RenovaCare (RCAR) Risk Analysis

We are not a fully reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); therefore, we are subject only to the reporting requirements of Section 15(d) of the Exchange Act. Until our Common Stock is registered under the Exchange Act, we will be subject only to the reporting obligations imposed by Section 15(d) of the Exchange Act, which we refer to as Section 15(d). Section15(d) requires that issuers file periodic and current reports with the U.S. Securities and Exchange Commission (the "Commission" or the "SEC") when they have issued any class of securities for which a registration statement was filed and became effective pursuant to the Securities Act. The purpose of Section 15(d) is to ensure that investors who buy securities in registered offering are provided with the same information on an ongoing basis that they would receive if the securities they purchased were listed on a securities exchange or the issuer were otherwise subject to periodic reporting obligations. However, companies that are required to report only under Section 15(d) are not subject to some of the Exchange Act reporting requirements. For example, companies that are required to report only under Section 15(d) are not subject to the short-swing profit reporting requirements contained in Section 16 of the Exchange Act, the beneficial ownership reporting requirements contained in Section 13 of the Exchange Act, the institutional investor reporting rules or the third-party tender offer rules, or the Exchange Act's proxy rules contained in Section 14 of the Exchange Act. The reporting obligations under Section15(d) of the Exchange Act are automatically suspended when: (i) any class of securities of the issuer reporting under Section 15(d) is registered under Section 12 of the Exchange Act; or (ii) at the beginning of the issuer's fiscal year, other than the year in which the applicable registration statement became effective, if the class of securities covered by the registration statement is held of record by fewer than 300 persons. In the latter case, the Company would no longer be subject to periodic reporting obligations so long as the number of holders remained below 300 unless we filed a registration statement with the Securities and Exchange Commission under Section 12 of the Exchange Act. If our obligation to file reports under Section 15(d) is suspended (other than due to our having registered our common stock under Section 12 of the Exchange Act), then investors will have reduced visibility with respect to the Company, its financial condition and results of operations. Since February 26, 2018, our Common Stock has traded on the OTC Markets Group, Inc.'s Pink Current Information platform, ("OTC Pink-Current"). Until our Common Stock is listed on an exchange, we expect to remain eligible for quotation on the OTC Pink-Current. In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect the liquidity of your shares. This would also make it more difficult for us to raise additional capital or attract qualified employees or partners.

The OTC Pink-Current is viewed by most investors as a less desirable, and less liquid, marketplace. As a result, an investor may find it more difficult to purchase, dispose of or obtain accurate quotations as to the value of, our common stock. We may reapply for listing on the OTCQB, which application may or may not be approved. If not approved, we expect that our stock will continue to trade on the OTC Pink-Current To be eligible for OTCQB, companies will be required to: - meet a minimum bid price test of $0.01. Securities that do not meet the minimum bid price test will be downgraded to OTC Pink-Current;- submit an application to OTCQB and pay an application and annual fee; and - submit an OTCQB "annual certification" confirming the Company Profile displayed on www.otcmarkets.com is current and complete and providing additional information on officers, directors, and controlling stockholders. In the event we do not submit an application for listing on the OTCQB or other stock exchange or if we do and the application is not approved, we expect that our stock will continue to trade on the OTC Pink-Current, which could adversely affect the market liquidity of our common stock.

"Penny stocks" are, generally speaking, those securities that are not listed on a national securities exchange and are priced under $5. There are exclusions for securities of issuers that have net tangible assets greater than $2 million if they have been in operation at least three years or greater than $5 million if in operation less than three years. Securities of issuers with average revenue of at least $6 million for the last three years are also not considered penny stocks. Currently our common stock is considered "penny stock exempt" by the OTC Pink-Current. This means that our stock is exempt from the definition of a Penny Stock under SEC under Rule 240.3a51-1 because it meets one of the following tests: 1) A price of over $5 per share, 2) the issuer has Average Revenue of at least $6 million for the last 3 years, or 3) the issuer has Net Tangible Assets in excess of $2 million if the issuer has been in continuous operations for at least 3 years or $5 million if less than 3 years. The value of our net tangible assets for the fiscal years ended December 31, 2021 and 2020 was, approximately $2.2 million and $6.9 million, respectively. As long as we continue to satisfy at least one of the foregoing exemptions, our common stock should continue to be deemed "penny stock exempt." However, because our stock is not registered for trading on a national stock exchange should we no longer satisfy at least one of the exemption criteria described above, our common stock would be considered a "penny stock." We expect that absent a financing, our net tangible assets, will fall below $2,000,000 during the third or fourth quarter of fiscal 2022. The penny stock rules are designed to prevent deceptive or manipulative practices. It provides that a broker cannot sell a penny stock to any person unless it has approved that person's account for penny stock transactions and the broker/dealer has received in writing from customer agreement to the transaction; approving an account includes, among other things, reviewing the customer's financial data and determining the customer's suitability, including the capability to evaluate the risks of trading in penny stocks. Some types of transactions in penny stocks are exempt from these rules. Exempt transactions include those with an established customer (a customer of more than one year or one who has made at least three separate penny stock purchases) and transactions in which the customer is an institutional investor. In addition, the penny stock regulations require that prior to any non-exempt buy/sell transaction in a penny stock, a disclosure schedule proscribed by the SEC relating to the penny stock market must be delivered by a broker-dealer to the purchaser of such penny stock. This disclosure must include the commissions payable to both the broker-dealer and the registered representative and current price quotations for our common stock. The regulations also require that monthly statements be sent to holders of penny stock that disclose recent price information for the penny stock and information of the limited market for penny stocks. These requirements adversely affect the market liquidity of our common stock. Accordingly, should our common stock be deemed a "penny stock," you may find it difficult to, deposit, transfer, sell or purchase the shares of our common stock in open market transactions.

The trading price of our common stock has, from time to time, fluctuated widely and in the future may be subject to similar fluctuations. The trading price may be affected by a number of factors including the risk factors set forth herein, as well as our operating results, financial condition, general economic beyond our control. In recent years, broad stock market indices in general, and smaller capitalization companies, in particular have experienced substantial price fluctuations. Since our common stock is thinly traded its trading price is likely to be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including, but not limited to: - the trading volume of our common stock;- the number of securities analysts, market-makers and brokers following our common stock;- new products or services introduced or announced by us or our competitors;- actual or anticipated variations in quarterly operating results;- conditions or trends in our business industries;- announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;- additions or departures of key personnel;- sales of our common stock and - general stock market price and volume fluctuations of publicly-traded, and particularly microcap, companies. In a volatile market, we may experience wide fluctuations in the market price of our common stock. These fluctuations may have a negative effect on the market price of our common stock. In addition, the sale of our common stock into the public market upon the effectiveness of this registration statement could put downward pressure on the trading price of our common stock. Such fluctuations and their potential negative impact on our stock price may also adversely affect our ability to raise capital on favorable terms.

Sales of a substantial number of shares of our common stock into the public market by the Selling Stockholders may result in significant downward pressure on the price of our common stock and may affect the ability of our stockholders to realize any trading price of our common stock when and if a trading market develops for our common stock. Any significant downward pressure on the price of our common stock as the Selling Stockholders sell their shares of our common stock could encourage other stockholders to sell as well as short sales by the Selling Stockholders or others. Any such short sales could place further downward pressure on the price of our common stock.

As of March 28, 2022 we had 87,352,364 shares issued and outstanding, of which 61,248,711 are deemed "control" or "restricted" securities within the meaning of Rule 144. The possibility that substantial amounts of our common stock may be sold into the public market, either under Rule 144, or pursuant to a resale registration statement, may adversely affect prevailing market prices for the common stock and could impair our ability to raise capital in the future through the sale of equity securities because of the perception that future re-sales could decrease our stock price and because of the availability of resale shares to those interested in investing in our common stock.

As of March 28, 2022, Mr. Harmel S. Rayat, a director and Interim President, Interim Chief Executive Officer, Interim Chief Financial Officer and Chairman, beneficially owned approximately 71.88% of our common shares (including shares issuable upon exercise of outstanding warrants). See the beneficial ownership table in the section of this Form 10-K titled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT." As a result, Mr. Rayat may be able to exercise significant influence or control over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, and will have significant control over our management and policies. Mr. Rayat's interests may be different from yours. For example, he may support proposals and actions with which you may disagree or which are not in your interest. This concentration of ownership could delay or prevent a change in control of our company or otherwise discourage a potential acquirer from attempting to obtain control of our company, which in turn could reduce the price of our common stock. In addition, Mr. Rayat could use his voting influence to maintain our existing management and directors in office, or support or reject other management and board proposals that are subject to stockholder approval, such as the adoption of employee stock plans and significant unregistered financing transactions.

As of the date of this Form 10-K we have granted options to purchase shares of our common stock to various persons and entities, under which we could be obligated to issue up to 3,139,999 shares of our common stock. The exercise prices of these options range from $1.05 to $4.20 per share. If issued, the shares underlying these options would increase the number of shares of our common stock currently outstanding and dilute the holdings and voting rights of our then-existing stockholders. The sale of the shares issued upon the exercise of such options may also place downward pressure on our stock price.

As of the date of this Form 10-K we have issued warrants to purchase shares of our common stock to various persons and entities, under which we could be obligated to issue up to 11,712,496 shares of common stock. Each of the warrants may be exercised on a "cashless basis" using the formula set forth therein at prices ranging from $2.00 to $3.45 per share. If exercised the shares issuable may be resold immediately pursuant to Rule 144, to the extent available. Such sales could exert downward pressure on the market price of our common stock and may cause other stockholders and others to sell their stock or to enter into short sales transactions which will further exacerbate the downward pressure on the stock price.

We intend to sell additional equity securities in order to fully implement our business plan. Such sales will be made at prices determined by our board of directors based on factors deemed appropriate at the time; accordingly, such sales by us could be made at prevailing market prices at the time, in which case, investors could experience dilution of their investment.

Our Articles of Incorporation allow our Board of Directors to issue up to 10,000,000 shares of preferred stock. Currently, no shares of preferred stock are issued and outstanding. However, we can issue shares of our preferred stock in one or more series and can set the terms of the preferred stock without seeking any further approval from the holders of our common stock. Any preferred stock that we issue may rank ahead of our common stock in terms of dividend priority or liquidation premiums and may have greater voting rights than our common stock. In addition, such preferred stock may contain provisions allowing it to be converted into shares of common stock, which could dilute the value of our common stock to then current stockholders and could adversely affect the market price, if any, of our common stock.