Cautionary Note Regarding Forward-Looking Statements





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



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

· our ability to meet requisite regulations or receive regulatory approvals in

the United States, and our ability to retain any regulatory approvals that

we may obtain; and the absence of adverse regulatory developments in the

United States and abroad;

· new entrance of competitive products or further penetration of existing


    products in our markets;
  · results of our clinical trials;
  · failure of our products to gain market acceptance;
  · the cost and success of our development programs;

· our failure to obtain financing as, if and when needed, on commercially


    acceptable terms;
  · our failure to attract and retain qualified personnel;
  · our failure to adequately manage our growth and expansion;
  · the effect on us from adverse publicity related to our products or the
    Company itself; and
  · our failure to defend against any adverse claims relating to our
    intellectual property.






                                       14






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



Overview



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



The Company, through its wholly owned subsidiary, RenovaCare Sciences Corp.,
owns the CellMist™ System which is a cell isolation procedure that enzymatically
renders stem cells from the patient's own skin or other tissues. The resulting
stem cell suspension is administered topically with our SkinGun™ spray device as
a cell therapy onto wounds including burns to facilitate healing. The CellMist™
System also includes our unique, closed, automated cell isolation device (the
"CID") to harvest stem cells from tissues which is in prototype development.



Currently, our proprietary technologies are the subject of forty-four (44) U.S.
and foreign granted or pending patents or patent applications and seventeen (17)
U.S. and foreign trademarks. Of the issued patents, five (5) are U.S. patents
and seventeen (17) have issued or are allowed in Australia, Canada, China,
Europe, Germany, France, Italy, Japan, Korea, Netherlands, Spain,
Switzerland/Lichtenstein, and the United Kingdom.The Company has six (6) allowed
trademarks in the United States, two (2) European registered trademarks, two (2)
United Kingdom trademarks, two (2) Japan trademarks, and two (2) pending in
Canada.



In May 2021, the Company announced that the US Food and Drug Administration
(FDA) fully approved the Company's Investigational Device Exemption (IDE)
application to conduct a clinical trial, designated CELLMIST 1, designed to
evaluate the safety and feasibility of autologous skin and pluripotent stem
cells rendered by its manual CellMist™ System from donor skin and applied
topically with the electronic SkinGun™ spray device for treatment of acute burn
wounds. The clinical trial protocol is an open-label, single-arm clinical study
designated to enroll 14 adult human burn subjects with partial-thickness,
second-degree deep thermal burn wounds covering between 10% and 30% total body
surface area. The Company may engage up to four (4) U.S. burn centers to conduct
the clinical study.




During the end of Q1 2022, the Board decided to stop enrollment of patients into
the clinical trial and take other measures to reduce the Company's overhead in
an effort to conserve financial resources as it continues to defend against the
Lawsuits; however, medical evaluation of the treated subjects will continue
periodically as scheduled in the clinical protocol at the clinical study site
until October 2022, when the study concludes. The Company hopes to restart the
clinical trial at a future date upon the occurrence of a favorable outcome
against the Lawsuits and with additional financing.



Research, development and commercialization of new technologies generally
requires significant financial resources, involves a high degree of risk, and
there is no assurance that development activities will result in a commercially
viable product. The Company has not generated any revenue and has sustained
recurring losses and negative cash flows from operations since inception. The
Company expects to incur losses as it continues development of its products and
technologies and defends itself against the Lawsuits (as defined in "Part
2-Other Information, Item 1. Legal Proceedings"). The Company will need to raise
additional capital through partnerships or the sale of securities to accomplish
its business plan. Failing to secure such additional funding poses a significant
risk. The Company's ability to meet its financial obligations, including to fund
the development of its cellular therapies depends on the amount and timing of
cash receipts from future financing activities. There can be no assurance as to
the availability or terms upon which such financing and capital might be
available.





                                       15

Components of Our Results of Operations





Revenue

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





Operating Expenses



Research and Development

Research and development ("R&D") expenses consist primarily of costs incurred for the development of our CellMistTM System and include:





       ·   design, pilot-scale manufacturing and pre-clinical testing of our cell
           isolation and SkinGunTM spray devices.

· employee-related expenses associated with our research and development


           activities, including salaries, benefits, travel and non-cash
           stock-based compensation expenses.




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




  · expenses incurred under agreements related to our clinical trial.

· other research and development costs including contract consulting fees


           and non-cash stock-based compensation to contract research
           organizations (CROs) and other third parties.




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



General and Administrative



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



Stock-Based Compensation



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



Other Income (Expense)




Other expense consists of the interest payable under our convertible note. Other
income consists of interest income earned on our cash and cash equivalents and
the reimbursement of legal fees from our Directors & Officers insurance policy
to the extent available up to the policy limit of $2,000,000.



Income Taxes



We have yet to generate taxable income. We have historically incurred operating
losses resulting in carry forward tax losses totaling approximately $21,945,000
as of December 31, 2021. We anticipate that we will continue to generate tax
losses for the foreseeable future and that we will be able to carry forward
these tax losses indefinitely to future taxable years. Accordingly, we do not
expect to pay taxes until we have taxable income after the full utilization of
our carry forward tax losses. We have provided a full valuation allowance with
respect to the deferred tax assets related to these carry forward losses.





                                       16





Results of Operations

Comparison of Three and Six Months Ended June 30, 2022 and 2021

Research and Development Expenses





                                 Three Months Ended                           Six Months Ended
                                      June 30,             Increase /             June 30,              Increase /
                                 2022          2021        (Decrease)       2022           2021         (Decrease)
Manufacturing clinical
supplies(1)                   $  17,996     $  31,887     $  (13,891 )   $  31,715     $   248,071     $ (216,356 )
Personnel related(2)             66,303       115,503        (49,200 )     184,176         269,978        (85,802 )

Stock-based compensation(3)     217,500       228,625        (11,125 )    

435,000         507,438        (72,438 )
Clinical trials(4)               41,655       219,601       (177,946 )     195,370         525,957       (330,587 )
Regulatory                          300        12,072        (11,772 )       5,016          21,904        (16,888 )
All other(5)                     35,650        96,881        (61,231 )     124,380         185,514        (61,134 )
                              $ 379,404     $ 704,569     $ (325,165 )   $ 975,657     $ 1,758,862     $ (783,205 )

(1) Manufacturing clinical supplies decreased due to completion of the

pilot-scale manufacturing and validation testing of the components of the

CellMist™ System and the electronic SkinGun™ spray device used in our

clinical trial which mostly tailed off during the quarter ended June 30,

2022.

(2) Personnel related expenses decreased primarily due to the suspension of the

clinical trial.

(3) Stock compensation expense relates to the stock purchase options granted to

R&D related personnel.

(4) In 2020 and early 2021, the Company's incurred certain costs in preparation

for its clinical trial during which time the set-up costs were mostly

completed with future clinical trial costs expected to fluctuate depending on

the number of enrollees into the clinical trial. During the three and six

months ended June 30, 2022 compared to the same periods in 2021, clinical

trial expenses decreased primarily due to the completion of the set-up costs

and subsequent enrollment of only two patients. As a result of the decision

during Q1 2022 to stop enrollment, clinical trial expenses have and are

expected to continue to decrease.

(5) All other expenses relate primarily to the prototype development of the

electronic SkinGun™ and cell isolation device at StemCell Systems. The costs


    have and are expected to decrease significantly due to the Company's
    cancellation of the Strategic Agreement dated April 28, 2022.

General and Administrative Expenses





                                    Three Months Ended                               Six Months Ended
                                         June 30,              Increase /                June 30,               Increase /
                                    2022           2021        (Decrease)         2022             2021         (Decrease)
Personnel related(1)            $    43,594     $ 238,911     $  (195,317 )   $   172,904     $    468,363     $  (295,459 )
Stock-based compensation(2)               -       (29,026 )        26,026           5,500       (1,182,601 )     1,188,101
Professional and consultant
fees(3)                           1,252,502       141,682       1,110,820       2,238,459          425,473       1,812,986
All other(4)                        453,159        49,243         403,916         478,949          152,531         326,418
Total G&A Expense               $ 1,749,255     $ 400,810     $ 1,348,445     $ 2,895,812     $   (136,234 )   $ 3,032,046

(1) Personnel related costs decreased due to lower headcount.







                                       17

(2) All stock options issued to G&A related personnel fully vested in Q1 2022.

Stock compensation expense in 2021 decreased due to the forfeiture and

cancellation of 2,730,571 stock options as a result of the resignation of the

Company's former Chairman, President and Chief Executive Officer and two

members of the Company's Board of Directors. Compensation expense was

recorded on these options prior to their full vesting. As a result, the

Company recognized a $1,248,575 reversal of the prior recognized compensation

expense related to the cancelled options.

(3) Professional and consultant fees increased primarily due to an increase in

legal fees related to the Lawsuits. During the three months ended June 30,

2022, the Company incurred $50,100 in fees related to patents and trademarks,

$1,192,402 in legal fees related to the Lawsuits, and $10,000 related to the

preparation and audit of our financial statements and related filings with

the SEC. During the six months ended June 30, 2022, the Company incurred

$99,367 in fees related to patents and trademarks, $2,056,342 in legal fees

related to the Lawsuits, $39,000 related to the preparation and audit of our

financial statements and related filings with the SEC, and $43,750 for other

legal related costs. The Company is obligated, pursuant to its bylaws, to

indemnify its directors and officers. As a result, all legal costs related to

the Lawsuits are recorded to the books of the Company. Insurance proceeds to

cover the cost of the Company's defense against the Lawsuits is recorded to

other income at the time of receipt.

(4) All other costs increased primarily due to the inclusion of $372,000

termination fee related to the Company's cancellation of the Strategic

Agreement with Stem Cell Systems in April 2022 and $36,687 of travel and

lodging costs paid by Mr. Rayat related to the Lawsuits and incurred during


    Q2.

Liquidity and Capital Resources





The Company does not have any commercialized products, has not generated any
meaningful revenue since inception and has sustained recurring losses and
negative cash flows since inception. During the six months ended June 30, 2022
and 2021, the Company has incurred operating losses of $3,871,000 and
$1,622,000, respectively, and has used cash in operating activities of
$3,405,000 and $3,070,000, respectively. The Company expects to incur losses as
it continues to fund its legal defense and scaled-back development of its
products and technologies.



At June 30, 2022, the Company had current and total liabilities of $1,887,671
and $2,689,985 respectively, including $1,271,925 of current liabilities related
to its defense against the Lawsuits compared to $1,395,107 of current assets. As
of June 30, 2022, the Company's working capital totaled negative $492,564 not
including approximately $1,042,000 in proceeds expected to be realized under its
D&O Policy with AIG during Q3 2022. In order to preserve its cash resources, the
Company has taken measures to streamline operations, including ending enrollment
of patients into its clinical trial, renegotiating and terminating certain
agreements and service arrangements and entered into a loan agreement with Kalen
Capital Corporation, an Alberta Canada corporation ("Kalen Capital") which is
wholly-owned by the Mr. Harmel S. Rayat, the Company's President, Chief
Executive Officer and Chairman, for $800,000 on March 18, 2022. As a result of
the actions taken, the Company has temporarily improved its ability to remain
solvent. However, due to the nature and stage of the Lawsuits, the Company is
unable to estimate the total costs to defend itself or the potential costs to
the Company in the event that it is not successful in its defense. As a result,
the Company estimates cash on hand will be insufficient for the twelve months
following the date these financial statements are issued.



Historically, the Company has been funded through the sale of equity securities
and debt financings. The future of the Company will depend on its ability to
successfully raise capital from external sources to fund operations. If the
Company is unable to obtain adequate funds, or if such funds are not available
to it on acceptable terms, the Company's ability to continue its business to
develop its cellular therapies will be significantly impaired and it may cause
the Company to curtail operations. Although the Company has instituted cost
savings measures, it will continue to assess its ongoing expenses.

Fair Value of Financial Instruments and Risks





The carrying value of cash, accounts payable and interest payable approximate
their fair value because of the short-term nature of these instruments and their
liquidity. It is not practical to determine the fair value of the Company's
notes payable due to the complex terms. Management is of the opinion that the
Company is not exposed to significant interest or credit risks arising from

these financial instruments.





                                       18





Market Risk Disclosures

We have not entered into derivative contracts either to hedge existing risks or for speculative purposes during the six months ended June 30, 2022 and the subsequent period through the date of this report.

Off-Balance Sheet Arrangements and Contractual Obligations

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually limited purposes. As of June 30, 2022, we were not involved in any SPE transactions.

Recently Accounting Standards

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

Transactions with Related Persons

During the three months ended June 30, 2022, Mr. Harmel S. Rayat, made payments totaling $36,687 for travel and lodging costs related to the Lawsuits. No reimbursements have been made as of the date of this quarterly report.

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