-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OvNc1EFLt62faqnhzRBk4HGS+5qtLX7mxlbplZZrkZO0eAC/rWGQ+tLJgf1j7an0 dhtK5q3zD0bTEwWZaVYnPw== 0001001277-00-000156.txt : 20000516 0001001277-00-000156.hdr.sgml : 20000516 ACCESSION NUMBER: 0001001277-00-000156 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: THERMOGENESIS CORP CENTRAL INDEX KEY: 0000811212 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 943018487 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-72035 FILM NUMBER: 630465 BUSINESS ADDRESS: STREET 1: 3146 GOLD CAMP DRIVE CITY: RANCHO CORDOVA STATE: CA ZIP: 95670 BUSINESS PHONE: 9168585100 MAIL ADDRESS: STREET 1: 3146 GOLD CAMP DRIVE CITY: RANCHO CORDOVA STATE: CA ZIP: 95670 FORMER COMPANY: FORMER CONFORMED NAME: INSTA COOL INC OF NORTH AMERICA DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2000. Commission File Number: 0-16375 ---------------------------------- THERMOGENESIS CORP. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Delaware 94-3018487 ------------------------ ------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 3146 Gold Camp Drive Rancho Cordova, CA 95670 (916) 858-5100 --------------------------------------------------- (Address, including zip code, and telephone number, including area code, of principal executive offices) Securities registered pursuant to section 12(b) of the Act: NONE Securities registered pursuant to section 12(g) of the Act: Name of each exchange Title of each class on which registered ----------------------------- ------------------------ Common Stock, $.001 Par Value Nasdaq SmallCap Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No The number of shares of the registrant's common stock, $.001 par value, outstanding on April 25, 2000 was 24,769,584. 2 THERMOGENESIS CORP. INDEX Page Number ----------- Part I Financial Information Item 1. Financial Statements (Unaudited): Balance Sheets at March 31, 2000 and June 30, 1999..................................3 Statements of Operations for the Three and Nine months ended March 31, 2000 and 1999...........................................................................5 Statements of Cash Flows for the Nine months ended March 31, 2000 and 1999....................................................................................6 Notes to Financial Statements...........................................................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................................10 Item 3. Quantitative and Qualitative Disclosure About Market Risk. See Management's Discussion and Analysis of Financial Condition and Results of Operations Part II Other Information Item 1. Legal proceedings........................................................................13 Item 2. Changes in Securities....................................................................13 Item 3. Default Upon Senior Securities...........................................................13 Item 4. Submission of Matters to a Vote of Security Holders......................................13 Item 5. Other Information........................................................................13 Item 6. Ehibits and Reports on Form 8-K..........................................................13 Signatures.......................................................................................14
3 PART I FINANCIAL INFORMATION THERMOGENESIS CORP. Balance Sheets (Unaudited) March 31, June 30, ASSETS 2000 1999 ------------- ------------- Current Assets: Cash and cash equivalents $ 3,565,000 $ 2,327,000 Accounts receivable, net of allowance for doubtful accounts of $95,000 ($95,000 at June 30, 1999) 747,000 1,204,000 Inventory 2,297,000 2,717,000 Other current assets 238,000 222,000 ------------- ------------- Total current assets 6,847,000 6,470,000 Equipment, at cost less accumulated depreciation of $1,685,000 ($1,216,000 at June 30, 1999) 1,160,000 1,457,000 Prepaid royalties, net of accumulated amortization of $540,000 ($499,000 at June 30, 1999) 14,000 55,000 Other assets 55,000 151,000 ------------- ------------- $ 8,076,000 $ 8,133,000 ============= =============
See accompanying notes to financial statements. 4 THERMOGENESIS CORP. Balance Sheets (continued) (Unaudited) March 31, June 30, LIABILITIES AND SHAREHOLDER'S EQUITY 2000 1999 ------------- ------------- Current liabilities: Accounts payable $ 377,000 $ 639,000 Accrued payroll and related expenses 194,000 236,000 Accrued liabilities 351,000 539,000 ------------- ------------- Total current liabilities 922,000 1,414,000 Commitments and contingencies --- --- Shareholders' equity: Series B convertible preferred stock, 4,080 shares authorized, 4,040 issued and outstanding 1,000 --- Series A convertible preferred stock, 1,200,000 shares authorized; 166,000 issued and outstanding (884,000 at June 30, 1999) 1,000 1,000 Preferred stock, $.001 par value; 795,920 shares authorized; no shares issued and outstanding --- --- Common stock, $.001 par value; 50,000,000 shares authorized; 24,769,584 issued and outstanding (18,925,669 at June 30, 1999) 25,000 21,000 Paid in capital in excess of par 42,744,000 37,442,000 Accumulated deficit (35,617,000) (30,745,000) ------------- ------------- Total shareholders' equity 7,154,000 6,719,000 ------------- ------------- $ 8,076,000 $ 8,133,000 ============= =============
See accompanying notes to financial statements. 5 THERMOGENESIS CORP. Statements of Operations (Unaudited) Three Months Ended Nine Months ended March 31, March 31, 2000 1999 2000 1999 ------------- ------------ ------------ ------------- Net revenues $ 927,000 $ 866,000 $ 3,188,000 $ 3,290,000 Cost of revenues 879,000 1,031,000 3,345,000 3,619,000 ------------- ------------ ------------ ------------- Gross profit (loss) 48,000 (165,000) (157,000) (329,000) ------------- ------------ ------------ ------------- Expenses: General and administrative 436,000 794,000 1,393,000 2,171,000 Sales and service 503,000 471,000 1,627,000 1,217,000 Research and development 309,000 513,000 1,171,000 1,507,000 Interest 4,000 16,000 12,000 113,000 ------------- ------------ ------------ ------------- Total expenses 1,252,000 1,794,000 4,203,000 5,008,000 Interest income 25,000 31,000 49,000 52,000 ------------- ------------ ------------ ------------- Net loss ($1,179,000) ($1,928,000) ($4,311,000) ($5,285,000) ============= ============ ============ ============= Per share data: Net loss ($1,179,000) ($1,928,000) ($4,311,000) ($5,285,000) Preferred stock discount 245,000 1,467,000 558,000 3,764,000 ------------- ------------ ------------ ------------- Net loss to common stockholders ($1,424,000) ($3,395,000) ($4,869,000) ($9,049,000) ============= ============ ============ ============= Basic and diluted net loss per share ($.06) ($0.18) ($.23) ($.48) ============= ============ ============ ============= Shares used in computing per share data 22,522,703 19,033,888 21,454,858 18,963,201 ============= ============ ============ =============
See accompanying notes to financial statements. 6 THERMOGENESIS CORP. Statements of Cash Flows Nine months ended March 31, Cash flows from operating activities: 2000 1999 ------------- ------------- Net loss ($4,311,000) ($5,285,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 510,000 506,000 Amortization of stock and options issued for services 45,000 92,000 Net change in operating assets and liabilities: Accounts receivable 457,000 333,000 Inventory 420,000 (89,000) Other current assets (16,000) 7,000 Other assets 96,000 (48,000) Accounts payable (262,000) (330,000) Accrued payroll and related expenses (42,000) (97,000) Accrued liabilities (188,000) 26,000 ------------- ------------- Net cash used in operating activities (3,291,000) (4,885,000) ------------- ------------- Cash flows used in investing activities: Capital expenditures (172,000) (64,000) ------------- ------------- Cash flows from financing activities: Issuance of convertible preferred stock 3,709,000 6,228,000 Exercise of stock options and warrants 992,000 4,000 ------------- ------------- Net cash provided by financing activities 4,701,000 6,232,000 ------------- ------------- Net increase in cash and cash equivalents 1,238,000 1,283,000 Cash and cash equivalents at beginning of period 2,327,000 1,975,000 ------------- ------------- Cash and cash equivalents at end of period $ 3,565,000 $ 3,258,000 ============= =============
See accompanying notes to financial statements 7 THERMOGENESIS CORP. Notes to Financial Statements March 31, 2000 (Unaudited) 1. Interim Reporting The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ended June 30, 2000. Summary of Significant Accounting Policies On December 3, 1999, the SEC staff issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition." The Company is currently assessing the impact, if any, that the SAB will have on its revenue recognition policy. The Company's existing revenue recognition policy is to recognize revenue at the time the customer takes title to the product, generally at the time of shipment. The SAB could require the Company to recognize revenue upon installation of the BioArchive System. The effect of the change, if any, must be recognized as a cumulative effect of a change in accounting no later than the quarter ending September 30, 2000. At the current time, it is not possible to determine the effect this change will have on the results of operations of the Company. Inventory Inventory consisted of the following at: March 31, 2000 June 30, 1999 -------------- ------------- Raw materials $ 1,203,000 $ 1,330,000 Work in process 307,000 363,000 Finished goods 787,000 1,024,000 -------------- ------------- $ 2,297,000 $ 2,717,000 ============== ============= 8 THERMOGENESIS CORP. Notes to Financial Statements (Continued) March 31, 2000 (Unaudited) Series B Convertible Preferred Stock On December 22, 1999, and January 4, 2000 the Company completed a private placement of 4,040 shares of Series B Convertible Preferred Stock ("Series B") raising an aggregate of $4,040,000, before direct expenses. The significant features of the Series B are as follows: Voting Rights - The holders of shares of Series B have no general voting rights other than as accorded by law under certain circumstances that effect Series B holders. Liquidation Rights - In the event of liquidation or dissolution of the Company, the Series B stockholders are entitled to priority over common stockholders and in parity with Series A holders with respect to distribution of Company assets or payments to stockholders. The liquidation distribution is equal to $1,000 per share plus any accrued and unpaid dividends. Dividends - Dividends at the rate of $60 per annum per share of Series B are payable in cash or, at the Company's option, may be added to the value of the Series B subject to conversion and to the $1,000 per share liquidation preference. Conversion Rights - The Series B is currently limited in conversion to a maximum of 4,236,000 shares. However, the current conversion price is a fixed conversion price of $2.2719 which represents the average market price of the Company's common stock for the ten days prior to the issuance of the Series B. Commencing on June 22, 2000, the conversion price will be adjusted on such date and every six months thereafter to be the lesser of (a) 130% of the fixed conversion price as stated above, or (b) 90% of the average market price for the ten days prior to such adjustment date. The conversion price is subject to further adjustment under certain other circumstances. Beneficial Conversion Feature - The value assigned to the beneficial conversion feature, as determined using the quoted market price of the Company's common stock on the date the Series B was sold, amounted to $777,000. Of the beneficial conversion feature, $292,000 is the amount attributed to the current conversion price and is recorded in the preferred stock discount at December 31, 1999. The remaining amount of the beneficial conversion feature, $485,000 will be amortized over the six months ended June 22, 2000, the initial reset date. The preferred stock discount for the nine months ended March 31, 2000 includes $266,000 of amortization. 9 THERMOGENESIS CORP. Notes to Financial Statements (Continued) March 31, 2000 (Unaudited) Series B Convertible Preferred Stock (continued) Redemption - If the Company is in compliance with the terms of the Series B agreements, the Company has the right at any time to redeem the Series B at a premium (generally, 120% of the $1,000 per share liquidation value plus accrued and unpaid dividends), and under certain circumstances, at the market value of the common stock into which the Series B would otherwise be convertible. Assuming the Company is in compliance with such agreements, after the third anniversary of issuance, the Company may redeem the Series B at its liquidation value plus accrued and unpaid dividends. If certain events occur which are solely within the Company's control, the holders of the Series B have the right to request that the Company repurchase all or some of their Series B at the greater of the premium or converted market value. These events include the following: There is no closing bid price reported for the Company's common stock for five consecutive trading days; The Company's common stock ceases to be listed for trading on the Nasdaq SmallCap Market; The holders of the Seris B are unable, for 30 or more days (whether or not consecutive) to sell their common stock issuable upon conversion of the Series B preferred stock pursuant to an effective registration statement; The Company defaults under any of the agreements relating to the sale of the Series B; Certain business combination events; The adoption of any amendment to the Company's Certificate of Incorporation materially adverse to the holders of the Series B without the consent of the holders of a majority of the Series B; and The holders of the Series B are unable to convert all of their shares because of limitations under exchange or market rules that require stockholder approval of certain stock issuances and the Company fails to obtain such approval. However, if any of these events occur which are not solely within the Company's control, the Company can give a Control Notice to the Series B shareholders which provides for certain adjustments to the conversion price, in lieu of the Company repurchasing the Series B shares. In addition, preferred shares are subject to certain transfer restrictions and are entitled to certain registration rights. 10 Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine months ended March 31, 2000 and 1999 The Company designs and sells medical devices which utilize its proprietary thermodynamic technology for the processing of biological substances including the cryopreservation, thawing and harvesting of blood components. During fiscal 1988 through 1999, the Company has focused on refining product design of the Thermoline(TM) (blood plasma freezers and thawers) products and developing two new technology platforms (BioArchive and CryoSeal Systems) and derivative products which utilize sterile disposable containers for processing blood components. The BioArchive system was launched at the end of fiscal 1998. Beginning in late 1993, and with accelerated research and development efforts from 1996 to 1999 totaling approximately $10 million, the Company completed development of the BioArchive and CryoSeal technology platforms. Each of the platforms will give rise to multiple medical devices targeted at a number of surgical, intravenous and external wound healing applications. Also, the Company spent approximately an additional $1 million on improvements, additional accessories and beta test site support for the new products launched to date. To achieve completion of the development and add experienced executive talent to launch the products and move the Company to new levels of growth and revenues, considerable capital resources were used. The Company is currently seeking strategic alliance partners with substantially greater financial and marketing resources than the Company in order to maximize the commercial value of the CryoSeal and BioArchive platform products. To assist in these efforts, the Company recently engaged Warburg Dillon Read LLC as financial advisors, chosen for their superior investment banking experience and analyst coverage in the field of Biomaterials. The following is Management's discussion and analysis of certain significant factors which have affected the Company's financial condition and results of operations during the period included in the accompanying financial statements. Results of Operations Net Revenues: Revenues for the three and nine months ended March 31, 2000 were $927,000 and $3,188,000 compared to $866,000 and $3,290,000 for the three and nine months ended March 31, 1999. The 7% increase for the three months ended March 31, 2000 is due to an increase in the sales of MicroCascade Plasma freezers which were introduced in March 1999. The 3% decrease in year-to-date sales is primarily due to the delay of expected orders for the BioArchive System. Six systems were sold in the nine months ended March 31, 1999, which accounted for over 30% of that period's revenues, compared to four systems and 22% of revenues in the nine months ended March 31, 2000. However, quotations requested by potential customers rose to a cumulative 47 BioArchive Systems for Cord Blood Banks in 27 countries. 11 THERMOGENESIS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine months ended March 31, 2000 and 1999 (Cont'd) Results of Operations (Cont'd) Cost of Revenues: Cost of revenues as a percent of net revenues was approximately 95% and 105% for the three and nine months ended March 31, 2000, as compared to 119% and 110% for the corresponding fiscal 1999 periods. The cost of revenues percentage decrease is due to the mix of products sold, the inventory management procedures the Company implemented over the past year and the Company's cost reduction efforts. However, cost of revenues remains higher than expected primarily due to the significant overhead costs associated with building and maintaining an infrastructure that is required to meet FDA regulatory requirements and standards for production of Class II medical devices. The Company has built up the infrastructure in anticipation of its two new products. General and Administrative Expenses: General and administrative expenses were $436,000 and $1,393,000 for the three and nine months ended March 31, 2000 compared to $794,000 and $2,171,000 for the fiscal 1999 periods, a decrease of 45% and 36%, respectively. The decreases were primarily due to personnel reductions and transferring or allocating personnel to other functions, namely sales and marketing and research and development. Sales and Service Expenses: Sales and service expenses for the three and nine months ended March 31, 2000 were $503,000 and $1,627,000 compared to $471,000 and $1,217,000 for the comparable fiscal 1999 periods, an increase of 7% and 34%, respectively. The percentage increase over the prior year declined in the third quarter as the Company focused on bringing the sales and service expenses more in line with the actual revenues produced while still funding activities to drive revenue and ensure customer satisfaction. Research and Development Expenses: Research and development expenses for the three and nine months ended March 31, 2000 were $309,000 and $1,171,000 compared to $513,000 and $1,507,000 for the corresponding fiscal 1999 periods, a decrease of 40% and 22%. These decreases are primarily due to a continuing reduction in personnel due to the transfer of the BioArchive and CryoSeal platforms to manufacturing. Even with these reductions, R&D personnel made significant advancements in finalizing the manufacturing transfer of the latest CryoSeal disposable, CP-2. The CP-2 produces both thrombin and fibrinogen (the two components of fibrin sealant) from single-donor homologous or autologous plasma donations. Liquidity and Capital Resources Working capital increased by $869,000 from June 30, 1999 to March 31, 2000. The increase was due to the net proceeds received from the Series B Convertible Preferred Stock private placement and the exercise of options and warrants. 12 THERMOGENESIS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine months ended March 31, 2000 Liquidity and Capital Resources (Cont'd) As discussed in the Notes to Financial Statements, on December 22, 1999 and January 4, 2000, the Company completed a private placement of 4,040 shares of Series B Preferred Stock, raising an aggregate of $4,040,000, before commissions and direct expenses. The Company used $3,291,000 for operations for the nine months ended March 31, 2000. This was due to lower sales volume in relationship to fixed manufacturing costs and added personnel to generate revenues. The report of independent auditors on the Company's June 30, 1999 financial statements includes an explanatory paragraph indicating there is substantial doubt about the Company's ability to continue as a going concern. The Company has developed a plan to address these issues and believes that its plan will enable the Company to continue as a going concern through the end of calendar year 2000 without additional financing. The plan includes the realization of revenues from the commercialization of new products and the reduction of certain operating expenses as required. Additionally, the Company is currently pursuing partnering relationships with large corporations in connection with the products derived from the BioArchive and CryoSeal technology platforms. The financial statements do not include any adjustments to reflect the uncertainties related to the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern. In the past, the Company has been able to obtain financing to continue its operations and product development. There is no assurance that the Company will be able to achieve additional financing or reach a strategic relationship, or that such events will be on terms favorable to the Company. The Company made the transition to the calendar year 2000 without "Year 2000" interruptions. The Company did not incur any material costs to be "Year 2000" compliant. At March 31, 2000, the Company had no significant outstanding capital commitments. Quantitative and Qualitative Disclosures About Market Risk All sales, domestic and foreign, are made in U.S. dollars and therefore currency fluctuations are believed to have no impact on the Company's net revenues. The Company has no long-term debt or investments and therefore is not subject to interest rate risk. 13 PART II - OTHER INFORMATION Item 1. Legal proceedings. In December 1998, the Company was served with a civil action entitled Metropolitan Creditors Service of Sacramento vs. THERMOGENESIS CORPORATION, Sacramento Superior Court No. 98-AS-05815. The action allegedly arises from the Company's vendor relationship with On-Time Manufacturing, Inc., and relates to several invoices totaling approximately $90,000 in the aggregate which On-Time Manufacturing, Inc. claimed were owing, and which were allegedly assigned to Metropolitan Creditors Service of Sacramento. The Company disputes the claims and filed an answer to the complaint in December 1998. In August 1999, Metropolitan Creditors Service of Sacramento sought to amend the Complaint to include additional claims for breach of contract, seeking compensatory and consequential damages in excess of $1 million. The Company proceeded to arbitration on the claims, including the breach of contract claims, and the arbitrator issued an award of $2,625 to Metropolitan Creditors Association on one invoice not encompassed by the contract, and ruled in the Company's favor on all other claims. Metropolitan Creditors Service of Sacramento rejected the arbitrator's award and elected to proceed to trial in Superior Court. In January 2000, following conversion of the On- Time bankruptcy proceeding to Chapter 7 liquidation, the Company and Metropolitan Creditors attended a judicial settlement conference, during which all claims were settled, without admission of liability by either party. The settlement has received the Bankruptcy Court approval in the On-Time bankruptcy proceeding, and the Company paid $40,000 to the bankruptcy trustee on April 27, 2000. Item 2. Changes in Securities. None. Item 3. Default Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits None. (b) Reports on Form 8-K. None. 14 THERMOGENESIS CORP. Signatures In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THERMOGENESIS CORP. (Registrant) Dated May 11, 2000 /s/ PHILIP H. COELHO ------------------------------- Philip H. Coelho Chief Executive Officer (Principal Executive Officer) /s/ RENEE RUECKER ------------------------------- Renee Ruecker Vice President of Finance (Principal Financial and Accounting Officer) EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-Q FOR THE PERIOD ENDED MARCH 31, 2000, FOR THERMOGENESIS CORP. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS JUN-30-2000 MAR-31-2000 3,565,000 0 842,000 95,000 2,297,000 238,000 2,845,000 1,685,000 8,076,000 922,000 0 0 2,000 25,000 7,127,000 8,076,000 3,188,000 3,237,000 3,345,000 3,345,000 0 32,000 12,000 (4,311,000) 0 (4,311,000) 0 0 0 (4,311,000) (0.23) (0.23)
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