UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC  20549


___________________________




FORM 10-K




(mark one)





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





For the fiscal year ended December 31, 2010




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




For the transition period from _______ to _______




Commission File No. 000-50746




cord blood America, inc.


(Exact Name of registrant as specified in its charter)




Florida

65-1078768(State or Other Jurisdiction of Incorporation

or Organization)

(I.R.S.  Employer Identification No.)1857 Helm Drive, Las Vegas, NV

89119(Address of Principal Executive Offices)

(Zip Code)
  (702)-914-7250(Issuer’s Telephone Number, Including Area Code)




With copy  to:
 Donald G. Davis, Esq.
 PO Box 12009
 Marina Del Rey, CA 90295
 (310) 823-8300


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





Title of Each Classto be so Registered:

Name of each exchange on which registeredNone

None





Securities registered under Section 12(g) of the Act:





Common Stock, Par Value $.0001


(Title of Class)





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o  No þ




Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes o   No þ





Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 þNo o


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 Regulations S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files)  Yes o  No o





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in the definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or amendment to Form 10-K.  þ




Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a small reporting company.  See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check One):




Large Accelerated Filer
o
Accelerated Filer
oNon-accelerated Filer
o
Smaller reporting company
þ




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso  Noþ





Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes o No o





The aggregate market value of the common equity held by non-affiliates of the registrant as of June 30, 2010, based on the closing price of the common stock as reported by the Over the Counter Bulletin Board on such date, was approximately $25.7 million.  The registrant has no outstanding non-voting common equity.




The Registrant had 6,815,696,764 shares of its common stock outstanding as of March 15, 2011, and no shares of its preferred stock outstanding.




List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated:




Schedule 14 A Proxy Statement, dated March 16, 2011.                                                                                                                     Part I, Subsequent Events




Reports on Form 8 K filed on March 22, 2011 and March 23, 2011                                                                                                   Part I, Subsequent Events




pertaining to non-binding letters of intent for potential acquisitions.












CORD BLOOD AMERICA, INC.


2010 ANNUAL REPORT ON FORM 10-K


Table of Contents








Page“SAFE HARBOR” STATEMENTPART IItem 1. BUSINESS


4Item 1A. RISK FACTORS


15Item 2. PROPERTIES


18Item 3. LEGAL PROCEEDINGS


19PART IIItem 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


19Item 6. SELECTED FINANCIAL DATA


21Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


21Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


27Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


27Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTAINS ON ACCOUNTING AND FINANCIAL DISCLOSURE


27Item 9A. CONTROLS AND PROCEDURES


27Item 9B. OTHER INFORMATION


28PART IIIItem 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


28Item 11. EXECUTIVE COMPENSATION


29Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


33Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


34Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES


34PART IVItem 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


35SIGNATURES


40





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“SAFE HARBOR” STATEMENT




Some of the information contained in this Annual Report may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We base these forward-looking statements on our current views with respect to our research and development activities, business strategy, business plan, financial performance and other matters, both with respect to us, specifically, and the biotechnology sector, in general. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “estimate,” “may,” “should,” “anticipate,” “will” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise, but the absence of these words does not necessarily mean that a statement is not forward-looking.




All forward-looking statements involve inherent risks and uncertainties, and there are or will be important factors that could cause actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, those factors set forth in the sections entitled “Business,” “Risk Factors,” “Legal Proceedings,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Controls and Procedures” in this Annual Report, all of which you should review carefully. Please consider our forward-looking statements in light of those risks as you read this Annual Report. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.




If one or more of these or other risks or uncertainties materializes, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we anticipate. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by the cautionary language above. You should consider carefully all of the factors set forth or referred to in this Annual Report, as well as others, that could cause actual results to differ.







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PART I




ITEM 1. BUSINESS




Overview




Cord Blood America, Inc. ("CBAI"), formerly D&A Lending, Inc., was incorporated in the State of Florida on October 12, 1999. In October, 2009, CBAI re-located its headquarters from Los Angeles, California to Las Vegas, Nevada. CBAI is primarily a holding company whose wholly-owned 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"). In March 2010, CBAI purchased a majority interest in Stellacure GmbH (“Stellacure”). In September 2010, CBAI purchased a majority interest in Biocordcell Argentina S.A. (“Bio”). CBAI and its subsidiaries engage in the following business activities:




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




Stellacure GmbH specializes in providing cord blood stem cell preservation services to families in Germany, Spain and Italy.




Biocordcell Argentina S.A. specializes in providing cord blood stem cell preservation to families in Argentina, Uruguay and Paraguay.




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.




Rain has specialized in creating direct response television and radio advertising campaigns, including media placement and commercial production.  Management has reduced the activities of Rain, terminated its former employees, and by the end of 2010, was no longer seeking additional business.  This is consistent with management’s decision to focus its attention exclusively on the stem cell storage business and related activities.




Events in 2010




New Plant




On January 22, 2010, we officially opened our new stem cell storage facility. On March 1, 2010, we commenced processing cord blood at this new facility and on March 8, 2010, our cryogenic freezers arrived, which allows us to store cord blood specimens in our own facility. We intend to continue our organic growth through continued improvement of internal processes, continued improvement and expansion of our relationships with health insurance providers, and by leveraging those relationships in the pregnancy programs with those providers. We will expend more limited effort on expanded print, direct response and internet marketing efforts to facilitate increased prospective customer contact. Additionally, we will be concentrating our efforts on building additional sales channels through obstetrics and gynecological practices and other healthcare professionals, hospitals and other health care influencers. We also hope to leverage our growth through continued mergers and/or acquisitions of other stem cell preservation companies. We are currently exploring various acquisition opportunities and will continue to do so. We intend to continue to fund mergers and acquisitions to the extent that we identify opportunities and are able to obtain capital on commercially reasonable terms for this purpose from placements of equity, debt or convertible debt.




4




Optimus Capital Partners Line of Credit





In an effort to raise more capital, on July 2, 2009, the Company executed a Preferred Stock Purchase Agreement and Warrant Agreement with Optimus Capital Partners, LLC, which contemplates a $7.5 million capital commitment which may be drawn down in increments in the future by the Company under certain conditions, including the filing and effectiveness of a registration statement registering common shares issuable upon Warrant exercise and certain common shares issued as a fee at the outset.  On November 2, 2009, the Company filed its registration statement for these common shares as required by these agreements.  However, the Company is reassessing whether to follow through with the implementation of this capital commitment.  In the mean time, on January 27, 2010, the Company elected to withdraw its registration statement filed with the SEC.





Stellacure Investment





At the end of March 2010, the Company acquired 138,712 Series B Shares (the Shares) in Stellacure GmbH, a German Limited Liability Company which is in the business of collecting, processing and storing cord blood samples as a private bank for use in current or future medical therapies in Germany, Spain, and other European and Middle Eastern Countries. Our shares represent 51% of the total outstanding shares of Stellacure.





Cord believes this acquisition may serve as a strategic footprint into the growth of the stem cell business throughout Europe. In addition to Germany, where Stellacure started processing and storing in 2006, additional Stellacure sales channels established in 2009 in Spain and Italy provide immediate market penetration and an opportunity for growth. Cord Blood views the established relationship Stellacure has with the German Red Cross as a potential catalyst for expansion of Cord Blood services throughout Europe.





China Stem Cell Ltd. Investment





In March, of 2010 the Company acquired pursuant to a License Agreement, a 10% non dilutable interest in what became, in December 2010, China Stem Cells, Ltd., a Cayman Islands Company (hereinafter "Cayman"), which indirectly holds a 100% capital interest in AXM Shenyang, a company organized to conduct a Stem Cell Storage Business in China. In exchange for issuance of an equity interest in Cayman, under the terms of the Transfer of Technology Agreement the Company agreed to provide technology transfer, knowhow and training in the setup, marketing and operation of the China Stem Cell Storage business. In connection with the License Agreement, the Company will receive royalties equal to 8.5% of "Net Revenues" realized from the China Stem Cell Storage business, over the 15 year term of the agreement, with certain minimum annual royalty's payable beginning in 2011.





In December the Company also acquired the option to provide up to $750,000 of additional capital funding to Cayman through the purchase of Cayman Secured Convertible Promissory Notes and attached Cayman Warrants to acquire its Common Stock.  Other Cayman shareholders were granted similar options, with the intent of raising the aggregate up to $1.5 million in additional capital for Cayman and its subsidiaries.





As of March, 2011, Cord Blood has exercised this option in part, provided a total of $500,000 in additional capital to Cayman, and received Cayman Secured Convertible Promissory Notes for this sum along with 100 Cayman Warrants.  The Secured Convertible Promissory Notes are convertible into Cayman stock at a conversion price of $1,500 per share, subject to certain adjustments.  The Warrants have a five year term and are exercisable at an option exercise price of $0.05 per share per share, subject to certain adjustments.  As of March, 2011, other shareholders of Cayman have exercised options with similar terms, provided $500,000 in additional capital to Cayman, and are entitled to similar Cayman Secured Convertible Notes and to be issued an aggregate of 100 Cayman Warrants.





ViviCells International Acquisition





On May 5, 2010, the Company executed and funded a Debtor-In-Possession loan agreement with ViviCells International, Inc. a Florida corporation (“Vivi” or the “Debtor”), NeoCells, Inc., an Illinois corporation, and AdultCells, Inc., an Illinois corporation, (jointly and severally referred to as the “Subsidiaries”), for $200,000 secured by  a super priority lien on the Debtor’s  and Subsidiaries’ assets.  As additional consideration for this loan, the Company received 21% of the Debtor’s outstanding Common Stock.  The $200,000 loan carries interest at 10% per annum, with principal and all accrued interest all due and payable on March 15, 2011.   In September 2010, the Company acquired an approximately $800,000 secured obligation of the Debtor held by a junior lien holder in  ViviCell’s bankruptcy proceeding, in exchange for the private issuance of 11,111,111 restricted shares of its Common stock  to the holder of this secured obligation.




5





On October 20, 2010, the Company  as a co-proponent  proposed a Plan of Reorganization for Vivi under the United States Bankruptcy Code, pursuant to which the Company proposed to acquire an additional 74% of the outstanding shares of Vivi, which would give it in excess of  94% ownership in ViVi, in exchange for the issuance of up to 64,488,889 shares of the Company’s common stock, and the Company’s agreement to make an additional senior secured loan in the amount of $300,000 to Vivi as working capital upon consummation of the Plan. Between June 16, 2010 and December 14, 2010, the Company accelerated the date of its loan commitment, and loaned $100,000 out of the proposed $300,000 loan amount to Vivi in advance of the Plan confirmation, secured under the super priority lien.   On February 16, 2011, a hearing on Confirmation of this proposed plan of reorganization was heard and approved.   The plan is scheduled to be Effective as of April 1, 2011.  However, Vivi has subsequently advised the Company that it would be unable to supply the full 94% plus ownership of Vivi’s outstanding capital stock to the Company as required under the Plan.  The Company has advised Vivi that unless the full 94% plus ownership of Vivi capital stock can be delivered to the Company as required under the Plan, the Company will declare a default under the Plan and pursue its rights to foreclose as the holder of a super priority lien against all Vivi assets and all assets of the Subsidiaries.





Biocordcell Acquisition





At the end of September 2010, the Company entered into a Stock Purchase Agreement (the “Agreement”), with the Shareholders of Biocordcell Argentina S.A., a corporation organized under the laws of Argentina (‘Bio”), providing for the Company’s acquisition of 50.1% of the outstanding shares of Bio (the “Shares), and concurrently closed the stock purchase transaction on the same date. Cord believes this acquisition will serve as an important piece to the continual growth of the Company. Bio is headquartered in Argentina, with affiliates under development in Peru, Colombia, Bolivia, Panama and Puerto Rico, and recent expansion into Uruguay and Paraguay.





With these acquisitions and investments, we now own a state-of-the-art laboratory in Las Vegas, Nevada, a stem cell company in Germany, and a stem cell company in Argentina, and a percentage ownership in what could be the world's largest stem cell storage facility in China.





Other




As a publicly traded small cap company, Cord Blood is reliant on a private entity, the Depository Trust Company (“DTC”), to permit its publicly traded shares to be eligible for electronic stock transactions.  The DTC is the only entity of its kind and is essentially unregulated.





In  December, 2010, the DTC unilaterally and without consultation with the Company, “chilled” all newly issued shares of the Company  which were entitled to be freely traded in the market and  whose holders expected to utilize the DTC Electronic Trading System.   Under what the DTC calls a “chill”, DTC precludes shares which it has unilaterally “chilled” from utilizing its Electronic Stock Transfer System, thereby putting the holders of such “chilled shares” at extreme disadvantage in the trading market when they go to sell their shares.  The “chill” applies to all shares newly issued or newly freed from private placement sales restrictions.  The chill includes as to the Company, even shares for which an effective registration statement is in place, and shares for which valid legal opinions have been issued by seasoned securities law counsel opining as to share entitlement to free trading status under SEC Rule 144.  The Chill fortunately does not apply to existing publicly traded shares of the Company which are out in the market place.   However, the holders of these “chilled” shares of the Company are the key investment bankers whose funds have been supporting CBAI with capital lines to fund its expanding business.   The Company has been forced to negotiate settlement agreements with its existing investment bankers to settle alleged breachs of contract as a result of this DTC chill and the unavailability of DTC electronic transfer for chilled Company shares.  Such settlement agreements have already cost the Company approximately $820,000 in damages.  The Company is endeavoring to maintain a dialogue with DTC over what the Company considers to be an unreasonable and illegal chill of its securities without cause or justification, in an effort to have this chill lifted. Whether the Company will be successful in obtaining relief from this chill is at this point uncertain.  Continued implementation of the DTC chill will make it more difficult for the Company to obtain new capital which its needs to expand its business, and will likely increase claims for  contract damages which the Company may have to pay as a result of its inability to deliver shares to investment bankers which are eligible for DTC electronic transfer.





Industry Background of Cord




Stem cells. The human body is comprised of many types of cells with individual characteristics and specific functions. Cells with a defined or specialized function are referred to as differentiated. Examples of differentiated cells include nerve cells, red blood cells and skin cells. Differentiated cells are replaced and renewed over time from a population of rare, undifferentiated cells known as stem cells. As stem cells grow and proliferate, they are capable of producing both additional stem cells as well as cells that have differentiated to perform a specific function. Stem cell differentiation is prompted by specific cell-to-cell interactions or other molecular signals. These signals trigger a change in the cell’s genetic profile, causing specific genes to become active and others to become inactive. As a result, the cell develops specialized structures, features and functions representative of its differentiated cell type.




6




There are many types of stem cells in the human body. These stem cells are found in different concentrations and in different locations in the body during a person’s lifetime. Current thinking suggests that each organ and tissue in the body is founded, maintained and possibly rejuvenated to different degrees, on a more or less continual basis, by specific stem cell populations naturally present in the body. Types of stem cells include:




Hematopoietic stem cells.Hematopoietic, or blood, stem cells reside in the bone marrow, umbilical cord and placenta. They can also be found in an infant’s umbilical cord as well as circulating in very small numbers in the blood. Hematopoietic stem cells generate all other blood and immune system cells in the body.




Neural stem cells. Neural stem cells can be found in the brain and spinal cord and are capable of differentiating into nerve and brain tissue.




Mesenchymal stem cells.  Mesenchymal stem cells can be found in bone marrow and differentiate into bone, cartilage, fat, muscle, tendon and other connective tissues.




Pancreatic islet stem cells. Pancreatic islet stem cells can be found in the pancreas and differentiate into specialized cells of the pancreas including cells that secrete insulin.




The ability of a stem cell to differentiate into multiple types of cells of a certain tissue is referred to as pluripotency. For example, a hematopoietic stem cell has the ability to differentiate into many types of blood and immune system cells. However, stem cells of one tissue type may also generate specialized cells of another tissue type, a characteristic referred to as plasticity. For example, under specific conditions, hematopoietic stem cells have been shown to generate specialized cells of other systems, including neural, endocrine, skeletal, respiratory and cardiac systems. These characteristics make stem cells highly flexible and very useful for a number of applications, including the potential use as therapeutics.




Cell therapy.Cell therapy is the use of live cells as therapeutic agents to treat disease. This therapy involves the introduction of cells to replace or initiate the production of other cells that are missing or damaged due to disease. Currently, the most common forms of cell therapy include blood and platelet transfusions and bone marrow transplants.




Bone marrow transplantation is a medical procedure in which hematopoietic stem cells are introduced into the body in order to regenerate healthy, functioning bone marrow. In this procedure, stem cells are obtained from a donor through a surgical procedure to remove approximately one liter of bone marrow. The donated bone marrow, including any “captured” stem cells, is then transfused into the patient. Stem cells for transplantation may also be obtained from peripheral blood or umbilical cord blood donations. Sometimes the stem cells used in the procedure are obtained from the patient’s own bone marrow or blood.




Bone marrow transplantation has been successfully employed in the treatment of a variety of cancers and other serious diseases since the 1960s. According to the International Bone Marrow Transplant Registry, over 45,000 bone marrow and other hematopoietic (blood) stem cell transplant procedures were performed worldwide in 2002.




The flexibility and plasticity of stem cells has led many researchers to believe that stem cells have tremendous promise in the treatment of diseases other than those currently addressed by stem cell procedures. Researchers have reported progress in the development of new therapies utilizing stem cells for the treatment of cancer, neurological, immunological, genetic, cardiac, pancreatic, liver and degenerative diseases.




7




Umbilical Cord Blood Banking




The success of current and emerging cell therapies is dependent on the presence of a rich and abundant source of stem cells. Umbilical cord blood has been emerging as an ideal source for these cells. As information about the potential therapeutic value of stem cells has entered the mainstream, and following the first successful cord blood transplant performed in 1988, cord blood collection has grown. In the past decade, several public and private cord blood banks have been established to provide for the collection and preservation of these cells. Public cord blood banks collect and store umbilical cord blood donated by women at the birth of the child. This blood is preserved and made available for a significant fee to anyone who needs it in the future. We do not currently collect or store donated cord blood units. Private, or family, cord blood banks such as Cord, collect and store umbilical cord blood on a fee-for-service basis for families. This blood is preserved and made available to the family in the event the family needs stem cells for a transplant. Stem cells have been successfully recovered from cord blood after at least fifteen years of storage in liquid nitrogen. However, these cells may be able to retain their usefulness at least as long as the normal life span of an individual.





CORD




Services Provided By Cord




Cord’s customers are typically expectant parents who choose to collect and store umbilical cord blood at the birth of their child for potential use in a stem cell transplant at a later date for that child or for another family member.  With the opening of the lab in Las Vegas, NV, Cord is able to provide services to collect, test, process and preserve umbilical cord blood.




Private cord blood banking has been growing in acceptance by the medical community and has become increasingly popular with families. For an initial fee of approximately $2,075 and an annual storage fee of approximately $125 for each year thereafter, Cord provides the following services to each customer:




Collection. We provide a 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.




Full-Time 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 manage all logistics for transporting the cord blood unit to our centralized facility immediately following birth. This procedure ensures chain-of-custody control during transportation for maximum security.




Comprehensive Testing.At the laboratory, the cord blood sample is tested for stem cell concentration levels and blood type. The cord blood sample and the maternal blood sample are also tested for infectious diseases. We report these results to both the mother and her doctor.




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 eighteen years when stored in this manner and theoretically could be maintained at least as long as the normal life span of an individual.




8





Explanation of Certain Material Agreements And Transactions




Patent License Agreement




PharmaStem Therapeutics holds certain patents relating to the storage, expansion and use of hematopoietic stem cells. In the past five years, PharmaStem has commenced suit against numerous companies involved in cord blood collection and preservation alleging infringement of its patents. In October 2003, after a jury trial, judgment was entered against certain of our competitors and in favor of PharmaStem in one of those suits. In February 2004, PharmaStem commenced suit against Cord Partners and certain of its competitors alleging infringement of its patents. Management of Cord Partners determined to settle, rather than to litigate, this matter. As a result, PharmaStem and Cord Partners entered into a Patent License Agreement in March 2004. Pursuant to the Patent License Agreement, Cord Partners may, on a non-exclusive basis, collect, process and store cord blood utilizing PharmaStem technology and processes covered by its patents for so long as the patents may remain in effect. All of the patents are scheduled to expire in 2010. Cord Partners is obligated under the Patent License Agreement to pay royalties to PharmaStem of 15% of all revenues generated by Cord Partners from the collection and storage of cord blood on and after January 1, 2004. Other than royalties, no amount is payable by Cord Partners to PharmaStem. All litigation between the parties was dismissed and all prior claims were released.  As of 2008, Cord has ceased paying all royalties to PharmaStem.  The patents have been declared void.  The decision is currently under a final appeal.




CorCell Acquisition




On October 13, 2006, we entered into an Asset Purchase Agreement with Vita34 for the assets of CorCell, Inc., to begin the process of acquiring the business of collection, processing and storage of blood taken from umbilical cord after a child is born. On February 28, 2007, we completed the acquisition. The acquisition related to all rights to possession and custody of all acquired samples owned by CorCell, Inc. and associated with the operations of CorCell, Inc., which is predominantly the current customer base and revenues. The deal also included the purchase of cryogenic freezers and other fixed assets used in this umbilical cord blood samples business. CorCell is not PharmaStem licensed. These cryogenic freezers were moved to our Las Vegas facilities on March 8, 2010.




CureSource Asset Acquisition




On August 20, 2007, we completed the acquisition of specific assets from CureSource, Inc., for the aggregate purchase price of $106,500 in cash and $10,000 value paid in common restricted shares of the company, for a total purchase price of $116,500. The asset purchase related to the existing customer samples owned by CureSource, Inc. and associated with the operations of CureSource, Inc., which predominantly is the current customer base and revenues.




Cryobank for Oncologic and Reproductive Donors (CORD) Acquisition




On January 24, 2006, we acquired specific assets related to our collecting, testing, processing and preserving umbilical cord blood, including the assets and liabilities associated with approximately 750 umbilical cord blood samples, as well as three cryogenic freezers used for the storage of such umbilical cord blood samples, for the aggregate purchase price of $260,000.




Shelter Island Warrants And Puts




In connection with convertible debt financing consummated in February of 2007 with Shelter Island Opportunity Fund, LLC, the Company issued to the lender in that transaction a “Put Agreement”, whereby the Company agreed to purchase from the Lender up to 36,000,000 shares of its common stock from the lender at a fixed purchase price of $0.05 per share, or for a total of up to $1,800,000 if the Put is exercised in full.  The Put provides that if the Company is unable to, or chooses not to pay the Put price in cash, the Company can issue a convertible promissory note, bearing interest at 16% per annum during its initial 12 month term, and interest at 20% per annum thereafter, payable on a monthly basis over on a 24 month level amortization, secured by unspecified assets, and payable at the Company’s option by delivery of shares of its Common stock in lieu of cash.




9





At the same time, the Company issued to the Lender a warrant to acquire 36,000,000 shares of its common stock, at a warrant exercise price of $0.101, subject to exercise price adjustment under certain circumstances. The exercise price as subsequently been adjusted under the warrant provisions and is currently fixed at $0.0086 per share.





The Lender in August of 2009 endeavored to exercise its rights under the Put without first exercising the warrant or otherwise acquiring shares of the Company’s common stock which the Lender would be able to deliver to the Company as required by the Put.  As a result of the Lender’s inability to deliver to the Company shares of the Company’s common stock as required by the Put, the Company declined to pay the cash Put price or deliver the convertible promissory note in satisfaction of the Put, and has taken the position that the Put has not been exercised.





After extensive negotiations with Shelter Island, the parties entered into a transaction on July 21, 2010, whereby the 36 million shares Warrant Agreement was canceled, and the obligation represented by the Put Option Agreement was satisfied by the Company's delivery  to Shelter Island of a new Senior Secured Note in the principal amount of $1,590,400  (the "Replacement Note"). With this agreement, the derivative liability of $1,608,658 was reduced to $1,590,400 and then reclassified on the balance sheet as a note payable. The Replacement Note matures on September 30, 2011, bears interest at 16% per annum, interest-only is due, for the period July 31, 2010 through January 31, 2011, and is payable in six equal monthly installments of $265,067 each, commencing January 31, 2011. The Company, at its option, may pay the principal amount due on the Replacement Note by the issuance of unregistered Company Common Stock, to be valued at an agreed conversion rate that is fixed for this purpose, subject to certain adjustments, at 85% of the market value of the Company's common stock, calculated based on the five lowest daily closing prices for the stock over certain specified 20 day periods.




On March 17, 2011, the parties entered into an Amendment for above said Replacement Note.  The Amendment extends the commencement date of the six monthly installments each in the amount of $ 248,400 to April 30, 2011 in exchange for continued interest payments for February, March and April, along with a cash payment of $25,000 as an adjustment to the principal balance.  Other terms of the Replacement Note remain for the most part the same.




Stellacure Acquisition




In March 2010, the Company acquired 138,712 Series B Shares of Stellacure, GmbH, which represents an ownership percentage of 51%, a German Limited Liability Company that is in the business of collecting, processing, and storing cord blood samples. The purchase price paid by the Company was EUR 501,000. Stellacure operates primarily in Germany; however, it established sales channels in Spain and Italy in 2009. The Company intends to utilize these markets for immediate market penetration and an opportunity for growth throughout Europe.




BioCells Acquisition




In September 2010, the Company entered into a Stock Purchase Agreement (the “Agreement”), with the Shareholders of Biocordcell Argentina S.A., a corporation organized under the laws of Argentina (“Bio”), providing for the Company’s acquisition of 50.1% of the outstanding shares of Bio (the “Shares).





Under the Agreement, the Company paid $375,000 in cash at the closing, and was obligated to pay an additional $350,000 in October, 2010, $150,000 of which is part of the fixed portion of the purchase price for the shares, for a total minimum purchase price of $525,000. The remaining $200,000 of this payment represents advances against the contingent payments due based on Bio’s 2010 and 2011 net income performances.




10





The Agreement provides that the Shareholders are to be paid contingent “earn-out” compensation in 2011 based on achieving certain levels of net income in 2010; and additional contingent “earn-out” compensation in 2012 based on achieving certain levels of net income in 2011.




BodyCells




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





Competition




The Company is one of an estimated thirty (30) firms in the US providing private cord blood banking services.  Internationally there are an estimated one hundred and twenty (120) additional firms offering these services. The Company has built its business in the United States (“US”) via a model of organic growth and accretive acquisitions.





Management believes that in the US the organic differentiator for the company is its emphasis on strategic relationships with larger health insurance providers. This approach differs from our major competitors who tend to focus on a traditional pharmaceutical model by having sales reps cover a market by visiting ob/gyn practices.  By focusing on the health insurance relationships, while the sales cycle is longer, once established, management believes the sales approach builds loyalty and reoccurring sales.





The Company officially opened its own laboratory operations at its new facility in Las Vegas, Nevada on January 22, 2010.  Previously the Company has outsourced these key scientific elements to a third party.  Now, with this key expertise in house, the Company has the ability to continue making advancements on existing and new services related to stem cells.





Management plans to add acquisitions that either increases the company's footprint, which may include international elements, and/or increase the reoccurring storage based revenues, assuming sufficient new sources of capital can be located to make such acquisitions.  To date, the Company has concluded six acquisitions, and management believes there exist multiple opportunities to acquire smaller competitors who do not have the resources to compete on a go forward basis.





Intellectual Property





We rely upon a combination of trade secret, copyright and trademark laws, license agreements, confidentiality procedures, nondisclosure agreements and technical measures to protect the intellectual property used in our business. We generally enter into confidentiality agreements with our employees, consultants, vendors and customers. We also seek to control access to and distribution of our technology, documentation and other proprietary information.  We use numerous trademarks, trade names and service marks for our products and services. We also rely on a variety of intellectual property rights that we license from third parties. Although we believe that alternative technologies are generally available to replace such licenses, these third party technologies may not continue to be available to us on commercially reasonable terms.




The steps we have taken to protect our copyrights, trademarks, service marks and other intellectual property may not be adequate, and third parties could infringe, misappropriate or misuse our intellectual property. If this were to occur, it could harm our reputation and adversely affect our competitive position or results of operations




11





Properties




CBA Properties, Inc. holds trademarks of CBA and its subsidiaries, including word marks registered with the United States Patent and Trademark Office (“USPTO”) in two international classes for the words “Cord Blood America,” as well as a design mark which incorporates the words “Cord Blood America,” registered with the USPTO in two international classes, along with several other trademarks.”




Rain




Rain was acquired on February 28, 2005 and is in the business of advertising.  Sources of revenue for Rain included, procuring and placing radio and television advertising; per-inquiry advertising on radio and television; production of radio and television commercials, procuring and setting up call centers; editing, dubbing and distribution of radio and television commercials; and procuring and placing print advertising.




Management has reduced the activities of Rain, terminated its former employees, and is no longer seeking new business.  This is consistent with management’s decision to focus its attention on the stem cell storage business and related activities.





Environmental Remediation




The Company does not currently have any material capital expenditure commitments for environmental compliance or environmental remediation for any of its properties. The Company does not believe compliance with federal, state and local provisions that have been enacted or adopted regarding the discharge of materials into the environment, or otherwise relating to the protection of the environment, will have a material effect on its capital expenditures, potential earnings or competitive position.





Employees




As of December 31, 2010, we had twenty two full time employees, and five part time employees.  Our full time employees include our Chairman of the Board and Chief Executive Officer, our Vice President of Operations, Dr. Geoffrey John O’Neill, laboratory, customer service and sales personnel.  We believe our relations with all of our employees are good.
 
 Exchange Act Reports





The Company makes available free of charge through its Internet website, www.cordblood-america.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such materials are electronically filed with or furnished to the Securities and Exchange Commission (SEC). The SEC maintains an Internet website, www.sec.gov, which contains reports, proxy and information statements, and other information filed electronically with the SEC. Any materials that the Company files with the SEC may also be read and copied at the SEC’s Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D. C. 20549.





Information on the operations of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. The information provided on the Company’s website is not part of this report and is not incorporated herein by reference.




12





Transactions Subsequent To Year End





JMJ Financial





On January 12, 2011, the Company issued a $1,050,000 “Convertible Promissory Note” to JMJ Financial (“JMJ”), a private investor (the “2011 Note”).    The 2011 Note bears interest in the form of a onetime interest charge of 10%, payable with the Note’s principal amount on the maturity date, January 12, 2014.  All or a portion of the 2011 Note principal and interest is convertible at the option of JMJ from time to time, into shares of the Company’s common stock, originally fixed at a per share conversion price equal to 85% of the average of the 5 lowest traded prices for the Company’s common stock in the 20 trading days previous to the effective date of each such conversion. At the same time, JMJ issued and delivered to the Company, a  “Secured & Collateralized Promissory Note” dated January 12, 2011, (the “JMJ Note”), which served as sole consideration to the Company for the Company’s issuance of  the 2011 Note to JMJ.   The JMJ Note is in the principal amount of   $1,000,000,  bears interest in the form of a onetime interest charge of 10.5%, and interest is payable with the JMJ Note’s principal on its maturity date, January 12, 2014..  The JMJ Note is secured by JMJ assets in the form of money market fund or similar equivalent having a value of at least $1,000,000.





Under a previous outstanding Convertible Promissory Note having similar terms as described above and issued to JMJ and funded by JMJ in the amount of approximately $1,750,000 (the “Earlier Notes”), the Company was obligated to deliver common shares which could be placed into the  Automated System for Deposits and Withdrawals of Securities (known as “DWAC”).  At present the DWAC system is not available to Company shareholders for newly issued shares of the Company’s common stock.  As a result of this breach, on February 8, 2011, the Company entered into a settlement agreement with JMJ which contained the following term, among others, which the Company agreed to pay $671,385 in liquidated damages to JMJ, and in consideration for an additional $1 million in financing, said to be added to the principal amount of the Earlier Note.





VidaPlus





On January 24, 2011, the Company entered into a Stock Purchase Agreement to acquire up to 51% of the capital stock in VidaPlus, an umbilical cord processing and storage company headquartered in Madrid, Spain.  The Agreement is organized into three tranches; the first executed at closing with an initial investment of 150,000 Euro for an amount equivalent to 7% as follows; 1% of share capital in initial equity and 6% from a loan convertible into equity within 12 months of closing.  The initial investment is secured by a Pledge Agreement on 270 VidaPlus samples that are incurring annual storage fees.  The second tranche provides the opportunity for an additional 28% in share capital through monthly investments based on the number of samples processed in that month (up to a maximum of 550,000 EUR).  Converting the investment from a loan into equity for tranche two will take place every 12 months, and the obligation will have been met in full after 1,000 samples have been processed and stored.  The third tranche follows a similar loan to equity agreement as tranche two but for an additional 16% equity at the option of the Company (up to a maximum of 550,000 EUR).  VidaPlus contracts through Stellacure and their relationship with the German Red Cross for their processing and storage.  The second and third tranches contain conditional components for funding to continue from CBAI, including payments to Stellacure by Vida to be current with previously agreed to terms between the parties. The Company believes that further support of a key channel partner to Stellacure provides additional opportunities for expansion throughout Europe.





Reproductive Genetics Institute





On February 24, 2011, the Company acquired the following assets; 593 umbilical cord blood samples and all related file documents, four (4) cryogenic storage tanks, and two computers from Reproductive Genetics Institute, Inc. (RGI) for $76,000 in cash.  In March 2011, the assets acquired were relocated to the Company’s Las Vegas laboratory.




13





Additional Possible Acquisitions




In 2010 and continuing in 2011, the Company has also entered into three separate letters of intent, two nonbinding and one binding, contemplating the acquisition of two separate operating companies in the stem cell industry.  Acquisition is contingent on completion of ongoing due diligence review to the Company’s satisfaction, and the Company’s successfully obtaining new capital on commercially reasonable terms to fund one or more, or all of these acquisitions.  One of these acquisitions is Cryo-Cell de Mexico, S.A. de C.V. (“Cryo Mexico”) - see discussion under litigation below). Another is a US Stem Cell Company, and a third is a South American Stem Cell Company.  (See separate Form 8K reports filed with the Securities and Exchange Commission with regard to certain of these potential acquisitions, which Reports are incorporated herein by reference.)   At this stage the only documents that have been executed are Letters of Intent, and each specifically states that it is non-binding.  Further, Cord Blood has initiated, but has not completed its due diligence. Also, each acquisition would require Cord first to locate and obtain additional capital on commercially reasonable terms in order to consummate the acquisition.  No such arrangements are currently in place, it is uncertain whether such additional capital can be obtained.  Finally, as a condition precedent to obtaining any such additional capital,  the Company’s shareholders would first have to approve a proposed reverse stock split and proportional increase in authorized capital at a Special Shareholders’ meeting called for that purpose for April 21, 2011.  As a result, although management is optimistic, there can be no assurance that any of the contemplated acquisitions will occur, and at this date there is no obligation on the Company’s part to proceed with any of these acquisitions.




St. George Investments




On March 10, 2011, Cord Blood America, Inc. (the "Company") entered into a Note and Warrant Purchase Agreement (the "Purchase Agreement") with St. George Investments, LLC, an Illinois limited liability company (the "Investor") whereby the Company issued and sold, and the Investor purchased: (i) Secured Convertible Promissory Notes of the Company in the principal amount of $1,105,500 (the "Company Note") and (ii) a Warrant to purchase common stock of the Company (the "Warrant").  The Investor paid $250,000 in cash as an initial payment to the Company and executed and delivered six separate “Secured Buyer Notes” (the “Buyer Notes”), as consideration in full for the issuance and sale of the Company Note and Warrants.




The principal amount of the Company Note is $1,105,500 ("Maturity Amount") and the Company Note is due 48 months from the issuance date of March 10, 2011.  The Company Note has an interest rate of 6.0%, which would increase to a rate of 12.0% on the happening of certain Trigger Events, including but not limited to: a decline in the 10-day trailing average daily dollar volume of the common shares in the Company’s primary market to less than $30,000.00 of volume per day at any time; the failure by the Company or its transfer agent to deliver Conversion Shares (defined in the Company Note) within 5 days of Company’s receipt of a Conversion Notice (defined in the Company Note).  The total amount funded (in cash and notes) at closing will be $1,000,000, representing the Maturity Amount less an original issue discount of $100,500.00 and the payment of $5,000 to the Investor to cover its fees, with payment consisting of $250,000 advanced at closing and $750,000 in a series of six secured convertible Buyer Notes of $125,000.00 each, with interest rates of 5.0%.  The Buyer Notes are secured by an Irrevocable Standby Letter of Credit (“Letter of Credit”).




The Investor has also received a five year warrant entitling it to purchase 139,925,374 shares of common stock of the Company at an exercise price of $.00179.The warrant also contains a net exercise /cashless exercise provision.




14





ITEM 1A.RISK FACTORS





Risks Related To Our Business




We Have Been The Subject Of A Going Concern Opinion By Our Independent Auditors Who Have Raised Substantial Doubt As To Our Ability To Continue As A Going Concern




Our consolidated financial statements have been prepared assuming we will continue as a going concern. We have experienced recurring net losses from operations, which losses have caused an accumulated deficit of approximately $42.8 million as of December 31, 2010.  In addition, we have a working capital deficit of approximately $3.8 million as of December 31, 2010.  We had net losses of $8.5 million and $9.8 million for the years ended December 31, 2010 and 2009, respectively. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. If we are unable to generate substantial revenues and/or unable to obtain additional financing to meet our working capital requirements, we may have to curtail our business or cease operations.


We are Currently Dependent on External Financing





Currently, we are dependent upon external financing to fund our operations. It is imperative that we receive this external financing to implement our business plan and to finance ongoing operations. New capital may not be available, adequate funds may not be sufficient for our operations, or capital may not be available when needed or on terms acceptable to our management.  The recent unilateral action by the DTC in chilling the use of the DTC electronic stock transfer system for privately  issued  and even registered shares of the Company’s common stock issued to its investment bankers,, is likely to make it more difficult and more costly to obtain new sources of capital.  Our failure to obtain adequate additional financing would require us to delay, curtail or scale back some or all of our operations would hinder our ability to implement our business plans and could jeopardize our ability to continue our business.





We May Not Be Able To Increase Sales Or Otherwise Successfully Operate Our Business, Which Could Have A Significant Negative Impact On Our Financial Condition




We believe that the key to our success is to increase sales of our cord blood preservation services as well as our advertising services and thereby increase our revenues and available cash. Our success with regard to cord blood preservation services will depend in large part on widespread market acceptance of cryo-preservation of cord blood and our efforts to educate potential customers and sell our services. Broad use and acceptance of our service requires marketing expenditures and education and awareness of consumers and medical practitioners. We may not have the resources required to promote our services and their potential benefits. Continued commercialization of our services will also require that we satisfactorily address the needs of various medical practitioners that constitute a target market to reach consumers of our services and to address potential resistance to recommendations for our services. If we are unable to increase market acceptance of our services, we may be unable to generate enough additional revenue to achieve and then maintain profitability or to continue our operation.
 
 We may be liable to our customers and may lose customers if we provide poor service, if our services do not comply with our agreements or if our storage facilities fail.


We must meet our customers’ service level expectations and our contractual obligations with respect to our services. Failure to do so could subject us to liability, as well as cause us to lose customers. In some cases, we rely upon third party contractors to assist us in providing our services. Our ability to meet our contractual obligations and customer expectations may be impacted by the performance of our third party contractors and their ability to comply with applicable laws and regulations.




15





Our Storage Systems are subject to the Risk of Material Disruption; Insurance Risks




Any material disruption in our ability to maintain continued, uninterrupted and fully operating storage systems could have a material adverse effect on our business, operating results and financial condition. Our systems and operations are vulnerable to damage or interruption from fire, flood, break-ins, tornadoes and similar events. We may not carry sufficient business interruption insurance and/or liability insurance to compensate us for losses and claims that might occur in the event of such an interruption.




If We Do Not Obtain And Maintain Necessary Domestic Regulatory Registrations, Approvals And Comply With Ongoing Regulations, We May Not Be Able To Market Our Cord Blood Banking Services.




The cord blood banking services that we provide are currently subject to FDA regulations requiring infectious disease testing. The cord blood facility we use has registered with the FDA as a cord blood banking service, listed its products with the FDA, and will be subject to FDA inspection. In addition, the FDA has proposed new good tissue practice regulations that would establish a comprehensive regulatory program for human cellular and tissue-based products as well as proposed rules for donor suitability. Consistent with industry practice, our cord blood collection kits have not been cleared as a medical device. The FDA has announced that it will implement more regulatory procedures for cord blood banking in 2006. This new regulation may require medical device pre-market notification clearance or approval for the collection kits. Securing any necessary medical device clearance or approval for the cord blood collection kits may involve the submission of a substantial volume of data and may require a lengthy substantive review. This would increase costs and could reduce profitability. The FDA could also require that we cease using the collection kit and require medical device pre-market notification clearance or approval prior to further use of the kits. This could cause us to cease operations for some period of time.




We may not be able to comply with any future regulatory requirements, including product standards that may be developed after the date hereof. Moreover, the cost of compliance with government regulations may adversely affect revenue and profitability.




Failure to comply with applicable regulatory requirements can result in, among other things, injunctions, operating restrictions, and civil fines and criminal prosecution. Delays or failure to obtain registrations could have a material adverse effect on the marketing and sales of services and impair the ability to operate profitably in the future.




Of the states in which we provide cord blood banking services, only California, New Jersey and New York currently require that cord blood banks be licensed. We maintain the required procurement service licenses of the states of California, New York and New Jersey. If other states adopt requirements for the licensing of cord blood banking services, either the cord blood storage facility, or we may have to obtain licenses to continue providing services in those states.




Because Our Industry Is Subject To Rapid Technological And Therapeutic Changes And New Developments, Our Future Success Will Depend On The Continued Viability Of The Use Of Stem Cells And Our Ability To Respond To The Changes.




The use of stem cells in the treatment of disease is a relatively new technology and is subject to potentially revolutionary technological, medical and therapeutic changes. Future technological and medical developments could render the use of stem cells obsolete. In addition, there may be significant advances in other treatment methods, such as genetics, or in disease prevention techniques, which could significantly reduce the need for the services we provide. Therefore, changes in technology could affect the market for our services and necessitate changes to those services. We believe that our future success will depend largely on our ability to anticipate or adapt to such changes, to offer on a timely basis, services that meet these evolving standards and demand of our customers. Expectant parents may not use our services and our services may not provide competitive advantages with current or future technologies. Failure to achieve increased market acceptance could have a material adverse effect on our business, financial condition and results of operations.




16




Our Markets Are Increasingly Competitive And, In The Event We Are Unable To Compete Against Larger Competitors, Our Business Could Be Adversely Affected.




Cord blood banking and stem cell preservation is becoming an increasingly competitive business. Our business faces competition from other operators of cord blood and stem cell preservation businesses and providers of cord blood and stem cell storage services. Competitors with greater access to financial resources may enter our markets and compete with us. Many of our competitors have longer operating histories, larger customer bases, longer relationships with clients, and significantly greater financial, technical, marketing, and public relations resources than we do. We do not have any research and development underway, while other competitors have established budgets for such R&D. Established competitors, who have substantially greater financial resources and longer operating histories than us, are able to engage in more substantial advertising and promotion and attract a greater number of customers and business than we currently attract. While this competition is already intense, if it increases, it could have an even greater adverse impact on our revenues and profitability. In the event that we are not able to compete successfully, our business will be adversely affected and competition may make it more difficult for us to grow our revenue and maintain our existing business.




Our Information Systems Are Critical To Our Business And A Failure Of Those Systems Could Materially Harm Us.




We depend on our ability to store, retrieve, process and manage a significant amount of information. If our information systems fail to perform as expected, or if we suffer an interruption, malfunction or loss of information processing capabilities, it could have a material adverse effect on our business.




The Company’s sales can be impacted by the health and stability of the general economy.


Unfavorable changes in general economic conditions, such as the current recession, or economic slowdown in the geographic markets in which the Company does business, may have the temporary effect of reducing the demand for the Company’s services. For example, economic forces may cause consumers to withhold discretionary dollars that might otherwise be spent on our services. Adverse economic conditions could also increase the likelihood of customer delinquencies and bankruptcies, which would increase the risk of uncollectibility of certain accounts. Each of these factors could adversely affect the Company’s revenue, price realization, gross margins and overall financial condition and operating results.





Recent volatility in the financial market may negatively impact the Company’s ability to access the credit markets.





Capital and credit markets have become increasingly volatile as a result of adverse conditions that have caused the failure and near failure of a number of large financial services companies. If the capital and credit markets continue to experience volatility and availability of funds remains limited, it is possible that the Company’s ability to raise additional capital through the private placement of shares, debt and/or convertible debt may be limited by these factors while the Company currently requires such sources of additional capital in order to continue its operations, fund negative cash flow, and implement its business plans.





We Could Fail To Attract Or Retain Key Personnel, Which Could Be Detrimental To Our Operations.




Our success largely depends on the efforts and abilities of our Chief Executive Officer, Matthew L. Schissler, and our Chief Operating Officer, Joseph Vicente. The loss of either’s services could materially harm our business because of the cost and time necessary to find their successor. Such a loss would also divert management’s attention away from operational issues. We do not presently maintain key-man life insurance policies on either Executive Officer. We also have other key employees who manage our operations and if we were to lose their services, senior management would be required to expend time and energy to find and train their replacements. To the extent that we are smaller than our competitors and have fewer resources, we may not be able to attract sufficient number and quality of staff.




17




Trading of our stock may be restricted by the Securities Exchange Commission’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our stock.




The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.




Failure to establish and maintain effective internal controls over financial reporting could have an adverse effect on our business, operating results and stock price.




Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial reports and is important in helping to prevent financial fraud.  If we are unable to maintain adequate internal controls, our business and operating results could be harmed.




ITEM 1B. UNRESOLVED STAFF COMMENTS




None




ITEM 2. PROPERTIES.




In October, 2009, we re-located our headquarters from Los Angeles, California to Las Vegas, Nevada. Our new principal office and facilities are located at 1857 Helm Drive, Las Vegas, NV 89119.  These facilities encompass approximately 17,000 square feet. The property is leased from an unaffiliated third party for a period of 5 years ending September 2014. The monthly lease payments are approximately $12,000. We continue to be responsible for our previous principal office located in Santa Monica, CA until September, 2012, where we leased approximately 2, 200 square feet at a monthly lease cost of approximately $9,500. As of October 2010, we have been able to sublease the Santa Monica, CA property. The property has been sub-leased for $6,297 per month, commencing January 2011 and is to continue for the remainder of the lease.





We maintain fire and casualty insurance on our leased property in an amount deemed adequate by management.





The German and Argentina subsidiaries both lease facilities for operations in Hamburg, Germany and Buenos Aires, Argentina respectively.




18


ITEM 3. LEGAL PROCEEDINGS.




CryoCell International, Inc.




On December 16, 2010, Cryo-Cell International, Inc. (“Cryo International”) filed an action against Cord Blood America, Inc. (the “Company”) in The Sixth Judicial Circuit Court, Pinellas County, Florida alleging claims for: tortuous interference with a business relationship; misappropriate of trade secrets and confidential information in violation of the Florida Uniform Trade Secrets Act, § 688.001, Et. Seq., Fla. Stat.; dilution of trademark in violation of § 495.151, Fla. Stat.; and Common Law Unfair Competition.   Cryo International, a competitor of the Company’s, has filed the suit apparently in an effort to stop the Company’s pursuit of the acquisition of Cryo-Cell de Mexico, S.A. de C.V. (“Cryo Mexico”), for which the Company has in place a non binding Letter of Intent for acquisition.    (see Subsequent Events).  In addition, along with its Complaint, Cryo International filed an Emergency Motion for a Temporary Injunction.  In January 2011, the Company filed a Memorandum of Law in Opposition to Cryo International’s Emergency Motion for Temporary Injunction, and a Rule 1.140(b) Motion to Dismiss Cryo International’s complaint, as well as amendments to these documents.  The Emergency Motion for a Temporary Injunction, Motion to Dismiss and related filings were heard by the Court on January 14, 2011.  The Court granted the Company’s Motion to Dismiss, finding that Cryo Mexico is an indispensible party to the lawsuit and granted Cryo International leave to file an amended complaint to add Cryo Mexico as a defendant to the lawsuit and to serve Cryo Mexico with the required legal papers.  Cryo International filed an Amended Complaint on January 20, 2011.  The Amended Complaint added Cryo Mexico as a defendant to the action, asserted all of the original causes of action against the Company, and added a claim for Breach of a License Agreement against Cryo Mexico and a claim for Unfair and Deceptive Trade Practices in violation of § 501.201, Et. Seq. Fla. Stat. against Cryo Mexico and the Company.  Cryo International also filed an amended motion for temporary injunction.  In response, Defendant Cryo Mexico filed a Motion to Dismiss for Insufficiency of Service of Process and a Motion to Dismiss for Improper Forum and Lack of Personal Jurisdiction, and the Company filed a Rule 1.140(b) Motion Regarding Amended Complaint, seeking dismissal of the Amended Complaint.  The Defendants’ Motions to Dismiss and Defendant Cryo Mexico’s Motion to Quash were heard on March 14, 2011.  The Court has not yet rendered a decision as to these motions.




Company  management believes that there is no merit to the claims filed by Cryo International and the Company intends to vigorously  defend against these claims.




PART II




ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES.




(a) Market Information. Our Common Stock is traded on the OTC Bulletin Board, under the symbol CBAI.OB.





The following table sets forth the high and low bid prices of the Company’s Common Stock traded on the OTC Bulletin Board for fiscal years ended December 31, 2010, and December 31, 2009. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.





Common StockFiscal Year 2010
High

LowFirst Quarter

$
0.02


$
0.01Second Quarter

$
0.01


$
0.00Third Quarter

$
0.01


$
0.00Fourth Quarter

$
0.01


$
0.00Common StockFiscal Year 2009
High

LowFirst Quarter

$
0.02


$
0.01Second Quarter

$
0.01


$
0.00Third Quarter

$
0.01


$
0.00Fourth Quarter

$
0.01


$
0.00





19





(b) Holders. As of March 15, 2011, our Common Stock was held by approximately 506 shareholders of record. Our transfer agent is Interwest Transfer Company, Inc., with offices at 1981 East 4800 South, Suite 100, P.O. Box 17136, Salt Lake City, Utah 84117, phone number 801-272-9294. The transfer agent is responsible for all record-keeping and administrative functions in connection with the common shares of stock.





(c) Dividends. We have never declared or paid a cash dividend. There are legal restrictions which preclude our ability to pay cash dividends on our common shares so long as we have an accumulated deficit. We do not anticipate declaring or paying any cash dividends in the foreseeable future.




(d) Securities Authorized for Issuance Under Equity Compensation Plans.





Equity Compensation Plan Information





The following table sets forth the information indicated with respect to our compensation plans as of December 31, 2010, under which our common stock is authorized for issuance.




Number of Securities to be issued

upon exercise of outstanding

options, warrants and rights

(a)


Weighted average

exercise price of

outstanding options,

warrants and rights

(b)


Number of securities

remaining available for

future issuance under

equity compensation plans

(excluding securities

reflected in column (a))

(c)Equity compensation plans approved by security holders


695,131,008


$
0.01Equity compensation plans not approved by security holders


N/AOutstanding warrants (1)


47,527,449


$
0.09



-Total


742,658,487


$
0.01





(1)
The warrants shown were issued in discreet transactions from time to time as compensation for services rendered by debt holders, consultants, advisors or other third parties, and do not include warrants sold in private placement transactions. The material terms of such warrants were determined based upon arm’s-length negotiations with the service providers. The warrant exercise prices approximated the market price of our common stock at or about the date of grant, and the warrant terms are five years from the grant date. The warrants contain customary anti-dilution adjustments in the event of a stock split, reverse stock split, reclassification or combination of our outstanding common stock and similar events and certain of the warrants contain anti-dilution adjustments triggered by other corporate events, such as dividends and sales of equity below market price.




20





Recent Issuances of Unregistered Securities





Exchange of Note Instruments with Investor.





In January 2010, the Company signed two Promissory Notes for $1.5 million each, totaling $3.0 million, with JMJ Financial bearing one-time interest rates of 10%, and maturing in January, 2013. The Company has drawn down a total of $3.0 million since inception, with $2.5 million being converted into common shares of the Company.





In April 2010, the Company signed a Promissory Note for $0.75 million with JMJ Financial bearing a one-time interest rate of 10%, and maturing in April, 2013. The Company has drawn down a total of $0.05 million since inception, with no amount being converted into common shares of the Company.





In October 2010, the Company signed a Promissory Note for $0.75 million with JMJ Financial bearing a one-time interest rate of 10%, and maturing in October, 2013. The Company has drawn down a total of $0.95 million since inception, with no amount being converted into common shares of the Company.





Repurchase of Shares





We did not repurchase any of our shares during the year ended December 31, 2010.





ITEM 6. SELECTED FINANCIAL DATA





Not Applicable.





ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





Summary and Outlook of the Business





CBAI is primarily 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.




21





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 recently re-located to Las Vegas, NV from Los Angeles, CA. Cord earns revenue through a one-time enrollment and processing fee, and through an annually recurring storage and maintenance fee. Cord blood testing, processing, and some storage was conducted by our outsourced laboratory partner, Progenitor Cell Therapy, LLC, (PCT) in New Jersey. In March 2010, we began to process and store cord blood in our own facility, terminating our contract with PCT on February 28, 2010. We provide the following services to each customer.





·
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 in Las Vegas, 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.





·
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.





Going forward, management will continue to assess business opportunities, and plans to pursue customer acquisition, both through organic growth and acquisition.





Stellacure GmbH




Based in Hamburg Germany, Stellacure GmbH  collects, processes and stores cord blood samples as a private bank for use in current or future medical therapies in Germany, Spain, and other European and Middle Eastern Countries.





Biocordcell Argentina S.A.




Based in Buenos Aires, Biocordcell Argentina S.A., processes and stores cord blood samples as a private bank for use in current or future medical therapies in Argentina, Uruguay and Paraguay.





Rain




Rain had specialized in creating direct response television and radio advertising campaigns, including media placement and commercial production.  Management has reduced the activities of Rain, terminated its former employees, and is no longer seeking business.  This is consistent with management’s decision to focus its attention on the stem cell storage business and related activities.




22





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 with.





Critical Accounting Policies





We define critical accounting policies as those that are important to the portrayal of our financial condition and results of operations and require estimates and assumptions based on our judgment of changing market conditions and the performance of our assets and liabilities at any given time. In determining which accounting policies meet this definition, we considered our policies with respect to the valuation of our assets and liabilities and estimates and assumptions used in determining those valuations. We believe the most critical accounting issues that require the most complex and difficult judgments and that are particularly susceptible to significant change to our financial condition and results of operations include the following:





●
determination of the level of allowance for bad debt;





●
deferred revenue; and





●
revenue recognition




●
valuation of derivative instruments





Accounts Receivable





Accounts receivable consist of the amounts due for the processing and storage of umbilical cord blood, placenta collection and whole cord blood collection, advertising, commercial production and internet lead generation. Accounts receivable relating to deferred revenues are netted against deferred revenue for presentation purposes. The allowance for doubtful accounts is estimated based upon historical experience. The allowance is reviewed quarterly and adjusted for accounts deemed uncollectible by management. Amounts are written off when all collection efforts have failed.





Deferred Revenue





Deferred revenue 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.




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Revenue Recognition





We recognize revenue under the provisions of ASC 605-25 (previously Staff Accounting Bulletin 104 “Revenue Recognition”). Cord provides a combination of products and services to customers. This combination arrangement is evaluated under ASC 605-25-25 (previously Emerging Issues Task Force (Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables,”). ASC 605-25-25 addresses certain aspects of accounting for arrangements under multiple revenue generating activities.





Revenue from both enrollment fees and processing fees are recognized upon the completion of processing. Revenue from storage fees are recognized ratably over the contractual storage period.





Rain generated revenue from packaged advertising services, including media buying, marketing and advertising production services. Rain’s advertising service revenue was recognized when the media ad space was sold and the advertising occurred. Rain’s advertising production service revenue was 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.





Our 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.





The umbilical cord blood stem cell preservation operations provide umbilical cord blood banking services to expectant parents throughout all 50 United States, Argentina, and Germany. Our corporate headquarters are located in Las Vegas, NV. Cord earns revenue through a one-time enrollment and processing fee, and through an annually recurring storage and maintenance fee.




·
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, 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.





·
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.





Going forward, management will continue to assess the market conditions, particularly related to the cost of customer acquisition, and whether organic growth or continued M&A activity will lead CBAI closer to profitability.




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We believe that the Stellacure acquisition may serve as a strategic footprint into the growth of the stem cell business throughout Europe. In addition to Germany, where Stellacure started processing and storing in 2006, additional Stellacure sales channels established in 2009 in Spain and Italy provide immediate market penetration and an opportunity for growth. Cord Blood management intends to continue to pursue additional sales channels in other markets in 2011, to the extent capital is available for this purpose. Cord Blood views the established relationship Stellacure has with the German Red Cross as a potential catalyst for expansion of Cord Blood services throughout Europe.





We believe the Biocordcell acquisition serves as an important piece to the continual growth of the Company. Bio is headquartered in Argentina, with affiliates under development in Peru, Colombia, Bolivia, Panama and Puerto Rico, and recent expansion into Uruguay and Paraguay.





With these recent acquisitions, we now own a state-of-the-art laboratory in Las Vegas, Nevada, a stem cell company in Germany, a stem cell company in Argentina, and we are partners in what could be the world's largest stem cell storage facility in China.





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 with.





Results of Operations for the Year Ended December 31, 2010 Compared To the Year Ended December 31, 2009





For the year ended December 31, 2010, our total revenue increased $0.9 million, or 28% to $4.1 million as compared to $3.2 million for the year ended December 31, 2009. Cord’s revenues were $3.25 million, while Stellacure’s revenues contributed $0.45 million, and Biocordcell’s revenues contributed $0.43 million. The increase in revenue overall, is due to growth in our customer list, revenue generation from the placenta project, which contributed $0.1 million, and the acquisitions of Stellacure and Biocordcell. Cord’s annual storage fees increased approximately $0.5 million, or 30% from the prior comparative year, to approximately $2.2 million. Cord remains focused on strategic organic growth and accretive acquisition strategies, which management hopes will reduce or eliminate the losses and negative operating cash flow.





Cost of services increased $0.2 million to $1.6 million, and gross profit which is 61% increased $0.8 million, or 41% to $2.5 million. The increase is a result of the duplicate costs incurred while bringing the lab process in house and continuing to pay for outsourcing early on during the year, which was an added cost of $0.2 million. In addition to these duplicate costs, we incurred $0.1 million in costs associated with implementing the placenta project.  The company anticipates that through the growth and expansion of our Cord business, and the processing and storage of the cord blood in our own facilities, our direct costs should decrease and our gross margins increase.




Administrative and selling expenses increased $1.0 million to a total of $8.3 million. Of the $1.0 million increase, $1.2 million was related to the consolidation of which Stellacure was $0.9 million, and Biocordcell was $0.3 million. Our interest expense and change in derivatives liability significantly decreased by approximately $2.47 million or 58% to approximately $1.78 million in 2010.The primary reason for this decrease is due to the settlement of the Shelter Island Put Option. Once settled, the amount was reclassified from a derivative liability to a note payable.During the year, the Company spent $0.65 million to purchase Stellacure, a company in Germany. The acquisition of StellaCure has resulted in start-up costs of $0.8 million. In addition to this acquisition, the Company spent $0.3 million as part of the purchase of Biocordcell, a company in Argentina. These two acquisitions have created opportunities that allow Cord to expand into the European market, and the South American market.




Our total net loss decreased approximately $1.3 million, or 13% from $9.8 million for the year ended December 31, 2009 to $8.5 million for the year ended December 31, 2010. Of the $8.5 million net loss in 2010, $4.5 million was related to non-cash expenses made up of $1.7 million in interest and changes in derivative liabilities, $0.6 million in depreciation and amortization, and $2.2 million in stock compensation.




Liquidity and Capital Resources
 
 We have experienced net losses of $8.5 million and $9.8 million for the years ended December, 2010 and 2009, respectively. At December 31, 2010, we had $0.35 million in cash. We currently collect cash receipts from operations through Cord and both of our subsidiaries, Biocordcells and Stellacure. Cash flows from operations are not currently sufficient to fund operations in combination with these corporate expenses. During the period we eliminated $3.7 million of notes payable, through equity issuances.
 
 Net cash used in operating activities increased approximately $2.5 million from the prior comparative year to $4.4 million. The increase was a result of the $0.3 million towards the acquisition of Bio, $0.6 million in operating assets and liabilities, and $0.4 million in non-controlling interest. Net cash provided by financing activities increased approximately $1.5 million from the prior comparative year to $4.5 million. This increase was due to the issuance of notes payable amounting to $4.2 million. During the year, cash and cash equivalents decreased approximately $0.4 million from the prior comparative year to $0.3 million.




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Since inception, we have financed cash flow requirements through the issuance of common stock and warrants for cash, services and repayments on 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 could, 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.





Financial Condition and Results Of Operations as of December 31, 2010





As of December 31, 2010, our total assets were $7.4 million as compared to $5.2 million as of December 31, 2009, or an increase of approximately 42%. A portion of this increase, or $0.8 million, is due to the acquisition of Stellacure and Biocordcell. Additionally these aquisitions, provided for an additional $0.3 million of accounts receivable, $0.1 million of property and equipment, and $0.3 million of goodwill.





As of December 31, 2010, total liabilities increased approximately 28% to $6.6 million as compared to approximately $5.2 million as of December 31, 2009. This increase is primarily due to the acquisition of Stellacure and Biocordcell, which added $1.7 million, compounded by a decrease in Cord’s total liabilities of approximately $0.2 million. Cord’s accounts payable have decreased by approximately $0.3 million, or 38% to $0.4 million. Our derivative liability has decreased approximately $2.2 million to $0.2 million. During the year, our notes payable have increased approximately $2.0 million to $2.2 million.





At December 31, 2010, we had a working capital deficit of approximately $4.6 million. We will continue to carry a deficit until such time, if ever, that we can increase our assets and reduce our significant liabilities which are currently composed of notes payable, derivatives liability, accounts payable, accrued expenses, and deferred revenues.





Off-Balance Sheet Arrangements




We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.




Recent Accounting Pronouncements





In September 2009, the FASB amended ASC 860, (formerly SFAS No. 166, Accounting for Transfers of Financial Assets, and an amendment to SFAS No. 140). ASC 860 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. ASC 860 is effective for fiscal years beginning after November 15, 2009. The adoption of ASC 860 did not have a material impact on our condensed consolidated financial statements.





In September 2009, the FASB amended ASC 810 (formerly Statement of Financial Accounting Standards No.167, Amendments to FASB Interpretation No. 46(R)). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. ASC 810 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The adoption of ASC 810 did not have a material impact on our financial statements.





In August 2009, the FASB issued ASU 2009-15, which changes the fair value accounting for liabilities. These changes clarify existing guidance that in circumstances in which a quoted price in an active market for the identical liability is not available, an entity is required to measure fair value using either a valuation technique that uses a quoted price of either a similar liability or a quoted price of an identical or similar liability when traded as an asset, or another valuation technique that is consistent with the principles of fair value measurements, such as an income approach (e.g., present value technique). This guidance also states that both a quoted price in an active market for the identical liability and a quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 input fair value measurements. This ASU became effective for us on January 1, 2010. Adoption of this ASU did not have a material impact on our condensed consolidated financial statements.




26





In January, 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. The standard amends ASC Topic 820, Fair Value Measurements and Disclosures to require additional disclosures related to transfers between levels in the hierarchy of fair value measurement. The standard does not change how fair values are measured. The standard is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of ASU 2010-06 did not have a material impact on our condensed consolidated financial statements.





In October 2009, the FASB issued authoritative guidance on multiple-deliverable revenue arrangements. This new guidance amends the existing criteria for separating consideration received in multiple-deliverable arrangements and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables based on their relative selling price. The guidance establishes a hierarchy for determining the selling price of a deliverable which is based on vendor-specific objective evidence, third-party evidence, or management estimates. Expanded disclosures related to multiple-deliverable revenue arrangements are also required. This guidance is effective for the Company beginning fiscal year 2011, with early adoption permitted. Upon adoption, the guidance may be applied either prospectively from the beginning of the fiscal year for new or materially modified arrangements, or it may be applied retrospectively.  The Company does not anticipate there will be a material impact on our consolidated financial statements upon adoption of this guidance.




ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.




None




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





Our consolidated financial statements and supplemental schedule and notes thereto as of December 31, 2010 and 2009, and for each of the two years then ended, together with the independent registered public accounting firm’s reports thereon, are set forth on pages F-1 to F-23of this Annual Report.





ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.





None.





ITEM 9A.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"). Our management, including our chief executive officer and our chief financial officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2010. Following this review and evaluation, management collectively determined that our disclosure controls and procedures are 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.





The deficiency in our disclosure controls and procedures is related to a lack of segregation of duties due to the size of the accounting department and the lack of experienced accountants due to the limited financial resources of the Company. We continue to actively search for additional capital in order to be in position to remediate this lack of segregation of duties.





Changes in Internal Control over Financial Reporting





There were no significant changes in the Company's internal controls over financial reporting or in other factors 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.




27





Management’s Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over our financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.





Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





We assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. 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, 2010, our internal control over financial reporting was not effective.





Based on its evaluation, the Company's Chief Executive Officer and Chief Financial Officer identified a major deficiency that existed in the design or operation of our internal control over financial reporting that it considers to be a “material weakness”. The Public Company Accounting Oversight Board has defined a material weakness as a “significant deficiency or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will note be prevented or detected.”  The material weakness was first identified at the beginning of 2007 and remained unchanged through December 31, 2010.





The deficiency in our internal control is related to a lack of segregation of duties due to the size of the accounting department and the lack of experienced accountants due to the limited financial resources of the Company.  We continue to actively search for additional capital in order to be in position to add the necessary staff to address this material weakness. We are also assessing how we can improve our internal control over financial reporting with the current number of employees in an effort to remediate this lack of segregation of duties.





ITEM 9B.    OTHER INFORMATION





None.





PART III




ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.




The following table sets forth the names and positions of our executive officers and directors. Our directors are elected at our annual meeting of stockholders and serve for one year or until successors are elected and quality.  Our Board of Directors elects our officers, and their terms of office are at the discretion of the Board, except to the extent governed by an employment contract.





Our directors, executive officers and other significant employees, their ages and positions are as follows:




Name

Age

Position with the CompanyMatthew L. Schissler

39

Chairman and Chief Executive OfficerJoseph R. Vicente

48

Director and Chief Operating OfficerTimothy McGrath

46

Director




Matthew L. Schissler is one of our founders and has served as Chairman of the Board and Chief Executive Officer since January 2003. From April 2001 until January 2003, Mr. Schissler was the President and Chief Executive Officer of Rain, an advertising agency which he founded. From 1994 through March 2001, Mr. Schissler held various management sales positions at TMP Worldwide, Inc., a personnel staffing company.




Joseph R. Vicentehas been a director of the Company since April 2004.  Mr. Vicente has occupied different positions at the Company since November 2004, serving most recently as Chief Operation Officer. From July 2002 through October 2004, Mr. Vicente was an independent consultant where he provided strategic consulting services to organizations on acquisitions, operational practices and efficiencies, and sales management.  From July 1993 through April 2002, he was a Senior Vice President at TMP Worldwide, Inc. where he held various strategic, operational, and sales management positions.




Timothy McGrath has been a director of the Company since March 2006. Mr. McGrath has served in an executive capacity for the past twelve years. Mr. McGrath is currently serving as a consultant to two small start-up businesses. From January 2006 to February 2008 Mr. McGrath served as the Vice President of Finance and Accounting at BioE, Inc.  From October 1999 through September 2005 Mr. McGrath served as Vice President and Chief Financial Officer of Orphan Medical, Inc.




28





Involvement In Certain Legal Proceedings




None of our officers, directors, promoters or control persons has been involved in the past five years in any of the following:




(1)
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;




(2)
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);




(3)
Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or




(4)
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.




Committees; Audit Committee Financial Expert.




Our board has an Audit Committee made up solely of Timothy McGrath.





Our Board of Directors has determined that Cord Blood has one Audit Committee financial expert, Mr. McGrath, On April 6, 2006; the board adopted its written Audit Committee charter.





Compliance with Section 16(a) of the Exchange Act




Section 16(a) of the Securities Exchange Act of 1934 requires that our officers and directors, and persons who own more that ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the Securities and Exchange Commission and with any exchange on which the Company's securities are traded. Officers, directors and persons owning more than ten percent of such securities are required by Commission regulation to file with the Commission and furnish the Company with copies of all reports required under Section 16(a) of the Exchange Act. To our knowledge, based solely upon our review of the copies of such reports furnished to us, during the fiscal year ended December 31, 2010, all Section 16(a) filing requirements applicable to our officers and directors were complied with.





Code of Ethics




We adopted a Code of Ethics on April 13, 2005 that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Ethics was attached as Exhibit 14.1 to our registration statement filed on Form SB-2 on May 2, 2005.





Changes in Nominating Procedures





None.




ITEM 11. EXECUTIVE COMPENSATION.







The Company accrued or paid compensation to the executive officers as a group for services rendered to the Company in all capacities during the 2010 and 2009 fiscal years as shown in the following table.




29




SUMMARY COMPENSATION TABLE


Overview




The following is a discussion of our program for compensating our named executive officers and directors. Currently, we do not have a compensation committee, and as such, our Board of Directors is responsible for determining the compensation of our named executive officers.




Compensation Program Objectives and Philosophy




The primary goals of our policy of executive compensation are to attract and retain the most talented and dedicated executives possible, to assure that our executives are compensated effectively in a manner consistent with our strategy and competitive practice and to align executives compensation with the achievement of our short- and long-term business objectives.




The board of directors considers a variety of factors in determining compensation of executives, including their particular background and circumstances, such as their training and prior relevant work experience, their success in attracting and retaining savvy and technically proficient managers and employees, increasing our revenues, broadening our product line offerings, managing our costs and otherwise helping to lead our Company through a period of rapid growth.




In the near future, we expect that our board of directors will form a compensation committee charged with the oversight of executive compensation plans, policies and programs of our Company and with the full authority to determine and approve the compensation of our chief executive officer and make recommendations with respect to the compensation of our other executive officers. We expect that our compensation committee will continue to follow the general approach to executive compensation that we have followed to date, rewarding superior individual and company performance with commensurate cash compensation.




Elements of Compensation




Our compensation program for the named executive officers consists primarily of base salary. There is no retirement plan, long-term incentive plan or other such plans, although Mr. Schissler’s agreement has a bonus plan, subject to the Board’s discretion.  The base salary we provide is intended to equitably compensate the named executive officers based upon their level of responsibility, complexity and importance of role, leadership and growth potential, and experience.




Base Salary




Our named executive officers receive base salaries commensurate with their roles and responsibilities. Base salaries and subsequent adjustments, if any, are reviewed and approved by our board of directors annually, based on an informal review of relevant market data and each executive’s performance for the prior year, as well as each executive’s experience, expertise and position. The base salaries paid to our named executive officers in 2010 are reflected in the Summary Compensation Table below.




Stock-Based Awards under the Equity Incentive Plan




We provide equity awards as a component of compensation.  Our Stock Option Plan permits the granting of stock options to its employees, directors, consultants and independent contractors for up to eighty million shares of our common stock. We believe 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.




Employment Agreements




On July 16, 2008, CBAI entered into a 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 base salary increases for each successive year, subject to approval by the Board of Directors. It also provides for an annual bonus, payable at the discretion of the Board of Directors, equal to thirty percent of the Employee’s prior year base salary. It also provided him with the immediate issuance of 7,500,000, five-year options to acquire restricted shares of the Company’s common shares at an exercise price of $0.01 per share, These options vest twenty-five percent immediately, and twenty-five percent annually thereafter. It also provided Mr. Schissler with the payment of an inducement bonus of 1,000,000 restricted shares of the Company’s common shares. In July, 2009, as a bonus for current and past services rendered, the Company awarded 241,096,000 options to purchase common stock, 50% of which vested immediately and the other 120,548,000 to be vested over the next four years. Mr. Schissler is subject to non-competition and confidentiality requirements. CBAI may terminate Mr. Schissler's Executive Agreement at any time without cause. In such event, no later than the Termination Date specified in the Termination Notice (both as defined in the Executive Agreement), CBAI shall pay to Mr. Schissler an amount in cash equal to the sum of his Compensation determined as of the date of such Termination Notice through the remaining term of the Executive Agreement. In December, 2009, Mr. Schissler was awarded an additional 242,929,000 options to purchase common stock, 50% of which vested immediately and the other 121,464,500 to vest at December 31, 2010. On July 1, 2010, the Company awarded a total of 30,937,178 options to purchase common shares to Matthew Schissler, to compensate him for both past services and future services, 50% of which vested immediately.





30




On July 16, 2008, CBAI entered into a three-year agreement with Mr. Joe Vicente, who serves as the Company’s Chief Operating Officer, which is renewable annually thereafter, which provides for a base salary of $115,000 the first year, with five percent base salary increases for each successive year, subject to approval by the Board of Directors. It also provides for 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. It also provided him with the immediate issuance of 7,500,000, five-year options to acquire restricted shares of the Company’s common shares at an exercise price of $0.01 per share, These options vest twenty-five percent immediately, and twenty-five percent annually thereafter. It also provided Mr. Vicente with the payment of an inducement bonus of 1,000,000 restricted shares of the Company’s common shares. In July, 2009, as a bonus for current and past services rendered, the Company awarded 120,548,000 options to purchase common stock, 50% of which vested immediately and the other 60,274,000 to be vested over the next four years. In December, 2009, Mr. Vicente was awarded an additional 121,464,500 options to purchase common stock, 50% of which vested immediately and the other 60,732,250 to vest at December 31, 2010. On July 1, 2010, the Company awarded a total of 15,468,690 options to purchase common shares to Joseph Vicente, to compensate him for both past services and future services, 50% of which vested immediately.




Retirement Benefits




We have adopted a tax-qualified employee savings and retirement plan, the 401(k) Plan, for eligible U.S. employees, including our named executive officers. Eligible employees may elect to defer a percentage of their eligible compensation in the 401(k) Plan, subject to the statutorily prescribed annual limit.After six months of service with the Company, we match dollar for dollar up to 3%, and then 50 cents on the dollar up to a maximum of 4% match. All contributions are times fully vested. We intend the 401(k) Plan, and the accompanying trust, to qualify under Sections 401(k) and 501 of the Internal Revenue Code so that contributions by employees to the 401(k) Plan, and income earned (if any) on plan contributions, are not taxable to employees until withdrawn from the 401(k) Plan, and so that we will be able to deduct our contributions, if any, when made. The trustee under the 401(k) Plan, at the direction of each participant, may invest the assets of the 401(k) Plan in any of a number of investment options.




Perquisites




Historically, we have not provided our named executive officers with any perquisites and other personal benefits. We do not view perquisites as a significant element of our compensation structure, but do believe that perquisites can be useful in attracting, motivating and retaining the executive talent for which we compete. It is expected that our historical practices regarding perquisites will continue and will be subject to periodic review by our by our board of directors.





The following table sets forth the compensation paid to our chief executive officer and our one other highly compensated executive officer for each of our last two completed fiscal years. No other officer received compensation greater than $100,000 for either fiscal year.





Summary Compensation Table





Name and  Position

Year

Salary ($)


Bonus ($) (1)


Option Awards ($) (2)


All Other

Compensation ($)


Total ($)StMatthew L. SchisslerPrChairman and Chief Executive Officer

2010


177,581



51,975



125,579



0



355,1352009


165,586



25,000



3,395,507



0



3,586,093Joseph Vicente

2010


123,769



44,563



62,790



0



231,122Chief Operating Officer

2009


112,848



21,900



1,697,754



0



1,832,502





(1)
Bonuses to the named executive officers reported above relating to 2010 were paid in July 2010. Bonuses to the named executive officers reported above relating to 2009 were paid in December 2009. Mr. Schissler’s bonuses were paid to Pyrenees Consulting, LLC.





(2)
The values shown in this column represent the aggregate grant date fair value of equity-based awards granted during the fiscal year, in accordance with ASC 718, “Share Based-Payment”. The fair value of the stock options at the date of grant was estimated using the Black-Scholes option-pricing model, based on the assumptions described in Note 10 of the Notes to Financial Statements included in this Annual Report.





Outstanding equity awards at fiscal year end.





The following table sets forth information with respect to the outstanding equity awards of our principal executive officers and principal financial officers during 2010, and each person who served as an executive officer of Cord Blood as of December 31, 2010:




31





2010 Grants of Plan-Based Awards





Name

Grant Date

All Other

Option Awards

(# of Cord

Shares)


Exercise Price of

Option Awards

($/Share)


Grant Date

Fair Value of

Option Awards

($)St Matthew L. Schissler

07/01/2010


30,937,178


$
0.005


$
125,579Chairman  and Chief Executive OfficerJoseph Vicente

07/01/2010


15,468,690


$
0.005


$
62,790Chief Operating Officer





Holdings of Previously Awarded Equity


2010 Outstanding Equity Awards at Fiscal Year-End





Option AwardsNumber of Securities

Underlying Unexercised

Options (#)


Option

Exercise Price

Option

ExpirationName

Exercisable


Unexercisable


($)

DateMatthew L. Schissler


500,000






0.25

04/29/14Chairman and Chief Executive Officer


20,555






0.18

07/01/15250,000






0.18

12/31/151,600,000






0.31

09/12/15--
(3)


7,500,000



0.01

07/06/1330,137,000
(1)


90,411,000



0.003

07/13/20121,464,500







0.01

12/31/19121,464,500







0.01

12/31/1915,468,589







0.01

07/01/20--
(2)


15,468,589



.0041

07/01/20J  Joseph Vicente


50,000







0.25

04/29/14Chief Operating Officer


700,000







0.25

01/10/15250,000







0.25

08/01/15150,000







0.25

12/31/15--
(3)


7,500,000



0.01

07/06/2060,274,000







0.003

07/06/1318,068,500
(1)


45,205,500



0.003

07/13/1360,732,250







0.01

12/31/1960,732,250







0.01

12/31/197,734,345







0.041

07/01/20--
(2)


7,734,345



.0041

07/01/20





(1)
These options vest equally over four years, commencing July 13, 2010 and ending July 13, 2013.


(2)
These options vest in their entirety on July 1, 2011.


(3)
These options vest in their entirety on July 16, 2011.




32





Option Exercises and Stock Vested




On June 1, 2010 and June 25, 2010, Matthew Schissler exercised 50,782,350 and 29,984,810 options respectively.





COMPENSATION OF DIRECTORS





Director Compensation for year ending December 31, 2010





The following table sets forth with respect to the named director, compensation information inclusive of equity awards and payments made in the year ended December 31, 2010.





Name

Fees Earned

or Paid in

Cash

($)


Stock

Awards

($)


Option

Awards

($)


Non-Equity

Incentive Plan

Compensation

($)


Nonqualified

Deferred

Compensation

Earnings

($)


All Other

Compensation

($)


Total

($)(a)

(b)


(c)


(d)


(e)


(f)


(g)


(h)Matthew Schissler


--


$
10,000
(1)


--



--



--



--


$
10,000Timothy McGrath


--


$
10,000



--



--



--



--


$
10,000Joseph R. Vicente


--


$
10,000
(1)


--



--



--



--


$
10,000





(1) These stock awards were awarded in their capacity as directors. They also received additional stock option awards in their capacity as executive officers (see first table in Item 10 above).





On January 26, 2006 the Company’s board of directors approved a board compensation plan through 2011. Shares issued as compensation for one year of service in 2010 are based on the closing stock price of the last business day of 2009, divided by $10,000.





Compensation Committee Interlocks and Insider Participation





We did not have a compensation committee during the year ended December 31, 2010. During the fiscal year ended December 31, 2010, none of our executive officers served on the Board of Directors of any entities whose directors or officers serve on our Board of Directors.




ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS




SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The following table sets forth information as of March 15, 2011, except as otherwise noted, with respect to the beneficial ownership of our common stock and is based on 6,815,696,764 shares of common stock issued and outstanding and entitled to vote as of said date as to:




●
Each person known by the Company to own beneficially more than five percent of our issued and outstanding common stock;




●
Each director and prospective director of the Company;




●
The Company’s Chief Executive Officer and each person who serves as an executive officer of the Company; and All executive officers and directors of the Company as a group.




Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned.




33




Title Of Class

Name And Address

Of Beneficial Owner (1)

Amount And Nature

Of Beneficial

Ownership (2)


Approximate

Percent of

Class (%)Common

Matthew L. Schissler


309,462,823
(3)


4.54
%Common

Joseph Vicente


152,766,365
(4)


2.24
%Common

Timothy G. McGrath


9,066,615



*
%Common

All executive officers and directors as a group (3 persons)


471,295,803



6.91
%


———————


*
Less than 1% of the outstanding common stock.




(1)
Except as noted above, the address for the above identified officers and directors of the Company is c/o Helm Drive, Las Vegas, NV 89119. Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants, or convertible debt currently exercisable or convertible, or exercisable or convertible within 60 days of March 15, 2011 are deemed outstanding for computing the percentage of the person holding such option or warrant. Percentages are based on a total of 6,815,696,764 shares of common stock outstanding on March 15, 2011 and shares issuable upon the exercise of options, warrants exercisable, and debt convertible on or within 60 days of March 15, 2011, as described above. The inclusion in the aforementioned table of those shares, however, does not constitute an admission that the named shareholder is a direct or indirect beneficial owner of those shares. Unless otherwise indicated, to our knowledge based upon information produced by the persons and entities named in the table, each person or entity named in the table has sole voting power and investment power, or shares voting and/or investment power with his or her spouse, with respect to all shares of capital stock listed as owned by that person or entity.




(3)
Includes 290,905,144 currently exercisable options held by Mr. Schissler, and 5,568,920 shares and 22,962,625 options held by Stephanie Schissler, Mr. Schissler’s wife. Mr. Schissler disclaims beneficial ownership of the shares beneficially owned by his wife. Percentage calculation considers additional outstanding of the potential options listed herein.




(4)
Includes 208,541,345 currently exercisable options held by Mr. Vicente. Percentage calculation considers additional outstanding of the potential options listed herein.





ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.




Certain Relationships and Related Transactions





On July 1, 2008, we entered into a one-year consulting agreement with Stephanie Schissler, who is the spouse of our CEO, Matthew Schissler. The agreement entitles Ms. Schissler to a monthly retainer and stock option incentives for her services in relation to strategic corporate planning and other business related matters. On January 1, 2010 the agreement was renewed for another 12 months with a retainer of $12,500 per month. The agreement automatically renews for a further term of six months, unless a 60-day written notice of cancellation is provided by Pyrenees Consulting, or a 180-day written notice is provided by CBAI.




Director Independence





Mr. McGrath is independent as that term is defined under the NASDAQ Marketplace Rules.





ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.




Rose, Snyder, Jacobs, serves as our independent registered public accounting firm and audited our financial statements for the years ended December 31, 2010 and 2009.








2010


2009Audit fees

$
101,620


$
101,455Tax Fees

$
13,080


$
10,260Total

$
114,700


$
111,715





The Audit Committee pre-approves all audit and non-audit services performed by the Company’s auditor and the fees to be paid in connection with such services in order to assure that the provision of such services does not impair the auditor’s independence.




34





PART IV




ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.




The following documents are filed as a part of this report or incorporated herein by reference:





(1)
Our Consolidated Financial Statements are listed on page F-1 of this Annual Report.(2)
Financial Statement Schedules.





None





(3)
Exhibits:





The following documents are included as exhibits to this Annual Report:





EXHIBIT

DESCRIPTION2.0

Form of Common Stock Share Certificate of Cord Blood America, Inc. (1)3.1

Amended and Restated Articles of Incorporation of Cord Blood American, Inc. (1)3.2

Articles of Amendment to Articles of Incorporation (38)3.1

Amended and Restated Bylaws of Cord Blood America, Inc. (1)3.2

Articles of Amendment to the Articles of Incorporation of Cord Blood America, Inc. (40)10.0

Patent License Agreement dated as of January 1, 2004 between PharmaStem Therapeutics, Inc. and Cord Partners,    IInc. (2)10.1

Web Development and Maintenance Agreement dated March 18, 2004 by and between Gecko Media, Inc. and Cord Partners, Inc. (1)10.2

Stock Option Agreement dated April 29, 2004 by and between Cord Blood America, Inc. andMatthew L. Schissler(1)10.3

Stock Option Agreement dated April 29, 2004 by and between Cord Blood America, Inc. and Joseph R. Vicente (1)10.4

Stock Option Agreement dated April 29, 2004 by and between Cord Blood America, Inc. and Gecko Media, Inc. (1)10.5

License Agreement by and between Cord Partners, Inc. and Premier Office Centers, LLC (2)10.6

Purchase and Sale of Future Receivables Agreement between AdvanceMe, Inc. and Cord Partners, Inc. (2)10.7

Promissory Note dated August 12, 2004 made by Cord Blood America, Inc. to the order of Thomas R. Walkey (2)10.8

Loan Agreement dated September 17, 2004 by and between Cord Blood America, Inc. and Thomas R. Walkey (3)10.9

Promissory Note dated January 17, 2005 made by CBA Professional Services, Inc. to the order ofJoseph R. Vicente (4)10.10

Exchange Agreement dated February 28, 2005 by and between Cord Blood America, Inc. andCareer Channel, Inc. ( 5)10.10

Standby Equity Distribution Agreement dated March 22, 2004 between Cornell Capital Partners, LP and Cord   Blood America, Inc. (6)10.12

Placement Agent Agreement dated March 22, 2005 between Newbridge Securities Corporation, Cornell Capital   Partners, LP and Cord Blood America, Inc. (6)10.13

Registration Rights Agreement dated March 22, 2004 between Cornell Capital Partners, LP and Cord Blood America, Inc. (6)10.14

Escrow Agreement dated March 22, 2004 between Cord Blood America, Inc., Cornell Capital Partners, LP and David Gonzalez, Esq. (6)10.15

Promissory Note to Cornell Capital Partners for $350,000 (7)10.16

Warrant for 1,000,000 shares of common stock to Cornell Capital Partners (7)10.17

Pledge and Escrow Agreement with Cornell Capital Partners (7)10.18

Exchange Agreement with Family Marketing Inc. (8)10.19

Amended and Restated Promissory Note with Cornell Capital Partners for $600,000 (9)10.20

Amendment Agreement to a Promissory Note with Cornell Capital Partners (10)10.21

Promissory Note to Cornell Capital Partners for $500,000 (11)10.22

Warrant to Purchase Common Stock by Cornell Capital Partners (12)10.23

Security Agreement between Family Marketing Inc. and Cornell Capital Partners (12)10.24

Security Agreement between Career Channel Inc. and Cornell Capital Partners (12)10.25

Security Agreement between CBA Professional Services Inc. and Cornell Capital Partners (12)10.26

Security Agreement between CBA Properties Inc. and Cornell Capital Partners (12)10.27

Security Agreement between Cord Blood America Inc. and Cornell Capital Partners (12)10.28

Security Agreement between Cord Partners Inc. and Cornell Capital Partners (12)10.29

Pledge and Escrow Agreement by Cord Blood America, Inc, Cornell Capital Partners, and David Gonzalez, Esq. (12)10.30

Insider Pledge and Escrow Agreement by Cornell Capital Partners, Cord Blood America, Inc., Matthew L.   Schissler, and David Gonzalez, Esq. (12)10.31

Investor Registration Rights Agreement between Cord Blood America, Inc. and Cornell Capital Partners (12)10.32

Securities Purchase Agreement between Cord Blood America, Inc. and Cornell Capital Partners (12)10.33

Warrant to Purchase Common Stock by Cornell Capital Partners (12)10.34

Secured Convertible Debenture issued by Cord Blood America, Inc. to Cornell Capital Partners (12)10.35

Secured Convertible Debenture issued by Cord Blood America, Inc. to Cornell Capital Partners (13)


35







10.36

Amended and Restated Secured Convertible Debenture issued by Cord Blood America, Inc. to Cornell Capital  Partners (13)10.37

Termination Agreement between Cord Blood America, Inc. to Cornell Capital Partners (13)10.38

Employment Agreement dated January 1, 2006 by and between Cord Blood America, Inc. and Matthew L. Schissler (14)10.39

Consulting Agreement dated January 1, 2006 by and between Cord Blood America, Inc. and Stephanie Schissler (14)10.40

Stock Option Schedule dated January 1, 2006 by and between Cord Blood America, Inc. and Stephanie Schissler (14)10.41

Asset Purchase Agreement between Cord Partners, Inc. and Cryobank for Oncologic and Reproductive Donors, Inc. (15)10.42

Board Compensation Plan (16)10.42

Web Development and Maintenance Agreement with Gecko Media, Inc. (17)10.43

Investment Banking Agreement with Kings Pointe Capital, Inc. (18)10.44

Investment Banking Agreement with FAE Holdings, Inc. (18)10.45

Investment Banking Agreement with First SB Partners, Inc. (18)10.46

Agreement with Cornell Capital Partners, LP (19)10.47

Subscription Agreement with Strategic Working Capital Fund, L.P. (20)10.48

Promissory Note for the Benefit of Strategic Working Capital Fund, L.P. (20)10.49

Funds Escrow Agreement with Strategic Working Capital Fund, L.P. (20)10.50

Severance Agreement, dated September 8, 2006, between the Company and Sandra Anderson (21)10.51

Stock Purchase Agreement, dated September 5, 2006, between the Company and Noah Anderson (21)10.52

Asset Purchase Agreement, executed October 13, 2006, between the Company and CorCell, Inc. (22)10.53

Stock Purchase Agreement, executed October 13, 2006, between the Company and Independence Blue Cross (22)10.54

Existing Samples Purchase Agreement, executed October 13, 2006, between the Company and Independence Blue  Cross (22)10.55

Registration Rights Agreement, executed October 13, 2006, between the Company and Independence Blue Cross (22)10.56

Existing Samples Purchase Agreement, executed October 13, 2006, between the Company and CorCell, Inc. (22)10.57

Bill of Sale, executed October 13, 2006, between the Company and CorCell, Inc. (22)10.58

Assumption Agreement, executed October 13, 2006, between the Company and CorCell, Inc. (22)10.59

Trademark Assignment, executed October 13, 2006, between the Company and CorCell, Inc. (22)10.60

Non-Competition Agreement, executed October 13, 2006, between the Company and CorCell, Inc. (22)10.61

Office Sublease, executed October 13, 2006, between the Company and CorCell, Inc. (22)10.62

Employment Agreement Assignment, executed October 13, 2006, between the Company and Bruce Ditnes (22)10.63

Employment Agreement Assignment, executed October 13, 2006, between the Company and Jill Hutt (22)10.64

Employment Agreement Assignment, executed October 13, 2006, between the Company and Antonia Lafferty (22)10.65

Employment Agreement Assignment, executed October 13, 2006, between the Company and Marcia Laleman (22)10.66

Employment Agreement Assignment, executed October 13, 2006, between the Company and Marion Malone (22)10.67

Employment Agreement Assignment, executed October 13, 2006, between the Company and George Venianakis (22)10.68

Technology License Agreement, executed October 13, 2006, between the Company and Vita34AG (22)10.69

Agreement by and between Cord Blood America, Inc and Cornell Capital Partners, LP executed October 13, 2006 (23)10.70

Promissory Note dated October 23, 2006 between the Company and Bergen Regional Community Blood Services (24)10.71

Stock Pledge, Escrow and Security Agreement dated October 23, 2006 for the benefit Bergen Regional Community   Blood Services (25)10.72

Placement Agency Agreement, dated December 18, 2006, by and between the Company and Stonegate Securities, I IInc. (26)10.73

Consulting Agreement dated June 1, 2007, by and between Cord Blood America, Inc. and Midtown Partners & Co., LLC (27)10.74

Exclusive Consulting Agreement, dated May 21, 2007, by and between Cord Blood America, Inc. and Jean R. Fuselier, Sr. (27)10.75

Exclusive Consulting Agreement, dated May 21, 2007, by and between Fuselier Holding, LLC and Cord Blood  America, Inc. (27)10.76

Promissory Note in the amount of $121,500 to Stephanie Schissler (28)10.77

Promissory Note in the amount of $76,950 to Stephanie Schissler (28)10.78

Promissory Note in the amount of $25,650 to Matthew L. Schissler (28)





36




10.79

Pledge Agreement, dated September 28, 2007, between Cord Blood America, Inc., and Stephanie Schissler,  rrelating to a note in the amount of $121,500 (28)10.80

Pledge Agreement, dated September 28, 2007, between Cord Blood America, Inc., and Stephanie Schissler, rrelating to a note in the amount of $76,950 (28)10.81

Pledge Agreement, dated September 28, 2007, between Cord Blood America, Inc., and Matthew L. Schissler (28)10.82

Asset Purchase Agreement, dated August 20, 2007, among Cord Partners, Inc., Cord Blood America, Inc., and    CureSource, Inc. (29)10.83

Form of Senior Convertible Note (30)10.84

Form of Warrant to Purchase Common Stock (30)10.85

Secured Original Issue Discount Debenture, by CorCell (30)10.86

Common Stock Purchase Warrant, dated November 26, 2007, by Cord Blood America, Inc. (30)10.87

Securities Purchase Agreement, dated November 26, 2007, by and among Cord Blood America, Inc., Enable     Growth Partners LP, and the other Purchasers (30)10.88

Security Agreement, dated November 26, 2007, among Cord Blood American, Inc. and the Purchasers (30)10.89

Registration Rights Agreement, dated November 26, 2007, among Cord Blood America, Inc. and the Purchasers (30)10.90

Second Amendment, dated November 26, 2007, to the Securities Purchase Agreement, dated as of February 14,   22007, as amended by the First Amendment, dated as ofApril 9, 2007, by and among CorCell, Cord Blood America, Inc., and Shelter Island (30)10.91

CorCell Security Agreement, dated as of November 26, 2007, by and between Cord Blood America, Inc., and   Shelter Island (30)10.92

Put Option Agreement, dated as of November 26, 2007, by and between Cord Blood America, Inc. and Shelter  Island (30)10.93

Subordination Agreement, dated November 26, 2007, by and between Cord Blood America, Inc., CorCell, Career Channel, Inc., the Purchasers and Shelter Island (30)10.94

Manufacturing Support Services Agreement, dated August 1, 2007, by and between Cord Blood American, Inc. and Progenitor Cell Therapy, LLC (31)10.95

Form of Sublease, dated October 1, 2006, by and between CorCell, Inc. and Cord Blood America, Inc. (31)10.96

Securities Purchase Agreement between the Company and Tangiers dated June 27, 2008 (32)10.97

Registration Rights Agreement between the Company and Tangiers dated June 27, 2008 (32)10.98

Waiver Letter, dated May 22, 2008, by and among the Company and Enable Growth Partners LP, Enable Opportunity Partners LP and Pierce Diversified Strategy Master Fund LLC, ena. (33)10.99

Fourth Amendment to Securities Purchase Agreement, dated June 3, 2008, by and among CorCell, Ltd., the  Company, Career Channel, Inc., a Florida corporation d/b/a Rainmakers International, and Shelter IslandOpportunity Fund, LLC (33)10.100

Form of Common Stock Purchase Warrant to Purchase Shares of Common Stock of the Company (33)10.101

Form of Lock-Up Agreement. (33)10.102

7% Convertible Debenture, dated October 28, 2008 (34)10.103

Amendment No. 1 to Securities Purchase Agreement, dated November 25, 2008 (35)10.104

Amendment No. 1 to Securities Purchase Agreement filed herewith dated January 22, 2009 (36)10.105

Employment Agreement between the Company and Joseph Vicente10.106

Amendment Agreement, dated as of February 20, 2009, by and among Shelter Island Opportunity Fund, LLC, Corcell Ltd. and Cord Blood America, Inc. (39)10.107

Lease for Las Vegas Facility10.108

2010 Flexible Stock Option Plan10.109

Compensatory Arrangement for Certain Officers Effective December 31, 2009, Stock Options (42)10.110

Convertible Promissory Note Executed January 6, 2010 between Cord Blood America, Inc. and JMJ     Financial (43)10.111

Entered on March 24, 2010 into Investment Agreement to Acquire Majority Interest in Stellacure (44)10.112

Convertible Promissory Note Executed March 24, 2010 between CBAI and JMJ Financial (45)10.113

Convertible Promissory Note Executed March 26, 2010 between CBAI and JMJ Financial (46)10.114

Compensatory Arrangement for Certain Officers Executed July 1, 2010. Stock Options (47)10.115

Senior Secured Note Agreement between Cord Blood America, Inc. and Shelter Island Opportunity Fund Executed July 21, 2010. (48)10.116

Executed Stock Purchase Agreement on September 20, 2010 to Acquire Majority Interest in BioCordcell Argentina, SA. (49)10.117

Entered into a Letter of Intent to Acquire Assets of Cryo-Cell De Mexico on December 3, 2010 (50)10.118

On March 20, 2011 Cord Blood America, Inc. Entered into a Note and Warrant Purchase Agreement with St. George Investments. (51)10.119

On January 12, 2011, Cord Blood America, Inc, Entered into a Convertible Promissory Note with JMJ Financial and a Liquidated Damages Agreement (52).10.120

On January 19, 2011, Cord Blood America, Inc. Entered into a Liquidated Damages Agreement with Tangiers Capital, LLC. (53)21

List of Subsidiaries (37)23.1

Consent of Independent Registered Public Accounting Firm31.1

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)





37


———————





(1)
Filed as an exhibit to Registration Statement on Form 10-SB filed on May 6, 2004.





(2)
Filed as an exhibit to Amendment No. 1 to Form 10-SB filed on August 23, 2004.





(3)
Filed as an exhibit to Amendment No. 2 to Registration Statement on Form 10-KSB filed on October 6, 2004.




(4)
Filed as an exhibit to Current Report on Form 8-K filed on January 17, 2005.




(5)
Filed as an exhibit to Current Report on Form 8-K filed on March 1, 2005.




(6)
Filed as an exhibit to Current Report on Form 8-K filed on March 28, 2005.




(7)
Filed as an exhibit to Current Report on Form 8-K filed on May 2, 2005.




(8)
Filed as an exhibit to Current Report on Form 8-K filed on May 3, 2005.




(9)
Filed as an exhibit to Current Report on Form 8-K filed on June 24, 2005.




(10)
Filed as an exhibit to Current Report on Form 8-K filed on July 7, 2005.




(11)
Filed as an exhibit to Current Report on Form 8-K filed on July 21, 2005.




(12)
Filed as an exhibit to Current Report on Form 8-K filed on September 12, 2005.




(13)
Filed as an exhibit to Current Report on Form 8-K filed on December 23, 2005.




(14)
Filed as an exhibit to Current Report on Form 8-K filed on January 6, 2006.




(15)
Filed as an exhibit to Current Report on Form 8-K filed on January 18, 2006.




(16)
Filed as an exhibit to Current Report on Form 8-K filed on February 8, 2006.




(17)
Filed as an exhibit to Current Report on Form 8-K filed on May 5, 2006.




(18)
Filed as an exhibit to Current Report on Form 8-K filed on June 1, 2006.




(19)
Filed as an exhibit to Current Report on Form 8-K filed on June 29, 2006.




(20)
Filed as an exhibit to Current Report on Form 8-K filed on August 2, 2006.





(21)
Filed as an exhibit to Current Report on Form 8-K filed on September 11, 2006.





(22)
Filed as an exhibit to Current Report on Form 8-K filed on October 13, 2006.





(23)
Filed as an exhibit to Current Report on Form 8-K filed on October 17, 2006.





(24)
Filed as an exhibit to Current Report on Form 8-K filed on October 27, 2006.





(25)
Filed as an exhibit to Current Report on Form 8-K filed on October 23, 2006.





(26)
Filed as an exhibit to Current Report on Form 8-K filed on December 29, 2006.




38




(27)
Filed as an exhibit to Current Report on Form 8-K filed on June 6, 2007.





(28)
Filed as an exhibit to Current Report on Form 8-K filed on October 3, 2007.





(29)
Filed as an exhibit to Current Report on Form 8-K filed on August 21, 2007.





(30)
Filed as an exhibit to Current Report on Form 8-K filed on November 30, 2007.





(31)
Filed as an exhibit to Registration Statement on Form SB-2 filed on December 28, 2007.





(32)
Filed as an exhibit to Current Report on Form 8-K filed on July 3, 2008.





(33)
Filed as an exhibit to Current Report on Form 8-K filed on June 3, 2008.





(34)
Filed as an exhibit to Current Report on Form 8-K filed on November 17, 2008





(35)
Filed as an exhibit to Current Report on Form 8-K filed on December 5, 2008





(36)
Filed as an exhibit to Registration Statement on Form S-1 filed on January 23, 2009





(37)
Files as an exhibit to Registration Statement on Form SB-2 filed on January 25, 2008




(38)
Filed as exhibit to Current Report on Form 8-K filed on August 29, 2008




(39)
Filed as an exhibit to the Current Report on Form 8-K filed on February 26, 2009




(40)
Filed as an exhibit to the Current Report on Form 8-K filed on March 31, 2009




(41)
Filed as an exhibit to Current Report on Form S-8 filed on December 30, 2009




(42)
Filed as an exhibit to Current Report on Form 8K filed on January 7, 2010





(43)
Filed as an exhibit to Current Report on Form 8K/A filed on January 12, 2010




(44)
Filed as an exhibit to Current Report on Form 8K filed on March 29, 2010




(45)
Filed as an exhibit to Current Report on Form 8K filed on March 29, 2010




(46)
Filed as an exhibit to Current Report on Form 8K filed on March 29, 2010




(47)
Filed as an exhibit to Current Report on Form 8K filed on July 7, 2010




(48)
Filed as an exhibit to Current Report on Form 8K filed on August 4, 2010




(49)
Filed as an exhibit to Current Report on Form 8K filed on September 23, 2010




(50)
Filed as an exhibit to Current Report on Form 8K filed on December 8, 2010




(51)
Filed as an exhibit to Current Report on Form 8K filed on March 21, 2011




(52)
Filed as an exhibit to Current Report on Form 8K filed on March 21, 2011




(53)
Filed as an exhibit to Current Report on Form 8K filed on March 21, 2011




39




SIGNATURES





In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 31st day of March, 2010.




CORD BLOOD AMERICA, INC.By:
/s/Matthew L. SchisslerChief Executive Officer

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)





In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.





/s/Matthew L. Schissler

March 31, 2011CEO and Chairman (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, and Director)/s/Joseph Vicente

March 31, 2011Director/s/Timothy McGrath

March 31, 2011Director




40




FINANCIAL STATEMENTS


Index to Financial Statements
 
 PageReport of Independent Registered Public Accounting Firm


F-2Consolidated Balance Sheets


F-3Consolidated Statements of Operations


F-4Consolidated Statements of Changes in Stockholders’ Equity (Deficit)


F-5Consolidated Statements of Cash Flows


F-6Notes to the Consolidated Financial Statements


F-8
 F-1
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the Board of Directors and Stockholders
 Cord Blood America, Inc.
 
 
 We have audited the accompanying consolidated balance sheets of Cord Blood America, Inc. and Subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years ended December 31, 2010 and 2009. Cord Blood America, Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
 We conducted our audits in accordance with the standards established by the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cord Blood America, Inc. and Subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for the years ended December 31, 2010 and 2009, in conformity with accounting principles generally accepted in the United States of America.
 
 The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has sustained recurring operating losses, continues to consume cash in operating activities, and has insufficient working capital and an accumulated deficit at December 31, 2010.  These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
 Rose, Snyder & Jacobs
 A Corporation of Certified Public Accountants
 
 Encino, California
 
 March 29, 2011
  F-2
 
 CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 AS OF DECEMBER 31, 2010 AND DECEMBER 31, 2009
 
 
 ASSETSCurrent assets:

December 31, 
2010


December 31,

2009Cash

$
347,258


$
716,576Accounts receivable, net of allowance for doubtful accounts of $10,000 and $70,000


540,279



174,103Prepaid expenses


141,300



--Other current assets


72,560



--Notes receivable, related party, current


300,000



--Total current assets


1,401,397



890,679Property and equipment, net of accumulated depreciation and amortization of $248,404 and $146,888


571,431



383,597Customer contracts and relationships, net of amortization of $1,949,377 and $1,477,399


5,038,582



3,848,319Notes receivable, related party


125,000



--Goodwill


244,053



--Total assets

$
7,380,463


$
5,122,595LIABILITIES AND STOCKHOLDERS’ DEFICITCurrent liabilities:Accounts payable

$
967,626


$
709,519Accrued expenses


1,338,115



120,176Deferred rent


112,231



260,367Deferred revenue


1,835,792



1,475,261Advances from stockholders


--



29,229Derivatives Liability


238,789



2,405,553Promissory notes payable, current, net of unamortized discount of $0 and $83,784


1,490,400



161,886Total current liabilities


5,982,953



5,161,991Promissory notes payable, net of unamortized discount of $251,903 and $0


651,217



--Total liabilities

$
6,634,170


$
5,161,991Stockholders’ deficit:Preferred stock, $.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding


--



--Common stock, $.0001 par value, 6,950,000,000 shares authorized, 6,283,883,175 and 4,947,735,145 shares issued and outstanding, inclusive of treasury shares


628,389



494,774Additional paid-in capital


42,892,449



34,763,094Common stock held in treasury stock, 2,000,000 shares


(599,833
)


(599,833
)Accumulated Other Comprehensive income (loss)


(551
)


--Accumulated deficit


(42,789,936
)


(34,697,431
)Total Cord Blood America stockholders’ equity (deficit)


130,518



(39,396
)Non-controlling interest


615,775



--Total stockholders’ equity (deficit)


746,293



(39,396
)Total liabilities and stockholders’ deficit

$
7,380,463


$
5,122,595
 
 See Report of the Independent Registered Public Accounting Firm and the accompanying notes to consolidated financial statements.
  F-3
  CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
 
 Year Ended December 31,2010


2009Revenue

$
4,128,439


$
3,237,183Cost of services


(1,622,046
)


(1,454,315
)Gross Profit


2,506,393



1,782,868Administrative and selling expenses


(8,310,587
)


(7,299,194
)Start-up costs


(868,844
)


--Loss from operations


(6,673,038
)


(5,516,326
)Interest expense and change in derivatives liability


(1,778,691
)


(4,252,813
)Net loss before income taxes


(8,451,729
)


(9,769,139
)Income taxes


--



--Consolidated net loss


(8,451,729
)


(9,769,139
)Non-controlling interest in income


359,224



--Net loss attributable to Cord Blood America

$
(8,092,505
)

$
(9,769,139
)Basic and diluted loss per share

$
(0.00
)

$
(0.00
)Weighted average common shares outstanding


5,419,994,236



2,479,335,673
 
 See Report of the Independent Registered Public Accounting Firm and the accompanying notes to consolidated financial statements.
  F-4
  CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
 YEARS ENDED DECEMBER 31, 2010 AND 2009
 
 Common Stock


Additional

Paid In


Treasury


Accumulated Other Comprehensive


Accumulated


Non-ControllingShares


Amount


Capital


Stock


Income


Deficit


Interest


TotalBalance at December 31, 2008


439,342,817


$
43,936


$
28,697,510


$
(12,159,833
)

$
-


$
(24,928,292
)

$
-


$
(8,346,679
)Shares issued for services


100,672,187



10,067



489,465



















499,532Shares issued for financing


325,323,972



32,532



1,217,468



















1,250,000Share-based compensation


4,550,000



455



2,929,643



















2,930,098Issuance of Common Stock for debt conversion


4,025,799,813



402,580



10,408,983



















10,811,563Warrants exercised


32,713,022



3,271



267,191



















270,462Shares issued for liquidated damages


53,333,334



5,333



961,947



















967,280Treasury shares


(34,000,000
)


(3,400
)


(11,556,600
)


11,560,000















-Reclassification of derivative liability










1,347,487



















1,347,487Net loss






















(9,769,139
)






(9,769,139
)Balance at December 31, 2009


4,947,735,145


$
494,774


$
34,763,094


$
(599,833
)

$
-


$
(34,697,431
)

$
-


$
(39,396
)Shares issued for services


80,736,596



8,074



630,090



















638,164Shares issued for cash


90,796,770



9,080



440,920



















450,000Share-based compensation


4,131,579



413



2,221,844



















2,222,257Issuance of common stock for debt conversion


1,025,832,843



102,583



3,600,479



















3,703,062Warrants exercised


42,771,971



4,277



(4,277
)


















-Options exercised


80,767,160



8,077



(8,077
)


















-Shares issued for security position


11,111,111



1,111



45,556



















46,667Reclassification of derivative liability










1,202,820



















1,202,820Acquisition of Biocordcell


























974,999



974,999Comprehensive income (loss):Net loss






















(8,092,505
)


(359,224
)


(8,451,729
)Other comprehensiveincome (loss), netof income tax provision (benefit):Foreign currency translation


















(551
)










(551
)Total comprehensive income (loss)






























(8,452,280
)Balance at December 31, 2010


6,283,883,175


$
628,389


$
42,892,449


$
(599,833
)

$
(551
)

$
(42,789,936
)

$
615,775


$
646,293
 
 See Report of the Independent Registered Public Accounting Firm and the accompanying notes to consolidated financial statements.
  F-5
  CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2010 AND 2009
 2010


2009Cash Flows from Operating ActivitiesConsolidated Net Loss

$
(8,451,729
)

$
(9,769,139
)Adjustments to reconcile net loss to net cash used in operating activitiesIssuance of stock for services


638,164



516,562Issuance of stock for position in vivicells international


46,667



--Amortization of deferred financing costs


--



648,767Amortization of loan discount


887,834



1,943,805Stock based compensation


2,222,257



2,913,068Bad debt


62,954



25,000Depreciation and amortization


587,778



590,757Change in value of derivative liability


(223,593
)


987,601Net Change in operating assets and liabilities


(658,998
)


256,954Payment for Acquisition of Biocordcell


(315,000
)


--Start-up costs for Stellacure


820,471



--Foreign currency translation


(551
)


--Net cash used in operating activities


(4,383,746
)


(1,886,625
)Cash Flows from Investing ActivitiesPurchase of property and equipment


(175,986
)


(399,138
)Loan receivable to ViviCells International, Inc.


(300,000
)


--Loan receivable to China Stem Cell, Ltd.


(125,000
)


--Cash acquired during acquisition of Biocordcell


134,643



--Net cash used in investing activities


(466,343
)


(399,138
)Cash Flows from Financing ActivitiesProceeds from the issuance of notes payable


4,160,000



1,786,025Payments on notes payable


(100,000
)


(200,441
)Payments on capital lease obligations


--



(2,589
)Net payments on advances from stockholders


(29,229
)


(84,036
)Proceeds from issuance of common stock


450,000



1,520,462Bank overdraft


--



(17,083
)Net cash provided by financing activities


4,480,771



3,002,338Net  increase (decrease) in cash and cash equivalents


(369,318
)


716,576Cash and Cash Equivalents, beginning of year


716,576



--Cash and Cash Equivalents, end of year

$
347,258


$
716,576
 
 See Report of the Independent Registered Public Accounting Firm and the accompanying notes to consolidated financial statements.
  F-6
 
 CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2010 AND 2009
 
 2010


2009Supplemental disclosure of cash flow information:Cash paid for interest

$
120,445


$
132,804Supplemental Schedule of Non-Cash Investing and Financing Activities:Issuance of debt for cancellation of warrants and put option

$
1,590,400


$
--Conversion of debt and payables into common shares

$
3,703,062


$
10,699,016
 
 See Report of the Independent Registered Public Accounting Firm and the accompanying notes to consolidated financial statements.
  F-7
 
 CORD BLOOD AMERICA, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010
 
 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. In October, 2009, CBAI re-located its headquarters from Los Angeles, California to Las Vegas, Nevada. 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.
  ●
Stellacure GmbH specializes in providing cord blood stem cell preservation services to families in Germany and Spain.
  ●
Biocordcell Argentina S.A. specializes in providing cord blood stem cell preservation to families in Argentina, Uruguay and Paraguay.
  ●
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 were formed to hold the corporate trademarks and other intellectual property of CBAI.
  ●
Rain has specialized in creating direct response television and radio advertising campaigns, including media placement and commercial production.  Management has reduced the activities of Rain, terminated its former employees, and in 2010 was no longer seeking business.  This is consistent with management’s decision to focus its attention exclusively on the stem cell storage business and related activities.
  The accompanying condensed 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 condensed 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 and Going Concern
 
 The accompanying financial statements of Cord Blood America, Inc. and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. CBAI has experienced recurring net losses from operations, which losses have caused an accumulated deficit of approximately $42.8 million as of December 31, 2010. In addition, CBAI has consumed cash in its operating activities of approximately $4.4 million for the year ending December 31, 2010 and has a working capital deficit of $4.6 million as of December 31, 2010. 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 and Securities Purchase Agreement, and expects to continue to raise funds through debt and equity instruments. CBAI is continuing to attempt to increase revenues within its core businesses and through acquiring other businesses in the stem cell industry. In addition, the Company has taken steps to reduce its overall spending through the reduction of our labor force. 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.
  F-8
 
 Basis of Consolidation
 
 The consolidated financial statements include the accounts of CBAI and its wholly-owned and majority-owned subsidiaries, Cord, Stellacure GmbH, Biocordcell Argentina S.A., BodyCells, Properties and Rain. All significant inter-company balances and transactions have been eliminated upon consolidation.
 
 Estimates
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.
 
 Accounts Receivable
 
 Accounts receivable consist of the amounts due for the processing and storage of umbilical cord blood, advertising, commercial production and internet lead generation. Accounts receivable relating to deferred revenues are netted against deferred revenues for presentation purposes. The allowance for doubtful accounts is estimated based upon historical experience. The allowance is reviewed periodically and adjusted for accounts deemed uncollectible by management. Amounts are written off when all collection efforts have failed.
 
 Property and Equipment
 
 Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Routine maintenance and repairs are charged to expense as incurred while major replacement and improvements are capitalized as additions to the related assets. Sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the related asset and accumulated depreciation accounts with any gain or loss credited or charged to income upon disposition.
 
 Intangible Assets
 
 Intangible assets consist primarily of customer contracts and relationships as part of the acquisition of the CorCell and CureSource assets in 2007 in addition to the acquisition of Biocordcell in 2010 (Note 3). Intangible assets are stated at cost. Amortization of intangible assets is computed using the sum of the years’ digits method, over an estimated useful life of 18 years. Estimated amortization expense for the next five years is as follows: 2011: $609,973; 2012: $569,252; 2013: $528,531; 2014: $487,811; 2015: $447,090.
 
 Impairment of Long-Lived Assets
 
 Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value.The Company reviews goodwill for impairment at least annually or whenever events or circumstances are more likely than not to reduce the fair value of goodwill below its carrying amount.
 
 Equity Investments
 
     Deferred Revenue
 
 Deferred revenue 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.
  F-9
 
 Valuation of Derivative Instruments
 
 ASC 815-40 (formerly 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 ASC 815-40-15 (formerly 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 December 31, 2010, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statement of operations.
 
 Revenue Recognition
 
 CBAI recognizes revenue under the provisions of ASC 605-25 (previously Staff Accounting Bulletin 104 “Revenue Recognition”). CBAI provides a combination of products and services to customers. This combination arrangement is evaluated under ASC 605-25-25 (previously Emerging Issues Task Force Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables"). ASC 605-25-25 addresses certain aspects of accounting for arrangements under multiple revenue generating activities.
 
 Cord, Stellacure and Bio recognize revenue from both enrollment fees and processing fees upon the completion of processing while revenue from storage fees are recognized ratably over the contractual storage period.
 
 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 per inquiry leads are delivered to the customer.
 
 Cost of Services
 
 Costs for Cord, Stellacure, and Bio are incurred as umbilical cord blood is collected. These costs include the transportation of the umbilical cord blood from the hospital to the lab, the labs’ processing fees, and royalties. The Company expenses costs in the period incurred. Costs for Rain include commercial production costs, lead generation costs and media buys.
 
 Advertising
 
 Advertising costs are expensed when incurred. Advertising expenses totaled approximately $193,527 and $159,000 for the years ended December 31, 2010 and 2009, respectively.
 
 Income Taxes
 
 The Company follows the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 as income in the period that included the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance based on the portion of tax benefits that more likely than not will not be realized. There was a valuation allowance equal to 100% of deferred tax assets as of December 31, 2010.
 
 The Company follows guidance issued by the FASB with regard to its accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taking authorities. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the years ended December 31, 2010 and 2009.  The Company files income tax returns with the Internal Revenue Service (“IRS”) and various state jurisdictions. For jurisdictions in which tax filings are prepared, the Company is no longer subject to income tax examinations by state tax authorities for years through 2005 and by the IRS for years through 2006.
  F-10
 
 Accounting for Stock Option Plan
 
 The Company’s share-based employee compensation plans are described in Note 10. On January 1, 2006, the Company adopted the provisions of ASC 718 (previously SFAS 123(R), “Accounting for Stock-based Compensation (Revised 2004)” (“123(R)”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, non-employee directors, and consultants, including employee stock options.  ASC 718 supersedes the Company’s previous accounting under APB 25 and SFAS 123, for periods beginning in fiscal 2006. In March 2005, the Securities and Exchange Commission issued SAB 107 relating to ASC 718. The Company has applied the provisions of SAB 107 in its adoption of ASC 718.
 
 Net Loss Per Share
 
 Net loss per common share is calculated in accordance with ASC 260 (formerly 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 5,419,994,236 and 2,479,335,673 for the years ended December 31, 2010 and 2009, 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.
 
 Concentration of Risk
 
 Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet their contractual obligations to be similarly affected by changes in economic or other conditions described below.
 
 Relationships and agreements which could potentially expose the Company to concentrations of credit risk consist of the use of one source for the processing and storage of all umbilical cord blood and one source for the development and maintenance of a website. The Company believes that alternative sources are available for each of these concentrations.
 
 Financial instruments that subject the Company to credit risk could consist of cash balances maintained in excess of federal depository insurance limits. The Company maintains its cash and cash equivalent balances with high credit quality financial institutions. At times, cash and cash equivalent balances may be in excess of Federal Deposit Insurance Corporation limits. To date, the Company has not experienced any such losses.
 
 Fair Value Measurements
 
 Assets and liabilities recorded at fair value in the 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 ASC 820-10, 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 December 31, 2010 for assets and liabilities measured at fair value on a recurring basis:
 
 Level 1


Level 2


Level 3


TotalCash

$
347,258


$
--


$
--


$
347,258Derivatives liability


--



--



(238,789)



(238,789)
 
 F-11
 
 Derivatives liability was valued under the Black-Scholes model with the following assumptions:
  Risk free interest rate
0.20% to 1.70%Expected life
0 to 4 yearsDividend Yield
0%Volatility
0% to 165%
  The following table summarizes fair value measurements by level at December 31, 2009 for assets and liabilities measured at fair value on a recurring basis:
 
 Level 1


Level 2


Level 3


TotalCash

$
716,576


$
--


$
--


$
716,576Derivatives liability


--



--



(2,405,553)



(2,405,553)
 
 Derivatives liability was valued under the Black-Scholes model, with the following assumptions:
  Risk free interest rate
0.20% to 1.70%Expected life
0 to 4 yearsDividend Yield
0%Volatility
0% to 165%
 
 The following is a reconciliation of the derivatives liability:
  Value at December 31, 2008

$
2,098,318Issuance of Instruments


668,205Increase in Value


987,601Reclassification of value ofWarrants exercised


(1,348,571
)Value at December 31, 2009

$
2,405,553Issuance of Instruments


855,903Decrease in Value


(225,913
)Reclassification of Value ofWarrants Exercised


(2,796,754
)Value at December 31, 2010

$
238,789
 
 For certain of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other assets, accounts payable and accrued expenses, and deferred revenues, the carrying amounts approximate fair value due to their short maturities. The carrying amounts of the Company’s notes receivable and notes payable approximates fair value based on the prevailing interest rates.
 
 Reclassification
 
 Certain numbers in the prior year have been reclassified to conform to the current year’s presentation.
 
 Recently Issued Accounting Pronouncements
 
 In January, 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. The standard amends ASC Topic 820, Fair Value Measurements and Disclosures to require additional disclosures related to transfers between levels in the hierarchy of fair value measurement. The standard does not change how fair values are measured. The standard is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of ASU 2010-06 did not have a material impact on our consolidated financial statements.
  F-12
 
 In October 2009, the FASB issued authoritative guidance on multiple-deliverable revenue arrangements. This new guidance amends the existing criteria for separating consideration received in multiple-deliverable arrangements and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables based on their relative selling price. The guidance establishes a hierarchy for determining the selling price of a deliverable which is based on vendor-specific objective evidence, third-party evidence, or management estimates. Expanded disclosures related to multiple-deliverable revenue arrangements are also required. This guidance is effective for the Company beginning fiscal year 2011, with early adoption permitted. Upon adoption, the guidance may be applied either prospectively from the beginning of the fiscal year for new or materially modified arrangements, or it may be applied retrospectively.  The Company does not anticipate there will be a material impact on our consolidated financial statements upon adoption of this guidance.
 
 In September 2009, the FASB amended ASC 860, (formerly SFAS No. 166, Accounting for Transfers of Financial Assets, and an amendment to SFAS No. 140). ASC 860 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. ASC 860 is effective for fiscal years beginning after November 15, 2009. The adoption of ASC 860 did not have a material impact on our condensed consolidated financial statements.
 
 In September 2009, the FASB amended ASC 810 (formerly Statement of Financial Accounting Standards No.167, Amendments to FASB Interpretation No. 46(R)). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. ASC 810 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The adoption of ASC 810 did not have a material impact on our consolidated financial statements.
 
 In August 2009, the FASB issued ASU 2009-15, which changes the fair value accounting for liabilities. These changes clarify existing guidance that in circumstances in which a quoted price in an active market for the identical liability is not available, an entity is required to measure fair value using either a valuation technique that uses a quoted price of either a similar liability or a quoted price of an identical or similar liability when traded as an asset, or another valuation technique that is consistent with the principles of fair value measurements, such as an income approach (e.g., present value technique). This guidance also states that both a quoted price in an active market for the identical liability and a quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 input fair value measurements. This ASU became effective for us on January 1, 2010. Adoption of this ASU did not have a material impact on our consolidated financial statements.
 
 Note 3. Summary of Acquisitions
 
 Stellacure GmbH
 
 In March 2010, the Company acquired 138,712 Series B Shares of Stellacure, GmbH, which represents an ownership percentage of 51%, a German Limited Liability Company that is in the business of collecting, processing, and storing cord blood samples. The purchase price paid by the Company was EUR 501,000 (approximately $660,000). Stellacure operates primarily in Germany; however, it established sales channels in Spain and Italy in 2009. The Company intends to utilize these markets for immediate market penetration and an opportunity for growth throughout Europe.
 
 In connection with the acquisition, the Company acquired the following assets and liabilities at fair value:
 
 Cash

$
466,735Accounts receivable


183,274Investments and other receivables


208,474Prepaid expenses


7,424Property and equipment**


52,302Other assets


149,036Total Assets

$
1,067,245Accounts payable

$
406,115Accrued expenses


334,994Deferred revenue


206,862Total Liabilities

$
947,971
  F-13
 Given that Stellacure has operated at a loss for the past several years, has negative working capital as of the acquisition date, and has a limited operating history, the Company determined that the fair value of any intangible assets identified as well as the non-controlling interest was $0.  As such, the Company recorded a charge of $820,471 to its consolidated statement of operations relating to the acquisition because the costs incurred in the acquisition were akin to a startup cost for the Company’s expansion into Europe.
 
 In connection with the purchase of the shares of Stellacure, the Company entered into a commitment to purchase the shares of Stellacure from the remaining holders, at the option of the holders, in either cash, shares of the Company, or a combination of both.  The commitment price is defined in the shareholder agreement and is based on a formula that considers a multiple of revenue and earnings of Stellacure. Should the Company pay the commitment price in shares of its common stock, it is required under the agreement that the holders be given stock equal to 110% of the commitment price. The commitment commences in 2012 and expires in 2014.  The Company valued this commitment as of December 31, 2010, based on the recent earnings activity of Stellacure, and determined that the value of the commitment was $0.
 
 Biocordcell Argentina S.A.
 
 In September 2010, the Company entered into a Stock Purchase Agreement (the “Agreement”), with the Shareholders of Biocordcell Argentina S.A., a corporation organized under the laws of Argentina (‘Bio”), providing for the Company’s acquisition of 50.1% of the outstanding shares of Bio (the “Shares).
 
 Under the Agreement, the Company paid $315,000 in cash at the closing, and paid an additional $410,000 in October, 2010, $150,000 of which is part of the fixed portion of the purchase price for the shares, for a total minimum purchase price of $525,000. The remaining $200,000 of this payment represents advances against the contingent payments due based on Bio’s 2010 and 2011 net income performances.
 
 The Agreement provides that the Shareholders are to be paid contingent “earn-out” compensation in 2011 based on achieving certain levels of net income in 2010; and additional contingent “earn-out” compensation in 2012 based on achieving certain levels of net income in 2011.
  The earn-out provisions are as follows for Bio’s 2010 fiscal year, which ends December 31, 2010:
  ●
If Bio net profits exceed $186,000 in 2010, the Company has agreed to pay an additional earn-out of $700,000 to the Shareholders, plus the Shareholders will retain the $100,000 payment advanced  on October 20, 2010 toward the 2010 earn-out, and the Shareholders will be entitled to be paid 20% of the amount by which 2010 Bio net income exceeds $186,000.
  ●
If Bio net profits exceed $139,500 in 2010 but do not reach $186,000, the Company has agreed to pay an additional earn-out of $700,000 to the Shareholders, plus the Shareholders will retain the $100,000 payment advanced on October 20, 2010 toward the 2010 earn-out, but will not be entitled to be paid a percentage of Bio net income.
  ●
If Bio net profits exceed $93,000 in 2010 but do not reach $139,500, the Company has agreed to pay an additional earn-out of $500,000 to the Shareholders, plus the Shareholders will retain the $100,000 payment advanced on October 20, 2010 toward the 2010 earn-out, but will not be entitled to be paid a percentage of Bio net income.
  ●
If Bio net profits do not equal $93,000 in 2010, no additional earn-out will be paid to the shareholders in 2011 for 2010, and the Shareholders are obligated to return to the Company, a sum equal the $100,000 payment advanced on October 20, 2010, toward the Shareholders’ 2010 earn-out, along with interest, but less actual net profits earned by Bio in 2010.
  F-14
  The earn-out provisions are as follows for Bio’s 2011 fiscal year, which ends on December 31, 2011:
 
 ●
If Bio net profits exceed $577,000 in 2011, the Company has agreed to pay an additional earn-out of $705,000 to the Shareholders, plus the Shareholders will retain the $100,000 payment advanced  on October 20, 2010 toward the 2011 earn-out, and the Shareholders will be entitled to be paid 20% of the amount by which 2011 Bio net income exceeds $577,000.
 
 ●
If Bio net profits exceed $432,750 in 2011 but do not reach $577,000, the Company has agreed to pay an additional earn-out of $705,000 to the Shareholders, plus the Shareholders will retain the $100,000 payment advanced on October 20, 2010 toward the 2011 earn-out, but will not be entitled to be paid a percentage of Bio net income.
 
 ●
If Bio net profits exceed $288,500 in 2011 but do not reach $432,750, the Company has agreed to pay an additional earn-out of $350,000 to the Shareholders, plus the Shareholders will retain the $100,000 payment advanced on October 20, 2010 toward the 2011 earn-out, but will not be entitled to be paid a percentage of Bio net income.
 
 ●
If Bio net profits do not equal  $288,500 in 2011, no additional earn-out will be paid to the shareholders in 2012 for 2011, and the Shareholders are obligated to return to the Company,  the $100,000 payment advanced on October 20, 2010, toward the  Shareholders’ 2011 earn-out, along with interest, but less actual net profits earned by Bio in 2010.
 
 The Agreement provides that the Shares purchased will be converted into Class Preferred A shares which in event of liquidation will have a right to a priority return of capital  equal to the purchase price paid for the Shares after the payment of all Bio creditors, and then will share pro rata in any remaining capital of Bio. The Shares are pledged by the Company to secure its performance under the Agreement, and the Company is given a first right of refusal in the even the Shareholders proposed to sell their remaining shares.
 
 In connection with the acquisition, the Company acquired the following assets and liabilities at fair value:
 
 Cash

$
134,695Accounts receivable


106,107Property and equipment**


60,204Customer contracts and relationships


1,662,242Goodwill


244,053Total Assets

$
2,223,338Accounts payable

$
30,567Accrued expenses


259,620Total Liabilities

$
290,187
 
 In connection with the acquisition of Bio, the Company recognized non-controlling interest amount of $974,999, representing its acquisition date fair value, based on management’s estimate. At the acquisition date, the Company estimated the total purchase price of Biocordcell to be $975,000. As of December 31, 2010 the Company recognized an additional $250,000 for the contingent “earn-out” compensation. It is reasonably possible that as Biocordcell’s operating results for 2011 become more apparent, the Company may have to revise their estimate of the contingent statements “earn-out” for 2011.
 
 The Stellacure and Biocordcell acquisitions, individually and in aggregate, did not meet the definition of a significant subsidiary. As such, pro-forma financial were not deemed necessary and considered immaterial.
  F-15
 
 Note 4. Property and Equipment
 
 At December 31, 2010, property and equipment consists of:
 
 Useful Life (Years)


2010


2009Furniture and fixtures


1-5


$
48,659


$
62,315Computer equipment


5



164,310



37,099Laboratory Equipment


1-5



184,427



61,307Freezer equipment


7-15



318,086



301,777Leasehold Improvements


5



104,353



67,987819,835



530,485Less: accumulated depreciation and amortization






(248,404
)


(146,888
)$
571,431


$
383,597
 
 For the years ended December 31, 2010 and 2009, depreciation and amortization expense totaled $108,089 and $46,523 respectively.
 
 Note 5. Accrued Expenses
 
 The components of accrued expenses at December 31, 2010 and 2009 are summarized as follows:
 
 2010


2009Accrued settlement costs

$
488,885


$
--Accrued Biocordcell investment


500,000



--Other accrued expenses


349,230



120,176$
1,338,115


$
120,176
 
 Note 6. Notes and Loans Payable, and Derivative Liabilities
 
 At December 31, 2010 and 2009, notes and loans payable consist of:
 
 2010


20090% Convertible Debenture payable to Enable Capital, effective interest rate of 72% per annum (considering the loan discount), due July 31, 2010


--



38,189Convertible Promissory Note Payable to JMJ Financial, secured by $1.3 million of the Company’s assets, one-time interest charge of 10.38%, due May 5, 2012


--



57,482Convertible Promissory Note Payable to JMJ Financial, secured by $1.05 million of the Company’s assets, one-time interest charge of 10%, due October 26, 2012


--



150,000Convertible Promissory Note Payable to JMJ Financial, secured by $1.5 million of the Company's assets, one time interest charge of 10.33%, due January 19, 2013


658,121Convertible Promissory Note Payable to JMJ Financial, secured by $.750 million of the Company's assets, one time interest charge of 10.67%, due April 7, 2013


99,975



--Senior  Convertible Secured Note Payable to Shelter Island Opportunity Fund, LLP, effective interest rate of 16% per annum, payable in six monthly installments of $256,067 January 2011 through September  2011


1,490,400



--Convertible Promissory Note Payable to JMJ Financial, secured by $.750 million of the Company's assets, one time interest charge of 10.67%, due October 7, 2013


145,025



--2,393,521



245,671Less: Unamortized Discount


(251,904
)


(83,784
)$
2,141,617


$
161,887
 
 Note 7. Notes Receivable, Related Parties
 
 At December 31, 2010 and 2009, notes receivable consist of:
 
 2010


2009Note Receivable from ViviCells International, Inc., related party, has 10% annual interest, is due March 15, 2011, and is collateralized by security interests and a super priority lien on substantially all property and assets of ViviCells and its' subsidiaries currently existing or hereafter acquired or arising.


200,000



--Note Receivable from ViviCells International, Inc., related party, has 10% annual interest, is due March 15, 2011, and is collateralized by security interests and a super priority lien on substantially all property and assets of ViviCells and its' subsidiaries currently existing or hereafter acquired or arising.


100,000



--Convertible Note Receivable from China Stem Cells, Ltd, related party, has 7% annual interest, payable semi-annually through December 10, 2011, annual principal and interest payments of $33,438 from December 10, 2012 through December 10, 2016, when the note matures, and collateralized by a debt of share charge.


125,000



--$
325,000


$
--
 
 F-16
 
 Note 8. Commitments and Contingencies
 
 Agreements
  On July 2, 2009, the Company executed a Preferred Stock Purchase Agreement and Warrant Agreement with Optimus Capital Partners, LLC, which contemplates a $7.5 million capital commitment which may be drawn down in increments in the future by the Company under certain conditions, including the filing and effectiveness of a current registration statement registering common shares issuable upon Warrant exercise and certain   common shares issued as a fee at the outset.  On November 2, 2009, the Company filed its registration statement for these common shares as required by these agreements.  However, the Company is reassessing whether to follow through with the implementation of this capital commitment.  In the mean time, on January 27, 2010, the Company elected to withdraw for the time being its registration statement filed with the SEC for these shares.
  The Company had previously entered into a series of Securities Purchase Agreements with Shelter Island Opportunity Fund, LLP (“Shelter Island”) which provided the Company various lines of credit which were drawn down and subsequently paid off in full. As part of these transactions, the Company issued to Shelter Island a Common Stock Purchase Warrant to purchase, as adjusted, 36,000,000 shares of Common Stock (the “Shelter Island Warrants”) along with a Put Option Agreement. After extensive negotiations with Shelter Island, the parties entered into a transaction on July 21, 2010, whereby the 36 million shares Warrant Agreement was canceled, and the obligation represented by the Put Option Agreement was satisfied by the Company's delivery  to Shelter Island of a new Senior Secured Note in the principal amount of $1,590,400  (the "Replacement Note"). With this agreement, the derivative liability of $1,608,658 was reduced to $1,590,400 and then reclassified on the balance sheet as a note payable of $1,590,400. The Replacement Note matures on September 30, 2011, bears interest at 16% per annum, interest only is due, for the period July 31, 2010 through January 31, 2011, and is payable in six equal monthly installments of $265,067 each, commencing January 31, 2011. The Company, at its option, may pay the principal amount due on the Replacement Note by the issuance of the holder of unregistered Company Common Stock, to be valued at an agreed conversion rate that is fixed for this purpose, subject to certain adjustments, at 85% of the market value of the Company's common stock, calculated based on the five lowest daily closing prices for the stock over certain specified 20 day periods.
  In March 2004, Cord entered into a Patent License Agreement with Pharmastem, 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 expired in 2010.
  Contingencies
  On December 16, 2010, Cryo-Cell International, Inc. (“Cryo International”) filed an action against Cord Blood America, Inc. (the “Company”) in The Sixth Judicial Circuit Court, Pinellas County, Florida alleging claims for: tortuous interference with a business relationship; misappropriate of trade secrets and confidential information in violation of the Florida Uniform Trade Secrets Act, § 688.001, Et. Seq., Fla. Stat.; dilution of trademark in violation of § 495.151, Fla. Stat.; and Common Law Unfair Competition.   Cryo International, a competitor of the Company’s, has filed the suit apparently in an effort to stop the Company’s pursuit of the acquisition of Cryo-Cell de Mexico, S.A. de C.V. (“Cryo Mexico”), for which the Company has in place a non binding Letter of Intent for acquisition.    (see Subsequent Events).  In addition, along with its Complaint, Cryo International filed an Emergency Motion for a Temporary Injunction.  In January 2011, the Company filed a Memorandum of Law in Opposition to Cryo International’s Emergency Motion for Temporary Injunction, and a Rule 1.140(b) Motion to Dismiss Cryo International’s complaint, as well as amendments to these documents.  The Emergency Motion for a Temporary Injunction, Motion to Dismiss and related filings were heard by the Court on January 14, 2011.  The Court granted the Company’s Motion to Dismiss, finding that Cryo Mexico is an indispensible party to the lawsuit and granted Cryo International leave to file an amended complaint to add Cryo Mexico as a defendant to the lawsuit and to serve Cryo Mexico with the required legal papers.  Cryo International filed an Amended Complaint on January 20, 2011.  The Amended Complaint added Cryo Mexico as a defendant to the action, asserted all of the original causes of action against the Company, and added a claim for Breach of a License Agreement against Cryo Mexico and a claim for Unfair and Deceptive Trade Practices in violation of § 501.201, Et. Seq. Fla. Stat. against Cryo Mexico and the Company.  Cryo International also filed an amended motion for temporary injunction.  In response, Defendant Cryo Mexico filed a Motion to Dismiss for Insufficiency of Service of Process and a Motion to Dismiss for Improper Forum and Lack of Personal Jurisdiction, and the Company filed a Rule 1.140(b) Motion Regarding Amended Complaint, seeking dismissal of the Amended Complaint.  The Defendants’ Motions to Dismiss and Defendant Cryo Mexico’s Motion to Quash were heard on March 14, 2011.  The Court has not yet rendered a decision as to these motions. Company management believes that there is no merit to the claims filed by Cyro International and the Company intends to vigorously defend against these claims, and there is no accrual for any potential gain or loss in connection with this litigation in accordance with ASC 450.
  F-17
  In connection with certain of the outstanding convertible promissory notes payable to JMJ Financial and in connection with a securities purchase agreement previously entered into with a third party for the purchase of common stock of the Company, the Company was obligated to deliver common shares which could be placed into the Automated System for Deposits and Withdrawals of Securities (known as “DWAC”).  As of December 14, 2010 and to date, the DWAC system is not available to Company shareholders for newly issued shares of the Company’s common stock.  This resulted in a breach of the convertible promissory notes payable to JMJ Financial and the securities purchase agreement.  As a result of the breach of the promissory notes and in exchange for JMJ to fund additional sums to the Company, on February 8, 2011, the Company entered into a settlement agreement calling for liquidated damages and compensation for the additional funding in the amount of $671,386 to be added on to the principal balance of the outstanding convertible promissory notes payable. In accordance with ASC450, the Company has accrued $338,886, which was estimated to be the portion of the settlement allocated to the liquidated damages resulting from the breach of contract on December 14, 2010. As a result of the breach of the securities purchase agreement, on January 19, 2011, the Company entered into a settlement agreement with the third party calling for liquidated damages to be calculated and paid based on a % of the value of the Company’s common stock over a period of time less (a) the value received by the third company in their subsequent sale of the Company’s shares and less (b) the value of the shares the third party holds at the date the DWAC system becomes available, based on the value of the Company’s shares on such date. Payments under this agreement are due monthly and a final payment due ten days after the DWAC system becomes available. In accordance with ASC 450, the Company has accrued $150,000 in connection with this Settlement Agreement.  The Company is unable to estimate the additional range of loss in connection with this agreement and as a result has not accrued for a related loss contingency at December 31, 2010.
 
 Employment Agreements
 
 On July 16, 2008, CBAI entered into a 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 base salary increases for each successive year, subject to approval by the Board of Directors. It also provides for an annual bonus, payable at the discretion of the Board of Directors, equal to thirty percent of the Employee’s prior year base salary. It also provided him with the immediate issuance of 7,500,000, five-year options to acquire restricted shares of the Company’s common shares at an exercise price of $0.01 per share, These options vest twenty-five percent immediately, and twenty-five percent annually thereafter. It also provided Mr. Schissler with the payment of an inducement bonus of 1,000,000 restricted shares of the Company’s common shares. In July, 2009, as a bonus for current and past services rendered, the Company awarded 241,096,000 options to purchase common stock, 50% of which vested immediately and the other 120,548,000 to be vested over the next four years. Mr. Schissler is subject to non-competition and confidentiality requirements. CBAI may terminate Mr. Schissler's Executive Agreement at any time without cause. In such event, no later than the Termination Date specified in the Termination Notice (both as defined in the Executive Agreement), CBAI shall pay to Mr. Schissler an amount in cash equal to the sum of his Compensation determined as of the date of such Termination Notice through the remaining term of the Executive Agreement. In December, 2009, Mr. Schissler was awarded an additional 242,929,000 options to purchase common stock, 50% of which vested immediately and the other 121,464,500 to vest at December 31, 2010. On July 1, 2010, the Company awarded a total of 30,937,178 options to purchase common shares to Matthew Schissler, to compensate him for both past services and future services, 50% of which vested immediately.
  On July 16, 2008, CBAI entered into a three-year agreement with Mr. Joe Vicente, who serves as the Company’s Chief Operating Officer, which is renewable annually thereafter, which provides for a base salary of $115,000 the first year, with five percent base salary increases for each successive year, subject to approval by the Board of Directors. It also provides for 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. It also provided him with the immediate issuance of 7,500,000, five-year options to acquire restricted shares of the Company’s common shares at an exercise price of $0.01 per share, These options vest twenty-five percent immediately, and twenty-five percent annually thereafter. It also provided Mr. Vicente with the payment of an inducement bonus of 1,000,000 restricted shares of the Company’s common shares. In July, 2009, as a bonus for current and past services rendered, the Company awarded 120,548,000 options to purchase common stock, 50% of which vested immediately and the other 60,274,000 to be vested over the next four years. In December, 2009, Mr. Vicente was awarded an additional 121,464,500 options to purchase common stock, 50% of which vested immediately and the other 60,732,250 to vest at December 31, 2010. On July 1, 2010, the Company awarded a total of 15,468,690 options to purchase common shares to Joseph Vicente, to compensate him for both past services and future services, 50% of which vested immediately.
  F-18
  Operating Leases
  CBAI leases office space in Las Vegas, NV and Santa Monica, CA under non-cancelable operating leases expiring in 2014 and 2012, respectively. The lease for the facility in Las Vegas has two options to renew for an additional five years each, extending the term to 2024. In October 2010, CBAI entered into a non-cancelable sub-lease agreement to sub-lease the vacated facility in Santa Monica, CA, through the end of the lease term, in 2012. Commitments for future minimum rental payments, by year, and in the aggregate, to be paid (and received) under such operating leases as of December 31, 2010, are as follows:
  Rent to be paid


Rent to be Received


Net Rent to be Paid2011


275,570



62,972



212,5982012


251,139



56,675



194,4642013


154,082



--



154,0822014


118,142



--



118,142Total

$
798,933



119,647



679,286
 
 Total rent expense for 2010 and 2009 under the operating leases amounted to $308,406 and $170,266 respectively.
 
 Employee Benefit Plan
 
 The Company has a Savings and Retirement 401K Plan covering substantially all of its employees. The Company makes a matching contribution dollar for dollar up to 3% of compensation, and then 50% up to a maximum 4% match. The Company’s contributions to the Plan for the years ended December 31, 2010 and 2009 were $7,687 and $10,000, respectively.
 
 Compensation of the Board of Directors
 
 On January 26, 2006, CBAI's Board of Directors approved a Board Compensation Plan (the “Plan”) effective through 2011. The Plan calls for all Board members to receive shares of the Company’s common stock to be issued as compensation for 2006 and 2007, in an amount equal to $10,000 per year. Since Mr. Neeson resigned in January, 2009, he did not receive any compensation. Shares issued as compensation for one year of service in 2010 were be based on $10,000 divided by the closing stock price on the last business day of 2009.
 
 Note 9. Related Party Transactions and Commitments
 
 Related Party Transactions
  In March, of 2010 the Company acquired pursuant to a License Agreement, a 10% non dilutable interest in what became, in December 2010, China Stem Cells, Ltd., a Cayman Islands Company (hereinafter "Cayman"), which indirectly holds a 100% capital interest in AXM Shenyang, a company organized to conduct a Stem Cell lStorage Business in China. In exchange for issuance of an equity interest in Cayman, under the terms of the Transfer of Technology Agreement the Company agreed to provide technology transfer, knowhow and training in the setup, marketing and operation of the China Stem Cell Storage business. In connection with the License Agreement, the Company will receive royalties equal to 8.5% of "Net Revenues" realized from the China Stem Cell Storage business, over the 15 year term of the agreement, with certain minimum annual royalty's payable beginning in 2011.
 
 In December the Company also acquired the option to provide up to $750,000 of additional capital funding to Cayman through the purchase of Cayman Secured Convertible Promissory Notes and attached Cayman Warrants to acquire its Common Stock.  Other Cayman shareholders were granted similar options, with the intent of raising the aggregate up to $1.5 million in additional capital for Cayman and its subsidiaries.
 
 As of March, 2011, Cord Blood has exercised this option in part, provided a total of $500,000 in additional capital to Cayman, and received Cayman Secured Convertible Promissory Notes for this sum along with 100 Cayman Warrants.  The Secured Convertible Promissory Notes are convertible into Cayman stock at a conversion price of $1,500 per share, subject to certain adjustments.  The Warrants have a five year term and are exercisable at an option exercise price of $0.05 per share per share, subject to certain adjustments.  As of March, 2011, other shareholders of Cayman have exercised options with similar terms, provided $500,000 in additional capital to Cayman, and are entitled to similar Cayman Secured Convertible Notes and to be issued an aggregate of 100 Cayman Warrants.
  F-19
 
 On May 5, 2010, the Company executed and funded a Debtor-In-Possession loan agreement with ViviCells International, Inc. a Florida corporation (“Vivi” or the “Debtor”), NeoCells, Inc., an Illinois corporation, and AdultCells, Inc., an Illinois corporation, (jointly and severally referred to as the “Subsidiaries”), for $200,000 secured by  a super priority lien on the Debtor’s assets.  As additional consideration for this loan, the Company received 21% of the Debtor’s outstanding Common Stock.  The $200,000 loan carries interest at 10% per annum, with principal and all accrued interest all due and payable on March 15, 2011.   In September 2010, the Company acquired an approximately $800,000 secured obligation of the Debtor held by a junior lien holder in  ViviCell’s bankruptcy proceeding, in exchange for the private issuance of 11,111,111 restricted shares of its Common stock  to the holder of this secured obligation. On October 20, 2010, the Company filed  as a co-proponent  proposed a Plan of Reorganization for Vivi under the United States Bankruptcy Code, pursuant to which the Company proposed to acquire an additional 74% of the outstanding shares of Vivi, which would give it in total of approximately  95% ownership in ViVi, in exchange for the issuance of up to 64,488,889 shares of the Company’s common stock, and the Company’s agreement to make an additional senior secured loan in the amount of $300,000 to Vivi as working capital upon consummation of the Plan. Between June 16, 2010 and December 14, 2010, the Company accelerated the date of its loan commitment, and loaned $100,000 out of the proposed $300,000 loan amount to Vivi in advance on Plan confirmation, secured under the super priority lien.   On February 16, 2011, a hearing on Confirmation of this proposed plan of reorganization was heard and approved.   The plan is scheduled to be Effective as of April 1, 2011, but Vivi has subsequently announced it would be unable to supply the full 94% plus ownership of Vivi’s outstanding capital stock to the Company as required under the Plan.  The Company has advised Vivi that unless the full 94% plus ownership of Vivi capital stock can be delivered to the Company as required under the Plan, the Company will be forced to withdraw from the Plan and pursue its rights to foreclose as the holder of a super priority lien against all Vivi assets.
 
 Consulting Agreement
  On July 1, 2008, CBAI entered into a one-year consulting agreement with Pyrenees Consulting, LLC., a business owned by Stephanie Schissler, CBAI's former President and Chief Operating Officer. Ms. Schissler is the spouse of the Company's Chief Executive Officer. The agreement entitles Ms. Schissler to a monthly retainer and stock option incentives for her services in relation to strategic corporate planning and other business related matters. On January 1, 2010 the agreement was renewed for another 12 months with a retainer of $12,500 per month. The agreement automatically renews for a further term of six months, unless a 60-day written notice of cancellation is provided by Pyrenees Consulting, or a 180-day written notice is provided by CBAI.
  Note 10. Stock Option Plan
 
 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. On July 13, 2009, the Company registered its 2009 Flexible Stock Plan, which increases the total shares available to 400 million common shares. The agreement allows the Company to issue either stock options or common shares from this Plan.
  On March 2, 2010, the Company awarded a total of 20,000,000 options to purchase common shares to Stephanie Schissler, to compensate her for both past services and future services.
  On June 1, 2010 and June 25, 2010, Matthew Schissler exercised 50,782,350 and 29,984,810 options respectively.
  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.
  F-20
  The Company’s stock option activity was as follows:
  Stock Options


Weighted Average Exercise Price


Weighted Avg. Contractual Remaining LifeOutstanding, January 1, 2009


23,308,140



0.07



5.5Granted


725,965,000



0.01Exercised


-



-



-Forfeited/Expired


-



-



-Outstanding, December 31, 2009


749,273,140



0.01



7.3Granted


66,405,868



0.01Exercised


80,767,160



-



-Forfeited/Expired


39,780,840



-



-Outstanding, December 31, 2010


695,131,008



0.01



7.30Exercisable at December 31, 2010


523,885,787



0.01



7.30
 
 The following table summarizes significant ranges of outstanding stock options under the stock option plan at December 31, 2010:
  Range of

Exercise Prices


Number of Options


Weighted Average

Remaining

Contractual Life

(years)


Weighted Average

Exercise

Price


Number of

Options

Exercisable


Weighted Average

Exercise

Price$
0.0033 — 0.20



690,328,560



7.46


$
0.008



579,083,334


$
0.010$
0.21 — 0.30



3,012,600



3.87



0.250



3,012,600



0.250$
0.31 — 0.51



1,789,848



4.69



0.312



1,789,848



0.312695,131,008



7.44


$
0.010



583,885,782


$
0.010
 
 A summary of the activity for unvested employee stock options as of December 31, 2010 and changes during the year is presented below:
 
 Weighted Average

Grant Date Fair

Value per Share2010


2009


2010


2009Nonvested at January 1,


372,393,750



13,962,500


$
0.01


$
0.01Granted


66,405,868



726,037,500



0.01



0.01Vested


(147,006,392
)


(367,606,250
)


0.01



0.01Exercised


(80,713,160
)


--



0.01



--Cancelled


(39,834,840
)


--



0.01



--Pre-vested forfeitures


--



--



--



--Nonvested at December 31,


171,245,226



372,393,750


$
0.01


$
0.01
 
 The total compensation cost related to non-vested options amounts to $941,480.
  F-21
 
 Note 11. Warrant Agreements
 
 A summary of warrant activity since January 1, 2009 is as follows:
  On July 2, 2009, the Company executed a Preferred Stock Purchase Agreement with Optimus Capital Partners, LLC, which also entitled them to a five-year conditional warrant to purchase 1,446,428,571 of the Company’s Common Stock at $0.007 per share.
  On September 23, 2009, the Company issued a Promissory Note for $200,000 to Joseph Schottland along with 54,200,542 three-year warrants at $0.0037 per share.
  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.
  On October 10, 2009, Cornell, a warrant holder, exercised their right to purchase 1,263,920 shares of the Company's Common Stock at $0.35 per share, on a cashless basis.
  On January 14, 2010, Schottland, a warrant holder, exercised their right to purchase 42,771,971 shares of the company's Common Stock at $0.0037 per share, on a cashless basis.
  The following table summarizes the warrants outstanding and exercisable at September 30, 2010:
  WARRANTS OUTSTANDING


EXERCISE PRICE

MATURITY DATE15,729,730


$
0.101

02/14/20124,000,000


$
0.101

02/14/20122,916,667


$
0.037

11/26/20123,796,950


$
0.037

11/26/20129,655,531


$
0.1875

05/30/201311,428,571


$
0.037

06/23/2012Total 47,527,449
 
 Note 12. Income Taxes
 
 The Company has loss carryforwards that it can use to offset a certain amount of taxable income in the future. The loss carryforwards are subject to significant limitations due to change in ownership. The Company is currently analyzing its amount of loss carryforwards, but has recorded a valuation allowance for the entire benefit due to the uncertainty of its realization.
  F-22
 
 Note 13. Stockholders’ Equity
 
 Preferred Stock
  CBAI has 5,000,000 shares of $.0001 par value preferred stock authorized. On July 2, 2009, the Company executed a Preferred Stock Purchase Agreement with Optimus Capital Partners, LLC, which contemplates a secured $7.5 million capital commitment which may be drawn down in increments through the “put” to the Fund of newly issued Series A Preferred Stock, subject to meeting certain conditions.  At the same time, a Warrant Agreement was executed, granting Optimus CGII, Ltd. the right to acquire 1,446,428,571 Common shares at an exercise price of $0.008 per share, subject to certain adjustments. See note 8.
  The Stock Purchase Agreement provides that up to 750 shares of Series A Preferred stock, par value $0.0001 may be “put” to the Fund at a purchase price of $10,000 per share over a period of time, provided its conditions are met. The Series A Preferred stock would accrue dividends at the rate of 10% per annum, preclude other dividends until it is paid, and have a liquidation preference equal to $10,000 plus all accrued but unpaid dividends. The Series A Preferred would be redeemable after four years at a redemption price of equal to $10,000 plus all accrued but unpaid dividends (or earlier if certain additional premiums are paid). The Series A Preferred Stock would not be publicly traded.
  Conditions precedent to utilizing this line of credit include the filing and effectiveness of a current registration statement registering  common shares issuable upon Warrant exercise and certain  common shares issued as a fee at the outset.  On November 2, 2009, the Company filed its registration statement for these common shares as required by these agreements.  However, the Company is re assessing whether to follow through with the implementation of this capital commitment.  In the mean time, on January 27, 2010, the Company elected to withdraw for the time being its registration statement filed with the SEC for these shares.
  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.
  On January 14, 2010, a warrant holder exercised a portion of their warrants, or 42,771,971 shares at an exercise price of $0.0037, exercised on a cashless basis.
  On June 1, 2010, the CEO exercised a portion of his options, or 50,782,350 shares at an exercise price of $0.0033, exercised on a cashless basis.
  On June 25, 2010, the CEO exercised a portion of his options, or 29,984,810 shares at an exercise price of $0.0033, exercised on a cashless basis.
  As of December 31, 2010 CBAI had 6,283,883,175 shares of Common Stock outstanding. 2,000,000 shares remain in the Company's treasury.
  F-23
  Note 14. Segment Reporting
 
 Guidance issued by the FASB 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 year ended December 31, 2010:
  Umbilical








Radio/ TV


Segment





Condensed ConsolidatedCord Blood


Stellacure


Biocordcell


Advertising


Total


Eliminations


TotalRevenue from External Customers

$
3,248,023


$
450,187


$
430,229


$
-


$
4,128,439


$
-


$
4,128,439Interest Expense and Change inDerivatives Liability


1,727,172



26,497



25,022



-



1,778,691



-



1,778,691Depreciation and Amortization


563,086



17,419



7,273



-



587,777



-



587,778Segment Income (Loss)


(6,947,884
)


(746,232
)


12,858



-



(7,681,258
)


(461,247
)


(8,142,505
)Segment Assets

$
6,851,443


$
347,686


$
457,019


$
-


$
7,656,148


$
(257,185
)

$
7,398,963
 The table below presents certain financial information by business segment for the year ended December 31, 2009:
  Umbilical

Cord Blood


Radio/

Television

Advertising


Segments

Total


Consolidated

TotalRevenue from External Customers

$
3,036,325


$
200,858


$
3,237,831


$
3, 237,183Interest Expense and change in derivative liability


4,279,147



3,666



4,252,813



4,252,813Depreciation and Amortization


570,757







570,757



570,757Segment Income (Loss)


(9,707,645
)


(61,494
)


(9,769,139
)


(9,769,139
)Segment Assets

$
5,122,595


$
-


$
5,122,595


$
5,122,595
 
 Note 15. Subsequent Events
 
 On January 12, 2011, the Company issued a $1,050,000 “Convertible Promissory Note” to JMJ Financial (“JMJ”), a private investor (the “2011 Note”).    The 2011 Note bears interest in the form of a onetime interest charge of 10%, payable with the Note’s principal amount on the maturity date, January 12, 2014.  All or a portion of the 2011 Note principal and interest is convertible at the option of JMJ from time to time, into shares of the Company’s common stock, originally fixed at a per share conversion price equal to 85% of the average of the 5 lowest traded prices for the Company’s common stock in the 20 trading days previous to the effective date of each such conversion.  At the same time, JMJ issued and delivered to the Company, a  “Secured & Collateralized Promissory Note” dated January 12, 2011, (the “JMJ Note”), which served as sole consideration to the Company for the Company’s issuance of  the 2011 Note to JMJ.   The JMJ Note is in the principal amount of   $1,000,000,  bears interest in the form of a onetime interest charge of 10.5%, and interest is payable with the JMJ Note’s principal on its maturity date, January 12, 2014..  The JMJ Note is secured by JMJ assets in the form of money market fund or similar equivalent having a value of at least $1,000,000.
  F-24
 
 Under a previous outstanding Convertible Promissory Note having similar terms as described above and issued to JMJ and funded by JMJ in the amount of approximately $1,750,000 (the “Earlier Notes”), the Company was obligated to deliver common shares which could be placed into the  Automated System for Deposits and Withdrawals of Securities (known as “DWAC”).  At present the DWAC system is not available to Company shareholders for newly issued shares of the Company’s common stock.  As a result of this breach, on February 8, 2011, the Company entered into a settlement agreement with JMJ which contained the following term, among others, which the Company agreed to pay $671,385 in liquidated damages to JMJ and in consideration for an additional $1 million of financing from JMJ said to be added to the principal amount of an earlier note.  In connection with the DWAC system not being available, the company was also in breach of a securities purchase agreement with a third party.  Settlement with this third party was reached on January 19, 2011.  See Note 8.
 
 On January 24, 2011, the Company entered into a Stock Purchase Agreement to acquire up to 51% of the capital stock in VidaPlus, an umbilical cord processing and storage company headquartered in Madrid, Spain.  The Agreement is organized into three tranches; the first executed at closing with an initial investment of 150,000 Euro for an amount equivalent to 7% as follows; 1% of share capital in initial equity and 6% from a loan convertible into equity within 12 months of closing.  The initial investment is secured by a Pledge Agreement on 270 VidaPlus samples that are incurring annual storage fees.  The second tranche provides the opportunity for an additional 28% in share capital through monthly investments based on the number of samples processed in that month (up to a maximum of 550,000 EUR).  Converting the investments from a loan into equity for tranche two will take place every 12 months, and the obligation will have been met in full after 1,000 samples have been processed and stored.  The third tranche follows a similar loan to equity agreement as tranche two but for an additional 16% equity at the option of the Company (up to a maximum of 550,000 EUR).  VidaPlus contracts through Stellacure and their relationship with the German Red Cross for their processing and storage.  The second and third tranches contain conditional components for funding to continue from CBAI including payments to Stellacure by Vida to be current with previously agreed to terms between the parties. The Company believes that further support of a key channel partner to Stellacure provides additional opportunities for expansion throughout Europe.
 
 On February 24, 2011, the Company acquired the following assets; 593 umbilical cord blood samples and all related file documents, four (4) cryogenic storage tanks, and two computers from Reproductive Genetics Institute, Inc. (RGI) for $76,000 in cash.  In March 2011, the assets acquired were relocated to the Company’s Las Vegas laboratory.
  On March 10, 2011, Cord Blood America, Inc. (the "Company") entered into a Note and Warrant Purchase Agreement (the "Purchase Agreement") with St. George Investments, LLC, an Illinois limited liability company (the "Investor") whereby the Company issued and sold, and the Investor purchased: (i) Secured Convertible Promissory Notes of the Company in the principal amount of $1,105,500 (the "Company Note") and (ii) a Warrant to purchase common stock of the Company (the "Warrant").  The Investor paid $250,000 in cash as an initial payment to the Company and executed and delivered six separate “Secured Buyer Notes” (the “Buyer Notes”), as consideration in full for the issuance and sale of the Company Note and Warrants.
  The principal amount of the Company Note is $1,105,500 ("Maturity Amount") and the Company Note is due 48 months from the issuance date of March 10, 2011.  The Company Note has an interest rate of 6.0%, which would increase to a rate of 12.0% on the happening of certain Trigger Events, including but not limited to: a decline in the 10-day trailing average daily dollar volume of the common shares in the Company’s primary market to less than $30,000.00 of volume per day at any time; the failure by the Company or its transfer agent to deliver Conversion Shares (defined in the Company Note) within 5 days of Company’s receipt of a Conversion Notice (defined in the Company Note).  The total amount funded (in cash and notes) at closing will be $1,000,000, representing the Maturity Amount less an original issue discount of $100,500.00 and the payment of $5,000 to the Investor to cover its fees, with payment consisting of $250,000 advanced at closing and $750,000 in a series of six secured convertible Buyer Notes of $125,000.00 each.  The Buyer Notes are secured by an Irrevocable Standby Letter of Credit (“Letter of Credit”).
  The Investor has also received a five year warrant entitling it to purchase 139,925,374 shares of common stock of the Company at an exercise price of $.00179.The warrant also contains a net exercise or cashless exercise provision.
 F-25