(Former name, former address and former fiscal year, if changed since last report).

Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes☒ No ☐ Not Applicable ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “small reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes~~ ☐ No ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐

~~State~~Indicate the number of shares outstanding of each of the ~~Registrant's~~issuer's classes of common stock, as of the latest practicable date. As of ~~October 12, 2021, 14,617,672~~July 11, 2022, 8,388,290 shares of $0.01 par value common stock were ~~issued and 8,529,647 were~~ outstanding.


	(Unaudited)						(Unaudited)
	August 31,			November 30,			May 31,			November 30,
	2021			2020			2022			2021
ASSETS
Current Assets
Cash and cash equivalents	$	7,700,806		$	10,361,125		$	2,804,452		$	8,263,088
Marketable securities		74,124			88,476			63,125			75,412
Accounts receivable (net of allowance for doubtful accounts of $2,896,051 and $2,781,668, respectively)		5,449,313			6,322,960
Accounts receivable (net of allowance for
doubtful accounts of $3,233,575 and $3,078,439, respectively)								5,150,154			5,253,173
Prepaid expenses		513,009			611,627			569,630			558,413
Inventory, current portion		833,963			927,318			873,157			921,213
Other current assets		349,695			244,696			844,774			711,208
Total current assets		14,920,910			18,556,202			10,305,292			15,782,507
Property and Equipment-net		3,028,268			1,640,774			4,027,969			3,230,204
Other Assets
Investment - Tianhe stock		308,000			308,000			308,000			308,000
Patent option agreement		—			350,000
Duke license agreement		14,891,995			—			14,171,415			14,651,802
Intangible assets, net		1,572,804			1,181,588			1,511,502			1,559,693
Inventory, net of current portion		10,855,900			11,064,034			9,552,616			9,695,363
Goodwill		1,941,411			1,941,411			1,941,411			1,941,411
Deferred tax assets		10,363,967			10,363,967			12,010,133			12,010,133
Operating lease right-of-use asset		992,346			299,089			762,617			916,493
Deposits and other assets, net		548,429			495,029			803,991			566,470
Total other assets		41,474,852			26,003,118			41,061,685			41,649,365
Total assets	$	59,424,030		$	46,200,094		$	55,394,946		$	60,662,076
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	999,118		$	957,390		$	1,722,552		$	1,489,774
Accrued expenses		1,646,916			2,898,211			2,074,987			3,057,386
Current portion of note payable		2,663,676			3,100,000
Note payable								357,842			1,898,065
Current portion of operating lease liability		306,817			275,570			315,042			312,067
Current portion of Duke license agreement liability		4,915,542			—			1,949,539			4,957,591
Deferred revenue		9,326,124			9,183,450			9,291,530			9,358,696
Total current liabilities		19,858,193			16,414,621			15,711,492			21,073,579
Other Liabilities
Deferred revenue, net of current portion		30,395,653			27,200,910			33,372,659			31,274,214
Contingent consideration		905,743			1,509,852			574,833			727,371
Note payable, net of current portion and debt issuance costs		—			2,841,214
Operating lease long-term liability		690,347			23,632			453,979			610,989
Duke license agreement liability		1,900,352			—			-			1,916,609
Long-term liability - revenue sharing agreements		875,000			875,000			875,000			875,000
Total other liabilities		34,767,095			32,450,608			35,276,471			35,404,183
Total liabilities		54,625,288			48,865,229			50,987,963			56,477,762
Commitments and contingencies (Note 9)		0			0			0			0
Stockholders' Equity (Deficit)
Preferred stock ($.01 par value, 500,000 authorized and NaN issued and outstanding)		0			0
Series A Junior participating preferred stock ($.01 par value, 20,000 authorized and NaN issued and outstanding)		0			0
Common stock ($.01 par value, 20,000,000 authorized; 14,617,672 issued and 8,529,647 outstanding as of August 31, 2021 and 13,633,638 issued and 7,545,613 outstanding as of November 30, 2020)		146,177			136,336
Stockholders' Equity
Preferred stock ($.01 par value, 500,000 authorized and NaN issued and outstanding)								0			0
Series A Junior participating preferred stock ($.01 par value, 20,000 authorized and NaN issued and outstanding)								0			0
Common stock ($.01 par value, 20,000,000 authorized; 14,675,772 issued and 8,399,490 outstanding as of May 31, 2022 and 14,665,772 issued and 8,551,816 outstanding as of November 30, 2021)								146,758			146,658
Additional paid-in capital		41,314,923			36,581,600			41,767,841			41,586,583
Treasury stock, at cost		(20,563,357	)		(20,563,357	)		(22,238,189	)		(20,812,734	)
Accumulated deficit		(16,099,001	)		(18,819,714	)		(15,269,427	)		(16,736,193	)
Total stockholders' equity (deficit)		4,798,742			(2,665,135	)
Total liabilities and stockholders' equity (deficit)	$	59,424,030		$	46,200,094
Total stockholders' equity								4,406,983			4,184,314
Total liabilities and stockholders' equity							$	55,394,946		$	60,662,076

The accompanying notes are an integral part of these consolidated financial statements.


	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	August 31,			August 31,			August 31,			August 31,			May 31,			May 31,			May 31,			May 31,
	2021			2020			2021			2020			2022			2021			2022			2021
Revenue:
Processing and storage fees	$	7,326,516		$	7,486,858		$	21,224,033		$	22,292,220		$	7,480,082		$	7,158,886		$	14,637,568		$	13,897,517
Public banking revenue		158,936			116,826			289,231			484,547			116,735			46,309			199,580			130,295
Licensee and royalty income		—			427,874			—			629,702
Product revenue		18,200			82,800			56,200			200,507			36,400			0			54,600			38,000
Total revenue		7,503,652			8,114,358			21,569,464			23,606,976			7,633,217			7,205,195			14,891,748			14,065,812
Costs and Expenses:
Cost of sales		2,458,938			2,360,324			6,693,806			7,344,011			2,201,540			2,222,671			4,304,742			4,234,868
Selling, general and administrative expenses		3,493,794			3,375,807			10,075,502			10,804,404			3,912,586			3,148,396			7,288,540			6,581,708
Change in fair value of contingent consideration		(324,904	)		(145,752	)		(604,109	)		(169,741	)		(36,105	)		(431,599	)		(152,538	)		(279,205	)
Research, development and related engineering		10,004			1,248			19,431			16,791			80,896			3,237			228,116			9,427
Depreciation and amortization		269,482			42,510			558,167			130,034			279,926			267,422			558,092			288,685
Total costs and expenses		5,907,314			5,634,137			16,742,797			18,125,499			6,438,843			5,210,127			12,226,952			10,835,483
Operating Income		1,596,338			2,480,221			4,826,667			5,481,477			1,194,374			1,995,068			2,664,796			3,230,329
Other Expense:
Gains (losses) on marketable securities		736			(134,626	)		(14,352	)		(133,250	)
Losses on marketable securities														(18,188	)		(12,512	)		(26,830	)		(15,088	)
Other income		25			17			75			749			118			25			127			50
Interest expense		(335,870	)		(338,675	)		(957,479	)		(1,069,345	)		(276,524	)		(341,390	)		(582,619	)		(621,609	)
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	)		(294,594	)		(353,877	)		(609,322	)		(636,647	)
Income before income tax expense		1,261,229			936,037			3,854,911			3,208,731			899,780			1,641,191			2,055,474			2,593,682
Income tax expense		(404,735	)		(151,570	)		(1,134,198	)		(783,960	)		(265,061	)		(470,562	)		(588,708	)		(729,463	)
Net Income	$	856,494		$	784,467		$	2,720,713		$	2,424,771		$	634,719		$	1,170,629		$	1,466,766		$	1,864,219
Net income per common share - basic	$	0.10		$	0.10		$	0.34		$	0.32		$	0.08		$	0.15		$	0.17		$	0.24
Weighted average common shares outstanding - basic		8,452,374			7,545,613			7,996,278			7,544,124			8,437,544			7,950,791			8,479,071			7,760,214
Net income per common share - diluted	$	0.10		$	0.10		$	0.33		$	0.30		$	0.07		$	0.14		$	0.17		$	0.23
Weighted average common shares outstanding - diluted		8,692,331			8,179,465			8,217,454			8,137,463			8,553,085			8,273,767			8,643,106			8,060,506

The accompanying notes are an integral part of these consolidated financial statements.


	For the Nine Months Ended						For the Six Months Ended
	August 31,			August 31,			May 31,			May 31,
	2021			2020			2022			2021
Cash flows from operating activities:
Net income	$	2,720,713		$	2,424,771		$	1,466,766		$	1,864,219
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		711,905			284,689			760,759			391,218
Loss on disposal of property and equipment		—			1,032
Change in fair value of contingent consideration		(604,109	)		(169,741	)		(152,538	)		(279,205	)
Losses on marketable securities		14,352			133,250			26,830			15,088
Compensatory element of stock options		233,869			450,746			149,358			152,572
Provision for doubtful accounts		271,460			501,312			399,953			105,279
Loss on extinguishment of revenue sharing agreements		—			1,070,900
Amortization of debt issuance costs		47,462			67,010			9,777			35,072
Amortization of operating lease right-of-use asset		211,434			197,079			153,876			136,116
Changes in assets and liabilities:
Accounts receivable		602,187			(907,531	)		(296,934	)		1,002,125
Prepaid expenses		98,618			(99,169	)		(11,217	)		261,691
Inventory		301,489			237,728			190,803			108,414
Other current assets		(104,999	)		(26,635	)		(133,566	)		(61,299	)
Deposits and other assets, net		(24,716	)		(52,103	)		(237,521	)		(113,564	)
Accounts payable		41,728			(469,160	)		232,778			278,800
Accrued expenses		(1,393,462	)		(757,318	)		(982,399	)		(1,407,076	)
Operating lease liability		(206,729	)		(196,939	)		(154,035	)		(133,259	)
Deferred revenue		3,337,417			2,799,957			2,031,279			1,842,959
Net cash provided by operating activities		6,258,619			5,489,878			3,453,969			4,199,150
Cash flows from investing activities:
Purchases of property and equipment		(1,554,004	)		(52,396	)		(954,607	)		(22,272	)
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
Payment of Duke license agreement								(5,000,000	)		(5,106,224	)
Purchases of marketable securities								(1,142,212	)		0
Sale of marketable securities								1,127,669			0
Net cash used in investing activities								(5,969,150	)		(5,128,496	)
Cash flows from financing activities:
Extinguishment of revenue sharing agreements		—			(1,900,000	)
Treasury stock purchases								(1,425,455	)		0
Repayments of note payable		(3,325,000	)		(2,324,998	)		(1,550,000	)		(2,550,000	)
Proceeds from the exercise of stock options		1,066,290			41,000			32,000			1,066,290
Payment of Cord:Use earnout		—			(45,000	)
Net cash used in financing activities		(2,258,710	)		(4,228,998	)		(2,943,455	)		(1,483,710	)
Change in cash and cash equivalents		(2,660,319	)		1,566,571
Decrease in cash and cash equivalents								(5,458,636	)		(2,413,056	)
Cash and cash equivalents - beginning of period		10,361,125			6,541,037			8,263,088			10,361,125
Cash and cash equivalents - end of period	$	7,700,806		$	8,107,608		$	2,804,452		$	7,948,069

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		$	—		$	—		$	904,691
Patent option agreement credit to purchase of patents and licenses	$	500,000		$	—		$	—		$	500,000
Liabilities incurred for the purchase of patents and licenses	$	11,315,894		$	—		$	—		$	11,258,083
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		$	—		$	0		$	3,585,172
Supplemental cash flow information:
Cash paid during the year for:
Interest							$	483,641		$	516,000
Income taxes							$	756,133		$	1,901,025

The accompanying notes are an integral part of these consolidated financial statements.


																For the Three Months Ended May 31, 2022
																				Additional								Total
																Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
																Shares		Amount		Capital		Stock			Deficit			Equity

Balance at February 28, 2022																	14,675,772	$	146,758	$	41,650,379	$	(21,641,714	)	$	(15,904,146	)	$	4,251,277
Exercise of stock options																	-		-		-								-
Compensatory element of stock options																					117,462								117,462
Treasury stock																							(596,475	)					(596,475	)
Net income																										634,719			634,719
Balance at May 31, 2022																	14,675,772	$	146,758	$	41,767,841	$	(22,238,189	)	$	(15,269,427	)	$	4,406,983


																For the Six Months Ended May 31, 2022
																				Additional								Total
																Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
																Shares		Amount		Capital		Stock			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																					149,358								149,358
Treasury stock																							(1,425,455	)					(1,425,455	)
Net income																										1,466,766			1,466,766
Balance at May 31, 2022																	14,675,772	$	146,758	$	41,767,841	$	(22,238,189	)	$	(15,269,427	)	$	4,406,983


																For the Three Months Ended May 31, 2021
																				Additional								Total
																Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
																Shares		Amount		Capital		Stock			Deficit			Equity
Balance at February 28, 2021																	13,658,938	$	136,589	$	36,857,787	$	(20,563,357	)	$	(18,126,124	)	$	(1,695,105	)
Exercise of stock options																	874,102		8,741		4,451,099								4,459,840
Compensatory element of stock options																					67,754								67,754
Net income																										1,170,629			1,170,629
Balance at May 31, 2021																	14,533,040	$	145,330	$	41,376,640	$	(20,563,357	)	$	(16,955,495	)	$	4,003,118


	For the Nine Months Ended August 31, 2021															For the Six Months Ended May 31, 2021
					Additional								Total							Additional								Total
	Common Stock				Paid-In		Treasury			Accumulated			Stockholders'			Common Stock				Paid-In		Treasury			Accumulated			Stockholders'
	Shares		Amount		Capital		Stock			Deficit			Equity			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	)		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
Exercise of stock options																	899,402		8,994		4,642,468								4,651,462
Compensatory element of stock options						233,869								233,869							152,572								152,572
Net income											2,720,713			2,720,713												1,864,219			1,864,219
Balance at August 31, 2021		14,617,672	$	146,177	$	41,314,923	$	(20,563,357	)	$	(16,099,001	)	$	4,798,742
Balance at May 31, 2021																	14,533,040	$	145,330	$	41,376,640	$	(20,563,357	)	$	(16,955,495	)	$	4,003,118

The accompanying notes are an integral part of these consolidated financial statements.

Note 1 - Description of Business, Basis of Presentation and Significant Accounting Policies

Cryo-Cell International, Inc. (“the Company” or “Cryo-Cell”) was incorporated in Delaware on September 11, 1989 and is headquartered in Oldsmar, Florida. The Company is organized in 3three reportable ~~segments,~~segments: (1) cellular processing and cryogenic cellular storage, with a current focus on the collection and preservation of umbilical cord blood stem cells for family use (2) the manufacture of PrepaCyte CB units, the processing technology used to process umbilical cord blood stem cells and ~~cellular processing and~~(3) cryogenic storage of umbilical cord blood stem cells for public use. Revenues ~~recognized~~ for the cellular processing and cryogenic cellular storage represent sales of the umbilical cord blood stem cells program to customers and income from licensees selling the umbilical cord blood stem cells program to customers outside the United States. Revenues ~~recognized~~ for the manufacture of PrepaCyte CB units represent sales of the PrepaCyte CB units to customers. Revenue ~~recognized~~ for the cryogenic storage of umbilical cord blood stem cells for public use, stored at Duke University (see below), is generated from the sale of the cord blood units to the National Marrow Donor Program (“NMDP”), which distributes the cord blood units to transplant centers located in the United States and around the world. The Company’s headquarters facility in Oldsmar, Florida handles all aspects of its U.S.-based business operations including the processing and storage of specimens, including specimens obtained from certain of its licensees’ customers. The specimens are stored in commercially available cryogenic storage equipment.

The unaudited consolidated financial statements including the Consolidated Balance Sheets as of ~~August~~May 31, ~~2021~~2022 and November 30, ~~2020,~~2021, the related Consolidated Statements of Income for the three and ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020,~~2021, Cash Flows for the ~~nine~~three and six months ended ~~August~~May 31, 2022 and 2021 and ~~2020 and~~ Stockholders’ Equity ~~(Deficit)~~ for the three and ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~2020~~2021 have been prepared by Cryo-Cell International, Inc. ~~and its subsidiaries~~ pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Certain financial information and note disclosures, which are normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to those rules and regulations. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's November 30, ~~2020~~2021 Annual Report on Form 10-K. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and changes in cash flows for all periods presented have been made. The results of operations for the three ~~and nine~~ months ended ~~August~~May 31, ~~2021~~2022 are not necessarily indicative of the results expected for any interim period in the future or the entire year ending November 30, ~~2021.~~2022.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. ASC 606 also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Under ASC 606, revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised services are transferred to the customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring services to a customer ("transaction price").

At contract inception, if the contract is determined to be within the scope of ASC 606, the Company evaluates its contracts with customers using the five-step model: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenue when (or as) each performance obligation is satisfied. The Company evaluates its

contracts for legal enforceability at contract inception and subsequently throughout the Company’s relationship with its customers. If legal enforceability with regards to the rights and obligations exist for both the Company and the customer, then the Company has an enforceable contract and revenue recognition is permitted subject to the satisfaction of the other criteria. If, at the outset of an arrangement, the Company determines that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met. The Company only applies the five-step model to contracts when it is probable that collection of the consideration that the Company is entitled to in exchange for the goods or services being transferred to the customer, will occur.

Contract modifications exist when the modification either creates new or changes in the existing enforceable rights and obligations. The Company’s contracts are occasionally modified to account for changes in contract terms and conditions, which the Company refers to as an upgrade or downgrade. An upgrade occurs when a customer wants to pay for additional years of storage. A downgrade occurs when a customer originally entered into a long-term contract (such as twenty-one year or lifetime plan) but would

like to change the term to a one-year contract. Upgrade modifications qualify for treatment as a separate contract as the additional services are distinct and the increase in contract price reflects the Company’s stand-alone selling price for the additional services and will be accounted for on a prospective basis. Downgrade modifications do not qualify for treatment as a separate contract as there is no increase in price over the original contract, thus failing the separate contract criteria. As such, the Company separately considers downgrade modifications to determine if these should be accounted for as a termination of the existing contract and creation of a new contract (prospective method) or as part of the existing contract (cumulative catch-up adjustment). ASC 606 requires that an entity account for the contract modification as if it were a termination of the existing contract, and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification. As the services after the modification were previously determined to be distinct, the Company concluded that downgrade modifications qualify under this method and will be accounted for on a prospective basis. Although contract modifications do occur, they are infrequent.

Performance Obligations

At contract inception, the Company assesses the goods and services promised in the contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. The Company determined that the following distinct goods and services represent separate performance obligations involving the sale of its umbilical cord blood ~~product~~product::

•

Collection and processing services

•

Storage services

•

Public cord blood banking

•

License and royalties

•

Sale of PrepaCyte CB product

Collection, Processing and Storage Fees

•

~~Collection and processing services~~

•

~~Storage services~~

•

~~Public cord blood banking~~

•

~~License and royalties~~

•

~~Sale of~~ ~~PrepaCyte CB product~~

a)	~~Collection, Processing and Storage Fees~~

Processing and storage fees include the Company providing umbilical cord blood and tissue cellular processing and cryogenic cellular storage for private use. Revenues recognized for the cellular processing and cryogenic cellular storage represent sales of the umbilical cord blood stem cells program to customers and income from licensees who are selling the umbilical cord blood stem cells program to customers outside the United States.

The Company recognizes revenue from processing fees at the point in time of the successful completion of processing and recognizes storage fees over time, which is ratably over the contractual storage period as well as other

income from royalties paid by licensees related to long-term storage contracts which the Company has under license agreements. Contracted storage periods are annual, twenty-one years and ~~life-time.~~ life-time. The life-time storage plan is based on a life expectancy of 81 years, which is the current estimate by the Center for Disease Control for United States women’s life expectancy and concluded that additional data analysis would result in an immaterial difference in revenue.Deferred revenue on the accompanying consolidated balance sheets includes the portion of the annual, the twenty-one-year and the life-time storage fees that are being recognized over the contractual storage period as well as royalties received from foreign licensees relating to long-term storage contracts for which the Company has future obligations under the license agreement.The Company classifies deferred revenue as current if the Company expects to recognize the related revenue over the next 12 months from the balance sheet date.

Significant financing component

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. For all plans being annual, twenty-one years and lifetime,, the storage fee is ~~paid~~billed at the beginning of the storage period (prepaid plans). ~~Alternatively, the~~The Company also offers payment plans (including a stated service fee) for customers to pay over time for a period of one to twenty-four plus months. The one-time plan includes the collection kit, processing and testing, return medical courier service and twenty-one years of pre-paid storage fees. The life-time plan includes the collection kit, processing and testing, return medical courier service and pre-paid storage fees for the life of the customer. The Company concluded that a significant financing component is not present within either the prepaid or overtime payment plans. The Company has determined that the twenty-one year and life-time prepayment options do not include a significant

financing component as the payment terms were structured primarily for reasons other than the provision of financing and to maximize profitability.

The Company has determined that the majority of plans that are paid over time are paid in less than a year. When considered over a twenty-four-month payment plan, the difference between the cash selling price and the consideration paid is nominal. As such, the Company believes that its payment plans do not include significant financing components as they are not significant in the aggregate when considered in the context of all contracts entered into nor significant at the individual contract level.

The Company elected to apply the practical expedient where the Company does not need to assess whether a significant financing component exists if the period between when it performs its obligations under the contract and when the customer pays is one year or less.

As of ~~August~~May 31, ~~2021,~~2022, the total aggregate transaction price allocated to the unsatisfied performance obligations was recorded as deferred revenue amounting to ~~$39,721,777,~~$42,664,189, which will be recognized ratably on a straight-line basis over the contractual period of which ~~$9,326,124,~~$9,291,530, will be recognized over the next twelve ~~months.~~months.

Variable consideration

In December 2005, the Company began providing its customers that enrolled after December 2005 a payment warranty under which the Company agrees to pay ~~$50,000~~$50,000 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. Effective February 1, 2012, the Company increased the ~~$50,000~~$50,000 payment warranty to a ~~$75,000~~$75,000 payment warranty to all of its new clients. Effective June 1, 2017, the Company increased the payment warranty to ~~$100,000~~$100,000 to all new clients who choose the premium processing method, PrepaCyte CB. ~~Additionally, under the Cryo-Cell Cares~~^TM ~~program, the Company will pay $10,000 to the client to offset personal expenses if the umbilical cord blood product is used for bone marrow reconstitution in a myeloablative transplant procedure.~~ The product warranty ~~and the Cryo-Cell Cares program are~~is available to clients who enroll under this structure for as long as the specimen is stored with the Company. In the processing and storage agreements, the Company provides limited rights which are offered to customers automatically upon contract execution. The Company has determined that the payment warranty represents variable consideration payable to the customer.

Based on the Company’s historical experience to date, the Company has determined the payment warranty to be fully constrained under the most likely amount method. Consequently, the transaction price does not currently reflect any expectation of service level credits. At the end of each reporting period, the Company will update the estimated transaction price related to the payment warranty including updating its assessment of whether an estimate of variable consideration is constrained to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period.

Allocation of transaction price

As the Company’s processing and storage agreements contain multiple performance obligations, ASC 606 requires an allocation of the transaction price based on the estimated relative standalone selling prices of the promised services underlying each performance obligation. The Company has selected an adjusted market assessment approach to estimate the stand-alone selling prices of the processing services and storage services and concluded that the published list price is the price that a customer in that market would be willing to pay for those goods or services. The Company also considered the fact that all customers are charged the list prices current at the time of their enrollment where the Company has separately stated list prices for processing and storage.

Costs to Obtain a Contract

The Company capitalizes commissions that are incremental in obtaining customer contracts and the costs incurred to fulfill a customer contract if those costs are not within the scope of another topic within the accounting literature and meet the specified criteria. These costs are deferred in other current or long-term assets and are expensed to selling, general and administrative expenses as the Company satisfies the performance obligations by transferring the service to the customer. These assets will be periodically assessed for impairment. As a practical expedient, the Company elected to recognize the incremental costs of obtaining its annual contracts as an expense when incurred, as the amortization period of the asset recognized would have been one ~~year.~~year.

The Company has determined that payments under the Company’s refer-a-friend program (“RAF program”) are incremental costs of obtaining a contract as they provide an incentive for existing customers to refer new customers to the Company and is referred to as commission. The amount paid under the RAF program (either through issuance of credits to customers or check payments) which exceeds the typical commission payment to a sales representative is recorded as a reduction to revenue under ASC 606. During the three and ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, the Company recorded ~~$12,678~~$12,169 and ~~$34,383,~~$27,321, respectively, in commission payments to customers under the RAF program as a reduction to revenue. During the three and ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, the Company recorded ~~$14,261~~$8,198 and ~~$37,405,~~$21,705, respectively, in commission payments to customers under the RAF program as a reduction to revenue. For the three and ~~nine~~six months ended ~~August~~May 31, 2022 the Company capitalized additional contract acquisition costs of $27,170 and $51,759, respectively, net of amortization. For the three and six months ended May 31, 2021, the Company capitalized additional contract acquisition costs of $~~$26,410~~27,672 and ~~$72,147,~~$45,934~~respectively, net of amortization. For the three and nine months ended August 31, 2020, the Company capitalized additional contract acquisition costs of $22,351 and $68,152,~~, respectively, net of amortization expense.

Public banking revenue

~~Public banking revenue~~

The Company sells and provides units not likely to be of therapeutic use for research to qualified organizations and companies operating under Institutional Review Board approval. Control is transferred at the point in time when the shipment has occurred, at which time, the Company records revenue.

Licensee and royalty income

~~Licensee and royalty income~~

Licensee and royalty income consist of royalty income earned on the processing and storage of cord blood stem cell specimens by an affiliate where the Company has a License and Royalty Agreement. The Company records revenue from processing and storage of specimens and pursuant to agreements with licensees. The Company records the royalty revenue in same period that the related processing and storage is being completed by the affiliate.

Product Revenue

~~Product Revenue~~

The Company records revenue from the sale of the PrepaCyte CB product line upon shipment of the product to the Company’s customers.

Shipping and handling

~~Shipping and handling~~

The Company elected to apply the practical expedient to account for shipping and handling activities performed after the control of a good has been transferred to the customer as a fulfillment cost. Shipping and handling costs that the Company incurs are therefore expensed and included in cost of sales.

~~The adoption of ASC 606 did not have an impact on the timing of revenue recognition for any of the Company’s revenue streams.~~

Disaggregation of Revenue

The revenue as reflected in the statements of income is disaggregated by products and services.

The following table provides information about assets and liabilities from contracts with customers:


	August 31, 2021		November 30, 2020		May 31, 2022		November 30, 2021
Contract assets (sales commissions)	$	519,541	$	466,141	$	573,043	$	535,522
Accounts receivables	$	5,449,313	$	6,322,960	$	5,150,154	$	5,253,173
Short-term contract liabilities (deferred revenue)	$	9,326,124	$	9,183,450	$	9,291,530	$	9,358,696
Long-term contract liabilities (deferred revenue)	$	30,395,653	$	27,200,910	$	33,372,659	$	31,274,214

The Company, in general, requires the customer to pay for processing and storage services at the time of processing. Contract assets include deferred contract acquisition costs, which will be amortized along with the associated revenue. Contract liabilities include payments received in advance of performance under the contract and are realized with the associated revenue recognized under the contract. Accounts receivable consists of amounts due from clients that have enrolled and processed in the umbilical cord blood stem cell processing and storage programs related to renewals of annual plans and amounts due from license affiliates, and sublicensee territories. The Company did 0t0t have asset impairment charges related to contract assets in the three and ~~nine~~six months ended ~~August~~May 31, ~~2021 and August 31, 2020.~~2022.

The following table presents changes in the Company’s contract assets and liabilities during the ~~nine~~six months ended ~~August~~May 31, ~~2021:~~2022:


	Balance at December 1, 2020		Additions		Deductions			Balance at August 31, 2021		Balance at December 1, 2021		Additions		Deductions			Balance at May 31, 2022
Contract assets (sales commissions)	$	466,141	$	72,421	$	(19,021	)	$	519,541	$	535,522	$	51,759	$	(14,238	)	$	573,043
Accounts receivables	$	6,322,960	$	28,066,214	$	(28,939,861	)	$	5,449,313	$	5,253,173	$	18,402,414	$	(18,505,433	)	$	5,150,154
Contract liabilities (deferred revenue)	$	36,384,360	$	13,482,055	$	(10,144,638	)	$	39,721,777	$	40,632,910	$	11,840,456	$	(9,809,177	)	$	42,664,189

1110

The following table presents changes in the Company’s contract assets and liabilities during the ~~nine~~six months ended ~~August~~May 31, ~~2020:~~2021:


	Balance at December 1, 2019		Additions		Deductions			Balance at August 31, 2020		Balance at December 1, 2020		Additions		Deductions			Balance at May 31, 2021
Contract assets (sales commissions)	$	398,535	$	68,152	$	(16,049	)	$	450,638	$	466,141	$	45,934	$	(12,447	)	$	499,628
Accounts receivables	$	6,097,331	$	28,361,238	$	(27,955,019	)	$	6,503,550	$	6,322,960	$	18,178,409	$	(19,285,813	)	$	5,215,556
Contract liabilities (deferred revenue)	$	32,508,511	$	13,045,728	$	(10,245,771	)	$	35,308,468	$	36,384,360	$	8,430,850	$	(6,587,891	)	$	38,227,319

Accounts Receivable

Accounts receivable consist of uncollateralized amounts due from clients that have enrolled and processed in the umbilical cord blood stem cell processing and storage programs and amounts due from license affiliates, and sublicensee territories. Accounts receivable are due within 30 days and are stated at amounts net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering the length of time accounts receivable are past due, the Company’s previous loss history, and the client’s current ability to pay its obligations. Therefore, if the financial condition of the Company’s clients were to deteriorate beyond the estimates, the Company may have to increase the allowance for doubtful accounts which could have a negative impact on earnings. The Company writes-off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.

Inventories

~~Inventories~~

On June 11, 2018, Cryo-Cell completed its acquisition of substantially all of the assets of Cord:Use Cord Blood Bank, Inc. a Florida corporation (“Cord:Use”), in accordance with the definitive Asset Purchase Agreement between Cryo-Cell and Cord:Use (the “Purchase Agreement”), including without limitation Cord:Use’s cord blood operations and its inventory of public cord blood units existing as of the closing date (the “Public Cord Blood Inventory”). As part of the Cord:Use Purchase Agreement, the Company has an agreement with Duke University (“Duke”) expiring on January 31, 2025 for Duke to receive, process, and store cord blood units for the Public Cord Blood Bank (“Duke Services”). As of ~~August~~May 31, ~~2021,~~2022, the Company had approximately 6,000 cord blood units in inventory. These units are valued at the lower of cost or net realizable value. Costs include the cost of collecting, transporting, processing and storing the unit. Costs charged by Duke for their Duke Services are based on a monthly fixed fee for processing and storing 12 blood units per month. The Company computes the cost per unit for these Duke Services and capitalizes the unit cost on all blood units shipped and stored in a year at Duke. If the Company ships and stores less than 144 blood units with Duke in a one-year period, a portion of these fixed costs are expensed and included in facility operating costs. Certain costs of collection incurred, such as the cost of collection staff and transportation costs incurred to ship Public Bank units from hospitals to the stem cell laboratory are allocated to banked units based on an average cost method. The change in the number of expected units to be sold could have a significant impact on the estimated net realizable value of banked units which could have a material effect on the value of the inventory. Costs incurred related to cord blood units that cannot be sold are expensed in the period incurred and are included in facility operating costs in the accompanying statements of operations. The Company records a reserve against inventory for units which have been processed and frozen but may not ultimately become distributable (see Note 3). Due to changes in sales trends and estimated recoverability of cost capitalized into inventory, an impairment charge of ~~$1,284,238~~$1,164,499 was recognized during the fourth quarter of fiscal ~~2020~~2021 to reduce inventory from cost to net realizable value.

Income Taxes

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The Company records a valuation allowance when it is “more likely than not” that all of the future income tax benefits will not be realized. When the Company changes its determination as to the amount of deferred income tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to income tax expense in the period in which

such determination is made. The ultimate realization of the Company’s deferred income tax assets depends upon generating sufficient taxable income prior to the expiration of the tax attributes. In assessing the need for a valuation allowance, the Company projects future levels of taxable income. This assessment requires significant judgment. The Company examines the evidence related to the recent history of losses, the economic conditions in which the Company operates and forecasts and projections to make that determination.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the

amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Increases or decreases to the unrecognized tax benefits could result from management’s belief that a position can or ~~can0t~~can0t be sustained upon examination based on subsequent information or potential lapse of the applicable statute of limitation for certain tax positions.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the ~~three and nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020,~~2021, the Company had 0 provisions for interest or penalties related to uncertain tax positions.

Long-Lived Assets

The Company evaluates the realizability of its long-lived assets, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment, such as reductions in demand or when significant economic slowdowns are present. Reviews are performed to determine whether the carrying value of an asset is impaired, based on comparisons to undiscounted expected future cash flows. If this comparison indicates that there is impairment and carrying value is in excess of fair value, the impaired asset is written down to fair value, which is typically calculated using: (i) quoted market prices or (ii) discounted expected future cash flows utilizing a discount rate. The Company did 0t0t note any impairment for the three and ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~2020.~~2021.

Goodwill

~~Goodwill~~

Goodwill represents the excess of the purchase price of the assets acquired from Cord:Use over the estimated fair value of the net tangible, intangible and identifiable assets acquired. The annual assessment of the reporting unit is performed as of September 1st, and an assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. The Company first performs a qualitative assessment to test goodwill for impairment and concludes if it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the qualitative assessment concludes that it is not more likely than not that the fair value is less than the carrying value, the two-step goodwill impairment test is not required. If the qualitative assessment concludes that it is more likely than not that the fair value of the reporting unit is less than the carrying value, then the two-step goodwill impairment test is required. Step one of the impairment assessment compares the fair value of the reporting unit to its carrying value and if the fair value exceeds its carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, the implied fair value of goodwill is compared to the carrying value of goodwill. If the implied fair value exceeds the carrying value then goodwill is not impaired; otherwise, an impairment loss would be recorded by the amount the carrying value exceeds the implied fair value.

Leases

~~Leases~~

~~Effective December 1, 2019, the~~The Company ~~adopted~~recognizes leases in accordance with ASU 2016-02, Leases (Topic 842), using the modified retrospective approach and utilizing the effective date as its date of initial application. As a result, prior periods are presented in accordance with the previous guidance in ASC 840, Leases (“ASC 840”). The Company has elected to apply the ‘package of practical expedients’ which allows the Company to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as a right-of-use (ROU) assets and as short-term and long-term lease liabilities, as applicable. The Company does not have any financing leases.

Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company believes it could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.

Stock Compensation

As of ~~August~~May 31, ~~2021,~~2022, the Company has ~~two~~three stock-based compensation plans, which are described in Note 7 to the unaudited consolidated financial ~~statements.~~statements: the 2006 Plan, 2012 Plan and the 2022 Plan. The ~~Company’s stock-based employee compensation plan became effective December 1, 2011~~2006 and 2012 Plan will remain in effect as ~~approved by the Board of Directors and approved by the stockholders~~long as any awards under it are outstanding; however, no further awards may be granted under either plan. The 2022 Plan is subject to stockholder approval, which vote is expected to occur at the ~~2012~~Company’s 2022 Annual Meeting. The Company recognized approximately ~~$234,000~~$149,000 and $~~$451,000~~153,000 for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020~~2021 respectively, of stock compensation expense. The Company recognized approximately ~~$81,000~~$117,000 and ~~$162,000~~$68,000 for the three months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020,~~2021, respectively, of stock option compensation expense.

The Company recognizes stock-based compensation based on the fair value of the related awards. Under the fair value

recognition guidance of stock-based compensation accounting rules, stock-based compensation expense is estimated at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award. The fair value of service-based vesting condition and performance-based vesting condition stock option awards is determined using the Black-Scholes valuation model. For stock option awards with only service-based vesting conditions and graded vesting features, the Company recognizes stock compensation expense based on the graded-vesting method. To value awards with market-based vesting conditions the Company uses a binomial valuation model. The Company recognizes compensation cost for awards with market-based vesting conditions on a graded-vesting basis over the derived service period calculated by the binomial valuation model. The use of these valuation models involves assumptions that are judgmental and highly sensitive in the determination of compensation expense and include the expected life of the option, stock price volatility, risk-free interest rate, dividend yield, exercise price, and forfeiture rate. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period.

The estimation of stock awards that will ultimately vest requires judgment and to the extent that actual results or updated estimates differ from current estimates, such amounts will be recorded as a cumulative adjustment in the period they become known. The Company considered many factors when estimating forfeitures, including the recipient groups and historical experience. Actual results and future changes in estimates may differ substantially from current estimates.

The Company issues performance-based equity awards which vest upon the achievement of certain financial performance goals, including revenue and income targets. Determining the appropriate amount to expense based on the anticipated achievement of the stated goals requires judgment, including forecasting future financial results. The estimate of the timing of the expense recognition is revised periodically based on the probability of achieving the required performance targets and adjustments are made as appropriate. The cumulative impact of any revision is reflected in the period of the change. If the financial performance goals are not met, the award does not vest, so no compensation cost is recognized and any previously stock-recognized stock-based compensation expense is reversed.

The Company issues equity awards with market-based vesting conditions which vest upon the achievement of certain stock price targets. If the awards are forfeited prior to the completion of the derived service period, any recognized

compensation is reversed. If the awards are forfeited after the completion of the derived service period, the compensation cost is not reversed, even if the awards never vest.

On April 8, 2022, the Board of Directors of the Company adopted the 2022 Equity Incentive Plan (the “2022 Plan”) to provide incentive compensation to the Company’s employees, independent directors and independent contractors. The plan is subject to stockholder approval, which vote is expected to occur at the Company’s 2022 Annual Meeting. The 2022 Plan will reserve 1,500,000 shares of the Company’s common stock for issuance pursuant to stock options, restricted stock, SARs, and other stock awards (i.e. performance shares and performance units).

Fair Value of Financial Instruments

Management uses a fair value hierarchy, which gives the highest priority to quoted prices in active markets. The fair value of financial instruments is estimated based on market trading information, where available. Absent published market values for an instrument or other assets, management uses observable market data to arrive at its estimates of fair value. Management believes that the carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term nature of these instruments. The Company believes that the fair value of its Revenue Sharing Agreements (”~~RSA”~~RSAs”) liability recorded on the balance sheet is between the recorded book value and up to the Company’s previous settlement experience, due to the various terms and conditions associated with each RSA.

The Company uses an accounting standard that defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the standard establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:

Level 1 Quoted prices in active markets for identical assets or liabilities.

~~Quoted prices in active markets for identical assets or liabilities.~~

~~Level 2~~

Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

~~Level 3~~

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

15Level 2 Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of ~~August~~May 31, ~~2021~~2022 and November 30, ~~2020,~~2021, respectively, segregated among the appropriate levels within the fair value hierarchy:

	Fair Value at			Fair Value Measurements
	August 31,			at August 31, 2021 Using						Fair Value at		Fair Value Measurements at May 31, 2022 Using
Description	2021			Level 1		Level 2		Level 3		May 31, 2022		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	74,124		$	74,124		—		—	$	63,125	$	63,125	$	-	$	-
Total	$	74,124		$	74,124		—		—	$	63,125	$	63,125	$	-	$	-

Liabilities:
Contingent consideration	$	905,743		$	—		—	$	905,743	$	574,833	$	-	$	-	$	574,833
Total	$	905,743		$	—		—	$	905,743	$	574,833	$	-	$	-	$	574,833

Contingent Consideration:
Beginning Balance as of November 30, 2020	$	1,509,852
Subtractions – Cord:Use earnout		0
Fair value adjustment as of August 31, 2021		(604,109	)
Ending balance as of August 31, 2021	$	905,743


Contingent Consideration:
Beginning Balance as of November 30, 2021	$	727,371
Subtractions – Cord:Use earnout payment		0
Fair value adjustment as of May 31, 2022		(152,538	)
Ending balance as of May 31, 2022	$	574,833


	Fair Value at		Fair Value Measurements at November 30, 2021 Using
Description	November 30, 2021		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	75,412	$	75,412	$	-	$	-
Total	$	75,412	$	75,412	$	-	$	-
Liabilities:
Contingent consideration	$	727,371	$	-	$	-	$	727,371
Total	$	727,371	$	-	$	-	$	727,371

Fair Value at

Fair Value Measurements

November 30,

at November 30, 2020 Using

Description

2020

Level 1

Level 2

Level 3

Assets:

Marketable securities

$
88,476

$
88,476

—

—

Total

$
88,476

$
88,476

—

—

Liabilities

Contingent consideration

$
1,509,852

$
—

—

$
1,509,852

Total

$
1,509,852

$
—

—

$
1,509,852

The following is a description of the valuation techniques used for these items, as well as the general classification of such items pursuant to the fair value hierarchy:

Marketable securities - Equity securities with readily determinable fair values are measured at fair value with the changes in fair value recognized through net income. There was approximately ($~~135,000)~~13,000) and ($~~133,000)~~15,000) in unrealized holding loss, respectively, recorded in other income and expense on the accompanying consolidated statements of income for the three and ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, respectively. There was approximately ~~$1,000~~($18,000) and ($~~14,000)~~27,000) in unrealized holding ~~gain (loss),~~loss, respectively, recorded in other income and expense on the accompanying consolidated statements of income for the three and ~~nine~~six months ended ~~August~~May 31, ~~2021, respectively.~~ 2022, respectively

Contingent consideration - The contingent consideration is the earnout that Cord:Use is entitled to from the Company’s sale of the ~~public cord blood inventory~~Public Cord Blood Inventory from and after closing. The estimated fair value of the contingent earnout was determined using a Monte Carlo analysis examining the frequency and mean value of the resulting earnout payments. The ~~analysis includes estimated annual sales of 16 units declining 3% annually and utilizes a risk adjusted discount rate of 5.25%, which are unobservable inputs. The~~ resulting value captures the risk associated with the form of the payout structure. The risk-neutral method is applied, resulting in a value that captures the risk associated with the form of

the payout structure and the projection risk. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the estimated value of the liability.

Product Warranty and Cryo-Cell CaresTM Program

In December 2005, the Company began providing its customers that enrolled after December 2005 a payment warranty under which the Company agrees to pay ~~$50,000~~$50,000 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. Effective February 1, 2012, the Company increased the ~~$50,000~~$50,000 payment warranty to a ~~$75,000~~$75,000 payment warranty to all of its new clients. Effective June 1, 2017, the Company increased the payment warranty to ~~$100,000~~$100,000 to all new clients who choose the premium processing method, PrepaCyte CB. ~~Additionally, under the Cryo-Cell Cares~~^TM ~~program, the Company will pay $10,000 to the client to offset personal expenses if the umbilical cord blood product is used for bone marrow reconstitution in a myeloablative transplant procedure.~~ The product warranty ~~and the Cryo-Cell Cares program are~~is available to clients who enroll under this structure for as long as the specimen is stored with the Company. The Company has not experienced any claims under the warranty program nor has it incurred costs related to these warranties.

As discussed above, the Company has determined that the payment warranty represents variable consideration payable to the customer. ~~The~~In accordance with ASC 606, the Company has concluded the payment warranty be fully constrained under the most likely amount ~~method,~~method; therefore, the transaction price does not reflect any expectation of service level ~~credits.~~credits at May 31, 2022 and November 30, 2021. At the end of each reporting period, the Company shall update the estimated transaction price related to the payment guarantee including updating its assessment of whether an estimate of variable consideration is constrained to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides guidance for estimating credit losses on certain types of financial instruments, including trade receivables, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. ASU 2016-13 also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The guidance requires a modified retrospective transition method and early adoption is permitted. In November 2019, FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses, Derivatives and Hedging, and Leases (“ASU 2019-10”), which defers the adoption of ASU 2016-13 for smaller reporting companies until periods beginning after December 15, 2022. The Company has not yet adopted ASU 2016-13 and will continue to evaluate the impact of ASU 2016-13 on its consolidated financial statements.

The following table shows, by segment: net revenue, cost of sales, depreciation and amortization, operating profit, and interest expense for the three ~~months~~ and ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020:~~2021:

The following table shows the assets by segment as of ~~August~~May 31, ~~2021~~2022 and November 30, ~~2020:~~2021:

The Company incurs certain legal and related costs in connection with patent and trademark applications. If a future economic benefit is anticipated from the resulting patent or trademark or an alternate future use is available to the Company, such costs are capitalized and amortized over the expected life of the patent or trademark. The Company’s assessment of future economic benefit involves considerable management judgment. A different conclusion could result in the reduction of the carrying value of these assets.

Intangible assets were as follows as of ~~August~~May 31, ~~2021~~2022 and November 30, ~~2020:~~2021:

	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			—
								Useful lives	May 31, 2022			November 30, 2021
Patents								10-20 years	$	697,744		$	697,744
Less: Accumulated amortization			(14,257	)		—				(100,228	)		(80,159	)
License agreement	10 years		470,000			470,000		10 years		474,000			474,000
Less: Intangible asset impairment			(185,000	)		(185,000	)			(185,000	)		(185,000	)
Less: Accumulated amortization			(195,879	)		(178,443	)			(213,433	)		(201,709	)
Customer relationships-PrepaCyte CB	15 years		41,000			41,000
Customer relationships – PrepaCyte®CB								15 years		41,000			41,000
Less: Intangible asset impairment			(26,267	)		(26,267	)			(26,267	)		(26,267	)
Less: Accumulated amortization			(7,719	)		(7,122	)			(8,314	)		(7,916	)
Brand	1 year		31,000			31,000		1 year		31,000			31,000
Less: Accumulated amortization			(31,000	)		(31,000	)			(31,000	)		(31,000	)
Customer relationships-Cord:Use	30 years		960,000			960,000
Customer relationships – Cord:Use								30 years		960,000			960,000
Less: Accumulated amortization			(104,000	)		(80,000	)			(128,000	)		(112,000	)

Net Intangible Assets		$	1,572,804		$	1,181,588			$	1,511,502		$	1,559,693

Amortization expense of intangibles was approximately ~~$24,000~~$24,000 and ~~$17,000~~$24,000 for the three months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020,~~2021, respectively. Amortization expense of intangibles was approximately ~~$65,000~~$48,000 and ~~$51,000~~$41,000 for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020, respectively.~~ 2021.

Note 5 – Notes Payable

On August 20, 2016, the Company entered into a Credit Agreement (“Credit Agreement”) with Texas Capital Bank, National Association (“TCB”) for a term loan of ~~$8.0~~$8.0 million in senior credit facilities. The proceeds of the term loan were used by the Company to fund repurchases of the Company’s common stock. Subject to the terms of the Credit Agreement, on August 20, 2016, TCB advanced the Company ~~$100.00.~~$100.00. On July 1, 2016, TCB advanced the remaining principal amount of ~~$7,999,900~~$7,999,900 per a promissory note dated August 20, 2016 between the Company and TCB, at a rate of ~~3.75%~~3.75% per annum plus LIBOR, payable monthly with a maturity date of July 2021 which was extended to June 2022 ~~with~~ pursuant to the Second ~~Amendment.~~Amendment to Credit Agreement discussed below. On August 26, 2016, the Company entered into a First Amendment to Credit Agreement with TCB. Pursuant to terms of the First Amendment to Credit Agreement, on August 26, 2016, TCB made an additional advance to the Company in the principal amount of ~~$2,133,433~~$2,133,433 per an Amended and Restated Promissory Note dated August 26, 2016 between the Company and TCB. The additional proceeds of the term loan were used by the Company to fund the extinguishment of revenue sharing agreements. On June 11, 2018, the Company entered into a Second Amendment to Credit Agreement with TCB. Pursuant to the terms of the Second Amendment to Credit Agreement, TCB increased the current outstanding principal amount of the loan from TCB by ~~$9,000,000~~$9,000,000 to finance a portion of the purchase price of the Cord:Use Purchase. In connection therewith, Cryo-Cell executed and delivered to TCB a Second Amended and Restated Promissory Note, in the principal amount of ~~$15,500,000.~~$15,500,000. As of the three and ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, the Company paid interest of ~~$25,862~~$5,969 and ~~$99,294,~~$18,115, respectively, which is reflected in interest expense on the accompanying consolidated statements of income. As of the three and ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, the Company paid interest of ~~$63,560~~$32,894 and ~~$254,945,~~$73,432, respectively, which is reflected in interest expense on the accompanying consolidated statements of income.

Collateral of the term and subordinated loans includes all money, securities and property of the Company.

The Company incurred debt issuance costs related to the term loan in the amount of ~~$548,085~~$548,085 which is recorded as a direct reduction of the carrying amount of the note payable and amortized over the life of the loan. As of the three and ~~nine~~six months ended ~~August~~May 31, ~~2021, $12,390~~2022, $3,388 and ~~$47,462,~~$9,777, respectively, of the debt issuance costs were amortized and are reflected in interest expense on the accompanying consolidated statements of income. As of the three and ~~nine~~six months ended ~~August~~May 31, ~~2020, $20,193~~2021, $15,390 and ~~$67,012,~~$35,072, respectively, of the debt issuance costs were amortized and are reflected in interest expense on the accompanying consolidated statements of income.

As of ~~August~~May 31, ~~2021,~~2022 and November 30, ~~2020,~~2021, the note payable obligation was as follows:


	August 31, 2021			November 30, 2020				May 31, 2022			November 30, 2021
Note payable	$	2,683,433		$	6,008,433			$	358,433		$	1,908,433
Unamortized debt issuance costs		(19,757	)		(67,219	)	��		(591	)		(10,368	)
Net note payable	$	2,663,676		$	5,941,214			$	357,842		$	1,898,065

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

2118

Interest expense on the note payable for the three and ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020~~2021 was as follows:


					For the three months ended		For the six months ended
	For the three months ended August 31, 2021		For the nine months ended August 31, 2021		May 31, 2022		May 31, 2022
Interest expense on notes payable	$	25,862	$	99,294	$	5,969	$	18,115
Debt issuance costs		12,390		47,462		3,388		9,777
Total interest expense	$	38,252	$	146,756	$	9,357	$	27,892


					For the three months ended		For the six months ended
					May 31, 2021		May 31, 2021
Interest expense on notes payable					$	32,894	$	73,432
Debt issuance costs						15,390		35,072
Total interest expense					$	48,284	$	108,504

For the three
months ended
August 31,
2020

For the nine
months ended
August 31,
2020

Interest expense on notes payable

$
63,560

$
254,945

Debt issuance costs

20,193

67,012

Total interest expense

$
83,753

$
321,957

As of July 1, 2022, subsequent to the balance sheet date, the Company paid the term loan in full. The Company has no further obligations under the Credit Agreement. The Company currently is considering financing alternatives and expects to enter into a new credit facility in July 2022. See "Risk Factors."

Note 6 – Income per Common Share

The following table sets forth the calculation of basic and diluted net income per common share:


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020		May 31, 2022		May 31, 2021		May 31, 2022		May 31, 2021
Numerator:
Net Income	$	856,494	$	784,467	$	2,720,713	$	2,424,771
Net income									$	634,719	$	1,170,629	$	1,466,766	$	1,864,219
Denominator:
Weighted-average shares outstanding-basic		8,452,374		7,545,613		7,996,278		7,544,124		8,437,544		7,950,791		8,479,071		7,760,214
Dilutive common shares issuable upon exercise of stock options		239,957		633,852		221,176		593,339		115,541		322,976		164,035		300,292
Weighted-average shares-diluted		8,692,331		8,179,465		8,217,454		8,137,463		8,553,085		8,273,767		8,643,106		8,060,506
Net income per common share:
Income per share:
Basic	$	0.10	$	0.10	$	0.34	$	0.32	$	0.08	$	0.15	$	0.17	$	0.24
Diluted	$	0.10	$	0.10	$	0.33	$	0.30	$	0.07	$	0.14	$	0.17	$	0.23

For the three months ended ~~August~~May 31, ~~2021,~~2022, the Company excluded the effect of ~~20,000~~288,381 outstanding options from the computation of diluted earnings per share, as the effect of potentially dilutive shares from the outstanding stock options would be anti-dilutive. For the ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, the Company excluded the effect of ~~27,000~~90,100 outstanding options from the computation of diluted earnings per share, as the effect of potentially dilutive shares from the outstanding stock options would be anti-dilutive.

For the three months ended ~~August~~May 31, ~~2020,~~2021, the Company excluded the effect of ~~7,000~~20,000 outstanding options from the computation of diluted earnings per share, as the effect of potentially dilutive shares from the outstanding stock options would be anti-dilutive. For the ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, the Company excluded the effect of ~~196,101~~27,000 outstanding options from the computation of diluted earnings per share, as the effect of potentially dilutive shares from the outstanding stock options would be anti-dilutive.

Note 7 – Stockholders’ Equity

Employee Stock Incentive Plan

The Company maintains the 2006 Stock Incentive Plan (the “2006 Plan”) under which it has reserved 1,000,000 shares of the Company’s common stock for issuance pursuant to stock options, restricted stock, stock-appreciation rights (commonly referred to as “SARs”) and stock awards (i.e., performance options to purchase shares and performance units). As of ~~August~~May 31, ~~2021,~~2022, and November

30, ~~2020,~~2021, there were ~~105,000~~45,000 and ~~305,000~~75,000 options issued, but not yet exercised, under the 2006 Plan, respectively. As of ~~August~~May 31, ~~2021,~~2022, there were 0 shares available for future issuance under the 2006 Plan. The 2006 Plan will remain in effect as long as any awards under it are outstanding; however, 0 awards may be granted under the 2006 Plan on or after the 10-year anniversary of the effective date of the Plan.

The Company maintains the 2012 Equity Incentive Plan (the “2012 Plan”) which became effective December 1, 2011 as approved by the Board of Directors and approved by the stockholders at the 2012 Annual Meeting on July 10, 2012. The 2012 Plan originally reserved 1,500,000 shares of the Company’s common stock for issuance pursuant to stock options, restricted stock, SARs, and other stock awards (i.e., performance shares and performance units). In August 2012, the Board of Directors approved an amendment to the 2012 Plan to increase the number of shares of the Company’s common stock reserved for issuance to 2,500,000 shares. In October 2019, the Board of Directors approved amendments to the plan, subject to ratification by the stockholders, which occurred at the Company’s 2019 Annual Meeting of Stockholders on November 21, 2019. As of ~~August~~May 31, ~~2021,~~2022, there were ~~463,143~~396,943 service-based options issued, 129,729 service-based restricted common shares granted, 530,851 performance-based and 116,218 market-based restricted common shares granted under the 2012 Plan. As of November 30, ~~2020,~~2021, there were ~~868,443~~460,943 service-based options issued, 129,729 service-based restricted common shares granted, 530,851 performance-based and 116,218 market-based restricted common shares granted under the 2012 Plan. As of ~~August~~May 31, ~~2021,~~2022, there were ~~542,310~~0 shares available for future issuance under the 2012 Plan. The 2012 Plan will remain in effect as long as any awards under it are outstanding; however, 0 awards may be granted under the 2012 Plan on or after the 10-year anniversary of the effective date of the 2012 Plan, which is December 1, 2011.

Service-based vesting condition options

The fair value of each option award is estimated on the date of the grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company’s stock over the most recent period commensurate with the expected life of the Company’s stock options. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected term of options granted to employees is based upon historical exercise data. Expected dividends are based on the historical trend of the Company not issuing dividends.

There were 052,500 and ~~20,000~~52,500 options granted during the three and ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, respectively.

There were ~~7,000~~20,000 and ~~51,969~~20,000 options granted during the three and ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, respectively.

Variables used to determine the fair value of the options granted for the three and ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020,~~2021, respectively, are as follows:


	Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended	Three months ended		Six months ended
	August 31, 2021	August 31, 2020	August 31, 2021	August 31, 2020	May 31, 2022	May 31, 2021	May 31, 2022	May 31, 2021
Weighted average values:
Expected dividends	-	0%	0%	0%	0%	0%	0%	0%
Expected volatility	-	51.8%	49.85%	62.60%	53.23%	49.85%	53.23%	49.85%
Risk free interest rate	-	0.42%	1.35%	1.70%	2.74%	1.35%	2.74%	1.35%
Expected life	-	6 years	6 years	9 years	3 years	6 years	3 years	6 years

Stock option activity for options with only service-based vesting conditions for the ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, was as follows:

				Weighted		Weighted Average
				Average		Remaining		Aggregate					Weighted		Weighted Average Remaining
	Shares			Exercise Price		Contractual Term (Years)		Intrinsic Value					Average		Contractual		Aggregate
Outstanding at November 30, 2020		1,174,943		$	3.72		3.42	$	4,502,324
										Options			Exercise Price		Term (Years)		Intrinsic Value
Outstanding at November 30, 2021											537,443		$	5.76	5.22		$	3,564,067
Granted		20,000			9.50				42,000		52,500			13.20				—
Exercised		(625,300	)		2.33				4,089,333		(10,000	)		3.20				87,000
Expired/forfeited		—			—				—		(84,000	)		6.07				112,875

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 at May 31, 2022											495,943		$	6.54		4.49	$	626,540
Exercisable at May 31, 2022											399,029		$	5.39		4.52	$	626,540

The weighted average grant date fair value of options granted during the ~~nine~~six months ended ~~August~~May 31, 2022 and 2021 was $4.56and ~~August 31, 2020 was $4.56 and $4.94,~~$4.56, respectively.

The aggregate intrinsic value represents the total value of the difference between the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money stock options that would have been received by the option holders had all option holders exercised their options on either ~~August~~May 31, ~~2021~~2022 or November 30, ~~2020,~~2021 as applicable. The intrinsic value of the Company’s stock options changes based on the closing price of the Company’s stock.

During the three and ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, the Company issued ~~84,632~~0 and ~~574,300~~10,000 common shares, respectively, to option holders who exercised options for $0$0 and ~~$1,066,000,~~$32,000, respectively.

During the three and ~~nine~~six months ended ~~August~~May 31, ~~2020,~~2021, the Company issued 0464,368 and ~~20,000~~489,668 common shares, respectively, to option holders who exercised options for $0$875,000 and ~~$41,000, respectively.~~$1,066,000, respectively

Significant option groups outstanding and exercisable at ~~August~~May 31, ~~2021~~2022 and related price and contractual life information are as follows:


	Outstanding						Exercisable				Outstanding						Exercisable
			Weighted Average		Weighted				Weighted				Weighted Average
			Remaining		Average				Average				Remaining		Weighted				Weighted
Range of Exercise Prices	Outstanding		Contractual Life (Years)		Exercise Price		Outstanding		Exercise Price		Outstanding		Contractual Life (Years)		Average Exercise Price		Outstanding		Average 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
$1.01 to $2.00												7,500		1.14	$	1.95		7,500	$	1.95
$2.01 to $3.00												15,000		1.13	$	2.22		15,000	$	2.22
$3.01 to $4.00												179,729		3.77	$	3.14		179,729	$	3.14
$6.01 to $7.00												3,833		4.09	$	6.52		3,833	$	6.52
$7.01 to $8.00												199,781		5.46	$	7.64		178,445	$	7.59
$9.01 to $10.00												29,000		5.76	$	9.37		7,450	$	9.37
$12.01 to $13.00												16,653		8.23	$	12.54		7,072	$	12.63
$13.01 to $14.00												44,447		2.57	$	13.50		0	$	0.00
		569,643		5.24	$	5.45		501,150	$	5.05		495,943		4.49	$	6.54		399,029	$	5.39

2421

A summary of the status of the Company’s non-vested options as of ~~August~~May 31, ~~2021,~~2022, and changes during the ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, is presented below:

				Weighted Average
				Grant-Date					Weighted Average
	Shares			Fair Value					Grant-Date
Non-vested at November 30, 2020		93,380		$	4.65
						Options			Fair Value
Non-vested at November 30, 2021							63,034		$	4.99
Granted		20,000			4.56		52,500			4.56
Vested		(44,887	)		5.00		(14,204	)		5.67
Forfeited		—			—		(4,416	)		7.98
Non-vested at August 31, 2021		68,493		$	4.39
Non-vested at May 31, 2022							96,914		$	4.52

As of ~~August~~May 31, ~~2021,~~2022, there was approximately ~~$175,000~~$348,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the ~~2006~~2012 Plan and the ~~2012~~2022 Plan. The cost is expected to be recognized over a weighted-average period of ~~3.15~~2.11 years as of ~~August~~May 31, ~~2021.~~2022. The total fair value of shares vested during the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 was approximately ~~$224,000.~~ $81,000.

During the second fiscal quarter of 2018, the Company entered into Amended and Restated Employment Agreements (“2018 Employment Agreements”) with each of the Company’s Co-CEOs. Per the Employment Agreements, each of the Co-CEOs is to receive base grant equity awards in the form of qualified stock options of the Company’s common stock. As of December 20, 2019, David Portnoy and Mark Portnoy were granted 23,636 and 20,000 stock options of the Company’s common stock, respectively. The options were issued under the Company’s 2012 Stock Plan and ~~will vest~~vested 1/3 upon grant, 1/3 on December 1, 2020 and the remaining 1/3 on November 30, 2021. The fair value of the options that vested through the three and ~~nine~~six months ended ~~August~~May 31, 2022 was $0. The fair value of the options that vested through the three and six months ended May 31, 2021 was approximately ~~$29,000~~$17,000 and ~~$85,000,~~$56,000, respectively, and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of income. As of ~~August~~May 31, ~~2021,~~2022, there was ~~approximately $28,000 of total~~0 unrecognized compensation cost related to the non-vested options of common ~~stock and these will continue to vest as notated above and per the 2018 Employment Agreements through November 30, 2021.~~stock.

Performance and market-based vesting condition options

~~Per the 2018 Employment Agreements, based upon certain performance criteria,~~

On April 8, 2022, the Company ~~shall grant~~granted 400,000 market-based vesting condition options to David Portnoy, ~~and~~ Mark Portnoy, ~~a percentage~~and Oleg Mikulinsky in the amounts of ~~up to 47,273~~280,000, 100,000, and ~~40,000, respectively, of qualified stock options of the Company’s common stock.~~20,000, respectively. For market-based vesting condition options, accounting principles do not require that the market condition be met in order for the compensation cost to be recognized. Fair value of these options has been determined using a Monte Carlo valuation ~~approach.~~approach and is being recognized over the requisite service period, regardless if the market condition will be met. The exercise price of the options is $12.27 and the calculated fair value of the options is $2.79. These stock options vest immediately when the price of the Company's stock reaches $25.00 per share during the seven-year option term. The grant of these options is subject to the Company's shareholders approving the 2022 Plan, which vote is expected to occur at the Company’s 2022 Annual Meeting. There were 0 market-based vesting condition options for the ~~nine~~six months ended ~~August~~May 31, ~~2021 or August~~2021. For the six months ended May 31, ~~2020, respectively. For performance-based vesting condition options,~~2022, the Company estimates the fair value of qualified stock options that met certain performance targets by the end of the fiscal 2018 requisite service period using a Black-Scholes valuation model. As of August 30, 2019, the Company granted David Portnoy and Mark Portnoy 26,243 and 22,222 of non-qualified stock options of the Company’s common stock based upon certain performance criteria met by the end of the fiscal 2018 service period. These options were issued under the Company’s 2012 Stock Plan and will vest 1/3 upon date of grant, 1/3 on December 1, 2019 and 1/3 on November 30, 2020. The fair value of these options vested through the nine months ended August 31, 2021 and August 31, 2020 wasrecognized approximately ~~$0 and $121,000~~$58,000 in compensation cost and is reflected as selling, general and administrative ~~expenses~~expense in the accompanying consolidated ~~statements~~statement of income. As of ~~August~~May 31, ~~2021,~~2022, there was $0approximately $1,058,000 of ~~total~~ unrecognized compensation cost to be recognized over the remaining requisite service period of 2.71 years.

On May 18, 2018, the Company entered into an Amendment Agreement (the "Amendment Agreement"), effective December 1, 2017, amending certain terms of Oleg Mikulinsky's Employment Agreement dated March 5, 2012, as ~~the options were fully vested.~~

previously amended. Per the Amendment Agreement, based upon certain performance criteria, the Company ~~shall~~is required to grant Oleg Mikulinsky a percentage of up to 8,000 of qualified stock options of the Company’s common stock. For market-based vesting condition options, accounting principles do not require that the market condition be met in order for the compensation cost to be recognized. Fair value of these options has been determined using a Monte Carlo valuation. There were 0 market-based vesting condition options for the nine months ended August 31, 2021 and August 31, 2020,

~~respectively.~~ For performance-based vesting condition options, the Company estimated the fair value of the qualified stock options that met certain performance targets by the end of the ~~fiscal 2018~~ requisite service period using a Black-Scholes valuation model. As of September 4, 2019, the Company granted Oleg Mikulinsky 4,444 of qualified stock options of the Company’s common stock based upon certain performance criteria met by the end of the fiscal 2018 service period and per the Amendment Agreement. These options were issued under the Company’s 2012 Stock Plan and ~~will vest~~vested 1/3 upon date of grant, 1/3 on December 1, 2019 and 1/3 on November 30, 2020. The fair of these options that vested through the ~~nine~~six months ended ~~August~~May 31, 2022 and May 31, 2021 ~~and August 31, 2020~~ was approximately ~~$200~~$0 and $~~10,000~~200 and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of income. As of February 27, 2020, the Company granted Oleg Mikulinsky 1,333 of qualified stock options of the Company’s common stock based upon certain performance criteria met by the end of the fiscal 2019 service period and per the Amendment Agreement. These options were issued under the Company’s 2012 Stock Plan and ~~will vest~~vested 1/3 upon date of grant, 1/3 on December 1, 2020 and 1/3 on November 30, 2021. The fair value of ~~the~~these options that vested through ~~the nine~~six months ended ~~August~~May 31, 2021 and ~~August~~May 31, ~~2020~~2021 was approximately $~~2,500~~0 and ~~$2,000,~~$1,700, respectively, and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of income. As of ~~August~~May 31, ~~2021,~~2022, there was ~~approximately $800~~ ~~of total~~0 unrecognized compensation cost related to the non-vested options of common stock.

Note 8 – License Agreements

The Company enters into two types of licensing agreements and in both types, the Company earns revenue on the initial license fees. Under the technology agreements, the Company earns processing and storage royalties from the affiliates that process in their own facility. Under the marketing agreements, the Company earns processing and storage revenues from affiliates that store specimens in the Company's facility in Oldsmar, Florida.

Technology Agreements

The Company ~~has~~ entered into a definitive License and Royalty Agreement with LifeCell International Private Limited, formerly Asia Cryo-Cell Private Limited, (“LifeCell”) to establish and market its umbilical cord blood and menstrual stem cell programs in India.

Per the License and Royalty Agreement with LifeCell, there iswas a ~~$1,000,000~~$1,000,000 cap on the amount of ~~royalties~~royalty due to the Company per year and a ~~$10,000,000~~$10,000,000 cap on the amount of royalties due to the Company for the term of the License and Royalty Agreement. ~~The cap(s) are calculated based on LifeCell’s fiscal year end, March 31~~^st~~. As of November 30, 2020, the Company had reached the $10,000,000 cap and recorded all royalties that were due.~~ Since inception of the License and Royalty Agreement, the Company has recorded ~~$10,000,000~~approximately $10,000,000 in royalty income due under the terms of the License and Royalty Agreement, of which, LifeCell has paid the Company ~~$9,700,000~~in full as of ~~August~~May 31, ~~2021. The balance~~2022. As of ~~$300,000 is reflected as Accounts Receivable on~~November 30, 2020, the ~~accompanying consolidated balance sheets.~~ Company had recognized all of the licensee income due under the License and Royalty Agreement with LifeCell.

Marketing Agreements

The Company has definitive license agreements to market the Company's umbilical cord blood stem cell programs in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua ~~Panama~~ and ~~Pakistan.~~ Panama.

The following table details the initial license fees for the technology agreements and processing and storage royalties earned under the technology agreements for the three and nine months ended August 31, 2021 and August 31, 2020. The initial license fees and processing and storage royalties are reflected in licensee and royalty income in the accompanying consolidated statements of income.

	~~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

Note 9 – Commitments and Contingencies

Employment Agreements

The Company has employment agreements in place for certain members of management. These employment agreements are for periods ranging from one to two years and contain certain provisions for severance payments in the event of certain events, including termination or change of control.

Purchase Contract - New Property

On December 3, 2015, a complaint styled Gary T. Brotherson, M.D., et al. v. Cryo-Cell International, Inc., Case No. 15-007461-CI, Circuit Court, Sixth Judicial Circuit, Pinellas County, Florida was served on the Company, naming it as defendant and alleging, among other things, that the Company breached certain agreements with plaintiffs and seeking damages in excess of $15,000, the jurisdictional amount of the court in which the action is pending. On January 12, 2016, the Company served its answer, affirmative defenses, and counterclaim against the plaintiffs.

~~On August 31, 2020 (the “Effective Date”),~~March 14, 2022, the Company entered into a ~~Termination Agreement~~$11.2 million purchase contract with Scannell Properties #502, LLC (“~~Termination Agreement”~~Scannell”) ~~with~~for a 56,000 square foot facility under construction located near the ~~Erie Group~~Research Triangle Park in the Regional Commerce Center in Durham, North Carolina (the “Erie Group”), pursuant to which all such parties terminated all of their respective rights, duties, obligations, options and liabilities to each other arising out of our related to the Cryo-Cell International, Inc. Space and Time Sharing (SATS) Lease Agreement, Addendum thereto, Addition to such Addendum, and Amendment to the Cryo-Cell International, Inc. Space and Time Sharing (SATS) Lease Agreement among the Company and the Erie Group (collectively, the “SATS Agreement”“New Facility”). ~~Additionally, pursuant~~Scannell is constructing certain improvements upon the land, including but not limited to ~~the terms of the Termination Agreement, the Company made a payment of $1,939,748 on the Effective Date and the parties released each other from all claims related~~an approximately 56,000 square foot building to ~~the SATS Agreement and agreed to dismiss with prejudice to foregoing complaint.~~be utilized by Cryo-Cell. Pursuant to the ~~terms~~Agreement, on March 16, 2022, the Company transferred an initial earnest deposit of $200,000. On June 10, 2022, the Company exercised its right to extend the closing date and transferred an additional deposit of $50,000 for a closing extension. The Company intends to fund the purchase price with cash on hand, cash flow from operations and with future additional financing. Construction is expected to be completed by the time the Company acquires the New Facility in approximately 90 days. The consummation of the ~~Agreement,~~purchase is subject to the ~~Erie Group~~Company’s completion of due diligence and various closing conditions to be met by the parties. Although the Company believes that the acquisition is probable, there can be no assurance that the acquisition of this property will ~~no longer~~be consummated. If the New Facility is purchased, the Company believes it will have space for not only its existing and future internal storage needs, but also will have the ~~rights~~capacity to ~~share~~offer third party pharmaceutical companies and medical institutions cold storage services (“ExtraVault” – see www.extravault.com), to set up a cellular therapy laboratory to manufacture mesenchymal stromal cells from cord tissue (“MSCs) and the space to consolidate the Cryo-Cell Institute for Cellular Therapies under the same roof.

The Company anticipates this New Facility will expand the Company’s cryopreservation and cold storage business by introducing a new service, ExtraVault (www.extravault.com). With over 30 years of experience in handling biological specimens for both research and clinical use, Cryo-Cell intends to leverage this expertise and offer these biorepository services to biopharmaceutical companies and healthcare institutions. The new facility is being constructed to offer state-of-the-art biologic, reagent and vaccine storage at cost effective prices. A robust inventory management system is planned to be implemented that Cryo-Cell believes will allow customers to view their own inventory through a ~~portion~~customer portal and place distribution orders online. As a result, it is anticipated ExtraVault will provide expertise, experience, customer electronic access and cost sensitive solutions to the Company’s partners in the biopharma and healthcare industries.

Contract to Sell Property

On June 10, 2022, the Company entered into a $1.85 million Agreement for Purchase and Sale of Improved Real Property with HFK Properties, LLC to sell the 8,800 square foot medical condominium building in Durham that was purchased by the Company in fiscal 2021. The building was originally purchased to become the Cryo-Cell Institute for Cellular Therapies which will now be in the new facility (see above). HFK Properties, LLC transferred the initial earnest deposit of $50,000 into escrow on June 15, 2022. The closing date is expected to be in the third quarter of fiscal 2022.

Form S-1

On April 4, 2022, the Company filed a Registration Statement on Form S-1 with the Securities and Exchange Commission for a public offering of senior promissory notes. The proposed maximum aggregate offering is $20,000,000 (exclusive of the ~~Company’s storage revenues derived from specimens which originated in~~underwriter's overallotment option). The Form S-1 has not yet been declared effective by the ~~state~~Securities and Exchange Commission. The Company can provide no assurance that it will consummate an offering under the Form S-1. The foregoing does not constitute an offer of ~~Illinois and its five contiguous states (see Note 14)~~any securities for sale.

~~In addition,~~

Legal Proceedings

The Company is not currently a party to any legal proceedings. However, from time to time, the Company ismay be subject to proceedings, lawsuits, contract disputes and other claims in the normal course of its business. ~~The Company believes that the ultimate resolution of current matters should not have a material adverse effect on the Company’s business, consolidated financial position or results of operations.~~ It is possible, ~~however,~~if the Company becomes subject to any such proceeding, that there could be an unfavorable ultimate outcome for or resolution of any such claim, which could be material to the Company’s results of operations for a particular quarterly reporting period. Litigation is inherently uncertain and there can be no assurance that the Company will prevail. The Company does not include an estimate of legal fees and other related defense costs in its estimate of loss contingencies.

Note 10 – Share Repurchase Plan

In December 2011, the Company’s Board of Directors authorized management at its discretion to repurchase up to one million ~~(1,000,000)~~(1,000,000) shares of the Company's outstanding common stock. On June 6, 2012, the Board of Directors of the Company increased the number of shares of the Company’s outstanding common stock that management is authorized to repurchase to up to three million ~~(3,000,000)~~(3,000,000). On April 8, 2015, the Board of Directors of the Company increased the number of shares of the Company’s outstanding common stock that management is authorized to repurchase to up to ~~nine~~six million ~~(6,000,000)~~(6,000,000) shares. On October 6, 2016, the Board of Directors of the Company increased the number of shares of the Company’s outstanding common stock that management is authorized to repurchase to up to eight million ~~(8,000,000)~~(8,000,000) shares. The repurchases must be effectuated through open market purchases, privately negotiated block trades, unsolicited negotiated transactions, and/or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission or in such other manner as will comply with the provisions of the Securities Exchange Act of 1934.

As of ~~August~~May 31, ~~2021,~~2022, the Company had repurchased an aggregate of ~~6,093,535~~6,276,282 shares of the Company’s common stock at an average price of ~~$3.37~~$3.54 per share through open market and privately negotiated transactions under the Company’s share repurchase plan. The Company purchased 162,326 (at an average price of $8.78 per share) during the six months ended May 31, 2022 and the Company did 0t0t purchase any shares of the Company’s common stock during the ~~nine~~six months ended ~~August~~May 31, ~~2021 and August 31, 2020.~~2021.

The repurchased shares will be held as treasury stock at cost and have been removed from common shares outstanding as of ~~August~~May 31, ~~2021~~2022 and November 30, ~~2020.~~2021. As of ~~August~~May 31, ~~2021~~2022 and November 30, ~~2020, 6,093,535~~2021, 6,276,282 and ~~6,093,535~~6,113,956 shares, respectively, were held as treasury stock.

Subsequent to the balance sheet date, May 31, 2022, the Company ~~has not~~ repurchased ~~any~~18,700 of additional shares of the Company’s common ~~stock.~~stock, at an average price of $6.10 per share.

Note 11 – Leases

Effective December 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), using the modified retrospective approach and utilizing the effective date as its date of initial application. As a result, prior periods are presented in accordance with the previous guidance in ASC 840, Leases (“ASC 840”). The Company has elected to apply the ‘package of practical expedients’ which allows the Company to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard.

In January 2021, the Company exercised its right to extend a lease for 36 months that resulted in an increase of $780,070 to operating lease right-of-use asset and of $780,070 to operating lease liabilities.

2824

In April 2021, the Company entered into a new lease for 24 months that resulted in an increase of $86,549 to operating lease right-of-use asset and of $86,549 to operating lease liabilities. Further, the Company adjusted the interest rate used to discount the lease payments to its current incremental borrowing rate and this resulted in an additional increase of $38,072 to operating lease right-of-use asset and of $38,072 to operating lease liabilities.

The following table presents the right-of-use asset and short-term and long-term lease liabilities amounts recorded on the consolidated balance sheets as of ~~August~~May 31, 2022 and November 30, 2021:


	August 31, 2021		November 30, 2020		May 31, 2022		November 30, 2021
Assets
Operating lease right-of-use asset	$	992,346	$	299,089	$	762,617	$	916,493

Liabilities
Current portion of operating lease liabilities	$	306,817	$	275,570	$	315,042	$	312,067
Operating lease long term liabilities		690,347		23,632
Operating lease long-term liabilities						453,979		610,989
Total lease liability	$	997,164	$	299,202	$	769,021	$	923,056

The maturity of the Company’s lease liabilities at ~~August~~May 31, ~~2021~~2022 were as follows:


	Future Operating			Future Operating
Fiscal Year Ending November 30,	Lease Payments			Lease Payments
2021 (remaining 3 months)	$	82,545
2022		339,182
2022 (remaining 6 months)				$	170,235
2023		313,996			313,996
2024		295,086			295,086
2025		24,590			24,591
Less: Imputed interest		(58,235	)		(34,887	)
Present value of lease liabilities	$	997,164		$	769,021

The remaining lease term and discount rates are as follows:


	May 31, 2022	November 30, 2021
Lease Term and Discount Rate
Remaining lease term (years)
Operating lease	2.58		3.08
Discount rate (percentage)
Operating lease	3.5%		3.5	%

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

Supplemental cash flow information related to leases is as follows:

	Three Months Ended		Nine Months Ended
	August 31, 2021		August 31, 2021		Three months ended
					May 31, 2022		May 31, 2021
Operating cash outflows from operating leases	$	82,545	$	229,675	$	85,964	$	75,564

	Three Months Ended		Nine Months Ended		Six months ended
	August 31, 2020		August 31, 2020		May 31, 2022		May 31, 2021

Operating cash outflows from operating leases	$	65,754	$	196,940	$	171,928	$	147,130

Note 12 – COVID-19

In March 2020, the World Health Organization declared a pandemic related to the rapidly spreading coronavirus (“COVID-19”) outbreak. The pandemic and government measures taken in response have had a significant adverse impact, both direct and indirect, on our business and the economy. The Company faces various risks related to health epidemics, pandemics and similar outbreaks, including the global outbreak of COVID-19. The Company believes it has taken appropriate steps to minimize the risk to our employees and to maintain normal business operations and continues to actively monitor the global outbreak and spread of COVID-19 and continues to take steps to mitigate the potential risks to us posed by its spread and related circumstances and impacts. Due to the change in consumer buying patterns as a result of COVID-19, the Company has experienced a decline in new client and public banking sales resulting in a decrease in revenues for the three and nine months ended August 31, 2021 compared to the three and nine months ended August 31, 2020. While the ultimate health and economic impact of COVID-19 remains highly uncertain, we expect that our business operations and results of operations, including our net sales, earnings and cash flows, may continue to be impacted by decreases in new client ~~and public banking~~ sales. We cannot predict the timing and speed of the recovery, and any delay in the recovery could significantly impact our future results.

Note 13 – Patent Option and Technology License Agreement

Effective June 9, 2020, the Company entered into a Patent Option Agreement (the “Option”) with Duke University (“Duke”). The Option grants Cryo-Cell the exclusive option to obtain an exclusive license to certain of Duke’s patent rights to make, have made, use, import, offer for sale, sell and otherwise commercially exploit (with the right to sublicense) certain licensed products and to practice certain licensed processes, and the exclusive right to use certain regulatory data and technical information in connection with such licensed patent rights, in the treatment, prevention, cure, reduction, mitigation or other management of diseases in humans, except, with regard to certain patent rights, in certain excluded fields of use and in certain territories, as well as a limited license to make, have made or use certain products, processes, data and information for the purpose of evaluating the market potential for such products and processes in the designated field of use, subject to Duke’s reserved rights to practice the licensed rights for all research, public service, internal (including clinical) and/or educational purposes. This exclusive Option is for a period of ~~nine~~six months from the effective date of the Option. As consideration for the Option, the Company paid Duke a non-refundable, option fee of ~~$350,000~~$350,000 during June 2020. The Option was subject to extension by the Company for an additional ~~nine~~six months by payment of ~~$150,000~~$150,000 on or before the expiration of the initial ~~nine-month~~six-month option period. On December 1, 2020, the Company made the extension payment of ~~$150,000.~~$150,000. Such option fee, plus the extension fee, ~~was~~will be fully credited against the license fee under the future license agreement. In connection with the option, Cryo-Cell anticipates opening a clinic to help patients have greater access to cord blood treatments established by Duke University under the FDA granted Expanded Access Program.

On February 23, 2021, pursuant to the Option, the Company entered into a Patent and Technology License Agreement (the ~~“Agreement”~~“Duke Agreement”) with Duke, pursuant to which Duke has granted to the Company an exclusive license to make, have made, use, import,

offer for sale, sell and otherwise commercially exploit (with the right to sublicense) certain licensed products and to practice certain licensed processes, and the exclusive right to use certain regulatory data and technical information in connection with such licensed patent rights, in the treatment, prevention, cure, reduction, mitigation or other management of certain diseases in humans, except, with regard to certain patent rights, in certain excluded fields of use and in certain territories, subject to Duke’s reserved rights to practice the licensed rights for all research, public service, internal (including clinical) and/or educational purposes.

Duke has completed or in progress a total of 19 FDA approved clinical trials related to the Duke License Agreement. The Company intends to fund additional clinical trials, as necessary, to provide the proof of efficacy that is required by the FDA to issue BLAs for some or all of the indications mentioned above.

In addition, Duke has provided its manufactured MSCs for one arm of a four arm, placebo controlled, multi-site, double blinded Phase 3 clinical trial, run by Emory University to treat osteoarthritis of the knee, in which cells from three different sources are compared to the current standard of care. If the Duke MSCs prove to be the most efficacious, the Company intends to design and fund a Phase 3 registration trial for that indication. The readout from the Emory trial is expected in the summer of 2022.

The Company has signed a contract to purchase a 56,000 square feet facility in Durham in which it plans to open the Cryo-Cell Institute for Cellular Therapies. Previously, the FDA has granted Duke the right to treat certain patients with infusions of cord blood under its Expanded Access Program. The Company intends to file an IND to conduct a clinical trial for either cerebral palsy or autism and will ask for similar rights to treat pediatric patients with certain neurological disorders (such as CP or autism) at its clinic. There can be no assurance that the FDA will approve of this or any IND filed by the Company.

The Agreement extends until expiration of the last Royalty Term, unless sooner terminated as provided in the Agreement. Royalty Term generally means the period beginning on the first commercial sale of each licensed product or licensed process and ending fifteen (15) years thereafter. Upon expiration of the applicable Royalty Term with respect to a particular licensed product or licensed processes, the licenses and rights granted by Duke to the Company under the Agreement with respect to such product or process become fully paid-up, royalty-free, perpetual and irrevocable.

The Company is required to pay Duke a license fee equal to ~~$12,000,000,~~$12,000,000, of which ~~$5,000,000 was~~$10,000,000 has been paid to date and an additional $2,000,000 is due ~~within 14 days of~~on February 23, 2021 (of which $500,000 has previously been paid through the crediting of the previously paid $350,000 option fee plus $150,000, extension fee, as described above), $5,000,000 must be paid on the first anniversary of February 23, 2021, and $2,000,000 must be paid on the second anniversary of February 23, 2021.2023. In addition, during the Royalty Term, subject to certain minimum royalties, the Company is required to pay Duke royalties based on a portion of the net sales varying from ~~7% - 12.5%~~7%—12.5% based on volume. ~~On March 8, 2021, the~~The Company ~~transferred $4,889,410~~is also obligated to ~~Duke which included the first payment due of $5,000,000, less $500,000 previously paid~~pay certain legal fees and ~~$389,410 in costs~~expenses associated with related ~~to the~~ patents.

Unless the Agreement is terminated or renegotiated as permitted per the Agreement, the Company is also required to pay Duke minimum annual royalties beginning on the second anniversary of the effective ~~date. The minimum annual royalties are~~date as follows:

•

Year 2: $500,000

•

Year 3: $1,000,000

•

Year 4: $2,500,000

•

Year 5 and each year thereafter during the term of this Agreement: $5,000,000

•

~~Year 2: $500,000~~

•

~~Year 3: $1,000,000~~

•

~~Year 4: $2,500,000~~

•

~~Year 5 and each year thereafter during the term of this Agreement: $5,000,000~~

In addition, the Company is required to pay Duke certain milestone payments, as follows:

26•

~~$2,000,000 upon initiation of the first Phase III clinical trial for an indication other than Autism Spectrum Disorder, for a licensed product comprising cord tissue; and~~

•

~~A number of shares of the Company’s common stock equal to the corresponding percentage of the Company’s fully-diluted equity ownership outstanding as of February 23, 2021 as follows:~~

~~(1)~~

~~5.0% upon execution of the Agreement;~~

~~(2)~~

~~2.5% upon cumulative net sales of licensed product and licensed process of $10,000,000;~~

~~(3)~~

~~2.5% upon cumulative net sales of licensed product and licensed process of $75,000,000~~

~~(4)~~

~~2.5% at each of the following market cap of the Company (based on a rolling 30-day average closing market cap) triggers:~~

~~Equal to or greater than $300,000,000, provided such trigger occurs within 18 months of February 23, 2021; and~~

~~Equal to or greater than $500,000,000, provided such trigger occurs within 24 months of February 23, 2021.~~

•

$2,000,000 upon initiation of the first Phase III clinical trial for an indication other than Autism Spectrum Disorder, for a licensed product comprising cord tissue; and

•

A number of shares of the Company’s common stock equal to the corresponding percentage of the Company’s fully-diluted equity ownership outstanding as of February 23, 2021 as follows:

(1)

5.0% upon execution of the Agreement;

(2)

2.5% upon cumulative net sales of licensed product and licensed process of $10,000,000;

(3)

2.5% upon cumulative net sales of licensed product and licensed process of $75,000,000;

(4)

2.5% at each of the following market cap of the Company (based on a rolling 30-day average closing market cap) triggers:

Equal to or greater than $300,000,000, provided such trigger occurs within 18 months of February 23, 2021; and

Equal to or greater than $500,000,000, provided such trigger occurs within 24 months of February 23, 2021.

On February 4, 2022, the Company entered into a First Amendment to License Agreement (the "Amendment") with Duke. The Amendment changes the requirements of the Company with regard to the minimum annual royalties payable to Duke. As amended, the minimum annual royalties are as follows:

•

Year 3: $500,000

•

Year 4: $1,000,000

•

Year 5: $2,500,000

•

Year 6 and each year thereafter during the term of this Agreement: $5,000,000

The Amendment also changed the requirements of the Company to pay Duke certain milestone payments, as follows:

•

$2,000,000 two years after the first patient or subject is treated in the first Phase III clinical trial of a licensed product comprising cord tissue derived MSC for an indication other than Autism Spectrum Disorder.

During the first quarter of fiscal 2021, the Company capitalized ~~$15,132,189~~$15,372,382 as a Duke ~~license agreement~~Agreement which was considered to be an asset acquisition and which represented the costs to obtain the Duke Agreement, and also recorded a corresponding liability to Duke for the ~~license agreement.~~Duke Agreement. The costs that were capitalized as a Duke license agreement includes the present value of the ~~$12,000,000~~$12,000,000 license fee, ~~$3,585,170~~$3,585,172, or 409,734 shares, of the Company’s common stock transferred to Duke and certain acquisition costs. The Company is amortizing these costs over 16 years. As of the ~~three and nine~~six months ended ~~August~~May 31, 2022 and 2021, the Company recorded ~~$240,193~~$480,387 and ~~$480,387,~~$240,193, respectively, in amortization expense which is reflected in amortization expense on the accompanying consolidated statements of income.

~~Note 14 – Cancellation~~ As of ~~Revenue Sharing Agreement~~

~~On August~~the three months ended May 31, ~~2020 (the “Effective Date”),~~2022 and 2021, the Company ~~entered into a Termination Agreement (“Termination Agreement”) with~~recorded $240,194 and $240,193, respectively, in amortization expense which is reflected in amortization expense on the ~~Erie Group (the “Erie Group”), pursuant to which all such parties terminated all~~accompanying consolidated statements of their respective rights, duties, obligations, options and liabilities to each other arising out of our related to the Cryo-Cell International, Inc. Space and Time Sharing (SATS) Lease Agreement, Addendum thereto, Addition to such Addendum, and Amendment to the Cryo-Cell International, Inc. Space and Time Sharing (SATS) Lease Agreement among the Company and the Erie Group (collectively, the “SATS Agreement”). Additionally, pursuant to the terms of the Terminationincome.

Through this Agreement, the Company ~~made~~intends to expand to a ~~payment~~triad of ~~$1,939,748 on~~core business units to include: (1) its cord blood bank and other storage services; (2) cord blood and cord tissue infusion clinic services initially under the ~~Effective Date~~FDA’s Expanded Access Program and in conjunction with the ~~parties released each other from all claims related~~undertaking of cord blood and cord tissue clinical trials to ~~the SATS Agreement~~obtain BLA approvals for new indications, and agreed to dismiss with prejudice the previously disclosed complaint (See Note 9). Pursuant to the terms of the Agreement, the Erie Group will no longer have the rights to share in a portion of the Company’s storage revenues derived from specimens which originated in the state of Illinois and its five contiguous states. The payment amount of $1,939,748 was offset(3) biopharmaceutical manufacturing if BLA(s) are approved by the ~~carrying amount~~FDA. The Company is projecting to open the Cryo-Cell Institute for Cellular Therapies and begin infusing patients with autologous cord blood units during thefirst half of the long-term liability related to the SATS in the amount of $550,000 and accrued expenses in the amount of $279,100 to reflect the extinguishment of revenue sharing agreements in the amount of $1,070,900 for the three and nine months ended August 31, 2020.fiscal 2023.

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

This Form 10‑Q, press releases and certain information provided periodically in writing or orally by the Company's officers or its agents may contain statements which constitute "forward‑looking statements". The terms "Cryo-Cell International, Inc.," “Cryo-Cell,” "Company," "we," "our" and "us" refer to Cryo-Cell International, Inc. The words "expect," “anticipate,” "believe," "goal," “strategy,” "plan," "intend," "estimate" and similar expressions and variations thereof, if used, are intended to specifically identify forward‑looking statements. Those statements appear in a number of places in this Form 10‑Q and in other places, and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things:

~~Investors and prospective investors are cautioned that any such forward‑looking statements are not guarantees of~~ future performance and operating results;

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. These forward-looking statements involve risks and uncertainties and ~~that~~reflect only our current views, expectations and assumptions with respect to future events and our future performance. If risks or uncertainties materialize or assumptions prove incorrect, actual results ~~may~~or events could differ materially from those ~~projected in the forward‑looking statements as a result of various factors.~~expressed or implied by such forward-looking statements. The factors that might cause such differences ~~include:~~include, among others:

~~We undertake no obligation to publicly update or revise~~ the ~~forward-looking statements made~~other risk factors set forth in this ~~Form 10‑Q to reflect events or circumstances after~~Report under the ~~date of this Form 10‑Q or to reflect the occurrence of unanticipated events.~~

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Cryo-Cell International, Inc. undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange ~~Commission,~~Commission.

The Company currently stores nearly 225,000 cord blood and cord tissue specimens for the exclusive benefit of newborn babies and possibly other members of their families. Founded in 1989, the Company was the world’s first private cord blood bank to separate and store stem cells in 1992. The Company’s U.S.-based business operations, including the ~~Annual Report on Form 10-K filed~~processing and storage of specimens, are handled from its headquarters facility in Oldsmar, Florida.

Utilizing its infrastructure, experience and resources derived from its umbilical cord blood stem cell business, the Company has expanded its research and development activities to develop technologies related to stem cells harvested from sources beyond umbilical cord blood stem cells. In 2011, the Company introduced its new cord tissue service, which stores a section of the umbilical cord tissue. The Company offers the cord tissue service in combination with the umbilical cord blood service.

On February 23, 2021, the Company entered into a Patent and Technology License Agreement (the “Duke Agreement”) with Duke University (“Duke”). The Duke Agreement grants the Company the rights to proprietary processes and regulatory data related to cord blood and cord tissue developed at Duke. The Company plans to explore, test, and/or administer these treatments to patients with osteoarthritis and with conditions for which there are limited U.S. Federal Drug Administration (“FDA”) approved therapies, including cerebral palsy, autism, and multiple sclerosis. These treatments utilize the unique immunomodulatory and potential regenerative properties derived from cord blood and cord tissue. Pursuant to the Duke Agreement, the Company has been granted exclusive commercial rights to Duke’s granted exclusive commercial rights to Duke’s intellectual property assets, FDA regulatory data, clinical expertise and manufacturing protocols associated with various applications of cord blood and cord tissue stem cells. Through this Agreement, the Company intends to expand to a triad of core business units to include: (1) its cord blood bank and other storage services;

(2) cord blood and cord tissue infusion clinic services initially under the FDA’s Expanded Access Program and in conjunction with the undertaking of cord blood and cord tissue clinical trials to obtain biologics license application (“BLA”) approvals for new indications, and (3) biopharmaceutical manufacturing if BLA(s) are approved by the ~~Company and any Current Reports on Form 8-K filed by the Company.~~

FDA. The Company is ~~engaged in~~projecting to open the Cryo-Cell Institute for Cellular Therapies and begin infusing patients with autologous cord blood units during the first half of fiscal 2023.

Nearly fifty years ago researchers discovered that cells could be cryopreserved at extremely low temperatures and all cellular ~~processing~~activity would cease until the specimens were thawed. Historically, cryopreservation was required for organ transplants, blood banking and ~~cryogenic storage, with a current focus on the collection and preservation~~medical research. Today, cryopreservation of umbilical cord blood stem cells gives individuals the opportunity to potentially take advantage of evolving cellular therapies and other medical technologies.

Hematopoietic stem cells are the building blocks of our blood and immune systems. They form the white blood cells that fight infection, red blood cells that carry oxygen throughout the body and platelets that promote healing. These cells are found in bone marrow where they continue to generate cells throughout our lives. Stem cells can be stored in a cryogenic environment, and upon thawing, infused into a patient. They can be returned to the individual from whom they were taken (autologous) or donated to someone else (allogeneic). An individual’s own bone marrow may be used for a transplant if the cancer has not entered the marrow system (metastasized). Otherwise, a marrow donor needs to be identified to provide the needed bone marrow. The availability of a marrow donor or matched stem cell specimen allows physicians to administer larger doses of chemotherapy or radiation in an effort to eradicate the disease. Stem cell therapies and transplants are used for both cancerous and non-cancerous diseases.

Stem cells are found in umbilical cord blood (“cord blood stem cells”) and can be collected and stored after a baby is born. Over 40,000 cord blood stem cell transplants have been performed to date. The Company believes that many parents will want to save and store these cells for potential future use by their family, ~~use. The Company’s principal sources~~either for the donor or for another family member. Today, stem cell transplants are known and accepted treatments for at least 78 diseases, we believe, a number of ~~revenues are service fees~~them life-threatening. With continued research in this area of medical technology, other therapeutic uses for cord blood ~~processing~~stem cells are being explored. Moreover, researchers believe they may be utilized in the future for treating diseases that currently have no cure.

It is the Company’s mission to inform expectant parents and ~~preservation~~their prenatal care providers of the potential medical benefits from preserving stem cells and to provide them the means and processes for ~~new customers~~collection and ~~recurring annual~~ storage ~~fees. Effective April 2016, the Company offers two pricing models,~~of these cells. A vast majority of expectant parents are simply unaware that umbilical cord blood contains a ~~standard plan~~rich supply of non-controversial stem cells and ~~premium plan. The Company charges fees of $1,675~~that they can be collected, processed and stored for the ~~standard plan~~potential future use of the newborn and ~~$2,025~~possibly related family members. A baby’s stem cells are a perfect match for the ~~premium plan~~baby throughout its life and have a 1-in-4 chance of being a perfect match and a 3-in-4 chance of being an acceptable match for a sibling. There is no assurance, however, that a perfect match means the cells could be used to ~~new clients~~treat certain diseases of the newborn or a relative. Today, it is still common for the ~~collection kit, processing, testing and return medical courier service, with discounts~~cord blood (the blood remaining in the ~~case~~umbilical cord and placenta) to be discarded at the time of ~~multiple children from~~birth as medical waste.

Despite the ~~same family and~~potential benefits of umbilical cord blood stem cell preservation, the number of parents of newborns participating in ~~other circumstances. The~~

~~Company charges an annual storage fee~~stem cell preservation is still relatively small compared to the number of ~~$175 for new clients that enroll~~births (four million per annum) in the ~~standard and premium plans; storage fees~~United States. Some reasons for ~~existing customers depend on~~this low level of market penetration are the ~~contracts with such customers. The Company continues to offer a one-time payment plan for 18 years~~misperception of the high cost of stem cell storage and a ~~lifetime payment plan, pursuant~~general lack of awareness of the benefits of stem cell preservation programs. However, evolving medical technology could significantly increase the utilization of the umbilical cord blood for transplantation and/or other types of treatments. The Company believes it offers the highest quality, highest value service targeted to a broad base of the market. We intend to maximize our growth potential through our superior quality, value-driven competitive leadership position, product differentiation, an embedded client base, increased public awareness and accelerated market penetration.

The Company believes that the market for cord blood stem cell preservation is enhanced by global discussion on stem cell research developments and the current focus on reducing prohibitive health care costs. With the increasing costs of bone marrow matches and transplants, a newborn’s umbilical cord blood cells can be stored as a precautionary measure. Medical technology is constantly evolving which may provide new uses for cryopreserved cord blood stem cells.

The Company enters into storage agreements with its clients under which the Company charges a fee for the processing and testing and first year of storage of the umbilical cord blood. Thereafter, the client is charged ~~$4,650~~an annual fee to store the specimen, unless the client entered into an 18-year pre-paid storage plan or a lifetime pre-paid storage plan.

The Company’s corporate headquarters are located in a nearly 18,000 square-foot state-of-the-art current Good Manufacturing

Practice and Good Tissue Practice (cGMP/cGTP)-compliant facility. Food and Drug Administration (“FDA”) 21 CFR Part 1271, effective in May 2005, requires human cellular and tissue-based products to be manufactured in compliance with good tissue practices (cGTPs). In addition, the cellular products cryogenic storage area has been designed as a “bunker,” with enhanced provisions for security, building fortification for environmental element protection and back-up systems for operational redundancies. The Company believes that it was the ~~standard plan~~first private bank to process cord blood in a technologically and ~~$5,000~~operationally advanced cGMP/cGTP-compliant facility. The Company’s facility, which also currently houses the Company’s client services, marketing and administrative operations, is designed to accommodate a broad range of events such as client tours and open houses, as well as educational workshops for clinicians and expectant parents.

Due to the ~~premium plan~~limited storage capacity of its existing facility in Oldsmar, FL, the Company is currently seeking a new building to house its stored specimens. If this facility is purchased, the Company believes it will have space for not only its existing and ~~approximately $5,800~~future internal storage needs, but also will have the capacity to offer third party pharmaceutical companies and medical institutions storage services, to set up a cellular therapy laboratory to manufacture MSCs and the Cryo-Cell Institute for ~~the standard plan and approximately $6,100 for the premium plan, respectively, less discounts in the case of multiple children from~~Cellular Therapies under the same ~~family and in other circumstances.~~ roof.

The ~~one-time plan includes~~Company believes that it provides several key advantages over its competitors, including:

In August 2011, the ~~collection kit, processing and testing, return medical courier~~Company introduced its advanced new cord tissue service, ~~and 18 years of prepaid storage fees. The lifetime plan includes the collection kit, processing and testing, return medical courier service and prepaid storage fees for the life~~which stores a section of the ~~client. The~~umbilical cord tissue. Approximately six inches of the cord tissue is procured and transported to the Company’s laboratory for processing, testing and cryopreservation for future potential use. Umbilical cord tissue is a rich source of MSCs, which have many unique functions including the ability to inhibit inflammation following tissue damage, to secrete growth factors that aid in tissue repair, and to differentiate into many cell types including neural cells, bone cells, fat cells and cartilage. MSCs are increasingly being researched in regenerative medicine for a wide range of conditions.

In June 2018, the Company ~~also receives other income from licensing fees and royalties from global affiliates.~~

~~On June 11, 2018, Cryo-Cell completed its acquisition of~~acquired substantially all of the assets ~~(the “Cord Purchase”)~~ of Cord:Use Cord Blood Bank, Inc., a Florida corporation (“Cord:Use”), in accordance with the definitive Asset Purchase Agreement between Cryo-Cell and Cord:Use (the “Purchase Agreement”), including without limitation Cord:Use’s cord blood operations and its inventory of public cord blood units existing as of the closing date (the “Public Cord Blood Inventory”) ~~and Cord:Use’s shares of common stock of Tianhe Stem Cell Biotechnologies, Inc.~~, ~~an Illinois corporation (the “Tianhe Capital Stock”). Cord:Use was in the business of~~which included both public (PHS 351) and private (PHS 361) banks. The Company closed the Cord:Use location and maintains its operations in Oldsmar, Florida. The new PHS 351 product is distributed under an IND (10-CBA) maintained by the National Marrow Donor Program (“NMDP”). The Company has continued the contract with Duke initiated by Cord:Use to manufacture, test, cryopreserve, store and distribute the public cord blood units. As part of the Cord:Use Purchase Agreement, the Company has an agreement with Duke, expiring on January 31, 2025, for Duke to receive, process, and ~~tissue, collection,~~store cord blood units for the Public Cord Blood Bank (“Duke Services”). As of May 31, 2022, the Company had approximately 6,000 cord blood units

in inventory. Costs charged by Duke for their Duke Services are based on a monthly fixed fee for processing ~~storage~~ and ~~banking.~~storing 12 blood units per month. The ~~aggregate consideration payable at closing under~~public units are listed on the NMDP Single Point of Access Registry and are available to transplant centers worldwide. The Company is reimbursed via cost recovery for public cord blood units distributed for transplant through the NMDP.

Pursuant to the Purchase Agreement, was $14,000,000, with $10,500,000 paid in cash and the balance paid through the delivery to Seller of 465,426 shares of Cryo-Cell’s common stock, par value $0.01 per share (“Common Stock”), at $7.52 per share. In addition, Cryo-Cell assumed certain limited liabilities incurred by Cord:Use in connection with its business that were unpaid as of the closing date and that directly relate to the services to be provided after closing by Cryo-Cell. Cryo-Cell also assumed certain of Cord:Use’s contracts and the obligations arising therefrom after the closing. Additionally, Cord:Use is entitled to an ~~earnout~~earn out from ~~Cryo-Cell’s~~the Company’s sale of the Public Cord Blood Inventory from and after closing. Each calendar year after the closing, ~~Cryo-Cell~~the Company is required to pay to Cord:Use 75% of all gross revenues, net of any returns, received from the sale of public cord blood inventory in excess of ~~$500,000.~~$500,000 up to an aggregate amount of $200,000,000. Such payments are to be made quarterly, within 30 days of the end of the last month of each calendar quarter, until the public cord blood inventory is exhausted. In addition, each calendar year after closing, until the public cord blood inventory is exhausted, for every $500,000 of retained gross revenues, net of any returns, received and retained by ~~Cryo-Cell~~the Company in excess of the initial $500,000 retained by ~~Cryo-Cell~~the Company during such year, ~~Cryo-Cell~~the Company is also required to deliver ~~$200,000 worth of Cryo-Cell Common~~its common stock to Cord:Use, up to an aggregate total value of $5,000,000. As of May 31, 2022, the Company has delivered 465,426 shares at $7.52 per share of its common stock to Cord:Use.

The Public Cord Blood Inventory creates a large, ethnically diverse, high-quality inventory of available cord blood stem cell units for those in need of life saving therapy. The Company collects cord blood units at hospitals in Florida, Arizona, California and Washington. The Company’s public inventory is stored at Duke in North Carolina, and the cord blood units are sold through the NMDP located in Minnesota, who ultimately distributes the cord blood units to transplant centers located in the United States, and around the world.

In connection with its acquisition of Cord:Use, the Company acquired 665,287 shares of Tianhe Stem Cell Biotechnologies, Inc., an Illinois corporation (“Tianhe”). We believe these shares represent approximately 5% of the Tianhe capital stock. In addition to the other amounts payable to Cord:Use, pursuant to the Cord:Use Asset Purchase Agreement, the Company agreed to pay Cord:Use (1) the Tianhe Sales Earnout; (2) the Tianhe Valuation Earnout; and (3) the Tianhe Recap Earnout (collectively hereinafter referred to as the “Earnout Payments”), which are further discussed below.

If the Company generates more than $500,000 in gross profits from the sale of the Tianhe capital stock (whether in a single transaction or series of transactions) (each, a “Tianhe Sale Event”), the Company is ~~also entitled~~obligated to ~~a portion~~pay Cord:Use 7% of the gross profits ~~generated, or deemed~~derived from such sale in excess of $500,000 in gross profits (collectively, the “Eligible Profits”), payable in a number of shares of common stock of the Company (the “Tianhe Sales Earnout”) equal to ~~have been generated,~~the quotient of the dollar amount of the Eligible Profits divided by ~~Cryo-Cell from its ownership~~the average of the closing sale prices of common stock during the 30 consecutive full trading days ending at the closing of trading on the trading day immediately prior to the date the Tianhe Sale Event. “Gross profit”, for these purposes, means the gross sale price of each share of Tianhe Stock sold pursuant to the Tianhe Sales Event minus (x) 0.43 per share and (y) all reasonable and documented transaction expenses (paid to third parties) directly related to the sale of the Tianhe ~~Capital~~ Stock.

~~As disclosed~~In the event a Tianhe Sale Event has not occurred on or before the five year anniversary of the Closing Date of the Cord:Use Asset Purchase Agreement, then the Company and Cord:Use will select an independent valuator to determine the fair market value of the Tianhe Stock owned by the Company and the Company will pay Cord:Use the Tianhe Valuation Earnout, which is 7% of the gross profits that would have been derived from a hypothetical sale of Tainhe capital stock, provided, that, notwithstanding the foregoing, in ~~Note 13,~~the Company’s sole discretion, the Company may, instead of issuing shares of its common stock, transfer 7% of its Tianhe Stock to Cord:Use in full payment of the Tianhe Valuation Earnout.

Additionally, if the Company, at any time after the Closing Date of the Cord:Use Asset Purchase Agreement, purchases additional shares of Tianhe Stock so that its aggregate holdings exceeds a majority percentage interest of the capital stock of Tianhe (the “Tianhe Recap Event”), the Company is required to pay to Cord:Use an additional amount equal to 10% of the value (based on ~~February 23, 2021,~~the purchase price paid by the Company) of such additional shares of Tianhe Stock equal to the difference between the price paid for the shares as of the Closing Date and the additional shares of Tianhe Stock acquired thereafter, payable in shares of common stock of the Company.

Due to the limited storage capacity of its existing facility in Oldsmar, FL, the Company has been evaluating new sites to house its stored specimens. On March 14, 2022, the Company entered into a ~~Patent and Technology License Agreement~~$11.2 million purchase contract with Scannell Properties #502, LLC (“Scannell”) for a 56,000 square foot facility under construction located near the Research Triangle Park in the Regional Commerce Center in Durham, North Carolina (the ~~“Agreement”) with Duke University (“Duke”~~“New Facility”). ~~The Agreement grants~~Scannell is constructing certain improvements upon the land, including but not limited to an approximately 56,000 square foot building to be utilized by Cryo-Cell. Construction is expected to be completed by the time the Company acquires the ~~rights~~New Facility in approximately 90 days. The consummation of the purchase is subject to ~~proprietary processes~~the Company’s completion of due diligence and ~~regulatory data~~various closing conditions to be met by the parties. Although the Company believes that the acquisition is probable, there can be no assurance that the acquisition of this property will be consummated. If the New Facility is purchased, the Company believes it will have space for not only its existing and future internal storage needs, but also will have the capacity to offer

third party pharmaceutical companies and medical institutions cold storage services (“ExtraVault” – see www.extravault.com), to set up a cellular therapy laboratory to manufacture mesenchymal stromal cells from cord tissue (“MSCs") and possibly the space to consolidate the Cryo-Cell Institute for Cellular Therapies under the same roof in the future.

The Company anticipates this New Facility will expand the Company’s cryopreservation and cold storage business by introducing a new service, ExtraVault (www.extravault.com). With over 30 years of experience in handling biological specimens for both research and clinical use, Cryo-Cell intends to leverage this expertise and offer these biorepository services to biopharmaceutical companies and healthcare institutions. The new facility is being constructed to offer state-of-the-art biologic, reagent and vaccine storage at cost effective prices. A robust inventory management system is planned to be implemented that Cryo-Cell believes will allow customers to view their own inventory through a customer portal and place distribution orders online. As a result, it is anticipated ExtraVault will provide expertise, experience, customer electronic access and cost sensitive solutions to the Company’s partners in the biopharma and healthcare industries.

The Company markets its cord blood stem cell preservation services directly to expectant parents and by distributing information through obstetricians, pediatricians, childbirth educators, certified nurse-midwives and other related tohealthcare professionals. The Company believes that its revenues have been facilitated by a variety of referral sources, resulting from high levels of customer satisfaction. New expectant parent referrals during fiscal 2022 are provided by physicians, midwives and childbirth educators, and by client-to-client referrals and repeat clients storing the stem cells of their additional children.

The Company has a national team of field cord blood educators who increase awareness of the benefits of storing cord blood and cord tissue ~~developed~~to the Company’s clinical referral sources, including physicians, midwives and hospitals and to expectant parents. Other promotional activities include internet advertisements and telemarketing activities. In addition, the Company exhibits at ~~Duke.~~ conferences, trade shows and other meetings attended by pregnant women and/or medical professionals. Significant portions of client referrals to the Company are from medical caregiver professionals.

The Company’s client support team advisors are available by telephone to enroll clients and educate both expectant parents and the medical community on the life-saving potential of cord blood stem cell preservation.

The Company ~~plans~~continues to ~~explore, test,~~use its website, www.cryo-cell.com, to market its services and ~~administer these treatments~~ to ~~patients with conditions~~provide resource information to expectant parents. The site, which is frequently updated and improved, is divided into areas of interest, including sections for ~~which there are limited FDA approved therapies, including cerebral palsy, autism, multiple sclerosis~~expectant parents, medical caregivers and ~~COVID-19. These treatments utilize~~investors. Expectant parents may request and receive information about the unique immunomodulatory and potential regenerative properties derived from cord blood and cord tissue. Per the Agreement, the Company has been granted exclusive commercial rights to Duke’s intellectual property assets, FDA regulatory data, clinical expertise and manufacturing protocols associated with various applications ofumbilical cord blood and cord tissue ~~stem cells. Through this Agreement, the~~service and enroll online.

The Company intends to ~~expand to a triad of core business units to include its~~continue offering cord blood ~~bank, biopharmaceutical manufacturing (once BLA(s) or Emergency Use Authorization(s)~~and cord tissue banking services to expectant parents and relying on both online advertising and its national team of field cord blood educators to enroll new clients. A significant portion of its new enrollments are ~~approved by~~generated from returning customers and referrals. Many of the ~~FDA), and infusion clinic(s) services, initially under~~Company’s clients choose to enter into either multiyear storage contracts, which results in deferred revenues that are recognized over the ~~rights granted to Duke through~~life the ~~FDAs Expanded Access Program.~~ storage contracts.

During the first quarter of fiscal 2021, the Company capitalized $15,132,189 as a Duke license agreement which represented the costs to obtain the Agreement and also recorded a corresponding liability to Duke for the license agreement (see Note 13). As of August 31, 2021, the balance was $14,891,995, net of amortization, and is reflected as Duke License AgreementOur public units are listed on the ~~accompanying consolidated balance sheets.~~

~~During~~NMDP registry, which is connected to all other major international registries. NMDP has a contract with the nine months ended August 31, 2021, total revenue decreased 9% as compared to the same period in 2020. The Company reported net income of approximately $2,721,000 or $0.34 per basic common share for the nine months ended August 31, 2021 compared to net income of $2,425,000 or $0.32 per basic common share for the nine months ended August 31, 2020. Net income for the nine months ended August 31, 2021 principally resulted from a 9% decrease in cost of

sales, a 7% decrease in selling, general and administrative expenses, a 10% decrease in interest expense and a 40% decrease in the Contingent Consideration (described below) which were offset by a 9% decrease in revenue.

At August 31, 2021, the Company had cash and cash equivalents of $7,700,806. The Company’s cash decreased approximately $2,700,000 during the first nine months of fiscal 2021. Cash provided by operations was approximately $6,259,000 and the Company received approximately $1,100,000 from the exercise of stock options, which were offset by $1,554,004 used for the purchase of property and equipment, $5,106,224 paid to Duke asHealth Resources & Services Administration (HRSA), part of the ~~Patent Option Agreement (see Note 13)~~Human Health Services Department of the US government, to be the single point of access for bone marrow, peripheral blood and ~~$3,325,000 used to repay the note payable.~~ cord blood for transplant centers needing stem cells for transplant.

In March 2020, the World Health Organization declared a pandemic related to the rapidly spreading coronavirus (“COVID-19”) outbreak. The Company faces various risks related to health epidemics, pandemics and similar outbreaks, including the global outbreak of COVID-19. The Company believes it has taken appropriate steps to minimize the risk to our employees and to maintain normal business operations and continues to actively monitor the global outbreak and spread of COVID-19 and continues to take steps to mitigate the potential risks to us posed by its spread and related circumstances and impacts. Due to the change in consumer buying patterns as a result of COVID-19,Additionally, the Company has ~~experienced a decline in new client and public banking sales resulting in a decrease in revenues for the three and nine months ended August 31, 2021 compared~~definitive license agreements to the three months ended August 31, 2020. While the ultimate health and economic impact of COVID-19 remains highly uncertain, we expect that our business operations and results of operations, including our net sales, earnings and cash flows, may continue to be impacted by decreases in new client and public banking sales. We cannot predict the timing and speed of the recovery, and any delay in the recovery could significantly impact our future results.

Consistent with its fiduciary duties, the board of directors and management has reviewed and will continue to review strategic options and opportunities for the Company, in order to maximize shareholder value. These options may include, but are not limited to, strategic mergers or acquisitions, investments in other public and/or private companies, repurchases of revenue sharing agreements (“RSA”) interests, a deregistration of the Company's common stock under the Securities Exchange Act of 1934 or a going-private transaction. These options may or may not be related tomarket the Company’s ~~current business. In order to undertake any~~umbilical cord blood stem cell programs in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

We are a Delaware corporation that was incorporated in 1989. Our executive offices are located at 700 Brooker Creek Blvd, Suite 1800, Oldsmar, Florida 34677 and our telephone number at such office is (813) 749-2100. Our website address is https://www.cryo-cell.com. Information contained on our website is not deemed part of ~~the aforementioned activities, the Company may take on substantial debt or equity capital which could increase the risk of investment in the Company.~~this report.

Results of Operations – ~~Nine-Month~~Six-Month Period Ended ~~August~~May 31, ~~2021~~2022 Compared to the ~~Nine-Month~~Six-Month Period Ended ~~August~~May 31, ~~2020~~2021

Revenue. Revenue for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 was ~~$21,569,464~~$14,891,748 as compared to ~~$23,606,976~~$14,065,812 for the same period in ~~2020.~~2021. The ~~decrease~~increase in revenue was in part due to a 5% ~~decrease~~increase in processing and storage fees.

Processing and Storage Fees. P~~Processing~~rocessing and storage fee revenue is attributable to a 9%6% increase in recurring annual storage fee revenue offset by ~~an 8%~~a slight decrease in the number of new domestic cord blood specimens processed in the first ~~nine~~six months of fiscal ~~2021~~2022 versus the same period in ~~2020.~~ 2021.

Product Revenue. For the ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, revenue from the product sales was ~~$56,200~~$54,600 compared to ~~$200,507~~$38,000 for the ~~nine~~six months ended ~~August~~May 31, ~~2020. The decrease in revenue is due to what the Company believes is a temporary change in customer demand.~~2021.

Public Cord Blood Banking Revenue. For the ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, revenue from the public cord blood banking sales was ~~$289,231~~$199,580 compared to ~~$484,547~~$130,295 for the ~~nine~~six months ended ~~August~~May 31, ~~2020.~~2021. The ~~decrease~~increase in revenue is due to the volatility of customer demand.

~~Licensee Income.~~ Licensee income for the nine months ended August 31, 2021 was $0 as compared to $629,702 for the 2020 period. Licensee and royalty income for the nine months ended August 31, 2021 and August 31, 2020 consists of royalty income earned on the processing and storage of specimens in India where the Company has a definitive License and Royalty Agreement.

Per the License and Royalty Agreement with LifeCell, there is a $1,000,000 cap on the amount of royalty due to the Company per year and a $10,000,000 cap on the amount of royalties due to the Company for the term of the License and Royalty Agreement. Since inception of the License and Royalty Agreement, the Company has recorded approximately $10,000,000 in royalty income due under the terms of the License and Royalty Agreement, of which, LifeCell has paid the Company approximately $9,700,000 as of August 31, 2021. The balance of approximately $300,000 is reflected as Accounts Receivable on the accompanying consolidated balance sheets. As of August 31, 2021, the Company has recognized all of the licensee income due under the License and Royalty Agreement with LifeCell.

Cost of Sales. Cost of sales for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 was ~~$6,693,806~~$4,304,742 as compared to ~~$7,344,011~~$4,234,868 for the same period in ~~2020,~~2021, representing a ~~9% decrease.~~2% increase. Cost of sales includes wages and supplies associated with process enhancements to the existing production procedures and quality systems in the processing of cord blood specimens at the Company’s facility in Oldsmar, Florida and depreciation expense of approximately ~~$154,000~~$102,000 and ~~$155,000~~$103,000 for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Cost of Sales also includes ~~$129,581~~$53,312 and ~~$128,153~~$76,084 for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020,~~2021, respectively, related to the costs associated with production of the PrepaCyte®-CB processing and storage system. Also included in Cost of Sales is ~~$1,111,022~~$791,375 and ~~$1,283,203~~$649,000 for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~August 31, 2020,~~2021, respectively, related to the public banks. The decrease in cost of sales for the nine months ended August 31, 2021 versus August 31, 2020 is due to the decrease in the number of new domestic cord blood specimens processed during the nine months ended August 31, 2021 versus August 31, 2020.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 were ~~$10,075,502~~$7,288,540 as compared to ~~$10,804,404~~$6,581,708 for the ~~2020~~2021 period representing a ~~7% decrease.~~11% increase. These expenses are primarily comprised of selling and marketing expenses, salaries and wages for personnel and professional fees. The decrease in selling, general and administrative expenses is primarily attributable to a $586,000 or a 13% decrease in selling expenses, a $230,000 or a 46% decrease in bad debt expense and a $217,000 or a 48% decrease in stock compensation expense for the nine months ended August 31, 2021 versus the nine months ended August 31, 2020. These expenses are offset by an increase for the nine months ended August 31, 2021 of $254,000 in expenses associated with the development of the Cryo-Cell Institute for Cellular Therapies’ and $131,000 in patent maintenance costs associated with the Duke License Agreement (see Note 13) versus the same period in 2020.

Research, Development and Related Engineering Expenses. Research, development and related engineering expenses for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 were ~~$19,431~~$228,116 as compared to ~~$16,791~~$9,427 for the ~~2020~~2021 period. The increase for the six months ended May 31, 2022 is due to the expenses related to the development of a manufacturing laboratory related to the Duke License Agreement (See Note 13).

Depreciation and Amortization. Depreciation and amortization (not included in Cost of Sales) for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 was ~~$558,167~~$558,092 compared to ~~$130,034~~$288,685 for the ~~2020~~2021 period. ~~The increase in depreciation and amortization is the result of the Duke License Agreement as described above (see Note 13).~~

Change in the Fair Value of Contingent Consideration. Change in the fair value of the contingent consideration for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 was a decrease of ~~$604,109~~$152,538 compared to a decrease of ~~$169,741~~$279,205 for the ~~2020~~2021 period. The contingent consideration is the earnout that Cord:Use is entitled to from the Company’s sale of the public cord blood inventory from and after closing, described above. The contingent consideration was remeasured to fair value as of ~~August~~May 31, ~~2021.~~2022. The estimated fair value of the contingent earnout was determined using a Monte Carlo analysis examining the frequency and mean value of the resulting earnout payments. The resulting value captures the risk associated with the form of the payout structure. The risk-neutral method is applied, resulting in a value that captures the risk associated with the form of the payout structure and the projection risk. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the estimated value of the liability.

Interest Expense. Interest expense during the ~~nine~~six months ended ~~August~~May 31, ~~2021,~~2022, was ~~$957,479~~$582,619 compared to ~~$1,069,345~~$621,609 during the comparable period in ~~2020,~~2021, of which, ~~$146,756~~$27,892 and ~~$321,957,~~$108,504, respectively, related to the credit and subordination agreements with Texas Capital Bank, National Association as described in Note 5. Interest expense is also ~~comprised~~includes of ~~$695,591~~$479,389 and ~~$747,388~~$455,785 as of the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 and ~~2020,~~2021, respectively, for amounts due to the parties to the Company’s revenue sharing agreements based on the Company’s storage revenue collected. The remaining interest expense for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 is due to the accretion of the outstanding liability due to Duke per the Agreement, see Note 13.

~~Extinguishment of Revenue Sharing Agreement.~~ On August 31, 2020, the Company entered into a Termination Agreement with the Erie Group pursuant to which all such parties terminated all of their respective rights, duties, obligations, options, and liabilities to each other arising out of or related to the Cryo-Cell International, Inc. Space and Time Sharing (SATS) Lease Agreement, Addendum thereto, Addition to such Addendum, and Amendment to the Cryo-Cell International, Inc. Space and Time Sharing (SATS) Lease Agreement among the Company and the Erie Group (collectively, the “SATS Agreement”). Additionally, pursuant to the terms of the Termination Agreement, the Company made a payment of $1,939,748 on the Effective Date and the parties released each other from all claims related to the SATS Agreement and to dismiss with prejudice the previously disclosed complaint (See Note 9). Pursuant to the terms of the Agreement, the Erie Group will no longer have the rights to share in a portion of the Company’s storage revenues derived from specimens which originated in the state of Illinois and its five contiguous states. The payment amount of $1,939,748 was offset by the carrying amount of the long-term liability related to the SATS in the amount of $550,000 and accrued expenses in the amount of $279,100 to reflect the extinguishment of revenue sharing agreements in the amount of $1,070,900 for the nine months ended August 31, 2020.

Income Taxes. U.S. income tax expense for the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 was ~~$1,134,198~~$588,708 compared to ~~$715,858~~$729,463 for the ~~nine~~six months ended ~~August~~May 31, ~~2020.~~ 2021.

Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The ultimate realization of our deferred tax assets depends upon generating sufficient future taxable income prior to the expiration of the tax attributes. In assessing the need for a valuation allowance, we must project future levels of taxable income. This assessment requires significant judgment. We examine the evidence related to the recent history of tax losses, the economic conditions in which we operate and our forecasts and projections to make that determination.

The Company records foreign income taxes withheld from installment payments of non-refundable up-front license fees and royalty income earned on the processing and storage of cord blood stem cell specimens in geographic areas where the Company has license agreements. The Company recorded $0 and $68,102 for the nine months ended August 31, 2021 and 2020, respectively, of foreign income tax expense, which is included in income tax expense in the accompanying consolidated statements of income.

Results of Operations ~~- Three Month~~– Three-Month Period Ended ~~August~~May 31, ~~2021~~2022 Compared to the Three-Month Period Ended ~~August~~May 31, ~~2020~~2021

Revenue. Revenue for the three months ended ~~August~~May 31, ~~2021~~2022 was ~~$7,503,652~~$7,633,217 as compared to ~~$8,114,358~~$7,205,195 for the same period in ~~2020,~~2021, a ~~decrease of 8%.~~

~~Processing and Storage Fees.~~ ~~For the three months ended August 31, 2021, processing and storage fees~~6% increase. The increase in revenue ~~was $7,326,516 compared to $7,486,858~~ for the three months ended ~~August~~May 31, ~~2020,~~2022 versus 2021 was in part due to a ~~2% decrease.~~ 4% increase in processing and storage fees.

Processing and Storage Fees. Processing and storage fee revenue is attributable to ~~an 8%~~a 6% increase in recurring annual storage fee revenue offset by a ~~less than 1%~~9% decrease in the number of new domestic cord blood specimens processed ~~in the third quarter of fiscal 2021~~for three months ended May 31, 2022 versus the same period in ~~2020. The average selling price in the third quarter of fiscal 2021 was 37% less than in the same period in 2020.~~ 2021.

Product Revenue. For the three months ended ~~August~~May 31, ~~2021,~~2022, revenue from the product sales was ~~$18,200~~$36,400 compared to ~~$82,800~~$0 for the three months ended ~~August~~May 31, ~~2020. The decrease in revenue is due to what the Company believes is a temporary change in customer demand.~~2021.

Public Cord Blood Banking Revenue. For the three months ended ~~August~~May 31, ~~2021,~~2022, revenue from the public cord blood banking sales was ~~$158,936~~$116,735 compared to ~~$116,826~~$46,309 for the three months ended ~~August~~May 31, ~~2020.~~2021. The ~~decrease~~increase in revenue is due to the volatility of customer demand.

~~Licensee Income.~~ Licensee income for the three months ended August 31, 2021, was $0 as compared to $427,874 for the 2020 quarter. Licensee income for the three months ended August 31, 2021 and August 31, 2020 consisted of royalty income earned on the processing and storage of cord blood stem cell specimens in India where the Company has a definitive License and Royalty Agreement.

Per the License and Royalty Agreement with Lifecell, there is a $1,000,000 cap on the amount of royalty due to the Company per year and a $10,000,000 cap on the amount of royalties due to the Company for the term of the License and Royalty Agreement. Since inception of the License and Royalty Agreement, the Company has recorded approximately $10,000,000 in royalty income due under the terms of the License and Royalty Agreement, of which, Lifecell has paid the Company approximately $9,700,000 as of August 31, 2021. The balance of approximately $300,000 is reflected as Accounts Receivable on the accompanying consolidated balance sheets. As of August 31, 2021, the Company has recognized all of the licensee income due under the License and Royalty Agreement with Lifecell.

Cost of Sales. Cost of sales for the three months ended ~~August~~May 31, ~~2021~~2022 was ~~$2,458,938~~$2,201,540 as compared to ~~$2,360,324~~$2,222,671 for the same period in ~~2020,~~2021, representing a ~~4% increase.~~1% decrease. Cost of sales includes wages and supplies associated with process enhancements to the existing production procedures and quality systems in the processing of cord blood specimens at the Company’s facility in Oldsmar, Florida and depreciation expense of approximately $51,000 and ~~$51,000~~$52,000 for the three months ended ~~August~~May 31, 2022 and 2021, respectively. Cost of Sales also includes $22,654 and ~~2020, respectively. Also, included in cost of sales is $53,498~~$41,203 for the three months ended May 31, 2022 and ~~$55,021~~2021, respectively, related to the costs associated with production of the ~~Prepacyte®~~PrepaCyte®-CB processing and storage ~~system~~system. Also included in Cost of Sales is $433,503 and $311,699 for the three months ended ~~August~~May 31, 2022 and 2021, ~~and August 31, 2020, respectively. Public cord blood banking costs included~~respectively, related to the public banks. The decrease in cost of sales for the three months ended ~~August~~May 31, 2022 versus May 31, 2021 ~~and 2020, are $462,021 and $394,162, respectively. The increase~~is due to the decrease in ~~cost~~the number of ~~sales for~~new domestic cord blood specimens processed during the three months ended ~~August~~May 31, ~~2021~~2022 versus ~~August~~May 31, ~~2020 is due to the increase in the cost of lab supplies associated with the current economic trends and the increase in costs due to the public cord blood bank.~~2021.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended ~~August~~May 31, ~~2021~~2022 were ~~$3,493,794~~$3,912,586 as compared to ~~$3,375,807~~$3,148,396 for the ~~2020~~2021 period representing a 3%24% increase. ~~Selling, general and administrative~~These expenses isare primarily comprised of ~~expenses for~~ selling and marketing expenses, salaries and wages for personnel and professional fees. The increase in selling, general and administrative expenses is primarily attributable to approximately $167,000 in expenses associated with the development of the Cryo-Cell Institute for Cellular Therapies’ and $104,000 in patent maintenance costs associated with the Duke License Agreement (see Note13). Also attributable to the increase for the three months ended August 31, 2021 versus August 31, 2020 is approximately $67,000 or a 67% increase in bad debt, offset by an 8% or a $108,000 decrease in selling expenses.

Research, Development and Related Engineering Expenses. Research, development and related engineering expenses for the three months ended ~~August~~May 31, ~~2021~~2022 were ~~$10,004~~$80,896 as compared to ~~$1,248~~$3,237 for the ~~2020~~2021 period. The increase for the three months ended May 31, 2022 is due to the expenses related to the development of a manufacturing laboratory related to the Duke License Agreement (See Note 13).

Depreciation and Amortization. Depreciation and amortization (not included in Cost of Sales) for the three months ended ~~August~~May 31, ~~2021~~2022 was ~~$269,482~~$279,926 compared to ~~$42,510~~$267,422 for the ~~2020~~2021 period. ~~The increase in depreciation and amortization is the result of the Duke License Agreement as described above (see Note 13).~~

Change in the Fair Value of Contingent Consideration. Change in the fair value of the contingent consideration for the three months ended ~~August~~May 31, ~~2021~~2022 was a decrease of ~~$324,904~~$36,105 compared to a decrease of ~~$145,752~~$431,599 for the ~~2020~~2021 period. The contingent consideration is the earnout that Cord:Use is entitled to from the Company’s sale of the public cord blood inventory from and after closing, described above. The contingent consideration was remeasured to fair value as of ~~August~~May 31, ~~2021.~~2022. The estimated fair value of the contingent earnout was determined using a Monte Carlo analysis examining the frequency and mean value of the resulting earnout payments. The resulting value captures the risk associated with the form of the payout structure. The risk-neutral method is applied, resulting in a value that captures the risk associated with the form of the payout structure and the projection risk. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the estimated value of the liability.

Interest Expense.Interest expense during the three months ended ~~August~~May 31, ~~2021,~~2022, was ~~$335,870~~$276,524 compared to ~~$338,675~~$341,390 during the comparable ~~quarter~~period in ~~2020. Interest expense for the three months ended August 31,~~ 2021, of which, $9,357 and ~~August 31, 2020 consists of $38,252 and $87,753,~~$48,284, respectively, related to the credit and subordination agreements with Texas Capital Bank, National Association as described in Note 5. Interest expense is also ~~comprised~~includes of ~~$239,806~~$250,632 and ~~$215,173~~$235,785 as of the three months ended ~~August~~May 31, ~~2021~~2022 and ~~2020,~~2021, respectively, for amounts due to the parties to the Company’s revenue sharing agreements based on the Company’s storage revenue collected. The remaining interest expense for the three months ended ~~August~~May 31, ~~2021~~2022 is due to the accretion of the outstanding liability due to Duke per the Agreement, see Note 13.

Income Taxes. U.S. income tax expense for the three months ended ~~August~~May 31, ~~2021 and August~~2022 was $265,061 compared to $470,562 for the three months ended May 31, ~~2020 was $404,735 and $105,296, respectively.~~ 2021.

The Company records foreign income taxes withheld from installment payments of non-refundable up-front license fees and royalty income earned on the processing and storage of cord blood stem cell specimens in geographic areas where the Company has license agreements. The Company recorded $0 and $46,274 for the three months ended August 31, 2021 and 2020, respectively, of foreign income tax expense, which is included in income tax expense in the accompanying consolidated statements of income.

On ~~August~~May 20, 2016, the Company entered into a Credit Agreement (“Credit Agreement”) with Texas Capital Bank, National

Association (“TCB”) for a term loan of $8.0 million in senior credit facilities. The proceeds of the term loan were used by the Company to fund repurchases of the Company’s common stock. Subject to the terms of the Credit Agreement, on ~~August~~May 20, 2016, TCB advanced the Company $100.00. On July 1, 2016, TCB advanced the remaining principal amount of $7,999,900 per a promissory note dated ~~August~~May 20, 2016 between the Company and TCB.

On August 26, 2016, the Company entered into a First Amendment to Credit Agreement with TCB. Pursuant to terms of the First Amendment to Credit Agreement, on August 26, 2016, TCB made an additional advance to the Company in principal amount of $2,133,433 per an Amended and Restated Promissory Note dated August 26, 2016 between the Company and TCB. The additional proceeds of the term loan were used by the Company to fund the extinguishment of revenue sharing agreements.

On June 11, 2018, the Company entered into a Second Amendment to Credit Agreement with TCB. Pursuant to the terms of the Second Amendment to Credit Agreement, TCB made an additional advance to the Company in principal amount of $9,000,000 per an Amended and Restated Promissory Note dated June 11, 2018 between the Company and TCB in the principal amount of $15,500,000. The proceeds were used to finance a portion of the purchase price of the Cord:Use Purchase.

~~Prior~~The TCB loan bears interest at a rate of 3.75% per annum plus LIBOR, payable monthly, and matures on June 2022. See Note 5.

As of July 1, 2022, subsequent to the balance sheet date, the Company paid the TCB term loan in full. The Company has no further obligations under the Credit Agreement. The Company currently is considering financing alternatives and expects to enter into a new credit facility in July 2022. See "Risk Factors."

Other than the foregoing loans, the Company’s principal source of cash has been from sales of its umbilical cord blood program to customers and royalties from licensees.

At ~~August~~May 31, ~~2021,~~2022, the Company had cash and cash equivalents of ~~$7,700,806~~$2,804,452 as compared to ~~$10,361,125~~$8,263,088 at November 30, ~~2020.~~2021. The decrease in cash and cash equivalents during the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 was primarily attributable to the following:

Net cash used in financing activities for the nine months ended August 31, 2020 was $4,228,998, which was primarily attributable to the payments of $2,324,998 to repay the note payable described above, $1,900,000 used to terminate a revenue sharing agreement (See Note 14), and $45,000 used to pay the Cord:Use earnout (See Note 1) which are offset by the receipt of $41,000 from the exercise of stock options.

The Company anticipates making discretionary capital expenditures of approximately ~~$10,000,000~~$14,000,000 over the next twelve months for software enhancements, purchases of property and equipment and obligations under the Patent and Technology License Agreement with Duke University. The Company anticipates funding future property and equipment purchases with cash-on-hand, ~~and~~ cash flows from future ~~operations.~~operations and, potentially, with future additional financing. However, there can be no assurances the Company will be able to obtain additional financing on favorable terms or at all.

The Company anticipates that its cash and cash equivalents, marketable securities and cash flows from future operations, together with external sources of capital, which the Company currently is exploring, will be sufficient to fund its known cash needs for at least the next 12 months. Cash flows from operations will depend primarily upon increasing revenues from sales of its umbilical cord blood and cord tissue cellular storage services, developing its infusion services at the Cryo-Cell Institute for Cellular Therapies and managing discretionary expenses. If expected increases in revenues are not realized, or if expenses are higher than anticipated, or if the

Company is unable to obtain additional financing, the Company ~~may~~will be required to reduce or defer cash expenditures or otherwise manage its cash resources during the next 12 months so that they are sufficient to meet the Company’s cash needs for that period. ~~In addition,~~The Company is considering the ~~Company may consider~~possibility of seeking additional equity or debt ~~financing if deemed appropriate for its plan of operations, and if such financing~~financing. However, there can be ~~obtained~~no assurances the Company will be able to obtain additional financing on ~~acceptable terms. There is no assurance that any~~favorable terms or at all. Any reductions in expenditures, if necessary, ~~will not~~may have an adverse effect on the Company’s business operations, including sales activities and the development of new services and technology. In the future, the Company anticipates using a substantial amount of cash to fund clinical trials related to the Patent and Technology License Agreement with Duke University (see Note ~~13.).~~13) and to develop its biopharmaceutical manufacturing capabilities related to mesenchymal stromal cells derived from umbilical cord tissue.

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make judgments, estimates, and assumptions that affect the reported

amounts of assets, liabilities, revenues, expenses and disclosures of contingent assets and liabilities. For a full discussion of our accounting policies please refer to Note 1 to the Consolidated Financial Statements included in our ~~2020~~2021 Annual Report on Form 10-K filed with the SEC on ~~March 1, 2021.~~February 22, 2022. Our most critical accounting policies and estimates include: recognition of revenue and the related allowance for doubtful accounts, stock-based compensation, income taxes and license and revenue sharing agreements. We continually evaluate our judgments, estimates and assumptions. We base our estimates on the terms of underlying agreements, historical experience and other factors that we believe are reasonable based on the circumstances, the results of which form our management’s basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. There have been changes to our critical accounting policies and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2020~~2021 Annual Report on Form 10-K. Please refer to Note 1 to the Consolidated Financial Statements.

The Company has no off-balance sheet arrangements that have or are reasonable likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Based on their most recent review, as of the end of the period covered by this report, the Company’s principal executive officers and principal financial officer have concluded that the Company’s disclosure controls and procedures were ~~not~~ fully effective, and that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company’s management, including its principal executive officers and principal financial officer, as appropriate to allow timely decisions regarding required disclosure and are ~~ineffective~~effective to ensure that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

During the second quarter fiscal 2021, the Company’s principal executive officers and principal financial officer concluded that the Company’s disclosure controls and procedures and internal controls and procedures and internal controls over financial reporting were not effective, due to a material weakness surrounding the Company’s interpretation of a non-routine transaction. The Company’s controls over non-routine transactions were not conducive to identify certain items with sufficient precision. Management has undertaken steps to design and implement more effective internal controls, including a more comprehensive review process of non-routine transactions.

~~The changes in the Company’s internal control over financial reporting described in the previous paragraph were implemented during the quarter ended August 31, 2021.~~

There were no other changes in the Company’s internal controls over financial reporting during the ~~nine~~six months ended ~~August~~May 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Our management, including our Co-CEOs and CFO, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the

Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Appearing as exhibits 31.1, 31.2 and 31.3 to this report there are Certifications of the Co-CEOs and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report is the information concerning the evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

~~From~~The Company is not currently a party to any legal proceedings. However, from time to time, the Company ismay be subject to proceedings, lawsuits, contract disputes and other claims in the normal course of its business. ~~The Company believes that the ultimate resolution of current matters should not have a material adverse effect on the Company’s business, consolidated financial position or results of operations.~~ It is possible, ~~however,~~if the Company becomes subject to any such proceeding, that there could be an unfavorable ultimate outcome for or resolution of any such claim, which could be material to the Company’s results of operations for a particular quarterly reporting period. Litigation is inherently uncertain and there can be no assurance that the Company will prevail. The Company does not include an estimate of legal fees and other related defense costs in its estimate of loss contingencies.

~~Not applicable.~~An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below before making an investment decision in our securities. These risk factors are effective as of the date of this Form 10-Q and shall be deemed to be modified or superseded to the extent that a statement contained in our future filings modifies or replaces such statement. All of these risks may impair our business operations. The forward-looking statements in this Form 10-Q involve risks and uncertainties and actual results may differ materially from the results we discuss in the forward-looking statements. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of our stock could decline, and you may lose all or part of your investment.

We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. A number of these risks are listed below. These risks could affect actual future results and could cause them to differ materially from any forward-looking statements we have made. You should carefully consider the risks described below. The risks and uncertainties described below are not the only ones we face. Any of the risks described below could significantly and adversely affect our business, prospects, financial condition or results of operations.

Our common stock may be delisted from Nasdaq if we fail to comply with continued listing standards.

If we fail to meet any of the continued listing standards of Nasdaq, our common stock could be delisted from the exchange. These continued listing standards include specifically enumerated criteria, including compliance with Nasdaq’s corporate governance requirements. We currently are not in compliance with Nasdaq’s requirement that we have three independent directors on our audit committee.

On January 19, 2022, we received a written notice (the “Notice”) from Nasdaq that our audit committee is comprised of two independent board members, and no longer complies with Nasdaq's audit committee requirement that the audit committee be comprised of at least three independent board members as set forth in Listing Rule 5605. In accordance with Nasdaq's Listing Rule 5605(c)(4) (“the “Rule”), Nasdaq provides a cure period in order to regain compliance. The cure period is until the earlier of the Company's next annual shareholders' meeting or September 20, 2022 or if the next annual shareholders' meeting is held before March 21, 2022, then the Company must evidence compliance no later than March 21, 2022. The Company must submit documentation, including the biography of any new director, evidencing compliance of the Rule no later than the compliance date described above. The Company is working diligently to comply with Nasdaq's audit committee requirements as set for in the Rule within the cure period provided by Nasdaq, and expects to evidence compliance to Nasdaq no later than the compliance date, but there can be no assurance that we will be able to maintain compliance and remain in compliance in the future.

If we fail to comply with Nasdaq’s continued listing standards, we may be delisted from Nasdaq. Delisting of the common stock could depress the price of our stock, substantially limit liquidity of our common stock and materially adversely affect our ability to raise capital on terms acceptable to us, or at all. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our common stock, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further.

We believe we have sufficient capital to fund our operations for at least the next 12 to 18 months. However, cash flows from operations will depend primarily upon increasing revenues from sales of our umbilical cord blood cellular storage services and controlling expenses. The Company has attempted to focus its capital resources on its core business of cellular storage services by de-emphasizing certain non-core business activities. There can be no assurance that sales will continue to increase or even maintain current levels. Additionally, the Company will require additional capital to pay for capital improvements and expenses associated with the Company’s infusion clinic (the opening of which is subject to the submission of an IND and FDA approval), to fund its proposed

ExtraVault business clinical trials related to the Duke Agreement, to develop biopharmaceutical manufacturing capabilities related to MSCs, for capital expenditures for software enhancements, purchases of property and equipment and obligations under the Duke Agreement. The Company will consider financing all or a portion of these capital expenditures through borrowings under a line of credit, vendor financing or other financing sources. There can be no assurance that such capital, if needed, will be available. The Company's current credit facility with TCB has matured. The Company is currently exploring financing alternatives, but there can be no assurances such financing will be obtained on favorable terms or at all.

Our business may decline, may not grow or may grow more slowly than expected. There can be no assurance that we will be able to grow or effectively operate our business. To the extent we are unable to achieve growth in our business we may continue to incur losses. We cannot assure you that we will be successful or make progress in the growth and operation of our business. Our success will depend in large part on widespread market acceptance of cryopreservation of stem cells. Our current and future expense levels are based on our operating plans and estimates of future revenues and are subject to increase as we implement our strategy. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues would likely have an immediate material adverse effect on our business, operating results and financial condition. Further, if we should substantially increase our operating expenses to increase sales and marketing or to develop our technology and cord blood processing and storage systems, and such expenses are not subsequently followed by increased revenues, our operating performance and results would be adversely affected and if sustained could have a material adverse effect on our business.

The Company’s operations and performance depend significantly on global and regional economic conditions.

Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment and currency fluctuations could materially adversely affect demand for the Company’s products and services. In addition, consumer confidence and spending could be adversely affected in response to financial market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or asset values, changes to fuel and other energy costs, labor and healthcare costs and other economic factors. A downturn in the economic environment could also lead to increased credit and collectability risk on the Company’s receivables, limitations on the Company’s ability to issue new debt and reduced liquidity. These and other economic factors could materially adversely affect the Company’s business, results of operations, financial condition and growth.

The COVID-19 pandemic has adversely impacted and is expected to have prolonged adverse impacts on our business and results of operations.

In 2020, a strain of novel coronavirus disease, COVID-19, was declared a pandemic and spread across the world. The pandemic and government measures taken in response have had a significant adverse impact, both direct and indirect, on our business and the economy. There can be no assurance that our ability to continue our operations will not be disrupted in the future in case of a resurgence of the pandemic or related public health crisis from new mutations of the virus. The COVID-19 pandemic continues to evolve. The extent to which the pandemic impacts our business, liquidity and financial results will depend on future developments, such as the continued geographic spread of the disease, the duration of the pandemic, the location, duration and magnitude of future waves of infection, new mutations of the virus, the availability, the adoption and effectiveness of vaccines and treatments against the virus and its variants, travel restrictions and social distancing in the United States, the European Union China and other countries. If we experience prolonged shutdowns or other business disruptions in the future, our ability to conduct our business in the manner and within planned timelines could be materially adversely impacted, and our business and financial results may continue to be adversely affected.

Additionally, concerns over the economic impact of the COVID-19 pandemic have caused volatility in financial and other capital markets. There is no assurance that future resurgence of COVID-19 infections and further economic downturns will not cause volatilities in the capital markets, which may adversely impact the price of our stock and our ability to access capital markets, such as what occurred in March and April 2020 and at various times in 2021 upon the discovery of new variants.

If our umbilical cord blood stem cell storage services do not achieve continued market acceptance we will not be able to generate revenue necessary to support our business.

We anticipate that service fees from the processing and storage of umbilical cord blood stem cells will continue to comprise a substantial majority of our revenue in the future and, therefore, our future success depends on the successful and continued market acceptance of this service. Broad use and acceptance of our service requires marketing expenditures and education and awareness of consumers and medical practitioners, and the time and expense required to accomplish such education and awareness of our services and its potential benefits could adversely affect market acceptance. Successful commercialization of our services will also require that we satisfactorily address the needs of various medical practitioners that constitute a target market to reach consumers of our services

and to address potential resistance to recommendations for our services. If we are unable to continue to gain market acceptance of our services, we will not be able to generate sufficient revenue to remain profitable.

In August 2011, the Company introduced its advanced new cord tissue service, which stores a section of the umbilical cord tissue. Approximately six inches of the cord tissue is procured and transported to the Company’s laboratory for processing, testing and cryopreservation for future potential use. Umbilical cord tissue is a rich source of mesenchymal stromal cells (“MSCs”). MSCs have many unique functions including the ability to inhibit inflammation following tissue damage, to secrete growth factors that aid in tissue repair, and to differentiate into many cell types including neural cells, bone cells, fat cells and cartilage. MSCs are increasingly being researched in regenerative medicine for a wide range of conditions are currently being used in many clinical trials. While there is much promise related to MSCs, we may fail to successfully manufacture and store MSCs, including as a result of negative results in clinical trials for efficacy.

Our public blood bank research involves clinical testing, which is expensive, complex and lengthy, and subject to various regulations, including the “Common Rule.” The Common Rule is a rule of ethics in the United States regarding biomedical and behavioral research involving human subjects. It governed Institutional Review Boards for oversight of human research. It is encapsulated in the 1991 revision to the U.S. Department of Health and Human Services Title 45 CFR 46 Subparts A, B, C and D. Subpart A. The outcome of clinical tries is inherently uncertain. There is a high rate of attrition for product candidates proceeding through clinical trials and most investigational medicines that commence clinical trials are never approved as products. We may not be able to initiate, may experience delays in, or may have to discontinue clinical trials for our investigational treatments. We and our strategic collaborators, including Duke, also may experience unforeseen events during, or as a result of, any clinical trials that we or they conduct that could delay or prevent us or them from successfully developing our investigational medicines and gaining approval from regulators. Delays or other events that might prevent us from proceeding with clinical trials include:

Any delay in developing assays that are acceptable to the FDA or other regulators could delay the start of future clinical trials. Further, the FDA or other regulators may change the requirements for approval even after they have reviewed and commented on the design for clinical trials. Significant preclinical or nonclinical testing and studies or clinical trial delays for our investigational treatments could allow our competitors to bring products to market before we do.

Our product candidates are subject to substantial government regulation, including the regulation of nonclinical testing and clinical trials. If we are unable to obtain regulatory approval for our product candidates, we will be unable to generate revenues.

Most of the product candidates we are developing must undergo rigorous nonclinical testing and clinical trials and an extensive regulatory approval process before they can be marketed in the United States or internationally. If we fail to obtain regulatory approval for our product candidates, we may have to cease further development. Clinical trials on our product candidates are expected to take several years to fully complete. The commencement or completion of nonclinical studies or clinical trials can be delayed or prevented for a number of reasons, including:

We cannot assure you that clinical trials will demonstrate the safety or effectiveness of any of our product candidates, or will otherwise satisfy regulatory requirements. Our nonclinical studies or clinical trials may produce negative or inconclusive results, there may be inconsistencies between early clinical trial results and results obtained in later clinical trials, and we may decide, or regulators may require us, to conduct additional nonclinical studies or clinical trials. Moreover, nonclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in nonclinical studies and clinical trials have nonetheless failed to obtain FDA approval for their products. If we are unable to resolve the FDA’s concerns, we will not be able to obtain regulatory approval for these product candidates.

The pre-marketing approval process can be particularly expensive, uncertain and lengthy, and a number of products for which FDA or other governmental regulatory approval has been sought by other companies have never been approved for marketing. In addition to testing and approval procedures, extensive regulations also govern marketing, manufacturing, distribution, labeling, and record-keeping procedures. If we do not comply with applicable regulatory requirements, such violations could result in warning letters, non-approval, suspensions of regulatory approvals or ongoing clinical trials, civil penalties and criminal fines, product seizures and recalls, operating restrictions, injunctions, and criminal prosecution.

We may encounter such delays and rejection of our product candidates by the FDA or other regulatory authority may also adversely affect our business. Such delays or rejection may be encountered due to, among other reasons, government or regulatory delays, lack of efficacy during clinical trials, unforeseen safety issues, or changes in regulatory policy during the period of product development. More stringent regulatory approval processes in product clearance and enforcement activities could result in our experiencing longer approval cycles, more uncertainty, greater risk, and higher expenses. Even if regulatory approval of a product is granted, this approval may entail limitations on uses for which the product may be labeled and promoted. It is possible, for example, that we may not receive FDA approval to market products based on our licensed, patented product candidates for different indications or to market updated products that represent extensions of our basic product candidates. In addition, we may not receive FDA approval to export our products based on our licensed, patented product candidates in the future, and countries to which products are to be exported may not approve them for import.

Stem cell preservation is becoming an increasingly competitive business. Our business faces competition from other operators of stem cell preservation businesses and providers of stem storage services. Certain of our competitors may have greater financial and other resources than us. Competitors with greater access to financial resources may enter our markets and compete with us. In the event that we are not able to compete successfully, our business may be adversely affected and competition may make it more difficult for us to grow our revenue and maintain our existing business on terms that are favorable to us.

A failure in the performance of our cryopreservation storage facility or systems, or those of Duke could harm our business and reputation.

To the extent our cryopreservation storage service, or the storage by Duke with regard to our public cord blood specimens, is disrupted, discontinued or the performance is impaired, our business and operations could be adversely affected. Any failure, including network, software or hardware or equipment failure, that causes a material interruption or discontinuance in our cryopreservation storage of stem cell specimens could result in stored specimens being damaged and unable to be utilized. Specimen damage, including loss in transit to the Company or loss of bulk shipments to its secondary storage site, could result in litigation against us and reduced future revenue to us, which in turn could be harmful to our reputation. Our insurance may not adequately compensate us for any losses that may occur due to any failures in our system or interruptions in our ability to maintain proper, continued, cryopreservation storage services. Any material disruption in our ability to maintain continued uninterrupted storage systems could have a material adverse effect on our business, operating results and financial condition. Our systems and operations are vulnerable to damage or interruption from fire, flood, equipment failure, break-ins, tornadoes and similar events for which we do not have redundant systems or a formal disaster recovery plan and may not carry sufficient business interruption insurance to compensate us for losses that may occur.

Because our industry is subject to rapid technological and therapeutic changes and new developments, our future success will depend on the continued viability of the use of stem cells.

Our success depends to a significant extent upon our ability to enhance and expand the use of and utility of our services so that they gain increased market acceptance. There can be no assurance that expectant parents will use our services or that our services will provide competitive advantages with current or future technologies. Failure to achieve increased market acceptance could have a material adverse effect on our business, financial condition and results of operations. The use of stem cells in the treatment of disease is subject to potentially revolutionary technological, medical and therapeutic changes. Future technological and medical developments could render the use of stem cells and our equipment obsolete and unmarketable. We may incur significant costs in replacing or modifying equipment in which we have already made a substantial investment prior to the end of its anticipated useful life. In addition, there may be significant advances in other treatment methods, such as genetics, or in disease prevention techniques, which could significantly reduce the need for the services we provide.

Our future success depends on our ability to retain our key personnel and to attract, retain and motivate qualified personnel.

Our future success depends upon our ability to retain our key management and other personnel and will also depend in large part on our ability to attract and retain additional qualified software developers, bioinformaticists, operations personnel, sales and marketing personnel, and business development personnel. Competition for these types of employees is intense due to the limited number of qualified professionals and the high demand for them, particularly in the Tampa Bay are of Florida, where our headquarters are located. We have in the past experienced difficulty in recruiting qualified personnel, especially in the area of sales. Failure to attract, assimilate, and retain personnel would have a material adverse effect on our business and potential growth.

If we do not obtain and maintain necessary domestic regulatory registrations, approvals and comply withongoing regulations, we may not be able to market our services in the United States.

We are subject to substantial regulation. We are required to register with the FDA under the Public Health Service Act because of our ongoing cellular storage business and are subject to FDA inspection. This requirement applies to all establishments engaged in the recovery, processing, storage, labeling, packaging, or distribution of any Human Cells, Tissues, and Cellular and Tissue-Based Products (“HCT/Ps”) or the screening or testing of a cell or tissue donor. In addition, with the purchase of the manufacturing rights to the PrepaCyte CB Processing System on June 30, 2015, we are required to register this product as a Medical Device under the Federal Food, Drug, and Cosmetic Act which is also subject to FDA inspection. The Company is in compliance with these requirements, but not assurances can be made that we will be able to meet future regulatory requirements. The division of FDA which regulates HCT/Ps is the Center for Biologics Evaluation and Research (“CBER”). Since 2004, the FDA has formulated a “Tissue Action Plan” which consists of these three rules:

The final rule allows the FDA to inspect cord blood laboratories to determine compliance with the provisions of 21 CFR Part 1271. As part of this oversight authority, the FDA conducts unannounced inspections of cord blood banks.

Upon execution of the acquisition of all of the assets of Cord:Use, the Company acquired the cord blood operations which included both public (PHS 351) and private (PHS 361) banks. The new PHS 351 product is distributed under an IND (10-CBA) maintained by the NMDP. The Company has continued the contract with Duke initiated by Cord:Use to manufacture, test, cryopreserve, store and distribute the public cord blood units. The units are listed on the NMDP Single Point of Access Registry and are available to transplant centers worldwide. The Company is reimbursed via cost recovery for public cord blood units distributed for transplant through the NMDP. The donation of cord blood units in the public cord blood banking program functions under The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the Company adheres to HIPAA rules. The FDA does not require establishments that manufacture drugs (including biological products) and devices that are HCT/Ps for use under an investigational new drug application (IND) (21 CFR Part 312) to register and list their HCT/Ps until the HCT/P is approved through a biologics license application (BLA), new drug application (NDA), or premarket approval application (PMA); or cleared through a premarket notification submission (510(k)).

The PrepaCyte CB (Cord Blood) Processing System is intended for use in cell processing laboratories to process and store total nucleated cells (TNC) from human umbilical cord blood, prior to banking. The device is composed of a bag with separation media. The system is 510(k) cleared as a Class II device. The division of the FDA which regulates this product is the Center of Biologics Evaluation and Research (“CBER”). Approval to market the device was determined by the Office of Cellular, Tissue and Gene Therapies. The section of FDA Code of Federal Regulations (“CFR”) pertaining to medical device is 21 CFR 800s. The requirements for compliance to this section include annual registration of the device, listing of devices with the FDA, good manufacturing practice, labeling, and prohibitions against misbranding and adulteration.

Currently, the states of California, Illinois, Maryland, New Jersey and New York require cord blood banks to be registered or licensed. The Company is currently registered or licensed to operate in these states. If the Company identifies other states with licensing requirements or if other states adopt such requirements, the Company would have to obtain licenses or registration to continue providing cord blood services in those states.

The Company is also subject to local, state and federal laws and regulations relating to safe working conditions, laboratory and manufacturing practices and the use and disposal of hazardous or potentially hazardous substances. These laws include the Occupational Safety and Health Act (“OSHA”), cGTPs, cGMPs, Environmental Protection Act and those of the local Department of Health.

Evolving legislation and regulations governing private cord blood banking in various jurisdictions throughout the world may impact the Company’s international licensees.

In addition, as the organization grows and evolves, other legislation and regulations are expected to impact the Company. One such evolution involves activities that may be designated as or involve medical research or cooperative agreements associated with medical research. These types of activities are also governed by the FDA, specifying oversight by an Institutional Review Board (IRB). The IRB is a board or committee that approves the initiation of, and conducts periodic review of, biomedical research involving human subjects. The primary purpose of such review is to assure the protection of the rights and welfare of the human subjects. Governance of biomedical research is codified as laws by Title 21 of the Code of Federal Regulations (CFR) Part 56, and enforced by the FDA. Other medical research associated with clinical trials may require an Investigational New Drug Application (IND). Current Federal law requires that a drug be the subject of an approved marketing application before it is transported or distributed across state lines. Because a sponsor will likely want to ship the investigational drug to clinical investigators in many states, it must seek an exemption from that legal requirement. The IND is the means through which the sponsor technically obtains this exemption from the FDA. This approval would be required in the case of a clinical trial.

We may be required to spend substantial amounts to comply with legislative and regulatory initiatives relating to patient privacy.

Regulations issued under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, contain provisions that require us to adopt business procedures designed to protect the privacy of each of our patients’ individual health information. Federal and state laws govern the Company’s ability to obtain and, in some cases, to use and disclose data that we may need to conduct certain activities. The HIPAA requires the Department of Health and Human Services to issue a series of regulations establishing standards for the electronic transmission of certain health information. The Company’s private cord blood bank operation is not subject to HIPAA because the Company does not engage in certain electronic transactions related to the reimbursement of healthcare providers and because blood and tissue procurement and banking activities are exempt. However, the healthcare providers that collect umbilical cord blood for the Company’s customers are subject to HIPAA. The identifiable information shared is only what is permitted by HIPAA. In 2009, a portion of the American Recovery and Reinvestment Act of 2009 modified HIPAA under the Health Information Technology for Economic and Clinical Health Act (“HITECH Act”). While the Company is still not subject to HIPAA for the reasons stated above the Company may incur material expenses associated with compliance efforts. In addition, compliance may require management to spend substantial time and effort on compliance measures. If the Company fails to comply with HIPAA, it is possible it could suffer criminal and civil penalties. The civil penalties could include monetary penalties ranging from $100 per violation to $1.5 million depending on the level of violation.

Our failure to comply with laws related to hazardous materials could materially harm us.

We are subject to state and federal laws regulating the protection of employees who may be exposed to hazardous material and regulating the proper handling and disposal of that material. There are inherent risks in connection with the handling, storage, disposal, distribution, and/or use of the specimens. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by federal, state and local regulation and regulations of foreign jurisdictions, the risk of accidental contamination or injury from these materials cannot be completely eliminated. Individuals who use or come in contact with the specimens may file claims related to their use and these claims could result in litigation that could be expensive to defend or result in judgements that exceed our resources and our insurance coverage. Any such litigations and judgement could adversely affect our business, financial condition and results of operations. Although we believe we are in compliance with all applicable laws, a violation of such laws, or the future enactment of more stringent laws or regulations, could subject us to liability, or require us to incur costs that would have an adverse effect on us.

Our international operations are subject to risk and we may not be able to successfully protect our intellectual property.

International licenses of our technology and services account for a portion of our income and our international growth may be limited if we are unable to successfully manage our international activities. We are subject to a number of challenges that relate to our international business activities. Our growth and future license income and return on investments from these sources will be impacted by these challenges, which include:

The occurrence of any one of these risks could harm our international business and, consequently, our results of operations. Additionally, operating in international markets requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required to operate in other countries will produce desired levels of revenue or profitability.

The Foreign Corrupt Practices Act (“FCPA”), prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts.

The Company’s business may be impacted by political events, international trade disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions.

Political events, international trade disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions, such as the current Ukrainian-Russian conflict could harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company and its customers, suppliers, cellular network carriers and other partners. International trade disputes could result in tariffs and other protectionist measures that could adversely affect the Company’s business.

Already the Ukrainian-Russian conflict has caused market volatility, a sharp increase in certain commodity prices, such as wheat and oil, and an increasing number and frequency of cybersecurity threats. So far, we have not experienced any direct impact from the conflict and, as our business is conducted primarily in the United States, we are probably less vulnerable than companies with international operations. Nevertheless, we will continue to monitor the situation carefully and, if necessary, take action to protect our business, operations and financial condition.

Our information systems are critical to our business, and a failure of those systems could materially harm us.

We depend on our ability to store, retrieve, process and manage a significant amount of information. If our information systems fail to perform as expected, or if we suffer an interruption, malfunction or loss of information processing capabilities, it could have a material adverse effect on our business.

If we experience a significant breach of data security or disruption in our information systems, our business could be adversely affected.

We rely on various information systems to manage our operations and to store information, including sensitive data such as confidential business information and personally identifiable information. These systems have been and continue to be vulnerable to interruption or malfunction, including due to events beyond our control, and to unauthorized access, computer hackers, ransomware, viruses, and other security problems. Failure of these systems or any significant breach of our data security could have an adverse effect on our business and may materially adversely affect our operating results and financial condition.

Data security breaches could result in loss or misuse of information, which could, in turn, result in potential regulatory actions or litigation, including material claims for damages, compelled compliance with breach notification laws, interruption to our operations, damage to our reputation or could otherwise have a material adverse effect on our business, financial condition and operating results. Companies throughout our industry have been increasingly subject to a wide variety of security incidents, cyber-attacks and other attempts to gain unauthorized access to networks or sensitive information. While we have implemented and continue to implement cybersecurity safeguards and procedures, these safeguards have been vulnerable to attack. As cyber threats continue to evolve, we may be required to expend additional resources to enhance our cybersecurity measures or to investigate or remediate any vulnerabilities or breaches.

Although we maintain insurance to protect ourselves in the event of a breach or disruption of certain of our information systems, we cannot ensure that the coverage is adequate to compensate for any damages that may be incurred.

Increasing use of social media could give rise to liability, breaches of data security, or reputational damage.

We and our employees are increasingly utilizing social media tools as a means of communication both internally and externally. Despite our efforts to monitor evolving social media communication guidelines and comply with applicable rules, there is risk that the use of social media by us or our employees to communicate about our products or business may cause us to be found in violation of applicable laws and regulations. In addition, our employees may knowingly or inadvertently make use of social media in ways that may not comply with our social media policy or other legal or contractual requirements, which may give rise to liability, lead to the loss of trade secrets or other intellectual property, or result in public exposure of personal information of our employees, clinical trial patients, customers, and others. Furthermore, negative posts or comments about us or our products in social media could seriously damage our reputation, brand image, and goodwill.

Some of our products contain open source software, which may pose particular risks to our proprietary software, technologies, products and services in a manner that could harm our business.

We use open source software in our products and anticipate using open source software in the future. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Additionally, we could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could include proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require us to expend significant additional research and development resources, and we cannot guarantee that we will be successful.

Additionally, the use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. There is typically no support available for open source software, and we cannot ensure that the authors of such open source software will implement or push updates to address security risks or will not abandon further development and maintenance. Many of the risks associated with the use of open source software, such as the lack of warranties or assurances of title or performance, cannot be eliminated, and could, if not properly addressed, negatively affect our business. We have processes to help alleviate these risks, including a review process for screening requests from

our developers for the use of open source software, but we cannot be sure that all open source software is identified or submitted for approval prior to use in our products. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could adversely affect our business, financial condition and results of operations.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on our product candidates throughout the world could be expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. We do not have any registered patents. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

If we are unable to protect our intellectual property from use by third parties, our ability to compete in the market will be harmed. There can be no assurance that we will not become subject to future patent infringement claims or litigation in a court of law, interference proceedings, or opposition to a patent granted in a foreign jurisdiction. The defense and prosecution of such intellectual property claims are costly, time-consuming, divert the attention of management and technical personnel and could result in substantial cost and uncertainty regarding our future viability. Future litigation or regulatory proceedings, which could result in substantial cost and uncertainty, may also be necessary to enforce our patent or other intellectual property rights or to determine the scope and validity of other parties’ proprietary rights. Any public announcements related to such litigation or regulatory proceedings that we initiate, or that are initiated or threatened against us by our competitors, could adversely affect the price of our common stock. We also rely upon trade secrets, technical know-how and continuing technological innovation to develop and maintain our competitive position, and we typically require our employees, consultants and advisors to execute confidentiality and assignment of inventions agreements in connection with their employment, consulting or advisory relationships. There can be no assurance, however, that these agreements will not be breached or that we will have adequate remedies for any breach. Failure to protect our intellectual property would limit our ability to produce and/or market our products in the future and would likely have an adverse effect on the revenues generated by the sale or license of such intellectual property.

We may become subject to third parties’ claims alleging infringement of their patents and proprietary rights, which could be costly, time consuming, and prevent the use of our technology solution.

We cannot assure you that third parties will not claim our current or future products or services infringe their intellectual property rights. Any such claims, with or without merit, could cause costly litigation that could consume significant management time. As the number of product and services offerings in our market increases and functionalities increasingly overlap, companies such as ours may become increasingly subject to infringement claims. These claims also might require us to enter into royalty or license agreements. If required, we may not be able to obtain such royalty or license agreements or obtain them on terms acceptable to us.

If our security measures are breached, or if our services are subject to attacks that degrade or deny the ability of users to access our platforms, our platforms and applications may be perceived as not being secure, customers and suppliers may curtail or stop using our services, and we may incur significant legal and financial exposure.

Our storage systems and the network infrastructure that are hosted by third-party providers involve the storage and transmission of healthcare data as well as proprietary information about organizations and programs, and security breaches could expose us to a risk of loss of this information, litigation, and potential liability. Our security measures may be breached due to the actions of outside parties, employee error, malfeasance, security flaws in the third-party hosting service that we rely upon, or any number of other reasons and, as a result, an unauthorized party may obtain access to our suppliers’ or customers’ data. Although we have never had any breach of data in our third-party provider’s environment, any future breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of our platforms and applications that could potentially have an adverse effect on our business. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures on a timely basis. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose suppliers and customers and we may have difficulty obtaining merchant processors or insurance coverage essential for our operations.

We incur significant costs and demands as a result of operating as a public company.

We incur significant legal, accounting and other expenses to meet our obligations as a publicly traded company. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the Nasdaq Stock Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways that are not currently anticipated. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, these rules and regulations may make it difficult and expensive for us to maintain director and officer liability insurance coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as our executive officers, which may adversely affect investor confidence in us and could cause our business or stock price to suffer.

If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

The Sarbanes-Oxley Act of 2002 requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. We are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also requires, subject to an exemption for so long as we remain a “smaller reporting company,” an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.

Increasing scrutiny and changing expectations from investors, customers, and governments with respect to Environmental, Social and Governance (“ESG”) policies and practices may cause us to incur additional costs or expose us to additional risks.

There has been increasing public focus and scrutiny from investors, governmental and nongovernmental organizations, and customers on corporate ESG practices. Our ESG practices may not meet the standards of all of our stakeholders and advocacy groups may campaign for further changes. A failure, or perceived failure, to respond to expectations of all parties could cause harm to our business and reputation and have a negative impact on the market price of our securities. New government regulations could also result in new regulations and new or more stringent forms of ESG oversight and disclosures which may lead to increased expenditures for sustainability initiatives.

Our principal stockholders and management own a significant percentage of our stock and will be able to exert

Based upon shares of common stock outstanding as of February 28, 2022, our executive officers, directors, 5% stockholders (known to us through publicly available information) and their affiliates beneficially owned approximately 39% of our voting stock. Therefore, these stockholders have the ability to substantially influence us through this ownership position. For example, these stockholders, if they choose to act together, may be able to influence the election of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This concentration of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire.

We may become subject to securities class action litigation, which can be expensive, divert management attention, and, if resolved unfavorably, expose us to significant liabilities.

We may become subject to litigation in the future that could result in substantial costs and a diversion of management’s resources and attention. In addition, any adverse determination from future litigation could expose us to significant liabilities, which could have a material adverse effect on our business, financial condition, and results of operations.

We are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable to smaller reporting companies, our common stock may be less attractive to investors.

We are a “smaller reporting company,” meaning that we have a public float of less than $250 million, have annual revenues of less than $100 million during the most recently completed fiscal year and the value of our voting and nonvoting common stock held by non-affiliates on the last business day of our second fiscal quarter in that fiscal year is less than $700.0 million. As a “smaller reporting company,” we are subject to lesser disclosure obligations in our SEC filings compared to other issuers. Specifically, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings, are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status a “smaller reporting company” may make it harder for investors to analyze our operating results and financial prospects.

Should our officers and/or directors require us to contribute to their defense, we may be required to spend significant amounts of our capital. Our certificate of incorporation, as amended, and bylaws, as amended, also provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of our company. This indemnification policy could result in substantial expenditures, which we may be unable to recoup. If these expenditures are significant or involve issues which result in significant liability for our key personnel, we may be unable to continue operating as a going concern.

Certain provision of our charter, bylaws and Delaware law may delay, defer or prevent a tender offer or takeover attempt that public stockholders might consider in their best interest.

Certain provisions of Delaware law, our certificate of incorporation and our bylaws could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, are expected to discourage certain types of coercive takeover practices and inadequate takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our board of directors.

Certificate of Incorporation and Bylaws. Our certificate of incorporation and bylaws include provisions that:

Delaware anti-takeover statute. We are subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:

Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the “interested stockholder” and an “interested stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may discourage business combinations or other attempts that might result in a premium over the market price for the shares of common stock held by our stockholders. The provisions of DGCL, our certificate of incorporation and our bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


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	3328

Item 3. Quantitative and Qualitative Disclosures about Market Risk	4237

Item 4. Controls and Procedures	4237

PART II - OTHER INFORMATION	4439

Item 1. Legal Proceedings	4439

Item 1A. Risk Factors	4439

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4451

Item 3. Defaults Upon Senior Securities	4451

Item 4. Mine Safety Disclosures	4452

Item 5. Other Information	4452

Item 6. Exhibits	4553

SIGNATURES	4654


	As of May 31, 2022			As of November 30, 2021
Raw materials	$	—		$	—
Work-in-process		332,589			357,686
Work-in-process – Public Bank		—			—
Finished goods		19,296			29,821
Finished goods – Public Bank		10,052,168			10,193,789
Collection kits		29,438			42,998
Inventory reserve		(7,718	)		(7,718	)
Total inventory	$	10,425,773		$	10,616,576

	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


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
March 1 - 31, 2022		31,169	$	7.73		—		1,778,447
April 1 - 30, 2022		39,772	$	6.59		—		1,738,675
May 1 - 31, 2022		14,957	$	6.23		—		1,723,718

	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 three months ended May 31,
	2022			2021
Net revenue:
Umbilical cord blood and cord tissue stem cell service	$	7,480,082		$	7,158,886
PrepaCyte CB		36,400			0
Public cord blood banking		116,735			46,309
Total net revenue	$	7,633,217		$	7,205,195
Cost of sales:
Umbilical cord blood and cord tissue stem cell service	$	1,745,383		$	1,869,769
PrepaCyte CB		22,654			41,203
Public cord blood banking		433,503			311,699
Total cost of sales	$	2,201,540		$	2,222,671
Operating profit:
Umbilical cord blood and cord tissue stem cell service	$	1,504,699		$	2,308,856
PrepaCyte CB		6,802			(48,097	)
Public cord blood banking		(317,127	)		(265,691	)
Total operating profit	$	1,194,374		$	1,995,068
Depreciation and amortization:
Umbilical cord blood and cord tissue stem cell service	$	272,621		$	260,226
PrepaCyte CB		6,945			6,894
Public cord blood banking		360			302
Total depreciation and amortization	$	279,926		$	267,422
Interest expense:
Umbilical cord blood and cord tissue stem cell service	$	276,524		$	341,390
PrepaCyte CB		—			—
Public cord blood banking		—			—
Total interest expense	$	276,524		$	341,390

	For the six months ended May 31,
	2022			2021
Net revenue:
Umbilical cord blood and cord tissue stem cell service	$	14,637,568		$	13,897,517
PrepaCyte CB		54,600			38,000
Public cord blood banking		199,580			130,295
Total net revenue	$	14,891,748		$	14,065,812
Cost of sales:
Umbilical cord blood and cord tissue stem cell service	$	3,460,055		$	3,509,784
PrepaCyte CB		53,312			76,084
Public cord blood banking		791,375			649,000
Total cost of sales	$	4,304,742		$	4,234,868
Operating profit:
Umbilical cord blood and cord tissue stem cell service	$	3,269,912		$	3,801,209
PrepaCyte CB		(12,601	)		(51,873	)
Public cord blood banking		(592,515	)		(519,007	)
Total operating profit	$	2,664,796		$	3,230,329
Depreciation and amortization:
Umbilical cord blood and cord tissue stem cell service	$	543,483		$	274,594
PrepaCyte CB		13,889			13,789
Public cord blood banking		720			302
Total depreciation and amortization	$	558,092		$	288,685
Interest expense:
Umbilical cord blood and cord tissue stem cell service	$	582,619		$	621,609
PrepaCyte CB		—			—
Public cord blood banking		—			—
Total interest expense	$	582,619		$	621,609

	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

	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


	As of		As of
	May 31, 2022		November 30, 2021
Assets:
Umbilical cord blood and cord tissue stem cell service	$	45,069,694	$	50,170,887
PrepaCyte CB		198,177		250,591
Public cord blood banking		10,127,075		10,240,598
Total assets	$	55,394,946	$	60,662,076

	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


	•		The world’s first private cord blood bank, that in combination with its global affiliates, currently stores nearly 225,000 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


	•		upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66-2/3% of the outstanding voting stock which is not owned by the interested stockholder.


~~31.1~~3.1 (1)		Amended and Restated Certificate of Incorporation
3.2 (2)		Amended and Restated By-Laws
10.3 (3)		Purchase Agreement between Scannell Properties #502, LLC and Cryo-Cell International, Inc. dated March 14, 2022.
10.4 (4) **		2022 Equity Incentive Plan.
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)
*		Filed Herewith
(1)		Incorporated by reference to the Company's Quarterly Report on Form 10-QSB for the quarter ended May 31, 2002.
(2)		Incorporated by reference to the Company's Quarterly Report on Form 8-K filed on December 11, 2018.
(3)		Incorporated by reference to the Company's Current Report on Form 8-K filed on March 16, 2022.
(4)		Incorporated by reference to the Company's Quarterly Report on Form 10Q filed on April 13, 2022.


		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