Table of Contents
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. | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2022. |
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)
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)
Rancho Cordova, California 95742
(Address of principal executive offices) (Zip Code)
|
(916) 858-5100 (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading symbol(s) | | Name of each exchange on which registered |
Common Stock, $.001 par value | | THMO | | Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | | Outstanding at November 12, 2021August 9, 2022 | |
| Common stock, $.001 par value | | 11,911,78431,321,362
| |
ThermoGenesis Holdings, Inc.
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ThermoGenesis Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| | | September 30, 2021 | | | December 31, 2020 | | | June 30, 2022 | | | December 31, 2021 | |
ASSETS | | | | | |
Current assets: | | |
Cash and cash equivalents | | $ | 7,634,000 | | | $ | 7,161,000 | | | $ | 4,001,000 | | | $ | 7,280,000 | |
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 | | |
Accounts receivable, net of allowance for doubtful accounts of $156,000 at June 30, 2022 and December 31, 2021 | | | 2,309,000 | | | 733,000 | |
Inventories | | 5,538,000 | | | 5,877,000 | | | 5,493,000 | | | 5,373,000 | |
Prepaid expenses and other current assets | | | 1,138,000 | | | | 878,000 | | | | 681,000 | | | | 1,578,000 | |
Total current assets | | 16,881,000 | | | 15,298,000 | | | 12,484,000 | | | 14,964,000 | |
| | | |
Inventories, non-current | | 1,784,000 | | | 1,221,000 | | |
Inventories non-current, net | | | 994,000 | | | 1,709,000 | |
Equipment and leasehold improvements, net | | 1,339,000 | | | 1,424,000 | | | 1,279,000 | | | 1,261,000 | |
Right-of-use operating lease assets, net | | 614,000 | | | 730,000 | | | 477,000 | | | 571,000 | |
Right-of-use operating lease assets – related party, net | | | 3,754,000 | | | -- | |
Goodwill | | 781,000 | | | 781,000 | | | 781,000 | | | 781,000 | |
Other intangible assets, net | | 1,326,000 | | | 1,358,000 | | | 1,302,000 | | | 1,318,000 | |
Other assets | | | 48,000 | | | | 48,000 | | | | 256,000 | | | | 48,000 | |
Total assets | | $ | 22,773,000 | | | $ | 20,860,000 | | | $ | 21,327,000 | | | $ | 20,652,000 | |
| | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
LIABILITIES AND EQUITY | | |
Current liabilities: | | |
Accounts payable | | $ | 1,502,000 | | | $ | 1,366,000 | | | $ | 1,240,000 | | | $ | 1,280,000 | |
Accrued payroll and related expenses | | 461,000 | | | 349,000 | | | 376,000 | | | 348,000 | |
Deferred revenue – short-term | | 943,000 | | | 608,000 | | | 1,029,000 | | | 719,000 | |
Convertible promissory note – related party, net | | 8,417,000 | | | -- | | |
Convertible promissory note – related party | | | 5,267,000 | | | -- | |
Interest payable – related party | | 1,668,000 | | | 2,082,000 | | | 709,000 | | | 2,231,000 | |
Note payable – short-term | | -- | | | 447,000 | | |
Convertible promissory note, net | | 733,000 | | | -- | | | 1,000,000 | | | 813,000 | |
Other current liabilities | | | 1,011,000 | | | | 1,291,000 | | | | 1,070,000 | | | | 957,000 | |
Total current liabilities | | 14,735,000 | | | 6,143,000 | | | 10,691,000 | | | 6,348,000 | |
| | | |
Convertible promissory note – related party, net | | -- | | | 5,935,000 | | | -- | | | 9,245,000 | |
Convertible promissory note, net | | -- | | | 493,000 | | |
Note payable | | -- | | | 199,000 | | |
Operating lease obligations – long-term | | 455,000 | | | 604,000 | | | 274,000 | | | 398,000 | |
Operating lease obligations – related party – long-term | | | 3,740,000 | | | -- | |
Deferred revenue – long-term | | 1,395,000 | | | 1,596,000 | | | 1,095,000 | | | 1,244,000 | |
Other noncurrent liabilities | | | 20,000 | | | | 20,000 | | | | 18,000 | | | | 20,000 | |
Total liabilities | | | 16,605,000 | | | | 14,990,000 | | | | 15,818,000 | | | | 17,255,000 | |
| | | |
Commitments and contingencies | | | | | | | | | | |
| | | |
Stockholders’ equity: | | |
Preferred stock, $0.001 par value; 2,000,000 shares authorized, none outstanding | | -- | | | -- | | | -- | | | -- | |
Common stock, $0.001 par value; 350,000,000 shares authorized; 11,911,784 issued and outstanding (8,934,952 at December 31, 2020) | | 12,000 | | | 9,000 | | |
| | | |
Common stock, $0.001 par value; 350,000,000 shares authorized; 27,779,440 issued and outstanding (11,911,784 at December 31, 2021) | | | 28,000 | | | 12,000 | |
Additional paid in capital | | 268,336,000 | | | 259,058,000 | | | 265,596,000 | | | 268,447,000 | |
Accumulated deficit | | (262,009,000 | ) | | (253,283,000 | ) | | (259,521,000 | ) | | (264,662,000 | ) |
Accumulated other comprehensive loss | | | 28,000 | | | | 16,000 | | | | 76,000 | | | | 31,000 | |
Total ThermoGenesis Holdings, Inc. stockholders’ equity | | 6,367,000 | | | 5,800,000 | | | 6,179,000 | | | 3,828,000 | |
| | | |
Noncontrolling interests | | | (199,000 | ) | | | 70,000 | | | | (670,000 | ) | | | (431,000 | ) |
Total equity | | | 6,168,000 | | | | 5,870,000 | | | | 5,509,000 | | | | 3,397,000 | |
Total liabilities and equity | | $ | 22,773,000 | | | $ | 20,860,000 | | | $ | 21,327,000 | | | $ | 20,652,000 | |
See accompanying notes.notes to the condensed consolidated financial statements.
ThermoGenesis Holdings, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
| | | Three Months Ended
September 30, | | Nine Months Ended September 30, | | | Three Months Ended
June 30, | | Six Months Ended June 30, | |
| | | 2021 | | | 2020 | | | 2021 | | | 2020 | | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
| | | |
Net revenues | | $ | 3,158,000 | | | $ | 2,355,000 | | | $ | 6,876,000 | | | $ | 7,797,000 | | | $ | 3,029,000 | | | $ | 2,201,000 | | | $ | 5,692,000 | | | $ | 3,718,000 | |
Cost of revenues | | | 2,043,000 | | | | 844,000 | | | | 4,067,000 | | | | 7,426,000 | | | | 2,090,000 | | | | 1,215,000 | | | | 3,813,000 | | | | 2,024,000 | |
| | | |
Gross profit (loss) | | | 1,115,000 | | | | 1,511,000 | | | | 2,809,000 | | | | 371,000 | | |
Gross profit | | | | 939,000 | | | | 986,000 | | | | 1,879,000 | | | | 1,694,000 | |
| | | |
Expenses: | | |
Selling, general and administrative | | 1,677,000 | | | 1,844,000 | | | 7,171,000 | | | 5,913,000 | | | 1,989,000 | | | 3,502,000 | | | 3,682,000 | | | 5,494,000 | |
Research and development | | | 543,000 | | | | 750,000 | | | | 1,544,000 | | | | 1,937,000 | | | | 392,000 | | | | 622,000 | | | | 847,000 | | | | 1,001,000 | |
| | | |
Total operating expenses | | | 2,220,000 | | | | 2,594,000 | | | | 8,715,000 | | | | 7,850,000 | | | | 2,381,000 | | | | 4,124,000 | | | | 4,529,000 | | | | 6,495,000 | |
| | | |
Loss from operations | | (1,105,000 | ) | | (1,083,000 | ) | | (5,906,000 | ) | | (7,479,000 | ) | | (1,442,000 | ) | | (3,138,000 | ) | | (2,650,000 | ) | | (4,801,000 | ) |
| | | |
Other expenses: | | |
| | | |
Interest expense | | (1,530,000 | ) | | (1,531,000 | ) | | (4,573,000 | ) | | (6,377,000 | ) | | (1,359,000 | ) | | (1,524,000 | ) | | (2,182,000 | ) | | (3,043,000 | ) |
Gain/(loss) on extinguishment of debt | | -- | | | -- | | | 652,000 | | | -- | | |
Other income/(expense) | | | 843,000 | | | | 5,000 | | | | 833,000 | | | | (6,000 | ) | |
| | | |
Other income (expenses) | | | -- | | | (10,000 | ) | | (4,000 | ) | | (11,000 | ) |
Gain on extinguishment of debt | | | | -- | | | | -- | | | | -- | | | | 652,000 | |
Total other expense | | | (687,000 | ) | | | (1,526,000 | ) | | | (3,088,000 | ) | | | (6,383,000 | ) | | | (1,359,000 | ) | | | (1,534,000 | ) | | | (2,186,000 | ) | | | (2,402,000 | ) |
| | | |
Net loss | | | (1,792,000 | ) | | | (2,609,000 | ) | | | (8,994,000 | ) | | | (13,862,000 | ) | | | (2,801,000 | ) | | | (4,672,000 | ) | | | (4,836,000 | ) | | | (7,203,000 | ) |
| | | |
Loss attributable to noncontrolling interests | | | (18,000 | ) | | | (146,000 | ) | | | (269,000 | ) | | | (360,000 | ) | | | (113,000 | ) | | | (133,000 | ) | | | (239,000 | ) | | | (251,000 | ) |
Net loss attributable to common stockholders | | $ | (1,774,000 | ) | | $ | (2,463,000 | ) | | $ | (8,725,000 | ) | | $ | (13,502,000 | ) | | $ | (2,688,000 | ) | | $ | (4,539,000 | ) | | $ | (4,597,000 | ) | | $ | (6,952,000 | ) |
| | | |
COMPREHENSIVE LOSS | | |
Net loss | | $ | (1,792,000 | ) | | $ | (2,609,000 | ) | | $ | (8,994,000 | ) | | $ | (13,862,000 | ) | | $ | (2,801,000 | ) | | $ | (4,672,000 | ) | | $ | (4,836,000 | ) | | $ | (7,203,000 | ) |
Other comprehensive loss: | | |
Foreign currency translation adjustments gain (loss) | | | (1,000 | ) | | | (19,000 | ) | | | 12,000 | | | | 20,000 | | | | 31,000 | | | | 12,000 | | | | 45,000 | | | | 13,000 | |
Comprehensive loss | | (1,793,000 | ) | | (2,628,000 | ) | | (8,982,000 | ) | | (13,842,000 | ) | | (2,770,000 | ) | | (4,660,000 | ) | | (4,791,000 | ) | | (7,190,000 | ) |
Comprehensive loss attributable to noncontrolling interests | | | (18,000 | ) | | | (146,000 | ) | | | (269,000 | ) | | | (360,000 | ) | | | (113,000 | ) | | | (133,000 | ) | | | (239,000 | ) | | | (251,000 | ) |
Comprehensive loss attributable to common stockholders | | $ | (1,775,000 | ) | | $ | (2,482,000 | ) | | $ | (8,713,000 | ) | | $ | (13,482,000 | ) | | $ | (2,657,000 | ) | | $ | (4,527,000 | ) | | $ | (4,552,000 | ) | | $ | (6,939,000 | ) |
| | | |
Per share data: | | |
| | | |
Basic and diluted net loss per common share | | $ | (0.15 | ) | | $ | (0.37 | ) | | $ | (0.74 | ) | | $ | (2.36 | ) | | $ | (0.20 | ) | | $ | (0.38 | ) | | $ | (0.36 | ) | | $ | (0.59 | ) |
| | | |
Weighted average common shares outstanding – basic and diluted | | | 11,911,784 | | | | 6,711,664 | | | | 11,757,211 | | | | 5,728,105 | | | | 13,463,137 | | | | 11,911,784 | | | | 12,879,072 | | | | 11,679,075 | |
See accompanying notes.notes to the condensed consolidated financial statements.
ThermoGenesis Holdings, Inc.
Condensed Consolidated Statements of Equity
For the Three and NineSix Months Ended SeptemberJune 30, 2022 and 2021 (Unaudited)
| | | Shares | | Common Stock | | Paid in Capital in Excess of Par | | Accumulated Deficit | | AOCL* | | Non- Controlling interests | | Total Equity | | | 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 | | |
Balance at January 1, 2022 | | | 11,911,784 | | | $ | 12,000 | | | $ | 268,447,000 | | | $ | (264,662,000 | ) | | $ | 31,000 | | | $ | (431,000 | ) | | $ | 3,397,000 | |
| | | |
Adoption of ASU 2020-06 | | | -- | | | -- | | | (10,681,000 | ) | | 9,739,000 | | | -- | | | -- | | | (942,000 | ) |
Stock-based compensation expense | | | -- | | | -- | | | 42,000 | | | -- | | | -- | | | -- | | | 42,000 | |
Issuance of common stock via at-the-market offering, net | | | 918,093 | | | 1,000 | | | 593,000 | | | -- | | | -- | | | -- | | | 594,000 | |
Related party convertible note price reset | | | | | | | | 213,000 | | | | | | | | | | 213,000 | |
Foreign currency translation gain | | | -- | | | -- | | | -- | | | -- | | | 14,000 | | | -- | | | 14,000 | |
Net loss | | | | -- | | | -- | | | -- | | | (1,910,000 | ) | | -- | | | (126,000 | ) | | (2,036,000 | ) |
Balance at March 31, 2022 | | | | 12,829,877 | | | $ | 13,000 | | | $ | 258,614,000 | | | $ | (256,833,000 | ) | | $ | 45,000 | | | $ | (557,000 | ) | | $ | 1,282,000 | |
| | | | | | | | | | | | | | | | | |
Stock-based compensation expense | | -- | | | -- | | | 258,000 | | | -- | | | -- | | | -- | | | 258,000 | | | -- | | | -- | | | 72,000 | | | -- | | | -- | | | -- | | | 72,000 | |
Issuance of common stock via at- the-market offering, net | | 2,976,832 | | | 3,000 | | | 6,829,000 | | | -- | | | -- | | | -- | | | 6,832,000 | | |
Issuance of common stock via at-the-market offering, net | | | 4,397,329 | | | 4,000 | | | 1,446,000 | | | -- | | | -- | | | -- | | | 1,450,000 | |
Related party convertible note price reset | | | -- | | | -- | | | 2,475,000 | | | -- | | | -- | | | -- | | | 2,475,000 | |
Conversion of related party note payable to common stock | | | 10,552,234 | | | 11,000 | | | 2,989,000 | | | -- | | | -- | | | -- | | | 3,000,000 | |
Foreign currency translation gain | | -- | | | -- | | | -- | | | -- | | | 1,000 | | | -- | | | 1,000 | | | -- | | | -- | | | -- | | | -- | | | 31,000 | | | -- | | | 31,000 | |
Net loss | | | -- | | | -- | | | -- | | | (2,413,000 | ) | | -- | | | (118,000 | ) | | (2,531,000 | ) | | | -- | | | -- | | | -- | | | (2,688,000 | ) | | -- | | | (113,000 | ) | | (2,801,000 | ) |
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 | | |
Balance at June 30, 2022 | | | | 27,779,440 | | | $ | 28,000 | | | $ | 265,596,000 | | | $ | (259,521,000 | ) | | $ | 76,000 | | | $ | (670,000 | ) | | $ | 5,509,000 | |
| | | 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 | |
* Accumulated other comprehensive loss.
See accompanying notes to the condensed consolidated financial statements.
ThermoGenesis Holdings, Inc.
Condensed Consolidated Statements of Equity
For the Three and Nine Months Ended September 30, 2020Cash Flows (Unaudited)
| | | 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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation expense | | | -- | | | | -- | | | | 67,000 | | | | -- | | | | -- | | | | -- | | | | 67,000 | |
Exercise of pre-funded warrants | | | 100,000 | | | | -- | | | | 10,000 | | | | -- | | | | -- | | | | -- | | | | 10,000 | |
Exercise of warrants | | | 7,866 | | | | -- | | | | 47,000 | | | | -- | | | | -- | | | | -- | | | | 47,000 | |
Discount due to beneficial conversion features | | | -- | | | | -- | | | | 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 | |
Conversion of note payable to common stock | | | 100,000 | | | | -- | | | | 180,000 | | | | -- | | | | -- | | | | -- | | | | 180,000 | |
Issuance of common stock, net | | | 1,050,748 | | | | 1,000 | | | | 3,220,000 | | | | -- | | | | -- | | | | -- | | | | 3,221,000 | |
Foreign currency translation gain | | | -- | | | | -- | | | | -- | | | | -- | | | | 38,000 | | | | -- | | | | 38,000 | |
Net loss | | | -- | | | | -- | | | | -- | | | | (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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation expense | | | -- | | | | -- | | | | 314,000 | | | | -- | | | | -- | | | | -- | | | | 314,000 | |
Exercise of pre-funded warrants | | | 224,445 | | | | | | | | 22,000 | | | | -- | | | | -- | | | | -- | | | | 22,000 | |
Exercise of warrants | | | 267,271 | | | | -- | | | | 1,604,000 | | | | -- | | | | -- | | | | -- | | | | 1,604,000 | |
Discount due to beneficial conversion features | | | -- | | | | -- | | | | 3,112,000 | | | | -- | | | | -- | | | | -- | | | | 3,112,000 | |
Conversion of note payable to common stock | | | 104,445 | | | | 1,000 | | | | 188,000 | | | | -- | | | | -- | | | | -- | | | | 189,000 | |
Issuance of Common Stock, net | | | 344,419 | | | | -- | | | | 1,993,000 | | | | -- | | | | -- | | | | -- | | | | 1,993,000 | |
Foreign currency translation gain | | | -- | | | | -- | | | | -- | | | | -- | | | | 1,000 | | | | -- | | | | 1,000 | |
Net loss | | | -- | | | | -- | | | | -- | | | | (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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 | |
| | | Six Months Ended June 30, | |
| | | 2022 | | | 2021 | |
Cash flows from operating activities: | | | | | | | | |
Net loss | | $ | (4,836,000 | ) | | $ | (7,203,000 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Depreciation and amortization | | | 410,000 | | | | 320,000 | |
Stock based compensation expense | | | 114,000 | | | | 2,357,000 | |
Amortization of debt discount/premium, net | | | 955,000 | | | | 1,815,000 | |
Reserve for excess and slow-moving inventories | | | 555,000 | | | | 98,000 | |
Gain on extinguishment of debt | | | -- | | | | (652,000 | ) |
Net change in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (1,576,000 | ) | | | 140,000 | |
Inventories | | | 37,000 | | | | (1,042,000 | ) |
Prepaid expenses and other assets | | | 689,000 | | | | 524,000 | |
Accounts payable | | | 1,000 | | | | (236,000 | ) |
Interest payable – related party | | | (1,522,000 | ) | | | (976,000 | ) |
Accrued payroll and related expenses | | | 28,000 | | | | (4,000 | ) |
Deferred revenue – short-term | | | 310,000 | | | | 294,000 | |
Other current liabilities | | | 119,000 | | | | (434,000 | ) |
Long-term deferred revenue and other noncurrent liabilities | | | (385,000 | ) | | | (245,000 | ) |
| | | | | | | | | |
Net cash used in operating activities | | | (5,101,000 | ) | | | (5,244,000 | ) |
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Capital expenditures | | | (219,000 | ) | | | (80,000 | ) |
| | | | | | | | | |
Net cash used in investing activities | | | (219,000 | ) | | | (80,000 | ) |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
| | | | | | | | | |
Proceeds from issuance of common stock, net of expenses | | | 2,044,000 | | | | 6,832,000 | |
| | | | | | | | | |
Net cash provided by financing activities | | | 2,044,000 | | | | 6,832,000 | |
| | | | | | | | | |
Effects of foreign currency rate changes on cash and cash equivalents | | | (3,000 | ) | | | (1,000 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | (3,279,000 | ) | | | 1,507,000 | |
| | | | | | | | | |
Cash, cash equivalents and restricted cash at beginning of period | | | 7,280,000 | | | | 7,161,000 | |
Cash, cash equivalents and restricted cash at end of period | | $ | 4,001,000 | | | $ | 8,668,000 | |
| | | | | | | | | |
Supplemental disclosures of cash flow information: | | | | | | | | |
Cash paid for related party interest | | $ | 2,628,000 | | | $ | 2,082,000 | |
Cash paid for interest | | $ | 120,000 | | | $ | 120,000 | |
Right-to-use asset acquired under operating lease | | $ | 3,863,000 | | | | -- | |
Related party promissory note converted to common stock | | $ | 3,000,000 | | | | -- | |
Related party convertible note price reset | | $ | 2,688,000 | | | | -- | |
* Accumulated other comprehensive loss.
See accompanying notes.notes to the condensed consolidated financial statements.
ThermoGenesis Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
| | | Nine Months Ended September 30, | |
| | | 2021 | | | 2020 | |
Cash flows from operating activities: | | | | | | | | |
Net loss | | $ | (8,994,000 | ) | | $ | (13,862,000 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Depreciation and amortization | | | 477,000 | | | | 569,000 | |
Stock based compensation expense | | | 2,449,000 | | | | 615,000 | |
Amortization of debt discount/premium, net | | | 2,723,000 | | | | 2,165,000 | |
Amortization of accelerated debt discount due to conversion | | | -- | | | | 2,486,000 | |
Reserve for excess and slow-moving inventories | | | 336,000 | | | | 4,036,000 | |
Reserve for bad debt expense | | | -- | | | | (6,000 | ) |
Loss on disposal of equipment | | | -- | | | | 118,000 | |
Gain on extinguishment of debt | | | (652,000 | ) | | | -- | |
Net change in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (1,190,000 | ) | | | (414,000 | ) |
Inventories | | | (742,000 | ) | | | (6,086,000 | ) |
Prepaid expenses and other assets | | | (260,000 | ) | | | 6,000 | |
Accounts payable | | | 145,000 | | | | 223,000 | |
Interest payable - related party | | | (413,000 | ) | | | (350,000 | ) |
Accrued payroll and related expenses | | | 111,000 | | | | 225,000 | |
Deferred revenue – short-term | | | 334,000 | | | | 80,000 | |
Other current liabilities | | | (271,000 | ) | | | (1,326,000 | ) |
Long-term deferred revenue and other noncurrent liabilities | | | (347,000 | ) | | | (338,000 | ) |
| | | | | | | | | |
Net cash used in operating activities | | | (6,294,000 | ) | | | (11,859,000 | ) |
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Capital expenditures | | | (64,000 | ) | | | (23,000 | ) |
| | | | | | | | | |
Net cash used in investing activities | | | (64,000 | ) | | | (23,000 | ) |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
| | | | | | | | | |
Proceeds from convertible promissory note-related party | | | -- | | | | 4,287,000 | |
Payments on financing lease obligations | | | -- | | | | (32,000 | ) |
Proceeds from issuance of common stock, net of expenses | | | 6,832,000 | | | | 5,580,000 | |
Proceeds from exercise of options, warrants and pre-funded warrants | | | -- | | | | 1,683,000 | |
Proceeds from note payable | | | -- | | | | 646,000 | |
| | | | | | | | | |
Net cash provided by financing activities | | | 6,832,000 | | | | 12,164,000 | |
| | | | | | | | | |
Effects of foreign currency rate changes on cash and cash equivalents | | | (1,000 | ) | | | (3,000 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 473,000 | | | | 279,000 | |
| | | | | | | | | |
Cash, cash equivalents and restricted cash at beginning of period | | | 7,161,000 | | | | 4,157,000 | |
Cash, cash equivalents and restricted cash at end of period | | $ | 7,634,000 | | | $ | 4,436,000 | |
| | | | | | | | | |
Supplemental disclosures of cash flow information: | | | | | | | | |
Cash paid for interest | | $ | 2,262,000 | | | $ | 2,094,000 | |
Supplemental non-cash financing and investing information: | | | | | | | | |
Recording of beneficial conversion feature on debt | | $ | -- | | | $ | 4,981,000 | |
Related party promissory note converted to common stock | | $ | -- | | | $ | 3,000,000 | |
Convertible promissory note converted to common stock | | $ | -- | | | $ | 369,000 | |
| Transfer of inventory to fixed assets | | $ | 181,000 | | | $ | -- | |
See accompanying notes.
ThermoGenesis Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1.
| DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
1.Description of Business
ThermoGenesis Holdings, Inc. (“ThermoGenesis Holdings,” the “Company,” “we,” “our,” “us”), develops commercializes and marketscommercializes a range of automated technologies for chimeric antigen receptor therapies (“CAR-T”)cell-banking, cell-processing, and other cell-based therapies. The Company currently marketstherapeutics. Since the 1990’s ThermoGenesis Holdings has been a full suitepioneer in, and a leading provider of solutions for automated clinical biobanking, point-of-care applications,systems that isolate, purify and automation for immuno-oncology, including its semi-automated, functionally closed CAR-TXpress™ platform, which streamlines the manufacturing processcryogenically store units of hematopoietic stem and progenitor cells for the emerging CAR-T immunotherapy market.cord blood banking industry. The Company was founded in 1986 and is incorporated in the State of Delaware and headquartered in Rancho Cordova, CA.
Medical Device Products for Automated Cell Processing
The Company provides the AutoXpress® and BioArchive® platforms for automated clinical bio-banking, PXP® platform for point-of-care cell-based therapies and the CAR-TXpress™ platform for bio-manufacturing for immuno-oncology applications. The Company and its subsidiaries currently manufacture and marketlarge scale cell manufacturing services. All product lines are reporting as a single reporting segment in the following products:financial statements.
Clinical Bio-Banking Applications:Planned CDMO Business
| ●
| AXP®IIAutomated 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:In March 2022, our Board of Directors approved the planned expansion of the Company’s business to include contract development and manufacturing services for cell and cell-based gene therapies. The Company plans to develop and build-out the capabilities to become a Contract Development and Manufacturing Organization (“CDMO”) for cell and cell-based gene therapies by partnering with Boyalife Genomics Tianjin Ltd., a China-based CDMO (“Boyalife Genomics”), to in-license certain know-how and other intellectual property from Boyalife Genomics, and by leasing and building out a cell manufacturing facility in Sacramento, California. We intend to leverage our existing technology and combine it with the in-licensed technologies to develop a proprietary manufacturing platform for cell manufacturing activities and other cell manufacturing solutions for clients with therapeutic candidates in various stages of development. We are targeting the launch of our CDMO services to customers in 2023.
| ●
2.Going Concern | 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 ProcessingThe Company has incurred historical losses from operations and Biomanufacturing:expects to continue to incur operating losses in the near future. The Company may need to raise additional capital to grow its business, fund operating expenses and make interest payments. The Company’s ability to fund its liquidity needs is subject to various risks, many of which are beyond its control. The Company may seek additional funding through debt borrowings, sales of debt or equity securities or strategic partnerships. The Company cannot guarantee that such funding will be available on a timely basis, in needed quantities or on terms favorable to the Company, if at all. These factors and other indicators raise substantial doubt about the Company’s ability to continue as a going concern within one year from the filing date of this report.
| ●
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and 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.Summary of Significant Accounting Polices There have been no material changes in the Company’s significant accounting policies to those disclosed in the 2021 Annual Report. | 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 CAR-T cell therapies. The CAR-TXpress Platform is owned and developed through a subsidiary CAR-TXpress Bio, Inc. (“CARTXpress Bio”) in which the Company owns 80% of the equity interest. |
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 and six month period ended SeptemberJune 30, 20212022 are not necessarily indicative of the results that may be expected for the Company’s fiscal year endingended December 31, 2021.2022. 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.Holdings’ Annual Report on Form 10-K for the year ended December 31, 2020.2021.
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.
At
Recently Adopted Accounting Standards
On September 30, 2021,January 1, 2022, we adopted Accounting Standards Update (“ASU”) 2020-06 “Debt-Debt with Conversion and Other Options (“Subtopic 470-20”) and Derivatives and Hedging-Contracts in Entity’s Own Equity (“Subtopic 815-40”): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,”using the modified retrospective method. ASU 2020-06 provides guidance on how to account for contracts on an entity’s own equity. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Specifically, the ASU eliminated the need for the Company had cashto assess whether a contract on the entity’s own equity (1) permits settlement in unregistered shares, (2) whether counterparty rights rank higher than shareholder’s rights, and cash equivalents of $7,634,000 and working capital of $2,146,000.(3) whether collateral is required. The Company has incurred historical losses from operationsrecognized a cumulative effect of $9,739,000 of initially applying the ASU as an adjustment to the January 1, 2022 opening balance of accumulated deficit. Due to the recombination of the equity conversion component of our convertible debt outstanding, the 2022 opening balance of additional paid in capital was reduced by $10,681,000 and expects to continue to incur operating losses in the near future.debt discounts of the convertible promissory notes were reduced $942,000.
4.Related Party Transactions
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 Company may need to raise additional capital to grow its business, fund operating expensesLender is a wholly owned subsidiary of the Boyalife Group (USA), Inc., which is owned and make interest payments.controlled by the Company’s Chief Executive Officer and Chairman of our Board of Directors. The Company’s ability to fund its liquidity needs is subject to various risks, many of which are beyond its control. The Company may seek additional funding through debt borrowings, sales of debt or equity securities or strategic partnerships. The Company cannot guarantee that such funding will be available on a timely basis, in needed quantities or on terms favorableCredit Agreement, as amended, grants to the Company ifthe right to borrow up to $10,000,000 (the “Loan”) at all. These factors and other indicators raise substantial doubt about any time prior to March 6, 2023 (the Company’s ability to continue as“Maturity Date”). The Company performed a going concern within one year from the filing date of this report.
debt extinguishment vs. modification analysis. The accompanying condensed consolidated financial statements have been prepared assuminganalysis determined that the Company will continue asextension would be considered an extinguishment from an accounting standpoint, due to the change in the value of the conversion option. In June 2022, the Lender converted a going concern. The condensed consolidated financial statements dototal of $3,000,000 of the outstanding balance of the convertible note into 10,552,234 shares of our common stock. As of notJune 30, 2022, include any adjustments to reflect the possible future effects onoutstanding principle balance of 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.Loan was $7,000,000.
3.
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
There have been no material changes inThe Credit Agreement and the Company’s significant accounting policies to those disclosed inConvertible Promissory Note issued thereunder (as amended, the Company’s Annual Report filed“Note”) provide that the principal and all accrued and unpaid interest under the Loan will be due and payable on its Form 10-K for the year ended December 31, 2020.
Recently Adopted Accounting Standards
In December 2019, Maturity Date, with payments of interest-only due on the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12 “Income Taxes (Topic 740): Simplifying the Accountinglast day 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. each calendar year. The Loan bears interest at 22% per annum, simple interest. The Company was not profitable for the nine months ended September 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 business days after the Lender demands payment to pay the interest due before the Loan is considered in Accounting Standards Codification (“ASC”) 606.default. The Loan can be prepaid in whole or in part by the Company at any time without penalty.
The following tables summarizesummarizes the revenues by product line:Note:
| | | Three Months Ended September 30, 2021 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 2,217,000 | | | $ | 72,000 | | | $ | 21,000 | | | $ | 2,310,000 | |
BioArchive | | | 221,000 | | | | 297,000 | | | | -- | | | | 518,000 | |
CAR-TXpress | | | 160,000 | | | | 31,000 | | | | 71,000 | | | | 262,000 | |
Manual Disposables | | | 55,000 | | | | -- | | | | -- | | | | 55,000 | |
Other | | | 9,000 | | | | -- | | | | 4,000 | | | | 13,000 | |
Total | | $ | 2,662,000 | | | $ | 400,000 | | | $ | 96,000 | | | $ | 3,158,000 | |
| | | Nine Months Ended September 30, 2021 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 3,490,000 | | | $ | 159,000 | | | $ | 1,000 | | | $ | 3,670,000 | |
BioArchive | | | 652,000 | | | | 1,165,000 | | | | -- | | | | 1,817,000 | |
CAR-TXpress | | | 702,000 | | | | 89,000 | | | | 214,000 | | | | 1,005,000 | |
Manual Disposables | | | 300,000 | | | | -- | | | | -- | | | | 300,000 | |
Other | | | 46,000 | | | | -- | | | | 38,000 | | | | 84,000 | |
Total | | $ | 5,190,000 | | | $ | 1,413,000 | | | $ | 273,000 | | | $ | 6,876,000 | |
| | Maturity Date | | Stated Interest Rate | | | Conversion Price | | | Face Value | | | Debt Discount | | | Carrying Value | |
June 30, 2022 | 3/6/2023 | | | 22 | % | | $ | 0.28 | | | $ | 7,000,000 | | | $ | (1,733,000 | ) | | $ | 5,267,000 | |
December 31, 2021 | 3/6/2022 | | | 22 | % | | $ | 1.80 | | | $ | 10,000,000 | | | $ | (755,000 | ) | | $ | 9,245,000 | |
The Note includes a down-round anti-dilution provision that lowers its conversion price if the Company sells shares of common stock at a lower price per share. In February 2022, the Company sold shares of common stock at a price lower than the conversion price of the Note, resulting in a down round triggering event lowering the conversion price of the Note to $0.64 per share. The Company determined that the triggering event created incremental value of $213,000 which was treated as a debt discount and amortized over the remaining term of the Note. A Black-Scholes pricing model was utilized to determine the change in the before and after incremental value of the conversion option with the following inputs:
| | | Before | | | After | |
Conversion Price | | $ | 1.80 | | | $ | 0.64 | |
Term (in years) | | | 0.02 | | | | 0.02 | |
Volatility | | | 39.53 | % | | | 39.53 | % |
Dividend rate | | | 0 | % | | | 0 | % |
Risk free rate | | | 1.97 | % | | | 1.97 | % |
In June 2022, the Company sold shares of common stock at a price lower than the conversion price of the Note, resulting in another down round triggering event lowering the conversion price of the Note to $0.28 per share. This triggering event created incremental value of $2,475,000 which was treated as a debt discount and will be amortized over the remaining term of the Note. A Black-Scholes pricing model was utilized to determine the change in the before and after incremental value of the conversion option with the following inputs:
| | | Before | | | After | |
Conversion Price | | $ | 0.64 | | | $ | 0.28 | |
Term (in years) | | | 0.69 | | | | 0.69 | |
Volatility | | | 85.6 | % | | | 85.6 | % |
Dividend rate | | | 0 | % | | | 0 | % |
Risk free rate | | | 3.2 | % | | | 3.2 | % |
The Company amortized $742,000 and $955,000 of debt discount to interest expense for the three and six months ended June 30, 2022. The $742,000 amortized in the three months ended June 30, 2022 relates to accelerated amortization for the portion of the Note that was converted in June 2022. In addition to the amortization, the Company also recorded interest expense of $556,000 and $1,106,000 for the three and six months ended June 30, 2022 and 2021. The interest payable balance as of June 30, 2022 and December 31, 2021 was $709,000 and $2,231,000, respectively.
Boyalife Genomics
On March 24, 2022, the Company entered into a License and Technology Access Agreement with Boyalife Genomics Tianjin Ltd. (“Boyalife Genomics”), a China-based CDMO and an affiliate of ThermoGenesis’ Chairman and Chief Executive Officer, Chris Xu, Ph.D. The agreement provides for a U.S. license to certain existing and future know-how and other intellectual property relating to cell manufacturing and related processes. The Company plans to develop and operate the CDMO cell therapy manufacturing business through a newly formed division named TG Biosynthesis.
Under the terms of the agreement, the Company transferred its remaining 8.64% interest in ImmuneCyte to Boyalife Genomics and agreed to pay a running royalty of 7.5% of its annual net sales of products and services that are covered by one or more of Boyalife Genomics’ granted U.S. patents and a royalty of 5.0% of other products and services covered by other licensed intellectual property. In the three and six months ended June 30, 2022, no sales were recorded under the license agreement and no royalty payments were made to Boyalife Genomics.
5.Related Party Lease
Z3 Investment
On March 24, 2022, the Company entered into a five year Lease Agreement with Z3 Investment LLC, an affiliate of the Company’s Chairman and CEO, beginning April 1, 2022, for approximately 35,000 square feet of laboratory and office space in Rancho Cordova, California. Under the terms of the agreement, monthly rent will be $46,000 per month for the firstsix months, then increasing to $104,000 per month (with a 4% annual increase) thereafter. Additionally, the Company will pay all operating expenses as they become due estimated to be approximately $5,000 per month and will be expensed in the period incurred. The Company has the option to renew the lease for two5-year periods. Additionally, the Company has the ability to opt out of the lease after 1 year if the CDMO facility is unable to be constructed as planned at the facility.
The Company performed an analysis of the lease and determined it to be an operating lease. A right-of-use asset and lease obligation were recorded at the lease inception.
Operating Lease
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. We recognize the expense for this lease on a straight-line basis over the lease term.
The following summarizes the Company’s operating lease:
| | | June 30, 2022 | |
Right-of-use operating lease assets – related party, net | | $ | 3,754,000 | |
Current lease liability (included in other current liabilities) | | | 200,000 | |
Non-current lease liability | | | 3,740,000 | |
| | | | | |
Weighted average remaining lease term | | | 5.3 | |
Discount rate | | | 22 | % |
Maturities of lease liabilities by year for our operating lease are as follows:
2022 (Remaining) | | $ | 449,000 | |
2023 | | | 1,256,000 | |
2024 | | | 1,307,000 | |
2025 | | | 1,359,000 | |
2026 | | | 1,428,000 | |
Thereafter | | | 1,133,000 | |
Total lease payments | | $ | 6,932,000 | |
Less: imputed interest | | | (2,992,000 | ) |
Present value of operating lease liabilities | | $ | 3,940,000 | |
Statement of Cash Flows
Cash paid for amounts included in the measurement of operating lease liabilities was $138,000 and $0 for the quarters ended June 30, 2022 and 2021, respectively.
6.Convertible Promissory Note
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, would have been due and payable three years from the date of the issuance on July 31, 2022, provided that the July 2019 Note was amended as set forth below.
Subsequent to June 30, 2022, the Company entered into an Amendment No.2 to the July 2019 Note (the "Note Amendment”). The Note Amendment extended the maturity date of the July 2019 Note to January 31, 2023 and modified when interest is due from quarterly to January 31, 2023. The Note Amendment changed the fixed conversion price to $0.21 per share, provided that in the event that the Company issues shares, options, warrants, or convertible securities, subject to certain exceptions, at an effective price per common share lower than $0.21, then the conversion price would be adjusted to such lower issuance price.
| | | 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 | |
The following summarizes the July 2019 Note:
| | | Nine Months Ended September 30, 2020 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 4,009,000 | | | $ | 103,000 | | | $ | -- | | | $ | 4,112,000 | |
BioArchive | | | 675,000 | | | | 900,000 | | | | -- | | | | 1,575,000 | |
CAR-TXpress | | | 1,035,000 | | | | 47,000 | | | | 214,000 | | | | 1,296,000 | |
Manual Disposables | | | 499,000 | | | | -- | | | | -- | | | | 499,000 | |
Other | | | 276,000 | | | | -- | | | | 39,000 | | | | 315,000 | |
Total | | $ | 6,494,000 | | | $ | 1,050,000 | | | $ | 253,000 | | | $ | 7,797,000 | |
| | Maturity Date | | Stated Interest Rate | | | Conversion Price | | | Carrying Value | |
June 30, 2022 | 1/31/2023 | | | 24 | % | | $ | 0.50 | | | $ | 1,000,000 | |
December 31, 2021 | 7/31/2022 | | | 24 | % | | $ | 0.91 | | | $ | 813,000 | |
Amortization of debt discount on the July 2019 Note was $0 for the three and six months ended June 30, 2022 and $80,000 and $161,000 for the three and six months ended June 30, 2021, respectively. Interest expense related to the July 2019 Note was $60,000 and $120,000 for the three and six months ended June 30, 2022 and 2021.
7.Stockholders’ Equity
Common Stock
On February 3, 2022, the Company entered into Amendment No.2 to the At the Market Offering Agreement (the “Offering Agreement”) with H.C. Wainwright & Co., LLC to further increase the maximum aggregate offering price of shares of Common Stock that may be offered and sold from time to time under the Offering Agreement from $15,280,000 to $19,555,000, which enables the Company to sell an additional $4,275,000 of shares after taking into account prior sales under the Offering Agreement (the “Additional Shares”). After filing the Company’s 2021 Form 10-K in March 2022, the total offering price was updated to $18,573,000 based on the shares currently available on Company’s existing Form S-3. The terms and conditions of the Offering Agreement otherwise remain unchanged. For the six months ended June 30, 2022, the Company sold a total of 5,315,422 shares of common stock under the Offering Agreement for aggregate gross proceeds of $2,255,000 at an average selling price of $0.42 per share, resulting in net proceeds of approximately $2,044,000 after deducting commissions and other transaction costs of approximately $211,000.
Equity Plans
On January 13, 2022, the Company’s stockholders approved an amendment of the Company’s Amended 2016 Equity Incentive Plan to increase the aggregate number of shares of the Company’s common stock that may be issued under the plan from 392,500 shares to 1,200,000 shares.
Net Loss Per Share
Net loss per share is computed by dividing the net loss by the weighted average number of common shares 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 June 30:
| | | 2022 | | | 2021 | |
Common stock equivalents of convertible promissory note and accrued interest | | | 29,235,002 | | | | 6,758,897 | |
Warrants – other | | | 653,248 | | | | 653,248 | |
Stock options | | | 293,670 | | | | 386,461 | |
Total | | | 30,181,920 | | | | 7,798,606 | |
8.Revenue
The following table presents net sales by geographic areas:
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
United States | | $ | 1,573,000 | | | $ | 1,016,000 | | | $ | 3,439,000 | | | $ | 2,041,000 | |
China | | | 1,117,000 | | | | 46,000 | | | | 1,206,000 | | | | 88,000 | |
Thailand | | | -- | | | | 398,000 | | | | 7,000 | | | | 400,000 | |
Other | | | 339,000 | | | | 741,000 | | | | 1,040,000 | | | | 1,189,000 | |
Total | | $ | 3,029,000 | | | $ | 2,201,000 | | | $ | 5,692,000 | | | $ | 3,718,000 | |
The following tables summarizes the revenues by product line and type:
| | | Three Months Ended June 30, 2022 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,923,000 | | | $ | 40,000 | | | $ | -- | | | $ | 1,963,000 | |
BioArchive | | | 338,000 | | | | 305,000 | | | | -- | | | | 643,000 | |
CAR-TXpress | | | 163,000 | | | | 58,000 | | | | 71,000 | | | | 292,000 | |
Manual Disposables | | | 102,000 | | | | -- | | | | -- | | | | 102,000 | |
Other | | | 23,000 | | | | -- | | | | 6,000 | | | | 29,000 | |
Total | | $ | 2,549,000 | | | $ | 403,000 | | | $ | 77,000 | | | $ | 3,029,000 | |
| | | Six Months Ended June 30, 2022 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 3,634,000 | | | $ | 96,000 | | | $ | -- | | | $ | 3,730,000 | |
BioArchive | | | 493,000 | | | | 603,000 | | | | -- | | | | 1,096,000 | |
CAR-TXpress | | | 361,000 | | | | 101,000 | | | | 142,000 | | | | 604,000 | |
Manual Disposables | | | 207,000 | | | | -- | | | | -- | | | | 207,000 | |
Other | | | 40,000 | | | | -- | | | | 15,000 | | | | 55,000 | |
Total | | $ | 4,735,000 | | | $ | 800,000 | | | $ | 157,000 | | | $ | 5,692,000 | |
| | | Three Months Ended June 30, 2021 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,048,000 | | | $ | 48,000 | | | $ | -- | | | $ | 1,096,000 | |
BioArchive | | | 223,000 | | | | 326,000 | | | | -- | | | | 549,000 | |
CAR-TXpress | | | 287,000 | | | | 30,000 | | | | 72,000 | | | | 389,000 | |
Manual Disposables | | | 116,000 | | | | -- | | | | -- | | | | 116,000 | |
Other | | | 30,000 | | | | -- | | | | 21,000 | | | | 51,000 | |
Total | | $ | 1,704,000 | | | $ | 404,000 | | | $ | 93,000 | | | $ | 2,201,000 | |
| | | Six Months Ended June 30, 2021 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,273,000 | | | $ | 87,000 | | | $ | -- | | | $ | 1,360,000 | |
BioArchive | | | 431,000 | | | | 868,000 | | | | -- | | | | 1,299,000 | |
CAR-TXpress | | | 542,000 | | | | 58,000 | | | | 143,000 | | | | 743,000 | |
Manual Disposables | | | 245,000 | | | | -- | | | | -- | | | | 245,000 | |
Other | | | 37,000 | | | | -- | | | | 34,000 | | | | 71,000 | |
Total | | $ | 2,528,000 | | | $ | 1,013,000 | | | $ | 177,000 | | | $ | 3,718,000 | |
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 ninesix months ended SeptemberJune 30, 20212022 that were included in the beginning balance of deferred revenue were $118,000$292,000 and $521,000,$641,000, respectively. Short-term deferred revenues increased from $608,000 to $943,000were $1,029,000 and long-term$719,000 at June 30, 2022 and December 31, 2021, respectively. Long-term deferred revenues decreased from $1,596,000 to $1,395,000 during therevenue was $1,095,000 and $1,244,000 at nineJune 30, 2022 months endedand September 30,December 31, 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 nine months ended September 30, 2021 and 2020, the Company recorded revenue related to the exclusivity fee of $71,000 and $214,000, respectively. The remaining balance of the $2,000,000 payment of $1,405,000 is recorded as deferred revenue, with $286,000 in short-term deferred revenue and $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.
BacklogConvertible 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 Remaining Customer Performance Obligationsthe 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, 2023 (the “Maturity Date”). The Company performed a debt extinguishment vs. modification analysis. The analysis determined that the extension would be considered an extinguishment from an accounting standpoint, due to the change in the value of the conversion option. In June 2022, the Lender converted a total of $3,000,000 of the outstanding balance of the convertible note into 10,552,234 shares of our common stock. As of June 30, 2022, the outstanding principle balance of the Loan was $7,000,000.
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. The Loan can be prepaid in whole or in part by the Company at any time without penalty.
The following tablesummarizes the Note:
| | Maturity Date | | Stated Interest Rate | | | Conversion Price | | | Face Value | | | Debt Discount | | | Carrying Value | |
June 30, 2022 | 3/6/2023 | | | 22 | % | | $ | 0.28 | | | $ | 7,000,000 | | | $ | (1,733,000 | ) | | $ | 5,267,000 | |
December 31, 2021 | 3/6/2022 | | | 22 | % | | $ | 1.80 | | | $ | 10,000,000 | | | $ | (755,000 | ) | | $ | 9,245,000 | |
The Note includes revenue expecteda down-round anti-dilution provision that lowers its conversion price if the Company sells shares of common stock at a lower price per share. In February 2022, the Company sold shares of common stock at a price lower than the conversion price of the Note, resulting in a down round triggering event lowering the conversion price of the Note to be recognized$0.64 per share. The Company determined that the triggering event created incremental value of $213,000 which was treated as a debt discount and recorded as salesamortized over the remaining term of the Note. A Black-Scholes pricing model was utilized to determine the change in the future from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the endbefore and after incremental value of the reporting period.conversion option with the following inputs:
| | | Remainder of 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 and beyond | | | Total | |
Service revenue | | $ | 359,000 | | | $ | 962,000 | | | $ | 462,000 | | | $ | 189,000 | | | $ | 85,000 | | | $ | 2,057,000 | |
Clinical revenue | | | 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 | | | 72,000 | | | | 286,000 | | | | 286,000 | | | | 286,000 | | | | 476,000 | | | | 1,406,000 | |
Total | | $ | 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
|
| | | Before | | | After | |
Conversion Price | | $ | 1.80 | | | $ | 0.64 | |
Term (in years) | | | 0.02 | | | | 0.02 | |
Volatility | | | 39.53 | % | | | 39.53 | % |
Dividend rate | | | 0 | % | | | 0 | % |
Risk free rate | | | 1.97 | % | | | 1.97 | % |
Revenues are netIn June 2022, the Company sold shares of normal discounts. Shippingcommon stock at a price lower than the conversion price of the Note, resulting in another down round triggering event lowering the conversion price of the Note to $0.28 per share. This triggering event created incremental value of $2,475,000 which was treated as a debt discount and handling fees billedwill be amortized over the remaining term of the Note. A Black-Scholes pricing model was utilized to customers are includeddetermine the change in net revenues, while the related costs are included in costbefore and after incremental value of revenues.the conversion option with the following inputs:
| | | Before | | | After | |
Conversion Price | | $ | 0.64 | | | $ | 0.28 | |
Term (in years) | | | 0.69 | | | | 0.69 | |
Volatility | | | 85.6 | % | | | 85.6 | % |
Dividend rate | | | 0 | % | | | 0 | % |
Risk free rate | | | 3.2 | % | | | 3.2 | % |
Reclassifications
Certain prior period amounts have been reclassifiedThe Company amortized $742,000 and $955,000 of debt discount to conform to the current period presentation. The reclassifications did not have an impact on net loss as previously reported. Forinterest expense for the three and ninesix month periodsmonths ended SeptemberJune 30, 2022. The $742,000 amortized in the three months ended June 30, 2022 relates to accelerated amortization for the portion of the Note that was converted in June 2022. In addition to the amortization, the Company also recorded interest expense of $556,000 and $1,106,000 for the three and six months ended June 30, 2022 and 2021. The interest payable balance as of June 30, 2022 and December 31, 2021 was $709,000 and $2,231,000, respectively.
Boyalife Genomics
On March 24, 2022, the Company entered into a License and Technology Access Agreement with Boyalife Genomics Tianjin Ltd. (“Boyalife Genomics”), a China-based CDMO and an affiliate of ThermoGenesis’ Chairman and Chief Executive Officer, Chris Xu, Ph.D. The agreement provides for a U.S. license to certain existing and future know-how and other intellectual property relating to cell manufacturing and related processes. The Company plans to develop and operate the CDMO cell therapy manufacturing business through a newly formed division named TG Biosynthesis.
Under the terms of the agreement, the Company transferred its remaining 8.64% interest in ImmuneCyte to Boyalife Genomics and agreed to pay a running royalty of 7.5% of its annual net sales of products and marketing and general and administrative expenses were combined intoservices that are covered by one line item identified asor more of Boyalife Genomics’ granted U.S. patents and a royalty of 5.0% of other products and services covered by other licensed intellectual property. In the three and six months ended June 30, 2022, no sales generalwere recorded under the license agreement 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.
no royalty payments were made to Boyalife Genomics.
4.5.Related Party Lease Z3 Investment On March 24, 2022, the Company entered into a five year Lease Agreement with Z3 Investment LLC, an affiliate of the Company’s Chairman and CEO, beginning April 1, 2022, for approximately 35,000 square feet of laboratory and office space in Rancho Cordova, California. Under the terms of the agreement, monthly rent will be $46,000 per month for the firstsix months, then increasing to $104,000 per month (with a 4% annual increase) thereafter. Additionally, the Company will pay all operating expenses as they become due estimated to be approximately $5,000 per month and will be expensed in the period incurred. The Company has the option to renew the lease for two5-year periods. Additionally, the Company has the ability to opt out of the lease after 1 year if the CDMO facility is unable to be constructed as planned at the facility. The Company performed an analysis of the lease and determined it to be an operating lease. A right-of-use asset and lease obligation were recorded at the lease inception. Operating Lease 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. We recognize the expense for this lease on a straight-line basis over the lease term.
The following summarizes the Company’s operating lease: | | | June 30, 2022 | | Right-of-use operating lease assets – related party, net | | $ | 3,754,000 | | Current lease liability (included in other current liabilities) | | | 200,000 | | Non-current lease liability | | | 3,740,000 | | | | | | | | Weighted average remaining lease term | | | 5.3 | | Discount rate | | | 22 | % |
Maturities of lease liabilities by year for our operating lease are as follows: 2022 (Remaining) | | $ | 449,000 | | 2023 | | | 1,256,000 | | 2024 | | | 1,307,000 | | 2025 | | | 1,359,000 | | 2026 | | | 1,428,000 | | Thereafter | | | 1,133,000 | | Total lease payments | | $ | 6,932,000 | | Less: imputed interest | | | (2,992,000 | ) | Present value of operating lease liabilities | | $ | 3,940,000 | |
Statement of Cash Flows Cash paid for amounts included in the measurement of operating lease liabilities was $138,000 and $0 for the quarters ended June 30, 2022 and 2021, respectively. 6.Convertible Promissory Note 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, would have been due and payable three years from the date of the issuance on July 31, 2022, provided that the July 2019 Note was amended as set forth below. Subsequent to June 30, 2022, the Company entered into an Amendment No.2 to the July 2019 Note (the "Note Amendment”). The Note Amendment extended the maturity date of the July 2019 Note to January 31, 2023 and modified when interest is due from quarterly to January 31, 2023. The Note Amendment changed the fixed conversion price to $0.21 per share, provided that in the event that the Company issues shares, options, warrants, or convertible securities, subject to certain exceptions, at an effective price per common share lower than $0.21, then the conversion price would be adjusted to such lower issuance price.
The following summarizes the July 2019 Note: | | Maturity Date | | Stated Interest Rate | | | Conversion Price | | | Carrying Value | | June 30, 2022 | 1/31/2023 | | | 24 | % | | $ | 0.50 | | | $ | 1,000,000 | | December 31, 2021 | 7/31/2022 | | | 24 | % | | $ | 0.91 | | | $ | 813,000 | |
Amortization of debt discount on the July 2019 Note was $0 for the three and six months ended June 30, 2022 and $80,000 and $161,000 for the three and six months ended June 30, 2021, respectively. Interest expense related to the July 2019 Note was $60,000 and $120,000 for the three and six months ended June 30, 2022 and 2021. 7.Stockholders’ Equity Common Stock On February 3, 2022, the Company entered into Amendment No.2 to the At the Market Offering Agreement (the “Offering Agreement”) with H.C. Wainwright & Co., LLC to further increase the maximum aggregate offering price of shares of Common Stock that may be offered and sold from time to time under the Offering Agreement from $15,280,000 to $19,555,000, which enables the Company to sell an additional $4,275,000 of shares after taking into account prior sales under the Offering Agreement (the “Additional Shares”). After filing the Company’s 2021 Form 10-K in March 2022, the total offering price was updated to $18,573,000 based on the shares currently available on Company’s existing Form S-3. The terms and conditions of the Offering Agreement otherwise remain unchanged. For the six months ended June 30, 2022, the Company sold a total of 5,315,422 shares of common stock under the Offering Agreement for aggregate gross proceeds of $2,255,000 at an average selling price of $0.42 per share, resulting in net proceeds of approximately $2,044,000 after deducting commissions and other transaction costs of approximately $211,000. Equity Plans On January 13, 2022, the Company’s stockholders approved an amendment of the Company’s Amended 2016 Equity Incentive Plan to increase the aggregate number of shares of the Company’s common stock that may be issued under the plan from 392,500 shares to 1,200,000 shares. Net Loss Per Share
| NET LOSS PER SHARE
|
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.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 SeptemberJune 30:
| | | 2021 | | | 2020 | | | 2022 | | | 2021 | |
Common stock equivalents of convertible promissory notes and accrued interest | | 7,071,241 | | | 6,988,334 | | |
Vested Series A warrants | | -- | | | 40,441 | | |
Unvested Series A warrants(1) | | -- | | | 69,853 | | |
Common stock equivalents of convertible promissory note and accrued interest | | | 29,235,002 | | | 6,758,897 | |
Warrants – other | | 653,248 | | | 1,006,190 | | | 653,248 | | | 653,248 | |
Stock options | | | 366,595 | | | | 892,149 | | | | 293,670 | | | | 386,461 | |
Total | | | 8,091,084 | | | | 8,996,967 | | | | 30,181,920 | | | | 7,798,606 | |
| (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.
| RELATED PARTY TRANSACTIONS
|
HealthBanks Biotech (USA) Inc.8.
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.Revenue
Between November 26, 2019 The following table presents net sales by geographic areas:
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
United States | | $ | 1,573,000 | | | $ | 1,016,000 | | | $ | 3,439,000 | | | $ | 2,041,000 | |
China | | | 1,117,000 | | | | 46,000 | | | | 1,206,000 | | | | 88,000 | |
Thailand | | | -- | | | | 398,000 | | | | 7,000 | | | | 400,000 | |
Other | | | 339,000 | | | | 741,000 | | | | 1,040,000 | | | | 1,189,000 | |
Total | | $ | 3,029,000 | | | $ | 2,201,000 | | | $ | 5,692,000 | | | $ | 3,718,000 | |
The following tables summarizes the revenues by product line 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.type:
| | | Three Months Ended June 30, 2022 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,923,000 | | | $ | 40,000 | | | $ | -- | | | $ | 1,963,000 | |
BioArchive | | | 338,000 | | | | 305,000 | | | | -- | | | | 643,000 | |
CAR-TXpress | | | 163,000 | | | | 58,000 | | | | 71,000 | | | | 292,000 | |
Manual Disposables | | | 102,000 | | | | -- | | | | -- | | | | 102,000 | |
Other | | | 23,000 | | | | -- | | | | 6,000 | | | | 29,000 | |
Total | | $ | 2,549,000 | | | $ | 403,000 | | | $ | 77,000 | | | $ | 3,029,000 | |
| | | Six Months Ended June 30, 2022 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 3,634,000 | | | $ | 96,000 | | | $ | -- | | | $ | 3,730,000 | |
BioArchive | | | 493,000 | | | | 603,000 | | | | -- | | | | 1,096,000 | |
CAR-TXpress | | | 361,000 | | | | 101,000 | | | | 142,000 | | | | 604,000 | |
Manual Disposables | | | 207,000 | | | | -- | | | | -- | | | | 207,000 | |
Other | | | 40,000 | | | | -- | | | | 15,000 | | | | 55,000 | |
Total | | $ | 4,735,000 | | | $ | 800,000 | | | $ | 157,000 | | | $ | 5,692,000 | |
| | | Three Months Ended June 30, 2021 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,048,000 | | | $ | 48,000 | | | $ | -- | | | $ | 1,096,000 | |
BioArchive | | | 223,000 | | | | 326,000 | | | | -- | | | | 549,000 | |
CAR-TXpress | | | 287,000 | | | | 30,000 | | | | 72,000 | | | | 389,000 | |
Manual Disposables | | | 116,000 | | | | -- | | | | -- | | | | 116,000 | |
Other | | | 30,000 | | | | -- | | | | 21,000 | | | | 51,000 | |
Total | | $ | 1,704,000 | | | $ | 404,000 | | | $ | 93,000 | | | $ | 2,201,000 | |
| | | Six Months Ended June 30, 2021 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,273,000 | | | $ | 87,000 | | | $ | -- | | | $ | 1,360,000 | |
BioArchive | | | 431,000 | | | | 868,000 | | | | -- | | | | 1,299,000 | |
CAR-TXpress | | | 542,000 | | | | 58,000 | | | | 143,000 | | | | 743,000 | |
Manual Disposables | | | 245,000 | | | | -- | | | | -- | | | | 245,000 | |
Other | | | 37,000 | | | | -- | | | | 34,000 | | | | 71,000 | |
Total | | $ | 2,528,000 | | | $ | 1,013,000 | | | $ | 177,000 | | | $ | 3,718,000 | |
Contract Balances
In March 2021, ImmuneCyte completedGenerally, all sales are contract sales (with either 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%underlying contract or purchase order). The Company performed an analysisdoes 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 six months ended June 30, 2022 that were included in the beginning balance of the transactiondeferred revenue were $292,000 and noted that$641,000, respectively. Short-term deferred revenues were $1,029,000 and $719,000 at noneJune 30, 2022 of the factors supporting significant influence changed as a result of the acquisition. Therefore, itand December 31, 2021, respectively. Long-term deferred revenue was concluded that significant influence remains$1,095,000 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,$1,244,000 at the time of the acquisition, the Company had accumulated losses of $428,000 in its investment in ImmuneCyte. As the accumulated losses were greater than the dilution gain, noJune 30, 2022 entry was recorded by the Company for its investment in ImmuneCyte for the quarter endedand MarchDecember 31, 2021.2021, respectively.
As
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, 20222023 (the “Maturity Date”). The Company performed a debt extinguishment vs. modification analysis. The analysis determined that the extension would be considered an extinguishment from an accounting standpoint, due to the change in the value of the conversion option. In June 2022, the Lender converted a total of $3,000,000 of the outstanding balance of the convertible note into 10,552,234 shares of our common stock. As of SeptemberJune 30, 2021 and December 31, 2020,2022, the Company had an outstanding principalprinciple balance onof the Loan of $10,000,000.was $7,000,000.
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 NoteLoan can be prepaid in whole or in part by the Company at any time without penalty.
The following summarizes the Note:
| | Maturity Date | | Stated Interest Rate | | | Conversion Price | | | Face Value | | | Debt Discount | | | Carrying Value | |
June 30, 2022 | 3/6/2023 | | | 22 | % | | $ | 0.28 | | | $ | 7,000,000 | | | $ | (1,733,000 | ) | | $ | 5,267,000 | |
December 31, 2021 | 3/6/2022 | | | 22 | % | | $ | 1.80 | | | $ | 10,000,000 | | | $ | (755,000 | ) | | $ | 9,245,000 | |
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 includedincludes a down-round anti-dilution provision that lowered thelowers its conversion price if the Company issuessells shares of common stock at a lower price per share,share. In February 2022, the Company sold shares of common stock at a price lower than the conversion price of the Note, is lowered to that amount. The Company completedresulting in a transaction in 2018, which lowereddown round triggering event lowering the conversion price of the Note to $1.80.$0.64 per share. The Company determined that the triggering event created incremental value of $213,000 which was treated as a debt discount and amortized over the remaining term of the Note. A Black-Scholes pricing model was utilized to determine the change in the before and after incremental value of the conversion option with the following inputs:
| | | Before | | | After | |
Conversion Price | | $ | 1.80 | | | $ | 0.64 | |
Term (in years) | | | 0.02 | | | | 0.02 | |
Volatility | | | 39.53 | % | | | 39.53 | % |
Dividend rate | | | 0 | % | | | 0 | % |
Risk free rate | | | 1.97 | % | | | 1.97 | % |
The
In June 2022, the Company sold shares of common stock at a price lower than the conversion price of the Note, resulting in another down round triggering event lowering the conversion price of the Note to $0.28 per share. This triggering event created incremental value of $2,475,000 which was treated as a debt discount and will be amortized over the remaining term of the Note. A Black-Scholes pricing model was utilized to determine the change in the before and after incremental value of the conversion option with the following summarizes the Note:inputs:
| | Maturity Date | | Stated Interest Rate | | | Conversion Price | | | Face Value | | | Remaining Debt Discount | | | Carrying Value | |
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 | |
| | | Before | | | After | |
Conversion Price | | $ | 0.64 | | | $ | 0.28 | |
Term (in years) | | | 0.69 | | | | 0.69 | |
Volatility | | | 85.6 | % | | | 85.6 | % |
Dividend rate | | | 0 | % | | | 0 | % |
Risk free rate | | | 3.2 | % | | | 3.2 | % |
The Company amortized $827,000$742,000 and $2,482,000$955,000 of debt discount to interest expense for the three and ninesix months ended SeptemberJune 30, 20212022. and $827,000 and $2,103,000 forThe $742,000 amortized in the three and ninemonths ended SeptemberJune 30, 2020,2022 respectively. relates to accelerated amortization for the portion of the Note that was converted in June 2022. In addition to the amortization, the Company also recorded interest expense of $562,000$556,000 and $1,668,000$1,106,000 for the three and ninesix months ended SeptemberJune 30, 20212022 and $562,000 and $1,519,000 for the three2021. and nine months ended September 30 2020, respectively. The interest payable balance as of SeptemberJune 30, 20212022 and December 31, 20202021 was $1,668,000$709,000 and $2,082,000,$2,231,000, respectively.
Boyalife Genomics
On March 24, 2022, the Company entered into a License and Technology Access Agreement with Boyalife Genomics Tianjin Ltd. (“Boyalife Genomics”), a China-based CDMO and an affiliate of ThermoGenesis’ Chairman and Chief Executive Officer, Chris Xu, Ph.D. The agreement provides for a U.S. license to certain existing and future know-how and other intellectual property relating to cell manufacturing and related processes. The Company plans to develop and operate the CDMO cell therapy manufacturing business through a newly formed division named TG Biosynthesis.
Under the terms of the agreement, the Company transferred its remaining 8.64% interest in ImmuneCyte to Boyalife Genomics and agreed to pay a running royalty of 7.5% of its annual net sales of products and services that are covered by one or more of Boyalife Genomics’ granted U.S. patents and a royalty of 5.0% of other products and services covered by other licensed intellectual property. In the three and six months ended June 30, 2022, no sales were recorded under the license agreement and no royalty payments were made to Boyalife Genomics.
6.5.Related Party Lease
| CONVERTIBLE PROMISSORY NOTE
|
Z3 Investment
On March 24, 2022, the Company entered into a five year Lease Agreement with Z3 Investment LLC, an affiliate of the Company’s Chairman and CEO, beginning April 1, 2022, for approximately 35,000 square feet of laboratory and office space in Rancho Cordova, California. Under the terms of the agreement, monthly rent will be $46,000 per month for the firstsix months, then increasing to $104,000 per month (with a 4% annual increase) thereafter. Additionally, the Company will pay all operating expenses as they become due estimated to be approximately $5,000 per month and will be expensed in the period incurred. The Company has the option to renew the lease for two5-year periods. Additionally, the Company has the ability to opt out of the lease after 1 year if the CDMO facility is unable to be constructed as planned at the facility.
The Company performed an analysis of the lease and determined it to be an operating lease. A right-of-use asset and lease obligation were recorded at the lease inception.
Operating Lease
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. We recognize the expense for this lease on a straight-line basis over the lease term.
The following summarizes the Company’s operating lease:
| | | June 30, 2022 | |
Right-of-use operating lease assets – related party, net | | $ | 3,754,000 | |
Current lease liability (included in other current liabilities) | | | 200,000 | |
Non-current lease liability | | | 3,740,000 | |
| | | | | |
Weighted average remaining lease term | | | 5.3 | |
Discount rate | | | 22 | % |
Maturities of lease liabilities by year for our operating lease are as follows:
2022 (Remaining) | | $ | 449,000 | |
2023 | | | 1,256,000 | |
2024 | | | 1,307,000 | |
2025 | | | 1,359,000 | |
2026 | | | 1,428,000 | |
Thereafter | | | 1,133,000 | |
Total lease payments | | $ | 6,932,000 | |
Less: imputed interest | | | (2,992,000 | ) |
Present value of operating lease liabilities | | $ | 3,940,000 | |
Statement of Cash Flows
Cash paid for amounts included in the measurement of operating lease liabilities was $138,000 and $0 for the quarters ended June 30, 2022 and 2021, respectively.
6.Convertible Promissory Note
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 bewould have been due and payable three years from the date of the issuance on July 31, 2022.2022, provided that the July 2019 Note was amended as set forth below.
Subsequent to June 30, 2022, the Company entered into an Amendment No.2 to the July 2019 Note (the "Note Amendment”). The Note Amendment extended the maturity date of the July 2019 Note to January 31, 2023 and modified when interest is due from quarterly to January 31, 2023. The Note Amendment changed the fixed conversion price to $0.21 per share, provided that in the event that the Company issues shares, options, warrants, or convertible securities, subject to certain exceptions, at an effective price per common share lower than $0.21, then the conversion price would be adjusted to such lower issuance price.
The following summarizes the July 2019 Note:
| | Maturity Date | | Stated Interest Rate | | | Conversion Price | | | Face Value | | | Remaining Debt Discount | | | Carrying Value | |
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 | |
| | Maturity Date | | Stated Interest Rate | | | Conversion Price | | | Carrying Value | |
June 30, 2022 | 1/31/2023 | | | 24 | % | | $ | 0.50 | | | $ | 1,000,000 | |
December 31, 2021 | 7/31/2022 | | | 24 | % | | $ | 0.91 | | | $ | 813,000 | |
The Company recorded amortization expense for theAmortization of debt discount on the July 2019 Note was $0for the three and ninesix months ended SeptemberJune 30, 20212022 ofand $80,000 and $241,000, respectively; and $27,000 and $107,000$161,000 for the three and ninesix months ended SeptemberJune 30, 2020.2021, respectively. Interest expense related to the July 2019 Note was $60,000 and $180,000$120,000 for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020.2021.
7.Stockholders’ Equity | LEASES
|
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 LeasesCommon Stock
Operating lease assets
On February 3, 2022, the Company entered into Amendment No.2 to the At the Market Offering Agreement (the “Offering Agreement”) with H.C. Wainwright & Co., LLC to further increase the maximum aggregate offering price of shares of Common Stock that may be offered and liabilities are recognized atsold from time to time under the lease commencement date. Operating lease liabilities representOffering Agreement from $15,280,000 to $19,555,000, which enables the present valueCompany to sell an additional $4,275,000 of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based uponshares after taking into account prior sales under 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 useOffering Agreement (the “Additional Shares”). After filing the Company’s cost of capital2021 Form 10-K in March 2022, the total offering price was updated to $18,573,000 based on the shares currently available on Company’s 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.
Form S-3.The following summarizes the Company’s operating leases:
| | | September 30, 2021 | | | December 31, 2020 | |
Right-of-use operating lease assets, net | | $ | 614,000 | | | $ | 730,000 | |
Current lease liability (included in other current liabilities) | | | 193,000 | | | | 157,000 | |
Non-current lease liability | | | 455,000 | | | | 604,000 | |
| | | | | | | | | |
Weighted average remaining lease term | | | 2.7 | | | | 3.4 | |
Discount rate | | | 22 | % | | | 22 | % |
Maturities of lease liabilities by year for our operating leases are as follows:
2021 (Remaining) | | $ | 78,000 | |
2022 | | | 319,000 | |
2023 | | | 328,000 | |
2024 | | | 139,000 | |
Total lease payments | | $ | 864,000 | |
Less: imputed interest | | | (217,000 | ) |
Present value of operating lease liabilities | | $ | 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 modificationterms and resulted in a right-of-use asset of $966,000 being recognized as a non-cash addition on the dateconditions of the amendment. Cash paid for amounts included inOffering Agreement otherwise remain unchanged. For the measurement of operating lease liabilities included in cash flow from operating activities was $78,000 and $231,000 for the three and ninesix months ended SeptemberJune 30, 20212022, the Company sold a total of 5,315,422 shares of common stock under the Offering Agreement for aggregate gross proceeds of $2,255,000 at an average selling price of $0.42 per share, resulting in net proceeds of approximately $2,044,000 after deducting commissions and $76,000 and $225,000 for the three and nine months ended September 30, 2020, respectively.other transaction costs of approximately $211,000.
Equity Plans
On January 13, 2022, the Company’s stockholders approved an amendment of the Company’s Amended 2016 Equity Incentive Plan to increase the aggregate number of shares of the Company’s common stock that may be issued under the plan from 392,500 shares to 1,200,000 shares.
Net Loss Per Share
Net loss per share is computed by dividing the net loss by the weighted average number of common shares 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 June 30:
| | | 2022 | | | 2021 | |
Common stock equivalents of convertible promissory note and accrued interest | | | 29,235,002 | | | | 6,758,897 | |
Warrants – other | | | 653,248 | | | | 653,248 | |
Stock options | | | 293,670 | | | | 386,461 | |
Total | | | 30,181,920 | | | | 7,798,606 | |
Operating Lease Costs8.Revenue
Operating lease costs were $107,000
The following table presents net sales by geographic areas:
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
United States | | $ | 1,573,000 | | | $ | 1,016,000 | | | $ | 3,439,000 | | | $ | 2,041,000 | |
China | | | 1,117,000 | | | | 46,000 | | | | 1,206,000 | | | | 88,000 | |
Thailand | | | -- | | | | 398,000 | | | | 7,000 | | | | 400,000 | |
Other | | | 339,000 | | | | 741,000 | | | | 1,040,000 | | | | 1,189,000 | |
Total | | $ | 3,029,000 | | | $ | 2,201,000 | | | $ | 5,692,000 | | | $ | 3,718,000 | |
The following tables summarizes the revenues by product line and $316,000 fortype:
| | | Three Months Ended June 30, 2022 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,923,000 | | | $ | 40,000 | | | $ | -- | | | $ | 1,963,000 | |
BioArchive | | | 338,000 | | | | 305,000 | | | | -- | | | | 643,000 | |
CAR-TXpress | | | 163,000 | | | | 58,000 | | | | 71,000 | | | | 292,000 | |
Manual Disposables | | | 102,000 | | | | -- | | | | -- | | | | 102,000 | |
Other | | | 23,000 | | | | -- | | | | 6,000 | | | | 29,000 | |
Total | | $ | 2,549,000 | | | $ | 403,000 | | | $ | 77,000 | | | $ | 3,029,000 | |
| | | Six Months Ended June 30, 2022 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 3,634,000 | | | $ | 96,000 | | | $ | -- | | | $ | 3,730,000 | |
BioArchive | | | 493,000 | | | | 603,000 | | | | -- | | | | 1,096,000 | |
CAR-TXpress | | | 361,000 | | | | 101,000 | | | | 142,000 | | | | 604,000 | |
Manual Disposables | | | 207,000 | | | | -- | | | | -- | | | | 207,000 | |
Other | | | 40,000 | | | | -- | | | | 15,000 | | | | 55,000 | |
Total | | $ | 4,735,000 | | | $ | 800,000 | | | $ | 157,000 | | | $ | 5,692,000 | |
| | | Three Months Ended June 30, 2021 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,048,000 | | | $ | 48,000 | | | $ | -- | | | $ | 1,096,000 | |
BioArchive | | | 223,000 | | | | 326,000 | | | | -- | | | | 549,000 | |
CAR-TXpress | | | 287,000 | | | | 30,000 | | | | 72,000 | | | | 389,000 | |
Manual Disposables | | | 116,000 | | | | -- | | | | -- | | | | 116,000 | |
Other | | | 30,000 | | | | -- | | | | 21,000 | | | | 51,000 | |
Total | | $ | 1,704,000 | | | $ | 404,000 | | | $ | 93,000 | | | $ | 2,201,000 | |
| | | Six Months Ended June 30, 2021 | |
| | | Device Revenue | | | Service Revenue | | | Other Revenue | | | Total Revenue | |
AXP | | $ | 1,273,000 | | | $ | 87,000 | | | $ | -- | | | $ | 1,360,000 | |
BioArchive | | | 431,000 | | | | 868,000 | | | | -- | | | | 1,299,000 | |
CAR-TXpress | | | 542,000 | | | | 58,000 | | | | 143,000 | | | | 743,000 | |
Manual Disposables | | | 245,000 | | | | -- | | | | -- | | | | 245,000 | |
Other | | | 37,000 | | | | -- | | | | 34,000 | | | | 71,000 | |
Total | | $ | 2,528,000 | | | $ | 1,013,000 | | | $ | 177,000 | | | $ | 3,718,000 | |
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 ninesix months ended SeptemberJune 30, 20212022 and $135,000 and $343,000 for the three and nine months ended September 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 arethat were included in equipmentthe beginning balance of deferred revenue were $292,000 and other current$641,000, respectively. Short-term deferred revenues were $1,029,000 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$719,000 at not material for the three and nine months ended SeptemberJune 30, 20212022 and 2020.December 31, 2021,
8.
| COMMITMENTS AND CONTINGENCIES
|
Contingencies
In the normal course of operations, the Companyrespectively. Long-term deferred revenue was $1,095,000 and $1,244,000 at 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 SeptemberJune 30, 2022 and December 31, 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.respectively.
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 September 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 nine months ended September 30, 2021 is summarized in the following table:
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 firstsix 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 nine months ended September 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 March 2020 CARES Act and then subsequently amended by the Consolidated Appropriation Act (“CAA”) of 2021 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.
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 September 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 nine months ended September 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 priceBacklog 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.Remaining Customer Performance Obligations
The Company recorded stock-based compensation of $92,000 and $2,449,000 for the three and nine months ended September 30, 2021, and $234,000 and $615,000 for the three and nine months ended September 30, 2020, respectively, as comprised of the following:
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2021 | | | 2020 | | | 2021 | | | 2020 | |
Cost of revenues | | $ | 4,000 | | | $ | 3,000 | | | $ | 14,000 | | | $ | 5,000 | |
Selling, general and administrative | | | 64,000 | | | | 195,000 | | | | 2,194,000 | | | | 538,000 | |
Research and development | | | 24,000 | | | | 36,000 | | | | 241,000 | | | | 72,000 | |
| | | $ | 92,000 | | | $ | 234,000 | | | $ | 2,449,000 | | | $ | 615,000 | |
The following is a summarytable represents revenue expected to be recognized in the future from the backlog of option activity forperformance obligations that are unsatisfied (or partially unsatisfied) at the Company’s stock option plans:end of the reporting period:
| | | 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 | | | $ | -- | |
| | | Remainder of 2022 | | | 2023 | | | 2024 | | | 2025 | | | 2026 and beyond | | | Total | |
Service revenue | | $ | 782,000 | | | $ | 682,000 | | | $ | 203,000 | | | $ | 83,000 | | | $ | -- | | | $ | 1,750,000 | |
Device revenue (1) | | | 41,000 | | | | 733,000 | | | | 41,000 | | | | -- | | | | -- | | | | 815,000 | |
Exclusivity fee | | | 143,000 | | | | 286,000 | | | | 286,000 | | | | 286,000 | | | | 191,000 | | | | 1,192,000 | |
Other | | | 7,000 | | | | 13,000 | | | | 13,000 | | | | 13,000 | | | | 130,000 | | | | 176,000 | |
Total | | $ | 973,000 | | | $ | 1,714,000 | | | $ | 543,000 | | | $ | 382,000 | | | $ | 321,000 | | | $ | 3,933,000 | |
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 nine months ended September 30, 2021.
Warrants
A summary of warrant activity for the nine months ended September 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 September 30, 2021 | | | 653,248 | | | $ | 6.97 | | | | 1.70 | |
Exercisable at September 30, 2021 | | | 653,248 | | | $ | 6.97 | | | | 1.70 | |
| (12.1) | MAJOR CUSTOMERS AND ACCOUNTS RECEIVABLERepresents the minimum purchase requirements under the distribution agreement the Company signed with its AXP distributor in China.
|
9. Concentrations
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, Accounts Receivable
| | | June 30, 2022 | | | December 31, 2021 | |
Customer 1 | | | 43 | % | | | -- | |
Customer 2 | | | 12 | % | | | -- | |
Customer 3 | | | 11 | % | | | -- | |
Customer 4 | | | 9 | % | | | 23 | % |
Customer 5 | | | -- | | | | 23 | % |
Revenues
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
Customer 1 | | | 24 | % | | | 15 | % | | | 36 | % | | | 13 | % |
Customer 2 | | | 32 | % | | | -- | | | | 17 | % | | | -- | |
Customer 3 | | | 11 | % | | | 4 | % | | | 8 | % | | | 6 | % |
Customer 4 | | | -- | | | | 18 | % | | | -- | | | | 11 | % |
one10. customer accounted for 42% and 20%, a second customer accounted for 24% and 22% and a third customer accounted for 0% and 10% for the three months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020,one customer accounted for 19% and 12%, a second customer accounted for 17% and 27%, while a third customer accounted for 10% and 12% of net revenues, respectively.Subsequent Events
AtSubsequent to SeptemberJune 30, 2021,2022, 2 customers accountedthe Company sold a total of 3,541,922 shares of common stock under the H.C. Wainwright ATM Agreement for 67%aggregate gross proceeds of accounts receivable. At$1,038,000 resulting in net proceeds of approximately $996,000 after deducting commissions and other transaction costs of approximately $42,000.
On DecemberJuly 25, 2022, the Company entered into an Amendment No.2 to the July 2019 Note (the "Note Amendment”). The Note Amendment extended the maturity date of the July 2019 Note to January 31, 2020,2023 3 customers accounted for 72%and modified when interest is due from quarterly to January 31, 2023. The Note Amendment changed the fixed conversion price to $0.21 per share, provided that in the event that the Company issues shares, options, warrants, or convertible securities, subject to certain exceptions, at an effective price per common share lower than $0.21, then the conversion price would be adjusted to such lower issuance price. As a result of accounts receivable.the Note Amendment, the conversion price of the related party Convertible Promissory Note with Boyalife Asset Holding II, Inc. decreased to $0.21 per share. On July 28, 2022, Boyalife Asset Holding II, Inc. transfer and sold such Convertible Promissory Note to Boyalife Group, Inc., which owns all of the capital and stock of Boyalife Asset Holding II, Inc.
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, risks associated with expanding into the Company’s planned CDMO business, 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 Thethe Company’s Form 10-K for the year ended December 31, 2020.2021.
Business Overview
ThermoGenesis Holdings, Inc. (“ThermoGenesis Holdings,” the “Company,” “we,” “our,” “us”), 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 providesOur business involves the manufacturing and related service of cell based medical devices, including 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.large scale cell manufacturing services. 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:Products for general laboratory use: 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 sortingBuoyancy-Activated Cell Sorting (“BACS”) technology. |
| | ● | CAR-TXpress™ Platform for Clinical Manufacturing – a modular designed, functionally closed manufacturing platform that addresses the critical unmet need for large scale cellular processing and chemistry, manufacturing and controls (“CMC”) needs for manufacturing CAR-Tcellular therapies, including chimeric antigen receptor (“CAR”) T cell therapies. The CAR-TXpress Platform is owned and developed through a subsidiary CAR-TXpress Bio, Inc. (“CARTXpress Bio”) in which the Company owns 80% of the equity interest. |
Planned Expansion of Business-- Contract Development and Manufacturing Services for Cell and Cell-Based Gene Therapies
In March 2022, our Board of Directors approved the planned expansion of the Company’s business to include contract development and manufacturing services for cell and cell-based gene therapies. The Company plans to develop and build-out the capabilities to become a world-class CDMO for cell and cell-based gene therapies by partnering with Boyalife Genomics Tianjin Ltd., a China-based CDMO (“Boyalife Genomics”), to in-license certain know-how and other intellectual property from Boyalife Genomics, and by leasing and building out a cell manufacturing facility in Sacramento, California. We intend to leverage our existing technology and combine it with the in-licensed technologies to develop a proprietary manufacturing platform for cell manufacturing activities.
The Company plans to develop and operate its planned CDMO business through a newly formed division named TG BiosynthesisTM. It is anticipated that TG Biosynthesis will provide high-quality development and manufacturing capabilities, cell and tissue processing development, quality systems, regulatory compliance, and other cell manufacturing solutions for clients with therapeutic candidates in various stages of development.
We are targeting the launch of our CDMO services to customers in 2023. The successful development and launch of TG Biosynthesis will require us to raise additional capital, acquire various equipment for the planned operations, hire certain personnel needed to launch the operation, and timely complete the build-out of our leased Sacramento facility. There is no assurance that we will be able to successfully obtain such additional capital resources, as such capital may not be available on reasonable terms, or available at all. We will need to hire, train, and retain additional employees who have experiences in the cell manufacturing field in order for our CDMO business to be successful.
ThermoGenesis Holdings is an affiliateResults of the Boyalife Group, a global diversified life science holding company that focuses on stem cell technology and cell-based therapeutics.Operations
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 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 SeptemberJune 30, 20212022 as Compared to the Three Months Ended SeptemberJune 30, 20202021
The following tables summarizes revenues by product line:
| | | Three Months Ended September 30, | | | | | | | | | |
| | | 2021 | | | 2020 | | | $ Change | | | % Change | |
AXP | | $ | 2,310,000 | | | $ | 1,169,000 | | | $ | 1,141,000 | | | | 98 | % |
BioArchive | | | 518,000 | | | | 619,000 | | | | (101,000 | ) | | | (16 | )% |
CAR-TXpress | | | 262,000 | | | | 425,000 | | | | (163,000 | ) | | | (38 | )% |
Manual Disposables | | | 55,000 | | | | 100,000 | | | | (45,000 | ) | | | (45 | )% |
Other | | | 13,000 | | | | 42,000 | | | | (29,000 | ) | | | (69 | )% |
Total | | $ | 3,158,000 | | | $ | 2,355,000 | | | $ | 803,000 | | | | 34 | % |
Net Revenues
Net revenues increased by $803,000$828,000 or 34%38%, from $2,355,000$2,201,000 to $3,158,000$3,029,000 for the three months ended SeptemberJune 30, 20212022 as compared to the three months ended SeptemberJune 30, 2020.2021. The revenue increase was primarilyis due to $867,000 in additional sales for AXP, driven by approximately $950,000 additional AXP disposable sales which increased by $1,141,000 or 98% in the three months ended September 30, 2021 as compared to the same period in 2020. The increased AXP revenue related to the new 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’sour distributor in China as compared to the same period in 2020, as they only purchasedand approximately $450,000 ofmore domestic AXP bagsetsdisposable sales. This is offset by approximately $100,000 less AXP disposable sales in Europe and approximately $400,000 less sales in Thailand. The Company had $94,000 more in BioArchive sales driven by one BioArchive device sold in the three monthsquarter ended SeptemberJune 30, 2020. The remainder of the increase relates to domestic AXP bagset sales, which increased2022. These increases were offset by approximately 100 cases or $200,000$103,000 decrease in the three months ended September 30, 2021 as compared to the same period in 2020. Revenues in the Company’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 the pandemic.revenues.
| | | June 30, 2022 | | | June 30, 2021 | |
AXP | | $ | 1,963,000 | | | $ | 1,096,000 | |
BioArchive | | | 643,000 | | | | 549,000 | |
CAR-TXpress | | | 292,000 | | | | 389,000 | |
Manual Disposables | | | 102,000 | | | | 116,000 | |
Other | | | 29,000 | | | | 51,000 | |
| Total | | $ | 3,029,000 | | | $ | 2,201,000 | |
Gross Profit
The Company’s gross profit was $1,115,000decreased by $47,000 to $939,000 or 35%31% of net revenues for the three months ended SeptemberJune 30, 2021,2022, compared to $1,511,000$986,000 or 64% of net revenues45% for the three months ended SeptemberJune 30, 2020, a decrease of $396,000 or 26%.2021. The decrease was driven by a refund of $800,000 received in the three months ended September 30, 2020inventory reserves and higher cost from ImmuneCyte relating to COVID-19 testing kits which were previously reserved by the Company in a prior quarter. The decrease was offset by higher gross profit fromour AXP disposables of approximately $400,000 generated by the increased sales of AXP disposables in the three months ended September 30, 2021.disposable contract manufacturer.
Selling, General and Administrative
Sales, general and administrative expenses for the three months ended SeptemberJune 30, 20212022 were $1,677,000$1,989,000 compared to $1,844,000$3,502,000 for the three months ended SeptemberJune 30, 2020,2021, a decrease of $167,000$1,513,000 or 9%43%. The decrease was driven by lower personnel expenses which decreased by approximately $225,000, and lower stock compensation expense, which decreased by approximately $130,000,$1,850,000 primarily due to the accelerated expense for the stock options that were voluntarily surrendered by Company executives in the three months ended SeptemberJune 30, 2021, as compared to the same period in 2020. These decreases were offset by increased consulting expensesrent expense of approximately $200,000.$325,000 for the new CDMO facility leased by the Company beginning in April 2022.
Research and Development Expenses
Research and development expenses were $543,000$392,000 for the three months ended SeptemberJune 30, 20212022 as compared to $750,000$622,000 for the three months ended SeptemberJune 30, 2020,2021, a decrease of $207,000$230,000 or 28%37%. 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$170,000 stock compensation expense ofand approximately $50,000$75,000 in the three months ended September 30, 2021.BACS development expenses.
Interest Expense
Interest expense for the three months ended SeptemberJune 30, 20212022 was $1,530,000,$1,359,000, compared to $1,531,000$1,524,000, for the three months ended SeptemberJune 30, 2020,2021, a decrease of $1,000. Interest expense was essentially flat year over year$165,000 or 11%. The decrease is due to the interest expense andadoption of ASU 2020-06, which resulted in the amortization of the previous debt discount relatedto be eliminated, offset by the accelerated interest for the triggering event that occurred in the second quarter of 2022 relating to the Revolving Credit Agreement with Boyalife Asset Holding II, Inc. beingportion of the same in both periods.Convertible Promissory Note that was converted during the quarter ended June 30, 2022.
Results of Operations for the NineSix Months Ended SeptemberJune 30, 20212022 as Compared to the NineSix Months Ended SeptemberJune 30, 20202021
The following tables summarizes revenues by product line:
| | | Nine Months Ended September 30, | | | | | | | | | |
| | | 2021 | | | 2020 | | | $ Change | | | % Change | |
AXP | | $ | 3,670,000 | | | $ | 4,112,000 | | | | (442,000 | ) | | | (11 | )% |
BioArchive | | | 1,817,000 | | | | 1,575,000 | | | | 242,000 | | | | 15 | % |
CAR-TXpress | | | 1,005,000 | | | | 1,296,000 | | | | (291,000 | ) | | | (22 | )% |
Manual Disposales | | | 300,000 | | | | 499,000 | | | | (199,000 | ) | | | (40 | )% |
Other | | | 84,000 | | | | 315,000 | | | | (231,000 | ) | | | (73 | )% |
Total | | $ | 6,876,000 | | | $ | 7,797,000 | | | $ | (921,000 | ) | | | (12 | )% |
Net Revenues
Net revenues decreasedincreased by $921,000$1,974,000 or 12%53%, from $7,797,000$3,718,000 to $6,876,000$5,692,000 for the ninesix months ended SeptemberJune 30, 20212022 as compared to the ninesix months ended SeptemberJune 30, 2020.2021. The decrease wasrevenue increase is due to $2,370,000 in additional sales for AXP, driven by lower AXP®approximately $1,000,000 in additional AXP disposable sales which declinedto our distributor in China and approximately $1,700,000 more domestic AXP disposable sales. This is offset by approximately $350,000 with 100 fewer cases sold$400,000 less sales in the nine months ended September 30, 2021 as compared to the same period in 2020. Additionally, thereThailand. These increases 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 decreasedoffset by $231,000 due to COVID-19 testing kits of which the Company didn’t sell in the nine months ended September 30, 2021. Offsetting the decreases, was an increase$203,000 less in BioArchive service revenue of $265,000sales and a $139,000 decrease in CAR-TXpress revenues for the nine monthsquarter ended SeptemberJune 30, 2021, as compared to the same period in 2020.2022.
| | | Six Months Ended June 30, | |
| | | 2022 | | | 2021 | |
AXP | | $ | 3,730,000 | | | $ | 1,360,000 | |
BioArchive | | | 1,096,000 | | | | 1,299,000 | |
CAR-TXpress | | | 604,000 | | | | 743,000 | |
Manual Disposables | | | 207,000 | | | | 245,000 | |
Other | | | 55,000 | | | | 71,000 | |
Total | | $ | 5,692,000 | | | $ | 3,718,000 | |
Gross Profit
The Company’s gross profit was $2,809,000$1,879,000 or 41%33% of net revenues for the ninesix months ended SeptemberJune 30, 2021,2022, compared to $371,000$1,694,000 or 5%46% of net revenues for the ninesix months ended SeptemberJune 30, 2020,2021, an increase of $2,438,000.$185,000. The current year gross profit is consistent with the Company’s standard profit margins. The gross profit was lower in the prior year due to increased inventory reserve expenses of approximately $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 decreasedriven by additional sales, offset by higher cost from our AXP disposable contract manufacturer and approximately $400,000 more in gross profit provided by AXP disposables of approximately $300,000.inventory reserves.
Selling, General and Administrative
Selling,Sales, general and administrative expenses for the ninesix months ended SeptemberJune 30, 2022 were $3,682,000 compared to $5,494,000 for the six months ended June 30, 2021, were $7,171,000 compared to $5,913,000 for the nine months ended September 30, 2020, an increasea decrease of $1,258,000$1,812,000 or 21%33%. The increasedecrease was driven by stock compensation expense, which increaseddecreased by approximately $1,700,000$2,000,000 primarily due to the accelerated expense for the stock options that were voluntarily surrendered by Company executives and increasedapproximately $100,000 more in consulting expenses in the quarter ended June 30, 2021, offset by increased rent expense of approximately $325,000 for the new CDMO facility leased by the Company beginning in April 2022.
Research and Development Expenses
Research and development expenses were $847,000 for the six months ended June 30, 2022, compared to $1,001,000 for the six months ended June 30, 2021, a decrease of $154,000 or 15%. The decrease was driven by approximately $200,000 stock compensation expense and approximately $95,000 in BACS development expenses, offset by increased salaries and benefits of approximately $165,000.
Gain on Extinguishment of Debt
The Company recorded no gain on the extinguishment of debt in the ninesix months ended SeptemberJune 30, 2022 as compared to a gain of $652,000 for the six months ended June 30, 2021. The increase is offset by a decrease of approximately $325,000 in lower legal expenses primarily due to the absence of expensesgain was related to the Mavericks lawsuit incurredprincipal and accrued interest for the Paycheck Protection Program loan the Company received in the prior year, approximately $100,000 less2020 and forgiven in fixed asset impairment expense, approximately $125,000 less in patent expense and approximately $60,000 less in investor relations related expenses in the nine months ended September 30, 2021 as compared to the same period in 2020.March 2021.
Research and Development Expenses
Consolidated research and development expenses were $1,544,000 for the nine months ended September 30, 2021, compared to $1,937,000 for the nine months ended September 30, 2020, a decrease of $393,000 or 20%. The decrease was driven by lower salaries and benefits of approximately $550,000 offset by increased stock compensation expense of approximately $175,000 in the nine months ended September 30, 2021 as compared to the same period in 2020.
Interest Expense
Interest expense decreased to $4,573,000$2,182,000 for the ninesix months ended SeptemberJune 30, 20212022 as compared to $6,377,000$3,043,000 for the ninesix months ended SeptemberJune 30, 2020,2021 a decrease of $1,804,000.$861,000. The decrease is driven an accelerated expensedue to the adoption of $2,486,000 forASU 2020-06, which resulted in the unamortizedamortization of the previous 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 nine months ended September 30, 2020.to be eliminated. This decrease was offset by additional interest expense andthe amortization of the debt discount amortization of approximately $500,000for the triggering events related to additional draw down from the Revolving Credit Agreement with Boyalife Asset Holding II, Inc. that occurred inConvertible Promissory Note of $955,000 during the second quarter of 2020.six months ended June 30, 2022.
Liquidity and Capital Resources
At SeptemberJune 30, 2021,2022, the Company had cash and cash equivalents of $7,634,000$4,001,000 and working capital of $2,146,000.$1,793,000. This compares to cash and cash equivalents of $7,161,000$7,280,000 and working capital of $9,155,000$8,616,000 at December 31, 2020.2021. 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. (the “Lender”). In June 2022, the Lender converted $3,000,000 of the outstanding balance of the convertible note into 10,552,234 shares of our common stock. As of SeptemberJune 30, 2021,2022, 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 Programoutstanding face value 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 nine months ended September 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.Loan was $7,000,000.
The Company has incurred historical losses from operations and expects to continue to incur operating losses 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 requirewill need to raise additional capital to grow theits business, to fund other operating expenses and to make interest payments.payments, as well as to fund its planned expansion into CDMO business. 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 bankdebt 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,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.
Non-GAAP Measures
In additionWe manage the concentration of credit risk with our customers and distributors through a variety of methods including, pre-shipment deposits, credit reference checks and credit limits. Although management believes that our customers and distributors are sound and creditworthy, a severe adverse impact on their business operations could have a corresponding material effect on their ability to the results reported in accordance with US GAAP, we also use a non-GAAP measure, adjusted EBITDA, to evaluate operating performancepay timely and to facilitate the comparison oftherefore on our historical resultsnet revenues, cash flows 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.condition.
Three months ended September 30, 2021 and 2020, respectively:
| | | Three Months Ended September 30, | |
| | | 2021 | | | 2020 | |
Net loss | | $ | (1,792,000 | ) | | $ | (2,609,000 | ) |
| | | | | | | | | |
Deduct: | | | | | | | | |
Interest expense | | | (1,530,000 | ) | | | (1,531,000 | ) |
Other expense | | | 843,000 | | | | 5,000 | |
Loss from operations | | $ | (1,105,000 | ) | | $ | (1,083,000 | ) |
| | | | | | | | | |
Add: | | | | | | | | |
Depreciation and amortization | | | 157,000 | | | | 177,000 | |
Stock-based compensation expense | | | 92,000 | | | | 234,000 | |
Adjusted EBITDA | | $ | (856,000 | ) | | $ | (672,000 | ) |
Adjusted EBITDA for the three months ended September 30, 2021 was a loss of $856,000, compared to a loss of $672,000 for the three months ended September 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 $3,315,000. The adjusted EBITDA improvement was primarily due to lower inventory reserve expense of approximately $3,300,000 primarily related to COVID-19 testing kits which was incurred in the nine months ended September 30, 2020. Additionally, the nine months ended September 30, 2020 also had approximately $325,000 less in legal expenses primarily due to the absence of legal and other expenses related to the Mavericks lawsuit, approximately $100,000 less due to a fixed asset impairment expense incurred in the nine months ended September 30, 2020 and approximately $125,000 less in patent expense in the nine months ended September 30, 2021 as compared to the same period in 2020. Offsetting these decreases was approximately $200,000 more incurred in 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 SeptemberJune 30, 2021.2022. 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 SeptemberJune 30, 2021.2022.
There were no changes in the Company’s internal controls over financial reporting that occurred during the three months ended SeptemberJune 30, 20212022 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.
PART II - OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS.Legal Proceedings
|
In the normal course of operations, we may have disagreements or disputes with distributors, vendors employees or other parties.employees. 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.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, 2020.2021.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.Unregistered Sales of Equity Securities and Use of Proceeds
|
None.
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.Defaults Upon Senior Securities
|
None.
ITEM 4. | MINE SAFETY DISCLOSURE.Mine Safety Disclosure
|
Not applicable.
ITEM 5. | OTHER INFORMATION.Other Information
|
None.
An index of exhibits is found on page 26 of this report.None.
Item
Exhibit No. | Description |
1.1 | At the Market Offering Agreement, dated December 13, 2019 by and between ThermoGenesis Holding, Inc. and H.C. Wainwright & Co., LLC incorporated herein by reference to Exhibit 1.2 to the Registration Statement on Form S-3 (Registration No. 333-235509) filed on December 13, 2019. |
1.2 | Amendment No. 1 to At the Market Offering Agreement, dated May 19, 2020, between ThermoGenesis Holdings, Inc. and H.C. Wainwright & Co., LLC, incorporated herein by reference to Exhibit 1.1 to the Form 8-K filed on May 20, 2020. |
1.3 | Amendment No. 2 to At the Market Offering Agreement, dated February 3, 2022, by and between ThermoGenesis Holdings, Inc. and H.C. Wainwright & Co., LLC, incorporated herein by reference to Exhibit 1.3 to the Form 8-K filed on February 3, 2022. |
3.1 | Second Amendment to Amended and Restated Bylaws of ThermoGenesis Holdings, Inc. dated June 30, 2022, incorporate by reference to Exhibit 3.1 to Form 8-K filed July 6, 2022. |
3.2 | Amended and Restated Certificate of Incorporation of ThermoGenesis Holdings, Inc. dated as of June 5, 2020, incorporated by reference to Exhibit 3.1 to Form 8-K filed June 6, 2020. |
3.3 | Amended and Restated Bylaws of ThermoGenesis Holdings, Inc., incorporated by reference to Exhibit 3.2 to Form 8-K filed with the SEC on October 30, 2019. |
3.4 | First Amendment to the Amended and Restated Bylaws of ThermoGenesis Holdings, Inc., incorporated by reference to Exhibit 3.1 to Form 8-K filed December 17, 2021. |
4.1 | Form of Common Stock Purchase Warrant, incorporated by reference to Exhibit 4.1 to Form 8-K filed with the SEC on March 28, 2018. |
4.2 | Form of Common Warrant, incorporated by reference to Exhibit 10.37 of amended Registration Statement on Form S-1 filed with the SEC on May 14, 2018. |
4.3 | Investors’ Rights Agreement, dated January 1, 2019, among CARTXpress Bio, Inc., Bay City Capital Fund V, L.P., and Bay City Capital Fund V Co-Investment Fund, L.P., incorporated by referenced to Exhibit 10.3 to Form 8-K filed with the SEC on January 4, 2019. |
4.4 | Form of Convertible Promissory Note, dated as of July 23, 2019, between ThermoGenesis Holdings, Inc. and Orbrex USA Co., incorporated by reference to Exhibit 4.1 to Form 8-K filed with the SEC on July 29, 2019. |
4.5 | Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended, incorporated by reference to Exhibit 4.8 to Form 10-K filed with the SEC on March 24, 2020. |
10.1 | Amendment No. 2 to Convertible Promissory Note, dated July 25, 2022, between ThermoGenesis Holdings, Inc. and Orbrex (USA) Co. Limited, incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on July 28, 2022. |
31.1 | Certification by the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certification by the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 |
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 |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |
ThermoGenesis Holdings, Inc.
Signatures
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: November 12, 2021August 11, 2022 | | /s/ Xiaochun (Chris) Xu, Ph.D. |
| |
| | Xiaochun (Chris) Xu, Ph.D. Chief Executive Officer (Principal Executive Officer) | |
| | | |
| | | |
Dated: November 12, 2021August 11, 2022 | | /s/ Jeffery Cauble |
| |
| | Jeffery Cauble Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |
