OTC: STME

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BUSINESS OF STIMCELL

eBalance® Technology

The Company acquired its proprietary microcurrent technology designed to be used in the treatment of diabetes and related ailments (the “eBalance® Technology”) in 2014 through a Technology Purchase Agreement. eBalance® Technology is based on the science of bioelectric signals, their effect on epigenetic events within the human body, and ability to modify and affect the behavior of cells, tissues, and organs. The eBalance® Technology utilizes microcurrent electrical therapy (“MEY”) to deliver subsensory micro amperage current to the patient/user to support general wellness or provide temporary relief of pain. eBalance® Technology is intended to be used in managing complications caused by various pathological diseases and ailments, which may include pain, diabetes, insulin resistance, neuropathy, poor kidney function, high blood pressure and metabolic syndrome. eBalance® Technology is the cornerstone to the Company’s medical device systems, eBalance® Pro and eBalance® Home. eBalance® Pro System was designed for use by healthcare professionals in a clinical setting; eBalance® Home System, was designed to be used directly by patients to manage their symptoms at home.

A research and development plan adopted by the Company included a series of investigations that allowed the Company to move the eBalance® Device from the prototype stage through a series of refinements and enhancements to achieve the safety and efficacy objectives of the eBalance® Medical Device Systems and define a set of claims that were used for submission to the FDA’s rigorous Pre-Market Approval (PMA) process for 510(k) clearance, as well as to receive Health Canada Class II Medical Device System Certification for the eBalance® Home System and eBalance® Pro System. Both systems are intended to be used for temporary relief of pain associated with sore-aching muscles in the shoulder, waist, back, neck, upper and lower extremities (arms and legs) due to strain from exercise or normal household work activities and general activities of daily living. The Health Canada Certifications received for the eBalance® Home System and eBalance® Pro System in July and August 2020, respectively, allowed the Company to define marketing claims for the eBalance® products. The results of the clinical observational trial the Company finalized during its Fiscal 2018 year (the “Clinical Study”) on the effects of eBalance® technology confirmed that claims such as diabetes management, reductions in fasting blood sugar, improvement of other markers that denote the degree and quality of blood sugar control, pain management, blood pressure control and insulin resistance, among several other positive results, warrant further investigation of the eBalance® Systems. Due to the Company’s financial situation, during the year ended May 31, 2023, the Company suspended further research of the eBalance® Technology, including the PMA process for 510(k) clearance, and defaulted on its Health Canada Class II Medical Device System Certification licenses, which were suspended on June 5, 2023.

In February of 2025, the Company engaged ADM Tronics Unlimited, Inc., a leader in electronic medical device engineering, to redesign the eBalance® Home device into a compact, affordable consumer unit optimized for home use, complete with diagnostic features.

The new eBalance® Home system is expected to be redesigned as a smaller and more cost-efficient unit than its predecessor, making advanced microcurrent technology accessible to a broader audience. Additionally, it will feature innovative diagnostics, including a real-time assessment of cellular energy capacity, treatment tracking, and personalized user profiles.

Scientific Foundations

The application of electromagnetic forces to human tissues to effect biologic change has been explored since the 19th century. Recent advances in molecular biology and imaging technology have allowed insight into the sources and downstream consequences of ion flows in complex organisms. Ion flows and transmembrane gradients produced by ion channels and pumps are key regulators of cell proliferation, migration, and differentiation.

In complement to the current focus on molecular genetics and stem cell biology, artificial modulation of bioelectrical signals in somatic tissues is a powerful modality that might result in profound advances in understanding and augmentation of regenerative capacity. Molecular bioelectricity and its role in cell-to-cell signaling and epigenetics (altering cell behavior without altering genes) provides a new pathway to discovery of technologies that can counteract the effects of many diseases.

Cells in the human body are “electrically excitable” including those involved with production of chemical signals that affect blood sugar. One example of such a cell of the endocrine type is the L cell, which resides in the gut and secretes cell glucagon-like peptide-1 (GLP-1), glucagon-like peptide-2 (GLP-2), peptide YY (PYY) and oxyntomodulin. GLP-

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1 is an enteric hormone that stimulates insulin secretion and improves glycemia in Type 2 diabetes. There is evidence that in Type 2 diabetes these cells become “unsynchronized”. Growing these cells in tissue culture and subjecting them to specific electrical signals can act to resynchronize their chemical activity and alter their behavior as a “dispersed” metabolic organ. This serves as an illustration of how endogenous ion flows may serve as key epigenetic regulators of cell behavior and suggests that bioelectric mechanisms might be harnessed at a whole-organism level to cause functional regenerative changes. It is possible that eBalance® Technology may affect these processes, although that has yet to be established. The Company was considering a possibility to explore this hypothesis in greater detail during future clinical trials, however, due to lack of funding, new clinical trials were suspended and, as of the date of this Annual Report on Form 10-K, are not being reviewed.

The eBalance® Device delivers microcurrent energy as electrical pulses that pass through the skin to the underlying peripheral nerves to aid in the blocking of pain signals traveling to the brain. These support general relaxation, pain management and may offer additional clinical benefits, as observed in the Company’s Health Canada-approved Clinical Study.

Market Opportunity - Diabetes and its Complications

Diabetes care is one of the main opportunities the Company sees for the use of its eBalance® Technology. Diabetes care was also a primary objective of the Company’s first clinical observational trial. Diabetes is a severe and debilitating disease with profound consequences, both for the individual and for society. The complications of diabetes are devastating, and the economic costs of care comprise a substantial portion of health care budgets. Despite the best efforts of the scientific community to devise a cure, the incidence of diabetes is on the rise.

According to information published by the International Diabetes Federation (“IDF”) in its IDF Diabetes Atlas Tenth Edition (2021) (www.diabetesatlas.org), in 2021, approximately 537 million adults (20-79 years) were living with diabetes; by 2045 this will rise to 783 million. A further 541 million people are at an increased risk of developing Type 2 diabetes. 1

Diabetes mellitus (DM) is a heterogeneous group of metabolic disorders characterized by hyperglycemia (high blood sugar levels) with impaired metabolism of carbohydrate, fat and proteins resulting from defects in insulin secretion, insulin action, or both. Diabetes is one of the world’s oldest diseases with the syndrome being discovered centuries ago. The worldwide increase in the prevalence of diabetes has highlighted the need for increased research efforts into treatment options for both the disease itself and its associated complications.

Type 1 diabetes is caused by destruction of the insulin secreting (beta) cells of the pancreas. The pathogenesis involves autoimmune processes that lead to an absolute insulin deficiency. Type 2 diabetes is caused by a combination of genetic and non-genetic factors that result in insulin resistance and insulin deficiency. Non-genetic factors include increasing age, high caloric intake, obesity, central adiposity, sedentary lifestyle, and low birth weight. This group comprises approximately 90-95% of cases in the diabetes syndrome.

Chronic hyperglycemia leads to various metabolic, hormonal, and physiologic alterations in the body, which further develop a number of secondary complications, resulting in the major increases in morbidity and mortality seen with all types of diabetes. Diabetes dramatically increases the risk of cardiovascular problems, such as coronary artery disease, chest pain (angina), heart attack, stroke, narrowing of arteries (atherosclerosis) and high blood pressure.

High blood sugar over time can injure the walls of the tiny blood vessels (capillaries) that nourish nerves, especially in the legs, causing tingling, numbness, burning or pain. Gradually, all sensation can be lost. Nerve damage in the feet or poor blood flow to the feet increases the risk of various foot complications. In diabetics, minor wounds easily become serious infections, which may heal poorly. Severe damage might require toe, foot or leg amputation.

Diabetes can damage the blood vessels of the retina (diabetic retinopathy), potentially leading to blindness. It also increases the risk of other serious vision conditions, such as cataracts and glaucoma. Diabetic hypertension is a major contributor to kidney failure or irreversible end-stage kidney disease, which often requires dialysis or a kidney transplant.

1 International Diabetes Federation. IDF Diabetes Atlas - Tenth Edition (2021) - https://diabetesatlas.org/

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Damage to the nerves that control digestion can cause problems with nausea, vomiting, diarrhea or constipation. For men, erectile dysfunction may be an issue. Diabetes may leave people more susceptible to a variety of skin disorders, including bacterial and fungal infections. Type 2 diabetes may increase the risk of Alzheimer’s disease.

Expansion of Disease Focus

Given the size of the market for diabetes control and management, the current eBalance® Technology has significant potential of success based solely on treating complications caused by diabetes. However, in order to capture a larger market share, the Company was considering developing more specialized software/treatment options which would have allowed the Company to continue to grow its market share and ensure constant revenue streams. The Company was planning to commence development of specialized software to target other ailments such as gout, hypertension, heart disease, neurological disorders, and depression, among others. The Company’s lack of funding and unfavorable financial position made it impossible to roll out such expansion, and management felt it necessary to stop all further research and development of eBalance® Technology until the Company is financially stable and has secured substantial financing to support its day-to-day operations and further research opportunities. As of the date of this Annual Report on Form 10-K, the Company is unable to provide any assurance that its attempts to raise additional capital will be successful.

Empirical Modeling

The first-in-human observations took place over many years and were carefully documented. The results of these observations lead to the belief that a specific device with a specific set of bioelectric signals of known waveform, frequency, amplitude, pulse, and duration, accompanied by sensing circuits that respond to fluctuations in the body’s response, in a closed feedback loop, produced cumulative effects that led to remarkable global effects in functional aspects of living in a person who had lived with Type 1 diabetes since age 10. Research and development involving patients with longstanding Type 2 diabetes, yielded findings of a similar nature in a limited time frame. These observations were followed by broader observational studies by Stimcell.

Effects observed in these observational studies include subjective reports of diminished fatigue, improved cognition, diminished neuropathic limb pain, improved sleep, reduction in swelling of extremities, improved skin appearance in color and texture, and a reduction in visual disturbance. Objective measures included healing of wounds, control of blood pressure leading to discontinuation or reduction of medication, and greatly improved control of blood sugars with remarkable diminution in HbA1C (which reflects average blood sugar over months). Remarkably, in the context of Type 1 Diabetes with other potential variables remaining the same, insulin requirements diminished by a considerable degree.

Clinical Trials

During January through March 2015, a preliminary Pilot Trial (the “Pilot Trial”) was conducted which was designed to examine the short-term metabolic impact of a single treatment with eBalance® Technology on two diabetic subjects. Pre- and post-treatment blood samples from each subject were sent for extensive metabolic pathway analysis at the University of Alberta Metabolomics Unit.

These studies observed alterations in several pathways, which are known to be deficient in persons with diabetes. The results of the Pilot Trial were notable in that significant shifts in metabolites related to blood sugar handling and disposal occurred in a very short time frame, with the only intervening variable being a 10-minute treatment with eBalance® Technology.

During fiscal 2016 the Company engaged Nutrasource Diagnostics Inc. (“Nutrasource”) with Dr. Richard Tytus of Hamilton Medical Research Group as the Lead Investigator, to commence observational clinical trial in Canada (“Clinical Study”) to assess and quantify eBalance® technology’s ability to alter key metabolic pathways while targeting improved blood sugar control.

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Based on finalized investigational protocol, which received Health Canada’s approval on January 12, 2017, the Clinical Study was structured to assess the impact of three months of the eBalance® therapy, as an adjunct treatment, on HbA1c in 30 Type 1 and Type 2 diabetics. The secondary endpoints of the Clinical Study were defined to observe changes from baseline and medical history of each Clinical Study subject in the following:

·Insulin sensitivity

·Diabetic neuropathy

·Diabetic foot pain and numbness

·Wound healing

·Blood pressure

·Kidney function

·Any other changes reported by patients

In-patient phase of the Clinical Study was completed on July 24, 2017, and a final clinical report was submitted to Health Canada for final approval on January 19, 2018.

All 30 subjects (100%) taking part in the Clinical Study followed through to completion. The treatment was considered safe for the purposes of the Clinical Study. There were no significant treatment-related adverse events or negative abnormalities in routine hematology, biochemistry, vital signs or physical findings for the duration of the Clinical Study.

The Clinical Study resulted in improvement in several biometric markers, including fasting blood sugar and plasma insulin.

Diabetes

The Clinical Study, tested the effectiveness of the eBalance® therapy as an adjunct treatment for diabetes and related complications in Type 1 and Type 2 diabetics over three months. The results of the Clinical Study showed that after three months of eBalance® treatments, average fasting blood glucose levels declined by 12.3% from 10.5 to 9.2 millimoles per litre. Plasma insulin declined by 48% from 168 to 86 picomoles per liter. These results indicate that, on average, the blood glucose uptake was increased and that less insulin was required to achieve that uptake. HbA1c levels declined by 0.16% from 8.36% to 8.20%. A longer double-blind, placebo-controlled study may be conducted in the future to determine if HbA1c levels would be further reduced as improving HbA1c by just 1% for individuals with Type 1 or Type 2 diabetes lowers their risk of combined microvascular complications by 25%.2

One of the largest diabetes clinical trials ever conducted, the UK Prospective Diabetes Study (UKPDS) showed that for every 1% reduction in HbA1c, the relative risk for:

·Microvascular complications decreased by 37%;

·Heart Failure decreased by 16%;

·Diabetes-related deaths decreased by 21%; and

·Myocardial infarction decreased by 14%.3

Blood pressure

After seven weeks of treatments, systolic pressure, the higher amount of pressure in the arteries during the contraction of the heart muscle, declined by 9.6% from 142 to 128 millimeters of mercury (“mmHg”) and stabilized at the lower level through to the end of the Clinical Study. During the same period, diastolic pressure, the pressure in the arteries when the heart muscle is between beats, and which is usually represented by a lower number, declined by 10.4% from 78 to 70 mmHg.

2 Diabetes Control and Complications Trial (DCCT): https://www.niddk.nih.gov/about-niddk/research-areas/diabetes/blood-glucose-control-studies-type-1-diabetes-dcct-edic.

3 The UK Prospective Diabetes Study (UKPDS): clinical and therapeutic implications for type 2 diabetes (UKPDS): https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2014359/

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Pain and numbness

Neuropathy is nerve damage that can occur with diabetes as a result of high blood glucose levels and high blood pressure. The damage most often affects the extremities and causes pain, tingling or numbness in the hands, arms, legs and feet. Only two subjects suffered from pain at the beginning of the Clinical Study and both reported feeling either less pain or reduced coldness or numbness in their extremities. These findings support the Company’s in-house informal observation and testing results with a number of people who have used the eBalance® device. Future studies may recruit subjects who are experiencing pain and loss of feeling.

Kidney function (Nephropathy)

Nephropathy is damage caused to the small blood vessels in the kidneys by high blood glucose levels and high blood pressure that prevents them from functioning properly or even causes them to fail completely. When the blood vessels in the kidneys are injured, the kidneys cannot clean the blood properly. The body will retain more water and salt than it should, which can result in weight gain and edema. A reduction in edema seen in our informal testing may warrant further investigation to assess the effect of eBalance® treatments on kidney function in diabetics.

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Product Development

eBalance® Home and Pro Systems

The eBalance® Home and Pro Systems include the eBalance® Console which acts as the central controller for three pre-programmed microcurrent algorithms (Wellness, Pain Management, and Dual) referred to as Treatment Options. In eBalance® Pro System the Treatments are administered to patients using Hand Bars, Foot Plates, and/or Pen Probes. The eBalance® Pro System is designed for Professional Use by Healthcare practitioners in a clinical setting. The Hand Bars and Foot Plates are used for general wellness and pain management while the Pen Probes are used in localized pain management. In eBalance® Home System the Treatments are administered using Hand Bars and Foot Plates and are controlled by the eBalance® Console. The eBalance® Home System is for Home Use and will be available without a prescription.

On October 1, 2015, the Company entered into a development agreement with Mr. Claudio Tassi (the “Development Agreement”) for the development of the first eBalance® Professional Series Device (the “Prototype”), which was delivered to the Company in November 2015. In December of 2015 the Company ordered the first batch of 25 eBalance® Pro devices with the same configuration as the original Prototype, which were manufactured in early 2016.

These devices were designed as a stand-alone unit, controlled by proprietary software installed in an external computer specifically designed to be used with the eBalance® device. Once internally tested, the devices were distributed to selected clinics and practitioners as well as used directly by the Company in our in-house observations to see the effects of the eBalance® Therapy on the human body.

After several months of testing and receiving feedback from the clinicians and participants, which allowed for further refinement of the devices, the Company ordered 20 units of the second generation eBalance® device, which were received in December 2016. These devices were also distributed to practitioners and other participants for observations and further testing.

In early 2017 the management decided to move manufacturing of the eBalance® devices to Canada. The decision to move to Canada was the outcome of further research the Company had done on potential markets, tax implications of manufacturing the devices in Europe versus in Canada, cross border transfer pricing, availability of raw material and the control of the production processes.

On October 16, 2017, the Company entered into a production development agreement (the “Development Agreement”) with Western Robotics Ltd. (“Western Robotics”) with an objective to enhance the eBalance® device based on preliminary findings from the Clinical Study and the Company’s ongoing in-house observations. The first batch of the Canadian-built eBalance® devices was completed during the 3rd quarter of the Company’s Fiscal 2019. The new eBalance® Devices were certified by LabTest Certification Inc. as Class A (professional use, which the Company refers to as eBalance® Pro System) and Class B (in-home use, which the Company refers to as eBalance® Home System) devices, and conformed to CSA, CE and UL standards for electrical safety and emission standards.

eBalance® Wellness

In February of 2025, the Company established a new partnership with ADM Tronics Unlimited, Inc., a leader in electronic medical device engineering, with an aim to design an eBalance® Wellness microcurrent device into a compact, affordable consumer unit optimized for home use, complete with cutting-edge diagnostic features. The wellness designation of the new device will negate the process of seeking approval for a medical device from the FDA and speed up the time required to reach market and lower the cost. This new streamlined unit is expected to be completed in the fall of 2025 and ready for market in early 2026.

Medical Device Regulations and Government Approvals

The manufacturing, packaging, marketing and importing of medical devices is heavily regulated in the United States, Canada and Europe. Further, the Company expects that any other countries in which it may seek to sell or market devices based on the eBalance® Technology will similarly have an extensive regulatory environment.

The U.S. Food and Drug Administration’s (FDA) Center for Devices and Radiological Health (CDRH) is responsible for regulating firms that manufacture, repackage, re-label and/or import medical devices sold in the United States.

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Health Canada’s Health Products and Food Branch Inspectorate is responsible for regulating the manufacture, labeling, packaging, distribution and import of medical devices sold in Canada.

At the end of February 2020, the Company completed an audit required for certification of its quality management systems (“QMS”) under Stage 2 Medical Device Single Audit Program (“MDSAP”) and under ISO 13485:2016 standard. The audit was carried out by BSI Group Canada Inc. (“BSI”) and included the following:

-The effectiveness of the QMS incorporating the applicable regulatory requirements outlined by ISO13485:2016 standard and as required under MDSAP;

-Product/process-related technologies;

-Adequate technical documentation for the eBalance® device in relation to ISO13485:2016 standard and MDSAP; and

-The Company’s ability to comply with these requirements.

On March 31, 2020, the Company received Certificate No. FM 716345, certifying that the Company operates a Quality Management System which complies with the requirements of ISO 13485:2016 for design, development and manufacture of microcurrent therapeutic devices for wellness and pain relief, and on June 2, 2020, received a certificate #MDSAP 716274.

Following the receipt of ISO and MDSAP certificates, the Company filed two separate applications for Class II Medical Device Licenses for the eBalance® Pro System and the eBalance® Home System with Health Canada. On July 17, 2020, Health Canada issued a Class II Medical Device License #104925 for the eBalance® Home System, and on August 18, 2020, issued a Class II Medical Device License #105044 for the eBalance® Pro System.

Class II Medical Licenses require the Company to go through annual MDSAP audits. Since the Company did not have adequate financing, the 2022-23 audit was cancelled, resulting in cancellation of the Class II Medical Device Licenses by Health Canada.

Prior to selling the eBalance® Home and Pro Systems in the United States, the Company will be required to apply for an approval from the FDA through a process known as 510K submission. Due to the financial situation of the Company, the submission for the 510K clearance was not finalized and the Company withdrew its application.

The cancellation of Class II Medical Device Licenses by Health Canada resulted in the Company suspending all its revenue-generating activities associated with sales of eBalance® Home and Pro Systems, as well as monthly recurring revenue from the online sales of eBalance® treatment packages.

Third Party Payers / Private Insurers

Reimbursement for medical devices through Medicare and Medicaid in the U.S., and through health protectorates in other nations, is not guaranteed. Third party private payers or private insurers typically follow the lead of government healthcare providers. A decision as to whether a device or treatment is covered involves extensive negotiations and is typically predicated on the concept of health cost savings. If the device can be shown to reduce health care costs through prevention of expensive complications of diabetes, such applications for approvals would be more favorably reviewed.

Marketing Plans

On March 21, 2019, the Company entered into an exclusive worldwide distribution agreement (the “Agreement”) with Live Current Media, Inc. (“LIVC”) for worldwide distribution rights to eBalance® devices in an end-user market (the “Direct Rights”). John Da Costa, Stimcell’s director and former COO, was a director of LIVC until his resignation in April of 2022, Mr. David Jeffs, the Company’s director, CEO and President, was a director and President of LIVC until May 24, 2023. LIVC paid an initial one-time fee of $250,000. In order to maintain the exclusivity, LIVC will be required to order a minimum of 2,000 devices by the end of a 24-month period from the date the eBalance® device receives its 510K clearance from the FDA (the “Initial Term”). The Company agreed to sell the eBalance® devices to LIVC at a 20% discount to the regular retail price in place at the time of the order (the “License Fee”), with 50% of the License Fee payable at the time of placing an order, and remaining 50% payable on the specified delivery date of the devices. In addition, the Company agreed that during the Initial Term the License Fee for the eBalance® devices will be fixed at CAD$2,400 per device. In addition to the License Fee, LIVC was required to pay a monthly recurring

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fee per each eBalance® device equal to 50% of the regular monthly home-use fee set by the Company. Following the Initial Term, the minimum monthly fee was to be $100,000.

On January 29, 2020, the Company reacquired the Direct Rights from LIVC in exchange for a royalty on all sales of the eBalance® device up to an aggregate $507,500 calculated as follows:

1.$25 per eBalance® device sold, not to exceed 3,500 eBalance® devices; and

2.$5 per month for each eBalance® device generating recurring monthly revenue, up to an aggregate royalty of $420,000.

Should the recurring monthly fee be cancelled due to a change in the Company’s distribution model, the royalty will be replaced by a one-time payment of $145 per eBalance® device sold up to an aggregate of $507,500.

Competition

The market for treatments that assist in the control and management of diabetes, its complications, as well as other ailments, including pain management, are highly competitive. However, since the Company’s eBalance® Pro and eBalance® Home Systems are based on the microcurrent therapy, which is not yet widely accepted in traditional medicine, direct competition for these Systems is not well defined.

Indirect competitors include a multitude of pharmaceutical companies that produce various drugs to maintain and prevent diabetes related complications; companies producing glucose monitoring devices, other pharmaceuticals to treat diseases and symptoms.

The Company operates in a competitive market that includes several companies developing and commercializing electrical/microcurrent therapy technologies for the treatment of acute, chronic and postoperative pain.

Patents/Trademarks/Licenses/Franchises/Concessions/Royalty Agreements or Labor Contracts

The Company’s eBalance® Technology is not patented.

On August 10, 2021, the Canadian Intellectual Property Office approved the Company’s EBALANCE trademark application number 1867918, which the Company filed on November 14, 2017, and issued a certificate of registration number 1,104,935 registering the trademark EBALANCE in the name of the Company. Earlier, on May 8, 2019, the European Union approved the Company’s eBalance® trademark application and issued certificate of registration number 017997155 registering the trademark eBalance® in the name of the Company. The eBalance® trademark was also registered in the U.K., bearing the registration number UK00003345540. On March 15, 2022, United States Patent and Trademarks Office issued a certificate of registration number 6,669,175 registering the trademark EBALANCE in the name of the Company.

Number of Total Employees and Number of Full Time Employees

The Company has no employees other than its executive officers, who provide their services as independent consultants. The Company contracts for the services of engineering staff for development of its eBalance® technology and medical and technical staff it requires to administer the observational studies and the clinical trials, as well as other consultants on “as needed” basis.

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