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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30,
2003.
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: 0-16375
THERMOGENESIS CORP.
(Exact name of registrant as specified in its charter)
Delaware 94-3018487
(State of Incorporation) (I.R.S. Employer
Identification No.)
2711 Citrus Rd.
Rancho Cordova, CA 95742
(916) 858-5100
(Address of principal executive officer, including zip code, and
telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section13 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 [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]
The number of shares of the registrant's common stock, $0.001 par value,
outstanding on October 29, 2003 was 39,549,103.
-----------------------------------
THERMOGENESIS CORP.
INDEX
Page Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Balance Sheets at September 30, 2003 and June 30, 2003.............. 3
Statements of Operations for the
Three Months ended September 30, 2003 and 2002...................... 5
Statements of Cash Flows for
the Three Months ended September 30, 2003 and 2002.................. 6
Notes to Financial Statements....................................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition & Results of Operations......................... 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......... 14
Item 4. Controls and Procedures............................................. 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings................................................... 15
Item 2. Changes in Securities............................................... 15
Item 3. Default Upon Senior Securities...................................... 15
Item 4. Submission of Matters to a Vote of Security Holders................. 15
Item 5. Other Information................................................... 15
Item 6. Exhibits and Reports on Form 8-K.................................... 15
SIGNATURES ................................................................. 16
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
- ----------------------------------------
THERMOGENESIS CORP.
Balance Sheets
(Unaudited)
September 30, June 30,
2003 2003
---------------------- ---------------------
ASSETS
Current Assets:
Cash and cash equivalents $5,250,000 $6,815,000
Accounts receivable, net of allowance for
doubtful accounts of $80,000
($80,000 at June 30, 2003) 2,121,000 2,014,000
Inventory 2,873,000 2,650,000
Other current assets 641,000 820,000
--------------------- ---------------------
Total current assets 10,885,000 12,299,000
Equipment, at cost less accumulated depreciation
of $2,255,000 ($2,599,000 at June 30, 2003) 833,000 442,000
Other assets 46,000 50,000
--------------------- ---------------------
$11,764,000 $12,791,000
===================== =====================
See accompanying notes to financial statements.
3
THERMOGENESIS CORP.
Balance Sheets (Con't)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY September 30, June 30,
2003 2003
-------------------- -------------------
Current liabilities:
Accounts payable $1,238,000 $1,165,000
Accrued payroll and related expenses 297,000 235,000
Deferred revenue 356,000 384,000
Accrued liabilities 368,000 389,000
-------------------- -------------------
Total current liabilities 2,259,000 2,173,000
Long-term portion of capital lease obligations and note
payable 37,000 44,000
Stockholders' equity:
Preferred stock, $0.001 par value; 2,000,000
shares authorized; Series A convertible
preferred stock, 1,077,540 shares issued,
158,000 outstanding ($1,363,000
aggregate involuntary liquidation value at
September 30, 2003) -- --
Common stock, $0.001 par value; 50,000,000
shares authorized; 39,462,060 issued and
outstanding (39,396,594 at June 30, 2003) 39,000 39,000
Paid in capital in excess of par 65,381,000 65,248,000
Accumulated deficit (55,952,000) (54,713,000)
-------------------- -------------------
Total stockholders' equity 9,468,000 10,574,000
-------------------- -------------------
$11,764,000 $12,791,000
==================== ===================
See accompanying notes to financial statements.
4
THERMOGENESIS CORP.
Statements of Operations
(Unaudited)
Three Months Ended
September 30,
2003 2002
---------------------- ----------------------
Net revenues $2,143,000 $2,053,000
Cost of revenues 1,554,000 1,697,000
---------------------- ----------------------
Gross profit 589,000 356,000
---------------------- ----------------------
Expenses:
Selling, general and administrative 1,136,000 1,184,000
Research and development 699,000 562,000
---------------------- ----------------------
Total expenses 1,835,000 1,746,000
Interest expense 9,000 3,000
Interest income 16,000 31,000
---------------------- ----------------------
Net loss ($1,239,000) ($1,362,000)
====================== ======================
Per share data:
Basic and diluted net loss per common share ($0.03) ($0.04)
====================== ======================
Shares used in computing per share data 39,460,449 35,265,271
====================== ======================
See accompanying notes to financial statements.
5
THERMOGENESIS CORP.
Statements of Cash Flows
Three Months ended September 30, 2003 and 2002
2003 2002
------------------- -------------------
Cash flows from operating activities:
Net loss ($1,239,000) ($1,362,000)
Adjustments to reconcile net loss to net cash used
in operating activities:
Stock compensation expense 20,000 --
Depreciation and amortization 58,000 73,000
Loss on retirement of equipment 10,000 8,000
Net change in operating assets and liabilities:
Accounts receivable (107,000) 401,000
Inventory (223,000) (755,000)
Other current assets 179,000 (294,000)
Other assets 5,000 5,000
Accounts payable 73,000 307,000
Accrued payroll and related expenses 62,000 102,000
Deferred revenue (28,000) (9,000)
Accrued liabilities (21,000) (15,000)
------------------- -------------------
Net cash (used in) operating activities (1,211,000) (1,539,000)
------------------- -------------------
Cash flows from investing activities:
Capital expenditures (459,000) (10,000)
Maturities of short-term investments -- 1,000,000
------------------- -------------------
Net cash (used in) provided by investing activities (459,000) 990,000
------------------- -------------------
Cash flows from financing activities:
Payments on capital lease obligations (7,000) (4,000)
Exercise of stock options and warrants 112,000 40,000
------------------- -------------------
Net cash provided by financing activities 105,000 36,000
------------------- -------------------
Net decrease in cash and cash equivalents (1,565,000) (513,000)
Cash and cash equivalents at beginning of period 6,815,000 4,713,000
------------------- -------------------
Cash and cash equivalents at end of period $5,250,000 $4,200,000
=================== ===================
See accompanying notes to financial statements
6
THERMOGENESIS CORP.
Notes to Financial Statements
September 30, 2003
(Unaudited)
INTERIM REPORTING
- -----------------
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete
financial statements. All sales, domestic and foreign, are made in U.S. dollars
and therefore currency fluctuations are believed to have no impact on the
Company's net revenues. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month period
ended September 30, 2003 are not necessarily indicative of the results that may
be expected for the year ended June 30, 2004.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------
The Company recognizes revenue including multiple element arrangements, in
accordance with the provisions of SAB No. 101 and EITF 00-21. Revenue
arrangements with multiple elements are divided into separate units of
accounting if certain criteria are met, including whether the delivered item has
value to the customer on a stand-alone basis and whether there is objective and
reliable evidence of the fair value of the undelivered items. Revenue is
recognized as specific elements indicated in sales contracts are executed. If an
element is essential to the functionality of an arrangement, the entire
arrangement's revenue is deferred until that essential element is delivered. The
fair value of each undelivered element that is not essential to the
functionality of the system is deferred until performance or delivery occurs.
The fair value of an undelivered element is based on vendor specific objective
evidence or third party evidence of fair value as appropriate. If an undelivered
element exists, the Company will determine the fair value of the undelivered
element and subtract the fair value of the undelivered element from the total
consideration under the arrangement. The residual amount is the Company's
estimate of the fair value of the delivered element. Costs associated with
inconsequential or perfunctory elements in multiple element arrangements are
accrued at the time of revenue recognition. The Company accounts for training
and installation as a separate element of a multiple element arrangement. The
Company therefore recognizes the fair value of training and installation
services upon their completion when the Company is obligated to perform such
services. For licensing agreements pursuant to which the Company receives
up-front licensing fees for products or technologies that will be provided by
the Company over the term of the arrangements, the Company defers the up-front
fees and recognizes the fees as revenue on a straight-line method over the term
of the respective contracts.
7
THERMOGENESIS CORP.
Notes to Financial Statements (Cont'd)
September 30, 2003
(Unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
- ---------------------------------------------------
Revenues from the sale of the Company's products are recognized upon transfer of
title. The Company generally ships products F.O.B. shipping point at its office.
There is no conditional evaluation on any product sold and recognized as
revenue. All foreign sales are denominated in U.S. dollars. The Company's
foreign sales are generally through distributors. There is no right of return
provided for distributors. For sales of products made to distributors, the
Company considers a number of factors in determining whether revenue is
recognized upon transfer of title to the distributor, or when the distributor
places the product with an end-user. These factors include, but are not limited
to, whether the payment terms offered to the distributor are considered to be
non-standard, the distributor history of adhering to the terms of its
contractual arrangements with the Company, the level of inventory maintained by
the distributor, whether the Company has a pattern of granting concessions for
the benefit of the distributor, or whether there are other conditions that may
indicate that the sale to the distributor is not substantive. Shipping and
handling fees billed to customers are included in product and other revenues,
while the related costs are included in cost of product and other revenues.
Service revenue which is included in net revenues, generated from contracts for
providing maintenance of equipment is amortized over the life of the agreement.
All other service revenue is recognized at the time the service is completed.
Amounts billed in excess of revenue recognized are recorded as deferred revenue
on the balance sheet.
RECENT ACCOUNTING PRONOUNCEMENTS
- --------------------------------
In November 2002, the EITF reached a consensus on Issue 00-21, "Revenue
Arrangements with Multiple Deliverables" ("EITF 00-21"). EITF 00-21 addresses
how to account for arrangements that may involve the delivery or performance of
multiple products, services, and/or rights to use assets. The consensus mandates
how to identify whether goods or services or both that are to be delivered
separately in a bundled sales arrangement should be accounted for separately
because they are "separate units of accounting." The guidance can affect the
timing of revenue recognition for such arrangements, even though it does not
change rules governing the timing or pattern of revenue recognition of
individual items accounted for separately. EITF 00-21 was adopted on July 1,
2003 and had no impact on our financial statements.
In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150
(SFAS 150), "Accounting for Certain Financial Instruments with Characteristics
of Both Liabilities and Equity". SFAS 150 requires certain financial instruments
that embody obligations of the issuer and have characteristics of both
liabilities and equity to be classified as liabilities. Many of these
instruments previously were classified as equity or temporary equity and as
such, SFAS 150 represents a significant change in practice in the accounting for
a number of mandatorily redeemable equity instruments and certain equity
derivatives that frequently are used in connection with share repurchase
programs. SFAS 150 was adopted as of July 1, 2003 and had no impact on our
financial statements.
8
THERMOGENESIS CORP.
Notes to Financial Statements (Cont'd)
September 30, 2003
(Unaudited)
INVENTORY
- ---------
Inventory consisted of the following at:
September 30, 2003 June 30, 2003
---------------------------- -----------------------
Raw Materials $1,430,000 $1,612,000
Work in process 499,000 382,000
Finished goods 944,000 656,000
---------------------------- -----------------------
$2,873,000 $2,650,000
============================ =======================
WARRANTY
- --------
The Company offers a one-year warranty for parts only on all of its products.
The Company estimates the costs that may be incurred under its basic limited
warranty and records a liability in the amount of such costs at the time product
revenue is recognized. Factors that affect the Company's warranty liability
include the number of installed units, historical and anticipated rates of
warranty claims, and cost per claim. The Company periodically assesses the
adequacy of its recorded warranty liabilities and adjusts the amounts as
necessary.
Changes in the Company's product liability during the period are as follows:
July 1, 2003 balance $193,000
Warranties issued during the period 37,000
Settlements made during the period (54,000)
Changes in liability for pre-existing
warranties during the period --
------------------
September 30, 2003 balance $176,000
==================
STOCK-BASED COMPENSATION
- ------------------------
The Company has adopted the disclosure provision for stock-based compensation of
SFAS No. 123, "Accounting for Stock-Based Compensation", but continues to
account for such items using the intrinsic value method as outlined under
accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees".
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options. The Company's employee stock options have
characteristics significantly different from those of traded options such as
vesting restrictions and extremely limited transferability. In addition, the
assumptions used in option valuation models (see below) are highly subjective,
particularly the expected stock price volatility of the underlying stock.
Because changes in these subjective input assumptions can materially affect the
fair value estimates, in management's opinion, the existing models do not
provide a reliable single measure of the fair value of its employee stock
options.
9
THERMOGENESIS CORP.
Notes to Financial Statements (Cont'd)
September 30, 2003
(Unaudited)
STOCK-BASED COMPENSATION (CONT'D)
- ---------------------------------
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized over the options' vesting periods. The Company's pro forma
information is as follows:
Three Months Ended
September 30,
2003 2002
------------------ -------------------
Net loss, as reported ($1,239,000) ($1,362,000)
Add: stock-based employee
compensation expense included in
reported net loss -- --
Deduct: total stock-based employee
compensation expense determined
under fair value method for all awards (113,000) (259,000)
------------------ -------------------
Pro forma net loss ($1,352,000) ($1,621,000)
================== ===================
Basic and diluted net loss per share
As reported ($0.03) ($0.04)
Pro Forma ($0.03) ($0.05)
There were no stock-based awards to employees during the three months ended
September 30, 2003. For the three months ended September 30, 2002, the fair
value of the Company's stock-based awards to employees was estimated using the
following weighted-average assumptions:
September 30,
2002
-----------------
Average expected life 3.8
(years)
Risk-free interest rate 3.10%
Volatility 98%
Dividend yield 0%
10
THERMOGENESIS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
- --------------------------
This report contains forward-looking statements which are made pursuant to the
safe harbor provisions of the 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. 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. The Company's actual results,
performance or achievements could differ materially from the results expressed
in, or implied by these forward-looking statements. The Company wishes to
caution readers of the important factors, among others, that in some cases have
affected, and in the future could affect the Company's actual results and could
cause actual results for fiscal year 2003, and beyond, 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 complete clinical
trials and product marketing for new products, market acceptance of new
products, regulatory approval and time frames for such approval of new products
and new claims for existing products, realization of forecasted income and
expenses, initiatives by competitors, price pressures, and the risk factors
listed from time to time in the Company's SEC reports, including, in particular,
the factors and discussion in the Company's Form 10-K for its last fiscal year.
INTRODUCTION
- ------------
The Company designs, markets and manufactures medical devices and disposables
used for the distributed manufacturing of biotherapeutic products such as
concentrated mononuclear cells from umbilical cord blood, fibrin sealant and
thrombin from blood plasma and other related blood products. Initially the
Company developed its ThermoLine products for ultra rapid freezing and thawing
of blood components, which the Company distributes to blood banks and hospitals.
After extensive research and development, two new technology platforms (the
BioArchive(R) System and the CryoSeal System) have evolved products which
provide new biotherapeutic products to patients in need.
Beginning in late 1993, and with accelerated research and development efforts
from 1996 to 1999, the Company completed development of the BioArchive and
CryoSeal technology platforms, each of which will give rise to multiple medical
products targeted at a number of different surgical and transplant indications.
To achieve completion of these research projects and add experienced executive
talent to launch the products and move the Company to new levels of growth and
revenues, considerable capital resources were used.
The following is Management's discussion and analysis of certain significant
factors which have affected the Company's financial condition and results of
operations during the period included in the accompanying financial statements.
11
THERMOGENESIS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (CONT'D)
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosure of contingent
assets and liabilities. On an on-going basis, the Company evaluates its
estimates, including those related to bad debts, inventories, warranties,
contingencies and litigation. The Company bases its estimates 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.
The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its financial
statements. The Company recognizes revenue in accordance with the provisions of
SAB No. 101 and EITF 00-21. For licensing arrangements pursuant to which the
Company receives up-front licensing fees for products or technologies that will
be provided by the Company over the term of the arrangements, the Company defers
the upfront fees and recognizes the fees as revenue on a straight-line method
over the term of the respective contracts. For sales of products made to
distributors, the Company considers a number of factors in determining whether
revenue is recognized upon transfer of title to the distributor, or when the
distributor places the product with an end-user. These factors include, but are
not limited to, whether the payment terms offered to the distributor are
considered to be non-standard, the distributor's history of adhering to the
terms of its contractual arrangements with the Company, the level of inventory
maintained by the distributor, whether the Company has a pattern of granting
concessions for the benefit of the distributor, or whether there are other
conditions that may indicate that the sale to the distributor is not
substantive. The Company maintains allowances for doubtful accounts for
estimated losses resulting from the inability of its customers to make required
payments. If the financial condition of the Company's customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required. The Company provides for the estimated
cost of product warranties at the time revenue is recognized. While the Company
engages in extensive product quality programs and processes, including actively
monitoring and evaluating the quality of its component suppliers, the Company's
warranty obligation is affected by product failure rates, material usage and
service delivery costs incurred in correcting a product failure. Should actual
product failure rates, material usage or service delivery costs differ from the
Company's estimates, revisions to the estimated warranty liability would be
required. The Company writes down its inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory and
the estimated market value based upon assumptions about future demand and market
conditions. If actual market conditions are less favorable than those projected
by management, additional inventory write-downs may be required.
12
THERMOGENESIS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (CONT'D)
RESULTS OF OPERATIONS
- ---------------------
NET REVENUES:
Net revenues for the three months ended September 30, 2003 were $2,143,000
compared to $2,053,000 for the three months ended September 30, 2002 an increase
of $90,000 or 4%. BioArchive product line revenues were $1,407,000 for the three
months ended September 30, 2003, compared to $993,000 for the three months ended
September 30, 2002, an increase of $414,000 or 42%. There were four BioArchives
recognized in revenue in the first quarter of both fiscal 2003 and 2004.
Included in the BioArchive product line revenues noted above was $483,000
generated from the sales of disposables for the first quarter of fiscal 2004
compared to $180,000 for the first quarter of the prior year. Revenues generated
by the CryoSeal product line for the three months ended September 30, 2003 were
$38,000 compared to $251,000 for the three months ended September 30, 2002.
CryoSeal revenues to date have primarily been generated to satisfy the
requirements for clinical trials outside of the United States for regulatory and
marketing purposes.
COST OF REVENUES:
Cost of revenues as a percent of revenues was approximately 73% for the three
months ended September 30, 2003, as compared to 83% for the corresponding fiscal
2003 period. The cost of revenues percentage decreased due to the programs that
were implemented in the fourth quarter of fiscal 2003 which included reducing
manufacturing overhead costs, consolidating operations into one facility and
discontinuing ThermoLine models with a low gross profit margin.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Selling, general and administrative expenses for the three months ended
September 30, 2003 decreased $48,000 or 4% from the corresponding fiscal 2003
period. Included in selling, general and administrative expenses at September
30, 2003 is $110,000 of one time expenses related to the move from three
facilities to one consolidated facility. This decrease is primarily the result
of professional fees paid in connection with the executive search for a new
chief operating officer in the first quarter of fiscal 2003.
RESEARCH AND DEVELOPMENT EXPENSES:
Research and development expenses for the three months ended September 30, 2003
increased $137,000 or 24% from the corresponding fiscal 2003 period. The
increase is due to the costs associated with the CryoSeal FS human clinical
trials which were $325,000 for the three months ended September 30, 2003.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At September 30, 2003, the Company had a cash balance of $5,250,000, and working
capital of $8,626,000. This compares to a cash balance of $6,815,000 and working
capital of $10,126,000 at June 30, 2003. The cash was used to fund operations
and other cash needs of the Company. In addition to product revenues, we have
primarily financed our operations through the private placement of equity
securities. Since its inception, the Company has raised approximately $57
million, net of expenses, through common and preferred stock financings and
option and warrant exercises. As of September 30, 2003, the Company has no
off-balance sheet arrangements.
13
THERMOGENESIS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (CONT'D)
Net cash used in operating activities for the three months ended September 30,
2003 was $1,211,000, primarily due to the net loss of $1,239,000. Inventory
utilized $223,000 of cash as a result of purchasing materials for the BioArchive
System to continue our revenue growth and ensure efficient manufacturing
operations. Expenditures for capital assets utilized $459,000 of cash. The
majority of the capital assets consisted of leasehold improvements, furniture,
phone and security systems as a result of moving to a consolidated facility in
the first quarter of fiscal 2004.
The report of independent auditors on the Company's June 30, 2003 financial
statements includes an explanatory paragraph indicating there is substantial
doubt about the Company's ability to continue as a going concern. The Company
believes that it has developed a viable plan to address these issues and that
its plan will enable the Company to continue as a going concern through the end
of fiscal year 2004. The plan includes the realization of revenues from the
commercialization of new products, the consummation of debt or equity financings
and the reduction of certain operating expenses as required. The financial
statements do not include any adjustments to reflect the uncertainties related
to the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the inability of the Company
to continue as a going concern. There is no assurance that the Company will be
able to achieve additional financing or that such events will be on terms
favorable to the Company.
At September 30, 2003, the Company has $1 million outstanding in cancelable
orders to purchase inventory, supplies and services for use in normal business
operations and no significant outstanding capital commitments. Additionally, the
Company has a contract with an OEM vendor to purchase $8.7 million of inventory
through fiscal 2009.
BACKLOG
- -------
The Company's cancelable backlog at September 30, 2003 was $1,218,000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------------------------------------------------------------------
All sales, domestic and foreign, are made in U.S. dollars and therefore currency
fluctuations are believed to have no impact on the Company's net revenues. The
Company has no significant long-term debt or investments and therefore is not
subject to interest rate risk.
ITEM 4. CONTROLS AND PROCEDURES
- -------------------------------
The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer along with the Company's Chief 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)) as of the end of our
first fiscal quarter pursuant to Exchange Act Rule 13a-15(b). Based upon that
evaluation, the Company's Chief Executive Officer along with the Company's Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in ensuring that information required to be disclosed
by us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.
14
PART II - OTHER INFORMATION
Item 1. Legal proceedings.
In the normal course of operations, the Company may have disagreements
or disputes with vendors or employees. These disputes are seen by the
Company's management as a normal part of business, and there are no
pending actions currently or no threatened actions that management
believes would have a significant material impact on the Company's
financial position, results of operations or cash flows.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Default Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
31.1 Certification by the Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification by the of 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.
(b) Reports on Form 8-K
A report on Form 8-K for the event dated September 24, 2003 was
filed on October 1, 2003 announcing the fourth quarter and
year-end results for the fiscal year ending June 30, 2003.
A report on Form 8-K for the event dated September 2, 2003 was
filed on September 11, 2003 announcing the resignation of Sam
Acosta, Vice President of Manufacturing Operations.
15
THERMOGENESIS CORP.
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 CORP.
(Registrant)
Dated: November 11, 2003
/s/Philip H. Coelho
--------------------------------------------
Philip H. Coelho
Chief Executive Officer
(Principal Executive Officer)
/s/Renee M. Ruecker
--------------------------------------------
Renee M. Ruecker
Chief Financial Officer
(Principal Financial and Accounting Officer)
16