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, 2021. |
or
| ☐ 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 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 ☐
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 | |
Common stock, $.001 par value | 11,911,784 |
INDEX
Page Number
| Page Number | |||
| Part I | |||
Item 1. | 1 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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PART I - FINANCIAL INFORMATION
ThermoGenesis Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, 2021 | December 31, 2020 | September 30, 2021 | December 31, 2020 | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 8,668,000 | $ | 7,161,000 | $ | 7,634,000 | $ | 7,161,000 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $214,000 at June 30, 2021 and December 31, 2020 | 1,242,000 | 1,382,000 | ||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $212,000 at September 30, 2021 ($214,000 at December 31, 2020) | 2,571,000 | 1,382,000 | ||||||||||||||
Inventories | 5,813,000 | 5,877,000 | 5,538,000 | 5,877,000 | ||||||||||||
Prepaid expenses and other current assets | 354,000 | 878,000 | 1,138,000 | 878,000 | ||||||||||||
Total current assets | 16,077,000 | 15,298,000 | 16,881,000 | 15,298,000 | ||||||||||||
Inventories, non-current | 2,227,000 | 1,221,000 | 1,784,000 | 1,221,000 | ||||||||||||
Equipment and leasehold improvements, net | 1,282,000 | 1,424,000 | 1,339,000 | 1,424,000 | ||||||||||||
Right-of-use operating lease assets, net | 654,000 | 730,000 | 614,000 | 730,000 | ||||||||||||
Goodwill | 781,000 | 781,000 | 781,000 | 781,000 | ||||||||||||
Other intangible assets, net | 1,334,000 | 1,358,000 | 1,326,000 | 1,358,000 | ||||||||||||
Other assets | 48,000 | 48,000 | 48,000 | 48,000 | ||||||||||||
Total assets | $ | 22,403,000 | $ | 20,860,000 | $ | 22,773,000 | $ | 20,860,000 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 1,120,000 | $ | 1,366,000 | $ | 1,502,000 | $ | 1,366,000 | ||||||||
Accrued payroll and related expenses | 345,000 | 349,000 | 461,000 | 349,000 | ||||||||||||
Deferred revenue – short-term | 903,000 | 608,000 | 943,000 | 608,000 | ||||||||||||
Convertible promissory note – related party, net | 7,590,000 | -- | 8,417,000 | -- | ||||||||||||
Interest payable – related party | 1,106,000 | 2,082,000 | 1,668,000 | 2,082,000 | ||||||||||||
Note payable – short-term | -- | 447,000 | -- | 447,000 | ||||||||||||
Convertible promissory note, net | 733,000 | -- | ||||||||||||||
Other current liabilities | 847,000 | 1,291,000 | 1,011,000 | 1,291,000 | ||||||||||||
Total current liabilities | 11,911,000 | 6,143,000 | 14,735,000 | 6,143,000 | ||||||||||||
Convertible promissory note – related party, net | -- | 5,935,000 | -- | 5,935,000 | ||||||||||||
Convertible promissory notes, net | 653,000 | 493,000 | ||||||||||||||
Convertible promissory note, net | -- | 493,000 | ||||||||||||||
Note payable | -- | 199,000 | -- | 199,000 | ||||||||||||
Operating lease obligations – long-term | 508,000 | 604,000 | 455,000 | 604,000 | ||||||||||||
Deferred revenue – long-term | 1,442,000 | 1,596,000 | 1,395,000 | 1,596,000 | ||||||||||||
Other noncurrent liabilities | 20,000 | 20,000 | 20,000 | 20,000 | ||||||||||||
Total liabilities | 14,534,000 | 14,990,000 | 16,605,000 | 14,990,000 | ||||||||||||
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; 11,911,784 issued and outstanding (8,934,952 at December 31, 2020) | 12,000 | 9,000 | ||||||||||||||
Preferred stock, $0.001 par value; 2,000,000 shares authorized, none outstanding | -- | -- | ||||||||||||||
Common stock, $0.001 par value; 350,000,000 shares authorized; 11,911,784 issued and outstanding (8,934,952 at December 31, 2020) | 12,000 | 9,000 | ||||||||||||||
Additional paid in capital | 268,244,000 | 259,058,000 | 268,336,000 | 259,058,000 | ||||||||||||
Accumulated deficit | (260,235,000 | ) | (253,283,000 | ) | (262,009,000 | ) | (253,283,000 | ) | ||||||||
Accumulated other comprehensive loss | 29,000 | 16,000 | 28,000 | 16,000 | ||||||||||||
Total ThermoGenesis Holdings, Inc. stockholders’ equity | 8,050,000 | 5,800,000 | 6,367,000 | 5,800,000 | ||||||||||||
Noncontrolling interests | (181,000 | ) | 70,000 | (199,000 | ) | 70,000 | ||||||||||
Total equity | 7,869,000 | 5,870,000 | 6,168,000 | 5,870,000 | ||||||||||||
Total liabilities and equity | $ | 22,403,000 | $ | 20,860,000 | $ | 22,773,000 | $ | 20,860,000 | ||||||||
See accompanying notes.
ThermoGenesis Holdings, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
Three Months Ended | Six Months Ended June 30, | Three Months Ended | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Net revenues | $ | 2,201,000 | $ | 2,242,000 | $ | 3,718,000 | $ | 5,442,000 | $ | 3,158,000 | $ | 2,355,000 | $ | 6,876,000 | $ | 7,797,000 | ||||||||||||||||
Cost of revenues | 1,215,000 | 4,874,000 | 2,024,000 | 6,582,000 | 2,043,000 | 844,000 | 4,067,000 | 7,426,000 | ||||||||||||||||||||||||
Gross profit (loss) | 986,000 | (2,632,000 | ) | 1,694,000 | (1,140,000 | ) | 1,115,000 | 1,511,000 | 2,809,000 | 371,000 | ||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||
Selling, general and administrative | 3,502,000 | 1,978,000 | 5,494,000 | 4,070,000 | 1,677,000 | 1,844,000 | 7,171,000 | 5,913,000 | ||||||||||||||||||||||||
Research and development | 622,000 | 578,000 | 1,001,000 | 1,187,000 | 543,000 | 750,000 | 1,544,000 | 1,937,000 | ||||||||||||||||||||||||
Total operating expenses | 4,124,000 | 2,556,000 | 6,495,000 | 5,257,000 | 2,220,000 | 2,594,000 | 8,715,000 | 7,850,000 | ||||||||||||||||||||||||
Loss from operations | (3,138,000 | ) | (5,188,000 | ) | (4,801,000 | ) | (6,397,000 | ) | (1,105,000 | ) | (1,083,000 | ) | (5,906,000 | ) | (7,479,000 | ) | ||||||||||||||||
Other expenses: | ||||||||||||||||||||||||||||||||
Interest expense | (1,530,000 | ) | (1,531,000 | ) | (4,573,000 | ) | (6,377,000 | ) | ||||||||||||||||||||||||
Gain/(loss) on extinguishment of debt | -- | -- | 652,000 | -- | ||||||||||||||||||||||||||||
Other income/(expense) | 843,000 | 5,000 | 833,000 | (6,000 | ) | |||||||||||||||||||||||||||
Interest expense | (1,524,000 | ) | (1,314,000 | ) | (3,043,000 | ) | (4,845,000 | ) | ||||||||||||||||||||||||
Other income (expenses) | (10,000 | ) | (8,000 | ) | (11,000 | ) | (11,000 | ) | ||||||||||||||||||||||||
Gain on extinguishment of debt | -- | -- | 652,000 | -- | ||||||||||||||||||||||||||||
Total other expense | (1,534,000 | ) | (1,322,000 | ) | (2,402,000 | ) | (4,856,000 | ) | (687,000 | ) | (1,526,000 | ) | (3,088,000 | ) | (6,383,000 | ) | ||||||||||||||||
Net loss | (4,672,000 | ) | (6,510,000 | ) | (7,203,000 | ) | (11,253,000 | ) | (1,792,000 | ) | (2,609,000 | ) | (8,994,000 | ) | (13,862,000 | ) | ||||||||||||||||
Loss attributable to noncontrolling interests | (133,000 | ) | (73,000 | ) | (251,000 | ) | (214,000 | ) | (18,000 | ) | (146,000 | ) | (269,000 | ) | (360,000 | ) | ||||||||||||||||
Net loss attributable to common stockholders | $ | (4,539,000 | ) | $ | (6,437,000 | ) | $ | (6,952,000 | ) | $ | (11,039,000 | ) | $ | (1,774,000 | ) | $ | (2,463,000 | ) | $ | (8,725,000 | ) | $ | (13,502,000 | ) | ||||||||
COMPREHENSIVE LOSS | ||||||||||||||||||||||||||||||||
Net loss | $ | (4,672,000 | ) | $ | (6,510,000 | ) | $ | (7,203,000 | ) | $ | (11,253,000 | ) | $ | (1,792,000 | ) | $ | (2,609,000 | ) | $ | (8,994,000 | ) | $ | (13,862,000 | ) | ||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||||||||
Foreign currency translation adjustments gain (loss) | 12,000 | 1,000 | 13,000 | 39,000 | (1,000 | ) | (19,000 | ) | 12,000 | 20,000 | ||||||||||||||||||||||
Comprehensive loss | (4,660,000 | ) | (6,509,000 | ) | (7,190,000 | ) | (11,214,000 | ) | (1,793,000 | ) | (2,628,000 | ) | (8,982,000 | ) | (13,842,000 | ) | ||||||||||||||||
Comprehensive loss attributable to noncontrolling interests | (133,000 | ) | (73,000 | ) | (251,000 | ) | (214,000 | ) | (18,000 | ) | (146,000 | ) | (269,000 | ) | (360,000 | ) | ||||||||||||||||
Comprehensive loss attributable to common stockholders | $ | (4,527,000 | ) | $ | (6,436,000 | ) | $ | (6,939,000 | ) | $ | (11,000,000 | ) | $ | (1,775,000 | ) | $ | (2,482,000 | ) | $ | (8,713,000 | ) | $ | (13,482,000 | ) | ||||||||
Per share data: | ||||||||||||||||||||||||||||||||
Basic and diluted net loss per common share | $ | (0.38 | ) | $ | (1.02 | ) | $ | (0.59 | ) | $ | (2.11 | ) | $ | (0.15 | ) | $ | (0.37 | ) | $ | (0.74 | ) | $ | (2.36 | ) | ||||||||
Weighted average common shares outstanding – basic and diluted | 11,911,784 | 6,315,566 | 11,679,075 | 5,230,921 | 11,911,784 | 6,711,664 | 11,757,211 | 5,728,105 | ||||||||||||||||||||||||
See accompanying notes.
ThermoGenesis Holdings, Inc.
Condensed Consolidated Statements of Equity
For the Three and SixNine Months Ended JuneSeptember 30, 2021 (Unaudited)
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.
ThermoGenesis Holdings, Inc.
Condensed Consolidated Statements of Equity
For the Three and Nine Months Ended September 30, 2020 (Unaudited)
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 | |||||||||||||||||||||||||||||||||||||||||
| Shares | Common Stock | Paid in Capital in Excess of Par | Accumulated Deficit | AOCL* | Non- Controlling interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2020 | 2,843,601 | $ | 3,000 | $ | 237,313,000 | $ | (236,932,000 | ) | $ | 2,000 | $ | 530,000 | $ | 916,000 | 2,843,601 | $ | 3,000 | $ | 237,313,000 | $ | (236,932,000 | ) | $ | 2,000 | $ | 530,000 | $ | 916,000 | ||||||||||||||||||||||||||||
Stock-based compensation expense | -- | -- | 67,000 | -- | -- | -- | 67,000 | -- | -- | 67,000 | -- | -- | -- | 67,000 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of pre-funded warrants | 100,000 | -- | 10,000 | -- | -- | -- | 10,000 | 100,000 | -- | 10,000 | -- | -- | -- | 10,000 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | 7,866 | -- | 47,000 | -- | -- | -- | 47,000 | 7,866 | -- | 47,000 | -- | -- | -- | 47,000 | ||||||||||||||||||||||||||||||||||||||||||
Discount due to beneficial conversion features | -- | -- | 1,869,000 | -- | -- | -- | 1,869,000 | -- | -- | 1,869,000 | -- | -- | -- | 1,869,000 | ||||||||||||||||||||||||||||||||||||||||||
Conversion of related party note payable to common stock | 1,666,670 | 2,000 | 2,998,000 | -- | -- | -- | 3,000,000 | 1,666,670 | 2,000 | 2,998,000 | -- | -- | -- | 3,000,000 | ||||||||||||||||||||||||||||||||||||||||||
Conversion of note payable to common stock | 100,000 | -- | 180,000 | -- | -- | -- | 180,000 | 100,000 | -- | 180,000 | -- | -- | -- | 180,000 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net | 1,050,748 | 1,000 | 3,220,000 | -- | -- | -- | 3,221,000 | 1,050,748 | 1,000 | 3,220,000 | -- | -- | -- | 3,221,000 | ||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation gain | -- | -- | -- | -- | 38,000 | -- | 38,000 | -- | -- | -- | -- | 38,000 | -- | 38,000 | ||||||||||||||||||||||||||||||||||||||||||
Net loss | -- | -- | -- | (4,602,000 | ) | -- | (141,000 | ) | (4,743,000 | ) | -- | -- | -- | (4,602,000 | ) | -- | (141,000 | ) | (4,743,000 | ) | ||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 5,768,885 | $ | 6,000 | $ | 245,704,000 | $ | (241,534,000 | ) | $ | 40,000 | $ | 389,000 | $ | 4,605,000 | 5,768,885 | $ | 6,000 | $ | 245,704,000 | $ | (241,534,000 | ) | $ | 40,000 | $ | 389,000 | $ | 4,605,000 | ||||||||||||||||||||||||||||
Stock-based compensation expense | -- | -- | 314,000 | -- | -- | -- | 314,000 | -- | -- | 314,000 | -- | -- | -- | 314,000 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of pre-funded warrants | 224,445 | 22,000 | -- | -- | -- | 22,000 | 224,445 | 22,000 | -- | -- | -- | 22,000 | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | 267,271 | -- | 1,604,000 | -- | -- | -- | 1,604,000 | 267,271 | -- | 1,604,000 | -- | -- | -- | 1,604,000 | ||||||||||||||||||||||||||||||||||||||||||
Discount due to beneficial conversion features | -- | -- | 3,112,000 | -- | -- | -- | 3,112,000 | -- | -- | 3,112,000 | -- | -- | -- | 3,112,000 | ||||||||||||||||||||||||||||||||||||||||||
Conversion of note payable to common stock | 104,445 | 1,000 | 188,000 | -- | -- | -- | 189,000 | 104,445 | 1,000 | 188,000 | -- | -- | -- | 189,000 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of Common Stock, net | 344,419 | -- | 1,993,000 | -- | -- | -- | 1,993,000 | 344,419 | -- | 1,993,000 | -- | -- | -- | 1,993,000 | ||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation gain | -- | -- | -- | -- | 1,000 | -- | 1,000 | -- | -- | -- | -- | 1,000 | -- | 1,000 | ||||||||||||||||||||||||||||||||||||||||||
Net loss | -- | -- | -- | (6,437,000 | ) | (73,000 | ) | (6,510,000 | ) | -- | -- | -- | (6,437,000 | ) | (73,000 | ) | (6,510,000 | ) | ||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 6,709,465 | $ | 7,000 | $ | 252,937,000 | $ | (247,971,000 | ) | $ | 41,000 | $ | 316,000 | $ | 5,330,000 | 6,709,465 | $ | 7,000 | $ | 252,937,000 | $ | (247,971,000 | ) | $ | 41,000 | $ | 316,000 | $ | 5,330,000 | ||||||||||||||||||||||||||||
Stock-based compensation expense | -- | -- | 234,000 | -- | -- | -- | 234,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Common Stock, net | 122,575 | -- | 366,000 | -- | -- | -- | 366,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation gain | -- | -- | -- | -- | (19,000 | ) | -- | (19,000 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss | -- | -- | -- | (2,463,000 | ) | (146,000 | ) | (2,609,000 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | 6,832,040 | $ | 7,000 | $ | 253,537,000 | $ | (250,434,000 | ) | $ | 22,000 | $ | 170,000 | $ | 3,302,000 | ||||||||||||||||||||||||||||||||||||||||||
* Accumulated other comprehensive loss.
See accompanying notes.
ThermoGenesis Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (7,203,000 | ) | $ | (11,253,000 | ) | $ | (8,994,000 | ) | $ | (13,862,000 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Depreciation and amortization | 320,000 | 392,000 | 477,000 | 569,000 | ||||||||||||
Stock based compensation expense | 2,357,000 | 381,000 | 2,449,000 | 615,000 | ||||||||||||
Amortization of debt discount/premium, net | 1,815,000 | 1,257,000 | 2,723,000 | 2,165,000 | ||||||||||||
Amortization of accelerated debt discount due to conversion | -- | 2,486,000 | -- | 2,486,000 | ||||||||||||
Reserve for excess and slow-moving inventories | 98,000 | 3,744,000 | 336,000 | 4,036,000 | ||||||||||||
Reserve for bad debt expense | -- | (6,000 | ) | |||||||||||||
Loss on disposal of equipment | -- | 114,000 | -- | 118,000 | ||||||||||||
Gain on extinguishment of debt | (652,000 | ) | -- | (652,000 | ) | -- | ||||||||||
Net change in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 140,000 | (378,000 | ) | (1,190,000 | ) | (414,000 | ) | |||||||||
Inventories | (1,042,000 | ) | (5,108,000 | ) | (742,000 | ) | (6,086,000 | ) | ||||||||
Prepaid expenses and other assets | 524,000 | (65,000 | ) | (260,000 | ) | 6,000 | ||||||||||
Accounts payable | (236,000 | ) | 1,812,000 | 145,000 | 223,000 | |||||||||||
Interest payable - related party | (976,000 | ) | (912,000 | ) | (413,000 | ) | (350,000 | ) | ||||||||
Accrued payroll and related expenses | (4,000 | ) | 238,000 | 111,000 | 225,000 | |||||||||||
Deferred revenue – short-term | 294,000 | 167,000 | 334,000 | 80,000 | ||||||||||||
Other current liabilities | (434,000 | ) | (1,607,000 | ) | (271,000 | ) | (1,326,000 | ) | ||||||||
Long-term deferred revenue and other noncurrent liabilities | (245,000 | ) | (221,000 | ) | (347,000 | ) | (338,000 | ) | ||||||||
Net cash used in operating activities | (5,244,000 | ) | (8,953,000 | ) | (6,294,000 | ) | (11,859,000 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Capital expenditures | (80,000 | ) | (23,000 | ) | (64,000 | ) | (23,000 | ) | ||||||||
Net cash used in investing activities | (80,000 | ) | (23,000 | ) | (64,000 | ) | (23,000 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from convertible promissory note-related party | -- | 4,287,000 | -- | 4,287,000 | ||||||||||||
Payments on financing lease obligations | -- | (22,000 | ) | -- | (32,000 | ) | ||||||||||
Proceeds from issuance of common stock, net of expenses | 6,832,000 | 5,214,000 | 6,832,000 | 5,580,000 | ||||||||||||
Proceeds from exercise of options, warrants and pre-funded warrants | -- | 1,683,000 | -- | 1,683,000 | ||||||||||||
Proceeds from note payable | -- | 646,000 | -- | 646,000 | ||||||||||||
Net cash provided by financing activities | 6,832,000 | 11,808,000 | 6,832,000 | 12,164,000 | ||||||||||||
Effects of foreign currency rate changes on cash and cash equivalents | (1,000 | ) | (5,000 | ) | (1,000 | ) | (3,000 | ) | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 1,507,000 | 2,827,000 | 473,000 | 279,000 | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 7,161,000 | 4,157,000 | 7,161,000 | 4,157,000 | ||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 8,668,000 | $ | 6,984,000 | $ | 7,634,000 | $ | 4,436,000 | ||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||
Cash paid for interest | $ | 2,202,000 | $ | 2,031,000 | $ | 2,262,000 | $ | 2,094,000 | ||||||||
Supplemental non-cash financing and investing information: | ||||||||||||||||
Recording of beneficial conversion feature on debt | $ | -- | $ | 4,981,000 | $ | -- | $ | 4,981,000 | ||||||||
Related party promissory note converted to common stock | $ | -- | $ | 3,000,000 | $ | -- | $ | 3,000,000 | ||||||||
Convertible promissory note converted to common stock | $ | -- | $ | 369,000 | $ | -- | $ | 369,000 | ||||||||
| Transfer of inventory to fixed assets | $ | 181,000 | $ | -- | ||||||||||||
See accompanying notes.
ThermoGenesis Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. |
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Description of Business
ThermoGenesis Holdings, Inc. (“ThermoGenesis Holdings,” the “Company,” “we,” “our,” “us”), develops, commercializes and markets a range of automated technologies for CAR-Tchimeric antigen receptor therapies (“CAR-T”) and other cell-based therapies. The Company currently markets a full suite of solutions for automated clinical biobanking, point-of-care applications, and automation for immuno-oncology, including its semi-automated, functionally closed CAR-TXpress™ platform, which streamlines the manufacturing process for the emerging CAR-T immunotherapy market. The Company was founded in 1986 and is incorporated in the State of Delaware and headquartered in Rancho Cordova, CA.
The Company provides the AutoXpress® and BioArchive® platforms for automated clinical bio-banking, PXP® platform for point-of-care cell-based therapies and CAR-TXpress™ platform for bio-manufacturing for immuno-oncology applications. The Company and its subsidiaries currently manufacture and market the following products:
Clinical Bio-Banking Applications:
● | AXP® II Automated Cell Separation System – an automated, fully closed cell separation system for isolating stem and progenitor cells from umbilical cord blood, registered as a U.S. FDA 510(k) medical device. |
● | BioArchive® Automated Cryopreservation System – an automated, robotic, liquid nitrogen controlled-rate-freezing and cryogenic storage system for cord blood samples and cell therapeutic products used in clinical applications, registered as a U.S. FDA 510(k) medical device. |
Point-of-Care Applications:
● | PXP® Point-of-Care System – an automated, fully closed, sterile system allows for the rapid, automated processing of autologous peripheral blood or bone marrow aspirate derived stem cells at the point-of-care, such as surgical centers or clinics, registered as a U.S. FDA 510(k) medical device. |
● | PXP-LAVARE System – an automated, fully closed system that is designed to wash, re-suspend and volume reduce cell suspensions. It allows for volume manipulation, supernatant or media exchange, and cell washing to occur without comprising cell viabilities and maximizing recoveries, registered as a U.S. FDA 510(k) medical device. |
● | PXP-1000 System – an automated, fully closed system that provides fast, reproducible separation of multiple cellular components from blood with minimal red blood cell contamination, registered as a U.S. FDA 510(k) medical device. |
Large Scale Cell Processing and Biomanufacturing:
● | X-Series® Products: X-Lab® for cell isolation, X-Wash® System for cell washing and reformulation, X-Mini® for high efficiency small scale cell purification, and X-BACS® System under development for large scale cell purification using our proprietary buoyancy-activated cell sorting (“BACS”) technology. |
● | CAR-TXpress™ Platform – a modular designed, functionally closed platform that addresses the critical unmet need for large scale cellular processing and chemistry, manufacturing and controls (“CMC”) needs for manufacturing |
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such Securities and Exchange Commission (SEC) rules and regulations and accounting principles applicable for interim periods. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance.
Operating results for the three-month period ended JuneSeptember 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in ThermoGenesis Holdings, Inc. Annual Report on Form 10-K for the year ended December 31, 2020.
Principles of Consolidation
The consolidated financial statements include the accounts of ThermoGenesis Holdings, Inc. and its wholly-owned subsidiaries, ThermoGenesis Corp. and TotipotentRX Cell Therapy, Pvt. Ltd and ThermoGenesis Corp’s majority-owned subsidiary, CARTXpress Bio. All significant intercompany accounts and transactions have been eliminated upon consolidation.
The 20% ownership interest of CARTXpress Bio that is not owned by ThermoGenesis Holdings is accounted for as a non-controlling interest as the Company has an 80% ownership interest in CARTXpress Bio. Earnings or losses attributable to other stockholders of a consolidated affiliated company are classified separately as "non-controlling interest" in the Company's consolidated statements of operations. Net loss attributable to non-controlling interests reflects only its share of the after-tax earnings or losses of an affiliated company. The Company's condensed consolidated balance sheets reflect non-controlling interests within the equity section.
2. |
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At JuneSeptember 30, 2021, the Company had cash and cash equivalents of $8,668,000$7,634,000 and working capital of $4,166,000.$2,146,000. The Company has incurred historical losses from operations and expects to continue to incur operating losses in the near future. These recurring losses raise substantial doubt about the Company’s ability to continue as a going concern within one year from the filing of this report. 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 cashliquidity 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 condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise substantial doubt about the Company’s ability to do so.concern. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
3. |
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There have been no material changes in the Company’s significant accounting policies to those disclosed in the Company’s Annual Report filed on its Form 10-K for the year ended December 31, 2020.
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting of Income Taxes”, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. The Company was not profitable for the sixnine months ended JuneSeptember 30, 2021 and has a full valuation allowance on all net operating loss (“NOL”) tax carryforwards. As such, the adoption of this standard did not have a material impact on the Company’s financial statements.
In January 2020, the FASB issued ASU 2020-01, “Investments – Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815”. The new guidance clarifies the interaction of accounting for the transition into and out of the equity method and the accounting for measuring certain purchased options and forward contracts to acquire investments. It is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s financial statements.
Revenue Recognition
Revenue is recognized based on the five-step process outlined in Accounting Standards Codification (“ASC”) 606.
The following tables summarize the revenues by product line:
Three Months Ended June 30, 2021 | Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||
Device Revenue | Service Revenue | Other Revenue | Total Revenue | Device Revenue | Service Revenue | Other Revenue | Total Revenue | |||||||||||||||||||||||||
AXP | $ | 1,048,000 | $ | 48,000 | $ | -- | $ | 1,096,000 | $ | 2,217,000 | $ | 72,000 | $ | 21,000 | $ | 2,310,000 | ||||||||||||||||
BioArchive | 223,000 | 326,000 | -- | 549,000 | 221,000 | 297,000 | -- | 518,000 | ||||||||||||||||||||||||
CAR-TXpress | 287,000 | 30,000 | 72,000 | 389,000 | 160,000 | 31,000 | 71,000 | 262,000 | ||||||||||||||||||||||||
Manual Disposables | 116,000 | -- | -- | 116,000 | 55,000 | -- | -- | 55,000 | ||||||||||||||||||||||||
Other | 30,000 | -- | 21,000 | 51,000 | 9,000 | -- | 4,000 | 13,000 | ||||||||||||||||||||||||
Total | $ | 1,704,000 | $ | 404,000 | $ | 93,000 | $ | 2,201,000 | $ | 2,662,000 | $ | 400,000 | $ | 96,000 | $ | 3,158,000 | ||||||||||||||||
Six Months Ended June 30, 2021 | Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||
Device Revenue | Service Revenue | Other Revenue | Total Revenue | Device Revenue | Service Revenue | Other Revenue | Total Revenue | |||||||||||||||||||||||||
AXP | $ | 1,273,000 | $ | 87,000 | $ | -- | $ | 1,360,000 | $ | 3,490,000 | $ | 159,000 | $ | 1,000 | $ | 3,670,000 | ||||||||||||||||
BioArchive | 431,000 | 868,000 | -- | 1,299,000 | 652,000 | 1,165,000 | -- | 1,817,000 | ||||||||||||||||||||||||
CAR-TXpress | 542,000 | 58,000 | 143,000 | 743,000 | 702,000 | 89,000 | 214,000 | 1,005,000 | ||||||||||||||||||||||||
Manual Disposables | 245,000 | -- | -- | 245,000 | 300,000 | -- | -- | 300,000 | ||||||||||||||||||||||||
Other | 37,000 | -- | 34,000 | 71,000 | 46,000 | -- | 38,000 | 84,000 | ||||||||||||||||||||||||
Total | $ | 2,528,000 | $ | 1,013,000 | $ | 177,000 | $ | 3,718,000 | $ | 5,190,000 | $ | 1,413,000 | $ | 273,000 | $ | 6,876,000 | ||||||||||||||||
Three Months Ended June 30, 2020 | ||||||||||||||||
Device Revenue | Service Revenue | Other Revenue | Total Revenue | |||||||||||||
AXP | $ | 621,000 | $ | 48,000 | $ | -- | $ | 669,000 | ||||||||
BioArchive | 165,000 | 294,000 | -- | 459,000 | ||||||||||||
CAR-TXpress | 550,000 | 13,000 | 71,000 | 634,000 | ||||||||||||
Manual Disposables | 198,000 | -- | -- | 198,000 | ||||||||||||
Other | 238,000 | -- | 44,000 | 282,000 | ||||||||||||
Total | $ | 1,772,000 | $ | 355,000 | $ | 115,000 | $ | 2,242,000 | ||||||||
Three Months Ended September 30, 2020 | ||||||||||||||||
Device Revenue | Service Revenue | Other Revenue | Total Revenue | |||||||||||||
AXP | $ | 1,137,000 | $ | 32,000 | $ | -- | $ | 1,169,000 | ||||||||
BioArchive | 337,000 | 282,000 | -- | 619,000 | ||||||||||||
CAR-TXpress | 332,000 | 22,000 | 71,000 | 425,000 | ||||||||||||
Manual Disposables | 100,000 | -- | -- | 100,000 | ||||||||||||
Other | 26,000 | -- | 16,000 | 42,000 | ||||||||||||
Total | $ | 1,932,000 | $ | 336,000 | $ | 87,000 | $ | 2,355,000 | ||||||||
Six Months Ended June 30, 2020 | Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||
Device Revenue | Service Revenue | Other Revenue | Total Revenue | Device Revenue | Service Revenue | Other Revenue | Total Revenue | |||||||||||||||||||||||||
AXP | $ | 2,829,000 | $ | 72,000 | $ | -- | $ | 2,901,000 | $ | 4,009,000 | $ | 103,000 | $ | -- | $ | 4,112,000 | ||||||||||||||||
BioArchive | 329,000 | 626,000 | -- | 955,000 | 675,000 | 900,000 | -- | 1,575,000 | ||||||||||||||||||||||||
CAR-TXpress | 702,000 | 25,000 | 142,000 | 869,000 | 1,035,000 | 47,000 | 214,000 | 1,296,000 | ||||||||||||||||||||||||
Manual Disposables | 401,000 | -- | -- | 401,000 | 499,000 | -- | -- | 499,000 | ||||||||||||||||||||||||
Other | 252,000 | -- | 64,000 | 316,000 | 276,000 | -- | 39,000 | 315,000 | ||||||||||||||||||||||||
Total | $ | 4,513,000 | $ | 723,000 | $ | 206,000 | $ | 5,442,000 | $ | 6,494,000 | $ | 1,050,000 | $ | 253,000 | $ | 7,797,000 | ||||||||||||||||
Contract Balances
Generally, all sales are contract sales (with either an underlying contract or purchase order). The Company does not have any material contract assets. When invoicing occurs prior to revenue recognition, a contract liability is recorded (as deferred revenue on the consolidated balance sheet). Revenues recognized during the three and sixnine months ended JuneSeptember 30, 2021 that were included in the beginning balance of deferred revenue were $130,000$118,000 and $403,000,$521,000, respectively. Short-term deferred revenues increased from $608,000 to $903,000$943,000 and long-term deferred revenues decreased from $1,596,000 to $1,442,000$1,395,000 during the sixnine months ended JuneSeptember 30, 2021, respectively.
Exclusivity Fee
On August 30, 2019, the Company entered into a Supply Agreement with Corning Incorporated (the “Supply Agreement”). The Supply Agreement has an initial term of five years with Corning having two options to renew for an additional two-years (up to four years total), unless terminated by either party in accordance with the terms of the Supply Agreement (collectively, the “Term”). Pursuant to the Supply Agreement, the Company has granted Corning exclusive worldwide distribution rights for substantially all X-Series® products under the CAR-TXpress™ platform (the “Products”) manufactured by its subsidiary, ThermoGenesis Corp., for the duration of the Term, subject to certain geographical and other exceptions. In addition to any amounts payable throughout the Term for the Products, as consideration for the exclusive worldwide distribution rights for the Products, Corning paid a $2,000,000 exclusivity fee. For the three and sixnine months ended JuneSeptember 30, 2021 and 2020, the Company recorded revenue related to the exclusivity fee of $72,000$71,000 and $143,000,$214,000, respectively. The remaining balance of the $2,000,000 payment of $1,477,000 was$1,405,000 is recorded toas deferred revenue, with $286,000 in short termshort-term deferred revenue and $1,191,000$1,119,000 recorded in long-term deferred revenue.
Distribution Agreement
The Company signed a new agreement with its AXP distributor in China through 2023. The new agreement called for the distributor to purchase a minimum of $1,400,000 of AXP disposables in 2021, then $650,000 in each of the next two years. In return for the minimum purchase commitment, the Company is providing the distributor with AXP processing devices to use during the term of the agreement. The Company maintains ownership of these devices and they must be returned to the Company at the end of the agreement in 2024. The Company analyzed the relevant accounting guidance and determined that the equipment and AXP bagsets represented distinct performance obligations. The equipment was concluded to be an embedded lease, accounted for as a sales-type operating lease. At September 30, 2021, the value of those assets was approximately $180,000 and they will be amortized over their accounting estimated useful life of five years. A portion of the revenue from each bagset shipment will be allocated and recorded as deferred revenue to be recognized as lease revenue over the term of the agreement. The expected lease revenue is $21,000 per quarter. At September 30, 2021, the Company had $82,000 in short term and $27,000 in long term deferred revenue related to future lease revenue.
Backlog of Remaining Customer Performance Obligations
The following table includes revenue expected to be recognized and recorded as sales in the future from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.
Remainder of 2021 | 2022 | 2023 | 2024 | 2025 and beyond | Total | Remainder of 2021 | 2022 | 2023 | 2024 | 2025 and beyond | Total | |||||||||||||||||||||||||||||||||||||
Service revenue | $ | 690,000 | $ | 886,000 | $ | 412,000 | $ | 151,000 | $ | 85,000 | $ | 2,224,000 | $ | 359,000 | $ | 962,000 | $ | 462,000 | $ | 189,000 | $ | 85,000 | $ | 2,057,000 | ||||||||||||||||||||||||
Clinical revenue | 6,000 | 13,000 | 13,000 | 13,000 | 160,000 | 205,000 | 3,000 | 13,000 | 13,000 | 13,000 | 160,000 | 202,000 | ||||||||||||||||||||||||||||||||||||
Device revenue(1) | 21,000 | 674,000 | 674,000 | 41,000 | -- | 1,410,000 | ||||||||||||||||||||||||||||||||||||||||||
Exclusivity fee | 143,000 | 286,000 | 286,000 | 286,000 | 476,000 | 1,477,000 | 72,000 | 286,000 | 286,000 | 286,000 | 476,000 | 1,406,000 | ||||||||||||||||||||||||||||||||||||
Total | $ | 839,000 | $ | 1,185,000 | $ | 711,000 | $ | 450,000 | $ | 721,000 | $ | 3,906,000 | $ | 455,000 | $ | 1,935,000 | $ | 1,435,000 | $ | 529,000 | $ | 721,000 | $ | 5,075,000 | ||||||||||||||||||||||||
(1) | Represents the minimum purchase requirements related to the Company AXP distributor in China |
Revenues are net of normal discounts. Shipping and handling fees billed to customers are included in net revenues, while the related costs are included in cost of revenues.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassifications did not have an impact on net loss as previously reported. For the three and sixnine month periodperiods ended JuneSeptember 30, 2021, sales and marketing and general and administrative expenses were combined into one line item identified as sales, general and administrative expenses on the Statement of Operations. Additionally, the loss on equity method investments was combined with other income on the Statement of Operations.
4. |
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Net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding plus the pre-funded warrants. For the purpose of calculating basic net loss per share, the additional shares of common stock that are issuable upon exercise of the pre-funded warrants have been included since the shares are issuable for a negligible consideration and have no vesting or other contingencies associated with them. As of June 30, 2021, all pre-funded warrants previously issued have been exercised and none are currently outstanding. The calculation of the basic and diluted earnings per share is the same for all periods presented, as the effect of the potential common stock equivalents noted below is anti-dilutive due to the Company’s net loss position for all periods presented. Anti-dilutive securities consisted of the following at JuneSeptember 30:
2021 | 2020 | 2021 | 2020 | |||||||||||||
Common stock equivalents of convertible promissory note and accrued interest | 6,758,897 | 6,676,112 | ||||||||||||||
Common stock equivalents of convertible promissory notes and accrued interest | 7,071,241 | 6,988,334 | ||||||||||||||
Vested Series A warrants | -- | 40,441 | -- | 40,441 | ||||||||||||
Unvested Series A warrants(1) | -- | 69,853 | -- | 69,853 | ||||||||||||
Warrants – other | 653,248 | 1,006,190 | 653,248 | 1,006,190 | ||||||||||||
Stock options | 386,461 | 893,349 | 366,595 | 892,149 | ||||||||||||
Total | 7,798,606 | 8,685,945 | 8,091,084 | 8,996,967 | ||||||||||||
(1) | The unvested Series A warrants were subject to vesting based upon the amount of funds actually received by the Company in the second close of the August 2015 financing which never occurred. The warrants remained outstanding but unvested until they expired in February 2021. |
5. |
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HealthBanks Biotech (USA) Inc.
On November 26, 2019 the Company entered into an agreement with HealthBanks Biotech (USA) Inc. (“HealthBanks”) to form a new company called ImmuneCyte, Inc. (“ImmuneCyte”) to commercialize the Company’s proprietary cell processing platform, CAR-TXpress™, for use in immune cell banking as well as for cell-based contract development and manufacturing services (CMO/CDMO). Under the terms of the agreement, ImmuneCyte was initially owned 80% by HealthBanks and 20% by the Company. Healthbanks is a subsidiary of the Boyalife Group (USA), Inc. which is owned by Dr. Xiaochun (Chris) Xu, the Company’s Chief Executive Officer and Chairman of our Board of Directors. Due to the significant influence the Company has over ImmuneCyte’s operations, the investment was accounted for by the Company using the equity method.
Between November 26, 2019 and September 30, 2020, ImmuneCyte closed on a series of investments with a private institution and qualified investors. After the investments, ImmuneCyte was owned 75.16% by HealthBanks, 18.79% by the Company and 6.05% by the private investors.
In March 2021, ImmuneCyte completed an acquisition to acquire Boyalife’s Cellular Therapy Division, for 12,000,000 shares in ImmuneCyte and Shangai KDWinfo Technology Co. Ltd. For 500,000 shares in ImmuneCyte. Following the acquisitions, the Company’s ownership percentage in ImmuneCyte decreased from 18.79% to 8.64%. The Company performed an analysis of the transaction and noted that none of the factors supporting significant influence changed as a result of the acquisition. Therefore, it was concluded that significant influence remains and the Company will continue to account for the transaction using the equity method. The Company recognized a dilution gain of $262,000 representing its share of the net assets acquired by ImmuneCyte. However, at the time of the acquistion,acquisition, the Company had accumulated losses of $428,000 in its investment in ImmuneCyte. As the accumulated losses were greater than the dilution gain, no entry was recorded by the Company for its investment in ImmuneCyte for the quarter ended March 31, 2021.
As of JuneSeptember 30, 2021, the value of the Company’s investment in ImmuneCyte on its Balance Sheet is $0. For the quarter ended JuneSeptember 30, 2021, ImmuneCyte had a consolidated net incomeloss of $599,000,$750,000; its current assets were $3,753,000$3,283,000 and current liabilities were $2,013,000.$2,970,000.
Convertible Promissory Note and Revolving Credit Agreement
In March 2017, ThermoGenesis Holdings entered into a Credit Agreement with Boyalife Asset Holding II, Inc. (the “Lender”). The Lender is a wholly owned subsidiary of the Boyalife Group (USA), Inc., which is owned and controlled by the Company’s Chief Executive Officer and Chairman of our Board of Directors. The Credit Agreement, as amended, grants to the Company the right to borrow up to $10,000,000 (the “Loan”) at any time prior to March 6, 2022 (the “Maturity Date”). As of JuneSeptember 30, 2021 and December 31, 2020, the Company had an outstanding principal balance on the Loan of $10,000,000.
The Credit Agreement and the Convertible Promissory Note issued thereunder (as amended, the “Note”) provide that the principal and all accrued and unpaid interest under the Loan will be due and payable on the Maturity Date, with payments of interest-only due on the last day of each calendar year. The Loan bears interest at 22% per annum, simple interest. The Company has five business days after the Lender demands payment to pay the interest due before the Loan is considered in default. In January 2021, the Company paid the Lender, the interest due as of December 31, 2020 in the amount of $2,082,000. The Note can be prepaid in whole or in part by the Company at any time without penalty.
The Credit Agreement and Note were amended in April 2018, granting the Lender the right to convert, at any time, outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price of $16.10 per share. The amendment included a down-round provision that lowered the conversion price if the Company issues shares of common stock at a lower price per share, the conversion price of the Note is lowered to that amount. The Company completed a transaction in 2018, which lowered the conversion price to $1.80.
The following summarizes the Note:
Maturity Date | Stated Interest Rate | Conversion Price | Face Value | Remaining Debt Discount | Carrying Value | Maturity Date | Stated Interest Rate | Conversion Price | Face Value | Remaining Debt Discount | Carrying Value | |||||||||||||||||||||||||||||||
At June 30, 2021 | 3/6/2022 | 22 | % | $ | 1.80 | $ | 10,000,000 | $ | (2,410,000 | ) | $ | 7,590,000 | ||||||||||||||||||||||||||||||
At September 30, 2021 | 3/6/2022 | 22% | $1.80 | $10,000,000 | $(1,583,000) | $8,417,000 | ||||||||||||||||||||||||||||||||||||
At December 31, 2020 | 3/6/2022 | 22 | % | $ | 1.80 | $ | 10,000,000 | $ | (4,065,000 | ) | $ | 5,935,000 | 3/6/2022 | 22% | $1.80 | $10,000,000 | $(4,065,000) | $5,935,000 | ||||||||||||||||||||||||
The Company amortized $827,000 and $1,655,000$2,482,000 of debt discount to interest expense for the three and sixnine months ended JuneSeptember 30, 2021 and $729,000$827,000 and $1,276,000$2,103,000 for the three and sixnine months ended JuneSeptember 30 2020, respectively. In addition to the amortization, the Company also recorded interest expense of $556,000$562,000 and $1,106,000$1,668,000 for the three and sixnine months ended JuneSeptember 30, 2021 and $515,000$562,000 and $957,000$1,519,000 for the three and sixnine months ended JuneSeptember 30 2020, respectively. The interest payable balance as of JuneSeptember 30, 2021 and December 31, 2020 was $1,106,000$1,668,000 and $2,082,000, respectively.
6. |
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July 2019 Note
On July 23, 2019, the Company entered into a private placement with the Accredited Investor, pursuant to which the Company issued and sold to such investor an unsecured convertible promissory note in the original principal amount of $1,000,000 (the “July 2019 Note”). The July 2019 Note is convertible into shares of the Company's common stock at a conversion price equal to the lower of (a) $1.80 per share or (b) 90% of the closing sale price of the Company’s common stock on the date of conversion (subject to a floor conversion price of $0.50). The July 2019 Note bears interest at the rate of twenty-four percent (24%) per annum and is payable quarterly in arrears. Unless sooner converted in the manner described below, all principal under the July 2019 Note, together with all accrued and unpaid interest thereupon, will be due and payable three years from the date of the issuance on July 31, 2022.
The following summarizes the July 2019 Note:
Maturity Date | Stated Interest Rate | Conversion Price | Face Value | Remaining Debt Discount | Carrying Value | Maturity Date | Stated Interest Rate | Conversion Price | Face Value | Remaining Debt Discount | Carrying Value | |||||||||||||||||||||||||||||||
At June 30, 2021 | 7/31/2022 | 24 | % | $ | 1.80 | $ | 1,000,000 | $ | (347,000 | ) | $ | 653,000 | ||||||||||||||||||||||||||||||
At September 30, 2021 | 7/31/2022 | 24% | $1.80 | $1,000,000 | $(267,000) | $733,000 | ||||||||||||||||||||||||||||||||||||
At December 31, 2020 | 7/31/2022 | 24 | % | $ | 1.80 | $ | 1,000,000 | $ | (507,000 | ) | $ | 493,000 | 7/31/2022 | 24% | $1.80 | $1,000,000 | $(507,000) | $493,000 | ||||||||||||||||||||||||
The Company recorded amortization expense for the debt discount on the July 2019 Note for the three and sixnine months ended JuneSeptember 30, 2021 of $80,000 and $161,000,$241,000, respectively; and $27,000 and $107,000 for the three and sixnine months ended JuneSeptember 30, 2020. Interest expense related to the July 2019 Note was $60,000 and $120,000$180,000 for the three and sixnine months ended JuneSeptember 30, 2021 and 2020.
7. |
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The Company leases an approximately 28,000 square foot facility located in Rancho Cordova, California for its corporate offices and in-house manufacturing. The lease was renewed in the first quarter of 2019 and is accounted for as an operating lease. The lease expires in May 2024.
Operating Leases
Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we use the Company’s cost of capital based on existing debt instruments. Our material leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term.
The following summarizes the Company’s operating leases:
June 30, 2021 | December 31, 2020 | September 30, 2021 | December 31, 2020 | |||||||||||||
Right-of-use operating lease assets, net | $ | 654,000 | $ | 730,000 | $ | 614,000 | $ | 730,000 | ||||||||
Current lease liability (included in other current liabilities) | 180,000 | 157,000 | 193,000 | 157,000 | ||||||||||||
Non-current lease liability | 508,000 | 604,000 | 455,000 | 604,000 | ||||||||||||
Weighted average remaining lease term | 2.9 | 3.4 | 2.7 | 3.4 | ||||||||||||
Discount rate | 22 | % | 22 | % | 22 | % | 22 | % | ||||||||
Maturities of lease liabilities by year for our operating leases are as follows:
2021 (Remaining) | $ | 157,000 | $ | 78,000 | ||||
2022 | 319,000 | 319,000 | ||||||
2023 | 328,000 | 328,000 | ||||||
2024 | 139,000 | 139,000 | ||||||
Total lease payments | $ | 943,000 | $ | 864,000 | ||||
Less: imputed interest | (255,000 | ) | (217,000 | ) | ||||
Present value of operating lease liabilities | $ | 688,000 | $ | 647,000 | ||||
Statement of Cash Flows
In January 2019, the Company signed an amendment to its Rancho Cordova, California lease. The amendment was accounted for as a modification and resulted in a right-of-use asset of $966,000 being recognized as a non-cash addition on the date of the amendment. Cash paid for amounts included in the measurement of operating lease liabilities included in cash flow from operating activities was $77,000$78,000 and $153,000$231,000 for the three and sixnine months ended JuneSeptember 30, 2021 and $75,000$76,000 and $149,000$225,000 for the three and sixnine months ended JuneSeptember 30, 2020, respectively.
Operating Lease Costs
Operating lease costs were $110,000$107,000 and $219,000$316,000 for the three and sixnine months ended JuneSeptember 30, 2021 and $105,000$135,000 and $208,000$343,000 for the three and sixnine months ended JuneSeptember 30, 2020, respectively. These costs are primarily related to long-term operating leases, but also include amounts for variable lease costs, as well as immaterial and short-term leases.
Finance Leases
Finance leases are included in equipment and other current and non-current liabilities on the condensed consolidated balance sheet. The amortization and interest expense are included in general and administrative expense and interest expense, respectively on the statement of operations. These leases were not material for the three and sixnine months ended JuneSeptember 30, 2021 and 2020.
8. |
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Contingencies
In the normal course of operations, the Company may have disagreements or disputes with customers, employees or vendors. Such potential disputes are seen by management as a normal part of business. As of JuneSeptember 30, 2021, except as disclosed, management believes any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the Company’s condensed consolidated financial position, operating results or cash flows.
Financial Covenants
On July 13, 2020, the Company, entered into a Manufacturing and Supply Amending Agreement #2 with CBR Systems, Inc. (“CBR”) with an effective date of July 13, 2020 (the “Amendment”). The Amendment amends the Manufacturing and Supply Agreement entered into on May 15, 2017 and Amendment #1 dated March 16, 2020 by the Company and CBR. The Amendment, among other things, revised the amount of certain products to be purchased, pricing of those products and removal of the safety stock requirement. In addition, the Amendment updated the financial requirement to exclude convertible debt from the definition of short-term debt under events or conditions that constitute a default. The Amendment states that the Company’s cash balance and short-term investments net of non-convertible debt and borrowed funds that are payable within one year must be greater than $1,000,000 at any month end. The Company was in compliance with this agreement as of JuneSeptember 30, 2021.
Warranty
The Company offers a warranty on all of its non-disposable products of one to two years. The Company warrants disposable products through their expiration date. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
The warranty liability is included in other current liabilities in the unaudited condensed consolidated balance sheets. The change in the warranty liability for the sixnine months ended JuneSeptember 30, 2021 is summarized in the following table:
Balance at December 31, 2020 | $ | 154,000 | ||
Warranties issued during the period | 21,000 | |||
Settlements made during the period | (75,000 | ) | ||
Changes in liability for pre-existing warranties during the period | -- | |||
Balance at June 30, 2021 | $ | 100,000 |
Balance at December 31, 2020 | $ | 154,000 | ||
Warranties issued during the period | 53,000 | |||
Settlements made during the period | (140,000 | ) | ||
Changes in liability for pre-existing warranties during the period | -- | |||
Balance at September 30, 2021 | $ | 67,000 |
9. | PAYCHECK PROTECTION PROGRAM |
On April 21, 2020, the Company entered into a promissory note and received a Paycheck Protection Program loan “PPP Loan” from the Small Business Association “SBA”, which was established under the CARES Act. The Company received net proceeds of $646,000 from the PPP Loan. The term of the PPP Loan is two years with an interest rate of 1.00% per annum, which was deferred for the first six months of the term of the loan or after an application is filed for loan forgiveness, whichever is later. Each monthly payment shall be in the amount which would fully amortize the principal balance outstanding under the PPP Loan. Pursuant to the terms of the CARES Act, the proceeds of the PPP Loan may be used for payroll costs, mortgage interest, rent or utility costs. The promissory note of the PPP Loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in a claim for the immediate repayment of the amount outstanding under the PPP Loan. In late December 2020, the Company applied with the SBA for forgiveness of the PPP Loan and was notified on March 30, 2021 that the SBA had approved our application to forgive the entire amount of the loan and accrued interest. For the sixnine months ended JuneSeptember 30, 2021, the Company recorded a gain on extinguishment of debt of $652,000 representing the principal and accrued interest for the PPP Loan at the time of forgiveness.
10. | EMPLOYEE RETENTION TAX CREDIT |
Employee Retention Tax Credits (“ERTC”), created in the 13March 2020
10.2021STOCKHOLDERS’ EQUITY and the American Rescue Plan Act (“ARPA”) of 2021, is a refundable payroll credit for qualifying businesses keeping employees on their payroll during the COVID-19 pandemic. Under CAA and ARPA amendments, employers can claim a refundable tax credit against the employer share of social security tax equal to 70% of the qualified wages (including certain health care expenses) paid to employees from January 1, 2021 to December 31, 2021. Qualified wages are limited to $10,000 per employee per quarter in 2021 so the maximum ERTC available is $7,000 per employee per quarter.
The Company is eligible to receive the ERTC credits under the gross receipts decline test when comparing the first, second and third quarters of 2021 to the same quarters in 2019, which qualified the Company to claim ERTC the firstthree quarters of 2021 under the amended ERTC program. The Company qualified for a refundable payroll tax credit totaling $842,000 for the firstthree quarters of 2021, which is recorded in other income on the Company’s consolidated statement of operations for the three and nine months ended September 30, 2021, and prepaid and other current assets on the Company’s consolidated balance sheet as of September 30, 2021.
11. | STOCKHOLDERS’ EQUITY |
Common Stock
On December 13, 2019, the Company entered into an At The Market Offering Agreement, by and between the Company and H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”) (the “ATM Agreement”), pursuant to which the Company may offer and sell, from time to time through H.C. Wainwright, shares of the Company’s common stock, having an aggregate offering price of up to $4,400,000 and on May 19, 2020 the ATM Agreement was amended to increase the aggregate value of up to $15,280,313 (the “HCW Shares”). As of JuneSeptember 30, 2021, the Company sold a total of 5,597,484 shares of the Company’s common stock for aggregate gross proceeds of $15,280,000 at an average selling price of $2.73 per share, resulting in net proceeds of approximately $14,568,000 after deducting legal expenses, audit fees, commissions and other transaction costs of approximately $712,000. For the sixnine months ended JuneSeptember 30, 2021, the Company sold 2,976,832 shares of common stock for net proceeds of $6,832,000 after deducting $224,000 in commissions and other transaction costs.
Stock Based Compensation
In May 2021, five Company executives voluntarily surrendered the options they were awarded in June 2020. At the time they were surrendered, the exercise price of the options was underwater. No payment or other consideration was paid to the Company executives for surrendering the options. In total 490,000 options were cancelled. As a result of the cancellation, the remaining unamortized expense of $2,008,000 was accelerated and recorded in the three months ended June 30, 2021.
The Company recorded stock-based compensation of $2,099,000$92,000 and $2,357,000$2,449,000 for the three and sixnine months ended JuneSeptember 30, 2021, and $314,000$234,000 and $381,000$615,000 for the three and sixnine months ended JuneSeptember 30, 2020, respectively, as comprised of the following:
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Cost of revenues | $ | 5,000 | $ | 2,000 | $ | 10,000 | $ | 2,000 | $ | 4,000 | $ | 3,000 | $ | 14,000 | $ | 5,000 | ||||||||||||||||
Selling, general and administrative | 1,914,000 | 291,000 | 2,130,000 | 343,000 | 64,000 | 195,000 | 2,194,000 | 538,000 | ||||||||||||||||||||||||
Research and development | 180,000 | 21,000 | 217,000 | 36,000 | 24,000 | 36,000 | 241,000 | 72,000 | ||||||||||||||||||||||||
| $ | 2,099,000 | $ | 314,000 | $ | 2,357,000 | $ | 381,000 | $ | 92,000 | $ | 234,000 | $ | 2,449,000 | $ | 615,000 | |||||||||||||||||
The following is a summary of option activity for the Company’s stock option plans:
Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2020 | 889,636 | $ | 8.57 | |||||||||||||
Cancelled / Forfeited | 503,050 | |||||||||||||||
Outstanding at June 30, 2021 | 386,461 | $ | 11.88 | 7.4 | $ | -- | ||||||||||
Vested and expected to vest at June 30, 2021 | 335,786 | $ | 9.15 | 7.3 | $ | -- | ||||||||||
Exercisable at June 30, 2021 | 244,211 | $ | 10.31 | 7.1 | $ | -- | ||||||||||
Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2020 | 889,636 | $ | 8.57 | 8.7 | $ | -- | ||||||||||
Cancelled / Forfeited | 523,041 | |||||||||||||||
Outstanding at September 30, 2021 | 366,595 | $ | 11.86 | 7.1 | $ | -- | ||||||||||
Vested and expected to vest at September 30, 2021 | 331,128 | $ | 12.36 | 6.9 | $ | -- | ||||||||||
Exercisable at September 30, 2021 | 244,245 | $ | 13.97 | 7.0 | $ | -- | ||||||||||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock. There were 0 options exercised during the sixnine months ended JuneSeptember 30, 2021.
Warrants
A summary of warrant activity for the sixnine months ended JuneSeptember 30, 2021 is as follows:
Number of Shares | Weighted-Average Exercise Price Per Share | Weighted- Average Remaining Contract Term | ||||||||||
Balance at December 31, 2020 | 1,116,484 | $ | 37.27 | 0.49 | ||||||||
Warrants expired | 463,236 | |||||||||||
Warrants exercised | -- | $ | -- | |||||||||
Outstanding at June 30, 2021 | 653,248 | $ | 6.97 | 1.90 | ||||||||
Exercisable at June 30, 2021 | 653,248 | $ | 6.97 | 1.90 | ||||||||
Number of Shares | Weighted-Average Exercise Price Per Share | Weighted- Average Remaining Contract Term | ||||||||||
Balance at December 31, 2020 | 1,116,484 | $ | 37.27 | 0.49 | ||||||||
Warrants expired | 463,236 | |||||||||||
Warrants exercised | -- | $ | -- | |||||||||
Outstanding at September 30, 2021 | 653,248 | $ | 6.97 | 1.70 | ||||||||
Exercisable at September 30, 2021 | 653,248 | $ | 6.97 | 1.70 | ||||||||
12. |
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The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable as follows:
For net revenues, one customer accounted for 18%42% and 0%20%, a second customer accounted for 16%24% and 1%,22% and a third customer accounted for 11% and 25% and a fourth customer accounted for 0% and 18%10% for the three months ended JuneSeptember 30, 2021 and 2020, respectively. For the sixnine months ended JuneSeptember 30, 2021 and 2020, one customer accounted for 13%19% and 14%12%, a second customer accounted for 11%17% and 1%27%, while a third customer accounted for 11%10% and 30%12% of net revenues, respectively.
At JuneSeptember 30, 2021, 42 customers accounted for 68%67% of accounts receivable. At December 31, 2020, 3 customers accounted for 72% of accounts receivable.
12.SUBSEQUENT EVENTS
The Company has evaluated events subsequent to June 30, 2021 through the date of this filing and determined that no subsequent events have occurred that would require recognition or disclosure in the unaudited condensed consolidated financial statements.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward‑Looking Statements
This report contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained herein. When used in this report, the words "anticipate," "believe," "estimate," "expect" and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. Actual results, performance or achievements could differ materially from the results expressed in, or implied by these forward-looking statements. Readers should be aware of important factors that, in some cases, have affected, and in the future could affect, actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. These factors include without limitation, the ability to obtain capital and other financing in the amounts and at the times needed to launch new products, market acceptance of new products, the nature and timing of regulatory approvals for both new products and existing products for which the Company proposes new claims, realization of forecasted revenues, expenses and income, initiatives by competitors, price pressures, failure to meet U.S. Food and Drug Administration (“FDA”) regulated requirements governing the Company’s products and operations (including the potential for product recalls associated with such regulations), risks associated with initiating manufacturing for new products, failure to meet Foreign Corrupt Practice Act regulations, legal proceedings, uncertainty associated with the COVID-19 pandemic, and other risk factors listed from time to time in our reports with the Securities and Exchange Commission (“SEC”), including, in particular, those set forth in The Company’s Form 10-K for the year ended December 31, 2020.
Business Overview
ThermoGenesis Holdings, Inc. develops, commercializes and markets a range of automated technologies for CAR-T and other cell-based therapies. The Company currently markets a full suite of solutions for automated clinical biobanking, point-of-care applications, and automation for immuno-oncology, including its semi-automated, functionally closed CAR-TXpress™ platform, which streamlines the manufacturing process for the emerging CAR-T immunotherapy market. The Company was founded in 1986 and is incorporated in the State of Delaware and headquartered in Rancho Cordova, CA.
The Company provides the AutoXpress® and BioArchive® platforms for automated clinical bio-banking, PXP® platform for point-of-care cell-based therapies and CAR-TXpress™ platform for bio-manufacturing for immuno-oncology applications. The Company and its subsidiaries currently manufacture and market the following products:
Clinical Bio-Banking Applications:
● | AXP® II Automated Cell Separation System – an automated, fully closed cell separation system for isolating stem and progenitor cells from umbilical cord blood, registered as a U.S. FDA 510(k) medical device. |
● | BioArchive® Automated Cryopreservation System – an automated, robotic, liquid nitrogen controlled-rate-freezing and cryogenic storage system for cord blood samples and cell therapeutic products used in clinical applications, registered as a U.S. FDA 510(k) medical device. |
Point-of-Care Applications:
● | PXP® Point-of-Care System – an automated, fully closed, sterile system allows for the rapid, automated processing of autologous peripheral blood or bone marrow aspirate derived stem cells at the point-of-care, such as surgical centers or clinics, registered as a U.S. FDA 510(k) medical device. |
● | PXP-LAVARE System – an automated, fully closed system that is designed to wash, re-suspend and volume reduce cell suspensions. It allows for volume manipulation, supernatant or media exchange, and cell washing to occur without comprising cell viabilities and maximizing recoveries, registered as a U.S. FDA 510(k) medical device. |
● | PXP-1000 System – an automated, fully closed system that provides fast, reproducible separation of multiple cellular components from blood with minimal red blood cell contamination, registered as a U.S. FDA 510(k) medical device. |
Large Scale Cell Processing and Biomanufacturing:
● | X-Series® Products: X-Lab® for cell isolation, X-Wash® System for cell washing and reformulation, X-Mini® for high efficiency small scale cell purification, and X-BACS® System under development for large scale cell purification using our proprietary buoyancy-activated cell sorting (“BACS”) technology. |
● | CAR-TXpress™ Platform – a modular designed, functionally closed platform that addresses the critical unmet need for large scale cellular processing and chemistry, manufacturing and controls (“CMC”) needs for manufacturing |
ThermoGenesis Holdings is an affiliate of the Boyalife Group, a global diversified life science holding company that focuses on stem cell technology and cell-based therapeutics.
COVID-19
We believe that the COVID-19 pandemic has had a material negative impact on the Company’s business and results of operations. The pandemic had a significant impact on the cord blood industry, with fewer cord blood units being stored globally after the start of the pandemic. The continued impact of the pandemic on the Company’s business and results of operations will depend on future developments relating to the pandemic in general and the cord blood industry in particular, and such future developments are highly uncertain and cannot be predicted. Such developments may include the continued geographic spread of the virus, the severity of the disease, the duration of the outbreak, the actions that may be taken by various governmental authorities in response to the outbreak, and the possible continued impact on the U.S. or global economy.economy and supply chains. As a result, at the time of this filing, it is impossible to predict the continued impact of the pandemic on the Company’s business, liquidity, capital resources and financial results.
Critical Accounting Policies
Management’s discussion and analysis of its financial condition and results of operations is based upon the condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a full discussion of our accounting estimates and assumptions that have been identified as critical in the preparation of the Company’s condensed consolidated financial statements, please refer to ThermoGenesis Holdings’ Form 10-K for the year ended December 31, 2020.
Results of Operations for the Three Months Ended JuneSeptember 30, 2021 as Compared to the Three Months Ended JuneSeptember 30, 2020
The following tables summarizes revenues by product line:
Three Months Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | 2021 | 2020 | $ Change | % Change | |||||||||||||||||||||||||
AXP | $ | 1,096,000 | $ | 669,000 | $ | 427,000 | 64 | % | $ | 2,310,000 | $ | 1,169,000 | $ | 1,141,000 | 98 | % | ||||||||||||||||
BioArchive | 549,000 | 459,000 | 90,000 | 20 | % | 518,000 | 619,000 | (101,000 | ) | (16 | )% | |||||||||||||||||||||
CAR-TXpress | 389,000 | 634,000 | (245,000 | ) | (39 | )% | 262,000 | 425,000 | (163,000 | ) | (38 | )% | ||||||||||||||||||||
Manual Disposables | 116,000 | 198,000 | (82,000 | ) | (41 | )% | 55,000 | 100,000 | (45,000 | ) | (45 | )% | ||||||||||||||||||||
Other | 51,000 | 282,000 | (231,000 | ) | (82 | )% | 13,000 | 42,000 | (29,000 | ) | (69 | )% | ||||||||||||||||||||
Total | $ | 2,201,000 | $ | 2,242,000 | $ | (41,000 | ) | (2 | )% | $ | 3,158,000 | $ | 2,355,000 | $ | 803,000 | 34 | % | |||||||||||||||
Net Revenues
Net revenues decreasedincreased by $41,000$803,000 or 2%34%, from $2,242,000$2,355,000 to $2,201,000$3,158,000 for the three months ended JuneSeptember 30, 2021 as compared to the three months ended JuneSeptember 30, 2020. The declineincrease was primarily driven by CAR-TXpressAXP sales, which decreasedincreased by $245,000$1,141,000 or 39%98% in the three months ended JuneSeptember 30, 2021 as compared to the same period in 2020. The decline was driven byincreased AXP revenue related to the COVID-19 pandemic, which has limitednew three year contract the Company signed with its distributor in China. The contract called for the distributor to purchase approximately three containers of AXP bagsets in 2021, representing approximately $1,400,000 in revenue. Those containers were shipped in the third quarter of 2021. This resulted increased revenue of approximately $1,000,000 in the third quarter of 2021 related to the Company’s exclusive distributor sales and marketing activities and limited its abilityin China as compared to perform product demos for potential new customers. Additionally, Other sales decreased by $231,000 or 82%. This decline was due primarily to COVID-19 antibody testing kits which the Company soldsame period in 2020, as they only purchased approximately $450,000 of AXP bagsets in the three months ended JuneSeptember 30, 2020, but is no longer selling in2020. The remainder of the same period in 2021.
These decreases were offset by increases in both theincrease relates to domestic AXP and BioArchive product lines. AXPbagset sales, which increased by $427,000approximately 100 cases or 64% and BioArchive increased by $90,000 or 20%$200,000 in the three months ended JuneSeptember 30, 2021 as compared to the same period in 2020. We believe this is a positive sign showing that cord blood revenues may be starting to return to pre-pandemic levels. While we don’t have any specific industry data at this time on the number of cord blood units stored globally, AXP disposable sales increased by approximately 150 casesRevenues in the second quarterCompany’s other product lines decreased by a combined $338,000. The largest decrease is related to CAR-TXpress sales. The Company sells this product line primarily through its exclusive worldwide distributor for x-series products, Corning Incorporated. They have indicated that the COVID-19 pandemic is still hindering their ability to expand revenue for the product line, as they are unable to on site demos and other sales activities that occurred prior to the start of 2021 as compared to 2020. The increased demand for AXP bagsets appears to imply that global cord blood units stored are beginning to pick up. We currently anticipate this trend continuing and cord blood units stored potentially returning to pre-pandemic levels in the next few quarters.
pandemic.
Gross Profit
The Company’s gross profit increased by $3,618,000 to $986,000was $1,115,000 or 45%35% of net revenues for the three months ended JuneSeptember 30, 2021, compared to $(2,632,000)$1,511,000 or (117)%64% of net revenues for the three months ended JuneSeptember 30, 2020.2020, a decrease of $396,000 or 26%. The increasedecrease was driven by a one-time expenserefund of approximately $3,600,000 incurred$800,000 received in the three months ended JuneSeptember 30, 2020 of an inventory reserve for the remaining on hand inventory offrom ImmuneCyte relating to COVID-19 testing kits at that time. Additionally,which were previously reserved by the Company had an increase in a prior quarter. The decrease was offset by higher gross profit from AXP disposables due to 154 more cases being soldof approximately $400,000 generated by the increased sales of AXP disposables in the three months ended JuneSeptember 30, 2021 as compared to the same period in 2020. This increase was offset by a decrease in gross profit from CAR-TXpress, which had sales decline by $245,000 in the same period.2021.
Selling, General and Administrative
Sales, general and administrative expenses for the three months ended JuneSeptember 30, 2021 were $3,502,000$1,677,000 compared to $1,978,000$1,844,000 for the three months ended JuneSeptember 30, 2020, an increasea decrease of $1,524,000$167,000 or 77%9%. The increasedecrease was driven by lower personnel expenses which decreased by approximately $225,000, and lower stock compensation expense, which increaseddecreased by approximately $1,600,000 primarily due to the accelerated expense for the stock options that were voluntarily surrendered by Company executives$130,000, in the three months ended June 30, 2021. The increase is offset by a decrease of approximately $100,000 due to a fixed asset impairment expense recognized in the three months ended June 30, 2020.
Research and Development Expenses
Consolidated research and development expenses were $622,000 for the three months ended June 30, 2021 as compared to $578,000 for the three months ended June 30, 2020, an increase of $44,000 or 8%. The increase was driven by approximately $150,000 more in stock compensation expense offset by a decrease of approximately $100,000 related to lower salaries and benefits in the three months ended JuneSeptember 30, 2021 as compared to the same period in 2020. These decreases were offset by increased consulting expenses of approximately $200,000.
Research and Development Expenses
Research and development expenses were $543,000 for the three months ended September 30, 2021 as compared to $750,000 for the three months ended September 30, 2020, a decrease of $207,000 or 28%. The decrease was driven by development expenses for the Company’s COVID-19 cartridge reader of approximately $150,000 incurred in the three months ended September 30, 2020 and lower stock compensation expense of approximately $50,000 in the three months ended September 30, 2021.
Interest Expense
Interest expense for the three months ended JuneSeptember 30, 2021 was $1,524,000,$1,530,000, compared to $1,314,000$1,531,000 for the three months ended JuneSeptember 30, 2020, an increasea decrease of $210,000 or 16%. The increase$1,000. Interest expense was driven by additionalessentially flat year over year due the interest expense and amortization of the debt discount related to the Revolving Credit Agreement with Boyalife Asset Holding II, Inc. in the three months ended June 30, 2021 as compared tobeing the same period in 2020.both periods.
Results of Operations for the SixNine Months Ended JuneSeptember 30, 2021 as Compared to the SixNine Months Ended JuneSeptember 30, 2020
The following tables summarizes revenues by product line:
Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | 2021 | 2020 | $ Change | % Change | |||||||||||||||||||||||||
AXP | $ | 1,360,000 | $ | 2,901,000 | (1,541,000 | ) | (53 | )% | $ | 3,670,000 | $ | 4,112,000 | (442,000 | ) | (11 | )% | ||||||||||||||||
BioArchive | 1,299,000 | 955,000 | 344,000 | 36 | % | 1,817,000 | 1,575,000 | 242,000 | 15 | % | ||||||||||||||||||||||
CAR-TXpress | 743,000 | 869,000 | (126,000 | ) | (14 | )% | 1,005,000 | 1,296,000 | (291,000 | ) | (22 | )% | ||||||||||||||||||||
Manual Disposales | 245,000 | 401,000 | (156,000 | ) | (39 | )% | 300,000 | 499,000 | (199,000 | ) | (40 | )% | ||||||||||||||||||||
Other | 71,000 | 316,000 | (245,000 | ) | (78 | )% | 84,000 | 315,000 | (231,000 | ) | (73 | )% | ||||||||||||||||||||
Total | $ | 3,718,000 | $ | 5,442,000 | $ | (1,724,000 | ) | (32 | )% | $ | 6,876,000 | $ | 7,797,000 | $ | (921,000 | ) | (12 | )% | ||||||||||||||
Net Revenues
Net revenues decreased by $1,724,000$921,000 or 32%12%, from $3,718,000$7,797,000 to $5,442,000$6,876,000 for the sixnine months ended JuneSeptember 30, 2021 as compared to the sixnine months ended JuneSeptember 30, 2020. The decrease was driven by lower AXP® disposable sales which declined by approximately $1,600,000$350,000 with approximately 900100 fewer cases sold in the first quarter of 2021 as compared to 2020. The primary driver of the decrease was the COVID-19 pandemic which has had a significant impact on our sales since it began over a year ago. We have started to experience increases in sales in the second quarter, which appears to provide evidence that global cord blood units stored may be beginning to pick back up. We currently anticipate this trend continuing and cord blood units stored could be returning to pre-pandemic levels in the next few quarters.
BioArchive sales posted a $344,000 increase in the sixnine months ended JuneSeptember 30, 2021 as compared to the same period in 2020. The increase was driven by higher service revenue in the six months ended June 30, 2021. Offsetting this increase wasAdditionally, there were decreases in the CAR-TXpress and manual disposable product lines of $291,000 and $199,000, respectively, primarily as a result of the COVID-19 pandemic. Other revenues also decreased by $231,000 due to COVID-19 testing kits of which the Company didn’t sell in the sixnine months ended JuneSeptember 30, 2021. Offsetting the decreases, was an increase in BioArchive service revenue of $265,000 in the nine months ended September 30, 2021, as compared to the same period in 2020.
Gross Profit
The Company’s gross profit was $1,694,000$2,809,000 or 46%41% of net revenues for the sixnine months ended JuneSeptember 30, 2021, compared to $(1,140,000)$371,000 or (21)%5% for the sixnine months ended JuneSeptember 30, 2020, an increase of $2,834,000.$2,438,000. The increasecurrent year gross profit is consistent with the Company’s standard profit margins. The gross profit was driven by a lower in the prior year due to increased inventory reserve expenseexpenses of approximately $3,500,000 in the six months ended June 30, 2021 as compared to the same period in 2020.$2,800,000. The inventory reserve expense recognized in 2020 was primarily for COVID-19 testing kits, which are no longer being sold by the Company. Offsetting the increase was a decrease in gross profit provided by the AXP product line. The six months ended June 30, 2021 had 900 fewer cases of AXP disposables sold as compared to the same period in 2020, resulting inof approximately $700,000 less in gross profit.$300,000.
Selling, General and Administrative
Sales,Selling, general and administrative expenses for the sixnine months ended JuneSeptember 30, 2021 were $5,494,000$7,171,000 compared to $4,070,000$5,913,000 for the sixnine months ended JuneSeptember 30, 2020, an increase of $1,424,000$1,258,000 or 35%21%. The increase was driven by stock compensation expense, which increased by approximately $1,800,000$1,700,000 primarily due to the accelerated expense for the stock options that were voluntarily surrendered by Company executives and increased consulting expenses of approximately $200,000 in the sixnine months ended JuneSeptember 30, 2021. The increase is offset by a decrease of approximately $220,000$325,000 in lower legal expenses primarily due to the absence of legal and other expenses related to the Mavericks lawsuit andincurred in the prior year, approximately $100,000 due to aless in fixed asset impairment expense, incurredapproximately $125,000 less in patent expense and approximately $60,000 less in investor relations related expenses in the sixnine months ended JuneSeptember 30, 2020. Additionally, the Company incurred approximately $50,000 in expenses related to its annual stockholder meeting in the six months ended June 30, 2020. In 2021 the Company anticipates moving that meetingas compared to the fourth quarter and expects to incur the expenses latersame period in the year.2020.
Research and Development Expenses
Consolidated research and development expenses were $1,001,000$1,544,000 for the sixnine months ended JuneSeptember 30, 2021, compared to $1,187,000$1,937,000 for the sixnine months ended JuneSeptember 30, 2020, a decrease of $186,000$393,000 or 16%20%. The decrease was driven by lower salaries and benefits of approximately $225,000$550,000 offset by increased project expenses driven by BACS developmentstock compensation expense of approximately $175,000 in the sixnine months ended JuneSeptember 30, 2021 as compared to the same period in 2020.
Interest Expense
Interest expense decreased to $3,043,000$4,573,000 for the sixnine months ended JuneSeptember 30, 2021 as compared to $4,845,000$6,377,000 for the sixnine months ended JuneSeptember 30, 2020, a decrease of $1,802,000.$1,804,000. The decrease is driven an accelerated expense of $2,486,000 for the unamortized debt discount of the beneficial conversion feature associated with the portions of the Revolving Credit Agreement with Boyalife Asset Holding II, Inc. which were converted in the sixnine months ended JuneSeptember 30, 2020. This decrease was offset by additional interest expense and debt discount amortization of approximately $500,000 related to additional draw down from the Revolving Credit Agreement with Boyalife Asset Holding II, Inc. that occurred in the second quarter of 2020.
Liquidity and Capital Resources
At JuneSeptember 30, 2021, the Company had cash and cash equivalents of $8,668,000$7,634,000 and working capital of $4,166,000.$2,146,000. This compares to cash and cash equivalents of $7,161,000 and working capital of $9,155,000 at December 31, 2020. We have primarily financed operations through private and public placement of equity securities and our line of credit facility.
The Company has a Revolving Credit Agreement with Boyalife Asset Holding II, Inc. As of JuneSeptember 30, 2021, the Company had drawn down the full $10,000,000 that is available under the Revolving Credit Agreement, which matures in March of 2022. Boyalife Asset Holding II, Inc. is a wholly-owned subsidiary of Boyalife Group Inc. (USA), which is owned and controlled by the Company’s Chief Executive Officer and Chairman of our Board of Directors.
During 2020, the Company received a loan totalling net proceeds of $646,000 from the SBA under the Payment Protection Program of the CARES Act, in response to the COVID-19 pandemic described above. The CARES Act permits that a loan may be forgiven if certain criteria are met. In March 2021, the SBA approved the Company’s application to forgive the entire amount of the debt. In the sixnine months ended JuneSeptember 30, 2021, the Company recognized a gain of the forgiveness of debt for $652,000 representing the principal balance and accrued interest related to the loan at the time of forgiveness.
The Company has incurred recurringhistorical losses from operations and expects to continue to incur operating losses and as of June 30, 2021 had an accumulated deficit of $260,235,000.in the near future. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year from the filing of this report. The Company may require additional capital to grow the business, to fund other operating expenses and to make interest payments. The Company’s ability to fund its cash needs is subject to various risks, many of which are beyond its control. The Company may seek additional funding through bank borrowings or public or private 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 us, if at all.
Non-GAAP Measures
In addition to the results reported in accordance with US GAAP, we also use a non-GAAP measure, adjusted EBITDA, to evaluate operating performance and to facilitate the comparison of our historical results and trends. The Company calculates adjusted EBITDA as income or (loss) from operations less depreciation, amortization, stock compensation, equity method investments and impairment of intangible assets. This financial measure is not a measure of financial performance under US GAAP and should not be considered in isolation or as a substitute for loss as a measure of performance. The calculation of this non-GAAP measure may not be comparable to similarly titled measures used by other companies. Reconciliations to the most directly comparable GAAP measure are provided below.
Three months ended JuneSeptember 30, 2021 and 2020, respectively:
Three Months Ended June 30, | Three Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net loss | $ | (4,672,000 | ) | $ | (6,510,000 | ) | $ | (1,792,000 | ) | $ | (2,609,000 | ) | ||||
Deduct: | ||||||||||||||||
Interest expense | (1,524,000 | ) | (1,314,000 | ) | (1,530,000 | ) | (1,531,000 | ) | ||||||||
Other expense | (10,000 | ) | (8,000 | ) | 843,000 | 5,000 | ||||||||||
Loss from operations | $ | (3,138,000 | ) | $ | (5,188,000 | ) | $ | (1,105,000 | ) | $ | (1,083,000 | ) | ||||
Add: | ||||||||||||||||
Depreciation and amortization | 154,000 | 193,000 | 157,000 | 177,000 | ||||||||||||
Stock-based compensation expense | 2,099,000 | 314,000 | 92,000 | 234,000 | ||||||||||||
Adjusted EBITDA | $ | (885,000 | ) | $ | (4,681,000 | ) | $ | (856,000 | ) | $ | (672,000 | ) | ||||
Adjusted EBITDA for the three months ended JuneSeptember 30, 2021 was a loss of $885,000,$856,000, compared to a loss of $4,681,000$672,000 for the three months ended JuneSeptember 30, 2020, a decrease of $184,000. The adjusted EBITDA decrease was primarily due to $287,000 less in gross profit and $200,000 more in consulting fees incurred in the three months ended September 30, 2021 as compared to the same period in 2020. These decreasing items were offset by approximately $225,000 less in selling, general and administrative personnel expenses.
Nine months ended September 30, 2021 and 2020, respectively:
Nine Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
Net Loss | $ | (8,994,000 | ) | $ | (13,862,000 | ) | ||
Deduct: | ||||||||
Interest expense | (4,573,000 | ) | (6,377,000 | ) | ||||
Other income (expense) | 833,000 | (6,000 | ) | |||||
Gain on extinguishment of debt | 652,000 | -- | ||||||
Loss from operations | $ | (5,906,000 | ) | $ | (7,479,000 | ) | ||
Add: | ||||||||
Depreciation and amortization | 477,000 | 569,000 | ||||||
Stock-based compensation expense | 2,449,000 | 615,000 | ||||||
Adjusted EBITDA | $ | (2,980,000 | ) | $ | (6,295,000 | ) | ||
The adjusted EBITDA loss was $2,980,000 for the nine months ended September 30, 2021 compared to a loss of $6,295,000 for the nine months ended September 30, 2020, an increase of $3,796,000.$3,315,000. The adjusted EBITDA improvement was primarily due to lower inventory reserve expense of approximately $3,600,000 related to COVID-19 testing kits which was incurred in the three months ended June 30, 2020. Additionally, the three months ended June 30, 2020 had approximately $100,000 in fixed asset impairment expense, with no similar charges occurring in the three months ended June 30, 2021.
Six months ended June 30, 2021 and 2020, respectively:
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Net Loss | $ | (7,203,000 | ) | $ | (11,253,000 | ) | ||
Deduct: | ||||||||
Interest expense | (3,043,000 | ) | (4,845,000 | ) | ||||
Other income (expense) | (11,000 | ) | (11,000 | ) | ||||
Gain on extinguishment of debt | 652,000 | -- | ||||||
Loss from operations | $ | (4,801,000 | ) | $ | (6,397,000 | ) | ||
Add: | ||||||||
Depreciation and amortization | 320,000 | 392,000 | ||||||
Stock-based compensation expense | 2,357,000 | 381,000 | ||||||
Adjusted EBITDA | $ | (2,124,000 | ) | $ | (5,624,000 | ) | ||
The adjusted EBITDA loss was $2,124,000 for the six months ended June 30, 2021 compared to a loss of $5,624,000 for the six months ended June 30, 2020, an increase of $3,500,000. The adjusted EBITDA improvement was primarily due to lower inventory reserve expense of approximately $3,500,000$3,300,000 primarily related to COVID-19 testing kits which was incurred in the sixnine months ended JuneSeptember 30, 2020. Additionally, the sixnine months ended JuneSeptember 30, 2020 also had $225,000 moreapproximately $325,000 less in researchlegal expenses primarily due to the absence of legal and development salaries and benefits,other expenses related to the Mavericks lawsuit, approximately $100,000 inless due to a fixed asset impairment expense and approximately $50,000 in annual meeting expenses. Offsetting the increased expenses incurred in the sixnine months ended JuneSeptember 30, 2020 was a decreaseand approximately $125,000 less in gross profit provided bypatent expense in the AXP product line. The sixnine months ended JuneSeptember 30, 2021 had 900 fewer cases of AXP disposables sold as compared to the same period in 2020, resulting2020. Offsetting these decreases was approximately $200,000 more incurred in approximately $700,000 less in gross profit.consulting expenses.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
ThermoGenesis Holdings is a smaller reporting company as defined by Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and is not required to provide information under this item.
ITEM 4. Controls and Procedures
The Company carried out an evaluation, under the supervision, and with the participation of management, including both the Company’s Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined by Exchange Act Rule 13a-15(e) or 15d-15(e)) as of JuneSeptember 30, 2021. Disclosure controls and procedures cover controls and other procedures that are designed to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have both concluded that the Company’s disclosure controls and procedures were effective as of JuneSeptember 30, 2021.
There were no changes in the Company’s internal controls over financial reporting that occurred during the three months ended JuneSeptember 30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. Management believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company, have been detected.
ITEM 1. | LEGAL PROCEEDINGS. |
In the normal course of operations, we may have disagreements or disputes with distributors, vendors, employees or other parties. Such potential disputes are seen by management as a normal part of business and while the outcome of such disagreements and disputes cannot be predicted with certainty, we do not believe that any pending legal proceedings are material. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
ITEM 1A. | RISK FACTORS. |
There have been no material changes to the risk factors relating to the Company set forth in f, “Item IA. Risk Factors” of its Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
None.
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
None.
ITEM 4. | MINE SAFETY DISCLOSURE. |
Not applicable.
ITEM 5. | OTHER INFORMATION. |
None.
ITEM 6. | EXHIBITS. |
An index of exhibits is found on page 26 of this report.
Item 6. Exhibits.
Exhibit No. | Description |
31.1 | |
31.2 | |
32 | |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
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| 104 | Cover Page Interactive Data File |
ThermoGenesis Holdings, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ThermoGenesis Holdings, Inc. (Registrant) | |||
Dated: | /s/ Xiaochun (Chris) Xu, Ph.D. | ||
Xiaochun (Chris) Xu, Ph.D. Chief Executive Officer (Principal Executive Officer) | |||
Dated: | /s/ Jeffery Cauble | ||
Jeffery Cauble Chief Financial Officer (Principal Financial Officer) |