Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Basis of Accounting, Policy [Policy Text Block]

Organization and Basis of Presentation

ThermoGenesis Holdings, Inc. (“ThermoGenesis Holdings,” or the “Company”), formerly known as Cesca Therapeutics Inc., develops, commercializes and markets a range of automated technologies for CAR-T and other cell-based therapies. The Company currently markets a full suite of solutions for automated clinical biobanking, point-of-care applications, and automation for immuno-oncology, including its semi-automated, functionally closed CAR-TXpress™ platform, which streamlines the manufacturing process for the emerging CAR-T immunotherapy market. The Company was founded in

1986

and is registered in the State of Delaware and headquartered in Rancho Cordova, CA.

ThermoGenesis Corp. (ThermoGenesis Corp), the Company’s fully owned device subsidiary, provides the AutoXpress

and BioArchive

platforms for automated clinical bio-banking, PXP

platform for point-of-care cell-based therapies and CAR-TXpress™ platform under development for bio-manufacturing for immuno-oncology applications. The Company, along with its fully owned device subsidiary, currently manufactures and markets the following products:

For Clinical Bio-Banking Applications:

•

AXP

Automated Cell Separation System – an automated, fully closed cell separation system for isolating and retrieving stem and progenitor cells from umbilical cord blood.

•

BioArchive

Automated Cryopreservation System – an automated, robotic, liquid nitrogen controlled-rate-freezing and cryogenic storage system for cord blood samples and cell therapeutic products used in clinical applications.

For

Point-of-Care

Applications:

•

PXP

Point-of-Care System – an automated, fully closed, sterile system allows for the rapid, automated processing of autologous peripheral blood or bone marrow aspirate derived stem cells at the point-of-care, such as surgical centers or clinics.

For

Large Scale Cell Processing and Biomanufacturing

•

-Series Products:

-Lab

for cell isolation,

-Wash

System for cell washing and reformulation,

-Mini

for high efficiency small scale cell purification, and

-BACS

™

System under development for large scale cell purification using our proprietary buoyance-activated cell sorting (BACS) technology.

•

CAR-TXpress™ Platform – a modular designed, functionally closed platform that addresses the critical unmet need for large scale cellular processing and chemistry, manufacturing and controls (CMC) needs for manufacturing chimeric antigen receptor (CAR) T cell therapies.

January 1, 2019,

the Company entered into a reorganization of the business and equity ownership of its majority-owned ThermoGenesis Corp. subsidiary. Pursuant to the reorganization, the assets acquired by ThermoGenesis Corp. from SynGen Inc. in

July 2017

were contributed to a newly formed Delaware subsidiary of ThermoGenesis Corp. named CARTXpress Bio, Inc. (CARTXpress Bio) and the

20%

interest in ThermoGenesis Corp. held by a

third

party was exchanged for a

20%

interest in CARTXpress Bio. As a result, the Company holds an

80%

equity interest in CARTXpress Bio and the Company has become the owner of

100%

of ThermoGenesis Corp. The purpose of the reorganization is to allow CARTXpress Bio to focus on the development and commercialization of the newly launched CARTXpress Bio cellular manufacturing platform.

The Company reacquired the non-controlling interest shares in ThermoGenesis Corp. with a deficit of

$1,711,000

in exchange for

20%

equity interest in the newly created subsidiary, CARTXpress Bio, which approximates

$1,100,000.

The total amount of

$2,843,000

related to reorganization of subsidiary and related change in non-controlling interest was recorded in the statement of stockholders’ equity.

ThermoGenesis Holdings is an affiliate of the Boyalife Group, a global diversified life science holding company that focuses on stem cell technology and cell-based therapeutics.

Reverse Stock Split [Policy Text Block]

Reverse Stock Split

June 4, 2019,

the Company effected a

one

(

) for

ten

(

) reverse stock split of its issued and outstanding common stock. The total number of shares of common stock authorized for issuance by the Company of

350,000,000

shares did

not

change in connection with the reverse stock split.

All historical share amounts disclosed herein have been retroactively restated to reflect the reverse split and subsequent share exchange.

fractional shares were issued as a result of the reverse stock split, as fractional shares of common stock were rounded up to the nearest whole share.

Substantial Doubt about Going Concern [Policy Text Block]

Liquidity and Going Concern

The Company has a Revolving Credit Agreement (Credit Agreement) with Boyalife Asset Holding II, Inc. (Refer to Note

). As of

September 30, 2019,

the Company had drawn down

$8,713,000

of the

$10,000,000

available under the Credit Agreement. Future draw-downs

may

be limited for various reasons including default or foreign government policies that restrict or prohibit transferring funds. At the time of this filing, we are currently unable to draw down on the line of credit. This

may

change in the near future but there is

assurance that the line of credit will become available at such time when it is needed. Boyalife Asset Holding II, Inc. is a wholly owned subsidiary of Boyalife Group Inc., which is owned and controlled by the Company’s Chief Executive Officer and Chairman of the Board.

September 30, 2019,

the Company had cash and cash equivalents of

$2,800,000

and working capital of

$5,435,000,

as compared to

$2,400,000

and

$2,261,000

respectively at

December 31, 2018.

These recurring losses raise substantial doubt about the Company’s ability to continue as a going concern within

one

year after the issuance date of these financial statements. The Company anticipates requiring additional capital to grow the business, to fund other operating expenses and to make interest payments on the line of credit with Boyalife Asset Holding II, Inc. The Company’s ability to fund its cash needs is subject to various risks, many of which are beyond its control. The Company

may

seek additional funding through bank borrowings or public or private sales of debt or equity securities or strategic partnerships. The Company cannot guarantee that such funding will be available on a timely basis, in needed quantities or on terms favorable to the Company, if at all.

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise substantial doubt about the Company’s ability to do so. The condensed consolidated financial statements do

not

include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that

may

result should the Company be unable to continue as a going concern.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of ThermoGenesis Holdings and its wholly-owned subsidiaries, ThermoGenesis Corp. and TotipotentRX Cell Therapy, Pvt. Ltd and ThermoGenesis Corp’s majority-owned subsidiary, CARTXpress Bio. All significant intercompany accounts and transactions have been eliminated upon consolidation.

Interim Reporting [Policy Text Block]

Interim Reporting

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with the instructions to Form

-Q and Article

of Regulation S-

Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such Securities and Exchange Commission (SEC) rules and regulations and accounting principles applicable for interim periods. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Operating results for the

three

and

nine

month periods ended

September 30, 2019

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 31, 2019.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in ThermoGenesis Holdings Annual Report on Form

-K for the year ended

December 31, 2018.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Standards

June 2018,

the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)

2018

07,

“Compensation-Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting”

, which simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that Topic

718

applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The Company adopted the standard on

January 1, 2019.

The adoption of this standard did

not

have a material impact on the Company’s financial statements.

February 2016,

the FASB issued ASU

2016

“

Leases

,” which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted the standard on

January 1, 2019.

The new standard requires lessees to recognize both the right-of-use assets and lease liabilities in the balance sheet for most leases, whereas under previous GAAP only finance lease liabilities (previously referred to as capital leases) were recognized in the balance sheet. In addition, the definition of a lease has been revised which

may

result in changes to the classification of an arrangement as a lease. Under the new standard, an arrangement that conveys the right to control the use of an identified asset by obtaining substantially all of its economic benefits and directing how it is used as a lease, whereas the previous definition focuses on the ability to control the use of the asset or to obtain its output. Quantitative and qualitative disclosures related to the amount, timing and judgements of an entity’s accounting for leases and the related cash flows are expanded. Disclosure requirements apply to both lessees and lessors, whereas previous disclosures related only to lessees. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have

not

significantly changed from previous GAAP. Lessor accounting is also largely unchanged.

The new standard provides a number of transition practical expedients, which the Company has elected, including:

●

A “package of three” expedients that must be taken together and allow entities to (

)

not

reassess whether existing contracts contain leases, (

) carryforward the existing lease classification, and (

)

not

reassess initial direct costs associated with existing leases, and

●

An implementation expedient which allows the requirements of the standard in the period of adoption with

restatement of prior periods.

The impact of adoption did

not

have a material impact to the Company as of

January 1, 2019

as the Company’s finance leases are immaterial and its operating leases had terms shorter than

one

year. In

January 2019,

the Company signed an amendment to its lease for office space at its corporate headquarters in Rancho Cordova, CA. The amendment extended the lease term by

five

years and was accounted for as a modification. At that time, the Company recorded lease assets and liabilities of

$966,000

and

cumulative effect adjustment to retained earnings.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

Revenue is recognized based on the

five

-step process outlined in Accounting Standards Codification (ASC)

606.

The following tables summarize the revenues of the Company’s reportable segments and product lines:

	Three Months Ended September 30, 2019
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
Device Segment:
AXP	$	2,255,000	$	51,000	$	--	$	2,306,000
BioArchive		243,000		351,000		--		594,000
Manual Disposables		212,000		--		--		212,000
CAR-TXpress		875,000		6,000		33,000		914,000
Other		--		--		19,000		19,000
Total Device Segment		3,585,000		408,000		52,000		4,045,000
Clinical Development Segment:
Manual Disposables		9,000		--		--		9,000
Other		--		4,000		--		4,000
Total Clinical Development		9,000		4,000		--		13,000
Total		3,594,000		412,000		52,000	$	4,058,000

	Nine Months Ended September 30, 2019
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
Device Segment:
AXP	$	6,550,000	$	160,000	$	--	$	6,710,000
BioArchive		1,274,000		1,117,000		--		2,391,000
Manual Disposables		711,000		--		--		711,000
CAR-TXpress		1,365,000		6,000		33,000		1,404,000
Other		--		--		40,000		40,000
Total Device Segment		9,900,000		1,283,000		73,000		11,256,000
Clinical Development Segment:
Manual Disposables		53,000		--		--		53,000
Other		5,000		11,000		--		16,000
Total Clinical Development		58,000		11,000		--		69,000
Total		9,958,000		1,294,000		73,000		11,325,000

	Three Months Ended September 30, 2018
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
Device Segment:
AXP	$	1,396,000	$	70,000	$	--	$	1,466,000
BioArchive		485,000		314,000		--		799,000
Manual Disposables		254,000		--		--		254,000
CAR-TXpress		517,000		--		--		517,000
Other		--		--		23,000		23,000
Total Device Segment		2,652,000		384,000		23,000		3,059,000
Clinical Development Segment:
Manual Disposables		8,000		--		--		8,000
Bone Marrow		--		40,000		--		40,000
Other		--		6,000		--		6,000
Total Clinical Development		8,000		46,000		--		54,000
Total	$	2,660,000	$	430,000	$	23,000	$	3,113,000

	Nine Months Ended September 30, 2018
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
Device Segment:
AXP	$	2,930,000	$	201,000	$	--	$	3,131,000
BioArchive		1,357,000		969,000		--		2,326,000
Manual Disposables		716,000		--		--		716,000
CAR-TXpress		547,000		--		--		547,000
Other		46,000		--		56,000		102,000
Total Device Segment		5,596,000		1,170,000		56,000		6,822,000
Clinical Development Segment:
Manual Disposables		31,000		--		--		31,000
Bone Marrow		--		101,000		--		101,000
Other		--		30,000		--		30,000
Total Clinical Development		31,000		131,000		--		162,000
Total	$	5,627,000	$	1,301,000	$	56,000	$	6,984,000

Contract Balances

Generally, all sales are contract sales (with either an underlying contract or purchase order). The Company does

not

have any material contract assets. When invoicing occurs prior to revenue recognition a contract liability is recorded (as deferred revenue on the consolidated balance sheet). Revenues recognized during the

three

and

nine

months ended

September 30, 2019

that were included in the beginning balance of deferred revenue were

$50,000

and

$480,000,

respectively. Short term deferred revenues increased from

$485,000

December 31, 2018

$840,000

September 30, 2019.

Supply

Agreement

August 30, 2019,

the Company entered into a supply agreement with a global distributor for substantially all

-Series® products under the CAR-TXpress™ platform (the “Products”). The agreement has an initial term of

five

years with automatic

two

-year renewal terms, unless terminated by either party in accordance with the terms of the agreement. Pursuant to the agreement, the Company has granted exclusive worldwide distribution rights for

-Series products, for the duration of the term, subject to certain geographical and other exceptions. In addition, the Company has granted rights of

first

refusal for the exclusive worldwide distribution of certain future products developed or introduced by the Company relating to cell isolation or cell selection, including any such products substantially related or similar to the Products (the “ROFR Products”). As consideration for the exclusive worldwide distribution rights for the Products and ROFR Products, the Company will receive a

$2,000,000

fee, in addition to any amounts payable throughout the term for the Products and any ROFR Products. The agreement also contains an option, exercisable by the global distributor at any time following

January 1, 2021,

to become the manufacturer for all or any portion of the Products.

The agreement contains covenants by the Company to negotiate in good faith regarding price reductions for the Products and, commencing in

2020,

cost reduction efforts with respect to development and manufacture of the Products. Moreover, the agreement contains a most-favored customer provision with respect to the pricing made available for the Products during the term. The agreement contains mutual indemnification provisions, as well as standard warranties with respect to the Products, including that the Products supplied and the services provided (including customer support services for Products sold) be manufactured or performed, as applicable, in a

first

class, workmanlike manner by personnel properly trained.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

In accordance with ASC

820,

“

Fair Value Measurements and Disclosures

,” fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The guidance establishes

three

levels of inputs that

may

be used to measure fair value:

Level

Quoted market prices in active markets for identical assets or liabilities.

Level

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level

Unobservable inputs reflecting the reporting entity’s own assumptions.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short duration. The fair value of the Company’s derivative obligation liability is classified as Level

within the fair value hierarchy since the valuation model of the derivative obligation is based on unobservable inputs. The impairment of goodwill and intangible assets is a non-recurring Level

fair value measurement.

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM), or decision-making group, whose function is to allocate resources to and assess the performance of the operating segments. The Company has identified its chief executive officer as the CODM. In determining its reportable segments, the Company considered the markets and the products or services provided to those markets.

The Company has

two

reportable business segments:

●

The Device Segment, engages in the development and commercialization of automated technologies for cell-based therapeutics and bio-processing. The device division is operated through the Company’s ThermoGenesis Corp. subsidiary.

●

The Clinical Development Segment, utilizes autologous stem cell-based therapeutics in the vascular and orthopedic markets through the Company’s TotipotentRX subsidiary in Gurgaon, India.

Earnings Per Share, Policy [Policy Text Block]

Net Loss per Share

Net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding plus the pre-funded warrants (as described in Footnote

). For the purpose of calculating basic net loss per share, the additional shares of common stock that are issuable upon exercise of the pre-funded warrants have been included since the shares are issuable for a negligible consideration and have

vesting or other contingencies associated with them. There were

324,444

pre-funded warrants included in the quarter ended

September 30, 2019

calculation. The calculation of the basic and diluted earnings per share is the same for all periods presented, as the effect of the potential common stock equivalents noted below is anti-dilutive due to the Company’s net loss position for all periods presented. Anti-dilutive securities consisted of the following at

September 30:

	2019		2018
Common stock equivalents of convertible promissory notes and accrued interest		6,013,667		4,626,667
Vested Series A warrants		40,442		40,442
Unvested Series A warrants (1)		69,853		69,853
Warrants – other		1,300,091		1,319,728
Stock options		296,029		118,830
Total		7,720,082		6,175,520

______________

(

)

The unvested Series A warrants were subject to vesting based upon the amount of funds actually received by the Company in the

second

close of the

August 2015

financing which never occurred. The warrants will remain outstanding but unvested until they expire in

February 2021.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassifications did

not

have an impact on net loss as previously reported.