SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. __)
Filed by the Registrant |X|
Filed by a party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to |_| ss.240.14a-11(c)
or |_| ss.240.14a-12
THERMOGENESIS CORP.
(Name of Registrant as Specified In Its Charter)
-------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
-------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
__________________________
4) Proposed maximum aggregate value of transaction: ______________
5) Total fee paid: ___________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ________________________________
2) Form, Schedule or Registration Statement No.: ______________
3) Filing Party: __________________________________________
4) Date Filed: ___________________________________________
<PAGE>
THERMOGENESIS CORP.
3146 Gold Camp Drive
Rancho Cordova, California 95670
(916) 858-5100
To the Stockholders of THERMOGENESIS CORP.:
You are invited to attend a Special Meeting of the Stockholders of
THERMOGENESIS CORP. ("Company") which will be held on July 21, 1999, at 2:00
p.m. (local time) at the Company's office located at 3146 Gold Camp Drive,
Rancho Cordova, California 95670.
The accompanying Notice of the Special Meeting of the Stockholders and
Proxy Statement contain the matters to be considered and acted upon, and you
should read such material carefully.
The Proxy Statement contains information concerning (i) the approval of
an amendment to the Company's Certificate of Incorporation to eliminate the
repurchase rights granted to stockholders of Series A Convertible Preferred
Stock; (ii) the approval of an amendment to the Company's Certificate of
Incorporation to adopt a one-for-two share consolidation, which may be
implemented in the future at the Board's discretion, if at all; and (iii) to
reaffirm the prior approval of an amendment to the Company's Certificate of
Incorporation to adopt a one-for-four share consolidation, which may be
implemented in the future at the Board's discretion, if at all. The Board of
Directors strongly recommends your approval of these proposals.
It is important that your shares be represented. Accordingly, we urge
you to mark, sign, date and return the enclosed proxy promptly. You may, of
course, withdraw your proxy if you attend the meeting and choose to vote in
person.
Sincerely,
/s/ Philip H. Coelho
Philip H. Coelho
Chief Executive Officer
July 7, 1999
<PAGE>
THERMOGENESIS CORP.
3146 Gold Camp Drive
Rancho Cordova, California 95670
(916) 858-5100
NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS
To Be Held On July 21, 1999
NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders of
THERMOGENESIS CORP., a Delaware corporation ("Company"), will be held on July
21, 1999, at 2:00 p.m. (local time), at 3146 Gold Camp Drive, Rancho Cordova,
California 95670, for the following purposes, which are more completely
discussed in the accompanying Proxy Statement:
1) To amend the Company's Certificate of Incorporation to eliminate
the repurchase rights granted to the stockholders of Series A
Convertible Preferred Stock;
2) To amend the Company's Certificate of Incorporation to adopt a
one-for-two share consolidation, subject to Board of Directors'
discretion as to the timing of its implementation, if at all;
3) To reaffirm the prior approval to amend the Company's Certificate
of Incorporation to adopt a one-for-four share consolidation,
subject to Board of Directors' discretion as to the timing of its
implementation, if at all; and
4) To transact such other business as may properly come before the
meeting including any continuance or adjournments thereof.
Only stockholders of record at the close of business on July 6, 1999,
are entitled to notice of and to vote at the Special Meeting of the
Stockholders.
By Order of the Board of Directors
/s/ David C.Adams
David C. Adams
Secretary
July 7, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE COMPANY'S SPECIAL MEETING OF
STOCKHOLDERS. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE
NUMBER YOU OWN. EVEN IF YOU PLAN TO BE PRESENT AT THE SPECIAL MEETING, YOU ARE
URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE EITHER IN PERSON OR
BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY
TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE>1
PROXY STATEMENT
of
THERMOGENESIS CORP.
3146 Gold Camp Drive
Rancho Cordova, California 95670
(916) 858-5100
Information Concerning the Solicitation
This Proxy Statement is furnished to the stockholders of THERMOGENESIS
CORP. ("Company") in connection with the solicitation of proxies on behalf of
the Company's Board of Directors for use at the Company's Special Meeting of the
stockholders (the "Meeting") to be held on July 21, 1999, at 2:00 p.m. (local
time), at 3146 Gold Camp Drive, Rancho Cordova, California 95670, and at any and
all adjournments. Only stockholders of record on July 6, 1999, will be entitled
to notice of and to vote at the Meeting.
The proxy solicited, if properly signed and returned to the Company and
not revoked prior to its use, will be voted at the Meeting in accordance with
the instructions contained in the proxy. If no contrary instructions are given,
each proxy received will be voted "FOR" the approval of Proposals One, Two and
Three and, at the proxy holders' discretion, on such other matters, if any,
which may come before the Meeting (including any proposal to continue or adjourn
the Meeting). Any stockholder giving a proxy has the power to revoke it at any
time before it is exercised by (i) filing with the Company written notice of its
revocation addressed to Secretary, THERMOGENESIS CORP., 3146 Gold Camp Drive,
Rancho Cordova, California 95670, (ii) submitting a duly executed proxy bearing
a later date, or (iii) appearing in person at the Meeting and giving the
Secretary notice of his or her intention to vote in person.
The Company will bear the entire cost of preparing, assembling, printing
and mailing proxy materials furnished by the Board of Directors to stockholders.
Copies of proxy materials will be furnished to brokerage houses, fiduciaries and
custodians to be forwarded to beneficial owners of the Common Stock. In addition
to the solicitation of proxies by use of the mail, some of the officers,
directors, employees and agents of the Company may, without additional
compensation, solicit proxies by telephone or personal interview, the cost of
which the Company will also bear. The Company may also engage a solicitation
company to assist in obtaining proxies. The Company will bear the cost of such
solicitation which will be approximately $5,000.
This Proxy Statement and form of proxy were first mailed to stockholders
on or about July 7, 1999.
Record Date and Voting Rights
The Company is currently authorized to issue up to 50,000,000 shares of
Common Stock, par value $0.001, and 2,000,000 shares of Preferred Stock, par
value $0.001. As of July 6, 1999, 20,597,532 shares of Common Stock were issued
and outstanding and 884,000 shares of Series A Convertible Preferred Stock were
issued and outstanding. Each share of Common Stock shall be entitled to one vote
on all matters submitted for stockholder approval and each share of Series A
Convertible Preferred Stock is entitled to vote on all matters submitted for
stockholder approval on an as converted basis voting together with the Common
Stock. Each share of Series A Convertible Preferred Stock is convertible into
five (5) shares of Common Stock. With regards to Proposal One, the Series A
Convertible Preferred Stock will also be voting on such Proposal as a separate
class. As of July 6, 1999, 884,000 shares of Series A Convertible Preferred
Stock were outstanding and entitled to convert into 4,420,000 shares of Common
<PAGE>2
Stock. The record date for determination of stockholders entitled to notice of,
and to vote at the Meeting, is July 6, 1999.
A majority of the shares entitled to vote of the Common Stock and Series
A Convertible Preferred Stock, as determined on the record date, represented in
person or by proxy constitute a quorum for the Meeting. For purposes of Proposal
One, a majority of the outstanding shares of Series A Convertible Preferred
Stock, as determined on the record date, represented in person or by proxy shall
constitute a quorum entitled to take action with respect to that proposal. Under
Delaware law, abstentions and broker non-votes shall be counted for purposes of
determining quorum but will not be counted either for or against any proposal.
The affirmative vote of a majority of the shares of outstanding Common
Stock and outstanding Series A Convertible Preferred Stock voting together as a
class, and the affirmative vote of a majority of shares of outstanding of Series
A Convertible Preferred Stock voting separately as a class, is necessary to
approve Proposal One. As discussed below, the holders of a majority of the
Series A Convertible Preferred Stock consented to approval of the amendment and
to eliminate their repurchase rights.
The affirmative vote of a majority of the shares of outstanding Common
Stock and Series A Convertible Preferred Stock, voting together as a class, is
necessary to approve Proposals Two and Three.
PROPOSAL ONE
APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
ELIMINATE THE REPURCHASE RIGHTS GRANTED TO THE HOLDERS OF SERIES A
CONVERTIBLE PREFERRED STOCK.
Reason For the Proposal
On May 20, 1999, the Company was notified by The Nasdaq SmallCap Market,
the market on which the Company's Common Stock is listed, that based on its
review of the Company's most recent Form 10-Q, for the quarter ended March 31,
1999, the Company failed to meet one of three of The Nasdaq SmallCap Market's
maintenance criteria: (1) net tangible assets of $2,000,000; (2) market
capitalization of $35,000,000; or (3) net income of $500,000 in the most
recently completed fiscal year or in two of the last three most recently
completed fiscal years. In the event the Company continued to fail to meet one
of the maintenance requirements pursuant to Nasdaq Rule 4310(c)(2), The Nasdaq
SmallCap Market would take action to delist the Company's Common Stock from such
market.
In January 1999, the Company completed the private placement of
approximately $6,434,600 of shares of Series A Convertible Preferred Stock.
Under the terms of the Series A Convertible Preferred Stock, the holders of
Series A Convertible Preferred Stock may require, after five years from the date
the Series A Convertible Preferred Stock was issued, that the Company
repurchase, in whole or in part, the number of shares of Series A Convertible
Preferred Stock held by such holder. Due to the repurchase right granted to the
holders of Series A Convertible Preferred Stock, The Nasdaq SmallCap Market is
treating the Company's Series A Convertible Preferred Stock as a debt for the
purpose of calculating net tangible assets. In treating the Series A Convertible
Preferred Stock as debt, the Company's current net tangible assets fall below
maintenance requirement for The Nasdaq SmallCap Market. Although the Company
does not agree with this interpretation, in response to the notice the Company
<PAGE>
began discussions with holders of the majority of the outstanding shares of
Series A Convertible Preferred Stock. After discussions, the holders of the
majority of the outstanding shares of the Series A Convertible Preferred Stock
have consented to the amendment and intend to vote for the amendment to the
Company's Certificate of Incorporation to eliminate the repurchase rights
granted to the holders of the Series A Convertible Preferred Stock in order to
comply with the minimum net tangible assets maintenance requirement of
$2,000,000 for continued listing of its Common Stock on The Nasdaq SmallCap
Market.
Although no delisting action was initiated by The Nasdaq SmallCap Market
at the time of the notice, the Company was given until July 30, 1999, in which
to satisfy one of the three alternatives. In the event that the Company fails to
satisfy one of the three alternatives, the Company's Common Stock may be
delisted. The Company believes that adoption of Proposal One, which will
eliminate the right of the holders of the Series A Convertible Preferred Stock
to require the Company to repurchase their Series A Convertible Preferred Stock,
will result in the Series A Convertible Preferred Stock being treated as equity
and satisfy The Nasdaq SmallCap Market net tangible assets maintenance
requirement. However, even if as a result of the passage of Proposal One the
Company satisfies the net tangible assets requirement to remain eligible for
listing, there can be no assurance that the Company will continue to remain
above the net tangible assets requirement or that the Company will able to meet
an alternative Nasdaq SmallCap Market maintenance listing standard in the
future.
The Company believes that maintaining the listing of its Common Stock on
The Nasdaq SmallCap Market is in the best interest of the Company and its
stockholders. Inclusion in The Nasdaq SmallCap Market increases liquidity and
may potentially minimize the spread between the "bid" and "asked" prices quoted
by market makers. Further, a listing on The Nasdaq SmallCap Market may enhance
the Company's access to capital and increase the Company's flexibility in
responding to anticipated capital requirements. The Company believes that
prospective investors will view an investment in the Company more favorably if
its shares of Common Stock qualify for listing on The Nasdaq SmallCap Market.
In the event that the Company's is delisted from The Nasdaq Stock
Market, trading, if any, in the Company's Common Stock would likely only be
conducted in the non-Nasdaq over-the-counter market in the so-called "pink
sheets" or the NASD's "Electronic Bulletin Board." This may have a negative
impact on the liquidity and price of the Common Stock and investors may find it
more difficult to purchase or dispose of, or to obtain accurate quotations as to
the market value of, the Company's Common Stock.
For all of the above reasons, the Company believes that eliminating the
repurchase rights granted to the holders of the Series A Convertible Preferred
Stock is in the best interest of the Company and its stockholders.
Vote Required
Proposal One must be approved by the holders of a majority of the
outstanding Common Stock and Series A Convertible Preferred Stock, voting
together as a class, and the holders of a majority of the outstanding Series A
Convertible Preferred Stock voting separately as a class. As discussed above,
holders of a majority of the outstanding shares of Series A Convertible
Preferred Stock have agreed to approve the proposal.
<PAGE>4
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE ADOPTION OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO ELIMINATE THE
REPURCHASE RIGHTS GRANTED TO THE STOCKHOLDERS OF SERIES A CONVERTIBLE PREFERRED
STOCK.
PROPOSAL TWO
APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO IMPLEMENT
A ONE-FOR-TWO SHARE CONSOLIDATION SUBJECT TO THE COMPANY'S BOARD OF DIRECTORS'
DISCRETION TO DELAY FILING THE AMENDMENT (FOR A PERIOD NOT TO EXCEED NINE (9)
MONTHS) OR NOT TO FILE THE AMENDMENT
Background
On December 11, 1998, the stockholders of the Company approved a
one-for-four share consolidation of Common Stock. Subsequent to the
stockholder's approval of the one-for-four share consolidation, the Board of
Directors determined that due to improved market conditions it was not in the
best interest of the Company to immediately file the amendment providing for the
consolidation.
The Board of Directors is still concerned about the low trading price
for the Company's Common Stock. Due to changing market conditions, the Board has
not determined whether it would be in the Company's best interest to implement a
share consolidation. At this time, the Board of Directors does not intend to
implement a share consolidation. However, the Board of Directors has concluded
that it may be in the best interest of the Company to allow the Board
flexibility to implement a one-for-two share consolidation as set forth in this
Proposal Two or to reaffirm the one-for-four share consolidation as approved at
the December 11, 1998 meeting (See Proposal Three), if it deems it necessary,
subject to the Board's discretionary authority to delay filing the amendment
(for a period not to exceed nine (9) months) or not to file the amendment at
all. If Proposal Two is adopted by the shareholder and the Board of Directors
decides to implement the one-for-two share consolidation, the Board will not
implement the one-for-four share consolidation pursuant to Proposal Three.
General
The Board has approved Proposal Two for the one-for-two share
consolidation subject to stockholder approval. The one-for-two share
consolidation proposal must be approved by the holders of a majority of the
outstanding Common Stock and Series A Convertible Preferred Stock voting as
together a single class.
If approved by the shareholders and implemented by the Board, other than
adjusting the total number of shares issued adoption of the one-for-two share
consolidation will result in no other material changes to ownership of the
stock. The voting rights and other privileges that each share of Common Stock
and Series A Convertible Preferred Stock enjoy before the proposed one-for-two
share consolidation will be the same following the one-for-two share
consolidation. Each stockholder will hold the same percentage of Common Stock
and Series A Convertible Preferred Stock outstanding immediately following the
one-for-two share consolidation as each stockholder did immediately prior to the
one-for-two share consolidation, except that the consolidation may result in an
immaterial adjustment due to the purchase of any fractional shares of Common
Stock that result from the consolidation. See "Exchange of Stock Certificate; No
Fractional Shares."
<PAGE>5
The one-for-two share consolidation will be implemented by an amendment
to the Company's Certificate of Incorporation and will become effective upon the
filing of such amendment with the Secretary of State of Delaware (the "Effective
Date"). The Board of Directors may determine that due to market or other
conditions, it may be in the best interests of the Company to delay (for a
period not to exceed nine (9) months from the date of the Meeting) implementing
the one-for-two share consolidation or not to implement the one-for-two share
consolidation at all. As previously discussed, it is the current intention of
the Board of Directors not to implement the one-for-two share consolidation at
this time, if at all. The Board of Directors is seeking shareholder approval for
the one-for-two share consolidation at this time in order to provide it
flexibility in the event that the Board determines that it is in the best
interest of the stockholders to implement the consolidation due to market or
other conditions. In the event the Board decides to implement the share
consolidation, it will notify the stockholders by a public announcement in
advance of the Effective Date.
If the one-for-two share consolidation is adopted, at the Effective
Date, each two (2) shares of Common Stock issued and outstanding will
automatically be reclassified and converted into one (1) share of Common Stock.
Any fractional interest resulting from such reclassification will be paid for
upon exchange of the outstanding certificates based upon the average of the high
and low bid price for the Common Stock as quoted on The Nasdaq SmallCap market
on the Effective Date. The conversion rate for shares of Series A Convertible
Preferred Stock will automatically be adjusted to reflect the one-for -two share
consolidation if the amendment is adopted.
If the one-for-two share consolidation proposal is approved by the
stockholders of the Company, the amendment will not be filed immediately.
Notwithstanding approval of the one-for-two share consolidation proposal by the
stockholders, the Board of the Company may elect not to file, or elect to delay
the filing of, the one-for-two share consolidation amendment, if the Board
determines that filing such amendment would not be in the best interest of the
Company and its stockholders. The actual timing of such filing (and whether such
filing is made) will be determined by the Board based upon their evaluation as
to when such action will be most advantageous to the Company and its
stockholders. In addition, the Board may make any and all changes to the
one-for-two share consolidation amendment that it deems necessary to give effect
to the intent and purpose of the one-for-two share consolidation.
Reasons For The One-For-Two Share Consolidation
Although not contemplated at this time, the intent of the one-for-two
share consolidation is to combine the outstanding shares of Common Stock so that
the Common Stock outstanding after giving effect to the one-for-two share
consolidation trades at a higher price per share than the Common Stock
outstanding before the one-for-two share consolidation. If implemented, the
Company believes that the consolidation will aid the Company in remaining
eligible for listing on The Nasdaq SmallCap Market.
As part of continued listing on that The Nasdaq SmallCap Market, the
Company must satisfy certain quantitative criteria. One of the requirements for
continued listing is that the minimum bid price for the Company's Common Stock
must be $1 per share. Failure to meet this requirement for a period of 30
consecutive business days will result in notification by Nasdaq of possible
de-listing from The Nasdaq SmallCap Market if the minimum bid is not brought
within compliance over a 90-day period following the notification. One method to
increase the bid price for the Common Stock is to consolidate the outstanding
shares, thereby increasing the attached value per share. The following table
illustrates the possible effect of a one-for-two share consolidation on the
stock price, assuming all other market factors remain the same:
<PAGE>6
<TABLE>
<S> <C> <C> <C>
Before One-for-Two Share Consolidation After One-for-Two Share Consolidation
- --------------------------------------- --------------------------------------
Number of Shares Owned Per Share Price Number of Shares Owned Per Share Price
- ---------------------- --------------- ----------------------- ----------------
100,000 $1.00 50,000 $2.00
</TABLE>
This table demonstrates the mathematical implication of a one-for-two
share consolidation. The Company cannot predict the actual result of trading and
bid price for the shares of Common Stock following the one-for-two share
consolidation, if implemented, due to the numerous market factors that affect
trading daily, including impacts to the market as a whole.
The Board of Directors further believes that if the future per share
price of the Common Stock is low, the low market price and the large number of
shares of Common Stock outstanding may have a negative impact on the market for
the Company's Common Stock. Furthermore, the large number of shares outstanding
and the relatively few shares that are traded on a daily basis in comparison,
may hindered the Company's ability to raise capital by issuing additional shares
of Common Stock. The Board of Directors is hopeful that if the one-for-two share
consolidation is implemented, the market will react positively and in such a
fashion that the price of the Company's Common Stock will rise and cease to be
treated as "low-priced" stock by the investment community.
The Board of Directors recognizes that the proposed one-for-two share
consolidation, if implemented, will not, in itself, result in the Company's
Common Stock being categorized other than as a low-priced stock, and that the
only path to being categorized as other than low-priced is through sustained
growth and profitability, neither of which can be assured, and the absence of
which will result negatively upon the trading value of the Company's Common
Stock following the proposed one-for-two share consolidation.
The Company believes there are several reasons beyond Nasdaq listing
requirements why the proposed one-for-two share consolidation is prudent and why
it may enhance the market for the Common Stock. These reasons are summarized as
follows:
1. Institutional investors often have internal policies that prevent the
purchase of low-priced stocks and many brokerage houses do not permit
low-priced stocks to be used as collateral for margin accounts. Similarly,
many banks do not permit collateralization of loans through the pledge of
low-priced stocks. If the one-for-two share consolidation, coupled with
Company potential growth and profitability, results in an increase in the
per share price for the Company's Common Stock, the Company may be able to
attract additional institutional investors as well as provide an avenue for
its stockholders to collateralize loans using their Common Stock instead of
selling that stock for needed money.
2. Further, some brokerage firm's implement internal policies and practices
that tend to discourage dealing with low-priced stock (stock priced under
$5 per share). These practices result in time-consuming procedures and
internal controls that must be complied with for payment of brokerage
commissions (and additional procedures, including branch manager approval),
which function to make handling low-priced stock unattractive to brokers
and registered representatives of a brokerage firm. Some brokerage firms
also require a non-solicitation letter from the client when the client
desires to purchase a low-priced stock. These policies and procedures add
delay and burden to the process, based on separate business criteria of the
<PAGE>7
brokerage firm, and are designed to balance the commission to be paid with
the cost of handling the stock transaction, rather than considering and
evaluating such factors as the underlying nature of the transaction and
quality of the issuer. The Company believes that such policies do not
foster evaluation of its reported results and prospects for future growth
and stockholder return, factors which should be considered in evaluating
stock prices.
3. Since the broker's commissions and transaction costs on low-priced stock
generally represent a higher percentage of the stock sale price than
commissions and costs on higher-priced stocks, the current share price of
the Company's Common Stock can result in individual stockholders paying
transaction costs (commissions, mark-ups, mark-downs, etc.) which are a
higher percentage of the total share value than would be the case if the
Company's share price were higher.
Although the Board of Directors is hopeful that the decrease in the
number of shares of Common Stock that would be outstanding after the proposed
one-for-two share consolidation will result in an increased price level per
share of Common Stock which will encourage interest in the market for that
Common Stock and promote greater marketability for the Common Stock, no
assurances can be given that the market will respond to the one-for-two share
consolidation with an increase in the per share price or with any increase in
average daily trading volume.
Finally, the effect of the proposed one-for-two share consolidation, if
adopted and implemented, and resulting decrease in the number of shares of
Common Stock on the market, could adversely affect the trading value of such
Common Stock if there is not a corresponding increase in the per share price
level for such stock following the one-for-two share consolidation. Many factors
beyond the Company's control will affect the ultimate trading market and there
can be no assurance that the per-share price for the Company's Common Stock
immediately after the one-for-two share consolidation will reflect the
corresponding math material value based on the one-for-two share consolidation
alone, or that any such value will be sustained for any period of time.
The Company's Common Stock has been traded on The Nasdaq SmallCap Market
under the symbol "KOOL" since 1987. On June 23, 1999, the closing price for the
Company's Common Stock, as quoted on The Nasdaq SmallCap Market, for a share of
Common Stock was $1.25 per share. The following table sets forth the range of
high and low prices for the Company's Common Stock for the fiscal years ended
June 30, 1997 and 1998, and for the first three quarters of fiscal 1999, as
reported in The Nasdaq SmallCap Market. Such prices reflect inter-dealer
quotation without adjustment for retail mark ups, mark downs or commissions and
may not represent actual transactions.
<TABLE>
<S> <C> <C>
Fiscal 1999 High Low
- ---------------- -------- ------
First Quarter $2.31 $1.25
Second Quarter $2.69 $.75
Third Quarter $3.31 $1.75
<PAGE>8
Fiscal 1998: High Low
- ---------------- -------- ------
First Quarter $3.56 $3.38
Second Quarter $3.13 $2.97
Third Quarter $2.75 $2.63
Fourth Quarter $2.25 $2.09
Fiscal 1997: High Low
- ---------------- -------- ------
First Quarter $4.25 $4.06
Second Quarter $3.88 $3.69
Third Quarter $3.06 $2.88
Fourth Quarter $2.78 $2.78
</TABLE>
Effect Of The One-For-Two Share Consolidation Proposal
Assuming approval of and adoption of the one-for-two share
consolidation, each stockholder will own one-half as many shares (but the same
percentage of the outstanding shares) as such stockholder owned before the
one-for-two share consolidation. The one-for-two share consolidation may,
however, result in an immaterial adjustment due to the purchase of any
fractional shares of Common Stock that result from the consolidation. Each
stockholder of the Company immediately before the one-for-two share
consolidation will continue to be a stockholder immediately after the
one-for-two share consolidation. The number of shares of Common Stock that may
be purchased upon the exercise of outstanding options, warrants, and other
securities convertible into Common Stock, such as the Series A Convertible
Preferred Stock, or exercisable or exchangeable for shares of Common Stock
(collectively, "Convertible Securities") and the per share exercise or
conversion prices thereof will be adjusted appropriately as of the Effective
Date so that the aggregate number of shares of Common Stock issuable in respect
of Convertible Securities immediately following the Effective Date will be
one-half (without taking into account the effect of rounding up) of the number
issuable in respect thereof immediately prior to the Effective Date and the
total exercise or conversion prices for all of such shares issuable in respect
of Convertible Securities will remain unchanged. For example, a holder of a
stock option to purchase 1,000 shares of Common Stock at an exercise price of
$1.00 per share prior to the Effective Date will be the holder of a stock option
to purchase 500 shares of Common Stock at an exercise price of $2.00 per share
at the Effective Date. The number of shares of Common Stock reserved for
issuance under an option plan would also be reduced after the Effective Date to
one-half of the number reserved for issuance under an option plan prior to the
Effective Date.
The one-for-two share consolidation will also result in some
stockholders owning "odd lots" of less than 100 shares of Common Stock received
as a result of the one-for-two share consolidation. Brokerage commissions and
other costs of transactions in odd lots may be higher, particularly on a
per-share basis, than the cost of transactions in even multiples of 100 shares.
The par value of the Common Stock will remain at $0.001 per share following the
one-for-two share consolidation, and the number of shares of the Common Stock
outstanding will be reduced. As a consequence, the aggregate par value of the
outstanding Common Stock will be reduced, while the aggregate capital in excess
of par value attributable to the outstanding Common Stock for statutory and
accounting purposes will be correspondingly increased. The one-for-two share
consolidation will not affect the Company's total stockholders' equity. If the
one-for-two share consolidation is implemented, all share and per share
information would be retroactively adjusted following the Effective Date to
reflect the one-for-two share consolidation for all periods presented in future
filings by the Company with the Securities and Exchange Commission.
<PAGE>9
If the one-for-two share consolidation is adopted and implemented, the
authorized number of shares will remain the same. The Board believes that the
availability of additional shares may be beneficial to the Company in the
future. The availability of additional authorized shares will allow the Board to
issue shares for corporate purposes, if appropriate opportunities should arise,
without further action by stockholders or the time delay involved in obtaining
stockholder approval (unless approval is required by law or regulation or the
rules of The Nasdaq SmallCap Market). Such purposes could include share
issuances for future acquisitions of other businesses or meeting requirements
for working capital or capital expenditures through the issuance of shares. To
the extent that any additional shares (or securities convertible into Common
Stock) may be issued on other than a pro rata basis to current stockholders, the
present ownership position of current stockholders may be diluted. The Common
Stock has no preemptive rights. In addition, if another party should seek to
acquire or take over control of the Company, and the Board does not believe such
transaction is in the best interest of the Company and its stockholders, some or
all of the authorized shares could be issued to another party to try to block
such transaction.
Exchange Of Stock Certificates; No Fractional Shares
If the one-for-two share consolidation is adopted and implemented, the
combination and reclassification of shares of Common Stock pursuant to the
one-for-two share consolidation will occur automatically on the Effective Date
without any action on the part of stockholders of the Company and without regard
to the date certificates representing shares of Common Stock prior to the
one-for-two share consolidation are physically surrendered for new certificates.
Every two (2) shares of issued Common Stock would be converted and reclassified
into one (1) share of post-one-for-two share consolidation Common Stock. Any
fractional interest resulting from such reclassification will be paid for upon
exchange of the outstanding certificates based upon the average of the high and
low bid price for the Common Stock as quoted on The Nasdaq SmallCap market on
the Effective Date. The following table gives an example of the effect of the
one-for-two consolidation:
<TABLE>
<S> <C> <C> <C>
Common Stock Owned Common Stock Owned Share Fractions Paid
Stockholder Before Effective Date After Effective Date After Effective Date
- --------------- --------------------- -------------------- ----------------------
Stockholder A 1,000 500 -0-
Stockholder B 1,001 500 1/2 share
</TABLE>
If the one-for-two share consolidation is adopted and implemented, as
soon as practicable after the Effective Date, transmittal forms will be mailed
to each holder of record of certificates for shares of Common Stock to be used
in forwarding such certificates for surrender and exchange for certificates
representing the number of shares of Common Stock such stockholder is entitled
to receive as a consequence of the one-for- two share consolidation. The
transmittal forms will be accompanied by instructions specifying other details
of the exchange. Upon receipt of such transmittal form, each stockholder should
surrender the certificates representing shares of Common Stock prior to the
one-for-two share consolidation in accordance with the applicable instructions.
Each holder who surrenders certificates will receive new certificates
representing the whole number of shares of Common Stock that such stockholder
holds as a result of the one-for-two share consolidation. No scrip or fractional
share certificates of post-one-for-two share consolidation Common Stock
certificate will be issued in connection with the proposed consolidation.
Stockholders who would otherwise receive fractional shares will receive,
instead, the cash value for such fractional shares determined by multiplying the
fractional shares by the average of the high and low bid price for the Company's
Common Stock on the Effective Date. Stockholders will not be required to pay any
transfer fee or other fee in connection with the exchange of certificates. As
<PAGE>10
previously stated, the Board of Directors has not determined whether it would be
in the Company's best interest to implement a share consolidation. THEREFORE,
STOCKHOLDERS SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A
TRANSMITTAL FORM.
As of the Effective Date, each certificate representing shares of Common
Stock outstanding prior to the Effective Date will be deemed canceled and, for
all corporate purposes, will be deemed only to evidence ownership of the number
of shares of Common Stock into which the shares of Common Stock evidenced by
such certificate have been converted by the one-for-two share consolidation.
Federal Income Tax Consequences
The following discussion of material federal income tax consequences of
the one-for-two share consolidation is based upon the Internal Revenue Code of
1986, as amended (the "Code"), Treasury Regulations thereunder, judicial
decisions, and current administrative rulings and practices, all as in effect on
the date hereof and all of which could be repealed, overruled, or modified at
any time, possibly with retroactive effect. No ruling from the Internal Revenue
Service (the "IRS") with respect to the matters discussed herein has been
requested, and there is no assurance that the IRS would agree with the
conclusions set forth in this discussion.
This discussion is for general information only and does not address
certain federal income tax consequences that may be relevant to particular
stockholders in light of their personal circumstances or to certain types of
stockholders (such as dealers in securities, insurance companies, foreign
individuals and entities, financial institutions, and tax-exempt entities) who
may be subject to special treatment under the federal income tax laws. This
discussion also does not address any tax consequences under state, local, or
foreign laws. IF THE ONE-FOR-TWO SHARE CONSOLIDATION IS APPROVED AND
IMPLEMENTED, STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISERS AS TO THE PARTICULAR
TAX CONSEQUENCES TO THEM OF THE ONE-FOR-TWO SHARE CONSOLIDATION.
Except as discussed below, no gain or loss should be recognized by a
stockholder who receives only Common Stock upon the one-for-two share
consolidation. The aggregate tax basis of the shares of Common Stock held by a
stockholder following the one-for-two share consolidation will equal the
stockholder's aggregate basis in the Common Stock held immediately prior to the
one-for-two share consolidation and generally will be allocated among the shares
of Common Stock held following the one-for-two share consolidation on a pro-rata
basis. Stockholders who have used the specific identification method to identify
their basis in shares of Common Stock combined in the one-for-two share
consolidation should consult their own tax advisors to determine their basis in
the post-one-for-two share consolidation shares of Common Stock received in
exchange therefor. Shares of Common Stock received should have the same holding
period as the Common Stock surrendered.
Registration and Trading
Assuming the one-for-two share consolidation is approved and
implemented, the post one-for-two share consolidation shares of Common Stock
will continue to be registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Company will continue to file periodic and
current reports with the Securities and Exchange Commission (the "Commission")
pursuant to the Exchange Act. In addition, the Company's post-one-for-two share
<PAGE>11
consolidation shares of Common Stock will continue to be traded on The Nasdaq
SmallCap Market. The Company intends to file all required notifications with The
Nasdaq SmallCap Market to provide for continued trading (on a post-consolidated
basis) in coordination with the Effective Date. Certificates representing the
post-one-for-two share consolidation shares of Common Stock will, however,
contain a new CUSIP number. Further, the Company intends to file all reports
with regulatory authorities and issue a press release in the event it decides to
implement the one-for-two share consolidation.
The Company has no intention of entering into any future transaction or
business combination which would result in deregistration of the
post-one-for-two share consolidation shares of Common Stock under the Exchange
Act, or which might result in loss of eligibility for the post-one-for-two share
consolidation shares of Common Stock to be listed and traded on The Nasdaq
SmallCap Market.
Vote Required
The affirmative vote of a majority of the outstanding Common Stock and
Series A Convertible Preferred Stock voting together as a single class is
necessary to approve the amendment to the Company's Certificate of Incorporation
to implement a one-for-two share consolidation subject to the Board of Directors
of the Company discretionary authority to delay filing the amendment (for a
period not to exceed nine (9) months from the Meeting date) or not to file the
amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE ADOPTION OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO IMPLEMENT A
ONE-FOR-TWO SHARE CONSOLIDATION SUBJECT TO THE BOARD OF DIRECTORS OF THE COMPANY
DISCRETIONARY AUTHORITY TO DELAY FILING THE AMENDMENT (FOR A PERIOD NOT TO
EXCEED NINE (9) MONTHS FROM THE DATE OF THE MEETING) OR NOT TO FILE THE
AMENDMENT.
PROPOSAL THREE
TO REAFFIRM THE PRIOR APPROVAL TO IMPLEMENT A ONE-FOR-FOUR SHARE CONSOLIDATION,
SUBJECT TO THE COMPANY'S BOARD OF DIRECTORS' DISCRETION TO DELAY FILING THE
AMENDMENT (FOR A PERIOD NOT TO EXCEED NINE (9) MONTHS) OR NOT TO FILE THE
AMENDMENT
General
As discussed in Proposal 2, on December 11, 1998, the stockholders of
the Company approved a one- for-four share consolidation of Common Stock.
Subsequent to the stockholder's approval of the one-for-four share
consolidation, the Board of Directors determined that due to market conditions,
it was not in the best interest of the Company to file the amendment
implementing the consolidation.
The Board of Directors now seeks stockholders' approval to reaffirm the
prior approval to implement a one-for-four share consolidation subject to the
Board of Directors discretionary authority to delay filing the amendment (for a
period not to exceed nine (9) months from the date of the Meeting) or not to
file the amendment due to market or other conditions. As previously discussed in
Proposal Two, the Board of Directors has not determined whether it would be in
the Company's best interest to implement a share consolidation, and the Board
does not intend to implement a share consolidation at this time. However, by
re-affirming the one-for-four share consolidation, it provides the Board
flexibility to either implement the one-for-two share consolidation, as
discussed in Proposal Two, or the one-for-four share consolidation pursuant to
this Proposal Three, or not implementing any consolidation, depending on market
condition and the Board's evaluation as which one is most advantageous to the
Company and the stockholders. Notwithstanding the approval of Proposal Three,
the Board of Directors may elect to delay (for a period not to exceed nine (9)
months from the date of the Meeting) or not to file the one-for-four share
<PAGE>12
consolidation amendment if the Board determines that filing the one-for-four
share consolidation amendment would not be in the best interest of the Company
and its stockholders. If the Board decides to implement the one-for- four share
consolidation pursuant to this Proposal Three, the Board will not implement the
one-for-two share consolidation pursuant to Proposal Two.
If the Board of Directors determines that it is in the best interest of
the Company to implement an one-for-four share consolidation, the one-for-four
share consolidation will be become effective upon the filing of the one-for-four
share consolidation amendment. For a general discussion on (i) the reasons for
the one-for-four share consolidation, (ii) the effect of the one-for-four share
consolidation, (iii) exchange of stock certificate; fractional shares, (iv) the
federal income tax consequences, and (v) registration and trading, please see
the Proposal Two with the following differences:
1. After the filing of the one-for-four share consolidation
amendment with the Secretary of State of Delaware, every four (4)
shares of issued Common Stock would be converted and reclassified
into one (1) share of post-one-for-four share consolidation
Common Stock, and any fractional interest resulting from such
reclassification will be paid for upon exchange of the
outstanding certificates based upon the average of the high and
low bid price for the Common Stock as quoted on The Nasdaq
SmallCap market on the date of the consolidation; and
2. The following table illustrates the possible effect of a
one-for-four share consolidation on the stock price, assuming all
other market factors remain the same. (This table demonstrates
the mathematical implication of a one-for-four share
consolidation):
<TABLE>
<S> <C> <C> <C>
Before One-for-Four Share Consolidation After One-for-Four Share Consolidation
- --------------------------------------------- ---------------------------------------------
Number of Shares Owned Per Share Price Number of Shares Owned Per Share Price
- ---------------------- --------------- ---------------------- ---------------
100,000 $1.00 25,000 $4.00
</TABLE>
Vote Required
The affirmative vote of a majority of the outstanding Common Stock and
outstanding Series A Convertible Preferred Stock voting together as a single
class is necessary to approve the amendment to the Company's Certificate of
Incorporation to implement a one-for-four share consolidation subject to the
Board of Directors of the Company discretionary authority to delay filing the
amendment (for a period not to exceed nine (9) months from the Meeting date) or
not to file the amendment.
<PAGE>13
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE RE- APPROVAL TO
IMPLEMENT A ONE-FOR-FOUR SHARE CONSOLIDATION, SUBJECT TO THE BOARD OF DIRECTORS
OF THE COMPANY DISCRETIONARY AUTHORITY TO DELAY FILING THE AMENDMENT (FOR A
PERIOD NOT TO EXCEED NINE (9) MONTHS FROM THE DATE OF THE MEETING) OR NOT TO
FILE THE AMENDMENT.
Principal Stockholders
The following table sets forth certain information as of July 6, 1999, with
respect to the beneficial ownership of the Company's Common Stock for (i) each
director, (ii) all directors and officers of the Company as a group, and (iii)
each person known to the Company to own beneficially five percent or more of the
outstanding shares of the Company's Common Stock.
<TABLE>
<S> <C> <C>
Name of Shareholder Number Percentage
- --------------------------------------------- ------------- ----------
The Kaufmann Fund, Inc. 3,760,000(1) 14%
Philip H. Coelho TTEE Coelho Living Trust
Chief Executive Officer
3146 Gold Camp Drive
Rancho Cordova, CA 95670 530,238(2) 2%
Vernon International Limited 1,150,000(3) 4%
Hubert Huckel
Director
3146 Gold Camp Drive
Rancho Cordova, CA 95670 50,000(4) *
Patrick McEnany
Director
3146 Gold Camp Drive
Rancho Cordova, CA 95670 120,829(5) *
James H. Godsey
Director
3146 Gold Camp Drive
Rancho Cordova, CA 95670 200,500(6) *
David Howell
Director
3146 Gold Camp Drive
Rancho Cordova, CA 95670 290,000(7) 1%
Directors and officers as a group 1,828,541 7%
</TABLE>
<PAGE>14
Footnotes to Table
* Less than one percent.
(1) Includes warrants to purchase 80,000 shares of Common Stock and 2,880,000
shares of Common Stock to be issued assuming the conversion of 576,000
shares of Series A Preferred Stock.
(2) Includes options to purchase 425,000 shares of Common Stock owned by Mr.
Coelho, warrants to purchase 20,000 shares of Common Stock, and 40,000
shares of Common Stock to be issued assuming the conversion of 8,000 shares
of Series A Preferred Stock.
(3) Includes warrants to purchase 250,000 shares of Common Stock and 400,000
shares of Common Stock to be issued upon the conversion of 80,000 shares of
Series A Preferred Stock.
(4) Includes warrants to purchase 10,000 shares of Common Stock and options to
purchase 40,000 shares of Common Stock.
(5) Includes warrants to purchase 10,000 shares of Common Stock, and options to
purchase 40,000 shares of Common Stock. Also includes 25,829 shares owned
by Equisource Capital of which Mr. McEnany is the sole shareholder and
2,500 owned by Mr. McEnany's spouse. Mr. McEnany disclaims beneficial
ownership of the shares owned by his spouse.
(6) Includes options to purchase 200,000 shares of Common Stock.
(7) Includes warrants to purchase 50,000 shares of Common Stock, and options to
purchase 200,000 shares of Common Stock to be issued upon the conversion of
40,000 shares of Series A Preferred Stock, both of which are in the name of
New England Venture Partners of which Mr. Howell is part owner and Mr.
Howell disclaims 89.5% ownership. Also includes 40,000 options to purchase
40,0000 shares of Common Stock owned by Mr. Howell.
Other Matters
The Board of Directors of the Company knows of no other matters that may or are
likely to be presented to the Meeting. However, if additional matters are
presented at the Meeting, the persons named in the enclosed proxy will vote such
proxy in accordance with their best judgment on such matters pursuant to the
discretionary authority granted to them by the terms and conditions of the
proxy.
THERMOGENESIS CORP.
/s/ PHILIP H. COELHO
-------------------------
Philip H. Coelho
Chairman and President
Rancho Cordova, California
July 7, 1999
<PAGE>15
THERMOGENESIS CORP.
3146 Gold Camp Drive
Rancho Cordova, California 95670
(916) 858-5100
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Philip H. Coelho and James H. Godsey, and each
of them, as proxies with the power to appoint his or their successor, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Common Stock of THERMOGENESIS CORP. ("Company") that the undersigned would be
entitled to vote if personally present at the Special Meeting of stockholders to
be held on July 21, 1999, at 2:00 p.m. (local), at 3146 Gold Camp Drive, Rancho
Cordova, California 95670 and at any and all adjournments thereof.
1. Approval of the Amendment to the Company's Certificate of Incorporation
to eliminate the repurchase rights granted to the stockholders of Series
A Convertible Preferred Stock.
FOR _______ AGAINST _________ ABSTAIN _____
2. Approval of the Amendment to the Company's Certificate of Incorporation
to implement a one-for-two share consolidation, subject to the Board of
Directors of the Company discretionary authority to delay filing the
amendment (for a period not to exceed nine (9) months from the Meeting
date) or not to file the amendment.
FOR _______ AGAINST _________ ABSTAIN _____
3. Approval to reaffirm the approval to implement a one-for-four share
consolidation, subject to the Board of Directors of the Company
discretionary authority to delay filing the amendment (for a period not
to exceed nine (9) months from the Meeting date) or not to file the
amendment.
FOR _______ AGAINST _________ ABSTAIN _____
4. In their discretion, the proxies are authorized to vote upon such other
business (including any extension or adjournment thereof) as may
properly come before the Meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted "FOR" Proposal One, "FOR" Proposal Two, and "FOR" Proposal Three and in
the proxy holder's discretion, any such other business as may properly come
before the Meeting.
Please sign exactly as your name appears on your share certificates. When shares
are held by joint tenants, all joint tenants should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If the signatory is a corporation, please sign the full corporate name
by the president or another authorized officer. If the signatory is a
partnership, please sign in the partnership's name by an authorized person.
--------------------------- ---------------------
Name (Print) Name (Print)
(if held jointly)
Dated: _________ ___________________________ ____________________
Signature Signature
(if held jointly)
--------------------------- ---------------------
(Address) (Address)
--------------------------- --------------------
(City, State, Zip) (City, State, Zip)
I will ____ attend the meeting.
Number of persons to attend ____ I will not ____attend the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
