☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
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FLORIDA
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000-50746
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90-0613888
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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1857 HELM DRIVE
LAS VEGAS, NV
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89119
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(Address
of principal executive offices)
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(Zip
Code)
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Large
accelerated filer ☐
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Accelerated
filer ☐
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|||||||||
Non-accelerated
filer ☑
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Smaller
reporting company ☐
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|||||||||
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Emerging
growth company ☐
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If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
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Condensed
Consolidated Financial Statements (unaudited)
|
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3
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|
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|
|
|
|
|
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Condensed
Consolidated Balance Sheets June 30, 2019 (unaudited) and December
31, 2018
|
|
3
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Income (unaudited) for the six
months ended June 30, 2019 and June 30, 2018
|
|
4
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Income (Loss) (unaudited) for the
three months ended June 30, 2019 and 30, 2018
|
|
5
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Stockholders’ Equity (unaudited) for the six
months ended June 30, 2019 and June 30,
2018
|
|
6
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Stockholders’
Equity (unaudited) for the three months ended June 30, 2019 and
June 30, 2018
|
|
7
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (unaudited) for the six
months ended June 30, 2019 and June 30, 2018
|
|
8
|
|
|
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
(unaudited)
|
|
9
|
|
|
|
|
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
18
|
|
|
|
|
|
|
|
Quantitative
and Qualitative Disclosures About Market Risk
|
|
19
|
|
|
|
|
|
|
|
Controls
and Procedures
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal
Proceedings
|
|
20
|
|
|
|
|
|
|
|
Risk
Factors
|
|
20
|
|
|
|
|
|
|
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
20
|
|
|
|
|
|
|
|
Defaults
Upon Senior Securities
|
|
20
|
|
|
|
|
|
|
|
Mine
Safety Disclosures
|
|
20
|
|
|
|
|
|
|
|
Other
Information
|
|
20
|
|
|
|
|
|
|
|
Exhibits
|
|
20
|
|
|
|
|
|
|
|
Signatures
|
|
21
|
|
|
June
30,
2019
(unaudited)
|
December
31,
2018
|
|
|
|
Current
assets:
|
|
|
Cash
|
$11,499,859
|
$12,412,583
|
Accounts
receivable, net of allowance for doubtful accounts of $0.00 and
$0.00, respectively
|
21,633
|
11,876
|
Prepaid
expenses
|
106,553
|
113,259
|
Total current
assets
|
11,628,045
|
12,537,718
|
|
|
|
Cash held in
escrow
|
3,005,165
|
3,000,674
|
Other
Assets
|
31,478
|
31,478
|
Total
assets
|
$14,664,688
|
$15,569,870
|
|
|
|
Liabilities and
Stockholders’ equity:
|
|
|
Accounts
payable
|
$301
|
$109,689
|
Income
tax payable
|
259,176
|
618,176
|
Sales
tax payable & other
|
114,000
|
116,000
|
Deferred tax
liability
|
201,788
|
503,577
|
Accrued
expenses
|
16,556
|
64,902
|
Total current
liabilities
|
591,821
|
1,412,344
|
Total
liabilities
|
591,821
|
1,412,344
|
|
|
|
Stockholders'
equity:
|
|
|
Preferred stock,
$.0001 par value, 5,000,000 shares authorized, no shares
outstanding
|
--
|
--
|
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
|
(39,409,017)
|
(39,324,358)
|
Total
stockholders’ equity
|
14,072,867
|
14,157,526
|
Total liabilities
and stockholders' equity
|
$14,664,688
|
$15,569,870
|
|
Six-Month
Period
Ended
|
Six-Month
Period
Ended
|
|
June
30,
|
June
30,
|
|
2019
|
2018
|
|
|
|
Revenue
|
$--
|
$--
|
Cost of
services
|
--
|
--
|
Gross
profit
|
--
|
--
|
Administrative and
selling expenses
|
(252,054)
|
(1,191,615)
|
Loss from
operations
|
(252,054)
|
(1,191,615)
|
|
|
|
|
|
|
Other
income
|
145,606
|
13,230
|
Loss from
continuing operations before income taxes
|
(106,448)
|
(1,178,385)
|
Income tax
benefit
|
21,789
|
260,000
|
Net loss from
continuing operations
|
(84,659)
|
(918,385)
|
Net income from
discontinued operations, net of tax
|
--
|
14,743,188
|
Net income
(loss)
|
(84,659)
|
13,824,803
|
|
|
|
Basic earnings from
continuing operations per share
|
$(0.00)
|
$(0.00)
|
Diluted earnings
from continuing operations per share
|
$(0.00
|
$(0.00)
|
Basic earnings from
discontinued operations per share
|
$0.00
|
$0.01
|
Diluted earnings
from discontinued operations per share
|
$0.00
|
$0.01
|
|
|
|
Basic earnings per
share
|
$0.00
|
$0.01
|
Diluted earnings
per share
|
$0.00
|
$0.01
|
|
|
|
Weighted
average common shares outstanding
|
|
|
Basic weighted average common shares outstanding
|
1,272,066,146
|
1,272,066,146
|
Diluted weighted average common shares outstanding
|
1,272,066,146
|
1,272,066,146
|
|
|
|
|
Three-Month
Period
Ended
|
Three-Month
Period
Ended
|
|
June
30,
|
June
30,
|
|
2019
|
2018
|
|
|
|
Revenue
|
$--
|
$
|
Cost of
services
|
--
|
|
Gross
profit
|
--
|
|
Administrative and
selling expenses
|
(148,623)
|
(762,693)
|
Loss from
operations
|
(148,623)
|
(762,693)
|
|
|
|
|
|
|
Other
income
|
97,514
|
6,407
|
Loss from
continuing operations before income taxes
|
(51,109)
|
(756,286)
|
Income tax
benefit
|
8,901
|
260,000
|
Net loss from
continuing operations
|
(42,208)
|
(496,286)
|
Net income from
discontinued operations, net of tax
|
--
|
14,284,439
|
Net income
(loss)
|
(42,208)
|
13,788,153
|
|
|
|
Basic earnings from
continuing operations per share
|
$(0.00)
|
$(0.00)
|
Diluted earnings
from continuing operations per share
|
$(0.00
|
$(0.00)
|
Basic earnings from
discontinued operations per share
|
$0.00
|
$0.01
|
Diluted earnings
from discontinued operations per share
|
$0.00
|
$0.01
|
|
|
|
Basic earnings per
share
|
$0.00
|
$0.01
|
Diluted earnings
per share
|
$0.00
|
$0.01
|
|
|
|
Weighted
average common shares outstanding
|
|
|
Basic weighted average common shares outstanding
|
1,272,066,146
|
1,272,066,146
|
Diluted weighted average common shares outstanding
|
1,272,066,146
|
1,272,066,146
|
|
|
|
Six-Month
period Ended June 30, 2019
|
||||||||
|
Preferred
stock
|
Common
stock
|
Additional
paid- in capital
|
Accumulated
deficit
|
Treasury
stock
|
Total
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
|
|
|
|
Balances
at December 31, 2018
|
--
|
$--
|
1,272,066,146
|
127,207
|
53,954,510
|
(39,324,358)
|
(599,833)
|
14,157,526
|
Net
Income
|
--
|
--
|
|
--
|
--
|
(84,659)
|
--
|
(84,659)
|
Other
comprehensive income:
|
--
|
--
|
|
--
|
--
|
--
|
--
|
--
|
Deferred
unrealized gain on derivatives
|
--
|
--
|
|
--
|
--
|
--
|
--
|
--
|
Dividends
declared:
|
--
|
--
|
|
--
|
--
|
--
|
--
|
--
|
Preferred
stock, $0.0001/Share
|
--
|
--
|
|
--
|
--
|
--
|
--
|
--
|
Common
stock, $0.0001/Share
|
--
|
--
|
|
--
|
--
|
--
|
--
|
--
|
Acquisition
of treasury stock
|
--
|
--
|
|
--
|
--
|
--
|
--
|
--
|
Cumulative
effect adjustment
|
--
|
--
|
|
--
|
--
|
--
|
--
|
--
|
Balances
at June 30, 2019
|
--
|
$--
|
1,272,066,146
|
127,207
|
53,954,510
|
(39,409,017)
|
(599,833)
|
14,072,867
|
Six-Month
period Ended June 30, 2018
|
||||||||
|
Preferred
stock
|
Common
stock
|
Additional
paid- in capital
|
Accumulated
deficit
|
Treasury
stock
|
Total
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
|
|
|
|
Balances
at December 31, 2017
|
--
|
$--
|
1,272,066,146
|
127,207
|
53,954,510
|
(52,497,796)
|
(599,833)
|
984,088
|
Net
Income
|
--
|
--
|
|
--
|
--
|
13,824,803
|
--
|
13,824,803
|
Other
comprehensive income:
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Deferred
unrealized gain on derivatives
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Dividends
declared:
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Preferred
stock, $0.0001/Share
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Common
stock, $0.0001/Share
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Acquisition
of treasury stock
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Cumulative
effect adjustment
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Balances
at June 30, 2018
|
--
|
$--
|
1,272,066,146
|
127,207
|
53,954,510
|
(38,672,993)
|
(599,833)
|
14,808,891
|
Three-Month period Ended June 30,
2019
|
||||||||
|
Preferred
stock
|
Common
stock
|
Additional
paid- in capital
|
Accumulated
deficit
|
Treasury
stock
|
Total
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
|
|
|
|
Balances
at March 31, 2019
|
--
|
$--
|
1,272,066,146
|
127,207
|
53,954,510
|
(39,324,358)
|
(599,833)
|
14,157,526
|
Net
Income
|
--
|
--
|
|
--
|
--
|
(42,208)
|
--
|
(42,208)
|
Other
comprehensive income:
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Deferred
unrealized gain on derivatives
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Dividends
declared:
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Preferred
stock, $0.0001/Share
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Common
stock, $0.0001/Share
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Acquisition
of treasury stock
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Cumulative
effect adjustment
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Balances
at June 30, 2019
|
--
|
$--
|
1,272,066,146
|
127,207
|
53,954,510
|
(39,366,566)
|
(599,833)
|
14,115,318
|
Three-Month
period Ended June 30, 2018
|
||||||||
|
Preferred
stock
|
Common
stock
|
Additional
paid- in capital
|
Accumulated
deficit
|
Treasury
stock
|
Total
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
|
|
|
|
Balances
at March 31, 2018
|
--
|
$--
|
1,272,066,146
|
127,207
|
53,954,510
|
(52,497,796)
|
(599,833)
|
984,088
|
Net
Income
|
--
|
--
|
|
--
|
--
|
13,788,153
|
--
|
13,788,153
|
Other
comprehensive income:
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Deferred
unrealized gain on derivatives
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Dividends
declared:
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Preferred
stock, $0.0001/Share
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Common
stock, $0.0001/Share
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Acquisition
of treasury stock
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Cumulative
effect adjustment
|
--
|
--
|
|
--
|
--
|
--
|
--
|
-
|
Balances
at June 30, 2018
|
--
|
$--
|
1,272,066,146
|
127,207
|
53,954,510
|
(38,709,643)
|
(599,833)
|
14,772,241
|
|
Six-Month
Period
Ended
|
Six-Month
Period
Ended
|
|
June 30,
2019
|
June 30,
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
Net loss from
continuing operations
|
$(84,659)
|
$(918,385)
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
Amortization of
loan receivable discount
|
--
|
(13,230)
|
Depreciation and
amortization
|
--
|
2,686
|
Bad
debt
|
--
|
16,197
|
Net change in
operating assets and liabilities
|
|
|
Changes
in accounts receivable
|
(9,757)
|
(177,905)
|
Changes
in prepaid
|
6,706
|
72,175
|
Change
in escrow receivable
|
(4,491)
|
--
|
Changes
in other assets
|
--
|
(15,822)
|
Changes
in accounts payable
|
(109,388)
|
(136,075)
|
Changes
in accrued expenses
|
(48,346)
|
(15,174)
|
Changes
in severance payable
|
--
|
(26,764)
|
Changes
in deferred income taxes
|
(662,789)
|
(260,000)
|
|
|
|
NET CASH USED
IN OPERATING ACTIVITIES OF CONTINUING OPERATIONS
|
(912,724)
|
(1,472,297)
|
|
|
|
NET CASH USED
IN INVESTING ACTIVITIES OF
|
|
|
CONTINUING
OPERATIONS
|
|
|
Payment from
loan receivable- BioCells
|
--
|
55,000
|
CASH FLOWS FROM
FINANCING ACTIVITIES
Change in cash
– continuing operations
|
--
|
(1,417,297)
|
|
|
|
CASH FLOWS FROM
DISCONTINUED OPERATIONS
|
|
|
Net
Cash provided by operating activities
|
--
|
1,087,005
|
Net
Cash provided by investing activities
|
--
|
12,500,000
|
NET CASH PROVIDED
BY DISCONTINUED OPERATIONS
|
--
|
13,587,005
|
|
|
|
NET INCREASE IN
CASH
|
(912,724)
|
12,169,708
|
|
|
|
Cash balance at
beginning of period
|
$12,412,583
|
$1,069,917
|
Cash balance at end
of period
|
$11,499,859
|
$13,239,625
|
|
|
|
Cash Paid
For
|
|
|
Interest
|
$--
|
$--
|
Taxes
|
$(641,000)
|
$--
|
●
|
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
products.
|
●
|
Properties was formed to hold corporate trademarks and other
intellectual property.
|
●
|
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.
|
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
|
|
Six-Month Period
Ended
|
Six-Month Period
Ended
|
|
June
30,
2019
|
June
30,
2018
|
Revenue
|
$--
|
$1,108,381
|
Cost of
services
|
--
|
(308,976)
|
Gross
profit
|
--
|
799,405
|
Depreciation and
amortization
|
--
|
(99,231)
|
Income from
Discontinued Operations
|
--
|
700,174
|
FamilyCord
reimbursement
|
--
|
164,477
|
Gain on sale of
assets
|
--
|
15,973,537
|
Income from
discontinued operations before taxes
|
--
|
16,838,188
|
Income
taxes
|
--
|
(2,095,000)
|
Net income from
discontinued operations
|
--
|
14,743,188
|
|
Six-Month Period
Ended
|
Six-Month Period
Ended
|
|
June
30,
2019
|
June
30,
2018
|
Cash provided by
discontinued operations
|
$--
|
$1,087,005
|
Cash provided by
investing activities of discontinued operations
|
$--
|
$12,500,000
|
|
Three-Month Period
Ended
|
Three-Month Period
Ended
|
|
June
30,
2019
|
June
30,
2018
|
Revenue
|
$--
|
$405,502
|
Cost of
services
|
--
|
(136,646)
|
Gross
profit
|
--
|
268,856
|
Depreciation and
amortization
|
--
|
(27,431)
|
Income from
Discontinued Operations
|
--
|
241,425
|
FamilyCord
reimbursement
|
--
|
164,477
|
Gain on sale of
assets
|
--
|
15,973,537
|
Income from
discontinued operations before taxes
|
--
|
16,379,439
|
Income
taxes
|
--
|
(2,095,000)
|
Net income from
discontinued operations
|
--
|
14,248,439
|
|
Three-Month Period
Ended
|
Three-Month Period
Ended
|
|
June
30,
2019
|
June
30,
2018
|
Cash provided by
discontinued operations
|
$--
|
$526,869
|
Cash provided by
investing activities of discontinued operations
|
$--
|
$12,500,000
|
|
Useful
Life
(Years)
|
June
30,
2019
|
December
31,
2018
|
Furniture and
fixtures
|
1-5
|
$--
|
$17,597
|
Computer
equipment
|
5
|
--
|
124,466
|
Laboratory
Equipment
|
1-5
|
--
|
5,837
|
Freezer
equipment
|
7-15
|
--
|
34,699
|
Leasehold
Improvements
|
5
|
--
|
102,862
|
|
|
--
|
285,461
|
Less: accumulated
depreciation and amortization
|
|
--
|
(285,461)
|
|
|
$--
|
$--
|
|
Rent
|
|
to be
paid.
|
2019
|
48,612
|
Total
|
$48,612
|
|
Stock
Options
|
Weighted Average
Exercise Price
|
Weighted Avg.
Contractual
Remaining
Life
|
|
|
|
|
Outstanding,
December 31, 2018
|
4,307,994
|
0.69
|
0.57
|
Granted
|
--
|
--
|
--
|
Exercised
|
--
|
--
|
--
|
Forfeited/Expired
|
--
|
--
|
--
|
Outstanding June
30, 2019
|
4,307,994
|
0.69
|
0.57
|
Exercisable June
30, 2019
|
4,307,994
|
0.69
|
0.57
|
Range
of
Exercise
Prices
|
Number
of
Options
|
Weighted
Average
Remaining
Contractual
Life
(years)
|
Weighted
Average
Exercise
Price
|
Number
of
Options
Exercisable
|
Weighted
Average
Exercise
Price
|
$0-53 —
1.11
|
4,307,994
|
0.57
|
$0.69
|
4,307,994
|
$0.69
|
|
4,307,994
|
0.57
|
$0.69
|
4,307,994
|
$0.69
|
●
|
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
products.
|
●
|
Properties was formed to hold corporate trademarks and other
intellectual property.
|
EXHIBIT
|
|
DESCRIPTION
|
2.0
|
|
Form of
Common Stock Share Certificate of Cord Blood America, Inc.
(1)
|
3.1(i)
|
|
Amended
and Restated Articles of Incorporation of Cord Blood America, Inc.
(1)
|
3.1(ii)
|
|
Articles
of Amendment to Articles of Incorporation (2)
|
3.1(iii)
|
|
Articles
of Amendment to the Articles of Incorporation of Cord Blood
America, Inc. (3)
|
3.1(iv)
|
|
Articles
of Amendment to the Articles of Incorporation of Cord Blood
America, Inc. (4)
|
3.1(v)
|
|
Articles
of Amendment to the Articles of Incorporation of Cord Blood
America, Inc. (4)
|
3.1(vi)
|
|
Articles
of Amendment to the Articles of Incorporation of Cord Blood
America, Inc. (5)
|
3.1
(vii)
|
|
Articles
of Amendment to the Articles of Incorporation of Cord Blood
America, Inc. (6)
|
3.1
(viii)
|
|
Articles
of Amendment to the Articles of Incorporation of Cord Blood
America, Inc. (7)
|
3.1
(ix)
|
|
Articles
of Amendment to the Articles of Incorporation of Cord Blood
America, Inc. (8)
|
3.1
(x)
|
Articles
of Amendment to the Articles of Incorporation of CBA Florida, Inc.
(9)
|
|
3.2(i)
|
|
Amended
and Restated Bylaws of Cord Blood America, Inc. (1)
|
3.2(ii)
|
Second
Amended and Restated Bylaws of Cord Blood America, Inc.
(7)
|
|
|
Certification
of the registrant’s Chief Executive Officer and Chief
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 (Filed Herewith)
|
|
|
Certification
of the Company’s Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
CBA FLORIDA, INC.
|
|
|
|
|
|
|
|
By:
|
/s/Anthony
Snow
|
|
|
|
President
and Corporate Secretary
|
|
|
|
(Principal
Executive Officer,
Principal Financial
and Accounting Officer)
|
|
|
|
|
|
Date: August 14,
2019
|
By:
|
/s/ Anthony
Snow
|
|
|
Name:
|
Anthony
Snow
|
|
|
Title:
|
President
Principal Financial
and Accounting Officer
|
|
Date: June 30,
2019
|
By:
|
/s/ Anthony
Snow
|
|
|
Name:
|
Anthony
Snow
|
|
|
Title:
|
President
Principal Financial
and Accounting Officer
|
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Aug. 14, 2019 |
|
Document And Entity Information | ||
Entity Registrant Name | CBA Florida, Inc. | |
Entity Central Index Key | 0001289496 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
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 Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,272,066,146 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Assets | ||
Allowance for doubtful accounts receivables | $ 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 |
Treasury stock | 20,000 | 20,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Cost of services | 0 | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 | 0 |
Administrative and selling expenses | (148,623) | (762,693) | (252,054) | (1,191,615) |
Loss from operations | (148,623) | (762,693) | (252,054) | (1,191,615) |
Other income | 97,514 | 6,407 | 145,606 | 13,230 |
Loss from continuing operations before income taxes | (51,109) | (756,286) | (106,448) | (1,178,385) |
Income tax benefit | 8,901 | 260,000 | 21,789 | 260,000 |
Net loss from continuing operations | $ (42,208) | $ (496,286) | $ (84,659) | $ (918,385) |
Net income from discontinuing operations | $ 0 | $ 14,284,439 | $ 0 | $ 14,743,188 |
Net income (loss) | $ (42,208) | $ 13,788,153 | $ (84,659) | $ 13,824,803 |
Basic earnings from continuing operations per share | $ 0.00 | $ 0.00 | $ (0.00) | $ (0.00) |
Diluted earnings from continuing operations per share | 0.00 | 0.00 | (0.00) | (0.00) |
Basic earnings from discontinued operations per share | 0.00 | 0.01 | (0.00) | .01 |
Diluted earnings from discontinued operations per share | 0.00 | 0.01 | (0.00) | .01 |
Basic earnings per share | 0.00 | 0.01 | 0.00 | 0.01 |
Diluted earnings per share | $ 0.00 | $ 0.01 | $ 0.00 | $ 0.01 |
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 STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) |
Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Treasury Stock |
Total |
---|---|---|---|---|---|---|
Beginning balance, shares at Dec. 31, 2017 | 0 | 1,272,066,146 | ||||
Beginning balance, amount at Dec. 31, 2017 | $ 0 | $ 127,207 | $ 53,954,510 | $ (52,497,796) | $ (599,833) | $ 984,088 |
Net income (loss) | 13,824,803 | 13,824,803 | ||||
Ending balance, shares at Jun. 30, 2018 | 0 | 1,272,066,146 | ||||
Ending balance, amount at Jun. 30, 2018 | $ 0 | $ 127,207 | 53,954,510 | (38,672,993) | (599,833) | 14,808,891 |
Beginning balance, shares at Mar. 31, 2018 | 0 | 1,272,066,146 | ||||
Beginning balance, amount at Mar. 31, 2018 | $ 0 | $ 127,207 | 53,954,510 | (52,497,796) | (599,833) | 984,088 |
Net income (loss) | 13,788,153 | 13,788,153 | ||||
Ending balance, shares at Jun. 30, 2018 | 0 | 1,272,066,146 | ||||
Ending balance, amount at Jun. 30, 2018 | $ 0 | $ 127,207 | 53,954,510 | (38,672,993) | (599,833) | 14,808,891 |
Beginning balance, shares at Dec. 31, 2018 | 0 | 1,272,066,146 | ||||
Beginning balance, amount at Dec. 31, 2018 | $ 0 | $ 127,207 | 53,954,510 | (39,324,358) | (599,833) | 14,157,526 |
Net income (loss) | (84,659) | (84,659) | ||||
Ending balance, shares at Jun. 30, 2019 | 0 | 1,272,066,146 | ||||
Ending balance, amount at Jun. 30, 2019 | $ 0 | $ 127,207 | 53,954,510 | (39,409,017) | (599,833) | 14,072,867 |
Beginning balance, shares at Mar. 31, 2019 | 0 | 1,272,066,146 | ||||
Beginning balance, amount at Mar. 31, 2019 | $ 0 | $ 127,207 | 53,954,510 | (39,324,358) | (599,833) | 14,157,526 |
Net income (loss) | (42,208) | (42,208) | ||||
Ending balance, shares at Jun. 30, 2019 | 0 | 1,272,066,146 | ||||
Ending balance, amount at Jun. 30, 2019 | $ 0 | $ 127,207 | $ 53,954,510 | $ (39,409,017) | $ (599,833) | $ 14,072,867 |
1. Organization and Description of Business |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2019 | |||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
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 as D&A Lending, Inc. 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 substantially all of the assets of the Company and its wholly-owned subsidiaries. Prior to the sale of substantially all of the assets, CBAI and its subsidiaries had engaged in the following business activities:
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 substantially all of the Company’s assets pursuant to the Purchase Agreement was completed 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 in 2019. However, no distribution has been declared by CBAI’s 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.
Sale of China Stem Cell Stock and Convertible Debt
The Company entered into an Asset Purchase Agreement, dated June 19, 2019 (the “Golden Sun Purchase Agreement”), with Golden Sun Multi-Manager Fund LP (“Golden Sun”), whereby the Company sold all shares and convertible debt it held in China Stem Cells Ltd. (“China Stem Cells”) to Golden Sun. The total proceeds from the sale was $50,000. The Company previously wrote-off the entire value of shares and convertible debt held, and has accrued a gain for the full value of sale proceeds received on its statement of operations for the three and six months ended June 30, 2019.
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 ended June 30, 2019 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, 2018 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, 2018 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 Accounting Policies |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||
Accounting Policies [Abstract] | |||||||
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.
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.
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 value of cash and cash equivalents held by the Company at a bank in excess of federally insured limits was $11,249,859 during the period ended June 30,2019.
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 $0 and $16,197 in bad debt expense during the six months ended June 30, 2019 and 2018, 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.
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 $641,000 and $0.00 for the six months ended June 30, 2019 and 2018, respectively. The Company files income tax returns with the Internal Revenue Service (“IRS”) and various state jurisdictions.
Accounting for Stock Option Plan
The Company follows the provisions of Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-based Compensation”), 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.
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 June 30, 2019, 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:
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 an effort to reduce the diversity of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. There has been no impact as a result of adopting this ASU on our financial statements and related disclosures.
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 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. The amendments of this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company determined that there no impact this ASU on the consolidated financial statements and related disclosures. The Company has no long-term operating leases on the date of adoption.
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3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations | 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 to FamilyCord was completed 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 FamilyCord $15.5 million in cash and 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 as net income from discontinued operations in the 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 Consolidated Balance Sheets and has classified the CBCTS operating results, net of tax, as discontinued operations in the accompanying 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, 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 previously 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 during the year ended December 31, 2018:
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 six months ended June 30, 2019 and 2018:
The following is a summary of net cash provided by operating activities and investing activities for the assets held for sale for the six months ended June 30, 2019 and June 30, 2018:
The following is a summary of the results of operations related to the assets held for sale for the three months ended June 30, 2019 and 2018:
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 June 30, 2019 and June 30, 2018:
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4. Property and Equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | At June 30, 2019 and December 31, 2018, property and equipment consist of:
For the six months ended June 30, 2019 and 2018, depreciation expense totaled $0 and $2,686 respectively for continuing operations and $0 and $5,682 respectively for discontinued operations.
For the three months ended June 30, 2019 and 2018, depreciation expense totaled $0 and $1,344 respectively for continuing operations and $0 and $2,345, respectively for discontinued operations.
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5. Commitments and Contingencies |
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Jun. 30, 2019 | |||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||
Commitments and Contingencies | Operating Leases
On January 21, 2014, the Company entered a First Amendment to Lease (the “Amendment”), 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 common area maintenance (“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 with the portion of the space leased to a third party. If the landlord was unable to or elected not to lease a portion of the premises to a third party by November 30, 2015 and each subsequent anniversary thereof, the Company was to receive an additional abatement of one month rent, excluding CAM charges, in December 2015, December 2016 and December 2017, respectively and as applicable. Effective May 15, 2016, the Company entered a Second Amendment to Lease. The Second Amendment to Lease sets forth that the square footage of the Property has been reduced by 380 square feet, such that the Property now consists of 16,523 square feet, confirms the abatements set forth in the First Amendment to Lease, sets forth that the Company’s CAM expenses and home owner association costs shall be calculated based on the reduced square footage amount, and confirms that the Company’s monthly rent amounts will remain unchanged from the First Amendment to Lease. 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.
Commitments for future minimum rental payments, by year, and in the aggregate, to be paid under such operating lease as of December 31, 2018, were as follows:
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6. Share Based Compensation |
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Share-based Payment Arrangement, Noncash Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 June 30, 2019 and the year ended December 31, 2018.
The Company’s stock option activity was as follows:
The following table summarizes significant ranges of outstanding stock options under the stock option plan at June 30, 2019:
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7. Income Tax |
6 Months Ended |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax | The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. For the first quarter of 2019 the Company expects to utilize net operating losses generated in the current year to offset future deferred tax liabilities derived from the sale of assets in 2018. The company expects its overall effective tax rate for 2019 to be around 23%.
As of June 30, 2019 and December 31, 2018, the Company has a partial valuation allowance on net operating losses that may not be able to be utilized fully.
For the six months ended June 30, 2019 the Company recorded a tax benefit of $21,789, as compared to a tax benefit of $260,000 for the comparative six month period ended June 30, 2018.
For the three months ended June 30, 2019 the Company recorded a tax benefit of $8,901, as compared to a tax benefit of $260,000 for the comparative three month period ended June 30, 2018.
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8. Stockholder's Equity |
6 Months Ended |
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Jun. 30, 2019 | |
Stockholders' equity: | |
Stockholder's Equity | Preferred Stock
The Company has 5,000,000 shares of $.0001 par value preferred stock authorized. As of June 30, 2019, and December 31, 2018, 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 June 30, 2019, and December 31, 2018, the Company had 1,272,066,146 shares of common stock issued and outstanding. 20,000 shares remain in the Company’s treasury.
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9. Subsequent Events |
6 Months Ended |
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Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | None. |
2. Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2019 | |||||||
Accounting Policies [Abstract] | |||||||
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.
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.
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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.
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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.
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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 value of cash and cash equivalents held by the Company at a bank in excess of federally insured limits was $11,249,859 during the period ended June 30,2019.
The Company maintains cash and cash equivalents at several financial institutions.
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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 $0 and $16,197 in bad debt expense during the six months ended June 30, 2019 and 2018, respectively.
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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.
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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 $641,000 and $0.00 for the six months ended June 30, 2019 and 2018, respectively. The Company files income tax returns with the Internal Revenue Service (“IRS”) and various state jurisdictions.
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Accounting for Stock Option Plan | The Company follows the provisions of Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-based Compensation”), 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. |
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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.
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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 June 30, 2019, this was the case. To date, the Company has not experienced any such losses.
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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:
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.
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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 an effort to reduce the diversity of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. There has been no impact as a result of adopting this ASU on our financial statements and related disclosures.
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 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. The amendments of this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company determined that there no impact this ASU on the consolidated financial statements and related disclosures. The Company has no long-term operating leases on the date of adoption.
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3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities sold, and gain recognized, in connection with the sale of assets |
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Assets and liabilities classified as held-for-sale |
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of operations related to the assets held for sale |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash provided by operating activities for the assets held for sale |
|
4. Property And Equipment (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment |
|
5. Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||
Future minimum rental payments |
|
6. Share Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement, Noncash Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of significant ranges of outstanding stock options |
|
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details) |
Dec. 31, 2018
USD ($)
|
---|---|
Discontinued Operations and Disposal Groups [Abstract] | |
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 |
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details 1) |
Dec. 31, 2018
USD ($)
|
---|---|
Discontinued Operations and Disposal Groups [Abstract] | |
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 |
3. Discontinued Operations - Cord Blood and Cord Tissue Stem Cell Storage Operations (Details 2) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||||
Revenue | $ 0 | $ 405,502 | $ 0 | $ 1,108,381 |
Cost of services | 0 | (136,646) | 0 | (308,976) |
Gross profit | 0 | 268,856 | 0 | 799,405 |
Depreciation and Amortization | 0 | (27,431) | 0 | (99,231) |
Income from Discontinued Operations | 0 | 241,425 | 0 | 700,174 |
FamilyCord reimbursement | 0 | 164,477 | 0 | 164,477 |
Gain on sale of assets | 0 | 15,973,537 | 0 | 15,973,537 |
Income from discontinued operations before taxes | 0 | 16,379,439 | 0 | 16,838,188 |
Income taxes | 0 | (2,095,000) | 0 | (2,095,000) |
Net income from discontinued operations | $ 0 | $ 14,248,439 | 0 | 14,743,188 |
Cash provided by discontinued operations | 0 | 1,087,005 | ||
Cash provided by investing activities of discontinued operations | $ 0 | $ 12,500,000 |
4. Property and Equipment (Details) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Property and equipment, gross | $ 0 | $ 285,461 |
Less: accumulated depreciation and amortization | 0 | (285,461) |
Property and equipment, net | 0 | 0 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 0 | 17,597 |
Computer Equipment [Member] | ||
Property and equipment, gross | 0 | 124,466 |
Labaratory Equipment [Member] | ||
Property and equipment, gross | 0 | 5,837 |
Freezer Equipment [Member] | ||
Property and equipment, gross | 0 | 34,699 |
Leaseholds and Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 0 | $ 102,862 |
4. Property and Equipment (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense, continuing operations | $ 0 | $ 1,344 | $ 0 | $ 2,686 |
Depreciation and amortization expense, discontinued operations | $ 0 | $ 2,345 | $ 0 | $ 5,682 |
5. Commitments and Contingencies (Details) |
Jun. 30, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 48,612 |
Total | $ 48,612 |
6. Share Based Compensation (Details 1) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Number of Options | 4,307,994 | 4,307,994 |
Weighted Average Remaining Contractual Life (years) | 6 months 25 days | |
Weighted Average Exercise Price | $ .69 | $ .69 |
Number of Options Exercisable | 4,307,994 | |
Weighted Average Exercise Price | $ .69 | |
Range One [Member] | ||
Range of Exercise Prices | $0.53 - $1.11 | |
Number of Options | 4,307,994 | |
Weighted Average Remaining Contractual Life (years) | 6 months 25 days | |
Weighted Average Exercise Price | $ 0.69 | |
Number of Options Exercisable | 4,307,994 | |
Weighted Average Exercise Price | $ 0.69 |
7. Income Tax (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax benefit | $ 8,901 | $ 260,000 | $ 21,789 | $ 260,000 |
8. Stockholder's Equity (Details Narrative) - $ / shares |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
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 |
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