Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | CBA Florida, Inc. | |
Entity Central Index Key | 1,289,496 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 1,272,066,146 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 12,043,572 | $ 1,069,917 |
Accounts receivable, net of allowance for doubtful accounts of $26,429 and $26,429, respectively | 271,015 | 61,698 |
Receivable - BioCells net of discount of $120,403 and $140,040 respectively current portion | 384,597 | 28,956 |
Prepaid expenses | 26,528 | 146,478 |
Assets held for sale | 0 | 1,130,032 |
Total current assets | 12,725,712 | 2,437,081 |
Cash held in escrow | 3,002,429 | 0 |
Property and equipment, net of accumulated depreciation and amortization of $280,397 and $276,369, respectively | 5,066 | 9,092 |
Other Assets | 35,114 | 19,292 |
Receivable - BioCells net of discount of $0.00 and $0.00, respectively - long term portion | 0 | 391,004 |
Total assets | 15,768,321 | 2,856,469 |
Liabilities and Stockholders' equity | ||
Accounts payable | 67,377 | 371,169 |
Income tax payable | 868,686 | 0 |
Accrued expenses | 116,909 | 93,233 |
Severance Payable | 0 | 26,764 |
Liabilities held for sale | 0 | 1,381,215 |
Total current liabilities | 1,052,972 | 1,872,381 |
Total liabilities | 1,052,972 | 1,872,381 |
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 shares issued and outstanding, inclusive of treasury shares, respectively | 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 | (38,766,535) | (52,497,796) |
Total stockholders' equity | 14,715,349 | 984,088 |
Total liabilities and stockholders' equity | $ 15,768,321 | $ 2,856,469 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Allowance for Doubtful accounts Receivables | $ 26,429 | $ 26,429 |
Receivable - BioCells net of discount - current portion | 120,403 | 140,040 |
Accumulated depreciation and amortization | 280,397 | 276,369 |
Receivable - BioCells net of discount - long term portion | $ 0 | $ 0 |
Stockholders Equity | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock shares outstanding | 0 | 0 |
Common stock, par value | $ .0001 | $ .0001 |
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 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Consolidated Statements Of Operations And Comprehensive Income Loss | ||||
Revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Cost of services | 0 | 0 | 0 | 0 |
Gross Profit | 0 | 0 | 0 | 0 |
Administrative and selling expenses | (297,424) | (342,354) | (1,489,038) | (1,130,447) |
Loss from operations | (297,424) | (342,354) | (1,489,038) | (1,130,447) |
Interest expense and change in derivative liability | 0 | (275) | 0 | 55,243 |
Other income | 33,553 | 6,823 | 46,783 | 20,719 |
Loss from continuing operations before income taxes | (263,871) | (335,806) | (1,442,255) | (1,054,485) |
Income tax benefit | 8,314 | 0 | 268,314 | 0 |
Net loss from continuing operations | $ (255,557) | $ (335,806) | $ (1,173,941) | $ (1,033,766) |
Net income from discontinuing operations | $ 162,014 | $ 513,096 | $ 14,905,202 | $ 1,503,450 |
Net income | $ (93,543) | $ 177,290 | $ 13,731,261 | $ 448,965 |
Basic earnings from continuing operations per share | $ 0 | $ 0 | $ 0 | $ 0 |
Diluted earnings from continuing operations per share | 0 | 0 | 0 | 0 |
Basic earnings from discontinued operations per share | 0.01 | 0 | 0.01 | 0 |
Diluted earnings from discontinued operations per share | 0.01 | 0 | 0.01 | 0 |
Basic earnings per share | 0.01 | 0 | 0.01 | 0 |
Diluted earnings per share | $ 0.01 | $ 0 | $ 0.01 | $ 0 |
Weighted average common shares outstanding | ||||
Basic weighted average common shares outstanding | 1,272,066,146 | 1,272,066,146 | 1,272,066,146 | 1,272,066,146 |
Diluted weighted average common shares outstanding | 1,272,066,146 | 1,272,066,146 | 1,272,066,146 | 1,272,066,146 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss from continuing operations | $ (1,427,513) | $ (1,054,484) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of loan discount | 0 | (56,568) |
Amortization of loan receivable discount | (19,637) | (20,719) |
Depreciation and amortization | 4,026 | 4,026 |
Change in value of derivative liability | 0 | (109,731) |
Bad debt | 16,197 | 56,120 |
Changes in accounts receivable | (225,514) | 14,927 |
Changes in prepaid | 119,950 | 112,812 |
Changes in other assets | (15,822) | 0 |
Change in escrow receivable | (2,429) | 0 |
Changes in accounts payable | (303,792) | (41,307) |
Changes in accrued expenses | 23,676 | (49,313) |
Changes in severance payable | (26,764) | (120,447) |
Changes in deferred income taxes | (1,226,314) | 0 |
Changes in accrued interest | 0 | (204,494) |
NET CASH USED IN OPERATING ACTIVITIES OF CONTINUING OPERATIONS | (3,083,936) | (1,469,178) |
NET CASH USED IN INVESTING ACTIVITIES OF CONTINUING OPERATIONS | ||
Payment from loan receivable - BioCells | 55,000 | 55,000 |
NET CASH PROVIDED BY INVESTING ACTIVITIES OF CONTINUING OPERATIONS | 55,000 | 55,000 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayment of convertible note payable | 0 | (300,000) |
NET CASH USED IN FINANCING ACTIVITIES | 0 | (300,000) |
Change in cash - continuing operations | (3,028,936) | (1,714,178) |
CASH FLOWS FROM DISCONTINUED OPERATIONS | ||
Net Cash provided by operating activities | 1,502,591 | 1,747,503 |
Net Cash provided by investing activities | 12,500,000 | 0 |
Net Cash provided by financing activities | 0 | 0 |
NET CASH PROVIDED BY DISCONTINUED OPERATIONS | 14,002,591 | 1,747,503 |
NET INCREASE IN CASH | 10,973,655 | 33,325 |
Cash balance at beginning of period | 1,069,917 | 926,209 |
Cash balance at end of period | 12,043,572 | 959,534 |
Non-Cash Investing and Financing Activities | ||
Cash paid for interest | 0 | 0 |
Cash paid for tax | $ 0 | $ 0 |
1. Organization and Description
1. Organization and Description of Business | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Organization and Description of Business | Overview CBA Florida, Inc. ("CBAI" or the “Company”), formerly known as Cord Blood America, Inc., was incorporated in the State of Florida on October 12, 1999. CBAI's wholly-owned subsidiaries include CBA Partners, Inc. which was formerly Cord Partners, Inc., CBA Companies Inc. which was formerly CorCell Companies, Inc., and CBA Sub Ltd. which was formerly CorCell, Ltd., (CBA Partners, Inc., CBA Companies Inc. and CBA Sub Ltd. are sometimes referred to herein collectively as “Cord”), CBA Properties, Inc. ("Properties"), and Career Channel, Inc. formerly D/B/A Rainmakers International. As further described below, on May 17, 2018, CBAI completed a sale of essentially all of the assets of the Company and its wholly-owned subsidiaries. Prior to the sale of essentially all of the assets and related liabilities, CBAI and its subsidiaries had engaged in the following business activities: ● CBAI and Cord specialized in providing private cord blood and cord tissue stem cell services. Additionally, the Company was 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”). The sale of essentially all the Company assets occurred on May 17, 2018. Pursuant to the terms of the Purchase Agreement, FamilyCord acquired from CBAI substantially all of the assets of CBAI and its wholly-owned subsidiaries and assumed certain liabilities of CBAI and its wholly-owned subsidiaries. The sale did 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 Purchase Agreement contained customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to the terms of the Purchase Agreement, CBAI indemnified 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 also entered into a transition services agreement designed to ensure a smooth transition of CBAI’s business from CBAI to FamilyCord. CBAI presently anticipates it will distribute a portion of the sale proceeds to its shareholders beginning in 2019. However, no distribution has been declared by the Board of Directors. 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, indemnification obligations under the Purchase Agreement 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. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete annual financial statements. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 or for any other future period. The condensed consolidated balance sheet at December 31, 2017 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these interim condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements of the Company for the period ended December 31, 2017 and notes thereto included in the Company's annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports as noted in the Company's annual report on Form 10-K. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Summary of Significant Accounting 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. The Company maintains cash and cash equivalents at several financial institutions. 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. The Company wrote off $16,197 and $56,120 in bad debt expense during the nine months ended September 30, 2018 and 2017, respectively. 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. 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 (related to cord blood and cord tissue stem cell storage business) 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. Note Receivable Notes receivable consists of the notes due from Biocordcell Argentina S.A. (BioCells) (Note 4). The note receivable is recorded at the 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 June 30, 2018 and December 31, 2017, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its condensed consolidated statements of income (loss). Revenue Recognition (related to the divested cord blood and cord tissue stem cell storage business) In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under the provisions of ASU 2014-09, entities should recognize revenue in an amount that reflects the consideration to which they expect to be entitled to in exchange for goods and services provided. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017. The Company adopted the provisions of this standard effective January 1, 2018. CBAI recognizes revenue under the provisions of Topic 606. See Note 10 for the Company’s disclosures on Revenue Recognition. Cost of Services (related to the divested cord blood and cord tissue stem cell storage business) 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 and labor, 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. Accounting for Stock Option Plan Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. Earnings 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. 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. To date, the Company has not experienced any such losses. Fair Value Measurements Assets and liabilities recorded at fair value in the condensed 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. 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 Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605 - Revenue Recognition (“ASC 605”) and most industry-specific guidance throughout ASC 605. The FASB has issued numerous updates that provide clarification on a number of specific issues as well as requiring additional disclosures. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 effective January 1, 2018 using the full retrospective approach. The adoption of ASU 2014-09 did not have any material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard was effective for the Company on January 1, 2018, there was no impact as a result of adopting this ASU on the financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This new standard 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 amendment was effective for the Company on December 15, 2017. There was no impact as a result of adopting this ASU on the financial statements and related disclosures. 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. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. |
3. Discontinued Operations - Co
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations | 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”). The sale of assets occurred on May 17, 2018. DISCONTINUED OPERATIONS On May 17, 2018, the Company divested its Cord Blood and Cord Tissue Stem Cell Storage Operations (CBCTS) to California Cryobank Stem Cell Services LLC (“FamilyCord”) for $15.5 million cash plus the assumption of net liabilities of $473,538. The sale resulted in the recognition of an after-tax income of $13.9 million, which is reflected on net income from discontinued operations in the Condensed Consolidated Statements of Operations. The Company has classified the CBCTS assets and liabilities as held-for-sale as of December 31, 2017 in the accompanying Condensed Consolidated Balance Sheets and has classified the CBCTS operating results, net of tax, as discontinued operations in the accompanying Condensed Consolidated Statement of operations for all periods presented. Previously, CBCTS represented the sole operations of the Company. 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 was completed on May 17, 2018, did not include CBAI’s cash, accounts receivables, and certain other excluded assets and liabilities. The assets sold and liabilities transferred in the transaction were the sole revenue generating assets of the Company. The results of operations associated with the assets sold have been reclassified into discontinued operations for periods prior to the completion of the transaction. The following is a summary of assets and liabilities sold, and gain recognized, in connection with the sale of assets to FamilyCord: Other current assets $ 45,391 Total current assets 45,391 Customer contracts and relationships, net of amortization 953,490 Property, plant & equipment, less accumulated depreciation 23,685 Total assets $ 1,022,566 Deferred revenue $ 1,496,104 Total liabilities $ 1,496,104 The gain on sale of assets was reported during the period was determined as follows: Total assets sold $ 1,022,566 Total liability sold 1,496,104 Net liability sold 473,538 Cash received 12,500,000 Cash in escrow 3,000,000 Total consideration 15,500,000 Net gain from sales of assets $ 15,973,538 Additionally, the operating results and cash flows related to assets sold on May 17, 2018 are included in discontinued operations in the consolidated statements of operations and consolidated statements of cash flows for the nine months ended September 30, 2018 and September 30, 2017. The following is summary of aggregate carrying amounts of the major classes of assets and liabilities classified as held-for-sale as of September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 ASSETS Inventory $ -- $ 45,762 Property and equipment, net of accumulated depreciation -- 35,152 Customer contracts and relationships, net of accumulated amortization -- 1,049,118 Total assets $ -- $ 1,130,032 LIABILITIES Deferred revenue $ -- $ 1,381,215 Total liabilities $ -- $ 1,381,215 Income From Discontinued Operations The sale of the 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 nine months ended September 30, 2018 and 2017: Nine-Month Period Ended Nine-Month Period Ended September 30, 2018 September 30, 2017 Revenue $ 1,108,381 $ 2,240,069 Cost of services (418,107 ) (509,166 ) Gross profit 690,274 1,730,903 Depreciation and amortization (99,231 ) (227,453 ) Income from Discontinued Operations 591,043 1,503,450 FamilyCord reimbursement 435,922 -- Gain on sale of assets 15,973,537 -- Income from discontinued operations before taxes 17,000,502 1,503,450 Income taxes (2,095,300 ) -- Net income from discontinued operations 14,905,202 1,503,450 The following is a summary of net cash provided by operating activities and investing activities for the assets held for sale for the nine months ended September 30, 2018 and September 30, 2017: Nine-Month Period Ended Nine-Month Period Ended September 30, 2018 September 30, 2017 Cash provided by discontinued operations $ 1,087,004 $ 1,482,731 Cash provided by investing activities of discontinued operations $ 12,500,000 $ -- The following is a summary of the results of operations related to the assets held for sale for the three months ended September 30, 2018 and 2017: Three-Month Period Ended Three-Month Period Ended September 30, 2018 September 30, 2017 Revenue $ -- $ 747,735 Cost of services (109,131 ) (162,236 ) Gross profit (109,131 ) 585,499 Depreciation and amortization -- (72,403 ) Income from Discontinued Operations (109,131 ) 513,096 FamilyCord reimbursement 271,445 -- Gain on sale of assets -- -- Income from discontinued operations before taxes 162,314 513,096 Income taxes (300 ) -- Net income from discontinued operations 162,014 513,096 The following is a summary of net cash provided by operating activities and investing activities for the assets held for sale for the three months ended September 30, 2018 and September 30, 2017: Three-Month Period Ended Three-Month Period Ended September 30, 2018 September 30, 2017 Cash provided by discontinued operations $ -- $ 324,436 Cash provided by investing activities of discontinued operations $ -- $ -- |
4. Property and Equipment
4. Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property And Equipment | |
Property and Equipment | At September 30, 2018 and December 31, 2017, property and equipment consist of: Useful Life (Years) September 30, 2018 December 31, 2017 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 (280,395 ) (276,369 ) $ 5,066 $ 9,092 Assets held for sale: Furniture and fixtures 1-5 $ -- $ 5,432 Computer equipment 5 -- 93,339 Laboratory Equipment 1-5 -- 92,351 Freezer equipment 7-15 -- 329,526 -- 520,648 Less: accumulated depreciation and amortization -- (485,496 ) $ -- $ 35,152 For the nine months ended September 30, 2018 and 2017, depreciation expense totaled $4,026 and $4,026 respectively for continuing operations and $5,862 and $13,497, respectively for discontinued operations. For the three months ended September 30, 2018 and 2017, depreciation expense totaled $1,342 and $1,342 respectively for continuing operations and $0 and $4,006, respectively for discontinued operations. |
5. Investment and Notes Receiva
5. Investment and Notes Receivable, Related Parties | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Investment and Notes Receivable, Related Parties | At September 30, 2018 and December 31, 2017, notes receivable consist of: September 30, 2018 December 31, 2017 On September 29, 2014, the Company closed a transaction selling its stake in BioCells to Diego Rissola; current President. Payments are to be made annually, after June of 2015, and the last payment due on or before June 1, 2025. $ 505,000 $ 560,000 Unamortized discount on BioCells note receivable (120,403 ) (140,040 ) $ 384,597 $ 419,960 Under the Agreement with the Purchaser of BioCells, BioCells is to make payments as follows: $5,000 on or before October 12, 2014 (amount paid in 2014); $10,000 on or before December 1, 2014 (amount paid in 2015); $15,000 on or before March 1, 2015 (amount paid in 2015); $15,000 on or before June 1, 2015 (amount paid in 2015); $45,000 on or before June 1, 2016 (amount paid in 2016); $55,000 on or before June 1, 2017 (amount paid in 2017); $55,000 on or before June 1, 2018 (amount paid in June 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 September 30, 2018, the Purchaser has paid all amounts due for the June 1, 2018 payment, such that the Purchaser is current with payments due under the Agreement. This loan receivable is secured, non-interest bearing, and subject to a 6% discount rate. As of September 30, 2018 and December 31, 2017, the receivable has a balance of $384,597 and $419,960, respectively. As further described in the Subsequent Events section below, on October 31, 2018, the Company entered into a settlement agreement whereby Diego Rissola agreed to make a one-time payment of $295,000 to the Company to settle and all remaining payments and obligations due under the Agreement with the Purchaser. The settlement payment was received by the Company on November 6, 2018 and constitutes a full and final satisfaction of outstanding obligations. |
6. Commitments and Contingencie
6. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Commitments and Contingencies | Joseph 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 was 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 would 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 became eligible for group health insurance coverage through a new employer. Mr. Vicente was 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 remained subject to the restrictive covenants contained in the Vicente Employment Agreement, including a covenant not to compete and a non-solicitation provision, and was subject to additional restrictive covenants in the Separation Agreement. 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 Commitments for future minimum rental payments, by year, and in the aggregate, to be paid under such operating lease as of September 30, 2018, are as follows: Rent to be paid. 2018 $ 48,612 2019 145,835 Total $ 194,447 As further described in the Subsequent Events section below, on October 25, 2018, the Company entered into a sublease agreement (“Sublease”) with a subleasee (“Subleasee”). The Sublease, approved by the Landlord on October 26, 2018, includes essentially the same terms as lease payment obligations included in the First Amendment to Lease between the Company and the Landlord. |
7. Share Based Compensation
7. Share Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Share Based Compensation | 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. On July 13, 2009, the Company registered its 2009 Flexible Stock Plan, which increased the total shares available to 4 million common shares. The plan 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 during the six months ended September 30, 2018 and the year ended December 31, 2017. The Company’s stock option activity was as follows: Stock Options Weighted Average Exercise Price Weighted Avg. Contractual Remaining Life Outstanding, December 31, 2017 4,307,994 0.69 2.06 Granted -- -- -- Exercised -- -- -- Forfeited/Expired -- -- -- Outstanding September 30, 2018 4,307,994 0.69 1.31 Exercisable September 30, 2018 4,307,994 0.69 1.31 The following table summarizes significant ranges of outstanding stock options under the stock option plan at September 30, 2018: 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 $ 0-33 — 20.00 4,307,994 1.31 $ 0.69 4,307,994 $ 0.69 4,307,994 1.31 $ 0.69 4,307,994 $ 0.69 |
8. Stockholder's Equity
8. Stockholder's Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders Equity | |
Stockholder's Equity | Preferred Stock The Company has 5,000,000 shares of $.0001 par value preferred stock authorized. As of September 30, 2018, and December 31, 2017, the Company had no shares of preferred stock outstanding. Common Stock The Company has 2,890,000,000 shares of $.0001 par value common stock authorized. As of September 30, 2018, and December 31, 2017, the Company had 1,272,066,146 shares of common stock issued and outstanding. 20,000 shares remain in the Company’s treasury. |
9. Revenue Recognition (related
9. Revenue Recognition (related to cord blood and cord tissue stem cell storage business) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition | |
Revenue Recognition (related to cord blood and cord tissue stem cell storage business) | The Company recognized revenue under ASC 606, Revenue from Contracts with Customers ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the company satisfies a performance obligation Because the Company’s agreements have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. The Company’s performance obligation to preserve cord blood and/or cord tissue is satisfied when the cord blood and/or cord tissue is cryogenically frozen, which is when the customer has obtained control and is receiving the benefits of the Company’s performance. The Company satisfies its performance obligation to store cord blood and/or cord tissue over time using a time-based input measure of progress that recognizes revenue on a straight-line basis as the customer is receiving a service that is provided continuously over time. The Company allocates the transaction price to each performance obligation using an adjusted market assessment approach. Customers pay upfront for processing and storage fees that are billed annually for each year of storage. Due to the sale of essentially all its assets on May 17, 2018, CBAI ceased to generate revenue from any cord blood and/or cord tissue activities as of divesture date. |
10. Tax Estimates and Tax Expen
10. Tax Estimates and Tax Expense | 9 Months Ended |
Sep. 30, 2018 | |
Tax Estimates And Tax Expense | |
Tax Estimates | For the three and nine months ended September 30, 2018, income from discontinued operations includes a $2,095,000 expense for estimated federal and state income taxes arising from the sale of essentially all the Company’s assets and we have realized an income tax benefit from continuing operations of $309,432 as a consequence of the utilization of the federal and state net operating losses. The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. For the three and nine months ended September 30, 2018, the Company accrued an income tax expense of $41,118 for tax penalties and related interest imposed by the Internal Revenue Service. The penalties cover tax years 2012 through 2014, and are due to the late filing of Company tax returns. |
11. Subsequent Events
11. Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | On October 25, 2018, the Company entered into a Sublease with a Subleasee for its offices at 1857 Helm Drive, Las Vegas, Nevada. The Sublease was approved by the Landlord on October 26, 2018 and includes essentially the same terms as lease payment obligations included in the First Amendment to Lease between the Company and the Landlord. Lease payments will cover the period commencing the second half of October 2018 through September 30, 2019, the end of the remaining term existing on the First Amendment to Lease. On October 31, 2018, the Company entered into a settlement agreement whereby Diego Rissola agreed to make a one-time payment of $295,000 to the Company to settle any and all remaining payments and obligations due under the Agreement with the Purchaser. The settlement payment was received by the company on November 06, 2019 and constitutes a full and final satisfaction of outstanding obligations. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary Of Significant Accounting 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. The Company maintains cash and cash equivalents at several financial institutions. |
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. The Company wrote off $16,197 and $56,120 in bad debt expense during the nine months ended September 30, 2018 and 2017, respectively. |
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. |
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) (Note 4). The note receivable is recorded at the 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 June 30, 2018 and December 31, 2017, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its condensed consolidated statements of income (loss). |
Revenue Recognition | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under the provisions of ASU 2014-09, entities should recognize revenue in an amount that reflects the consideration to which they expect to be entitled to in exchange for goods and services provided. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017. The Company adopted the provisions of this standard effective January 1, 2018. CBAI recognizes revenue under the provisions of Topic 606. See Note 10 for the Company’s disclosures on Revenue Recognition. |
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 and labor, 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. |
Accounting for Stock Option Plan | Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. |
Earnings 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. |
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. To date, the Company has not experienced any such losses. |
Fair Value Measurements | Assets and liabilities recorded at fair value in the condensed 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. 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 Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605 - Revenue Recognition (“ASC 605”) and most industry-specific guidance throughout ASC 605. The FASB has issued numerous updates that provide clarification on a number of specific issues as well as requiring additional disclosures. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 effective January 1, 2018 using the full retrospective approach. The adoption of ASU 2014-09 did not have any material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard was effective for the Company on January 1, 2018, there was no impact as a result of adopting this ASU on the financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This new standard 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 amendment was effective for the Company on December 15, 2017. There was no impact as a result of adopting this ASU on the financial statements and related disclosures. 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. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. |
3. Discontinued Operations - _2
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Assets and liabilities sold, and gain recognized, in connection with the sale of assets | Other current assets $ 45,391 Total current assets 45,391 Customer contracts and relationships, net of amortization 953,490 Property, plant & equipment, less accumulated depreciation 23,685 Total assets $ 1,022,566 Deferred revenue $ 1,496,104 Total liabilities $ 1,496,104 The gain on sale of assets was reported during the period was determined as follows: Total assets sold $ 1,022,566 Total liability sold 1,496,104 Net liability sold 473,538 Cash received 12,500,000 Cash in escrow 3,000,000 Total consideration 15,500,000 Net gain from sales of assets $ 15,973,538 |
Assets and liabilities classified as held-for-sale | September 30, 2018 December 31, 2017 ASSETS Inventory $ -- $ 45,762 Property and equipment, net of accumulated depreciation -- 35,152 Customer contracts and relationships, net of accumulated amortization -- 1,049,118 Total assets $ -- $ 1,130,032 LIABILITIES Deferred revenue $ -- $ 1,381,215 Total liabilities $ -- $ 1,381,215 |
Results of operations related to the assets held for sale | Nine-Month Period Ended Nine-Month Period Ended September 30, 2018 September 30, 2017 Revenue $ 1,108,381 $ 2,240,069 Cost of services (418,107 ) (509,166 ) Gross profit 690,274 1,730,903 Depreciation and amortization (99,231 ) (227,453 ) Income from Discontinued Operations 591,043 1,503,450 FamilyCord reimbursement 435,922 -- Gain on sale of assets 15,973,537 -- Income from discontinued operations before taxes 17,000,502 1,503,450 Income taxes (2,095,300 ) -- Net income from discontinued operations 14,905,202 1,503,450 Three-Month Period Ended Three-Month Period Ended September 30, 2018 September 30, 2017 Revenue $ -- $ 747,735 Cost of services (109,131 ) (162,236 ) Gross profit (109,131 ) 585,499 Depreciation and amortization -- (72,403 ) Income from Discontinued Operations (109,131 ) 513,096 FamilyCord reimbursement 271,445 -- Gain on sale of assets -- -- Income from discontinued operations before taxes 162,314 513,096 Income taxes (300 ) -- Net income from discontinued operations 162,014 513,096 |
Net cash provided by operating activities for the assets held for sale | Nine-Month Period Ended Nine-Month Period Ended September 30, 2018 September 30, 2017 Cash provided by discontinued operations $ 1,087,004 $ 1,482,731 Cash provided by investing activities of discontinued operations $ 12,500,000 $ -- Three-Month Period Ended Three-Month Period Ended September 30, 2018 September 30, 2017 Cash provided by discontinued operations $ -- $ 324,436 Cash provided by investing activities of discontinued operations $ -- $ -- |
4. Property And Equipment (Tabl
4. Property And Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure 4.Property And Equipment Tables Abstract | |
Property And Equipment | Useful Life (Years) September 30, 2018 December 31, 2017 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 (280,395 ) (276,369 ) $ 5,066 $ 9,092 Assets held for sale: Furniture and fixtures 1-5 $ -- $ 5,432 Computer equipment 5 -- 93,339 Laboratory Equipment 1-5 -- 92,351 Freezer equipment 7-15 -- 329,526 -- 520,648 Less: accumulated depreciation and amortization -- (485,496 ) $ -- $ 35,152 |
5. Investment and Notes Recei_2
5. Investment and Notes Receivable, Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investment And Notes Receivable Related Parties | |
Investment and Notes Receivable, Related Parties | September 30, 2018 December 31, 2017 On September 29, 2014, the Company closed a transaction selling its stake in BioCells to Diego Rissola; current President. Payments are to be made annually, after June of 2015, and the last payment due on or before June 1, 2025. $ 505,000 $ 560,000 Unamortized discount on BioCells note receivable (120,403 ) (140,040 ) $ 384,597 $ 419,960 |
6. Commitments and Contingenc_2
6. Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies | |
Future minimum rental payments | Rent to be paid. 2018 $ 48,612 2019 145,835 Total $ 194,447 |
7. Share Based Compensation (Ta
7. Share Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Stock option activity | Stock Options Weighted Average Exercise Price Weighted Avg. Contractual Remaining Life Outstanding, December 31, 2017 4,307,994 0.69 2.06 Granted -- -- -- Exercised -- -- -- Forfeited/Expired -- -- -- Outstanding September 30, 2018 4,307,994 0.69 1.31 Exercisable September 30, 2018 4,307,994 0.69 1.31 |
Summary of significant ranges of outstanding stock options | 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 $ 0-33 — 20.00 4,307,994 1.31 $ 0.69 4,307,994 $ 0.69 4,307,994 1.31 $ 0.69 4,307,994 $ 0.69 |
3. Discontinued Operations - _3
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details) - USD ($) | Sep. 30, 2018 | May 17, 2018 | Dec. 31, 2017 |
Discontinued Operations - Cord Blood And Cord Tissue Stem Cell Storage Operations | |||
Other current assets | $ 45,391 | ||
Total current assets | 45,391 | ||
Customer contracts and relationships, net of amortization | 953,490 | ||
Property, plant & equipment, less accumulated depreciation | 23,685 | ||
Total assets | $ 0 | 1,022,566 | $ 1,130,032 |
Deferred revenue | 0 | 1,496,104 | 1,381,215 |
Total liabilities | $ 0 | $ 1,496,104 | $ 1,381,215 |
3. Discontinued Operations - _4
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details 1) - USD ($) | Sep. 30, 2018 | May 17, 2018 | Dec. 31, 2017 |
Discontinued Operations - Cord Blood And Cord Tissue Stem Cell Storage Operations | |||
Total assets sold | $ 0 | $ 1,022,566 | $ 1,130,032 |
Total liability sold | $ 0 | 1,496,104 | $ 1,381,215 |
Net liability sold | 473,538 | ||
Cash received | 12,500,000 | ||
Cash in escrow | 3,000,000 | ||
Total consideration | 15,500,000 | ||
Net gain from sales of assets | $ 15,973,538 |
3. Discontinued Operations - _5
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details 2) - USD ($) | Sep. 30, 2018 | May 17, 2018 | Dec. 31, 2017 |
ASSETS | |||
Inventory | $ 0 | $ 45,762 | |
Property and equipment, net of accumulated depreciation | 0 | 35,152 | |
Customer contracts and relationships, net of accumulated amortization | 0 | 1,049,118 | |
Total assets | 0 | $ 1,022,566 | 1,130,032 |
LIABILITIES | |||
Deferred revenue | 0 | 1,496,104 | 1,381,215 |
Total liabilities | $ 0 | $ 1,496,104 | $ 1,381,215 |
3. Discontinued Operations - _6
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Notes to Financial Statements | ||||
Revenue | $ 0 | $ 747,735 | $ 1,108,381 | $ 2,240,069 |
Cost of services | (109,131) | (162,236) | (418,107) | (509,166) |
Gross profit | (109,131) | 585,499 | 690,274 | 1,730,903 |
Depreciation and Amortization | 0 | (72,403) | (99,231) | (227,453) |
Income from Discontinued Operations | (109,131) | 513,096 | 591,043 | 1,503,450 |
FamilyCord reimbursement | 271,445 | 0 | 435,922 | 0 |
Gain on sale of assets | 0 | 0 | 15,973,537 | 0 |
Income from discontinued operations before taxes | 162,314 | 513,096 | 17,000,502 | 1,503,450 |
Income taxes | (300) | 0 | (2,095,300) | 0 |
Net income from discontinued operations | 162,014 | 513,096 | 14,905,202 | 1,503,450 |
Cash provided by discontinued operations | 0 | 324,436 | 1,087,004 | 1,482,731 |
Cash provided by investing activities of discontinued operations | $ 0 | $ 0 | $ 12,500,000 | $ 0 |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Property and equipment Total | $ 285,461 | $ 285,461 |
Less: accumulated depreciation and amortization | (280,397) | (276,369) |
Net property and equipment | 5,066 | 9,092 |
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 (De_2
4. Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disclosure 4.Property And Equipment Details Narrative Abstract | ||||
Depreciation and amortization expense, continuing operations | $ 1,342 | $ 1,342 | $ 4,026 | $ 4,026 |
Depreciation and amortization expense, discontinued operations | $ 0 | $ 4,006 | $ 5,862 | $ 13,497 |
5. Investment and Notes Recei_3
5. Investment and Notes Receivable, Related Parties (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Unamortized discount on BioCells note receivable | $ (120,403) | $ (140,040) |
Notes receivable, net | 384,597 | 419,960 |
BioCells | ||
Notes receivable | $ 505,000 | $ 560,000 |
6. Commitments and Contingenc_3
6. Commitments and Contingencies (Details) | Sep. 30, 2018USD ($) |
Commitments And Contingencies | |
2,018 | $ 48,612 |
2,019 | 145,835 |
Total | $ 194,447 |
7. Share Based Compensation (De
7. Share Based Compensation (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
AccruedExpensesRelatedParties | |
Beginning Balance, shares | shares | 4,307,994 |
Granted, shares | shares | 0 |
Exercised, shares | shares | 0 |
Forfeited/Expired, shares | shares | 0 |
Ending Balance, shares | shares | 4,307,994 |
Ending Balance Exercisable, shares | shares | 4,307,994 |
Beginning Balance, weighted average exercise price | $ / shares | $ 0.69 |
Granted, weighted average exercise price | $ / shares | 0 |
Exercised, weighted average exercise price | $ / shares | 0 |
Forfeited/Expired, weighted average exercise price | $ / shares | 0 |
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 | 2 years 22 days |
Ending Balance, Weighted Avg. Contractual Remaining Life | 1 year 3 months 22 days |
Weighted Avg. Contractual Remaining Life, Exercisable | 1 year 3 months 22 days |
7. Share Based Compensation (_2
7. Share Based Compensation (Details 1) - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Number of Options | 4,307,994 | 4,307,994 |
Weighted Average Remaining Contractual Life (years) | 1 year 3 months 22 days | |
Weighted Average Exercise Price | $ 0.69 | $ 0.69 |
Number of Options Exercisable | 4,307,994 | |
Weighted Average Exercise Price | $ 0.69 | |
Range One [Member] | ||
Range of Exercise Prices | 0.33 - 20.00 | |
Number of Options | 4,307,994 | |
Weighted Average Remaining Contractual Life (years) | 1 year 3 months 22 days | |
Weighted Average Exercise Price | $ 0.69 | |
Number of Options Exercisable | 4,307,994 | |
Weighted Average Exercise Price | $ 0.69 |
8. Stockholder's Equity (Detail
8. Stockholder's Equity (Details Narrative) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Stockholders Equity Details Narrative Abstract | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock shares outstanding | 0 | 0 |
Common stock, par value | $ .0001 | $ .0001 |
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 |