-----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, J1fYtTumLwfVHvwcilkfHjepPEbQCVD3AtQgrA0poE+uw+V0T3SkWOyTi0Jw0WN1 fFtAtrNKcpk/LQEtEXhmtw== 0001001277-02-000245.txt : 20020513 0001001277-02-000245.hdr.sgml : 20020513 ACCESSION NUMBER: 0001001277-02-000245 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020513 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: 1934 Act SEC FILE NUMBER: 333-82900 FILM NUMBER: 02643261 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 form10qfor033102.txt FOR MARCH 31, 2002 U.S. SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q X Quarterly Report Pursuant to Section 13 or 15(b) of the Securities --- Exchange Act of 1934 for the quarterly period ended March 31, 2002. Commission File Number: 0-16375 THERMOGENESIS CORP. (Exact name of Registrant as specified in its character) 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(d) 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, $0.001 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, $0.001 par value, outstanding on May 1, 2002 was 35,219,496. THERMOGENESIS CORP. INDEX Page Number Part I Financial Information ----------- Item 1. Financial Statements (Unaudited): Balance Sheets at March 31, 2002 and June 30, 2001.................3 Statements of Operations for the Three and Nine months ended March 31, 2002 and 2001................5 Statements of Cash Flows for the Nine months ended March 31, 2002 and 2001......................6 Notes to Financial Statements......................................7 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations.....................9 Item 3. Quantitative and Qualitative Disclosures About Market Risk. See Management's Discussion and Analysis of Financial Condition and Results of Operations Part II Other Information Item 1. Legal Proceedings..................................................14 Item 2. Changes in Securities..............................................14 Item 3. Default Upon Senior Securities.....................................14 Item 4. Submission of Matters to a Vote of Security Holders................14 Item 5. Other Information..................................................14 Item 6. Exhibits and Reports on Form 8-K...................................14 Signatures ...................................................................15 PART I - FINANCIAL INFORMATION THERMOGENESIS CORP. Balance Sheets (Unaudited) March 31, June 30, 2002 2001 --------------- --------------- ASSETS Current Assets: Cash and cash equivalents $6,092,000 $3,544,000 Short term investments 1,000,000 1,822,000 Accounts receivable, net of allowance for doubtful accounts of $84,000 ($84,000 at June 30, 2001) 2,285,000 1,369,000 Inventory 3,082,000 1,843,000 Other current assets 98,000 96,000 --------------- --------------- Total current assets 12,557,000 8,674,000 Equipment, at cost less accumulated depreciation of $2,305,000 ($1,974,000 at June 30, 2001) 604,000 811,000 Other assets 63,000 68,000 --------------- --------------- $13,224,000 $9,553,000 =============== =============== See accompanying notes to financial statements. THERMOGENESIS CORP. Balance Sheets (continued) (Unaudited) LIABILITIES AND STOCKHOLERS' EQUITY March 31, June 30, 2002 2001 --------------- --------------- Current liabilities: Accounts payable $1,055,000 $709,000 Accrued payroll and related expenses 293,000 182,000 Deferred revenue 358,000 233,000 Accrued liabilities 690,000 452,000 --------------- --------------- Total current liabilities 2,396,000 1,576,000 Long-term portion of capital lease obligations 35,000 45,000 Commitments and contingencies Stockholders' equity: Series A convertible preferred stock, $0.001 par value, 1,200,000 shares authorized; 158,000 issued and outstanding (158,000 at June 30, 2001) -- -- Preferred stock, $0.001 par value; 800,000 shares authorized; no shares issued and outstanding -- -- Common stock, $0.001 par value; 50,000,000 shares authorized; 34,941,686 issued and outstanding (31,794,769 at June 30, 2001) 35,000 32,000 Paid in capital in excess of par 58,398,000 52,397,000 Stockholder note receivable -- (425,000) Accumulated deficit (47,640,000) (44,072,000) --------------- ---------------- Total stockholders' equity 10,793,000 7,932,000 --------------- ---------------- $13,224,000 $9,553,000 =============== ================ See accompanying notes to financial statements. THERMOGENESIS CORP. Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended March 31, March 31, 2001 2001 2002 (Restated) 2002 (Restated) ---------------- --------------- --------------- --------------- Net revenues $2,735,000 $1,703,000 $6,720,000 $4,164,000 Cost of revenues 2,101,000 1,447,000 5,211,000 3,584,000 ---------------- --------------- --------------- --------------- Gross profit 634,000 256,000 1,509,000 580,000 ---------------- --------------- --------------- --------------- Expenses: General and administrative 683,000 464,000 1,813,000 1,319,000 Selling and service 501,000 487,000 1,620,000 1,498,000 Research and development 652,000 476,000 1,708,000 1,346,000 ---------------- --------------- --------------- --------------- Total expenses 1,836,000 1,427,000 5,141,000 4,163,000 Interest expense 4,000 208,000 11,000 243,000 Interest income 6,000 30,000 75,000 89,000 ---------------- --------------- --------------- --------------- Net loss before cumulative effect of accounting change under SAB 101 ($1,200,000) ($1,349,000) ($3,568,000) ($3,737,000) Cumulative effect of accounting change under SAB 101 -- -- -- (282,000) ---------------- --------------- --------------- --------------- Net loss ($1,200,000) ($1,349,000) ($3,568,000) ($4,019,000) ================ =============== =============== =============== Per share data: Net loss before preferred stock dividend and cumulative effect of accounting change under EITF 00-27 ($1,200,000) ($1,349,000) ($3,568,000) ($4,019,000) Preferred stock dividend -- (19,000) -- (92,000) Cumulative effect of accounting change under EITF 00-27 -- -- -- (580,000) ---------------- --------------- --------------- --------------- Net loss applicable to common stockholders ($1,200,000) ($1,368,000) ($3,568,000) ($4,691,000) ================ =============== =============== =============== Basic and diluted net loss per share before cumulative effect of accounting changes ($0.04) ($0.05) ($0.11) ($0.15) Cumulative effect of accounting change under SAB 101 -- -- -- (0.01) Cumulative effect of accounting change under EITF 00-27 -- -- -- (0.02) ---------------- --------------- --------------- --------------- Basic and diluted net loss per common share ($0.04) ($0.05) ($0.11) ($0.18) ================ =============== =============== =============== Shares used in computing per share data 32,745,103 27,128,028 32,051,362 26,389,540 ================ =============== =============== =============== Pro forma amounts assuming the accounting change under SAB 101 is applied retroactively: Net loss applicable to common stockholders ($1,200,000) ($1,368,000) ($3,568,000) ($4,409,000) ================ =============== =============== =============== Basic and diluted net loss per share ($0.04) ($0.05) ($0.11) ($0.17) ================ =============== =============== ===============
See accompanying notes to financial statements. THERMOGENESIS CORP. Statements of Cash Flows Nine months ended March 31, 2002 and 2001 2002 2001 (Restated) --------------- -------------- Cash flows from operating activities: Net loss ($3,568,000) ($4,019,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation, amortization and accretion 331,000 537,000 Net change in operating assets and liabilities: Accounts receivable (916,000) (799,000) Inventory (1,239,000) 431,000 Prepaid Expenses (2,000) 44,000 Other current assets 5,000 (41,000) Accounts payable 346,000 333,000 Accrued payroll and related expenses 111,000 90,000 Deferred revenue 125,000 209,000 Accrued liabilities 238,000 71,000 --------------- -------------- Net cash used in operating activities (4,569,000) (3,144,000) --------------- -------------- Cash flows from investing activities: Capital expenditures (124,000) (201,000) Maturities of short-term investments 822,000 1,740,000 --------------- -------------- Net cash provided by investing activities 698,000 1,539,000 --------------- -------------- Cash flows from financing activities: Proceeds from short-term debt -- 2,075,000 Payments on capital lease obligations (10,000) (6,000) Exercise of stock options and warrants 141,000 316,000 Issuance of common stock 6,288,000 -- --------------- -------------- Net cash provided by financing activities 6,419,000 2,385,000 --------------- -------------- Net increase in cash and cash equivalents 2,548,000 780,000 Cash and cash equivalents at beginning of period 3,544,000 810,000 --------------- -------------- Cash and cash equivalents at end of period $6,092,000 $1,590,000 =============== ============== Supplemental cash flow information: Cash paid for interest $10,000 $6,000 =============== ============== Supplemental non-cash flow information: Issuance of stockholder note receivable -- $425,000 =============== ============== Cancellation of stockholder note receivable $425,000 -- =============== ============== See accompanying notes to financial statements THERMOGENESIS CORP. Notes to Financial Statements March 31, 2002 (Unaudited) 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. 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. 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, 2002 are not necessarily indicative of the results that may be expected for the year ended June 30, 2002. Summary of Significant Accounting Policies On December 3, 1999, the SEC staff issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," and effective July 1, 2000, the Company changed its method of accounting for revenue recognition for BioArchive systems and certain licensing agreements. Previously, the Company recognized revenue for BioArchive units upon the delivery of the equipment to the customers. The costs of training and installation were accrued in the same period the installation and training was performed and the related training and installation revenue was recognized. Under the new accounting method for BioArchive systems adopted retroactive to July 1, 2000, the Company now recognizes revenue for BioArchive systems upon completion of training and installation of the equipment at the end-user's site. Furthermore, due to business customs in Japan and the Company's interpretation of Japanese law, all significant equipment sales to Japan are recognized upon customer acceptance, which occurs after the completion of training and installation. Previously, the Company recognized revenue for licensing agreements when payment was received and the Company performed all services required under the agreements. Under the new accounting method which was adopted retroactive to July 1, 2000 for licensing agreements pursuant to which the Company receives up-front licensing fees for products or technologies that will be provided by the Company over the term of the arrangements, the Company now defers the up-front fees and recognizes the fees as revenue on a straight-line method over the term of the respective contracts. The cumulative effect of the change on prior years resulted in an increase in the net loss of $282,000 (net of income taxes of $0), which is included in the net loss before the cumulative effect of a change in accounting principle for the year ended June 30, 2001, and $13,000 has been included in deferred revenue as of June 30, 2001. The $282,000 is comprised of revenues of $664,000 less cost of revenues of $382,000. The effect of the change on the year ended June 30, 2001 was to decrease the net loss before the cumulative effect of the accounting change by $179,000 ($0.01 per share). The $179,000 is comprised of revenues of $272,000 less cost of revenues of $93,000. For the three months ended March 31, 2002 and 2001, the Company recognized $0 and $189,000 respectively, in revenue that was included in the cumulative effect adjustment as of July 1, 2000. The effect of that revenue and related cost of revenue of $0 and $121,000 was to reduce the net loss by $0 and $68,000 during those periods, respectively. For the nine months ended March 31, 2002 and 2001 the Company recognized $138,000 and $478,000 respectively, in revenue that was included in the cumulative effect adjustment as of July 1, 2000. The effect of that revenue and related cost of revenue of $125,000 and $257,000 was to reduce the net loss by $13,000 and $221,000 during those periods, respectively. The unaudited pro forma amounts presented in the statement of operations were calculated assuming the accounting change was made retroactively to prior periods. THERMOGENESIS CORP. Notes to Financial Statements (Continued) March 31, 2002 (Unaudited) Recent Accounting Pronouncements On June 29, 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 eliminates the pooling-of-interests method of accounting for business combinations. Under SFAS No. 142, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually, or more frequently if impairment indicators arise, for impairment. Intangible assets whose lives are not indefinite are amortized over their useful lives, and reviewed for impairment in accordance with SFAS No. 121. SFAS No. 141 was adopted as of July 1, 2001 and had no impact on our financial statements. We will adopt SFAS No. 142 on July 1, 2002. We do not anticipate that the adoption of SFAS No. 142 will have a significant impact on our financial statements. Inventory Inventory consisted of the following at: March 31, 2002 June 30, 2001 -------------- ------------- Raw Materials $1,760,000 $929,000 Work in process 674,000 238,000 Finished goods 648,000 676,000 -------------- ------------- $3,082,000 $1,843,000 ============== ============= Stockholders' Equity The Company completed a private financing on March 26, 2002, in which it received $7,008,620 before expenses, $500,000 of which was received after March 31, 2002. The proceeds from the offering were received from the sale of 3,504,310 shares of common stock at $2.00 per share and issued five year warrants to the purchasers representing the right to acquire an additional 700,862 shares of common stock at $3.07 per share. The warrants vest immediately. Stockholder note receivable In October 2000, the Company entered into a note receivable with the Company's Chief Executive Officer (CEO) and Chairman of the Board for $425,000. The principal amount of the note represents the amount due to the Company for the exercise of options for 200,000 shares of common stock at an exercise price of $2.13. The note was a full recourse note, bears interest at 6.3% and was due October 31, 2001. In October 2001, the CEO elected to surrender the 200,000 shares of common stock in exchange for cancellation of the note receivable. The transaction was approved by the compensation committee of the Company's board of directors. THERMOGENESIS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended March 31, 2002 and 2001 Forward-Looking Statements This report contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. When used in this report, the words "anticipate," "believe," "estimate," "expect" and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. The Company's actual results, performance or achievements could differ materially from the results expressed in, or implied by these forward-looking statements. The Company wishes to caution readers of the important factors, among others, that in some cases have affected, and in the future could affect the Company's actual results and could cause actual results for fiscal year 2002, and beyond, to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. These factors include without limitation, the ability to obtain capital and other financing in the amounts and at the times needed to complete clinical trials and product marketing for new products, market acceptance of new products, regulatory approval and time frames for such approval of new products and new claims for existing products, realization of forecasted income and expenses, initiatives by competitors, price pressures, and the risk factors listed from time to time in the Company's SEC reports, including, in particular, the factors and discussion in the Company's Form 10-K for its last fiscal year. Introduction The Company designs and manufactures medical devices and disposables used for the distributed manufacturing of biotherapeutic products such as concentrated mononuclear cells from umbilical cord blood, fibrin sealant and thrombin from blood plasma and other related blood products. Initially the Company developed its ThermoLine products for ultra rapid freezing and thawing of blood components, which the Company distributes to blood banks and hospitals. After extensive research and development, two new technology platforms (the BioArchive System and the CryoSeal System) have evolved products which provide new biotherapeutic products to patients in need. Beginning in late 1993, and with accelerated research and development efforts from 1996 to 1999, the Company completed development of the BioArchive and CryoSeal technology platforms, each of which will give rise to multiple medical products targeted at a number of different surgical and transplant indications. To achieve completion of these research projects 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 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. THERMOGENESIS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended March 31, 2002 and 2001 (Cont'd) Critical Accounting Policies The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to bad debts, inventories, warranties, contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its financial statements. The Company recognizes revenue for BioArchive systems upon completion of training and installation of the equipment at the end-user's site. For licensing arrangements pursuant to which the Company receives up-front licensing fees for products or technologies that will be provided by the Company over the term of the arrangements, the Company defers the upfront fees and recognizes the fees as revenue on a straight-line method over the term of the respective contracts. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company provides for the estimated cost of product warranties at the time revenue is recognized. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company's warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company's estimates, revisions to the estimated warranty liability would be required. The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. THERMOGENESIS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended March 31, 2002 and 2001 (Cont'd) Results of Operations Net Revenues: Revenues for the three and nine months ended March 31, 2002 were $2,735,000 and $6,720,000, compared to $1,703,000 and $4,164,000 for the fiscal 2001 periods, an increase of $1,032,000 or 61% and $2,556,000 or 61%, respectively. BioArchive revenues were $2,262,000 for the nine months ended March 31, 2002, compared to $1,017,000 for the corresponding fiscal 2001 period, an increase of $1,245,000 or 122%. There were ten BioArchive installations in the nine months ended March 31, 2002 versus six for the nine months ended March 31, 2001. The increase in installations is a result of the additional personnel moving the BioArchive customers through the sales process. Management believes, but cannot assure, that the increase in BioArchive revenues continue to reflect the market's acceptance of its product and its ability to sell more systems at prices higher than historical average selling prices. Freezer revenues were $1,342,000 and $2,271,000 for the three and nine months ended March 31, 2002, compared to $361,000 and $1,169,000 for the corresponding fiscal 2001 periods, an increase of $981,000 or 272% and $1,102,000 or 94%, respectively. The increases are primarily due to a large order received from Aventis Bio-Services, Inc. Cost of Revenues: Cost of revenues as a percent of net revenues was approximately 77% and 78% for the three and nine months ended March 31, 2002, as compared to 85% and 86% for the corresponding fiscal 2001 periods. The improvement in the cost of revenues percentage is a result of achieving higher average selling prices on the BioArchive device, disposables and accessories and the higher sales volume which absorbs more of the fixed manufacturing overhead. General and Administrative Expenses: General and administrative expenses were $683,000 and $1,813,000 for the three and nine months ended March 31, 2002 compared to $464,000 and $1,319,000 for the fiscal 2001 periods, an increase of 47% and 37%, respectively. The increases were the result of professional fees which includes the investor relations firm hired in September 2001 and additional personnel. Additionally, the Company incurred moving charges and higher facility costs. THERMOGENESIS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended March 31, 2002 and 2001 (Cont'd) Selling and Service Expenses: Selling and service expenses for the three and nine months ended March 31, 2002 were $501,000 and $1,620,000, compared to $487,000 and $1,498,000 for the comparable fiscal 2001 periods, an increase of 3% and 8%, respectively. The increase in selling and service expenses is due to higher sales commissions as a result of increasing revenues more than 60%, additional travel and trade show expenses to increase revenues in the BioArchive product line and launch the CryoSeal FS product line in Europe. Research and Development Expenses: Research and development expenses for the three and nine months ended March 31, 2002 were $652,000 and $1,708,000 compared to $476,000 and $1,346,000 for the corresponding fiscal 2001 periods, an increase of 37% and 27% respectively. The increase is primarily due to the costs associated with completing the CryoSeal FS pre-clinical trials and the initiation of the human clinical trials. Management expects the research and development line item to increase as the human clinical trials continue. Liquidity and Capital Resources At March 31, 2002, the Company had a cash balance of $6,092,000, short term investments of $1,000,000 and working capital of $10,161,000. This compares to a cash balance of $3,544,000, short term investments of $1,822,000 and working capital of $7,098,000 at June 30, 2001. The Company raised net proceeds of $6,288,000 through the private placement of common stock in March 2002 and an additional $500,000 in April 2002. The cash and short-term investments were used to fund operations and other cash needs of the Company. In addition to product revenues, we have primarily financed our operations through the private placement of equity securities. Since its inception, the Company has raised approximately $51 million, net of expenses, through common and preferred stock financings and option and warrant exercises. As of March 31, 2002, the Company has no off-balance sheet arrangements. Net cash used in operating activities for the nine months ended March 31, 2002 was $4,568,000. The expenditures were the result of completing the CryoSeal FS pre-clinical trials, initiating the human clinical trials and increasing the resources in sales, marketing and service to ensure a successful launch of the CryoSeal FS system in Europe and Canada. Accounts receivable utilized $916,000 of cash due to increasing revenues. Inventory utilized $1,239,000 of cash as a result of purchasing materials for BioArchive systems and freezers scheduled to ship in the fourth quarter to continue our revenue growth. THERMOGENESIS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended March 31, 2002 and 2001 (Cont'd) The report of independent auditors on the Company's June 30, 2001 financial statements includes an explanatory paragraph indicating there is substantial doubt about the Company's ability to continue as a going concern. The Company believes that it has developed a viable plan to address these issues and that its plan will enable the Company to continue as a going concern through the end of fiscal year 2002. The plan includes the realization of revenues from the commercialization of new products, the consummation of debt or equity financings and the reduction of certain operating expenses as required. 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. There is no assurance that the Company will be able to achieve additional financing or that such events will be on terms favorable to the Company. At March 31, 2002, the Company has $1 million outstanding in cancelable orders to purchase inventory, supplies and services for use in normal business operations and no significant outstanding capital commitments. Backlog The Company's cancelable backlog at March 31, 2002 was $1.9 million. The purchase order from Aventis Bio-Services, Inc. accounted for $1 million of the backlog. 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. PART II - OTHER INFORMATION Item 1. Legal proceedings. In the normal course of operations, the Company may have disagreements or disputes with vendors or employees. These disputes are seen by the Company's management as a normal part of business, and there are no pending actions currently or no threatened actions that management believes would have a significant material impact on the Company's financial position, results of operations or cash flows. Item 2. Changes in Securities. On March 26, 2002, the Company, pursuant to a private placement with certain institutional investors and holders of Series A Preferred with participation rights ("Private Placement") sold 3,504,310 shares of common stock at $2.00 per share and issued five year warrants representing the right to acquire an additional 700,862 shares of common stock, in the aggregate, at an exercise price of $3.07 per share, for gross proceeds of approximately $7,008,620, before deducting expenses in the offering. The Company will use the net proceeds from the offering for general corporate purposes and working capital during its human clinical trials to support the Company's claims for the CryoSeal Fibrin Sealant System. The Private Placement was made in reliance on the exemptions under Sections 4(2) and 4(6) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D, promulgated by the Securities and Exchange Commission, and comparable exemptions for sales under state securities laws. Pursuant to the terms of the offering, the Company registered the shares of common stock issued and shares of common stock issuable upon conversion of the warrants for resale by the investors. 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 A report on Form 8-K for the event dated March 26, 2002 was filed on April 5, 2002 announcing the closing of the Company's Private Placement. THERMOGENESIS CORP. Signatures In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on behalf by the undersigned thereunto duly authorized. THERMOGENESIS CORP. (Registrant) Dated May 8, 2002 s/Philip H. Coelho ------------------------------------------- Philip H. Coelho Chief Executive Officer (Principal Executive Officer) s/Renee M. Ruecker ------------------------------------------- Renee M. Ruecker Vice President of Finance (Principal Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----