Acquisition of Totipotent RX

9 Months Ended

Mar. 31, 2015

Acquisition of Totipotent RX [Abstract]

Acquisition of Totipotent RX

2. Acquisition of Totipotent RX

On February 18, 2014, the Company consummated the acquisition of TotipotentRX by merger pursuant to the Agreement and Plan of Merger and Reorganization (Merger Agreement).  TotipotentRX was a privately held biomedical technology company specializing in human clinical trials in the field of regenerative medicine and the exclusive provider of cell-based therapies to the Fortis Healthcare System.  TotipotentRX had two wholly-owned subsidiaries, TotipotentRX Cell Therapy Pvt. Ltd. (TotiRX India) and TotipotentSC Product Pvt. Ltd. (TotiSC India).  The two subsidiaries are located in Gurgaon, a suburb of New Delhi, India.  The Company believes that TotipotentRX has the depth of clinical, scientific and biological engineering experience necessary to fully engineer and effectively navigate the evolving regulatory pathways necessary to commercialize approved blockbuster cell therapies

The acquisition was accounted for under the acquisition method of accounting for business combinations in accordance with FASB ASC 805, “Business Combinations”(ASC 805), which requires, among other things that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.  Acquisition-related costs are not included as a component of the acquisition accounting, but are recognized as expenses in the periods in which the costs are incurred.  Acquisition related costs of $484 and $1,725 for the three and nine months ended March 31, 2014 were included in general and administrative expenses.

Allocation of Consideration Transferred to Net Assets Acquired

The following represents the consideration transferred to acquire TotipotentRX and our determination of the fair value of identifiable assets acquired and liabilities assumed at the acquisition date. Certain adjustments related to TotipotentRX’s opening balance sheet were finalized during the second quarter of fiscal 2015.  As a result, the carrying amount of equipment acquired in the acquisition was increased by $59, with a corresponding decrease to goodwill.

Purchase Price:
ThermoGenesis common shares and warrants			$	27,287
Fair value of assets acquired:
Cash	$	351
Receivables		171
Inventories		191
Clinical protocols		19,870
Other intangible assets		2,187
Equipment		384
Other assets		132
Total assets		23,286
Fair value of liabilities assumed:
Accounts payable		514
Related party notes payable		337
Deferred tax liability		8,048
Other liabilities		295
Total liabilities		9,194
Net assets acquired				14,092
Goodwill			$	13,195

Supplemental Pro Forma Data

The Company used the acquisition method of accounting to account for the Totipotent RX acquisition and, accordingly, the results of TotipotentRX are included in the Company’s consolidated financial statements for the period subsequent to the date of acquisition.  The following unaudited supplemental pro forma data for the quarter and nine months ended March 31, 2014 present consolidated information as if the acquisition had been completed on July 1, 2013.  The pro forma results were calculated by combining the results of ThermoGenesis Corp with the stand-alone results of Totipotent RX for the pre-acquisition periods:

	Three Months Ended March 31, 2014			Nine Months Ended March 31, 2014
Net revenues	$	4,099		$	12,738
Net loss	$	(1,702	)	$	(5,139	)
Basic and Diluted Net Loss per common share	$	(0.04	)	$	(0.16	)

The unaudited pro forma financial information reflects certain adjustments related to the acquisition, such as the incremental amortization expense in connection with recording acquired identifiable intangible assets at fair value, the incremental payroll expense associated with the new executive salaries resulting from the merger, and the elimination of the impact of historical transactions between ThermoGenesis and TotipotentRX that would have been treated as intercompany transactions had the companies been consolidated.  The unaudited pro forma financial information also excludes certain non-recurring expenses directly attributable to the merger in the amount of $531 and $1,933 for the three and nine months ended March 31, 2014, respectively.