BioStem Technologies, Inc. Common Stock Micro-Cap Virtual Conference

Thanks, Alex, and good morning, everyone, and thank you to Sidoti for hosting us. I'm Jason Matuszewski, Chair and CEO of BioStem Technologies. We trade on the Nasdaq Capital Market under ticker BSEM, and we uplisted to Nasdaq just 12 days ago on August 7th. Today's presentation contains forward-looking statements as described on this slide, which applies to everything I say this morning, including our guidance. You'll find this presentation and our filings on the investor page of our website at ir.biostemtechnologies.com. What I want to do in the next 20 minutes is explain why this company you're looking at today is fundamentally different business than the one that carried the name 18 months ago, and why we think we're building one of the most differentiated regenerative medicine platforms in this space. Let me start with the basics.

BioStem develops and commercializes perinatal tissue-based allografts derived from donated placental and umbilical cord tissue, supporting healing across the continuum of care. That spans surgical applications in the operating room and advanced wound care in the outpatient setting. We're headquartered in Fort Lauderdale, Florida, and we have a manufacturing facility in Pompano Beach, Florida. I'll come back to that facility because it's where our margin expansion comes from later on in the story. For fiscal year 2026, we've guided to revenue of $26 million-$29 million, and we raised the low end of that target range last week alongside our second quarter results. Market cap is roughly $57 million on about 17.5 million shares outstanding. We're governed by a seven-member board, myself, our CEO and co-founder, and five independent directors. Four of those seven joined this year, and the additions were deliberate.

Steve Sonenreich spent nearly 40 years running hospitals, including as CEO of Mount Sinai Medical Center. Jodi Ungrodt chairs our audit committee with a long career as a senior partner at Ernst & Young's life sciences practice, with more than 30 IPOs advised, and she qualifies as a designated financial expert under SEC and Nasdaq rules. Rayna Lesser Hannaway spent 29 years as an institutional investor, including leading the small cap company growth team at Polen Capital. Last but not least, Mark Glickman, who built commercial organizations at TherapeuticsMD and Esperion, and now leads the famous BioFlorida nonprofit here in sunny South Florida. We built this board for the company we're becoming, not the one we were. That's the shape of the company, and here's the mission behind it.

Our mission is to create and deliver the most advanced healing technologies in the world, and here's what backs that up today. 10-plus commercial products, which are broad, clinically differentiated, and patent-protected. We recently just announced that we added to our IP in the second quarter earnings results. Eight new U.S.-designed patents covering fenestrated placental allograft technologies. We have 60-plus sales representatives across the direct and independent agents, leveraging our GPO contracts for account access, and four times our current capacity available in manufacturing. We are not capacity constrained on the growth I'm going to describe. A $26 billion addressable market across U.S. surgical and chronic wound applications. Why does this market exist as it starts in the operating room? Over 40 million major surgical procedures are performed per year in the United States, one in nine Americans reportedly having surgery in the past 12 months.

This is not a niche, and surgery has a complication problem. Infections and post-surgical complications cost the health system an estimated $30 billion annually. Surgical site infections alone are roughly 30% of that. Here's why that matters commercially. In a hospital, that cost lands on the hospital. Under bundled payment, a complication isn't incremental revenue, it's a margin erosion. When we walk into a value analysis committee, we're not asking a hospital to fund a nice-to-have. We're talking about a cost they're already absorbing. Why does our technology actually do what we say it does? The unique thing about perinatal tissue is it optimizes the healing environment, and that shows up in five ways. It modulates inflammation, minimizes scarring and adhesion, helps prevent infection, helps manage pain, and collectively helps reduce complications, including the risk that an acute wound becomes a chronic non-healing one.

The through line is the biology of perinatal tissue does the work. We place a native tissue matrix into the surgical site and let it do what it does in utero. That's the science. Now the most important thing I'll say this morning, the BioTissue acquisition did not add products to BioStem. It changed who BioStem is. Look at the before and after on this slide. Before, we were wound-centric, dependent on CMS wound reimbursement and pricing, weighted to the physician office, and had a single commercial engine, Venture Medical. After the transaction, we are surgical-centric, commercial payers plus CMS, hospital and office, direct sales force, independent agents, and distributors.

Every one of those four lines is a reduction in risk. The acquisition brought six things: new products, placental and umbilical cord tissues across dry, hydrated, and cryopreserved formats; new customers, hospitals, ambulatory surgery centers, VA, and Department of Defense; and new channels, 30 direct reps and 30-plus independent agents with GPO and IDN access that have taken us years to build. We are now looking at new end markets, urology, orthopedics, colorectal, burn, other soft tissues. These come with new economics and reimbursement, procedural-driven hospital use with commercial payer exposure. Something I will cover in more detail later on is the new margin lever, which is transferring manufacturing into our own facility after the tech transfer. Let me be direct about the last one, because it's what investors most often miss. We acquired a revenue stream that we do not yet manufacture.

Today, we buy that product from BioTissue on a cost-plus basis. Fixing that is central to our margin event in this story, and I will show you both that timeline and the size of it later on. Let me stay on the channel shift, because moving into the hospital changed the quality of our revenue. If you remember one thing from this presentation, make it the chart on this slide. Before the acquisition, 100% of our revenue was product-based reimbursement. The product itself is billed, and CMS sets the reimbursement rate and the price. Today, 87% of our revenue is tied to surgical procedural-based reimbursement under the DRG. 13% is product-based. That is a fundamentally different business, and it is the single most important de-risking element of our story today. You can see it in the second quarter mix directly.

Hospital revenue was $6.7 million, up from $5.7 million in the first quarter, and physician office was $1.1 million, up from $800,000. Both growing, but the hospital channel is now our engine. Why hospital matters specifically to us. We have broad surgical applications with established reimbursement. We have materially reduced our dependence on CMS wound pricing, which as the audience knows, has been the defining source of volatility in our sector. Our product is purchased as an expense under a procedural bill to the payer. So the hospital's decision is a value decision, not a reimbursement decision. Then there is access. Hospitals buy through group purchasing organizations or GPOs. If you are not on contract, you generally do not get considered at all.

We hold four GPO contracts covering roughly two-thirds of U.S. hospital beds, and during the second quarter, we transitioned all of the major agreements from BioTissue that came over with the acquisition. So the access is ours. Let me be precise about what that gets us. It is eligibility, not revenue. Being on contract means a hospital is permitted to buy us. The surgeon still has to want the product, and the value analysis committee still has to approve it. What it removes is the procurement barrier that keeps most companies our size out of the hospital entirely. Last, adoption is led by physician champions. That is what makes this repeatable rather than lumpy. A surgeon who adopts in a procedure does that procedure every week. This is exactly why we put a former hospital system CEO on our board this year. Steve Sonenreich ran Mount Sinai Medical Center.

He has sat on the other side of this table, deciding whether a product like ours earns a place on a hospital shelf. That perspective is worth a great deal when your growth depends on winning value analysis committees. So we have the channel, but how big really is it? This $26 billion market breaks into six segments, and notice the distribution. Wound care is largest at roughly $15.3 billion. Diabetic and venous leg ulcers, pressure ulcers, and burns make up that concept. That is where we came from, and we are not leaving it. Then the surgical segments, orthopedics and sports medicine, about $3.1 billion. Foot and ankle, $2.6 billion. Spine, another $2.6 billion. Urology, $1.2 billion. Last but not least, colorectal, $1.2 billion. So roughly $11 billion of surgical opportunity and have almost no share of it today. That is not a weakness in the story. That is the story. To go after six markets, you need a portfolio, not just one product.

We have three platform technologies, and they map to how tissue is preserved and where it is used. BioRetain is our dry platform, SteriTek is hydrated and shelf-stable, and CryoTek is cryopreserved. Different clinical settings need different formats. A surgeon in an OR with a freezer nearby has different needs than a clinician in a physician office, and a room temperature product travels into places a frozen one can't. Office and wound is our VENDAJE and VENDAJE AC and Neox wound family products. Hospital and surgical is our Clarix family and our American Amnion in the VA and DoD facilities. Our portfolio breadth lets us position the right product against the specific clinical need rather than forcing our product into every situation. Our next step is pretty straightforward.

Add BioRetain products to the GPO contracts where it makes sense and deepen penetration accounts that we already know use our Neox and Clarix product families. Here is the portfolio in detail. I will not walk you all through this table line by line. It is more of a reference, and my team can go through any product with you in a one-on-one outside of this presentation. Three takeaways. Breath, cryopreserved, hydrated, and dry. Membrane and particulate, amnion only, and amnion with ultra-thick, as well as umbilical cord. Sizes up to 10 by 20 centimeters. Second, the products marked as coming in from the acquisition, the Neox and Clarix families, are the ones that opened the surgical door for us, and they were the primary driver of our second quarter revenue. Third, the most important, the surgical revenue is largely unaffected by CMS wound pricing and reimbursement changes.