10-Q 1 cyrx-20220331x10q.htm 10-Q
0001124524--12-312022Q1false49660579438044834966057943804483000020000020000049616154494533070.310.13P3YP7YP4YP3YP7Y0.310.13P0YP0YP0YP0Y0001124524us-gaap:SubsequentEventMember2022-04-302022-04-300001124524us-gaap:SubsequentEventMember2022-04-012022-04-3000011245242022-03-012022-03-310001124524cyrx:ClassCConvertiblePreferredStockMember2021-02-052021-02-050001124524us-gaap:RetainedEarningsMember2022-03-310001124524us-gaap:AdditionalPaidInCapitalMember2022-03-310001124524us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001124524us-gaap:RetainedEarningsMember2021-12-310001124524us-gaap:AdditionalPaidInCapitalMember2021-12-310001124524us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001124524us-gaap:RetainedEarningsMember2021-03-310001124524us-gaap:AdditionalPaidInCapitalMember2021-03-310001124524us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001124524us-gaap:RetainedEarningsMember2020-12-310001124524us-gaap:AdditionalPaidInCapitalMember2020-12-310001124524us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001124524cyrx:SeniorNotes2026Membercyrx:ConcurrentPlacementMember2021-11-300001124524us-gaap:OverAllotmentOptionMember2021-01-250001124524cyrx:PreferredClassCMemberus-gaap:PreferredStockMember2022-03-310001124524us-gaap:CommonStockMember2022-03-310001124524cyrx:PreferredClassCMemberus-gaap:PreferredStockMember2021-12-310001124524us-gaap:CommonStockMember2021-12-310001124524cyrx:PreferredClassCMemberus-gaap:PreferredStockMember2021-03-310001124524us-gaap:CommonStockMember2021-03-310001124524cyrx:PreferredClassCMemberus-gaap:PreferredStockMember2020-12-310001124524us-gaap:CommonStockMember2020-12-310001124524us-gaap:EmployeeStockOptionMember2021-12-310001124524us-gaap:EmployeeStockOptionMembercyrx:Plan2018Member2022-03-310001124524us-gaap:EmployeeStockOptionMembercyrx:Plan2018Member2018-05-310001124524us-gaap:EmployeeStockOptionMembercyrx:Plan2018Member2021-04-012021-04-300001124524srt:MinimumMember2021-01-012021-03-310001124524srt:MaximumMember2021-01-012021-03-310001124524us-gaap:RestrictedStockUnitsRSUMember2021-12-310001124524us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-03-310001124524us-gaap:CostOfSalesMember2022-01-012022-03-310001124524cyrx:EngineeringAndDevelopmentMember2022-01-012022-03-310001124524us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-03-310001124524us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001124524us-gaap:CostOfSalesMember2021-01-012021-03-310001124524cyrx:EngineeringAndDevelopmentMember2021-01-012021-03-310001124524cyrx:MveBiologicalSolutionsMember2022-01-252022-01-250001124524cyrx:ReproductiveMedicineMembercyrx:GlobalLogisticsSolutionsMember2022-01-012022-03-310001124524cyrx:BiopharmaceuticalMembercyrx:GlobalLogisticsSolutionsMember2022-01-012022-03-310001124524cyrx:AnimalHealthMembercyrx:GlobalLogisticsSolutionsMember2022-01-012022-03-310001124524us-gaap:EMEAMember2022-01-012022-03-310001124524srt:AsiaPacificMember2022-01-012022-03-310001124524srt:AmericasMember2022-01-012022-03-310001124524cyrx:GlobalLogisticsSolutionsMember2022-01-012022-03-310001124524cyrx:ForeignCustomersMember2022-01-012022-03-310001124524cyrx:ReproductiveMedicineMembercyrx:GlobalLogisticsSolutionsMember2021-01-012021-03-310001124524cyrx:BiopharmaceuticalMembercyrx:GlobalLogisticsSolutionsMember2021-01-012021-03-310001124524cyrx:AnimalHealthMembercyrx:GlobalLogisticsSolutionsMember2021-01-012021-03-310001124524us-gaap:EMEAMember2021-01-012021-03-310001124524srt:AsiaPacificMember2021-01-012021-03-310001124524srt:AmericasMember2021-01-012021-03-310001124524cyrx:GlobalLogisticsSolutionsMember2021-01-012021-03-310001124524cyrx:ForeignCustomersMember2021-01-012021-03-310001124524cyrx:FirstInstallmentRepayableNoLaterThanDecember312021Membercyrx:CryopdpMember2022-01-012022-03-310001124524srt:MinimumMemberus-gaap:ComputerEquipmentMember2022-01-012022-03-310001124524srt:MinimumMemberus-gaap:BuildingMember2022-01-012022-03-310001124524srt:MinimumMembercyrx:TruckAndAutoMember2022-01-012022-03-310001124524srt:MinimumMembercyrx:FreezerMember2022-01-012022-03-310001124524srt:MinimumMembercyrx:EquipmentAndFurnitureMember2022-01-012022-03-310001124524srt:MaximumMemberus-gaap:ComputerEquipmentMember2022-01-012022-03-310001124524srt:MaximumMemberus-gaap:BuildingMember2022-01-012022-03-310001124524srt:MaximumMembercyrx:TruckAndAutoMember2022-01-012022-03-310001124524srt:MaximumMembercyrx:FreezerMember2022-01-012022-03-310001124524srt:MaximumMembercyrx:EquipmentAndFurnitureMember2022-01-012022-03-310001124524us-gaap:RetainedEarningsMember2022-01-012022-03-310001124524us-gaap:RetainedEarningsMember2021-01-012021-03-310001124524cyrx:SeniorNotes2026Membercyrx:ConcurrentPlacementMember2021-11-012021-11-300001124524us-gaap:OverAllotmentOptionMember2021-01-252021-01-250001124524us-gaap:ConvertiblePreferredStockMember2022-03-310001124524cyrx:ClassCConvertiblePreferredStockMember2022-03-310001124524cyrx:ClassBConvertiblePreferredStockMember2022-03-310001124524us-gaap:ConvertiblePreferredStockMember2021-12-310001124524cyrx:ClassCConvertiblePreferredStockMember2021-12-310001124524cyrx:ClassBConvertiblePreferredStockMember2021-12-310001124524cyrx:ClassCConvertiblePreferredStockMemberus-gaap:PrivatePlacementMember2020-10-010001124524cyrx:SeniorNotes2025Member2020-05-012020-05-310001124524us-gaap:USTreasurySecuritiesMember2022-03-310001124524cyrx:MutualFundsMember2022-03-310001124524us-gaap:USTreasurySecuritiesMember2021-12-310001124524cyrx:MutualFundsMember2021-12-310001124524us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001124524us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-3100011245242021-01-012021-06-300001124524cyrx:SeniorNotes2025Member2021-11-090001124524cyrx:SecondInstallmentRepayableNoLaterThanDecember312022Membercyrx:CryopdpMember2022-03-310001124524cyrx:CriticalTransportSolutionsAustraliaAndFairgateMember2022-01-012022-03-310001124524cyrx:MveCryobiologicalStorageBusinessMember2021-01-012021-03-310001124524us-gaap:UseRightsMember2022-01-012022-03-310001124524us-gaap:TrademarksAndTradeNamesMember2022-01-012022-03-310001124524us-gaap:TechnologyBasedIntangibleAssetsMember2022-01-012022-03-310001124524us-gaap:OrderOrProductionBacklogMember2022-01-012022-03-310001124524us-gaap:NoncompeteAgreementsMember2022-01-012022-03-310001124524us-gaap:CustomerRelationshipsMember2022-01-012022-03-310001124524cyrx:PatentsAndTrademarksMember2022-01-012022-03-310001124524cyrx:AgentNetworkMember2022-01-012022-03-310001124524us-gaap:UseRightsMember2021-01-012021-12-310001124524us-gaap:TrademarksAndTradeNamesMember2021-01-012021-12-310001124524us-gaap:TechnologyBasedIntangibleAssetsMember2021-01-012021-12-310001124524us-gaap:OrderOrProductionBacklogMember2021-01-012021-12-310001124524us-gaap:NoncompeteAgreementsMember2021-01-012021-12-310001124524us-gaap:CustomerRelationshipsMember2021-01-012021-12-310001124524cyrx:PatentsAndTrademarksMember2021-01-012021-12-310001124524cyrx:AgentNetworkMember2021-01-012021-12-310001124524us-gaap:UseRightsMember2022-03-310001124524us-gaap:TrademarksAndTradeNamesMember2022-03-310001124524us-gaap:TechnologyBasedIntangibleAssetsMember2022-03-310001124524us-gaap:OrderOrProductionBacklogMember2022-03-310001124524us-gaap:NoncompeteAgreementsMember2022-03-310001124524us-gaap:CustomerRelationshipsMember2022-03-310001124524cyrx:PatentsAndTrademarksMember2022-03-310001124524cyrx:AgentNetworkMember2022-03-310001124524us-gaap:UseRightsMember2021-12-310001124524us-gaap:TrademarksAndTradeNamesMember2021-12-310001124524us-gaap:TechnologyBasedIntangibleAssetsMember2021-12-310001124524us-gaap:OrderOrProductionBacklogMember2021-12-310001124524us-gaap:NoncompeteAgreementsMember2021-12-310001124524us-gaap:CustomerRelationshipsMember2021-12-310001124524cyrx:PatentsAndTrademarksMember2021-12-310001124524cyrx:AgentNetworkMember2021-12-310001124524us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001124524cyrx:ClassCConvertiblePreferredStockMember2021-01-012021-12-310001124524cyrx:CryopdpMember2022-03-310001124524cyrx:SeniorNotes2026Memberus-gaap:PrivatePlacementMember2021-11-120001124524cyrx:SeniorNotes2026Member2021-11-120001124524cyrx:SeniorNotes2025Memberus-gaap:PrivatePlacementMember2020-05-310001124524cyrx:SeniorNotes2025Member2020-05-310001124524us-gaap:WarrantMember2022-01-012022-03-310001124524us-gaap:SeniorNotesMember2022-01-012022-03-310001124524us-gaap:ServiceMember2022-01-012022-03-310001124524us-gaap:ProductMember2022-01-012022-03-310001124524us-gaap:ServiceMember2021-01-012021-03-310001124524us-gaap:ProductMember2021-01-012021-03-310001124524us-gaap:CommonStockMember2021-02-050001124524cyrx:ClassCConvertiblePreferredStockMember2020-10-010001124524cyrx:SeniorNotes2026Member2022-03-310001124524cyrx:SeniorNotes2026Member2021-12-310001124524cyrx:SeniorNotes2025Member2021-12-310001124524cyrx:ForeignCustomersMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310001124524cyrx:CustomerMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-12-310001124524cyrx:ForeignCustomersMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-3100011245242020-10-010001124524us-gaap:RestrictedStockUnitsRSUMember2022-03-310001124524us-gaap:EmployeeStockOptionMember2022-03-310001124524cyrx:ClassCConvertiblePreferredStockMember2022-03-3100011245242021-03-112021-03-1100011245242021-03-3100011245242020-12-310001124524cyrx:CellCoBioservicesMemberus-gaap:SubsequentEventMember2022-04-300001124524cyrx:CriticalTransportSolutionsAustraliaAndFairgateMember2021-06-300001124524cyrx:CriticalTransportSolutionsAustraliaAndFairgateMember2021-04-012021-06-300001124524cyrx:CellCoBioservicesMemberus-gaap:SubsequentEventMember2022-04-012022-04-300001124524us-gaap:USTreasuryNotesSecuritiesMember2022-03-310001124524us-gaap:CorporateDebtSecuritiesMember2022-03-310001124524us-gaap:CorporateDebtSecuritiesMember2021-12-310001124524us-gaap:USTreasuryNotesSecuritiesMember2021-12-310001124524us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001124524us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryNotesSecuritiesMember2022-03-310001124524us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember2022-03-310001124524us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-03-310001124524us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001124524us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryNotesSecuritiesMember2022-03-310001124524us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember2022-03-310001124524us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-03-310001124524us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001124524us-gaap:FairValueMeasurementsRecurringMember2022-03-310001124524us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001124524us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryNotesSecuritiesMember2021-12-310001124524us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember2021-12-310001124524us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2021-12-310001124524us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001124524us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryNotesSecuritiesMember2021-12-310001124524us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember2021-12-310001124524us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2021-12-310001124524us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001124524us-gaap:FairValueMeasurementsRecurringMember2021-12-310001124524cyrx:SeniorNotes2026Membercyrx:ClassCConvertiblePreferredStockMember2022-01-012022-03-310001124524us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001124524us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001124524cyrx:SeniorNotes2025Member2022-01-012022-03-310001124524cyrx:ClassCConvertiblePreferredStockMember2022-01-012022-03-310001124524us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001124524us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001124524cyrx:SeniorNotes2025Member2021-01-012021-03-310001124524cyrx:ClassCConvertiblePreferredStockMember2021-01-012021-03-310001124524cyrx:CryopdpMember2021-01-012021-03-310001124524cyrx:PublicOfferingMember2022-01-012022-03-310001124524cyrx:PublicOfferingMember2021-01-012021-03-3100011245242022-04-220001124524cyrx:SeniorNotes2026Memberus-gaap:PrivatePlacementMember2021-11-122021-11-120001124524cyrx:SeniorNotes2025Memberus-gaap:PrivatePlacementMember2020-05-012020-05-310001124524us-gaap:CommonStockMember2022-01-012022-03-310001124524us-gaap:CommonStockMember2021-01-012021-03-310001124524us-gaap:EmployeeStockOptionMembercyrx:Plan2018Member2018-05-012018-05-310001124524us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001124524us-gaap:SubsequentEventMember2022-04-300001124524cyrx:PreferredStockRedemptionPeriodOneMembercyrx:ClassCConvertiblePreferredStockMember2021-02-052021-02-050001124524cyrx:PreferredStockRedemptionPeriodTwoMembercyrx:ClassCConvertiblePreferredStockMember2020-10-012020-10-010001124524cyrx:PreferredStockRedemptionPeriodThreeMembercyrx:ClassCConvertiblePreferredStockMember2020-10-012020-10-0100011245242021-02-052021-02-050001124524srt:DirectorMember2022-01-012022-03-310001124524cyrx:CryopdpMember2022-01-012022-03-310001124524us-gaap:RevenueFromContractWithCustomerMember2022-01-012022-03-310001124524us-gaap:AccountsReceivableMember2021-01-012021-12-310001124524us-gaap:RevenueFromContractWithCustomerMember2021-01-012021-03-310001124524cyrx:ClassCConvertiblePreferredStockMember2020-10-012020-10-010001124524us-gaap:CommonStockMemberus-gaap:PrivatePlacementMember2020-10-012020-10-010001124524cyrx:ClassCConvertiblePreferredStockMemberus-gaap:PrivatePlacementMember2020-10-012020-10-010001124524us-gaap:PrivatePlacementMember2020-10-012020-10-010001124524srt:MinimumMember2022-01-012022-03-310001124524srt:MaximumMember2022-01-012022-03-3100011245242020-10-012020-10-010001124524cyrx:ScenarioOneMembercyrx:SeniorNotes2026Member2022-01-012022-03-310001124524cyrx:ScenarioOneMembercyrx:SeniorNotes2025Member2022-01-012022-03-310001124524cyrx:ScenarioTwoMembercyrx:SeniorNotes2026Member2022-01-012022-03-310001124524cyrx:ScenarioTwoMembercyrx:SeniorNotes2025Member2022-01-012022-03-310001124524cyrx:SeniorNotes2025Membercyrx:ConcurrentPlacementMember2021-11-012021-11-300001124524cyrx:SeniorNotes2026Member2022-01-012022-03-310001124524cyrx:SeniorNotes2025Member2022-01-012022-03-310001124524cyrx:SeniorNotes2025Member2022-03-3100011245242021-01-012021-12-310001124524cyrx:SeniorNotes2025Member2021-11-092021-11-0900011245242022-01-012022-03-310001124524cyrx:PreferredClassCMemberus-gaap:PreferredStockMember2022-01-012022-03-310001124524us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001124524cyrx:PreferredClassCMemberus-gaap:PreferredStockMember2021-01-012021-03-310001124524us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100011245242021-01-012021-03-3100011245242022-03-3100011245242021-12-31iso4217:USDiso4217:USDxbrli:sharesxbrli:purecyrx:Dcyrx:itemcyrx:customercyrx:directorxbrli:sharesiso4217:EUR

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 March 31, 2022

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

Graphic

CRYOPORT, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada

88-0313393

(State or other 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)

(949470-2300

(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 April 22, 2022 there were 49,376,409 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

 

Page

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Condensed Consolidated Balance Sheets at March 31, 2022 (Unaudited) and December 31, 2021

3

Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021

4

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2022 and 2021

5

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021

6

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

7

Notes to Condensed Consolidated Financial Statements (Unaudited)

8

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

34

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

43

ITEM 4. Controls and Procedures

43

PART II. OTHER INFORMATION

44

ITEM 1. Legal Proceedings

44

ITEM 1A. Risk Factors

44

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

46

ITEM 3. Defaults Upon Senior Securities

47

ITEM 4. Mine Safety Disclosures

47

ITEM 5. Other Information

47

ITEM 6. Exhibits

48

SIGNATURES

49

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share data)

March 31, 

December 31, 

    

2022

    

2021

(unaudited)

ASSETS

Current Assets:

  

  

Cash and cash equivalents

$

134,448

$

139,101

Short-term investments

 

465,063

 

489,698

Accounts receivable, net

 

35,837

 

39,412

Inventories

 

22,062

 

16,501

Prepaid expenses and other current assets

 

8,363

 

8,804

Total current assets

 

665,773

 

693,516

Property and equipment, net

 

50,734

49,029

Operating lease right-of-use assets

17,948

20,675

Intangible assets, net

 

197,608

201,427

Goodwill

146,591

146,954

Deposits

 

944

950

Deferred tax asset

1,734

419

Total assets

$

1,081,332

$

1,112,970

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

Current Liabilities:

 

  

 

  

Accounts payable and other accrued expenses

$

28,309

$

28,583

Accrued compensation and related expenses

 

12,096

9,912

Deferred revenue

 

517

547

Operating lease liabilities

3,466

3,542

Other liabilities

 

53

61

Total current liabilities

 

44,441

 

42,645

Convertible senior notes, net of discount of $12.0 million and $12.7 million, respectively

404,803

404,171

Note payable, net of discount of $0.03 million and $0.05 million, respectively

1,048

1,086

Operating lease liabilities, net of current portion

15,494

18,144

Deferred tax liability

5,002

4,018

Other long-term liabilities

372

349

Contingent consideration

738

729

Total liabilities

 

471,898

 

471,142

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; 200,000 issued and outstanding

12,275

10,275

Common stock, $0.001 par value; 100,000,000 shares authorized; 49,453,307 and 49,616,154 issued and outstanding at March 31, 2022 and December 31, 2021, respectively

50

50

Additional paid-in capital

 

1,102,725

 

1,100,287

Accumulated deficit

 

(489,294)

 

(467,541)

Accumulated other comprehensive income

 

(16,322)

 

(1,243)

Total stockholders’ equity

 

609,434

 

641,828

Total liabilities and stockholders’ equity

$

1,081,332

$

1,112,970

See accompanying notes to condensed consolidated financial statements.

3

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

Three Months Ended March 31, 

    

2022

    

2021

Service revenues

$

32,910

$

26,765

Product revenues

19,392

26,519

Total revenues

52,302

53,284

Cost of service revenues

18,718

15,552

Cost of product revenues

 

11,243

13,182

Total cost of revenues

29,961

28,734

Gross margin

 

22,341

24,550

 

  

Operating costs and expenses:

 

  

 

  

Selling, general and administrative

 

26,622

 

21,388

Engineering and development

 

3,538

 

4,304

Total operating costs and expenses

 

30,160

 

25,692

 

 

  

Loss from operations

 

(7,819)

 

(1,142)

Other income (expense):

 

  

 

  

Investment income

1,264

398

Interest expense

 

(1,491)

 

(1,210)

Other expense, net

 

(5,017)

 

(535)

Total other expense, net

(5,244)

 

(1,347)

Loss before provision for income taxes

 

(13,063)

 

(2,489)

Provision for income taxes

 

(341)

 

(1,038)

Net loss

$

(13,404)

$

(3,527)

Paid in kind dividend on Series C convertible preferred stock

(2,000)

(2,196)

Net loss attributable to common stockholders

$

(15,404)

$

(5,723)

Net loss per share attributable to common stockholders - basic and diluted

$

(0.31)

$

(0.13)

Weighted average common shares outstanding – basic and diluted

 

49,660,579

 

43,804,483

4

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

Three Months Ending March 31, 

    

2022

    

2021

Net loss

$

(13,404)

$

(3,527)

Other comprehensive loss, net of tax:

 

  

 

  

Net unrealized loss on available-for-sale debt securities

 

(14,065)

 

(768)

Reclassification of realized loss on available-for-sale debt securities to earnings

33

30

Foreign currency translation adjustments

 

(1,047)

 

(3,758)

Other comprehensive loss

 

(15,079)

 

(4,496)

Total comprehensive loss

$

(28,483)

$

(8,023)

5

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

Other 

Class A

Class B

Class C

Comprehensive 

Total 

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Additional

Accumulated 

Income

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Paid–In Capital

    

Deficit

    

(Loss)

    

Equity  (Deficit)

Balance at December 31, 2020

 

 

250,000

2,844

 

39,837,058

40

566,451

(192,013)

5,376

382,698

Net loss

 

 

 

 

 

 

 

 

 

(3,527)

 

 

(3,527)

Other comprehensive loss, net of taxes

(4,496)

(4,496)

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,979

 

 

 

2,979

Issuance of common stock for board of director compensation

 

 

 

 

 

 

229

 

 

11

 

 

 

11

Cost of Series C preferred stock conversion

(1,800)

(1,800)

Issuance of common stock in public offering, net of costs of $17.7 million

4,356,059

4

269,821

269,825

Conversion of Series C preferred shares to common stock

(50,000)

(765)

1,312,860

1

764

Paid-in-kind preferred stock dividend, including beneficial conversion feature

2,196

(2,196)

Proceeds from exercise of stock options and warrants

 

 

 

 

 

 

187,486

 

 

1,585

 

 

 

1,585

Balance at March 31, 2021

 

$

 

$

200,000

$

4,275

 

45,693,692

$

45

$

837,615

$

(195,540)

$

880

$

647,275

Balance at December 31, 2021

 

 

200,000

10,275

 

49,616,154

50

1,100,287

(467,541)

(1,243)

641,828

Net loss

(13,404)

(13,404)

Other comprehensive loss, net of taxes

(15,079)

(15,079)

Stock-based compensation expense

4,125

4,125

Paid-in-kind preferred stock dividend

 

 

 

 

 

2,000

 

 

 

(2,000)

 

 

 

Repurchase of common stock

(306,300)

(8,349)

(8,349)

Vesting of restricted stock units

58,395

Proceeds from exercise of stock options and warrants

 

 

 

 

 

 

85,058

 

 

313

 

 

 

313

Balance at March 31, 2022

 

$

 

$

200,000

$

12,275

 

49,453,307

$

50

$

1,102,725

$

(489,294)

$

(16,322)

$

609,434

See accompanying notes to condensed consolidated financial statements.

6

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

For the Three Months Ended

March 31, 

    

2022

    

2021

Cash Flows From Operating Activities:

 

  

 

  

Net loss

$

(13,404)

$

(3,527)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

Depreciation and amortization

5,365

 

4,837

Amortization of debt discount

643

 

264

Unrealized loss on investments in equity securities

4,908

 

263

Realized loss on available-for-sale investments

49

40

Stock-based compensation expense

4,125

 

2,990

Loss on disposal of property and equipment

92

 

71

Provision for bad debt

31

 

63

Insurance proceeds for operations

3,000

 

Changes in operating assets and liabilities:

Accounts receivable

3,340

 

(5,213)

Inventories

(7,715)

 

(988)

Prepaid expenses and other current assets

21

 

(6,545)

Deposits

 

229

Change in operating lease right-of-use assets and lease liabilities

5

60

Accounts payable and other accrued expenses

(2,107)

 

532

Accrued compensation and related expenses

2,141

 

804

Deferred revenue

(30)

 

49

Deferred tax liability

60

80

Net cash provided by (used in) operating activities

524

 

(5,991)

 

  

Cash Flows From Investing Activities:

 

  

Purchases of property and equipment

(4,245)

 

(2,811)

Insurance proceeds for loss of fixed assets

2,000

Software development costs

(213)

(193)

Purchases of short-term investments

(30,354)

 

(215,318)

Sales/maturities of short-term investments

36,000

3,000

Patent and trademark costs

(138)

 

(48)

Net cash provided by (used in) investing activities

3,050

 

(215,370)

 

  

Cash Flows From Financing Activities:

 

  

Proceeds from exercise of stock options and warrants

313

 

1,586

Proceeds from public offering, net of $17.7 million in offering costs

269,825

Repurchase of common stock

(8,349)

 

Repayment of finance lease liabilities

(13)

(18)

Net cash provided by (used in) financing activities

(8,049)

 

271,393

Effect of exchange rates on cash and cash equivalents

(178)

 

(1,411)

Net change in cash and cash equivalents

(4,653)

48,621

Cash and cash equivalents — beginning of period

139,101

 

36,873

Cash and cash equivalents — end of period

$

134,448

$

85,494

Supplemental Disclosure of Non-Cash Financing Activities:

Conversion of Series C Preferred Stock to common stock

$

$

765

Cost of Series C Preferred stock conversion included in additional paid-in-capital and accounts payable and accrued liabilities

$

$

1,800

CRYOPDP goodwill adjustment included in deferred tax liability

$

$

1,394

MVE goodwill adjustment included in fixed assets

$

$

71

Note valuation adjustment included in note payable and goodwill

$

$

1,266

Net unrealized loss on available-for-sale securities

$

14,065

$

768

Reclassification of realized loss on available-for-sale debt securities to earnings

$

33

$

30

Paid-in-kind preferred stock dividend

$

2,000

$

2,196

Fixed assets included in accounts payable and accrued liabilities

$

549

$

198

See accompanying notes to condensed consolidated financial statements.

7

Cryoport, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

Note 1. Management’s Representation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Cryoport, Inc. (the “Company”, “Cryoport”, “our” or “we”) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statement presentation. However, the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The Company has evaluated subsequent events through the date of this filing and determined that no subsequent events have occurred that would require recognition in the unaudited condensed consolidated financial statements or disclosure in the notes thereto other than as disclosed in the accompanying notes.

Note 2. Nature of the Business

Cryoport serves the life sciences industry as a provider of integrated temperature-controlled supply-chain solutions supporting the biopharma/pharma, animal health, and reproductive medicine markets. Our mission is to support life and health worldwide and we are continuously developing, implementing, and leveraging our supply chain platform, which is designed to deliver comprehensive, unparalleled, highly differentiated temperature-controlled logistics, packaging, storage, cryogenic systems, informatics, and related services for life science products, regenerative medicine, cellular therapies, and treatments that require unique, specialized cold chain management.

On October 1, 2020, the Company completed both the acquisition of MVE Biological Solutions (the “MVE Acquisition”) and the acquisition of CRYOPDP (the “CRYOPDP Acquisition”). In addition, in the second quarter of 2021, the Company completed the acquisitions of Critical Transport Solutions Australia (CTSA) in Australia and F-airGate in Belgium to further enhance CRYOPDP’s existing global temperature-controlled supply chain capabilities in the APAC (Asia-Pacific) and EMEA (Europe, the Middle East, and Africa) regions. These acquisitions are further discussed in Note 4.

The Company is a Nevada corporation and its common stock is traded on the NASDAQ Capital Market exchange under the ticker symbol “CYRX.”

Note 3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Cryoport, Inc. and its wholly-owned subsidiaries, Cryoport Systems, LLC, Cryogene, Inc., MVE Biological Solutions US, LLC, and Cryoport Netherlands B.V. and subsidiaries, which includes CRYOPDP. All intercompany accounts and transactions have been eliminated.

8

Cash and Cash Equivalents

Our cash and cash equivalents represent demand deposits, and money market funds which are readily convertible into cash, have maturities of 90 days or less when purchased and are considered highly liquid and easily tradeable.

Short-Term Investments

Our investments in equity securities consist of mutual funds with readily determinable fair values which are carried at fair value with changes in fair value recognized in earnings.

Investments in debt securities are classified as available-for-sale and are carried at fair value, with unrealized gains and losses, net of tax, reported as accumulated other comprehensive income (loss) and included as a separate component of stockholders’ equity.

Gains and losses are recognized when realized. When we have determined that an other than temporary decline in fair value has occurred, the amount related to a credit loss is recognized in earnings. Gains and losses are determined using the specific identification method.

Short-term investments are classified as current assets even though maturities may extend beyond one year because they represent investments of cash available for operations.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from estimated amounts. The Company’s significant estimates include the allowance for doubtful accounts, fair value of short-term investments, valuations and purchase price allocations related to business combinations, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets, estimated fair values of intangible assets and goodwill, intangible asset useful lives and amortization methods, allowance for inventory obsolescence, equity-based instruments, tax reserves and recoverability of the Company’s net deferred tax assets and related valuation allowance.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Future events, including the extent and the duration of the COVID-19 related economic impacts, and their effects cannot be predicted with certainty, and, accordingly the Company’s accounting estimates require the exercise of judgment.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses, finance lease liabilities, note payable, and the Company’s 0.75% Convertible Senior Notes due in 2026 (the “2026 Senior Notes”) and 3.0% Convertible Senior Notes due in 2025 (the “2025 Senior Notes” and together with the 2026 Senior Notes, the “Senior Notes”). The carrying value for all such instruments, except finance lease liabilities, note payable and the Senior Notes, approximates fair value at March 31, 2022 and December 31, 2021 due to their short-term nature. The carrying value of finance lease liabilities approximates fair value because the interest rate approximates market rates available to us for similar obligations with the same maturities. For additional information related to fair value measurements, including the note payable and the Senior Notes, see Notes 6 and 9.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments. From time to time, we maintain cash, cash equivalent and short-term investment balances in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection Corporation (“SIPC”). Primarily all of our cash, cash equivalents and short-term investments at March 31, 2022 were in excess of amounts insured by the FDIC and

9

SIPC. The Company performs ongoing evaluations of these institutions to limit its concentration risk exposure. We manage such risks in our portfolio by investing in highly liquid, highly-rated instruments, and limit investing in long-term maturity instruments.

Our investment policy requires that purchased instruments in marketable securities may only be in highly-rated instruments, which are primarily U.S. Treasury bills or treasury-backed securities, and also limits our investment in securities of any single issuer.

Customers

The Company grants credit to customers within the U.S. and international customers and does not require collateral. Revenues from international customers are generally secured by advance payments except for established foreign customers. The Company generally requires advance or credit card payments for initial revenues from new customers. The Company’s ability to collect receivables can be affected by economic fluctuations in the geographic areas and industries served by the Company. Reserves for uncollectible amounts are provided based on past experience and a specific analysis of the accounts, which management believes to be sufficient. Accounts receivable at March 31, 2022 and December 31, 2021 are net of reserves for doubtful accounts of $1.1 million and $1.2 million, respectively. Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts. The Company maintains reserves for bad debt and such losses, in the aggregate, historically have not exceeded its estimates.

The Company’s customers are in the biopharma, pharmaceutical, animal health, reproductive medicine and other life science industries. Consequently, there is a concentration of accounts receivable within these industries, which is subject to normal credit risk. At March 31, 2022 and December 31, 2021, there were no customers that accounted for more than 10% of net accounts receivable.

The Company has revenue from foreign customers primarily in the United Kingdom, France, Germany, China and India. During the three months ended March 31, 2022 and 2021, the Company had revenues from foreign customers of approximately $24.4 million and $25.5 million, respectively, which constituted approximately 46.7% and 48.0%, respectively, of total revenues. No single customer generated over 10% of revenues during the three months ended March 31, 2022 and 2021.

Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. Inventories are reviewed periodically for slow-moving or obsolete status. The Company writes down the carrying value of its inventories to reflect situations in which the cost of inventories is not expected to be recovered. Once established, write-downs of inventories are considered permanent adjustments to the cost basis of the obsolete or excess inventories. Raw materials and finished goods include material costs less reserves for obsolete or excess inventories. The Company evaluates the current level of inventories considering historical trends and other factors, such as selling prices and costs of completion, disposal and transportation, and based on the evaluation, records adjustments to reflect inventories at net realizable value. These adjustments are estimates, which could vary significantly from actual results if future economic conditions, customer demand, competition or other relevant factors differ from expectations. These estimates require us to make assessments about future demand for the Company’s products in order to categorize the status of such inventories items as slow-moving, obsolete or in excess-of-need. These estimates are subject to the ongoing accuracy of the Company’s forecasts of market conditions, industry trends, competition and other factors.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets which is generally three to twelve years for computer hardware and software, seven to ten years for freezers, four to ten years for trucks and autos, three to fifteen years for furniture and equipment and over the shorter of the lease term or useful lives of the assets for leasehold improvements. Buildings are depreciated over a useful life ranging from 20 to 45 years. Maintenance and repairs are expensed as incurred.

Betterments, renewals and extraordinary repairs that extend the lives of the assets are capitalized; other repairs and maintenance charges are expensed as incurred. The cost and related accumulated depreciation and amortization applicable to assets retired are removed from the accounts, and the gain or loss on disposition is recognized in the consolidated statements of operations.

Leases

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to

10

make lease payments arising from the lease. Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease liabilities on our consolidated balance sheets.

Lease ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at commencement date calculated using our incremental borrowing rate applicable to the lease asset, unless the implicit rate is readily determinable. ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives received. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recognized on the consolidated balance sheets. The Company’s leases do not contain any residual value guarantees. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company accounts for lease and non-lease components as a single lease component for all its leases.

Business Combinations

Total consideration transferred for acquisitions is allocated to the assets acquired and liabilities assumed based on their fair values at the dates of acquisition. This purchase price allocation process requires management to make significant estimates and assumptions primarily with respect to intangible assets. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions determined by management. Any excess of purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as any contingent consideration, where applicable, the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Goodwill

The Company evaluates goodwill on an annual basis in the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include, but are not limited to: (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. The Company compares the fair value of the reporting unit with its carrying amount and then recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value up to the total amount of goodwill allocated to the reporting unit. The Company assessed triggering events indicating potential goodwill impairment, including the effects of the COVID-19 pandemic, and after assessment, concluded that there was no impairment during the three months ended March 31, 2022.

Intangible Assets

Intangible assets are comprised of patents, trademarks, software development costs and the intangible assets acquired in the Company’s recent acquisitions which include a non-compete agreement, technology, customer relationships, trade name/trademark, agent network, order backlog, developed technology and land use rights. These intangible assets are amortized using the straight-line method over the estimated useful lives (see Note 8). The Company uses the following valuation methodologies to value the significant intangible assets acquired: income approach for customer relationships, replacement cost for agent network and software, and relief from royalty for trade name/trademarks and developed technology. The Company capitalizes costs of obtaining patents and trademarks, which are amortized, using the straight-line method over their estimated useful life of five years once the patent or trademark has been issued.

The Company evaluates the recoverability of identifiable intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to: (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These

11

assumptions require significant judgment and actual results may differ from assumed and estimated amounts. There was no impairment of intangible assets during the three months ended March 31, 2022.

Other Long-lived Assets

If indicators of impairment exist, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If impairment is indicated, we measure the amount of such impairment by comparing the fair value to the carrying value. We believe the future cash flows to be received from the long-lived assets will exceed the assets’ carrying value, and accordingly, we have not recognized any impairment losses through March 31, 2022.

Deferred Financing Costs

Deferred financing costs represent costs incurred in connection with the issuance of debt instruments and equity financings. Deferred financing costs related to the issuance of debt are amortized over the term of the financing instrument using the effective interest method and are presented in the consolidated balance sheets as an offset against the related debt. Offering costs from equity financings are netted against the gross proceeds received from the equity financings.

Income Taxes

The Company accounts for income taxes under the provision of Accounting Standards Codification (“ASC”) 740, “Income Taxes”, or ASC 740. As of March 31, 2022 and December 31, 2021, there were no unrecognized tax benefits included in the accompanying consolidated balance sheets that would, if recognized, impact the effective tax rate.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. Based on the weight of available evidence, the Company’s management has determined that it is not more likely than not that the U.S. based net deferred tax assets will be realized. Therefore, the Company has recorded a full valuation allowance against its U.S. based net deferred tax assets. With respect to the foreign based deferred tax assets, the Company’s management has reviewed these deferred tax assets on a jurisdictional basis. Based on the weight of each jurisdiction’s evidence available, the Company’s management has made separate determinations for each foreign jurisdiction regarding whether it is more likely than not that a net deferred tax asset within a particular jurisdiction will be realized. The Company has recorded full valuation allowances in jurisdictions where deferred tax assets are not deemed more likely than not to be realized.

The Company has recorded a net deferred tax liability in jurisdictions where taxable temporary differences associated with indefinite-lived intangible assets do not support the realization of deferred tax assets with finite carryforward periods. In addition, the Company has recorded a net deferred tax liability in jurisdictions where taxable temporary differences exceed deductible temporary differences.

The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company has immaterial accruals for interest or penalties on its consolidated balance sheets at March 31, 2022 and December 31, 2021 and has recorded only immaterial interest and/or penalties in the consolidated statements of operations for the three months ended March 31, 2022 and 2021. The Company is subject to taxation in the U.S., various state jurisdictions and in various foreign countries. As of March 31, 2022, the Company is no longer subject to U.S. federal examinations for years before 2018 and for California franchise and income tax examinations for years before 2017. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses were generated and carried forward and make adjustments up to the amount of the net operating loss carry forward amount. The Company is not currently under examination by U.S. federal or state jurisdictions. Our foreign subsidiaries are generally subject to examination three years following the year in which the tax obligation originated. The years subject to audit may be extended if the entity substantially understates corporate income tax. The Company’s subsidiary in India is currently under examination by the Indian tax authorities for 2012-2013, 2013-2014 and 2015-2016 tax periods. Other than India, the Company does not have any foreign subsidiaries currently under audit by their local taxing authorities.

On June 29, 2020, the State of California passed Assembly Bill (“AB”) 85 which suspends the California net operating loss deduction for the 2020-2022 tax years and the R&D credit usage for the same period (for credit usages in excess of $5 million). These

12

suspensions were considered in the preparation of the December 31, 2021 financial statements.  On February 9, 2022, the California governor signed Senate Bill (“SB”) 113, which was retroactive to January 1, 2021.  SB 113 removed the limitations from AB 85 on net operating loss and tax credit usage for the 2022 tax year.  This change in our ability to use the net operating loss deduction and R&D credits in California were considered in the preparation of the March 31, 2022, financial statements.

On March 11, 2021, the United States enacted the American Rescue Plan (“ARP”). The ARP includes provisions extending certain CARES Act provisions, repeals a worldwide interest allocation election, modifies the $1 million executive compensation limitation for years after 2026 and extends the employee retention credit. The Company will continue to evaluate the impact of the ARP and its impact on our financial statements in 2022 and beyond.

The 2017 Tax Cuts and Jobs Act amended the Internal Revenue Code (“Code”), effective for amounts paid or incurred in tax years beginning after December 31, 2021, to eliminate the immediate expensing of research and experimental expenditures (“R&E”) and to require taxpayers to charge their R&E expenditures and software development costs (collectively, R&E expenditures) to a capital account. Capitalized costs are required to be amortized over five years (15 years for expenditures attributable to foreign research). Additionally, the R&E credit may only be claimed for costs that are eligible to be treated as R&E expenditures under the Code.  This change in the treatment of R&E expenditures has been considered in the preparation of the March 31, 2022, financial statements.

Revenue Recognition

Revenues are recognized when control is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

Performance Obligations

At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when our performance obligation has been met. The Company considers control to have transferred upon delivery because the Company has a present right to payment at that time, the Company has transferred use of the asset, and the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

For arrangements under which the Company provides biological specimen storage services and logistics support and management to the customer, the Company satisfies its performance obligations as those services are performed whereby the customer simultaneously receives and consumes the benefits of such services under the agreement.

Revenue generated from short-term logistics and engineering consulting services provided to customers is recognized when the Company satisfies the contractually defined performance obligations. When a contract includes multiple performance obligations, the contract price is allocated among the performance obligations based upon the stand-alone selling prices. Approved contract modifications are accounted for as either a separate contract or as part of the existing contract depending on the nature of the modification.

Our performance obligations on our orders and under the terms of agreements with customers are generally satisfied within one year from a given reporting date and, therefore, we omit disclosure of the transaction price allocated to remaining performance obligations on open orders.

Shipping and handling activities related to contracts with customers are accounted for as costs to fulfill our promise to transfer the associated products pursuant to the accounting policy election allowed under Topic 606 and are not considered a separate performance obligation to our customers. Accordingly, the Company records amounts billed for shipping and handling as a component of revenue. Shipping and handling fees and costs are included in cost of revenues in the accompanying condensed consolidated statements of operations.

Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to governmental agencies.

13

Significant Payment Terms

Pursuant to the Company’s contracts with its customers, amounts billed for services or products delivered by the Company are generally due and payable in full within 15 to 60 days from the date of the invoice (except for any amounts disputed by the customer in good faith). Accordingly, the Company determined that its contracts with customers do not include extended payment terms or a significant financing component.

Variable Consideration

When a contract includes variable consideration, the Company evaluates the estimate of the variable consideration to determine whether the estimate needs to be constrained. Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available. Variable consideration estimates are updated at each reporting date. Revenues are recorded net of variable consideration, such as discounts and allowances.

Warranties

The Company provides product warranties with varying terms and durations for some of its products. The Company estimates product warranty costs and accrues for these costs as products are sold with a charge to cost of sales. Factors considered in estimating warranty costs include historical and projected warranty claims, historical and projected cost-per-claim, and knowledge of specific product issues that are outside of typical experience. Warranty accruals are evaluated and adjusted as necessary based on actual claims experience and changes in future claim and cost estimates.

Product warranty accrued liabilities totaled $0.5 million at March 31, 2022 and December 31, 2021, and are included in accounts payable and other accrued expenses. Warranty expense was not material for the three months ended March 31, 2022, and 2021.

Incremental Direct Costs

Incremental direct costs are expensed when incurred when the amortization period of the asset that would have been recognized is one year or less; otherwise, incremental contract costs are recognized as an asset and amortized over time as promised goods and services are transferred to a customer. Incremental direct costs were not material for the three months ended March 31, 2022 and 2021.

Contract Assets

Typically, we invoice the customer and recognize revenue once we have satisfied our performance obligation. Accordingly, our contract assets comprise accounts receivable, which are recognized when payment is unconditional and only the passage of time is required before payment is due. Generally, we do not have material amounts of other contract assets since revenue is recognized as control of goods is transferred or as services are performed.

Contract Liabilities (Deferred Revenue)

Contract liabilities are recorded when cash payments are received in advance of the Company’s performance. Deferred revenue was $0.5 million at March 31, 2022 and December 31, 2021. During the three months ended March 31, 2022 and 2021, the Company recognized revenues of $0.3 million and $0.2 million from the related contract liabilities outstanding as the services were performed.

Nature of Goods and Services

The Company provides Cryoport Express® Shippers to its customers and charges a fee in exchange for the use of the Cryoport Express® Shipper under long-term master service agreements with customers. The Company’s arrangements convey to the customers the right to use the Cryoport Express® Shippers over a period of time. The Company retains title to the Cryoport Express® Shippers and provides its customers the use of the Cryoport Express® Shipper for a specified shipping cycle. At the culmination of the customer’s shipping cycle, the Cryoport Express® Shipper is returned to the Company.

14

The Company recognizes revenue for the use of the Cryoport Express® Shippers at the time of the delivery of the Cryoport Express® Shipper to the end user of the enclosed materials, and at the time that collectability is probable.

The Company also provides vacuum insulated aluminum dewars and cryogenic freezers systems to its customers. Revenue is recognized when the Company satisfies performance obligations by transferring the equipment to a customer, and at the time that collectability is probable.

The Company also provides global temperature-controlled logistics services, support and management. Revenue is recognized for these services as services are rendered and at the time that collectability is probable.

The Company also provides comprehensive and integrated temperature-controlled biostorage solutions to customers in the life sciences industry and charges a fee under long-term master service agreements with customers. These services include (1) biological specimen cryopreservation storage and maintenance, (2) archiving, monitoring, tracking, receipt and delivery of samples, (3) transport of frozen biological specimens to and from customer locations, and (4) management of incoming and outgoing biological specimens. The Company recognizes revenue for its biostorage solutions as services are rendered over time and at the time that collectability is probable.

The Company also provides short-term logistics and engineering consulting services to some customers, with fees tied to the completion of contractually defined services. We recognize revenue from these services over time as the customer simultaneously receives and consumes the benefit of these services as they are performed.

A significant portion of our revenues are covered under long-term agreements. We have determined that individual Statements of Work or Scope of Work (“SOW”), whose terms and conditions taken with a Master Services Agreement (“MSA”), create the Topic 606 contracts which are generally short-term in nature (e.g., 15-day shipping cycle) for the Cryoport Express® solutions and up to 12 months for biostorage solutions. Our agreements (including SOWs) generally do not have multiple performance obligations and, therefore, do not require an allocation of a single price amongst multiple goods or services. Prices under these agreements are generally fixed.

Revenue Disaggregation

The Company views its operations, makes decisions regarding how to allocate resources and manages its business as one reportable segment and one reporting unit. As a result, the financial information disclosed herein represents all of the material financial information related to the Company. When disaggregating revenue, the Company considered all of the economic factors that may affect its revenues. We consider sales disaggregated by end-market to depict how the nature, amount, timing and uncertainty of revenues and cash flows are impacted by changes in economic factors. The following table disaggregates our revenues by major markets for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

    

2022

    

2021

Biopharma/Pharma

$

43,011

$

42,393

Animal Health

 

6,794

 

8,997

Reproductive Medicine

2,497

1,894

Total revenues

$

52,302

$

53,284

Given that the Company’s revenues are generated in different geographic regions, factors such as regulatory and geopolitical factors within those regions could impact the nature, timing and uncertainty of the Company’s revenues and cash flows. Our geographical revenues, by origin, for the three months ended March 31, 2022 and 2021, were as follows (in thousands):

Three Months Ended March 31,

    

2022

    

2021

Americas

$

27,878

$

27,734

Europe, the Middle East and Africa (EMEA)

 

16,187

 

14,208

Asia Pacific (APAC)

 

8,237

 

11,342

Total revenues

$

52,302

$

53,284

15

Cost of Service Revenues

Our cost of service revenues is primarily comprised of freight charges, payroll and associated expenses related to our global logistics and supply chain centers, depreciation expenses of our Cryoport Express® Shippers and supplies and consumables used for our solutions.

Cost of Product Revenues

Our cost of product revenues is primarily comprised of materials, direct and indirect labor, inbound freight charges, purchasing and receiving, inspection, and distribution and warehousing of inventory. In addition, shop supplies, facility maintenance costs and depreciation expense for assets used in the manufacturing process are included in cost of product revenues.

Engineering and Development Expenses

Expenditures relating to engineering and development are expensed in the period incurred to engineering and development expense in the statement of operations.

Acquisition Costs

Acquisition costs consist of legal, accounting, third-party valuations, and other due diligence costs related to our acquisitions.

Stock-Based Compensation

Under our stockholder approved stock-based compensation plan, we have granted incentive stock options, non-qualified stock options and restricted stock units that vest over four years. Incentive and non-qualified stock options expire from seven to ten years from date of grant. The Company accounts for stock-based payments in accordance with stock-based payment accounting guidance which requires all stock-based payments to be recognized based upon their fair values. The fair value of stock options is estimated at the grant date using the Black-Scholes Option Pricing Model (“Black-Scholes”) and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. The determination of fair value using Black-Scholes is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and expected term. The Company accounts for forfeitures of unvested awards as they occur.

The grant date fair value per share for restricted stock units is based upon the closing market price of our common stock on the award grant date.

The Company’s stock-based compensation plans are discussed further in Note 14.

Basic and Diluted Net Loss Per Share

We calculate basic and diluted net loss per share using the weighted average number of common shares outstanding during the periods presented. In periods of a net loss position, basic and diluted weighted average common shares are the same. For the diluted earnings per share calculation, we adjust the weighted average number of common shares outstanding to include dilutive stock options, warrants, unvested restricted stock units and shares associated with the conversion of the Senior Notes and convertible preferred stock outstanding during the periods.

The following shows the amounts used in computing net loss per share (in thousands except per share data):

Three Months Ended March 31, 

    

2022

    

2021

Net loss

$

(13,404)

$

(3,527)

Paid-in-kind dividend on Series C convertible preferred stock

 

(2,000)

 

(2,196)

Net loss attributable to common shareholders

$

(15,404)

$

(5,723)

Weighted average common shares outstanding – basic and diluted

49,660,579

43,804,483

Basic and diluted net loss per share

$

(0.31)

$

(0.13)

16

The following table sets forth the number of shares excluded from the computation of diluted loss per share, as their inclusion would have been anti-dilutive:

Three Months Ended March 31, 

    

2022

    

2021

Stock options

4,699,476

 

6,149,186

Restricted stock units

693,887

304,157

Series C convertible preferred stock

5,497,939

5,283,411

Conversion of 2026 Senior Notes

3,422,780

Conversion of 2025 Senior Notes

599,954

 

4,810,002

14,914,036

 

16,546,756

Foreign Currency Transactions

Management has determined that the functional currency of its subsidiaries is the local currency. Assets and liabilities of the Netherlands and United Kingdom subsidiaries are translated into U.S. dollars at the period-end exchange rates. Income and expenses are translated at an average exchange rate for the period and the resulting translation gain (loss) adjustments are accumulated as a separate component of stockholders’ equity. The translation gain (loss) adjustment totaled $(1.1) million, and $(3.8) million for the three months ended March 31, 2022 and 2021, respectively. Foreign currency gains and losses from transactions denominated in other than respective local currencies are included in earnings.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements.

Reclassification

Prior year amounts in sales and marketing expense have been reclassified to selling, general and administrative expense to conform to the current period presentation, which reflects how the Company tracks operating costs. These reclassifications had no effect on the previously reported net loss.

Recently Adopted Accounting Pronouncements

In July 2021, the FASB issued ASU 2021-05, “Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments.” Under this ASU, lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: (1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in Topic 842 and (2) the lessor would have otherwise recognized a day-one loss. ASU 2021-05 is effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years for all public business entities. We adopted this standard in the first quarter of fiscal 2022, which did not have a material impact on the Company’s consolidated financial statements or disclosures.

In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40): Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the Emerging Issues Task Force).” ASU 2021-04 requires issuers to account for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange. Under the guidance, an issuer determines the accounting for the modification or exchange based on whether the transaction was done to issue equity, to issue or modify debt, or for other reasons. ASU 2021-04 is applied prospectively and is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. We adopted this standard in the first quarter of fiscal 2022, which did not have a material impact on the Company’s consolidated financial statements or disclosures.

Accounting Guidance Issued but Not Adopted at March 31, 2022

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures,” which addresses and amends areas identified by the FASB as part of its post-implementation

17

review of the accounting standard that introduced the current expected credit losses (“CECL”) model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. For entities, such as Cryoport, that have not yet adopted the CECL accounting model in ASU 2016-13, the effective date for the amendments in ASU 2022-02 is the same as the effective date in ASU 2016-13 (i.e., fiscal years beginning after December 15, 2022, including interim periods within those fiscal years). We are currently evaluating the impact of this standard on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers, on the acquisition date as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for public business entities. We are currently evaluating the impact of this standard on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." This ASU replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information for credit loss estimates on certain types of financial instruments, including trade receivables. In addition, new disclosures are required. The ASU, as subsequently amended, is effective for the Company for fiscal years beginning after December 15, 2022, as the Company was a smaller reporting company as of November 15, 2019, the determination date. We are currently evaluating the impact of adopting this guidance.

Note 4. Acquisitions

2021 Acquisitions

In the second quarter of 2021, we completed the acquisitions of Critical Transport Solutions Australia (CTSA) in Australia and F-airGate in Belgium to further enhance our existing global temperature-controlled supply chain capabilities in the APAC and EMEA regions. The combined purchase consideration was $6.8 million, of which $2.7 million was allocated to goodwill and $2.8 million to identifiable intangible assets. The combined purchase consideration also included a contingent consideration liability of $0.7 million. The acquisitions include earnout provisions subject to achieving future EBITDA targets through 2025 and certain employment requirements, as defined in the share purchase agreements. The goodwill amount represents synergies related to our existing logistics management services. Through March 31, 2022, the Company recorded combined measurement period adjustments of $0.8 million, mainly comprised of deferred tax adjustments. The acquired goodwill and intangible assets are not deductible for tax purposes.

Note 5. Cash, Cash Equivalents and Short-Term Investments

Cash, cash equivalents and short-term investments consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Cash

$

32,647

$

27,788

Cash equivalents:

 

Money market mutual fund

 

101,801

111,313

Total cash and cash equivalents

 

134,448

139,101

Short-term investments:

 

U.S. Treasury notes and bills

 

316,939

223,896

Mutual funds

 

105,536

110,006

Corporate debt securities

42,588

155,796

Total short-term investments

 

465,063

489,698

Cash, cash equivalents and short-term investments

$

599,511

$

628,799

18

Available-for-sale investments

The amortized cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale investments by type of security at March 31, 2022 were as follows (in thousands):

Amortized

Unrealized

Unrealized

    

Cost

    

Gains

    

Losses

    

Fair Value

U.S. Treasury notes

$

322,728

$

$

(5,789)

$

316,939

Corporate debt securities

50,831

(8,243)

42,588

Total available-for-sale investments

$

373,559

$

$

(