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 MARCH 31, 1997
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)
Registrant's telephone number, including area code (916)
858-5100
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 15,861,305 shares of common stock outstanding on May 11,
1997.
<PAGE> 1
THERMOGENESIS CORP.
INDEX
PAGE NUMBER
PART I
Condensed Financial Statements (Unaudited):
Condensed Balance Sheets at March 31, 1997
and June 30, 1996 3
Condensed Statements of Operations
for the Three and Nine Months
ended March 31, 1997 and 1996 5
Condensed Statements of Cash Flows
for the Three and Nine Months Ended
March 31, 1997 and 1996 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)
MARCH 31 JUNE 30
1997 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 5,865,215 $ 1,243,079
Accounts receivable, net of allowance
for doubtful accounts of $97,913 2,226,862 1,441,148
($97,913 at June 30, 1996)
Inventory 2,513,545 2,137,198
Net investment in sales-type leases 9,145 31,882
Prepaid expenses 164,281 44,177
Total current assets 10,779,048 4,897,484
Equipment, at cost less accumulated
depreciation of $476,408 ($312,307 1,049,983 689,562
at June 30, 1996)
Long-term net investment in sales-type 44,097 50,716
leases
Prepaid royalties, net of accumulated
amortization of $374,322 ($332,733 180,178 221,767
at June 30, 1996)
Leased equipment, net of accumulated
depreciation of $112,376 ($101,337 9,189 20,228
at June 30, 1997)
Other assets 55,447 57,383
$12,117,942 $5,937,140
</TABLE>
See accompanying notes.
<PAGE> 3
THERMOGENESIS CORP.
CONDENSED BALANCE SHEET (CONT'D)
(UNAUDITED)
MARCH 31 JUNE 30,
1997 1996
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued liabilities $734,570 $931,944
Accrued payroll and related expenses 214,161 184,660
Customer deposits 66,939 35,891
Current portion of long-term capital lease 126,712 124,050
obligations
Total current liabilities 1,142,382 1,276,545
Deferred rent 823 3,365
Long-term capital lease obligations 224,176 282,919
Commitments - -
Shareholders' equity:
Common stock, $.001 par value;
50,000,000 shares authorized;
15,861,305 issued and outstanding
(12,708,967 at June 30, 1996) 15,862 12,709
Paid in Capital in excess of par 19,173,939 10,744,530
Accumulated deficit (8,419,240) (6,382,928)
Total shareholders' equity 10,750,561 4,374,311
$12,117,942 $5,937,140
</TABLE>
See accompanying notes.
<PAGE> 4
THERMOGENESIS CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31 MARCH 31 MARCH 31
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $1,396,259 $1,062,503 $5,744,545 $2,744,485
Cost of sales 1,077,363 623,624 3,565,284 1,552,630
Gross Profit 318,896 438,879 2,179,261 1,191,855
Expenses:
General and administrative expense 375,753 79,109 814,069 281,614
Selling and marketing expense 556,130 327,763 1,326,088 713,331
Research and development expense 858,646 437,695 2,052,793 881,796
Issuance of stock options for 14,000 - 42,000 -
services
Interest expense 22,001 9,781 58,448 21,119
Total expenses 1,826,530 854,348 4,293,398 1,897,860
Interest Income 16,021 11,149 57,825 19,842
Net loss ($1,491,613) ($404,320) ($2,056,312) ($686,163)
Net loss per share ($0.09) ($0.03) ($0.14) ($0.06)
Shares used in computing net
loss per share 15,846,000 12,382,500 14,452,000 11,159,000
</TABLE>
See accompanying notes.
<PAGE> 5
THERMOGENESIS CORP.
CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1997 AND 1996
INCREASE (DECREASE) IN CASH
(UNAUDITED)
1997 1996
Cash flows from operating activities:
Net loss ($2,056,312) ($686,163)
Adjustments to reconcile net loss to
net cash provided by (used) in operating activities:
Depreciation and amortization 218,665 127,647
Issuance of stock options for services 42,000 -
Issuance of common stock for inventory 432,395 -
Net change in operating assets and liabilities:
Accounts receivable (785,714) (819,345)
Investment in sales type leases 29,356 27,208
Inventory (376,347) (338,584)
Prepaid expenses (140,104) (62,970)
Accounts payable and accrued liabilities (197,374) 90,227
Accrued payroll and related expenses 29,501 117,092
Customer deposits 31,048 146,107
Deferred revenue - (60,000)
Deferred rent (2,542) (5,130)
Total adjustments (719,116) (777,748)
Net cash used in operating activities (2,775,428) (1,463,911)
Cash flows from investing activities:
Capital expenditures (512,620) (160,035)
Net cash used in investing activities (512,620) (160,035)
Cash flows from financing activities:
Issuance of common stock 7,946,265 1,891,511
Principal payments on long-term lease (56,081) (30,498)
obligations
Net cash provided by financing activities 7,890,184 1,861,013
Net increase in cash 4,602,136 237,067
Cash at beginning of period 1,243,079 325,965
Cash at end of period $5,845,215 $563,032
See accompanying notes.
<PAGE> 6
THERMOGENESIS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
(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. All sales, domestic and foreign,
are made in U.S. dollars and therefore currency fluctuations
have no effect on the Company's net sales. 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, 1997
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,
1997 1996
Raw materials $1,859,391 $1,273,889
Work in process 59,352 1,490
Finished goods 594,802 861,819
Total $2,513,545 $2,137,198
NET INVESTMENT IN SALES TYPE LEASES
The net investment in sales type leases consists of the
following:
March 31, June 30,
1997 1996
Total minimum lease payments receivable $57,355 $91,888
Less unearned interest (4113) (9,290)
Net investment in sales type leases $53,242 $82,598
<PAGE> 7
THERMOGENESIS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONT'D)
MARCH 31, 1997
(UNAUDITED)
EQUITY
During the nine months ended March 31, 1997, 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 $11,902 was
capitalized in equipment as of March 31, 1997.
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 $42,000.
The Company received proceeds of $577,500 upon 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 NINE MONTHS ENDED MARCH 31, 1997 AND 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, 1997, by approximately 31% and 109%, respectively, from the
corresponding 1996 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 77% for
the three months ended March 31, 1997, as compared to 59% for
the corresponding 1996 period and 62% for the nine months ended
March 31, 1997, as compared to 57% for the corresponding 1996
period. Cost of sales increased as a percentage of revenues due
to higher overhead from staff increases, facility expansion in
anticipation of production of new products and decreased
production volume. Manufacturing facility space increased by
33%, staff increased by 30% (primarily document control and
quality assurance) and production volume decreased by 40% from
the previous quarter. Additionally, during the nine month
period ended march 31, 1997, the Company made an inventory
adjustment of $150,000 to reflect a write down for
technological obsolescence of stock plasma freezers.
General and administrative expenses for the three and nine
months ended March 31, 1997 increased by 375% and 189%,
respectively, from the corresponding 1996 periods. A 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 nine months
ended March 31, 1997 increased by 70% and 86%, respectively,
over the corresponding 1996 periods. Expenses increased due to
added personnel, non-recurring market studies ($65,000) 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.
Research and development expenses for the three and nine months
ended December 31, 1996, increased by 92% and 131%,
respectively, over the corresponding 1996 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:
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(CONT'D)
RESULTS OF OPERATIONS (CONT'D)
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<trademark> for testing and
surgical support in clinical trials under way, $63,000 of
equipment and disposables consumed in the CryoSeal<trademark>
clinical trials and expanded the R&D facility. Management
believes that research and development is essential to
maintaining the Company's market position and therefore,
considers such costs a continuing cost of doing business.
ISSUANCE OF STOCK OPTIONS FOR SERVICES:
During the period ended March 31, 1997, the Company recorded
$42,000 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 $42,000 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 March 31, 1996 and 1997, the Company
had consumed cash resources for operating activities. These
resources were primarily used to fund increases in accounts
receivable, reduce accounts payable and the net loss resulting
from marketing activities and product development.
Working capital increased by $6,015,727. 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 used $2,775,428 for operations for the nine months
ended March 31, 1997. This was due to increased research and
development, lower sales volume in relationship to
manufacturing fixed costs and added personnel in anticipation
of new products production. Additionally, the Company has
invested $512,620 in capital equipment for expected production
and sales of new products. Cash flow from financing activity
totaled $7,890,184 for the nine months ended March 31, 1997.
This was attributable to proceeds from the November 1996 unit
offering and the exercise of warrants and options. The Company
expects, based upon its current business plan, its existing
cash equivalents and/or investment capital will be available to
satisfy its current working capital needs for the next twelve
months.
At March 31, 1997, the Company has no significant outstanding
capital commitments.
<PAGE> 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.
Form 8-K for event dated March 27, 1997 -
License Agreement with Pall Medsep and NYBC.
<PAGE> 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 14, 1997
WALTER J. LUDT, III
Chief Financial Officer
(Principal Financial and Accounting Officer)
PHILIP H. COELHO
President and Chief
Executive Officer
(Principal Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000811212
<NAME> THERMOGENESIS CORP.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,865,215
<SECURITIES> 0
<RECEIVABLES> 2,324,775
<ALLOWANCES> 97,913
<INVENTORY> 2,513,545
<CURRENT-ASSETS> 10,799,048
<PP&E> 1,526,391
<DEPRECIATION> 476,408
<TOTAL-ASSETS> 12,137,942
<CURRENT-LIABILITIES> 1,142,382
<BONDS> 0
0
0
<COMMON> 15,862
<OTHER-SE> 10,754,699
<TOTAL-LIABILITY-AND-EQUITY> 12,137,942
<SALES> 5,744,545
<TOTAL-REVENUES> 5,802,370
<CGS> 3,565,284
<TOTAL-COSTS> 3,565,284
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,448
<INCOME-PRETAX> (2,036,312)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,036,312)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,036,312)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
