UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the nine
month period ended June 30, 2014
Commission file
number: 000-54672
AMERICAN
CRYOSTEM CORPORATION |
(Name of registrant
as specified in its charter) |
Nevada |
26-4574088 |
(State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.)
|
1
Meridian Road, Eatontown, NJ 07724 |
(Address
of principal executive offices)(Zip Code)
|
(732)
747-1007
(Registrant’s
telephone number, including area code)
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.
Yes
x No o
Indicate by
check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted 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 and post such files).
Yes
x No o
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o |
Accelerated
filer o |
Non-accelerated
filer o (Do
not check if smaller reporting company) |
Smaller
reporting company x |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes o No x
As of August 18, 2014 there were
32,882,364 shares of common stock outstanding.
TABLE OF CONTENTS
PART I –
FINANCIAL INFORMATION
| Item
1. | Financial
Statement |
American CryoStem
Corporation
INTERIM FINANCIAL
STATEMENTS
JUNE 30, 2014
American CryoStem
Corporation
Balance Sheets
As of June
30, 2014 and 2013
| |
June
30, | | |
June
30 | |
| |
2014 | | |
2013 | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current
assets: | |
| | | |
| | |
Cash | |
$ | 31,759 | | |
$ | 31,355 | |
Trade
Accounts Receivable | |
| 5,520 | | |
| 3,051 | |
Other
Receivable | |
| — | | |
| 710 | |
Investment | |
| 1,000 | | |
| — | |
Deferred
Contract Expense | |
| 65,875 | | |
| — | |
Prepaid
Expenses | |
| 250 | | |
| 250 | |
| |
| | | |
| | |
Total
current assets | |
| 104,404 | | |
| 35,366 | |
| |
| | | |
| | |
Property
and Equipment (Net of Accumulated Depreciation) | |
| 137,505 | | |
| 167,927 | |
| |
| | | |
| | |
Other
Assets | |
| 325,311 | | |
| 291,400 | |
| |
| | | |
| | |
Total
Assets | |
$ | 567,220 | | |
$ | 494,693 | |
| |
| | | |
| | |
LIABILITIES
AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Current
liabilities: | |
| | | |
| | |
Accounts
Payable & Accrued Expenses | |
$ | 574,903 | | |
$ | 220,144 | |
Contract
Payable | |
| 68,000 | | |
| — | |
Convertible
Notes Payable | |
| 185,550 | | |
| — | |
Notes
Payable | |
| 506,000 | | |
| — | |
Capital
Lease Payable | |
| 16,147 | | |
| 19,092 | |
| |
| | | |
| | |
Total
current liabilities | |
| 1,350,600 | | |
| 239,236 | |
| |
| | | |
| | |
Long-Term
Liabilities | |
| | | |
| | |
Deferred
Revenue | |
| 1,100 | | |
| — | |
Notes
Payable | |
| — | | |
| 199,000 | |
Capital
Lease Payable | |
| — | | |
| 18,350 | |
Payable
to Shareholder | |
| 136,948 | | |
| 139,447 | |
| |
| | | |
| | |
Total
Long-Term Liabilities | |
| 138,048 | | |
| 356,797 | |
| |
| | | |
| | |
Shareholders’
equity: | |
| | | |
| | |
Common
stock ($.001 par value, 32,840,721 shares issued and outstanding at June 30, 2014, and 30,400,405 shares issued and outstanding
at June 30, 2013; 300,000,000 shares authorized) | |
| 32,841 | | |
| 30,401 | |
Additional
paid in capital | |
| 6,149,318 | | |
| 4,395,840 | |
Accumulated
deficit | |
| (7,103,587 | ) | |
| (4,527,581 | ) |
Total
shareholders’ equity | |
| (921,428 | ) | |
| (101,340 | ) |
| |
| | | |
| | |
Total
Liabilities & Shareholders’ Equity | |
$ | 567,220 | | |
$ | 494,693 | |
See
accompanying notes to financial statements
American
CryoStem Corporation
Statements
of Operations
For the Three
Months Ended June 30, 2014 and 2013
and the Nine
Months Ended June 30, 2014 and 2013
| |
Three
Months Ended | | |
Nine
Months Ended | |
| |
June
30, 2014 | | |
June
30, 2013 | | |
June
30, 2014 | | |
June
30, 2013 | |
| |
| | |
| | |
| | |
| |
Sales | |
$ | 63,760 | | |
$ | 5,761 | | |
$ | 74,379 | | |
$ | 7,257 | |
| |
| | | |
| | | |
| | | |
| | |
Operating
Expenses: | |
| | | |
| | | |
| | | |
| | |
Professional
Fees | |
| 55,382 | | |
| 28,731 | | |
| 273,750 | | |
| 88,018 | |
Research
& Development | |
| 105,745 | | |
| 66,840 | | |
| 287,053 | | |
| 192,417 | |
Administration | |
| 123,219 | | |
| 226,140 | | |
| 513,527 | | |
| 562,934 | |
| |
| | | |
| | | |
| | | |
| | |
Total
Operating Expenses | |
| 284,346 | | |
| 321,711 | | |
| 1,074,330 | | |
| 843,369 | |
| |
| | | |
| | | |
| | | |
| | |
Net
Loss from Operations | |
| (220,586 | ) | |
| (315,950 | ) | |
| (999,951 | ) | |
| (836,112 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other
Income (Expense) | |
| (13,833 | ) | |
| (5,955 | ) | |
| (28,243 | ) | |
| (15,820 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net
Loss | |
$ | (234,419 | ) | |
| (321,905 | ) | |
$ | (1,028,194 | ) | |
| (851,932 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic
& fully diluted net earnings (loss) per common share | |
$ | (.007 | ) | |
$ | (.011 | ) | |
$ | (.032 | ) | |
$ | (.029 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted
average of common shares outstanding: Basic & fully diluted | |
| 32,683,908 | | |
| 29,856,282 | | |
| 32,617,324 | | |
| 28,902,802 | |
See accompanying
notes to financial statements
American
CryoStem Corporation
Statement
of Cash Flows
For the Nine
Months Ended June 30, 2014 and 2013
| |
Nine
Months Ended June 30, | |
| |
2014 | | |
2013 | |
Operating
Activities: | |
| | | |
| | |
Net
loss | |
$ | (1,028,194 | ) | |
$ | (851,932 | ) |
Adjustments
to reconcile net income items not requiring the use of cash: | |
| | | |
| | |
Depreciation
expense | |
| 30,505 | | |
| 28,658 | |
Accrued
Interest | |
| 28,243 | | |
| 10,880 | |
Common
Stock Issued for Services | |
| — | | |
| 7,500 | |
Changes
in other operating assets and liabilities | |
| | | |
| | |
Accounts
Receivable | |
| (3,517 | ) | |
| (3,051 | ) |
Other
Receivable | |
| — | | |
| (710 | ) |
Deferred
Contract Expense | |
| (65,875 | ) | |
| — | |
Prepaid
Expenses | |
| (250 | ) | |
| (250 | ) |
Accounts
Payable and accrued expenses | |
| 286,531 | | |
| (31,266 | ) |
Contract
Payable | |
| 68,000 | | |
| — | |
Deferred
Revenue | |
| 1,100 | | |
| — | |
Net
cash used by operations | |
| (683,457 | ) | |
| (840,171 | ) |
| |
| | | |
| | |
Investing
activities: | |
| | | |
| | |
Investment | |
| (1,000 | ) | |
| — | |
Purchase
of equipment | |
| (8,149 | ) | |
| (998 | ) |
Investment
in other assets | |
| (34,075 | ) | |
| (31,327 | ) |
Net
cash used by investing activities | |
| (43,224 | ) | |
| (32,325 | ) |
| |
| | | |
| | |
Financing
activities: | |
| | | |
| | |
Convertible
notes | |
| (5,250 | ) | |
| 126,525 | |
Payment
to Shareholder | |
| (2,499 | ) | |
| (365 | ) |
Issuance
of Notes Payable | |
| 506,000 | | |
| | |
Issuance
of common stock | |
| 159,250 | | |
| 767,350 | |
Capital
Lease | |
| (14,993 | ) | |
| 6,302 | |
| |
| | | |
| | |
Net
cash provided by financing activities | |
| 642,508 | | |
| 899,812 | |
| |
| | | |
| | |
Net
increase (decrease) in cash during the period | |
| (84,173 | ) | |
| 27,316 | |
| |
| | | |
| | |
Cash
Balance, Beginning of Period | |
| 115,932 | | |
| 4,039 | |
| |
| | | |
| | |
Cash
balance, End of Period | |
$ | 31,759 | | |
$ | 31,355 | |
| |
| | | |
| | |
Supplemental
disclosures of cash flow information: | |
| | | |
| | |
Interest
Paid | |
$ | 1,361 | | |
$ | 405 | |
Income
Taxes Paid | |
$ | 0 | | |
$ | 0 | |
See accompanying
notes to financial statements
American
CryoStem Corporation
Statement
of Changes in Shareholders’ Equity
For the Nine
Months Ended June 30, 2014
Prices &
shares adjusted for stock splits
| |
| | |
| | |
Additional | | |
| | |
Total | |
| |
Common
Stock | | |
Paid
in | | |
Accumulated | | |
Shareholders’ | |
| |
Shares | | |
Par
Value | | |
Capital | | |
Deficit | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| |
Balance at September 30, 2013 | |
| 32,285,721 | | |
$ | 32,286 | | |
$ | 5,990,623 | | |
$ | (6,075,393 | ) | |
$ | (52,484 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of Common Stock | |
| 555,000 | | |
| 555 | | |
| 158,695 | | |
| | | |
| 159,250 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net
Loss | |
| | | |
| | | |
| | | |
| (1,028,194 | ) | |
| (1,028,194 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at June
30, 2014 | |
| 32,840,721 | | |
$ | 32,841 | | |
$ | 6,149,318 | | |
$ | (7,103,587 | ) | |
$ | (921,428 | ) |
See accompanying
notes to financial statements
American CryoStem
Corporation
Notes to the
Financial Statements
June
30, 2014
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) for 21 million shares
of common stock. ACS was deemed to be the accounting acquirer. At that time, the former operations of R&A were discontinued
and the name of the Company was changed to American CryoStem Corporation.
The Company
operates within the Regenerative Medicine sector of the Life Sciences industry which aims to repair, replace or regenerate organs
and tissue that have been damaged or diseased, to provide its consumers and institutions with a standardized, patented cellular
platform and clinical grade solutions using adipose derived adult stem cells (ADSCs).
The Company
maintains a state-of-the-art, FDA-registered, clinical laboratory dedicated to processing, bio-banking and manufacturing of cellular
applications using autologous adipose (fat) tissue and ADSCs. Through its scientific efforts, the Company has built a strong,
strategic portfolio of intellectual property, patent applications, and proprietary operating procedural processes that form its
core cellular platform.
The Company
has received Institutional Review Board (IRB) approval of its protocols for isolating Stromal Vascular Fraction (SVF) and culturing
of ADSCs from a patient’s adipose tissue. These protocols provide validated testing methods necessary to move the clinical
investigative process towards uniform disease treatments, and the collection of cGMP data necessary for approval of regenerative
cellular therapies.
The Company’s
lead product, ATCELL ™, is currently being combined with university research and product development
partners and collaborators such as Rutgers University and Autogenesis Corporation to create new cellular therapy applications.
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
and interest bearing deposits - 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.
Revenue
Recognition – The Company recognizes revenue from the processing of adipose tissue into usable stem cells once all the
procedures have been performed and the client sample has been stored in the Company’s cryogenic storage tank. Storage revenues
for stored client samples are recognized on an annual basis on the anniversary date of the storage.
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.
American CryoStem
Corporation
Notes to the
Financial Statements
June 30, 2014
NOTE
1. Organization of the Company and Significant Accounting Policies (continued)
Equipment
- Equipment is 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:
Office equipment |
5 years |
Lab equipment & Furniture |
7 years |
Lab software |
5 years |
Leasehold improvements |
15 years |
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 June 30, 2014, the Company has no uncertain tax positions that qualify for either recognition or disclosure
in the financial statements. All tax returns from fiscal years 2009 to 2012 are subject to IRS audit.
Recent
Accounting Pronouncements:
There
are no recently issued accounting pronouncements that have a material impact on the Company’s financial statements.
NOTE 2. Going Concern
The accompanying
financial statements have been presented in accordance with GAAP, which assumes the continuity of the Company as a going concern.
However, the Company has incurred significant losses since its inception and has no material revenues to date and continues to
rely on financing and the issuance of shares to raise capital to fund its business operations. Management’s plans with regard
to this matter are as follows:
On August
26, 2013, the Company entered into an Agreement with an investment banker as the exclusive financial advisor and placement agent
in connection with a private offering of the Company’s securities. The Company is completing the due diligence and expects
to begin the offering in the third quarter of fiscal 2014.
The Company
plans to continue to fund its operations through fundraising activities in 2014 until the new commercial facilities generate sufficient
revenue to support its operations.
American CryoStem
Corporation
Notes to the
Financial Statements
June 30, 2014
NOTE 3. Loss per Share
The Company
applies ASC 260, ” Earnings per Share” to calculate loss per share. In accordance with ASC 260, basic net loss
per share has been computed based on the weighted average of common shares outstanding during the periods reported. The effects
of the options and notes convertible into shares of common stock are not included in the calculation of loss per share since their
inclusion would be anti-dilutive.
Net
loss per share is computed as follows:
| |
For
the Three Months Ended | | |
For
the Nine Months Ended | |
| |
June 30, | | |
June 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Net
Loss | |
$ | (234,419 | ) | |
$ | (321,905 | ) | |
$ | (1,028,194 | ) | |
$ | (851,932 | ) |
Weighted
average shares outstanding | |
| 32,683,908 | | |
| 28,659,711 | | |
| 32,617,324 | | |
| 28,902,802 | |
Basic
& fully diluted net earnings (loss) per common share | |
$ | (.007 | ) | |
$ | (.011 | ) | |
$ | (.032 | ) | |
$ | (0.029 | ) |
NOTE 4. Property and Equipment
Property and Equipment is comprised
of the following:
| |
June
30, 2014 | | |
June
30, 2013 | |
Office
Furniture and Equipment | |
$ | 24,986 | | |
$ | 24,986 | |
Lab
Furniture and Equipment | |
| 250,094 | | |
| 241,945 | |
Leasehold
Improvements | |
| 7,753 | | |
| 7,753 | |
| |
| 282,833 | | |
| 274,684 | |
Less:
Accumulated Depreciation | |
| (145,328 | ) | |
| (106,757 | ) |
Net
Property and Equipment | |
$ | 137,505 | | |
$ | 167,927 | |
NOTE 5. Patents
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 maintains a continuation (U.S. Serial No. 13/194,900) with
additional claims pending.
The Company
has filed the following additional patents to extend its intellectual property to encompass additional aspects of the Company’s
platform processing technologies:
|
● |
A
Business Method for Collection Cryogenic Storage and Distribution of a Biologic Sample Material PCT/US2011/39260 |
|
|
|
|
● |
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 |
|
|
|
|
● |
Compositions
and Methods for Collecting, Washing, Cryopreserving, Recovering and Return of Lipaspirates to Physician for Autologous Adipose
Transfer Procedures PCT/US13/44621 filed June 6, 2013 |
|
|
|
|
● |
Stem
Cell-Based Therapeutic Devices and Methods U.S. Serial No. 14/196,414 Filed March 10, 2013 |
|
|
|
|
● |
Autologous
Serum for Transport of Isolated Stromal Vascular Fraction or Adipose Derived Stem Cells 61/810,970 Filed April 11, 2013 |
|
|
|
|
● |
Cell
Culture Media, Kits and Methods of Use US Serial No. 13/194,900 Continuation of US Serial No. 11/542,863 |
|
|
|
|
● |
Nanoparticle
Mediated Synthetic Transcription Factor for Enhanced Gene Expression and Cell Differentiation
61/947,898 Filed March 28, 2014 (Jointly Owned with Rutgers University)
|
American CryoStem
Corporation
Notes to the
Financial Statements
June 30, 2014
NOTE 6. Debt
During
the nine months ended June 30, 2014, the Company issued $129,500 of convertible notes. The convertible notes have an exercise
price of $0.35 per share of common stock and mature in September 2014. During the nine months ended June 30, 2014, convertible
notes of $134,750 were converted to common stock.
During
the nine months ended June 30, 2014, the Company raised $506,000 in an 8% Note Offering with principal and interest to be repaid
one year from the date of issuance or from the proceeds of a future offering of Company securities (the “Bridge Notes”).
Additionally, the Company granted each note holder an option to purchase one share of the Company’s common stock for each
dollar of the principal amount of the note at $0.05 per share. The options expire one year from the date on which the note is
repaid.
The following
table describes the Company’s debt outstanding as of June 30, 2014:
Debt | |
Carrying
Value | | |
Maturity | |
Rate | |
| |
| | | |
| |
| | |
Capital
lease | |
$ | 16,147 | | |
March 31, 2015 | |
| 10.00 | % |
| |
| | | |
| |
| | |
Convertible
notes | |
$ | 185,550 | | |
September 30, 2014 | |
| 8.00 | % |
| |
| | | |
| |
| | |
Notes
Payable (Bridge Notes) | |
$ | 506,000 | | |
Various – One year
from inception | |
| 8.00 | % |
| |
| | | |
| |
| | |
Due
to shareholder | |
$ | 136,948 | | |
Demand | |
| 0.00 | % |
NOTE 7. Commitments &
Contingencies
Operating
Leases – The Company has two operating leases for its laboratory facilities at the Burlington County College Science
Incubator in Burlington, New Jersey. Each lease is for a term of three years with a monthly rent of $1,650 per laboratory. The
term of the leases is from February 1, 2014 through January 31, 2017.
The Company
has an operating lease for its office facilities in Eatontown, New Jersey. The lease is for a term of three years with a monthly
rent of $2,650. The term of the lease is from May 1, 2012 through April 30, 2015.
Capital
Lease – The Company has a capital lease for laboratory equipment. The minimum lease payments due on the capital lease
are as follows.
2014 | |
| 5,610 | |
2015 | |
| 11,220 | |
| |
| | |
Total
minimum lease payments | |
$ | 16,830 | |
| |
| | |
Less
amounts representing interest | |
| (683 | ) |
| |
| | |
Present
value of net minimum lease payments | |
$ | 16,147 | |
American CryoStem
Corporation
Notes to the
Financial Statements
June 30, 2014
NOTE 7. Commitments &
Contingencies (continued)
Research
& Development – On December 1, 2013, the Company executed two additional agreements (1) the Cooperative Research
Agreement and (2) the Research Evaluation and License Option Agreement, with Rutgers University for further collaboration and
intellectual property development with Dr. Kibum Lee. The Cooperative Research Agreement calls for the Company to provide Dr.
Lee’s laboratory and staff with additional materials to continue their research utilizing the Company’s ATCELL
™ and ACSelerate ™ products. The Agreement also provides for the Company to have
exclusive access to certain identified Rutgers intellectual property and for the joint ownership of any additional intellectual
property developed. The Research Evaluation and License Option Agreement provides a platform for the Company to be the exclusive
developer and licensor of any new intellectual property and patent rights. The Company will be managing all patent application
and prosecution for any technologies developed under the Agreements. The Company has agreed to pay Rutgers University $93,000
for this research project.
On October
18, 2013, the Company formed Autogenesis Corporation (“Autogenesis”) as part of its collaborative agreement to develop
wound healing products and other cellular therapies with privately-held Protein Genomics (PGen). The Company is jointly owned
by American CryoStem and Protein Genomics. Autogenesis will be separately funded and will serve as the dedicated business unit
focused on continuing and accelerating the research and development of innovative new products and biotechnologies that combine
American CryoStem’s ATCELL ™ (adipose derived regenerative cells), and ACSelerate ™
cell media culture products with PGen’s Elastatropin ® human-based protein materials.
The Company
has entered into a number of Material Transfer Agreements (MTAs) with potential collaborative, licensing and product distribution
partners. These potential partners are evaluating the company products and there can be no assurance that these evaluations will
result in material product distribution, licensing or collaborative arrangements.
NOTE
8. Common Stock Issuances
During
the nine months ended June 30, 2014, the Company issued 385,000 shares of common stock in connection with the conversion by the
holders of $134,750 of principal amounts of its unsecured convertible notes, as referred in Note 6.
During the nine
months ended June 30, 2014, the Company issued 170,000 shares of common stock in connection with the exercise of stock options
for $24,500.
NOTE
9. Stock Options
During
the nine months ended June 30, 2014, the Company issued options to the holders of the Notes mentioned in Note 6. The Company has
granted each note holder an option to purchase one share of the Company’s common stock for each dollar of the principal
amount of the note at $0.05 per share. The options expire one year from the date on which the note is repaid.
The following
is a summary of common stock options outstanding at June 30, 2014:
| |
Options | | |
Wgtd
Avg
Exercise Price | | |
Wgtd
Years to Maturity | |
| |
| | |
| | |
| |
Outstanding
at September 30, 2013 | |
| 6,600,000 | | |
$ | 0.18 | | |
| 4.16 | |
| |
| | | |
| | | |
| | |
Issues | |
| 506,000 | | |
$ | 0.05 | | |
| 1.85 | |
Exercises | |
| 170,000 | | |
$ | 0.14 | | |
| | |
Expires | |
| 0 | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Outstanding
at June 30, 2014 | |
| 6,936,000 | | |
$ | 0.16 | | |
| 3.50 | |
American CryoStem
Corporation
Notes to the
Financial Statements
June 30, 2014
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.
Cash,
prepaid expense, security deposit, accounts payable and accrued expenses, capital lease payable, payable to shareholder, and note
payable to shareholder in the balance sheet are estimated to approximate fair market value at June 30, 2014.
NOTE
11. Reliance on Key Personnel
The Company
largely relies on the efforts of its Chief Operating Officer and its Chief Executive Officer and Chairman of its Board of Directors.
A withdrawal of the efforts of the Chief Operating Officer or the Chief Executive Officer and Chairman would have a material adverse
effect on the Company’s ability to continue as a going concern.
NOTE 12.
Litigation
From
time to time we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course
of business. We are not currently involved in legal proceedings that we believe could reasonably be expected to have a material
adverse effect on our business, prospects, financial condition or results of operations.
American
CryoStem Corporation
Notes
to the Financial Statements
June
30, 2014 and 2013
ITEM
2. |
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS
|
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:
|
● |
Inadequate
capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; |
|
|
|
|
● |
Our
failure to earn revenues or profits; |
|
|
|
|
● |
Inadequate
capital to continue business; |
|
|
|
|
● |
Volatility
or decline of our stock price; |
|
|
|
|
● |
Potential
fluctuation in quarterly results; |
|
|
|
|
● |
Rapid
and significant changes in markets; |
|
|
|
|
● |
Litigation
with or legal claims and allegations by outside parties; and |
|
|
|
|
● |
Insufficient
revenues to cover operating costs.
|
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
American CryoStem
Corporation was 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 Common
Stock 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.
Overview
American CryoStem
Corporation is a biotechnology pioneer in the fields of Regenerative and Personalized Medicine and operates a state-of-the-art,
FDA-registered, clinical laboratory dedicated to our standardized processing platform, bio-banking and the development
of cellular applications using autologous adipose (fat) tissue and adipose derived stem cells (ADSCs). Through its scientific
efforts, the Company has built a strong, strategic portfolio of intellectual property, and proprietary operating processes that
form the core standardized cellular platform which we believe supports and promotes a growing pipeline of biologic products
and processes, clinical services and international licensing opportunities. Our FDA registered clinical laboratory, which
we believe to be in compliance with the FDA’s current Good Manufacturing Procedures (cGMP) for human tissue processing,
cryro-storage and cell culture and differentiation media development is located in Mount Laurel, New Jersey at the Burlington
County College Science Incubator.
The reproducibility
of scientific studies has become a major issue in life science research from drug discovery and development through to clinical
trials as researchers around the world continue to use different protocols for processes associated with sample preparation, cryopreservation
and cold chain management. The scientific community is now becoming more aware of factors that affect sample integrity and experimental
variability. By standardizing handling, storage, and transportation protocols we can vastly improve the quality and reproducibility
of preclinical and clinical data, helping to accelerate the transition from lab research to drug development and market launch.
Our business
strategy is centered on promoting our standardized platform as a complete adipose stem cell solution and expanding our research
and development through scientific collaborations and we plan to generate revenue through the sale and licensing of our patented
products, laboratory tools, and services to attempt to capitalize on: (1) adipose tissue and adipose derived stem cell (“ADSC”)
technologies; (2) scientific breakthroughs incorporating ADSCs that we believe have been rapidly developing in the fast growing
Regenerative and Personalized Medicine industries; (3) providing these growth industries with a standardized ADSC cell processing
platform; (4) enhancing the delivery of healthcare through cellular-based therapies and applications which address disease treatment,
wound and burn healing, joint repair and personalized health and beauty care; and (5) building a global network of physicians
and affiliated laboratory facilities for the delivery of our products and services.
Our proprietary,
patent pending clinical core processing platform allows for the collection, preparation and cryo-preservation of adipose
tissue without manipulation, bio-generation or the addition of animal-derived products or other chemical materials which require
removal from the tissue sample upon retrieval or prior to use. Management believes this core process makes each tissue sample
suitable for use in cosmetic grafting procedures or for further processing to adult stem cells for other types of stem cell therapies.
Currently, there are numerous therapeutic and orthopedic applications for adipose tissue and adult stem cell treatments identified
or in use globally. As of August 4, 2014, a review of clinicaltrials.gov, operated by the US National Institutes of Health (NIH)
indicates that there is a significant number of clinical trials registered or completed that are focused on adipose tissue (1397)
adult stem cells (4442) adipose derived stem cells (111), mesenchymal stem cells (414), and stromal vascular fraction (25).
Products
and Services
American CryoStem
is focused on multiple business lines that we believe will generate sustainable, recurring revenue streams from each of our developed
products and services. Our core platform is designed in a modular fashion so that each service or product we offer can be performed
in connection with or as a precursor to another Company service. This modular configuration also permits the Company to customize
the licensing of individual technologies so that the Licensee’s may quickly roll out the services that are permitted within
their Licensed Territory. The Company also incorporates its proprietary and patented or patent pending laboratory products, such
as our ACSelerate™ cell culture and differentiation medias in all product processing, production and contract manufacturing
services.
To date, we
have generated minimal revenue; however, subject to, among other factors, obtaining the requisite financing, we believe we are
well positioned to leverage our developed and proposed products and services as the basis for a host of Regenerative Medicine
uses and future applications.
Products and
services we offer are:
CELLECT® |
● |
Tissue
collection system designed for participating physicians to facilitate the collection and overnight shipping of an individual’s
adipose tissue to our FDA registered laboratory for processing into any cellular products for storage |
ATGRAFT™ |
● |
Tissue
processing at our laboratory of adipose tissue received from clients and prepared for long term storage in different configuration
sizes allowing future retrieval for tissue grafting procedures or the production of ATCELL™ products for Regenerative
Medicine applications |
ATCELL™ |
● |
Clinical
Processing the adipose tissue which removes the adipocytes and red blood cells for storage, expansion, or differentiation;
|
● |
Clinical
and Research grade donated ATCELL™ lines for use with collaborative partners in research and application development
and optimization, cell morphology, characterization assays, and growth analysis; |
ACSelerate™ |
● |
Patented
animal serum free cell culture media products for growing human stromal cells (including all cells found in human skin, fat
and other connective tissue); |
● |
ACSelerate-SFM™
cell culture media is available animal free (Fetal Bovine Serum (FBS) free), which is designed for clinical grade
cell culture; |
● |
ACSelerate-LSM™
is a low FBS (0.05%) version for application development and research purposes. |
Our branded
product and service offerings include:
CELLECT®-
Validated Collection, Transportation, and Storage System A clinical solution allowing physicians to collect and ship tissue
samples to our laboratory utilizing proprietary and patent-pending methods and materials. The CELLECT®
service is monitored in real-time and we believe assures the highest cell viability in the tissue upon laboratory receipt. The
CELLECT® service is included in our pending patent application US Serial No. 13/702,304.
We believe
that American CryoStem is the first tissue bank to globally incorporate through its CELLECT® service
the International Blood Banking identification and labeling and product identification coding system. The coding was developed
in conjunction with the American Association of Blood Banks (AABB), the American Red Cross and the International Society of Blood
Transfusion (ISBT). The Company intends to promote this standard in all laboratories that license or utilize our technology.
ATGRAFT™
Adipose Tissue Storage Service – A clinical adipose tissue (fat) storage solution allowing physicians to provide
their patients with multiple tissue/stem cell storage options. The ATGRAFT™ Service, is incorporated into
one liposuction procedure, and permits the individual to access multiple cosmetic or regenerative procedures by using their own
stored adipose tissue (from the initial ATGRAFT™ storage). The stored ATGRAFT™ samples
can be used as a natural biocompatible filler or processed to a cellular therapy application and allows the client to avoid the
trauma of additional or multiple liposuction procedures. We believe that potential ATGRAFT™ uses and procedures
include breast reconstruction, layered augmentation, buttocks enhancement or volume corrections of the hands, feet, face, neck and other
areas of the body 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 may be retrieved from cryopreservation in the future and
re-processed to create ATCELL™ our clinical grade stem cell product for use in Regenerative Medicine applications.
The fees
we charge for ATGRAFT™ tissue processing and storage range from $750 to $2,500, depending upon the volume of
tissue processed. The annual storage fees we charge are: (i) the minimum storage fee of $200 for up to 100mL of tissue, or (ii)
samples over 100mL are billed $200 plus $1 per mL. for the amount over 100mL annually. These fees may be paid by the collecting/treating
physician or the consumer. The Company believes it will earn additional fees from the physician of $100 to $500, for the thawing,
packaging and shipment of the stored samples to the physician for immediate use. The AGRAFT™ products
and services are incorporated into our pending patent application PCT/US13/44621.
We believe
the ATGRAFT™ service creates a significant revenue opportunity for the participating physician to promote additional
procedures and generate additional fees from adipose tissue (fat) collected during liposuction procedures.. The ATGRAFT™
service is designed to operate under the minimally manipulated regulations contained in both 21 CFR 1271.10 and PHS 361.
ATCELL™
Adipose Derived Stem Cells (ADSCs) – Clinically processed and characterized ADSCs created using the Company’s
proprietary Standard Operating Procedures (SOPs) and patented cell culture media. ATCELL™ is the
Company’s trademarked name for its ADSC and differentiated cell products and processing. The Company may create multiple
master and differentiated cell lines for an individual and labels them according to their characterization. (i.e. ATCELL™
(adipose derived stem cells) ATCELL-SVF™ (stromal vascular fraction), ATCELL – CH™
(differentiated chondrocytes), etc.). The personalized stem cell lines are custom created for patients desiring
to store their cells for their own use in future Regenerative Medicine applications and procedures. The Company intends to charge
fees ranging from $750 to $10,000 to process a previously stored ATGRAFT™ sample or a minimum of
$1,500 for newly collected client tissue samples requesting ATCELL™ (cellular component) processing.
Customer samples submitted for processing must utilize the CELLECTR collection system to conform to our
internal cGMP SOPs.
The Company’s
ATCELL™ cell lines are adipose derived stem cells (ADSC), cGMP processed and cultured in our patented
ACSelerate™ – SFM, and ACSelerate-LSM™ cell culture media. All tissue samples,
cells, and research materials that are made available for sale to research institutions are tested for sterility, disease, lifespan,
and population doubling rate (PDL). Cell morphology is confirmed by (i) flow cytometry and (ii) differentiation analysis using
ACSelerate™ differentiation media. All ATCELL™ lines can be further
cultured and differentiated allowing the Company to provide genetically matched clinical grade cell types. We believe this research
methodology provides opportunities for the Company’s ATCELL™ and ACSelerate™
products to become the building blocks necessary for the development of commercial applications.
The chart
below illustrates the flexibility and capabilities of our products and how they are combined to create new and differentiated
lines and their potential applications;
Master Cell
Product |
Cell
Media Used |
Resulting
Cell Type |
Potential
Applications * |
ATCELL™ |
ACSelerate
– SFM ™
(animal product free)
|
Animal
free clinical grade cultured adult stem cell lines in passages P0 to P4 |
Systemic
and chronic disease, infusion therapy, regenerative tissue technologies focused on structural and stromal tissue loss from
disease and injury throughout the body, wounds, ulcers, burns |
ATCELL™ |
ACSelerate
- LSM™
(contains 0.05% Fetal Bovine
Serum) |
Research
grade cultured adult stem cell lines in passages P0 to P4 |
Research
and Development of applications, Systemic and chronic disease, infusion therapy, regenerative tissue technologies focused
on structural and stromal tissue throughout the body |
ATCELL™ |
ACSelerate™
– CH
|
ATCELL™–
CH
(Chondrocytes) |
Cell
Morphology Assays, repair and regeneration of cartilage damage and loss resulting from degenerative disease (rheumatoid and
osteoarthritis) trauma, sports injury, etc. |
ATCELL™ |
ACSelerate™-
OB |
ATCELL™
– OB
(Osteoblasts) |
Cell
Morphology Assays, repair and regeneration of bone damage and loss due to chronic or systemic disease, trauma and sports injury |
ATCELL™ |
ACSelerate™
- AD |
ATCELL™_
AD
(Adipocytes) |
Cell
Morphology Assays, repair and regeneration of stromal and adipose tissue loss from disease, injury, trauma, surgical procedures,
lumpectomy, mastectomy, radiation and chemotherapy |
ATCELL™ |
ACSelerate™
– SFM |
Autokine™
- CM |
Topical
wound healing, infusion therapies, Orthopedic, Dental and Cosmetic applications |
ATCELL
–SVF™ |
ACSelerate
– SFM ™
ACSelerate - LSM™ |
ATCELL™ |
Topical
wound healing, infusion therapies, Orthopedic, Dental and Cosmetic applications |
*
Additional information on stem cell research can be found at www.clinicaltrials.gov
and www.nih.gov (see adipose tissue, adipose derived stem
cells and mesenchymal stem cells)
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). ACSelerate™ cell culture
media is available in animal serum (FBS) free, which is suitable for human clinical and therapeutic uses; and a low serum version
(0.05% FBS) for application development and research purposes is also available.
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 (clinical) grade and FBS (research) grade. This patent
covers both non-GMP research grades and GMP clinical grades suitable for cell culture of adipose-derived stem cells intended for
use in humans. The Company has also filed a continuation of the media patent containing additional patent claims under US Serial
No. 13/194,900.
The patented ACSelerate™
cell culture media line was specifically developed to address increasing industry demand for animal serum-free cell
culture products and for the acceleration of products from the laboratory to the patient.
We believe the
ability of the Company to provide clinical grade materials for research and development collaborators, partners and other third
parties inhances the Company’s ability to become a primary source of standardized and validated clinical grade materials
and services necessary to support approved applications and treatments.
The Company manufactures several
versions of its ACSelerate™ cell culture media including:
| ● | ACSelerate-SFM™
- our flagship clinical grade, cGMP manufactured animal serum free cell culture
media, which is ideally suited for the rapid expansion of adipose-derived cell samples
for direct use or further culturing into other cell types; |
| | |
| ● | ACSelerate-LSM™
- our flagship research grade, cGMP manufactured low FBS (0.05%) cell culture
media, which is ideally suited for the rapid expansion of adipose-derived cell samples
for research and cellular application development or further culturing into other research
grade cell types; |
| | |
| ● | ACSelerate-CY™-
for differentiation of ATCELL™ into chondrocytes (ATCELL-CY™),
which are suitable for use in cartilage repair applications in knees and other joints
for patients suffering from joint injury, osteoarthritis and other diseases that cause
degeneration of joint cartilage; |
| | |
| ● | ACSelerate-OB™-
for differentiation of ATCELL™ into osteoblasts (ATCELL-OB™)
for the repair of bone injuries resulting from traumatic injury and musculoskeletal diseases; |
| | |
| ● | ACSelerate-AD™
- for differentiation of ATCELL™ into adipocytes (ATCELL-AD™)
for the repair of adipose tissue defects resulting from injury or surgical procedures
and is designed for those patients without an appropriate amount of body fat for corrective
tissue transfer procedures; |
| | |
| ● | ACSelerate-MY™-
for differentiation of ATCELL™ into myocytes (ATCELL-MY™)
for the repair of muscle tissue defects and loss as the result of traumatic injury, surgery
or systemic disease; |
| | |
| ● | ACSelerate-CP™-
a clinical grade, non-DMSO (Dimethyl Sulfoxide) cellular cryopreservation media designed
to conform to certain FDA and PHS 361 exemptions available for marketing our ATGRAFT™
service. |
| | |
| ● | ACSelerate-TR™-
a clinical grade transportation media designed for use with our CELLECT collection services
to maintain tissue viability during transport from the collection site to the processing
laboratory. |
ACS
Laboratories: An unincorporated division of American CryoStem Corporation, intended to be responsible for (1) operating
our Mount Laurel laboratory facility (2) the CELLECTR service (3) processing and storage of all ATGRAFT™
and ATCELL™ consumer samples, (4) manufacturing and distribution of all ACSelerate™ media
products (5) processing and testing products and services for professional, institutional and commercial clients and, contract
manufacturing relationships. The Company operates the division and the website www.acslaboratories.com to separate
the proposed sale of commercial and research products from its consumer products, services and website www.americancryostem.com.
ACS Laboratories
also offers services to physicians and other medical professionals that perform tissue transfer and cellular therapy services
in same day “in-office” procedures. Physicians can submit adipose tissue and cellular samples
to ACS laboratory for ATGRAFT™ processing and storage or for sterility, viability, cellular density and growth
assay analysis. The Company believes many physicians that provide their patients tissue transfer services do not have the facilities
and equipment necessary to perform tissue testing. Large diagnostic and testing laboratories do not currently offer these specialized
adipose tissue testing services.
Contract
Manufacturing:- American CryoStem’s contract manufacturing services are available for physician, corporate and biotech
customers for custom and white label products and services for incorporation into their business. We believe the Company is positioned
to develop, manufacture and license products for white label opportunities with physicians, other biotech companies, wellness clinics and spa’s.
Under an agreement with Personal Cell Sciences (“PCS”), we manufacture the key ingredient Autokine-CM™*
(autologous adipose derived conditioned medium) for PCS’ U-Autologous™* and other anti-aging
topical formulation products. Each product is genetically unique to the patient and custom blended, deriving its key ingredients
from the individual client’s own stem cells. The Company provides its CELLECTR Tissue Collection service to collect
the required tissue to manufacture the U-Autologous product and processes it under the same cGMP standard operating procedures
that it developed for the ATGRAFT™ and the ATCELL™ cell processing services utilizing ACSelerate™
cell culture media. The Company receives collection, processing and long term storage fees and earns a ongoing royalty on all U-Autologous
product sales. The utilization of the Company’s core services in its contract manufacturing relationship provides opportunities
for the Company to promote its ATGRAFT™ and ATCELL™ products for an individual’s cosmetic
purposes.
The Company
intends to expand its relationships and contract manufacturing abilities through its physician network and globally through its
proposed international licensing programs.
International
Licensing Program – The Company believes that globally, many jurisdictions outside the US currently permit use of
cellular therapies and regenerative medicine applications. The Company has received numerous inquiries concerning the sale or
licensing of our SOPs, 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 attempt to expand the Company’s sales, marketing and branding opportunities; the Company currently
markets an international licensing program.
The Company
believes it has designed the program to permit the licensing of the Company’s products and services to organizations that
meet the Company’s criteria. The Company believes, that the proposed licensing program will allow for a variety
of international business relationship including franchising, partnering and joint venturing.
Our licensing program is broken down
into four operating modules corresponding to our CELLECTR, ATGRAFT™, ATCELL™
and Contract Manufacturing services. Our proposed international development program offers the opportunity for further
development and establishing a global footprint of American CryoStem’s laboratory services and
patented products. The platform allows for the Company’s laboratory services, technology and products to become
the core platform to implement cellular therapies and regenerative medicine in licensed territories globally.
On June 25,
2014, the Company entered into an agreement with Health Innovative Technology Corporation Limited, Hong Kong (“HIT”)
for the licensing of our ATGRAFT tissue storage product. Pursuant to the terms of the Agreement, American CryoStem has licensed
to HIT the exclusive rights to utilize the Company’s Standard Operating Procedures (SOP’s) to create and market the
Company’s ATGRAFT™ tissue storage service in Hong Kong. The financial terms call for annual minimum licensing payments
for a period of three years as well as additional royalty payments based on gross revenue. HIT will also purchase CRYO’s
ACSelerate™ storage media and other products necessary for clinical collection, processing and storage of Adipose Tissue.
Upon execution CRYO received the initial payment of the minimum annual licensing fee with the balance of first year licensing
payments due prior to full commercial launch of the ATGRAFT™ service in Hong Kong. HIT currently operates a cord blood,
cellular processing and banking platform and, offers comprehensive healthcare solutions to clients in Hong Kong.
Product Development
Our strategic
approach to product development is to design, develop and launch new products and services that utilize or incorporate our existing
products and services. Management believes that this approach will provide the Company with opportunities to produce near term
cash flow, strong recurring revenue streams, strong international licensing partners and complementary scientific data. We focus
on developing products, services and applications that require tissue collection and processing as the initial requirement to
produce cellular therapies and products. These products and services can include adipose tissue and stem cell sample processing
and storage as a form of personal “bio-insurance”, adipose tissue (fat) storage for cosmetic
fat engraftment procedures, and the creation and production of topical applications and ingredients used by other companies in
the wound care and cosmetic industries as well as cellular application and bio-materials development.
We intend to
focus our efforts on the expansion of our product and service pipelines based upon our intellectual property portfolio, collaborative
development relationships, product sales and distribution, and international licensing and partnering opportunities. Our current
activities include supporting our university and industry collaborations by providing our products and services with the expectation
that our products and services become the basis for new adipose tissue and stem cell based Regenerative Medicine and cellular
therapy applications. We believe this strategy allows for our current and proposed research partners and their application development
to begin with standardized, clinically harvested and processed adipose tissue and ADSCs (ATCELL™), which we believe
will be a significant step toward accelerating the development and approval of new treatments.
Collaboration
and Partnering Opportunities
UHV
Technologies, nanoRANCH
On May
1st, 2014, the Company entered into a Material Transfer Agreement with the nanoRANCH division of UHV Technologies under
which we delivered research grade ATCELLs and ACSelerate – SFM cell culture medium for scientific study and use in a novel
technology for delivering cancer and other drugs utilizing adipose derived stem cells. The project is being managed jointly by
Dr. Michael Moeller our Chief Scientist and Dr. Dan Dimitrijevich from nanoRANCH. The Company believes that new intellectual property,
scientific publications and ultimately commercial applications may result from the ongoing scientific collaboration.
Protein
Genomics and Formation of Autogenesis Corporation
In
2012, American CryoStem entered into a Memorandum of Understanding (MOU) outlining our initial collaborative efforts with Protein
Genomics, Inc. (PGen) to test and develop new products by combining certain components of our respective intellectual property
and patented products into a new wound covering application, the “Living Bandage”. We have provided
PGen and its research partner, Development Engineering Sciences (DES), with adipose derived stem cells (ATCELL™)
and our patented cell culture mediums (ACSelerate™) for testing with
PGen’s patented products designed for the wound healing market. Research and development has been ongoing since
late 2012 and we believe notable progress has been achieved. As a result of the success realized in the early stage of
this research collaboration, we entered into a formal joint venture with PGen through the incorporation of Autogenesis, Corp.
as required in the 2012 MOU. Each company (CRYO and PGen) initially has an equal ownership interest. The products being commercialized,
utilizing the combined technology, as well as any new intellectual property resulting from the ongoing scientific collaboration
will be wholly-owned by Autogenesis. Autogenesis has completed an initial proof of concept
animal study to assess the safety and efficacy of the combined technologies. Autogenesis is planning additional animal studies
designed to initiate the FDA application process for the wound covering products.
Rutgers
University
In
May of 2013, American CryoStem entered into Material Transfer Agreements with three research scientists at Rutgers University
allowing them to utilize the Company’s autologous adipose derived stem cells (ATCELL™) and patented, FBS
serum free, cGMP grade cell culture and differentiation mediums (ACSelerate™) for evaluation with the anticipation
to implement additional agreements to research, develop and commercialize innovative new cellular therapies targeting incurable
diseases, neurological disorders and the $5 billion global wound care market.
On
April 9, 2014 the Company filed its first jointly-owned patent application with its research partners at Rutgers University titled, “Nanoparticle-Mediated
Synthetic Transcription Factor for Enhanced Gene Regulation and Cell Differentiation.”
In
December of 2013, American CryoStem and Rutgers University executed a Collaboration and Research Agreement involving
stem cell differentiation molecules and molecular biological reagents under the direction and supervision of Dr. KiBum Lee, the
PRINCIPAL INVESTIGATOR (PI) for the research. We believe our collaborative efforts have advanced
rapidly and new intellectual property will result from this work. Based on the collaborative efforts under the Collaboration and
Research Agreement, our Company’s patent counsel is preparing additional patent applications based upon earlier developments
which are now optioned to American CryoStem. In addition, American CryoStem’s agreement with Rutgers University allows us
the use of intellectual property and biomaterials developed by Dr. Lee and his team in combination with our ATCELL™ and ACSelerate™ products
for the development of new cellular therapies and regenerative medicine applications. To support the new discoveries, Dr.
Lee and our professionals intends to develop file and publish patent applications, research papers, government and private grant
funding applications to support future clinical studies as appropriate.
University
of Washington
The
Company has entered into a Non-Disclosure and a Material Transfer Agreement with the University of Washington under which the
Company has delivered its ACSelerate media products. The Company and Dr. Gao have agreed to focus on the expansion of the use
of the ACSelerate media on alternative cells and tissues as well as improvement in the formulation to extend shelf life of the
products and improve their general use.
University
of Miami
The
Company has entered into a Non-Disclosure and a Material Transfer Agreement with the University of Miami under which the Company
has delivered its ATCELL and ACSelerate products. The Company and Dr. Sharon Elliott have agreed to focus on the use of ATCELLs
and ACSelerate media for the development of novel cellular therapies as alternatives to the use of bone marrow and other adult
stem cells that have been more difficult to culture.
Institutional
Review Board Approval of Protocols
In
an effort to make it easier for other physicians and researchers to study the safety of adipose derived stem cells ADSCs and stromal
vascular fraction (SVF), we sought approval from the Institutional Review Board (“IRB”) of the International
Cell Surgical Society (“ICSS”) of our protocols for the processing of ATCELL-SVF™
and culturing of stem cells from adipose tissue ATCELL™.
The two protocols, titled: Autologous Adipose Tissue-Derived Stromal Vascular Fraction (SVF) Containing Adult Stem
Cells with Isolation of SVF, and Culturing of Adipose Derived Stem Cells (ADSCs) For Use in Institutional Review
Board Studies, provide appropriate processing, storage and testing methods necessary to move the clinical investigative
process towards uniform treatments. The collection of cGMP processing and outcome data from IRB approved protocols is required
by prevailing FDA regulations and guidance for approval of regenerative cellular therapies including at a minimum, potency (cell
count), contamination testing and cell viability data.
We
believe the ICSS IRB thoroughly evaluated every step of our Standard Operating Procedures (“SOPs”),
which serve to isolate the SVF or ADSCs from a patient’s adipose tissue. The objective of the IRB was to assess these protocols
to ensure the highest patient safety possible and appropriate data reporting and collection and, to minimize the risks for individuals
participating in innovative research and investigational studies. In 2013, the ICSS IRB approved protocols for an additional IRB
reviewed study titled, “Comparative Viability Assessment of Human Adipose Tissue Before and After Cryopreservation”.
The new study was developed and submitted to support a pending clinical study of our ATGRAFT™
products and services and the development of publications in support of our patented
technologies and product marketing efforts.
The
Company is making available its processing services utilizing the IRB-approved protocols to physicians and clinical researchers
for inclusion in their studies. By adopting these standardized and repeatable protocols (SOPs) and utilizing our laboratory services,
researchers can focus their resources on application development rather than creating, validating and managing a clinical laboratory
for the preliminary processing of tissue and cellular samples.
Management intends to utilize its existing and future IRB approvals to support collaborative and partnering opportunities as a strategic
method to advance its scientific study of our patented products, services, technologies and expertise in the clinical processing of adult
adipose tissue and ADSCs.
Regulatory
Information
The Company’s
believes that its methods, testing and facilities are in compliance with all current Good Manufacturing
Practices (cGMP) and current Good Tissue Practices (cGTP) as defined by the United States Public Health Service Act (“PHS”
or the “PHS Act”) and the Food and Drug Administration (FDA) regulations as they relate to the operation
of a tissue processing and storage facility.
The Company’s
Mount Laurel facility is registered with the FDA (FEI 3008307548) as a processing and storage facility for Human Cells, Tissues
and Cellular and Tissue Based Products (HCT/Ps) since 2010. In 2013 The Company further registered the facility as a tissue bank
with the State of New York (CP169TP136) and The State of California (CNC80948). These state registrations required the submission
of our Standard Operating Procedures (SOPs) for review by the respective state Health Departments. Annual updates are required
to maintain the tissue bank registrations. In addition we have discussed our operations with the State of New Jersey Health Department
and Department of Environmental Protection (NJDEP) to ascertain whether we are subject to any special regulations thereunder.
Based upon these discussions, and our use of a registered medical waste disposal company, we believe we do not at this time have
any special requirements for compliance with the State of New Jersey regulations.
The Company also is required
to comply with a significant body of FDA and PHS regulation, including, but not limited to, regulations governing our SOPs which
we have developed and reviewed with our FDA consultants.
We believe our
SOPs are the key to proper operation of a clinical tissue processing facility. To produce what the company believes are the highest
quality products, processing tools and services we also incorporated into our SOPs portions of certain accreditation guidelines
published by the American Association of Blood Banks (AABB), The American Association of Tissue Banks (AATB) and the Foundation
for the Accreditation of Cellular Therapy (FACT-JACIE).
Intellectual Property
Patents
From its very
early stages, part of the Company’s strategy has been to develop intellectual property and protect such intellectual property.
One of the reasons we are developing our IP portfolio is to attempt to ensure and enhance our business flexibility and allow us
to gain favorable terms in potential future collaborative efforts with third parties. Our intellectual property portfolio currently
includes one issued U.S. patent (No. 7989205, Cell Culture Media Kits and Methods of Use); and the pending patent applications
detailed in the following chart:
PATENT
TITLE |
USE
OF PATENT |
APPLICATION
# |
A
Business Method for “Collection, Cryogenic Storage and Distribution of a Biological Sample Material” |
Company
Core Tissue Collection Processing and Storage Methodology |
U.S.
Serial No. 13/702,304 filed June 6, 2011, and claiming a priority date of June 7, 2010 from provisional application 61/352,217 |
Systems
and Methods for “The Digestion of Adipose Tissue Samples Obtained From a Client for Cryopreservation” |
Adipose
Tissue Digestion Laboratory Processing Methods |
U.S.
Serial No. 13/646,647 filed October 5, 2012, and claiming a priority date of October 6, 2011 from provisional application
61/544,103 |
Compositions
and Methods for “Collecting, Washing, Cyroprocessing, Recovering and Return of Lipoaspirate to Physicians for Autologous
Adipose Transfer Procedures” |
Company
Adipose Tissue Storage Platform for Cosmetic Procedures |
PCT/US13/44621
Filed June 6, 2013 and claiming a priority date of June 7, 2012
|
Stem
Cell-Based Therapeutic Devices and Methods |
Combining
ADRCs with Biomaterials for healing and tissue growth |
U.
S. Serial No. 14/196,414 filed March 4, 2014 and claiming a priority date from provisional
application 61/773,112 filed March 10, 2013 |
Autologous
Serum for Transport of Isolated Stromal Vascular Fraction or Adipose Derived Stem Cells |
Utilization
of Autologous Blood Components for the Transport of Adipose Derived Cells to a Patient |
U.S. Serial No. 14,250,338 and
claiming a priority date from provisional application 61/810,970 filed April 11, 2013 |
Cell
Culture Media, Kits, and Methods of Use |
Continuation
of U.S. Serial No. 11/542,863, includes Optimized and improvements to Media Formulations |
U.S.
Serial No. 13/194,900 |
Additionally
the Company has licensed the following intellectual property under its collaborations with Rutgers and Protein Genomics, Inc (Autogenesis
Corporation).
PATENT
TITLE |
USE
OF PATENT |
APPLICATION
# |
Nanoparticle-Mediated
Synthetic Transcription Factor from Enhanced Gene Expression and Cell Differentiation |
Rutgers
collaboration and R&D |
Rutgers
Docket Number 20113-013
USPTO Provisional Filing#
61/947,898
(Jointly owned with Rutgers) |
Direct
Stamping-Assisted Graphene Oxide Patterned Substrates for Controlling Adipose Derived Adult Stem Cell Differentiation |
Rutgers
collaboration and R&D |
Rutgers
Docket Number 2014-024 |
Single
Vehicular Delivery of siRNA and Small Molecules to Control Stem Cell Differentiation |
Rutgers
collaboration and R&D |
Docket
Number 2014-034 |
Devices
and Methods to Guide Stem Cell Differentiation Using Graphene-Nanofiber Hybrid Scaffold |
Rutgers
collaboration and R&D |
US
Provisional Filing No. 61/978,177 |
Cosmetic
compositions including tropoelastin isomorphs |
Protein
Genomics and American CryoStem (Autogenesis) collaboration |
USPTO
#5,726,040 |
Cosmetic
compositions |
Protein
Genomics and American CryoStem (Autogenesis) collaboration |
USPTO
#6,451,326 |
Recombinant
hair treatment compositions |
Protein
Genomics and American CryoStem (Autogenesis) collaboration |
USPTO
#6,572,845 |
Wound
healing compositions and methods using tropoelastin and lysyl oxidase |
Protein
Genomics and American CryoStem (Autogenesis) collaboration |
USPTO:
#6,808,707 |
Business
methods, processes and systems for collection, cryogenic storage and distribution of cosmetic formulations from an obtained
stem cell based biological |
Personal
Cell Sciences and American CryoStem collaboration |
USPTO
application #61/588,841 |
Trademarks
In addition
to our patents, the Company has registered the following trademarks with the U.S. Patent and Trademark Office: American CryoStem®
(Registration No. 4189056) and CELLECT® (Registration No. 4278333). We plan to file for
registration trademarks for our future products, slogans and themes to be used in our marketing initiatives, including, for example,
ATGRAFT™, ACSelerate SFM™; ACSelerate LSM™; and ATCELL™.
Marketing and Distribution
A key objective
of our marketing strategy is to position American CryoStem in the market as the “Gold Standard” for adipose tissue
collection, cellular processing, cell storage, cellular expansion, therapeutic applications, and, research and commercial
uses of adipose tissue within the current regulatory framework. The combination of a direct sales approach, supported by
continuous internal and external marketing programs will be closely coordinated with the expansion of our laboratory processing
capabilities. We intend to employ both print advertising and social media sales campaigns. In addition, we plan 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 and collaborate with us.
We have also
initiated a direct marketing program focused on reaching plastic and cosmetic surgeons and have an initial group of providers
that have begun to offer our services to their patients. This marketing initiative has been implemented using a direct sales approach.
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, when
capital is available provides for a comprehensive marketing approach focused on identifying and supplying end users with samples
of our cellular based products and services. The essence of this targeted strategy, capital permitting is to accelerate the adoption
curve of our products and services within the academic and scientific communities. In the future we plan to utilize outside sales
organizations to further increase the distribution of our products and services.
Development of U.S. Markets
Physician
Network
The Company
continues to continue to develop relationships to leverage our products and services through existing cosmetic surgery and regenerative
medicine practices while at the same time growing its current efforts to develop and expand its network of individual physicians and surgeons
seeking to adopt the Company’s products and services. These efforts are currently focused on surgeons performing liposuction,
tissue transfer or regenerative procedures involving the use of adipose tissue. The Company intends to expand its efforts to non-cosmetic
medical professionals interested in Regenerative Medicine applications utilizing ADSCs to 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.
The Stern
Center
During our first
fiscal quarter ended December 31, 2012, we announced the initiation of adult stem cell and adipose tissue collection at the Stern
Center for Aesthetic Surgery in Bellevue Washington. Dr. Frederick Stern, a member of the Company’s Scientific and Medical
Advisory Board, founded the Stem Center in 1997. The Stern Center offers state-of-the-art laser and cosmetic surgical techniques
to patients throughout the western U.S., and is one of the premier laser-assisted liposuction centers in the Pacific Northwest.
Dr. Park Avenue
In September
2013, we announced the opening of three new adipose tissue collection centers at Dr. Park Avenue’s New Jersey locations.
Dr. Park Avenue is a leading provider of aesthetic and cosmetic services in the Tri-State
area with locations in Brick Township, Franklin Lakes and Hoboken, New Jersey. Dr. Park Avenue’s newest center, located
in Hoboken, held its grand opening in late September; in conjunction with the opening, Dr. Park Avenue formally introduced our
ATGRAFT™ service for patients interested in fat grafting as an alternative to artificial fillers by using
their own stored fat tissue to undergo transfer procedures to the face, hands, breast and buttocks.
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 in Mount Laurel, New Jersey
at the Burlington County College Science Incubator located on the Burlington County College campus. Our laboratory website address
is www.acslaboratories.com.
Going Concern
As of the date
of this quarterly 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 business.
We have suffered
recurring losses from operations since our inception. In addition, we have yet to generate sufficient internal cash flow from
our business operations or successfully raise the financing required to fully develop 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 and services. Our continued existence is dependent
upon our ability to resolve our liquidity problems and increase 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.
Liquidity
and Capital Resources
We had a cash
balance of $31,759 as of the date of this quarterly report. Our principal source of funds has been sales of our securities. Should
we be unable to raise sufficient funds, we will be required to curtail our operating plans if not 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.
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 twelve (12) to
twenty-four (24) months. We have minimal long term debt and have been able to meet our past financial obligations.
In order to
finance further market development with the associated expansion of operational capabilities for the time period discussed above
we are planning additional fundraising through the sale of our equity and debt securities 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.
We expended
$55,382 during the three months ended June 30, 2014 in professional fees (legal, accounting and consultants) and $105,745 in Research
and Development.
Commitments
As of the date
of this quarterly report, the Company’s material capital commitments were (i) the continued funding of the expansion of
our marketing efforts and laboratory processing capabilities; (ii) an equipment lease in the amount of $16,147 for laboratory
equipment with monthly payments of $1,869.74 and the final payment due March 2015; and (iii) the current two-year lease for the
laboratory spaces at the Burlington County College Science Incubator, Laboratory 110 and 108, which was renewed for an additional
three year period on February1, 2014 and is subject to a monthly payment of $3,300.
The Company
has an operating lease for its main office facility located at 1 Meridian Road, Eatontown, New Jersey 07724. The lease is for
a term of three years with a monthly rent of $2,650. The total rent for office facilities for the three months ended June 30,
2014 was $7,950.
The Company
has unsecured liabilities without interest of $137,447 due to ACS Global, the majority shareholder of the Company, for certain
prepaid expenses made by ACS Global prior to the closing of the transaction. There is no due date associated with this liability.
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.
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. We periodically evaluate these estimates and assumptions based on the most recently available information, our
own historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from
other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ
from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We
believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our
financial statements.
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.
Fair Value
of Financial Instruments
Our financial
instruments consist of cash and cash equivalents. The fair value of cash and cash equivalents approximates the recorded amounts
because of the liquidity and short-term nature of these items.
Recent Accounting
Pronouncements
We have reviewed
all recently issued, but not yet effective, accounting pronouncements and do not believe that any future adoption of such pronouncements
will have a material impact on our financial condition or the results of our operations.
ITEM
3. |
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Not Applicable
ITEM
4. |
CONTROLS
AND PROCEDURES |
Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures
We maintain
disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports
is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that
such information is accumulated and communicated to our management, including our Chief Executive Officer and our Treasurer, as
appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment
in evaluating the cost-benefit relationship of possible controls and procedures.
As of June 30,
2014, our Chief Executive Officer and Treasurer evaluated the effectiveness of our disclosure controls and procedures (as defined
in Rule 13a-15(e) under the Securities Exchange Act). Based on such evaluation, our Chief Executive Officer and Treasurer concluded
that our disclosure controls and procedures were effective as of June 30, 2014.
Changes in
Internal Control over Financial Reporting
Our management
has evaluated whether any change in our internal control over financial reporting occurred during the last fiscal quarter. Based
on that evaluation, management concluded that there has been no change in our internal control over financial reporting during
the relevant period that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
PART II - OTHER INFORMATION
ITEM
1. |
LEGAL
PROCEEDINGS |
From time to time we may become
party to litigation or other legal proceedings that we consider to be a part of the ordinary course of business. We are not currently
involved in legal proceedings that we believe could reasonably be expected to have a material adverse effect on our business,
prospects, financial condition or results of operations.
Not applicable.
ITEM
2. |
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
During the nine months ended
June 30, 2014, the Company issued $129,500 of convertible notes. The convertible notes have an exercise price of $0.35 per share
of common stock and mature in September 2014. During the nine months ended June 30, 2014, convertible notes of $134,750 were converted
to common stock. There are $185,500 of convertible notes, all of which are convertible
at $0.35 per share, outstanding as of the date of this report.
During the nine
months ended June 30, 2013, the Company issued a principal amount of $506,000 of 8% Notes. The Notes are due one year from their
date of issuance. In addition each purchaser of the Notes received an option to purchase one share of the Company’s common
stock at $0.5 per share for each dollar of principal. The Company issued options to purchase 506,000 common shares to the note
holders. The options expire one year from the date the note is repaid.
During the nine months ended June
30, 2014, the Company issued 170,000 shares of common stock in connection with the exercise of stock options for $24,500.
ITEM
3. |
DEFAULTS
UPON SENIOR SECURITIES |
None
ITEM 4. |
MINE SAFETY DISCLOSURES |
Not Applicable
ITEM 5. |
OTHER INFORMATION |
None
(a) Exhibits
furnished as Exhibits hereto:
Exhibit
No. |
Description |
|
|
31.1 |
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 |
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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.
|
AMERICAN CRYOSTEM CORPORATION
|
|
|
|
August
19, 2014 |
By: |
/s/
John Arnone |
|
|
John
Arnone, Chief Executive Officer |
|
|
(Principal
Executive Officer)
|
|
|
|
August
19, 2014 |
By: |
/s/
Anthony Dudzinski |
|
|
Anthony
Dudzinski, Treasurer |
|
|
(Principal
Financial Officer) |
EXHIBIT 31.1
CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT
TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 302 OF
THE
SARBANES-OXLEY ACT OF 2002
I, John
Arnone, certify that:
1. |
I
have reviewed this Form 10-Q of American CryoStem Corporation; |
|
|
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
|
|
3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
present in this report; |
|
|
4. |
Along
with the Principal Accounting Officer, I am responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
|
|
a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and |
|
|
|
|
d) |
Disclosed
in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
|
|
|
5. |
I
have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
|
|
|
a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
b) |
Any
fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Dated: August 19,
2014 |
By: |
/s/
John Arnone |
|
|
|
John
Arnone |
|
|
|
Principal Executive
Officer
American CryoStem
Corporation |
|
EXHIBIT 31.2
CERTIFICATION
OF PRINCIPAL ACCOUNTING OFFICER
PURSUANT
TO18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 302 OF
THE
SARBANES-OXLEY ACT OF 2002
I, Anthony
Dudzinski, certify that:
1. |
I
have reviewed this Form 10-Q of American CryoStem Corporation; |
|
|
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
|
|
3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
present in this report; |
|
|
4. |
Along
with the Principal Executive Officer, I am responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and |
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d) |
Disclosed
in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
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5. |
I
have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
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b) |
Any
fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Dated: August 19,
2014 |
By: |
/s/
Anthony Dudzinski |
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Anthony
Dudzinski |
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Principal Accounting
Officer
American CryoStem
Corporation |
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EXHIBIT 32.1
CERTIFICATION
PURSUANT TO
18 U.S.C.
SECTION 1350,
AS ADOPTED
PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY
ACT OF 2002
In
connection with this Quarterly Report of American CryoStem Corporation (the “Company”), on Form 10-Q for the
quarter ended June 30, 2014, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, John
Arnone, Chief Executive Officer of the registrant and Anthony Dudzinski, Treasurer of the registrant, certify to the best of
my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002,
that:
| (1) | Such Quarterly Report on
Form 10-Q for the quarter ended June 30, 2014 fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and |
| (2) | The information contained
in such Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 fairly presents, in all material respects, the financial
condition and results of operations of the Company. |
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Dated: August
19, 2014 |
By: |
/s/
John Arnone |
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John
Arnone |
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Chief Executive Officer
American CryoStem Corporation |
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Dated:
August 19, 2014 |
By: |
/s/
Anthony Dudzinski |
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Anthony
Dudzinski |
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Treasurer
American CryoStem Corporation |
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