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.

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.



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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 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.





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.



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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.





Fiscal 2020 Operations

In Fiscal 2020, the Company's Total Revenue increased to $557,903 from $321,647 in Fiscal 2019, due to a discontinuation of the moratorium on billing of fees to Baoxin. Accounts Receivable increased to $500,000 in Fiscal 2020 from $330,154 in Fiscal 2019 due to increased fees receivable from International Licensees. In Fiscal 2020 Consulting Fees, Licensing Fees and Royalties increased to $523,333 from $269,757 in Fiscal 2019. Short term liabilities decreased to $1,049,634 in Fiscal 2020 from $1,292,206 in Fiscal 2019 due to reduction of liabilities to contractors, consultants and professionals. Long term debt decreased to $848,414 in 2020 from $1,239,716 in 2019; due to movement of convertible debt from long term to current, payment of accrued salary and pay down of debt to the parent company. Cost of Sales increased to $43,837 in Fiscal 2020 from $31,876 in Fiscal 2019. Research and Development decreased to $19,176 in 2020 from $224,792 in 2019, since the company reduced its labor force and research and development contractors in response to the COVID-19 pandemic. Laboratory Expense was reduced to $74,093 in Fiscal 2020 from $156,512, due to reduction in activity, staffing and facilities required. Stock Compensation increased to $417,542 in Fiscal 2020 from $125,403, primarily due to stock options granted. Bad Debt Expense increased to $326,650 in Fiscal 2020 from $10,935 in Fiscal 2019. Management increased its allowance for Bad Debt by $326,650. The majority of the increase in Bad Debt Allowance was caused by Management's concern for its International Partner, Baoxin's ability to pay caused by the COVID-19 Pandemic. General and Administrative Expenses were reduced to $439,577 in Fiscal 2020 from $587,791 in Fiscal 2019, since the company reduced payroll and consultants costs.

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.

Liquidity and Capital Resources

As of the fiscal year ended September 30, 2020, the Company had a cash balance of $41,760 and accounts receivable of $500,000. Our sources of funds in 2020 were tissue processing and storage fees, international product sales, consulting and licensing fees, and financing activities. In Fiscal 2020, we used $514,648 of net cash for Operations, and $12,731 for investment activities, including Patent Development, and the purchase of computer equipment at the corporate office. Additionally, the Company generated $545,339 from financing activities, which included option exercises, issuance of convertible notes, issuance of common stock and proceeds from the PPP Loan. The Company also paid down a portion of its Finance Lease and debt to its parent company.



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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, 2020.

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. See Note 1 and Note 3 of the Financial Statements for additional information.





Basis of Presentation

Our financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States 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.



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Recent Accounting Pronouncements

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

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 which requires lessees to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months; and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 and additional ASUs are now codified as Accounting Standards Codification Standard ("ASC") 842 - Leases ("ASC 842"). The Company adopted ASC 842 on October 1, 2019 and used the modified retrospective transition approach and did not restate its comparative periods. As of the date of implementation on October 1, 2019, the impact of the adoption of ASC 842 resulted in the recognition of a Finance Lease Right-of-Use-Asset and an Operating Lease Right-of-use-Asset and corresponding Lease Liability Obligations on the Company's consolidated balance sheets. The Company elected to not recognize lease assets and lease liabilities for leases with an initial term of 12 months or less.

As the Right of use asset and the corresponding Lease Liability obligation were the same upon adoption of ASC 842, there was no cumulative effect impact on the Company's accumulated deficit. Since the Equipment Asset related to the Capital Lease and the Finance Lease Asset established had different values, the Company recorded a cumulative effect modification on October 31, 2019 by a reducing equity (increasing the accumulated deficit) by $41,804.

In November 2018, the FASB issued ASU 2018-18, Clarifying the Interaction between Topic 808 and Topic 606. This new ASU applies to companies that have collaborative arrangements, or agreements that involve two parties that actively participate in a joint operating activity. We believe our contract with Baoxin falls under the collaborative arrangements guidance in (ASC 808). ASU 2018-18 is effective for public companies for years beginning after December 15, 2019. The Company plans to implement ASU 2018-18 in Fiscal 2021 and is currently assessing the impact on its contracts.





Related Party Transactions.

At September 30, 2020, the Company was indebted to a company that is majority owned by the Company's two chief executive officers for $99,125.

The advances are due on demand, are unsecured, and carry no interest rate.

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