Cryo Cell International Inc 10-Q for FY2021 Q3

Cryo Cell International Inc (CCEL)

10-Q 2021-10-15 For: 2021-08-31

Added on April 06, 2026

About this 10-Q

Cryo Cell International Inc filed this 10-Q on October 15, 2021, covering the quarter ended August 31, 2021 (FY2021 Q3).

Headline figures

Quarter ended August 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $7.5M; down 7.5% from $8.11M a year earlier
Net income: $856.49K; up 9.2% from net income of $784.47K a year earlier
Diluted EPS: $0.10; unchanged from $0.10 a year earlier

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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	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

	(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

	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

	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		$	—

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

	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

	August 31, 2021		November 30, 2020
Contract assets (sales commissions)	$	519,541	$	466,141
Accounts receivables	$	5,449,313	$	6,322,960
Short-term contract liabilities (deferred revenue)	$	9,326,124	$	9,183,450
Long-term contract liabilities (deferred revenue)	$	30,395,653	$	27,200,910

	Balance at December 1, 2020		Additions		Deductions			Balance at August 31, 2021
Contract assets (sales commissions)	$	466,141	$	72,421	$	(19,021	)	$	519,541
Accounts receivables	$	6,322,960	$	28,066,214	$	(28,939,861	)	$	5,449,313
Contract liabilities (deferred revenue)	$	36,384,360	$	13,482,055	$	(10,144,638	)	$	39,721,777

	Balance at December 1, 2019		Additions		Deductions			Balance at August 31, 2020
Contract assets (sales commissions)	$	398,535	$	68,152	$	(16,049	)	$	450,638
Accounts receivables	$	6,097,331	$	28,361,238	$	(27,955,019	)	$	6,503,550
Contract liabilities (deferred revenue)	$	32,508,511	$	13,045,728	$	(10,245,771	)	$	35,308,468

	Fair Value at			Fair Value Measurements
	August 31,			at August 31, 2021 Using
Description	2021			Level 1		Level 2		Level 3
Assets:
Marketable securities	$	74,124		$	74,124		—		—
Total	$	74,124		$	74,124		—		—

Liabilities:
Contingent consideration	$	905,743		$	—		—	$	905,743
Total	$	905,743		$	—		—	$	905,743

Contingent Consideration:
Beginning Balance as of November 30, 2020	$	1,509,852
Subtractions – Cord:Use earnout		—
Fair value adjustment as of August 31, 2021		(604,109	)
Ending balance as of August 31, 2021	$	905,743

	For the three months ended August 31, 2021			For the three months ended August 31, 2020
Net revenue
Umbilical cord blood and cord tissue stem cell service	$	7,326,516		$	7,914,732
PrepaCyte®-CB		18,200			82,800
Public cord blood banking		158,936			116,826
Total net revenue	$	7,503,652		$	8,114,358

Cost of sales
Umbilical cord blood and cord tissue stem cell service	$	1,943,419		$	1,911,141
PrepaCyte®-CB		53,498			55,021
Public cord blood banking		462,021			394,162
Total cost of sales	$	2,458,938		$	2,360,324

Depreciation and amortization
Umbilical cord blood and cord tissue stem cell service	$	262,229		$	35,616
PrepaCyte®-CB		6,894			6,894
Public cord blood banking		359			—
Total depreciation and amortization	$	269,482		$	42,510

Operating income
Umbilical cord blood and cord tissue stem cell service	$	1,941,976		$	2,736,798
PrepaCyte®-CB		(42,193	)		21,291
Public cord blood banking		(303,445	)		(277,868	)
Total operating income	$	1,596,338		$	2,480,221

Interest expense
Umbilical cord blood and cord tissue stem cell service	$	335,870		$	338,675
PrepaCyte®-CB		—			—
Public cord blood banking		—			—
Total interest expense	$	335,870		$	338,675

	For the nine months ended August 31, 2021			For the nine months ended August 31, 2020
Net revenue
Umbilical cord blood and cord tissue stem cell service	$	21,224,033		$	22,921,922
PrepaCyte®-CB		56,200			200,507
Public cord blood banking		289,231			484,547
Total net revenue	$	21,569,464		$	23,606,976

Cost of sales
Umbilical cord blood and cord tissue stem cell service	$	5,453,203		$	5,932,655
PrepaCyte®-CB		129,581			128,154
Public cord blood banking		1,111,022			1,283,202
Total cost of sales	$	6,693,806		$	7,344,011

Depreciation and amortization
Umbilical cord blood and cord tissue stem cell service	$	536,823		$	109,351
PrepaCyte®-CB		20,683			20,683
Public cord blood banking		661			—
Total depreciation and amortization	$	558,167		$	130,034

Operating income
Umbilical cord blood and cord tissue stem cell service	$	5,743,184		$	6,229,222
PrepaCyte®-CB		(94,065	)		51,671
Public cord blood banking		(822,452	)		(799,416	)
Total operating income	$	4,826,667		$	5,481,477

Interest expense
Umbilical cord blood and cord tissue stem cell service	$	957,479		$	1,069,345
PrepaCyte®-CB		—			—
Public cord blood banking		—			—
Total interest expense	$	957,479		$	1,069,345

	As of August 31, 2021		As of November 30, 2020
Assets
Umbilical cord blood and cord tissue stem cell service	$	47,637,754	$	34,215,780
PrepaCyte®-CB		243,312		302,683
Public cord blood banking		11,542,964		11,681,631
Total assets	$	59,424,030	$	46,200,094

	August 31, 2021			November 30, 2020
Raw materials	$	—		$	—
Work-in-process		159,781			273,430
Work-in-process – Public Bank		—			—
Finished goods		77,185			63,327
Finished goods – Public Bank		11,425,667			11,629,307
Collection kits		34,948			33,006
Inventory reserve		(7,718	)		(7,718	)
Total inventory	$	11,689,863		$	11,991,352

	Useful lives	August 31, 2021			November 30, 2020
Patents and Domain Names	10-20 years		234,570			234,570
Less: Accumulated amortization			(55,868	)		(47,150	)
Patents - Acquired with Duke License Agreement	16 years		456,224			—
Less: Accumulated amortization			(14,257	)		—
License agreement	10 years		470,000			470,000
Less: Intangible asset impairment			(185,000	)		(185,000	)
Less: Accumulated amortization			(195,879	)		(178,443	)
Customer relationships-PrepaCyte CB	15 years		41,000			41,000
Less: Intangible asset impairment			(26,267	)		(26,267	)
Less: Accumulated amortization			(7,719	)		(7,122	)
Brand	1 year		31,000			31,000
Less: Accumulated amortization			(31,000	)		(31,000	)
Customer relationships-Cord:Use	30 years		960,000			960,000
Less: Accumulated amortization			(104,000	)		(80,000	)

Net Intangible Assets		$	1,572,804		$	1,181,588

	August 31, 2021			November 30, 2020
Note payable	$	2,683,433		$	6,008,433
Unamortized debt issuance costs		(19,757	)		(67,219	)
Net note payable	$	2,663,676		$	5,941,214

Current portion of note payable	$	2,663,676		$	3,100,000
Long-term note payable, net of debt issuance costs		—			2,841,214
Total	$	2,663,676		$	5,941,214

	For the three months ended August 31, 2021		For the nine months ended August 31, 2021
Interest expense on notes payable	$	25,862	$	99,294
Debt issuance costs		12,390		47,462
Total interest expense	$	38,252	$	146,756

	Three Months Ended				Six Months Ended
	August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Numerator:
Net Income	$	856,494	$	784,467	$	2,720,713	$	2,424,771
Denominator:
Weighted-average shares outstanding-basic		8,452,374		7,545,613		7,996,278		7,544,124
Dilutive common shares issuable upon exercise of stock options		239,957		633,852		221,176		593,339
Weighted-average shares-diluted		8,692,331		8,179,465		8,217,454		8,137,463
Net income per common share:
Basic	$	0.10	$	0.10	$	0.34	$	0.32
Diluted	$	0.10	$	0.10	$	0.33	$	0.30

	Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended
	August 31, 2021	August 31, 2020	August 31, 2021	August 31, 2020
Weighted average values:
Expected dividends	-	0%	0%	0%
Expected volatility	-	51.8%	49.85%	62.60%
Risk free interest rate	-	0.42%	1.35%	1.70%
Expected life	-	6 years	6 years	9 years

				Weighted		Weighted Average
				Average		Remaining		Aggregate
	Shares			Exercise Price		Contractual Term (Years)		Intrinsic Value
Outstanding at November 30, 2020		1,174,943		$	3.72		3.42	$	4,502,324

Granted		20,000			9.50				42,000
Exercised		(625,300	)		2.33				4,089,333
Expired/forfeited		—			—				—

Outstanding at August 31, 2021		569,643		$	5.45		5.24	$	3,505,096
Exercisable at August 31, 2021		501,150		$	5.05		5.02	$	3,283,299

	Outstanding						Exercisable
			Weighted Average		Weighted				Weighted
			Remaining		Average				Average
Range of Exercise Prices	Outstanding		Contractual Life (Years)		Exercise Price		Outstanding		Exercise Price
$1.01 to $ 2.00		22,500		1.88	$	1.95		22,500	$	1.95
$2.01 to $ 3.00		45,000		1.88		2.22		45,000		2.22
$3.01 to $4.00		204,729		4.48		3.14		204,729		3.14
$6.01 to $7.00		3,833		4.84		6.52		3,388		6.51
$7.01 to $8.00		266,581		6.55		7.64		224,133		7.62
$9.01 to $10.00		27,000		6.44		9.40		1,400		9.10
		569,643		5.24	$	5.45		501,150	$	5.05

				Weighted Average
				Grant-Date
	Shares			Fair Value
Non-vested at November 30, 2020		93,380		$	4.65

Granted		20,000			4.56
Vested		(44,887	)		5.00
Forfeited		—			—
Non-vested at August 31, 2021		68,493		$	4.39

	Processing and Storage Royalties
	Three Months Ended August 31, 2021		Nine Months Ended August 31, 2021
License and royalty income	$	—	$	—

Total	$	—	$	—

	Three Months Ended August 31, 2020		Nine Months Ended August 31, 2020
License and royalty income	$	427,874	$	629,702

Total	$	427,874	$	629,702

	Future Operating
Fiscal Year Ending November 30,	Lease Payments
2021 (remaining 3 months)	$	82,545
2022		339,182
2023		313,996
2024		295,086
2025		24,590
Less: Imputed interest		(58,235	)
Present value of lease liabilities	$	997,164

	August 31, 2021
Lease Term and Discount Rate
Remaining lease term (years)
Operating lease		3.3
Discount rate (percentage)
Operating lease		3.5	%

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
June 1 – 30, 2021		—		—		—		1,906,465
July 1 – 31, 2021		—		—		—		1,906,465
August 1 – 31, 2021		—		—		—		1,906,465

31.1		Certification of Co-CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Co-CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3		Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


		Cryo-Cell International, Inc.

		/s/ David Portnoy
		David Portnoy
		Co-Chief Executive Officer

		Cryo-Cell International, Inc.

		/s/ Mark Portnoy
		Mark Portnoy
		Co-Chief Executive Officer

		Cryo-Cell International, Inc.

		/s/ Jill M. Taymans
		Jill M. Taymans
		Vice President, Finance, Chief Financial Officer