U.S. Securities and Exchange Commission
Washington, D.C. 20549
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FORM 10-KSB/A
(Amendment No. 2)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the fiscal year ended November 30, 2002
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the transition period from to
Commission File Number 000-23386
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CRYO-CELL INTERNATIONAL, INC.
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(Exact Name of Small Business Issuer as specified in its charter)
DELAWARE 22-3023093
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3165 MCMULLEN BOOTH ROAD, BLDG. B, CLEARWATER, FL 33761
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (727) 450-8000
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
None NASDAQ
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Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.01 per share
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(Title of class)
Check whether Issuer: (1) has filed all reports required to be filed by section
13 or 15 (d) of the Securities and Exchange Act of 1934 during the past 12
months and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form or any amendment to this Form
10-KSB [_]
Issuer's Revenues for its most recent fiscal year: $7,073,094.
As of February 25, 2003 the aggregate market value of the voting stock held by
non-affiliates of the Issuer was approximately $10,905,566. The market value of
Common Stock of the Issuer, par value $0.01 per share, was computed by reference
to the average of the closing bid and asked prices of the Issuer's Common Stock
on such date which was February 25, 2003.
The number of shares outstanding of the Issuer's Common Stock, par value $0.01
per share, as of February 25, 2003: 11,997,540 .
DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference: The information required by Part III
of Form 10-KSB is incorporated by reference to the Issuer's definitive proxy
statement relating to the 2002 Annual Meeting of Shareholders which is expected
to be filed with Securities and Exchange Commission on or about March 30, 2003.
Transitional Small Business Disclosure Format (check one): Yes ____; No X
EXPLANATORY NOTE
CRYO-CELL International, Inc. amends its Annual Report on Form 10-KSB for
the fiscal year ended November 30, 2002 (filed on February 28, 2002), as set
forth in this Form 10-KSB/A (Amendment No. 2), to include Item 9, Item 10, Item
11 and Item 12 of Part III. In addition, as required by Rule 12b-15, promulgated
under the Securities and Exchange Act of 1934, the registrant's principal
executive officer and principal financial officer are providing new Rule 13a-14
certifications in connection with this Form 10-KSB/A (Amendment No. 2).
2
Part III
ITEM 9. Directors, Executive Officers, Promoters and Control Persons;
Section 16(a) Beneficial Ownership Reporting Compliance
Directors, Executive Officers and Key Employees
Below are the names, ages and background of the current Board of Directors of
the Company.
Mercedes Walton, 49, Chairman of the Board. Ms. Walton has served as a director
since October 2000 and as Chairman since June 2002. Ms. Walton is CEO of Ralston
Hill Consulting LLC, a business development and strategic management consulting
practice. The firm specializes in the design and deployment of technology
commercialization strategies. Ms. Walton retired after 24 years with AT&T where
she rose through the ranks to the position of Vice President of Corporate
Strategy and Business Development. In this capacity she was responsible for
leading strategic partnership negotiations with device manufacturers and
technology development firms in the U.S., Europe and Asia. During her tenure
with AT&T, Ms. Walton held positions in Business and Consumer Operations, Global
Network Operations, Engineering, Marketing & Sales, Product Management and Human
Resources. Ms. Walton's educational achievements include a Bachelor of Arts
degree from Smith College, and Master degrees from both Harvard University and
Massachusetts Institute of Technology. Ms. Walton is on the Board of Directors
of Norstan, Inc. (Nasdaq: NRRD) where she serves on the Compensation Committee
and is Chairman of the Corporate Governance Committee.
Edward Modzelewski, 74, Director. Mr. Modzelewski has served as a director since
1996. Mr. Modzelewski owned and operated a successful chain of 10 fast food
restaurants and a popular steak house in Cleveland, Ohio, which was purchased by
Choc-Ful-O-Nuts, a New York Stock Exchange Company. Mr. Modzelewski is a
graduate of the University of Maryland School of Business. While at the
University of Maryland, Mr. Modzelewski was an All-American football player and
went on to play professional football for 8 years.
Frederick C. S. Wilhelm, 72, Director. Mr. Wilhelm has served as a director
since 1989. Mr. Wilhelm was formerly Chairman of the Board of Directors of
Buffalo Scale and Supply, Inc., a distributor of scales. He was President of
that company from 1976 to 1989. Mr. Wilhelm has served as a member of the Board
of Directors since the inception of the Company.
Charles D. Nyberg 72, Director. Mr. Nyberg has served as a director since August
2001. Mr. Nyberg was an executive with the Hormel Foods Corporation for 31
years. He served as a director of the company and a member of the executive
committee. He also served as a director and a member of the executive committee
of the Jennie-O Foods Corporation, a wholly owned subsidiary of the Hormel Foods
Corp. Mr. Nyberg also served as a member of The Hormel Foundation. Mr. Nyberg
has a degree from The University of Minnesota Law School.
John V. Hargiss, 58, Director, Chief Executive Officer, President and Chief
Operating Officer. Mr. Hargiss has served as a director since June 2002. Mr.
Hargiss was hired as President and Chief Operating Officer in February 2002 and
became Chief Executive Officer upon the founder and former Chairman and Chief
Executive Officer, Dan Richard's resignation as Chief Executive Officer and
Chairman. Prior to joining CRYO-CELL, Mr. Hargiss was a health care consultant,
providing advisory services to firms within the biotechnology, medical device,
and heath care services segments. Mr. Hargiss served as President and Chief
Executive Officer of Biodynamics, International, Inc., a publicly traded company
(currently Tutogen Medical, Inc.). Prior to this, he served as Corporate Vice
President of Sales and Marketing for the health care services unit of the BOC
Group, plc. Mr. Hargiss held several executive management positions during his
twelve-year career with Becton-Dickinson & Co., a multi-national medical and
laboratory product firm. Mr. Hargiss holds an M.B.A. from the University of
Miami (FL) and
a B.S. from the University of Texas.
Gaby W. Goubran, 61. Mr. Goubran has served as a director since June 2002. Mr.
Goubran is currently Managing Director of International Business Developments,
Ltd, an international consulting firm providing business development services to
multinational companies in diverse industries. Mr. Goubran founded International
Business Developments in 1983 and has been active in the company since that
time.
Jagdish Sheth, Ph.D., 64. Dr. Sheth has served as a director since October
2002. Dr. Sheth is currently the Charles H. Kellstadt Professor of Marketing at
Emory University's Goizueta Business School, where he founded the Center for
Relationship Management. Dr. Sheth has published twelve books and over two
hundred articles in different areas of marketing and business strategy. Dr.
Sheth is a frequent consultant to Fortune 500 companies, has held chairs at the
University of Southern California and the University of Illinois, and served on
the faculties of Columbia and MIT. Dr. Sheth also serves on the board of
directors of Norstan, Inc., Pac-West Telecomm, Inc. and Wipro Limited.
Anthony P. Finch, 53, Mr. Finch became a director in March 2003. Mr. Finch is
currently Chief Scientific Officer of the Irish National Blood Centre and
National Tissue Typing Reference Laboratory. Mr. Finch is responsible for the
direction, management, organization, integration and restructuring of the
national laboratories and their ancillary services to comply with the highest
pharmaceutical standards. He has over 25 years experience in cell separation and
cryopreservation of cellular products with over 12 years experience in cord
blood processing. In 1993, Mr. Finch pioneered the fractionation and isolation
of cord blood stem cells for small volume cryogenic storage and has developed
large scale processing in line with current Good Manufacturing Practice. He has
established several cord blood stem cell banks in the United States, Europe and
Asia. Among numerous professional affiliations, Mr. Finch is a Fellow of both
the Academy of Medical Laboratory Sciences and Institute of Biomedical
Sciences, and is a member of the Cord Blood Stem Cell International Society.
Gerald F. Maass, 49, Executive Vice President. Mr. Maass joined the Company in
1998 from Critikon, a subsidiary of Johnson & Johnson, where his most recent
position was International Director of Marketing for the Patient Monitoring
business. Mr. Maass' ten-year tenure with Johnson and Johnson included several
marketing and business development roles; he also served on the Critikon
management committee. Prior to Johnson & Johnson, Mr. Maass was with Baxter
Healthcare and Control Data Corporation in marketing, sales management, business
development and business management roles. Mr. Maass began his career with Mayo
Clinic in Rochester, MN and has a degree in Medical Technology.
Jill Taymans, 33, Vice President, Finance. Ms. Taymans joined the Company in
April 1997 serving initially as Controller and was appointed Chief Financial
Officer in May 1998. Ms. Taymans graduated from the University of Maryland in
1991 with a BS in Accounting. She has worked in the accounting industry for over
ten years in both the public and private sectors. Prior to joining the company
she served for three years as Controller for a telecommunications company in
Baltimore, Maryland.
E. Thomas Deutsch, III, 39, Vice President, Technology. Mr. Deutsch joined the
Company in May 1996 and is a software and process engineer, specializing in
healthcare information systems. He graduated from the University of North
Carolina in Chapel Hill in 1986 with a B. S. degree in Mathematics. Prior to
joining the Company in 1996, Mr. Deutsch worked for Shared Medical Systems in
Malvern, PA, IBM in Atlanta, GA, and HBO and Company in Atlanta, GA. His
responsibilities include developing, implementing and supporting the Company's
communications and information systems, the Company's Internet plan and systems
engineering for the patented CCEL II Cellular Storage System.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company believes that during the fiscal year 2002 all reports for the
Company's officers and directors that were required to be filed under
Section 16 of the Securities and Exchange Act of 1934 were timely filed, except
that one Form 3 was filed late by Mr. Goubran.
ITEM 10. Executive Compensation
Set forth below is a Summary Compensation table relating to the
compensation earned by the Chief Executive Officer and each of the persons who
qualified as named executive officers under Item 402(a)(2) of Regulation S-B,
for fiscal years ending November 30, 2002, 2001 and 2000.
Long Term
Annual Compensation Compensation
------------------- ------------
Restricted Securities
Name and Stock Underlying
Principal Position Year Salary Bonus Awards ($) Options
- ------------------ ---- ------ ----- ---------- -------
John Hargiss 2002 $146,436 --- $43,700 50,000
Chief Executive Officer (1)
Gerald F. Maass 2002 $129,031 --- --- 5,000
Executive Vice President 2001 $127,693 --- --- 3,000
2000 $116,091 --- --- ---
Former Chief Executive Officer (2) 2002 $242,720 --- --- ---
Daniel D. Richard 2001 $234,571 $50,000 --- ---
2000 $188,767 --- ---
- ----------
(1) Represents compensation beginning February 11, 2002 for services as
President and Chief Operating Officer and for Chief Executive Officer
services commencing June 18, 2002, see Employment Agreements. Mr
Hargiss received 10,000 shares of restricted stock. The market value
based on the stock price as of November 30, 2002 is $18,400.
(2) The Company's founder, Daniel Richard resigned as the Company's
Chairman and Chief Executive Officer on June 18, 2002, and
subsequently as a director of the Company on January 29, 2003. Mr.
Richard currently serves as Chairman and CEO of Stem Cell Preservation
Technologies, Inc. (`SCPT'). The amounts of compensation reflected in
the table for fiscal 2002 relate to the period in which Mr. Richard
served as the Company's Chief Executive Officer and include $142,720
for service as Chairman and Chief Executive Officer of the Company and
$100,000 for service as Chairman and Chief Executive Officer of SCPT.
Upon Mr. Richard's resignation as Chairman and CEO, the Company and
Mr. Richard entered into an agreement which provided the following:
(a) the Company's one-time payment to Mr. Richard of a $250,000
retirement bonus which was recorded at May 31, 2002,
(b) a conditional award of stock options to purchase up to
200,000 shares of Company
common stock from the Stock Incentive Plan, 50,000 to be
granted upon the successful completion of each of any of the
following milestones:
(i) The Company's common stock becomes listed on the
NASDAQ National Market;
(ii) The Company's shareholders' equity reaches $50
million;
(iii) The Company's holdings of any Stem Cell
Preservation Technologies, Inc. common stock
reaches a value of $20 million; and
(iv) The Company's annual net profits reach $10 million;
and
(c) the payment to Mr. Richard of $200,000 per year for ten
years for consulting services in the event of Mr. Richard's
death during such ten-year period the required payment shall
be made to Mr. Richard's living trust.
Option Grants in Last Fiscal Year
The following table sets forth information concerning stock options awarded to
each of the named executive officers during fiscal year 2002.
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (1) Fiscal Year (2) ($ per share) Date
John Hargiss 50,000 30% $5.00 June 18, 2007
Gerald Maass 5,000 3% $5.67 December 14, 2006
Daniel Richard 0 0% 0 ---
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(1) Options granted are eligible for exercise after a one-year vesting
period.
(2) Based on a total of 165,500 shares subject to options granted to
employees under CRYO-CELL's option plan in fiscal year 2002.
Aggregated Option Exercises in Last Fiscal Year
The following table sets forth certain information regarding options to purchase
shares of Common Stock held as of November 30, 2002 by each of the named
Executive Officers.
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options At
Acquired on Value Options At Fiscal Year-End Fiscal Year-End
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable (1) ($)
---- ------------ ------------ ------------------------- -------------------
John Hargiss 0 0 0/50,000 0
Gerald Maass 0 0 49,400/0 0
Daniel Richard 0 0 1,000,000/0 0
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(1) None of the named executive officers hold options that are in the
money based upon a closing price of $1.84 at fiscal year end.
Employment Agreements
The Company does not have any employment agreements except with its Chief
Executive Officer. Mr. John Hargiss commenced employment as President and Chief
Operating Officer on February 11, 2002 and on June 18, 2002 the Company entered
into an employment agreement with Mr. Hargiss, pursuant to which he agreed to
serve as the Company's Chief Executive Officer and President (hereinafter
referred to as the "Hargiss Employment Agreement"). The Hargiss Employment
Agreement is for a one-year term, and is renewable for subsequent one-year terms
upon mutual agreement. Pursuant to the terms of the Hargiss Employment
Agreement, Mr. Hargiss is entitled to a base annual salary of $200,000, which
salary may be adjusted periodically to reflect the overall performance of the
Company and the planning and execution of programs, which increase shareholder
value. As additional compensation pursuant to the Hargiss Employment Agreement,
the Company issued options to purchase 50,000 shares of common stock to Mr.
Hargiss, at an exercise price of $5.00. These options vest on June 18, 2003.
Additionally, Mr. Hargis will receive options to purchase 25,000 shares at the
market value on July 1, 2003 and 25,000 shares at the market value on July 1,
2004. These options will vest as follows, 25,000 on July 1, 2004 and 25,000 on
July 1, 2005. Pursuant to the terms of the Hargiss Employment Agreement, the
Company and Mr. Hargiss agreed to enter into a change of control agreement which
will provide for the acceleration of the vesting of Mr. Hargiss' stock options
in the event of a change of control resulting from a merger in which the company
is not the survivor, a person or group acquiring more than thirty percent of the
Company's outstanding common stock or announcing a tender offer for at least
thirty percent of the Company's common stock.
Equity Compensation Plan Information
Number of securities
remaining available
for future issuance
Number of under equity
securities to be Weighted-average compensation plans
Equity Compensation issued upon exercise exercise price (excluding securities
plans approved by of outstanding options, of outstanding options, reflected in the first
shareholders warrants and rights warrants and rights column)
------------ ------------------- ------------------- -------
CRYO-CELL International
Incentive Stock Option
Plan (1) 120,900 $2.91 ---
CRYO-CELL International
2000 Stock Incentive
Plan (2) 1,459,900 $5.57 756,400
Equity Compensation plans
not approved by shareholders
Other Plans (3) 382,000 $5.36 ---
Total 1,962,800 $5.37 756,400
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(1) CRYO-CELL Incentive Stock Option Plan expired on April 1, 2000.
(2) CRYO-CELL 2000 Stock Incentive Plan originally had 1,500,000 stock
options to be issued and in June 2002 the shareholders approved an
additional 750,000 shares.
(3) From time to time the Company grants options pursuant to individual
compensation arrangements in exchange for goods or services provided
to the Company. These options are granted at fair market value on the
date of grant and typically vest immediately and provide for an
exercise period of three (3) years.
ITEM 11. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of March 31, 2003 by (i) each person who is
known by the Company to own beneficially more than five percent (5%) of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii) all
of the executive officers named in the Summary Compensation Table (the "Named
Executive Officers"), and (iv) all directors, nominees and executive officers of
the Company as a group. Except as otherwise indicated below, each of the
individuals named in the table has sole voting and investment power with respect
to their shares of Common Stock, except to the extent authority is shared by
spouses under applicable law.
Number of Shares Percent of
Name of Beneficial Owner Beneficially Owned Class (1)
------------------------ ------------------ ---------
Directors and Executive Officers:
Mercedes Walton (2) 106,000 *
Frederick C.S. Wilhelm (3) 70,000 *
John V. Hargiss (4) 60,000 *
Gaby Goubran (5) 20,000 *
Edward Modzelewski (6) 60,300 *
Charles Nyberg (7) 155,000 1.4%
Jagdish Sheth (8) 20,000 *
Gerald F. Maass (9) 63,400 *
Other Beneficial Owners:
Richard Family Living Trust (10) 1,996,900 16.17%
Daniel D. Richard (10) 1,996,900 16.17%
All Executive Officers and
Directors as a Group (8 persons) 554,700 4.36%
*- Less than one percent (1%).
Unless otherwise indicated, the address for the persons listed above is 3165
McMullen Booth Road, Building B, Clearwater, Florida 33761.
- ------------------
(1) Pursuant to the rules of the Securities and Exchange Commission, the
percentage of voting stock for each stockholder is calculated by dividing
(i) the number of shares deemed to be beneficially held by such
shareholders as of March 31, 2003 by (ii) the sum of (a) the number of
shares of Common Stock outstanding as of March 31, 2003 plus (b) the number
of shares issuable upon exercise of options (which are shares that are not
voting until exercised) held by such stockholder which were exercisable as
of March 31, 2003 or will become exercisable within 60 days after March 31,
2003.
(2) Includes 100,000 shares subject to options exercisable as of March 31,
2003.
(3) Includes 20,000 shares subject to options exercisable as of October 3,
2003.
(4) Includes 50,000 shares subject to options exercisable as of June 18, 2003.
(5) Includes 20,000 shares subject to options exercisable as of June 18, 2003.
(6) Includes 20,000 shares subject to options exercisable as of October 3,
2003.
(7) Includes 100,000 shares subject to warrants exercisable as of March 31,
2003 issued to Red Rock Partners in which Mr. Nyberg is a partner.
(8) Includes 20,000 shares subject to options exercisable as of October 3,
2003.
(9) Includes 49,400 shares subject to options exercisable as of March 31, 2003.
(10) Represents (i) 996,900 shares held by the Richard Family Living Trust, of
which Daniel D. Richard is co-trustee with his wife, and as co-trustees
share voting and investment control of the shares and (ii) options to
purchase 1,000,000 shares held individually by Daniel D. Richard which are
currently exercisable. Daniel D. Richard's contact information is as
follows, Daniel D. Richard, c/o Stem Cell Preservation Technologies, Inc.,
6905 Rockledge Drive, Suite 600, Bethesda, MD 20817.
ITEM 12. Certain Relationships and Related Transactions
Daniel D. Richard, former Chairman of the Board and Chief Executive Officer
is the father of Ronald B. Richard, a former member of the Board of Directors of
the Company and the former Chief Executive Officer of the Company's majority
owned subsidiary Stem Cell Preservation Technologies, Inc. While Mr. R. Richard
was Chief Executive Officer of Stem Cell Preservation Technologies, Inc. he
received $138,936 as compensation in fiscal 2002.
On June 18, 2002, Daniel D. Richard resigned from his positions as Chairman
and Chief Executive Officer of the Company. On January 29, 2003, Mr. D. Richard
resigned from the Board of Directors. The Board awarded Mr. Richard a $250,000
retirement bonus which was recorded at May 31, 2002 and conditionally awarded,
200,000 stock options at 110% of market value at the time of grant from the
Company's Stock Incentive Plan upon the successful completion of certain
performance milestones. Mr. Richard will be paid $200,000 per year over the next
10 years as part of a long-term consulting agreement with the Company. The
agreement constitutes a survivor's benefit to his widow in the event of death
before the expiration of the 10-year period. Mr. D. Richard currently serves as
Chairman and Chief Executive Officer of Stem Cell Preservation Technologies,
Inc.
On July 25, 2001 the Board of Directors of CRYO-CELL International, Inc.
announced that the Company would declare and distribute a stock dividend in the
shares of its then wholly owned subsidiary, Stem Cell Preservation Technologies,
Inc. (`SCPT'). SCPT is a development stage company, which will be involved in
the development of marketing programs for the collection and preservation of
adult stem cells.
Shareholders of record of CRYO-CELL on August 31, 2001 are expected to
receive a distribution of three shares of Stem Cell Preservation Technologies,
Inc. common stock for every four shares of CCEL that they owned on the record
date. The payment date of the shares to be distributed is expected to follow the
anticipated effective date of a registration statement relating to such
distribution. Subsequent to an effective registration statement, the Company
will own approximately 24.9% of SCPT. In June 2002 SCPT filed the original
registration statement. In November 2002 SCPT responded to the first round of
comments from the Securities and Exchange Commission and is now responding to
additional comments. Upon the effective date of the registration statement and
distribution of the shares, shareholders will thereafter be able to sell
one-third of their shares immediately and the remaining two-thirds equally over
the two years following the effective date.
Prior to the spin off of SCPT, and continuing thereafter, the Company and
SCPT will be partners in the sharing of certain revenues earned by SCPT. In
exchange for $3,000,000 in cash and common stock ($600,000 in cash, $2,400,000
in common stock of CCEL) the Company is to receive in perpetuity a fixed portion
of all income derived from the storage of adult stem cells, for up to 50,000
specimens originating from customers from each of the states of New York and
Illinois. An operational agreement has been established between the Company and
SCPT for the processing and storage of SCPT client specimens.
As of March 31, 2003 Mr. D. Richard owned 750,000 shares of SCPT, Mr. Maass
owned 30,000 shares, Ms. Walton owned 25,000 shares, Mr. Nyberg owned 25,000
shares and Ms. Taymans owned 25,000 shares. To the extent these officers and
directors own shares in the Company, they will participate pro-rata in the
anticipated dividend.
On February 9, 1999, the Company's revenue sharing agreement with two
individual investors relating to the State of Arizona (the "Arizona Agreement")
was modified and replaced by a new Revenue Sharing Agreement relating to the
State of Florida (the "Florida Revenue Sharing Agreement"). Under the terms of
the new agreement, the Company was to receive an aggregate one time up front
payment of $1,000,000 from the individual investors. The individual investors
received a credit from the Company of $450,000 toward the $1,000,000 payment as
a result of payments previously made by the investors to the Company pursuant to
the Arizona Agreement. The Florida Revenue Sharing Agreement entitles the
investors to an ongoing fixed percentage of the net storage revenue earned by
the Company from specimens originating within the State of Florida up to a
maximum of 33,000 storage spaces. The Company is applying all of its payment
obligations under the Florida Revenue Sharing Agreement toward the $550,000
balance owed to the investors until such amount is paid in full. After the
$550,000 payment is satisfied, payments under the Florida Revenue Sharing
Agreement will be made to the investors. The Company applied $114,660 and
$55,177 in fiscal years ending 2002 and 2001, respectively, toward the
investors' obligation to pay the $550,000 balance. One of the Florida Revenue
Sharing Agreement investors is Mr. Nyberg, who became a director of the Company
in August 2001.
In May 2001 the Redrock Partners, a partnership ("Redrock"), paid $200,000
to acquire warrants that expire on May 31, 2006 for 100,000 shares of the
Company's common stock at $6.00 per share. Mr. Nyberg, a director of the
Company, is a partner of Redrock.
On May 31, 2001 the Company also entered into a revenue sharing agreement
with Redrock entitling Redrock to an on-going fixed percentage of the net
storage revenue earned by the Company from specimens originating within the
State of Texas up to a maximum of 33,000 storage spaces (the "Texas Revenue
Sharing Agreement"). Under the terms of the Texas Revenue Sharing Agreement
Redrock paid the Company an aggregate one time up-front payment of $750,000 and
the Company made total payments to Redrock of $52,308 and $15,138 for fiscal
years ending 2002 and 2001, respectively.
In October 2001, the company sold 90% of Safti-Cell, Inc., an inactive
subsidiary of the company, to Red Rock Partners, an Arizona general partnership.
Mr. Charles Nyberg, a current member of the Board of Directors of the Company,
owns an interest in Red Rock Partners. The sale took place prior to the time
that Mr. Nyberg became a member of the Company's Board of Directors. The sale
required that the partnership invest capital in land, buildings, equipment and
personnel sufficient to provide back-up dual cryogenic storage of umbilical cord
stem cells for the Company. Red Rock Partners has advised the Company it has
invested in excess of one million dollars to
bring such facilities into operation. These operations, which commenced in
October 2002, have delivered increased revenues to the Company. An expanded
building and facilities program is expected to be implemented over the next 18
months to facilitate expanded dual cryogenic storage capacity for the Company.
Item 13. a.) Exhibits
The information required by this item is hereby incorporated by reference
to the Exhibit Index.
b.) Reports on Form 8-K
None.
Item 14. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Within 90 days prior to the date of this report, we carried out an
evaluation (the "Evaluation"), under the supervision and with the participation
of our President and Chief Executive Officer ("CEO") and Chief Financial Officer
("CFO"), of the effectiveness of the design and operation of our disclosure
controls and procedures ("Disclosure Controls"). Based on the Evaluation, our
CEO and CFO concluded that, subject to the limitations noted below, our
Disclosure Controls are effective in timely alerting them to material
information required to be included in our periodic SEC reports.
Changes in Internal Controls
We have also evaluated our internal controls for financing reporting, and
there have been no significant changes in our internal controls or in other
factors that could significantly affect those controls subsequent to the date of
their last evaluation.
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our
Disclosure Controls and internal controls will prevent all error and all fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management or
board override of the control.
The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.
CEO and CFO Certifications
Appearing immediately following the Signatures section of this report there
are Certifications of the CEO and the CFO. The Certifications are required in
accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302
Certifications). This Item of this report, which you are currently reading is
the information concerning the Evaluation referred to in the Section 302
Certifications and this information should be read in conjunction with the
Section 302 Certifications for a more complete understanding of the topics
presented.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CRYO-CELL INTERNATIONAL, INC.
By: /s/ John V. Hargiss
-------------------
John V. Hargiss, Chief Executive Officer
Dated: March 31, 2003
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons in the capacities indicated:
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ John V. Hargiss Director, Chief Executive Officer
- ------------------- and President March 31, 2003
John V. Hargiss
/s/ Jill M. Taymans Vice President, Finance,
- ------------------- The Company's Principal Financial Officer
Jill M. Taymans and Principal Accounting Officer March 31, 2003
- ---------------
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER REQUIRED
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, John V. Hargiss, certify that:
1. I have reviewed this annual report on Form 10-KSB of CRYO-CELL
International, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal controls;
and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: March 31, 2003 By: /s/ John V. Hargiss
-------------------
John V. Hargiss
Chief Executive Officer
I, Jill Taymans, certify that:
1. I have reviewed this annual report on Form 10-KSB of CRYO-CELL
International, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal controls;
and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: March 31, 2003 By: /s/ Jill Taymans
------------------
Jill Taymans
Vice President, Finance
16
EXHIBIT INDEX
Exhibit
No. Description
-- -----------
3.1(2) Amended and Restated Certificate of Incorporation
3.2(2) Amended and Restated By-Laws
10.11(3) Amended Agreement with Bio-Stor
10.12(1) Revenue Sharing Agreement between Stem Cell Preservation
Technologies, Inc. and CRYO-CELL International, Inc.
10.13(1) Chairman of the Board Compensation
10.14(1) Employment agreement between John V. Hargiss and CRYO-CELL
International, Inc. dated June 18, 2002
10.15(1) Agreement with Daniel D. Richard and CRYO-CELL International, Inc.
dated June 18, 2002.
10.16(4) Agreement with Red Rock Partners for the State of Texas Revenue
Sharing Agreement dated May 30, 2001.
10.17(4) Addendum Agreement to Secondary Storage Agreement
10.18(4) Secondary Storage Agreement
21(4) Subsidiaries of CRYO-CELL International, Inc.
23(5) Consent of Auditors
99.1 Certification of the Chief Executive Officer of CRYO-CELL
International, Inc. pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
99.2 Certification of the Chief Financial Officer of CRYO-CELL
International, Inc. pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
(1) Incorporated by reference to the Company's Quarterly Report on Form
10-QSB for the quarter ended August 31, 2002.
(2) Incorporated by reference to the Company's Quarterly Report on Form
10-QSB for the quarter ended May 31, 2002.
(3) Incorporated by reference to the Company's Annual Report on Form
10-KSB for the year ended November 30, 1997.
(4) Incorporated by reference to the Company's Annual Report on Form
10-KSB for the year ended November 30, 2002 filed February 28,
2003.
(5) Incorporated by reference to the Company's Annual Report on Form
10-KSB/A (Amendment No. 1) for the year ended November 30, 2002
filed March 14, 2003.