Note 8 - STOCKHOLDERS’ EQUITY

Series A Preferred Stock

On November 8, 2021, in connection with the Company’s public offering, the Company’s Board of Directors adopted a resolution allowing for the designation and issuance of 1,543,158 shares of the Company’s Preferred Stock, $.01 par value per share, designated as Series A Preferred Stock (“Series A”). The Series A had a liquidation preference of $0.001 per share. On September 8, 2022, the Company issued 1,543,158 shares of Series B Preferred Stock (“Series B”) to Auctus Fund, LLC (“Auctus”) in exchange for an equal number of shares of the Company’s outstanding Series A. Simultaneously, the stock certificate representing the Series A shares was being returned to the Company for cancellation. On such date and upon such exchange, the Company’s Board of Directors cancelled the Series A.

Series B Preferred Stock

Effective September 8, 2022, the Company issued 1,543,158 shares of Series B to Auctus in exchange for an equal number of shares of the Company’s outstanding Series A. The terms of the Series B are substantially identical to those of the Series A, except that, among other things, the limitation on beneficial ownership of common stock of the Company upon a conversion of the Series B into Common Stock, and the limitation on the number of votes attributable to the Series B, is 9.99% of the then outstanding Common Stock of the Company instead of 4.99% as provided for the Series A. The Company is required, at all times, to reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of the Series B. The Series B is not subject to redemption by the Company or any Series B holder. The exchange of Series A for Series B had no impact on the Company’s financial statements as of December 31, 2022.

Dividends

Series B holders shall be entitled to receive, when and as declared by the Board of Directors, dividends on a pari passu basis with the holders of the shares of Common Stock based upon the number of shares of Common Stock into which the Series B is then convertible.

Voting Rights

Series B holders shall be entitled to vote on all matters presented to the stockholders of the Company for a vote at a meeting of stockholders of the Company or a written consent in lieu of a meeting of stockholders of the Company, and shall be entitled to such number of votes for each share of Series B entitled to vote at such meetings or pursuant to such consent, voting together with the holders of shares of Common Stock and other shares of preferred stock who are entitled to vote, and not as a separate class, except as required by law. The number of votes to which the Series B holders shall be entitled to vote for each share of Series B shall equal the number of shares of Common Stock into which such Series B is then convertible; provided, however, that in no event shall a Series B holder be entitled to vote more than 9.99% of the then outstanding shares of Common Stock.

Conversion

Optional Conversion - Each share of Series B shall be convertible, at any time and from time to time, at the option of the Series B holder, into one share of Common Stock; provided, however, that in no event shall a Series B holder be entitled to convert any shares of Series B to the extent that such conversion would result in beneficial ownership by such Series B holder of more than 9.99% of the outstanding shares of common stock.

Automatic Conversion - From time to time, in the event that an event occurs which has the effect of reducing a Series B holder’s beneficial ownership of shares of Common Stock to less than 9.5% of the then publicly disclosed outstanding shares of Common Stock, then, within five business days, the Series B holder is required to provide notice to the Company to such effect, which notice shall state the number of shares of Common Stock beneficially owned by the Series B holder and shall provide reasonable detail with regard thereto, including the number of derivative securities compromising a portion of such beneficial share amount. Such notice shall have the effect of a notice of conversion with respect to the conversion of such number of shares of Series B as would increase the Series B holder’s beneficial ownership of Common Stock to 9.99% of the then publicly disclosed outstanding shares of Common Stock.

On October 25, 2022, Auctus converted 25,000 shares of Series B into 25,000 shares of Common Stock. The number of shares of Series B remaining outstanding after this conversion was 1,518,158.

On April 4, 2023, Auctus converted 120,000 shares of Series B into 120,000 shares of Common Stock. As of December 31, 2023, the number of shares of Series B remaining outstanding after giving effect to such conversion was 1,398,158.

2021 Stock Incentive Plan

On March 18, 2021, the Company’s Board of Directors adopted the BioRestorative Therapies, Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan was approved by the Company’s stockholders on August 17, 2021. Pursuant to the 2021 Plan, a total of 1,175,000 shares of common stock were initially authorized to be issued pursuant to the grant of stock options, restricted stock units, restricted stock, stock appreciation rights and other incentive awards. On December 10, 2021, the Company’s Board of Directors approved an amendment to increase the number of shares of Common Stock authorized to be issued from 1,175,000 to 2,500,000. Such amendment was approved by the Company’s stockholders on November 3, 2022. On July 13, 2023, the Company’s Board of Directors approved an amendment to the 2021 Plan to increase the number of shares of Common Stock authorized to be issued from 2,500,000 to 3,850,000. Such amendment was approved by the Company’s stockholders on September 13, 2023. 

Compensatory Common Stock Issuance

During the year ended December 31, 2022, the Company issued 15,898 shares of immediately vested common stock with an aggregate value of $135,888 to third parties for services rendered. During the year ended December 31, 2023, the Company issued 1,442 shares of immediately vested common stock with a value of $7,500 to a consultant for services rendered.

Sales of Common Stock

In April 2023, the Company entered into a Capital on Demand Sales Agreement with JonesTrading Institutional Services LLC (the “Sales Agent”) under which the Company currently has the ability to issue and sell shares of its Common Stock, from time to time, through the Sales Agent, up to an aggregate offering price of approximately $6,109,000 in what is commonly referred to as an “at-the-market” (“ATM”) program. During the year ended December 31, 2023, the Company sold 132,827 shares of its Common Stock at a weighted average price of $4.68 per share and raised $494,782 in net proceeds under the ATM program. As of December 31, 2023, the Company had remaining capacity to sell up to an additional $5,487,000 of common stock under the ATM program.

On July 13, 2023, the Company sold an aggregate of 685,033 shares of Common Stock to several institutional buyers and accredited investors in a registered direct offering at an offering price of $3.03 per share. The offering closed on July 13, 2023 with net proceeds of $1,853,990. The Company intends to use the net proceeds from the offering in connection with its clinical trials with respect to its lead cell therapy candidate, BRTX-100, pre-clinical research and development with respect to its metabolic ThermoStem Program and for general corporate purposes and working capital.

Warrant and Option Valuation

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

See Note 11 – Fair Value Measurement – for details regarding the fair value estimates of the Warrants that are classified as derivative liabilities.

Warrant Activity Summary

A summary of the warrant activity during the year ended December 31, 2023 is presented below:

SCHEDULE OF WARRANT ACTIVITY 

In applying the Black-Scholes option pricing model to warrants granted during 2022, the Company used the following assumptions:

SCHEDULE OF WARRANTS GRANTED ASSUMPTIONS 

The weighted average estimated fair value of the warrants granted during the year ended December 31, 2022 was $2.28 per warrant. The Company did not issue any warrants during the year ended December 31, 2023.

The following table presents information related to stock warrants at December 31, 2023:

 SCHEDULE OF STOCK WARRANTS

Stock Options

A summary of the option activity during the year ended December 31, 2023 is presented below:

SCHEDULE OF STOCK OPTION ACTIVITY 

The weighted average grant date fair value of the stock options granted during the years ended December 31, 2023 and 2022 was approximately $3.00 and $4.88, respectively.

The following table presents information related to stock options at December 31, 2023:

SCHEDULE OF INFORMATION RELATED TO STOCK OPTIONS 

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

SCHEDULE OF STOCK OPTION GRANTED ASSUMPTIONS 

Restricted Share Units

Pursuant to the 2021 Plan, the Company may grant restricted stock units (“RSUs”) to employees, consultants or non-employee directors (“Eligible Recipients”). The number, terms and conditions of the RSUs that are granted to Eligible Recipients are determined on an individual basis by the 2021 Plan administrator. On the distribution date, the Company shall issue to the Eligible Recipient one unrestricted, fully transferable share of the Company’s common stock (or the fair market value of one such share in cash) for each vested and nonforfeitable RSU.

A summary of the unvested RSUs as of December 31, 2023 is as follows:

SCHEDULE OF UNVESTED RESTRICTED STOCK UNITS 

Stock-Based Compensation Expense

The following table presents information related to stock-based compensation expense:

SCHEDULE OF STOCK OPTION EXPENSE