cash (m) bv/s $ 1.0 $ 0.01 debt (m) equity (m) $ - $ 6.2 ... · financial summary equity (m) $ 6.2...

1

D E C E M B E R 1 5 , 2 0 1 4

I N D U S T R Y :

C O M M E R C I A L S E R V I C E S - F I N A N C E

See Important Disclosures and Disclaimer on Page 24

M A Y 2 8 , 2 0 1 5

I N D U S T R Y :

B I O T E C H N O L O G Y

PharmaCyte Biotech, Inc.

(OTCQB: PMCB)

Initiation of Coverage: PMCB: Company hopes ride on

novel approach to pancreatic cancer and diabetes

PharmaCyte has the goal of becoming a pure player in the biotechnology domain.

The Company is focused on developing treatment for rare diseases with unmet

needs such as pancreatic cancer and Type 1 diabetes. Having completed Phase 1

and 2a trials for pancreatic cancer, the Company is now preparing to enter into its

2b trial phase. The Company believes that further success in clinical trials could

lead to a possible treatment for pancreatic cancer.

Cell in-a-Box® - Novel Treatment Platform

PharmaCyte is focused on developing treatment of pancreatic cancer using its Cell-

in-a-Box® technology. The Company believes it is one of the most advanced

platforms for the development of treatments for rare diseases such as pancreatic

cancer. Under this technology, living cells are packed in a capsule, which acts as a

defense against the diseases. With a life of more than two years, this encapsulation

platform is different from other similar platforms in the market that could degrade

in the body.

Flagship Potential Treatment for Pancreatic Cancer

PharmaCyte aims to develop mechanisms for the treatment of the tumor and the

symptoms associated with pancreatic cancer. Phase 1 and 2a trials were

encouraging compared to the treatment using the single-approved drug

gemcitabine as the single agent. This treatment showed a median survival time of

44 weeks compared to the 28 weeks, and the combination treatment also resulted

in a 25%-50% reduction in the tumor size in four of the 14 treated patients.

PharmaCyte has been preparing for a phase 2b trial over the last four years, with a

large sample pool of patients afflicted with advanced, inoperable pancreatic cancer.

Expected to begin by end-2015 (CY3Q15) in Australia, this trial will be multi-

centered, two-armed, and random, and the Company believes that if successful it

could be a pathway to commercial opportunities.

Received the orphan drug status

PharmaCyte’s flagship drug for the treatment of pancreatic cancer received the

orphan drug status from the US Food and Drug Administration (FDA) in

December 2014. The Company is expected to enjoy seven years of exclusive

marketing rights of this drug in the US, and could also be offered special assistance

from the FDA for the development of the treatment for pancreatic cancer, in

addition to exemptions or reduction in regulatory fees and taxes. We believe that

the orphan drug designation should speed the process of getting FDA approval

while ensuring the Company’s competitive advantage.

Valuation

The live-cell encapsulation and ifosfamide combination treatment for pancreatic

cancer, which is in its 2b trials phase, is the major catalyst for the growth of the

Company. The Company has a current market capitalization of $112.5M and

enterprise value of $111.6M versus comparable companies’ median market

capitalization of $237.4M and median enterprise value of $200.0M.

MARKET STATISTICS

Price $0.16

52-Week Range $0.10 – $0.33

Daily Vol. (3 Month Avg.) 3,391,870

Market Cap (M) $112.5

Enterprise Value (M) $111.6

Shares Outstanding (M) 707.8

Float (M) 582.2

Insider Ownership 18.0%

Institutional Ownership 0.00%

FINANCIAL SUMMARY

Equity (M) 6.2$

BV/S 0.01$

Cash (M) 1.0$

Debt (M) -$

Debt/Cap 0%

FYE: Apr 2014 2015E 2016E

(in $000)

Rev -$ -$ -$

Chng% NA NA NA

EBITDA (1,051)$ (12,520)$ (14,200)$

EPS (0.03)$ (0.02)$ (0.02)$

EV/R nm nm nm

EV/EBITDA nm nm nm

P/E nm nm nm

Dan D. Trang [email protected]

214-987-4121

COMPANY DESCRIPTION

PharmaCyte Biotech, Inc. (earlier known as Nuvilex, Inc.) is an early-stage biotech company involved in development of treatments of pancreatic cancer and diabetes using its proprietary cellulose-based live cell encapsulation technology (Cell-in-a-

Box®

). One of its subsidiaries is also

involved in the medical marijuana field. The Company entered the biotechnology sector in 2013, following the acquisition of a 14.5% stake in SG Austria and a 100% stake in Bio Blue Bird AG, which possess the worldwide licensing rights to the use of the Cell-in-

a-Box®

platform for developing

treatments for pancreatic cancer and diabetes.

mailto:[email protected]

2

E Q U I T Y R E S E A R C H S T O N E G A T E C A P I T A L P A R T N E R S

PharmaCyte Biotech, Inc. | May 28, 2015

INVESTMENT FACTORS

PharmaCyte is becoming a pure player in the biotechnology domain. The Company is focused on

developing treatment for rare diseases such as pancreatic cancer and Type 1 diabetes, both of which

present a huge unmet need. The Company plans to leverage its proprietary Cell-in-a-Box®

technology, a cell encapsulation platform to develop "targeted" treatments for cancerous tumors and

insulin-dependent diabetes. Having concluded the phase 1 and 2a trials for pancreatic cancer, the

Company is now preparing to enter into its 2b trial phase. The positive results of the phase 1 and 2a

trials could lead to a potential development of the treatment for pancreatic cancer.

Investment Positives

Cell in-a-Box® - Novel Treatment Platform

PharmaCyte is focused on developing treatment of pancreatic cancer using its Cell-in-a-Box®

technology. The Company believes it is one of the most advanced platforms for the development of

treatments for rare diseases such as pancreatic cancer. Under this technology, living cells are packed

in a capsule, which acts as a defense against the diseases. The size of these capsules can be altered

to accommodate several cells with different purposes. The standard size of such capsules is that of

the head of a pin, with a capacity to enclose approximately 10,000 cells. This encapsulation

platform is different from other similar platforms in the market. The Company encloses living cells

that have a long life of about over two years, unlike other platforms that enclose cells made up of

alginate (a seaweed derivative), agarose or chitosan, which hold the risk of degrading in the human

body.

Flagship Potential Treatment for Pancreatic Cancer

PharmaCyte aims to develop mechanisms for the treatment of the tumor and the symptoms

associated with pancreatic cancer, using the live-cell encapsulation and ifosfamide combination.

Under this treatment, the Company combines encapsulated live cells and low doses of the anticancer

prodrug ifosfamide (IFEX®). When administered in this combination, the widely-used anticancer

drug IFEX® is converted into its cancer-killing form to show the desired results in the liver. Once

the encapsulated cells are instilled into the body, low doses of ifosfamide are injected intravenously.

The blood stream carries ifosfamide to the capsule containing the cytochrome P450 expressing

cells. The capsule then releases ifosfamide in the form of a short-lived metabolite, which enters into

the pancreas and destroys the tumor cells. PharmaCyte has been preparing for a phase 2b trial over

the last four years, with a large sample pool of patients afflicted with advanced, inoperable

pancreatic cancer. Expected to begin by the end of 2015 (CY3Q15) in Australia, this trial will be

multi-centered, two-armed, and random. The Company plans to compare the results of this trial with

those derived using the gemcitabine plus Abraxane® combination and if successful, the Company

believes it could lead to possible commercial opportunities.

Received the orphan drug status

PharmaCyte’s flagship drug for the treatment of pancreatic cancer received the orphan drug status

from the US Food and Drug Administration (FDA) in December 2014. With this, the Company is

expected to enjoy seven years of exclusive marketing rights of this drug in the US. PharmaCyte

could also be offered special assistance from the FDA for the development of the treatment for

pancreatic cancer, in addition to exemptions or reduction in regulatory fees and taxes. Such status is

expected to enhance the research and development activity at PharmaCyte. The Company has also

filed an application for a similar status with the European Medicines Agency (EMA) of Europe and

the Therapeutic Goods Administration (TGA) of Australia. The Orphan drug designation is granted

to drugs and treatments for "rare" and life-threatening diseases. The US FDA defines a rare disease

as “one that is diagnosed in less than 200,000 people in the US”. Pancreatic cancer is termed as a

life-threatening condition because even with chemotherapeutic treatment, the average life of

patients in the advanced stages of this disease is no longer than a year. The five-year survival rate

among patients is below 7%. Since 2010, the US FDA has granted orphan drug status to roughly

1,100 drugs, which are in the pipeline. This status is also competitive regarding tax treatment,

marketing exclusivity, and fast track procedure for the FDA. We believe that the orphan drug

3



designation should speed the process of getting FDA approval while ensuring the Company’s

competitive advantage.

Other ongoing research With its live-cell encapsulation technology, the Company plans to conduct research for the

treatment of various diseases such as Type 1 diabetes with the Melligen cell line as a drug, and

breast cancer with Cannabinoids as treatment. The Company enjoys an exclusive world-wide

license, granted by the University of Sydney (UTS) in Australia, to use Melligen cells in the

development of the treatment for diabetes. PharmaCyte has formed a consortium of eight renowned

scientists for its research activities. The Company commenced its Tumorigenicity testing in

February 2015 to ensure the safety, efficiency, and dosage of its proprietary Melligen cell line in the

treatment of diabetes and plans to complete it by CY2Q15. Research for the treatment of breast

cancer and treatments using Cannabinoids are still under the preclinical stage.

Investment challenges / risks

Slow progress on the phase 2b trial

Since the completion of the phase 2a trial for its treatment for pancreatic cancer in June 2011, the

preparations for phase 2b trials are ongoing. Although the Company has acquired the licensing

rights of the Cell-in-a-Box® platform from SG Austria and Austrianova Singapore in June 2013, it

is highly dependent on them for further development as it does not have any in-house expertise in

the biotechnology domain. Recently, the Company announced plans to commence the phase 2b trial

by the end of 2015 in Australia. However, the surety of such plans remains doubtful, considering

that the commencement of the trial is being delayed since the last four years. Also, the Company’s

patents and licenses are set to expire in 2016 and 2017, respectively, which may trigger additional

payment for renewal.

Risk associated with drug development

A study conducted by pipelinedrugs.com reveals a 90% probability of failure in the early-stage

phase I clinical trials; a 50% probability in phase II; 20% in phase III; and 10% after that. Therefore,

although entities in their phase II and III trials appear promising, they hold a high degree of

volatility. Like other biotech companies, PharmaCyte is also prone to this risk.

Funding is crucial

PharmaCyte generates no revenues. For FY14, its net loss was financed primarily by stock issuance.

The Company reported a cash balance of $1.0M as of January 2015. PharmaCyte estimates this to

be sufficient to fund its operations for the next six months. The Company’s additional fund

requirement, thereafter, could be met through the selling of the common or preferred stock. This is

expected to result in additional dilution for common stockholders. The Company is authorized to

issue 1.49B common shares. Moreover, heavy stock dilution is already planned to fulfill previous

agreements such as that with Lincoln Park Capital and stock options granted to directors and

officers, among others.

4



VALUATION SUMMARY

PharmaCyte Biotech, along with its subsidiaries, is engaged in development of treatment related to

pancreatic cancer, Type 1 diabetes, and cancer treatment using Cannabinoids. The success of the

live-cell encapsulation and ifosfamide combination treatment for pancreatic cancer, which is in its

2b trial phase, is the major catalyst for the Company’s future performance. The Company believes

its novel therapy for pancreatic cancer has potential if the trials are successfully completed to reach

the commercial phase. The Company has been planning its phase 2b trial for the last four years and

aims to initiate it by the end of 2015. Moreover, if successful, the Cell-in-a-Box® platform can be

used in the treatment of other diseases.

Comparison Analysis

As PharmaCyte caters to multiple diseases with different therapy approaches, we have selected

multiple players to gauge the potential value of the Company. The Company has a current market

capitalization of $112.5M and enterprise value of $111.6M versus comparable companies’ median

market capitalization of $237.4M and median enterprise value of $200.0M.

Accordingly, we believe the successful completion of the phase 2b study for its combination

treatment for pancreatic cancer is expected to increase the value of PharmaCyte, going forward.

Below, we list important catalysts for the stock in CY15 and beyond:

Commencement of the phase 2b trial for the treatment for pancreatic cancer…………CY15

Commencement of the preclinical trial for the pain in pancreatic cancer……………...CY15

Completion of the second preclinical study for ascites in pancreatic cancer…………..CY15

Completion of the Tumorigenicity testing of Melligen cell line…………………CY2Q15

Development and initiation of preclinical studies in animal glioblastoma and pancreatic

cancer xenograft models………………………………………………………….CY2Q15

Exhibit 1: Comparative Analysis

Source: CapIQ, Stonegate Capital Partners

Name Ticker Price (1) Sh Mrkt Cap EV

Cannabis (Marijuana) Companies

Cannabis Science, Inc. CBIS 0.03$ 1,185.2 36.1$ 37.9$

GW Pharmaceuticals plc GWPH 114.51$ 237.1 2,155.4$ 1,923.4$

Medical Marijuana, Inc. MJNA 0.08$ 1,783.1 142.6$ 73.7$

Average 778.1$ 678.3$

Median 142.6$ 73.7$

Early-stage Development Companies

Halozyme Therapeutics, Inc. HALO 17.82$ 125.3 2,232.8$ 2,164.0$

Merrimack Pharmaceuticals, Inc. MACK 12.29$ 110.0 1,352.2$ 1,382.9$

OncoMed Pharmaceuticals, Inc. OMED 23.55$ 30.0 706.9$ 493.9$

Momenta Pharmaceuticals Inc. MNTA 19.61$ 56.2 1,103.0$ 1,047.2$

Celsion Corp. CLSN 2.60$ 20.0 52.0$ 30.9$

Living Cell Technologies Limited LCT 0.06$ 424.0 25.0$ 17.6$

Rexahn Pharmaceuticals, Inc. RNN 0.72$ 179.6 130.0$ 100.7$

Threshold Pharmaceuticals Inc. THLD 3.91$ 71.3 278.9$ 200.0$

Synta Pharmaceuticals Corp. SNTA 2.19$ 108.4 237.4$ 229.4$

GTX Inc. GTXI 1.14$ 140.4 160.0$ 115.4$

AVEO Pharmaceuticals, Inc. AVEO 2.16$ 54.9 118.7$ 97.9$

Advaxis, Inc. ADXS 22.47$ 27.2 611.4$ 641.1$

Average 584.0$ 543.4$

Median 258.1$ 214.7$

622.8$ 570.4$

237.4$ 200.0$

PharmaCyte Biotech, Inc. PMCB 0.16$ 707.8 112.5$ 111.6$

(1) Previous day's closing price

(2) Estimates are from CapIQ except those for PharmaCyte Biotech which are Stonegate estimates

Combined Median

Combined Average

5 PharmaCyte Biotech, Inc. | May 28, 2015


COMPANY OVERVIEW

Company Background

PharmaCyte Biotech, Inc. (PharmaCyte, formerly known as Nuvilex, Inc.) is an early-stage

biotechnology company involved in the development of drugs for the treatment of pancreatic cancer

and its symptoms and diabetes. The Company uses a proprietary cellulose-based live cell

encapsulation technology (Cell-in-a-Box®) as a platform for disease treatment development.

The 1996-founded PharmaCyte operated several businesses under different names, with diverse

offerings such as nutraceutical products and software for tracking fresh fruits and vegetables. The

Company has evolved over time, largely through acquisitions led by a change in its growth strategy.

PharmaCyte’s corporate milestones are as follows:

1996 to 2000: The Company operated as DJH International, Inc.

2000 to 2009: The Company changed its name to eFoodSaftey.com, Inc., following the

acquisition of Global Procurement Systems, Inc. in 2000. It acquired Ozone Safe Food, Inc.

in 2003, which offered sterilization methods and software that tracked fresh fruits and

vegetables. With little success in its businesses thus far, the Company shifted its focus to

non-prescription medical products.

o PharmaCyte acquired Knock-Out Technologies, Ltd. and MedElite, Inc. in May

2004 and August 2005, respectively, and divested its business under Ozone Safe

Food, Inc.

o The Company formed two subsidiaries in November 2006, namely, Cinnergen,

Inc. to manufacture a non-prescription liquid nutritional supplement and purEffect,

Inc. to manufacture purEffectTM

, a four-step non-prescription acne treatment. In

March 2006, the Company licensed the marketing rights of purEffectTM

to

Charlston Kentrist 41 Direct, Inc. PharmaCyte sold this business to Charlston in

February 2009.

2009 to 2012: The Company was re-named Nuvilex, Inc. in 2009 and focused on

nutraceutical products.

o At this stage, PharmaCyte operated through its subsidiaries I-Boost, Inc. and

Cinnechol, Inc. that catered to immune system ailments and cardiovascular health.

o The Company acquired Freedom2 Holdings, Inc. in March 2009, which

manufactured products including Infinitink®, a permanent tattoo ink remover.

2013 onwards: o The Company formed Medical Marijuana Sciences, Inc. (MMS) in 2013 with

plans to focus on research using compounds derived from the plant Cannabis

Sativa. The Company is yet to release any major discovery through this subsidiary.

o In June 2013, Nuvilex acquired a 100% stake in Bio Blue Bird AG, a live-cell

encapsulation biotech company, from SG Austria for a consideration of US$1.5M

and a 14.5% stake in SG Austria to focus on the biotechnology industry. These

acquisitions were funded through the sale of restricted stock at US$0.125 per share

to accredited investors.

o In January 2015, the Company changed its name to PharmaCyte Biotech, Inc. and

started trading under the PMCB ticker on the OTCBQ board.

Product Overview

Since its acquisition of the worldwide licensing rights for Cell-in-a-Box®, PharmaCyte is focused on

developing treatments for cancer and diabetes using its Cell-in-a-Box® technology as its

development platform. PharmaCyte is closely working with SG Austria, in framing the process

related to the commencement of future clinical trials in pancreatic cancer and insulin-dependent

diabetes.



Cell-in-a Box®

The Company considers Cell in-a-Box® one of the most advanced platforms for the development of

treatments for rare diseases like pancreatic cancer. Under this technology, living cells, cells that can

metabolize, adapt, and reproduce, are packed in a capsule, which protects the encapsulated cells

from destruction by the body’s immune system. These capsules can be manufactured to hold

different cells with different purposes. The standard size of such capsules is that of the head of a

pin, with a capacity to enclose approximately 10,000 cells, when they are used as part of a treatment

for advanced pancreatic cancer.

The capsule pores facilitate the exchange of nutrients, other beneficial substances, and allow for the

elimination of waste products from those cells inside as well. Furthermore, beneficial substances

produced by the encapsulated cells can pass through the pores. This enables the cells to function for

long after their implantation. The pores are rightly-sized to prevent the escape of the encapsulated

cells into the environment as well as the inflow of the bodily cells into the capsule. The Company

states that the encapsulated cells can be frozen and stored for more than five years and when

thawed, more than 95% viability of the cells is restored.

PharmaCyte’s encapsulation platform is different from other similar platforms in the market. The

Company encloses living cells that have a long life of about over two years, unlike other platforms

Exhibit 2: Cell-in-a-Box® Capsules: Microscopy

Source: Company Reports, Stonegate Capital Partners

Exhibit 3: The Encapsulation Process


Live Cells are Mixed with a Proprietary Polymer (Polymer A) Solution Containing Sodium Cellulose Sulfate

Mixture is Passed through a Droplet-forming Machine

Droplets Containing Live Cells Fall into a Bath Containing Polymer B

Capsule Membrane Complex Forms Immediately around the Droplets Containing the Live Cells

Complex Grows from Outside In, Trapping Groups of Cells Inside



that enclose cells made up of alginate (a seaweed derivative), agarose or chitosan, which hold the

risk of degrading in the human body.

Treatments under development using the Cell-in-a-Box® platform

PharmaCyte plans to develop treatments for various types of cancer and insulin-dependent diabetes

using the Cell-in-a-Box® platform. As of now, the Company is focused on developing a therapy for

the treatment of pancreatic cancer. A Phase 1/2 and a Phase 2 clinical trial to develop effective

treatment for pancreatic cancer have already been completed.

Exhibit 4: The Working of the Cell-in-a-Box® Platform: Implantation and Growth


Exhibit 5: Development Pipeline


Immune

System

Cells

A Single Capsule Containing

Cancer Prodrug-Activating

Cells

Nutrients Waste Products

Immune

System

Cells

Capsules Containing Cancer Prodrug–Activating Cells

are Implanted in or near the Tumor

Step 1

Inactive Prodrug

Molecules

Activated Drug

Molecules

Capsules Containing

Prodrug Activating Cells

Cancer Prodrug is

“Activated” by enzymes

produced by the

Encapsulated Cells Tumor Cells

are Destroyed

Cancer Prodrug is AdministeredStep 2



Pancreatic Cancer

PharmaCyte intends to develop a treatment for pancreatic cancer using the combination of Cell-in-a-

Box® live-cell encapsulation and low doses of ifosfamide. It will use this treatment to:

1. attack the tumor (Phase 1/2 and Phase 2 clinical trials have been completed) and

2. decrease the impact of the two serious symptoms associated with pancreatic cancer:

a. Pain: extremely severe and/or untreatable pain

b. Ascites: The accumulation of fluid in the abdominal cavity, leading to the formation

of new tumors

The Tumor Treatment Under this treatment, the Company combines encapsulated live cells and low doses of the anticancer

prodrug1 ifosfamide (IFEX®). When administered in this combination, the widely-used IFEX® is

converted into its cancer-killing form to show the desired results in the liver. This conversion is

facilitated by the 22P1G cells encapsulated using the Cell-in-a-Box® platform. Once the

encapsulated cells are implanted in the body near the tip of the pancreas and near the tumor itself,

low doses (one-third of “normal) of ifosfamide are injected intravenously. The blood stream carries

ifosfamide to the capsule containing the ifosfamide-converting cells. The capsule then releases

ifosfamide in the form of a short-lived metabolite, which enters into the pancreas and destroys the

tumor cells.

This treatment has resulted in reduction in tumor size in patients without any treatment related side

effects related to the treatment.

Phase 1/2 Clinical Trial

Under the Phase 1/2 open-label, single-arm clinical trial, patients with advanced, inoperable

pancreatic cancer were considered for treatment using the live-cell encapsulation and ifosfamide

combination. This trial was performed in Germany.

1 The Company reports define a prodrug as an entity that requires conversion or “activation” for it to

become effective in killing or deleteriously affecting cancer cells.

Exhibit 6: Cell-in-a-Box®: Mechanism of Action in Pancreatic Cancer


Immune cells too

large to enter

capsule

A Single Capsule Containing

CytoP450 Producing Cells

Inactive Prodrug

Molecules

(Ifos)Activated Drug Molecules

Tumor killing in-situ

Pancreatic

Tumor

Inactive Prodrug

Molecules

Waste ProductsNutrients



Of the total 17 patients enrolled for these trials, only 14 with advanced, inoperable pancreatic cancer

were considered. At a time, approximately 300 capsules were implanted in each patient, with only

one patient receiving 250 capsules. The patients were given an ifosfamide dose of 1 g/m2 (a third of

the typical dose) on days 2, 3, 4, 23, 24, and 25 after the capsule implantation.

The results were encouraging compared to the use of the single-approved drug as the single agent,

gemcitabine, also known as GEMZAR®, developed by Eli Lilly (NYSE:LLY) in 1997. Following

are the findings of this Phase 1/2 trials:

The live-cell

encapsulation and

ifosfamide combination

showed a median survival

time of 44 weeks (after

diagnosis) compared to the

28 weeks under the

gemcitabine treatment.

With a one-year survival

rate of 36%, this

combination drug resulted

in doubling the survival

rate compared to that

displayed by use of

gemcitabine.

The combination

treatment resulted in a

25%-50% reduction in the

tumor volume in 4 of the 14 patients, with the other patients showing a stable volume.

No major side effects were noticed, unlike the treatment using gemcitabine. However, the

dosage of the combination drug administered was lower than the normal dosage.

A Phase 2 clinical trial was conducted on thirteen patients. All factors for were the same as the

except the dose of ifosfamide was doubled to two-thirds (2 g/m2) the “normal” dose. Doubling

had no significant beneficial effect on median survival time and severe side effects were

observed. The major conclusion from this Phase 2 trial was that the dose of ifosfamide used for

all future trials should be one-third (1g/m2) of that usually used for cancer treatment.

Upcoming Phase 2b Trial The Company has been making preparations for a Phase 2b trial with a much larger number over the

last four years and plans to begin with it by end-2015 (CY3Q15) in Australia. PharmaCyte has

already established an agreement with ViruSure in Vienna, Austria, for the Master Cell Bank and

Working Cell Bank of CYP2B1-expressing cells that will be required for the encapsulation process.

Clinical Network Services, a CRO in Australia, is expected to conduct the trial. The Company plans

to administer multiple courses of ifosfamide to patients under this trial, different from only two

dosages in Phase 1 and 2a. This trial will be a multi-centered, two-armed, randomized one in

patients with advanced, inoperable pancreatic cancer. About 50% of the patients will receive

treatment with the Cell-in-a-Box®/low-dose ifosfamide combination and remainder of the patients

will receive the current “gold standard” for the treatment of advanced pancreatic cancer, namely the

combination of two anticancer drugs, gemcitabine and Abraxane® combination. The main goal of

this trial is to compare the activity of the two treatments in making borderline inoperable and

inoperable tumors become operable

Treatment for the Symptoms

Pain Management

PharmaCyte plans to determine whether its pancreatic cancer treatment can reduce the severe pain

resulting from pancreatic cancer due to the tumor’s invasion into the nerves that connect with the

other organs in the abdomen. According to the Company, in about 20-25% of the patients, this pain

is untreatable and leads to patient morbidity and mortality. The Company has engaged Translational

Exhibit 7: Phase 1 and 2a Trials Results




Drug Development (TD2), a CRO specializing in oncology, to conduct a clinical trial in the US,

which is expected to commence by CY3Q15.

Ascites (the accumulation of fluids) Another common symptom of pancreatic cancer is the accumulation of fluids in the abdomen,

which is a condition known as ascites. This fluid contains other cancer cells which lead to the

development of a new tumor. As a result, it is important that the fluid is removed regularly, the

process for which is painful and expensive. PharmaCyte aims to its pancreatic cancer treatment can

delay the accumulation of ascites fluid.

The Company completed a pilot preclinical study on mice in late 2014, conducted by TD2 in the

US. The study was performed on mice afflicted with aggressive human ovarian cancer (ES-2) that

releases ascites fluids. Four groups of 10 mice each were used in the study.

1. Group 1: Control group (given vehicle only)

2. Group 2: Given only Cell-in-a-Box plus ifosfamide

3. Group 3: Was treated with cisplatin, a chemotherapy drug

4. Group 4: Was treated with a combination of PharmaCyte's pancreatic cancer treatment and

cisplatin

Encouraged by the results of this study, the Company kicked-off a second preclinical study in

February 2015, based on the same ES-2 ovarian cancer model, which is expected to be completed

by CY2Q15. The major variation in this study compared to the previous one is in the number of

groups of mice treated and the number of Cell-in-a-Box® capsules used in the different groups. This

study will be performed on 13 groups comprising 10 mice each. The Company also aims to file the

Investigational New Drug (IND) program with the FDA by CY3Q15.

Type 1 Diabetes

Recently, PharmaCyte completed the pilot proof-of-principal study for the treatment of Type 1

diabetes by using pig pancreatic β islet cells that had been encapsulated using the Cell-in-a-Box®

technology. Under this treatment, the insulin produced The β islet cells of the pancreas control the

levels of glucose in the blood, which is regulated by the production of insulin by these β islet cells.

High levels of blood glucose are a key indicator of diabetes.

The Proof-of-Principal Study

Under the proof-of-principle study, cellulose-based capsules containing live pancreatic islet cells

from pigs were implanted into diabetic rats. Within a short time, the blood glucose levels of the rats

were normalized and remained normal throughout the six-month duration of the study. As cellulose-

based capsules have a lifetime of at least two years in the human body, no immunosuppressive

drugs were required during that time. Upon removal of the capsules, the encapsulated cells reacting

to changes in the glucose levels in the body.

Exhibit 8: The Proof-of-Principal Study – Result




Due to encouraging results of the study, PharmaCyte is focusing on the diabetes space. The

Company has already formed a consortium of experts, including its CEO and COO, to expedite its

research in the area of diabetes.

Preclinical Study: Melligen Cell Line – Lead Drug In line with its strategy, the Company enjoys an exclusive worldwide license, granted by the

University of Technology, Sydney (UTS) in Australia, to use the Melligen cells in the development

of the treatment for diabetes.

Exhibit 9: Key Members of the Diabetes Consortium

No. Name of

Consortium

Member

Professional Background

1 Dr. Eva Maria

Brandtner Previously served as the Chief Scientist with

Austrianova Singapore, where she conducted

preclinical studies with Melligen cells (human

cells engineered to produce, store, and secrete

insulin at levels that are in direct proportion to

the levels of glucose (blood sugar) in the

human body)

Serves as the Director of Diabetes Program

Development

2 Prof. Ann. M

Simpson Professor at the University of Technology,

Sydney

Serves as a consultant to PharmaCyte

3 Prof. Walter H.

Günzburg Chief Scientific Officer at PharmaCyte

Chief Technical Officer at Austrianova

Singapore

One of the co-developers of the Cell-in-a-Box

technology

4 Dr. Brian

Salmons CEO of Austrianova Singapore

Member of PharmaCyte Biotech’s Scientific

Advisory Board

One of the co-developers of the Cell-in-a-Box

technology

5 Dr. Constantine

Konstantoulas Located at the University of Veterinary

Medicine, Vienna, where the Company

conducted some of its initial pre-clinical

studies related to the diabetes treatment

6 Prof. Eckhard

Wolf Professors at the Ludwig-Maximillian

University in Munich, Germany

Developers of unique animal models for

insulin-dependent diabetes

Serves as a consultants to the Company

7 Prof. Rüdiger

Wanke

8 Dr. Matthias

Löhr Gastroenterologist and oncologist at the

Karolinska Institute in Stockholm, Sweden

Expert in the treatment of diseases of the

pancreas, including diabetes

Served as the principal investigator for the pre-

clinical trials involving the encapsulation and

ifosfamide combination therapy

Chairman of PharmaCyte Biotech's Scientific

Advisory Board




Along with the other scientists, Prof. Ann Simpson at UTS has developed the Melligen cell line, a

human non-pancreatic cell line that originated from liver cells and that were genetically engineered

to produce and store insulin and secrete it at levels in proportion to the levels of glucose (blood

sugar) in the human body. This cell line and the gene therapy have displayed the potential to treat

Type 1 diabetes. Through genetic modification and augmentation of non-pancreatic cells, the

Company plans to produce the glucose-responsive, artificial β insulin-producing cells that serve the

purpose of pancreatic β cells among non-diabetics.

PharmaCyte commenced its Tumorigenicity testing in February 2015 to ensure the safety,

efficiency, and dosage of its proprietary Melligen cell line in the treatment of diabetes and plans to

complete it by CY2Q15. The testing is being conducted at the Institute of Virology, Department of

Pathobiology, at the University of Veterinary Medicine in Vienna, Austria. It revealed that Melligen

cells are no more tumorigenic than the 22P1G cells used for PharmaCyte’s pancreatic cancer

treatment under the test condition used. Upon completion of this testing, the Company may initiate

preclinical studies, for which it has already secured sponsorship from the Juvenile Diabetes

Research Foundation.

Breast Cancer

PharmaCyte has conducted a pilot preclinical study on dogs using its live-cell encapsulation and

cyclophosphamide combination therapy, enjoying encouraging results. This prodrug is similar to

ifosfamide, which the Company uses in its pancreatic cancer trials. The Company is yet to disclose

its further course of action under this area of research.

Cancer treatment using Cannabinoids

Based on the results of the research conducted so far, Cannabinoids THC and CBD have shown

signs of anti-cancer properties leading to reduction in tumor growth, spread, and development of the

new blood vessels needed as new tumors grow as well as induction of tumor cell death. PharmaCyte

is assessing ways to develop treatments using the Cell-in-a-Box® technology, coupled with

cannabinoids and cannabinoid-like compounds, for various types of cancers. The Company obtained

an exclusive, worldwide license from Austrianova Singapore in December 2014 to use its

proprietary Cell-in-a-Box® cellulose-based live cell encapsulation technology for the development

of various treatments, in combination with compounds known as Cannabinoids, obtained from the

constituents of Cannabis.

The Company has enlisted Dr. Mark L. Rabe, an industry veteran in the medical marijuana field, as

a member of its Scientific Advisory Board. Moreover, it is collaborating with the University of

Northern Colorado for research purposes. The Company aims to identify an existing cell line that is

capable of converting cannabinoid prodrugs into their cancer-killing forms., with plans to develop

Cell-in-a-Box® and commence pre-clinical studies based on animal glioblastoma and pancreatic

cancer xenograft models in CY2Q15.

Business Strategy

PharmaCyte has transformed its business from developing nutraceutical products to focusing on

biotechnology as its core field of operation. As a stepping stone, the Company has acquired a 100%

stake in Bio Blue Bird AG, which is an early-stage biotech company. PharmaCyte has also

collaborated with SG Austria and Austrianova Singapore as well as various universities, globally.

With no products in the commercial stage yet, the Company's primary focus is to develop treatments

for advanced pancreatic cancer and its associated symptoms which are already nearing the clinical

stage. Thus, the Company management has laid down the following roadmap for achieving its

objectives.

Completing the preparations for a Phase 2b trial related to pancreatic cancer on time to

commence the trial by end of CY2015.

Completing the preclinical studies related to the effectiveness of the Company’s

pancreatic cancer treatment for the symptoms including pain management and ascites.



Developing the additional usages of the Cell-in-a-Box® technology through contracts,

licensing agreements, and joint ventures with other companies.

Intellectual Property Overview

PharmaCyte posses several patents, trademarks, and exclusive worldwide licensing rights in the

following biotechnology areas:

Patent related to the use of the Cell-in-a-Box® platform for live cell encapsulation,

applicable in 37 countries under the US patent number 6,776,985, with June 24, 2016 as its

expiry date.

Patent related to the treatment of solid tumors, including pancreatic cancer, applicable in 37

countries under the US patent number 6,893,634 and 6,540,995, with March 27, 2017 as its

expiry date.

Treatment including the encapsulation of cells for producing retroviral particles for gene

therapy.

Exclusive worldwide licensing rights to patents, trademarks and know-how using Cell-in-a-

Box®

technology in the diabetes field. According to the agreement with Austrianova

Singapore, the Company should commence the research program involving European

academic research partners with a total funding of US$400,000 within three years of the

agreement date, June 25, 2013, and start clinical trials within seven years of the agreement

date to retain the exclusive world-wide license.

Financial Model Review

Revenues

Since 2013, PharmaCyte has discontinued its loss-making operations related to nutraceutical

products and started focusing on the biotechnology field. Accordingly, the revenue analysis prior to

2013 is irrelevant and will not be helpful in forecasting future revenues.

For the fiscal year ending April 2014, (FY14), the Company generated no revenue as its disease

treatments are in the pipeline. This trend is expected to continue until one of the Company’s

treatments reaches the commercial stage.

Operating costs

Compensation expense remains the major component of the Company’s operating cost, followed by

General and Administrative expenses. The Company reported compensation expenses of US$13.6M

in FY14, the highest so far, especially considering that its revenues are zero for the same period.

At $347,763, the Company reported the first of its R&D expenses in the last three years in 2Q15

which are expected to accelerate in the future. As most of the R&D activities are outsourced to

CROs, the Company conducts no in-house research.

Model Assumption

As the Company is in an early development stage and with no revenue generating compounds or

any royalty or licensing agreement, PMCB is not likely to generate any revenue for the next few

years. As such we have modeled our topline with zero revenue for the next two fiscal years.

We are modeling total operating expenses for FY2015 and FY2016 of $13.2M and $14.2M

respectively. We expect compensation expense to be the main driver at $8.0M with G&A

increasing to $3.1M with costs associated with its clinical trials. The Company looks to remain lean

compared to its previous spending. For FY2015 we are modeling a net loss of $13.1M and a

negative EPS of $0.02. For FY2016 we are modeling a net loss of $14.2M and a negative EPS of

$0.02.



INDUSTRY OVERVIEW

Pancreatic Cancer

The pancreas is an organ in the abdomen that helps the

body digest and use the energy that comes from food.

Pancreatic cancer occurs when cells in the pancreas

grow out of control and form a growth or tumor.

Tumors may or may not be cancerous.

Although pancreatic cancer patients account for only

3% of the total cancer patients globally, this form of

cancer occupies the 4th

position as the cause of death,

according to World Cancer Organization. Every year

140,000 new cases are diagnosed with pancreatic

cancer globally, two-thirds of which are above 65

years of age.

Approximately 46,000 are diagnosed with pancreatic

cancer in the US in 2014, recording about 40,000

deaths in 2014, according to the American Cancer Society. In line with the global average,

pancreatic cancer patients were 2.8% of the total cancer patients diagnosed in 2014 in the US. The

number of pancreatic cancer patients in the US has been fairly stable over the past several years.

Pancreatic cancer can often be difficult to diagnose because, currently, there are no specific, cost-

effective screening tests that can easily and reliably find early-stage pancreatic cancer in people who

display no symptoms of the disease. Because the signs and symptoms of pancreatic cancer are non-

specific and may not appear until the disease has spread to other sites, approximately 80% of

patients are diagnosed with the disease in its late stages and are not candidates for surgery.

Chemotherapy is the mainstay of the therapy for such patients.

As a result, the one-year survival rate

2 of people with pancreatic cancer is 27% and the five-year

survival rate is less than 6%. Fewer than 20% of the newly-diagnosed patients survive more than

two years. If the cancer is detected at an early stage, when the surgical removal of the tumor is

possible, the five-year survival rate is about 25%.

2 The overall one-year survival rate is the percentage of people who survive at least one year after the

cancer is detected, excluding those who die from other diseases.

Exhibit 10: Pancreas and Other

Organs

Source: SEER Cancer Org, Stonegate Capital Partners

Exhibit 11: Percentage of Cases Diagnosed by Stage vs. Survival Rate

Source: Seer Cancer Org, Stonegate Capital Partners

9.0%

28.0%

53.0%

11.0%

25.8%

9.9%

2.3% 4.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Localized

(Confined to

Primary Site)

Regional

(Spread to Regional

Lymph Nodes)

Distant

(Cancer Has

Metastasized)

Unknown

(Unstaged)

Percent of Cases by Stage 5-Year Relative Survival



Currently, following chemotherapy drugs are used in treating pancreatic cancer: 1. Gemcitabine (Gemzar®)

2. 5-fluorouracil (5-FU)

3. Irinotecan (Camptosar®)

4. Oxaliplatin (Eloxatin®)

5. Albumin-bound paclitaxel (Abraxane®)

6. Capecitabine (Xeloda®)

7. Cisplatin

8. Paclitaxel (Taxol®)

9. Docetaxel (Taxotere®)

Drugs in the pipeline According to Pancreatic Cancer Drug Pipeline Update 2015, published by BioSeeker Group, 291

companies along with their research partners are developing 347 drugs for the treatment of

pancreatic cancer. In addition, there are 129 drugs for which the research and development activities

are suspended or ceased.

Competition

Along with the companies developing drugs for pancreatic cancer using different therapies, several

entities are focusing on the drug development using cell-based technology. While these companies

cater to different diseases, they belong to a similar line of treatment like PharmaCyte.

Exhibit 13: Peer Profile

Source: Various Company Reports, Stonegate Capital Partners

Name of the Company Type of Company Diseases Name of Product

Clinical

Trials Current status

Living Cell Technologies Public Parkinson’s disease and Type 1 diabetes NTCELL

DIABECELL

Phase 2/2b Ongoing

Viacyte Inc. Private Type I and II diabetes VC-01™ Phase 1/2 Ongoing

CELLMED Research GmbH Private Ovarian cancer PROCURE® Phase 2b Ongoing

MicroIslet, Inc. Private Type I diabetes MicroIslet-P NA Filed for Chapter 11

Cerco Medical Private Type I diabetes NA NA Acquired

Beta-Cell NV Private Diabetes BetaGraft® Phase 1 Ongoing

Exhibit 12: Drug Pipeline – Number of Drugs

Source: BioSeeker Group AB, Stonegate Capital Partners

14

1 1

26

127

9182

5 1

128

0

20

40

60

80

100

120

140



Type 1 diabetes

As the result of an autoimmune condition, Type 1 diabetes generally affects young adults and

children with high blood glucose levels. The autoimmune destruction of the pancreatic beta cells

that generate insulin leads to Type 1 diabetes, which is a form of diabetes mellitus. This condition

turns the immune system active against the insulin-producing cells. As a result, the body’s ability to

generate insulin is affected, disturbing blood glucose homeostasis. Consequently, glucose levels in

the blood and urine rise due to inadequate insulin. The symptoms include frequent urination,

increased thirst hunger as well as weight loss.

About 5% of the diabetic patients, globally, are afflicted with diabetes mellitus Type 1. This

condition is found in as many as 80,000 children, each year, world over. About one to three million

in the US are estimated to suffer from diabetes mellitus Type 1.

Currently, three types of diabetes treatments are available. Traditional treatment: Insulin therapy

Pancreas transplantation

Islet cell transplantation

Market Size According to GlobalData, the Type 1 diabetes market constituted only 11% of the total diabetes

market in 2012. Also, about 8% of the total global diabetic population was tested positive for Type

1 diabetes for the same year. The global Type 1 diabetes market is projected to show a 6.9% CAGR

between 2013 and 2018, according to TechNavio.

Competition

Some of the major companies operating in the global Type 1 diabetes market are Eli Lilly and Co.

(NYSE:LLY), Astrazeneca Plc. (NYSE:AZN), B.Braun Melsungen AG (private), Novo Nordisk

A/S (NYSE:NVO), Sanofi-Aventis (NYSE:SNY), Biodel, Inc. (NASDAQ:BIOD) and Macrogenics,

Inc. (NASDAQ:MGNX).

New treatments in development:

PharmaCyte is involved in the research by the UTS in Australia on the use of the Melligen

cells in the development of the treatment for diabetes.

The Stanford University School of Medicine has been successful in identifying a new

molecular pathway that reduces the proliferation of insulin-producing cells, which is

generally associated with advancing age. In order to develop a new treatment for diabetes,

research is being conducted to artificially activate this pathway.

17

E Q U I T Y R E S E A R C H S T O N E G A T E C A P I T A L P A R N T N E R S


BALANCE SHEETS

PharmaCyte Biotech, Inc. (OTCBQ: PMCB)

Consolidated Balance Sheets (in thousands $)

Fiscal Year: April

FY 2014 Q1 Q2 Q3

ASSETS Jul-14 Oct-14 Jan-15

Current Assets

Cash & cash equivalents 3,616 2,897 1,155 959

Prepaid expenses and other assets 570 172 125 38

Total Current Assets 4,187 3,069 1,280 997

Licenses and patents 3,549 3,549 3,799 4,049

Investment in S G Austria 1,572 1,572 1,572 1,572

Other assets 8 8 8 8

Total Assets 9,316 8,199 6,659 6,626

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Accounts payable 188 204 272 376

Accrued expenses 8 5 5 3

Accrued interest, related party 34 37 - -

Due to officers and directors 144 125 - -

Total Current Liabilities 374 371 277 379

Long-Term Liabilities

Other non-current liabilities

Total Long-Term Liabilities - - - -

Stockholders' Equity

Common stock -

Issued shares 69 71 70 70

Common stock payable 75,999 78,041 81,920 83,243

Accumulated deficit (68,700) (70,285) (75,607) (77,065)

Common stock to be issued 1,575 - - -

Total Stockholders' Equity (deficit) 8,942 7,827 6,382 6,248

Total Liabilities and Stockholders' Equity 9,316 8,199 6,659 6,626

Ratios

Liquidity

Current Ratio 11.2x 8.3x 4.6x 2.6x

Quick Ratio 11.2x 8.3x 4.6x 2.6x

Working Capital 3,813 2,698 1,003 618

Leverage

Debt To Equity 0.0% 0.0% 0.0% 0.0%

Debt To Capital 0.0% 0.0% 0.0% 0.0%

Capital Usage -Annualized

A/P Turns 0.0x 0.0x 0.0x 0.0x


18

E Q U I T Y R E S E A R C H S T O N E G A T E C A P I T A L P A R N T N E R S

INCOME STATEMENTS


Consolidated Statements of Income (in thousands $, except per share amounts)

Fiscal Year: April

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 E Q1 E Q2 E Q3 E Q4 E

FY 2013 Jul-13 Oct-13 Jan-14 Apr-14 FY 2014 Jul-14 Oct-14 Jan-15 Apr-15 FY 2015 E Jul-15 Oct-15 Jan-16 Apr-16 FY 2016 E

Revenues

Revenues 12.2$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Total revenue 12.2 - - - - - - - - - - - - - - -

Cost of revenues

Cost of sales 9.6 - - - - - - - - - - - - - - -

Total cost of revenues 9.6 - - - - - - - - - - - - - - -

Gross (loss) profit 2.5 - - - - - - - - - - - - - - -

Operating expenses

Research and development - - - - - - - 347.8 273.8 300.0 921.6 250.0 250.0 250.0 250.0 1,000.0

Selling and marketing expenses 106.4 15.0 - 309.6 547.6 872.2 230.5 - - - 230.5 - - - - -

Compensation expense 678.7 1,202.1 140.1 92.8 12,174.9 13,610.0 253.4 4,840.8 204.2 2,500.0 7,798.4 2,250.0 2,250.0 2,250.0 2,250.0 9,000.0

Director fees - 64.4 - - 703.6 768.0 - - - - - - - - - -

Legal and professional 284.5 - 143.2 33.2 1,311.3 1,487.7 260.9 353.2 236.5 300.0 1,150.6 300.0 300.0 300.0 300.0 1,200.0

General and administrative 617.3 119.2 165.3 245.5 1,711.3 2,241.3 838.4 703.7 742.1 800.0 3,084.1 750.0 750.0 750.0 750.0 3,000.0

Total operating expenses 1,686.9 1,400.7 448.6 681.1 16,448.8 18,979.1 1,583.2 6,245.4 1,456.6 3,900.0 13,185.2 3,550.0 3,550.0 3,550.0 3,550.0 14,200.0

Income (loss) from operations (1) (1,684.4) (1,400.7) (448.6) (681.1) (16,448.8) (18,979.1) (1,583.2) (6,245.4) (1,456.6) (3,900.0) (13,185.2) (3,550.0) (3,550.0) (3,550.0) (3,550.0) (14,200.0)

Other income (expense):

Interest income - - 0.1 0.1 0.8 1.1 1.0 0.5 0.0 0.5 2.0 0.5 0.5 0.5 0.5 2.0

Interest expense net (154.4) (10.4) (3.6) (3.8) (3.3) (21.1) (2.7) (2.1) (1.5) (2.0) (8.2) (2.0) (2.0) (2.0) (2.0) (8.0)

Other income/(expense) (1) 2.6 - - - - - - - - - - - - - - -

Total other income (expense): (151.8) (10.4) (3.5) (3.6) (2.5) (20.0) (1.7) (1.6) (1.5) (1.5) (6.2) (1.5) (1.5) (1.5) (1.5) (6.0)

Pre-tax income (loss) (1) (1,836.2) (1,411.0) (452.1) (684.7) (16,451.3) (18,999.1) (1,584.8) (6,247.0) (1,458.1) (3,901.5) (13,191.4) (3,551.5) (3,551.5) (3,551.5) (3,551.5) (14,206.0)

Provision for taxes (benefit) - - - - - - - - - - - - - - - -

Net income (loss) (1) (1,836.2)$ (1,411.0)$ (452.1)$ (684.7)$ (16,451.3)$ (18,999.1)$ (1,584.8)$ (6,247.0)$ (1,458.1)$ (3,901.5)$ (13,191.4)$ (3,551.5)$ (3,551.5)$ (3,551.5)$ (3,551.5)$ (14,206.0)$

Net income (loss ) to common (1,836.2)$ (1,411.0)$ (452.1)$ (684.7)$ (16,451.3)$ (18,999.1)$ (1,584.8)$ (6,247.0)$ (1,458.1)$ (3,901.5)$ (13,191.4)$ (3,551.5)$ (3,551.5)$ (3,551.5)$ (3,551.5)$ (14,206.0)$

Basic EPS (loss) (0.00)$ (0.00)$ (0.00)$ (0.00)$ (0.02)$ (0.03)$ (0.00)$ (0.01)$ (0.00)$ (0.01)$ (0.02)$ (0.01)$ (0.01)$ (0.01)$ (0.01)$ (0.02)$

Diluted EPS (loss) (0.00)$ (0.00)$ (0.00)$ (0.00)$ (0.02)$ (0.03)$ (0.00)$ (0.01)$ (0.00)$ (0.01)$ (0.02)$ (0.01)$ (0.01)$ (0.01)$ (0.01)$ (0.02)$

Basic shares outstanding 440,955 521,873 541,233 599,925 669,848 583,220 701,930 703,329 696,146 697,886 699,823 699,631 701,380 703,134 704,891 702,259

Diluted shares outstanding 440,955 521,873 541,233 599,925 669,848 583,220 701,930 703,329 696,146 697,886 699,823 699,631 701,380 703,134 704,891 702,259

EBITDA (699.7) (199.1) (1,538.6) 359.7 327.1 (1,050.8) (1,285.7) (6,245.4) (1,088.8) (3,900.0) (12,519.9) (3,550.0) (3,550.0) (3,550.0) (3,550.0) (14,200.0)

Source: Company Reports, Stonegate Capital Partners estimates



CASH FLOWS


Consolidated Statements of Cash Flows (cumulative)

Fiscal Year: April

FY 2014 Q1 Q2 Q3

Cash Flow from Operations Jul-14 Oct-14 Jan-15

Net income (loss) (27,254) (1,585) (5,648) (7,107)

Adjustments to reconcile net income to net cash :

Stock issued for services 17,928 298 298 665

Stock issued for compensation - 86 480 568

Stock based compensation - options - - 4,308 4,308

Stock based compensation - warrants - - 100 100

(Gain) loss on recovery of stock issued for services - - (2,183) (2,183)

(Gain) loss on settlement of debt 3,993 - - -

(Gain) loss on conversion of preferred stock 5,895 - - -

(Gain) loss of forgiveness of debt (1,633) - - -

Changes in operating assets and liabilities:

Prepaid and other current assets (442) 398 445 532

Accounts payable (59) 16 84 188

Accrued expenses 2 (3) (3) (5)

Accrued expenses, related party 16 3 (34) (34)

Other assets (8) - - -

Net cash provided (used) by operating activities (1,563) (787) (2,154) (2,969)

Cash Flow from Investing

Purchase of license and patents, includes acquisitions (3,551) - (250) (500)

Net cash provied (used) by investing activities (3,551) - (250) (500)

Cash Flow from Financing

Proceeds from sale of common stock 8,511 86 86 955

Proceeds from borrowings, related party 82 - - -

Repayment of debt, related party (62) (19) (144) (144)

Net cash provided (used) by financing activities 8,531 67 (58) 811

Net increase (decrease) in cash 3,417 (720) (2,461) (2,658)

Cash and cash equivalents, beginning of year 199 3,616 3,616 3,616

Cash and cash equivalents, end of period 3,616 2,897 1,155 959




IMPORTANT DISCLOSURES AND DISCLAIMER

a) Stonegate Capital Partners, Inc. (“Stonegate”) expects to receive or intends to seek compensation for investment banking or

other business relationships with the covered companies mentioned in this report in the next three months.

b) The Research Analyst principally responsible for the preparation of this report has received compensation that is based upon,

among other things, Stonegate’s investment banking revenues.

c) Within the last twelve months, Stonegate has not received compensation for investment banking services from the Company;

however Stonegate has a non-exclusive research and institutional investor awareness agreement in place since 2/2/15;

Stonegate is currently engaged to provide research and institutional investor awareness for the Company. As compensation,

Stonegate receives $5,000 per month for the next 3 months and thereafter, at the Company’s discretion.

d) Within the last twelve months, Stonegate has not managed or co-managed a public offering for the Company.

e) Stonegate and/or its employees, officers, directors and owners do not own options, rights or warrants to purchase this security.

f) Stonegate does not make a market in this security.

g) No employee of Stonegate serves on the Company’s Board of Directors.

h) A Research Analyst and/or a member of the Analyst’s household do not own shares of this security.

i) A Research Analyst and/or a member of the Analyst’s household do not serve as an officer, director, or advisory board

member of the Company.

j) This security is eligible for sale in one or more states.

k) This security is subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set forth sales practice

requirements for certain low-priced securities.

l) Stonegate or its affiliates do not beneficially own 1% or more of an equity security of the Company.

m) Stonegate does not have other actual, material conflicts of interest in the securities of the Company.

Meaning of Ratings - Stonegate does not rate the securities covered in its information memorandums.

Distribution of Ratings - Stonegate does not rate the securities covered in its information memorandums.

Price Chart - Stonegate does not have, nor has previously had, a rating for any securities of the Company.

Price Targets - Stonegate does not have a price target for any securities of the Company.

Regulation Analyst Certification: I, Dan D. Trang, hereby certify that all views expressed in this report accurately reflect my personal views about the subject

company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be directly or

indirectly related to the specific recommendations or views expressed in this report.

For Additional Information Contact:

Stonegate Capital Partners, Inc. Dan D. Trang 214-987-4121 [email protected]

Please note that this report was originally prepared and issued by Stonegate for distribution to their market professional and institutional investor

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cash (m) bv/s $ 1.0 $ 0.01 debt (m) equity (m) $ - $ 6.2 ... · financial summary equity (m) $ 6.2...

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