Cryo-Cell International(CCEL)2024-04-15 21:10Corporate Structure and Subsidiaries - The Company formed a wholly owned subsidiary, Celle Corp., on February 22, 2024, to hold certain assets not directly associated with its recurring revenue stream [71]. Financial Projections and Needs - The Company anticipates needing over 5,000,000 over the next twelve months for property build-out and equipment purchases [223]. - The Company anticipates that its cash and cash equivalents, marketable securities, and cash flows from future operations will be sufficient to fund its known cash needs for at least the next 12 months [243]. Legal and Compliance Matters - The Company believes that the resolution of a legal matter will not have a material adverse effect on its business or financial position, although there is a possibility of an unfavorable outcome [67]. - The Company’s common stock may be delisted from NYSE if it fails to comply with continued listing standards, which could adversely affect liquidity and capital raising efforts [72]. Financial Reporting and Internal Controls - The Company’s internal controls over financial reporting were deemed not effective due to a material weakness in identifying appropriate accounting treatment for non-routine transactions [60]. - The Company adopted ASU 2016-13 regarding credit losses as of December 1, 2023, with no material impact on its consolidated financial statements [89]. Revenue and Income - The company reported a net income of 766,812 for the same period in 2023, reflecting a decrease of approximately 27.4% [109]. - Total net revenue for the three months ended February 29, 2024, was 7,824,415 for the same period in 2023, reflecting a slight increase [133]. - Revenue from public cord blood banking sales for the three months ended February 29, 2024, was 230,697 for the same period in 2023, representing a decline of approximately 81% [196]. Expenses and Costs - The total cost of sales for the three months ended February 29, 2024, was 2,067,364 for the same period in 2023, indicating an increase of approximately 4.5% [133]. - Selling, general, and administrative expenses for the three months ended February 29, 2024, were 3,878,903 in 2023 [234]. - Interest expense for the three months ended February 29, 2024, was 466,231 in the comparable period in 2023 [236]. Assets and Inventory - Total inventory as of February 29, 2024, was 6,028,996 as of November 30, 2023 [104]. - The Company had approximately 6,000 cord blood units in inventory as of February 29, 2024, valued at the lower of cost or net realizable value [251]. Clinical Trials and Research - The total cost of the phase 3 clinical trial for treating children with cerebral palsy is estimated at 94,099 for the three months ended February 29, 2024 [161]. - The company has completed or is in progress of 19 FDA approved clinical trials related to the Duke License Agreement and intends to fund additional trials as necessary [155]. Strategic Plans and Business Development - The company aims to expand its core business units to include cord blood storage services, infusion clinic services, and biopharmaceutical manufacturing if BLA(s) are approved by the FDA [174]. - The company plans to open the Cryo-Cell Institute for Cellular Therapies in a 56,000 square feet facility in Durham, with operations expected to begin during fiscal 2024 [169][174]. - The company intends to expand its cryopreservation and cold storage business with the introduction of a new service, ExtraVault, aimed at biopharmaceutical companies and healthcare institutions [192]. Market Position and Competitive Advantage - The company has a competitive advantage as the world's first private cord blood bank, currently storing over 500,000 cord blood and cord tissue specimens [189]. - The company has a national team of field cord blood educators to increase awareness of the benefits of storing cord blood and cord tissue [193]. Cash Flow and Financing Activities - Net cash used in operating activities for the three months ended February 29, 2024, was 1,643,926 for the same period in 2023 [241]. - Net cash provided by financing activities for the three months ended February 29, 2024, was 950,000 line of credit, offset by 170,376 for stock repurchases [241]. Impairment and Asset Management - The company recorded an impairment charge of $13,108,064 during the fourth quarter of fiscal 2023 due to uncertain future cash flows from the Duke license agreement [160]. - The company has recognized indications of impairment of assets associated with the Duke license agreement, leading to a full impairment of the asset [160].