BBLG US Equity☆

Item 1A. Risk Factors 12

Item 1B. Unresolved Staff Comments 26

Item 2. Properties 26

Item 3. Legal Proceedings 26

Item 4. Mine Safety Disclosures 26

Part II

Item 6. Selected Financial Data 28

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 34

Item 8. Financial Statements and Supplementary Data 34

Item 9A. Controls and Procedures 34

Item 9B. Other Information 35

Part III

Item 10. Directors, Executive Officers and Corporate Governance 35

Item 11. Executive Compensation 39

Item 14. Principal Accounting Fees and Services 46

Part IV

Item 15. Exhibits, Financial Statement Schedules 47

Signatures 51

Power of Attorney 52

Index to Consolidated Financial Statements F-1

Cautionary

Note on Forward-Looking Statements

This

annual report on form 10-K (“Annual Report”) 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.

All

statements other than historical facts contained in this Annual Report, including statements regarding our future financial position,

capital expenditures, cash flows, business strategy and plans and objectives of management for future operations are forward-looking

statements. The words “anticipated,” “believe,” “expect,” “plan,” “intend,”

“seek,” “estimate,” “project,” “could,” “may,” and similar expressions

are intended to identify forward-looking statements. These statements include, among others, information regarding future operations,

future capital expenditures, and future net cash flow. Such statements reflect our management’s current views with respect

to future events and financial performance and involve risks and uncertainties, including, without limitation, our ability to

raise additional capital to fund our operations, obtaining Food and Drug Administration (“FDA”) and other regulatory

authorization to market our drug and biological products, successful completion of our clinical trials, our ability to achieve

regulatory authorization to market our lead product NELL-1/DBX®, our reliance on third party manufacturers for our drug products,

market acceptance of our products, our dependence on licenses for certain of our products, our reliance on the expected growth

in demand for our products, exposure to product liability and defect claims, development of a public trading market for our securities,

and various other matters, many of which are beyond our control.

Should

one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may

vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking

statements made in this Annual Report are qualified by these cautionary statements and accordingly there can be no assurances

made with respect to the actual results or developments. We undertake no obligation to revise or publicly release the results

of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are

cautioned not to place undue reliance on such forward-looking statements.

Unless

expressly indicated or the context requires otherwise, the terms “Company,” “we,” “us,” and

“our” in this document refer to Bone Biologics Corporation, a Delaware corporation, and, our wholly owned subsidiary,

as defined under Part I, Item 1-”Business” in this Annual Report.

PART

I

Item

1. Business

OVERVIEW

We

are a medical device company that is currently focused on bone regeneration in spinal fusion using the recombinant human protein,

known as NELL-1/DBX®. The NELL-1/DBX® combination product is an osteostimulative recombinant protein that provides target

specific control over bone regeneration. The protein, as part of the UCB-1 technology platform has been licensed exclusively for

worldwide applications to us through a technology transfer from the UCLA Technology Development Group on behalf of UC Regents

(“UCLA TDG”). UCLA TDG and the Company received guidance from the FDA that NELL-1/DBX® will be classified as a

combination product with a device lead.

The

Company was founded by University of California professors in collaboration with an Osaka University professor and a University

of Southern California surgeon in 2004 as a privately-held company with proprietary, patented technology that has been validated

in sheep and non-human primate models to facilitate bone growth. Our platform technology has application in delivering improved

outcomes in the surgical specialties of spinal, orthopedic, general orthopedic, plastic reconstruction, neurosurgery, interventional

radiology, and sports medicine. Lead product development and clinical studies are targeted on spinal fusion surgery, one of the

larger segments in the orthopedic market.

We

are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to

as the JOBS Act. We would cease to be an emerging growth company upon the earliest of: (i) the last day of the first fiscal year

in which our annual gross revenues are $1.07 billion or more; (ii) the end of any fiscal year in which the market value of our

common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year; or (iii)

the date on which we have, during the previous three-year period, issued more than $1.07 billion in non-convertible debt securities.

An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally

to public companies. We have elected to take advantage of these reduced disclosure obligations, and may elect to take advantage

of other reduced reporting obligations in the future.

The

JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised

accounting standards applicable to public companies. We are choosing to irrevocably “opt out” of this provision and,

as a result, we will comply with new or revised accounting standards as required when they are adopted.

We

are a development stage entity. The production and marketing of our products and ongoing research and development activities will

be subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United

States, any combination product developed by us must undergo rigorous preclinical (animal) and clinical (human) testing and an

extensive regulatory approval process implemented by the FDA under the Food, Drug and Cosmetic Act. There can be no assurance

that we will not encounter problems in clinical trials that will cause us or the FDA to delay or suspend the clinical trials.

Our

success will depend in part on our ability to obtain patents and product license rights, maintain trade secrets, and operate without

infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that

patents issued to or licensed by us will not be challenged, invalidated, or circumvented, or that the rights granted thereunder

will provide proprietary protection or competitive advantages to us.

PRODUCTS

We

have developed a stand-alone platform technology through significant laboratory and small and large animal research over 11 years

to generate the current applications across broad fields of use. The platform technology is our recombinant human protein, known as NELL-1,

a proprietary skeletal specific growth factor which is a bone void filler. NELL-1 provides regulation over skeletal tissue formation

and stem cell differentiation during bone regeneration. The Company obtained the platform technology pursuant to an exclusive license

agreement with UCLA TDG.

We

are currently focused on bone regeneration in lumbar spinal fusion, in keeping with our exclusive license agreement, using NELL-1

in combination with DBX®, a proprietary demineralized bone matrix from Musculoskeletal Transplant Foundation (“MTF”).

The NELL-1/DBX® medical device is a combination product which is an osteostimulative recombinant protein that provides target

specific control over bone regeneration. Leveraging the resources of investors and strategic partners, we have successfully surpassed

four critical milestones:

● Initiated pivotal animal study; and

● Filed for a Phase I clinical trial outside the United States.

Our

lead product is expected to be purified NELL-1 mixed with 510(k) cleared DBX® Demineralized Bone Putty recommended for use

in conjunction with applicable hardware consistent with the indication. The NELL-1/DBX® Fusion Device will be comprised of

a single dose vial of NELL-1 recombinant protein freeze dried onto DBX®. A vial of NELL-1/DBX® will be sold in a convenience

kit with a diluent and a syringe of 510(k) cleared demineralized bone (“DBX® Putty”) produced by MTF. A delivery

device will allow the surgeon to mix the reconstituted NELL-1 with the appropriate quantity of DBX® Putty just prior to implantation.

The

NELL-1/DBX® Fusion Device is intended for use in lumbar spinal fusion and may have a variety of other spine and orthopedic

applications.

While

the product is initially targeted at the lumbar spine fusion market, in keeping with our exclusive license agreement, we believe

NELL-1’s unique set of characteristics, target specific mechanism of action, efficacy, safety and affordability position

the product well for application in a variety of procedures including:

Spine

Implants. This is the largest market for bone substitute product, representing greater than 70% of the total U.S. market

according to Transparency Market Research. While use of the patient’s own bone, also referred to as autograft, to enhance

fusion of vertebral segments remains the optimal use for this type of treatment, complications associated with use of autograft

bone including pain, increased surgical time and infection limit its use.

Non-Union

Trauma Cases. While the majority of fractures heal without the need for osteosynthetic products, bone substitutes are used in

complicated breaks where the bone does not mend naturally. Management believes that NELL-1 is expected to perform as well as high-priced

growth factors in this market.

Osteoporosis.

The medical need to find a solution to counter a decrease in bone mass and density seen in women most frequently after menopause

or a similar effect on astronauts in microgravity environments for an extended period is a major medical challenge. The systemic

use of NELL-1 to stimulate bone regeneration throughout the body thereby increasing bone density could have a very significant

impact on the treatment of osteoporosis.

UCLA’s

initial research was funded with approximately $18 million in resources from UCLA TDG and government grants. Since licensing the

exclusive worldwide intellectual property rights from UCLA TDG, our continued development has been funded through various strategic

investments. Our research and development expenses for the years ended December 31, 2020 and 2019 were $340,672 and $1,095,176,

respectively. We anticipate that it will require an additional $20 million to complete protein synthesis, animal studies, and

commence first in man studies. An estimated additional $27 million will be required to achieve product launch for spine interbody

fusion. These amounts are estimates based on data currently available to us, and are subject to many factors including the

various risk factors discussed below under Item 1A.

NELL-1’s

powerful specific bone and cartilage forming properties are derived from the ability of NELL-1 to only target cells that exhibit

an activated “master switch” to develop into bone or cartilage. NELL-1 is a function specific recombinant human protein

that has been proven in laboratory bench models to recapitulate normal human growth and development to provide control over bone

and cartilage regeneration.

NELL-1

was isolated in 1996, and the first NELL-1 patent on bone regeneration was filed in 1999. Subsequent patents and continuations

in part describing NELL-1 manufacturing, delivery, and cartilage regeneration were filed to further strengthen the patent portfolio.

RESEARCH

& PUBLICATIONS

Bone

Biologics’ scientific evidence validates the many benefits of NELL-1. Currently there is a comprehensive database of more

than 80 research publications and abstracts of preclinical studies with NELL-1.

Bone

Biologics has completed preclinical studies, which shows its rhNELL-1 growth factor effectively promotes bone formation

in a phylogenetically advanced, clinically relevant, spine model. In addition, rhNELL-1 was shown to be well tolerated

and there were no findings of inflammation.

Bone

Biologics has received Human Research Ethics Committee (HREC) approval for the first center of a multicenter pilot clinical

trial to evaluate NB1 (NELL-1/DBX®) in 30 patients in Australia. The pilot study will evaluate the safety and effectiveness of

NB1 in adult subjects with degenerative disc disease (DDD) at one level from L2-S1, who may also have up to Grade 1

spondylolisthesis or Grade 1 retrolisthesis at the involved level who undergo transforaminal lumbar interbody fusion

(TLIF)

PROPOSED

INITIAL CLINICAL APPLICATION

The

NELL-1/DBX® Fusion Device will be indicated for spinal fusion procedures in skeletally mature patients with degenerative disc

disease (“DDD”) at one level from L4-S1. These DDD patients may also have up to Grade I spondylolisthesis at the involved

level. The NELL-1/DBX® Fusion Device is to be implanted via an anterior open or an anterior laparoscopic approach in conjunction

with a cleared intervertebral body fusion device. Patients receiving the device should have had at least six months of non-operative

treatment prior to treatment with the device. A cervical indication is currently under consideration. This indication for use

would fill a current clinical gap, created by potentially dangerous inflammatory responses caused by commercially available catalytic

bone growth agents, the subject of a Public Health Notification from the FDA on July 1, 2008 about life threatening complications

associated with a recombinant human protein in cervical spine fusion. We do not expect our product to see the same adverse events

with NELL-1/DBX® as have been observed with other commercially available protein. We have performed a rat femoral onlay model

to compare proinflammatory response of rhBMP-2 and NELL-1 within Helistate collagen sponges. While NELL-1 induced normal healing,

rhBMP-2 induced significant amounts of swelling and histological evidence of intense inflammatory response.

DESCRIPTION

OF THE DBX® PUTTY TO BE USED WITH NELL-1

The

DBX® Demineralized Bone Putty provided in the convenience kit with NELL-1/DBX® is a Class III device with a pre-market

approval (PMA). The common name is “Bone Void Filler Containing Human Demineralized Bone Matrix.” The product is regulated

under 21 C.F.R. §888.3045 Resorbable calcium salt bone void filler device, Product Codes MQV, GXP, and MBP. MTF is the manufacturer

of the DBX® Putty. This product was cleared by the FDA under 510(k) number K053218 for spine indication in December 2006.

DBX®

Putty is a matrix composed of processed human cortical bone. Demineralized bone granules are mixed with sodium hyaluronate to

form the DBX® Putty. Every lot of final DBX® Putty product is tested in an athymic mouse model or in an alkaline phosphatase

assay, which has been shown to have a positive correlation with the athymic mouse model, to ensure osteostimulation.

Based

upon extensive discussions with regulatory experts and a specific communication from the FDA in response to a submission of our

plan under the Restated License Agreement between UCLA TDG and the Company we believe the NELL-1/DBX® Fusion Device will be

regulated as a Class III medical device and will therefore require submission and approval of a pre-market approval, (“PMA”).

The FDA response to the submission of our plan is: “We have determined that the product is a combination product that will

be regulated under Device authorities, with CDRH (Center for Devices and Radiological Health) as the lead center.”

OUR

BUSINESS STRATEGY

Our

business strategy is to develop our target specific growth factor that has demonstrated increases in the quantity and quality of

bone, while displaying a strong safety profile. Our focus continues to narrow from the research to the development stage and soon to

be clinical stage to allow for the approval for use of our target specific protein exhibiting efficacy and safety by matching or

exceeding current market approved products. The utilization of investment partners is critical to facilitate the development through

pre-Investigational Device Exemption (“IDE”), clinical, and ultimate commercialization as we fund the

pre-IDE work and continue achieving milestones.

DEVELOPMENT

OF THE COMPANY

Bone

Biologics Corporation (the “Company”) was incorporated under the laws of the State of Delaware on October 18, 2007

as AFH Acquisition X, Inc. Pursuant to a Merger Agreement, dated September 19, 2014, by and among the Company, its wholly-owned

subsidiary, Bone Biologics Acquisition Corp., a Delaware corporation (“Merger Sub”), and Bone Biologics, Inc. Merger

Sub merged with and into Bone Biologics Inc., with Bone Biologics Inc. remaining as the surviving corporation in the merger. Upon

the consummation of the merger, the separate existence of Merger Sub ceased. On September 22, 2014, the Company officially changed

its name to “Bone Biologics Corporation” to more accurately reflect the nature of its business and Bone Biologics,

Inc. became a wholly owned subsidiary of the Company. Bone Biologics, Inc. was incorporated in California on September 9, 2004.

On

July 16, 2018, the Company closed a rights offering in which Hankey Capital purchased 3,539,654 shares of the Company’s

Common Stock and executed amendments (the “Amendments”) to the convertible promissory notes (the “Existing Convertible

Notes”) payable to Hankey Capital dated October 24, 2014, May 4, 2015 and February 24, 2016. The Amendments reduced the

conversion price of the Existing Convertible Notes from $15.80 per share to $1.00 per share and extended the maturity date of

the February 24, 2016 convertible promissory note from February 24, 2019 to December 31, 2019. As a result of the share issuance

and Amendments, Hankey Capital and Don Hankey, the Chairman of the Company’s Board of Directors, acquired a majority of

the voting common shares issued and outstanding and thus effective control of the Company. On October 1, 2019, the maturity date

of the notes was extended to December 31, 2021.

Effective

July 24, 2018, the Company implemented a reverse split of the common stock of the Company on a basis of 1 new common share for 10 old

common shares.

UCLA

TDG Exclusive License Agreement

Effective

April 9, 2019, the Company entered into an Amended and Restated Exclusive License Agreement dated as of March 21, 2019 (the “Amended

License Agreement”) with the UCLA Technology Development Group on behalf of UC Regents (“UCLA TDG”). The Amended

License Agreement amends and restates the Amended and Restated Exclusive License Agreement, dated as of June 19, 2017 (the “2017

Agreement”). The 2017 Agreement amended and restated the Exclusive License Agreement, effective March 15, 2006, between

the Company and UCLA TDG, as amended by ten amendments. Under the terms of the Amended License Agreement, the Regents have continued

to grant the Company exclusive rights to develop and commercialize NELL-1 (the “Licensed Product”) for spinal fusion,

osteoporosis and trauma applications. The Licensed Product is a recombinant human protein growth factor that is essential for

normal bone development.

We

have agreed to pay an annual maintenance fee to UCLA TDG of $10,000 as well as to pay certain royalties to UCLA TDG under the

Restated License Agreement at the rate of 3.0% of net sales of licensed products. We must pay the royalties to UCLA TDG on a quarterly

basis. Upon a first commercial sale, we also must pay between $50,000 and $250,000, depending on the calendar year which is after

the first commercial sale. If we are required to pay any third party any royalties as a result of us making use of UCLA TDG patents,

then we may reduce the royalty owed to UCLA TDG by 0.333% for every percentage point paid to a third party. If we grant sublicense

rights to a third party to use the UCLA TDG patent, then we will pay to UCLA TDG 10% to 20% of the sublicensing income we receive

from such sublicense.

We

are obligated to make the following milestone payments to UCLA TDG for each Licensed Product or Licensed Method:

● $100,000 upon enrollment of the first subject in a Feasibility Study;

● $250,000 upon enrollment of the first subject in a Pivotal Study:

We

are also obligated to pay UCLA TDG a cash milestone payment within thirty (30) days of a Liquidity Event (including a Change of

Control Transaction and a payment election by UCLA TDG exercisable after December 22, 2019) such payment to equal the greater

of:

● 2% of all proceeds in connection with a Change of Control Transaction.

We

are obligated to diligently proceed with developing and commercializing licensed products under UCLA TDG patents set forth in

the Restated License Agreement. UCLA TDG has the right to either terminate the license or reduce the license to a non-exclusive

license if we do not meet certain diligence milestone deadlines set forth in the Restated License Agreement.

We

must reimburse or pre-pay UCLA TDG for patent prosecution and maintenance costs incurred during the term of the Restated License

Agreement. We have the right to bring infringement actions against third party infringers of the Restated License Agreement, UCLA

TDG may join voluntarily, at its own expense, or, at our expense, be joined involuntarily to the action. We are required to indemnify

UCLA TDG against any third party claims arising out of our exercise of the rights under the Restated License Agreement or any

sublicense.

On August 13, 2020 the Company

and UCLA TDG entered into a First Amendment to the Amended and Restated License Agreement pursuant to which the due dates for certain

Development Milestones was updated to better reflect delays caused by the COVID-19 Pandemic and to address the Company’s failure

to pay certain amounts with regard to patent prosecution, cost reimbursement, maintenance fees, and late fees, and in connection therewith,

a revised payment schedule was set forth.

COMPETITION

The

orthobiologic and orthopedic industries are characterized by rapidly advancing technologies, intense competition and a strong

emphasis on intellectual property. We face substantial competition from many different sources, including large and specialty

orthopedic companies, biotechnology companies, academic research institutions and governmental agencies along with public and

private research institutions.

Our

business is in a very competitive and evolving field, that faces competition from large established orthopedic companies such

as (but not limited to) Medtronic, Stryker, Zimmer-Biomet, and DePuy-Synthes that possess considerably more resources than Bone

Biologics.

Our

commercial opportunity could be reduced if our competitors develop and commercialize products that are safer, more effective,

have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors

also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could

result in our competitors establishing a strong market position before we are able to enter the market.

The

NELL-1 growth factor is mechanistically distinct from BMPs and can minimize complications associated with BMP therapies. The early

proof of concept animal studies has shown the efficacy of NELL-1 combined with demineralized bone matrix (DBM) as a novel bone

graft material for interbody spine fusion.

CUSTOMERS

The

populations of interest include spine surgeons, and patients with a skeletal bone defect or bone-related condition in their spine,

for which intervention is undertaken to correct such a defect. Spine surgeons and patients can choose to eliminate the need to

perform a second painful surgery to obtain autograft harvest of hip bone for fusion procedures by utilizing various other types

of biologics.

Most

cases of lower back pain can be linked to a general cause such as muscle strain, injury, overuse, or can be attributed to a specific

condition like herniated disc, degenerative disc disease, spondylolisthesis, spinal stenosis, or osteoarthritis.

INTELLECTUAL

PROPERTY

We

have an intellectual property portfolio that includes exclusive, worldwide licenses from UCLA TDG which we believe constitute

a formidable barrier to entry.

Additional

patent applications are currently in preparation. The intellectual property is unique and comprehensively covers NELL-1 manufacture,

NELL-1 compositions and NELL-1 use in wide ranging clinical and diagnostic applications. We protect our proprietary technology

through all mechanisms including U.S. and foreign patent filings, trade secret protections, and collaboration agreements with

domestic and international corporations, universities and research institutions. We are the exclusive licensee for the following

thirteen (13) UCLA TDG issued patents:

U.S. Patent No. Summary Date Issued

GOVERNMENT

REGULATION

The

manufacturing and marketing of any product which we may formulate with our technologies as well as our related research and development

activities are subject to regulation for safety, efficacy and quality by governmental authorities in the U.S. and other countries.

We anticipate that these regulations will apply separately to each product. The Company believes that complying with these regulations

will involve a considerable level of time, expense and uncertainty.

In

the U.S., drugs are subject to rigorous federal regulation and, to a lesser extent, state regulation. The Federal Food, Drug and

Cosmetic Act, as amended, and the regulations promulgated thereunder, and other federal and state statutes and regulations govern,

among other things, the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion

of our products. Drug development and approval within this regulatory framework is difficult to predict, requires a number of

years and involves the expenditure of substantial resources. Moreover, ongoing legislation by U.S. Congress and rule making by

the FDA presents an ever-changing landscape where we could be required

to undertake additional activities before any governmental approval is granted allowing us to market our products. The steps required

before a pharmaceutical agent may be marketed in the U.S. include:

● The submission of a New Drug Application (“NDA”) or PMA to the FDA; and

In

addition to obtaining FDA approval for each product, each manufacturing establishment must be registered with, and approved by,

the FDA. Moreover, manufacturing establishments are subject to biennial inspections by the FDA and must comply with the FDA’s

current Good Manufacturing Practices “cGMP” for products, drugs and devices.

Non-clinical

Trials

Non-clinical

testing includes laboratory evaluation of chemistry and formulation as well as tissue culture and animal studies to assess the

safety and potential efficacy of the product. Non-clinical safety tests must be conducted by laboratories that comply with FDA

regulations regarding good laboratory practices. Non-clinical testing is inherently risky and the results can be unpredictable

or difficult to interpret. The results of non-clinical testing are submitted to the FDA as part of an IDE and are reviewed by

the FDA prior to the commencement of clinical trials. Unless the FDA objects to an IDE, clinical studies may begin 30 days after

the IDE is submitted. We have relied and intend to continue to rely on third-party contractors to perform non-clinical trials.

Clinical

Trials

Clinical

trials involve the administration of the investigational product to healthy volunteers or to patients under the supervision of

a qualified investigator. Clinical trials must be conducted in accordance with good clinical practices under protocols that detail

the objectives of the study, the parameters to be used to monitor safety and the efficacy criteria to be evaluated. Each protocol

must be submitted to the FDA prior to its conduct. Further, each clinical study must be conducted under the auspices of an independent

institutional review board. The institutional review board will consider, among other things, ethical factors, the safety of human

subjects and the possible liability of the institution. The drug product used in clinical trials must be manufactured according

to the FDA’s current Good Manufacturing Practices.

Clinical

trials under IDE regulations are typically conducted in two sequential trials. In the Pilot trial, the initial introduction of

the product into healthy human subjects, the drug is tested for safety (adverse side effects), absorption, metabolism, bio-distribution,

excretion, food and drug interactions, abuse as well as limited measures of pharmacologic effect and proof of principle that involves

studies in a limited patient population in order to:

● demonstrate efficacy in a limited patient population;

● identify the range of doses likely to be effective for the indication; and

● identify possible adverse events and safety risks.

When

there is evidence that the product may be effective and has an acceptable safety profile in Pilot evaluations, Pivotal trials

are undertaken to establish and confirm the clinical efficacy and establish the safety profile of the product within a larger

population at geographically dispersed clinical study sites. Pivotal trials frequently involve randomized controlled trials and,

whenever possible, studies are conducted in a manner so that neither the patient nor the investigator knows what treatment is

being administered. The Company, or the FDA, may suspend clinical trials at any time if it is believed that the individuals participating

in such trials are being exposed to unacceptable health risks. We intend to rely upon third-party contractors to advise and assist

us in the preparation of our IDEs and the conduct of clinical trials that will be conducted under the IDEs.

Premarket

Approval and FDA Approval Process

The

results of the manufacturing process, development work, non-clinical studies and clinical studies are submitted to the FDA in

the form of a PMA prior to marketing and selling the product. The testing and approval process is likely to require substantial

time and effort. In addition to the results of non-clinical and clinical testing, the PMA applicant must submit detailed information

about chemistry, manufacturing and controls that will describe how the product is made and tested through the manufacturing process.

The

PMA review process involves FDA investigation into the details of the manufacturing process, as well as the design and analysis

of each of the non-clinical and clinical studies. This review includes inspection of the manufacturing facility, the data recording

process for the clinical studies, the record keeping at a sample of clinical trial sites and a thorough review of the data collected

and analyzed for each non-clinical and clinical study. Through this investigation, the FDA reaches a decision about the risk-benefit

profile of a product candidate. If the benefit is worth the risk, the FDA begins negotiating with the company about the content

of an acceptable package insert and associated Risk Evaluation and Mitigation Strategies (“REMS”), if required.

The

approval process is affected by a number of factors, including the severity of the disease, the availability of alternative treatments

and the risks and benefits demonstrated in clinical trials. Consequently, there is a risk that approval may not be granted on

a timely basis, if at all. The FDA may deny a PMA if applicable regulatory criteria are not satisfied, require additional testing

or information or require post-marketing testing (Phase 4) and surveillance to monitor the safety of a company’s product

if it does not believe the PMA contains adequate evidence of the safety and efficacy of the product. Moreover, if regulatory approval

of a product is granted, such approval may entail limitations on the indicated uses for which it may be marketed. Finally, product

approvals may be withdrawn if compliance with regulatory standards is not maintained or health problems are identified that would

alter the risk-benefit analysis for the product. Post-approval studies may be conducted to explore the use of the product for

new indications or populations such as pediatrics.

Among

the conditions for PMA approval is the requirement that any prospective manufacturer’s quality control and manufacturing

procedures conform to the FDA’s Good Manufacturing Practices and the specifications approved in the PMA. In complying with

standards set forth in these regulations, manufacturers must continue to expend time, money and effort in the area of product

and quality control to ensure full technical compliance. Manufacturing establishments, both foreign and domestic, also are subject

to inspections by or under the authority of the FDA and by other federal, state or local agencies. Additionally, in the event

of non-compliance, FDA may issue warning letters and/or seek criminal and civil penalties, enjoin manufacture, seize product or

revoke approval.

International

Approval

Whether

or not FDA approval has been obtained, approval of a product by regulatory authorities in foreign countries must be obtained prior

to the commencement of commercial sales of the drug in such countries. The requirements governing the conduct of clinical trials

and drug approvals vary widely from country to country, and the time required for approval may be longer or shorter than that

required for FDA approval. Although there are some procedures for unified filings for certain European countries, in general,

each country at this time has its own procedures and requirements.

Other

Regulation

In

addition to regulations enforced by the FDA, we are also subject to U.S. regulation under the Controlled Substances Act, the Occupational

Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery

Act and other present and potential future federal, state, local or similar foreign regulations. Our research and development

may involve the controlled use of hazardous materials, chemicals and radioactive compounds. Although we believe that its safety

procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations,

the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of any accident,

we could be held liable for any damages that result and any such liability could exceed our resources.

EMPLOYEES

AND HUMAN CAPITAL

As

of the date hereof, we have one (1) full-time employee and one (1) part-time employee. We have relied and plan on continuing to rely

on independent organizations, advisors and consultants to perform certain services for us, including handling substantially all aspects

of regulatory approval, clinical management, manufacturing, marketing, and sales. Such services may not always be available to us on

a timely basis or at costs that we can afford. Our future performance will depend in part on our ability to successfully integrate newly

hired officers and to engage and retain consultants, as well as our ability to develop an effective working relationship with our management

and consultants.

Item

1A. Risk Factors

The

following factors, as well as factors described elsewhere in this Form 10-K, or in other filings by the Company with the Securities

and Exchange Commission, could adversely affect the Company’s consolidated financial position, results of operations or

cash flows. Other factors not presently known to us or that we presently believe are not material could also affect our business

operations and financial results.

Risks

Related to Our Business

Our

ability to grow and compete in the future will be adversely affected if adequate capital is not available to us or not available

on terms favorable to us.

The

ability of our business to grow and compete depends on the availability of adequate capital. We currently have no cash flow. We

cannot assure you that we will be able to obtain equity or debt financing on acceptable terms or at all to implement our growth

strategy. As a result, we cannot assure you that adequate capital will be available to finance our current growth plans, take

advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

Impact

of the Novel Coronavirus (COVID-19) on the Company’s Business Operations

The

global outbreak of the novel coronavirus (COVID-19) has led to severe disruptions in general economic activities worldwide, as businesses

and governments have taken broad actions to mitigate this public health crisis. In light of the uncertain and continually evolving situation

relating to the spread of COVID-19, this pandemic could pose a risk to the Company. The extent to which the coronavirus may impact the

Company’s business operations will depend on future developments, which are highly uncertain and cannot be predicted at this time.

The Company intends to continue to monitor the situation and may adjust its current business plans as more information and guidance become

available.

The

coronavirus pandemic presents a challenge to medical facilities worldwide. As the Company’s clinical trials will be conducted on

an outpatient basis, it is not currently possible to predict the full impact of this developing health crisis on such clinical trials,

which could include delays in and increased costs of such clinical trials. Current indications from the clinical research organizations

conducting the clinical trials for the Company are that such clinical trials are being delayed or extended for several months as a result

of the coronavirus pandemic.

There

is also significant uncertainty as to the effect that the coronavirus may have on the amount and type of financing available to the Company

in the future.

We

rely on Hankey Capital for Funding

For

the past several years, we have depended on our relationship with Hankey Capital for working capital to fund our operations, which has

been raised in the form of both debt and equity capital. Hankey Capital, directly and indirectly, controls approximately 89% of our issued

and outstanding shares of common stock (including collateral shares to secure the repayment of convertible notes) and has been

issued convertible notes payable with an aggregate principal balance of $11,712,179 at December 31, 2020. No assurance can be given that

any future financing from Hankey Capital will be available or, if available, that it will be on terms that are satisfactory to the Company.

In the absence of financing from other sources, the inability to obtain additional financing from Hankey Capital will result in the scaling

back or discontinuance of our product development programs or operations entirely.

Our

recurring operating losses have raised substantial doubt regarding our ability to continue as a going concern.

Our

recurring operating losses raise substantial doubt about our ability to continue as a going concern. As a result, our independent

registered public accounting firm included an explanatory paragraph in its report on our financial statements as and for the years

ended December 31, 2020 and 2019 with respect to this uncertainty. The perception of our ability to continue as a going concern

may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence

by investors, suppliers and employees.

We

have incurred losses for the years ended December 31, 2020 and 2019 and we expect our operating expenses to increase in the foreseeable

future, which may make it more difficult for us to achieve and maintain profitability.

We

have no significant operating history and since inception to December 31, 2020 have incurred accumulated losses of approximately $69.0

million. We will continue to incur significant expenses for development activities for our lead product NELL-1/DBX®. Operating expenditures

for the next twelve months are estimated at $6.6 million. Our auditors have included in their audit report for the year ended

December 31, 2020 an explanatory paragraph regarding our ability to continue as a going concern. As reflected in the financial statements,

we had a stockholders’ deficit of $13,692,310 at December 31, 2020, incurred a net loss of $1,824,690 and used net cash in operating

activities of $426,933 during the year ended December 31, 2020. These factors raise substantial doubt about our ability to continue

as a going concern within one year after the date that the financial statements are issued.

We

will continue to attempt to raise additional debt and/or equity financing to fund future operations and to provide additional

working capital. However, there is no assurance that such financing will be consummated or obtained in sufficient amounts necessary

to meet the Company’s needs. If cash resources are insufficient to satisfy the Company’s on-going cash requirements,

the Company will be required to scale back or discontinue its product development programs, or obtain funds if available (although

there can be no certainties) through strategic alliances that may require the Company to relinquish rights to its technology,

substantially reduce or discontinue its operations entirely. No assurance can be given that any future financing will be available

or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional

financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for

our stockholders, in the case of equity financing. As a result, we can provide no assurance as to whether or if we will ever be

profitability. If we are not able to achieve and maintain profitability, the value of our company and our common stock could decline

significantly.

We

face a number of risks associated with our incurrence of substantial debt which could adversely affect our financial condition.

The

Company has the following debt outstanding with Hankey Capital, a related party:

Note Type Issue Date Maturity Date Interest Rate December 31, 2020

Incurring

a substantial amount of debt may require us to use a significant portion of any cash flow to pay principal and interest on the

debt, which will reduce the amount available to fund working capital, capital expenditures, and other general purposes. Our indebtedness

may negatively impact our ability to operate our business and limit our ability to borrow additional funds by increasing our borrowing

costs, and impact the terms, conditions, and restrictions contained in possible future debt agreements, including the addition

of more restrictive covenants; impact our flexibility in planning for and reacting to changes in our business as covenants and

restrictions contained in possible future debt arrangements may require that we meet certain financial tests and place restrictions

on the incurrence of additional indebtedness and place us at a disadvantage compared to similar companies in our industry that

have less debt.

The

Convertible Notes are secured by 23,404,255 collateral shares of Common Stock issued by the Company in the name of Hankey Capital, in

such amount so as to maintain a loan to value ratio equal to 50% (the “Collateral Shares”). The number of shares of

the Collateral Shares are adjusted on a yearly basis. The principal amount of the loans are pre-payable in whole or in part at

any time, without premium or penalty. Upon any voluntary partial prepayment of outstanding principal, Hankey Capital will return Collateral

Shares to the Company in the amount necessary, if any, to maintain the loan to value ratio at no less than 50%. Upon a full payment of

the outstanding principal, all Collateral Shares will be returned and cancelled. Hankey Capital will also return Collateral

Shares under the same terms in case of partial or full conversion of the Convertible Notes. All of the Company’s personal property

further secure the Convertible Notes, including collateral assignments of all the Company’s license agreements and the MTF Sygnal

Option Agreement.

We

operate in a highly competitive environment.

The

medical device industry is characterized by rapidly evolving technology and intense competition. Our competitors include major

multi-national orthopedic and med-tech companies developing both generic and proprietary therapies to treat serious diseases.

Many of these companies are well-established and possess technical, human, research and development, financial and sales and marketing

resources significantly greater than ours. In addition, many of our potential competitors have formed strategic collaborations,

partnerships and other types of joint ventures with larger, well established industry competitors that afford these companies

potential research and development and commercialization advantages in the therapeutic areas we are currently pursuing.

Academic

research centers, governmental agencies and other public and private research organizations are also conducting and financing

research activities which may produce products directly competitive to those being developed by us. In addition, many of these

competitors may be able to obtain patent protection, obtain FDA and other regulatory approvals, and begin commercial sales of

their products before us.

Our

limited operating history makes it difficult to evaluate our current business and future prospects.

We

have a limited operating history, and there is a risk that we will be unable to continue as a going concern. We have minimal assets

and no significant financial resources. Our limited operating history makes it difficult to evaluate our current business model

and future prospects. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties

frequently encountered by companies in the early stages of development. Potential investors should carefully consider the risks

and uncertainties that a new company with no operating history will face. In particular, potential investors should consider that

there is a significant risk that we will not be able to:

● implement or execute our current business plan, which may or may not be sound;

● maintain our anticipated management and advisory team; and

● raise sufficient funds in the capital markets to effectuate our business plan.

If

we cannot execute any one of the foregoing or similar matters relating to our business, the business may fail, in which case you

would lose the entire amount of your investment in the Company.

Our

future success is dependent, in part, on the performance and continued service of our officers and directors.

We

are presently dependent largely upon the experience, abilities and continued services of Jeffrey Frelick, our President and Chief

Executive Officer. The loss of services of Mr. Frelick could have a material adverse effect on our business, financial condition

or results of operation.

Acceptance

of our formulations or products in the marketplace is uncertain and failure to achieve market acceptance will prevent or delay

our ability to generate revenues.

Our

future financial performance will depend, at least in part, upon the introduction and customer acceptance of our products. Even

if approved for marketing by the necessary regulatory authorities, our formulations or products may not achieve market acceptance.

The degree of market acceptance will depend upon a number of factors, including:

● Our ability to market our products.

Physicians,

patients, payers or the medical community in general may be unwilling to accept, utilize or recommend any of our proposed formulations

or products. If we are unable to obtain regulatory approval, commercialize and market our proposed formulations or products when

planned, we may not achieve any market acceptance or generate revenue.

Our

long-term capital requirements are subject to numerous risks.

We

anticipate that it will require an additional $20 million to complete protein synthesis, animal studies, and commence first in man studies.

An estimated additional $27 million will be required to achieve product launch for spine interbody fusion. These amounts are estimates

based on data currently available to us, and are subject to many factors, including the risk factors discussed in this item 1A. We

anticipate we will need to raise substantial additional funds for the pivotal clinical trial prior to marketing our first product. Our

long-term capital requirements are expected to depend on many factors, including, among others:

● continued progress and cost of our research and development programs;

● progress with pre-clinical studies and clinical trials;

● time and costs involved in obtaining regulatory (including FDA) clearance;

● competing technological and market developments;

● market acceptance of our drug formulations or products;

● costs for recruiting and retaining employees and consultants;

● costs for training physicians; and

● legal, accounting and other professional costs.

We

may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding. We may

seek to raise any necessary additional funds through equity or debt financings, collaborative arrangements with corporate partners

or other sources, which may be dilutive to existing stockholders or otherwise have a material effect on our current or future

business prospects. If adequate funds are not available, we may be required to significantly reduce or refocus our development

and commercialization efforts with regard to our delivery technologies and our proposed formulations and products.

We

note that there is significant uncertainty from the affect that the novel coronavirus may have on the availability, cost and type