10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

or

☐ 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 ☑ 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 ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☑
(do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.): Yes ☐ No ☑

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

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. ☐

Number of shares of Cord Blood America, Inc. common stock, $0.0001 par value, outstanding as of November 3, 2017, 1,272,066,146 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 September 30, 2017 (unaudited) and December 31, 2016	3
	Condensed Consolidated Statements of Income (unaudited) for the nine months ended September 30, 2017 and September 30, 2016	4
	Condensed Consolidated Statements of Income (unaudited) for the three months ended September 30, 2017 and September 30, 2016	5
	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2017 and September 30, 2016	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3. Quantitative and Qualitative Disclosures About Market Risk		19
Item 4T. Controls and Procedures		19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		21
Item 1A. Risk Factors		21
Item 2.  Unregistered Sales of Equity Securities And Use Of Proceeds		21
Item 3. Defaults Upon Senior Securities		21
Item 4. Mine Safety Disclosures		21
Item 5. Other Information		21
Item 6. Exhibits		22
Signatures		23

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2017 (unaudited)	December 31, 2016
Current assets:
Cash	$959,534	$926,209
Accounts receivable, net of allowance for doubtful accounts of $78,123 and $78,123, respectively	42,269	113,316
Other current assets	59,420	58,376
Receivable – Biocells net of discount of $26,875 and $27,541, respectively current portion	28,125	27,459
Prepaid expenses	62,253	175,065
Total current assets	1,151,601	1,300,425
Property and equipment, net of accumulated depreciation and amortization of $760,724 and $743,200, respectively	49,104	66,628
Customer contracts and relationships, net of accumulated amortization of $4,446,938 and $4,232,982, respectively	1,108,100	1,322,056
Other Assets	19,292	19,292
Receivable - BioCells net of discount of $119,988 and $140,041, respectively - long term portion	385,012	419,959
Total assets	$2,713,109	$3,128,360
Liabilities and Stockholders’ equity
Accounts payable	$109,998	$151,305
Accrued expenses	62,707	112,020
Severance payable	66,913	187,360
Deferred revenue – current portion	1,204,783	1,158,578
Derivative liability – current portion	--	109,731
Interest on promissory notes	--	204,494
Promissory notes payable, net of unamortized discount of $0 and $43,432, respectively	--	356,568
Total current liabilities	1,444,401	2,280,056
Deferred revenue - long term portion	243,067	271,628
Total liabilities	1,687,468	2,551,684
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	(52,456,243)	(52,905,208)
Total stockholders’ equity	1,025,641	576,676
Total liabilities and stockholders' equity	$2,713,109	$3,128,360

See accompanying notes to these unaudited condensed consolidated financial statements

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CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

	NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2017	NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2016
Revenue	$2,240,069	$2,554,571
Cost of services	(509,166)	(714,721)
Gross profit	1,730,903	1,839,850
Administrative and selling expenses	(1,357,900)	(1,763,932)
Income from operations	373,003	75,918
Interest expense and change in derivative liability	55,243	(3,135)
Other income	20,719	27,344
Income from continuing operations before provision for income taxes	448,965	100,127
Income taxes	--	--
Net income	$448,965	$100,127
Basic earnings per share	$0.00	$0.00
Diluted earnings per share	$0.00	$0.00
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

See accompanying notes to these unaudited condensed consolidated financial statements

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CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

	THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2017	THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2016
Revenue	$747,735	$774,984
Cost of services	(162,236)	(172,902)
Gross profit	585,499	602,082
Administrative and selling expenses	(414,757)	(497,926)
Income from operations	170,742	104,155
Interest expense and change in derivative liability	(275)	28,300
Other income	6,823	7,073
Income from continuing operations before provision for income taxes	177,290	139,528
Income taxes	--	--
Net income	$177,290	$139,528
Basic earnings per share	$0.00	$0.00
Diluted earnings per share	$0.00	$0.00
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

See accompanying notes to these unaudited condensed consolidated financial statements

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CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2017	NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2016
Net income	$448,965	$100,127
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of loan discount	(56,568)	169,554
Amortization of note receivable discount	(20,719)	(21,031)
Depreciation and amortization	231,480	275,687
Change in value of derivative liability	(109,731)	(228,404)
Bad debt	56,120	17,253
Other income from loan receivable	--	(6,313)
Changes in accounts receivable	14,927	210,951
Changes in inventory	(1,044)	12,656
Changes in prepaid	112,812	112,529
Changes in accounts payable	(41,307)	(144,926)
Changes in accrued expenses	(49,313)	(26,996)
Changes in severance payable	(120,447)	--
Changes in accrued interest	(204,494)	61,986
Changes in deferred revenue	17,644	(41,789)
NET CASH PROVIDED BY OPERATING ACTIVITIES	278,325	491,284
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for loan receivable – Biocells	55,000	45,350
Payment for loan receivable – Banco Vida	--	69,454
NET CASH PROVIDED BY INVESTING ACTIVITIES	55,000	114,804
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable	(300,000)	(275,000)
NET CASH USED IN FINANCING ACTIVITIES	(300,000)	(275,000)
NET INCREASE IN CASH	33,325	331,088
Cash balance at beginning of period	$926,209	$789,046
Cash balance at end of period	$959,534	$1,120,134

See accompanying notes to these unaudited condensed consolidated financial statements

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CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(UNAUDITED)

Note 1.  Organization and Description of Business

Overview

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.  CBAI and its subsidiaries engage in the following business activities:

● CBAI and Cord specialize in providing private cord blood and cord tissue stem cell services. Additionally, the Company is in the business of procuring birth tissue for organizations utilizing the tissue in the transplantation and/or research of therapeutic based products.

● Properties was formed to hold corporate trademarks and other intellectual property.

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 nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or for any other future period.  The condensed consolidated balance sheet at December 31, 2016 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, 2016 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.

Note 2.  Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of CBAI and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.

7

Cash

Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase.

The Company maintains cash and cash equivalents at several financial institutions.

Accounts Receivable

Accounts receivable consist of the amounts due for facilitating the processing and storage of umbilical cord blood and cord tissue, and birth tissue procurement services.  Accounts receivable relating to deferred revenues are netted against deferred revenue for presentation purposes. The allowance for doubtful accounts is estimated based upon historical experience. The allowance is reviewed quarterly and adjusted for accounts deemed uncollectible by management. Amounts are written off when all collection efforts have failed. The Company wrote off $56,120 and $17,253 in bad debt expense during the nine months ended September 30, 2017 and 2016, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Routine maintenance and repairs are charged to expense as incurred while major replacement and improvements are capitalized as additions to the related assets. Sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the related asset and accumulated depreciation accounts with any gain or loss credited or charged to income upon disposition.

Impairment of Long-Lived Assets

Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable.For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. The Company reviews goodwill for impairment at least annually or whenever events or circumstances are more likely than not to reduce the fair value of goodwill below its carrying amount.

Inventory

Inventory, comprised principally of finished goods, is stated at the lower of cost or market, and net realized value, using the first-in, first-out (“FIFO”) method. This policy requires the Company to make estimates regarding the market value of its inventory, including an assessment of excess or obsolete inventory. The Company determines excess and obsolete inventory based on an estimate of the future demand and estimated selling prices for its products.

Note Receivable

Notes receivable consists of the notes due from Biocordcell Argentina S.A. (BioCells) (Note 4). The note receivable is recorded at the carrying-value on the financial statements.

For note receivable from BioCells, since the Company agreed to finance the sale of the shares in Biocordcell at no stated interest, in accordance with ASC 500, the interest method was applied using a 6% borrowing rate. The Company recorded an unamortized discount based on the 6% borrowing rate and the discount is amortized throughout the life of the note.

8

Deferred Revenue

Deferred revenue consists of payments for enrollment in the program and processing of umbilical cord blood and cord tissue by customers whose samples have not yet been collected, as well as the pro-rata share of annual storage fees for customers whose samples were stored during the year.

Valuation of Derivative Instruments

ASC 815-40 requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Binomial option pricing formula and present value pricing. At September 30, 2017 and December 31, 2016, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its condensed consolidated statements of income (loss).

Revenue Recognition

CBAI recognizes revenue under the provisions of ASC 605. CBAI provides a combination of products and services to customers. This combination arrangement is evaluated under ASC 605. ASC 605 addresses certain aspects of accounting for arrangements under multiple revenue generating activities.

Cord recognizes revenue from both enrollment fees and processing fees upon the completion of processing while revenue from storage fees are recognized ratably over the contractual storage period.

Cost of Services

Costs are incurred as umbilical cord blood, cord tissue and birth tissue are collected. These costs include the transportation of the umbilical cord blood, cord tissue and birthing tissue from the hospital, direct material and labor, costs for processing and cryogenic storage of new samples by a third party laboratory, collection kit materials and allocated rent, utility and general administrative expenses. The Company expenses costs in the period incurred.

Accounting for Stock Option Plan

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding.  Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. 

Concentration of Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet their contractual obligations to be similarly affected by changes in economic or other conditions described below.

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Relationships and agreements which could potentially expose the Company to concentrations of credit risk consist of the use of one source for the processing and storage of all umbilical cord blood and one source for the development and maintenance of a website. The Company believes that alternative sources are available for each of these concentrations.

Financial instruments that subject the Company to credit risk could consist of cash balances maintained in excess of federal depository insurance limits. The Company maintains its cash and cash equivalent balances with high credit quality financial institutions. At times, cash and cash equivalent balances may be in excess of Federal Deposit Insurance Corporation limits. To date, the Company has not experienced any such losses.

Fair Value Measurements

Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by ASC 820, are as follows:

● Level 1 – quoted prices in active markets for identical assets or liabilities.

● Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.

● Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

The following table summarizes fair value measurements by level at September 30, 2017 for assets and liabilities measured at fair value on a recurring basis:

	Level 1	Level 2	Level 3	Total
Derivative liability	$--	$--	$--	$--

Derivative liability was valued under the Binomial model with the following assumptions:

Risk free interest rate	0%
Expected life	0 years
Dividend Yield	0%
Volatility	0%

The following table summarizes fair value measurements by level at December 31, 2016 for assets and liabilities measured at fair value on a recurring basis:

	Level 1	Level 2	Level 3	Total
Derivative liability	$--	$--	$(109,731)	$(109,731)

Derivative liability was valued under the Binomial model, with the following assumptions:

Risk free interest rate	0.12%-0.47%
Expected life	0 to 0.75 years
Dividend Yield	0%
Volatility	0% to 109%

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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 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 is currently assessing the potential impact this ASU will have on the consolidated financial statements and related disclosures.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedient, which is to (1) clarify the objective of the collectability criterion for applying paragraph 606-10-25-7; (2) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; (3) specify that the measurement date for noncash consideration is contract inception; (4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; (5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently assessing the potential impact this ASU will have on the consolidated financial statements and related disclosures

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. The Company is currently assessing the potential impact this ASU will have on the 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 will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This amendment will be effective for the Company on December 15, 2017.

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Note 3. Notes and Loans Payable

At September 30, 2017 and December 31, 2016 notes and loans payable consist of:

	September 30, 2017	December 31, 2016
Secured Convertible Promissory Note to Tonaquint, Inc., 7.5% per annum; due on or before September 17, 2017	$--	$400,000
	--	400,000
Less: Unamortized Discount	--	(43,432)
	$--	$356,568

Tonaquint, Inc.

On August 30, 2013, Cord Blood America, Inc. (the “Company”) filed a Complaint in the United States District Court for the District of Utah, Central Division against Tonaquint, Inc. (“Tonaquint”) and St. George Investments, LLC (“St. George”) (collectively “Defendants”), case number 2:13-cv-00806-PMW (the “Action”), and on May 7, 2014, the Company filed an amended complaint. On September 25, 2013, Defendants each filed their Answer and Counterclaim in the Action, which they amended on March 22, 2014.

On December 17, 2014, in settlement of the Action, the parties entered into a Settlement and Exchange Agreement (the "Settlement Agreement"). Pursuant to the Settlement Agreement, the Secured Convertible Promissory Note and the Warrant to Purchase Shares of Common Stock issued by the Company to St. George on or around March 10, 2011, as well as the SGI Purchase Agreement, and all other documents that made up the March 2011 transaction between the Company and St. George, all of which have been set forth in detail in prior filings by the Company, were terminated, cancelled or otherwise extinguished.  Further pursuant to the Settlement Agreement, the Tonaquint Note was exchanged for a Secured Convertible Promissory Note of the Company in the principal amount of $2,500,000 (the "Company Note"), and certain of the other documents that were part of the June 27, 2012 transaction between the Company and Tonaquint (the “June 2012 Tonaquint Transaction”) were terminated, cancelled or otherwise extinguished, and certain of them were amended, as set forth below.

Under the Company Note, the Company shall make monthly payments to Tonaquint, with the first payment due on or before April 17, 2015, and with payments continuing thereafter until the Company's Note is paid in full, with a maturity date that is 33 calendar months after the effective date of December 17, 2014. The amount of the monthly payments is $100,000 (the “Installment Amount”); provided, however, that if the remaining amount owing under the Company Note as of the applicable Installment Date (defined in the Company Note) is less than $100,000, then the Installment Amount for such Installment Date shall be equal to the outstanding amount. The Company may prepay any or all of the outstanding amount of the Company Note at any time, without penalty. In the event the Company prepays an amount that is less than the outstanding amount, then the prepayment amount shall be applied to the next Installment Amount(s) due under the Company Note.

For each monthly payment, the Company may elect to designate all or any portion of the Installment Amount then due as a conversion eligible amount (hereafter “Conversion Eligible Amount”); provided that the total outstanding Conversion Eligible Amount that has not been converted by Tonaquint, as set forth below, at any given time may not exceed one hundred thousand dollars ($100,000) without Tonaquint’s prior written consent and subject to additional restrictions set forth in the Company Note. In the event the Company designates any portion of any monthly payment amount as a Conversion Eligible Amount, the applicable monthly payment shall be reduced by an amount equal to the portion thereof designated as a Conversion Eligible Amount. The Conversion Eligible Amount shall continue to be included in and be deemed to be a part of the Outstanding Balance (defined in the Company Note) of the Company Note unless and until such amount is either paid in cash by the Company or converted into Common Stock by Tonaquint. The Company may pay the Conversion Eligible Amount in cash, provided that no prepayments of cash shall reduce the Conversion Eligible Amount until the Outstanding Balance is equal to or less than the Conversion Eligible Amount.

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Once the Company has designated amounts as Conversion Eligible Amount, Tonaquint may convert all or any portion of that amount into shares of the Company's Common Stock. In the event of a conversion by Tonaquint of a Conversion Eligible Amount, the number of Common Stock shares delivered to Tonaquint upon conversion will be calculated by dividing the amount of the Company Note that is being converted by 70% of the average of the three (3) lowest Closing Bid Prices of the Common Stock (as defined in the Company Note) in the twenty (20) Trading Days immediately preceding the applicable Conversion.

The Company records debt discounts in connection with the issuance of convertible debt and the initial valuation of the derivative liability. The discounts are amortized to non-cash interest expense over the life of the debt.

The Company Note has an interest rate of 7.5%, compounding daily, which would increase to a rate of 15.0% on the happening of certain Events of Default (defined in the Company Note) that are not considered a Payment Default (defined in the Company Note), provided that the Company may cure the default in accordance with and subject to the terms set forth in the Company Note. Where a Payment Default occurs, including where (i) Borrower shall fail to pay any principal, interest, fees, charges, or any other amount when due and payable under that Company Note; or (ii) Borrower shall fail to deliver any Conversion Shares in accordance with the terms of the Company Note, late fees shall accrue as set forth in the Company Note, and in addition, the Company shall have ninety (90) days from delivery of notice of default from Tonaquint to cure the default, as set forth in more detail in the Company Note. If the Company fails to cure the Payment Default, Tonaquint may accelerate the Company Note by written notice to the Company, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default Amount (defined in the Company Note) equal to (i) the Outstanding Balance as of the date of acceleration (which Outstanding Balance, for the avoidance of doubt, will include all Late Fees that accrue until any applicable Payment Default is cured) multiplied by (ii) two hundred fifty percent (250%), along with other remedies, as set forth in the Company Note.

As of December 31, 2016, the principal balance on the Tonaquint note was $400,000, and there was $204,494 of accrued interest. On July 7, 2017, the Company made its final payment to Tonaquint which constituted payment in full of the original $2.5 million principal obligation and associated interest.

Note 4:  Investment and Notes Receivable, Related Parties

At September 30, 2017 and December 31, 2016, notes receivable consist of:

	September 30, 2017	December 31, 2016
On September 29, 2014, the Company closed a transaction selling its stake in BioCells to Diego Rissola; current President.  Payments are to be made annually, after June of 2015, and the last payment due on or before June 1, 2025.	$560,000	$615,000
Unamortized discount on BioCells note receivable	(146,863)	(167,582)
	$413,137	$447,418

Under the Agreement with the Purchaser of BioCells, BioCells is to make payments as follows: $5,000 on or before October 12, 2014 (amount paid in 2014); $10,000 on or before December 1, 2014 (amount paid in 2015); $15,000 on or before March 1, 2015 (amount paid in 2015); $15,000 on or before June 1, 2015 (amount paid in 2015); $45,000 on or before June 1, 2016 (amount paid in 2016); $55,000 on or before June 1, 2017 (amount paid in 2017); $55,000 on or before June 1, 2018; $55,000 on or before June 1, 2019; $65,000 on or before June 1, 2020; $75,000 on or before June 1, 2021; $75,000 on or before June 1, 2022; $75,000 on or before June 1, 2023; $80,000 on or before June 1, 2024; $80,000 on or before June 1, 2025. As of September 30, 2017, the Purchaser has paid all amounts due for the June 1, 2017 payment, such that the Purchaser is current with payments due under the Agreement. This loan receivable is secured, non-interest bearing, and subject to a 6% discount rate. As of September 30, 2017 and December 31, 2016, the receivable has a balance of $413,137 and $447,418, respectively.

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Note 5.  Commitments and Contingencies

Stephen Morgan Employment Agreement

On March 31, 2015, the Company entered into an Executive Employment Agreement with Stephen Morgan, the Company’s Vice President, General Counsel and Corporate Secretary, which is effective as of April 1, 2015 and shall terminate as of March 31, 2017, unless earlier terminated by the Company or Mr. Morgan in accordance with the agreement (the “Morgan Employment Agreement”).

The Morgan Employment Agreement provides for a base salaryequal to $130,000, as well as an annual bonus opportunity, payable at the discretion of the Board of Directors, equal to 25% of Mr. Morgan’s base salary for that calendar year, provided that Mr. Morgan had the option to receive any portion of his salary and bonus in stock of the Company, in lieu of cash, at a value determined by the Board of Directors in their reasonable discretion and otherwise in accordance with the Employment Agreement.  

Amendments to Stephen Morgan Employment Agreement

Effective April 9, 2015, the Company entered into an Amendment to Executive Employment Agreement with Stephen Morgan amending his employment agreement, such that Mr. Morgan no longer has the option, in his sole discretion, to receive his salary and bonus amounts in the form of Company stock, rather than cash.

Effective February 12, 2016, the Company entered into a Second Amendment to Executive Employment Agreement with Mr. Morgan (the “Second Amendment”), amending his original, April 1, 2015 employment agreement. Concurrent with the Second Amendment, Mr. Morgan commenced serving as Interim President of the Company.  Mr. Morgan no longer serves as Vice President of the Company, but remains in his positions as Corporate Secretary and General Counsel.  The Second Amendment reflects a five thousand dollar ($5,000) increase in Mr. Morgan’s annual salary during the period Mr. Morgan serves as Interim President, which period commenced on February 12, 2016 and shall end at any time on three (3) days’ notice by the Company (the “Interim Term”). The Amendment further provides that the increase in Mr. Morgan’s salary shall not be included in any severance calculations, including the severance calculations set forth in Sections 5(e) and 5(f) of his original agreement, and that upon termination of the Interim Term for any reason, Mr. Morgan’s employment, duties and salary shall revert back to what they were prior to the Second Amendment.

Effective March 31, 2017, the Company entered into a Third Amendment to Executive Employment Agreement (the “Third Amendment”) with Stephen Morgan (the “Employee”), amending his original, April 1, 2015 employment agreement.  The Third Amendment provides that the last day of the term of Employee’s employment is extended from March 31, 2017, to March 31, 2018, subject to the other terms and conditions of Section 2 of the original agreement; provided, however, that (i) the Company may change Employee’s status from full-time to part-time employee at any time, (ii) concurrently with any such change in status, the Company may modify Employee’s base compensation amount and structure, and Employee’s prospective bonus, if any, and (iii) notwithstanding any such change in status, Employee shall remain eligible to receive the amount and other benefits set forth in Section 5(f) in accordance with the terms and conditions thereof.

On July 11, 2017, the Company’s Board of Directors announced that Stephen Morgan resigned from his positions as Interim President, General Counsel, and Corporate Secretary effective July 19, 2017. Effective July 19, 2017, the Company’s Board of Directors named Director and Chairman of the Audit Committee, Anthony Snow, as Interim President and Corporate Secretary. No severance was paid to Mr. Morgan and the Company has no commitments associated with his prior employment with or resignation from the Company.

Joseph Vicente Agreements

On December 18, 2014, the Company entered into an Executive Employment Agreement with Joseph R. Vicente, the Company’s former President and Chairman of the Board, which was effective as of January 1, 2015 and was to terminate as of December 31, 2017, unless earlier terminated by the Company or Mr. Vicente in accordance with the agreement (the “Vicente Employment Agreement”).

The Vicente Employment Agreement provided for a base salaryequal to $135,000, as well as an annual bonus opportunity, payable at the discretion of the Board of Directors, equal to 30% of Mr. Vicente’s base salary for that calendar year. Mr. Vicente had the option to receive any portion of his salary and bonus in stock of the Company, which was amended effective April 9, 2015 pursuant to an Amendment to Executive Employment Agreement whereby Mr. Vicente no longer had the option in his sole discretion to receive his salary and bonus amounts in stock. The Vicente Employment Agreement includes two-year restrictions on competition and solicitation of customers following termination of the agreement.

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Effective February 12, 2016 (the “Separation Date”), the Company entered a Mutual Separation Agreement with Mr. Vicente (the “Separation Agreement”).  Pursuant to the Separation Agreement, Mr. Vicente stepped down from his positions as President and as a member of the Board.  Under the Separation Agreement, Mr. Vicente is entitled to receive a severance, payable in equal monthly installments over the twenty-four month period post separation, in an amount equal to all compensation paid by the Company to Mr. Vicente for the 24 months preceding the termination, including salary and bonus received by Mr. Vicente.  Additionally, the Company will pay for the value of his health insurance premiums, in monthly installments, until the earlier of twenty-four months after the Separation Date or until Mr. Vicente or his dependents become eligible for group health insurance coverage through a new employer.  Mr. Vicente is also entitled to payment of his salary through the Separation Date, payment for unused vacation days, payment for any unreimbursed expenses, and a bonus payment for work performed in calendar year 2015, payable within sixty (60) days of the Company completing its fiscal 2015 audit.

Mr. Vicente remains subject to the restrictive covenants contained in the Vicente Employment Agreement, including a covenant not to compete and a non-solicitation provision, and is subject to additional restrictive covenants in the Separation Agreement.

Operating Leases

On January 21, 2014, the Company entered a First Amendment to Lease, which extended its lease at the property located at 1857 Helm Drive, Las Vegas (the “Property”), Nevada through September 30, 2019.  In connection with the amendment, the Company received an abatement of the entire amount of its rent for January 2014, except for CAM charges.  In addition, as of October 1, 2014, the Company’s monthly lease payments reverted back to their rates as they existed in June 2009, other than CAM charges, with annual adjustments thereafter as set forth in the Amendment. Moreover, the Landlord had the option to lease a portion of the premises then occupied by the Company to a third party, and if this portion is leased to a third party, the Company’s monthly rent amount was to be reduced pro rata with the portion of the space leased to a third party.  If the Landlord is unable to or elects not to lease a portion of the premises to a third party by November 30, 2015 and by each subsequent anniversary thereof, the Company shall 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 Common Area Maintenance Expenses and HOA 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.

Commitments for future minimum rental payments, by year, and in the aggregate, to be paid under such operating lease as of September 30, 2017, are as follows:

	Rent
	to be paid
2017	$47,465
2018	191,006
2019	145,835
Total	$384,306

Note 6.  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. The Company believes that such awards encourage employees to remain employed by the Company and also to attract persons of exceptional ability to become employees of the Company. 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.

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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 nine months ended September 30, 2017 and the year ended December 31, 2016.

The Company’s stock option activity was as follows:

	Stock Options	Weighted Average Exercise Price	Weighted Avg. Contractual Remaining Life
Outstanding, December 31, 2016	4,458,679	0.68	2.98
Granted	--	--	--
Exercised	--	--	--
Forfeited/Expired	150,685	0.33	--
Outstanding September 30, 2017	4,307,994	0.69	2.31
Exercisable September 30, 2017	4,307,994	0.69	2.31

The following table summarizes significant ranges of outstanding stock options under the stock option plan at September 30, 2017:

Range of Exercise Prices	Number of Options	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price	Number of Options Exercisable	Weighted Average Exercise Price
$0.33 — 1.11	4,307,994	2.31	$0.69	4,307,994	$0.69
	4,307,994	2.31	$0.69	4,307,994	$0.69

Note 7.  Stockholder’s Equity

Preferred Stock

The Company has 5,000,000 shares of $.0001 par value preferred stock authorized. As of September 30, 2017 and December 31, 2016, the Company had no shares of preferred stock outstanding.

Common Stock

The Company has 2,890,000,000 shares of $.0001 par value common stock authorized. As of September 30, 2017 and December 31, 2016, 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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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 the Company’s 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 September 30, 2017 unaudited condensed consolidated financial statements and related notes thereto included elsewhere in the quarterly report and with its consolidated financial statements and notes thereto for the year ended December 31, 2016 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, 2016, 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 its disclosures 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, 2016.

Summary and Outlook of the Business

CBAI primarily facilitates umbilical cord blood and cord tissue stem cell services, with a particular focus on the acquisition of customers in need of family based products and services.

Cord

Services Provided By Cord

Cord’s operations facilitate umbilical cord blood banking and cord tissue services to expectant parents. 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 facilitates processing and storage of cord blood and cord tissue for new customers through an engagement with a third party laboratory. Cord provides or facilitates 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 and cord tissue 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 instruction for the successful collection, packaging, and transportation of the cord blood and cord tissue and maternal blood samples.

● Transportation. Manage all logistics for transporting the cord blood and cord tissue unit to the Company’s third party facility immediately following birth. This procedure ensures chain-of-custody control during transportation for maximum security.

● Comprehensive Testing. The cord blood sample is tested by third parties engaged by Cord for stem cell concentration levels and blood type. The maternal samples are tested for infectious diseases. Cord reports results to the newborn’s mother.

● Cord Blood Storage. After processing and testing, the cord blood and cord tissue unit is cryogenically frozen in a controlled manner and stored in liquid nitrogen for potential future use. For new customers, this process is conducted at a third party laboratory.

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Additionally, the Company provides services related to procuring birth tissue for organizations utilizing the tissue in the transplantation and/or research of therapeutic based products.  The Company receives a one-time recovery fee per tissue.  Associated services provided by the Company with this offering may include arranging for transportation, providing collection materials, facilitating information used to determine donor eligibility and arranging for infectious disease testing of the maternal blood.

Results of Operations for the Three-Months Ended September 30, 2017

For the three months ended September 30, 2017, total revenue decreased to approximately $0.75 million from $0.78 million, a 3.5% decrease over the same period of 2016.Revenues are generated primarily from three sources: new enrollment/processing fees; recurring storage fees (both from cord blood and cord tissue); and services related to the procurement of birth tissue for organizations utilized in the transplantation and/or research of therapeutic products. The decrease in revenue is due primarily to the $0.02 decrease in revenue related to a reduction in storage and processing revenue from a previously terminated agreement with a third party. Recurring storage revenues decreased 2.4% to $0.67 million for the three-month period ended September 30, 2017, versus $0.69 million for the prior comparative period ended September 30, 2016. 

Cost of services as a percentage of revenue decreased to 21.7% for the three-month period ending September 30, 2017 compared to 22.3% in the same period of 2016. The cost of services include transportation of the umbilical cord blood and tissue from the hospital to the lab, direct material and labor, costs for processing and cryogenic storage of new samples by a third party laboratory, and allocated rent, utility and general administrative expenses.Gross profit decreased by approximately $0.02 million or 2.8% to approximately $0.59 million for the three month period ending September 30, 2017 from the comparable three-month period of 2016. The decline in gross profit is due to the reduction in storage and processing revenue from the third party.

The Company’s net income was $0.18 million for the three month period of 2017, as compared to $0.14 million for the three month comparative period of 2016.

Results of Operations for the Nine-Months Ended September 30, 2017

For the nine months ended September 30, 2017, total revenue decreased to approximately $2.24 million from $2.55 million, a 12.3% decrease over the same period of 2016.Revenues are generated primarily from three sources: new enrollment/processing fees; recurring storage fees (both from cord blood and cord tissue); and services related to the procurement of birth tissue for organizations utilized in the transplantation and/or research of therapeutic products. The decrease in revenue is due primarily to a $0.17 million reduction in orders for services related to procurement of birth tissue and a $0.07 million reduction in revenue related to a reduction in storage and processing revenue from a previously terminated agreement with a third party. Recurring storage revenues decreased 2.9% to $1.99 million for the nine-month period ended September 30, 2017, versus $2.05 million for the prior comparative period ended September 30, 2016. 

Cost of services as a percentage of revenue decreased to 22.7% for the nine-month period ending September 30, 2017 compared to 28.0% the same period of 2016. The cost of services include transportation of the umbilical cord blood and tissue from the hospital to the lab, direct material and labor, costs for processing and cryogenic storage of new samples by a third party laboratory, and allocated rent, utility and general administrative expenses.Gross profit decreased by approximately $0.11 million or 5.9% to approximately $1.73 million for the nine-month period ending September 30, 2017 from the comparable nine-month period of 2016. The decline in gross profit is due to the reduction in the aforementioned revenue.

The Company’s net income was $0.45 million for the nine-month period of 2017, as compared to net income of $0.10 million for the nine-month comparative period of 2016.

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Liquidity and Capital Resources

Total assets at September 30, 2017 were $2.71 million, compared to $3.13 million at December 31, 2016.Total liabilities at September 30, 2017 were $1.69 millionconsisting primarily of deferred revenue of $1.45 million. At December 31, 2016, total liabilities were $2.55 million consisting primarily of deferred revenue of $1.43 million.

At September 30, 2017, the Company had $0.96 million in cash, an increase of $0.03 million from the December 31, 2016 cash balance of $0.93 million. Cash flows from operations are currently sufficient to fund operations as net cash provided by operating activities for the nine months ended September 30, 2017, was $0.28 million, compared to net cash provided by operating activities of $0.49 million for the prior comparative period of 2016.During the nine-month period of 2017 there was no increase in notes payable for purposes of working capital.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has incurred losses since its inception through December 31, 2014, as development and infrastructure costs were incurred in advance of obtaining customers. However, the Company generated positive net income and cash flow from operations for the years ended December 31, 2015 and 2016. Starting in 2014, the Company's management commenced a plan to reduce operating expenses to be commensurate with operating cash flows. Prior to 2015, the Company relied on debt to provide capital for working capital needs.

Management has taken several actions to ensure that the Company will continue as a going concern, including the divesture of its investment in its unconsolidated affiliates, including the sale of its 51% ownership in Stellacure GmbH and 50.004% interest in Biocordcell Argentina S.A., headcount reductions, and reductions in discretionary expenditures. These changes effected by the Company's management resulted in the Company generating cash flow from operations in 2015 and 2016, and the Company did not require additional debt or equity capital from external sources. Further, the Company has eliminated its debt via the repayment of the principal balance. Management plans to continue to implement its business plan and to fund operations through operating revenue and a corresponding increase in the amount of net income from its operations. The Company expects that cash flow from operations over the next 12 months will be sufficient to meet its working capital needs. Management's objective is to continue to monitor and manage expenses relative to its revenue such that it will continue to generate operating cash flows to meet its operating cash requirements. Management believes that these actions will enable the Company to continue as a going concern through September 30, 2018.

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.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

It is management's responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange Act"). The Company’s management has reviewed and evaluated the effectiveness of its disclosure controls and procedures as of September 30, 2017. Following this review and evaluation, management collectively determined that its disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to management, including its president and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

19

The deficiency in the Company’s disclosure controls and procedures is related to a lack of segregation of duties due to the size of the accounting department and the lack of experienced accountants due to the limited financial resources of the Company. The Company continues to actively develop the controls and resources necessary in order to be in position to remediate this lack of segregation of duties.

Changes in Internal Control over Financial Reporting

There were no significant changes in the Company's internal controls over financial reporting or in other factors that could significantly affect these internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE

ITEM 1A.RISK FACTORS.

A description of the Company’s risk factors can be found in “Risk Factors” of its Annual Report on Form 10-K for the year ended December 31, 2016. There were no material changes to those risk factors for the three and nine months ended September 30, 2017.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a-b) Not applicable.

(c) Repurchase of Shares. The Company did not repurchase any of its shares during the quarter ended September 30, 2017.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION

NONE

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ITEM 6. EXHIBITS

The following documents are included as exhibits to this Form 10Q:

EXHIBIT	DESCRIPTION
2	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)
3.2(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)
31.1	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)
32.1	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.

(1) Filed as an exhibit to Registration Statement on Form 10-SB filed on May 6, 2004

(2) Filed as an exhibit to Current Report on Form 8-K filed on August 29, 2008

(3) Filed as an exhibit to the Current Report on Form 8-K filed on March 31, 2009 

(4) Filed as an exhibit to Current Report on Form 10Q filed on May 23, 2011

(5) Filed as an exhibit to Current Report on Form S-8 filed on June 3, 2011

(6) Filed as an exhibit to the Current Report on Form 8K filed on August 10, 2015

(7) Filed as an exhibit to the Current Report on Form 8K filed on May 29, 2015

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 13th day of November 2017.

CORD BLOOD AMERICA, INC.
By:	/s/Anthony Snow
	Interim President and Corporate Secretary
	(Principal Executive Officer, Principal Financial and Accounting Officer)

23

EX-31.1

 Exhibit 31.1

CERTIFICATION

I, Anthony Snow, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Cord Blood America, Inc. for the quarter ended September 30, 2017;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant 's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant 's internal control over financial reporting that occurred during the registrant 's most recent fiscal quarter (the registrant 's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant 's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant 's auditors and the audit committee of the registrant 's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date: November 13, 2017	By:	/s/ Anthony Snow
		Name Anthony Snow
		Interim President Principal Financial and Accounting Officer

EX-32.1

  Exhibit 32.1

CERTIFICATION

In connection with the Quarterly Report on Form 10-Q of Cord Blood America, Inc. (the “Company”) for the quarter ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Anthony Snow, Interim President and Principal Financial and Accounting Officer certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company, as of, and for the periods presented in the Report.

Date: November 13, 2017	By:	/s/ Anthony Snow
		Name Anthony Snow
		Interim President Principal Financial and Accounting Officer

 

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 03, 2017
Document And Entity Information
Entity Registrant Name	Cord Blood America, Inc.
Entity Central Index Key	0001289496
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,272,066,146
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2017

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash	$ 959,534	$ 926,209
Accounts receivable, net of allowance for doubtful accounts of $78,123 and $78,123, respectively	42,269	113,316
Other current assets	59,420	58,376
Receivable – Biocells net of discount of $26,875 and $27,541, respectively current Portion	28,125	27,459
Prepaid expenses	62,253	175,065
Total current assets	1,151,601	1,300,425
Property and equipment, net of accumulated depreciation and amortization of $760,724 and $743,200, respectively	49,104	66,628
Customer contracts and relationships, net of accumulated amortization of $4,446,938 and $4,232,982, respectively	1,108,100	1,322,056
Other Assets	19,292	19,292
Receivable - BioCells net of discount of $119,988 and $140,041, respectively - long term portion	385,012	419,959
Total assets	2,713,109	3,128,360
Liabilities and Stockholders' equity
Accounts payable	109,998	151,305
Accrued expenses	62,707	112,020
Severance Payable	66,913	187,360
Deferred revenue - current portion	1,204,783	1,158,578
Derivative liability - current portion	0	109,731
Interest on promissory notes	0	204,494
Promissory notes payable, net of unamortized discount of $0 and $43,432, respectively	0	356,568
Total current liabilities	1,444,401	2,280,056
Deferred revenue - long term portion	243,067	271,628
Total liabilities	1,687,468	2,551,684
Stockholders' equity:
Preferred stock, $.0001 par value, 5,000,000 shares authorized, no shares outstanding	0	0
Common stock, $.0001 par value, 2,890,000,000 shares authorized, 1,272,066,146 shares issued and outstanding, inclusive of treasury shares, respectively	127,207	127,207
Additional paid-in capital	53,954,510	53,954,510
Common stock held in treasury stock, 20,000 shares	(599,833)	(599,833)
Accumulated deficit	(52,456,243)	(52,905,208)
Total stockholders' equity	1,025,641	576,676
Total liabilities and stockholders' equity	$ 2,713,109	$ 3,128,360

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Assets
Allowance for Doubtful accounts Receivables	$ 78,123	$ 78,123
Receivable - BioCells net of discount - current portion	26,875	27,541
Accumulated depreciation and amortization	760,724	743,200
Customer contracts and relationship - net of amortization	4,446,938	4,232,982
Receivable - BioCells net of discount - long term portion	119,988	140,041
Liabilities
Promissory notes payable unamortized discount	$ 0	$ 43,432
Stockholders Equity
Preferred stock, par value	$ 0.0001	$ .0001
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares outstanding	0	0
Common stock, par value	$ 0.0001	$ .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

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Condensed Consolidated Statements Of Operations And Comprehensive Income Loss
Revenue	$ 747,735	$ 774,984	$ 2,240,069	$ 2,554,571
Cost of services	(162,236)	(172,902)	(509,166)	(714,721)
Gross Profit	585,499	602,082	1,730,903	1,839,850
Administrative and selling expenses	(414,757)	(497,926)	(1,357,900)	(1,763,932)
Income from operations	170,742	104,155	373,003	75,918
Interest expense and change in derivative liability	(275)	28,300	55,243	(3,135)
Other income	6,823	7,073	20,719	27,344
Income from continuing operations before provision for income taxes	177,290	139,528	448,965	100,127
Income taxes	0	0	0	0
Net income	$ 177,290	$ 139,528	$ 448,965	$ 100,127
Basic earnings per share	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Diluted earnings per share	$ 0.00	$ 0.00	$ 0.00	$ 0.00
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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 448,965	$ 100,127
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of loan discount	(56,568)	169,554
Amortization of note receivable discount	(20,719)	(21,031)
Depreciation and amortization	231,480	275,687
Change in value of derivative liability	(109,731)	(228,404)
Bad debt	56,120	17,253
Other income from loan receivable	0	(6,313)
Changes in accounts receivable	14,927	210,951
Changes in inventory	(1,044)	12,656
Changes in prepaid	112,812	112,529
Changes in accounts payable	(41,307)	(144,926)
Changes in accrued expenses	(49,313)	(26,996)
Changes in severance payable	(120,447)	0
Changes in accrued interest	(204,494)	61,986
Changes in deferred revenue	17,644	(41,789)
NET CASH PROVIDED BY OPERATING ACTIVITIES	278,325	491,284
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for loan receivable – Biocells	55,000	45,350
Payment for loan receivable - Banco Vida	0	69,454
NET CASH PROVIDED BY INVESTING ACTIVITIES	55,000	114,804
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable	(300,000)	(275,000)
NET CASH USED IN FINANCING ACTIVITIES	(300,000)	(275,000)
NET INCREASE IN CASH	33,325	331,088
Cash balance at beginning of period	926,209	789,046
Cash balance at end of period	$ 959,534	$ 1,120,134

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1. Organization and Description of Business

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

NOTE 1 - Organization and Description of Business

Overview

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.  CBAI and its subsidiaries engage in the following business activities:

● CBAI and Cord specialize in providing private cord blood and cord tissue stem cell services. Additionally, the Company is in the business of procuring birth tissue for organizations utilizing the tissue in the transplantation and/or research of therapeutic based products.

● Properties was formed to hold corporate trademarks and other intellectual property.

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 nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or for any other future period.  The condensed consolidated balance sheet at December 31, 2016 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, 2016 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.

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2. Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

NOTE 2 - Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of CBAI and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.

Cash

Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase.

The Company maintains cash and cash equivalents at several financial institutions.

Accounts Receivable

Accounts receivable consist of the amounts due for facilitating the processing and storage of umbilical cord blood and cord tissue, and birth tissue procurement services.  Accounts receivable relating to deferred revenues are netted against deferred revenue for presentation purposes. The allowance for doubtful accounts is estimated based upon historical experience. The allowance is reviewed quarterly and adjusted for accounts deemed uncollectible by management. Amounts are written off when all collection efforts have failed. The Company wrote off $56,120 and $17,253 in bad debt expense during the nine months ended September 30, 2017 and 2016, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Routine maintenance and repairs are charged to expense as incurred while major replacement and improvements are capitalized as additions to the related assets. Sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the related asset and accumulated depreciation accounts with any gain or loss credited or charged to income upon disposition.

Impairment of Long-Lived Assets

Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. The Company reviews goodwill for impairment at least annually or whenever events or circumstances are more likely than not to reduce the fair value of goodwill below its carrying amount.

Inventory

Inventory, comprised principally of finished goods, is stated at the lower of cost or market, and net realized value, using the first-in, first-out (“FIFO”) method. This policy requires the Company to make estimates regarding the market value of its inventory, including an assessment of excess or obsolete inventory. The Company determines excess and obsolete inventory based on an estimate of the future demand and estimated selling prices for its products.

Note Receivable

Notes receivable consists of the notes due from Biocordcell Argentina S.A. (BioCells) (Note 4). The note receivable is recorded at the carrying-value on the financial statements.

For note receivable from BioCells, since the Company agreed to finance the sale of the shares in Biocordcell at no stated interest, in accordance with ASC 500, the interest method was applied using a 6% borrowing rate. The Company recorded an unamortized discount based on the 6% borrowing rate and the discount is amortized throughout the life of the note.

Deferred Revenue

Deferred revenue consists of payments for enrollment in the program and processing of umbilical cord blood and cord tissue by customers whose samples have not yet been collected, as well as the pro-rata share of annual storage fees for customers whose samples were stored during the year.

Valuation of Derivative Instruments

ASC 815-40 requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Binomial option pricing formula and present value pricing. At September 30, 2017 and December 31, 2016, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its condensed consolidated statements of income (loss).

Revenue Recognition

CBAI recognizes revenue under the provisions of ASC 605. CBAI provides a combination of products and services to customers. This combination arrangement is evaluated under ASC 605. ASC 605 addresses certain aspects of accounting for arrangements under multiple revenue generating activities.

Cord recognizes revenue from both enrollment fees and processing fees upon the completion of processing while revenue from storage fees are recognized ratably over the contractual storage period.

Cost of Services

Costs are incurred as umbilical cord blood, cord tissue and birth tissue are collected. These costs include the transportation of the umbilical cord blood, cord tissue and birthing tissue from the hospital, direct material and labor, costs for processing and cryogenic storage of new samples by a third party laboratory, collection kit materials and allocated rent, utility and general administrative expenses. The Company expenses costs in the period incurred.

Accounting for Stock Option Plan

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding.  Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. 

Concentration of Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet their contractual obligations to be similarly affected by changes in economic or other conditions described below.

Relationships and agreements which could potentially expose the Company to concentrations of credit risk consist of the use of one source for the processing and storage of all umbilical cord blood and one source for the development and maintenance of a website. The Company believes that alternative sources are available for each of these concentrations.

Financial instruments that subject the Company to credit risk could consist of cash balances maintained in excess of federal depository insurance limits. The Company maintains its cash and cash equivalent balances with high credit quality financial institutions. At times, cash and cash equivalent balances may be in excess of Federal Deposit Insurance Corporation limits. To date, the Company has not experienced any such losses.

Fair Value Measurements

Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by ASC 820, are as follows:

● Level 1 – quoted prices in active markets for identical assets or liabilities.

● Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.

● Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

The following table summarizes fair value measurements by level at September 30, 2017 for assets and liabilities measured at fair value on a recurring basis:

		Level 1		Level 2		Level 3		Total
Derivative liability	$	—	$	—	$	—	$	—

Derivative liability was valued under the Binomial model with the following assumptions:

Risk free interest rate	0%
Expected life	0 years
Dividend Yield	0%
Volatility	0%

The following table summarizes fair value measurements by level at December 31, 2016 for assets and liabilities measured at fair value on a recurring basis:

		Level 1		Level 2		Level 3			Total
Derivative liability	$	—	$	—	$	(109,731	)	$	(109,731	)

Derivative liability was valued under the Binomial model, with the following assumptions:

Risk free interest rate	0.12%-0.47%
Expected life	0 to 0.75 years
Dividend Yield			0%
Volatility		0% to 109%

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 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 is currently assessing the potential impact this ASU will have on the consolidated financial statements and related disclosures.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedient, which is to (1) clarify the objective of the collectability criterion for applying paragraph 606-10-25-7; (2) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; (3) specify that the measurement date for noncash consideration is contract inception; (4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; (5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently assessing the potential impact this ASU will have on the consolidated financial statements and related disclosures

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. The Company is currently assessing the potential impact this ASU will have on the 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 will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This amendment will be effective for the Company on December 15, 2017.

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3. Notes and Loans Payable

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

NOTE 3 - Notes and Loans Payable

At September 30, 2017 and December 31, 2016 notes and loans payable consist of:

	September 30, 2017		December 31, 2016
Secured Convertible Promissory Note to Tonaquint, Inc., 7.5% per annum; due on or before September 17, 2017	$	—	$	400,000
		—		400,000
Less: Unamortized Discount		—		(43,432	)
	$	—	$	356,568

Tonaquint, Inc.

On August 30, 2013, Cord Blood America, Inc. (the “Company”) filed a Complaint in the United States District Court for the District of Utah, Central Division against Tonaquint, Inc. (“Tonaquint”) and St. George Investments, LLC (“St. George”) (collectively “Defendants”), case number 2:13-cv-00806-PMW (the “Action”), and on May 7, 2014, the Company filed an amended complaint.  On September 25, 2013, Defendants each filed their Answer and Counterclaim in the Action, which they amended on March 22, 2014.

On December 17, 2014, in settlement of the Action, the parties entered into a Settlement and Exchange Agreement (the "Settlement Agreement"). Pursuant to the Settlement Agreement, the Secured Convertible Promissory Note and the Warrant to Purchase Shares of Common Stock issued by the Company to St. George on or around March 10, 2011, as well as the SGI Purchase Agreement, and all other documents that made up the March 2011 transaction between the Company and St. George, all of which have been set forth in detail in prior filings by the Company, were terminated, cancelled or otherwise extinguished.  Further pursuant to the Settlement Agreement, the Tonaquint Note was exchanged for a Secured Convertible Promissory Note of the Company in the principal amount of $2,500,000 (the "Company Note"), and certain of the other documents that were part of the June 27, 2012 transaction between the Company and Tonaquint (the “June 2012 Tonaquint Transaction”) were terminated, cancelled or otherwise extinguished, and certain of them were amended, as set forth below.

Under the Company Note, the Company shall make monthly payments to Tonaquint, with the first payment due on or before April 17, 2015, and with payments continuing thereafter until the Company's Note is paid in full, with a maturity date that is 33 calendar months after the effective date of December 17, 2014. The amount of the monthly payments is $100,000 (the “Installment Amount”); provided, however, that if the remaining amount owing under the Company Note as of the applicable Installment Date (defined in the Company Note) is less than $100,000, then the Installment Amount for such Installment Date shall be equal to the outstanding amount. The Company may prepay any or all of the outstanding amount of the Company Note at any time, without penalty. In the event the Company prepays an amount that is less than the outstanding amount, then the prepayment amount shall be applied to the next Installment Amount(s) due under the Company Note.

For each monthly payment, the Company may elect to designate all or any portion of the Installment Amount then due as a conversion eligible amount (hereafter “Conversion Eligible Amount”); provided that the total outstanding Conversion Eligible Amount that has not been converted by Tonaquint, as set forth below, at any given time may not exceed one hundred thousand dollars ($100,000) without Tonaquint’s prior written consent and subject to additional restrictions set forth in the Company Note. In the event the Company designates any portion of any monthly payment amount as a Conversion Eligible Amount, the applicable monthly payment shall be reduced by an amount equal to the portion thereof designated as a Conversion Eligible Amount. The Conversion Eligible Amount shall continue to be included in and be deemed to be a part of the Outstanding Balance (defined in the Company Note) of the Company Note unless and until such amount is either paid in cash by the Company or converted into Common Stock by Tonaquint. The Company may pay the Conversion Eligible Amount in cash, provided that no prepayments of cash shall reduce the Conversion Eligible Amount until the Outstanding Balance is equal to or less than the Conversion Eligible Amount.

Once the Company has designated amounts as Conversion Eligible Amount, Tonaquint may convert all or any portion of that amount into shares of the Company's Common Stock. In the event of a conversion by Tonaquint of a Conversion Eligible Amount, the number of Common Stock shares delivered to Tonaquint upon conversion will be calculated by dividing the amount of the Company Note that is being converted by 70% of the average of the three (3) lowest Closing Bid Prices of the Common Stock (as defined in the Company Note) in the twenty (20) Trading Days immediately preceding the applicable Conversion.

The Company records debt discounts in connection with the issuance of convertible debt and the initial valuation of the derivative liability. The discounts are amortized to non-cash interest expense over the life of the debt.

The Company Note has an interest rate of 7.5%, compounding daily, which would increase to a rate of 15.0% on the happening of certain Events of Default (defined in the Company Note) that are not considered a Payment Default (defined in the Company Note), provided that the Company may cure the default in accordance with and subject to the terms set forth in the Company Note. Where a Payment Default occurs, including where (i) Borrower shall fail to pay any principal, interest, fees, charges, or any other amount when due and payable under that Company Note; or (ii) Borrower shall fail to deliver any Conversion Shares in accordance with the terms of the Company Note, late fees shall accrue as set forth in the Company Note, and in addition, the Company shall have ninety (90) days from delivery of notice of default from Tonaquint to cure the default, as set forth in more detail in the Company Note. If the Company fails to cure the Payment Default, Tonaquint may accelerate the Company Note by written notice to the Company, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default Amount (defined in the Company Note) equal to (i) the Outstanding Balance as of the date of acceleration (which Outstanding Balance, for the avoidance of doubt, will include all Late Fees that accrue until any applicable Payment Default is cured) multiplied by (ii) two hundred fifty percent (250%), along with other remedies, as set forth in the Company Note.

As of December 31, 2016, the principal balance on the Tonaquint note was $400,000, and there was $204,494 of accrued interest. On July 7, 2017, the Company made its final payment to Tonaquint which constituted payment in full of the original $2.5 million principal obligation and associated interest.

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4. Investment and Notes Receivable, Related Parties

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

NOTE 4 - Investment and Notes Receivable, Related Parties

At September 30, 2017 and December 31, 2016, notes receivable consist of:

	September 30, 2017			December 31, 2016
On September 29, 2014, the Company closed a transaction selling its stake in BioCells to Diego Rissola; current President.  Payments are to be made annually, after June of 2015, and the last payment due on or before June 1, 2025.	$	560,000		$	615,000
Unamortized discount on BioCells note receivable		(146,863	)		(167,582	)
	$	413,137		$	447,418

Under the Agreement with the Purchaser of BioCells, BioCells is to make payments as follows: $5,000 on or before October 12, 2014 (amount paid in 2014); $10,000 on or before December 1, 2014 (amount paid in 2015); $15,000 on or before March 1, 2015 (amount paid in 2015); $15,000 on or before June 1, 2015 (amount paid in 2015); $45,000 on or before June 1, 2016 (amount paid in 2016); $55,000 on or before June 1, 2017 (amount paid in 2017); $55,000 on or before June 1, 2018; $55,000 on or before June 1, 2019; $65,000 on or before June 1, 2020; $75,000 on or before June 1, 2021; $75,000 on or before June 1, 2022; $75,000 on or before June 1, 2023; $80,000 on or before June 1, 2024; $80,000 on or before June 1, 2025. As of September 30, 2017, the Purchaser has paid all amounts due for the June 1, 2017 payment, such that the Purchaser is current with payments due under the Agreement. This loan receivable is secured, non-interest bearing, and subject to a 6% discount rate. As of September 30, 2017 and December 31, 2016, the receivable has a balance of $413,137 and $447,418, respectively.

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5. Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

NOTE 5 - Commitments and Contingencies

Stephen Morgan Employment Agreement

On March 31, 2015, the Company entered into an Executive Employment Agreement with Stephen Morgan, the Company’s Vice President, General Counsel and Corporate Secretary, which is effective as of April 1, 2015 and shall terminate as of March 31, 2017, unless earlier terminated by the Company or Mr. Morgan in accordance with the agreement (the “Morgan Employment Agreement”).

The Morgan Employment Agreement provides for a base salary equal to $130,000, as well as an annual bonus opportunity, payable at the discretion of the Board of Directors, equal to 25% of Mr. Morgan’s base salary for that calendar year, provided that Mr. Morgan had the option to receive any portion of his salary and bonus in stock of the Company, in lieu of cash, at a value determined by the Board of Directors in their reasonable discretion and otherwise in accordance with the Employment Agreement.  

Amendments to Stephen Morgan Employment Agreement

Effective April 9, 2015, the Company entered into an Amendment to Executive Employment Agreement with Stephen Morgan amending his employment agreement, such that Mr. Morgan no longer has the option, in his sole discretion, to receive his salary and bonus amounts in the form of Company stock, rather than cash.

Effective February 12, 2016, the Company entered into a Second Amendment to Executive Employment Agreement with Mr. Morgan (the “Second Amendment”), amending his original, April 1, 2015 employment agreement. Concurrent with the Second Amendment, Mr. Morgan commenced serving as Interim President of the Company.  Mr. Morgan no longer serves as Vice President of the Company, but remains in his positions as Corporate Secretary and General Counsel.  The Second Amendment reflects a five thousand dollar ($5,000) increase in Mr. Morgan’s annual salary during the period Mr. Morgan serves as Interim President, which period commenced on February 12, 2016 and shall end at any time on three (3) days’ notice by the Company (the “Interim Term”). The Amendment further provides that the increase in Mr. Morgan’s salary shall not be included in any severance calculations, including the severance calculations set forth in Sections 5(e) and 5(f) of his original agreement, and that upon termination of the Interim Term for any reason, Mr. Morgan’s employment, duties and salary shall revert back to what they were prior to the Second Amendment.

Effective March 31, 2017, the Company entered into a Third Amendment to Executive Employment Agreement (the “Third Amendment”) with Stephen Morgan (the “Employee”), amending his original, April 1, 2015 employment agreement.  The Third Amendment provides that the last day of the term of Employee’s employment is extended from March 31, 2017, to March 31, 2018, subject to the other terms and conditions of Section 2 of the original agreement; provided, however, that (i) the Company may change Employee’s status from full-time to part-time employee at any time, (ii) concurrently with any such change in status, the Company may modify Employee’s base compensation amount and structure, and Employee’s prospective bonus, if any, and (iii) notwithstanding any such change in status, Employee shall remain eligible to receive the amount and other benefits set forth in Section 5(f) in accordance with the terms and conditions thereof.

On July 11, 2017, the Company’s Board of Directors announced that Stephen Morgan resigned from his positions as Interim President, General Counsel, and Corporate Secretary effective July 19, 2017. Effective July 19, 2017, the Company’s Board of Directors named Director and Chairman of the Audit Committee, Anthony Snow, as Interim President and Corporate Secretary. No severance was paid to Mr. Morgan and the Company has no commitments associated with his prior employment with or resignation from the Company.

Joseph Vicente Agreements

On December 18, 2014, the Company entered into an Executive Employment Agreement with Joseph R. Vicente, the Company’s former President and Chairman of the Board, which was effective as of January 1, 2015 and was to terminate as of December 31, 2017, unless earlier terminated by the Company or Mr. Vicente in accordance with the agreement (the “Vicente Employment Agreement”).

The Vicente Employment Agreement provided for a base salary equal to $135,000, as well as an annual bonus opportunity, payable at the discretion of the Board of Directors, equal to 30% of Mr. Vicente’s base salary for that calendar year. Mr. Vicente had the option to receive any portion of his salary and bonus in stock of the Company, which was amended effective April 9, 2015 pursuant to an Amendment to Executive Employment Agreement whereby Mr. Vicente no longer had the option in his sole discretion to receive his salary and bonus amounts in stock. The Vicente Employment Agreement includes two-year restrictions on competition and solicitation of customers following termination of the agreement.

Effective February 12, 2016 (the “Separation Date”), the Company entered a Mutual Separation Agreement with Mr. Vicente (the “Separation Agreement”).  Pursuant to the Separation Agreement, Mr. Vicente stepped down from his positions as President and as a member of the Board.  Under the Separation Agreement, Mr. Vicente is entitled to receive a severance, payable in equal monthly installments over the twenty-four month period post separation, in an amount equal to all compensation paid by the Company to Mr. Vicente for the 24 months preceding the termination, including salary and bonus received by Mr. Vicente.  Additionally, the Company will pay for the value of his health insurance premiums, in monthly installments, until the earlier of twenty-four months after the Separation Date or until Mr. Vicente or his dependents become eligible for group health insurance coverage through a new employer.  Mr. Vicente is also entitled to payment of his salary through the Separation Date, payment for unused vacation days, payment for any unreimbursed expenses, and a bonus payment for work performed in calendar year 2015, payable within sixty (60) days of the Company completing its fiscal 2015 audit.

Mr. Vicente remains subject to the restrictive covenants contained in the Vicente Employment Agreement, including a covenant not to compete and a non-solicitation provision, and is subject to additional restrictive covenants in the Separation Agreement.

Operating Leases

On January 21, 2014, the Company entered a First Amendment to Lease, which extended its lease at the property located at 1857 Helm Drive, Las Vegas (the “Property”), Nevada through September 30, 2019.  In connection with the amendment, the Company received an abatement of the entire amount of its rent for January 2014, except for CAM charges.  In addition, as of October 1, 2014, the Company’s monthly lease payments reverted back to their rates as they existed in June 2009, other than CAM charges, with annual adjustments thereafter as set forth in the Amendment. Moreover, the Landlord had the option to lease a portion of the premises then occupied by the Company to a third party, and if this portion is leased to a third party, the Company’s monthly rent amount was to be reduced pro rata with the portion of the space leased to a third party.  If the Landlord is unable to or elects not to lease a portion of the premises to a third party by November 30, 2015 and by each subsequent anniversary thereof, the Company shall 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 Common Area Maintenance Expenses and HOA 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.

Commitments for future minimum rental payments, by year, and in the aggregate, to be paid under such operating lease as of September 30, 2017, are as follows:

	Rent
	to be paid
2017	$	47,465
2018		191,006
2019		145,835
Total	$	384,306

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6. Share Based Compensation

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

NOTE 6 - 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. The Company believes that such awards encourage employees to remain employed by the Company and also to attract persons of exceptional ability to become employees of the Company. 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 nine months ended September 30, 2017 and the year ended December 31, 2016.

The Company’s stock option activity was as follows:

	Stock Options		Weighted Average Exercise Price		Weighted Avg. Contractual Remaining Life
Outstanding, December 31, 2016		4,458,679		0.68		2.98
Granted		—		—		—
Exercised		—		—		—
Forfeited/Expired		150,685		0.33		—
Outstanding September 30, 2017		4,307,994		0.69		2.31
Exercisable September 30, 2017		4,307,994		0.69		2.31

The following table summarizes significant ranges of outstanding stock options under the stock option plan at September 30, 2017:

Range of Exercise Prices		Number of Options		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Options Exercisable		Weighted Average Exercise Price
$	0.33 — 1.11		4,307,994		2.31	$	0.69		4,307,994	$	0.69
			4,307,994		2.31	$	0.69		4,307,994	$	0.69

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7. Stockholder's Equity

9 Months Ended

Sep. 30, 2017

Stockholders Equity

NOTE 7 - Stockholder's Equity

Preferred Stock

The Company has 5,000,000 shares of $.0001 par value preferred stock authorized. As of September 30, 2017 and December 31, 2016, the Company had no shares of preferred stock outstanding.

Common Stock

The Company has 2,890,000,000 shares of $.0001 par value common stock authorized. As of September 30, 2017 and December 31, 2016, 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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2. Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Summary Of Significant Accounting Policies Policies

Basis of Consolidation

The consolidated financial statements include the accounts of CBAI and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.

Cash

Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase.

The Company maintains cash and cash equivalents at several financial institutions.

Accounts Receivable

Accounts receivable consist of the amounts due for facilitating the processing and storage of umbilical cord blood and cord tissue, and birth tissue procurement services.  Accounts receivable relating to deferred revenues are netted against deferred revenue for presentation purposes. The allowance for doubtful accounts is estimated based upon historical experience. The allowance is reviewed quarterly and adjusted for accounts deemed uncollectible by management. Amounts are written off when all collection efforts have failed. The Company wrote off $56,120 and $17,253 in bad debt expense during the nine months ended September 30, 2017 and 2016, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Routine maintenance and repairs are charged to expense as incurred while major replacement and improvements are capitalized as additions to the related assets. Sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the related asset and accumulated depreciation accounts with any gain or loss credited or charged to income upon disposition.

Impairment of Long-Lived Assets

Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. The Company reviews goodwill for impairment at least annually or whenever events or circumstances are more likely than not to reduce the fair value of goodwill below its carrying amount.

Inventory

Inventory, comprised principally of finished goods, is stated at the lower of cost or market, and net realized value, using the first-in, first-out (“FIFO”) method. This policy requires the Company to make estimates regarding the market value of its inventory, including an assessment of excess or obsolete inventory. The Company determines excess and obsolete inventory based on an estimate of the future demand and estimated selling prices for its products.

Notes Receivable

Notes receivable consists of the notes due from Biocordcell Argentina S.A. (BioCells) (Note 4). The note receivable is recorded at the carrying-value on the financial statements.

For note receivable from BioCells, since the Company agreed to finance the sale of the shares in Biocordcell at no stated interest, in accordance with ASC 500, the interest method was applied using a 6% borrowing rate. The Company recorded an unamortized discount based on the 6% borrowing rate and the discount is amortized throughout the life of the note.

Deferred Revenue

Deferred revenue consists of payments for enrollment in the program and processing of umbilical cord blood and cord tissue by customers whose samples have not yet been collected, as well as the pro-rata share of annual storage fees for customers whose samples were stored during the year.

Valuation of Derivative Instruments

ASC 815-40 requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Binomial option pricing formula and present value pricing. At September 30, 2017 and December 31, 2016, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its condensed consolidated statements of income (loss).

Revenue Recognition

CBAI recognizes revenue under the provisions of ASC 605. CBAI provides a combination of products and services to customers. This combination arrangement is evaluated under ASC 605. ASC 605 addresses certain aspects of accounting for arrangements under multiple revenue generating activities.

Cord recognizes revenue from both enrollment fees and processing fees upon the completion of processing while revenue from storage fees are recognized ratably over the contractual storage period.

Cost of Services

Costs are incurred as umbilical cord blood, cord tissue and birth tissue are collected. These costs include the transportation of the umbilical cord blood, cord tissue and birthing tissue from the hospital, direct material and labor, costs for processing and cryogenic storage of new samples by a third party laboratory, collection kit materials and allocated rent, utility and general administrative expenses. The Company expenses costs in the period incurred.

Accounting for Stock Option Plan

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding.  Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. 

Concentration of Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet their contractual obligations to be similarly affected by changes in economic or other conditions described below.

Relationships and agreements which could potentially expose the Company to concentrations of credit risk consist of the use of one source for the processing and storage of all umbilical cord blood and one source for the development and maintenance of a website. The Company believes that alternative sources are available for each of these concentrations.

Financial instruments that subject the Company to credit risk could consist of cash balances maintained in excess of federal depository insurance limits. The Company maintains its cash and cash equivalent balances with high credit quality financial institutions. At times, cash and cash equivalent balances may be in excess of Federal Deposit Insurance Corporation limits. To date, the Company has not experienced any such losses.

Fair Value Measurements

Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by ASC 820, are as follows:

● Level 1 – quoted prices in active markets for identical assets or liabilities.

● Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.

● Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

The following table summarizes fair value measurements by level at September 30, 2017 for assets and liabilities measured at fair value on a recurring basis:

		Level 1		Level 2		Level 3		Total
Derivative liability	$	—	$	—	$	—	$	—

Derivative liability was valued under the Binomial model with the following assumptions:

Risk free interest rate	0%
Expected life	0 years
Dividend Yield	0%
Volatility	0%

The following table summarizes fair value measurements by level at December 31, 2016 for assets and liabilities measured at fair value on a recurring basis:

		Level 1		Level 2		Level 3			Total
Derivative liability	$	—	$	—	$	(109,731	)	$	(109,731	)

Derivative liability was valued under the Binomial model, with the following assumptions:

Risk free interest rate	0.12%-0.47%
Expected life	0 to 0.75 years
Dividend Yield			0%
Volatility		0% to 109%

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 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 is currently assessing the potential impact this ASU will have on the consolidated financial statements and related disclosures.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedient, which is to (1) clarify the objective of the collectability criterion for applying paragraph 606-10-25-7; (2) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; (3) specify that the measurement date for noncash consideration is contract inception; (4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; (5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently assessing the potential impact this ASU will have on the consolidated financial statements and related disclosures

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. The Company is currently assessing the potential impact this ASU will have on the 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 will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This amendment will be effective for the Company on December 15, 2017.

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2. Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Summary Of Significant Accounting Policies Tables

Fair value measurements for assets and liabilities

The following table summarizes fair value measurements by level at September 30, 2017 for assets and liabilities measured at fair value on a recurring basis:

		Level 1		Level 2		Level 3		Total
Derivative liability	$	—	$	—	$	—	$	—

The following table summarizes fair value measurements by level at December 31, 2016 for assets and liabilities measured at fair value on a recurring basis:

		Level 1		Level 2		Level 3			Total
Derivative liability	$	—	$	—	$	(109,731	)	$	(109,731	)

Derivative liability assumptions

Derivative liability was valued under the Binomial model with the following assumptions:

Risk free interest rate	0%
Expected life	0 years
Dividend Yield	0%
Volatility	0%

Derivative liability was valued under the Binomial model, with the following assumptions:

Risk free interest rate	0.12%-0.47%
Expected life	0 to 0.75 years
Dividend Yield			0%
Volatility		0% to 109%

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3. Notes and Loans Payable (Tables)

9 Months Ended

Sep. 30, 2017

Notes and Loans Payable [Abstract]

Notes and Loans Payable

	September 30, 2017		December 31, 2016
Secured Convertible Promissory Note to Tonaquint, Inc., 7.5% per annum; due on or before September 17, 2017	$	—	$	400,000
		—		400,000
Less: Unamortized Discount		—		(43,432	)
	$	—	$	356,568

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4. Investment and Notes Receivable, Related Parties (Tables)

9 Months Ended

Sep. 30, 2017

Investment And Notes Receivable Related Parties Tables

Investment and Notes Receivable, Related Parties

	September 30, 2017			December 31, 2016
On September 29, 2014, the Company closed a transaction selling its stake in BioCells to Diego Rissola; current President.  Payments are to be made annually, after June of 2015, and the last payment due on or before June 1, 2025.	$	560,000		$	615,000
Unamortized discount on BioCells note receivable		(146,863	)		(167,582	)
	$	413,137		$	447,418

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5. Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2017

Commitments And Contingencies Tables

Future minimum rental payments

	Rent
	to be paid
2017	$	47,465
2018		191,006
2019		145,835
Total	$	384,306

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6. Share Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Stock option activity

	Stock Options		Weighted Average Exercise Price		Weighted Avg. Contractual Remaining Life
Outstanding, December 31, 2016		4,458,679		0.68		2.98
Granted		—		—		—
Exercised		—		—		—
Forfeited/Expired		150,685		0.33		—
Outstanding September 30, 2017		4,307,994		0.69		2.31
Exercisable September 30, 2017		4,307,994		0.69		2.31

Summary of significant ranges of outstanding stock options

Range of Exercise Prices		Number of Options		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Options Exercisable		Weighted Average Exercise Price
$	0.33 — 1.11		4,307,994		2.31	$	0.69		4,307,994	$	0.69
			4,307,994		2.31	$	0.69		4,307,994	$	0.69

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2. Summary of Significant Accounting Policies (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Measurements, Recurring [Member]
Summary of assets and liabilities measured at fair value on a recurring basis
Derivative liability	$ 0	$ (109,731)
Fair Value, Measurements, Recurring [Member], Level 1 [Member]
Summary of assets and liabilities measured at fair value on a recurring basis
Derivative liability	0	0
Fair Value, Measurements, Recurring [Member], Level 2 [Member]
Summary of assets and liabilities measured at fair value on a recurring basis
Derivative liability	0	0
Fair Value, Measurements, Recurring [Member], Level 3 [Member]
Summary of assets and liabilities measured at fair value on a recurring basis
Derivative liability	$ 0	$ (109,731)

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2. Summary of Significant Accounting Policies (Details 1)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Risk free interest rate	0.00%
Expected life	0 years
Dividend Yield	0.00%	0.00%
Volatility	0.00%
Minimum [Member]
Risk free interest rate		0.12%
Expected life		0 years
Volatility		0.00%
Maximum [Member]
Risk free interest rate		0.47%
Expected life		9 months
Volatility		109.00%

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3. Notes and Loans Payable (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Notes and loans payable	$ 0	$ 400,000
Less: Unamortized Discount	0	(43,432)
Notes and loans payable, Net	0	356,568
Secured Convertible Promissory Note To Tonaquint [Member]
Notes and loans payable	$ 0	$ 400,000

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3. Notes and Loans Payable (Details Narrative) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Principal Balance Of Notes and Loans Payable	$ 0	$ 400,000
Tonaquint, Inc
Principal Balance Of Notes and Loans Payable		400,000
Accrued Interest		$ 204,494

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4. Investment and Notes Receivable, Related Parties (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Unamortized discount on BioCells note receivable	$ (146,863)	$ (167,582)
Notes receivable, net	413,137	447,418
BioCells
Notes receivable	$ 560,000	$ 615,000

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5. Commitments and Contingencies (Details)	Sep. 30, 2017 USD ($)
Commitments And Contingencies Tables
2017	$ 47,465
2018	191,006
2019	145,835
Total	$ 384,306

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6. Share Based Compensation (Details)	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Share Based Compensation Details
Beginning Balance, shares | shares	4,458,679
Granted, shares | shares	0
Exercised, shares | shares	0
Forfeited/Expired, shares | shares	150,685
Ending Balance, shares | shares	4,307,994
Ending Balance Exercisable, shares | shares	4,307,994
Beginning Balance, weighted average exercise price | $ / shares	$ .68
Granted, weighted average exercise price | $ / shares	0.00
Exercised, weighted average exercise price | $ / shares	0.00
Forfeited/Expired, weighted average exercise price | $ / shares	.33
Ending Balance, weighted average exercise price | $ / shares	.69
Ending Balance Exercisable, weighted average exercise price | $ / shares	$ .69
Beginning Balance, Weighted Avg. Contractual Remaining Life	2 years 11 months 23 days
Ending Balance, Weighted Avg. Contractual Remaining Life	2 years 3 months 22 days
Weighted Avg. Contractual Remaining Life, Exercisable	2 years 3 months 22 days

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6. Share Based Compensation (Details 1) - $ / shares	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Number of Options	4,307,994	4,458,679
Weighted Average Remaining Contractual Life (years)	2 years 3 months 22 days
Weighted Average Exercise Price	$ .69	$ .68
Number of Options Exercisable	4,307,994
Weighted Average Exercise Price	$ .69
Range One [Member]
Range of Exercise Prices	$0.33 - $1.11
Number of Options	4,307,994
Weighted Average Remaining Contractual Life (years)	2 years 3 months 22 days
Weighted Average Exercise Price	$ .69
Number of Options Exercisable	4,307,994
Weighted Average Exercise Price	$ .69

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7. Stockholder's Equity (Details Narrative) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Stockholders Equity Details Narrative
Preferred stock, par value	$ 0.0001	$ .0001
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares outstanding	0	0
Common stock, par value	$ 0.0001	$ .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