Investments in Affiliates
|12 Months Ended|
Nov. 30, 2015
|Equity Method Investments and Joint Ventures [Abstract]|
|Investments in Affiliates||
NOTE 9 - INVESTMENTS IN AFFILIATES.
As of November 30, 2015 and November 30, 2014, the Company had an ownership interest of approximately 33% and 33%, respectively, in Saneron, which is accounted for under the equity method. As of November 30, 2015 and November 30, 2014, the net Saneron investment, is reflected on the consolidated balance sheets at $0 and $684,000, respectively, and is included in the umbilical cord blood and cord tissue stem cell service reporting segment. During 2015 and 2014, management reviewed the Saneron investment to determine if there were any indicators that would imply that the investment was impaired. Based on management’s review, there were no indicators of impairment and goodwill was not impaired in 2014, but there was evidence of a loss in value in the fourth quarter of 2015 and the Company impaired the net Saneron investment, resulting in a charge of approximately $684,000. The main factors that lead to this decision include a decline in grant funding, reduction in employees, and the inability to sustain research activities due to lack of funding. Without the ability to perform current and future research activities, management believes the carrying amount of the investment as of November 30, 2015 is impaired and not recoverable.
In October 2013, the Company entered into a Convertible Promissory Note Purchase Agreement with Saneron. Cryo-Cell will loan Saneron in quarterly payments an aggregate amount up to $300,000, subject to certain conditions. The initial loan amount was $150,000 to be paid in four quarterly installments of $37,500 per quarter. If after the initial loan amount, Saneron has made best efforts, satisfactory to Cryo-Cell in its sole discretion, to have started independently or via serving as a sponsor of a clinical trial related to its U-CORD-CELL™ program, then Cryo-Cell will agree to lend Saneron an additional $150,000 through a series of four additional quarterly payments of $37,500. Upon receipt of each quarterly payment, Saneron will deliver a convertible promissory note (“Note”) that matures five years from the date of the Note. Upon maturity of any Note, Saneron will have the option to repay all or a portion of the loan in cash or convert the outstanding principal and accrued interest under the applicable Note(s) into shares of Saneron common stock. The Company made five payments of $37,500 through November 30, 2014. The Company made no additional payments through November 30, 2015.
Equity in losses of affiliate for the year ended November 30, 2015 consists of $19,000 related to compensation expense for stock and warrant awards that were granted in previous periods by Saneron to certain consultants and employees. Equity in losses of affiliate for fiscal 2014 consists of $187,500 related to additional investments made by the Company into Saneron, $93,904 related to compensation expense for stock option awards that were granted by Saneron to certain consultants and employees and $81,480 related to the Company’s share of Saneron’s losses.
During the third quarter of fiscal 2014, the Company repurchased 93,800 common shares that were held by Saneron for $2.60 per share. During the third quarter of fiscal 2014 the Company was made aware that the remaining 56,300 common shares of Cryo-Cell common stock owned by Saneron were sold in prior periods. The Company should have increased the investment in Saneron and the investment amount would have then been reduced each quarter for the Company’s portion of the losses in Saneron. The correction was made during the third quarter of fiscal 2014 to reclass approximately $400,000 from treasury stock to accumulated deficit on the accompanying consolidated balance sheets.
The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.
Reference 1: http://www.xbrl.org/2003/role/presentationRef