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CBAI > SEC Filings for CBAI > Form 10-Q on 15-May-2013All Recent SEC Filings

Show all filings for CORD BLOOD AMERICA, INC. | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for CORD BLOOD AMERICA, INC.


15-May-2013

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

Forward Looking Statements

In addition to the historical information contained herein, the Company makes statements in this Quarterly Report on Form 10-Q that are forward-looking statements. Sometimes these statements will contain words such as "believes," "expects," "intends," "should," "will," "plans," and other similar words. Forward-looking statements include, without limitation, assumptions about our future ability to increase income streams, reduce and control costs, to grow revenue and earnings, and our ability to obtain additional debt and/or equity capital on commercially reasonable terms, none of which is certain. These statements are only predictions and involve known and unknown risks, uncertainties and other factors included in the Company's periodic reports with the SEC. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

The following information should be read in conjunction with the Company's March 31, 2013 condensed consolidated financial statements and related notes thereto included elsewhere in the quarterly report and with its condensed consolidated financial statements and notes thereto for the year ended December 31, 2012 and the related "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, as well as its quarterly reports and reports filed on Form 8-K for the relevant periods. The Company also urges you to review and consider itsdisclosures describing various risks that may affect its business, which are set forth under the heading "Risk Factors Related to the Company Business" in its Annual Report on Form 10-K for the year ended December 31, 2012.

Recent Developments During the Quarter

Tangiers Investors, LP

For the period ending March 31, 2013, the Company paid in full the remaining six
(6) convertible notes with a principal balance of $165,000 and $18,640 of interest. The Company issued 116,107, 906 share of common stock during the period ending March 31, 2013 to retire these notes.

Summary and Outlook of the Business

CBAI is primarily an umbilical cord blood stem cell preservation company with a particular focus on the acquisition of customers in need of family based products and services.


Cord

Cord's operations provide umbilical cord blood banking services to expectant parents throughout all 50 United States and Puerto Rico. The Company's corporate headquarters re-located to Las Vegas, NV from Los Angeles, CA in October 2009. Cord earns revenue through a one-time enrollment and processing fee, and through an annually recurring storage and maintenance fee. Cord blood testing, processing, and some storage were conducted for a period of time through outsourced laboratory partners, Bergen Community Blood Services and Progenitor Cell Therapy, LLC, (PCT) in New Jersey. In March 2010, Cord began to process and store cord blood in its own facility. Cord provides the following services to each customer.

? Collection Materials. A medical kit that contains all of the materials and instructions necessary for collecting the newborn's umbilical cord blood at birth and packaging the unit for transportation. The kit also provides for collecting a maternal blood sample for infectious disease testing.

? Physician And Customer Support. 24-hour consulting services to customers as well as to physicians and labor and delivery personnel, providing any instruction necessary for the successful collection, packaging, and transportation of the cord blood and maternal blood samples.

? Transportation. Manage all logistics for transporting the cord blood unit to the Company's centralized facility immediately following birth. This procedure ensures chain-of-custody control during transportation for maximum security.

? Comprehensive Testing. The cord blood sample is tested for stem cell concentration levels and blood type. The maternal samples are tested for infectious diseases. Cord reports these results to the newborn's mother.

? Cord Blood Preservation. After processing and testing, the cord blood unit is cryogenically frozen in a controlled manner and stored in liquid nitrogen for potential future use. Data indicates that cord blood retains viability and function for at least twenty five years when stored in this manner and theoretically could be maintained at least as long as the normal life span of an individual.

Going forward, management will continue to assess business opportunities, and plans to pursue customer acquisition, primarily through organic growth.

Biocordcell Argentina S.A.

Based in Buenos Aires, Biocordcell Argentina S.A., processes and stores cord blood samples as a private bank for use in current or future medical therapies in Argentina, Uruguay and Paraguay and Panama. In 2012, Bio began franchising with locations in Argentina and Brazil for which it receives franchise fees and/or royalty payments based on franchise revenues. Bio continues to explore additional franchise opportunities.

Results of Operations for the Three-Months Ended March 31, 2013

For the three months ended March 31, 2013, total revenue increased to approximately $1.45 million from $1.43 million, an increase of 1% over the same period of 2012. Revenues are generated primarily from new enrollment/processing fees and recurring storage fees. The processing fees decreased approximately 11%, and the recurring revenues increased approximately 7% for the three months ended March 31, 2013 versus the prior comparative period of 2012. The remaining revenue consisted primarily of tissue related sales which increased at 31%. Per segment, Cord had an increase of its total revenues of 2%, and Bio increased its revenues 1% over the same period ending March 31, 2013. Cord remains focused on strategic organic growth which management hopes will provide sustainable operating cash flows, and, positive operating and net income.


Cost of services as a percentage of revenue increased to 30% for the period ended March 31, 2013 compared to 26% the same prior period of 2012. The cost of services include transportation of the umbilical cord blood from the hospital to the lab, direct material plus labor costs for processing and cryogenic storage, and allocated rent, utility and general administrative expenses. Gross profit decreased by approximately $0.05 million or 4% to $1.0 million for the period ending March 31, 2013 from the prior three month period of 2012. The Company anticipates that through the growth and expansion of its Cord business, seasonal adjustments and continuing efficiencies in its own facilities, direct costs should decrease and gross profits should continue to improve.

Administrative and selling expenses for the three months ended March 31, 2013 were $1.11 million as compared to $1.24 million for the comparative period of 2012 representing a 11% decrease. These expenses are primarily related to marketing/advertising, professional services, allocated facility related expenses and wages for personnel. Generally, each functional unit within administrative and selling expenses has reduced expenses from the prior comparative period. The Company continues to evaluate its expenses and their relationship to revenues for alignment. Depreciation and amortization are included as an administrative expense. For the three month period ending March 31, 2013, depreciation and amortization was approximately $0.19 million versus $0.20 million for the prior comparative period of 2012.

The Company's loss from operations was $0.10 million versus a loss of $0.19 million for the comparative period, a reduction of 49%. The Company's net loss was $0.59 million for the period ended March 31, 2013, a decrease of approximately 54% compared to the comparative period net loss of $1.29 million.

Liquidity and Capital Resources

Total assets at March 31, 2013 were $6.38 million, compared to $6.35 million at December 31, 2012. Total liabilities at March 31, 2013 were $5.77 million consisting primarily of Promissory Notes, Accounts Payable and Deferred Revenue $1.86 million, $0.58 million and $2.38 million respectively. At December 31, 2012, total liabilities were $5.84 million consisting primarily of Promissory Notes, Accounts Payable and Deferred Revenue $2.23 million, $0.54 million and $ 2.34 million respectively.

For the period ending March 31, 2013, the company had $0.39 million in cash, an increase of 40% from the prior comparative period total of $0.28 million. The Company currently collects cash receipts from operations through Cord and its subsidiary, Bio-cells. During the three month period ended March 31, 2013 there was no increase in notes payable for purposes of working capital or investment in affiliate companies. Net cash provided by operating activities for the three month period ending March 31, 2013 was $0.13 million, versus a net use of cash of $0.10 million from the prior comparative period of 2012, an improvement of $0.23 million. Net cash used in investing activities decreased by $0.03 million, primarily due to the company limiting additional investment in unconsolidated foreign affiliates during the three month period ending March 31, 2013 as compared to the period ending March 31, 2012. Net cash provided by financing activities decreased $0.46 million from the prior comparative period ending March 31, 2012. The Company did not have any financing activities during three month period ending March 31, 2013, and cash flow from operations continue to be sufficient to fund operations.

Since inception, the Company has financed cash flow requirements through the issuance of common stock and warrants for cash, services and loans. However, over the past four quarters, the Company has reduced operating expenses, ended investment in its unconsolidated affiliates and received no additional funding from outside sources for working capital. The Company plans to continue to operate on its cash flows from operations by aligning its expenses with its revenues. If cash flows from operations are significantly less than projected, then the company would need to either cut back on its budgeted spending, look to outside sources for additional funding or a combination of the two. The Company currently does not have any financing agreements in place for additional funding. If the Company is unable to access sufficient funds when needed, obtain additional external funding or generate sufficient revenue from the sale of our products, the Company could be forced to curtail or possibly cease operations.

Inflation

In the opinion of management, inflation has not and will not have a material effect on the Company operations in the immediate future. Management will continue to monitor inflation and evaluate the possible future effects of inflation on the Company's business and operations.


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