U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
X Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended SEPTEMBER 30, 1996
Commission File Number: 0-16375
THERMOGENESIS CORP.
(Exact name of Small Business issuer as specified in its charter)
DELAWARE 94-3018487
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11431 SUNRISE GOLD, STE. A, RANCHO CORDOVA, CA. 95742
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (916) 638-8357
Former name, former address and former fiscal year, if changed since last
report.
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 issuer had 14,626,622 shares of common stock outstanding on November
11, 1996.
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1
THERMOGENESIS CORP.
INDEX
PART I
Condensed Financial Statements (Unaudited):
PAGE NUMBER
Condensed Balance Sheets at September
30, 1996 and June 30, 1996 2
Condensed Statements of Operations
for the Three Months ended
September 30, 1996 and 1995 4
Condensed Statements of Cash Flows
for the Three Months Ended September
30, 1996 and 1995 5
Notes to Condensed Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II
Item 6. Exhibits and Reports on Form 8-K. 10
SIGNATURES 11
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2
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<CAPTION>
THERMOGENESIS CORPORATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Condensed Balance Sheet
(Unaudited)
September June 30,
30,
ASSETS 1996 1996
Current assets:
Cash and cash equivalents $393,692 $1,243,079
Accounts receivable, net of allowance for
doubtful accounts of $97,913 ($97,913 at June 30, 1996) 2,471,057 1,441,148
Inventory 2,469,467 2,137,198
Net investment in sales-type leases 23,895 31,882
Prepaid expenses 181,653 44,177
Total current assets 5,539,764 4,897,484
Equipment, at cost less accumulated depreciation
of $370,456 ($312,307 at June 30, 1996) 721,655 689,562
Long-term net investment in sales-type leases 48,888 50,716
Prepaid royalties, net of accumulated amortization
of $351,596 ($332,733 at June 30, 1996) 207,904 221,767
Leased equipment, net of accumulated depreciation
of $106,322 ($101,337 at June 30, 1996) 16,254 20,228
Other assets 56,738 57,383
$6,591,203 $5,937,140
See accompanying notes.
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3
<TABLE>
<CAPTION>
THERMOGENESIS CORPORATION
<S> <C> <C> <C> <C> <C> <C> <C>
Condensed Balance Sheet (Cont'd)
(Unaudited)
September 30, June 30,
1996 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $919,435 $931,944
Current portion of long-term capital lease obligations 125,166 124,050
Accrued payroll and related expenses 219,145 184,660
Customer deposits 34,514 35,891
Total current liabilities 1,298,260 1,276,545
Deferred rent 1,329 3,365
Long-term capital lease obligations 268,041 282,919
Commitments
Shareholders' equity:
Common stock, $.001 par value;
50,000,000 shares authorized:
13,059,560 issued and outstanding
(12,708,967 at June 30, 1996) 13,060 12,709
Paid in capital in excess of par 11,761,325 10,744,530
Accumulated deficit (6,750,812) (6,382,928)
Total shareholders' equity 5,023,573 4,374,311
$6,591,203 $5,937,140
See accompanying notes.
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4
<TABLE>
<CAPTION>
THERMOGENESIS CORPORATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Condensed Statements of Operations
(Unaudited)
Three Months Ended
September 30, 1996 September 30, 1995
Net sales $1,697,596 $851,903
Cost of sales 973,965 443,535
Gross profit 723,631 408,368
Expenses:
General and administrative expense 131,254 84,307
Selling and marketing expense 364,380 169,121
Research and development expense 568,735 155,214
Issuance of stock options for services 14,000 --
Interest expense 21,239 2,936
Total expenses 1,099,608 411,578
Interest income 8,093 2,823
Net loss ($367,884) ($3,323)
Net loss per share ($0.03) ($0.00)
Shares used in computing
net loss per share 12,997,000 10,177,500
See accompanying notes.
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5
THERMOGENESIS CORPORATION
Statements of Cash Flows
Three Months Ended September 30, 1996 and 1995
Increase and Decrease in Cash and Cash Equivalents
1996 1995
Cash flows from operating activities:
Net loss ($367,884) ($387)
Adjustments to reconcile net loss to
net cash provided (used) by
operating activities:
Depreciation and amortization 76,631 36,655
Issuance of stock options for services 14,000 --
Net changes in operating assets and liabilities:
Accounts receivable (1,029,909) (140,238)
Investment in sales type leases 9,815 8,768
Inventory (332,269) 79,872
Prepaid expenses (137,476) (11,723)
Accounts payable and
accrued liabilities (12,509) (112,893)
Accrued payroll and related expenses 34,485 48,963
Customer deposits (1,377) 402
Deferred revenue -- (21,700)
Deferred rent (2,036) (1,059)
Total adjustments (1,380,645) (112,953)
Net cash used by operating activities (1,748,529) (113,340)
Cash flows from investing activities:
Capital expenditures (90,242) --
Net cash used in investing activities (90,242) --
Cash flows from financing activities:
Principal payments on long-term lease obligations (13,762) (19,175)
Issuance of common stock 1,003,146 --
Net cash provided (used) by financing activities 989,384 (19,175)
Net decrease in cash and cash equivalents (849,387) (132,515)
Cash and cash equivalents at beginning of period 1,243,079 325,965
Cash and cash equivalents at end of period $393,692 $193,450
See accompanying notes.
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6
THERMOGENESIS CORP.
Notes to Condensed Financial
Statements
September 30, 1996
(Unaudited)
1. Interim Reporting.
These Condensed Financial Statements should be read in conjunction with the
Company's Annual Report (Form 10-KSB) for the year ended June 30, 1996. In
the opinion of management, all adjustments (which consist of only normally
recurring adjustments) necessary for a fair presentation of the condensed
financial statements have been made. The results of operations for the
three and nine months ended September 30, 1996 are not necessarily
indicative of the results to be expected for the full year.
INVENTORIES
Inventories are stated at the lower of cost (First-In, First-Out) or market
and consist approximately of the following:
September 30, June 30,
1996 1996
Raw materials $ 1,606,158 $ 1,273,889
Work in process 51,490 1,490
Finished goods 811,819 861,819
Total $ 2,469,467 $ 2,137,198
NET INVESTMENT IN SALES TYPE LEASES
The net investment in sales type leases consists of the following:
September 30, June 30,
1996 1996
Total minimum lease payments receivable $79,517 $ 91,888
Less unearned interest (6,734) (9,290)
Net investment in sales type leases $ 72,783 $ 82,598
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7
THERMOGENESIS CORP.
Notes to Condensed Financial Statements (Cont'd)
September 30, 1996
(Unaudited)
EQUITY
During the quarter ended September 30, 1996, the Company issued 132,487
shares of common stock for manufacturing services from a vender. The
Company recorded these transactions at the estimated fair value on the date
of the transaction.
On July 31, 1996, the Company issued options to purchase 200,000 shares of
the Company's common stock for consulting services from key advisors in the
product area of CryoSeal. The exercise price is equal to the fair market
value as determined by the closing bid price for the Company's common stock
as quoted by the Nasdaq SmallCap market on the date of grant. Accordingly,
the Company has recorded consulting expense recognizing the estimated fair
value of the options of $120,000.
Subsequent Events
The Company completed a minimum equity offering of units in a private
placement and had an initial closing from that equity offering on November
1, 1996, in which it received gross proceeds of $4,417,873 (before costs of
the offering). The proceeds from the initial closing were received from the
sale of 783,834 units at $6.00 per unit. Each unit consisted of two shares
of common stock and a seven year warrant representing the right to acquire
one additional share of common stock at an exercise price of $3.885 per
share. The Company anticipates a final closing of the offering prior to
November 30, 1996.
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8
Management's Discussion and Analysis of
Financial Condition and Results of Operation
for the Three Months Ended September 30, 1996 and 1995
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 periods included in the accompanying
financial statements.
RESULTS OF OPERATIONS
SALES AND REVENUES:
Net sales increased for the three months ended September 30, 1996 by
approximately 99% from the 1995 quarter ended September 30, 1995. Sales
increased primarily due to increased shipments of the Company's human blood
plasma freezer to a key customer who placed an order for approximately
$3,900,000.
Cost of sales as a percent of sales for the three months ended September
30, 1996 was approximately 57% as compared to 53% for the corresponding
1995 period. The increase in cost of sales as a percent of sales was due to
greater than expected manufacturing and startup costs associated with the
production of a new freezer for the above mentioned order. The Company is
working to reduce these costs in future periods over which the order is
spread.
General and administrative expenses for the three months ended September
30, 1996 increased by 56% from the corresponding period in 1995. The year
to date increase was due to expanded staff and facilities.
Selling and marketing expenses for the three months ended September 30,
1996 increased by 115% over the corresponding period in 1995. Expenses
increased due to added personnel, additional facilities and related
operating expenses. These increased expenses are intended to upgrade and
prepare sales, marketing and customer service personnel and systems for new
products nearing completion of research and development.
Research and development expenses for the three months ended September 30,
1996, increased by 266% over the corresponding 1995 period. The increase
was due to accelerated research and development of three programs: (i)
BioArchive System: a computerized human blood plasma sample storage and
retrieval system, (ii) N{2} BioArchive System: a computerized liquid
nitrogen biological storage and retrieval system and (iii) CryoSeal{TM}: a
system that converts a surgical patient's blood plasma into an autologous
tissue sealant and hemostatic agent. Management believes that research and
development is essential to maintaining the Company's market position.
Therefore, the Company considers such costs a continuing cost of doing
business.
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9
Management's Discussion and Analysis of
Financial Condition and Results of Operation
for the Three Months Ended September 30, 1996 and 1995 (Cont'd)
ISSUANCE OF STOCK OPTIONS FOR SERVICES:
During the quarter ended September 30, 1996, the Company recorded $120,000
of consulting expense for issuance of stock options issued to two key
advisors in the product area of CryoSeal. The options are exercisable at
the fair market value as determined by the closing bid price for the
Company's common stock as quoted by the Nasdaq SmallCap market on the date
of grant. While the $120,000 is a non-monetary transaction, the Company has
recorded the estimated fair value of the options under generally accepted
accounting principles.
LIQUIDITY AND CAPITAL RESOURCES
During the quarters ended September 30, 1995 and 1996, the Company had
consumed cash resources for operating activities. These resources were
primarily used to fund increases in accounts receivable the net loss
resulting from marketing activities and product development.
Working capital increased by $620,565 from the first quarter of 1996. The
increase was primarily due to the issuance of common stock upon the
conversion of warrants which was offset by increases in accounts
receivable, increases in inventory and operating losses primarily due to
new product development.
The Company does not believe that inflation has a significant impact on the
Company and believes it can pass any cost increases due to inflation on to
the customer.
The Company believes it has sufficient resources to continue to operate for
the next twelve months.
At September 30, 1996, the Company has no significant outstanding capital
commitments.
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10
PART II - OTHER INFORMATION
Item 1. Legal proceedings.
None.
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
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11
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 October 13, 1996
Walter J. Ludt, III
Walter J. Ludt, III,
Chief Financial Officer (Principal Financial and
Accounting Officer)
Philip H. Coelho
Philip H. Coelho,
President and Chief Executive Officer
(Principal Executive Officer)
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<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000811212
<NAME> THERMOGENESIS CORP.
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 393,692
<SECURITIES> 0
<RECEIVABLES> 2,471,057
<ALLOWANCES> 97,913
<INVENTORY> 2,469,467
<CURRENT-ASSETS> 5,539,764
<PP&E> 721,665
<DEPRECIATION> 370,456
<TOTAL-ASSETS> 6,591,203
<CURRENT-LIABILITIES> 1,298,260
<BONDS> 0
0
0
<COMMON> 13,060
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<TOTAL-LIABILITY-AND-EQUITY> 6,591,203
<SALES> 1,697,596
<TOTAL-REVENUES> 1,697,596
<CGS> 973,965
<TOTAL-COSTS> 1,099,608
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,239
<INCOME-PRETAX> (367,884)
<INCOME-TAX> 0
<INCOME-CONTINUING> (367,884)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (367,884)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
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