FLORIDA
|
000-50746
|
65-1078768
|
||
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
1857 HELM DRIVE
LAS VEGAS, NV 89119
|
89119
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer | o | Accelerated filer | o | Non-accelerated filer | o | Smaller reporting company filer | þ |
PART I. FINANCIAL INFORMATION | |||||
Item 1. | Condensed Consolidated Financial Statements (Unaudited) | 1 | |||
Condensed Consolidated Balance Sheets (unaudited) March 31, 2011 and December 31, 2010 (audited) | 1 | ||||
Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2010 and March 31, 2011 | 2 | ||||
Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2010 and March 31, 2011 | 3 | ||||
Notes to Condensed Consolidated Financial Statements (unaudited) | 5 | ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | |||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 22 | |||
Item 4T. | Controls and Procedures | 22 | |||
PART II. OTHER INFORMATION | |||||
Item 1. | Legal Proceedings | 23 | |||
Item 1A. | Risk Factors | 24 | |||
Item 2. | Unregistered Sales Of Equity Securities And Use Of Proceeds | 24 | |||
Item 3. | Defaults Upon Senior Securities | 24 | |||
Item 4. | Reserved | 24 | |||
Item 5. | Other Information | 24 | |||
Item 6. | Exhibits | 24 | |||
Signatures | 27 |
ASSETS
|
||||||||
Current assets:
|
March 31,
2011
|
December 31,
2010
|
||||||
Cash
|
$
|
403,021
|
$
|
347,258
|
||||
Accounts receivable, net of allowance for doubtful accounts of $ 9,760 and $10,000
|
588,998
|
540,279
|
||||||
Prepaid expenses
|
226,753
|
141,300
|
||||||
Other current assets
|
289,289
|
72,560
|
||||||
Notes receivable, related party, current
|
320,416
|
300,000
|
||||||
Total current assets
|
1,828,477
|
1,401,397
|
||||||
Property and equipment, net of accumulated depreciation and amortization of $277,893 and $248,404
|
622,961
|
571,431
|
||||||
Customer contracts and relationships, net of accumulated amortization of $ 2,110,317 and $1,949,377
|
4,877,642
|
5,038,582
|
||||||
Investments and related party receivables
|
593,861
|
125,000
|
||||||
Goodwill
|
244,053
|
244,053
|
||||||
Total assets
|
$
|
8,166,994
|
$
|
7,380,463
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
1,042,306
|
$
|
967,626
|
||||
Accrued expenses
|
1,110,082
|
1,338,115
|
||||||
Deferred rent
|
86,366
|
112,231
|
||||||
Deferred revenue
|
1,839,333
|
1,835,792
|
||||||
Derivative liability
|
717,320
|
238,789
|
||||||
Promissory notes payable, current, net of unamortized discount of $0 and $0
|
1,490,400
|
1,490,400
|
||||||
Total current liabilities
|
6,285,807
|
5,982,953
|
||||||
Promissory notes payable, net of unamortized discount of $864,560 and 251,903
|
1,803,848
|
651,217
|
||||||
Total liabilities
|
8,089,655
|
6,634,170
|
||||||
Stockholders’ deficit:
|
||||||||
Preferred stock, $.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding
|
––
|
––
|
||||||
Common stock, $.0001 par value, 250,000,000 shares authorized, 67,461,996 and 62,838,832 shares issued and outstanding, inclusive of treasury shares
|
674,620
|
628,389
|
||||||
Additional paid-in capital
|
44,061,189
|
42,892,449
|
||||||
Common stock held in treasury stock, 20,000 shares
|
(599,833
|
)
|
(599,833
|
)
|
||||
Accumulated Other Comprehensive income (loss)
|
(9,627
|
) |
(551
|
) | ||||
Accumulated equity (deficit)
|
(44,629,856
|
)
|
(42,789,936
|
)
|
||||
Total cord blood stockholders’ equity (deficit)
|
(503,507
|
)
|
130,518
|
|
||||
Non-controlling interest
|
580,846
|
615,775
|
||||||
Total stockholders’ equity (deficit)
|
77,339
|
|
746,293
|
|||||
Total liabilities and stockholders’ deficit
|
$
|
8,166,994
|
$
|
7,380,463
|
|
THREE-MONTH
PERIOD
|
THREE-MONTH
PERIOD
|
||||||
|
ENDED
|
ENDED
|
||||||
|
MARCH 31,
|
MARCH 31,
|
||||||
|
2011
|
2010
|
||||||
Revenue
|
$ | 1,457,912 | $ | 839,343 | ||||
Cost of services
|
(471,202 | ) | (415,366 | ) | ||||
Gross profit
|
986,710 | 423,977 | ||||||
Administrative and selling expenses
|
(2,130,554 | ) | (1,750,262 | ) | ||||
Start-up Costs
|
—
|
(820,471 | ) | |||||
Loss from operations
|
(1,438,844 | ) | (2,146,756 | ) | ||||
Interest expense and change in derivative liability
|
(730,869 | ) | (432,071 | ) | ||||
Net loss before income taxes
|
(1,874,713 | ) | (2,578,827 | ) | ||||
Income taxes
|
–– | –– | ||||||
Non-controlling interest in income
|
34,929 | –– | ||||||
Net loss
|
(1,839,784 | ) | (2,578,827 | ) | ||||
Basic and diluted loss per share
|
$ | (0.00 | ) | $ | (0.00 | ) | ||
Weighted average common shares outstanding
|
65,841,079 | 50,551,886 |
THREE-MONTH
|
THREE-MONTH
|
|||||||
PERIOD ENDED
|
PERIOD ENDED
|
|||||||
MARCH 31,
|
MARCH 31,
|
|||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Consolidated Net loss
|
$ | (1,874,713 | ) | $ | (2,578,827 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Shares issued (cancelled) relating to services, net
|
(23,050 | ) | 427,300 | |||||
Shares issued to employees, directors and consultants
|
30,000 | 30,000 | ||||||
Amortization of loan discount
|
220,558 | 32,700 | ||||||
Depreciation and amortization
|
192,181 | 144,411 | ||||||
Stock Option Expense
|
96,089 | 551,603 | ||||||
Change in value of derivative liability
|
34,460 | (5,373 | ) | |||||
Bad Debt (Recovery)
|
(480 | ) | –– | |||||
Start-up costs for Stellacure
|
–– | 820,471 | ||||||
Foreign Currency Translation
|
(9,076 | ) | –– | |||||
DWAC Settlement liabilities
|
671,386 | –– | ||||||
Net change in operating assets and liabilities
|
(546,659 | ) | (544,456 | ) | ||||
Net cash used in operating activities
|
(1,209,304 | ) | (1,122,171 | ) | ||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Payments for purchase of property and equipment
|
(82,763 | ) | (86,800 | ) | ||||
Loan Receivable issued to China Stem Cells
|
(250,000 | ) | –– | |||||
Loan Receivable issued to VidaPlus
|
(218,861 | ) | –– | |||||
Net cash used in investing activities
|
(551,624 | ) | (86,800 | ) | ||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Issuance of common shares for cash
|
566,691 | 150,000 | ||||||
Proceeds from issuance of notes payable
|
1,250,000 | 1,200,000 | ||||||
Proceeds from advances from shareholders
|
–– | (21,419 | ) | |||||
Net cash provided by financing activities
|
1,816,691 | 1,328,581 | ||||||
|
||||||||
Net increase in cash
|
55,763 | 119,610 | ||||||
Cash balance at beginning of period
|
347,258 | 716,576 | ||||||
Cash balance at end of period
|
$ | 403,021 | $ | 836,186 |
|
THREE-MONTH
PERIOD
|
THREE-MONTH
PERIOD
|
||||||
|
ENDED
|
ENDED
|
||||||
|
MARCH 31,
|
MARCH 31,
|
||||||
|
2011
|
2010
|
||||||
Supplemental disclosures:
|
||||||||
Cash paid for interest
|
$
|
––
|
$
|
—
|
||||
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
||||||
Debt repaid through issuance of common stock
|
$
|
496,125
|
$
|
38,819
|
·
|
Cord specializes in providing private cord blood stem cell preservation services to families.
|
·
|
Stellacure GmbH specializes in providing cord blood stem cell preservation services to families in Germany, Spain and Italy.
|
·
|
Biocordcell Argentina S.A. specializes in providing cord blood stem cell preservation to families in Argentina, Uruguay and Paraguay.
|
·
|
BodyCells is a developmental stage company and intends to be in the business of collecting, processing and preserving peripheral blood and adipose tissue stem cells allowing individuals to privately preserve their stem cells for potential future use in stem cell therapy.
|
·
|
Properties was formed to hold the corporate trademarks and other intellectual property.
|
·
|
Rain has specialized in creating direct response television and radio advertising campaigns, including media placement and commercial production. Management has reduced the activities of Rain, terminated its former employees, and by the end of 2010, was no longer seeking additional business. This is consistent with management’s decision to focus its attention exclusively on the stem cell storage business and related activities.
|
|
·
|
Level 1 – quoted prices in active markets for identical assets or liabilities.
|
|
·
|
Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.
|
|
·
|
Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Cash and cash equivalents
|
$
|
403,021
|
|
$
|
—
|
$
|
—
|
$
|
403,021
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(717,320)
|
|
|
$
|
(717,320)
|
|
Risk free interest rate
|
0.20% to 1.28%
|
||
Expected life
|
0 to 4 years
|
||
Dividend Yield
|
0% | ||
Volatility
|
0% to 165%
|
Value at December 31, 2010
|
$ | 238,789 | ||
Issuance of instruments
|
$ | 677,740 | ||
Increase in Value
|
$ | 34,460 | ||
Reclassification
|
$ | (233,669 | ) | |
Value at March 31, 2011
|
$ | 717,320 |
2011
|
2010
|
|||||||
Net income (loss)
|
$ | (1,839,784 | ) | $ | (2,578,827 | ) | ||
Foreign currency translation gain (loss)
|
(9,076 | ) | –– | |||||
Comprehensive income (loss)
|
$ | (1,848,860 | ) | $ | (2,578,827 | ) |
|
March 31,
2011
|
December 31,
2010
|
||||||
Convertible Promissory Note Payable to JMJ Financial, secured by $1.5 million of the Company's assets, one time interest charge of 10.33%, due January 19, 2013
|
$ |
1,317,883
|
$ |
658,121
|
||||
Convertible Promissory Note Payable to JMJ Financial, secured by $.750 million of the Company's assets, one time interest charge of 10.67%, due April 7, 2013
|
700,025
|
99,975
|
||||||
Senior Secured Note Payable to Shelter Island Opportunity Fund, LLP, effective interest rate of 16% per annum, payable in six monthly installments of $248,400 April 2011 through September 2011
|
1,490,400
|
1,490,400
|
||||||
Convertible Promissory Note Payable to JMJ Financial, secured by $.750 million of the Company's assets, one time interest charge of 10.67%, due October 7, 2013
|
145,025
|
145,025
|
||||||
Convertible Promissory Note Payable to St. George Investment, secured by the Company’s assets, interest rate of 6.0% per annum, with payment due on or before March 10, 2015
|
355,500
|
––
|
||||||
Convertible Promissory Note Payable to JMJ Financial, secured by $1.0 million of the Company's assets, one time interest charge of 10.0%, due January 12, 2014
|
149,975
|
––
|
||||||
––
|
||||||||
|
4,158,808
|
2,393,521
|
||||||
Less: Unamortized Discount
|
(864,560
|
)
|
(251,904
|
) | ||||
|
$
|
3,294,248
|
$
|
2,141,617
|
Rent to be
paid
|
Rent to be Received
|
Net Rent to
be Paid
|
||||||||||
2011
|
$ | 200,282 | $ | 56,675 | $ | 143,607 | ||||||
2012
|
251,139 | 56,675 | 194,464 | |||||||||
2013
|
154,082 | -- | 154,082 | |||||||||
2014
|
118,142 | -- | 118,142 | |||||||||
Total
|
$ | 723,645 | $ | 113,350 | $ | 610,295 |
Stock Options
|
Weighted Average Exercise Price
|
Weighted Avg. Contractual Remaining Life
|
||||||||||
Outstanding, January 1, 2011
|
7,492,723 | 0.07 | 5.5 | |||||||||
Granted
|
664,058 | 0.01 | - | |||||||||
Exercised
|
807,672 | - | - | |||||||||
Forfeited/Expired
|
397,808 | - | - | |||||||||
Outstanding, December 31, 2011
|
6,951,310 | 0.01 | 7.3 | |||||||||
Granted
|
- | - | - | |||||||||
Exercised
|
- | - | - | |||||||||
Forfeited/Expired
|
- | - | - | |||||||||
Outstanding, March 31, 2011
|
6,951,310 | 0.01 | 7.30 | |||||||||
Exercisable at March 31, 2011
|
5,438,858 | 0.01 | 7.30 |
Range of
Exercise Prices
|
Number of Options
|
Weighted Average
Remaining
Contractual Life
(years)
|
Weighted Average
Exercise
Price
|
Number of
Options
Exercisable
|
Weighted Average
Exercise
Price
|
||||||||||
$0.0033 — 0.20 |
6,903,286
|
7.33
|
$
|
0.08
|
5,390,834
|
$
|
0.010
|
||||||||
$0.21 — 0.30 |
30,126
|
3.87
|
0.250
|
30,126
|
0.250
|
||||||||||
$0.31 — 0.51 |
17,898
|
4.69
|
0.312
|
17,898
|
0.312
|
||||||||||
6,951,310
|
7.30
|
$
|
0.010
|
5,438,858
|
$
|
0.010
|
WARRANTS OUTSTANDING
|
EXERCISE PRICE
|
MATURITY DATE
|
||
157,297 | $0.101 |
02/14/2012
|
||
40,000 | $0.101 |
02/14/2012
|
||
29,167 | $0.37 |
11/26/2012
|
||
37,970 | $0.37 |
11/26/2012
|
||
96,555 | $0.1875 |
05/30/2013
|
||
114,286 | $0.37 |
06/23/2012
|
||
Total 475,275
|
|
Umbilical
|
Segment
|
Condensed Consolidated
|
||||||||||||||||||||||
|
Cord Blood
|
Stellacure
|
Biocordcell
|
Total
|
Eliminations
|
Total
|
||||||||||||||||||
Revenue from External Customers
|
$ | 833,907 | $ | 129,506 | $ | 494,499 | $ | 1,457,912 | $ | - | $ | 1,457,912 | ||||||||||||
Interest & Derivative Expense
|
698,084 | 25,744 | 7,041 | 730,869 | - | 730,869 | ||||||||||||||||||
Depreciation and Amortization
|
185,505 | 2,509 | 4,166 | 192,180 | - | 192, 180 | ||||||||||||||||||
Segment Income (Loss)
|
(1,800,566 | ) | (214,267 | ) | 140,120 | (1,874,713 | ) | 34,929 | (1,839,713 | ) | ||||||||||||||
Segment Assets
|
$ | 7,696,339 | $ | 420,631 | $ | 595,667 | $ | 8,712,637 | $ | (545,643 | ) | $ | 8,166,994 |
|
Umbilical
|
Segment
|
Condensed
|
|||||||||||||||
Cord Blood
|
StellaCure
|
Total
|
Eliminations
|
Total
|
||||||||||||||
Revenue from External Customers
|
$ | 839,343 | $ | - | $ | 839,343 | $ | - | $ | 839,343 | ||||||||
Interest Expense
|
432,071 | - | 432,071 | - | 432,071 | |||||||||||||
Depreciation and Amortization
|
144,411 | - | 144,411 | - | 144,411 | |||||||||||||
Segment Income (Loss)
|
(2,578,827 | ) | - | (2,578,827 | ) | - | (25,788,272 | ) | ||||||||||
Segment Assets
|
$ | 5,627,206 | $ | 1,074,672 | $ | 6,701,878 | $ |
(947,176
|
) | $ | 5,754,702 |
|
·
|
Collection Materials.
We provide a medical kit that contains all of the materials necessary for collecting the newborn’s umbilical cord blood at birth and packaging the unit for transportation. The kit also provides for collecting a maternal blood sample for later testing.
|
|
·
|
Physician And Customer Support.
We provide 24-hour consulting services to customers as well as to physicians and labor and delivery personnel, providing any instruction necessary for the successful collection, packaging, and transportation of the cord blood & maternal blood samples.
|
|
·
|
Transportation.
We manage all logistics for transporting the cord blood unit to our centralized facility immediately following birth. This procedure ensures chain-of-custody control during transportation for maximum security.
|
|
·
|
Comprehensive Testing.
At the laboratory, the cord blood sample is tested for stem cell concentration levels, bacteria and blood type. The maternal blood sample is tested for infectious diseases. We report these results to the newborn’s mother.
|
|
·
|
Cord Blood Preservation.
After processing and testing, the cord blood unit is cryogenically frozen in a controlled manner and stored in liquid nitrogen for potential future use. Data indicates that cord blood retains viability and function for at least fifteen years when stored in this manner and theoretically could be maintained at least as long as the normal life span of an individual.
|
EXHIBIT
|
DESCRIPTION
|
|
2.0
|
Form of Common Stock Share Certificate of Cord Blood America, Inc.
(1)
|
|
3.1(i)
|
Amended and Restated Articles of Incorporation of Cord Blood American, Inc.
(1)
|
|
3.1(ii)
|
Articles of Amendment to Articles of Incorporation
(7)
|
|
3.1(iii)
|
Articles of Amendment to the Articles of Incorporation of Cord Blood America, Inc.(12)
|
|
3.1(iv) | Articles of Amendment to the Articles of Incorporation of Cord Blood America, Inc. (Filed herewith) | |
3.1(v) | Articles of Amendment to the Articles of Incorporation of Cord Blood America, Inc. (Filed herewith) | |
3.2(i) |
Amended and Restated Bylaws of Cord Blood America, Inc.
(1)
|
|
10.0
|
Patent License Agreement dated as of January 1, 2004 between PharmaStem Therapeutics, Inc. and Cord Partners, Inc.
(2)
|
10.1 | Board Compensation Plan (3) | |
10.2
|
Second Amendment, dated November 26, 2007, to the Securities Purchase Agreement, dated as of February 14, 2007, as amended by the First Amendment, dated as of April 9, 2007, by and among CorCell, Cord Blood America, Inc., and Shelter Island
(4)
|
|
10.3
|
CorCell Security Agreement, dated as of November 26, 2007, by and between Cord Blood America, Inc., and Shelter Island
(4)
|
|
10.4
|
Put Option Agreement, dated as of November 26, 2007, by and between Cord Blood America, Inc. and Shelter Island
(4)
|
|
10. 5
|
Subordination Agreement, dated November 26, 2007, by and between Cord Blood America, Inc., CorCell, Career Channel, Inc., the Purchasers and Shelter Island
(4)
|
|
10.6
|
Securities Purchase Agreement between the Company and Tangiers dated June 27, 2008
(5)
|
|
10.7
|
Registration Rights Agreement between the Company and Tangiers dated June 27, 2008
(5)
|
|
10.8
|
Employment Agreement between the Company and Joseph Vicente (6)
|
|
10.9 | Employment Agreement between the Company and Matthew Schissler (6) | |
10.10
|
Fourth Amendment to Securities Purchase Agreement, dated June 3, 2008, by and among CorCell, Ltd., the Company, Career Channel, Inc., a Florida corporation d/b/a Rainmakers International, and Shelter Island Opportunity Fund, LLC
(8)
|
|
10.11
|
Form of Common Stock Purchase Warrant to Purchase Shares of Common Stock of the Company
(8)
|
|
10.12
|
Form of Lock-Up Agreement.
(8)
|
|
10.13
|
Amendment No. 1 to Securities Purchase Agreement, dated November 25, 2008
(9)
|
|
10.15
|
Amendment No. 1 to Securities Purchase Agreement filed herewith dated January 22, 2009
(10)
|
|
10.16
|
Amendment Agreement, dated as of February 20, 2009, by and among Shelter Island Opportunity Fund, LLC, Corcell Ltd. and Cord Blood America, Inc. (11)
|
|
10.17
|
Lease for Las Vegas Facility
|
|
10.18
|
2010 Flexible Stock Option Plan
|
|
10.19
|
Compensatory Arrangement for Certain Officers Effective July 13, 2009, Stock Options (13)
|
|
10.20 | Compensatory Arrangement for Certain Officers Effective December 31, 2009, Stock Options (14) | |
10.21
|
Convertible Promissory Note Executed January 6, 2010 between Cord Blood America, Inc. and JMJ Financial (15)
|
|
10.22
|
Entered on March 24, 2010 into Investment Agreement to Acquire Majority Interest in Stellacure (16)
|
|
10.24 | Material Agreement between Company and Pyrenees Capital (16) | |
10.25
|
Convertible Promissory Note Executed March 24, 2010 between CBAI and JMJ Financial (16)
|
|
10.26
|
Convertible Promissory Note Executed March 26, 2010 between CBAI and JMJ Financial (16)
|
|
10.27
|
Compensatory Arrangement for Certain Officers Executed July 1, 2010. Stock Options (17)
|
|
10.28
|
Senior Secured Note Agreement between Cord Blood America, Inc. and Shelter Island Opportunity Fund Executed July 21, 2010. (18)
|
|
10.29
|
Executed Stock Purchase Agreement on September 20, 2010 to Acquire Majority Interest in BioCordcell Argentina, SA. (19)
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10.30
|
Entered into a Letter of Intent to Acquire Assets of Cryo-Cell De Mexico on December 3, 2010 (20)
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10.31
|
On March 20, 2011 Cord Blood America, Inc. Entered into a Note and Warrant Purchase Agreement with St. George Investments. (21)
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10.32
|
On January 12, 2011, Cord Blood America, Inc, Entered into a Convertible Promissory Note with JMJ Financial and a Liquidated Damages Agreement (21).
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10.33
|
On January 19, 2011, Cord Blood America, Inc. Entered into a Liquidated Damages Agreement with Tangiers Capital, LLC. (21)
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21
|
List of Subsidiaries
(37)
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31.1
|
Certification of the registrant’s Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ((Filed Herewith)
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32.1
|
Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed Herewith)
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CORD BLOOD AMERICA, INC.
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||
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|||
Date: May 23, 2011 |
By:
|
/s/
Matthew L. Schissler
|
|
Name: | Matthew L. Schissler | ||
Title: |
Chairman and Chief Executive Officer
(Principal Executive Officer and
Principal Financial and Accounting Officer)
|
Date: May 23, 2011
|
By:
|
/s/ Matthew L. Schissler |
|
Name:
|
Matthew L. Schissler
|
||
Title:
|
Chief Executive Officer
|
||
and Chief Financial Officer |