| 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 On
February 7, 2018, the Company announced that it entered into the Purchase Agreement with FamilyCord. The sale of substantially
all of the Company’s assets occurred on May 17, 2018. 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. 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 $10,220 and $13,298 in bad debt expense during the years ended December 31, 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. 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, 2018 and 2017 was $27,345 and $295,486 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 (related to cord blood and cord tissue stem cell storage business) Notes
receivable consists of the notes due from Biocordcell Argentina S.A. (BioCells). 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 BioCells 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, 2018 and December 31, 2017, 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) In
May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers
(Topic 606). Under the provisions of Accounting Standards Update (“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. 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. 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, 2018 and 2017. 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 7. On January 1, 2006, the Company adopted the provisions
of Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-based Compensation (Revised 2004)”
(“123(R)”), 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). ASC 718 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
(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, 2018 and 2017,
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, 2018, 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 provides a roll-forward of the Company’s derivative liabilities measured at fair value on a recurring basis
using unobservable level 3 inputs:
2018 2017
Balance
as of beginning of period $ — $ 109,731
Change
in fair value of derivative — (109,731 )
Reversal
of derivative liability associated with payoff of the convertible note payable — —
Balance
as of end of period $ — $ — There
were no financial instruments measured on a recurring basis as of December 31, 2018 and 2017 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 Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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
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, and there was no impact as a result of adopting this
ASU on our 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 our 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 statements. 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. |
