CEO Blog: A Summary of Recent Events

Dear Shareholders and Friends,

Thank you for your continued interest and support in U.S. Stem Cell, Inc.  In an effort to keep you updated on matters related to the Company, please see our latest summary of recent events below.

Prior to our litigation with the FDA, U.S. Stem Cell had grown remarkably as a company. Since year-end 2015, the Company had experienced 12 quarters of continued growth in revenues (compared each time to the same period the year prior). This performance earned U.S. Stem Cell the honor of being recognized as a Deloitte Technology Fast 500 company, an award that recognizes 500 of the fastest-growing technology, media, telecommunications, life sciences, and energy tech companies in North America based on percentage of fiscal year revenue growth from 2015 to 2018.

During this time (and since May 9, 2018), U.S. Stem Cell, as one of the parties, has been challenged by the FDA’s injunctive action against the Company, alleging, among other matters, that the defendants manufactured “stromal vascular fraction” (SVF) products from patient adipose (fat) tissue without first obtaining what the government alleges are necessary FDA approvals for a new drug. The Company has always maintained that stem cell treatments are medical procedures regulated by the respective State medical boards—and a patients’ own stem cells are not drugs to be regulated by the federal government.  Notwithstanding, on June 25th, 2019, Florida-based federal court judge Ursula Ungaro ruled in favor of the government on summary judgement (and without giving our Company our day in court by holding a trial) and ruled that U.S. Stem Cell must stop most product sales, processes and procedures. The result was a devastating impact on our revenue streams and growth trends. The Company filed an appeal on August 23rd, 2019.

Recently, in a substantially similar case in California (with the same attorneys, Venable LLP, representing the stem cell companies; the other case being “United States v. California Stem Cell Treatment Centers”) the California federal judge in that case, judge Jesus Bernal, denied the FDA’s motion for summary judgement and has designated that the case will proceed to trial. This is positive news for our appeal as two circuit courts have reached an opposite result.

In summary on the legal actions:

1- The FDA filed two lawsuits, one in California and one in Florida, arguing that SVF (stromal vascular fraction) falls under FDA oversight— contrary to the position of our Company and others, branding an individual’s stem cells a “drug” and therefor under the federal jurisdiction of the FDA;

2- Both defendants (U.S. Stem Cell et al and Cell Surgical Network) defended by citing the ‘same day surgical exception,’ which if our position is accepted, would have same-day stem cell therapy fall under the jurisdiction of each respective State’s medical board;

3- In Florida, federal judge Ursula Ungaro ruled that a trial was not necessary and granted the FDA’s requested relief—thus denying U.S. Stem Cell its day in court to present testimony and cross examine the FDA witnesses;

4- In contrast, California federal judge Jesus Bernal, denied the FDA’s same request for summary judgment and ordered the matter to proceed to trial—and declined to follow the Florida court’s ruling;

5- We are gratified that the judge in California took the time to carefully review both the law and science and allowed the matter to proceed to trial.  We respectfully believe that was the correct result.  In the meantime, of course, U.S. Stem Cell et al are adhering to the current Florida court order while our appeal is pending;

6-  As noted, we have filed an appeal with the 11th circuit.

In the meantime, we continue to operate with reduced income and new products to our network. The Company plans to file form 12b-25, requesting a 15-day extension for the 2019 Annual Report on Form 10K deadline.  We are considering possible strategic alliances with other regenerative, integrated, functional and wellness medicine groups.  No assurances can be provided that any alliances will transpire or what impact the COVID-19 preventative measure will have on our business or any potential business transactions.

We truly appreciate your continued support.

Thank you and warm regards,

Mike Tomas

President & CEO
US Stem Cell Inc.