Cryo-Cell International(CCEL) - 2023 Q2 - Quarterly Report

Business Operations - The company currently stores over 225,000 cord blood and cord tissue specimens for newborns and their families [183]. - The company has expanded its research and development to include technologies related to stem cells harvested from sources beyond umbilical cord blood [171]. - The company entered into a Patent and Technology License Agreement with Duke University, granting exclusive commercial rights to proprietary processes related to cord blood and cord tissue [195]. - The company acquired substantially all assets of Cord:Use, enhancing its public cord blood inventory [191]. - The company has introduced a new cord tissue service, which stores a section of the umbilical cord tissue, enhancing its service offerings [190]. - The company is focused on expanding its core business units to include biopharmaceutical manufacturing if BLA(s) are approved by the FDA [178]. - The company believes that the market for cord blood stem cell preservation is enhanced by global discussions on stem cell research and reducing healthcare costs [187]. - The company has entered into a License and Royalty Agreement with LifeCell to market its umbilical cord blood and menstrual stem cell programs in India [139]. - The Company has definitive license agreements to market umbilical cord blood stem cell programs in six Central American countries [154]. Financial Performance - Total revenue for the three months ended May 31, 2023, was $7,772,690, a 1.8$7,633,217 for the same period in 2022 [6]. - Processing and storage fees contributed $7,581,697 to total revenue, compared to$7,480,082 in the prior year, reflecting a growth of 1.4% [6]. - Net income for the three months ended May 31, 2023, was $220,976, a decrease of 65.2$634,719 in the same period last year [6]. - Total net revenue for the company reached $15,597,105, an increase from$14,891,748 in the previous year, representing a growth of approximately 4.7% [91]. - The cost of sales totaled $4,210,550, down from$4,304,742, indicating a decrease of about 2.2% [91]. - Operating profit increased to $2,711,069 from$2,664,796, reflecting a growth of approximately 1.7% [91]. - The company reported a total inventory of $9,715,581 as of May 31, 2023, down from$10,126,574 as of November 30, 2022, a decrease of about 4.1% [94]. - The company recorded a provision for doubtful accounts of $403,040 for the six months ended May 31, 2023, compared to$399,953 for the same period in 2022 [27]. - The company incurred a loss of $223,974 on a derivative related to interest rate swaps as of May 31, 2023 [87]. Assets and Liabilities - Current assets increased to$10,313,477 as of May 31, 2023, compared to $9,610,185 as of November 30, 2022, representing a growth of 7.3$69,616,083 as of May 31, 2023, up from $66,412,356 as of November 30, 2022, indicating a 3.3$6,682,479, an increase from $6,043,941 as of November 30, 2022 [41]. - The company’s total stockholders' equity as of May 31, 2022, was$4,406,983, reflecting a decrease from previous periods [29]. - The total lease liability as of May 31, 2023, was $1,191,845, significantly higher than$610,989 as of November 30, 2022, representing an increase of approximately 95.3% [144]. Research and Development - The company projects to open the Cryo-Cell Institute for Cellular Therapies and begin infusing patients during fiscal 2024 due to equipment delivery delays [172]. - Research, development, and related engineering expenses increased significantly to $304,682 for the three months ended May 31, 2023, compared to$80,896 in the same period last year, marking a growth of 276.5% [6]. - Duke has completed or is in progress with a total of 19 FDA approved clinical trials related to the Duke License Agreement [162]. - The readout from a Phase 3 clinical trial run by Emory University, which compares Duke's MSCs to the current standard of care for osteoarthritis, is expected in 2023 [163]. Stock and Compensation - The company has three stock-based compensation plans, with the 2022 Plan effective from April 8, 2022 [51]. - The company recognized approximately $470,000 and$149,000 in stock compensation expense for the six months ended May 31, 2023 and 2022, respectively [51]. - The fair value of options granted during the six months ended May 31, 2023 was $2.19, compared to$4.56 for the same period in 2022, indicating a decrease of approximately 52.0% [133]. - As of May 31, 2023, there were 198,578 service-based options issued under the 2012 Equity Incentive Plan, with no shares available for future issuance under this plan [128]. - The Company has approximately $292,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements, expected to be recognized over a weighted-average period of 1.85 years [137]. Warranty and Legal Matters - The company offers a payment warranty of up to$100,000 for clients using its premium cord blood processing method if the product fails to engraft [190]. - The company has not experienced any claims under its payment warranty program, which has increased from $50,000 to$100,000 for new clients since 2017 [89]. - The Company believes that the ongoing litigation regarding umbilical cord blood storage services will not have a material adverse effect on its business, although there is a possibility of an unfavorable outcome [123].