Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Dec. 31, 2014 |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation |
|
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. |
| | | | | | | |
Principles of Consolidation | Principles of Consolidation |
|
The condensed consolidated financial statements include the accounts of Cryoport, Inc. and its wholly owned subsidiary, Cryoport Systems, Inc. All intercompany accounts and transactions have been eliminated. |
| | | | | | | |
Use of Estimates | Use of Estimates |
|
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from estimated amounts. The Company’s significant estimates include allowances for doubtful accounts, recoverability of long-lived assets, allowance for inventory obsolescence, deferred taxes and their accompanying valuations and valuation of equity instruments. |
| | | | | | | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
|
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, related-party notes payable, convertible debentures payable, notes payable, accounts payable and accrued expenses. The carrying value for all such instruments approximates fair value at December 31, 2014 and March 31, 2014 due to their short-term nature. The difference between the fair value and recorded values of the related party notes payable is not significant. |
| | | | | | | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
|
The Company considers highly liquid investments with original maturities of 90 days or less to be cash equivalents. |
| | | | | | | |
Customers | Customers |
|
The Company grants credit to customers within the U.S. and to a limited number of international customers and does not require collateral. Revenues from international customers are generally secured by advance payments except for a limited number of established foreign customers. The Company generally requires advance or credit card payments for initial revenues from new customers. The Company’s ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by the Company. Reserves for uncollectible amounts are provided based on past experience and a specific analysis of the accounts, which management believes is sufficient. Accounts receivable at December 31, 2014 and March 31, 2014 are net of reserves for doubtful accounts of $10,000 and $24,600, respectively. Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts. |
|
The majority of the Company’s customers are in the biotechnology, pharmaceutical and life science industries. Consequently, there is a concentration of accounts receivable within these industries, which is subject to normal credit risk. At December 31, 2014 and March 31, 2014, there was one customer that accounted for 19.3% and 30.6%, respectively, of net accounts receivable. No other single customer owed us more than 10% of net accounts receivable at December 31, 2014 and March 31, 2014. The Company maintains reserves for bad debt and such losses, in the aggregate, historically have not exceeded our estimates. |
|
For the nine months ended December 31, 2014 and 2013, there was one customer that accounted for 25.0% and 31.0% of revenues, respectively. No other single customer generated over 10% of revenues during the nine months ended December 31, 2014 and 2013. |
|
The Company has revenue from foreign customers primarily in Europe, Japan, Canada, India and Australia. During nine months ended December 31, 2014 and 2013, the Company had revenues from foreign customers of approximately $421,800 and $312,000, respectively, which constituted approximately 15.4% and 17.1% of total revenues, respectively. |
| | | | | | | |
Inventories | Inventories |
|
The Company’s inventories consist of accessories that are sold and shipped to customers along with pay-per-use containers that are not returned to the Company with the containers at the culmination of the customer’s shipping cycle. Inventories are stated at the lower of cost or current estimated market value. Cost is determined using the standard cost method which approximates the first-in, first-to-expire method. Inventories are reviewed periodically for slow-moving or obsolete status. The Company writes down the carrying value of its inventories to reflect situations in which the cost of inventories is not expected to be recovered. Once established, write-downs of inventories are considered permanent adjustments to the cost basis of the obsolete or excess inventories. Raw materials and finished goods include material costs less reserves for obsolete or excess inventories. The Company evaluates the current level of inventories considering historical trends and other factors, and based on the evaluation, records adjustments to reflect inventories at its net realizable value. These adjustments are estimates, which could vary significantly from actual results if future economic conditions, customer demand, competition or other relevant factors differ from expectations. These estimates require us to make assessments about future demand for the Company’s products in order to categorize the status of such inventory items as slow-moving, obsolete or in excess-of-need. These estimates are subject to the ongoing accuracy of the Company’s forecasts of market conditions, industry trends, competition and other factors. |
| | | | | | | |
Property and Equipment | Property and Equipment |
|
The Company provides shipping containers to its customers and charges a fee in exchange for the use of the container. The Company’s arrangements are similar to the accounting standard for leases since they convey the right to use the container over a period of time. The Company retains the title to the containers and provides its customers the use of the container for a specific shipping cycle. At the culmination of the customer’s shipping cycle, the container is returned to the Company. As a result, the Company classifies the containers as fixed assets for the per-use container program. |
|
Property and equipment are recorded at cost. Cryogenic shippers are depreciated using the straight-line method over their estimated useful lives of three years. Equipment and furniture are depreciated using the straight-line method over their estimated useful lives (generally three to seven years) and leasehold improvements are amortized using the straight-line method over the estimated useful life of the asset or the lease term, whichever is shorter. Equipment acquired under capital leases is amortized over the estimated useful life of the assets or term of the lease, whichever is shorter and included in depreciation expense. |
|
Betterments, renewals and extraordinary repairs that extend the lives of the assets are capitalized; other repairs and maintenance charges are expensed as incurred. The cost and related accumulated depreciation and amortization applicable to assets retired are removed from the accounts, and the gain or loss on disposition is recognized in current operations. |
| | | | | | | |
Intangible Assets | Intangible Assets |
|
Intangible assets are comprised of patents and trademarks and software development costs. The Company capitalizes costs of obtaining patents and trademarks, which are amortized, using the straight-line method over their estimated useful life of five years. The Company capitalizes certain costs related to software developed for internal use. Software development costs incurred during the preliminary or maintenance project stages are expensed as incurred, while costs incurred during the application development stage are capitalized and amortized using the straight-line method over the estimated useful life of the software, which is five years. Capitalized costs include purchased materials and costs of services including the valuation of warrants issued to consultants. |
| | | | | | | |
Long-lived Assets | Long-lived Assets |
|
If indicators of impairment exist, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If impairment is indicated, we measure the amount of such impairment by comparing the fair value to the carrying value. We believe the future cash flows to be received from the long-lived assets will exceed the assets’ carrying value, and accordingly, we have not recognized any impairment losses through December 31, 2014. |
| | | | | | | |
Deferred Financing Costs | Deferred Financing Costs |
|
Deferred financing costs represent costs incurred in connection with the issuance of the convertible debentures payable and private equity financing. Deferred financing costs related to the issuance of debt are amortized over the term of the financing instrument using the effective interest method while deferred financing costs from equity financings are netted against the gross proceeds received from the equity financings. |
| | | | | | | |
Convertible Debentures | Convertible Debentures |
|
If a conversion feature of conventional convertible debt is not accounted for as a derivative instrument and provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount. The convertible debt is recorded net of the discount related to the BCF. The Company amortizes the discount to interest expense over the life of the debt using the effective interest rate method. |
| | | | | | | |
Income Taxes | Income Taxes |
|
The Company accounts for income taxes under the provision of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes, or ASC 740. As of December 31, 2014 and March 31, 2014, there were no unrecognized tax benefits included in the accompanying condensed consolidated balance sheets that would, if recognized, affect the effective tax rates. |
|
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. Based on the weight of available evidence, the Company’s management has determined that it is more likely than not that the net deferred tax assets will not be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets. The Company’s income tax provision consists of state minimum taxes. |
|
The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties on its condensed consolidated balance sheets at December 31, 2014 and March 31, 2014, respectively and has not recognized interest and/or penalties in the condensed consolidated statement of operations for the nine months ended December 31, 2014 and 2013. The Company is subject to taxation in the U.S. and various state jurisdictions. As of December 31, 2014, the Company is no longer subject to U.S. federal examinations for years before 2010 and for California franchise and income tax examinations for years before 2009. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carry forward amount. The Company is not currently under examination by U.S. federal or state jurisdictions. |
| | | | | | | |
Revenue Recognition | Revenue Recognition |
|
The Company provides shipping containers to its customers and charges a fee in exchange for the use of the container. The Company’s arrangements are similar to the accounting standard for leases since they convey the right to use the containers over a period of time. The Company retains title to the containers and provides its customers the use of the container for a specified shipping cycle. At the culmination of the customer’s shipping cycle, the container is returned to the Company. |
|
The Company recognizes revenue for the use of the shipper at the time of the delivery of the shipper to the end user of the materials shipped, and at the time that collectability is reasonably certain. Revenue is based on gross revenues, net of discounts and allowances. |
|
The Company also provides logistics support and management to some customers, which may include onsite logistics personnel and other services. Revenue is recognized for these services as services are rendered and at the time that collectability is reasonably certain. |
| | | | | | | |
Accounting for Shipping and Handling Revenue, Fees and Costs | Accounting for Shipping and Handling Revenue, Fees and Costs |
|
The Company classifies amounts billed for shipping and handling as revenue. Shipping and handling fees and costs are included in cost of revenues in the accompanying condensed consolidated statements of operations. |
| | | | | | | |
Research and Development Expenses | Research and Development Expenses |
|
Expenditures relating to research and development are expensed in the period incurred. |
| | | | | | | |
Stock-based Compensation | Stock-Based Compensation |
|
The Company accounts for stock-based payments to employees and directors in accordance with stock-based payment accounting guidance which requires all stock-based payments to employees and directors, including grants of employee stock options and warrants, to be recognized based upon their fair values. The fair value of stock-based awards is estimated at grant date using the Black-Scholes Option Pricing Model (“Black-Scholes”) and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. |
|
Since stock-based compensation is recognized only for those awards that are ultimately expected to vest, the Company has applied an estimated forfeiture rate to unvested awards for the purpose of calculating compensation cost. These estimates will be revised, if necessary, in future periods if actual forfeitures differ from estimates. Changes in forfeiture estimates impact compensation cost in the period in which the change in estimate occurs. The estimated forfeiture rates at December 31, 2014 and March 31, 2014 were zero as the Company has not had a significant history of forfeitures and does not expect significant forfeitures in the future. |
|
Cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options or warrants are classified as financing cash flows. Due to the Company’s loss position, there were no such tax benefits during the nine months ended December 31, 2014 and 2013. |
|
The Company uses Black-Scholes to estimate the fair value of stock-based awards. The determination of fair value using Black-Scholes is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option exercise behaviors. |
|
The Company’s stock-based compensation plans are discussed further in Note 9. |
| | | | | | | |
Equity Instruments Issued to Non-Employees for Acquiring Goods or Services | Equity Instruments Issued to Non-Employees for Acquiring Goods or Services |
|
Issuances of the Company’s common stock for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates. |
| | | | | | | |
Basic and Diluted Net Income (Loss) Per Share | Basic and Diluted Net Income (Loss) Per Share |
|
We calculate basic and diluted net income (loss) per share attributable to common stockholders using the weighted average number of common shares outstanding during the periods presented, and adjust the amount of net income (loss) used in this calculation for cumulative preferred stock dividends, (if any), whether they are earned or not during the period. In periods of a net loss position, basic and diluted weighted average shares are the same. For the diluted earnings per share calculation, we adjust the weighted average number of common shares outstanding to include dilutive stock options, warrants and shares associated with the conversion of convertible debt and convertible preferred stock outstanding during the periods. For the three and nine months ended December 31, 2014, the Company had cumulative, undeclared dividends that have not been accrued related to its preferred stock of $95,304 and $194,301, respectively, which were added to the net loss on the condensed consolidated statement of operations in order to calculate net loss per common share attributable to common stockholders. |
|
The following shows the amounts used in computing net loss per share for the nine months ended December 31, 2014 and 2013: |
|
| | Nine Months Ended December 31, | |
| | 2014 | | 2013 | |
Net loss | | $ | -5,089,781 | | $ | -18,123,516 | |
Less: | | | | | | | |
Preferred stock beneficial conversion charge | | | -2,961,723 | | | — | |
Undeclared cumulative preferred dividends | | | -194,901 | | | — | |
Net loss attributable to common stockholders | | $ | -8,246,405 | | $ | -18,123,516 | |
Weighted average shares issued and outstanding | | | 60,032,189 | | | 45,342,320 | |
Basic and diluted net loss per share attributable to common stockholders | | $ | -0.14 | | $ | -0.4 | |
|
The following shows the amounts used in computing net loss per share for the three months ended December 31, 2014 and 2013: |
|
| | Three Months Ended December 31, | |
| | 2014 | | 2013 | |
Net loss | | $ | -1,407,758 | | $ | -1,840,331 | |
Less: | | | | | | | |
Preferred stock beneficial conversion charge | | | -492,910 | | | — | |
Undeclared cumulative preferred dividends | | | -95,304 | | | — | |
|
Net loss attributable to common stockholders | | $ | -1,995,972 | | $ | -1,840,331 | |
Weighted average shares issued and outstanding | | | 60,057,846 | | | 58,995,821 | |
Basic and diluted net loss per share attributable to common stockholders | | $ | -0.03 | | $ | -0.03 | |
|
The following table sets forth the number of shares excluded from the computation of diluted earnings per share, as their inclusion would have been anti-dilutive: |
|
| | Nine Months Ended December 31, | |
| | 2014 | | 2013 | |
Class A convertible preferred stock | | | 13,286,640 | | | — | |
Stock options | | | 4,680,124 | | | 9,908,272 | |
Warrants | | | 4,750,277 | | | 24,144,727 | |
| | | 22,717,041 | | | 34,052,999 | |
| | | | | | | |
Segment Reporting | Segment Reporting |
|
We currently operate in one reportable segment. |
| | | | | | | |
Fair Value Measurements | Fair Value Measurements |
|
We measure fair value based on the prices 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. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include the following: |
|
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date. The fair value hierarchy gives the highest priority to Level 1 inputs. |
|
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. These inputs include quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Currently we do not have any items classified as Level 2. |
|
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
|
In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in the assessment of fair value. |
|
We did not elect the fair value option, as allowed, to account for financial assets and liabilities that were not previously carried at fair value. Therefore, material financial assets and liabilities that are not carried at fair value, such as trade accounts receivable and payable, are reported at their historical carrying values. We have no assets or liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2014 and March 31, 2014. |
| | | | | | | |
Foreign Currency Translation | Foreign Currency Translation |
|
We record foreign currency transactions at the exchange rate prevailing at the date of the transaction with resultant gains and losses being included in results of operations. Foreign currency transaction gains and losses have not been significant for any of the periods presented. |
| | | | | | | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
|
In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements-Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the reporting periods beginning after December 15, 2016 and early application is permitted. Management is currently assessing the impact the adoption of ASU 2014-15 will have on our condensed consolidated financial statements. |
|
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. ASU 2014-09 supersedes the revenue recognition requirements in FASB Topic 605, "Revenue Recognition". The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, and early adoption is prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 will have on our condensed consolidated financial statements. |
| | | | | | | |