Cryo Cell International Inc 10-Q for FY2023 Q1

Cryo Cell International Inc (CCEL)

10-Q 2023-04-21 For: 2023-02-28

Added on April 06, 2026

About this 10-Q

Cryo Cell International Inc filed this 10-Q on April 21, 2023, covering the quarter ended February 28, 2023 (FY2023 Q1).

Headline figures

Quarter ended February 28, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $7.82M; up 7.8% from $7.26M a year earlier
Net income: $766.81K; down 7.8% from net income of $832.05K a year earlier
Diluted EPS: $0.09; down 10.0% from $0.10 a year earlier

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	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’ (Deficit) Equity	6

Notes to Consolidated Financial Statements	7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3. Quantitative and Qualitative Disclosures about Market Risk	33

Item 4. Controls and Procedures	33

PART II - OTHER INFORMATION	35

Item 1. Legal Proceedings	35

Item 1A. Risk Factors	35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 3. Defaults Upon Senior Securities	47

Item 4. Mine Safety Disclosures	48

Item 5. Other Information	48

Item 6. Exhibits	49

SIGNATURES	50


	(Unaudited)
	February 28,			November 30,
	2023			2022
ASSETS
Current Assets
Cash and cash equivalents	$	1,373,099		$	1,703,958
Marketable securities		840,277			17,620
Accounts receivable (net of allowance for
doubtful accounts of $3,580,233 and $3,528,119, respectively)		6,522,456			6,043,941
Prepaid expenses		580,144			566,557
Inventory, current portion		900,052			851,230
Other current assets		421,083			426,879
Total current assets		10,637,111			9,610,185
Property and Equipment-net		14,426,725			13,603,115
Other Assets
Investment - Tianhe stock		308,000			308,000
Duke license agreement		13,450,834			13,691,028
Intangible assets, net		1,439,217			1,463,312
Inventory, net of current portion		8,996,063			9,275,344
Goodwill		1,941,411			1,941,411
Deferred tax assets		13,742,399			13,742,399
Operating lease right-of-use asset		526,710			606,034
Deposits and other assets, net		665,565			647,226
Total other assets		41,070,199			41,674,754
Total assets	$	66,134,035		$	64,888,054
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	2,363,757		$	1,605,301
Accrued expenses		3,074,903			3,585,810
Note payable		158,456			150,527
Line of credit		1,772,728			2,272,728
Current portion of operating lease liability		288,902			297,691
Current portion of Duke license agreement liability		2,000,000			1,983,036
Deferred revenue		9,253,131			9,586,327
Total current liabilities		18,911,877			19,481,420
Other Liabilities
Deferred revenue, net of current portion		37,246,889			36,000,059
Contingent consideration		998,003			1,162,704
Note payable, net of current portion and debt issuance costs		8,547,744			8,579,875
Operating lease long-term liability		242,039			313,298
Long-term liability - revenue sharing agreements		875,000			875,000
Total other liabilities		47,909,675			46,930,936
Total liabilities		66,821,552			66,412,356
Commitments and contingencies (Note 9)		—			—
Stockholders' 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; 14,848,001 issued and 8,443,230 outstanding as of February 28, 2023 and 14,848,001 issued and 8,500,511 outstanding as of November 30, 2022)		148,480			148,480
Additional paid-in capital		42,910,554			42,597,380
Treasury stock, at cost		(22,875,850	)		(22,632,649	)
Accumulated deficit		(20,870,701	)		(21,637,513	)
Total stockholders' deficit		(687,517	)		(1,524,302	)
Total liabilities and stockholders' deficit	$	66,134,035		$	64,888,054


	For the Three Months Ended
	February 28,			February 28,
	2023			2022
Revenue:
Processing and storage fees	$	7,561,518		$	7,157,486
Public banking revenue		230,697			82,845
Product revenue		32,200			18,200
Total revenue		7,824,415			7,258,531
Costs and Expenses:
Cost of sales		2,067,364			2,103,202
Selling, general and administrative expenses		3,878,903			3,375,954
Change in fair value of contingent consideration		(164,701	)		(116,433	)
Research, development and related engineering		78,834			147,220
Depreciation and amortization		280,844			278,166
Total costs and expenses		6,141,244			5,788,109
Operating Income		1,683,171			1,470,422
Other Income (Expense):
Losses on marketable securities		(3,681	)		(8,642	)
Other income		1,268			9
Interest expense		(466,231	)		(306,095	)
Total other income (expense)		(468,644	)		(314,728	)
Income before income tax expense		1,214,527			1,155,694
Income tax expense		(447,715	)		(323,647	)
Net Income	$	766,812		$	832,047
Net income per common share - basic	$	0.09		$	0.10
Weighted average common shares outstanding - basic		8,467,074			8,527,031
Net income per common share - diluted	$	0.09		$	0.10
Weighted average common shares outstanding - diluted		8,474,737			8,748,183


	For the Three Months Ended
	February 28,			February 28,
	2023			2022
Cash flows from operating activities:
Net income	$	766,812		$	832,047
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		369,950			396,112
Change in fair value of contingent consideration		(164,701	)		(116,433	)
Losses on marketable securities		3,681			8,642
Compensatory element of stock options		313,174			31,896
Provision for doubtful accounts		186,904			164,388
Amortization of debt issuance costs		5,444			6,389
Amortization of operating lease right-of-use asset		79,324			76,604
Changes in assets and liabilities:
Accounts receivable		(665,419	)		(62,780	)
Prepaid expenses		(13,587	)		20,687
Inventory		230,459			33,636
Other current assets		5,796			227,666
Deposits and other assets, net		(18,339	)		(17,594	)
Accounts payable		221,749			357,959
Accrued expenses		(510,907	)		(953,433	)
Operating lease liability		(80,048	)		(76,255	)
Deferred revenue		913,634			577,228
Net cash from operating activities		1,643,926			1,506,759
Cash flows from investing activities:
Purchases of property and equipment		(375,600	)		(647,637	)
Payment of Duke license agreement		—			(5,000,000	)
Purchases of marketable securities		(1,017,738	)		(405,599	)
Sale of marketable securities		191,400			—
Net cash used in investing activities		(1,201,938	)		(6,053,236	)
Cash flows from financing activities:
Treasury stock purchases		(243,201	)		(828,980	)
Repayments of note payable		(29,646	)		(775,000	)
Repayment of line of credit		(500,000	)		—
Proceeds from the exercise of stock options		—			32,000
Net cash used in financing activities		(772,847	)		(1,571,980	)
Decrease in cash and cash equivalents		(330,859	)		(6,118,457	)
Cash and cash equivalents - beginning of period		1,703,958			8,263,088
Cash and cash equivalents - end of period	$	1,373,099		$	2,144,631

Supplemental investing activities:
Construction costs payable	$	536,707		$	—
Supplemental cash flow information:
Cash paid during the year for:
Interest	$	441,336		$	247,081
Income taxes	$	33,072		$	644


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


	For the Three Months Ended February 28, 2023
					Additional								Total
	Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
	Shares		Amount		Capital		Stock			Deficit			(Deficit) Equity
Balance at November 30, 2022		14,848,001	$	148,480	$	42,597,380	$	(22,632,649	)	$	(21,637,513	)	$	(1,524,302	)
Compensatory element of stock options						313,174								313,174
Treasury stock								(243,201	)					(243,201	)
Net income											766,812			766,812
Balance at February 28, 2023		14,848,001	$	148,480	$	42,910,554	$	(22,875,850	)	$	(20,870,701	)	$	(687,517	)




	For the Three Months Ended February 28, 2022
					Additional								Total
	Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
	Shares		Amount		Capital		Stock			Deficit			(Deficit) Equity
Balance at November 30, 2021		14,665,772	$	146,658	$	41,586,583	$	(20,812,734	)	$	(16,736,193	)	$	4,184,314
Exercise of stock options		10,000		100		31,900								32,000
Compensatory element of stock options						31,896								31,896
Treasury stock								(828,980	)					(828,980	)
Net income											832,047			832,047
Balance at February 28, 2022		14,675,772	$	146,758	$	41,650,379	$	(21,641,714	)	$	(15,904,146	)	$	4,251,277


	February 28, 2023		November 30, 2022
Contract assets (sales commissions)	$	633,966	$	615,628
Accounts receivable	$	6,522,456	$	6,043,941
Short-term contract liabilities (deferred revenue)	$	9,253,131	$	9,586,327
Long-term contract liabilities (deferred revenue)	$	37,246,889	$	36,000,059


	Balance at December 1, 2022		Additions		Deductions			Balance at February 28, 2023
Contract assets (sales commissions)	$	615,628	$	26,436	$	(8,098	)	$	633,966
Accounts receivable	$	6,043,941	$	10,373,235	$	(9,894,720	)	$	6,522,456
Contract liabilities (deferred revenue)	$	45,586,386	$	6,404,429	$	(5,490,795	)	$	46,500,020


	Balance at December 1, 2021		Additions		Deductions			Balance at February 28, 2022
Contract assets (sales commissions)	$	535,522	$	24,589	$	(6,995	)	$	553,116
Accounts receivable	$	5,253,173	$	8,749,914	$	(8,851,522	)	$	5,151,565
Contract liabilities (deferred revenue)	$	40,632,910	$	3,997,047	$	(3,419,819	)	$	41,210,138


	Fair Value at		Fair Value Measurements at February 28, 2023 Using
Description	February 28, 2023		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	840,277	$	840,277	$	—	$	—
Total	$	840,277	$	840,277	$	—	$	—
Liabilities:
Contingent consideration	$	998,003	$	—	$	—	$	998,003
Total	$	998,003	$	—	$	—	$	998,003


Contingent Consideration:
Beginning Balance as of November 30, 2022	$	1,162,704
Subtractions – Cord:Use earnout payment		—
Fair value adjustment as of February 28, 2023		(164,701	)
Ending balance as of February 28, 2023	$	998,003


	Fair Value at		Fair Value Measurements at November 30, 2022 Using
Description	November 30, 2022		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	17,620	$	17,620	$	-	$	-
Total	$	17,620	$	17,620	$	-	$	-
Liabilities:
Contingent consideration	$	1,162,704	$	-	$	-	$	1,162,704
Total	$	1,162,704	$	-	$	-	$	1,162,704


	For the three months ended February 28,
	2023			2022
Net revenue:
Umbilical cord blood and cord tissue stem cell service	$	7,561,518		$	7,157,486
PrepaCyte CB		32,200			18,200
Public cord blood banking		230,697			82,845
Total net revenue	$	7,824,415		$	7,258,531
Cost of sales:
Umbilical cord blood and cord tissue stem cell service	$	1,687,250		$	1,714,672
PrepaCyte CB		17,122			30,658
Public cord blood banking		362,992			357,872
Total cost of sales	$	2,067,364		$	2,103,202
Operating profit:
Umbilical cord blood and cord tissue stem cell service	$	1,807,693		$	1,765,213
PrepaCyte CB		8,133			(19,403	)
Public cord blood banking		(132,655	)		(275,388	)
Total operating profit	$	1,683,171		$	1,470,422
Depreciation and amortization:
Umbilical cord blood and cord tissue stem cell service	$	273,539		$	270,862
PrepaCyte CB		6,945			6,944
Public cord blood banking		360			360
Total depreciation and amortization	$	280,844		$	278,166
Interest expense:
Umbilical cord blood and cord tissue stem cell service	$	466,231		$	306,095
PrepaCyte CB		—			—
Public cord blood banking		—			—
Total interest expense	$	466,231		$	306,095


	As of		As of
	February 28, 2023		November 30, 2022
Assets:
Umbilical cord blood and cord tissue stem cell service	$	56,298,385	$	54,849,697
PrepaCyte CB		140,439		176,546
Public cord blood banking		9,695,211		9,861,811
Total assets	$	66,134,035	$	64,888,054


	As of February 28, 2023			As of November 30, 2022
Raw materials	$	—		$	—
Work-in-process		246,838			254,953
Work-in-process – Public Bank		—			—
Finished goods		42,992			62,554
Finished goods – Public Bank		9,574,265			9,775,322
Collection kits		39,738			41,463
Inventory reserve		(7,718	)		(7,718	)
Total inventory	$	9,896,115		$	10,126,574


	Useful lives	February 28, 2023			November 30, 2022
Patents	10-20 years	$	697,744		$	697,744
Less: Accumulated amortization			(130,331	)		(120,297	)
License agreement	10 years		474,000			474,000
Less: Intangible asset impairment			(185,000	)		(185,000	)
Less: Accumulated amortization			(231,020	)		(225,157	)
Customer relationships – PrepaCyte®CB	15 years		41,000			41,000
Less: Intangible asset impairment			(26,267	)		(26,267	)
Less: Accumulated amortization			(8,909	)		(8,711	)
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			(152,000	)		(144,000	)
Net Intangible Assets		$	1,439,217		$	1,463,312


			Three months ended
			February 28,
			2023
Weighted average values:
Expected dividends			0%
Expected volatility			55.00%
Risk free interest rate			3.87%
Expected life			5 years


			Weighted		Weighted Average Remaining
			Average		Contractual		Aggregate
	Options		Exercise Price		Term (Years)		Intrinsic Value
Outstanding at November 30, 2022		329,314	$	8.36	4.68		$	37,250
Granted		113,000		4.68				—
Exercised		—		—				—
Expired/forfeited		—		—				—
Outstanding at February 28, 2023		442,314	$	7.42		4.54	$	20,750
Exercisable at February 28, 2023		320,671	$	7.48		4.46	$	20,750


	February 28, 2023			November 30, 2022
Note payable - Susser	$	8,891,792		$	8,921,437
Unamortized debt issuance costs - Susser		(185,592	)		(191,035	)
Net note payable	$	8,706,200		$	8,730,402
Current portion of note payable	$	158,456		$	150,527
Long-term note payable, net of debt issuance costs		8,547,744			8,579,875
Total	$	8,706,200		$	8,730,402


	February 28, 2023		February 28, 2022
Interest expense on notes payable - TCB	$	—	$	12,146
Interest expense on notes payable - Susser		202,475		—
Debt issuance costs - TCB		—		6,389
Debt issuance costs - Susser		5,444		—
Total interest expense	$	207,919	$	18,535


	February 28, 2023		February 28, 2022
Numerator:
Net income	$	766,812	$	832,047
Denominator:
Weighted-average shares outstanding-basic		8,467,074		8,527,031
Dilutive common shares issuable upon exercise of stock options		7,663		221,152
Weighted-average shares-diluted		8,474,737		8,748,183
Income per share:
Basic	$	0.09	$	0.10
Diluted	$	0.09	$	0.10


	Outstanding						Exercisable
			Weighted Average
			Remaining		Weighted				Weighted
Range of Exercise Prices	Outstanding		Contractual Life (Years)		Average Exercise Price		Outstanding		Average Exercise Price
$3.01 to $4.00		30,000		2.50	$	3.13		30,000	$	3.13
$4.01 to $5.00		113,000		4.85	$	4.68		50,000	$	4.62
$6.01 to $7.00		14,433		7.94	$	6.50		8,249	$	6.51
$7.01 to $8.00		194,781		4.71	$	7.63		180,829	$	7.60
$9.01 to $10.00		29,000		5.02	$	9.37		9,166	$	9.31
$12.01 to $13.00		16,653		7.48	$	12.54		12,799	$	12.58
$13.01 to $14.00		44,447		1.82	$	13.50		29,628	$	13.50
		442,314		4.54	$	7.42		320,671	$	7.48


				Weighted Average
				Grant-Date
	Options			Fair Value
Non-vested at November 30, 2022		95,486		$	4.42
Granted		113,000			2.19
Vested		(86,843	)		3.17
Forfeited		—			—
Non-vested at February 28, 2023		121,643		$	3.24


	Future Operating
Fiscal Year Ending February 28,	Lease Payments
2023	$	228,878
2024		295,086
2025		24,591
Less: Imputed interest		(17,614	)
Present value of lease liabilities	$	530,941


	February 28, 2023	November 30, 2022
Lease Term and Discount Rate
Remaining lease term (years)
Operating lease	1.83		2.08
Discount rate (percentage)
Operating lease	3.5%		3.5	%


	Three months ended
	February 28, 2023		February 28, 2022
Operating cash outflows from operating leases	$	88,395	$	85,964


	•		The world’s first private cord blood bank, that in combination with its global affiliates, currently stores over 500,000 cord blood and cord tissue specimens,


	•		Our facility’s status as a cGMP- and cGTP-compliant private cord blood bank with AABB accreditation and FACT (the Foundation for the Accreditation for Cellular Therapy) accreditation,


	•		utilization of a processing method using superior technology that yields the maximum recovery of healthy stem cells and provides superior red blood depletion over all other methods,


	•		a five-compartment cord blood freezer bag that allows for multiple uses of the baby’s cord blood stem cells,


	•		since inception, 100% viability rate of the Company’s specimens upon thaw for therapeutic use,


	•		a payment warranty under which the Company agrees to pay $50,000 (effective February 1, 2012 this payment was increased to $75,000 for new clients, effective June 1, 2017 this payment was increased to $100,000 for new clients that choose our premium cord blood processing method, PrepaCyte® CB Processing System (“PrepaCyte CB”)) to its client if the umbilical cord blood product retrieved is used for a stem cell transplant for the donor or an immediate family member and fails to engraft, subject to various restrictions.


	•		authorize the board of directors to issue, without stockholder approval, blank-check preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by the board of directors;


	•		establish advance notice requirements for stockholder nominations of directors and for stockholder proposals that can be acted on at stockholder meetings;


	•		require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;


	•		provide that the board may increase the size of our board of directors and authorize the board to fill any vacancies on our board of directors by a majority of directors then in office;


	•		authorize us to indemnify officers and directors against losses that they may incur in investigations and legal proceedings resulting from their services to us, which may include services in connection with takeover defense measures; and


	•		prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; or