thmo20220930

thmo20220930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2022.

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition from _____________ to _______________.

Commission File Number: 333-82900

ThermoGenesis Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State of incorporation)

94-3018487

(I.R.S. Employer Identification No.)

2711 Citrus Road

Rancho Cordova, California 95742

(Address of principal executive offices) (Zip Code)

(916) 858-5100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common Stock, $.001 par value		THMO		Nasdaq Capital Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Class		Outstanding at November 8, 2022
	Common stock, $.001 par value		45,997,792

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ThermoGenesis Holdings, Inc.

INDEX

	Page Number
PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements	1

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	20

ITEM 4. Controls and Procedures	20

PART II OTHER INFORMATION

ITEM 1. Legal Proceedings	21
ITEM 1A. Risk Factors	21
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	21
ITEM 3. Defaults upon Senior Securities	21
ITEM 4. Mine Safety Disclosure	21
ITEM 5. Other Information	21
ITEM 6. Exhibits	22

Signatures	23

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ThermoGenesis Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	3,903,000		$	7,280,000
Accounts receivable, net of allowance for doubtful accounts of $149,000 ($156,000 at December 31, 2021)		2,056,000			733,000
Inventories		4,912,000			5,373,000
Prepaid expenses and other current assets		612,000			1,578,000
Total current assets		11,483,000			14,964,000

Inventories non-current, net		930,000			1,709,000
Equipment and leasehold improvements, net		1,271,000			1,261,000
Right-of-use operating lease assets, net		426,000			571,000
Right-of-use operating lease assets – related party, net		3,653,000			--
Goodwill		781,000			781,000
Other intangible assets, net		1,294,000			1,318,000
Other assets		255,000			48,000
Total assets	$	20,093,000		$	20,652,000

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,007,000		$	1,280,000
Accrued payroll and related expenses		493,000			348,000
Deferred revenue – short-term		841,000			719,000
Convertible promissory note – related party		5,133,000			--
Interest payable – related party		1,099,000			2,231,000
Convertible promissory note, net		1,000,000			813,000
Other current liabilities		1,395,000			957,000
Total current liabilities		10,968,000			6,348,000

Convertible promissory note – related party, net		--			9,245,000
Operating lease obligations – long-term		205,000			398,000
Operating lease obligations – related party – long-term		3,622,000			--
Deferred revenue – long-term		1,014,000			1,244,000
Other noncurrent liabilities		18,000			20,000
Total liabilities		15,827,000			17,255,000

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.001 par value; 2,000,000 shares authorized, none outstanding		--			--

Common stock, $0.001 par value; 350,000,000 shares authorized; 31,321,362 issued and outstanding (11,911,784 at December 31, 2021)		31,000			12,000
Additional paid in capital		267,731,000			268,447,000
Accumulated deficit		(262,761,000	)		(264,662,000	)
Accumulated other comprehensive loss		98,000			31,000
Total ThermoGenesis Holdings, Inc. stockholders’ equity		5,099,000			3,828,000

Noncontrolling interests		(833,000	)		(431,000	)
Total equity		4,266,000			3,397,000
Total liabilities and equity	$	20,093,000		$	20,652,000

See accompanying notes to the condensed consolidated financial statements.

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ThermoGenesis Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021

Net revenues	$	2,115,000		$	3,158,000		$	7,807,000		$	6,876,000
Cost of revenues		1,678,000			2,043,000			5,491,000			4,067,000

Gross profit		437,000			1,115,000			2,316,000			2,809,000

Expenses:
Selling, general and administrative		1,982,000			1,677,000			5,665,000			7,171,000
Research and development		470,000			543,000			1,317,000			1,544,000

Total operating expenses		2,452,000			2,220,000			6,982,000			8,715,000

Loss from operations		(2,015,000	)		(1,105,000	)		(4,666,000	)		(5,906,000	)

Other expenses:
Interest expense		(1,391,000	)		(1,530,000	)		(3,572,000	)		(4,573,000	)
Gain on extinguishment of debt		--			--			--			652,000
Other income/(expense)		3,000			843,000			(1,000	)		833,000

Total other expense		(1,388,000	)		(687,000	)		(3,573,000	)		(3,088,000	)

Net loss		(3,403,000	)		(1,792,000	)		(8,239,000	)		(8,994,000	)

Loss attributable to noncontrolling interests		(163,000	)		(18,000	)		(402,000	)		(269,000	)
Net loss attributable to common stockholders	$	(3,240,000	)	$	(1,774,000	)	$	(7,837,000	)	$	(8,725,000	)

COMPREHENSIVE LOSS
Net loss	$	(3,403,000	)	$	(1,792,000	)	$	(8,239,000	)	$	(8,994,000	)
Other comprehensive loss:
Foreign currency translation adjustments gain (loss)		22,000			(1,000	)		67,000			12,000
Comprehensive loss		(3,381,000	)		(1,793,000	)		(8,172,000	)		(8,982,000	)
Comprehensive loss attributable to noncontrolling interests		(163,000	)		(18,000	)		(402,000	)		(269,000	)
Comprehensive loss attributable to common stockholders	$	(3,218,000	)	$	(1,775,000	)	$	(7,770,000	)	$	(8,713,000	)

Per share data:

Basic and diluted net loss per common share	$	(0.10	)	$	(0.15	)	$	(0.41	)	$	(0.74	)

Weighted average common shares outstanding – basic and diluted		31,265,797			11,911,784			19,075,331			11,757,211

See accompanying notes to the condensed consolidated financial statements.

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ThermoGenesis Holdings, Inc.

Condensed Consolidated Statements of Equity

For the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)

	Shares		Common Stock		Paid in Capital in Excess of Par			Accumulated Deficit			AOCL*		Non- Controlling Interests			Total Equity
Balance at January 1, 2022		11,911,784	$	12,000	$	268,447,000		$	(264,662,000	)	$	31,000	$	(431,000	)	$	3,397,000

Adoption of ASU 2020-06		--		--		(10,681,000	)		9,739,000			--		--			(942,000	)
Stock-based compensation expense		--		--		42,000			--			--		--			42,000
Issuance of common stock via at-the-market offering, net		918,093		1,000		593,000			--			--		--			594,000
Related party convertible note price reset						213,000											213,000
Foreign currency translation gain		--		--		--			--			14,000		--			14,000
Net loss		--		--		--			(1,910,000	)		--		(126,000	)		(2,036,000	)
Balance at March 31, 2022		12,829,877	$	13,000	$	258,614,000		$	(256,833,000	)	$	45,000	$	(557,000	)	$	1,282,000

Stock-based compensation expense		--		--		72,000			--			--		--			72,000
Issuance of common stock via at-the-market offering, net		4,397,329		4,000		1,446,000			--			--		--			1,450,000
Related party convertible note price reset		--		--		2,475,000			--			--		--			2,475,000
Conversion of related party note payable to common stock		10,552,234		11,000		2,989,000			--			--		--			3,000,000
Foreign currency translation gain		--		--		--			--			31,000		--			31,000
Net loss		--		--		--			(2,688,000	)		--		(113,000	)		(2,801,000	)
Balance at June 30, 2022		27,779,440		28,000		265,596,000			(259,521,000	)		76,000		(670,000	)		5,509,000

Stock-based compensation expense		--		--		70,000			--			--		--			70,000
Issuance of common stock via at-the-market offering, net		3,541,922		3,000		990,000			--			--		--			993,000
Related party convertible note price reset		--		--		1,075,000			--			--		--			1,075,000
Foreign currency translation gain		--		--		--			--			22,000		--			22,000
Net loss		--		--		--			(3,240,000	)		--		(163,000	)		(3,403,000	)
Balance at September 30, 2022		31,321,362	$	31,000	$	267,731,000		$	(262,761,000	)	$	98,000	$	(833,000	)	$	4,266,000

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	Shares		Common Stock		Paid in Capital in Excess of Par		Accumulated Deficit			AOCL*			Non- Controlling Interests			Total Equity
Balance at January 1, 2021		8,934,952	$	9,000	$	259,058,000	$	(253,283,000	)	$	16,000		$	70,000		$	5,870,000

Stock-based compensation expense		--		--		258,000		--			--			--			258,000
Issuance of common stock via at-the-market offering, net		2,976,832		3,000		6,829,000		--			--			--			6,832,000
Foreign currency translation gain		--		--		--		--			1,000			--			1,000
Net loss		--		--		--		(2,413,000	)		--			(118,000	)		(2,531,000	)
Balance at March 31, 2021		11,911,784	$	12,000	$	266,145,000	$	(255,696,000	)	$	17,000		$	(48,000	)	$	10,430,000

Stock-based compensation expense		--		--		2,099,000		--			--			--			2,099,000
Foreign currency translation gain		--		--		--		--			12,000			--			12,000
Net loss		--		--		--		(4,539,000	)		--			(133,000	)		(4,672,000	)
Balance at June 30, 2021		11,911,784	$	12,000	$	268,244,000	$	(260,235,000	)	$	29,000		$	(181,000	)	$	7,869,000

Stock-based compensation expense		--		--		92,000		--			--			--			92,000
Foreign currency translation gain		--		--		--		--			(1,000	)		--			(1,000	)
Net loss		--		--		--		(1,774,000	)		--			(18,000	)		(1,792,000	)
Balance at September 30, 2021		11,911,784	$	12,000	$	268,336,000	$	(262,009,000	)	$	28,000		$	(199,000	)	$	6,168,000

* Accumulated other comprehensive loss.

See accompanying notes to the condensed consolidated financial statements.

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ThermoGenesis Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Nine Months Ended September 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(8,239,000	)	$	(8,994,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		666,000			477,000
Stock based compensation expense		184,000			2,449,000
Amortization of debt discount, net		1,897,000			2,723,000
Reserve for excess and slow-moving inventories		654,000			336,000
Gain on extinguishment of debt		--			(652,000	)
Net change in operating assets and liabilities:
Accounts receivable		(1,323,000	)		(1,190,000	)
Inventories		582,000			(742,000	)
Prepaid expenses and other assets		757,000			(260,000	)
Accounts payable		(210,000	)		145,000
Interest payable – related party		(1,132,000	)		(413,000	)
Accrued payroll and related expenses		145,000			111,000
Deferred revenue – short-term		122,000			334,000
Other current liabilities		446,000			(271,000	)
Long-term deferred revenue and other noncurrent liabilities		(650,000	)		(347,000	)

Net cash used in operating activities		(6,101,000	)		(6,294,000	)

Cash flows from investing activities:
Capital expenditures		(308,000	)		(64,000	)

Net cash used in investing activities		(308,000	)		(64,000	)

Cash flows from financing activities:

Proceeds from issuance of common stock, net of expenses		3,037,000			6,832,000

Net cash provided by financing activities		3,037,000			6,832,000

Effects of foreign currency rate changes on cash and cash equivalents		(5,000	)		(1,000	)
Net increase (decrease) in cash, cash equivalents and restricted cash		(3,377,000	)		473,000

Cash, cash equivalents and restricted cash at beginning of period		7,280,000			7,161,000
Cash, cash equivalents and restricted cash at end of period	$	3,903,000		$	7,634,000

Supplemental disclosures of cash flow information:
Cash paid for related party interest	$	2,628,000		$	2,082,000
Cash paid for interest	$	180,000		$	180,000
Right-to-use asset acquired under operating lease	$	3,863,000			--
Related party promissory note converted to common stock	$	3,000,000			--
Related party convertible note price reset	$	3,763,000			--
Transfer of inventory to fixed assets		--		$	181,000

See accompanying notes to the condensed consolidated financial statements.

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ThermoGenesis Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.	Description of Business

ThermoGenesis Holdings, Inc. (“ThermoGenesis Holdings,” the “Company,” “we,” “our,” “us”) develops and commercializes a range of automated technologies for cell-banking, cell-processing, and cell-based therapeutics. Since the 1990’s, ThermoGenesis Holdings has been a pioneer in, and a leading provider of automated systems that isolate, purify and cryogenically store units of hematopoietic stem and progenitor cells for the cord blood banking industry. The Company was founded in 1986 and is incorporated in the State of Delaware and headquartered in Rancho Cordova, CA.

Medical Device Products for Automated Cell Processing

The Company provides the AutoXpress® and BioArchive® platforms for automated clinical bio-banking, PXP® platform for point-of-care cell-based therapies and the CAR-TXpress™ platform for large scale cell manufacturing services. All product lines are reporting as a single reporting segment in the financial statements.

Planned CDMO Business

In March 2022, our Board of Directors approved the planned expansion of the Company’s business to include contract development and manufacturing services for cell and cell-based gene therapies. The Company plans to develop and build-out the capabilities to become a Contract Development and Manufacturing Organization (“CDMO”) for cell and cell-based gene therapies by partnering with Boyalife Genomics Tianjin Ltd., a China-based CDMO (“Boyalife Genomics”), to in-license certain know-how and other intellectual property from Boyalife Genomics, and by leasing and building out a cell manufacturing facility in Sacramento, California. We intend to leverage our existing technology and combine it with the in-licensed technologies to develop a proprietary manufacturing platform for cell manufacturing activities and other cell manufacturing solutions for clients with therapeutic candidates in various stages of development. We are targeting the launch of our CDMO services to customers in 2023.

2.	Going Concern

The Company has incurred historical losses from operations and expects to continue to incur operating losses in the near future. The Company may need to raise additional capital to grow its business, fund operating expenses and make interest payments. The Company’s ability to fund its liquidity needs is subject to various risks, many of which are beyond its control. The Company may seek additional funding through debt borrowings, sales of debt or equity securities or strategic partnerships. The Company cannot guarantee that such funding will be available on a timely basis, in needed quantities or on terms favorable to the Company, if at all. These factors and other indicators raise substantial doubt about the Company’s ability to continue as a going concern within one year from the filing date of this report.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classifica

SEC Form 10-Q filed by ThermoGenesis Holdings Inc.