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As filed with the Securities and Exchange Commission on January 14 , 2010

Registration Number 333-162350

 

Nevada	3086	88-0313393
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification No.)

Mark R. Ziebell, Esq. Anthony Ippolito, Esq. Snell & Wilmer L.L.P. 600 Anton Boulevard., Suite 1400 Costa Mesa, California  92626 Tel: (714) 427-7400 Fax: (714) 427-7799

Gregory Sichenzia, Esq. Thomas Rose, Esq. Sichenzia Ross Friedman Ference LLP 61 Broadway New York, New York 10006 Tel: (212) 930-9700 Fax: (212) 930-9725

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company ý
		(Do not check if smaller reporting company)

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Title of Each Class of Securities to be Registered		Amount To Be Registered				Proposed Maximum Aggregate Offering Price(2)			Amount of Registration Fee(1)
Units, each consisting of one share of common stock, $0.001 par value, and one warrant(2)			3,593,750			$	17,250,000		$	1,229.93
Shares of common stock included as part of the units(2)			3,593,750				--			--	(3)
Warrants included as part of the units(2)			3,593,750				--			--	(3)
Shares of common stock underlying the warrants included in the units(2)(4)			3,593,750			$	18,975,000		$	1,352.92
Total						$	36,225,000		$	2,582.85	(5)

 

The registrant hereby amends this registration statement on such date or date(s) as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the commission acting pursuant to said Section 8(a) may determine.

PRELIMINARY PROSPECTUS

Subject to Completion

January 14 , 2010

 

 

 

 

		Per unit				Total
Public offering price		$				$
Underwriting discounts and commissions (1)		$				$
Proceeds, before expenses, to us (2)		$				$

(1)	Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to Rodman & Renshaw, LLC, the underwriters’ representative. Non-accountable expenses are estimated to be $150,000.

(2)

We estimate that the total expenses of this offering will be approximately $350,000, consisting of $150,000 for the underwriter’s non-accountable expense allowance (equal to 1% of the gross proceeds) and $200,000 for legal, accounting, printing costs and various fees associated with the registration and listing of our shares of common stock and warrants.

Prospectus Summary	2
Risk Factors	9
Forward-Looking Statements	21
Use Of Proceeds	22
Market For Common Equity And Related Stockholder Matters	22
Determination Of Offering Price	24
Capitalization	25
Dilution	26
Management’s Discussion And Analysis Of Financial Condition and Results of Operations	27
Business	37
Description Of Property	50
Legal Proceedings	50
Directors And Executive Officers	51
Director Compensation	59
Compensation Committee Interlocks And Insider Participation	61
Security Ownership Of Certain Beneficial Owners And Management	61
Certain Relationships And Related Transactions	62
Description Of Securities	63
Underwriting And Plan Of Distribution	64
Legal Matters	72
Experts	72
Where You Can Find More Information	72
Disclosure Of Commission Position On Indemnification For Securities Act Liabilities	72
Index To Consolidated Financial Statements	73

 

On January 12, 2010, we entered into an Amendment to Debentures and Warrants, Agreement and Waiver with the holders of our Debentures (as defined below) (the “2010 Amendment”).  Pursuant to the 2010 Amendment, the debenture holders agreed to defer until March 1, 2010 our obligation to make the January 1, 2010 and February 1, 2010 debenture amortization payments (each in the aggregate amount of $200,000).  In addition, subject to our consummating this offering for gross proceeds of not less than $10,000,000 at a per unit price of not less than $4.80 per unit (after giving effect to the anticipated 12-to-1 reverse stock split) and obtaining the listing of our common stock and warrants offered hereby on the NASDAQ Capital Market by no later than March 1, 2010, the debenture holders have consented and agreed, among other items, to the following:

Subject to the occurrence of the foregoing, we have agreed to reduce the exercise price of the warrants held by the debenture holders from $5.40 per share to $4.80 per share (after giving effect to the anticipated 12-to-1 reverse stock split).

		Six Months Ended September 30, (unaudited)								Years Ended March 31,
		2009 (‘000)				2008 (‘000)				2009 (‘000)				2008 (‘000)
Revenues		$	22			$	19			$	35			$	84
Cost of sales			326				253				546				386
Gross loss			(304	)			(234	)			(511	)			(302	)
Operating expenses:
Selling, general and administrative expenses			1,507				1,340				2,387				2,551
Research and development expenses			181				216				297				166
Total operating expenses			1,688				1,556				2,684				2,717
Loss from operations			(1,992	)			(1,790	)			(3,195	)			(3,019	)
Other income (expense):
Interest income			4				24				32				50
Interest expense			(4,143	)			(1,214	)			(2,693	)			(1,593	)
Loss on sale of fixed assets			(1	)			-				-				-
Change in fair value of derivative liabilities			(1,402)				-				-				-
Loss on extinguishment of debt			-				(6,811	)			(10,847	)
Total other expense, net			(5,542)				(8,001	)			(13,508	)			(1,543	)
Loss before income taxes			(7,534)				(9,791	)			(16,703	)			(4,562	)
Income taxes			2				1				2				2
Net loss		$	(7,536)			$	(9,792	)		$	(16,705	)		$	(4,564	)
Loss per share, basic and diluted (after giving effect to the anticipated 12-to-1 reverse stock split)		$	(2.02)			$	(2.85	)		$	(4.86	)		$	(1.38	)

		September 30, 2009 (unaudited)				September 30, 2008 (unaudited)				March 31, 2009				March 31, 2008
Assets		$	2,438			$	2,438			$	1,573			$	3,461
Liabilities			25,816				5,059				6,348				3,461
Total Stockholders’ Deficit			(23,378	)			(2,621	)			(4,775	)			-
Liabilities and Stockholders’ Deficit			2,438				2,438				1,573				3,461

Securities offered		3,125,000 units, each unit consisting of one share of common stock and warrant to purchase one share of common stock.
Common stock to be outstanding immediately prior to offering		4,167,943 shares of common stock (1)
Common stock to be outstanding immediately after this offering		7,292,943 shares of common stock (1)(3)(4)
Warrants to be outstanding immediately prior to offering		0(2)
Warrants to be outstanding immediately after this offering		3,125,000 warrants (2)(5)
Use of Proceeds		We expect the net proceeds to us from this offering will be approximately $13.3 million after deducting the underwriting discount and estimated offering expenses (assuming the representative of the underwriters does not exercise its option to cover over-allotments).  We intend to use those net proceeds primarily to repay a portion of our outstanding debt, build up inventory, for capital expenditures, including establishing selected global staging and refurbishing sites, and for working capital and general corporate purposes.  See “Use of Proceeds” for more information.
Over-allotment option		We have granted the underwriters an option for a period of 45 days to purchase, on the same terms and conditions set forth above, up to an additional 468,750 units, consisting of 468,750 shares of our common stock and warrants to purchase 468,750 shares of our common stock, to cover over-allotments.
Description of Warrants		Each purchaser will receive a warrant to purchase one share of our common stock for each share of common stock it purchases in this offering.  The warrants are exercisable at an exercise price of $5.28 per share of common stock.  The warrants are exercisable starting on __________, and expire on ________, 2015.  The warrants may be redeemed by us upon 10 days prior notice at any time after the closing bid price of our common stock is at least $7.92 (representing 165% of the unit offering price) for a period of 20 consecutive trading days for $0.01 per warrant.  See “Description of the Warrants” below for more information.
OTC Bulletin Board symbol for our Common Stock		CYRX
Proposed NASDAQ Capital Market symbols for our Common Stock and Warrants		CYPT and CYPTW
Risk Factors		The purchase of our common stock and warrants involves a high degree of risk.  You should carefully review and consider “Risk Factors” beginning on page 9.

	●	1,800,502 shares of common stock reserved for issuance upon the conversion of outstanding convertible debentures after giving effect to the 2010 Amendment, which will be effective upon the consummation of this offering, pursuant to which we will repay approximately fifty-five percent (55%) of the outstanding principal balance of such debentures with proceeds from this offering with the holders converting the remaining outstanding principal balance into the foregoing number of shares of common stock;
	●	225,736 shares of common stock reserved for issuance upon the conversion of outstanding convertible promissory notes with a conversion price of $6.12 per share;
	●	3,042,406 shares of common stock reserved for issuance upon the exercise of outstanding warrants with a weighted average exercise price of $5.52 per share, after giving effect to the 2010 Amendment pursuant to which the exercise price of the warrants held by the holders of our convertible debentures will be reduced from $5.40 per share to $4.80 per share (assuming the consummation of the anticipated reverse stock split, at a ratio of 12-to-1);
	●	74,292 shares of common stock reserved for issuance upon the exercise of outstanding stock options with a weighted average exercise price of $7.05 per share; and

●

254,483 shares of common stock available for future grant under our 2002 Stock Incentive Plan and an additional 942,500 shares of common stock available for future grant under our 2009 Stock Incentive Plan.

		Net Loss
Fiscal Year Ended March 31, 2009		$	16,705,151
Fiscal Year Ended March 31, 2008		$	4,564,054
Fiscal Year Ended March 31, 2007		$	2,326,259

		Number of Shares of Common Stock Issuable or Reserved For Issuance (assuming the consummation of the anticipated reverse stock split, at a ratio of 12-to-1)
Common stock issuable upon conversion of outstanding debentures and convertible promissory notes (after giving effect to the 2010 Amendment)		2,026,238
Common stock issuable upon exercise of outstanding warrants		3,042,406
Common stock reserved for issuance upon exercise of outstanding options or reserved for future incentive awards under our stock incentive plans		1,271,275
Total		6,339,919

	●	our shipper’s ability to perform and preserve the integrity of the materials shipped;
	●	relative convenience and ease of use of our shipper and/or web portal;
	●	availability of alternative products;
	●	pricing and cost effectiveness; and
	●	effectiveness of our or our collaborators’ sales and marketing strategy.

Our products must meet stringent requirements and we must develop our products quickly to keep pace with the rapidly changing market.  Products and services as sophisticated as ours could contain undetected errors or defects, especially when first introduced or when new models or versions are released.  In general, our products may not be free from errors or defects after commercial shipments have begun, which could result in damage to our reputation, lost revenues, diverted development resources, increased customer service and support costs, and litigation.  The costs incurred in correcting any product errors or defects may be substantial and could adversely affect our business, results of operations and financial condition.

	●	acceptance of our business model and a per use consolidated fee structure;
	●	ongoing development of enhanced technical features and benefits;
	●	reductions in the manufacturing cost of competitors’ products;
	●	the ability to maintain and expand distribution channels;
	●	brand name;
	●	the ability to deliver our products to our customers when requested;
	●	the timing of introductions of new products and services; and
	●	financial resources.

	●	effect a reverse stock split of our outstanding common stock;
	●	incur additional indebtedness, except for certain permitted indebtedness.  Permitted indebtedness is defined to include lease obligations and purchase money indebtedness of up to an aggregate of $200,000 and indebtedness that is expressly subordinated to the Debentures and matures following the maturity date of the Debentures;
	●	incur additional liens on any of our assets except for certain permitted liens including but not limited liens for taxes, assessments and government charges not yet due and liens incurred in connection with permitted indebtedness;
	●	pay cash dividends;
	●	redeem any outstanding shares of our common stock or any outstanding options or warrants to purchase shares of our common stock except in connection with a the repurchase of stock from former directors and officers provided such repurchases do not exceed $100,000 during the term of the Debentures;
	●	enter into transactions with affiliates other than on arms-length terms; and
	●	make any revisions to the terms of existing contractual agreements for the Notes Payable to Former Officer, Related Party Notes Payable and the Line of Credit (as each is referred to in our Form 10-Q for the period ended June 30, 2009).

	●	we must maintain a total cash balance of no less than $100,000 at all times;
	●	we must maintain an average monthly operating cash burn of no more than $500,000 with operating cash burn is defined by taking net income (or loss) and adding back all non-cash items and excludes changes in assets, liabilities and financing activities;
	●	we must maintain minimum current ratio of 0.5 to 1 with the calculation made by excluding the current portion of the convertible notes payable and accrued interest, and liability from derivative instruments from current liability for the current ratio;
	●	our accounts payable shall not exceed $750,000; and
	●	our accrued salaries shall not exceed $350,000.

 

In the event that we consummate this offering for minimum gross proceeds of $10,000,000 and comply with certain other provisions of the 2010 Amendment, then the foregoing limitations and covenants will terminate following consummation of this offering.

	●	technological innovations or new products and services by us or our competitors;
	●	additions or departures of key personnel;
	●	sales of our common stock;
	●	our ability to integrate operations, technology, products and services;
	●	our ability to execute our business plan;
	●	operating results below expectations;
	●	loss of any strategic relationship;
	●	industry developments;
	●	economic and other external factors; and
	●	period-to-period fluctuations in our financial results.

 

Even if our common stock and warrants are approved for listing on the NASDAQ Capital Market, there is no guarantee that we will be able to maintain such listing for any period of time by perpetually satisfying NASDAQ's continued listing requirements.

	●	our intention to introduce new products or services,
	●	our expectations about the markets for our products or services,
	●	our expectations about securing strategic relationships with global couriers or large clinical research organization,
	●	our future capital needs,
	●	results of our research and development efforts, and
	●	success of our patent applications.

	●	the effect of regulation by United States and foreign governmental agencies,
	●	research and development efforts, including delays in developing, or the failure to develop, our products,
	●	the development of competing or more effective products by other parties,
	●	uncertainty of market acceptance of our products,
	●	errors in business planning attributable to insufficient market size or segmentation data,
	●	problems that we may face in manufacturing, marketing, and distributing our products,
	●	problems that we may encounter in further development of CryoPort Express® Portal or its ability to scale to meet customer demand and needs,
	●	problems relating to the development of wireless sensor monitoring devices, or regulatory approval relating to their use,
	●	our inability to raise additional capital when needed,
	●	delays in the issuance of, or the failure to obtain, patents for certain of our products and technologies,
	●	problems with important suppliers and strategic business partners, and
	●	difficulties or delays in establishing marketing relationships with international couriers.

Fiscal 2010		High				Low
1st Quarter		$	10.80			$	4.92
2nd Quarter			8.40				4.44

Fiscal 2009		High				Low
1st Quarter		$	13.80			$	8.04
2nd Quarter			12.00				6.00
3rd Quarter			9.00				5.64
4th Quarter			6.60				3.96

Fiscal 2008		High				Low
1st Quarter		$	39.60			$	9.24
2nd Quarter			20.40				7.32
3rd Quarter			17.64				8.40
4th Quarter			16.44				10.20

The 2009 Plan provides for the grant of stock-based incentives.  The 2009 Plan allows for the grant of up to 1,000,000 shares (after giving effect to the anticipated 12-to-1 reverse stock split) of our common stock for awards to our officers, directors, employees and consultants.  The 2009 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock rights, restricted stock, performance share units, performance shares, performance cash awards, stock appreciation rights, and stock grant awards.  The 2009 Plan also permits the grant of awards that qualify for the “performance-based compensation” exception to the $1,000,000 limitation on the deduction of compensation imposed by Section 162(m) of the Code.  As of November 30, 2009, a total of 942,500 shares (after giving effect to the anticipated 12-to-1 reverse stock split) of our common stock remained available for future grants under the 2009 Plan.

Proposed Reverse Stock Split		Percentage Reduction in the Outstanding Shares of Common Stock		Common Stock Outstanding After the Reverse Stock Split			Common Stock Authorized After the Reverse Stock Split
2-to-1		50%		25,007,659			250,000,000
5-to-1		80%		10,003,063			250,000,000
12-to-1		912/3%		4,167,943			250,000,000
15-to-1		931/3%		3,334,355			250,000,000

		September 30, 2009
		Actual				As Adjusted
Cash and cash equivalents		$	1,120,758			$	11,153,763
Derivative liabilities			18,404,578				1,119,595
Convertible notes payable and accrued interest, net of discount of $775,960			639,647				639,647
Current portion of convertible debentures and other long-term debt, net of debt discounts of $2,468,355		$	3,883,070			$	-
Convertible notes payable, net of current portion and discount of $6,351,425		$	-			$	-
Stockholders’ equity:
Common stock, $0.001 par value: 250,000,000 shares authorized; 3,965,470 issued and outstanding, actual; and 9,093,445 shares issued and outstanding, as adjusted(1)		$	3,965			$	9,093
Additional paid-in capital		$	24,446,002			$	70,257,975
Retained deficit		$	(47,828,293	)		$	(62,444,336	)
Total stockholders’ equity (deficit)		$	(23,378,326	)		$	7,822,732

	●	225,736 shares of common stock reserved for issuance upon the conversion of outstanding convertible promissory notes with a conversion price of $6.12 per share;
	●	3,042,406 shares of common stock reserved for issuance upon the exercise of outstanding warrants with a weighted average exercise price of $5.52 per share;
	●	74,292 shares of common stock reserved for issuance upon the exercise of outstanding stock options with a weighted average exercise price of $7.05 per share;
	●	254,453 shares of common stock available for future grant under our 2002 Stock Incentive Plan and an additional 942,500 shares of common stock available for future grant under our 2009 Stock Incentive Plan;
	●	3,125,000 shares of common stock issuable upon the exercise of the warrants to be issued in connection with this offering; and
	●	156,250 shares of common stock that may be issued to Rodman & Renshaw, LLC upon exercise of the warrant we will sell to them (representing 5% of the shares of common stock sold by us in this offering, excluding the over-allotment option).

		Adjusted
Public offering price per share		$	4.80
Net tangible book value as of September 30, 2009		$	(5.96	)
Increase attributable to this offering		$	6.79
Adjusted net tangible book value per share after this offering		$	0.83
Dilution in net tangible book value per share to new investors		$	3.97

	●	The existing common stockholders (including the holders of our Debentures who are converting a portion of the outstanding principal amount of the Debentures upon the consummation of this offering pursuant to the 2010 Amendment); and
	●	The new investors in this offering, assuming the sale of 3,125,000 units offered hereby at a public offering price of $4.80 per share.

	Shares of common stock Purchased					Total Consideration						Average Price Per Share
	Number		Percent			Amount			Percent
Existing Stockholders	5,968,445			66%		$	10,683,494			42%		$	1.79
New Investors	3,125,000			34%		$	15,000,000			58%		$	4.80
Total	9,093,445			100%		$	25,683,494			100%		$	2.82

 

 

		Fiscal Year												For the Six Months Ended September 30, (unaudited)
		2009 (‘000)				2008 (‘000)				2007 (‘000)				2009 (‘000)				2008 (‘000)
Revenues		$	35			$	84			$	67			$	22			$	19
Cost of sales			546				386				177				326				253
Gross loss			(511	)			(302	)			(110	)			(304	)			(234	)
Operating expenses:
Selling, general and administrative expenses			2,387				2,551				1,899				1,507				1,340
Research and development expenses			297				166				88				181				216
Total operating expenses			2,684				2,717				1,987				1,688				1,556
Loss from operations			(3,195	)			(3,019	)			(2,097	)			(1,992	)			(1,790	)
Other income (expense):
Interest income			32				50				-				4				24
Interest expense			(2,693	)			(1,593	)			(228	)			(4,143	)			(1,214	)
Loss on sale of fixed assets			-				-				-				(1	)			-
Change in fair value of derivative liabilities			-				-				-				(1,402	)			-
Loss on extinguishment of debt			(10,847	)			-				-				-				(6,811	)
Total other expense, net			(13,508	)			(1,543	)			(228	)			(5,542	)			(8,001	)
Loss before income taxes			(16,703	)			(4,562	)			(2,325	)			(7,534	)			(9,791	)
Income taxes			2				2				2				2				1
Net loss		$	(16,705	)		$	(4,564	)		$	(2,327	)		$	(7,536	)		$	(9,792	)
Net loss available to common stockholders per common share:
Basic and diluted loss per common share		$	(4.86	)		$	(1.38	)		$	(0.90	)		$	(2.02	)		$	(2.85	)
Weighted average common shares outstanding:
Basic and diluted (after giving effect to the anticipated 12-to-1 reverse stock split)			3,436,515				3,285,427				2,578,596				3,712,997				3,424,432

Cost of Sales.  Cost of sales for the six month period ended September 30, 2009 increased $73,113 (29%) to $326,444 from $253,331 for the six month period ended September 30, 2008 primarily as the result of increased fixed overhead manufacturing costs which resulted from CryoPort’s discontinuation of the reusable shippers and refocus of manufacturing operation for the CryoPort Express® System.  During both periods, cost of sales exceeded sales due to fixed manufacturing costs and plant underutilization.
 

Gross Loss. Gross loss for the six month period ended September 30, 2009 increased by $70,338 (30%) to $304,263 compared to $233,925 for the six month period ended September 30, 2008.  The increase in gross loss is due to low revenues and increased fixed overhead manufacturing costs which resulted from the refocus of CryoPort’s manufacturing operations as discussed above and plant under utilization.
 

Research and Development Expenses.  Research and development expenses decreased by $35,453 (16%) to $180,791 for the six month period ended September 30, 2009 as compared to $216,244 for the six month period ended September 30, 2008.  Prior year expenses included consulting costs associated with software development for the web based system to be used with the CryoPort Express® One-Way Shipper, and to other research and development activity related to the CryoPort Express® One-Way Shipper System, as CryoPort strove to develop improvements in both the manufacturing processes and product materials for the purpose of achieving additional product cost efficiencies.
 

Interest Expense. Interest expense increased $2,929,388 to $4,143,256 for the six month period ended September 30, 2009 as compared to $1,213,868 for the six month period ended September 30, 2008.  This increase was due to $3,737,569 of amortized debt discount, $25,579 of amortized financing fees, and $380,108 of accrued interest, primarily related to the Debentures and the Private Placement Debentures that were issued during the six month period ended September 30, 2009.  These increases were partially offset by a reduction in interest expense for related party notes payable and notes payable to officers as the result of the payments made against the principal note balances.
 

CryoPort incurred a gain on extinguishment of debt of $91,727 during the six months ended September 30, 2008 as the result of the August 29, 2008 Amendment of the October Debentures which provided for an increase of $866,202 in the principal balance of the October Debentures for the interest that would have been paid September 30, 2008 and December 31, 2008 and for 15% of the aforementioned interest and the outstanding principal as of the date of the amendment.  The gain consists of a combination of the $866,202 increase in principal offset by the $899,004 increase in the unamortized discount balance and the previously accrued interest of $58,925 related to the October Debentures to reflect the present value of the debentures as of August 29, 2008 (see Note 8 of the accompanying unaudited consolidated financial statements).  There was no gain on extinguishment of debt in the six months ended September 30, 2009.
 

		Payments Due by Period
Contractual Obligations		Total				Less than 1 Yr				1-3 Years				4-5 Years				After 5 Years
Related Party Notes		$	1,129,500			$	150,000			$	224,000			$	192,000			$	563,500
Convertible Debentures (a)			6,681,629				4,454,424				2,227,205				-				-
Operating Lease			221,000				156,000				65,000				-				-
Note Payable to P. Berry			143,950				90,000				53,950				-				-
Line of Credit			90,310				90,310				-				-				-
Private Placement Convertible Debt			60,000				60,000				-				-				-
Total Contractual Cash Obligations		$	8,326,389			$	5,000,734			$	2,570,155			$	192,000			$	563,500