This annual report on Form 10-K and other reports filed by American CryoStem Corporation (the "Company") from time to time with the U.S. Securities and Exchange Commission (the "SEC") contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company's management as well as estimates and assumptions made by Company's management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or the negative of these terms and similar expressions as they relate to the Company or the Company's management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the "Risk Factors" section of the this Annual Report on Form 10-K., relating to the Company's industry, the Company's operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.



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Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.





Background

We were incorporated in the State of Nevada on March 13, 2009. On April 20, 2011, we acquired, through our wholly owned subsidiary American CryoStem Acquisition Corporation, substantially all of the assets from, and assumed substantially all of the liabilities of, ACS Global, Inc. ("ACS") in exchange for our issuance of 21,000,000 shares of our common stock, par value $0.001 per share, to ACS (the "Asset Purchase"). We filed a Current Report on Form 8-K with the Securities and Exchange Commission on April 27, 2011 disclosing the Asset Purchase and certain related matters including, but not limited to, the appointment of our present officers and directors as well as the resignation by the former chief executive officer and sole director. Our fiscal year ends September 30 of each calendar year.





Overview

American CryoStem Corporation, which we refer to as "we," "us," "our" and "our Company," is a developer, marketer and global licensor of patented adipose tissue-based cellular technologies and related proprietary services with a focus on processing, commercial bio-banking and application development for adipose (fat) tissue and autologous adipose-derived regenerative cells (ADRCs). We maintain a strategic portfolio of intellectual property and patent applications that form our Adipose Tissue Processing Platform, which supports and promotes a growing pipeline of biologic products and processes, services and international licensing opportunities. Through our ACS Laboratories division, we operate an FDA registered, human tissue processing, cryopreservation, and cell culture and differentiation media development facility in Monmouth Junction, New Jersey.

Our growth strategy is centered on expanding our research and development through scientific collaborations to fully capitalize on (1) scientific breakthroughs that have been rapidly shaping the fast growing Regenerative and Personalized Medicine industries; (2) to provide these growth industries with a standardized cell processing platform and, (3) to enhance the delivery of healthcare through cellular-based therapies and applications which address disease treatment, wound and burn healing, joint repair and management, and personalized health and beauty care.

Through our ACS Laboratories division, our Company operates its FDA registered, human tissue processing, cryopreservation and cell culture and differentiation media development facility in Monmouth Junction, New Jersey. On a mission to fulfill the pressing need to set a global gold standard for end-to-end collection, processing, tracking and storage, American CryoStem has spent nearly eight years designing and constructing the necessary framework capable of replicating its protocols in markets around the world.

American CryoStem continues to focus on expanding and securing additional licensing arrangements with qualified partners around the world to institute and operate its turnkey laboratories that are properly equipped for processing and storing adipose tissue and ADSCs for use in Regenerative and Personalized Medicine applications.



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Cash Requirements

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

In order to move our Company through its next critical growth phase of development and commercialization and to ensure we are in position to support our research collaborations and market penetration strategies, Management continues to seek new investment into the Company from existing and new investors with particular emphasis on identifying the best deal structure to attract and retain meaningful capital sponsorship from both the retail and institutional investing communities, while limiting dilution to our current shareholders. Management also focuses its efforts on increasing sales and licensing revenue and reducing expenses. On May 11, 2018 the Company entered into an agreement with Gramatan LLC under which Gramatan will provide the Company with advisory services and assistance with business and strategic development and raising additional capital. The Company terminated the agreement on January 14, 2019.





Fiscal 2019 Operations

In Fiscal 2019, The Company's Total Revenue decreased to $321,647 versus $1,103,417 in Fiscal 2018, due mainly to ceasing shipment of our ATCELL product in the US. Accounts Receivable increased to $330,154 in Fiscal 2019 from $217,318 in Fiscal 2018 due to increased fees receivable from International Licensees. In 2019 Licensing Fees and Royalties decreased to $44,757 from $449,019 in Fiscal 2018. Consulting Fees increased to $225,000 in Fiscal 2019 from $75,000 in 2018. Short term liabilities increased to $1,292,206 in Fiscal 2019 from $1,112,110 in Fiscal 2018 due to increases in liabilities to contractors, consultants and professionals along with debt discounts maturing and long term debt becoming current. Long term debt increased to $1,239,716 in 2019 from $854,761 in 2018. Cost of Sales decreased to $31,876 in Fiscal 2019 from $296,992 in Fiscal 2018 due to reduced processing activities associated with ATCELL™. The Company saw a decrease in professional fees to $101,619 in Fiscal 2019 from $171,536 in Fiscal 2018. Research and Development decreased to $224,792 in 2019 from $341,516 in 2018 due to completion of certain activities associated with laboratory remediation, validation, and IND preparation expenses associated with the Company's ATCELL™ product.

Going Concern

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

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

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



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Liquidity and Capital Resources

As of the fiscal year ended September 30, 2019, the Company had a cash balance of $23,800 and accounts receivable of $330,154. Our sources of funds in 2019 were tissue processing and storage fees, international product sales, consulting and licensing fees, and financing activities. In Fiscal 2019, we used $496,957 of net cash for Operations, and $49,902 in investment activities, including Patent Development, and the purchase of Laboratory equipment and furniture associated with the ongoing upgrade of our Monmouth Junction, NJ facility. Additionally, the Company generated $502,339 from financing activities, which included option exercises, issuance of convertible notes, issuance of common stock and an infusion of capital from an affiliate. The Company also paid down a portion of its Capital Lease.

The Company will continue to focus on its financing and investment activities but should we be unable to raise sufficient funds, we will be required to curtail our operating plans 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.

There was no significant impact on the Company's operations as a result of inflation for the fiscal year ended September 30, 2019.

Off Balance Sheet Arrangements

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





Critical Accounting Policies

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

Related Party Transactions

The Company was indebted to a company that is majority owned by the Company's two officers in the amount of $205,355 for Fiscal 2019 and $107,189 for Fiscal 2018. The advances are unsecured, and carry no interest rate and are collectible at the discretion of the company's two officers/directors. The officers/directors do not anticipate collecting this in Fiscal 2020.

The Company was indebted to a company that is wholly owned by the Company's Chief Executive Officer $3,080 for Fiscal 2019 and $1,831 for Fiscal 2018. The advances are unsecured, carry no interest rate and are collectible at the discretion of the company's two officers/directors. The balance due at September 30, 2019 has been paid in full.

The Company was indebted to the Company's Chief Executive Officer in the amount of $5,165 for Fiscal 2019. The advances are unsecured, and carry no interest rate and are collectible at the discretion of the company's two officers/directors. The balance due at September 30, 2019 of $5,165 was paid in full in Fiscal 2020.

The company paid Mr. Arnone consulting fees of $5,000 in Fiscal 2019 and $59,500 in Fiscal 2018. The company paid Mr. Dudzinski consulting fees of $5,000 in Fiscal 2019 and $59,500 in Fiscal 2018.

The advances are determined by actual cash received by the Company, are due on demand, are unsecured, and carry no interest rate.

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