American CryoStem Corp - Quarter Report: 2022 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

x Yes o No

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 23, 2022, the issuer’s $0.001 par value Common Stock totaled 43,692,922 shares outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. CONSOLIDATED Financial StatementS

American CryoStem Corporation

Consolidated Balance Sheets

As of March 31, 2022 and September 30, 2021

See the notes to the financial statements.

American CryoStem Corporation

Consolidated Statements of Operations

For the Six Months and the Three Months Ended March 31, 2022 and 2021

Unaudited

See the notes to the financial statements.

American CryoStem Corporation

Consolidated Statements of Cash Flows

For the Six Months and the Three Months Ended March 31, 2022 and 2021

Unaudited

See the notes to the financial statements.

American CryoStem Corporation

Consolidated Statements of Changes in Shareholders’ Deficit

For the Six Months and the Three Months Ended March 31, 2022 and 2021

Unaudited

See the notes to the financial statements.

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 1. Organization of the Company and Significant Accounting Policies

American CryoStem Corporation (the “Company”) is a publicly held corporation formed on March 13, 2009 in the state of Nevada as R&A Productions Inc. (R&A).

In April 2011, R&A purchased substantially all the assets and liabilities of American CryoStem Corporation (ACS) a company formed in 1987, for 21 million shares of common stock. ACS was deemed to be the accounting acquirer. At the date of the purchase, the former operations of R&A were discontinued, and the name of the Company was changed to American CryoStem Corporation.

The Company is in the business of collecting adipose tissue, processing it to separate the adult stem cells, preparing such stem cells for long-term storage and developing autologous mesenchymal stem cell therapies. The process allows individuals to preserve their stem cells for future personal use in cellular therapy. The adipose derived stem cells are prepared and stored in their raw form without manipulation, bio-generation or the addition of biomarkers or other materials, making them suitable for use in cellular treatments and therapies offered by existing and planned treatment centers worldwide. Individualized collection and storage of adult stem cells provides personalized medicine solutions by making the patient’s own preserved stem cells available for future cellular therapies.

The Company has devoted a significant amount of its time and resources to develop its technologies and intellectual property. These efforts have resulted in the development of cell lines, cell culture medium, other laboratory products and cellular therapies which the Company believes are suitable for licensing and distribution by third parties. Additionally, the Company has initiated a licensing program to license its technologies to laboratories currently processing other types of biologic materials including cord blood and general blood banks. The Company closed its first licensing agreement in 2014 and intends to pursue additional licensing partners in the future.

The accompanying consolidated financial statements include the accounts of American CryoStem Corporation and its wholly owned subsidiaries.  The Company’s subsidiaries are APAC CryoStem Limited, a Hong Kong company and APAC CryoStem (Shenzhen) Ltd. which were established to support its licensing agreement and operations and collect the licensing fees in Hong Kong and China. Currently, Mr. Arnone and Mr. Dudzinski serve as management and directors of both companies. All significant intercompany accounts and transactions have been eliminated in the consolidation. Management believes all amounts have been adjusted properly.

Accounting policies refer to specific accounting principles and the methods of applying those principles to present fairly the company’s financial position and results of operations in accordance with generally accepted accounting principles. The policies discussed below include those that management has determined to be the most appropriate in preparing the company’s financial statements.

Use of Estimates – The preparation of the financial statements in conformity with United States generally accepted accounting principles (“GAAP”) uniformly applied requires management to make reasonable estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses at the date of the financial statements and for the period they include. Actual results may differ from these estimates.

Cash – For the purpose of calculating changes in cash flows, cash includes all cash balances and highly liquid short-term investments with an original maturity of three months or less. Occasionally, the Company maintains cash balances at financial institutions that exceed federally insured limits.

Accounting for Investments – The Company accounts for investments based upon the type and nature of the investment and the availability of current information to determine its value. Investments in marketable securities in which there is a trading market will be valued at market value on the nearest trading date relative to the Company’s financial reporting requirements. Investments which there is no trading market from which to obtain recent pricing and trading data for valuation purposes will be valued based upon management’s review of available financial information, disclosures related to the investment and recent valuations related to the investment’s fundraising efforts.

Research and Development – Research and development expenses include both external and internal expenses. External expenses primarily include costs of intellectual property development, clinical trial development, fees paid for third party testing services, clinical supply and manufacturing expenses, regulatory filing fees, consulting and professional fees as well as other general costs related to the execution of research and development activities. Internal expenses primarily include compensation of employees engaged in research and development activities. Research and development expenses are expensed as incurred. Manufacturing costs are generally expensed as incurred.

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 1. Organization of the Company and Significant Accounting Policies (continued)

Revenue Recognition – Effective October 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for the periods presented. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, certain collaboration arrangements and financial instruments. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of ASC 606 did not have an impact on the amount of reported revenues. See Note 3 “Revenue Recognition” for additional information.

Advertising – Advertising Costs are expensed as they are incurred. Advertising Costs were $444 and $370, respectively for the six months ended March 31, 2022 and 2021 and $222 and $0, respectively for the three months ended March 31, 2022 and 2021; which is in Sales and Marketing Expenses within the Consolidated Statements of Operations.

Bad Debt Expense – The Company provides, through charges to income or loss, a charge for bad debt expense, which is based upon management’s evaluation of numerous factors. These factors include economic conditions prevailing, a predictive analysis of the outcome of the current portfolio by client, and prior credit loss experience of each client. The Company uses the information from this analysis to develop an estimate of bad debt reserve based upon the amount of accounts receivable by client at the balance sheet date. The Allowance for Doubtful Accounts was $860,933 at March 31, 2022 and $860,933 at September 30, 2021. (See Note 3 for additional information).

Inventory – Inventory is valued at lower of cost or market using the first in, first out method. Inventory consists of the disposables and materials used to create production kits, for processing of adipose tissue and cellular samples, the manufacture of Medias used to prepare the samples and cryoprotectant for the storage of the samples.

Inventory was composed of Raw Materials and Finished Goods, which was valued at $19,424 at March 31, 2022 and $17,934 at September 30, 2021.

Long Lived Assets – The Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount.

Fixed Assets – Fixed assets are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful life of the assets, which is estimated as follows:

Schedule of Fixed Assets, Useful Life of Assets

Income Taxes – The Company accounts for income taxes in accordance with generally accepted accounting principles which require an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between financial statement and income tax bases of assets and liabilities that will result in taxable income or deductible expenses in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets and liabilities to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period adjusted for the change during the period in deferred tax assets and liabilities.

The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board (FASB) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of March 31, 2022 and September 30, 2021, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. All tax returns from fiscal years 2015 to 2020 are subject to IRS and State of New Jersey audit.

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 1. Organization of the Company and Significant Accounting Policies (continued)

Recently Issued Accounting Pronouncements

The FASB recently issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity.

The guidance in ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives.

In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract.

The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.

The amendments in ASU 2020-06 are effective for our company for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently assessing the impact of these amendments on its future financial reporting.

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses.  The new guidance provides better representation about expected credit losses on financial instruments. This Update requires the use of a methodology that reflects expected losses and requires consideration of a broader range of reasonable and supportive information to inform credit loss estimates.  This ASU is effective for reporting periods beginning after December 15, 2022, with early adoption permitted.  The company is studying the impact of adopting the ASU in fiscal year 2024, and what effect it could have. The Company believes the accounting change would not have a material effect on the financial statements.

NOTE 2. Going Concern

The accompanying consolidated financial statements have been presented in accordance with generally accepted accounting principles in the US, which assume the continuity of the Company as a going concern. However, the Company has incurred significant losses since its inception which raises substantial doubt about the Company’s ability to continue as a going concern. Management has made this assessment for the period one year from date of the issuance of this report. Management’s plans regarding this matter are to continue to fund its operations through fundraising activities in fiscal 2022 for future operations and business expansion. The Company executed a firm Letter of Intent (LOI) in 2021 for a $10 million financing with EF Hutton in 2022.

NOTE 3. Revenue Recognition

Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps:

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 3. Revenue Recognition (continued)

We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, if the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Our major sources of revenue during the reporting periods were 1. Tissue Collection, Processing and Storage revenue from various customers; 2. Annual Storage Fees for our ATGRAFT and ATCELL products, from customers who have had stored in our laboratory facility, along with former Bio-Life and Cytori storage customers purchased by American CryoStem; 3. Licensing and other fees from Baoxin; and 4. Products sales revenues. The adoption of ASC 606 did not have an impact on the pattern or timing of recognition of our Tissue Processing, Storage Fees or Product Sales Revenue, since:

Revenue and Allowances

All revenue for the six months and three months was provided by customers who were individuals rather than corporate partners.

Performance Obligations

At contract inception, we assess the goods and services promised in our contracts and identify the performance obligations for each promise to transfer to the customer goods or to provide the customer with a service that is distinct. To identify the performance obligations, we consider all of the goods and services promised in the contract regardless of whether they are specifically stated or are implied by customary business practices. We determined that the following distinct goods or services represent separate performance obligations:

We principally sell our products to end users, who have agreements with us to utilize our processing and storage technology. We provide processing and storage services to individual customers. We charge various fees for consulting services or licensing of our technologies, which includes processing and storage agreements, arrangements with biotechnology processing facilities for the provision of our services within a limited geographic area.

For the customers that purchase our Tissue Collection, Processing and Storage Products we transfer control at the point in time when the goods are shipped from our facility, shipping costs are paid by the customer and these costs are not accrued when the related revenue is recognized.

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 3. Revenue Recognition (continued)

Variable Consideration

Under ASC 606, we are required to make estimates of the net sales price, including estimates of variable consideration (such as rebates and discounts) and recognize the estimated amount as revenue when we transfer control of the product or provide the service to our customers. Variable Consideration must be determined using either an “expected value” or a “most likely amount” method. At the current time the Company does not offer rebates or discounts on our provision of ATGRAFT and ATCELL customer processing and storage fees; Licensing and other Fees; and offer Tissue Collection, Processing and Storage products; therefore, we have not made any provisions for variable consideration related to discounts or rebates.

Product Returns

We only offer product returns in the event a delivered product is found to be defective for which we offer replacement only. The Company has not had any product returned based upon a defective product claim however return experience may change over time.

NOTE 4. Loss per Share

The Company applies ASC 260, “Earnings per Share” to calculate loss per share. In accordance with ASC 260, basic and fully diluted net loss per share has been computed based on the weighted average of common shares outstanding during the years. The dilutive effects of the convertible notes and the options outstanding are not included in the calculation of loss per share since their inclusion would be anti-dilutive.

The Company had 13,636,500 and 7,986,500 shares of Common Stock issuable upon exercise of all outstanding stock options and warrants at March 31, 2022 and 2021, respectively: and 2,334,784 and 2,268,117 shares issuable on the conversion of outstanding Convertible Notes at March 31, 2022 and 2021, respectively.

Net Loss per share for the following quarters is computed below:

Schedule of Net Loss per Share

NOTE 5. Fixed Assets

The fixed assets accounts of the Company are comprised as follows:

Schedule of Fixed Assets 

Depreciation expense for the six months ended March 31, 2022 and 2021 were $6,554 and $6,555, respectively; and for the three months ended March 31, 2022 and 2021 were $3,277 and $3,277, respectively.

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 6. Patent & Patents Filings

The patent and patents development are recorded at cost and are being amortized on a straight-line basis over a period of seventeen years. The company capitalizes Legal and Administrative Fees incurred in the process of filing for its patents. The Company has only been amortizing the patents issued. Amortization Expense for the six months ended March 31, 2022 and 2021 were $6,986 and $29,527, respectively; and for the three months ended March 31, 2022 and 2021 were $3,455 and $28,104, respectively.

Patents still in the application process have not been amortized. The unamortized costs of patents in the application process are $210,832 as of March 31, 2022 and $164,194 as of September 30, 2021. Amortizable Patent Costs were $238,172 at March 31, 2022 and $238,172 at September 30, 2021. The following is the anticipated amortization expense for these patents for the next 5 years:

Schedule of patent amortization

The following is a description of the Company’s patent assets:

On August 2, 2011, the Company was awarded U.S. Patent No. US 7,989,205 B2, titled Cell Culture Media, Kits, and Methods of Use. The Patent is for cell culture media kits for the support of primary culture of normal non-hematopoietic cells of mesodermal origin suitable for both research and clinical applications. The Company filed and maintained a continuation (U.S. Serial No. 13/194,900) and additional claims were granted on November 8, 2016 under patent Number 9,487,755. The Company filed an additional continuation on November 7, 2016 as part of our overall patent strategy and to cover expanded modifications of the original patent grant, US Patent Application No. 15/344,805.

On July 3, 2018, the Company was awarded U. S. Patent No. US 10,014,079 B2 titled “Business Method for Collection, Cryogenic Storage and Distribution of a Biologic Sample Material originally filed as US Serial No 13/702,304 filed June 6, 2011 with a priority date of June 6, 2010. The patent covers the Company’s comprehensive business method for collecting, processing, cryogenic storage and distribution of a biologic sample material. The Company has filed a continuation of the patent to cover addition claims and will file additional Continuation in Part claims for improvements that it has developed since the original patent filing.

On December 18, 2018, the Company was awarded US Patent No. US 10,154,664 B2 titled “Systems and Methods for the Digestion of Adipose Tissue Samples Obtained from a Client for Cryopreservation” U.S. Serial No. 13/646,647 filed October 5, 2012 with a priority date of October 6, 2011.

The Company has filed the following additional patents to extend its intellectual property to encompass additional aspects of the Company’s platform processing technologies. To date the following additional patent filings have been made:

A business method for Collection, Cryogenic Storage and Distribution of a Biologic Sample Material US Serial No 13/702,304 filed June 6, 2011 with a priority date of June 6, 2010.

Additionally, this patent has been filed European Union Application No. EPI3800847.9 and China Application No. 2013800391988.

Human Serum for Cell Culture Medium for Clinical Growth of Human Adipose Stromal Cells, International PCT filing PCT/US/68350 filed December 31, 2015 with a priority date of December 31, 2014. During 2017 the Company extended the filing into China, the EU, India, Japan, the Kingdom of Saudi Arabia, Canada and Mexico.

The Company is currently developing additional US and foreign patent applications and expects to file a number of additional provisional and PCT patent applications in Fiscal 2022.

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 7. Debt

The following table describes the Company’s debt outstanding as of March 31, 2022:

Schedule of Debt

The convertible notes are exercisable at any time and have exercise prices ranging from $0.15 to $0.48 with the amount of shares exercisable based on the face value of the convertible note. The holders of the bridge notes also have an option to purchase shares of the Company at $0.05 per share with the number of shares dependent upon the face value of the bridge note. As of the date of this report, 36,500 of these options remain outstanding.

In March 2021, the Company issued debentures and received proceeds of $150,000. The debentures mature in December 2022 and have an exercise price of $0.75 with interest at 5%. The entire Carrying Value of $150,000 is due in Fiscal 2023.

As a result of the issue, the Company recognized interest expense of $25,333 as a beneficial conversion feature of the debentures, which has been amortized over the lives of the notes. The Interest Expense due to the Beneficial Conversion Feature for the six months and three months ended March 31, 2022 was $6,826 and $3,814, respectively.

NOTE 8. Common Stock Transactions

During the six months ended March 31, 2021, the Company issued 640,000 shares and received proceeds of $143,000. The share price was determined by agreement with the purchasers, based upon the current market price less a discount for purchasing restricted securities.

During the six months ended March 31, 2021, the Company issued 80,000 shares and for services valued at $20,000. The share price was determined by agreement with the service provider, based upon the current market price less a discount for purchasing restricted securities.

During the six months ended March 31, 2021, the Company issued 100,000 shares for services to be provided valued at $75,000. The share price was determined by agreement with the service provider, based upon the current market price less a discount for purchasing restricted securities.

During the six months ended March 31, 2021, the Company issued 81,031 shares to pay interest due holders of bridge notes and convertible notes. The amount of interest paid was $26,148. The share prices were determined by the aggregate market price for the week in which the interest became due.

During the six months ended March 31, 2022, the Company issued 2,083,333 shares and received proceeds of $675,000. The share price was determined by agreement with the purchasers, based upon the current market price less a discount for purchasing restricted securities.

During the six months ended March 31, 2022, the Company issued 110,740 shares to pay interest due to holders of the bridge notes and convertible notes. The value of the interest paid was $34,487. The share prices were determined by the aggregate market price for the week in which the shares were issued.

During the six months ended March 31, 2022, the Company issued 91,091 shares for prepaid legal fees. The share price was determined by agreement with legal service provider, based upon the current market price less a discount for acquiring restricted securities.

The Company exchanged 1,000,000 newly created Series A Voting Convertible Preferred Shares for 20,000,000 common shares held by ACS Global, Inc. (See Note 14 for more details).

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 9. Option Issuances

The Company applies ASC 718, “Accounting for Stock-Based Compensation” to account for its option issues. Accordingly, all options granted are recorded at fair value using a generally accepted option pricing model at the date of the grant. The Company uses the Black-Sholes option pricing model to measure the fair values of its option grants. For purposes of determining the option values at issuance, the fair value of each option granted is measured at the date of the grant by the option pricing model using the parameters of the volatility of the Company’s share prices and the risk-free interest rate.

The Company normally issues options to its key personnel and consultants at the end of each fiscal year or as may be included in retainer or employment agreements. The Company prepares an option agreement for each option grant that includes the date of the grant, the vesting schedule, the expiration date and other terms of the granted options.  The Company’s option plan calls for the immediate expiration and cancellation of the granted options in the event of the termination of employment or the contract associated with the original option grant except for certain circumstances including retirement or disability.  The Company’s method for exercising options is to require delivery of the executed option agreement with the payment of the option price to the Company by the option holder. Upon receipt and confirmation of payment of the exercise price by Company management, the Company prepares board minutes and issues instructions to the Company’s transfer agent to issue the requisite number of shares underlying the option exercise.   

Using the Black-Sholes valuation method the company issued options and recorded compensation of $638,916 for six months and $533,394 for the three months ended March 31, 2022. The fair value of the options issued was calculated using the following assumptions:

Schedule of weighted average assumptions 

The following is a summary of common stock options outstanding at March 31, 2022:

Schedule of Stock Option Outstanding

Option Forfeitures are recorded as they occur. The intrinsic value of the outstanding stock options is $1,983,870 and the intrinsic value of the outstanding vested stock options is $551,620 at March 31, 2022.

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 10. Fair Values of Financial Instruments

Fair Value Measurements under generally accepted accounting principles clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The Company valued Accounts Receivable, Bridge Notes and Convertible Notes at cost. Financial instruments’ carrying value approximates fair value. Stock Options are valued using level 3 of the fair value hierarchy.

NOTE 11. Leases

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, one of the Company’s leases does not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate which is based on the interest rate of similar debt outstanding. Effective October 1, 2019, the Company adopted the provision of ASC 842 Leases.

Finance Lease

The Company leases Equipment at its laboratory from NFS Leasing, Inc. Lease payments are $2,993.62 per month for eighteen (18) months. The final lease payment is scheduled for January 1, 2023. When the final payment is made, the Company will own the equipment. The table below presents the lease related asset and liability recorded on the Company’s consolidated balance sheets as of March 31, 2022:

Schedule of Finance Lease related Assets and Liability 

Schedule of Finance Lease Obligation 

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

Note 11. Leases (continued)

Lease payments for the six months ended March 31, 2022 and 2021 were $17,962 and $10,503, which consisted of amortization of $15,483 and 9,191 and interest of $2,989 and $1,312, respectively. Lease payments for the three months ended March 31, 2022 and 2021 were $8,981 and $10,559, which consisted of amortization of $7,865 and $9,729 and interest of $1,116 and 830, respectively. At March 31, 2022, the remaining lease term was 0.833 years (10 months) and the discount rate was 13.25%.

Operating Lease

The Company leases its office facility, in Eatontown, New Jersey, from Eaton Holdings LLC. The lease expired on April 30, 2021. The Company extended the lease on March 23, 2022 for an additional three years from May 1, 2021 to April 30, 2024. The table below presents the lease related asset and liability recorded on the Company’s consolidated balance sheets as of March 31, 2022:

Schedule of Operating Lease 

Schedule of Operating Lease Obligation

The lease expense for the six months ended March 31, 2022 and 2021 was $15,900 and $15,900, respectively; and for the three months ended March 31, 2022 and 2021 was $7,950 and $7,950, respectively, and we used a discount rate of 8%.

The Company leases its laboratory facility, in Monmouth Junction, New Jersey, from Princeton Corporate Plaza LLC. The Company renewed its lease on April 1, 2021, for an additional 12 months and pays $2,462 per month. Since the lease obligation is less than twelve months, the Company does not report a lease related asset or liability for this lease. Rent paid for the laboratory facility for the six months ended March 31, 2022 and 2021 was $15,073 and $14,334 respectively; and for the three months ended March 31, 2022 and 2021 was $7,386 and $7,167.

NOTE 12. Investments

During the first quarter of 2018, the Company invested $300,000 in Baoxin Ltd., a Chinese company that is involved in tissue storage and processing in Baoxin, China.  Baoxin is not a publicly traded corporation and the investment is carried at the lower of cost or market value. The Company annually reviews its investments for impairment. Based on the Company’s review, the carrying value of the Baoxin Investment was reported as $244,919 on March 31, 2022 and $244,919 on September 30, 2021.

The Agreement with Baoxin is for Baoxin to develop, own and operate multiple laboratory/treatment/training facilities in China using the American CryoStem’s intellectual property. Under the Agreement, American CryoStem received an upfront fee of $200,000 USD and a yearly minimum annual guarantee of $500,000 USD per year from Baoxin until the entire amount of the Contract ($6,000,000 USD) is paid. Additionally, as part of the transaction American CryoStem has invested $300,000 into Baoxin to obtain a 5% minority equity in Baoxin (China) and an option to acquire up to a 20% equity ownership interest in its Regenerative Medicine Center in Hong Kong (HK). The goals are to set up two additional GMP grade adipose tissue processing and storage facilities in Beijing and Shanghai to cover the need of the whole China region, and a proper education facility in China to promote the use of ATGRAFT as a more natural dermal filler over artificial fillers. Due to the uncertainty caused by the pandemic and our pending public offering, the Company has decided to increase its allowance for doubtful accounts to include the amount owed by Baoxin at this time and to suspend its recognition of revenue from Baoxin until such time as circumstances in China ease and Baoxin is able to return to normal operations and make the contractual payments.

American CryoStem Corporation

Notes to the Consolidated Financial Statements

March 31, 2022

Unaudited

NOTE 13. Concentration of Credit

The Company regularly reviews all receivables and determines the amount of allowances if any on a quarterly basis.

The difficulties and uncertainties caused by COVID, Chinese government policies and Baoxin’s going concern considerations have caused concern as to the collectibility of the Baoxin receivable. Communications and correspondence with Baoxin Management indicate a continuing commitment to American CryoStem’s technology and the Agreement to a Territorial License of its patents and other intellectual property. Baoxin recently completed its state-of-the-art facilities in Shenzhen to roll out therapies to the Chinese people. Although Baoxin has confirmed their receivable, the Technology Fees billed of $500,000 annually and a total contractual obligation of $6,000,000, there is concern about to their ability to pay. For this reason, the Company is not reporting the Fees from this contract as revenue.

Baoxin is still relying on investment (financing) to continue its operations, which is typical for biotechnology companies globally and is currently in negotiations with the Chinese government which include funding requests. Management is optimistic that the effects of the pandemic will eventually subside, Baoxin’s operations will return to normal, and they will obtain the financing necessary to pay American CryoStem.

NOTE 14. Related Party Transactions

On October 1, 2020, the Company executed a note with ACS Global, Inc. for a principal amount of $99,125 representing the outstanding balance due to ACS Global. Inc. The Note matures on October 1, 2023 and carries an interest rate of 10% per annum which may be paid in cash or stock. The note is due and payable in full upon maturity. On March 1, 2021, the note was increased by $49,000. The note may be prepaid at any time by the Company.

From time to time the Company takes advances makes principal payments on the note. During the six months ended March 31, 2022, the Company was advanced $1,729 and made payments of $18,000 on the note.

The principal balance of the Note is $131,505 at March 31, 2022 and 147,775 at September 30, 2021.

The Company exchanged 1,000,000 newly created Series A Voting Convertible Preferred Shares for 20,000,000 common shares held by ACS Global, Inc. in November 2021.

Terms of the Series A Voting Convertible Preferred Shares are as follows:

NOTE 15. Subsequent Events

The Company has made a review of material subsequent events from March 31, 2022 through the date of issuance of this report. There are no subsequent events to report as of the issuance of these financial statements.

Forward-looking Statements

We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this quarterly report and other filings with the Securities and Exchange Commission (the “SEC”), reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,”“anticipate,”“intend,”“plan,”“believe,”“seek,”“estimate,”“project,”“forecast,”“may,”“should,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this quarterly report to conform forward-looking statements to actual results. Important factors on which such statements are based on assumptions concerning uncertainties, including but not limited to, uncertainties associated with the following:

The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this quarterly report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.

Background

We were incorporated in the state of Nevada on March 13, 2009. On April 20, 2011, we acquired, through our wholly owned subsidiary American CryoStem Acquisition Corporation, substantially all of the assets from, and assumed substantially all of the liabilities of, ACS Global, Inc. (“ACS”) in exchange for our issuance of 21,000,000 shares of our common stock, par value $0.001 per share, to ACS (the “Asset Purchase”). We filed a Current Report on Form 8-K with the Securities and Exchange Commission (SEC) on April 27, 2011, disclosing the Asset Purchase and certain related matters including, but not limited to, the appointment of our present officers and directors as well as the resignation by the former chief executive officer and sole director. Our fiscal year ends September 30 of each calendar year. Upon the closing of the Asset Purchase: (i) ACS Global became our majority shareholder, (ii) John Arnone was appointed as our chief executive officer and president Anthony Dudzinski was appointed as our chief operating officer, treasurer and secretary, and (iii) John Arnone and Anthony Dudzinski were appointed to our board of directors, with Mr. Arnone being appointed as Chairman of the Board. Mr. Dudzinski is also a director, president and treasurer of ACS Global and Mr. Arnone is a director and secretary of ACS Global.

Overview

American CryoStem Corporation; (CRYO) founded in 2008, is a biotechnology pioneer, having developed standardized adipose tissue derived technologies (Adult Stem Cells) for the fields of regenerative and personalized medicine. These standardized technologies which include granted patents, are the basis for our chemistry, manufacturing, and controls (cGMP Manufacturing) of our ATCell™ autologous cellular therapy product for use in clinical investigations for Biologic License Applications with the US Food and Drug Administration (FDA). Our laboratory stem cell products are characterized adult human Mesenchymal Stem Cell (MSC’s) derived from adipose tissue that work in conjunction with our patented (non-animal) medium lines and knowhow.

The Company filed its first Investigational New Drug Application (IND) with the FDA for our ATCell™ cellular therapy product. The IND filing is titled “ATCell™ Expanded Autologous Adipose Derived Mesenchymal Stem Cells deployed via Intravenous Infusion for the Treatment of Post-Concussion Syndrome (PCS) in Retired Athletes and Military Personnel” File number 19089 was approved by the FDA on September 17, 2020 to commence the Phase 1 Clinical Trial. Post-concussion syndrome is a chronic, incurable central nervous system condition affecting a significant number of the United States military and athletes, especially those involved in contact sports such as football, boxing, soccer, and other sports where participants have suffered one or more concussions or mild traumatic brain injuries (mTBI). Published research has indicated that up to 30% of all military personal, active and retired, may suffer from this condition. According to the Department of Defense evaluation of U.S. military casualty statistics, from 2000-2019 Q3, 413,858 United States Military personnel worldwide experienced a concussion.

The Company built and validated a new cGMP clean room processing and manufacturing area at our facility in Monmouth Junction NJ, implemented and validated cGMP Standard Operating Procedures (SOPs) and installed a new Quality Management System to support its IND filings and an increased focus on patent and product development and support additional clinical activities.

The Company has built a domestic and international patent portfolio consisting of 32 patents. Our 4 primary operating patents regarding the “collection – processing – cryopreservation and return to point-of-care” of adipose derived stem cells, have been granted.

The Company is expanding its efforts to attract and cultivate collaborative partners to accelerate its product development efforts, harnessing its manufacturing platform and tissue processing platforms. The R&D collaborations are to discover, develop, and commercialize cellular therapies, laboratory products and combinations thereof with synergistic technologies to create regenerative medicine applications and develop new intellectual property.

Adipose Tissue

The Company’s manufacturing platform technologies, cell transportation products, cell culture mediums and cell therapies are focused on the acquisition and processing of adipose tissue as the primary raw material. Many of our developed technologies have been successfully applied to other raw materials such as bone marrow, umbilical and placenta tissue. Adipose tissue, also known as fat tissue or fatty tissue, is a connective tissue that is mainly composed of fat cells called adipocytes. Adipocytes are energy storing cells that contain large globules of fat known as lipid droplets surrounded by a structural network of fibers. tissue and other stromal tissues. The Company is focused on adipose tissue because it contains higher densities of mesenchymal stems cells (often 500 to 1000 times more) per gram of raw material when compared to other sources (bone marrow, umbilical cord tissue, etc). The higher cellular density of adipose tissue supports the ability to create regenerative cellular products more efficiently and with less expansion (lower passages and population doublings), which is preferred when producing cellular therapy products.

Adipose tissue is considered one of the top human stem cell sources considering its accessibility, abundance, and least painful collection procedure when compared to other sources such as bone marrow. The adipose derived mesenchymal stem cells (ADSCs) that adipose tissue contains can be maintained and expanded in culture for long periods of time without losing their differentiation capacity, leading to large cell quantities being increasingly used in cell therapy purposes. Many published and peer reviewed reports show that ADSC-based cell therapy products demonstrated optimal efficacy and efficiency in various clinical indications for both autologous and allogeneic purposes, hence they are increasingly being considered as potential tools for replacing, repairing, and regenerating dead or damaged cells.

Adipose tissue is a specialized type of connective tissue that arises from the differentiation of mesenchymal stem cells into adipocytes during fetal development. Mesenchymal stem cells are multipotent cells that can transform into various cell types, including fat cells, bone cells, cartilage cells, and muscle cells among others. Adipose tissue can be found in a number of different places throughout the body. Adipose tissue is the most abundant type of fat in humans. It is distributed within subcutaneous fat, visceral fat, and bone marrow fat. Subcutaneous fat is found throughout the whole body, in the spaces between the skin and underlying muscles. Visceral fat is predominantly found around the organs in the abdominal cavity, such as the liver, intestines and kidneys, as well as in the peritoneum (a serous membrane that lines the outside of the abdominal organs). Adipose tissue is also present in bone marrow (a sponge-like tissue present in the central cavity of bones). In addition, adipose tissue can be found in the pericardium surrounding the heart, or cushioning other parts of the body, like the soles of the feet, eyeballs, and certain blood vessels.

The main function of adipocytes is to store excess energy in the form of fatty molecules, mainly triglycerides. Fat storage is regulated by several hormones, including insulin, glucagon, catecholamines (adrenaline and noradrenaline), and cortisol. Depending on the body’s immediate energy requirements, these hormones can either stimulate adipose tissue formation and storage (i.e. lipogenesis) or initiate the release of fat from adipose tissue (i.e. lipolysis). Under the influence of insulin, for instance, adipocytes can increase the uptake of blood glucose and transform it into fatty molecules, thereby increasing fat storage.

In addition to being an energy storing reservoir, adipose tissue performs important endocrine and metabolic roles by secreting several biologically active factors known as adipokines. These molecules contribute to a variety of different functions, including regulation of energy balance, food intake and satiety, inflammatory response, and metabolism of steroid hormones. Finally, adipose tissue also helps cushion and protect parts of the body, as well as insulate the body from extreme temperatures.

In addition to adipocytes, adipose tissue contains the stromal vascular fraction (SVF) comprised of cells including preadipocytes, fibroblasts, vascular endothelial cells, and a variety of immune cells such as adipose tissue macrophages. Far from being hormonally inert, adipose tissue has, in recent years, been recognized as a major endocrine organ, as it produces hormones such as leptin, estrogen, resisting, and cytokines (especially TNFα). Adipose tissue contains some of the highest concentrations of adult stem cells, progenitor cells and immune cells.

Processing Technology

The FDA considers processing and expanding cells as the manufacturing of a drug product. The Company’s completed proprietary, patented processing and manufacturing platform is designed for the collection, preparation and cryo-preservation of pure adipose tissue and adipose tissue derived cells. The processing platform has been validated to enable the Company to deliver cellular therapy samples with repeatable and identifiable characteristics of safety, potency, viability, and purity which are the core FDA requirements for the cGMP manufacturing of all biologic drug products. Our manufacturing platform is approved by FDA for use in our current clinical study of Post-Concussion Syndrome for the manufacturing of the cellular therapy samples. The Company believes that the platform is suitable to support the Company’s growing pipeline of product development and planned clinical studies, and future biologic license applications for an array of target diseases and conditions.

The Company believes the reproducibility of scientific studies is a substantial issue in cellular therapy research, from drug discovery and development through clinical trials as researchers throughout the world continue to use different protocols for processes associated with cell sample preparation, cryopreservation, and cold chain management. We believe our validated manufacturing processes for our ATCell™ product solves this issue. The samples we produce with our patented platform and proprietary products have proven purity, consistent viabilities above 80 percent, and cell identification panels across six biomarkers and proven sterility. Our standardizing handling, storage, and transportation protocols substantially improve the quality and reproducibility of adipose tissue derived stem cells and the adipose tissue collection, processing, storage and retrieval which is designed to permit us to accelerate the time line of creating and processing cellular therapy products - from lab research to regulatory submission and FDA approval.

Each individual process has the potential to create multiple autologous products and to generate multiple revenue streams including customer fees for storage of biomaterials. Our processing platform and methodology allow the opportunity for continuing revenue streams from each tissue sample received and processed including, cellular therapy treatments, pure tissue storage for secondary procedures, processing, and handling fees and CRYO storage and release fees.

We are leveraging our patented platform and developing our product portfolio to create a global footprint of licensed laboratory affiliates, physician’ networks, patients, research organizations, and licensees who purchase tissue collection, processing and storage services or consumables from our Company.

Products and Services

Therapy Product Development

During the Company’s initial stage of developing its manufacturing protocol and products chose adipose tissue as its source material following review and experiments that included other biomaterials and cell sources such as bone marrow and peripheral blood samples. The selection of adipose tissue is based upon a number of factors including high cell density and its wide array of other cell types including precursor and immune cells that may be derived and developed as future products. Although the Company is currently focused on the development of cellular therapy products utilizing adipose derived mesenchymal cells, the platform is designed to be easily extendable to permit the acquisition and expansion of additional cellular derivatives from other biomaterials.

A significant amount of research, case studies and anecdotal evidence has been published over the past several decades concerning the study of cellular therapies for a wide range of diseases and maladies from ALS and Parkinson’s to wound healing and immunological support. The Company, recognizing that each new application for therapy approval requires a standalone clinical study, has refined its development strategy to initially encompass mild traumatic brain injury and immunosuppression as core targets for its development strategy. We focus our efforts on expanding our product pipelines based upon our intellectual property portfolio, collaborative development relationships, target market size, medical need, disease classification, and international licensing and partnering opportunities.

The completion, submission and approval of our validated manufacturing platform is the culmination of the Company’s development efforts. Validation of the manufacturing platform for the study has provided the Company with the opportunity to expand its efforts and resources on the further development of its downstream intellectual property. The objective is to provide deliverable commercial cell therapy products to address patient populations with large unmet medical needs such as brain injuries and conditions that include immunologic complications. The Company’s continuing efforts in the development of additional products includes an increased focus on the recruitment of collaborative partners and the extension of our existing manufacturing capabilities to development of other adipose tissue derivative and cellular/biomaterial combination products. Leveraging our repeatable processing platform provides the Company with contributable technology and capabilities to rapidly develop clinical studies, accumulate complementary scientific data and attract strong collaborative and developmental partners.

Our activities include supporting collaborations by providing our products and services (ACSelerate^™ and ATCELL^™) with the goal and expectation that our products and services become the basis for new cell based Regenerative Medicine and cellular therapy applications.

Part of this strategic approach to therapy product development is to design, develop and launch new products and services that rely on our core processing technology and leverage existing products and services. Examples of this approach are the use of the CELLECT^® collection kit/ box and materials to collect fresh tissue for cellular therapy sample processing, use of our patented non-animal growth medium for cell culture and use of our storage medium for cryo-storage. Management is currently pursing collaborative product development agreements with healthcare institutions, universities, and other biotech companies.

2022 Therapy Pipeline

The Company has developed and refined its pipeline around its flagship cellular product, ATCell™, for clinical therapeutic use. The initiation of this pipeline strategy occurred with the filing, approval and commencement of its Post-Concussion Syndrome Phase 1 clinical study. During this review process, the US FDA fully reviewed the Company’s manufacturing platform contained in the Chemistry, Manufacturing and Control section of the Investigational New Drug (IND) submission. The Company’s filing included unpublished research of ATCell™ use in an animal model as well as a report covering its safety results from a pilot study that included the treatment of more than 80 patients that received one or more treatments with the ATCell™ product that resulted in no reported adverse events.

About ATCELL™

The Company has established and trademarked ATCELL™ as the brand name for its line of adipose derived stem cell products. ATCELL™ is a purified sample of adipose tissue derived from adipose tissue through our manufacturing processes that can be incubated and grown (cultured) to large quantities in cGMP conditions.

ATCELL^™ Adipose Derived Mesenchymal Cells Processed and characterized adipose derived cells created using the Company’s proprietary, validated and patented Standard Operating Procedures (SOPs) of its manufacturing platform and the Company’s ACSelerate^™ patented cell culture media. Cell lines may also be custom created for patients desiring to store their cells for their own future use in Regenerative Medicine procedures, shipped “On Demand”. Customer samples are collected by the physician in an mini liposuction procedure and delivered to the Company’s facility utilizing the CELLECT^® collection system and ACSelerate^™ transport medium to conform to our validated quality control standards. The Company charges its customers a fee to process newly collected client tissue samples into cellular samples.

ATCELL’s repeatable sample manufacturing process is designed to comply with the requirements of FDA to produce highly consistent and validated cellular products necessary to achieve regulatory approval. The validation of our manufacturing process and quality control results are of great value in biomanufacturing and serve as the basis for approval and commercial product development.

The Company’s ATCELL^™ cell lines are cultured in our patented ACSelerate^™ cell culture media. All processed samples: tissue, cells, and research materials are made available for clinical study therapies, tissue transfer or sale to research institutions. All samples are tested for sterility, disease, lifespan, and population doubling rate (PDL). Cell morphology is confirmed by (i) flow cytometry (6 markers) and (ii) tri-lineage differentiation analysis using ACSelerate^™ differentiation media. Each ATCELL^™ line can be further processed and differentiated allowing the Company to provide genetically matched cell types. We believe this research methodology may provide opportunities for the Company’s ATCELL^™ and ACSelerate^™ products to become the building blocks of additional commercial application development.

The Company believes it can earn additional fees based upon storage and retrieval fees and for future product creation. Cell culturing and differentiation may be performed upon receipt of the raw tissue sample or at any time on a previously processed and cryopreserved tissue or master cell sample. ATCELL^™ has shown that it is ideally suited for differentiation into additional cell types (bone, cartilage, etc.) utilizing our patented ACSelerate^™ line of differentiation mediums.

The ATCELL^™ processing, products and services are incorporated into multiple granted patents including the granted claim of: “Systems and Methods for the Digestion of Adipose Tissue Samples Obtained from a Client for Cryopreservation” US 10,154,664 issued December 18, 2018, and “Business Method for Collection, Processing, Cryogenic Storage and Distribution of a Biologic Sample Material” US Patent Number 10,014,079, issued July 3, 2018. The ACSelerate™ Medium products are incorporated into our granted patents “Cell Culture Media, Kits and Methods of Use” US Patent No. 7,989,205 issued August 2, 2011, with additional claims granted in US Patent No. 9,487,755 granted November 8, 2016.

Tissue Processing and Storage Services:

ATGRAFT is an adipose tissue (fat) collection, processing and storage solution used by cosmetic and plastic surgeons to provide their patients with multiple tissue transfer and storage options. The ATGRAFT^™ service, through one liposuction procedure, allows individuals to prepare for multiple future cosmetic or regenerative procedures by using their own stored adipose tissue as natural biocompatible filler, or for multiple cellular therapy applications over time without the trauma of further liposuctions. Many physicians currently offering tissue transfer or “stem cell (SVF)” therapies are required to perform a concurrent tissue harvest for each transfer or procedure which increases the opportunities for infection at the harvest site and the development of long-term complications related to the formation of scar tissue (stroma) at the harvest site(s).

ATGRAFT^™ supported procedures include; breast reconstruction, layered augmentations, buttocks enhancement, volume corrections of the hands, feet, face and neck areas that experience significant adipose tissue (fat) volume reduction as we age. ATGRAFT^™ is processed and stored utilizing our cGMP standards so that any stored fat tissue sample may in the future be further processed to create, “ATCELL^™”, for use in Regenerative Medicine applications. The ATGRAFT^™ service is included in our granted patent “Business Method for Collection, Processing, Cryogenic Storage and Distribution of a Biologic Sample Material” US Patent Number 10,014,079, issued July 3, 2018.

The Company’s charges processing fees for ATGRAFT^™ tissue processing and minimum annual storage fees based on the volume of tissue processed. These processing and storage fees may be paid by the collecting/treating physician or the consumer. The Company earns additional fees upon sample retrieval, for the thawing, packaging and shipment of the stored samples to the physician or clinical “point-of-care” for immediate use upon receipt. Additionally, physicians may request that any stored ATGRAFT^™ tissue sample of 25ml or greater be reprocessed utilizing the Company’s ATCELL^™ and Autokine-CM^™ processing to create topical therapy or cosmetic products, on-demand.

Laboratory Products; Culture Medium, and Manufacturing Services

CELLECT^® Collection, Transportation, and Storage System – An unbreakable “chain of custody” solution to collect and deliver tissue samples utilizing proprietary and patent pending methods and materials. The CELLECT^® service is the required platform for the collection and transportation of live adipose tissue samples to American CryoStem Corporation’s processing facility. Tissue collected and transported in our CELLECT kits is monitored through the transportation process to assures the highest viability upon laboratory receipt. The CELLECT^® system incorporates our ACSelerate–TR^™ transport medium to support the health of the tissue during transport. The ability to support the health of the collected tissue using our proprietary material and services greatly enhances our highly consistent and repeatable manufacturing and processing protocol. The CELLECT^® service is included in our granted patent “Business Method for Collection, Processing, Cryogenic Storage and Distribution of a Biologic Sample Material” US Patent Number 10,014,079, issued July 3, 2018.

American CryoStem is the first tissue bank to globally incorporate through its CELLECT^® service the International Blood Banking identification, labeling and product identification coding system. This labeling system is an acceptable machine-readable labeling standard, product description, and bar-coding system for FDA Center for Biologics Evaluation and Research under 21 CFR 606.12(c)13. American CryoStem conforms to this standard in its laboratory facility and all cellular and tissue products produced at the facility carry our W3750 ICCBBA facility identifier allowing any hospital, clinic, laboratory and regulator worldwide to identify the origin and obtain additional information on any sample produced at an American CryoStem laboratory facility. The Company requires use of this standard in all laboratories that license or utilize our technology.

ACSelerate^™ Cell Culture Media Products – Manufactured patented cell culture media products for growing human stromal cells (including all cells found in human skin, fat and other connective tissue). Certain of the Company’s ACSelerate^™ cell culture media lines are available in animal serum free, which may be suitable for human and therapeutic uses, or in a low serum version for application development and research purposes. The patented ACSelerate^™ cell culture media line(s) were specifically developed to address increasing industry demand for fetal bovine serum-free cell culture products. The use of fetal bovine serum (FBS) and other animal products in cellular therapy application development and manufacture raises concerns and generates debates within the scientific and regulatory community relating to potential human/animal cross-contamination. These same concerns may lead to additional expensive and expansive testing and documentation requirements with the FDA during the application and approval process for new cellular therapies manufactured with or containing animal or animal derived products. FDA concerns are evidenced in their Guidance’s and Guidelines regarding cellular therapy involving human cells, tissues and products (HCT/Ps) published and maintained by the FDA. Management believes that eliminating or greatly reducing FBS in cellular manufacturing, applications and products can eliminate or ease these scientific and regulatory concerns and may prove to be a winning strategy for cellular therapy application developers seeking FDA approval.

The Company entered into a licensing and manufacturing agreement with PeproTech (April 4, 2016) a life sciences company formed in 1988. PeproTech is the trusted source for the development and manufacturing of high quality cytokine products for the life-science and cell therapy markets.  PeproTech has grown into a global enterprise with state-of-the-art manufacturing facilities in the US, and offices around the world. With over 2,000 products PeproTech has developed and refined innovative protocols to ensure quality, reliability and consistency. The licensed medium is marketed under both PeproTech’s PeproGrow and the Company’s ACSelerate MAX brands.

On August 2, 2011, the Company was issued US patent number 7,989,205 for “Cell Culture Media, Kits and Methods of Use.” The granted claims include media variations for cellular differentiation of ADSCs into osteoblasts (bone), chondrocytes (cartilage), adipocytes (fat), neural cells, and smooth muscles cells in both HSA medium grade and FBS (research) grade. This patent covers both non-GMP research grades and cGMP grades suitable for cell culture of adipose-derived stem cells. Additionally, on November 8, 2016, the Company was granted additional claims from the continuation U.S. Serial No. 13/194,900 issued as a new Patent Serial No. 9,487,755. Prior to the issuance the Company filed a continuation in part (CIP) containing additional claims related to our ongoing media development.

The Company supports its marketing efforts by making ATCELL^™ samples available for research purposes and for internal product development through our collaborative and partnering programs. We believe these cell lines may be suitable for use by private researchers and universities for use in pre-clinical trial studies and in-vitro research. We also believe that the Company’s ability to provide these materials for these research and development collaborators, partners and other third parties extends the Company’s ability to become a primary source of clinical grade materials and services necessary to support approved applications and treatments.

The Company has created several versions of its ACSelerate^™ cell culture media including:

The Company continues to optimize additional versions of ACSelerate^™ media that may be necessary for use in future applications. On December 31, 2014, the Company filed a patent application for an advanced medium formulation titled Human Albumin Serum for Cell Culture Medium for Growth of Human Adipose Stromal Cells. (US Serial No. 62/098799) representing the initial results of this ongoing optimization program. On December 31, 2015, the Company converted the provisional patent application to an international PCT filing (PCT/US/68350) under the title Human Serum for Cell Culture for Growth of Human Adipose Stromal Cells. To date the patent has also been filed in the following additional countries: China and Hong Kong, India, Mexico, Brazil, the European Union, US, Japan, Thailand, Brazil, Russia, Australia, New Zealand, Canada, and Saudi Arabia.

Contract Manufacturing, Autokine-CM^® Anti-Aging, Autologous Skin Care Product Line – Under agreement with Personal Cell Sciences Corp. (PCS), we manufacture the key ingredient Autokine-CM^® (autologous adipose derived stem cell conditioned medium) for PCS’ U-Autologous™ anti-aging topical formulation. Every product is genetically unique to the patient and custom blended, deriving its key ingredients from the individual client’s own adipose derived stem cells. The Company provides its CELLECT^® Tissue Collection service to collect the required tissue to manufacture the U-Autologous^™ product and processes it under the same Standard Operating Procedures (SOP’s) that it developed for the ATGRAFT^™ and ATCELL^™ processing services utilizing ACSelerate^™ cell culture media. The Company receives collection, processing and storage fees and earns a royalty on all U-Autologous product sales. The utilization of the Company’s core services in its contract manufacturing relationships provides opportunities for the Company to promote ATGRAFT^™ and ATCELL^™ products.

CRYO’s contract manufacturing services can be extended to develop custom and/or white label products and services for both local and global cosmetic and regenerative medicine companies, physicians, wellness clinics and medical spas. The Company intends to expand its relationships and contract manufacturing regionally through its physician networks and globally through its International Licensing Program.

International Licensing Program – COVID RISK FACTOR

The development of our products could be disrupted and materially adversely affected in the future by a pandemic, epidemic or outbreak of an infectious disease like the recent outbreak of COVID-19. For example, as a result of measures imposed by the governments in regions affected by COVID-19 businesses have been suspended due to quarantines or “stay at home” orders intended to contain this outbreak. Furthermore, many patients had concerns about making hospital and physician office visits for fear of contracting the virus. These factors may have direct adverse impact on our ability to enroll participants in our clinical trial programs. In addition, travel restrictions, stay-in-place orders and other measures including information control. specifically in Asian countries, such as China, imposed by governmental agencies and health organizations to prevent the spread of COVID-19 and protect the citizenry, have had an adverse impact on the flow of information, goods and services between nations. The supply disruptions have resulted in shortages of goods and materials. This could also impact our ability to produce the products we need to conduct our clinical trials. In addition, these measures have resulted in delays to the regulatory process, which may also have an adverse impact on our business. We are still assessing our business plans and the impact COVID-19 may have on our ability to advance the development of our drug candidates or to raise financing to support the development of our drug candidates, we cannot assure you that we will be able to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally or in our sector in particular.

The Company is aware many jurisdictions outside the US currently permit cellular therapies and regenerative medicine applications. The Company has targeted these jurisdictions for licensing its technologies to local operators and facilities and receives numerous unsolicited international inquiries concerning the sale or licensing of our SOPs, culture medium products and tissue banking services for use in the Regenerative Medicine and Medical Tourism Markets. The Company believes that the inquiries to date are a result of the global boom in Medical Tourism, Regenerative and Personalized Medicine and the slow pace of approval of cellular therapies and regenerative medicine applications in the US. To address the Company’s sales, marketing and branding opportunities globally, the Company has included in its international licensing program metrics to vet potential partners and collaborators and their facilities. To date we have licensed our technologies in Hong Kong, China, and Thailand.

The Company believes it can take advantage of the significant growth of the global cellular therapy market through its international licensing and marketing efforts. A recently published study by Transparency Market Research predicts the global market for stem cells is expected to register a healthy CAGR of 13.8% during the period from 2017 to 2025 to become worth US$270.5 bn by 2025.

(https://www.transparencymarketresearch.com/pressrelease/stem-cells-market.htm)

China

On July 12, 2018, the Company announced the national launch of its ATGRAFT^TM tissue collection, processing and storage technology by Baoxin Asia Pacific Biotechnology (Shenzhen) Co. Ltd. (“Baoxin”) in China. The Company’s management team traveled throughout southeast China with the management and marketing team of Baoxin to present the ATGRAFT^TM platform to leading plastic and cosmetic surgery hospitals in Shenzhen, Nanning, Guangzhou, Guangxi and Changsha. Additionally, Mr. Arnone and Mr. Dudzinski attended the signing of investment documents between Baoxin and Chinese government and Banking officials in Shenzhen, China as well as the official launch presentation and evening gala hosted by Baoxin in Shenzhen.

The China launch activities were in support of the Company’s licensing and supply agreement with Baoxin, under which Baoxin agreed to pay the Company a minimum annual guarantee against a fixed fee per process and purchase certain necessary consumables from CRYO required for the collection, processing and storage of the collected adipose tissue. Under the terms of the Agreements signed in Fiscal 2018, the Company invested in and currently holds five percent (5%) of Baoxin shares. Additionally, Mr. Arnone and Mr. Dudzinski were elected to serve as Directors of Baoxin during their visit to Shenzhen, China. Mr. Arnone resigned as a board Member of Baoxin in 2019. Mr. Dudzinski continues to serve the Company’s interests as a board member of Baoxin.

During Fiscal 2020 and 2021, due to the continuing effects of the COVID pandemic and associated government policies and regulations Baoxin suspended its processing activities. Baoxin is an emerging biotechnology company in China that has relied to date on investment to fund operation and build their facilities, as is typical for these types of companies. During 2020 and 2021, Baoxin developed a new state of the art facility with sizable clean rooms and biomaterial storage space. The facility was completed in February 2021 and officially opened in May of 2021. Unfortunately, due to the continued effects of COVID and the appearance of new variants Baoxin has been unable to restart operations and its marketing programs in 2022.

Hong Kong

On June 30, 2014, the Company granted Health Information Technology Company, LTD (“HIT”) exclusive rights to utilize the Company’s Standard Operating Procedures (SOP’s) to market the Company’s ATGRAFT™ tissue storage service for Hong Kong. The Agreement calls for upfront fees, royalties and the purchase by HIT of certain consumables manufactured by the Company. The Company and HIT reached further agreement to extend their relationship on a non exclusive basis to include HIT’s cord blood laboratory located in Shenzhen, Guangdong Province, one of China’s most successful Special Economic Zones. The HIT agreement includes initial upfront fees and royalty payments for predetermined gross revenue volumes. HIT will also purchase CRYO ACSelerate™ storage media, CELLECT™ collection and transportation kits as well as other American CryoStem products necessary for clinical adipose tissue processing and storage at the Shenzhen facility. The final master licensing agreement is for a period of 5 years with renewal options and was executed between the parties on September 24, 2014. The HIT license has been extended per the terms of Schedule B of the Term Sheet, dated June 30, 2014, for an additional 3-year period to June 30, 2023.

In 2017, as part of the Company’s transaction with Baoxin, HIT and the Company agreed to transfer certain product and distribution rights granted to HIT under its 2014 agreement to Baoxin. The Company was paid of fee of US$100,000 in the transaction and was provided with an initial ownership position in a planned Regenerative Treatment Center to be established by HIT in Hong Kong.

The current pandemic, changes in Chinese regulations and policies regarding Hong Kong, recent political unrest and the inability of Chinese citizens to cross the border between Hong Kong and China have significantly curtailed the ability of HIT to implement its business plans to utilize the Company’s technology and purchase the associated consumables.

Thailand

On April 5, 2018, the Company announced further expansion of its global laboratory and cellular technology footprint by entering into an agreement to license its ATGRAFT™ and ATCELL™ adipose tissue (fat) processing and storage technologies with CRYOVIVA (Thailand) Ltd., a Bangkok, Thailand based Cord Blood processing and storage facility. CRYOVIVA, Thailand, currently offers collection, processing and storage of Cord Blood derived biologics to patients throughout Thailand and Southeast Asia.

American CryoStem licensed to CRYOVIVA (Thailand) Ltd., established in 2007, the rights to utilize the Company’s Standard Operating Procedures (SOP’s) to create and market the Company’s ATGRAFT™ tissue storage service and ATCELL™ adipose derived stem cell processing and storage services in Thailand. The financial terms generally, call for the payment of certain training fees and, a percentage of the gross revenue subject to annual minimum payments generated from our products. Additionally, the Agreement calls for the purchase of CRYO consumable products required for ATGRAFT™ and ATCELL™ sample processing including CRYO’s ACSelerate™ non-DMSO cryogenic tissue storage media, transportation media, Cellect™ tissue collection kit, and ACSelerate – Max™ cell culture medium.

The current COVID pandemic has delayed CRYOVIVA’s scheduled launch of its marketing campaign several times and unfortunately, CRYOVIVA suspended their tissue banking operations in 2020 and 2021. We are currently in discussions with them concerning the restart of their operations and initiation of their marketing program for calendar 2022 although there is no certainty that the effects of the pandemic will ease sufficiently to do so in the near term.

Japan

In June 2015, the Company entered into a licensing agreement with CellSource, LTD. (“CellSource”) located in Shibuya, Tokyo Japan for the licensing of our AGRAFT^™ tissue processing and storage technology and the purchase of our CELLECT^® collection products which include our ACSelerate-TR^™ transport medium. The non-exclusive agreement expired in June of 2020.

Collaborations / Partnering Opportunities / Acquisitions

The Company recognizes the benefits of collaborations with industry and university partners and has increased its efforts to attract and develop these relationships. Strategically, the Company believes that with a current approved IND application with the US FDA and the strength of its granted and pending patent portfolio, that it can attract new partners and collaborative arrangements These relationships are generally covered by Confidential Non-Disclosure Agreements and include Material Transfer Agreements (MTA) under which the Company may supply ATCELL^™ and/or ACSelerate^™ medium products for evaluation, testing, and the development of new cellular therapy applications. The Company has entered into Non-Disclosure and Material Transfer Agreements with a number of potential collaborators. No assurance can be given that these efforts or relationships will ultimately result in new technology for future commercialization.

The Company has developed a strategy to expand the opportunities to commercialize its products by increasing its ability to identify and pursue collaborative and partnering opportunities by cultivating and engaging new relationships with biotechnology companies engaged in similar or complimentary development activities. Included in this strategy is the increased recruitment of consultants and other biotechnology experts to identify potential collaborators, partners and acquisition candidates. The Company’s goal is to develop additional standardized cellular processing models to support FDA IND treatment protocol approvals. This may be accomplished by further identifying, and validating certain mechanisms and characteristics of mesenchymal stem cells related to regulating modulation of immune response(s) and promoting tissue regeneration and stability (homeostasis) for the treatment of traumatic injuries, inflammation, auto-immune diseases, and brain and organ damage associated with viruses such as SARS-CoV-2 (COVID-19), including, the expanding group of patients dealing with the chronic and debilitating symptoms of what is commonly termed “Long Haul COVID” or “Long COVID.” To date the Company has completed agreements with the following entities for development of new products and cellular therapy targets although the successful commercialization of new products and therapies resulting from these activities cannot be assured or predicted at this time.

WRNMMC

On December 3, 2020, the Company entered into a Cooperative Research and Development Agreement (CRADA) with Walter Reed National Military Medical Center (WRNMMC), the nation’s largest and most renowned joint military medical center serving the Army, Navy, Air Force and Marines located in Bethesda, Maryland.

A Cooperative Research and Development Agreement (CRADA) is a written agreement between a government agency and a non-federal entity that allows the federal government and its non-federal partners to optimize and maximize use of their resources, exchange technical expertise in a protected fashion, share intellectual property resulting from collaborative effort, and speed commercialization of federally developed technology. The Company has committed to provide materials including ATCell samples and Umbilical Cord stem cells, ACSelerate Max Growth and differentiation mediums testing and other processing supplies, processing and testing methods. The Company maintains the rights to commercialize all technology developed under this CRADA Agreement. The technology is centered on creating in vitro (test tube) assays to standardize and commercialize new treatment protocols; optimizing quality control measures; and developing standardized protocol potency assays for precise therapy dosing. Management believes that these new assays can be commercialized to generate substantial sales and licensing revenues and create value for the Company’s stakeholders.

Through the Collaboration entitled “Stem Cells for Regeneration and Medical Innovation, a multi-faceted and multi-staged research project with WRNMMC Biomedical Laboratories, the Company plans to develop, validate and standardize baseline and assay metrics to identify mesenchymal stem cell (MSC) characteristics and quantities across various cell biomarkers and exosome expressions data sets for its ATCell™ product for biologics developers’ use worldwide. The focus of the Collaboration is to enable the creation of predictive and prescriptive cellular models which will further enhance American CryoStem’s mission as a premier biologics’ manufacturer and developer and be highly valuable to the medical community, biotech developers, and the public at large.

WRNMMC is part of The Military Health System (MHS) which is the enterprise within the United States Department of Defense that provides health care to active duty, Reserve component and retired U.S. Military personnel and their dependents.

The missions of the MHS are complex and interrelated: To ensure America’s 1.4 million active duty and 331,000 reserve-component personnel are healthy so they can complete their national security missions.

The MHS also provides health care, through the TRICARE health plan, to:

The MHS has a $50+ billion budget and serves approximately 9.5 million beneficiaries. The MHS employs more than 144,217 in 51 hospitals, 424 clinics, 248 dental clinics and 251 veterinary facilities across the nation and around the world, as well as in contingency and combat-theater operations worldwide.

Muscular Dystrophy

In March 2020, the Company entered into a collaborative agreement with RACEMD, a 501c(3) charitable organization focused on the improvement of treatments and therapies for patient with Duchenne Muscular Dystrophy. Duchenne muscular dystrophy (DMD) is a severe type of muscular dystrophy that primarily affects boys. Muscle weakness usually begins around the age of four and worsens quickly. Muscle loss typically occurs first in the thighs and pelvis followed by the arms. Most affected individuals are unable to walk by the age of 12. Some may have intellectual disability. DMD affects about one in 3,500 to 6,000 males at birth. It is the most common type of muscular dystrophy. The life expectancy is 26; however, with excellent care, some may live into their 30s or 40s. The disease is much rarer in girls, occurring approximately once in 50,000,000 live female births.

The terms of the Agreement call for the Company to work with RACEMD to develop clinical therapies and studies focused on mitigating the effect of the disease, improve muscle strength and quality of life in the short term and to build upon successes to seek a more curative cellular therapy solution to extend life expectancy over the long term. The Company is in the final stages of completing its plans with RACEMD to submit an initial safety study for use of ATCell as the treatment protocol and expects to make its initial filing to FDA in early 2022. RACEMD has committed to funding the initial studies and to assist the Company in creating non-dilutive funding opportunities for larger advanced studies in the future.

PeproTech, Inc.

On April 4, 2016, the Company entered into an Agreement with PeproTech, Inc of Rocky Hill, NJ. Under the Agreement PeproTech manufactures, markets and distributes the Company’s ACSelerate – Max cell growth medium. The Company and PeproTech completed the optimization and scale up manufacturing studies and the licensed medium is marketed under both PeproTech’s, PeproGrow and the Company’s ACSelerate MAX brands. PeproTech plans to leverage its current global sales relationships which reach a majority of all research laboratories worldwide to maximize distribution of the optimized media while the Company will concentrate its sales efforts on its collaborative and international licensing partners. Additionally, the Company and PeproTech are discussing the licensing of additional American CryoStem patented media and products for production and distribution by PeproTech, any additional media licensed to PeproTech will undergo similar optimization and scale up production testing prior to being released for sale. The Company is in ongoing discussion with PeproTech related to increasing the visibility and sales of the medium and the optimization of additional medium products focused on the differentiation of adult stem cells that are synergistic to the cell culture medium. On January 5^th, 2022, Thermo Fisher Scientific completed its acquisition of PeproTech for $1.85 billion.

Intellectual Property

From the Company’s formation, our strategy has been to invest time and capital in intellectual property protection. This strategy is intended to strengthen our Company’s foundation in any defensive or offensive legal challenge. In addition, we are developing our IP portfolio to ensure and enhance our business flexibility and allow us to gain favorable terms in potential future collaborative partnerships with third parties. Our intellectual property portfolio currently includes four issued U.S. patents (No. 7,989,205, and Serial No. 9,487,755, Cell Culture Media Kits and Methods of Use, “Systems and Methods for the Digestion of Adipose Tissue Samples Obtained from a Client for Cryopreservation” US 10,154,664 issued December 18, 2018, and “Business Method for Collection, Processing, Cryogenic Storage and Distribution of a Biologic Sample Material” US Patent Number 10,014,079, issued July 3, 2018); and has additional pending patent applications which are detailed in the following chart:

Additionally, the Company has in-licensed the following IP:

Trademarks

In addition to patents, the Company has registered the following trademarks with the U.S. Patent and Trademark Office: American CryoStem^®, CELLECT^® and ATGRAFT^™. We plan to obtain additional registered trademarks for our future products, slogans and themes to be used in our marketing initiatives, including, for example, ACSelerate-SFM^™, ACSelerate- LSM^™ and ATCELL^™. The Company has also secured a number of online domain names relevant to its business, including www.americancryostem.com and www.acslaboratories.com.

Market Size and Opportunities

By leveraging our proprietary Adipose Tissue Processing Platform, the Company is working to address multiple high growth, multi-billion dollar market opportunities prevailing within the Regenerative Medicine, Cosmeceuticals, Medical Tourism and Cell Therapy markets. The Company regularly reviews independent market research to gauge the market size of its intended domestic and international markets and to identify additional areas within these markets where the Company’s laboratory products, cell culture medium, and tissue and cellular processing services can be marketed, sold and/or licensed.

Global Stem Cells Market

A report from Transparency Market Research (TMR) forecasts that the global stem cells market is expected to register a healthy CAGR of 13.8% during the period from 2017 to 2025 to become worth US$270.5 bn by 2025. Depending upon geography, the key segments of the global stem cells market are North America, Latin America, Europe, Asia Pacific, and the Middle East and Africa. At present, North America dominates the market because of the substantial investments in the field, impressive economic growth, rising instances of target chronic diseases, and technological progress. As per the TMR report, the market in North America will likely retain its dominant share in the near future to become worth US$167.33 bn by 2025.

A report published by Markets and Markets Research in 2017 titled “Cell Expansion Market by Product (Reagent, Media, Flow Cytometer, Centrifuge, Bioreactor), Cell Type (Human, Animal), Application (Regenerative Medicine & Stem Cell Research, Cancer), End user (Research Institute, Cell Bank) - Global Forecasts to 2021”. The report states: “The global cell expansion market is expected to reach USD $18.76 Billion by 2021 from USD $8.34 Billion in 2016 at a CAGR of 17.6%. Geographically, the cell expansion market is dominated by North America, followed by Europe, Asia, and the Rest of the World (RoW). Growth in the North American segment is primarily driven by increasing incidence of chronic diseases in the North American countries. According to the American Medical Association and the American Medical Group Association, more than 50% of Americans suffered from one or more chronic diseases in 2012; the number of Americans suffering from chronic diseases was around 133 million in 2005 and this figure is expected to reach around 157 million by 2020. With this significant growth in the number of patients suffering from chronic diseases, the market for cell expansion is expected to grow in this region in the coming years.

Regenerative Medicine Market

The Global Translational Regenerative Medicine market is expected to grow significantly over the forecast period. The Global Translational Regenerative Medicine market was valued at $5.8bn in 2016. Vision gain forecasts this market to increase to $14.5bn in 2021. The market is estimated to grow at a CAGR of 19.9% in the first half of the forecast period and 17.7% from 2016 to 2027.

Cell Culture Market

Cell Culture Market Global Forecast to 2023, according to “marketsandmarkets” the cell culture market is expected to reach USD $26.28 Billion by 2023 from USD $15.32 Billion in 2018, at a CAGR of 11.4%. Growth in this market is driven by the growing number of regulatory approvals for cell culture-based vaccines, increasing demand for monoclonal antibodies (mAbs), funding for cell-based research, growing preference for single-use technologies, and the launch of advanced cell culture products.

Marketing and Distribution

The key objective of our marketing strategy is to position American CryoStem in the market as the “Gold Standard” for adipose tissue collection, cell processing and cryogenic storage, research/commercial uses and therapeutic applications of adipose tissue within the current regulatory framework. The combination of a traditional sales approach supported by continuous internal and external marketing program(s) is closely coordinated with the expansion of our laboratory processing capabilities. Our initial marketing efforts intend to disseminate current and future uses of adipose tissue and adult stem cells which support our business model, products and services. We intend to continue to employ both print advertising and social media sales campaigns. In addition, we plan to continue to utilize key leaders, and early adopters in the medical community as a marketing resource to enhance awareness of our proprietary, patented products and services and to increase the number of surgeons who join our network, university and private collaboration and consumers who use our products and services.

We plan to continue direct marketing programs focused on reaching regenerative medicine physicians and plastic and cosmetic surgeons to join our network of providers that offer our services to their patients. This marketing initiative has been implemented using a traditional sales approach common to the pharmaceutical and biotechnology industries. This fundamental sales approach at the core of our marketing activities is being strategically and tactically expanded using a combination of in-house sales personnel and outside independent channels.

Our plan, capital permitting, provides for a comprehensive integrated marketing approach using various traditional and new media, such as the Internet, social media/blogging, video, print, TV, radio and trade shows to reach targeted potential consumers and promote awareness of our Company and our branded products and services. The essence of this targeted strategy is to reach the end-users as quickly as possible and to accelerate the adoption curve of our products and services. We also plan to utilize outside marketing resources and trade groups to increase the number of surgeons willing to offer our products and services to their patients.

Development of Regional U.S. Markets

Physician Network

Physician Network – The Company continues to develop regional relationships to leverage its new products and services through existing cosmetic surgery and regenerative medicine practices. The Company continues to develop and expand its network of physicians seeking to adopt its products and services, initially focusing on surgeons performing liposuction, tissue transfer and regenerative procedures involving the use of adipose tissue. The Company intends to continue expanding its efforts to medical professionals interested in tissue storage and Regenerative Medicine applications utilizing ASDCs and establish itself as a primary source of collection, processing, and preparation of cellular therapies as they are developed and approved for patient use by the FDA.

Development of International Markets

International Licensing Program – Globally, many jurisdictions outside the US permit the use of adipose tissue based cellular therapies and regenerative medicine applications. The Company has received numerous inquiries concerning the sale or licensing of our products and services in these jurisdictions. The Company believes that the inquiries to date are a result of the global boom in Medical Tourism and the slow pace of approval of cellular therapies and regenerative medicine applications in the US. To address these inquiries and to expand the Company’s sales, marketing and branding opportunities the Company has designed and is offering an International Licensing Program.

The program is designed to permit the licensing of the Company’s products and services to organizations that meet the Company’s financial and technical criteria. The licensing program allows for a variety of business relationship including franchising, partnering and joint venturing. Marketing efforts to date have been to clinics, physician and hospitals in foreign jurisdictions capable of rapidly building or committing the appropriate facilities and personnel to create the required laboratory facilities to operate the CELLECT^®, ATGRAFT™ and ATCELL™ services in their local market. Strategically, the Company’s international licensees will maintain the branding of the Company’s services along the lines of the “Intel Inside” branding program.

Qualified Licensees can quickly take advantage of the rapidly expanding opportunity to collect, process, store and culture individual regenerative cell samples for their clients with the comfort and confidence that they are providing services that have been developed to conform to US FDA standards. Core to the relationship is the developed proprietary and patent pending processing and laboratory operational methodologies contained in our Standard Operating Procedures, Training, and Continuous Quality Management, Testing Program, and Laboratory Operations manuals.

Licensing programs may be initiated through a letter of intent (LOI) agreement between the Company and the prospective licensee. This LOI agreement is designed for due diligence and facility qualifications purposes. The Company receives an initial fee under the agreement which may or may not be credited toward future royalty payments. Following evaluation of the prospective licensee the Company will enter into a final Agreement which outlines all upfront fees, minimum royalties and consumable purchase obligations of the Licensee.

Significant to our international development activities is the global expansion of the American CryoStem branded services and patented products, as well as the expansion of the Company’s services, technology and products as the core platform to implement cellular therapies and regenerative medicine.

Baoxin Asia Pacific Biotechnology (Shenzhen) Co. Ltd. On July 12, 2018, the Company announced the national launch of CRYO’s ATGRAFT^TM tissue collection, processing and storage technology by Baoxin Asia Pacific Biotechnology (Shenzhen) Co. Ltd. (“Baoxin”) in China. The management team traveled throughout southeast China with the management and marketing team of Baoxin to present the ATGRAFT^TM platform to leading plastic and cosmetic surgery hospitals in Shenzhen, Nanning, Guangzhou, Guangxi and Changsha. The China launch activities are in support of the Company’s previously announced licensing and supply agreement with Baoxin, under which Baoxin will pay the Company a minimum annual guarantee against a fixed fee per process and purchase certain necessary consumables from CRYO required for the collection, processing and storage of the collected adipose tissue. Under the terms of the Agreements signed in Fiscal 2018, the Company invested in and currently holds five percent (5%) of Baoxin shares. Additionally, Mr. Arnone and Mr. Dudzinski were elected to serve as Directors of Baoxin during their visit to Shenzhen, China. During 2019 Mr. Arnone resigned from the board of Baoxin.

During Fiscal 2020 and 2021, due to the continuing effects of the COVID pandemic and associated government policies and regulations Baoxin suspended its processing activities. Baoxin is an emerging biotechnology company in China that has relied to date on investment to fund operation and build their facilities, as is typical for these types of companies. During 2020 and 2021, Baoxin developed a new state of the art facility with sizable clean rooms and biomaterial storage space. The facility was completed in February 2021 and officially opened in May of 2021. Unfortunately, due to the continued effects of COVID and the appearance of new variants Baoxin has been unable to restart operations and its marketing programs. See Note 3, Note 13 and Note 14 for additional information.

Health Information Technology Company, LTD (Hong Kong) – On June 30, 2014, the Company granted Health Information Technology Company, LTD (“HIT”) exclusive rights to utilize the Company’s Standard Operating Procedures (SOP’s) to market the Company’s ATGRAFT™ tissue storage service for Hong Kong. The Agreement calls for upfront fees, royalties and the purchase by HIT of certain consumables manufactured by the Company. The Company and HIT have reached further agreement to extend their relationship on a non-exclusive basis to include HIT’s cord blood laboratory located in Shenzhen, Guangdong Province, one of China’s most successful Special Economic Zones. The HIT agreement includes initial upfront fees and royalty payments for predetermined gross revenue volumes. HIT will also purchase CRYO ACSelerate™ storage media, CELLECT™ collection and transportation kits as well as other American CryoStem products necessary for clinical adipose tissue processing and storage at the Shenzhen facility. The final master licensing agreement is for a period of 5 years with renewal options and was executed between the parties on September 24, 2014. The HIT license has been extended per the terms of Schedule B of the Term Sheet, dated June 30, 2014, for an additional 3 year period to June 30, 2023.

In 2017 as part of the Company’s transaction with Baoxin, HIT and the Company agreed to transfer certain product and distribution rights granted to HIT under its 2014 agreement to Baoxin. The Company was paid a fee in the transaction and was provided with an initial ownership position in a planned Regenerative Treatment Center to be established by HIT in Hong Kong.

The current pandemic, changes in Chinese regulations and policies regarding Hong Kong, recent political unrest and the inability of Chinese citizens to cross the border between Hong Kong and China have significantly curtailed the ability of HIT to implement its business plans to utilize the Company’s technology and purchase the associated consumables.

CRYOVIVA (Thailand), Ltd. – On April 5, 2018, the Company announced further expansion of its global laboratory and cellular technology footprint by entering into an agreement to license its ATGRAFT™ and ATCELL adipose tissue (fat) processing and storage technologies with Cryoviva (Thailand) Ltd., a Bangkok, Thailand based Cord Blood processing and storage facility. Cryoviva, Thailand, currently offers collection, processing and storage of Cord Blood derived biologics to patients throughout Thailand and Southeast Asia.

American CryoStem has licensed to Cryoviva (Thailand) Ltd., established in 2007, the rights to utilize the Company’s Standard Operating Procedures (SOP’s) to create and market the Company’s ATGRAFT™ tissue storage service and ATCELL™ adipose derived stem cell processing and storage services in Thailand. The financial terms generally, call for the payment of certain training fees and, a percentage of the gross revenue subject to annual minimum payments generated from our products. Additionally, the Agreement calls for the purchase of CRYO consumable products required for ATGRAFT and ATCELL sample processing including CRYO’s ACSelerate™ non-DMSO cryogenic tissue storage media, transportation media, Cellect™ tissue collection kit, and ACSelerate – Max™ cell culture medium.

CellSource Tokyo, Japan – In the second quarter of 2015 the Company entered into negotiations with CellSource, LLC in Tokyo, Japan for the licensing of its ATGRAFT^™ products and services and on June 2, 2015 the Company and Cell Source entered into an initial term sheet licensing the ATGRAFT^™ technology to CellSource for Japan. The non- exclusive agreement expired in June of 2020.

Corporate Information

Our principal executive offices are located at 1 Meridian Road, Eatontown, New Jersey 07724 and our telephone number is (732) 747-1007. Our website is www.americancryostem.com. We also lease and operate a tissue processing laboratory at Princeton Corporate Plaza in Monmouth Junction NJ. Our laboratory website address is www.acslaboratories.com.

Available Information

We file electronically with the U.S. Securities and Exchange Commission (SEC) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. The public can obtain materials that we file with the SEC through the SEC’s website at http://www.sec.gov or at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.  Information on the operation of the Public Reference Room is available by calling the SEC at 800-SEC-0330.

Going Concern

As of the date of this annual report, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our proposed business.

We have suffered recurring losses from operations since our inception. In addition, we have yet to generate an internal cash flow from our business operations or successfully raised the financing required to expand our business. As a result of these and other factors, our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.

Our plans with regard to these matters encompass the following actions: (i) obtaining funding from new investors to alleviate our working capital deficiency, and (ii) implementing a plan to generate sales of our proposed products. Our continued existence is dependent upon our ability to resolve our liquidity problems and achieve profitability in our current business operations. However, the outcome of management’s plans cannot be ascertained with any degree of certainty. Our financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.

Results of Operations – Three Months

The Company’s revenue for the quarter ended March 31, 2022, increased to $31,935 versus $1,935 in the same period of Fiscal 2021.

Operating expenses increased to $967,339 for the quarter ended March 31, 2022, from $397,220 for the same period in Fiscal 2021. The Company incurred increases in its Research and Development efforts due to ongoing expenses of the Company’s FDA approved clinical study for Post-Concussion Syndrome, increased expenses associated with the Company’s addition clinical study development and the issuance of common stock options.

Administrative expenses, exclusive of research and development, increased to $686,284 from $144,680. The increase is primarily related to the issuance of common stock options.

Interest expense for the quarter ending March 31, 2022, decreased to $25,348 compared to $29,742 for the same period in 2021. The interest expense for the quarters ended March 31, 2022 and 2021 includes an additional $3,413 and $7,895 respectively for the effects of the beneficial conversion feature associated with debenture holders.

Net loss for the quarter ended March 31, 2022 was $963,767 compared to a net loss of $304,729 for the same period of Fiscal 2021. The increase in the net loss for quarter versus the same period in 2021, was due to increased expenses in Research and Development, primarily Clinical Study efforts and the issuance of Common Stock Options.

Liquidity and Capital Resources

As of March 31, 2022, the Company had a cash balance of $22,765, compared to $8,244 at September 30, 2021. We used $502,069 of our cash for operations and $123,514 for investing activities. The main sources of cash provided by financing activities included new equity issuances totaling $675,000.

Accounts Receivable decreased to $65,680 at March 31, 2022 from $78,782 at September 30, 2021.

Convertible debt increased to $712,957 as of March 31, 2022, versus $706,131 as of September 30, 2021. This increase was due to the effects of amortizing the beneficial conversion feature of the notes. See Note 7. Debt reported in the financial statements.

The Company will continue to focus on its financing and investment activities, but should we be unable to raise sufficient funds, we will be required to curtail our operating plans or cease them entirely. We cannot assure you that we will generate the necessary funding to operate or develop our business. Please see “Cash Requirements” above for our existing plans with respect to raising the capital we believe will be required. In the event that we are able to obtain the necessary financing to move forward with our business plan, we expect that our expenses will increase significantly as we attempt to grow our business. Accordingly, the above estimates for the financing required may not be accurate and must be considered in light these circumstances.

There was no significant impact on the Company’s operations as a result of inflation for the six months ended March 31, 2022.

Cash Requirements

We will require additional capital to fund marketing, operational expansion, processing staff training, as well as for working capital. We are attempting to raise sufficient funds would enable us to satisfy our cash requirements for a period of the next 12 to 24 months. In order to finance further market development with the associated expansion of operational capabilities for the time period discussed above, we will need to raise additional working capital. However, we cannot assure you we can attract sufficient capital to enable us to fully fund our anticipated cash requirements during this period. In addition, we cannot assure you that the requisite financing, whether over the short or long term, will be raised within the necessary time frame or on terms acceptable to us, if at all. Should we be unable to raise sufficient funds we may be required to curtail our operating plans if not cease them entirely. As a result, we cannot assure you that we will be able to operate profitably on a consistent basis, or at all, in the future.

In order to move our Company through its next critical growth phase of development and commercialization and to ensure we are in position to support our research collaborations and market penetration strategies, Management continues to seek new investment into the Company from existing and new investors with particular emphasis on identifying the best deal structure to attract and retain meaningful capital sponsorship from both the retail and institutional investing communities, while limiting dilution to our current shareholders. Management also focuses its efforts on increasing sales and licensing revenue and reducing expenses.

Effects of COVID 19

The development of our drug candidates could be disrupted and materially adversely affected in the future by a pandemic, epidemic or outbreak of an infectious disease like the recent outbreak of COVID-19. For example, as a result of measures imposed by the governments in regions affected by COVID-19 businesses and schools have been suspended due to quarantines or “stay at home” orders intended to contain this outbreak. Furthermore, many patients had concerns about making hospital and physician office visits for fear of contracting the virus. These factors had an direct adverse impact on our ability to enroll participants in our clinical trial programs. In addition, travel restrictions, stay-in-place orders and other measures imposed by governmental agencies and health organizations to prevent the spread of COVID-19 and protect the citizenry, have had an adverse impact on the flow of goods and services between nations. The supply disruptions have resulted in shortages of goods and materials. This could also impact our ability to produce the products we need to conduct our clinical trials. In addition, these measures have resulted in delays to the regulatory process, which may also have an adverse impact on our business. Finally, initially, the outbreak of COVID-19 led to steep declines in the Dow Industrial Average and other domestic and international stock indices at the end of February and during March and April 2020. While the markets have rebounded nicely since then, recent concerns over the “Delta variant” and the impact it may have on the U.S. and global economies, have led to “risk-off” sessions in the global markets. We are still assessing our business plans and the impact COVID-19 may have on our ability to advance the development of our drug candidates or to raise financing to support the development of our drug candidates, we cannot assure you that we will be able to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally or in our sector in particular.

Commitments

Effective October 1, 2019, the Company adopted the provision of ASC 842 Leases. The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, one of the Company’s leases does not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate which is based on the interest rate of similar debt outstanding.

Finance Lease

The Company leases Equipment at its laboratory from NFS Leasing, Inc. Lease payments are $2,993.62 per month for eighteen (18) months. The final lease payment is scheduled for January 1, 2023. When the final payment is made, the Company will own the equipment. See Note 11. Leases in the Financial Statements.

Operating Lease

The Company leases its office facility, in Eatontown, New Jersey, from Eaton Holdings LLC. The Company extended the lease on March 23, 2022 for an additional three years from May 1, 2021 to April 30, 2024. at $2,650 per month. See Note 11. Leases in the Financial Statements.

The Company was not party to any litigation against it and is not aware of any litigation contemplated against it as of March 31, 2022. See also Legal Proceedings below.

We anticipate that any further capital commitments that may be incurred will be financed principally through the issuance of our securities. However, we cannot assure you that additional financing will be available to us on a timely basis, on acceptable terms, or at all.

Related Party Transactions

On October 1, 2020, the Company executed a note with ACS Global, Inc. for a principal amount of $99,125 representing the outstanding balance due to ACS Global. Inc. The Note matures on October 1, 2023 and carries an interest rate of 10% per annum which may be paid in cash or stock. The note is due and payable in full upon maturity. On March 1, 2021, the note was increased by $49,000. The note may be prepaid at any time by the Company.

From time to time the Company takes advances makes principal payments on the note. During the six months ended March 31, 2022, the Company was advanced $1,729 and made payments of $18,000 on the note.

The principal balance of the Note is $131,505 at March 31, 2022 and 147,775 at September 30, 2021.

The Company entered into an agreement with ACS Global, Inc wherein the Company exchanged 1,000,000 newly created Series A Voting C The Company entered into an agreement with ACS Global, Inc wherein the Company exchanged 1,000,000 newly created Series A Voting Convertible Preferred Shares for 20,000,000 common shares held by ACS Global, Inc.

Terms of the Series A Voting Convertible Preferred Shares are as follows:

Terms of the Series A Voting Convertible Preferred Shares are as follows:

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies

We prepare financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”), which requires us to make estimates and assumptions that affect the amounts reported in our combined and consolidated financial statements and related notes. See Note 1 and Note 3 to the Financial Statements for more information.

Basis of Presentation

Our financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United State of America, whereby revenues are recognized in the period earned and expenses when incurred.

Management’s Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Long-Lived Assets

We review and evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, we compare the assets’ carrying amounts against the estimated undiscounted cash flows to be generated by those assets over their estimated useful lives. If the carrying amounts are greater than the undiscounted cash flows, the fair values of those assets are estimated by discounting the projected cash flows. Any excess of the carrying amounts over the fair values are recorded as impairments in that fiscal period.

Statement of Cash Flows

For purposes of the statement of cash flows, we consider all highly liquid investments (i.e., investments which, when purchased, have original maturities of three months or less) to be cash equivalents.

Recent Accounting Pronouncements

The FASB recently issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity.

The guidance in ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives.

In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract.

The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.

The amendments in ASU 2020-06 are effective for our company for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently assessing the impact of these amendments on its future financial reporting.

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses.  The new guidance provides better representation about expected credit losses on financial instruments. This Update requires the use of a methodology that reflects expected losses and requires consideration of a broader range of reasonable and supportive information to inform credit loss estimates.  This ASU is effective for reporting periods beginning after December 15, 2022, with early adoption permitted.  The company is studying the impact of adopting the ASU in fiscal year 2024, and what effect it could have. The Company believes the accounting change would not have a material effect on the financial statements.

Not Applicable

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company’s disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (ii) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our principal executive officer and principal financial officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2022 and concluded that the disclosure controls and procedures were effective as a whole.

Changes in Internal Control over Financial Reporting

PART II - OTHER INFORMATION

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Not applicable.

During the six months ended March 31, 2021, the Company issued 640,000 shares and received proceeds of $143,000. The share price was determined by agreement with the purchasers, based upon the current market price less a discount for purchasing restricted securities.

During the six months ended March 31, 2021, the Company issued 80,000 shares and for services valued at $20,000. The share price was determined by agreement with the service provider, based upon the current market price less a discount for purchasing restricted securities.

During the six months ended March 31, 2021, the Company issued 100,000 shares for services to be provided valued at $75,000. The share price was determined by agreement with the service provider, based upon the current market price less a discount for purchasing restricted securities.

During the six months ended March 31, 2021, the Company issued 81,031 shares to pay interest due holders of bridge notes and convertible notes. The amount of interest paid was $26,147. The share prices were determined by the aggregate market price for the week in which the interest became due.

During the six months ended March 31, 2022, the Company issued 2,083,333 shares and received proceeds of $675,000. The share price was determined by agreement with the purchasers, based upon the current market price less a discount for purchasing restricted securities.

During the six months ended March 31, 2022, the Company issued 110,470 shares to pay interest due to holders of the bridge notes and convertible notes. The value of the interest paid was $34,487. The share prices were determined by the aggregate market price for the week in which the shares were issued.

During the six months ended March 31, 2022, the Company issued 91,091 shares for prepaid legal fees. The share price was determined by agreement with legal service provider, based upon the current market price less a discount for acquiring restricted securities.

The Company exchanged 1,000,000 newly created Series A Voting Convertible Preferred Shares for 20,000,000 common shares held by ACS Global, Inc. (See Note 14 for more details).

None

Not Applicable.

None

(a) Exhibits furnished as Exhibits hereto:

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.