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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 August 31, 2023

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

 

NYSE American 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 October 12, 2023, 8,286,785 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’ Deficit

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

36

 

 

Item 4. Controls and Procedures

37

 

 

PART II - OTHER INFORMATION

38

 

 

Item 1. Legal Proceedings

38

 

 

Item 1A. Risk Factors

38

 

 

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

50

 

 

Item 3. Defaults Upon Senior Securities

50

 

 

Item 4. Mine Safety Disclosures

50

 

 

Item 5. Other Information

50

 

 

Item 6. Exhibits

51

 

 

SIGNATURES

52

 

 

 

2


 

CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

(Unaudited)

 

 

 

 

 

 

August 31,

 

 

November 30,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

583,996

 

 

$

1,703,958

 

Marketable securities

 

 

623,489

 

 

 

17,620

 

Accounts receivable (net of allowance for

 

 

 

 

 

 

doubtful accounts of $3,757,884 and $3,528,119, respectively)

 

 

6,437,644

 

 

 

6,043,941

 

Prepaid expenses

 

 

719,007

 

 

 

566,557

 

Inventory, current portion

 

 

1,062,859

 

 

 

851,230

 

Swap contract

 

 

58,757

 

 

 

 

Other current assets

 

 

450,617

 

 

 

426,879

 

Total current assets

 

 

9,936,369

 

 

 

9,610,185

 

Property and Equipment-net

 

 

18,836,456

 

 

 

13,603,115

 

Other Assets

 

 

 

 

 

 

Investment - Tianhe stock

 

 

308,000

 

 

 

308,000

 

Duke license agreement

 

 

12,970,447

 

 

 

13,691,028

 

Intangible assets, net

 

 

1,391,026

 

 

 

1,463,312

 

Inventory, net of current portion

 

 

8,836,287

 

 

 

9,275,344

 

Goodwill

 

 

1,941,411

 

 

 

1,941,411

 

Deferred tax assets

 

 

13,742,399

 

 

 

13,742,399

 

Operating lease right-of-use asset

 

 

1,107,171

 

 

 

606,034

 

Deposits and other assets, net

 

 

726,800

 

 

 

647,226

 

Total other assets

 

 

41,023,541

 

 

 

41,674,754

 

Total assets

 

$

69,796,366

 

 

$

64,888,054

 

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable

 

$

2,785,459

 

 

$

1,605,301

 

Accrued expenses

 

 

1,774,456

 

 

 

3,585,810

 

Note payable

 

 

162,659

 

 

 

150,527

 

Line of credit

 

 

2,722,728

 

 

 

2,272,728

 

Current portion of operating lease liability

 

 

221,062

 

 

 

297,691

 

Current portion of Duke license agreement liability

 

 

1,200,000

 

 

 

1,983,036

 

Deferred revenue

 

 

9,696,530

 

 

 

9,586,327

 

Total current liabilities

 

 

18,562,894

 

 

 

19,481,420

 

Other Liabilities

 

 

 

 

 

 

Deferred revenue, net of current portion

 

 

39,966,150

 

 

 

36,000,059

 

Contingent consideration

 

 

1,030,050

 

 

 

1,162,704

 

Note payable, net of current portion and debt issuance costs

 

 

8,468,312

 

 

 

8,579,875

 

Operating lease long-term liability

 

 

910,123

 

 

 

313,298

 

Long-term liability - revenue sharing agreements

 

 

875,000

 

 

 

875,000

 

Total other liabilities

 

 

51,249,635

 

 

 

46,930,936

 

Total liabilities

 

 

69,812,529

 

 

 

66,412,356

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

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; 14,849,246 issued and 8,286,785 outstanding as of August 31, 2023 and 14,848,001 issued and 8,500,511 outstanding as of November 30, 2022)

 

 

148,492

 

 

 

148,480

 

Additional paid-in capital

 

 

43,236,194

 

 

 

42,597,380

 

Treasury stock, at cost

 

 

(23,431,685

)

 

 

(22,632,649

)

Accumulated deficit

 

 

(19,969,164

)

 

 

(21,637,513

)

Total stockholders' deficit

 

 

(16,163

)

 

 

(1,524,302

)

Total liabilities and stockholders' deficit

 

$

69,796,366

 

 

$

64,888,054

 

 

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 Nine Months Ended

 

 

 

 

August 31,

 

 

August 31,

 

 

August 31,

 

 

August 31,

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Processing and storage fees

 

 

$

7,862,949

 

 

$

7,522,134

 

 

$

23,006,164

 

 

$

22,159,702

 

Public banking revenue

 

 

 

4,383

 

 

 

137,825

 

 

 

398,896

 

 

 

337,405

 

Product revenue

 

 

 

2,543

 

 

 

21,000

 

 

 

61,920

 

 

 

75,600

 

Total revenue

 

 

 

7,869,875

 

 

 

7,680,959

 

 

 

23,466,980

 

 

 

22,572,707

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

2,156,187

 

 

 

2,348,755

 

 

 

6,366,737

 

 

 

6,653,497

 

Selling, general and administrative expenses

 

 

 

3,804,564

 

 

 

3,603,411

 

 

 

11,722,435

 

 

 

10,891,951

 

Change in fair value of contingent consideration

 

 

 

122,671

 

 

 

412,307

 

 

 

(65,154

)

 

 

259,769

 

Research, development and related engineering

 

 

 

344,132

 

 

 

80,272

 

 

 

727,648

 

 

 

308,388

 

Depreciation and amortization

 

 

 

281,277

 

 

 

281,903

 

 

 

843,201

 

 

 

839,995

 

Total costs and expenses

 

 

 

6,708,831

 

 

 

6,726,648

 

 

 

19,594,867

 

 

 

18,953,600

 

Operating Income

 

 

 

1,161,044

 

 

 

954,311

 

 

 

3,872,113

 

 

 

3,619,107

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (losses) on marketable securities

 

 

 

93,386

 

 

 

(11,627

)

 

 

100,082

 

 

 

(38,457

)

Gain on interest rate swap

 

 

 

282,731

 

 

 

62,835

 

 

 

58,757

 

 

 

62,835

 

Other income

 

 

 

102

 

 

 

796

 

 

 

3,436

 

 

 

923

 

Interest expense

 

 

 

(469,642

)

 

 

(365,349

)

 

 

(1,405,825

)

 

 

(947,968

)

Total other income (expense)

 

 

 

(93,423

)

 

 

(313,345

)

 

 

(1,243,550

)

 

 

(922,667

)

Income before income tax expense

 

 

 

1,067,621

 

 

 

640,966

 

 

 

2,628,563

 

 

 

2,696,440

 

Income tax expense

 

 

 

(387,060

)

 

 

(174,146

)

 

 

(960,214

)

 

 

(762,854

)

Net Income

 

 

$

680,561

 

 

$

466,820

 

 

$

1,668,349

 

 

$

1,933,586

 

Net income per common share - basic

 

 

$

0.08

 

 

$

0.06

 

 

$

0.20

 

 

$

0.23

 

Weighted average common shares outstanding - basic

 

 

 

8,286,555

 

 

 

8,390,335

 

 

 

8,358,792

 

 

 

8,449,277

 

Net income per common share - diluted

 

 

$

0.08

 

 

$

0.06

 

 

$

0.20

 

 

$

0.23

 

Weighted average common shares outstanding - diluted

 

 

 

8,342,067

 

 

 

8,404,485

 

 

 

8,374,939

 

 

 

8,475,661

 

 

 

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 Nine Months Ended

 

 

 

August 31,

 

 

August 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

1,668,349

 

 

$

1,933,586

 

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

 

 

 

 

 

 

Depreciation and amortization expense

 

 

1,063,771

 

 

 

1,129,804

 

Change in fair value of contingent consideration

 

 

(65,154

)

 

 

259,769

 

Unrealized (gains) losses on marketable securities

 

 

(100,082

)

 

 

38,457

 

Unrealized gain on interest rate swap contract

 

 

(58,757

)

 

 

(62,835

)

Compensatory element of stock options

 

 

641,690

 

 

 

310,441

 

Provision for doubtful accounts

 

 

717,052

 

 

 

634,405

 

Amortization of debt issuance costs

 

 

16,259

 

 

 

10,368

 

Amortization of operating lease right-of-use asset

 

 

236,730

 

 

 

231,825

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(1,110,755

)

 

 

(727,905

)

Prepaid expenses

 

 

(152,450

)

 

 

(86,433

)

Inventory

 

 

227,428

 

 

 

303,162

 

Other current assets

 

 

(23,738

)

 

 

(555,591

)

Deposits and other assets, net

 

 

(79,574

)

 

 

(59,272

)

Accounts payable

 

 

550,266

 

 

 

302,876

 

Accrued expenses

 

 

(1,814,218

)

 

 

(872,298

)

Operating lease liability

 

 

(217,671

)

 

 

(232,709

)

Deferred revenue

 

 

4,076,294

 

 

 

3,585,261

 

Net cash from operating activities

 

 

5,575,440

 

 

 

6,142,911

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(5,124,056

)

 

 

(12,193,470

)

Payment of Duke license agreement

 

 

(533,333

)

 

 

(5,000,000

)

Proceeds from liquidation of marketable securities

 

 

179,306

 

 

 

 

Purchases of marketable securities

 

 

(1,082,924

)

 

 

(1,142,212

)

Sale of marketable securities

 

 

397,831

 

 

 

1,140,472

 

Net cash used in investing activities

 

 

(6,163,176

)

 

 

(17,195,210

)

Cash flows from financing activities:

 

 

 

 

 

 

Treasury stock purchases

 

 

(799,036

)

 

 

(1,692,433

)

Repayments of note payable

 

 

(115,690

)

 

 

(1,908,433

)

Repayment of line of credit

 

 

(500,000

)

 

 

 

Proceeds from the exercise of stock options

 

 

 

 

 

551,274

 

Proceeds from line of credit

 

 

950,000

 

 

 

 

Proceeds from note payable

 

 

 

 

 

8,960,000

 

Issuance costs associated with the proceeds from the note payable

 

 

 

 

 

(196,501

)

Payment of Cord:Use earnout

 

 

(67,500

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(532,226

)

 

 

5,713,907

 

Decrease in cash and cash equivalents

 

 

(1,119,962

)

 

 

(5,338,392

)

Cash and cash equivalents - beginning of period

 

 

1,703,958

 

 

 

8,263,088

 

Cash and cash equivalents - end of period

 

$

583,996

 

 

$

2,924,696

 

 

 

 

 

 

 

 

Supplemental non-cash operating activities:

 

 

 

 

 

 

Lease liability arising from right-of-use asset

 

$

737,867

 

 

$

 

Supplemental investing activities:

 

 

 

 

 

 

Construction costs payable

 

$

363,225

 

 

$

 

Duke license agreement payable

 

$

266,667

 

 

$

 

Supplemental financing activities:

 

 

 

 

 

 

Dividends declared but not yet paid

 

$

 

 

$

7,672,728

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

Interest

 

$

1,363,934

 

 

$

776,517

 

Income taxes

 

$

1,504,647

 

 

$

1,377,133

 

 

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

5


 

CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

 

 

 

 

For the Three Months Ended August 31, 2023

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Treasury

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at May 31, 2023

 

 

14,848,001

 

 

$

148,480

 

 

$

43,066,971

 

 

$

(23,424,101

)

 

$

(20,649,725

)

 

$

(858,375

)

Exercise of stock options

 

 

1,245

 

 

 

12

 

 

 

(2,876

)

 

 

 

 

 

 

 

 

(2,864

)

Compensatory element of stock options

 

 

 

 

 

 

 

 

172,099

 

 

 

 

 

 

 

 

 

172,099

 

Treasury stock

 

 

 

 

 

 

 

 

 

 

 

(7,584

)

 

 

 

 

 

(7,584

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

680,561

 

 

 

680,561

 

Balance at August 31, 2023

 

 

14,849,246

 

 

$

148,492

 

 

$

43,236,194

 

 

$

(23,431,685

)

 

$

(19,969,164

)

 

$

(16,163

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended August 31, 2023

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Treasury

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Deficit

 

Balance at November 30, 2022

 

 

14,848,001

 

 

$

148,480

 

 

$

42,597,380

 

 

$

(22,632,649

)

 

$

(21,637,513

)

 

$

(1,524,302

)

Exercise of stock options

 

 

1,245

 

 

 

12

 

 

 

(2,876

)

 

 

 

 

 

 

 

 

(2,864

)

Compensatory element of stock options

 

 

 

 

 

 

 

 

641,690

 

 

 

 

 

 

 

 

 

641,690

 

Treasury stock

 

 

 

 

 

 

 

 

 

 

 

(799,036

)

 

 

 

 

 

(799,036

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,668,349

 

 

 

1,668,349

 

Balance at August 31, 2023

 

 

14,849,246

 

 

$

148,492

 

 

$

43,236,194

 

 

$

(23,431,685

)

 

$

(19,969,164

)

 

$

(16,163

)