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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

 

FORM 10-Q

 

(Mark One)

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended May 31, 2022

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to

Commission File Number 001-40767

 

CRYO-CELL INTERNATIONAL, INC.

(Exact name of Registrant as Specified in its Charter)

 

 

Delaware

 

22-3023093

(State or other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

700 Brooker Creek Blvd. Oldsmar, FL 34677

 

(Address of Principal Executive Offices) (Zip Code)

 

(813) 749-2100

 

 

(Issuer's phone number, including area code)

(Former name, former address and former fiscal year, if changed since last report).

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.01 par value

 

CCEL

 

The Nasdaq Stock Market LLC

 

Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes ☒ No ☐ Not Applicable ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “small reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of July 11, 2022, 8,388,290 shares of $0.01 par value common stock were outstanding.

 

 


 

CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

 

PAGE

PART I - FINANCIAL INFORMATION (UNAUDITED)

 

 

 

Item 1. Financial Statements

 

 

 

Consolidated Balance Sheets

3

 

 

Consolidated Statements of Income

4

 

 

Consolidated Statements of Cash Flows

5

 

 

Consolidated Statements of Stockholders’ Equity

6

 

 

Notes to Consolidated Financial Statements

7

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

28

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

37

 

 

Item 4. Controls and Procedures

37

 

 

PART II - OTHER INFORMATION

39

 

 

Item 1. Legal Proceedings

39

 

 

Item 1A. Risk Factors

39

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

51

 

 

Item 3. Defaults Upon Senior Securities

51

 

 

Item 4. Mine Safety Disclosures

52

 

 

Item 5. Other Information

52

 

 

Item 6. Exhibits

53

 

 

SIGNATURES

54

 

 

 

2


 

CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

(Unaudited)

 

 

 

 

 

 

May 31,

 

 

November 30,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,804,452

 

 

$

8,263,088

 

Marketable securities

 

 

63,125

 

 

 

75,412

 

Accounts receivable (net of allowance for

 

 

 

 

 

 

doubtful accounts of $3,233,575 and $3,078,439, respectively)

 

 

5,150,154

 

 

 

5,253,173

 

Prepaid expenses

 

 

569,630

 

 

 

558,413

 

Inventory, current portion

 

 

873,157

 

 

 

921,213

 

Other current assets

 

 

844,774

 

 

 

711,208

 

Total current assets

 

 

10,305,292

 

 

 

15,782,507

 

Property and Equipment-net

 

 

4,027,969

 

 

 

3,230,204

 

Other Assets

 

 

 

 

 

 

Investment - Tianhe stock

 

 

308,000

 

 

 

308,000

 

Duke license agreement

 

 

14,171,415

 

 

 

14,651,802

 

Intangible assets, net

 

 

1,511,502

 

 

 

1,559,693

 

Inventory, net of current portion

 

 

9,552,616

 

 

 

9,695,363

 

Goodwill

 

 

1,941,411

 

 

 

1,941,411

 

Deferred tax assets

 

 

12,010,133

 

 

 

12,010,133

 

Operating lease right-of-use asset

 

 

762,617

 

 

 

916,493

 

Deposits and other assets, net

 

 

803,991

 

 

 

566,470

 

Total other assets

 

 

41,061,685

 

 

 

41,649,365

 

Total assets

 

$

55,394,946

 

 

$

60,662,076

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable

 

$

1,722,552

 

 

$

1,489,774

 

Accrued expenses

 

 

2,074,987

 

 

 

3,057,386

 

Note payable

 

 

357,842

 

 

 

1,898,065

 

Current portion of operating lease liability

 

 

315,042

 

 

 

312,067

 

Current portion of Duke license agreement liability

 

 

1,949,539

 

 

 

4,957,591

 

Deferred revenue

 

 

9,291,530

 

 

 

9,358,696

 

Total current liabilities

 

 

15,711,492

 

 

 

21,073,579

 

Other Liabilities

 

 

 

 

 

 

Deferred revenue, net of current portion

 

 

33,372,659

 

 

 

31,274,214

 

Contingent consideration

 

 

574,833

 

 

 

727,371

 

Operating lease long-term liability

 

 

453,979

 

 

 

610,989

 

Duke license agreement liability

 

 

-

 

 

 

1,916,609

 

Long-term liability - revenue sharing agreements

 

 

875,000

 

 

 

875,000

 

Total other liabilities

 

 

35,276,471

 

 

 

35,404,183

 

Total liabilities

 

 

50,987,963

 

 

 

56,477,762

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

Preferred stock ($.01 par value, 500,000 authorized and none issued and
   outstanding)

 

 

 

 

 

 

Series A Junior participating preferred stock ($.01 par value, 20,000
   authorized and
none issued and outstanding)

 

 

 

 

 

 

Common stock ($.01 par value, 20,000,000 authorized; 14,675,772 issued
   and
8,399,490 outstanding as of May 31, 2022 and 14,665,772
   issued and
8,551,816 outstanding as of November 30, 2021)

 

 

146,758

 

 

 

146,658

 

Additional paid-in capital

 

 

41,767,841

 

 

 

41,586,583

 

Treasury stock, at cost

 

 

(22,238,189

)

 

 

(20,812,734

)

Accumulated deficit

 

 

(15,269,427

)

 

 

(16,736,193

)

Total stockholders' equity

 

 

4,406,983

 

 

 

4,184,314

 

Total liabilities and stockholders' equity

 

$

55,394,946

 

 

$

60,662,076

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3


 

CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

 

May 31,

 

 

May 31,

 

 

May 31,

 

 

May 31,

 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Processing and storage fees

 

 

$

7,480,082

 

 

$

7,158,886

 

 

$

14,637,568

 

 

$

13,897,517

 

Public banking revenue

 

 

 

116,735

 

 

 

46,309

 

 

 

199,580

 

 

 

130,295

 

Product revenue

 

 

 

36,400

 

 

 

-

 

 

 

54,600

 

 

 

38,000

 

Total revenue

 

 

 

7,633,217

 

 

 

7,205,195

 

 

 

14,891,748

 

 

 

14,065,812

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

2,201,540

 

 

 

2,222,671

 

 

 

4,304,742

 

 

 

4,234,868

 

Selling, general and administrative expenses

 

 

 

3,912,586

 

 

 

3,148,396

 

 

 

7,288,540

 

 

 

6,581,708

 

Change in fair value of contingent consideration

 

 

 

(36,105

)

 

 

(431,599

)

 

 

(152,538

)

 

 

(279,205

)

Research, development and related engineering

 

 

 

80,896

 

 

 

3,237

 

 

 

228,116

 

 

 

9,427

 

Depreciation and amortization

 

 

 

279,926

 

 

 

267,422

 

 

 

558,092

 

 

 

288,685

 

Total costs and expenses

 

 

 

6,438,843

 

 

 

5,210,127

 

 

 

12,226,952

 

 

 

10,835,483

 

Operating Income

 

 

 

1,194,374

 

 

 

1,995,068

 

 

 

2,664,796

 

 

 

3,230,329

 

Other Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses on marketable securities

 

 

 

(18,188

)

 

 

(12,512

)

 

 

(26,830

)

 

 

(15,088

)

Other income

 

 

 

118

 

 

 

25

 

 

 

127

 

 

 

50

 

Interest expense

 

 

 

(276,524

)

 

 

(341,390

)

 

 

(582,619

)

 

 

(621,609

)

Total other expense

 

 

 

(294,594

)

 

 

(353,877

)

 

 

(609,322

)

 

 

(636,647

)

Income before income tax expense

 

 

 

899,780

 

 

 

1,641,191

 

 

 

2,055,474

 

 

 

2,593,682

 

Income tax expense

 

 

 

(265,061

)

 

 

(470,562

)

 

 

(588,708

)

 

 

(729,463

)

Net Income

 

 

$

634,719

 

 

$

1,170,629

 

 

$

1,466,766

 

 

$

1,864,219

 

Net income per common share - basic

 

 

$

0.08

 

 

$

0.15

 

 

$

0.17

 

 

$

0.24

 

Weighted average common shares outstanding - basic

 

 

 

8,437,544

 

 

 

7,950,791

 

 

 

8,479,071

 

 

 

7,760,214

 

Net income per common share - diluted

 

 

$

0.07

 

 

$

0.14

 

 

$

0.17

 

 

$

0.23

 

Weighted average common shares outstanding - diluted

 

 

 

8,553,085

 

 

 

8,273,767

 

 

 

8,643,106

 

 

 

8,060,506

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Six Months Ended

 

 

 

May 31,

 

 

May 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

1,466,766

 

 

$

1,864,219

 

Adjustments to reconcile net income to net cash provided by
   operating activities:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

760,759

 

 

 

391,218

 

Change in fair value of contingent consideration

 

 

(152,538

)

 

 

(279,205

)

Losses on marketable securities

 

 

26,830

 

 

 

15,088

 

Compensatory element of stock options

 

 

149,358

 

 

 

152,572

 

Provision for doubtful accounts

 

 

399,953

 

 

 

105,279

 

Amortization of debt issuance costs

 

 

9,777

 

 

 

35,072

 

Amortization of operating lease right-of-use asset

 

 

153,876

 

 

 

136,116

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(296,934

)

 

 

1,002,125

 

Prepaid expenses

 

 

(11,217

)

 

 

261,691

 

Inventory

 

 

190,803

 

 

 

108,414

 

Other current assets

 

 

(133,566

)

 

 

(61,299

)

Deposits and other assets, net

 

 

(237,521

)

 

 

(113,564

)

Accounts payable

 

 

232,778

 

 

 

278,800

 

Accrued expenses

 

 

(982,399

)

 

 

(1,407,076

)

Operating lease liability

 

 

(154,035

)

 

 

(133,259

)

Deferred revenue

 

 

2,031,279

 

 

 

1,842,959

 

Net cash provided by operating activities

 

 

3,453,969

 

 

 

4,199,150

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(954,607

)

 

 

(22,272

)

Payment of Duke license agreement

 

 

(5,000,000

)

 

 

(5,106,224

)

Purchases of marketable securities

 

 

(1,142,212

)

 

 

 

Sale of marketable securities

 

 

1,127,669

 

 

 

 

Net cash used in investing activities

 

 

(5,969,150

)

 

 

(5,128,496

)

Cash flows from financing activities:

 

 

 

 

 

 

Treasury stock purchases

 

 

(1,425,455

)

 

 

-

 

Repayments of note payable

 

 

(1,550,000

)

 

 

(2,550,000

)

Proceeds from the exercise of stock options

 

 

32,000

 

 

 

1,066,290

 

Net cash used in financing activities

 

 

(2,943,455

)

 

 

(1,483,710

)

Decrease in cash and cash equivalents

 

 

(5,458,636

)

 

 

(2,413,056

)

Cash and cash equivalents - beginning of period

 

 

8,263,088

 

 

 

10,361,125

 

Cash and cash equivalents - end of period

 

$

2,804,452

 

 

$

7,948,069

 

 

 

 

 

 

 

 

Supplemental non-cash operating activities:

 

 

 

 

 

 

Lease liability arising from right-of-use asset

 

$

 

 

$

904,691

 

Patent option agreement credit to purchase of patents and licenses

 

$

 

 

$

500,000

 

Liabilities incurred for the purchase of patents and licenses

 

$

 

 

$

11,258,083

 

Supplemental financing activities:

 

 

 

 

 

 

Stock issued for the purchase of patents and licenses

 

$

 

 

$

3,585,172

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

Interest

 

$

483,641

 

 

$

516,000

 

Income taxes

 

$

756,133

 

 

$

1,901,025

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5


 

CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

 

 

 

 

For the Three Months Ended May 31, 2022

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Treasury

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at February 28, 2022

 

 

14,675,772

 

 

$

146,758

 

 

$

41,650,379

 

 

$

(21,641,714

)

 

$

(15,904,146

)

 

$

4,251,277

 

Exercise of stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

-

 

Compensatory element of stock options

 

 

 

 

 

 

 

 

117,462

 

 

 

 

 

 

 

 

 

117,462

 

Treasury stock

 

 

 

 

 

 

 

 

 

 

 

(596,475

)

 

 

 

 

 

(596,475

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

634,719

 

 

 

634,719

 

Balance at May 31, 2022

 

 

14,675,772

 

 

$

146,758

 

 

$

41,767,841

 

 

$

(22,238,189

)

 

$

(15,269,427

)

 

$

4,406,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended May 31, 2022

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Treasury

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Equity

 

Balance at November 30, 2021

 

 

14,665,772

 

 

$

146,658

 

 

$

41,586,583

 

 

$

(20,812,734

)

 

$

(16,736,193

)

 

$

4,184,314

 

Exercise of stock options

 

 

10,000

 

 

 

100

 

 

 

31,900

 

 

 

 

 

 

 

 

 

32,000

 

Compensatory element of stock options

 

 

 

 

 

 

 

 

149,358

 

 

 

 

 

 

 

 

 

149,358

 

Treasury stock

 

 

 

 

 

 

 

 

 

 

 

(1,425,455

)

 

 

 

 

 

(1,425,455

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,466,766

 

 

 

1,466,766

 

Balance at May 31, 2022