Cord Blood America Inc. (OTCBB: CBAI)

Cord Blood America Inc. (CBAI) is engaged in the business of collecting, testing, processing and preserving umbilical cord blood. The Company is primarily a holding company whose subsidiaries include Cord Partners Inc. (Cord), CorCell Co. Inc., CorCell Ltd., CBA Professional Services Inc. D/B/A BodyCells Inc. (BodyCells), CBA Properties Inc. (Properties), Career Channel Inc., D/B/A Rainmakers International (Rain), and Family Marketing Inc. (Family).

In addition, the Company provides private cord blood stem cell preservation services to families in the United States. It also engages in collecting, processing, and preserving peripheral blood and adipose tissue stem cells, which allows individuals to privately preserve their stem cells for potential future use in stem cell therapy.

Further, the Company creates direct response television and radio advertising campaigns, including media placement and commercial production; involves in the placement of advertising in television and radio outlets; and production of advertising content, including television commercials and radio copy. Additionally, the company engages in procuring and setting up call centers; editing, dubbing, and distribution of radio and television commercials; and procuring and placing print advertising, as well as provides advertising and marketing consulting services relating to the customer’s marketing campaign.

The Company is headquartered in Santa Monica, California.

Source: https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=CBAI , http://www.reuters.com/finance/stocks/incomeStatement?stmtType=INC&perType=ANN&symbol=CBAI.OB , http://www.cordblood-america.com/

Financial Summary

For the three months ended June 30, 2009, CBAI’s total revenue decreased approximately $0.2 million, or 23% to approximately $0.8 million. The Company’s revenues decreased $0.1 million, or 8.3%, to approximately $0.8 million, because of significant cutbacks in marketing and advertising. CBAI remains focused on strategic organic growth and accretive acquisition strategies, which management hopes will reduce or eliminate continuing losses and negative cash flow.

Cost of services decreased 27.4% or $0.2 million as a result of lower revenues, but Gross Profit decreased from 64.9% of revenues to 61.2%, due to a significantly higher proportion of revenues coming from the higher margin Cord business. The Company anticipates that through the continued growth and expansion of its Cord business, CBAI will be able to benefit from economies of scale in that business segment.

Administrative and selling expenses increased by approximately $0.1 million, or 19.0% from the prior comparative period to $1.0 million. The Company had an increase in professional fees and public company costs of approximately $0.2 million, primarily due to the Company’s costs associated with its search for additional capital, offset by a decrease of approximately $0.1 million in wages and marketing costs. The Company has had to raise additional debt to finance both its acquisitions as well as its operating losses. In March 2009, the Company’s shareholders authorized a significant increase in the Company’s authorized capital. This has allowed the Company to convert a significant amount of debt. Consequently, interest, financing costs and changes in derivative liabilities decreased 40.4%, from $2.3 million to $1.4 million in the comparative period. All interest charges during the period have been accrued.

CBAI’s net loss decreased by $0.6 million, or 23.9% from the prior comparative period

CBAI has experienced net losses of $3.6 million and $3.7 million for the six months ended June 30, 2009, and 2008, respectively. At June 30, 2009, it had $324,549 in cash. CBAI currently collects cash receipts from operations through both of its subsidiaries: Cord and Rain. Cord’s cash flows from operations are not currently sufficient to fund operations in combination with its corporate expenses. Because of this shortfall, CBAI has had to obtain additional capital through other sources.

Since inception, CBAI has financed cash flow requirements through the issuance of common stock and warrants for cash, services and loans. As it expands its operational activities, it will likely continue to experience net negative cash flows from operations. The Company hopes to be able to obtain additional financing to fund operations through equity offerings and borrowings to the extent necessary to provide the necessary working capital. Financing may not be available, and, if available, it may not be available on acceptable terms. Should CBAI secure such financing, it could have a negative impact on the Company’s financial condition and its shareholders. The sale of debt would, among other things, adversely impact the Company’s balance sheet, increase its expenses and increase its cash flow requirements. The sale of equity could, depending on the terms of its placement, among other things result in dilution to shareholders. If cash flows from operations are significantly less than projected, then CBAI would either need to cut back on its budgeted spending, look to outside sources for additional funding or a combination of the two. If the Company is unable to access sufficient funds when needed, obtain additional external funding or generate sufficient revenue from the sale of its products and services, it could be forced to curtail or possibly cease operations.

In June 2008, the Company announced the signing of a Securities Purchase Agreement with Tangiers Investors, LP, whereby Tangiers may purchase up to $4 million of the Company’s common stock. In the first six months of the year, Tangiers has purchased $325,000 of common stock. In May 2009, the Company announced the signing of a Secured & Collateralized Convertible Promissory Note for $1.3 million. The Company has drawn $325,000 of this Note as of June 30, 2009. On July 2, 2009, the Company executed a Preferred Stock Purchase Agreement with Optimus Capital Partners, LLC pursuant to which it has secured a $7.5 million capital commitment which may be drawn down in increments, under certain conditions. On August 3, 2009, the company filed its registration statement for these shares.

Source: http://yahoo.brand.edgar-online.com/default.aspx?cik=1289496

Analyst Consensus

No chart available.

Source: Financial Times.com

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/estimates?symbol=CBAI.OB

Investment Highlights

CBAI announced in September that it is on schedule to complete the construction of its new Las Vegas laboratory by the first week of October. It is expected that the new facility will allow gross profit to increase greatly because the Company will no longer outsource and pay significant storage fees, allow CBAI to store tissues and samples for other companies, decrease transportation costs because the lab is near the large Las Vegas airport, allow for the storage of other stem cells such as adipose tissue and peripheral blood stem cells, and prepare the Company for the future, with more medical uses of stem cells expected every year.

CBAI in an interview given to PRNewswire addressed shareholder questions regarding the Company’s 2010 business strategy. Matthew Schissler, founder and CEO commented, “Our 2010 business strategy involves a shift in focus to acquiring more assets, organic growth and diversification and increase of our revenue streams.” Schissler explained that the importance of the Company’s new 17,000-square foot facility is perhaps because it is one of the largest cryogenic storage facility in the U.S. “Our goal is to ensure CBAI becomes one of the largest cryogenic storage companies in the world,” Schissler stated in a press release. “The new facility will significantly reduce the cost of sales while increasing gross profits, because we no longer have to outsource the storage and because of its proximity to one of the nation’s busiest airports,” Schissler stated.

Source: Scottrade.com, Reuters.com, cordblood-america.com

Technical Analysis

Moving Average Price Compare

No current signals.

Bollinger Bands

CBAI is trading near its lower Bollinger Band. This suggests that the stock price is low relative to its recent price action.

MACD

The MACD for CBAI currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.

Comparative Analysis

Source: Reuter.com, Nasdaq.com

Insider Trading Activity

Net Share Purchase Activity

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