Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 30, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | Cord Blood America, Inc. | ||
Entity Central Index Key | 1,289,496 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 4,450,000 | ||
Entity Common Stock, Shares Outstanding | 1,272,066,146 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 1,069,917 | $ 926,209 |
Accounts receivable, net of allowance for doubtful accounts of $26,429 and $78,123, respectively | 61,698 | 113,316 |
Receivable - Biocells net of discount $26,044 and $27,541, respectively (current portion) | 28,956 | 27,459 |
Prepaid expenses | 146,478 | 175,065 |
Assets held for sale | 1,130,032 | 1,432,600 |
Total current assets | 2,437,081 | 2,674,649 |
Property and equipment, net of accumulated depreciation and amortization of $761,685 and $743,200, respectively | 9,092 | 14,460 |
Other assets | 19,292 | 19,292 |
Receivable – Biocells net of discount $140,041 and $167,231, respectively (long term portion) | 391,004 | 419,959 |
Total assets | 2,856,469 | 3,128,360 |
Current liabilities: | ||
Accounts payable | 371,169 | 151,305 |
Accrued expenses | 93,233 | 112,020 |
Severance payable | 26,764 | 187,360 |
Derivative liability (current portion) | 0 | 109,731 |
Interest on Promissory Notes | 0 | 204,494 |
Promissory convertible notes payable, net of unamortized discount of $43,432 and $159,407, respectively (current portion) | 0 | 356,568 |
Liabilities held for sale | 1,381,215 | 1,430,206 |
Total current liabilities | 1,872,382 | 2,551,684 |
Total liabilities | 1,872,382 | 2,551,684 |
Stockholders' equity: | ||
Preferred stock, $.0001 par value, 5,000,000 shares authorized, no shares outstanding | 0 | 0 |
Common stock, $.0001 par value, 2,890,000,000 shares authorized, 1,272,066,146 outstanding | 127,207 | 127,207 |
Additional paid-in capital | 53,954,510 | 53,954,510 |
Common stock held in treasury stock, 20,000 shares | (599,833) | (599,833) |
Accumulated deficit | (52,497,796) | (52,905,208) |
Total stockholders’ equity | 984,088 | 576,676 |
Total liabilities and stockholders’ equity | $ 2,856,469 | $ 3,128,360 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Allowance for Doubtful accounts Receivables | $ 26,429 | $ 78,123 |
Receivable - BioCells net of discount - current portion | 26,044 | 27,541 |
Accumulated depreciation | 761,685 | 743,200 |
Receivable - BioCells net of discount - long term portion | 113,996 | 140,041 |
Liabilities | ||
Convertible promissory notes payable unamortized discount | $ 0 | $ 43,432 |
Stockholders Equity | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 2,890,000,000 | 2,890,000,000 |
Common stock shares issued | 1,272,066,146 | 1,272,066,146 |
Common stock shares outstanding | 1,272,066,146 | 1,272,066,146 |
Treasury stock | 20,000 | 20,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (AUDITED) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements Of Operations And Comprehensive Income Loss Audited | ||
Revenue | $ 0 | $ 0 |
Cost of services | 0 | 0 |
Gross Profit | 0 | 0 |
Administrative and selling expenses | (1,699,346) | (2,131,793) |
Income (loss) from operations | (1,699,346) | (2,131,793) |
Interest expense and change in derivative liability | 55,243 | 22,132 |
Gain or loss on BV Settlement | 0 | 151,951 |
Other income | 27,542 | 34,417 |
Income (loss) from continuing operations before provision for income taxes | (1,616,561) | (1,923,293) |
Income taxes | 0 | 0 |
Net loss from continuing operations | (1,616,561) | (1,923,293) |
Net income from discontinued operations, net of tax | 2,023,973 | 2,025,535 |
Net income | $ 407,412 | $ 102,242 |
Basic earnings per share | $ 0 | $ 0 |
Diluted earnings per share | $ 0 | $ 0 |
Weighted average common shares outstanding | ||
Basic weighted average common shares outstanding | 1,272,066,146 | 1,272,066,146 |
Diluted weighted average common shares outstanding | 1,272,066,146 | 1,272,066,146 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total |
Beginning Balance - Shares at Dec. 31, 2015 | 0 | 1,272,066,146 | ||||
Beginning Balance - Amount at Dec. 31, 2015 | $ 0 | $ 127,207 | $ 53,954,510 | $ (599,833) | $ (53,007,451) | $ 474,433 |
Net income (loss) | 102,243 | 102,242 | ||||
Ending Balance, Shares at Dec. 31, 2016 | 0 | 1,272,066,146 | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 0 | $ 127,207 | 53,954,510 | (599,833) | (52,905,208) | 576,676 |
Net income (loss) | 407,412 | 407,412 | ||||
Ending Balance, Shares at Dec. 31, 2017 | 0 | 1,272,066,146 | ||||
Ending Balance, Amount at Dec. 31, 2017 | $ 0 | $ 127,207 | $ 53,954,510 | $ (599,833) | $ (52,497,796) | $ 984,088 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (AUDITED) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ (1,616,561) | $ (1,923,293) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of loan discount | (56,568) | 229,754 |
Amortization of loan receivable discount | (27,542) | (28,104) |
Depreciation and amortization | 5,368 | 5,324 |
Change in value of derivative liability | (109,731) | (327,772) |
Bad debt | 13,298 | 48,554 |
Gain on settlement with Banco Vida | 0 | (151,951) |
Other income from loan receivable | 0 | (6,313) |
Net change in operating assets and liabilities | ||
Changes in accounts receivable | 38,320 | 196,521 |
Changes in prepaid | 28,587 | (23,191) |
Changes in accounts payable | 219,864 | (1,500) |
Changes in accrued expenses | (18,787) | (92,920) |
Changes in severance payable | (160,596) | 187,360 |
Changes in accrued interest | (204,494) | 75,887 |
NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS | (1,888,842) | (1,811,644) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Payment to loan receivable - Banco Vida | 0 | 69,454 |
Payments from loan receivable - Biocordcell | 55,000 | 45,350 |
Payment from sales of equipment | 0 | 20,000 |
NET CASH PROVIDED BY INVESTNG ACTIVITIES OF CONTINUING OPERATIONS | 55,000 | 134,804 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayment of convertible note payable | (300,000) | (575,000) |
NET CASH USED IN FINANCING ACTIVITIES OF CONTINUING OPERATIONS | (300,000) | (575,000) |
Change in cash - continuing operations | (2,133,842) | (2,251,840) |
CASH FLOWS FROM DISCONTINUED OPERATIONS | ||
Net Cash provided by operating activities | 2,277,550 | 2,389,003 |
Net Cash provided by investing activities | 0 | 0 |
Net Cash provided by financing activities | 0 | 0 |
NET CASH PROVIDED BY DISCONTINUED OPERATIONS | 2,277,550 | 2,389,003 |
NET INCREASE IN CASH | 143,708 | 137,163 |
Cash balance at beginning of year | 926,209 | 789,046 |
Cash balance at end of year | 1,069,917 | 926,209 |
Supplemental Disclosures: | ||
Cash paid for interest | 214,147 | 0 |
Cash paid for taxes | $ 0 | $ 0 |
1. Organization and Description
1. Organization and Description of Business | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 1 - Organization and Description of Business | Overview Cord Blood America, Inc. ("CBAI" or the “Company”), formerly D&A Lending, Inc., was incorporated in the State of Florida on October 12, 1999. In October, 2009, CBAI re-located its headquarters from Los Angeles, California to Las Vegas, Nevada. CBAI's wholly-owned subsidiaries include Cord Partners, Inc., CorCell Companies, Inc., CorCell, Ltd., (Cord Partners, Inc., CorCell Companies, Inc. and CorCell, Ltd. are sometimes referred to herein collectively as “Cord”), CBA Properties, Inc. ("Properties"), and Career Channel, Inc. formerly D/B/A Rainmakers International. CBAI and its subsidiaries engage in the following business activities: ● CBAI and Cord specialize in providing private cord blood and cord tissue stem cell services. Additionally, the Company is in the business of procuring birth tissue for organizations utilizing the tissue in the transplantation and/or research of therapeutic based products. ● Properties was formed to hold corporate trademarks and other intellectual property. Company Developments – Sale of Assets On February 7, 2018, the Company announced that it entered into an Asset Purchase Agreement, dated as of February 6, 2018 (the “Purchase Agreement”), with California Cryobank Stem Cell Services LLC (“FamilyCord”). Pursuant to the terms of the Purchase Agreement, FamilyCord agreed to acquire from CBAI substantially all of the assets of CBAI and its wholly-owned subsidiaries and to assume certain liabilities of CBAI and its wholly-owned subsidiaries. The sale does not include CBAI’s cash and certain other excluded assets and liabilities. FamilyCord agreed to pay a purchase price of $15,500,000 in cash at closing with $3,000,000 of the purchase price deposited into escrow to secure CBAI’s indemnification obligations under the Purchase Agreement. The sale, which is subject to the closing conditions described below, is expected to close as soon as practicable, but likely during the second quarter of 2018. The Purchase Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to the terms of the Purchase Agreement, CBAI shall indemnify FamilyCord for breaches of its representations and warranties, breaches of covenants, losses related to excluded assets or excluded liabilities and certain other matters. The representations and warranties set forth in the Purchase Agreement generally survive for two years following the closing. In connection with the sale, the parties will also enter into a transition services agreement designed to ensure a smooth transition of CBAI’s business from CBAI to FamilyCord. The consummation of the sale is dependent upon the satisfaction or waiver of a number of closing conditions, including among other things, approval by CBAI’s shareholders, receipt of certain third-party consents and FamilyCord obtaining external financing. The Purchase Agreement may be terminated at any time prior to the date of closing by mutual agreement of the parties, or by either party under certain circumstances set forth in the Purchase Agreement, including by either party if the closing has not occurred within six months of the execution of the Purchase Agreement, by FamilyCord for CBAI’s failure to obtain its shareholders’ approval of the asset sale, by FamilyCord if CBAI pursues an alternative superior transaction or by FamilyCord if it is unable to obtain necessary financing. The Purchase Agreement also sets forth termination fees that may be payable by one party to the other under certain circumstances of termination. Upon completion of the transaction, CBAI presently estimates it will distribute a portion of the sale proceeds to its shareholders. The initial distribution amount will be determined by CBAI’s board of directors and will be subject to such factors as taxes payable, operating expenses and other contingencies and estimates. Additional monies may be distributed over time based on cash available and the release of known and unknown liabilities. Given cash needed for the aforementioned expenses and contingencies, total proceeds paid out to shareholders are expected to be significantly less than the gross purchase price. A copy of the Purchase Agreement was attached as Exhibit 2.1 to the Form 8-K filed February 8, 2018. Company Developments – Banco Vida On August 17, 2015, the Company received a notice of termination from Cord Blood Caribbean, Inc. d/b/a Banco Vida (“Banco Vida”) with regards to both the Tissue Agreement and the Storage and Processing Agreement between the two companies, effective February 2016. The Company reached an amendment to the Tissue Agreement extending the agreement through February 7, 2018, and with automatic renewals for consecutive two (2) year terms, in perpetuity unless terminated prior to a renewal term or otherwise in accordance with the amendment. Although the parties had not yet reached an agreement regarding the Storage and Processing Agreement between the two companies, Banco Vida continued to store samples with the Company until December 2016. In December 2016, the Company and Banco Vida entered a Release Agreement, pursuant to which the storage relationship between them ceased. In connection with the Release Agreement, Banco Vida paid the Company $20,000, and Banco Vida received from the Company equipment used in the storage of samples. The Company recorded a gain on settlement of $151,951 relating to release of deferred revenue and sales of equipment in connection with the transaction. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 2 - Summary of Significant Accounting Policies | Financial Statement Presentation The preparation of the financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from these estimates. Certain prior year amounts have been reclassified to conform to current year presentation. Pursuant to guidance in ASC 205-20, Presentation of Financial Statements, and ASC 360-10-45-9 to 14, Property, Plant and Equipment, regarding when the results of operations of a component of an entity that is classified as held for sale would be reported as a discontinued operation in the financial statements of the entity. The Company determined that it met the threshold for reporting discontinued operations due to a strategic business shift having a major effect on an entity's operations and financial results. In February 2018, the Company announced strategic repositioning actions which resulted in agreements to sell cord blood and stem cell storage business. For this reason, the results of operations for the cord blood and cord tissue stem cell operations have been reclassified into discontinued operations and the related assets and liabilities are reflected as held-for-sale for all periods presented. See Note 3. Basis of Consolidation The consolidated financial statements include the accounts of CBAI and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 amount of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. Cash Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase. Accounts Receivable Accounts receivable consist of the amounts due for facilitating the processing and storage of umbilical cord blood and cord tissue, and birth tissue procurement services. Accounts receivable relating to deferred revenues are netted against deferred revenue for presentation purposes. The allowance for doubtful accounts is estimated based upon historical experience. The allowance is reviewed quarterly and adjusted for accounts deemed uncollectible by management. Amounts are written off when all collection efforts have failed. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Routine maintenance and repairs are charged to expense as incurred while major replacement and improvements are capitalized as additions to the related assets. Sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the related asset and accumulated depreciation accounts with any gain or loss credited or charged to income upon disposition. Intangible Assets (related to cord blood and cord tissue stem cell storage business) Intangible assets consist primarily of customer contracts and relationships as part of the acquisition of the CorCell and CureSource assets in 2007. During 2011 the Company also foreclosed and acquired assets from NeoCells, a subsidiary of ViviCells, as satisfaction of outstanding receivables from Vivicells. Intangible assets are stated at cost. Amortization of intangible assets is computed using the sum of the years’ digits method, over an estimated useful life of 18 years. Amortization expense included in the discontinued operations for the years ended December 31, 2017 and 2016 was $295,486 and $345,348 respectively. Impairment of Long-Lived Assets Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. Inventory Inventory, comprised principally of finished goods, is stated at the lower of cost or net realized value using the first-in, first-out (“FIFO”) method. This policy requires the Company to make estimates regarding the market value of its inventory, including an assessment of excess or obsolete inventory. The Company determines excess and obsolete inventory based on an estimate of the future demand and estimated selling prices for its products. Notes Receivable Notes receivable consists of the notes due from Biocordcell Argentina S.A. (BioCells) and Banco Vida. The notes receivable are recorded at carrying-value on the financial statements. For note receivable from BioCells, since the Company agreed to finance the sale of the shares in Biocordcell at no stated interest, in accordance with ASC 500, the interest method was applied using a 6% borrowing rate. The Company recorded an unamortized discount based on the 6% borrowing rate and the discount is amortized throughout the life of the note. Deferred Revenue (related to cord blood and cord tissue stem cell storage business) Deferred revenue consists of payments for enrollment in the program and processing of umbilical cord blood and cord tissue by customers whose samples have not yet been collected, as well as the pro-rata share of annual storage fees for customers whose samples were stored during the year. Valuation of Derivative Instruments ASC 815-40 requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Binomial option pricing formula and present value pricing. At December 31, 2017 and December 31, 2016, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statements of operations. Revenue Recognition (related to cord blood and cord tissue stem cell storage business) CBAI recognizes revenue under the provisions of ASC 605. CBAI provides a combination of products and services to customers. This combination arrangement is evaluated under ASC 605. ASC 605 addresses certain aspects of accounting for arrangements under multiple revenue generating activities. Cord recognizes revenue from both enrollment fees and processing fees upon the completion of processing while revenue from storage fees are recognized ratably over the contractual storage period. Cost of Services Costs are incurred as umbilical cord blood, cord tissue and birth tissue are collected. These costs include the transportation of the umbilical cord blood, cord tissue and birthing tissue from the hospital, direct material, costs for processing and cryogenic storage of new samples by a third party laboratory, collection kit materials and allocated rent, utility and general administrative expenses. The Company expenses costs in the period incurred. Income Taxes The Company follows the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 as income in the period that included the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance based on the portion of tax benefits that more likely than not will not be realized. The Company follows guidance issued by the FASB with regard to its accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the years ended December 31, 2017 and 2016. The Company files income tax returns with the Internal Revenue Service (“IRS”) and various state jurisdictions. Accounting for Stock Option Plan The Company’s share-based employee compensation plans are described in Note 9. On January 1, 2006, the Company adopted the provisions of ASC 718 , “Accounting for Stock-based Compensation (Revised 2004)” (“123(R)”), which requires the fair value measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options. Earnings (Loss) Per Share Basic earnings per share (EPS) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. The Company’s common equivalent shares are excluded from the computation of diluted EPS if the effect is anti-dilutive. The diluted weighted average common shares outstanding are 1,272,066,146 and as of December 31, 2017 and 2016, respectively. Concentration of Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet their contractual obligations to be similarly affected by changes in economic or other conditions described below. Relationships and agreements which could potentially expose the Company to concentrations of credit risk consist of the use of one source for the processing and storage of all umbilical cord blood and one source for the development and maintenance of a website. The Company believes that alternative sources are available for each of these concentrations. Financial instruments that subject the Company to credit risk could consist of cash balances maintained in excess of federal depository insurance limits. The Company maintains its cash and cash equivalent balances with high credit quality financial institutions. At times, cash and cash equivalent balances may be in excess of Federal Deposit Insurance Corporation limits, and as of December 31, 2017, this was the case. To date, the Company has not experienced any such losses. Fair Value Measurements Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by ASC 820, are as follows: ● Level 1 – quoted prices in active markets for identical assets or liabilities. ● Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date. ● Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date. The following table summarizes fair value measurements by level at December 31, 2017 for assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total Derivative liability $ -- $ -- $ -- $ -- Derivative liability was valued under the Binomial model with the following assumptions: Risk free interest rate 0 % Expected life 0 years Dividend Yield 0 % Volatility 0 % The following table summarizes fair value measurements by level at December 31, 2016 for assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total Derivative liability $ -- $ -- $ 109,731 $ 109,731 Derivative liability was valued under the Binomial model, with the following assumptions: Risk free interest rate 0.12% to 0.47% Expected life 0 to 0.75 years Dividend Yield 0% Volatility 0% to 109% The following table provides a roll-forward of the Company’s derivative liabilities measured at fair value on a recurring basis using unobservable level 3 inputs: 2017 2016 Balance as of beginning of period $ 109,731 $ 182,213 Change in fair value of derivative — (72,482 ) Reversal of derivative liability associated with payoff of the convertible note payable (109,731 ) — Balance as of end of period $ — $ 109,731 There were no financial instruments measured on a recurring basis as of December 31, 2017 and 2016 and on a non-recurring basis for any of the periods presented. For certain of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other assets, accounts payable and accrued expenses, and deferred revenues, the carrying amounts approximate fair value due to their short maturities. The carrying amounts of the Company’s notes receivable and notes payable approximates fair value based on the prevailing interest rates. Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company will adopt the new standard effective January 1, 2018, using the full retrospective approach. The adoption of ASU 2014-09 will not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequently amended the guidance relating largely to transition considerations under the standard in January 2017. The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. The Company is currently evaluating the new guidance to determine the impact it may have on its financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The objective of this ASU is to eliminate the diversity in practice related to the classification of restricted cash or restricted cash equivalents in the statement of cash flows. For public business entities, this ASU is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The amendments in this update should be applied retrospectively to all periods presented. The Company will adopt this standard on January 1, 2018 and will not have a material impact on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (ASU 2016-09), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The Company will adopt this standard on January 1, 2018 and will not have a material impact on the Company’s financial statements. On December 22, 2017 the SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the TCJA). SAB 118 provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but for which they are able to determine a reasonable estimate, it must record a provisional amount in the financial statements. Provisional treatment is proper in light of anticipated additional guidance from various taxing authorities, the SEC, the FASB, and even the Joint Committee on Taxation. If a company cannot determine a provisional amount to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The Company has applied this guidance to its financial statement |
3. Assets Held for Sale - Cord
3. Assets Held for Sale - Cord Blood and Cord Tissue Stem Cell Storage Operations | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
3. Assets Held for Sale - Cord Blood and Cord Tissue Stem Cell Storage Operations | Background Pursuant to the terms of the Purchase Agreement dated as of February 6, 2018, FamilyCord agreed to acquire from CBAI substantially all of the assets of CBAI and its wholly-owned subsidiaries and to assume certain liabilities of CBAI and its wholly-owned subsidiaries. FamilyCord agreed to pay a purchase price of $15,500,000 in cash at closing with $3,000,000 of the purchase price deposited into escrow to secure CBAI’s indemnification obligations under the Purchase Agreement. The sale, which is subject to the closing conditions described below, is expected to close as soon as practicable, but likely during the second quarter of 2018. The sale does not include CBAI’s cash, accounts receivables, and certain other excluded assets and liabilities. The consummation of the sale is dependent upon the satisfaction or waiver of a number of closing conditions, including among other things, approval by CBAI’s shareholders, receipt of certain third-party consents and FamilyCord obtaining external financing. The Purchase Agreement may be terminated at any time prior to the date of closing by mutual agreement of the parties, or by either party under certain circumstances set forth in the Purchase Agreement, including by either party if the closing has not occurred within six months of the execution of the Purchase Agreement, by FamilyCord for CBAI’s failure to obtain its shareholders’ approval of the asset sale, by FamilyCord if CBAI pursues an alternative superior transaction or by FamilyCord if it is unable to obtain necessary financing. The Purchase Agreement also sets forth termination fees that may be payable by one party to the other under certain circumstances of termination. The assets sold in the transaction are the sole revenue generating assets of the Company. The results of operations associated with the assets sold have been reclassified into discontinued operations and the assets and liabilities are reflected as held-for-sale (current and long-term) for all periods presented. Assets and groups of assets and liabilities which comprise disposal groups are classified as “held for sale” when all of the following criteria are met: a decision has been made to sell, the assets are available for sale immediately, the assets are being actively marketed at a reasonable price in relation to the current fair value, a sale has been or is expected to be concluded within twelve months of the balance sheet date, and significant changes to the plan to sell are not expected. Assets held for sale are not depreciated. Additionally, the operating results and cash flows related to these assets and liabilities are included in discontinued operations in the consolidated statements of operations and consolidated statements of cash flows for the years ended December 31, 2017 and December 31, 2016. The following is summary of aggregate carrying amounts of the major classes of assets and liabilities classified as held-for-sale as of December 31, 2017 and 2016: December 31, 2017 December 31, 2016 ASSETS Inventory $ 45,762 $ 58,376 Property and equipment, net of accumulated depreciation 35,152 52,168 Customer contracts and relationships, net of accumulated amortization 1,049,118 1,322,056 Total assets $ 1,130,032 $ 1,432,600 LIABILITIES Deferred revenue $ 1,381,215 $ 1,430,206 Total liabilities $ 1,381,215 $ 1,430,206 Income / (Loss) of Discontinued Operations The proposed sale of majority of the assets and liabilities related to the cord blood and cord tissue stem cell operation represents a strategic shift in the Company’s business. For this reason, the results of operations related to the assets and liabilities held for sale for all periods are classified as discontinued operations. The following is a summary of the results of operations related to the assets held for sale for the years ended December 31, 2017 and 2016: Year Ended Year Ended December 31, 2017 December 31, 2016 Revenue $ 2,994,676 $ 3,288,291 Cost of services (680,750 ) (904,863 ) Gross profit 2,313,926 2,383,428 Depreciation and Amortization (289,953 ) (357,893 ) Net income from discontinued operations $ 2,023,973 $ 2,025,535 The following is a summary of net cash provided by operating activities for the assets held for sale for the years ended December 31, 2017 and 2016: Year Ended Year Ended December 31, 2017 December 31, 2016 Cash provided by operating activities $ 2,277,550 $ 2,389,003 |
4. Property and Equipment
4. Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property And Equipment | |
NOTE 4 - Property and Equipment | At December 31, 2017 and 2016, property and equipment consist of: Useful Life (Years) 2017 2016 Furniture and fixtures 1-5 $ 17,597 $ 17,597 Computer equipment 5 124,466 124,466 Laboratory Equipment 1-5 5,837 5,837 Freezer equipment 7-15 34,699 34,699 Leasehold Improvements 5 102,862 102,862 285,461 285,461 Less: accumulated depreciation and amortization (276,369 ) (271,001 ) $ 9,092 $ 14,460 Assets held for sale: Furniture and fixtures 1-5 $ 5,432 $ 5,432 Computer equipment 5 93,339 93,339 Laboratory Equipment 1-5 92,351 92,351 Freezer equipment 7-15 329,526 329,526 520,648 520,648 Less: accumulated depreciation and amortization (485,496 ) (468,480 ) $ 35,152 $ 52,168 For the years ended December 31, 2017 and 2016, depreciation expense totaled $5,368 and $5,324, respectively for continuing operations and $22,383 and $47,865, respectively for discontinued operations. |
5. Notes and Loans Payable, and
5. Notes and Loans Payable, and Derivative Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 5 - Notes and Loans Payable, and Derivative Liabilities | At December 31, 2017 and 2016, notes and loans payable consist of: December 31, 2017 December 31, 2016 Secured Convertible Promissory Note to Tonaquint, Inc. 7.5% per annum; due on or before September 17, 2017. -- 400,000 Less: Unamortized Discount -- (43,432 ) $ -- $ 356,568 Total interest expense was $54,488 and $305,640 during the years ended December 31, 2017 and 2016, respectively. The gains from changes in derivative liability were $109,731 and $327,772 during the years ended December 31, 2017 and 2016, respectively. Tonaquint, Inc. On August 30, 2013, Cord Blood America, Inc. (the “Company”) filed a Complaint in the United States District Court for the District of Utah, Central Division against Tonaquint, Inc. (“Tonaquint”) and St. George Investments, LLC (“St. George”) (collectively “Defendants”), case number 2:13-cv-00806-PMW (the “Action”), and on May 7, 2014, the Company filed an amended complaint. On September 25, 2013, Defendants each filed their Answer and Counterclaim in the Action, which they amended on March 22, 2014. On December 17, 2014, in settlement of the Action, the parties entered into a Settlement and Exchange Agreement (the "Settlement Agreement"). Pursuant to the Settlement Agreement, the Secured Convertible Promissory Note and the Warrant to Purchase Shares of Common Stock issued by the Company to St. George on or around March 10, 2011, as well as the SGI Purchase Agreement, and all other documents that made up the March 2011 transaction between the Company and St. George, all of which have been set forth in detail in prior filings by the Company, were terminated, cancelled or otherwise extinguished. Further pursuant to the Settlement Agreement, the Tonaquint Note was exchanged for a Secured Convertible Promissory Note of the Company in the principal amount of $2,500,000 (the "Company Note"), and certain of the other documents that were part of the June 27, 2012 transaction between the Company and Tonaquint (the “June 2012 Tonaquint Transaction”) were terminated, cancelled or otherwise extinguished, and certain of them were amended, as set forth below. Under the Company Note, the Company shall make monthly payments to Tonaquint, with the first payment due on or before April 17, 2015, and with payments continuing thereafter until the Company's Note is paid in full, with a maturity date that is 33 calendar months after the effective date of December 17, 2014. The amount of the monthly payments is $100,000 (the “Installment Amount”); provided, however, For each monthly payment, the Company may elect to designate all or any portion of the Installment Amount then due as a conversion eligible amount (hereafter “Conversion Eligible Amount”); provided that the total outstanding Conversion Eligible Amount that has not been converted by Tonaquint, as set forth below, at any given time may not exceed one hundred thousand dollars ($100,000) without Tonaquint’s prior written consent and subject to additional restrictions set forth in the Company Note. In the event the Company designates any portion of any monthly payment amount as a Conversion Eligible Amount, the applicable monthly payment shall be reduced by an amount equal to the portion thereof designated as a Conversion Eligible Amount. The Conversion Eligible Amount shall continue to be included in and be deemed to be a part of the Outstanding Balance (defined in the Company Note) of the Company Note unless and until such amount is either paid in cash by the Company or converted into Common Stock by Tonaquint. The Company may pay the Conversion Eligible Amount in cash, provided that no prepayments of cash shall reduce the Conversion Eligible Amount until the Outstanding Balance is equal to or less than the Conversion Eligible Amount. Once the Company has designated amounts as Conversion Eligible Amount, Tonaquint may convert all or any portion of that amount into shares of the Company's Common Stock. In the event of a conversion by Tonaquint of a Conversion Eligible Amount, the number of Common Stock shares delivered to Tonaquint upon conversion will be calculated by dividing the amount of the Company Note that is being converted by 70% of the average of the three (3) lowest Closing Bid Prices of the Common Stock (as defined in the Company Note) in the twenty (20) Trading Days immediately preceding the applicable Conversion. The Company records debt discounts in connection with the issuance of convertible debt and the initial valuation of the derivative liability. The discounts are amortized to non-cash interest expense over the life of the debt. The Company Note has an interest rate of 7.5%, compounding daily, which would increase to a rate of 15.0% on the happening of certain Events of Default (defined in the Company Note) that are not considered a Payment Default (defined in the Company Note), provided that the Company may cure the default in accordance with and subject to the terms set forth in the Company Note. Where a Payment Default occurs, including where (i) Borrower shall fail to pay any principal, interest, fees, charges, or any other amount when due and payable under that Company Note; or (ii) Borrower shall fail to deliver any Conversion Shares in accordance with the terms of the Company Note, late fees shall accrue as set forth in the Company Note, and in addition, the Company shall have ninety (90) days from delivery of notice of default from Tonaquint to cure the default, as set forth in more detail in the Company Note. If the Company fails to cure the Payment Default, Tonaquint may accelerate the Company Note by written notice to the Company, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default Amount (defined in the Company Note) equal to (i) the Outstanding Balance as of the date of acceleration (which Outstanding Balance, for the avoidance of doubt, will include all Late Fees that accrue until any applicable Payment Default is cured) multiplied by (ii) two hundred fifty percent (250%), along with other remedies, as set forth in the Company Note. As of December 31, 2016, the principal balance on the Tonaquint note was $400,000, and there was $204,494 of accrued interest. As of December 31, 2017, the principal balance on the Tonaquint note was $0, and there was $0 of accrued interest. |
6. Investment and Notes Receiva
6. Investment and Notes Receivable, Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 6 - Investment and Notes Receivable, Related Parties | At December 31, 2017 and 2016, notes receivable consists of: 2017 2016 On September 29, 2014, the Company closed a transaction selling its stake in BioCells to Diego Rissola; current President. Payments are to be annually, after June of 2015, and the last payment due on or before June 1, 2025. 560,000 615,000 Unamortized discount on BioCells note receivable (140,040 ) (167,582 ) $ 419,960 $ 447,418 Under the Agreement with Purchaser of BioCells, BioCells is to make payments as follows: $5,000 on or before October 12, 2014; $10,000 on or before December 1, 2014; $15,000 on or before March 1, 2015; $15,000 on or before June 1, 2015; $45,000 on or before June 1, 2016; $55,000 on or before June 1, 2017; $55,000 on or before June 1, 2018; $55,000 on or before June 1, 2019; $65,000 on or before June 1, 2020; $75,000 on or before June 1, 2021; $75,000 on or before June 1, 2022; $75,000 on or before June 1, 2023; $80,000 on or before June 1, 2024; $80,000 on or before June 1, 2025. As of December 31, 2017, the Purchaser is current on all payments. This loan receivable is secured, non-interest bearing, and subject to a 6% discount rate. As of December 31, 2016, the receivable has a balance of $447,418, net of unamortized discount of $167,582 and allowance of doubtful accounts of $0. As of December 31, 2017, the receivable has a balance of $419,960, net of unamortized discount of $140,040 and allowance of doubtful accounts of $0. The Purchaser is current with payments as of December 31, 2017. The Company incurred interest income from the amortized discount of $27,542 and $28,104 during the years ended December 31, 2017 and 2016, respectively. |
7. Commitments and Contingencie
7. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 7 - Commitments and Contingencies | VidaPlus On January 24, 2011, the Company entered into a Stock Purchase Agreement to acquire up to 51% of the capital stock in VidaPlus, an umbilical cord processing and storage company headquartered in Madrid, Spain. The Agreement is organized into three tranches; the first executed at closing with an initial investment of approximately $204,000 (150,000 Euro) for an amount equivalent to 7% as follows; 1% of share capital in initial equity or approximately $30,000 and 6% or an estimated $174,000 as a loan convertible into equity within 12 months of closing. The initial investment was secured by a Pledge Agreement on 270 VidaPlus samples that were incurring annual storage fees. The second tranche provided the opportunity for an additional 28% in share capital through monthly investments based on the number of samples processed in that month (up to a maximum of 550,000 EUR). In connection with Tranche 2, the Company loaned VidaPlus $246,525. Converting the investment from a loan into equity was to take place within 24 months of the date the amount of shares due to the Company pursuant to the second tranche is calculated. According to the Stock Purchase Agreement, the third tranche follows a similar loan to equity agreement as tranche two but for an additional 16% equity at the option of the Company (up to a maximum of 550,000 EUR). In connection with the VidaPlus Stock Purchase Agreement entered into on January 24, 2011, the Company was obligated to make monthly loans to VidaPlus based on the number of new samples processed and up to a maximum of 550,000 Euro for each of Tranche 2 and 3 of the Agreement. Tranche 2 did contain provisions that provided the Company an option to discontinue funding if certain performance targets were not met. In January 2012, the Company exercised its right to convert its Tranche 1 loan into 6% of the outstanding shares of VidaPlus, and as a result, the Company owned a total of 7% of the outstanding shares. At the time of the equity conversion, the Company no longer maintained its Pledge on the 270 VidaPlus samples associated with Tranche 1; however, the Company maintained a liquidation preference in VidaPlus over the money invested by the Company in VidaPlus. Additionally, the Company declined to make any further investment (loan or otherwise) to VidaPlus under either Tranche 2, Tranche 3 or otherwise. Pursuant to the Agreement, CBAI held a pledge over the umbilical cord blood maintenance and storage contracts between VidaPlus and certain of its customers, and all rights contained therein, including but not limited to the rights to administer those contracts and the rights to collect the revenues derived from those contracts, for 328 samples. CBAI held that pledge until such time as it converted the monies paid to VidaPlus under Tranche 2 of the Stock Purchase Agreement into equity into VidaPlus, in accordance with the formulas set forth in the Stock Purchase Agreement. CBAI was required to make that conversion within two years of when the calculation was made as to the amount of shares to which CBAI is entitled pursuant to Tranche 2, which meant that such conversion would take place around or before February 2014. CBAI also holds a liquidation preference in VidaPlus for the money the Company invested in VidaPlus. On February 14, 2014, CBAI delivered to VidaPlus its election to convert its loan under Tranche 2 into shares of stock in VidaPlus, including Anti-Dilution shares. The Company is entitled to an additional ownership stake of approximately 2.24% in connection with the forgoing, bringing its total ownership percentage to approximately 9.24%. The Company holds approximately 9.24% of the outstanding shares of VidaPlus, and has a balance of convertible loans receivable amounting to $246,525. During the year ended December 31, 2012, the Company reviewed the recoverability of the equity investment and loans receivable and the carrying amount exceeds the fair value of the investment as a result of recurring and continued operating losses at VidaPlus. Fair value of the loans receivable is determined based on the discounted future net cash flows expected to be generated by assets pledged against the loans. The Company recorded an impairment of 100% of the book value of the equity investment and convertible loan receivable. Employment Agreement Vicente Agreements On December 18, 2014, the Company entered into an Executive Employment Agreement with Joseph R. Vicente, the Company’s former President and Chairman of the Board, which was effective as of January 1, 2015 and was to terminate as of December 31, 2017, unless earlier terminated by the Company or Mr. Vicente in accordance with the agreement (the “Vicente Employment Agreement”). The Vicente Employment Agreement provided for a base salary an Amendment to Executive Employment Agreement whereby Mr. Vicente no longer had the option in his sole discretion to receive his salary and bonus amounts in stock Effective February 12, 2016 (the “Separation Date”), the Company entered a Mutual Separation Agreement with Mr. Vicente (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Vicente stepped down from his positions as President and as a member of the Board. Under the Separation Agreement, Mr. Vicente is entitled to receive a severance, payable in equal monthly installments over the twenty four month period post separation, in an amount equal to all compensation paid by the Company to Mr. Vicente for the 24 months preceding the termination, including salary and bonus received by Mr. Vicente. Additionally, the Company will pay for the value of his health insurance premiums, in monthly installments, until the earlier of twenty-four months after the Separation Date or until Mr. Vicente or his dependents become eligible for group health insurance coverage through a new employer. Mr. Vicente is also entitled to payment of his salary through the Separation Date, payment for unused vacation days, payment for any unreimbursed expenses, and a bonus payment for work performed in calendar year 2015, payable within sixty (60) days of the Company completing its fiscal 2015 audit. Mr. Vicente remains subject to the restrictive covenants contained in the Vicente Employment Agreement, including a covenant not to compete and a non-solicitation provision, and is subject to additional restrictive covenants in the Separation Agreement. In 2017, the Company paid Mr. Vicente $142,724 in connection with the severance, and the remaining amount payable as of December 31, 2017 is $23,787. Operating Leases On January 21, 2014, the Company entered a First Amendment to Lease, which extended its lease at the property located at 1857 Helm Drive, Las Vegas (the “Property”), Nevada through September 30, 2019. In connection with the amendment, the Company received an abatement of the entire amount of its rent for January 2014, except for CAM charges. In addition, as of October 1, 2014, the Company’s monthly lease payments reverted back to their rates as they existed in June 2009, other than CAM charges, with annual adjustments thereafter as set forth in the Amendment. Moreover, the Landlord had the option to lease a portion of the premises then occupied by the Company to a third party, and if this portion is leased to a third party, the Company’s monthly rent amount was to be reduced pro rata The Company’s monthly rent payments are approximately $15,451, which includes Common Area Maintenance (CAM) charges. Commitments for future minimum rental payments, by year, and in the aggregate, to be paid under such operating lease as of December 31, 2017, are as follows: Rent to be paid 2018 191,006 2019 145,835 Total $ 336,841 The Company’s rent expense was $162,899 and $177,394 during the years ended December 31, 2017 and 2016, respectively. |
8. Stock Option Plan
8. Stock Option Plan | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 8 - Stock Option Plan | Stock Option Plan The Company's Stock Option Plan permits the granting of stock options to its employees, directors, consultants and independent contractors for up to 8.0 million shares of its common stock. The Company believes that such awards encourage employees to remain employed by the Company and also to attract persons of exceptional ability to become employees of the Company. On July 13, 2009, the Company registered its 2009 Flexible Stock Plan, which increases the total shares available to 4 million common shares. The agreement allows the Company to issue either stock options or common shares from this Plan. On June 3, 2011, the Company registered its 2011 Flexible Stock Option plan, and reserved 1,000,000 shares of the Company's common stock for future issuance under the Plan. The Company canceled the Company's 2010 Flexible Stock Plan and returned 501,991 reserved but unused common shares back to its treasury. Stock options that vest at the end of a one-year period are amortized over the vesting period using the straight-line method. For stock options awarded using graded vesting, the expense is recorded at the beginning of each year in which a percentage of the options vests. The Company did not issue any stock options for the years ended December 31, 2017 and 2016. The Company’s stock option activity was as follows: Stock Options Weighted Average Exercise Price Weighted Avg. Contractual Remaining Life Outstanding, December 31, 2016 4,458,679 0.68 2.98 Granted - - - Exercised - - - Forfeited/Expired 150,685 0.33 - Outstanding, December 31, 2017 4,307,994 0.69 2.06 Exercisable at December 31, 2017 4,307,994 0.69 2.06 The following table summarizes significant ranges of outstanding stock options under the stock option plan at December 31, 2017: Range of Exercise Prices Number of Options Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Options Exercisable Weighted Average Exercise Price $ 0.53 — 1.11 4,307,994 2.06 $ 0.69 4,307,994 $ 0.69 4,307,994 2.06 $ 0.69 4,307,994 $ 0.69 |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
NOTE 9 - Income Taxes | The components of income (loss) consists of the following: Years Ended December 31, 2017 2016 Loss from continuing operations $ (1,616,561 ) $ (1,923,293 ) Income from discontinued operations 2,023,973 2,025,535 Income before taxes $ 407,412 $ 102,242 The difference between the provision for income taxes (benefit) and the amount computed by applying the U.S. federal income tax rate for the years ended December 31, 2017 and 2016 are as follows Years Ended December 31, 2017 2016 Federal income tax benefit/expense at statutory rate (34%) 34.0 % 34.0 % State income tax, net of federal benefit -- -- Permanent differences 2.1 (42.0 ) Federal rate reduction under tax reform 1,314.0 -- Other (220.5 ) (76.0 ) Change in valuation allowance (1,129.6 ) 84.0 Effective income tax rate 0.0 % 0.0 % The major components of the Company’s deferred tax assets as of December 31, 2017 and 2016 are shown below. 2017 2016 Net operating loss carryforwards $ 9,016,972 $ 13,365,813 Other deferred tax assets 22,350 475,280 Deferred tax liabilities, long-lived assets (391,532 ) (591,003 ) Valuation allowance (8,647,790 ) (13,250,090 ) Net deferred tax assets $ — $ — The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Under applicable accounting standards, management has considered the Company’s operational history and concluded that it is more likely than not the Company will not recognize the benefits of its deferred tax assets. Accordingly, a valuation allowance of $8,647,790 and $13,250,090 was established at December 31, 2017 and 2016 respectively, to offset the net deferred tax assets. When and if management determines that it is more likely than not that the Company will be able to utilize a portion of the deferred tax assets prior to their expiration, the valuation allowance may be reduced or eliminated. The decrease in valuation allowance to $204,578 for the year ending December 31, 2017 is primarily related to the use of net operating loss carryforwards to offset current year income. Additionally, the valuation allowance had a reduction as a result of deferred tax assets revalued at the reduced federal tax rate under the U.S. Tax Cuts and Jobs Act enacted in December of 2017. The Company has U.S. federal net operation loss, or NOL, carryforwards available at December 31, 2017 of approximately $42,937,966 that will begin to expire in 2025. The Company has its operations in the state of Nevada, which does not have state income taxes. The State of Nevada has a gross receipts tax, which is included as a component of operating expenses. Utilization of the net operating loss and research and development credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that could occur in the future. These future ownership changes may limit the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income and tax, respectively. To the extent an ownership change may occur, the net operating loss, credit carryforwards and other deferred tax assets may be subject to limitations. On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act,” or TCJA, which significantly reforms the Internal Revenue Code of 1986, as amended. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating loss carryforwards, allows for the expensing of capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial system. The TCJA permanently lowers the corporate federal income tax rate to 21% from the existing maximum rate of 35%, effective for tax years including or commencing on January 1, 2018. As a result of the reduction of the corporate federal income tax rate to 21%, U.S. GAAP requires companies to revalue their deferred tax assets and deferred tax liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. This revaluation resulted in a provision of $4,602,300 to income tax expense in continuing operations and a corresponding reduction of the Company’s valuation allowance. As a result of the offsetting valuation allowance, there is no impact to the Company’s income statement for the year ended December 31, 2017 from the reduction in federal income tax rates. The Company’s preliminary estimate of the TCJA and the remeasurement of its deferred tax assets and liabilities is subject to the finalization of management’s analysis related to certain matters, such as developing interpretations of the provisions of the TCJA, changes to certain estimates and the filing of its tax returns. U.S. Treasury regulations, administrative interpretations or court decisions interpreting TCJA may require further adjustments and changes to the Company’s estimates. The final determination of TCJA and the remeasurement of the Company’s deferred tax assets and liabilities will be completed as additional information becomes available, but no later than one year from the enactment of the TCJA. For the years ending December 31, 2017 and 2016, the Company is not aware of any uncertain tax positions or benefits. The Company’s policy is to record estimated interest and penalties related to uncertain tax benefits as income tax expense. As of December 31, 2017, and 2016, the Company had no accrued interest or penalties recorded related to uncertain tax positions. The tax years 2013 through 2017 remain open to examination by major taxing jurisdictions to which the Company is subject, which are primarily in the U.S. The statute of limitations for U.S. net operating losses utilized in future years will remain open beginning in the year of utilization. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year the temporary differences are expected to be recovered or settled. Tax rate changes affecting deferred tax assets and liabilities are recognized in the statement of operations at the enactment date. In 2017 and 2016, the Company incurred a tax effected net income of $407,412 and $102,242, respectively. At that time, the Company neither had nor anticipated sufficient income to absorb the benefits from net operating loss carryforwards, and established a full valuation allowance. In 2018, if the sale of assets is consummated, the portion of valuation allowance released related due to a capital gain resulting from the sale of the cord blood and stem cell operations would be a benefit and will be recorded in continuing operations. The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions as of December 31, 2017 and 2016, and as such, no interest or penalties were recorded to income tax expense. The tax reform bill that Congress voted to approve December 20, 2017, also known as the “Tax Cuts and Jobs Act”, made sweeping modifications to the Internal Revenue Code, including a much lower corporate tax rate, changes to credits and deductions, and a move to a territorial system for corporations that have overseas earnings. The act replaced the prior-law graduated corporate tax rate, which taxed income over $10 million at 34%, with a flat rate of 21%. The Company files a U.S. federal income tax return and gross receipts tax return in Nevada. The U.S. federal income tax returns for years 2013 and prior are not subject to further examination by the U.S. Internal Revenue Service. With few exceptions, the Company is no longer subject to state and local or non-U.S. income tax examinations by tax authorities for years before 2013. |
10. Other
10. Other | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 10 - Other | Certain U.S. Federal Income Tax Consequences of the Sale of Assets The proposed sale of assets to FamilyCord will be a transaction taxable to the Company for United States federal income tax purposes. In general, the Company will recognize taxable gain in an amount equal to the difference, if any, between (i) the total amount realized by the Company on the Sale and (ii) the Company’s aggregate adjusted tax basis in the assets sold. The total amount realized by the Company on the Sale will equal the cash the Company receives in exchange for the assets sold, plus the amount of related liabilities assumed by the Buyer or cancelled in the transaction. The Company expects that a portion of the taxable gain recognized on the Sale will be offset by current year losses from operations and available net operating loss carry forwards, as currently reflected on our consolidated U.S. federal income tax returns. However, the Company believes that a significant portion of its net operating loss carryforwards will never be fully utilized and will expire unused. Shareholders will not be subject to U.S. federal income tax on the Sale. However, as discussed below, Shareholders will be subject to U.S. federal income tax upon the receipt of any distribution of Sale proceeds made by the Company to the Shareholders. Certain U.S. Federal Income Tax Consequences of the Sale of Assets to U.S. Shareholders For purposes of this discussion, a “U.S. shareholder” is a beneficial owner of shares of Company stock who or that is, for U.S. federal income tax purposes: ● an individual who is a citizen or resident of the United States; ● corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; ● an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or ● any trust (i) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the United States Internal Revenue Code of 1986) have the authority to control all substantial decisions of the trust, or (ii) if a valid election is in place to treat the person as a United States person. Pursuant to the Asset Purchase Agreement, the Company may not dissolve or liquidate for at least two years following closing of the transaction. Therefore, prior to the Company’s adoption of a plan of liquidation, each distribution made by the Company to a U.S. shareholder is characterized as a dividend to the extent of the Company’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles). Provided that certain holding period requirements are satisfied, a dividend received by a U.S. shareholder who is an individual, trust or estate may qualify as “qualified dividend income” that is currently subject to U.S. federal income tax at a maximum rate of 20%. Dividends received by corporate U.S. shareholders may be eligible for a dividend received deduction (subject to applicable exceptions and limitations). Any portion of a distribution that exceeds the Company’s current and accumulated earnings and profits is treated as a non-taxable return of capital, reducing such U.S. shareholder’s adjusted tax basis in its shares of Company stock and, thereafter as gain from the sale or exchange of Company stock. If the Company adopts of a plan of liquidation in the future, the tax consequences of each distribution to a U.S. shareholder will change. The Company will provide an additional discussion of U.S. federal income tax considerations if the Company adopts of a plan of liquidation in the future. |
11. Stockholder's Equity
11. Stockholder's Equity | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 11 - Stockholder's Equity | Preferred Stock The Company has 5,000,000 shares of $0.0001 par value preferred stock authorized. As of December 31, 2017 and 2016, the Company had no preferred stock issued and outstanding. Common Stock As of December 31, 2017 the Company had 2,890,000,000 shares of $$0.0001 par value common stock authorized. As of December 31, 2017 and 2016, the Company had 1,272,066,146 shares of common stock issued and outstanding, and 20,000 shares remain in the Company’s treasury. |
12. Subsequent Events
12. Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 12 - Subsequent Events | On February 7, 2018, Cord Blood America, Inc. (“CBAI” or the “Company” or “We”) announced that it entered into an Asset Purchase Agreement, dated as of February 6, 2018 (the “Purchase Agreement”), with California Cryobank Stem Cell Services LLC (“FamilyCord”). Pursuant to the terms of the Purchase Agreement, FamilyCord agreed to acquire from CBAI substantially all of the assets of CBAI and its wholly-owned subsidiaries and to assume certain liabilities of CBAI and its wholly-owned subsidiaries. The sale does not include CBAI’s cash and certain other excluded assets and liabilities. FamilyCord agreed to pay a purchase price of $15,500,000 in cash at closing with $3,000,000 of the purchase price deposited into escrow to secure CBAI’s indemnification obligations under the Purchase Agreement. The sale, which is subject to the closing conditions described below, is expected to close as soon as practicable, but likely during the second quarter of 2018. The Purchase Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to the terms of the Purchase Agreement, CBAI shall indemnify FamilyCord for breaches of its representations and warranties, breaches of covenants, losses related to excluded assets or excluded liabilities and certain other matters. The representations and warranties set forth in the Purchase Agreement generally survive for two years following the closing. In connection with the sale, the parties will also enter into a transition services agreement designed to ensure a smooth transition of CBAI’s business from CBAI to FamilyCord. The consummation of the sale is dependent upon the satisfaction or waiver of a number of closing conditions, including among other things, approval by CBAI’s shareholders, receipt of certain third-party consents and FamilyCord obtaining external financing. The Purchase Agreement may be terminated at any time prior to the date of closing by mutual agreement of the parties, or by either party under certain circumstances set forth in the Purchase Agreement, including by either party if the closing has not occurred within six months of the execution of the Purchase Agreement, by FamilyCord for CBAI’s failure to obtain its shareholders’ approval of the asset sale, by FamilyCord if CBAI pursues an alternative superior transaction or by FamilyCord if it is unable to obtain necessary financing. The Purchase Agreement also sets forth termination fees that may be payable by one party to the other under certain circumstances of termination. A copy of the Purchase Agreement was attached as Exhibit 2.1 to the Form 8-K filed by the Company on February 8, 2018. The Red Oak Fund, LP, The Red Oak Long Fund, LP and Pinnacle Opportunities Fund, LP (collectively, the “Shareholders”), which own 164,073,684, 76,226,316 and 140,752,632 shares of CBAI’s common stock, respectively, or approximately 30.0% of CBAI’s issued and outstanding common stock in the aggregate, and each of which are affiliates of Red Oak Partners, LLC, entered into a voting agreement (the “Voting Agreement”) with FamilyCord and CBAI on February 6, 2018, pursuant to which the Shareholders have agreed, among other things, to vote their shares (the “Covered Shares”) in favor of the asset sale and grant to FamilyCord an irrevocable proxy with respect to their respective Covered Shares. Assets and liabilities included in the Purchase Agreement are now classified as assets and liabilities held for sale and operations related to these assets and liabilities are classified as discontinued operations for all years presented. Upon closing of the transaction, the Company will have no or nominal operations and no or nominal assets and will therefore considered to be a “Shell Company” as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). |
2. Summary of Significant Acc19
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Consolidation | The consolidated financial statements include the accounts of CBAI and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation. |
Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 amount of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. |
Cash | Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase. |
Accounts Receivable | Accounts receivable consist of the amounts due for facilitating the processing and storage of umbilical cord blood and cord tissue, and birth tissue procurement services. Accounts receivable relating to deferred revenues are netted against deferred revenue for presentation purposes. The allowance for doubtful accounts is estimated based upon historical experience. The allowance is reviewed quarterly and adjusted for accounts deemed uncollectible by management. Amounts are written off when all collection efforts have failed. |
Property and Equipment | Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Routine maintenance and repairs are charged to expense as incurred while major replacement and improvements are capitalized as additions to the related assets. Sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the related asset and accumulated depreciation accounts with any gain or loss credited or charged to income upon disposition. |
Intangible Assets | Intangible assets consist primarily of customer contracts and relationships as part of the acquisition of the CorCell and CureSource assets in 2007. During 2011 the Company also foreclosed and acquired assets from NeoCells, a subsidiary of ViviCells, as satisfaction of outstanding receivables from Vivicells. Intangible assets are stated at cost. Amortization of intangible assets is computed using the sum of the years’ digits method, over an estimated useful life of 18 years. Amortization expense included in the discontinued operations for the years ended December 31, 2017 and 2016 was $295,486 and $345,348 respectively. |
Impairment of Long-Lived Assets | Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. |
Inventory | Inventory, comprised principally of finished goods, is stated at the lower of cost or net realized value using the first-in, first-out (“FIFO”) method. This policy requires the Company to make estimates regarding the market value of its inventory, including an assessment of excess or obsolete inventory. The Company determines excess and obsolete inventory based on an estimate of the future demand and estimated selling prices for its products. |
Notes Receivable | Notes receivable consists of the notes due from Biocordcell Argentina S.A. (BioCells) and Banco Vida. The notes receivable are recorded at carrying-value on the financial statements. For note receivable from BioCells, since the Company agreed to finance the sale of the shares in Biocordcell at no stated interest, in accordance with ASC 500, the interest method was applied using a 6% borrowing rate. The Company recorded an unamortized discount based on the 6% borrowing rate and the discount is amortized throughout the life of the note. |
Deferred Revenue | Deferred revenue consists of payments for enrollment in the program and processing of umbilical cord blood and cord tissue by customers whose samples have not yet been collected, as well as the pro-rata share of annual storage fees for customers whose samples were stored during the year. |
Valuation of Derivative Instruments | ASC 815-40 requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Binomial option pricing formula and present value pricing. At December 31, 2017 and December 31, 2016, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statements of operations. |
Revenue Recognition | CBAI recognizes revenue under the provisions of ASC 605. CBAI provides a combination of products and services to customers. This combination arrangement is evaluated under ASC 605. ASC 605 addresses certain aspects of accounting for arrangements under multiple revenue generating activities. Cord recognizes revenue from both enrollment fees and processing fees upon the completion of processing while revenue from storage fees are recognized ratably over the contractual storage period. |
Cost of Services | Costs are incurred as umbilical cord blood, cord tissue and birth tissue are collected. These costs include the transportation of the umbilical cord blood, cord tissue and birthing tissue from the hospital, direct material, costs for processing and cryogenic storage of new samples by a third party laboratory, collection kit materials and allocated rent, utility and general administrative expenses. The Company expenses costs in the period incurred. |
Income Taxes | The Company follows the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 as income in the period that included the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance based on the portion of tax benefits that more likely than not will not be realized. The Company follows guidance issued by the FASB with regard to its accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the years ended December 31, 2017 and 2016. The Company files income tax returns with the Internal Revenue Service (“IRS”) and various state jurisdictions. |
Accounting for Stock Option Plan | The Company’s share-based employee compensation plans are described in Note 9. On January 1, 2006, the Company adopted the provisions of ASC 718 , “Accounting for Stock-based Compensation (Revised 2004)” (“123(R)”), which requires the fair value measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options. |
Earnings (Loss) Per Share | Basic earnings per share (EPS) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. The Company’s common equivalent shares are excluded from the computation of diluted EPS if the effect is anti-dilutive. The diluted weighted average common shares outstanding are 1,272,066,146 and as of December 31, 2017 and 2016, respectively. |
Concentration of Risk | Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet their contractual obligations to be similarly affected by changes in economic or other conditions described below. Relationships and agreements which could potentially expose the Company to concentrations of credit risk consist of the use of one source for the processing and storage of all umbilical cord blood and one source for the development and maintenance of a website. The Company believes that alternative sources are available for each of these concentrations. Financial instruments that subject the Company to credit risk could consist of cash balances maintained in excess of federal depository insurance limits. The Company maintains its cash and cash equivalent balances with high credit quality financial institutions. At times, cash and cash equivalent balances may be in excess of Federal Deposit Insurance Corporation limits, and as of December 31, 2017, this was the case. To date, the Company has not experienced any such losses. |
Fair Value Measurements | Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by ASC 820, are as follows: ● Level 1 – quoted prices in active markets for identical assets or liabilities. ● Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date. ● Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date. The following table summarizes fair value measurements by level at December 31, 2017 for assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total Derivative liability $ -- $ -- $ -- $ -- Derivative liability was valued under the Binomial model with the following assumptions: Risk free interest rate 0 % Expected life 0 years Dividend Yield 0 % Volatility 0 % The following table summarizes fair value measurements by level at December 31, 2016 for assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total Derivative liability $ -- $ -- $ 109,731 $ 109,731 Derivative liability was valued under the Binomial model, with the following assumptions: Risk free interest rate 0.12% to 0.47% Expected life 0 to 0.75 years Dividend Yield 0% Volatility 0% to 109% The following table provides a roll-forward of the Company’s derivative liabilities measured at fair value on a recurring basis using unobservable level 3 inputs: 2017 2016 Balance as of beginning of period $ 109,731 $ 182,213 Change in fair value of derivative — (72,482 ) Reversal of derivative liability associated with payoff of the convertible note payable (109,731 ) — Balance as of end of period $ — $ 109,731 There were no financial instruments measured on a recurring basis as of December 31, 2017 and 2016 and on a non-recurring basis for any of the periods presented. For certain of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other assets, accounts payable and accrued expenses, and deferred revenues, the carrying amounts approximate fair value due to their short maturities. The carrying amounts of the Company’s notes receivable and notes payable approximates fair value based on the prevailing interest rates. |
Recently Issued Accounting Pronouncements | In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company will adopt the new standard effective January 1, 2018, using the full retrospective approach. The adoption of ASU 2014-09 will not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequently amended the guidance relating largely to transition considerations under the standard in January 2017. The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. The Company is currently evaluating the new guidance to determine the impact it may have on its financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The objective of this ASU is to eliminate the diversity in practice related to the classification of restricted cash or restricted cash equivalents in the statement of cash flows. For public business entities, this ASU is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The amendments in this update should be applied retrospectively to all periods presented. The Company will adopt this standard on January 1, 2018 and will not have a material impact on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (ASU 2016-09), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The Company will adopt this standard on January 1, 2018 and will not have a material impact on the Company’s financial statements. On December 22, 2017 the SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the TCJA). SAB 118 provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but for which they are able to determine a reasonable estimate, it must record a provisional amount in the financial statements. Provisional treatment is proper in light of anticipated additional guidance from various taxing authorities, the SEC, the FASB, and even the Joint Committee on Taxation. If a company cannot determine a provisional amount to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The Company has applied this guidance to its financial statement |
2. Summary of Significant Acc20
2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Fair value measurements for assets and liabilities | The following table summarizes fair value measurements by level at December 31, 2017 for assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total Derivative liability $ -- $ -- $ -- $ -- Derivative liability was valued under the Binomial model with the following assumptions: Risk free interest rate 0 % Expected life 0 years Dividend Yield 0 % Volatility 0 % The following table summarizes fair value measurements by level at December 31, 2016 for assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total Derivative liability $ -- $ -- $ 109,731 $ 109,731 |
Derivative liability assumptions | Derivative liability was valued under the Binomial model, with the following assumptions: Risk free interest rate 0.12% to 0.47% Expected life 0 to 0.75 years Dividend Yield 0% Volatility 0% to 109% The following table provides a roll-forward of the Company’s derivative liabilities measured at fair value on a recurring basis using unobservable level 3 inputs: 2017 2016 Balance as of beginning of period $ 109,731 $ 182,213 Change in fair value of derivative — (72,482 ) Reversal of derivative liability associated with payoff of the convertible note payable (109,731 ) — Balance as of end of period $ — $ 109,731 |
3. Assets Held for Sale - Cor21
3. Assets Held for Sale - Cord Blood and Cord Tissue Stem Cell Storage Operations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Assets and liabilities classified as held-for-sale | December 31, 2017 December 31, 2016 ASSETS Inventory $ 45,762 $ 58,376 Property and equipment, net of accumulated depreciation 35,152 52,168 Customer contracts and relationships, net of accumulated amortization 1,049,118 1,322,056 Total assets $ 1,130,032 $ 1,432,600 LIABILITIES Deferred revenue $ 1,381,215 $ 1,430,206 Total liabilities $ 1,381,215 $ 1,430,206 |
Results of operations related to the assets held for sale | Year Ended Year Ended December 31, 2017 December 31, 2016 Revenue $ 2,994,676 $ 3,288,291 Cost of services (680,750 ) (904,863 ) Gross profit 2,313,926 2,383,428 Depreciation and Amortization (289,953 ) (357,893 ) Net income from discontinued operations $ 2,023,973 $ 2,025,535 |
Net cash provided by operating activities for the assets held for sale | Year Ended Year Ended December 31, 2017 December 31, 2016 Cash provided by operating activities $ 2,277,550 $ 2,389,003 |
4. Property And Equipment (Tabl
4. Property And Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property And Equipment Tables | |
Property And Equipment | Useful Life (Years) 2017 2016 Furniture and fixtures 1-5 $ 17,597 $ 17,597 Computer equipment 5 124,466 124,466 Laboratory Equipment 1-5 5,837 5,837 Freezer equipment 7-15 34,699 34,699 Leasehold Improvements 5 102,862 102,862 285,461 285,461 Less: accumulated depreciation and amortization (276,369 ) (271,001 ) $ 9,092 $ 14,460 Assets held for sale: Furniture and fixtures 1-5 $ 5,432 $ 5,432 Computer equipment 5 93,339 93,339 Laboratory Equipment 1-5 92,351 92,351 Freezer equipment 7-15 329,526 329,526 520,648 520,648 Less: accumulated depreciation and amortization (485,496 ) (468,480 ) $ 35,152 $ 52,168 |
5. Notes and Loans Payable, a23
5. Notes and Loans Payable, and Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes And Loans Payable And Derivative Liabilities Tables | |
Notes and Loans Payable, and Derivative Liabilities | December 31, 2017 December 31, 2016 Secured Convertible Promissory Note to Tonaquint, Inc. 7.5% per annum; due on or before September 17, 2017. -- 400,000 Less: Unamortized Discount -- (43,432 ) $ -- $ 356,568 |
6. Investment and Notes Recei24
6. Investment and Notes Receivable, Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investment And Notes Receivable Related Parties Tables | |
Notes receivable | 2017 2016 On September 29, 2014, the Company closed a transaction selling its stake in BioCells to Diego Rissola; current President. Payments are to be annually, after June of 2015, and the last payment due on or before June 1, 2025. 560,000 615,000 Unamortized discount on BioCells note receivable (140,040 ) (167,582 ) $ 419,960 $ 447,418 |
7. Commitments and Contingenc25
7. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies Tables | |
Future minimum rental payments | Rent to be paid 2018 191,006 2019 145,835 Total $ 336,841 |
8. Stock Option Plan (Tables)
8. Stock Option Plan (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock Option Plan Tables | |
Stock option activity | Stock Options Weighted Average Exercise Price Weighted Avg. Contractual Remaining Life Outstanding, December 31, 2016 4,458,679 0.68 2.98 Granted - - - Exercised - - - Forfeited/Expired 150,685 0.33 - Outstanding, December 31, 2017 4,307,994 0.69 2.06 Exercisable at December 31, 2017 4,307,994 0.69 2.06 |
Outstanding stock options under the stock option plan | Range of Exercise Prices Number of Options Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Options Exercisable Weighted Average Exercise Price $ 0.53 — 1.11 4,307,994 2.06 $ 0.69 4,307,994 $ 0.69 4,307,994 2.06 $ 0.69 4,307,994 $ 0.69 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes Tables | |
Components of income (loss) | Years Ended December 31, 2017 2016 Loss from continuing operations $ (1,616,561 ) $ (1,923,293 ) Income from discontinued operations 2,023,973 2,025,535 Income before taxes $ 407,412 $ 102,242 |
Provision for income tax | Years Ended December 31, 2017 2016 Federal income tax benefit/expense at statutory rate (34%) 34.0 % 34.0 % State income tax, net of federal benefit -- -- Permanent differences 2.1 (42.0 ) Federal rate reduction under tax reform 1,314.0 -- Other (220.5 ) (76.0 ) Change in valuation allowance (1,129.6 ) 84.0 Effective income tax rate 0.0 % 0.0 % |
Net deferred tax assets | 2017 2016 Net operating loss carryforwards $ 9,016,972 $ 13,365,813 Other deferred tax assets 22,350 475,280 Deferred tax liabilities, long-lived assets (391,532 ) (591,003 ) Valuation allowance (8,647,790 ) (13,250,090 ) Net deferred tax assets $ — $ — |
2. Summary of Significant Acc28
2. Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Measurements, Recurring [Member] | ||
Derivative liability | $ 0 | $ 109,731 |
Fair Value, Measurements, Recurring [Member], Level 1 [Member] | ||
Derivative liability | 0 | 0 |
Fair Value, Measurements, Recurring [Member], Level 2 [Member] | ||
Derivative liability | 0 | 0 |
Fair Value, Measurements, Recurring [Member], Level 3 [Member] | ||
Derivative liability | $ 0 | $ 109,731 |
2. Summary of Significant Acc29
2. Summary of Significant Accounting Policies (Details 1) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Dividend Yield | 0.00% | 0.00% |
MinimumMember | ||
Risk free interest rate | 0.12% | 0.12% |
Expected life | 0 years | 0 years |
Volatility | 0.00% | 0.00% |
MaximumMember | ||
Risk free interest rate | 0.63% | 0.63% |
Expected life | 1 year 9 months | 1 year 9 months |
Volatility | 0.00% | 109.00% |
2. Summary of Significant Acc30
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Notes to Financial Statements | ||
Intangible assets estimated useful life | 18 years | |
Amortization expense | $ 295,486 | $ 345,348 |
Diluted weighted average common shares outstanding | 1,272,066,146 | 1,272,066,146 |
3. Assets Held for Sale - Cor31
3. Assets Held for Sale - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details) - Assets held for sale - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
ASSETS | ||
Inventory | $ 45,762 | $ 58,376 |
Property and equipment, net of accumulated depreciation | 35,152 | 52,168 |
Customer contracts and relationships, net of accumulated amortization | 1,049,118 | 1,322,056 |
Total assets | 1,130,032 | 1,432,600 |
LIABILITIES | ||
Deferred revenue | 1,381,215 | 1,430,206 |
Total liabilities | $ 1,381,215 | $ 1,430,206 |
3. Assets Held for Sale - Cor32
3. Assets Held for Sale - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Net income from discontinued operations | $ 2,023,973 | $ 2,025,535 |
Cash provided by operating activities | 2,277,550 | 2,389,003 |
Assets held for sale | ||
Revenue | 2,994,676 | 3,288,291 |
Cost of services | (680,750) | (904,863) |
Gross profit | 2,313,926 | 2,383,428 |
Depreciation and Amortization | (289,953) | (357,893) |
Net income from discontinued operations | 2,023,973 | 2,025,535 |
Cash provided by operating activities | $ 2,277,550 | $ 2,389,003 |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property and equipment Total | $ 285,461 | $ 285,461 |
Less: accumulated depreciation and amortization | (276,369) | (271,001) |
Net property and equipment | 9,092 | 14,460 |
Furniture and Fixtures [Member] | ||
Property and equipment Total | 17,597 | 17,597 |
Computer Equipment [Member] | ||
Property and equipment Total | 124,466 | 124,466 |
Labaratory Equipment [Member] | ||
Property and equipment Total | 5,837 | 5,837 |
Freezer Equipment [Member] | ||
Property and equipment Total | 34,699 | 34,699 |
Leaseholds and Leasehold Improvements [Member] | ||
Property and equipment Total | $ 102,862 | $ 102,862 |
4. Property and Equipment (De34
4. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property And Equipment Details Narrative | ||
Depreciation and amortization expense | $ 22,383 | $ 47,865 |
5. Notes and Loans Payable, a35
5. Notes and Loans Payable, and Derivative Liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Notes and loans payable | $ 0 | $ 400,000 |
Less: Unamortized Discount | 0 | (43,432) |
Notes and loans payable, Net | 0 | 356,568 |
Secured Convertible Promissory Note Tonaquint, Inc | ||
Notes and loans payable | $ 0 | $ 400,000 |
5. Notes and Loans Payable, a36
5. Notes and Loans Payable, and Derivative Liabilities (Details Narratives) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Interest expense | $ 54,488 | $ 305,640 |
Gains from changes in derivative liability | 109,731 | 327,772 |
Tonaquint Note | ||
Note payable | $ 0 | $ 400,000 |
6. Investment and Notes Recei37
6. Investment and Notes Receivable, Related Parties (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Notes receivable | $ 560,000 | $ 615,000 |
Unamortized discount on BioCells note receivable | (140,040) | (167,582) |
Notes receivable, net | 419,960 | 447,418 |
BioCells | ||
Notes receivable | $ 560,000 | $ 615,000 |
7. Commitments and Contingenc38
7. Commitments and Contingencies (Details) | Dec. 31, 2017USD ($) |
Commitments for future minimum rental payments, by year, and in the aggregate, to be paid (and received) under such operating leases | |
2,018 | $ 191,006 |
2,019 | 145,835 |
Total | $ 336,841 |
6. Commitments and Contingencie
6. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments And Contingencies Details Narrative | ||
Rent expense | $ 162,899 | $ 177,394 |
8. Stock Option Plan (Details)
8. Stock Option Plan (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Stock Option Plan Details | |
Beginning Balance, shares | shares | 4,458,679 |
Granted, shares | shares | 0 |
Exercised, shares | shares | 0 |
Forfeited/Expired, shares | shares | 150,685 |
Ending Balance, shares | shares | 4,307,994 |
Ending Balance Exercisable, shares | shares | 4,307,994 |
Beginning Balance, weighted average exercise price | $ / shares | $ 0.68 |
Granted, weighted average exercise price | $ / shares | 0 |
Exercised, weighted average exercise price | $ / shares | 0 |
Forfeited/Expired, weighted average exercise price | $ / shares | 0.33 |
Ending Balance, weighted average exercise price | $ / shares | 0.69 |
Ending Balance Exercisable, weighted average exercise price | $ / shares | $ 0.69 |
Beginning Balance, Weighted Avg. Contractual Remaining Life (in years) | 2 years 11 months 23 days |
Ending Balance, Weighted Avg. Contractual Remaining Life (in years) | 2 years 22 days |
Ending Balance Exercisable, Weighted Avg. Contractual Remaining Life (in years) | 2 years 22 days |
8. Stock Option Plan (Details 1
8. Stock Option Plan (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Options | 4,307,994 | 4,458,679 |
Weighted Average Remaining Contractual Life (years) | 2 years 22 days | |
Weighted Average Exercise Price | $ 0.69 | $ 0.68 |
Number of Options Exercisable | 4,307,994 | |
Weighted Average Exercise Price | $ 0.69 | |
RangeOneMember | ||
Range of Exercise Prices | 0.53-1.11 | |
Number of Options | 4,307,994 | |
Weighted Average Remaining Contractual Life (years) | 2 years 22 days | |
Weighted Average Exercise Price | $ 0.69 | |
Number of Options Exercisable | 4,307,994 | |
Weighted Average Exercise Price | $ 0.69 |
9. Income Taxes (Details)
9. Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details | ||
Loss from continuing operations | $ (1,616,561) | $ (1,923,293) |
Income from discontinued operations | 2,023,973 | 2,025,535 |
Income before taxes | $ 407,412 | $ 102,242 |
9. Income Taxes (Details 1)
9. Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details 1 | ||
Federal income tax benefit/expense at statutory rate (34%) | 34.00% | 34.00% |
State income tax, net of federal benefit | 0.00% | 0.00% |
Permanent differences | 2.10% | (42.00%) |
Federal rate reduction under tax reform | 1314.00% | 0.00% |
Other | (220.50%) | (76.00%) |
Change in valuation allowance | (1129.60%) | 84.00% |
Effective income tax rate | 0.00% | 0.00% |
9. Income Taxes (Details 2)
9. Income Taxes (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Taxes Details 2 | ||
Net operating loss carryforwards | $ (7,812,113) | $ (13,758,925) |
Other deferred tax assets | 22,350 | 475,280 |
Deferred tax liabilities, long-lived assets | (391,532) | (591,003) |
Valuation allowance | (8,647,790) | (13,250,090) |
Net deferred tax assets | $ 0 | $ 0 |
11. Stockholders Equity (Detail
11. Stockholders Equity (Details Narrative) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Stockholders Equity Details Narrative | ||
Preferred stock authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Common Stock outstanding | 1,272,066,146 | 1,272,066,146 |
Treasury stock | 20,000 | 20,000 |