ThermoGenesis Holdings, Inc. - Quarter Report: 2023 September (Form 10-Q)

thmo20230930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 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 November 9, 2023
Common stock, $.001 par value		3,136,504

ThermoGenesis Holdings, Inc.

INDEX

		Page Number
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements	1

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	22

ITEM 4.	Controls and Procedures	22

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	22
ITEM 1A.	Risk Factors	22
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
ITEM 3.	Defaults upon Senior Securities	23
ITEM 4.	Mine Safety Disclosure	23
ITEM 5.	Other Information	23
ITEM 6.	Exhibits	24

Signatures		25

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ThermoGenesis Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	4,018,000		$	4,177,000
Accounts receivable, net of allowance for credit losses of $2,000 ($149,000 at December 31, 2022)		368,000			1,865,000
Inventories		1,821,000			3,334,000
Prepaid expenses and other current assets		718,000			1,508,000
Total current assets		6,925,000			10,884,000

Inventories, non-current		772,000			1,003,000
Equipment and leasehold improvements, net		2,523,000			1,254,000
Right-of-use operating lease assets, net		190,000			372,000
Right-of-use operating lease assets – related party, net		3,213,000			3,550,000
Goodwill		781,000			781,000
Intangible assets, net		1,262,000			1,286,000
Other assets		255,000			256,000
Total assets	$	15,921,000		$	19,386,000

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	591,000		$	820,000
Accrued payroll and related expenses		451,000			399,000
Deferred revenue – short-term		818,000			782,000
Convertible promissory note – related party		4,817,000			5,777,000
Interest payable – related party		225,000			1,492,000
Convertible promissory note, net		456,000			962,000
Other current liabilities		1,532,000			1,277,000
Total current liabilities		8,890,000			11,509,000

Operating lease obligations – long-term		--			131,000
Operating lease obligations – related party – long-term		3,071,000			3,495,000
Deferred revenue – long-term		680,000			911,000
Other noncurrent liabilities		17,000			17,000
Total liabilities		12,658,000			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; 3,136,504 issued and outstanding (1,037,138 at December 31, 2022)		3,000			1,000
Additional paid in capital		281,632,000			270,377,000
Accumulated deficit		(277,154,000	)		(266,193,000	)
Accumulated other comprehensive loss		114,000			111,000
Total ThermoGenesis Holdings, Inc. stockholders’ equity		4,595,000			4,296,000

Noncontrolling interests		(1,332,000	)		(973,000	)
Total equity		3,263,000			3,323,000
Total liabilities and equity	$	15,921,000		$	19,386,000

See accompanying 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,
	2023			2022			2023			2022

Net revenues	$	2,194,000		$	2,115,000		$	7,039,000		$	7,807,000
Cost of revenues		1,799,000			1,678,000			5,070,000			5,491,000

Gross profit		395,000			437,000			1,969,000			2,316,000

Expenses:
Selling, general and administrative		1,686,000			1,982,000			5,346,000			5,665,000
Research and development		266,000			470,000			955,000			1,317,000

Total operating expenses		1,952,000			2,452,000			6,301,000			6,982,000

Loss from operations		(1,557,000	)		(2,015,000	)		(4,332,000	)		(4,666,000	)

Other expenses:
Interest expense		(2,118,000	)		(1,391,000	)		(6,689,000	)		(3,572,000	)
Loss on retirement of debt		(87,000	)		--			(326,000	)		--
Other income/(expense)		22,000			3,000			27,000			(1,000	)

Total other expense		(2,183,000	)		(1,388,000	)		(6,988,000	)		(3,573,000	)

Net loss		(3,740,000	)		(3,403,000	)		(11,320,000	)		(8,239,000	)

Loss attributable to noncontrolling interests		(125,000	)		(163,000	)		(359,000	)		(402,000	)

Net loss attributable to common stockholders	$	(3,615,000	)	$	(3,240,000	)	$	(10,961,000	)	$	(7,837,000	)

COMPREHENSIVE LOSS
Net loss	$	(3,740,000	)	$	(3,403,000	)	$	(11,320,000	)	$	(8,239,000	)
Other comprehensive loss:
Foreign currency translation adjustments gain		9,000			22,000			3,000			67,000
Comprehensive loss		(3,731,000	)		(3,381,000	)		(11,317,000	)		(8,172,000	)
Comprehensive loss attributable to noncontrolling interests		(125,000	)		(163,000	)		(359,000	)		(402,000	)
Comprehensive loss attributable to common stockholders	$	(3,606,000	)	$	(3,218,000	)	$	(10,958,000	)	$	(7,770,000	)

Per share data:

Basic and diluted net loss per common share	$	(1.44	)	$	(4.66	)	$	(5.26	)	$	(18.49	)

Weighted average common shares outstanding – basic and diluted		2,503,631			694,795			2,083,095			423,897

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, 2023

(Unaudited)

	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

Stock-based compensation expense		--		--		13,000		--			--			--			13,000
Exercise of pre-funded warrants		946,429		--		--		--			--			--			--
Net loss		--		--		--		(2,260,000	)		--			(138,000	)		(2,398,000	)
Balance at June 30, 2023		2,482,298	$	2,000	$	277,266,000	$	(273,539,000	)	$	105,000		$	(1,207,000	)	$	2,627,000

Stock-based compensation expense		--		--		7,000		--			--			--			7,000
Related party convertible note converted to common stock		654,206		1,000		699,000		--			--			--			700,000
Related party convertible note price reset		--		--		3,660,000		--			--			--			3,660,000
Foreign currency translation gain		--		--		--		--			9,000			--			9,000
Net loss		--		--		--		(3,615,000	)		--			(125,000	)		(3,740,000	)
Balance at September 30, 2023		3,136,504	$	3,000	$	281,632,000	$	(277,154,000	)	$	114,000		$	(1,332,000	)	$	3,263,000

ThermoGenesis Holdings, Inc.

Condensed Consolidated Statements of Equity

For the Three and Nine Months Ended September 30, 2022

	Shares		Common Stock		Paid in Capital in Excess of Par			Accumulated Deficit			AOCL*		Non- Controlling Interests			Total Equity
Balance at January 1, 2022		279,629	$	--	$	268,459,000		$	(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		20,407		--		594,000			--			--		--			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		300,036	$	--	$	258,627,000		$	(256,833,000	)	$	45,000	$	(557,000	)	$	1,282,000

Stock-based compensation expense		--		--		72,000			--			--		--			72,000
Issuance of common stock via at-the-market offering, net		97,726		--		1,450,000			--			--		--			1,450,000
Related party convertible note price reset		--		--		2,475,000			--			--		--			2,475,000
Conversion of related party note payable to common stock		234,495		1,000		2,999,000			--			--		--			3,000,000
Foreign currency translation gain		--		--		--			--			31,000		--			31,000
Net loss		--		--		--			(2,688,000	)		--		(113,000	)		(2,801,000	)
Balance at June 30, 2022		632,257	$	1,000	$	265,623,000		$	(259,521,000	)	$	76,000	$	(670,000	)	$	5,509,000

Stock-based compensation expenses		--		--		70,000			--			--		--			70,000
Issuance of common stock via at-the-market offering, net		78,710		--		993,000			--			--		--			993,000
Related party convertible note price reset		--		--		1,075,000			--			--		--			1,075,000
Foreign currency translation gain		--		--		--			--			22,000		--			22,000
Net loss		--		--		--			(3,240,000	)		--		(163,000	)		(3,403,000	)
Balance at September 30, 2022		710,967	$	1,000	$	267,761,000		$	(262,761,000	)	$	98,000	$	(833,000	)	$	4,266,000

Accumulated other comprehensive loss.

See accompanying notes to the condensed consolidated financial statements.

ThermoGenesis Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(11,320,000	)	$	(8,239,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		816,000			666,000
Stock based compensation expense		30,000			184,000
Amortization of debt discount/premium, net		5,396,000			1,897,000
Reserve for excess and slow-moving inventories		480,000			654,000
Loss on retirement of debt		326,000			--
Net change in operating assets and liabilities:
Accounts receivable		1,496,000			(1,323,000	)
Inventories		1,264,000			582,000
Prepaid expenses and other assets		791,000			757,000
Accounts payable		(226,000	)		(210,000	)
Interest payable – related party		(289,000	)		(1,132,000	)
Accrued payroll and related expenses		52,000			145,000
Deferred revenue – short-term		37,000			122,000
Other current liabilities		255,000			446,000
Long-term deferred revenue and other noncurrent liabilities		(786,000	)		(650,000	)

Net cash used in operating activities		(1,678,000	)		(6,101,000	)

Cash flows from investing activities:
Capital expenditures		(1,541,000	)		(308,000	)

Net cash used in investing activities		(1,541,000	)		(308,000	)

Cash flows from financing activities:

Proceeds from issuance of common stock, net of expenses		2,640,000			3,037,000
Proceeds from the exercise of warrants		421,000			--

Net cash provided by financing activities		3,061,000			3,037,000

Effects of foreign currency rate changes on cash and cash equivalents		(1,000	)		(5,000	)
Net increase (decrease) in cash and cash equivalents		(159,000	)		(3,377,000	)

Cash and cash equivalents at beginning of period		4,177,000			7,280,000
Cash and cash equivalents at end of period	$	4,018,000		$	3,903,000

Supplemental disclosures of cash flow information:
Cash paid for related party interest	$	1,492,000		$	2,628,000
Cash paid for interest	$	140,000		$	180,000
Fair value of January 2023 amended convertible note issued in connection with the extinguishment of original convertible note	$	1,239,000			--
Fair value of July 2023 amended convertible note issued in connection with the extinguishment of original convertible note	$	484,000			--
Right-to-use asset acquired under operating lease, related party		--		$	3,863,000
Convertible note price reset	$	43,000			--
Related party convertible note converted to common stock	$	700,000		$	3,000,000
Related party convertible note price reset	$	6,820,000		$	3,763,000
Promissory note converted to common stock	$	603,000			--

See accompanying notes to the condensed consolidated financial statements.

ThermoGenesis Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.	Description of Business

Overview

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

Medical Device Products for Automated Cell Processing

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

CDMO Business

The Company is expanding its business to include contract development and manufacturing services for cell and cell-based gene therapies. The Company is in the process of building out the capabilities to become a world-class Contract Development and Manufacturing Organization (“CDMO”) for cell and cell-based gene therapies. The Company is building out a new facility in the Sacramento metro area, containing a total of 12, class-7, ReadyStart cGMP Suites available for lease by early-stage life science and cell gene therapy companies. The ReadyStart Suites are located in a 35,500+ square foot cGMP facility that will meet the highest scientific, quality, and regulatory requirements. The CDMO facility was completed in October of 2023.

Reverse Stock Split

On December 22, 2022, we effected a one (1) for forty-five (45) reverse stock split of our issued and outstanding common stock. All historical share amounts disclosed in this quarterly report on Form 10-Q have been retroactively restated to reflect the reverse split and subsequent share exchange. No fractional shares were issued as a result of the reverse stock split, as fractional shares of common stock were rounded up to the nearest whole share.

2.	Going Concern

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

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and 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 Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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 statement of the results for the periods presented 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 and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the Company’s fiscal year ending December 31, 2023. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in ThermoGenesis Holdings’ Annual Report on Form 10-K for the year ended December 31, 2022.

Principles of Consolidation

The consolidated financial statements include the accounts of ThermoGenesis Holdings and its wholly-owned subsidiaries, ThermoGenesis Corp. and TotipotentRX Cell Therapy, Pvt. Ltd and ThermoGenesis Corp’s majority-owned subsidiary, CARTXpress Bio, Inc. (“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.

Recently Adopted Accounting Standards

On 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 to 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 (3) whether collateral is required. The Company recognized 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 the debt discounts of the convertible promissory notes were reduced $942,000.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”). The ASU introduced a new accounting model, the Current Expected Credit Losses model (“CECL”), which requires earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses at the time the financial asset is originated or acquired. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2022, including interim reporting periods within those annual reporting periods. The Company adopted the standard effective January 1, 2023. Based on the composition of the Company’s trade receivables and unbilled revenue, and expected future losses, the adoption of ASU 2016-13 did not have a material impact on its condensed consolidated financial statements.

4.	Related Party Transactions

Convertible Promissory Note and Revolving Credit Agreement

In March 2017, ThermoGenesis Holdings entered into a Credit Agreement with Boyalife Group (USA), Inc. (the “Lender”), 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 the Company the right to borrow up to $10,000,000 (the “Loan”) at any time prior to the maturity date. On March 6, 2023, the Company entered into an Amendment No. 2 (the “Amendment to the Note”) to its Second Amended and Restated Convertible Promissory Note with Boyalife Group Inc. (the “Note”), and an Amendment No. 3 to its First Amended and Restated Revolving Credit Agreement with Boyalife Group Inc. The Amendment to the Note amended and extended the maturity date of the Note from March 6, 2023 to December 31, 2023 (the “Maturity Date”) and added to the principal balance of the Note all accrued and unpaid interest at the time of the extension, resulting in an outstanding principal balance of $7,278,000 as of March 6, 2023.

The Company performed a debt extinguishment vs. modification analysis on the Amendment to the Note and determined that the amendment would be considered an extinguishment, due to an increase of more than 10% to the value of the embedded conversion option. However, no gain or loss was recorded in the condensed consolidated statements of operations and comprehensive loss at the time of the Amendment as it was determined that the fair value of the Amendment to the Note and accrued interest was the same before and after the extension.

On September 28, 2023, the Company received a conversion notice from the Lender to convert a total of $700,000 of the outstanding accrued interest. The conversion resulted in an issuance of 654,206 shares of the Company’s common stock at a conversion price of $1.07 per share. Immediately following the conversion, the outstanding principal balance of the Note was $7,278,000 and accrued but unpaid interest of $216,000.

The Credit Agreement and the Note, as amended 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 summarizes the Note:

Maturity

Date

Stated

Interest

Rate

Conversion

Price

Face

Value

Debt

Discount

Carrying

Value

September 30, 2023

12/31/23

1.07

7,278,000

(2,461,000

)

4,817,000

December 31, 2022

12/31/23

6.30

7,000,000

(1,223,000

)

5,777,000

The Note includes a down-round anti-dilution provision that lowers its conversion price if the Company sells shares of common stock or issues convertible debt at a lower price per share. Through September 30, 2023, the down-round provision was triggered as noted below:

In January 2023, when the conversion price of the Note was at $6.30 per share, the Company amended a previously outstanding convertible note, resulting in a triggering event lowering the conversion price of the Note to $2.87. The Company determined that it created an incremental value of $2,350,000 which was treated as a discount to the carrying amount of the Note and amortized over its remaining term.

In March 2023, the Company sold shares of common stock and warrants at $2.65 per share, resulting in a down round triggering event lowering the conversion price of the Note to that value. The triggering event created an incremental value of $810,000 which was treated as a discount to the carrying amount of the Note and will be amortized over its remaining term.

In July 2023, when the conversion price of the Note was at $2.65 per share, the Company amended a previously outstanding convertible note, resulting in a triggering event lowering the conversion price of the Note to $1.07. The Company determined that it created an incremental value of $3,660,000 which was treated as a discount to the carrying amount of the Note and amortized over its remaining term.

A Black-Scholes pricing model was utilized to determine the change in the before and after incremental value of the conversion option at each triggering event, with the following inputs:

	January 2023			March 2023			July 2023
Conversion price before	$	6.30		$	2.87		$	2.65
Conversion price after	$	2.87		$	2.65		$	1.07
Term (years)		0.09			0.78			0.42
Volatility		167	%		168.9	%		156.8	%
Dividend rate		0	%		0	%		0	%
Risk free rate		4.46	%		4.20	%		4.22	%

For the three and nine months ended September 30, 2023, the Company amortized $1,720,000 and $5,582,000 of debt discount related to triggering events, compared to $940,000 and $1,897,000 for the three and nine months ended September 30, 2022. In addition to the amortization, the Company also recorded interest expense of $409,000 and $1,203,000 for the three and nine months ended September 30, 2023, compared to $394,000 and $1,496,000 for the three and nine months ended September 30, 2022, respectively. The interest payable balance as of September 30, 2023 and December 31, 2022 was $225,000 and $1,492,000, 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 division named TG Biosynthesis.

Under the terms of the agreement, the Company transferred its remaining 8.64% interest in ImmuneCyte, Inc. 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 nine months ended September 30, 2023, 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 owned by the Company’s CEO and Chairman of the Board and the Company’s Chief Operating Officer who is also a Board Member, 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 is $104,000 per month (with a 4% annual increase). Additionally, the Company will pay all operating expenses as they become due estimated to be approximately $10,000 per month and will be expensed in the period incurred. The Company has the option to renew the lease for up to ten years after the commencement of the initial five-year term.

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:

	September 30, 2023			December 31, 2022
Right-of-use operating lease assets – related party, net	$	3,213,000		$	3,550,000
Current lease liability (included in other current liabilities)		551,000			433,000
Non-current lease liability – related party		3,071,000			3,495,000

Weighted average remaining lease term		4.0			4.8
Discount rate		22	%		22	%

Maturities of lease liabilities by year for our operating lease are as follows:

2023 (Remaining)	$	324,000
2024		1,307,000
2025		1,359,000
2026		1,428,000
Thereafter		1,133,000
Total lease payments	$	5,551,000
Less: imputed interest		(1,930,000	)
Present value of operating lease liabilities	$	3,621,000

Statement of Cash Flows

Cash paid for amounts included in the measurement of operating lease liabilities was $932,000 and $277,000 for the nine months ended September 30, 2023 and 2022, respectively.

6.	Convertible Promissory Note

July 2019 Note

On July 23, 2019, the Company entered into a private placement with Orbrex (USA) Co. Limited (“Orbrex”), pursuant to which the Company issued and sold to Orbrex an unsecured convertible promissory note, as amended, in the original principal amount of $1,000,000 (the “July 2019 Note”). The July 2019 Note bears interest at a rate of twenty-four percent (24%) per annum and is payable in arrears on January 31 of each year. In the nine months ended September 30, 2023, the Company has amended the July 2019 Note two times:

●

On January 31, 2023, the Company entered into Amendment No. 3 to the July 2019 Note, which extended the maturity date from January 31, 2023 to July 31, 2023 and changed the fixed conversion price to $2.87 per share. The Company performed a debt extinguishment vs. modification analysis on this amendment to the July 2019 Note and determined that the extension would be considered an extinguishment, due to an increase of more than 10% to the value of the embedded conversion option. The Company determined that the fair value of the July 2019 Note after the amendment was $1,239,000 representing a $239,000 increase in its fair value. The increase will be recorded as a premium to the July 2019 Note and was amortized over the remaining term.

●

On July 31, 2023, the Company entered into an Amendment No. 4 to the July 2019 Note, which extended the maturity date of the July 2019 Note from July 31, 2023 to January 31, 2024 and changed the fixed conversion price to $1.07 per share. The Company performed a debt extinguishment vs. modification analysis on this amendment to the July 2019 Note and determined that the extension would be considered an extinguishment, due to an increase of more than 10% to the value of the embedded conversion option. The Company determined that the fair value of the July 2019 Note after the amendment was $538,000 representing a $87,000 increase in its fair value. The increase will be recorded as a premium to the July 2019 Note and amortized over the remaining term.

The following summarizes the July 2019 Note:

Maturity

Date

Stated

Interest

Rate

Conversion

Price

Face
Value

Debt
Discount/
Premium

Carrying

Value

September 30, 2023

1/31/2024

24%

1.07

397,000

59,000

456,000

December 31, 2022

7/31/2023

24%

6.30

1,000,000

(38,000

)

962,000

The July 2019 Note includes a down-round anti-dilution provision that lowers its conversion price if the Company sells shares of common stock or issues convertible debt at a lower price per share. In 2023, the anti-dilution provision was triggered, as noted below:

In March 2023, the Company sold shares of common stock at $2.65 per share, resulting in a down round triggering event lowering the conversion price of the Note to that value. The triggering event created an incremental value of $43,000 which was treated as a discount to the carrying amount of the July 2019 Note and was be amortized over its remaining term.

A Black-Scholes pricing model was utilized to determine the change in the before and after incremental value of the conversion option at each triggering event, with the following inputs:

	March 2023
Conversion price before	$	2.87
Conversion price after	$	2.65
Term (years)		0.36
Volatility		182	%
Dividend rate		0	%
Risk free rate		4.20	%

The Company recorded amortization expense for the July 2019 Note of ($35,000) and ($186,000) for the three and nine months ended September 30, 2023, respectively. In addition to the amortization, the Company also recorded interest expense related to the July 2019 Note of $24,000 and $90,000 for the three and nine months ended September 30, 2023, compared to $60,000 and $180,000 for the three and nine months ended September 30, 2022, respectively.

7.	Stockholders’ Equity

Common Stock

On March 15, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) pursuant to which the Company agreed to issue and sell to the Investor in a private placement (the “Offering”) (i) 125,000 shares of its common stock, $0.001 par value (the “Common Shares”), (ii) 946,429 pre-funded warrants to purchase Common Shares at a purchase price of $2.80, and (iii) common stock warrants to purchase up to an aggregate 1,071,429 Common Shares were issued (the “Underlying Shares”). The common stock warrants have an exercise price of $2.65 per share and are exercisable immediately upon issuance and expire five and one-half years following the issuance. The Offering resulted in net proceeds of approximately $2,640,000, excluding legal and other transaction fees of $360,000. The Offering closed on March 20, 2023. All 946,429 pre-funded warrants have been exercised.

In connection with the Offering, the Company entered into a Warrant Amendment Agreement (the "Warrant Amendment Agreement”), dated March 15, 2023, with the Investor, whereby the Company agreed to amend existing warrants, held by the Investor, to purchase up to an aggregate of 158,731 shares of common stock that were previously issued in October 2022. These warrants had an exercise price of $6.30 per share and pursuant to the Warrant Amendment Agreement have been amended to reduce the exercise price to $2.65 per share effective upon the closing of the Offering. During the nine months ended September 30, 2023, 158,731 common warrants were exercised. The Company received approximately $421,000 from the exercises of the warrants.

The warrant repricing resulted in an immediate and incremental increase of approximately $50,000 in the estimated fair value of the common warrants issued in the Company’s October 2022 public offering. The common warrants were valued on the date of the warrant repricing using the Black-Scholes option pricing model based on the following assumptions:

	March 2023
Conversion price before	$	6.30
Conversion price after	$	2.65
Term (years)		4.9
Volatility		123	%
Dividend rate		0	%
Risk free rate		4.20	%

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”). In March 2022, the total offering price was updated to $18,573,000 based on the shares that were currently available on Company’s existing Form S-3. The terms and conditions of the Offering Agreement otherwise remain unchanged. For the nine months ended September 30, 2022, the Company sold a total of 196,843 shares of common stock under the Offering Agreement for aggregate gross proceeds of $3,293,000 at an average selling price of $16.55 per share, resulting in net proceeds of approximately $3,037,000 after deducting commissions and other transaction costs of approximately $256,000.

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. All pre-funded warrants previously issued have been exercised and none are 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 September 30:

	2023		2022
Common stock equivalents of convertible promissory notes and accrued interest		7,448,487		969,173
Warrants		1,238,869		14,518
Stock options		6,218		6,380
Total		8,693,574		990,071

Warrants

A summary of warrant activity for the nine months ended September 30, 2023 is as follows:

	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
Warrants expired		(14,518	)
Pre-funded warrants granted		946,429
Pre-funded warrants exercised		(946,429	)
Warrants exercised		(158,731	)
Exercisable and Outstanding at September 30, 2023		1,238,869		$	3.14		4.82

8.	Revenue

The following table presents net sales by geographic areas:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	1,500,000	$	1,535,000	$	4,589,000	$	4,973,000
China		29,000		364,000		77,000		1,570,000
United Arab Emirates		259,000		--		439,000		--
Other		406,000		216,000		1,934,000		1,264,000
Total	$	2,194,000	$	2,115,000	$	7,039,000	$	7,807,000

The following tables summarize the revenues by product line and type:

	Three Months Ended September 30, 2023
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
AXP	$	1,486,000	$	88,000	$	--	$	1,574,000
BioArchive		131,000		322,000		--		453,000
CAR-TXpress		42,000		34,000		71,000		147,000
Manual Disposables		8,000		--		--		8,000
Other		6,000		--		6,000		12,000
Total	$	1,673,000	$	444,000	$	77,000	$	2,194,000

	Nine Months Ended September 30, 2023
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
AXP	$	4,245,000	$	184,000	$	--	$	4,429,000
BioArchive		879,000		1,020,000		--		1,899,000
CAR-TXpress		101,000		109,000		213,000		423,000
Manual Disposables		229,000		--		--		229,000
Other		41,000		--		18,000		59,000
Total	$	5,495,000	$	1,313,000	$	231,000	$	7,039,000

	Three Months Ended September 30, 2022
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
AXP	$	1,034,000	$	75,000	$	--	$	1,109,000
BioArchive		201,000		321,000		--		522,000
CAR-TXpress		190,000		44,000		72,000		306,000
Manual Disposables		150,000		--		--		150,000
Other		20,000		--		8,000		28,000
Total	$	1,595,000	$	440,000	$	80,000	$	2,115,000

	Nine Months Ended September 30, 2022
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
AXP	$	4,668,000	$	171,000	$	--	$	4,839,000
BioArchive		694,000		924,000		--		1,618,000
CAR-TXpress		551,000		146,000		214,000		911,000
Manual Disposables		357,000		--		--		357,000
Other		59,000		--		23,000		82,000
Total	$	6,329,000	$	1,241,000	$	237,000	$	7,807,000

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 that were included in the beginning balance of deferred revenue during the three and nine months ended September 30, 2023 were $144,000 and $663,000, respectively. Short-term deferred revenues were $818,000 and $782,000 at September 30, 2023 and December 31, 2022, respectively. Long-term deferred revenues were $680,000 and $911,000 at September 30, 2023 and December 31, 2022, respectively.

Backlog of Remaining Customer Performance Obligations

The following table represents revenue expected to be recognized in the future from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:

	Remainder of 2023		2024		2025		2026		2027 and beyond		Total
Service revenue	$	319,000	$	741,000	$	252,000	$	--	$	--	$	1,312,000
Device revenue ⁽¹⁾		21,000		692,000		--		--		--		713,000
Exclusivity fee		71,000		286,000		286,000		190,000		--		833,000
Other		3,000		13,000		13,000		13,000		97,000		139,000
Total	$	414,000	$	1,732,000	$	551,000	$	203,000	$	97,000	$	2,997,000

(1)

Represents 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 individual revenue was material to the Company’s total revenue, or whose accounts receivable balances were material to the Company’s total accounts receivable balances. Those customers are listed as follows:

Accounts Receivable

	September 30, 2023		December 31, 2022
Customer 1		--		29%
Customer 2		--		27%
Customer 3		--		15%

Revenues

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Customer 1		41%		36%		36%		36%
Customer 2		1%		1%		1%		13%

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, risks associated with expanding into the Company’s new 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 the Company’s Form 10-K for the year ended December 31, 2022.

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.

Our 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 large scale cell manufacturing services. The Company and its subsidiaries currently manufacture and market the following products:

Clinical Bio-Banking Applications:

●

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:

●

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 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 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 cellular 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.

Expansion of Business – Contract Development and Manufacturing Services for Cell and Cell-Based Gene Therapies

The Company expanded its business to include contract development and manufacturing services for cell and cell-based gene therapies. The Company is in the process of building out the capabilities to become a world-class Contract Development and Manufacturing Organization (“CDMO”) for cell and cell-based gene therapies. The Company is rolling out a new facility in the Sacramento metro area, containing a total of 12, class-7, ReadyStart cGMP Suites available for lease by early-stage life science and cell gene therapy companies. The ReadyStart Suites are located in a 35,500+ square foot cGMP facility that will meet the highest scientific, quality, and regulatory requirements. 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 will operate its new CDMO business through a newly formed division named TG Biosynthesis^TM. 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.

The CDMO facility was completed in October of 2023. The successful development and launch of TG Biosynthesis will require us to hire certain personnel needed to operate our leased Sacramento facility. There is no assurance that the Company will be able to achieve market acceptance of the new CDMO business. We will need to hire, train, and retain additional employees who have experience in the cell manufacturing field in order for our CDMO business to be successful.

Results of Operations

Three Months Ended September 30, 2023 as Compared
to the Three Months Ended September 30, 2022

Net Revenues

Net revenues increased by $79,000 or 4%, from $2,115,000 to $2,194,000 for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The increase in revenue was driven by a new distributor in the United Arab Emirates, offset by lower CAR-TXpress sales for the quarter ended September 30, 2023.

The following table summarizes revenue by product line:

	September 30, 2023		September 30, 2022
AXP	$	1,574,000	$	1,109,000
BioArchive		453,000		522,000
CAR-TXpress		147,000		306,000
Manual Disposables		8,000		150,000
Other		12,000		28,000
Total	$	2,194,000	$	2,115,000

Gross Profit

The Company’s gross profit decreased by $42,000 to $395,000 or 18% of net revenues for the three months ended September 30, 2023, compared to $437,000 or 21% for three months ended September 30, 2022. The primary driver of the decrease was lower absorption driven by excess manufacturing capacity in the third quarter of 2023.

Selling, General and Administrative

Sales, general and administrative expenses for the three months ended September 30, 2023 were $1,686,000 compared to $1,982,000 for the three months ended September 30, 2022, a decrease of $296,000 or 15%. The decrease was driven primarily by lower employee benefit expenses of approximately $200,000 and $70,000 in lower investor relations expenses.

Research and Development Expenses

Research and development expenses were $266,000 for the three months ended September 30, 2023 as compared to $470,000 for the three months ended September 30, 2022, a decrease of $204,000 or 43%. The decrease was primarily due to approximately $100,000 less in project expenses and approximately $50,000 in lower personnel expenses during the quarter.

Interest Expense

Interest expense for the three months ended September 30, 2023 was $2,118,000 compared to $1,391,000, for the three months ended September 30, 2022, an increase of $727,000. The increase was driven by an increase of approximately $700,000 in amortization expense related to triggering events from a decrease in the conversion price of the Note in the three months ended September 30, 2023 as compared to the same period in 2022.

Loss on Retirement of Debt

Loss on retirement of debt was $87,000 in the three months ended September 30, 2023 as a result of the July 2023 amendment to the July 2019 Note which extended the due date for six months and lowered the conversion price of the note.

Nine Months Ended September 30, 2023 as Compared to
the Nine Months Ended September 30, 2022

Net Revenues

Net revenues decreased by $768,000 or 10%, from $7,807,000 to $7,039,000 for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease in revenue was driven by lower AXP disposable sales to the Company’s distributor in China and lower CAR-TXpress sales which were offset by BioArchive device revenue and sales to the new distributor in the United Arab Emirates for the nine months ended September 30, 2023.

	Nine Months Ended September 30,
	2023		2022
AXP	$	4,429,000	$	4,839,000
BioArchive		1,899,000		1,618,000
CAR-TXpress		423,000		911,000
Manual Disposables		229,000		357,000
Other		59,000		82,000
Total	$	7,039,000	$	7,807,000

Gross Profit

The Company’s gross profit was $1,969,000 or 28% of net revenues for the nine months ended September 30, 2023, compared to $2,316,000 or 30% of net revenues for the nine months ended September 30, 2022, a decrease of $347,000. The primary driver of the decrease was due to lower absorption driven by excess manufacturing capacity and lower sales in the nine months ended September 30, 2023.

Selling, General and Administrative

Sales, general and administrative expenses for the nine months ended September 30, 2023 were $5,346,000 compared to $5,665,000 for the nine months ended September 30, 2022, a decrease of $319,000 or 6%. The variance was driven primarily by lower employee benefit expenses of approximately $475,000, offset by increased operating expenses for the Company’s CDMO facility of approximately $175,000.

Research and Development Expenses

Research and development expenses were $955,000 for the nine months ended September 30, 2023, compared to $1,317,000 for the nine months ended September 30, 2022, a decrease of $362,000 or 27%. The decrease was driven by lower personnel expenses of approximately $100,000 and lower project expenses of approximately $275,000.

Interest Expense

Interest expense increased to $6,689,000 for the nine months ended September 30, 2023 as compared to $3,572,000 for the nine months ended September 30, 2022, an increase of $3,117,000. The increase was driven by an additional amortization expense of approximately $3,500,000 related to triggering events from a decrease in the conversion price of the Note, offset by $400,000 less in interest expenses to the Note and July 2019 Note in the nine months ended September 30, 2023 as compared to the same period in 2022.

Loss on Retirement of Debt

Loss on retirement of debt was $326,000 in the nine months ended September 30, 2023 as a result of the January and July 2023 amendments to the July 2019 Note which extended the due date for six months and lowered the conversion price of the note.

Liquidity and Capital Resources

The Company had cash and cash equivalents of $4,018,000 and $4,177,000 and working capital deficit of $1,965,000 and $625,000 at September 30, 2023 and December 31, 2022, respectively. We have primarily financed cash shortfalls from operations through private and public placement of equity and debt securities.

On March 15, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) pursuant to which the Company agreed to issue and sell to the Investor in a private placement (the “Offering”) (i) 125,000 shares of its common stock, $0.001 par value (the “Common Shares”), (ii) 946,429 pre-funded warrants to purchase Common Shares at a purchase price of $2.80, and (iii) common stock warrants to purchase up to an aggregate of 1,071,429 Common Shares. The warrants have an exercise price of $2.65 per share and are exercisable immediately upon issuance and expire five and one-half years following the issuance for a total net proceeds of approximately $2.6 million, excluding legal and transaction fees. The Offering closed on March 20, 2023. As of September 30, 2023, all pre-funded warrants were exercised.

On July 31, 2023 the Company entered into an Amendment No. 4 to the July 2019 Note with Orbrex (USA) Co. Limited (the "July 2019 Note Amendment”). The July 2019 Note Amendment amends the July 2019 Note to extend the maturity date of the July 2019 Note from July 31, 2023 to January 31, 2024. The July 2019 Note Amendment also changed the fixed conversion price under the July 2019 Note to $1.07 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 $1.07, then the conversion price will be adjusted to such lower issuance price. As a result of the July 2019 Note Amendment, the conversion price of the Note with Lender was likewise reduced to $1.07 under the down-round conversion price adjustment provisions of such Note.

The Company has incurred historical losses from operations and expects to continue to incur operating losses in the near future. We completed our new CDMO facility in October of 2023 and anticipate increasing cash from operations; however, 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.

We 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 pay timely and therefore on our net revenues, cash flows and financial condition.

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 September 30, 2023. 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 September 30, 2023.

There were no changes in the Company’s internal controls over financial reporting that occurred during the three months ended September 30, 2023 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

In the normal course of operations, we may have disagreements or disputes with distributors, vendors or 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

There have been no material changes to the risk factors relating to the Company set forth in, “Item IA. Risk Factors” of its Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3.

Defaults Upon Senior Securities

None.

ITEM 4.

Mine Safety Disclosure

Not applicable.

ITEM 5.

Other Information

(a)

None.

(b)

None.

(c)

During the three months ended September 30, 2023, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

ITEM 6.

Exhibits

Exhibit No.	Description
1.1	At the Market Offering Agreement, dated December 13, 2019, by and between ThermoGenesis Holdings, Inc. and H.C. Wainwright & Co., LLC, incorporated 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, by and between ThermoGenesis Holdings, Inc. and H.C. Wainwright & Co., LLC, incorporated by reference to Exhibit 1.1 to Form 8-K filed May 20, 2020.
1.3	Amendment No. 2 to At the Market Offering Agreement dated May 19, 2020, by and between ThermoGenesis Holdings, Inc. and H.C. Wainwright & Co., LLC, incorporated by reference to Exhibit 1.3 to Form 8-K filed February 3, 2022.
3.1	Amended and Restated Certificate of Incorporation of ThermoGenesis Holdings, Inc. dated as of June 5, 2020, as amended December 21, 2022., incorporated by reference to Exhibit 3.1 to Form 10-K filed March 30, 2023.
3.2	Amended and Restated Bylaws of ThermoGenesis Holdings, Inc., incorporated by reference to Exhibit 3.2 to Form 8-K filed with the SEC on March 10, 2023.
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	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.
4.3	Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended, incorporated by reference to Exhibit 4.4 to Annual Report on Form 10-K filed on March 30, 2023.
4.4	Form of Common Warrant (Incorporated by reference to Exhibit 10.40 to Amendment No. 3 to Form S-1 filed with the SEC on October 17, 2022).
4.5	Form of Common Warrant, incorporated by reference to Exhibit 4.1 to Form 8-K filed with the SEC on March 21, 2023.
4.6	Form of Pre-Funded Warrant, incorporated by reference to 4.2 to Form 8-K filed with the SEC on March 21, 2023.
4.7	Form of Warrant Amendment Agreement, incorporated by reference to 4.3 to Form 8K filed with the SEC on March 21, 2023.
10.1	Amendment No. 4 to Convertible Promissory Note, dated July 31, 2023, 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 August 3, 2023.
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 (formatted as 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 13, 2023	/s/ Xiaochun (Chris) Xu, Ph.D.
	Xiaochun (Chris) Xu, Ph.D. Chief Executive Officer (Principal Executive Officer)


Dated: November 13, 2023	/s/ Jeffery Cauble
	Jeffery Cauble Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)