NOTE 14 - REVENUE SHARING AGREEMENTS (“RSAs”)

Florida.  On February 9, 1999, the previous agreements with the Company's Arizona Revenue Sharing investors were modified and replaced by a RSA for the state of Florida for a price of $1,000,000.  During fiscal 2016, 50% of the RSA for the state of Florida was repurchased by the Company.  The revenue sharing agreement applies to net storage revenues originating from specimens from within the state of Florida.  The revenue sharing agreement entitles the investors to revenues of up to a maximum of 33,000 storage spaces.  

Texas.  On May 31, 2001, the Company entered into an RSA with Red Rock Partners, an Arizona general partnership, entitling them to on-going shares in a portion of the Company’s net storage revenue generated by specimens originating from within the state of Texas for a price of $750,000.  The investors are entitled to a 37.5% share of net storage revenues originating in the state of Texas to a maximum of 33,000 storage spaces.  During fiscal 2008, Red Rock assigned 50% of their interest in the agreement to SCC Investments, Inc., an Arizona corporation.  During fiscal year 2010, SCC Investments, Inc. assigned its interest to SCF Holdings, LLC, an Arizona limited liability company.  During fiscal 2016, 50% of the RSA for the state of Texas was repurchased by the Company.

Illinois.  In 1996, the Company signed agreements with a group of investors (the “Erie Group”) entitling them to an on-going 50% share of the Company’s 75% share of the annual storage fees (“net storage revenues”) less a deduction for 50% of billing and collection expenses generated by specimens stored in the Illinois Masonic Medical Center for a price of $1,000,000.  The agreements were modified in 1998 to broaden the covered specimens to those originating in Illinois and its contiguous states and stored in Oldsmar, Florida for a maximum of up to 33,000 storage spaces.  

The Company made total payments to all RSA holders of $974,276 and $832,587 for the fiscal years ended November 30, 2020 and 2019, respectively.  The Company recorded an RSA accrual of $762,573 and $909,765 as of November 30, 2020 and 2019, respectively, related to interest owed to the RSA holders, which is included in accrued expenses.  The Company also recorded interest expense of $1,148,592 and $944,060 for the fiscal years ended November 30, 2020 and 2019, respectively, which is reflected in interest expense on the accompanying consolidated statements of comprehensive income.

Cancellation of Revenue Sharing Agreements

On August 31, 2020 (the “Effective Date”), the Company entered into a Termination Agreement (“Termination Agreement”) with the Erie Group, pursuant to which all such parties terminated all of their respective rights, duties, obligations, options, and liabilities to each other arising out of or related to the Cryo-Cell International, Inc. Space and Time Sharing (SATS) Lease Agreement, Addendum thereto, Addition to such Addendum, and Amendment to the Cryo-Cell International, Inc. Space and Time Sharing (SATS) Lease Agreement among the Company and the Erie Group (collectively, the “SATS Agreement”). Additionally, pursuant to the terms of the Termination Agreement, the Company made a payment of $1,939,748 on the Effective Date and the parties released each other from all claims related to the SATS Agreement and to dismiss with prejudice the previously disclosed complaint (See Note 12).   Pursuant to the terms of the Agreement, the Erie Group will no longer have the rights to share in a portion of the Company’s storage revenues derived from specimens which originated in the state of Illinois and its five contiguous states. The payment amount of $1,939,748 was offset by the carrying amount of the long-term liability related to the SATS in the amount of $550,000 and accrued expenses in the amount of $279,100 to reflect the extinguishment of revenue sharing agreements in the amount of $1,070,900 for the twelve months ended November 30, 2020.