UNITED STATES
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q/A
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended DECEMBER 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.)
3146 GOLD CAMP DRIVE, RANCHO CORDOVA, CA. 95670
(Address of principal executive offices) (Zip code)
(916) 858-5100
(Registrant's telephone number, including area code)
11431 SUNRISE GOLD, STE. A, RANCHO CORDOVA, CA. 95742
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 15,834,005 shares of common stock outstanding on February
11, 1997.
THERMOGENESIS CORP.
INDEX
PART I PAGE NUMBER
Condensed Financial Statements (Unaudited):
Condensed Balance Sheets at December 31, 1996
and June 30, 1996 3
Condensed Statements of Operations
for the Three and Six Months
Ended December 31, 1996 and 1995 5
Condensed Statements of Cash Flows
for the Six Months Ended
December 31, 1996 and 1995 6
Notes to Condensed Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II
Item 6. Exhibits and Reports on Form 8-K. 11
SIGNATURES 12
<PAGE> 2
PART I - FINANCIAL INFORMATION
THERMOGENESIS CORP.
CONDENSED BALANCE SHEET
(UNAUDITED)
December 31, June 30,
ASSETS 1996 1996
Current Assets:
Cash and cash equivalents $6,732,114 $1,243,079
Accounts receivable, net of allowances for doubtful
accounts of $97,913 ($97,913 at June 30, 1996) 3,012,028 1,441,148
Inventory 2,328,976 2,137,198
Net investment in sales-type leases 31,882 31,822
Prepaid expenses 221,714 44,177
Total current assets 12,326,714 4,897,484
Equipment, at cost less accumulated depreciation
of $422,581 ($312,307 at June 30, 1996) 809,349 689,562
Long-term net investment in sales-type leases 36,770 50,716
Prepaid royalties, net of accumulated amortization
of $369,459 ($332,733 at June 30, 1996) 194,041 221,767
Leased equipment, net of accumulated depreciation 11,252 20,228
Other assets 50,092 57,383
$13,434,218 $5,937,140
See accompanying notes.
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THERMOGENESIS CORP.
CONDENSED BALANCE SHEET (CONT'D)
(UNAUDITED)
December 31, June 30,
1996 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $679,932 $931,944
Accrued payroll and related expenses 132,457 184,660
Customer deposits 63,914 35,891
Current portion of long-term capital lease 125,166 124,050
obligations
Total current liabilities $1,001,469 $1,276,545
Deferred rent 1,546 3,365
Long-term capital lease obligations 256,703 282,919
Commitments
Shareholders' equity:
Common stock, $.001 par value;
50,000,000 shares authorized:
15,834,005 issued and outstanding
(12,708,967 at June 30, 1996) 15,834 12,709
Paid in capital in excess of par 19,106,313 10,744,530
Accumulated deficit (6,947,647) (6,382,928)
12,174,500 4,374,311
Total shareholders' equity $1,434,218 $5,937,140
See accompanying notes.
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THERMOGENESIS CORP.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
Net sales $2,650,690 $ 830,079 $4,348,286 $1,681,982
Cost of sales 1,513,956 485,471 2,487,921 929,006
Gross profit 1,136,734 344,608 1,860,365 752,976
Expenses:
General and 307,062 118,198 438,316 202,505
administrative expense
Selling and marketing 405,578 216,447 769,958 385,568
expense
Research and development 625,432 288,887 1,194,167 444,101
expense
Issuance of stock options 14,000 -- 28,000 --
for services
Interest expense 15,208 8,402 36,447 11,338
Total expenses 1,367,280 631,934 2,466,888 1,043,512
Interest income 33,711 5,870 41,804 8,693
Net loss ($196,835) ($281,456) ($564,719) ($281,843)
Net loss per share ($0.01) ($0.03) ($0.04) ($0.03)
Shares used in computing
net loss per share 14,511,000 10,916,000 13,755,000 10,547,000
See accompanying notes.
<PAGE> 5
THERMOGENESIS CORP.
STATEMENTS OF CASH FLOW
SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
1996 1997
Cash flows from operating activities:
Net loss ($564,719) ($281,843)
Adjustments to reconcile net loss to
net cash provided (used) by operating activities:
Depreciation and amortization 148,267 80,447
Issuance of Common Stock for Inventory 414,426 --
Issuance of stock options for services 28,000 --
Net changes in operating assets and liabilities:
Accounts receivable (1,570,880) (430,601)
Investment in sales-type leases 13,946 17,900
Inventory (173,809) (34,835)
Prepaid expenses (177,537) (52,635)
Accounts payable and
accrued liabilities (252,012) (110,369)
Accrued payroll and related
expenses (52,203) 15,431
Customer deposits 28,023 7,340
Deferred revenue -- (60,000)
Deferred rent (1,819) (3,094)
Total adjustments (1,595,598) (570,416)
Net cash used by operating activities (2,160,317) (852,259)
Cash flows from investing activities:
Capital expenditures (218,159) (46,784)
Net cash used by investing activities (218,159) (46,784)
Cash flows from financing activities:
Principal payments on long-term lease obligations (25,100) (11,483)
Issuance of common stock 7,892,611 1,906,243
Net cash provided by financing activities 7,867,511 1,894,760
Net increase in cash and cash equivalents 5,489,035 995,717
Cash and cash equivalents at beginning of period 1,243,079 325,965
Cash and cash equivalents at end of period $6,732,114 $1,321,682
See accompanying notes.
<PAGE> 6
THERMOGENESIS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 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, 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 six months ended December 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:
December 31, June 30,
1996 1996
Raw materials $1,405,799 $1,273,889
Work in process 304,972 1,490
Finished goods 618,205 861,819
Total $2,328,976 $2,137,198
NET INVESTMENT IN SALES TYPE LEASES
The net investment in sales type leases consists of the following:
December 31, June 30,
1996 1996
Total minimum lease payments receivable 71,226 $91,888
Less unearned interest (2,574) (9,290)
Net investment in sales type leases $68,652 $82,598
<PAGE> 7
THERMOGENESIS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31, 1996
(UNAUDITED)
EQUITY
During the six months ended December 31, 1996, the Company issued 146,000
shares of common stock for manufacturing services from a vendor. The
Company recorded these transactions at the estimated fair value of $444,297
on the date of the transaction. Of the $444,297, the amount of $17,969 remained
in inventory and the $11,902 was capitalized in equipment as of December 31,
1996.
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,
through December 31, 1996, the Company has recorded consulting expense
recognizing the estimated fair value of the options of $28,000.
The Company received proceeds of $577,500 upon the exercise of outstanding
warrants in July 1996.
The Company completed a minimum equity offering of units in a private
placement on November 27, 1996, in which it received gross proceeds of
$8,268,006 (before costs of the offering). The proceeds from the offering
were received from the sale of 1,378,001 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.
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 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 and six months ended December 31, 1996,
by approximately 219% and 159%, respectively, from the corresponding 1995
period. 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 was approximately 57% for the three
months ended December 31, 1996, as compared to 58% for the corresponding
1995 period and 57% for the six months ended December 31, 1996, as compared
to 55% for the corresponding 1995 period. Before an inventory adjustment of
$150,000 to reflect a write down for technological obsolescence of stock
plasma freezers, cost of sales decreased. The after adjustment decrease in
cost of sales as a percent of sales for the three month period was due to
changes in product mix with a higher percent of blood plasma freezers and
economies of scale allowed by production of a new freezer for the above
mentioned order.
General and administrative expenses for the three and six months ended
December 31, 1996 increased by 160% and 116%, respectively, from the
corresponding 1995 periods. A significant portion of the increase was due
to non-recurring expenses of approximately $120,000 for consulting services
to refine the Company's policy and procedures and internal processing
systems while the remainder of the increase was due to expanded staff and
facilities.
Selling and marketing expenses for the three and six months ended December
31, 1996 increased by 87% and 100%, respectively, over the corresponding
1995 periods. Expenses increased due to added personnel and additional
facilities. 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.
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 (CONT'D)
RESULTS OF OPERATIONS (CONT'D)
Research and development expenses for the three and six months ended
December 31, 1996, increased by 117% and 169%, respectively, over the
corresponding 1995 periods. 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. Additionally, the Company expensed $30,000 for CryoSeal{TM} for
testing and surgical support in clinical trials under way and $63,000 of
equipment and disposables consumed in the CryoSeal{TM} clinical trials.
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.
ISSUANCE OF STOCK OPTIONS FOR SERVICES:
During the period ended December 31, 1996, the Company recorded $28,000 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 $28,000 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 periods ended December 31, 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 $7,704,306. The increase was primarily due to
the issuance of common stock upon the conversion of warrants and placement
of 1,378,001 units.
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 December 31, 1996, the Company has no significant outstanding capital
commitments.
<PAGE> 10
THERMOGENESIS CORP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THERMOGENESIS CORP.
(Registrant)
Dated May 7, 1997
WALTER J. LUDT, III
Walter J. Ludt, III,
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
PHILIP H. COELHO
Philip H. Coelho,
President and Chief Executive Officer
(Principal Executive Officer)
<PAGE> 11
