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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, 2021

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)

 

 

Issuer's phone number, including area code: (813) 749-2100

(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

 

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 October 12, 2021, 14,617,672 shares of $0.01 par value common stock were issued and 8,529,647 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 (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

42

 

 

Item 4. Controls and Procedures

42

 

 

PART II - OTHER INFORMATION

44

 

 

Item 1. Legal Proceedings

44

 

 

Item 1A.  Risk Factors

44

 

 

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

44

 

 

Item 3. Defaults Upon Senior Securities

44

 

 

Item 4. Mine Safety Disclosures

44

 

 

Item 5. Other Information

44

 

 

Item 6. Exhibits

45

 

 

SIGNATURES

46

 

 

 

2


 

CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

(Unaudited)

 

 

 

 

 

 

 

August 31,

 

 

November 30,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,700,806

 

 

$

10,361,125

 

Marketable securities

 

 

74,124

 

 

 

88,476

 

Accounts receivable (net of allowance for doubtful accounts of $2,896,051 and $2,781,668, respectively)

 

 

5,449,313

 

 

 

6,322,960

 

Prepaid expenses

 

 

513,009

 

 

 

611,627

 

Inventory, current portion

 

 

833,963

 

 

 

927,318

 

Other current assets

 

 

349,695

 

 

 

244,696

 

Total current assets

 

 

14,920,910

 

 

 

18,556,202

 

Property and Equipment-net

 

 

3,028,268

 

 

 

1,640,774

 

Other Assets

 

 

 

 

 

 

 

 

Investment - Tianhe stock

 

 

308,000

 

 

 

308,000

 

Patent option agreement

 

 

 

 

 

350,000

 

Duke license agreement

 

 

14,891,995

 

 

 

 

Intangible assets, net

 

 

1,572,804

 

 

 

1,181,588

 

Inventory, net of current portion

 

 

10,855,900

 

 

 

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

 

 

992,346

 

 

 

299,089

 

Deposits and other assets, net

 

 

548,429

 

 

 

495,029

 

Total other assets

 

 

41,474,852

 

 

 

26,003,118

 

Total assets

 

$

59,424,030

 

 

$

46,200,094

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

999,118

 

 

$

957,390

 

Accrued expenses

 

 

1,646,916

 

 

 

2,898,211

 

Current portion of note payable

 

 

2,663,676

 

 

 

3,100,000

 

Current portion of operating lease liability

 

 

306,817

 

 

 

275,570

 

Current portion of Duke license agreement liability

 

 

4,915,542

 

 

 

 

Deferred revenue

 

 

9,326,124

 

 

 

9,183,450

 

Total current liabilities

 

 

19,858,193

 

 

 

16,414,621

 

Other Liabilities

 

 

 

 

 

 

 

 

Deferred revenue, net of current portion

 

 

30,395,653

 

 

 

27,200,910

 

Contingent consideration

 

 

905,743

 

 

 

1,509,852

 

Note payable, net of current portion and debt issuance costs

 

 

 

 

 

2,841,214

 

Operating lease long-term liability

 

 

690,347

 

 

 

23,632

 

Duke license agreement liability

 

 

1,900,352

 

 

 

 

Long-term liability - revenue sharing agreements

 

 

875,000

 

 

 

875,000

 

Total other liabilities

 

 

34,767,095

 

 

 

32,450,608

 

Total liabilities

 

 

54,625,288

 

 

 

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; 14,617,672 issued and 8,529,647 outstanding as of August 31, 2021 and 13,633,638 issued and 7,545,613 outstanding as of November 30, 2020)

 

 

146,177

 

 

 

136,336

 

Additional paid-in capital

 

 

41,314,923

 

 

 

36,581,600

 

Treasury stock, at cost

 

 

(20,563,357

)

 

 

(20,563,357

)

Accumulated deficit

 

 

(16,099,001

)

 

 

(18,819,714

)

Total stockholders' equity (deficit)

 

 

4,798,742

 

 

 

(2,665,135

)

Total liabilities and stockholders' equity (deficit)

 

$

59,424,030

 

 

$

46,200,094

 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Processing and storage fees

 

$

7,326,516

 

 

$

7,486,858

 

 

$

21,224,033

 

 

$

22,292,220

 

Public banking revenue

 

 

158,936

 

 

 

116,826

 

 

 

289,231

 

 

 

484,547

 

Licensee and royalty income

 

 

 

 

 

427,874

 

 

 

 

 

 

629,702

 

Product revenue

 

 

18,200

 

 

 

82,800

 

 

 

56,200

 

 

 

200,507

 

Total revenue

 

 

7,503,652

 

 

 

8,114,358

 

 

 

21,569,464

 

 

 

23,606,976

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

2,458,938

 

 

 

2,360,324

 

 

 

6,693,806

 

 

 

7,344,011

 

Selling, general and administrative expenses

 

 

3,493,794

 

 

 

3,375,807

 

 

 

10,075,502

 

 

 

10,804,404

 

Change in fair value of contingent consideration

 

 

(324,904

)

 

 

(145,752

)

 

 

(604,109

)

 

 

(169,741

)

Research, development and related engineering

 

 

10,004

 

 

 

1,248

 

 

 

19,431

 

 

 

16,791

 

Depreciation and amortization

 

 

269,482

 

 

 

42,510

 

 

 

558,167

 

 

 

130,034

 

Total costs and expenses

 

 

5,907,314

 

 

 

5,634,137

 

 

 

16,742,797

 

 

 

18,125,499

 

Operating Income

 

 

1,596,338

 

 

 

2,480,221

 

 

 

4,826,667

 

 

 

5,481,477

 

Other Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (losses) on marketable securities

 

 

736

 

 

 

(134,626

)

 

 

(14,352

)

 

 

(133,250

)

Other income

 

 

25

 

 

 

17

 

 

 

75

 

 

 

749

 

Interest expense

 

 

(335,870

)

 

 

(338,675

)

 

 

(957,479

)

 

 

(1,069,345

)

Loss on extinguishment of revenue sharing agreement

 

 

 

 

 

(1,070,900

)

 

 

 

 

 

(1,070,900

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expense

 

 

(335,109

)

 

 

(1,544,184

)

 

 

(971,756

)

 

 

(2,272,746

)

Income before income tax expense

 

 

1,261,229

 

 

 

936,037

 

 

 

3,854,911

 

 

 

3,208,731

 

Income tax expense

 

 

(404,735

)

 

 

(151,570

)

 

 

(1,134,198

)

 

 

(783,960

)

Net Income

 

$

856,494

 

 

$

784,467

 

 

$

2,720,713

 

 

$

2,424,771

 

Net income per common share - basic

 

$

0.10

 

 

$

0.10

 

 

$

0.34

 

 

$

0.32

 

Weighted average common shares outstanding - basic

 

 

8,452,374

 

 

 

7,545,613

 

 

 

7,996,278

 

 

 

7,544,124

 

Net income per common share - diluted

 

$

0.10

 

 

$

0.10

 

 

$

0.33

 

 

$

0.30

 

Weighted average common shares outstanding - diluted

 

 

8,692,331

 

 

 

8,179,465

 

 

 

8,217,454

 

 

 

8,137,463

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

2,720,713

 

 

$

2,424,771

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

711,905

 

 

 

284,689

 

Loss on disposal of property and equipment

 

 

 

 

 

1,032

 

Change in fair value of contingent consideration

 

 

(604,109

)

 

 

(169,741

)

Losses on marketable securities

 

 

14,352

 

 

 

133,250

 

Compensatory element of stock options

 

 

233,869

 

 

 

450,746

 

Provision for doubtful accounts

 

 

271,460

 

 

 

501,312

 

Loss on extinguishment of revenue sharing agreements

 

 

 

 

 

1,070,900

 

Amortization of debt issuance costs

 

 

47,462

 

 

 

67,010

 

Amortization of operating lease right-of-use asset

 

 

211,434

 

 

 

197,079

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

602,187

 

 

 

(907,531

)

Prepaid expenses

 

 

98,618

 

 

 

(99,169

)

Inventory

 

 

301,489

 

 

 

237,728

 

Other current assets

 

 

(104,999

)

 

 

(26,635

)

Deposits and other assets, net

 

 

(24,716

)

 

 

(52,103

)

Accounts payable

 

 

41,728

 

 

 

(469,160

)

Accrued expenses

 

 

(1,393,462

)

 

 

(757,318

)

Operating lease liability

 

 

(206,729

)

 

 

(196,939

)

Deferred revenue

 

 

3,337,417

 

 

 

2,799,957

 

Net cash provided by operating activities

 

 

6,258,619

 

 

 

5,489,878

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,554,004

)

 

 

(52,396

)

Purchase of patent option agreement

 

 

 

 

 

(350,000

)

Payment of Duke License Agreement

 

 

(5,106,224

)

 

 

 

Liquidation of marketable securities

 

 

 

 

 

708,087

 

Net cash (used in) provided by investing activities

 

 

(6,660,228

)

 

 

305,691

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Extinguishment of revenue sharing agreements

 

 

 

 

 

(1,900,000

)

Repayments of note payable

 

 

(3,325,000

)

 

 

(2,324,998

)

Proceeds from the exercise of stock options

 

 

1,066,290

 

 

 

41,000

 

Payment of Cord:Use earnout

 

 

 

 

 

(45,000

)

Net cash used in financing activities

 

 

(2,258,710

)

 

 

(4,228,998

)

Change in cash and cash equivalents

 

 

(2,660,319

)

 

 

1,566,571

 

Cash and cash equivalents - beginning of period

 

 

10,361,125

 

 

 

6,541,037

 

Cash and cash equivalents - end of period

 

$

7,700,806

 

 

$

8,107,608

 

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

 

$

11,315,894

 

 

$

 

Taxes payable upon net exercise of stock options

 

$

142,167

 

 

$

 

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.

5


CRYO-CELL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited)

 

 

 

For the Three Months Ended August 31, 2021

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Treasury

 

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

 

Deficit

 

 

Equity

 

Balance at May 31, 2021

 

 

14,533,040

 

 

$

145,330

 

 

$

41,376,640

 

 

$

(20,563,357

)

 

 

$

(16,955,495

)

 

$

4,003,118

 

Common stock issued

 

 

84,632

 

 

 

847

 

 

 

(143,014

)

 

 

 

 

 

 

 

 

 

 

 

(142,167

)

Compensatory element of stock options

 

 

 

 

 

 

 

 

 

 

81,297

 

 

 

 

 

 

 

 

 

 

 

 

81,297

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

856,494

 

 

 

856,494

 

Balance at August 31, 2021

 

 

14,617,672

 

 

$

146,177

 

 

$

41,314,923

 

 

$

(20,563,357

)

 

 

$

(16,099,001

)

 

$

4,798,742

 

 

 

 

For the Nine Months Ended August 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

 

 

984,034

 

 

 

9,841

 

 

 

4,499,454

 

 

 

 

 

 

 

 

 

 

 

 

4,509,295

 

Compensatory element of stock options

 

 

 

 

 

 

 

 

 

 

233,869

 

 

 

 

 

 

 

 

 

 

 

 

233,869

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,720,713

 

 

 

2,720,713

 

Balance at August 31, 2021

 

 

14,617,672

 

 

$

146,177

 

 

$

41,314,923

 

 

$

(20,563,357

)

 

 

$

(16,099,001

)

 

$

4,798,742

 

 

 

 

For the Three Months Ended August 31, 2020

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Treasury