thmo20230331

thmo20230331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2023

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

Commission File Number: 333-82900 ThermoGenesis Holdings, Inc. (Exact name of registrant as specified in its charter)

Delaware (State of incorporation)		94-3018487 (I.R.S. Employer Identification No.)

2711 Citrus Road Rancho Cordova, California 95742 (Address of principal executive offices) (Zip Code) (916) 858-5100 (Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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

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

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 May 12, 2023
Common stock, $.001 par value		1,904,298

		Page Number
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements	1

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

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	18

ITEM 4.	Controls and Procedures	18

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	19
ITEM 1A.	Risk Factors	19
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
ITEM 3.	Defaults upon Senior Securities	19
ITEM 4.	Mine Safety Disclosure	19
ITEM 5.	Other Information	19
ITEM 6.	Exhibits	20

Signatures		21

	March 31, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	5,854,000		$	4,177,000
Accounts receivable, net of allowance for doubtful accounts of $4,000 ($149,000 at December 31, 2022)		955,000			1,865,000
Inventories		3,426,000			3,334,000
Prepaid expenses and other current assets		734,000			1,508,000
Total current assets		10,969,000			10,884,000

Inventories, non-current		778,000			1,003,000
Equipment and leasehold improvements, net		1,931,000			1,254,000
Right-of-use operating lease assets, net		315,000			372,000
Right-of-use operating lease assets – related party, net		3,443,000			3,550,000
Goodwill		781,000			781,000
Intangible assets, net		1,278,000			1,286,000
Other assets		256,000			256,000
Total assets	$	19,751,000		$	19,386,000

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	934,000		$	820,000
Accrued payroll and related expenses		445,000			399,000
Deferred revenue – short-term		729,000			782,000
Convertible promissory note – related party		6,499,000			5,777,000
Interest payable – related party		111,000			1,492,000
Convertible promissory note, net		423,000			962,000
Other current liabilities		1,330,000			1,277,000
Total current liabilities		10,471,000			11,509,000

Operating lease obligations – long-term		54,000			131,000
Operating lease obligations – related party – long-term		3,361,000			3,495,000
Deferred revenue – long-term		835,000			911,000
Other noncurrent liabilities		18,000			17,000
Total liabilities		14,739,000			16,063,000

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; 1,535,869 issued and outstanding (1,037,138 at December 31, 2022)		2,000			1,000
Additional paid in capital		277,253,000			270,377,000
Accumulated deficit		(271,279,000	)		(266,193,000	)
Accumulated other comprehensive loss		105,000			111,000
Total ThermoGenesis Holdings, Inc. stockholders’ equity		6,081,000			4,296,000

Noncontrolling interests		(1,069,000	)		(973,000	)
Total equity		5,012,000			3,323,000
Total liabilities and equity	$	19,751,000		$	19,386,000

	Three Months Ended March 31,
	2023			2022

Net revenues	$	2,572,000		$	2,663,000
Cost of revenues		1,467,000			1,723,000

Gross profit		1,105,000			940,000

Expenses:

Selling, general and administrative		1,844,000			1,693,000
Research and development		306,000			456,000

Total operating expenses		2,150,000			2,149,000

Loss from operations		(1,045,000	)		(1,209,000	)

Other income (expenses):
Interest expense		(3,903,000	)		(823,000	)
Loss on retirement of debt		(239,000	)		-
Other income (expenses)		5,000			(4,000	)
Total other expenses		(4,137,000	)		(827,000	)

Net loss		(5,182,000	)		(2,036,000	)

Loss attributable to noncontrolling interests		(96,000	)		(126,000	)
Net loss attributable to common stockholders	$	(5,086,000	)	$	(1,910,000	)

COMPREHENSIVE LOSS
Net loss	$	(5,182,000	)	$	(2,036,000	)
Other comprehensive loss:
Foreign currency translation adjustments gain (loss)		(6,000	)		14,000
Comprehensive loss		(5,188,000	)		(2,022,000	)
Comprehensive loss attributable to noncontrolling interests		(96,000	)		(126,000	)
Comprehensive loss attributable to common stockholders	$	(5,092,000	)	$	(1,896,000	)

Per share data:

Basic and diluted net loss per common share	$	(4.07	)	$	(6.63	)
Weighted average common shares outstanding basicand diluted		1,249,576			288,003

	Shares		Common Stock		Paid in Capital in Excess of Par		Accumulated Deficit			AOCL*			Non-Controlling Interests			Total Equity
Balance at January 1, 2023		1,037,138	$	1,000	$	270,377,000	$	(266,193,000	)	$	111,000		$	(973,000	)	$	3,323,000

Stock-based compensation expense		-		-		10,000		-			-			-			10,000
Related party convertible note price reset		-		-		3,160,000		-			-			-			3,160,000
Convertible note price reset		-		-		43,000		-			-			-			43,000
Conversion of note payable to common stock		215,000		1,000		602,000		-			-			-			603,000
Sale of common stock and warrants, net		125,000		-		2,640,000		-			-			-			2,640,000
Exercise of warrants		158,731		-		421,000		-			-			-			421,000
Foreign currency translation gain		-		-		-		-			(6,000	)		-			(6,000	)
Net loss		-		-		-		(5,086,000	)		-			(96,000	)		(5,182,000	)
Balance at March 31, 2023		1,535,869	$	2,000	$	277,253,000	$	(271,279,000	)	$	105,000		$	(1,069,000	)	$	5,012,000

	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net loss	$	(5,182,000	)	$	(2,036,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		267,000			150,000
Stock-based compensation expense		10,000			42,000
Amortization of debt discount/premium, net		3,472,000			213,000
Loss on extinguishment of debt		239,000			-
Reserve for excess and slow-moving inventories		70,000			374,000
Net change in operating assets and liabilities:
Accounts receivable		271,000			(1,442,000	)
Inventories		58,000			(383,000	)
Prepaid expenses and other assets		778,000			103,000
Accounts payable		748,000			599,000
Interest payable - related party		(1,103,000	)		(2,078,000	)
Accrued payroll and related expenses		45,000			107,000
Deferred revenue – short term		(53,000	)		441,000
Other current liabilities		53,000			(112,000	)
Long-term deferred revenue and other noncurrent liabilities		(288,000	)		(137,000	)

Net cash used in operating activities		(615,000	)		(4,159,000	)

Cash flows from investing activities:
Capital expenditures		(771,000	)		(65,000	)

Net cash used in investing activities		(771,000	)		(65,000	)

Cash flows from financing activities:
Proceeds from sale of common stock and warrants, net		2,640,000			594,000
Proceeds from exercise of warrants		421,000			-

Net cash provided by financing activities		3,061,000			594,000

Effects of foreign currency rate changes on cash and cash equivalents		-			2,000
Net increase (decrease) in cash, cash equivalents and restricted cash		1,675,000			(3,628,000	)

Cash, cash equivalents and restricted cash at beginning of period		4,177,000			7,280,000
Cash, cash equivalents and restricted cash at end of period	$	5,852,000		$	3,652,000

Supplemental disclosures of cash flow information:
Cash paid for interest	$	140,000		$	60,000
Cash paid for related party interest	$	1,492,000		$	2,628,000
Fair value of amended convertible note issued in connection with the extinguishment of original convertible note	$	1,239,000			-
Convertible note price reset	$	43,000			-
Related party convertible note price reset	$	3,160,000		$	213,000
Promissory note converted to common stock	$	603,000			-

	January 2023			March 2023
Conversion price before	$	6.30		$	2.87
Conversion price after	$	2.87		$	2.65
Term (years)		0.09			0.78
Volatility		167	%		168.9	%
Dividend rate		0	%		0	%
Risk free rate		4.46	%		4.20	%

	March 31, 2023			December 31, 2022
Right-of-use operating lease assets – related party, net	$	3,443,000		$	3,550,000
Current lease liability (included in other current liabilities)		470,000			433,000
Non-current lease liability – related party		3,361,000			3,495,000

Weighted average remaining lease term		4.5			4.8
Discount rate		22	%		22	%

2023 (Remaining)	$	945,000
2024		1,307,000
2025		1,359,000
2026		1,428,000
Thereafter		1,133,000
Total lease payments	$	6,172,000
Less: imputed interest		(2,341,000	)
Present value of operating lease liabilities	$	3,831,000

	2023		2022
Common stock equivalents of convertible promissory notes and accrued interest		2,946,525		157,139
Warrants – other		1,253,387		14,518
Stock options		6,400		8,147
Total		4,206,312		179,804

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted- Average Remaining Contract Term
Balance at December 31, 2022		340,689		$	19.40		1.90
Warrants granted		1,071,429
Pre-funded warrants granted		946,429
Warrants exercised		(158,731	)
Exercisable and Outstanding at March 31, 2023		2,199,816		$	3.84		2.56

	2023		2022
United States	$	1,372,000	$	1,958,000
Singapore		404,000		-
Other		796,000		705,000
Total	$	2,572,000	$	2,663,000

	Three Months Ended March 31, 2023
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
AXP	$	1,484,000	$	55,000	$	-	$	1,539,000
BioArchive		298,000		359,000		-		657,000
CAR-TXpress		35,000		40,000		71,000		146,000
Manual Disposables		207,000		-		-		207,000
Other		17,000		-		6,000		23,000
Total	$	2,041,000	$	454,000	$	77,000	$	2,572,000

	Three Months Ended March 31, 2022
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
AXP	$	1,711,000	$	55,000	$	-	$	1,766,000
BioArchive		155,000		298,000		-		453,000
CAR-TXpress		199,000		43,000		71,000		313,000
Manual Disposables		105,000		-		-		105,000
Other		17,000		-		9,000		26,000
Total	$	2,187,000	$	396,000	$	80,000	$	2,663,000

	Remainder of 2023		2024		2025		2026		2027 and beyond		Total
Service revenue	$	961,000	$	659,000	$	244,000	$	-	$	-	$	1,864,000
Device revenue ⁽¹⁾		712,000		41,000		-		-		-		753,000
Exclusivity fee		214,000		286,000		286,000		190,000		-		976,000
Other		10,000		13,000		13,000		13,000		104,000		153,000
Total	$	1,897,000	$	999,000	$	543,000	$	203,000	$	104,000	$	3,746,000

Accounts Receivable	March 31, 2023			December 31, 2022
Customer 1		20	%		15	%
Customer 2		16	%		-
Customer 3		1	%		27	%
Customer 4		-			29	%

	Three Months Ended March 31,
Revenues	2023			2022
Customer 1		33	%		48	%
Customer 2		16	%		-

SEC Form 10-Q filed by ThermoGenesis Holdings Inc.