Quarterly Report (10-q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
————————
FORM 10-Q
————————
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31 , 2013
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
for the transition period from _________ to _________
CORD BLOOD AMERICA, INC.
(Exact Name of Small Business Registrant as Specified in its Charter)
FLORIDA
000-50746
90-0613888
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
1857 HELM DRIVE
LAS VEGAS, NV 89119
89119
(Address of principal executive offices)
(Zip Code)
(702) 914-7250
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company filer
þ
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.): Yes ¨ No þ
Number of shares of Cord Blood America, Inc. common stock, $0.0001 par value, outstanding as of March 31, 2013, 647,592,183 exclusive of treasury shares.
CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
3
Condensed Consolidated Balance Sheets at March 31, 2013 (unaudited) and December 31, 2012 (audited)
3
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2013 and March 31, 2012
4
Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2013 and March 31, 2012
5
Notes to Condensed Consolidated Financial Statements (unaudited)
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
23
Item 4T.
Controls and Procedures
23
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
24
Item 1A.
Risk Factors
24
Item 2.
Unregistered Sales Of Equity Securities And Use Of Proceeds
24
Item 3.
Defaults Upon Senior Securities
25
Item 4.
Reserved
25
Item 5.
Other Information
25
Item 6.
Exhibits
26
Signatures
28
2
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2012 (UNAUDITED) AND DECEMBER 31, 2012 (AUDITED)
March 31,
2013
December 31,
2012
ASSETS
Current assets:
Cash
$
393,642
$
393,832
Accounts receivable, net of allowance for doubtful accounts of $96,250 and $82,309
220,004
181,745
Prepaid expenses
146,000
91,911
Other current assets
380,151
367,506
Total current assets
1,139,797
1,034,994
Property and equipment, net of accumulated depreciation and amortization of $570,764 and $536,145
876,065
801,568
Customer contracts and relationships, net of accumulated amortization of $ 3,368,497and $3,214,273
3,970,802
4,125,028
Investments and related party receivables
123,262
123,262
Other Assets
21,224
22,754
Goodwill
244,053
244,053
Total assets
$
6,375,203
$
6,351,659
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$
583,915
$
538,278
Accrued expenses
776,983
776,636
Deferred revenue
1,604,965
1,616,797
Derivative liability
378,768
354,654
Interest on Promissory Notes
121,080
76,700
Promissory notes payable, net of unamortized discount of $201,968 and $269,620
1,050,032
1,095,380
Total current liabilities
4,515,743
4,458,445
Notes payable, net of unamortized discount of $130,537 and $206,411
479,383
653,809
Interest on promissory note
--
3,242
Deferred Revenue (long term portion)
773,516
719,736
Total liabilities
5,768,642
5,835,232
Stockholders' deficit:
Preferred stock, $.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding
--
--
Common stock, $.0001 par value, 890,000,000 shares authorized, 647,592,183 and 376,234,408 shares issued and outstanding, inclusive of treasury shares
686,867
659,732
Additional paid-in capital
51,487,084
50,871,033
Common stock held in treasury stock, 20,000 shares
(599,833
)
(599,833
)
Accumulated Other Comprehensive income (loss)
176,735
141,867
Accumulated equity (deficit)
(51,769,739
)
(51,218,693
)
Total cord blood stockholders’ equity (deficit)
(18,886)
(145,894
)
Non-controlling interest
625,447
662,321
Total stockholders’ equity (deficit)
606,561
516,427
Total liabilities and stockholders’ deficit
$
6,375,203
$
6,351,659
See the accompanying notes to condensed consolidated financial statements.
3
CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
THREE-MONTH
PERIOD
THREE-MONTH
PERIOD
ENDED
ENDED
MARCH 31,
MARCH 31,
2013
2012
Revenue
$
1,452,138
$
1,434,461
Cost of services
(439,985
)
(377,272
)
Gross profit
1,012,153
1,057,189
Administrative and selling expenses
(1,107,077
)
(1,243,985
)
Income (loss) from operations
(94,924)
(186,796)
Interest expense and change in derivative liability
(492,996)
(1,022,296
)
Net Loss from continuing operations before provision for income taxes
(587,920)
(1,209,092
)
Income taxes
--
--
Net Loss from continuing operations after provision for income taxes
(587,920)
(1,209,092)
Discontinued Operations:
Loss from discontinued operations, net of tax
--
(77,791
)
Net income (loss) from discontinued operations
--
(77,791
)
Net Loss
(587,920
)
(1,286,883
)
Net (income) loss attributable to Non-controlling interest
36,874
26,805
Net loss from continuing operations before provision for income taxes attributable to Cord Blood America
$
(551,046)
(1,260,078
)
Basic loss per share
Continuing operations
$
(0.00)
$
(0.01
)
Discontinued operations
0.00
(0.01
)
Net basic earnings per share
$
(0.00
)
$
(0.01
)
Weighted average common shares outstanding
Basic weighted average common shares outstanding
503,603,412
209,141,141
Net loss before income taxes
$
(587,920
)
$
(1,286,883
)
Other comprehensive income (loss)
Foreign currency translation adjustments
34,867
(29,477
)
Income tax expense related to the items of other comprehensive income
--
--
Other comprehensive income, (loss) net of tax
34,867
(29,477 )
Comprehensive income (loss)
(553,053
)
(1,316,360
)
Non-controlling interest
36,874
26,805
Comprehensive income (loss) attributable to Cord Blood America
(576,179
)
(1,289,555
)
See the accompanying notes to condensed consolidated financial statements.
4
CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
THREE-MONTH
PERIOD ENDED
MARCH 31,
2013
THREE-MONTH
PERIOD ENDED
MARCH 31,
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated Net loss
$
(587,920
)
$
(1,286,883
)
Adjustments to reconcile net loss to net cash used in operating activities:
(Income)/loss from discontinued operations
--
77,791
Shares issued (cancelled) relating to services, net
--
45,902
Amortization of loan discount
143,521
557,529
Depreciation and amortization
193,397
201,338
Stock option expense
--
16,897
Change in value of derivative liability
256,394
318,389
Shares issued as payment of interest on convertible notes
47,611
68,498
Bad debt
5,965
378
Foreign currency translation
34,867
(29,477
)
Accrued interest receivable on investment (China Stem Cells)
--
(9,000)
Net change in operating assets and liabilities
35,135
(65,533 )
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF CONTINUING OPERATIONS
128,970
(104,171
)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of property and equipment
(129,160
)
(67,025
)
Loan receivable issued to China Stem Cells
--
--
Loan Receivable issued to VidaPlus
--
(93,397
)
NET CASH USED IN INVESTNG ACTIVITIES OF CONTINUING OPERATIONS
(129,160
)
(160,422
)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares for cash
--
425,000
Proceeds from issuance of notes payable-related party
--
50,000
Repayment of Notes payable related-party
--
(16,336
)
NET CASH PROVIDED BY FINANCING ACTIVITIES OF CONTINUING OPERATIONS
--
458,664
CASH FLOW FROM DISCONTINUED OPERATIONS
Operating cash flows
--
(84,552
)
Investing cash flows
--
--
Financing cash flows
--
--
NET CASH USED IN DISCONTINUING OPERATIONS
--
(84,552
)
NET INCREASE (DECREASE) IN CASH
(190
)
109,519
Cash balance at beginning of period
$
393,832
$
181,550
Cash balance at end of period
$
393,642
$
291,069
Supplemental Disclosures
Interest Paid
$
--
$
--
Summary of non-cash transactions
Conversion of debt into common shares
$
410,910
$
1,556,886
See the accompanying notes to condensed consolidated financial statements.
5
CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013
Note 1. Organization and Description of Business
Cord Blood America, Inc. ("CBAI" or the “Company”), formerly D&A Lending, Inc., was incorporated in the State of Florida on October 12, 1999. In October, 2009, CBAI re-located its headquarters from Los Angeles, California to Las Vegas, Nevada. CBAI's wholly-owned subsidiaries include Cord Partners, Inc., CorCell Companies, Inc., CorCell, Ltd., (Cord Partners, Inc, CorCell Companies, Inc. and CorCell, Ltd. are sometimes referred to herein collectively as “Cord”), CBA Properties, Inc. ("Properties"), and Career Channel, Inc. formerly D/B/A Rainmakers International ("Rain"). In March 2010, CBAI purchased a majority interest in Stellacure GmbH (“Stellacure”). In September 2010, CBAI purchased a majority interest in Biocordcell Argentina S.A. (“Bio”). CBAI and its subsidiaries engage in the following business activities:
?
Cord specializes in providing private cord blood stem cell preservation services to families to families throughout the United States and Puerto Rico.
?
Stellacure GmbH specializes in providing private cord blood stem cell preservation services to families in Germany, Spain and Italy.
?
Biocordcell Argentina S.A. specializes in providing private cord blood stem cell preservation to families in Argentina, Uruguay and Paraguay.
?
Properties was formed to hold corporate trademarks and other intellectual property.
6
