November 6, 2020 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2020


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

For the transition period from ______ to ______.

Commission File Number: 001-34632

CRYOPORT, INC.

(Exact Name of Registrant as Specified in its Charter)


Nevada	88-0313393
(State or another jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

112 Westwood Place, Suite 350

Brentwood, TN 37027

(Address of principal executive offices , including zip code)

(949) 470-2300

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Trading Symbol(s)		Name of each exchange on which registered:
Common Stock , $0.001 par value		CYRX		The Nasdaq Stock Market LLC (The Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company," and "emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
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.

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

As of October 30, 2020 there were 39,663,710 shares of the registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS


	Page

PART I. FINANCIAL INFORMATION	3

ITEM 1. Financial Statements	3

Condensed Consolidated Balance Sheets at September 30, 2020 (Unaudited) and December 31, 2019	3

Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019	4

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019	5

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019	6

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	7

Notes to Condensed Consolidated Financial Statements (Unaudited)	8

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	41

ITEM 4. Controls and Procedures	41

PART II. OTHER INFORMATION	41

ITEM 1. Legal Proceedings	41

ITEM 1A. Risk Factors	42

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	55

ITEM 3. Defaults Upon Senior Securities	55

ITEM 4. Mine Safety Disclosures	55

ITEM 5. Other Information	55

ITEM 6. Exhibits	56

SIGNATURES	57

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	September 30,		December 31,
	2020		2019
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	161,987,083	$	47,234,770
Short-term investments		40,952,522		47,060,786
Accounts receivable, net		7,783,502		7,098,191
Inventories		476,622		473,961
Prepaid expenses and other current assets		1,444,303		1,096,855
Total current assets		212,644,032		102,964,563
Property and equipment, net		15,178,619		11,833,057
Operating lease right-of-use assets		8,113,923		4,460,319
Intangible assets, net		4,891,124		5,177,578
Goodwill		10,999,722		10,999,722
Deposits		535,750		437,299
Total assets	$	252,363,170	$	135,872,538

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and other accrued expenses	$	9,663,211	$	2,498,375
Accrued compensation and related expenses		2,554,753		1,903,720
Deferred revenue		236,975		367,867
Operating lease liabilities		666,929		665,901
Finance lease liabilities		63,616		24,617
Total current liabilities		13,185,484		5,460,480
Convertible senior notes, net of discount of $3.8 million		111,155,209		—
Operating lease liabilities, net of current portion		7,814,874		4,101,236
Finance lease liabilities, net of current portion		123,654		8,539
Deferred tax liability		47,943		20,935
Total liabilities		132,327,164		9,591,190

Commitments and contingencies
Stockholders’ Equity:
Preferred stock, $0.001 par value; 2,500,000 shares authorized:
Class A convertible preferred stock — $0.001 par value; 800,000 shares authorized; none issued and outstanding		—		—
Class B convertible preferred stock — $0.001 par value; 585,000 shares authorized; none issued and outstanding		—		—
Class C convertible preferred stock - $0.001 par value; 250,000 shares authorized; none issued and outstanding		—		—
Common stock, $0.001 par value; 100,000,000 shares authorized; 38,983,824 and 37,339,787 issued and outstanding at September 30, 2020 and December 31, 2019, respectively		38,984		37,340
Additional paid-in capital		300,273,819		285,609,022
Accumulated deficit		(180,483,423)		(159,319,963)
Accumulated other comprehensive income (loss)		206,626		(45,051)
Total stockholders’ equity		120,036,006		126,281,348
Total liabilities and stockholders’ equity	$	252,363,170	$	135,872,538

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues	$	11,172,084	$	9,583,334	$	30,335,165	$	24,699,834
Cost of revenues		5,116,831		4,956,277		13,894,952		12,280,487
Gross margin		6,055,253		4,627,057		16,440,213		12,419,347

Operating costs and expenses:
General and administrative		10,794,110		9,376,686		20,557,301		15,332,326
Sales and marketing		3,681,862		5,961,593		10,056,134		11,212,658
Engineering and development		2,311,718		1,640,528		5,990,887		2,671,057
Total operating costs and expenses		16,787,690		16,978,807		36,604,322		29,216,041

Loss from operations		(10,732,437)		(12,351,750)		(20,164,109)		(16,796,694)
Other income (expense):
Interest expense		(1,081,542)		(248,410)		(1,482,249)		(921,048)
Other income, net		367,093		133,499		536,691		344,412
Loss before provision for income taxes		(11,446,886)		(12,466,661)		(21,109,667)		(17,373,330)
Benefit (provision) for income taxes		29,065		(1,886)		(53,793)		(10,610)
Net loss	$	(11,417,821)	$	(12,468,547)	$	(21,163,460)	$	(17,383,940)
Net loss per share – basic and diluted	$	(0.29)	$	(0.35)	$	(0.55)	$	(0.54)
Weighted average shares outstanding – basic and diluted		39,144,916		35,674,162		38,211,327		32,449,940

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net loss	$	(11,417,821)	$	(12,468,547)	$	(21,163,460)	$	(17,383,940)
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on available-for-sale debt securities		(105,020)		(55,891)		250,643		(16,382)
Reclassification of realized (gain) loss on available-for-sale debt securities to earnings		27,669		(29,067)		(18,800)		(21,809)
Foreign currency translation adjustments		23,773		(19,348)		19,834		(30,964)
Other comprehensive income (loss)		(53,578)		(104,306)		251,677		(69,155)
Total comprehensive loss	$	(11,471,399)	$	(12,572,853)	$	(20,911,783)	$	(17,453,095)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)


																	Accumulated
	Class A			Class B			Class C						Additional				Other		Total
	Preferred Stock			Preferred Stock			Preferred Stock			Common Stock			Paid–In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Income (Loss)		Equity (Deficit)
Balance at June 30, 2019	—	$	—	—	$	—	—	$	—	35,485,570	$	35,486	$	254,580,262	$	(145,903,877)	$	38,304	$	108,750,175
Net loss	—		—	—		—	—		—	—		—		—		(12,468,547)		—		(12,468,547)
Other comprehensive loss, net of taxes	—		—	—		—	—		—	—		—		—		—		(104,306)		(104,306)
Stock-based compensation expense	—		—	—		—	—		—	—		—		1,925,108		—		—		1,925,108
Accelerated stock-based compensation expense	—		—	—		—	—		—	—		—		10,789,774		—		—		10,789,774
Issuance of common stock for board of director compensation	—		—	—		—	—		—	1,249		1		20,665		—		—		20,666
Proceeds from exercise of stock options and warrants	—		—	—		—	—		—	356,713		357		1,415,895		—		—		1,416,252
Balance at September 30, 2019	—	$	—	—	$	—	—	$	—	35,843,532	$	35,844	$	268,731,704	$	(158,372,424)	$	(66,002)	$	110,329,122

Balance at June 30, 2020	—	$	—	—	$	—	—	$	—	38,565,193	$	38,565	$	295,423,521	$	(169,065,602)	$	260,204	$	126,656,688
Net loss	—		—	—		—	—		—	—		—		—		(11,417,821)		—		(11,417,821)
Other comprehensive loss, net of taxes	—		—	—		—	—		—	—		—		—		—		(53,578)		(53,578)
Stock-based compensation expense	—		—	—		—	—		—	—		—		2,412,005		—		—		2,412,005
Issuance of common stock for board of director compensation	—		—	—		—	—		—	432		1		20,666		—		—		20,667
Proceeds from exercise of stock options and warrants	—		—	—		—	—		—	418,199		418		2,417,627		—		—		2,418,045
Balance at September 30, 2020	—		—	—		—	—		—	38,983,824	$	38,984	$	300,273,819	$	(180,483,423)	$	206,626	$	120,036,006

Balance at December 30, 2018	—	$	—	—	$	—	—	$	—	30,319,038	$	30,319	$	179,501,577	$	(140,988,484)	$	3,153	$	38,546,565
Net loss	—		—	—		—	—		—	—		—		—		(17,383,940)		—		(17,383,940)
Other comprehensive loss, net of taxes	—		—	—		—	—		—	—		—		—		—		(69,155)		(69,155)
Stock-based compensation expense	—		—	—		—	—		—	—		—		5,280,931		—		—		5,280,931
Accelerated stock-based compensation expense	—		—	—		—	—		—	—		—		10,789,774		—		—		10,789,774
Proceeds from public offering, net of costs of $106,300	—		—	—		—	—		—	4,312,500		4,313		68,806,405		—		—		68,810,718
Issuance of common stock for board of director compensation	—		—	—		—	—		—	4,488		5		70,329		—		—		70,334
Proceeds from exercise of stock options and warrants	—		—	—		—	—		—	1,207,506		1,207		4,282,688		—		—		4,283,895
Balance at September 30, 2019	—	$	—	—	$	—	—	$	—	35,843,532	$	35,844	$	268,731,704	$	(158,372,424)	$	(66,002)	$	110,329,122

Balance at December 31, 2019	—	$	—	—	$	—	—	$	—	37,339,787	$	37,340	$	285,609,022	$	(159,319,963)	$	(45,051)	$	126,281,348
Net loss	—		—	—		—	—		—	—		—		—		(21,163,460)		—		(21,163,460)
Other comprehensive income, net of taxes	—		—	—		—	—		—	—		—		—		—		251,677		251,677
Stock-based compensation expense	—		—	—		—	—		—	—		—		6,292,546		—		—		6,292,546
Issuance of common stock for board of director compensation	—		—	—		—	—		—	2,400		2		61,998		—		—		62,000
Proceeds from exercise of stock options and warrants	—		—	—		—	—		—	1,641,637		1,642		8,310,253		—		—		8,311,895
Balance at September 30, 2020	—		—	—		—	—		—	38,983,824	$	38,984	$	300,273,819	$	(180,483,423)	$	206,626	$	120,036,006

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)


	For the Nine Months Ended
	September 30,
	2020		2019
Cash Flows From Operating Activities:

Net loss	$	(21,163,460)	$	(17,383,940)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,499,087		1,590,171
Amortization of debt discount		247,604		46,790
Unrealized (gain)/loss on investments in equity securities		(437,762)		87,850
Realized loss on investments in equity securities		804,772		—
Realized gain on available-for-sale investments		(9,952)		(62,484)
Stock-based compensation expense		6,354,546		5,351,265
Accelerated stock-based compensation expense		—		10,789,774
Loss on disposal of property and equipment		213,892		158,872
Provision for bad debt		63,979		42,085
Changes in operating assets and liabilities:
Accounts receivable		(749,290)		(3,995,609)
Inventories		(2,661)		(130,406)
Prepaid expenses and other current assets		151,519		(203,736)
Deposits		(98,451)		(55,849)
Change in operating lease right-of-use assets and lease liabilities		61,062		(9,538)
Accounts payable and other accrued expenses		6,365,123		1,268,267
Accrued compensation and related expenses		651,033		304,676
Deferred revenue		(130,892)		136,931
Deferred tax liability		27,008		—
Net cash used in operating activities		(5,152,843)		(2,064,881)

Cash Flows From Investing Activities:
Purchases of property and equipment		(5,118,803)		(4,188,943)
Purchases of short-term investments		(136,293,195)		(43,044,925)
Sales/maturities of short-term investments		142,276,244		3,995,000
Cash paid for acquisition		—		(20,429,651)
Patent and trademark costs		(116,296)		(48,470)
Net cash provided by (used in) investing activities		747,950		(63,716,989)

Cash Flows From Financing Activities:
Proceeds from June 2019 public offering, net of offering costs		—		68,810,718
Proceeds from exercise of stock options and warrants		8,311,895		4,283,895
Proceeds from issuance of convertible senior notes		115,000,000		—
Payment of deferred financing costs		(4,118,495)		(19,748)
Repayment of finance lease liabilities		(51,711)		(17,261)
Net cash provided by financing activities		119,141,689		73,057,604

Effect of exchange rates on cash and cash equivalents		15,517		(17,705)
Net change in cash and cash equivalents		114,752,313		7,258,029
Cash and cash equivalents — beginning of period		47,234,770		37,327,125
Cash and cash equivalents — end of period	$	161,987,083	$	44,585,154

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Net unrealized gain/(loss) on available-for-sale securities	$	250,643	$	(16,382)
Reclassification of realized gain on available-for-sale debt securities to earnings	$	18,800	$	21,809
Financing costs included in accounts payable and accrued liabilities	$	472,867	$	—
Fixed assets included in accounts payable and accrued liabilities	$	326,846	$	158,239
Purchase of equipment through finance lease obligations	$	204,516	$

Form: 10-Q

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