UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q





þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 
OF 1934For the quarterly period ended March 31, 2009

or

 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACTfor the transition period from _________ to _________



CORD BLOOD AMERICA, INC.

(Exact Name of Small Business Registrant as Specified in its Charter)





|                                               |                          |                                     
|---------------------------------------------- | ------------------------ | ------------------------------------
|                                               |                          |                                     
|FLORIDA                                        | 000-50746                | 65-1078768                          
|(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.)



|                                                       |  |           
|------------------------------------------------------ |  | ----------
|                                                       |  |           
|501 SANTA MONICA BLVD. STE. 700
SANTA MONICA, CA 90401 |  | 90401     
|(Address of principal executive offices)               |  | (Zip Code)



(310) 432-4090

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings for the past 90 days.Yes  þ   No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ̈ No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act:

Large accelerated filer  ̈ Accelerated filer  ̈  Non-accelerated filer  ̈ Smaller reporting company filer þ

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

Number of shares of Cord Blood America, Inc. common stock, $0.0001 par value, outstanding as of May 15, 2009: 1,579,096,424, exclusive of treasury shares.













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CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Page
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements
1
Consolidated Balance Sheets as of March 31, 2009(unaudited) and December 31, 2008 (Audited)
1
Consolidated Statements of Operations (Unaudited) For The Three Months Ended March 31, 2009 and 2008
2
Consolidated Statements of Cash Flows (Unaudited) For The Three Months Ended March 31, 2009 and 2008
3
Notes to Consolidated Financial Statements (Unaudited)
4
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations
15
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
17
Item 4t.
Controls and Procedures
18
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
19
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
19
Item 3.
Defaults Upon Senior Securities
19
Item 4.
Submission of Matters to a Vote of Securities Holders
19
Item 5.
Other Information
19
Item 6.
Exhibits
19
Signatures
20











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PART I. FINANCIAL INFORMATION



ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS

CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                          |  |                |             |   |                   |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                                          |  | Unaudited      |             |   | Audited           |  
|                                                                                                                                                          |  | March 31,
2009 |             |   | December 31,
2008 |  
|ASSETS                                                                                                                                                    |  |                |             |   |                   |   |             |  
|Current assets:                                                                                                                                           |  |                |             |   |                   |   |             |  
|Cash                                                                                                                                                      |  | $              | 106,883     |   |                   | $ |           |  
|Accounts receivable, net of allowance for doubtful accounts of $45,000                                                                                    |  |                | 120,177     |   |                   |   | 106,075     |  
|Supplies                                                                                                                                                  |  |                | 2,574       |   |                   |   | 2,574       |  
|Prepaid expenses                                                                                                                                          |  |                | 10,683      |   |                   |   | 47,685      |  
|Total current assets                                                                                                                                      |  |                | 240,317     |   |                   |   | 156,334     |  
|Property and equipment, net of accumulated depreciation and amortization of $309,672 and $293,741                                                         |  |                | 33,504      |   |                   |   | 49,435      |  
|Deferred financing costs, net of amortization of $1,357,627 and $778,965                                                                                  |  |                | 70,105      |   |                   |   | 648,767     |  
|Customer contracts and relationships, net of amortization of $1,105,872 and $954,124                                                                      |  |                | 4,219,846   |   |                   |   | 4,371,594   |  
|Deposits                                                                                                                                                  |  |                | 20,130      |   |                   |   | 20,130      |  
|Domain name, net of amortization of $126 and $115                                                                                                         |  |                | 274         |   |                   |   | 285         |  
|Other assets                                                                                                                                              |  |                | 670         |   |                   |   | 670         |  
|Total assets                                                                                                                                              |  | $              | 4,584,846   |   |                   | $ | 5,247,215   |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                                     |  |                |             |   |                   |   |             |  
|Current liabilities:                                                                                                                                      |  |                |             |   |                   |   |             |  
|Bank overdraft                                                                                                                                            |  | $              |           |   |                   | $ | 17,083      |  
|Accounts payable                                                                                                                                          |  |                | 1,038,763   |   |                   |   | 1,173,850   |  
|Accrued expenses                                                                                                                                          |  |                | 2,277,710   |   |                   |   | 2,161,704   |  
|Deferred revenue                                                                                                                                          |  |                | 1,219,442   |   |                   |   | 1,194,987   |  
|Advances from Officers                                                                                                                                    |  |                | 104,716     |   |                   |   | 120,448     |  
|Capital lease obligations                                                                                                                                 |  |                |           |   |                   |   | 2,589       |  
|Derivatives Liability                                                                                                                                     |  |                | 2,203,020   |   |                   |   | 2,098,318   |  
|Promissory notes payable, net of unamortized discount of $1,181,832 and $1,309,384                                                                        |  |                | 5,589,552   |   |                   |   | 6,824,915   |  
|Total current liabilities                                                                                                                                 |  |                | 12,433,203  |   |                   |   | 13,593,894  |  
|Commitments and Contingencies, note 5                                                                                                                     |  |                |             |   |                   |   |             |  
|Stockholders deficit:                                                                                                                                    |  |                |             |   |                   |   |             |  
|Preferred stock, $.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding                                                          |  |                |           |   |                   |   |           |  
|Common stock, $.0001 par value, 6,945,000,000 shares authorized 1,127,205,730 and 439,342,817 shares issued and outstanding, inclusive of treasury shares |  |                | 112,221     |   |                   |   | 43,923      |  
|Additional paid-in capital                                                                                                                                |  |                | 19,322,441  |   |                   |   | 28,697,523  |  
|Common stock held in treasury stock, 7,266,667 and 41,266,667 shares                                                                                      |  |                | (599,833    | ) |                   |   | (12,159,833 | )
|Accumulated deficit                                                                                                                                       |  |                | (26,683,186 | ) |                   |   | (24,928,292 | )
|Total stockholders deficit                                                                                                                               |  |                | (7,848,357  | ) |                   |   | (8,346,679  | )
|Total liabilities and stockholders deficit                                                                                                               |  | $              | 4,584,846   |   |                   | $ | 5,247,215   |  





See the accompanying notes to condensed consolidated financial statements.



1



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CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008



|                                                    |  |                    |             |   |                    |   |             |  
|--------------------------------------------------- |  | ------------------ | ----------- | - | ------------------ | - | ----------- | -
|                                                    |  | THREE-MONTH PERIOD |             |   | THREE-MONTH PERIOD |  
|                                                    |  | ENDED              |             |   | ENDED              |  
|                                                    |  | MARCH 31,          |             |   | MARCH 31,          |  
|                                                    |  | 2009               |             |   | 2008               |  
|                                                    |  |                    |             |   |                    |   |             |  
|Revenue                                             |  | $                  | 941,938     |   |                    | $ | 1,428,590   |  
|Cost of services                                    |  |                    | (447,514    | ) |                    |   | (784,864    | )
|Gross profit                                        |  |                    | 494,424     |   |                    |   | 643,726     |  
|Administrative and selling expenses                 |  |                    | (803,323    | ) |                    |   | (1,048,240  | )
|Loss from Operations                                |  |                    | (308,899    | ) |                    |   | (404,514    | )
|Interest expense and change in derivative liability |  |                    | (1,414,378  | ) |                    |   | (844,896    | )
|Net loss before income taxes                        |  |                    | (1,723,277  | ) |                    |   | (1,249,410  | )
|Income taxes                                        |  |                    |           |   |                    |   |           |  
|Net loss                                            |  |                    | (1,723,277  | ) |                    |   | (1,249,410  | )
|Basic and diluted loss per share                    |  | $                  | (0.00       | ) |                    | $ | (0.01       | )
|Weighted average common shares outstanding          |  |                    | 821,575,972 |   |                    |   | 205,907,285 |  





See the accompanying notes to condensed consolidated financial statements.



2



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CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008

|                                                                            |  |           |            |   |           |   |            |  
|--------------------------------------------------------------------------- |  | --------- | ---------- | - | --------- | - | ---------- | -
|                                                                            |  | MARCH 31, |            |   | MARCH 31, |  
|                                                                            |  | 2009      |            |   | 2008      |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |  |           |            |   |           |  
|Net loss                                                                    |  | $         | (1,723,277 | ) |           | $ | (1,249,410 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |           |            |   |           |   |            |  
|Shares issued for services                                                  |  |           | 151,910    |   |           |   | 271,240    |  
|Gain on exercise of warrants                                                |  |           |          |   |           |   | (62,941    | )
|Amortization of loan discount                                               |  |           | 253,557    |   |           |   | 674,928    |  
|Amortization of deferred financing costs                                    |  |           | 578,662    |   |           |   | 132,681    |  
|Depreciation and amortization                                               |  |           | 167,690    |   |           |   | 156,591    |  
|Change in value of derivative liability                                     |  |           | (4,136     | ) |           |   | (215,496   | )
|Inducement Warrants                                                         |  |           | 204,419    |   |           |   |          |  
|Net change in operating assets and liabilities                              |  |           | 270,216    |   |           |   | 225,772    |  
|                                                                            |  |           |            |   |           |   |            |  
|NET CASH USED IN OPERATING ACTIVITIES                                       |  |           | (100,959   | ) |           |   | (66,635    | )
|                                                                            |  |           |            |   |           |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |  |           |            |   |           |   |            |  
|Payments for purchase of property and equipment                             |  |           |          |   |           |   |          |  
|                                                                            |  |           |            |   |           |   |            |  
|NET CASH USED IN INVESTING ACTIVITIES                                       |  |           |          |   |           |   |          |  
|                                                                            |  |           |            |   |           |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                       |  |           |            |   |           |   |            |  
|Bank overdraft                                                              |  |           | (17,083    | ) |           |   |          |  
|Issuance of common shares for cash                                          |  |           | 347,486    |   |           |   | 80,590     |  
|Proceeds from issuance of notes payable                                     |  |           |          |   |           |   | 77,200     |  
|Payments on notes payable                                                   |  |           | (104,240   | ) |           |   | (267,400   | )
|Proceeds from advances from shareholders                                    |  |           | 2,944      |   |           |   | 9,400      |  
|Payments on advances from shareholders                                      |  |           | (18,676    | ) |           |   | (19,064    | )
|Payments on capital lease obligations                                       |  |           | (2,589     | ) |           |   | (1,013     | )
|                                                                            |  |           |            |   |           |   |            |  
|NET CASH PROVIDED FINANCING ACTIVITIES                                      |  |           | 207,842    |   |           |   | (120,287   | )
|                                                                            |  |           |            |   |           |   |            |  
|NET INCREASE IN CASH                                                        |  |           | 106,883    |   |           |   | (186,922   | )
|                                                                            |  |           |            |   |           |   |            |  
|Cash balance at beginning of year                                           |  |           |          |   |           |   | 338,828    |  
|                                                                            |  |           |            |   |           |   |            |  
|Cash balance at end of year                                                 |  | $         | 106,883    |   |           | $ | 151,906    |  
|                                                                            |  |           |            |   |           |   |            |  
|Supplemental disclosures:                                                   |  |           |            |   |           |   |            |  
|Interest paid                                                               |  | $         | 50,762     |   |           | $ | 67,252     |  
|                                                                            |  |           |            |   |           |   |            |  
|Summary of non-cash transactions:                                           |  |           |            |   |           |   |            |  
|Conversion of debt into common shares                                       |  |           | 1,532,234  |   |           |   |          |  









See the accompanying notes to condensed consolidated financial statements.



3



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CORD BLOOD AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2009

Note 1. Organization and Description of Business

Cord Blood America, Inc. ("CBAI"), formerly D&A Lending, Inc., was incorporated in the State of Florida on October 12, 1999. CBAI's headquarters are located in Los Angeles, California. CBAI is primarily a holding company whose subsidiaries include Cord Partners, Inc., CorCell Co. Inc., CorCell Ltd., (Cord), CBA Professional Services, Inc. D/B/A BodyCells, Inc. ("BodyCells"), CBA Properties, Inc. ("Properties"), and Career Channel Inc, D/B/A Rainmakers International ("Rain"). CBAI and its subsidiaries engage in the following business activities:

·

Cord specializes in providing private cord blood stem cell preservation services to families.

·

BodyCells is a developmental stage company and intends to be in the business of collecting, processing and preserving peripheral blood and adipose tissue stem cells allowing individuals to privately preserve their stem cells for potential future use in stem cell therapy.

·

Properties was formed to hold the corporate trademarks and other intellectual property of CBAI.

·

Rain specializes in creating direct response television and radio advertising campaigns, including media placement and commercial production.

The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that may be necessary in the event CBAI cannot continue as a going concern.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of Cord Blood America, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with Article 8 of Regulation S-X . Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The consolidated financial statements reflect all normal recurring adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results for the periods shown. The results of operations for the periods presented are not necessarily indicative of the results expected for the full fiscal year or for any future period. Certain prior period amounts have been reclassified to conform to the current period presentation. The information included in these unaudited consolidated financial statements should be read in conjunction with Management's Discussion and Analysis and Plan of Operations contained in this report and the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Basis of Consolidation

The consolidated financial statements include the accounts of CBAI and its wholly owned subsidiaries, Cord, CorCell Co, CorCell Ltd., BodyCells, Properties and Rain. Significant inter-company balances and transactions have been eliminated upon consolidation.

Deferred Revenue

Deferred revenue for Cord consists of payments for enrollment in the program and processing of umbilical cord blood by customers whose samples have not yet been collected, as well as the pro-rata share of annual storage fees for customers whose samples were stored during the year. Deferred revenue for Rain consists of payments for per inquiry leads that have not yet been delivered or media buys that have not yet been placed.



4



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Valuation of Derivative Instruments

SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with EITF 00-19 Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula. At March 31, 2009, the Company adjusted its derivative liability to its fair value, and reflected the increase  in fair value, in its statement of operations, as an increase in interest expense.

Revenue Recognition

CBAI recognizes revenue under the provisions of Staff Accounting Bulletin ("SAB") 104 "Revenue Recognition". Cord provides a combination of products and services to customers. This combination arrangement is evaluated under Emerging Issues Task Force Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables," ("EITF 00-21"). EITF 00-21 addresses certain aspects of accounting for arrangements under multiple revenue generating activities.

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

Rain generates revenue from packaged advertising services, including media buying, marketing and advertising production services. Rain's advertising service revenue is recognized when the media ad space is sold and the advertising occurs. Rain's advertising production service revenue is derived through the production of an advertising campaign including, but not limited to, audio and video production, establishment of a target market and the development of an advertising campaign. Rain recognizes revenue generated from packaged advertising services provided to our clients using the "Gross" basis in accordance with Emerging Issues Task Force No. 99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent" (EITF 99-19).

Rain's revenue recognition policy involves significant judgments and estimates about the ability to collect. We assess the probability of collection based on a number of factors, including past transaction history and/or the creditworthiness of our clients' customers, which is based on current published credit ratings, current events and circumstances regarding the business of our client's customer and other factors that we believe are relevant. If we determine that collection is not reasonably assured, we defer revenue recognition until such time as collection becomes reasonably assured, which is generally upon receipt of cash payment. Rain recognizes revenue generated through per inquiry advertising as the inquiry leads are delivered to the customer.

Cost of Services

Costs for Cord are incurred as umbilical cord blood is collected. These costs include the transport of the umbilical cord blood from the hospital to the lab, the labs processing fees, storage fees and royalties. Cord records costs in the period incurred and does not defer any costs of sales. Costs for Rain include commercial productions costs, lead generation costs and media buys.



5



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Fair Value Measurements

The Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), effective January 1, 2007. SFAS 157 does not require any new fair value measurements; instead it defines fair value, establishes a framework for measuring fair value in accordance with existing generally accepted accounting principles and expands disclosure about fair value measurements. The adoption of SFAS 157 for our financial assets and liabilities did not have an impact on our financial position or operating results. Beginning January 1, 2008, assets and liabilities recorded at fair value in consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by SFAS 157, are as follows:

·

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

·

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

·

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

The following table summarizes fair value measurements by level at March 31, 2009 for assets and liabilities measured at fair value on a recurring basis:

|                          |  |         |         |  |          |   |   |           |  |   |            |   |  |   |            |  
|------------------------- |  | ------- | ------- |  | -------- | - | - | --------- |  | - | ---------- | - |  | - | ---------- | -
|                          |  | Level I |         |  | Level II |   |   | Level III |  |   | Total      |  
|Cash and cash equivalents |  | $       | 106,883 |  |          | $ |  |           |  | $ |           |   |  | $ | 106,883    |  
|Derivatives liability     |  |         |        |  |          |   |  |           |  |   | (2,203,020 | ) |  |   | (2,203,020 | )



Derivative liability was valued under the Black-Scholes model, consistent with last year, with the following assumptions:

|                        |  |             
|----------------------- |  | ------------
|Risk free interest rate |  | 0.27% to 3% 
|Expected life           |  | 0 to 5 years
|Dividend Yield          |  | 0%          
|Volatility              |  | 0% to 165%  

The following is a reconciliation of the derivative liability:

|                           |  |   |           |  
|-------------------------- |  | - | --------- | -
|Value at December 31, 2008 |  | $ | 2,098,318 |  
|Reduction in Value         |  |   | (4,136    | )
|Reclassification           |  |   | 108,838   |  
|Value at March 31, 2009    |  | $ | 2,203,020 |  



Net Loss Per Share

Net loss per common share is calculated in accordance with SFAS No. 128, Earnings per Share. Basic net loss per share is computed by dividing the net loss by the weighted average common shares outstanding of 821,575,972 and 205,907,825 for the three-months ended March 31, 2009 and 2008, respectively. Outstanding options to acquire common stock and warrants are not included in the computation of net loss per common share because the effects of inclusion are anti-dilutive.

Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements(SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does not expand the use of fair value in any new circumstances. In February 2008, the FASB issued Staff Position No. FAS 157-1, which amended SFAS No. 157 to exclude SFAS No. 13, Accounting for Leases, and other accounting pronouncements that address fair value measurements for purposes of lease classification or measurement under Statement 13. However, this scope exception does not apply to assets acquired and liabilities assumed in a business combination. Also in February 2008, the FASB issued Staff Position No. FAS 157-2, which delayed the effective date of SFAS No. 157 for non-financial assets and liabilities, except those items



6



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recognized at fair value on an annual or more frequently recurring basis to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. Adoption of SFAS No. 157 did not have a significant impact on the Companys consolidated financial statements. In October 2008, the FASB issued Staff Position No. 157-3, to clarify the application of SFAS No. 157 when the market for a financial asset is inactive. In April, 2009 the FASB issued Staff Position No. FAS 157-4 which expands the application of SFAS No. 157 in situations where the volume and level of activity for the asset or liability has significantly decreased. In addition, this also provides guidance so that transactions that are not orderly can be identified. SFAS No. 157 did not have a significant impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements(SFAS No. 160) and a revision to SFAS No. 141, Business Combinations(SFAS No. 141R). SFAS No. 160 modifies the accounting for non-controlling interest in a subsidiary and the deconsolidation of a subsidiary. SFAS No. 141R establishes the measurements in a business combination of the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. Both of these related statements are effective for fiscal years beginning after December 15, 2008.The adoption of SFAS No. 141R and SFAS No. 160 did not have an impact on our consolidated financial statements.

In March 2008, the Financial Accounting Standards Board or FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, which amends SFAS No. 133. The statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entitys derivative instruments and hedging activities and their effects on the entitys financial position, financial performance, and cash flows. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of SFAS No. 161 did not have an impact on our consolidated financial statements.

In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. The Position is effective for fiscal years beginning after December 15, 2008 and only applies prospectively to intangible assets acquired after the effective date. Early adoption is not permitted. The adoption of SFAS No. 142-3 did not have a material impact on our consolidated financial statements.

In May 2008, the FASB issued Staff Position No. Accounting Principles Board 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP No. APB 14-1). FSP No. APB 14-1 requires that the liability and equity components of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) be separately accounted for in a manner that reflects an issuers nonconvertible debt borrowing rate. FSP No. APB 14-1 is effective for us as of January 1, 2009. The adoption of SFAS No. 161 did not have a material impact on our consolidated financial statements.

In June 2008, the FASB ratified EITF (Emerging Issues Task Force) 07-05, Determining Whether an Instrument (or Embedded Feature) IS Indexed to an Entitys Own Stock. The objective of this issue is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entitys own stock. This issue applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative instrument or an instrument which may be potentially settled in an entitys own stock regardless of whether the instrument possess derivative characteristics. This issue provides a two-step approach to asset in making these determination and is effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of EITF 07-05 did not have a material impact on our consolidated financial statements.

In August 2008, the U.S. Securities and Exchange Commission, or SEC, announced that it will issue for comment a proposed roadmap regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards, or IFRS. IFRS is a comprehensive series of accounting standards published by the International Accounting Standards Board, or IASB. Under the proposed roadmap, the Company could be required in fiscal year 2014 to prepare financial statements in accordance with IFRS and the SEC will make a determination in 2011 regarding mandatory adoption of IFRS. The Company is currently assessing the impact that this potential change would have on our consolidated financial statements and will continue to monitor the development of the potential implementation of IFRS.



7



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In April 2009, the FASB issued Financial Staff Position SFAS 107-1 and Accounting Principles Board (APB) Opinion No. 28-1, Interim Disclosures about Fair Value of Financial Instruments (SFAS 107-1 and APB 28-1).

This statement amends FASB Statement No. 107, Disclosures about Fair Values of Financial Instruments, to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. The statement also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in all interim financial statements. This statement is effective for interim periods ending after June 15, 2009, but early adoption is permitted for interim periods ending after March 15, 2009. The Company is currently assessing the impact that this potential change will have on our consolidated financial statements.

Going Concern

CBAI's consolidated financial statements have been prepared assuming it will continue as a going concern. CBAI has experienced recurring net losses from operations, which losses have caused an accumulated deficit of approximately $26.7 million as of March 31, 2009. In addition, CBAI has a working capital deficit of approximately $12.2 million as of March 31, 2009. These factors, among others, raise substantial doubt about CBAI's ability to continue as a going concern.

Management has been able, thus far, to finance the losses and the growth of the business, through private placements of its common stock, the issuance of debt and proceeds from the Equity Distribution Agreement, the Shelter Securities Purchase Agreement and the Enable Securities Purchase Agreement. CBAI is continuing to attempt to increase revenues within its core businesses. In addition, CBAI is exploring alternate ways of generating revenues through acquiring other businesses in the stem cell industry. In June, 2008, the Company had 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. The Company filed a registration statement to register certain shares of common stock issuable pursuant to the Securities Purchase Agreement. The Securities and Exchange Commission declared the Registration Statement effective on November 4, 2008. In January, 2009, Tangiers purchased $100,000 of common stock. The Company continues to monitor its overall spending. The ongoing execution of CBAI's business plan is expected to result in operating losses over the next twelve months. There are no assurances that CBAI will be successful in achieving its goals of increasing revenues and reaching profitability.

In view of these conditions, CBAI's ability to continue as a going concern is dependent upon its ability to meet its financing requirements, and to ultimately achieve profitable operations. Management believes that its current and future plans provide an opportunity to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that may be necessary in the event CBAI cannot continue as a going concern.

Note 3. Accrued Expenses

The components of accrued expenses at March 31, 2009 are summarized as follows:

|                                                |  |           |           | 
|----------------------------------------------- |  | --------- | --------- | 
|                                                |  | March 31, |          
|                                                |  | 2009      |          
|Accrued interest and related financing expenses |  | $         | 1,913,279 | 
|Deferred Rent                                   |  |           | 15,500    | 
|Other                                           |  |           | 348,931   | 
|                                                |  | $         | 2,277,710 | 





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Note 4. Notes and Loans Payable, and Derivative Liabilities

At March 31, 2009 and December 31, 2008, notes and loans payable consist of:



|                                                                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                                                                                                                                                                                                                            |  | March 31,
2009 |            |   | December 31,
2008 |  
|Secured Convertible Debenture payable to Cornell Capital Partners (a/k/a YA Global Advisors, L.P.), secured by substantially all of the Company's assets, interest at 10% per annum, principal and interest due on December 23, 2008 (currently in default) |  | $              | 957,350    |   |                   | $ | 1,474,100  |  
|Secured Convertible Debenture payable to Enable Capital, secured by substantially all of the Company's assets, interest at 10% per annum, principal and interest due on December 23, 2008 (currently in default)                                            |  |                | 2,112,142  |   |                   |   | 2,227,464  |  
|Promissory Note payable to Strategic Working Capital Fund, L.P., interest at 8% per annum, due August 2, 2008                                                                                                                                               |  |                | 307,591    |   |                   |   | 302,032    |  
|0% Convertible Debenture payable to Enable Capital, effective interest rate of 72% per annum (considering the loan discount), due November 26, 2009                                                                                                         |  |                | 1,276,940  |   |                   |   | 1,823,823  |  
|Secured Original Discount Debenture payable to Shelter Island Opportunity Fund, LLP, interest at 11.25% per annum, maturing in August, 2009                                                                                                                 |  |                | 1,564,691  |   |                   |   | 1,650,000  |  
|2nd Secured Discount Debenture payable to Shelter Island Opportunity Fund, LLP, interest at 18% per annum, 4 equal payments remaining, maturing in May, 2009                                                                                                |  |                | 21,026     |   |                   |   | 67,251     |  
|Advance on credit card sales                                                                                                                                                                                                                                |  |                | 75,205     |   |                   |   | 133,190    |  
|Convertible Note payable to CorCell, Inc., interest at 8% per annum, due in 2008 (currently in default)                                                                                                                                                     |  |                | 212,959    |   |                   |   | 212,959    |  
|Convertible Note payable to Tangiers Investors, LP, interest at 7% per annum, principal and interest due March 28, 2010                                                                                                                                     |  |                | 160,000    |   |                   |   | 160,000    |  
|Promissory Note payable to CorCell, Inc., interest at 10.5% per annum, due March, 2008 (currently in default)                                                                                                                                               |  |                | 83,480     |   |                   |   | 83,480     |  
|                                                                                                                                                                                                                                                            |  |                | 6,771,384  |   |                   |   | 8,134,299  |  
|Less: Unamortized Discount                                                                                                                                                                                                                                  |  |                | (1,181,832 | ) |                   |   | (1,309,384 | )
|                                                                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  
|                                                                                                                                                                                                                                                            |  | $              | 5,589,552  |   |                   | $ | 6,824,915  |  



CBAI is in default on several of the notes, as detailed below.

Cornell

Liquidated damages and interest have been accrued for an event of default under the terms of this note, and are recorded as accrued expenses at March 31, 2009 and December 31, 2008.

This note is in default, since it matured in December 2008. However, Cornell has provided a verbal waiver and furthermore converted $516,750 in the three-month period ended March 31, 2009.

Strategic

CBAI is in default since the note was not repaid in August 2008. However, CBAI is currently in negotiations to sell the note to a third party.

Convertible Notes Payable  Enable

Both convertible notes payable to Enable were in default in 2008. However, the Company negotiated waivers extending the maturity into 2009.

In the three-month period ended March 31, 2009, Enable converted $115,292 of its Secured Convertible Debenture and $546,883 of its 0% Convertible Debenture.



9



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Note Payable - Shelter Island.

In the three-month period ended March 31, 2009, the Company agreed to allow Shelter to make a one-time conversion of $353,309 of its Note payable, in exchange for approximately 41 million common shares. In addition the Company renegotiated the terms of its Note in exchange a financing fee of $268,000, which was added to the amount of the Note. In February 2007, as part of the financing for the CorCell acquisition, the Company conducted an analysis under EITF 00-19, and accounted for the warrants as derivative liabilities. The total value of warrants was $5,310,142 at the date of issuance, using the Black-Scholes pricing model with the following assumptions: expected life of 5 years; stock volatility of 163%, risk-free interest rate of 3.23%, and no dividend. $2,000,000 of these warrants were recorded as loan discount, $1,218,653 was recorded as deferred financing costs to be amortized on a straight line basis over the life of the loan, and $2,091,489 was recorded as interest expense, representing the excess of the derivative liability over the amount of the note.

Notes Payable  CorCell.

CBAI is in default on its notes payable to CorCell. However, CBAI is currently in negotiations to sell the notes to a third party.

Note 5. Commitments and Contingencies

On June 27, 2008, the Company entered into a Securities Purchase Agreement with Tangiers Investors, LP whereby Tangiers may purchase up to $4 million of the Companys common stock. CBAI filed a Registration Statement on Form S-1 to register a portion of the shares issuable pursuant to the Securities Purchase Agreement. The registration statement was declared effective on November 4, 2008. On January 22, 2009, the company entered into Amendment No. 1 with Tangiers, which, among other things, removed the floor price under this Agreement. On May, 1, 2009, the company filed an S-1 to register a further block of shares under this Securities Purchase Agreement.

Agreements

Progenitor Cell Therapy, LLC- The Company entered into an agreement on August 1, 2007, with Progenitor Cell Therapy, LLC to process, test and store all umbilical cord blood samples collected. The agreement has a five year term and contains termination provisions for each party.

Pharmastem

In March 2004, Cord entered into a Patent License Agreement with the holder of patents utilized in the collection, processing, and storage of umbilical cord blood to settle litigation against Cord for alleged patent infringements. The Patent License Agreement calls for royalties of 15% of processing and storage revenue, with a minimum royalty of $225 per specimen collected, on all specimens collected after January 1, 2004 until the patents expire in 2010.

Employment Agreements

On July 16, 2008, CBAI entered into a new three-year agreement with Mr. Schissler, which is renewable annually thereafter, which provides for a base salary of $165,000 the first year, with five percent automatic base salary increases for each successive year. It also provided for additional share options as well as an annual bonus, payable at the discretion of the Board of Directors, equal to thirty percent of the Employees prior year base salary.

On July 16, 2008, CBAI entered into a new three-year agreement with Mr. Joe Vicente, who serves as the Companys Vice-President, which is renewable annually thereafter, which provides for a base salary of $115,000 the first year, with five percent automatic base salary increases for each successive year. It also provided for additional share options as well as an annual bonus, payable at the discretion of the Board of Directors, equal to twenty-five percent of the Employees prior year base salary.



10



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Note 6. Related Party Transactions and Commitments

Advances from Officers

In prior years, the Company received non-interest bearing advances from officers of CBAI. In addition, on May 11, 2007, Ms. Stephanie Schissler, CBAI's former President and Chief Operating Officer, who is the spouse of the Company's Chief Executive Officer, loaned $121,500 to theCompany, to be repaid in 36 equal monthly installments of $3,908. The Company signed a Promissory Note, which carries interest at the rate of 10% per annum. At March 31, 2009, the balance remaining on this loan was $47,250.

On June 14, 2007, Mr. Matt Schissler, the Companys Chief Operating Officer, loaned $25,650 to the Company, to be repaid in 36 equal monthly installments of $828. The Company signed a Promissory Note, which carries interest at the rate of 10% per annum. At March 31, 2009, the balance remaining on this loan was $10,687.

On June 14, 2007, Ms. Stephanie Schissler loaned a further $76,950 to the Company, to be repaid in 36 equal monthly installments of $2,483. The Company signed a Promissory Note, which carries interest at the rate of 10% per annum.At March 31, 2009, the balance remaining on this loan was $32,062.

During 2008 and the first quarter of 2009, Mr. Matt Schissler advanced certain sums to the Company, with no specific terms assigned to these advances. At March 31, 2009, the balance outstanding was $ 14,717.

In addition, Mr. Matt Schissler and Mr. Joe Vicente, officers of the Company, have deferred receipt of a portion of their salaries, totaling $188,916 at March 31, 2009 and which are included in accrued expenses.

Consulting Agreement

On July 1, 2008, CBAI entered into a one-year consulting agreement with Stephanie Schissler, The agreement entitles Ms. Schissler to a monthly retainer of $11,500 and stock option incentives for her services in relation to strategic corporate planning and other business related matters. The agreement automatically renews, unless a 60-day written notice of cancellation is provided by either CBAI or Ms. Schissler.

Note 7. Share Based Compensation

Stock Option Plan

The Company's Stock Option Plan permits the granting of stock options to its employees, directors, consultants and independent contractors for up to 8.0 million shares of its common stock. The Company believes that such awards encourage employees to remain employed by the Company and also to attract persons of exceptional ability to become employees of the Company.

Stock options that vest at the end of a one-year period are amortized over the vesting period using the straight-line method. For stock options awarded using graded vesting, the expense is recorded at the beginning of each year in which a percentage of the options vests.

At March 31, 2009, the Companys stock option activity was as follows:

|                              |  |               |            |  |                                 |   |      | 
|----------------------------- |  | ------------- | ---------- |  | ------------------------------- | - | ---- | 
|                              |  | Stock Options |            |  | Weighted
Average
Exercise Price |  
|Outstanding, January 1, 2009  |  |               | 23,308,140 |  |                                 | $ | 0.07 | 
|Granted                       |  |               |          |  |                                 |   |      | 
|Exercised                     |  |               |          |  |                                 |   |      | 
|Forfeited/Expired             |  |               |          |  |                                 |   |      | 
|Outstanding, March 31, 2009   |  |               | 23,308,140 |  |                                 | $ | 0.07 | 
|Exercisable at March 31, 2009 |  |               | 9,520,640  |  |                                 | $ | 0.16 | 





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A summary of the activity for unvested employee stock options as of March 31, 2009, and changes during the year are presented below:



|                             |  |               |            |   |                                                  |   |      | 
|---------------------------- |  | ------------- | ---------- | - | ------------------------------------------------ | - | ---- | 
|                             |  | Stock Options |            |   | Weighted
Average Grant
Date Fair
Value per
Share |  
|Nonvested at January 1, 2009 |  |               | 13,962,500 |   |                                                  | $ | 0.01 | 
|Granted                      |  |               |          |   |                                                  |   |    | 
|Vested                       |  |               | (175,000   | ) |                                                  | $ | 0.25 | 
|Forfeited                    |  |               |          |   |                                                  |   |    | 
|Nonvested at March 31, 2009  |  |               | 13,787,500 |   |                                                  | $ | 0.01 | 



The following table summarizes significant ranges of outstanding stock options under the stock option plan at March 31, 2009:

|                         |  |  |                               |            |            |                                                     |  |      |                                 |  |   |                               |      |  |                                   |           |           |                                 |  |      |      |  |   |      |      | 
|------------------------ |  |  | ----------------------------- | ---------- | ---------- | --------------------------------------------------- |  | ---- | ------------------------------- |  | - | ----------------------------- | ---- |  | --------------------------------- | --------- | --------- | ------------------------------- |  | ---- | ---- |  | - | ---- | ---- | 
|Range of
Exercise Prices |  |  | Number of
Options
Outstanding |            |            | Weighted
Average
Remaining
Contractual Life
(years) |  |      | Weighted
Average
Exercise Price |  |   | Number of
Options
Exercisable |      |  | Weighted
Average
Contractual Life |           |           | Weighted
Average
Exercise Price | 
|$0.01  0.20             |  |  |                               | 18,473,192 |            |                                                     |  | 5.09 |                                 |  | $ | 0.02                          |      |  |                                   | 4,685,692 |           |                                 |  | 4.42 |      |  | $ | 0.05 |     
|$0.21  0.30             |  |  |                               | 3,028,850  |            |                                                     |  | 5.63 |                                 |  |   | 0.25                          |      |  |                                   | 3,028,850 |           |                                 |  | 5.62 |      |  |   | 0.25 |     
|$0.31  0.51             |  |  |                               | 1,806,098  |            |                                                     |  | 6.44 |                                 |  |   | 0.31                          |      |  |                                   | 1,806,098 |           |                                 |  | 6.34 |      |  |   | 0.31 |     
|                         |  |  |                               |            | 23,308,140 |                                                     |  |      | 5.27                            |  |   | $                             | 0.07 |  |                                   |           | 9,520,640 |                                 |  |      | 4.73 |  |   | $    | 0.16 | 



Note 8. Warrant Agreements

On January 30, 2009, Enable Capital, a warrant holder, exercised their right to purchase 31,449,102 shares of the Companys Common Stock at $0.0086 per share.

The following table summarizes the warrants outstanding and exercisable at March 31, 2009:

|                     |            |  |                |   |               |  |           
|-------------------- | ---------- |  | -------------- | - | ------------- |  | ----------
|WARRANTS OUTSTANDING |            |  | EXERCISE PRICE |   | MATURITY DATE
|                     | 1,000,000  |  |                | $ | 0.1875        |  | 09/19/2009
|                     | 9,028,000  |  |                | $ | 0.37          |  | 09/09/2010
|                     | 19,729,730 |  |                | $ | 0.101         |  | 02/12/2012
|                     | 2,916,667  |  |                | $ | 0.037         |  | 11/26/2012
|                     | 3,796,950  |  |                | $ | 0.037         |  | 05/15/2013
|                     | 9,655,531  |  |                | $ | 0.0086        |  | 05/30/2013
|Total 46,126,878     |            |  |                |   |               | 



The Company also has put options with Shelter Island and Ascendient, under which it could be required to repurchase 40,000,000 shares of its common stock at $0.05 per share.

Note 9. Stockholders Equity

Preferred Stock

CBAI has 5,000,000 shares of $.0001 par value preferred stock authorized. No preferred stock has been issued to date.



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Common Stock

On March 25, 2009, the Companys Articles of Incorporation were amended to increase the authorized common stock to 6,945,000,000 shares, par value $0.0001, up from 950,000,000. This amendment was adopted by the Companys Board of Directors on February 12, 2009, and its Shareholders at a Special Meeting of Shareholders called for this purpose on March 23, 2009.

During the first three months ending March 31, 2009, a warrant holder exercised a portion of their warrants, or 31,449,102 shares at an exercise price of $0.0086, providing approximately $270,462 of cash. Also, certain of the Companys note holders converted a total of $1,532,234 of debt in exchange for approximately 654 million shares. The Company received services from consultants in exchange for the issuance of approximately 23 million shares.

As of March 31, 2009 CBAI had 1,127,205,730 shares of Common Stock outstanding. An additional 7,266,667 shares has been issued and remains in the Companys treasury.

Note 10. Segment Reporting

SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information," requires that public business enterprises report financial and descriptive information about its reportable operating segments. CBAI has two operating segments. Cord generates revenues related to the processing and preservation of umbilical cord blood. Rain generates revenues related to television and radio advertising. All of its long-lived assets are located in, and substantially all of its revenues are generated from within, the United States of America.

The table below presents certain financial information by business segment for the three months ended March 31, 2009:

|                                 |  |  |            |            |            |          |             |        |          |   |              |  |  |   |            |   |  |   |            |   | 
|-------------------------------- |  |  | ---------- | ---------- | ---------- | -------- | ----------- | ------ | -------- | - | ------------ |  |  | - | ---------- | - |  | - | ---------- | - | 
|                                 |  |  |            |            |            | Adipose/ |             | Radio/ |          |   |              |  | 
|                                 |  |  | Umbilical  |            | Peripheral |          | Television  |        | Segments |   | Consolidated | 
|                                 |  |  | Cord Blood |            | Blood      |          | Advertising |        | Total    |   | Total        | 
|Revenue from 
External Customers |  |  | $          | 773,453    |            | $        | 0           |        |          | $ | 168,485      |  |  | $ | 941,938    |   |  | $ | 941,938    |  
|Interest Expense                 |  |  |            | 1,414,378  |            |          | 0           |        |          |   | 0            |  |  |   | 1,414,378  |   |  |   | 1,414,378  |  
|Depreciation and Amortization    |  |  |            | 167,690    |            |          | 0           |        |          |   | 0            |  |  |   | 167,690    |   |  |   | 167,690    |  
|Segment Income (Loss)            |  |  |            | (1,744,421 | )          |          |             |        |          |   | 21,144       |  |  |   | (1,723,277 | ) |  |   | (1,723,277 | )
|Segment Assets                   |  |  | $          | 4,558,533  |            | $        |             |        |          | $ | 26,313       |  |  | $ | 4,584,846  |   |  | $ | 4,584,846  |  



The table below presents certain financial information by business segment for the three months ended March 31, 2008:



|                                 |  |  |            |            |            |          |             |        |          |   |              |  |  |   |            |   |  |   |            |   | 
|-------------------------------- |  |  | ---------- | ---------- | ---------- | -------- | ----------- | ------ | -------- | - | ------------ |  |  | - | ---------- | - |  | - | ---------- | - | 
|                                 |  |  |            |            |            | Adipose/ |             | Radio/ |          |   |              |  | 
|                                 |  |  | Umbilical  |            | Peripheral |          | Television  |        | Segments |   | Consolidated | 
|                                 |  |  | Cord Blood |            | Blood      |          | Advertising |        | Total    |   | Total        | 
|Revenue from 
External Customers |  |  | $          | 980,501    |            | $        | 0           |        |          | $ | 448,089      |  |  | $ | 1,428,590  |   |  | $ | 1,428,590  |  
|Interest Expense                 |  |  |            | 844,896    |            |          | 0           |        |          |   | 0            |  |  |   | 844,896    |   |  |   | 844,896    |  
|Depreciation and Amortization    |  |  |            | 156,590    |            |          | 0           |        |          |   | 0            |  |  |   | 156,590    |   |  |   | 156,590    |  
|Segment Income (Loss)            |  |  |            | (1,513,496 | )          |          |             |        |          |   | 264,086      |  |  |   | (1,249,410 | ) |  |   | (1,249,410 | )
|Segment Assets                   |  |  | $          | 6,042,601  |            | $        | 44          |        |          | $ | 201,672      |  |  | $ | 6,244,317  |   |  | $ | 6,244,317  |  







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Note 11. Subsequent Event

On May 5, 2009, the Company issued a $1,350,000 Convertible Promissory Note to a private investor (the Company Note). The Company Note bears interest in the form of a one time interest charge of 10%, payable with the Company Notes principal amount on the maturity date, May 5, 2012. All or a portion of Company Note principal and interest is convertible at the option of the investor/holder from time to time, into shares of the Companys common stock. At the same time, this same investor issued and delivered to the Company, a second Secured & Collateralized Promissory Note (the Investor Note), which served as sole consideration to the Company for the Companys issuance of the Company Note to the investor. This Investor Note is in the principal amount of $1,300,000, bears interest in the form of a one time interest charge of 10.38%, and interest is payable with the Notes principal on its maturity date, May 5, 2012. Immediately after the exchange by the Company of its Company Note for the Investor Note, the investor delivered to the Company the sum of $300,000 in cash, as a pre payment of the Investor Note.







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ITEM 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

In addition to the historical information contained herein, we make statements in this Quarterly Report on Form 10-Q that are forward-looking statements. Sometimes these statements will contain words such as "believes," "expects," "intends," "should," "will," "plans," and other similar words. Forward-looking statements include, without limitation, our ability to increase income streams, to grow revenue and earnings, and to obtain additional cord blood banking revenue streams. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties.

The following information should be read in conjunction with our March 31, 2009 consolidated financial statements and related notes thereto included elsewhere in the quarterly report and with our consolidated financial statements and notes thereto for the year ended December 31, 2008 and the related "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our annual Report on Form 10-K for the year ended December 31, 2008. We also urge you to review and consider our disclosures describing various risks that may affect our business, which are set forth under the heading "Risk Factors Related to our Business" in our annual Report on Form 10-K for the year ended December 31, 2008.

Summary and Outlook of the Business

CBAI is an umbilical cord blood stem cell preservation company with a particular focus on the acquisition of customers in need of family based products and services. We also provide television, radio and internet advertising services to businesses that sell family based products and services.

We operate two core businesses:

·

Cord operates the umbilical cord blood stem cell preservation operations, and Career Channel, Inc. D/B/A Rainmakers International ("Rain") operates the television and radio advertising operations.

Cord

The umbilical cord blood stem cell preservation operations provide umbilical cord blood banking services to expectant parents throughout all 50 United States. Our corporate headquarters are located in Los Angeles, California. We also maintains offices in Philadelphia, Pennsylvania. We earn revenue through a one-time enrollment and processing fee, and through an annually recurring storage and maintenance fee. Cord blood testing, processing, and storage is conducted by our outsourced laboratory partner, Progenitor Cell Therapy, LLC (PCT) (formerly Bergen Community Regional Blood Services). We entered into our agreement with PCT in August 1, 2007, for testing, processing and storage of cord blood samples. The transition from Bergen to PCT has provided additional leverage to operating costs and efficiencies while maintaining the highest of quality standards. We provide the following services to each customer. In addition, some storage services are provided by ThermoFisher of Rockville, Maryland.

·

Collection Materials. We provide a medical kit that contains all of the materials necessary for collecting the newborns umbilical cord blood at birth and packaging the unit for transportation. The kit also provides for collecting a maternal blood sample for later testing.

·

Physician And Customer Support. We provide 24-hour consulting services to customers as well as to physicians and labor and delivery personnel, providing any instruction necessary for the successful collection, packaging, and transportation of the cord blood & maternal blood samples.

·

Transportation. We coordinate the transportation of the cord blood unit to our laboratory partner, Progenitor Cell Therapies, immediately following birth. This process utilizes a private medical courier, Airnet, for maximum efficiency and security.

·

Comprehensive Testing. At the laboratory, the cord blood sample is tested for stem cell concentration levels, bacteria and blood type. The maternal blood sample is tested for infectious diseases. We report these results to the newborns mother.



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·

Cord Blood Preservation. After processing and testing, the cord blood unit is cryogenically frozen in a controlled manner and stored in liquid nitrogen for potential future use. Data indicates that cord blood retains viability and function for at least fifteen years when stored in this manner and theoretically could be maintained at least as long as the normal life span of an individual.

During 2007, we acquired the assets of Corcell which significantly enhanced the number of samples under our management. We will continue to assess the market conditions, particularly related to the cost of customer acquisition, and whether organic growth or continued acquisitions are the most beneficial growth strategy to maximize shareholder value.

Rain

Rain, the television and radio operations, are located in the corporate headquarters in Los Angeles, California. Rain provides advertising and direct marketing customers a range of services including:

·

the placement of advertising in television, radio, on-hold and motor sports outlets;

·

the production of advertising content, including television commercials and radio copy, which is outsourced to third party production companies; and

·

advertising and marketing consulting services which can include assistance in not only developing an advertising program, but helping the client to develop the particular product or service, determine the appropriate market and design and implement an overall marketing program and strategy.

A majority of Rain's revenues are earned via direct response media buys and per inquiry campaigns. We also generate revenues through the commercial production aspect of our business using production partners in Florida and California.

In December, 2007, Rain made a significant shift in its business development strategy. Rains revenues prior to 2008 were largely reliant on a few customers. Rain decided that a business model with smaller contracts and a larger volume of customers would better serve the marketplace and steady the large swings in revenues for the segment. We recently decided to focus our attention on Cords business but will continue to operate Rain with minimal resources.

BodyCells

We are continuing to pursue other growth opportunities by acquisition or internal growth. The development of BodyCells, which is anticipated to facilitate the collecting, processing and preserving of peripheral blood and adipose tissue stem cells allowing individuals to privately preserve their stem cells for potential future use in stem cell therapy, is currently suspended pending the identification of an alternative lab to partner.

Results of Operations for the Three-Months Ended March 31, 2009

For the three months ended March 31, 2009, our total revenue decreased approximately $487,000, or 34% to $942,000. Cords revenues decreased $207,000 or 21%, to $773,000, because of limited expenditures in marketing and advertising. Cord remains focused on strategic organic growth and accretive acquisition strategies, which will limit the losses and negative cash flow. However, the Companys billings in the three-month period ended March 31, 2009 as compared to the three-month period ended March 31, 2008 significantly increased as measured by the increase in deferred revenues of approximately $240,000, jumping from $979,000 to $1,219,000. As described in the Companys significant accounting policies (Note 2), deferred revenue for Cord consists of payments for enrollment in the program and processing of umbilical cord blood by customers whose samples have not yet been collected, as well as the pro-rata share of annual storage fees for customers whose samples were stored during the year. Rains revenues decreased approximately $280,000, or 62%, due to a change in the business model. Rain is focused on creating an annuity base business with high volume advertising. Historically, Rain was reliant on a few large advertising contracts, and the risks associated with those. Understanding that it would be difficult to value a few contracts, Rain made a decision in December of 2007 to focus on low cost, high volume, annuity based advertising. The result in this change for the first three months was a loss in revenue.







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Cost of services decreased 43% or by $338,000 as a result of lower revenues, but Gross Profit increased from 45% of revenues to 52.5% due to a significantly higher proportion of revenues coming from the higher margin Cord business. We anticipate that through the continued growth and expansion of our Cord business, we will increasingly benefit from economies of scale in that business segment.

Administrative and selling expenses decreased by approximately $245,000 or 23% from the prior comparative period to $803,000. We continue to monitor its expenses across the board, due to cash restrictions. We have had to raise additional debt to finance both our acquisitions as well as our operating losses. In addition, these financings resulted in a change in the Companys derivative liabilities. Consequently, interest, financing costs and changes in derivative liabilities increased from $0.8 million to $1.4 million. All interest charges during the period have been recorded.

Our net loss increased by $0.4 million, or 38% from the prior comparative period.

Liquidity and Capital Resources

We have experienced net losses of $1.7 million and $1.2 million for the three months ended March 31, 2009 and 2008, respectively. At March 31, 2009, we had $106,883 in cash. We currently collect cash receipts from operations through both of our 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, we have had to obtain additional capital through other sources as discussed in Note 4, Notes and Loans Payable.

Since inception, we have financed cash flow requirements through the issuance of common stock and warrants for cash, services and loans. As we expand our operational activities, we may continue to experience net negative cash flows

from operations and we will be required to obtain additional financing to fund operations through equity offerings and borrowings to the extent necessary to provide working capital. Financing may not be available, and, if available, it may not be available on acceptable terms. Should we secure such financing, it could have a negative impact on our financial condition and our shareholders. The sale of debt would, among other things, adversely impact our balance sheet, increase our expenses and increase our cash flow requirements. The sale of equity would, among other things, result in dilution to our shareholders. If our cash flows from operations are significantly less than projected, then we would either need to cut back on our budgeted spending, look to outside sources for additional funding or a combination of the two. If we are unable to access sufficient funds when needed, obtain additional external funding or generate sufficient revenue from the sale of our products, we could be forced to curtail or possibly cease operations. On June 27, 2008, we entered into a Securities Purchase Agreement with Tangiers Investors, LP whereby Tangiers may purchase up to $4 million of the Companys common stock. CBAI has filed a Registration Statement on Form S-1 to register a portion of the shares issuable pursuant to the Securities Purchase Agreement. The registration statement was declared effective on November 4, 2008. On January 22, 2009, the company entered into Amendment No. 1 with Tangiers, which, among other things, removed the floor price under this Agreement.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

N/A



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ITEM 4T.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

It is management's responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange Act"). The Companys management, including the principal executive officer, the principal operations officer, and the principal financial officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2009. Following this review and evaluation, management collectively determined that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to management, including our chief executive officer, our chief operations officer, and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure. We are continuing our efforts in these regards in order to fully remedy previously reported material weaknesses and to ensure that all of our controls and procedures are adequate and effective. The Company filed a Registration Statement on Form S-1 to register a portion of the shares issuable pursuant to a Securities Purchase Agreement as discussed above. The registration statement was declared effective on November 4, 2008. We anticipate raising additional capital to hire the necessary staff to address the material weaknesses disclosed in our latest Form 10K. On May, 1, 2009, the company filed an S-1 to register a further block of shares under this Securities Purchase Agreement.

Changes in Internal Control over Financial Reporting

We assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based upon managements assessment using the criteria contained in COSO, and for the reasons discussed below, our management has concluded that, as of December 31, 2008, our internal control over financial reporting was not effective.

There were no significant changes in the Company's internal controls over financial reporting or in other factors during the three months ended March 31, 2009 that could significantly affect these internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. We are continuing our efforts in these regards in order to fully remedy previously reported material weaknesses and to ensure that all of our controls and procedures are adequate and effective. Any failure to implement and maintain improvements in the controls over our financial reporting could cause us to fail to meet our reporting obligations under the SECs rules and regulations. The Company filed a Registration Statement on Form S-1 to register a portion of the shares issuable pursuant to a Securities Purchase Agreement as discussed above. The registration statement was declared effective on November 4, 2008. On May, 1, 2009, the company filed an S-1 to register a further block of shares under this Securities Purchase Agreement. We are hoping to raise some additional capital to hire the necessary staff and address the material weaknesses disclosed in our latest Form 10K. Any failure to improve our internal controls to address the weaknesses we have identified could also cause investors to lose confidence in our reported financial information, which could have a negative impact on the trading price of our common stock. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.



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PART II. - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

On March 25, 2009, the Companys Articles of Incorporation were amended to increase the authorized common stock to 6,945,000,000 shares, par value $0.0001, up from 950,000,000. This amendment was adopted by the Companys Board of Directors on February 12, 2009, and its Shareholders at a Special Meeting of Shareholders called for this purpose on March 23, 2009.

ITEM 5.

OTHER INFORMATION

NONE

ITEM 6.

EXHIBITS

(a)   Exhibits

The following exhibits are filed as part of this Form 10-Q.



31.1

Certification of the registrant's Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

31.2

Certification of the registrant's Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32.1

Certification of the Company's Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                   |                          |                                                                             
|------------------ | ------------------------ | ----------------------------------------------------------------------------
|                   | CORD BLOOD AMERICA, INC.
|                   |                          |                                                                             
|                   |                          |                                                                             
|Date: May 19, 2009 | By:                      | /s/ MATTHEW L. SCHISSLER                                                    
|                   | Name:                    | Matthew L. Schissler                                                        
|                   | Title:                   | Chairman and Chief Executive Officer                                        
|                   |                          | (Principal Executive Officer and
Principal Financial and Accounting Officer)





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