director or officer acts as the alter ego of the Nevada Revised Statutes provides that unless indemnification is ordered bycorporation. The court as a court,matter of law must determine the determination to provide indemnification must be made by the stockholders, by a majority votequestion of a quorum of the board of directors who were not parties to the action, suit or proceeding, or in specified circumstances by independent legal counsel in a written opinion. In addition, the articles of incorporation, bylaws or an agreement made by the corporation may provide for the payment of the expenses ofwhether a director or officer ofacts as the expenses of defending an action as incurred upon receipt of an undertaking to repay the amount if it is ultimately determined by a court of competent jurisdiction that the person is not entitled to indemnification. Section 78.751 of the Nevada Revised Statutes further provides that the indemnification provided for therein shall not be deemed exclusive of any other rights to which the indemnified party may be entitled and that the scope of indemnification shall continue as to directors, officers, employees or agents who have ceased to hold such positions, and to their heirs, executors and administrators.
Section 78.752 of the Nevada Revised Statutes provides that a corporation may purchase and maintain insurance on behalfalter ego of a director, officer, employee or agent of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the authority to indemnify him against such liabilities and expenses.
Articles of Incorporation and Bylaws
Neither our articles of incorporation nor our bylaws, as amended, include specific provisions relating to the indemnification of our directors or officers.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Leo Motors, Inc. pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable.
Item 15. Recent Sales of Unregistered Securities
On March 25, 2015, we acquired Streamline and committed to issue an aggregate of 1,875,000 shares of common stock as partial consideration for this company. The closing price of our common stock on this date was $4.50. All of the foregoing securities were issued in reliance upon the exemption from registration pursuant to Section 4(a)(2) under the Securities Act.
On April 29, 2016, we completed an offering of privately placed securities with accredited investors, which in the aggregate, yielded a total of 1,211,760 shares and warrants to purchase 605,880 shares to be issued to investors. The shares underlying the units of securities in this offering are, in part, the subject of this registration statement on Form S-1. All of the foregoing securities were issued in reliance upon the exemption from registration pursuant to Section 4(a)(2) under the Securities Act, as amended, and Regulation D, promulgated thereunder.
Item 16. Exhibits and Financial Statement Schedules
EXHIBIT INDEX
Exhibits 
Exhibit NumberDescription
2.1Agreement and Plan of Merger, dated September 16, among MedoveX Corp. f/k/a SpineZ Corp. and Debride Inc. (1)
2.2Agreement and Plan of Merger, dated March 9, 2015 among MedoveX Corp. and Streamline, Inc. (2)
3.1Articles of Incorporation of Spinez Corp. (1)
3.2Certificate of Amendment to the Articles of Incorporation of Spinez Corp. (changing the name of the company to MedoveX Corp. and Effecting the Reverse Split of the Outstanding Shares of MedoveX Corp.’s Common Stock).
4.1Modification Agreement by and between the Company and Steve Gorlin dated January 25, 2016. (3)
4.2Amendment to the Modification Agreement by and between the Company and Steve Gorlin dated February 16, 2016. (4)
4.3Second amendment to the Modification Agreement by and between the Company and Steve Gorlin dated March 25, 2016.
5.1Opinion of Sichenzia Ross Friedman Ference LLP**
10.12013 Stock Incentive Plan. (1)
10.2Employment Agreement between MedoveX Corp. and Jarrett Gorlin dated October 14, 2013. (1)
10.3Employment Agreement between MedoveX Corp. and Patrick Kullmann dated October 14, 2013. (1)
10.4Employment Agreement between MedoveX Corp. and Charlie Farrahar dated October 14, 2013. (1)
10.5Employment Agreement between MedoveX Corp. and Dennis Moon dated November 11, 2013. (1)
10.6Contribution and Royalty Agreement between MedoveX and Scott W. Haufe dated January 31, 2013. (1)
10.7Co-Development Agreement between MedoveX Corp. and Dr. James Andrews dated September 30, 2013. (1)
10.8Consulting Agreement between MedoveX Corp. and Robb Knie dated December 2, 2013. (1)
10.9Engineering Services Agreement between MedoveX Corp. and Devicix, LLC dated November 25, 2013. (1)
10.10Form of Indemnification Agreement. (1)
10.11Promissory note issued on November 9, 2015 in favor of Steve Gorlin
10.12Warrant issued on November 9, 2015 to Steve Gorlin
10.13Form of Warrant to be issued by MedoveX Corporation to each of the Selling Securityholders (5)
10.14Form of Unit Purchase Agreement, by and between the Company and Selling Securityholders (5)
14Business and Code of Ethics of MedoveX Corp. (1)
21.1Subsidiaries of MedoveX Corp.
23.1Consent of Fraizer & Deeter, LLC, Independent Registered Public Accounting Firm
23.2Consent of Sichenzia Ross Friedman Ference LLP (included in Exhibit 5.1)**
(1)Incorporated by reference herein from the Registration Statement on Form S-1/A filed on December 9, 2014.
(2)Incorporated by reference herein from the Current Report on Form 8-K filed on March 11, 2015.
(3)Incorporated by reference herein from the Current Report on Form 8-K filed on January 25, 2016.
(4)Incorporated by reference herein from the Current Report on Form 8-K filed on February 17, 2016.
(5)Incorporated by reference herein from the Current Report on Form 8-K filed on May 5, 2016.
(6)Incorporated by reference herein from theAnnual Report on Form 10-K filed onApril 14, 2016.
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Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter);
(ii)Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii)The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
corporation.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers andor persons controlling persons of the registrantus pursuant to the foregoing provisions, or otherwise, the registrant haswe have been advisedinformed that, in the opinion of the Securities and Exchange CommissionSEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrantwe will, unless in the opinion of itsour counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by itus is against public policy as expressed hereby in the Securities Act and we will be governed by the final adjudication of such issue.

Our amended and restated Bylaws, effective November 15, 2019, provide that the Company may indemnify and advance litigation expenses to its directors, officers, employees and agents to the extent permitted by law, the Company’s articles of incorporation or Bylaws, and shall indemnify and advance litigation expenses to its directors, officers, employees and agents to the extent required by law, the Company’s articles of incorporation or Bylaws. The Company’s obligations of indemnification, if any, shall be conditioned on the Company receiving prompt notice of the claim and the opportunity to settle and defend the claim. The Company may, to the extent permitted by law, purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee or agent of the Company.

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Item 15. Exhibits and Financial Statement Schedules.

Exhibit

Number

Description of Exhibit
3.1Second Amended and Restated Articles of Incorporation (incorporated by reference to Definitive Information Statement on Form DEF 14C filed on June 16, 2020)
3.2Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 to the current report on Form 8-K filed on November 21, 2019)
3.3Certificate of Designation of Series D Preferred Stock (incorporated by reference to Exhibit 3.2 to the current report on Form 8-K filed on November 21, 2019)
3.4Amended and Restated Certificate of Designation of Series B Preferred Stock (incorporated by reference to Exhibit 3.3 to the current report on Form 8-K filed on November 21, 2019)
5.1Opinion of Sichenzia Ross Ference LLP *
10.1Secured Convertible Note and Warrant Purchase Agreement dated April 17, 2020 (incorporated by reference to Exhibit 10.1 to the annual report on Form 10-K filed on April 22, 2020).
10.2Form of Secured Convertible Note dated April 17, 2020 (incorporated by reference to Exhibit 10.2 to the annual report on Form 10-K filed on April 22, 2020)
10.3Form of Warrant dated April 17, 2020 (incorporated by reference to Exhibit 10.3 to the annual report on Form 10-K filed on April 22, 2020)
10.4Security Agreement dated April 17, 2020 (incorporated by reference to Exhibit 10.4 to the annual report on Form 10-K filed on April 22, 2020)
10.5Intellectual Property Security Agreement dated April 17, 2020 (incorporated by reference to Exhibit 10.5 to the annual report on Form 10-K filed on April 22, 2020)
10.6Form of Subsidiary Guarantee dated April 17, 2020 (incorporated by reference to Exhibit 10.6 to the annual report on Form 10-K filed on April 22, 2020)
10.7Amendment Letter to William Horne Employment Agreement dated April 17, 2020 (incorporated by reference to Exhibit 10.7 to the annual report on Form 10-K filed on April 22, 2020)
10.8First Amendment to Hawes Secured Note dated April 17, 2020 (incorporated by reference to Exhibit 10.8 to the annual report on Form 10-K filed on April 22, 2020)
10.9Securities Purchase Agreement dated November 15, 2019 by and between the Company and FWHC LLC (incorporated by reference to Exhibit 10.1 to current report on Form 8-K filed on November 21, 2019)
10.10Right of First Refusal and Co-Sale Agreement dated November 15, 2019 by and among the Company, FWHC LLC and certain key holders (incorporated by reference to Exhibit 10.2 to current report on Form 8-K filed on November 21, 2019)
10.11Voting Agreement dated November 15, 2019 by and among the Company, FWHC and certain key holders (incorporated by reference to Exhibit 10.3 to current report on Form 8-K filed on November 21, 2019)
10.12Investors’ Rights Agreements dated November 15, 2019 by and among the Company, FWHC and certain key holders (incorporated by reference to Exhibit 10.4 to current report on Form 8-K filed on November 21, 2019)
10.13Services Agreement dated November 18, 2019 by and between the Company and Rion, LLC (incorporated by reference to Exhibit 10.5 to current report on Form 8-K filed on November 21, 2019)
10.15Form of Warrant Agreement*
14Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14 to Amendment No. 1 to Registration Statement on Form S-1/A filed on October 7, 2014)
21

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to Registration Statement on Form S-1 filed on July 2, 2020)

23.1Consent of Frazier & Deeter, LLC
23.2Consent of Sichenzia Ross Ference LLP (included as part of Exhibit 5.1) *
101.INSInline XBRL Instance Document**
101.SCHInline XBRL Taxonomy Extension Schema Document**
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document**
101.LABInline XBRL Taxonomy Extension Label Linkbase Document**
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document**
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
107Exhibit Filing Fees*

 * Previously filed.

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For

Item 17. Undertakings.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, (§ 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

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(5) For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by the registrant of expenses incurred and paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the securities being registered hereby, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(c) The undersigned Registrant hereby undertakes that it will:

(1) for determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1), or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.

(2) for determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.

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SIGNATURES


Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statementregistration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,Tampa, State of Georgia,Florida, on this [17th] day of June, 2016.

February 9, 2022.

MEDOVEX CORP.H-Cyte, Inc
By:/s/ Jarrett GorlinMichael Yurkowsky
Jarrett GorlinMichael Yurkowsky
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statementregistration statement has been signed by the following persons in the capacities held on the dates indicated.

indicated below:

/s/ Jarrett GorlinSignatureTitle Date
/s/ Michael Yurkowsky
Michael YurkowskyChief Executive Officer President and Director February 9, 2022
Jarrett Gorlin (Principal Executive Officer)
/s/ * June 17, 2016
Jeremy DanielChief Financial OfficerFebruary 9, 2022
/s/ Raymond Monteleone
Raymond MonteleoneChairman of the Board of DirectorsFebruary 9, 2022
/s/ William E Horne
William E HorneDirectorFebruary 9, 2022
     
/s/ Jeffery WrightRichard Rosenblum Chief Financial Officer  
Jeffery WrightRichard Rosenblum (Principal Financial and Accounting Officer)Director June 17, 2016February 9, 2022
     
/s/ Larry PapasanMatthew Anderer
Matthew Anderer Director February 9, 2022

* Signed by Michael Yurkowsky pursuant to the power of attorney signed by each individual and previously filed with this Registration Statement on February 7, 2022.

Larry PapasanChairman of the Board of DirectorsJune 17, 2016
/s/ Clyde A. Hennies
Clyde A. HenniesDirectorJune 17, 2016
/s/ Scott M.W. Haufe
Scott M.W. HaufeDirectorJune 17, 2016
/s/ James R. Andrews
James R. AndrewsDirectorJune 17, 2016
/s/ Thomas E. Hills
Thomas E. HillsDirectorJune 17, 2016
/s/ Randal R. Betz
Randal R. BetzDirectorJune 17, 2016
/s/ Steve Gorlin
Steve GorlinDirectorJune 17, 2016
/s/ John Thomas
John ThomasDirectorJune 17, 2016II-6

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