CryoHeart Laboratories, Inc.

Who are we?  CryoHeart Laboratories, Inc is a medical device and biotech company dedicated to developing a series of patented medical products for the underserved cardio-thoracic surgical marketplace. Our first entry into this underdeveloped market is ThoraGraft, a game-changing biologic product specifically designed to close the sternum following an open- heart surgery.

The Problem We Address: There are more than 2.5 million, open heart surgeries worldwide (some 500,000+ in the US alone not including the pediatric or trauma markets), that involve open sternal wounds (essentially cutting the sternum down the center and splitting it apart to allow access to the heart). For the past 70 years these sternal wounds are closed with stainless steel wires 95% of the time. This methodology of wiring sternal bone back together is a triage technique left over from WWII. CryoHeart’s ThoraGraft product is a game changing solution that brings this outdated methodology up to modern standards.  With ThoraGraft implanted, patients no longer have to undergo this 70-year- old procedure as the primary closure modality for an incision as complicated as the sternal wound.

The outdated methodology of wiring the sternal bone back together following heart surgery creates the following issues :

 Our Solution: CryoHeart’s Flagship Product, ThoraGraft is a multi-functional bone graft technology with a singularly unique patented design. Our proprietary tissue form is implanted between the surgically separated halves of a sternum as the surgeon closes a patient’s chest wound following an open thoracic procedure. ThoraGraft acts as a bone “gasket” implanted just prior to the surgeon closing the chest wall. Traditionally, postoperative complications associated with this wound are frequently very costly and complicated for the patient as well as the healthcare system.

 WHAT DOES THORAGRAFT DELIVER? ThoraGraft has been used successfully in more than 120 procedures during the trial release of the product. ThoraGraft has demonstrated      it provides a simple and effective solution that surgeons claim dramatically improves patient outcomes by addressing numerous post-operative challenges per the following:

Hospitals get paid for these procedures under a DRG reimbursement model from insurance companies. Diagnosis-Related Group Reimbursement. Diagnosis-related group reimbursement (DRG) is a reimbursement system for inpatient charges from facilities. This is a one lump sum payment to the hospital for these procedures from the insurance company and can range from $85,000 to $300,000 plus for an open-heart procedure, depending on the facility.

The revenue opportunity is based on the following process. The surgeon orders the graft for the procedure and the hospital issues a PO Purchase Order for the graft to CryoHeart. CryoHeart ships the product to the hospital while at the same time invoicing the hospital directly for each graft ($4,985 per graft). If a hospital performs 1,000 open heart procedures in a year and uses our product 50% of the time, that one account represents $2.5 million dollars annually for CryoHeart. There are well over 500,000 open sternal wound procedures performed each year just in the US. A 10% penetration of the US Market equates to roughly $250 Million in annual sales that generates gross margins in the range of $200 Million

CryoHeart is the first company to develop a tissue form specifically to address these issues in the sternum and we are the first to come to market with this solution.. Our technology is protected by two broad and comprehensive patents. The first patent is a Utility Patent. As such it is a broader and more expansive patent that protects the business methodology as well as the clinical approach of our technology in a more comprehensive way than a traditional design and materials patent. This means holding a Utility Patent is far more broad in its protection and significantly more valuable.  The second patent on our technology is The System and Methods for fusing bone in the sternum. Together these two patents combined gives CryoHeart broad protection against a competitor coming to market and provides CryoHeart a clear path to grow and establish a well-protected position in the cardio-thoracic marketplace.

To redefine the systems and methods currently utilised by the Cardiothoracic community to treat, fix and heal sternal wound as well as  thoracic cavity as a whole.  Our plan includes the following steps:

Innovative and Leading Edge Product Development:  The innovation that has taken place in the thoracic cavity has been minimal over the past 5 decades.  CryoHeart has identified this space as a major opportunity and has taken a systematic approach to developing new technologies for sternal healing, sternal fixation, percutaneous fractured rib stabilization, rib fixation, as well as thoracic spinal issues.  Quite simply, our vision is to establish CryoHeart as the  world leader in innovative thoracic applications and solutions.

Direct Sales Distribution: We sell directly to hospitals through our contracted network of distributors. We engage third-party distributors that have established relationships with the thoracic surgeons and pursue customer relationships through our support of these distributors. Our distributors work directly with these surgeons and hospitals on a regular basis and sell our product through initialising contact with those surgeons and getting their commitment to ThoraGraft. 

Surgeon to Surgeon Interaction and Promotion: We have built and active group of respected surgeons who sit on our Board of Surgical Advisors (BSA). These surgeons in turn interface with other surgeons on behalf of CryoHeart to promote our product by discussing the outstanding clinical outcomes they have experienced using ThoraGraft with their patients.  This peer-to-peer communication to essential to maintaining necessary and proper clinical standards and focus. 

Clinical Studies: CryoHeart is writing up our retrospective clinical data now and will publish those results in a peer reviewed White Paper.  In addition, our objective is to launch a 500-patient clinical trial towards the end of this year to formalize the consistent patient outcomes we are seeing. This larger study will add significant value to the company.  Companies such as Medtronic, J&J and others highly value this kind of data and upon an acquisition of this technology would use it to plug into their massive worldwide sales forces to make ThoraGraft a Standard of Care product for thoracic surgery.

Trade Shows/Conferences: CryoHeart attends leading trade shows and conferences as an exhibitor or as an active participant throughout the year. Presently we are planning to attend 3 to 4 trade shows each year. At these trade shows we will have presence through a booth staffed by key members of our team, representatives from of our Board of Surgical Advisors. Our Distributors, Founders, and Sales Team will also actively “work” the events and we will use the event provider’s media and other onsite marketing to gain additional exposure. The overall objective is to directly engage with and impact the many doctors, surgeons, hospital administrators, and medical industry influencers, who regularly attend these trade shows and conferences.

Marketing: CryoHeart has a robust marketing plan mapped out to help promote the awareness of ThoraGraft to each of our five target audiences:

i. Geo and Demographic Targeted Messaging: Will initially focus on smaller vibrant secondary markets with our media aimed directly to our audience segments. In this effort we will use a series of short videos with patient and surgeon

testimonials, blogs, video content, and links to grass root discussions to help generate an organic awareness of and demand for ThoraGraft. This will be cross promoted with our P/R efforts with social media (see below).

d. Direct to Consumer Media to Drive Patient-to-Patient and Patient-to-Doctor Organic Growth: Patient to patient testimonials have already proven to be one of the most powerfulmeansbywhichourproductisgettingtractioninthemarketplace. Itislife- changing when any patient finds out that they need heart (lung or other cardio-thoracic surgery) and will have their sternums "cracked" for the surgeon to surgically address their issue. They and their friends and family are often in a state of shock, fear and confusion, especially as they begin to grasp the trauma this kind of wound is going to cause them.

CryoHeart introduced ThoraGraft to the market on a limited release basis at the end of 2020. Despite the Pandemic, we established a controlled release of ThoraGraft so that we could analyze our market, generate sales tools, establish implantation protocols, as well as to understand the products handling characteristics. However, the most important reason for the limited release was to create enough clinical data to support a general release of ThoraGraft.  With our patents now in place, this will allow us to quickly develop into a dominant player in the cardio- thoracic space. We can now scale ThoraGraft into a “standard of care” product that will grow over time into the optimal method for treating and closing a sternal wound.

1. We have sales firmly established at several test bed hospital and clinical facilities with an annual revenue run rate of $600,000.

2. We are in the process of establishing sales at another 12 targeted hospitals with the opportunity to achieve an annual revenue run rate of $7.2 Million.

3. We have unsolicited word of mouth activity occurring on the patient-to-patient and patient-to- doctor levels.

4. We are building a very seasoned Sales Management team with a network of third-party Distributors and Sales Reps to scale ThoraGraft sales on a national and international basis.

1. In more than 120 successful surgeries we have established the clinical relevance of ThoraGraft into a proven, safe and highly effective product that significantly improves patient outcomes and quality of life!

2. We have firmly established the market for ThoraGraft at a price point of in the range of $5,000 per graft (which yields exceptional gross margins to CryoHeart).

3. We have validated with hospitals and healthcare providers that there is an excellent economic case for ThoraGraft as it saves the hospital far more than it costs to implant per patient.

4. We have clinically proven ThoraGraft performs consistently on every patient independent of the comorbidity with which each patient may be challenged.

5. Every Doctor using ThoraGraft raves about the ease of use and that it yields meaningful improvement in patient outcomes and healing.

6. The clinical results are clear... ThoraGraft has the potential to be a Standard of Care product. As such, it is ready to be scaled into a billion dollar marketplace...

Intellectual Property:

1. ThoraGraft is protected with both a Utility Patent as well as a System and Methods Patent. Both kinds of patents significantly add to the value of ThoraGraft and protect our product and the market we've established from competition!

2. We recently received patents on two additional technologies that further support ThoraGraft unique position in the medical marketplace.

3. We have another four unique technologies in the patent process that have been designed to address other unmet needs in the thoracic cavity.

4. We have a robust product development and prototyping program we are cultivating to work with our surgeon base to create new medical implant technologies.

The Team we have gathered within CryoHeart is highly experienced, technically capable, and clinically sound with hundreds of years in cumulative medical experience. On the business side all our four advisors in finance, investment, sales, and marketing each have a minimum of 35 years of experience in their fields. We are extremely excited and pleased that we have been able to attract the best and brightest minds in our industry to CryoHeart! We also have assembled an outstanding group of outside legal professionals that have successfully guided us through the process of patenting ThoraGraft, along with additional products that support ThoraGraft. Plus, they have prepared patent filings for our upcoming products that will continue to help CryoHeart be a dominant player in the Cardio-Thoracic medical products space well into the future.

Our corporate message has gained a very warm and heart felt acceptance in our industry. We take human donor tissue and create lifesaving and life-giving implant technologies to enhance the quality of life and improve outcomes for the patients, doctors, and hospitals we serve.  All our Team values the selfless gift of life from donors that makes our technology possible. The sacred relationship we hold with our donors carries with it a profound sense of responsibility and the commitment to honor their desire to pass on the gift of healing to those in need. It is part of our mission to honor that desire in the work we perform daily at CryoHeart.

1. We have completed the first half of our $4 Million Series A Preferred angel/friend & family, seed round. Therefore, there is currently the remaining 1,950,000  Series A Preferred shares available at $1.00 per share. We intend to close that Series A seed round by early Fall.

2. When this seed round has closed, we will immediately introduce a secondary round  to raise an additional $5 Million of funding at $3.00 per share of Series A Common shares.

Our Projected ROI: Our vision is to rapidly grow ThoraGraft to 5% penetration of the sternal grafting market.This equates approximately 30,000 surgical procedures (based on a total US market estimated of 600,000 annual open sternal wounds) This is roughly $125 Million in sales and would generate an estimated Gross Margin of $75 Million.  Our model is to spin out products one by one for acquisition by large established medical products companies.

At just $25 Million in sales, we anticipate that we will generate serious interest from larger companies like Medtronic, Johnson & Johnson, Zimmer Bio Met, Globus, Stryker, and SOARIN to acquire our ThoraGraft product technology (including its patents and revenues). CryoHeart provides a projected EBITDA for the product line of at least 40% on ThoraGrafts’s gross sales and the average minimal multiple on an acquisition of this nature will be around 10 x on EBITDA. Doing the math... 40% on $125 Million is $50 Million. This translate into roughly a $25 per share return on investment.

ThoraGraft is poised to become the first major advancement in treating sternal wounds since World War II. It represents a game-changing technology in cardio-thoracic space and clearly has the potential to become a “Standard of Care” product. Given that ThoraGraft has clinically shown that it will , significantly reduce pain, dramatically improve patient outcomes, advance healing, save costs for hospitals... ThoraGraft will positively transform Cardiothoracic surgery in the future..