ccel-10q_20210531.htm

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

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):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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. ☐

State the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date. As of July 12, 2021, 14,533,040 shares of $0.01 par value common stock were issued and 8,445,015 were outstanding.

	(Unaudited)
	May 31,			November 30,
	2021			2020
ASSETS
Current Assets
Cash and cash equivalents	$	7,948,069		$	10,361,125
Marketable securities		73,388			88,476
Accounts receivable (net of allowance for doubtful accounts of $2,794,455 and $2,781,668, respectively)		5,215,556			6,322,960
Prepaid expenses		349,936			611,627
Inventory, current portion		890,388			927,318
Other current assets		305,995			244,696
Total current assets		14,783,332			18,556,202
Property and Equipment-net		1,552,984			1,640,774
Other Assets
Investment - Tianhe stock		308,000			308,000
Patent option agreement		—			350,000
Duke license agreement		15,132,189			—
Intangible assets, net		1,596,849			1,181,588
Inventory, net of current portion		10,992,550			11,064,034
Goodwill		1,941,411			1,941,411
Deferred tax assets		10,363,967			10,363,967
Operating lease right-of-use asset		1,067,664			299,089
Deposits and other assets, net		579,466			495,029
Total other assets		41,982,096			26,003,118
Total assets	$	58,318,412		$	46,200,094
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	1,236,190		$	957,390
Accrued expenses		1,491,135			2,898,211
Current portion of note payable		3,100,000			3,100,000
Current portion of operating lease liability		301,613			275,570
Current portion of Duke license agreement liability		4,889,830			—
Deferred revenue		9,101,008			9,183,450
Total current liabilities		20,119,776			16,414,621
Other Liabilities
Deferred revenue, net of current portion		29,126,311			27,200,910
Contingent consideration		1,230,647			1,509,852
Note payable, net of current portion and debt issuance costs		326,286			2,841,214
Operating lease long-term liability		769,021			23,632
Duke license agreement liability		1,868,253			—
Long-term liability - revenue sharing agreements		875,000			875,000
Total other liabilities		34,195,518			32,450,608
Total liabilities		54,315,294			48,865,229
Commitments and contingencies (Note 9)		—			—
Stockholders' Equity (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; 14,533,040 issued and 8,445,015 outstanding as of May 31, 2021 and 13,633,638 issued and 7,545,613 outstanding as of November 30, 2020)		145,330			136,336
Additional paid-in capital		41,376,640			36,581,600
Treasury stock, at cost		(20,563,357	)		(20,563,357	)
Accumulated equity		(16,955,495	)		(18,819,714	)
Total stockholders' equity (deficit)		4,003,118			(2,665,135	)
Total liabilities and stockholders' equity (deficit)	$	58,318,412		$	46,200,094

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

	For the Three Months Ended						For the Six Months Ended
	May 31,			May 31,			May 31,			May 31,
	2021			2020			2021			2020
Revenue:
Processing and storage fees	$	7,158,886		$	7,399,074		$	13,897,517		$	14,805,362
Public banking revenue		46,309			213,642			130,295			367,721
Licensee and royalty income		—			201,828			—			201,828
Product revenue		—			57,300			38,000			117,707
Total revenue		7,205,195			7,871,844			14,065,812			15,492,618
Costs and Expenses:
Cost of sales		2,222,671			2,480,543			4,234,868			4,983,687
Selling, general and administrative expenses		3,148,396			3,558,568			6,581,708			7,428,597
Change in fair value of contingent consideration		(431,599	)		27,423			(279,205	)		(23,989	)
Research, development and related engineering		3,237			9,821			9,427			15,543
Depreciation and amortization		267,422			43,303			288,685			87,524
Total costs and expenses		5,210,127			6,119,658			10,835,483			12,491,362
Operating Income		1,995,068			1,752,186			3,230,329			3,001,256
Other Expense:
(Losses) gains on marketable securities		(12,512	)		(53,572	)		(15,088	)		1,376
Other income		25			105			50			732
Interest expense		(341,390	)		(365,371	)		(621,609	)		(730,670	)
Total other expense		(353,877	)		(418,838	)		(636,647	)		(728,562	)
Income before income tax expense		1,641,191			1,333,348			2,593,682			2,272,694
Income tax expense		(470,562	)		(380,010	)		(729,463	)		(632,390	)
Net Income	$	1,170,629		$	953,338		$	1,864,219		$	1,640,304
Net income per common share - basic	$	0.15		$	0.13		$	0.24		$	0.22
Weighted average common shares outstanding - basic		7,956,301			7,545,613			7,765,724			7,543,376
Net income per common share - diluted	$	0.14		$	0.12		$	0.23		$	0.20
Weighted average common shares outstanding - diluted		8,279,277			8,112,289			8,066,016			8,120,454

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

	For the Six Months Ended
	May 31,			May 31,
	2021			2020
Cash flows from operating activities:
Net income	$	1,864,219		$	1,640,304
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		391,218			190,872
Loss on disposal of property and equipment		—			1,032
Change in fair value of contingent consideration		(279,205	)		(23,989	)
Losses (gains) on marketable securities		15,088			(1,376	)
Compensatory element of stock options		152,572			288,752
Provision for doubtful accounts		105,279			401,679
Amortization of debt issuance costs		35,072			46,818
Amortization of operating lease right-of-use asset		136,116			131,351
Changes in assets and liabilities:
Accounts receivable		1,002,125			(278,805	)
Prepaid expenses		261,691			(184,615	)
Inventory		108,414			293,762
Other current assets		(61,299	)		18,519
Deposits and other assets, net		(113,564	)		(35,340	)
Accounts payable		278,800			(417,259	)
Accrued expenses		(1,407,076	)		(146,354	)
Operating lease liability		(133,259	)		(131,185	)
Deferred revenue		1,842,959			1,643,589
Net cash provided by operating activities		4,199,150			3,437,755
Cash flows from investing activities:
Purchases of property and equipment		(22,272	)		(50,228	)
Payment of Duke License Agreement		(5,106,224	)		—
Net cash used in investing activities		(5,128,496	)		(50,228	)
Cash flows from financing activities:
Repayments of note payable		(2,550,000	)		(1,549,999	)
Proceeds from the exercise of stock options		1,066,290			41,000
Net cash used in financing activities		(1,483,710	)		(1,508,999	)
Change in cash and cash equivalents		(2,413,056	)		1,878,528
Cash and cash equivalents - beginning of period		10,361,125			6,541,037
Cash and cash equivalents - end of period	$	7,948,069		$	8,419,565
Supplemental non-cash operating activities:
Operating lease liability and right-of-use asset due to adoption of ASC 842	$	—		$	562,775
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		$	—

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

	For the Three Months Ended May 31, 2021
					Additional								Total
	Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
	Shares		Amount		Capital		Stock			Deficit			Equity
Balance at February 28, 2021		13,658,938	$	136,589	$	36,857,787	$	(20,563,357	)	$	(18,126,124	)	$	(1,695,105	)
Common stock issued		874,102		8,741		4,451,099								4,459,840
Compensatory element of stock options						67,754								67,754
Net income											1,170,629			1,170,629
Balance at May 31, 2021		14,533,040	$	145,330	$	41,376,640	$	(20,563,357	)	$	(16,955,495	)	$	4,003,118

	For the Six Months Ended May 31, 2021
					Additional								Total
	Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
	Shares		Amount		Capital		Stock			Deficit			Equity
Balance at November 30, 2020		13,633,638	$	136,336	$	36,581,600	$	(20,563,357	)	$	(18,819,714	)	$	(2,665,135	)
Common stock issued		899,402		8,994		4,642,468								4,651,462
Compensatory element of stock options						152,572								152,572
Net income											1,864,219			1,864,219
Balance at May 31, 2021		14,533,040	$	145,330	$	41,376,640	$	(20,563,357	)	$	(16,955,495	)	$	4,003,118

	For the Three Months Ended May 31, 2020
					Additional								Total
	Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
	Shares		Amount		Capital		Stock			Deficit			Deficit
Balance at February 29, 2020		13,633,638	$	136,336	$	36,183,738	$	(20,563,357	)	$	(21,757,344	)	$	(6,000,627	)
Compensatory element of stock options						64,494								64,494
Net income

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☑

		Emerging growth company	☐

	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 (Deficit)	6

Notes to Consolidated Financial Statements	7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3. Quantitative and Qualitative Disclosures about Market Risk	41

Item 4. Controls and Procedures	41

PART II - OTHER INFORMATION	43

Item 1. Legal Proceedings	43

Item 1A. Risk Factors	43

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3. Defaults Upon Senior Securities	43

Item 4. Mine Safety Disclosures	43

Item 5. Other Information	43

Item 6. Exhibits	44

SIGNATURES	45

700 Brooker Creek Blvd. Oldsmar, FL 34677
(Address of Principal Executive Offices) (Zip Code)