U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
X Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended MARCH 31, 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.
Check whether the issuer: (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 24,765,434 shares of common stock outstanding on May 7, 1996.
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1
THERMOGENESIS CORP.
INDEX
PART I
Condensed Financial Statements (Unaudited): PAGE NUMBER
Condensed Balance Sheets at March 31, 1996
and June 30, 1995 2
Condensed Statements of Operations
for the Three and Nine Months ended
March 31, 1996 and 1995 4
Condensed Statements of Cash Flows
for the Nine Months Ended
March 31, 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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THERMOGENESIS CORP.
Condensed Balance Sheet
(Unaudited)
March 31, June 30,
ASSETS 1996 1995
Current assets:
Cash and cash equivalents $563,032 $325,965
Accounts receivable, net of allowance for doubtful
of $97,913 ($72,913 at June 30, 1995) 1,685,493 675,240
Net investment in sales-type leases 35,731 35,731
Inventory 1,234,260 1,014,309
Prepaid expenses 72,681 9,711
Total current assets 3,591,197 2,060,956
Equipment, at cost less accumulated depreciation
of $263,205 ($200,557 at June 30, 1995) 625,225 176,535
Long-term net investment in sales-type leases 59,252 86,460
Prepaid royalties, net of accumulated amortization
of $323,870 ($277,259 at June 30, 1995) 235,630 277,241
Leased equipment, net 22,688 40,778
Other assets 18,933 20,869
$4,552,925 $2,662,839
See accompanying notes.
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3
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THERMOGENESIS CORP.
Condensed Balance Sheet (Cont'd)
(Unaudited)
March 31, June 30,
1996 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $603,158 $512,931
Current portion of long-term lease obligations 90,135 --
Accrued payroll and related expenses 172,438 55,346
Deferred revenue -- 60,000
Customer deposits 58,401 19,523
Total current liabilities 924,132 647,800
Deferred rent 9,326 14,456
Long-term lease obligations 234,032 --
Commitments
Shareholders' equity:
Common stock, $.001 par value;
50,000,000 shares authorized:
24,765,434 issued and outstanding
(20,355,434 at June 30, 1995) 24,765 20,356
Paid in capital in excess of par 9,681,723 7,794,621
Accumulated deficit (6,321,053) (5,814,394)
Total shareholders' equity 3,385,435 2,000,583
$4,552,925 $2,662,839
See accompanying notes.
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THERMOGENESIS CORP.
Condensed Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31, March 31, March 31,
1996 1995 1996 1995
Net sales $1,062,503 $907,364 $3,042,622 $2,745,526
Cost of Sales 623,624 619,133 1,671,263 1,641,552
Gross Profit 438,879 288,231 1,371,359 1,103,974
Expenses:
General and administrative expense 79,109 83,391 281,614 247,891
Selling and marketing expense 327,763 181,831 713,331 561,046
Research and development expense 437,695 123,602 881,796 294,774
Total expenses 844,567 388,824 1,876,741 1,103,711
Interest income 11,149 4,259 19,842 8,929
Interest expense 9,781 -- 21,119 --
Net income (loss) ($404,320) ($96,334) ($506,659) $9,192
Net income (loss) per share ($0.02) ($0.00) ($0.02) $0.00
Shares used in computing
net income (loss) per share 24,765,000 20,349,000 22,318,000 20,858,000
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See accompanying notes.
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5
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THERMOGENESIS CORP.
Condensed Statements of Cash Flows
Nine Months Ended March 31, 1996 and 1995
Increase (Decrease) in Cash
(Unaudited)
1996 1995
Cash flows from operating activities:
Net income (loss) ($506,659) $9,192
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 127,647 150,447
Net changes in operating assets and libilities:
Accounts receivable (1,010,253) 48,920
Investment in sales type leases 27,208 (11,898)
Inventory (219,951) (320,252)
Prepaid expenses (62,970) 3,888
Accounts payable and accrued liabilities 90,227 99,973
Accrued payroll and related expenses 117,092 (12,718)
Customer deposits 38,878 (35,791)
Deferred revenue (60,000) --
Deferred rent (5,130) --
-
Total adjustments (982,252) (77,431)
Net cash used in operating activities (1,463,911) (68,239)
Cash flows from investing activities:
Capital expenditures (160,035) (144,559)
Sale of investments -- 45,000
Net cash used in investing activities (160,035) (99,559)
Cash flows from financing activities:
Issuance of common stock 1,891,511 10,600
Principal payments on long-term lease obligations (30,498) --
Net cash provided by financing activities 1,861,013 10,600
Net increase (decrease) in cash 237,067 (157,198)
Cash at beginning of period 325,965 347,769
Cash at end of period $563,032 $190,571
See accompanying notes.
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6
THERMOGENESIS CORP.
Notes to Condensed Financial Statements
March 31, 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, 1995. 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 March 31, 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:
March 31, June 30,
1996 1995
Raw materials $ 552,500 $ 453,669
Work in proces 137,520 113,508
Finished goods 544,240 447,132
Total $ 1,234,260 $ 1,014,309
NET INVESTMENT IN SALES TYPE LEASES
The net investment in sales type leases consists of the following:
March 31, June 30,
1996 1995
Total minimum lease payments receivable $106,185 $ 140,020
Less unearned interest (11,202) (17,829)
Net investment in sales type leases $ 94,983 $ 122,191
STATEMENT OF CASH FLOWS
The Company incurred approximately $354,500 in long-term lease obligations for
the purchase of computer equipment.
EQUITY
The Company completed a private placement of 4,400,000 common shares on
December 9, 1995 and received $1,891,511 net of expenses. The placement
consisted of 88 units. Each unit consisted of 50,000 common shares and 12,500
warrants to purchase common shares at $1.50 per share for six months. The
Company filed a registration statement covering the shares issued within 90
days of completion of the offering as required by the terms of the financing.
The shares are subject to a six month lockup period which will expire on
approximately September 22, 1996, except under limited circumstances providing
for early release from the lockup by the placement agent.
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7
THERMOGENESIS CORP.
Notes to Condensed Financial Statements (Cont'd)
March 31, 1996
(Unaudited)
2. Subsequent events
On May 9, 1996, the Company received 510K permission to market two licensed
hand held disposable applicators designed to improve a surgeon's ability to
achieve hemostasis and tissue bonding at a wound site during surgery. The
applicators combine fibrinogen and thrombin at a wound site in a spray, line or
dot that converts into an adhesive clot in less than one minute. The Company
believes, based upon the current usage of fibrin sealant, that approximately a
two million unit annual market for the applicators exists in Europe, Japan,
Canada and South America where fibrin sealant is a licensed drug product. The
Company expects to begin marketing the applicators, expected to be priced
between $30-$50 each, in those markets late in this calendar year.
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8
Management's Discussion and Analysis of
Financial Condition and Results of Operation
for the Three and Nine Months Ended March 31, 1996
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 and nine months ended March 31, 1996 by
approximately 17% and 11% respectively, from the corresponding 1995 periods.
Sales increases were primarily due to increased sales of the Company's human
blood plasma freezer and thawer products.
Cost of sales as a percent of sales for the three and nine months ended March
31, 1996 were approximately 59% and 55% respectively, as compared to 68% and
60% respectively, for the corresponding 1995 periods. The decrease in cost of
sales as a percent of sales was due to improved manufacturing methods and a
reduction of component costs.
General and administrative expenses for the three and nine months ended March
31, 1996 decreased by 5% for the three month period but increased by 14% for
the nine month period from the corresponding periods in 1995. The year to date
increase was due to expanded staff and space. The quarter decrease was due to
lower than expected legal and accounting expenses.
Selling and marketing expenses for the three and nine months ended March 31,
1996 increased by 80% and 27%, respectively, over the corresponding periods in
1995. Expenses increased due to added personnel, additional space 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 and nine months ended March 31,
1996, increased by 254% and 199%, respectively, over the respective 1995
periods. The increase was due to accelerated research and development of three
programs: (i) a computerized human blood plasma sample storage and retrieval
system, (ii) a computerized liquid nitrogen biological storage and retrieval
system and (iii) a system that converts a surgical patient's blood plasma into
an autologous tissue sealant and hemostatic agent. Additional expenses have
been incurred for continuing development of computer controllers for plasma
thawers and freezers which feature remote diagnostics and compliance with CE96
European Union electronics standards. 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company has consumed cash resources for operating activities. These
resources have been primarily consumed for marketing activities and product
development.
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9
Management's Discussion and Analysis of
Financial Condition and Results of Operation
for the Three and Nine Months Ended March 31, 1996 (Cont'd)
LIQUIDITY AND CAPITAL RESOURCES (CONT'D)
Working capital increased by $1,253,909 from June 30, 1995. This increase was
primarily due to the issuance of common stock which raised $1,891,511 which was
offset by increases in accounts receivable, increases in inventory and
operating losses primarily due to new product development.
The Company believes it has sufficient resources to continue to operate for the
next twelve months.
The Company has no significant outstanding capital commitments at March 31,
1996.
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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 May 15, 1996 s/Merrill L. Parker
Merrill L. Parker,
Controller (Principal Financial
and Accounting Officer)
Dated May 15, 1996 s/Philip H. Coelho
Philip H. Coelho,
President and Chief Executive Officer
(Principal Executive Officer)
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<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY
REPORT ON FORM 10-QSB FOR THE PERIOD ENDED MARCH 31, 1996, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 563,032
<SECURITIES> 0
<RECEIVABLES> 1,685,493
<ALLOWANCES> 72,913
<INVENTORY> 1,234,260
<CURRENT-ASSETS> 3,591,197
<PP&E> 888,430
<DEPRECIATION> 263,205
<TOTAL-ASSETS> 4,552,925
<CURRENT-LIABILITIES> 924,132
<BONDS> 0
0
0
<COMMON> 24,765,434
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,552,925
<SALES> 3,042,622
<TOTAL-REVENUES> 3,042,622
<CGS> 1,671,263
<TOTAL-COSTS> 1,876,741
<OTHER-EXPENSES> 21,119
<LOSS-PROVISION> 25,000
<INTEREST-EXPENSE> 19,842
<INCOME-PRETAX> (506,659)
<INCOME-TAX> 0
<INCOME-CONTINUING> (506,659)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
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