ThermoGenesis Holdings, Inc. Annual Report 2019

← All annual reports

FY2019 Annual Report · ThermoGenesis Holdings, Inc.

Loading PDF…

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended: December 31, 2019

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-16375

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
Common Stock, $0.001 par value

Trading Symbol(s)
THMO

Name of each exchange on which registered
Nasdaq Stock Market, LLC

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No
[X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]
No [X]

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 [X]

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files.). Yes [X] 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 definition 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 [X]

Smaller reporting company [X]
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
[X]

As of June 28, 2019, the aggregate market value of the common equity held by non-affiliates of the registrant was approximately
$4,733,000 based on the closing sales price as reported on the NASDAQ Stock Market. As of March 19, 2020, there were 4,561,017
shares of common stock outstanding.

TABLE OF CONTENTS

Part I

ITEM 1. Business ........................................................................................................................ 2
ITEM 1A. Risk Factors ................................................................................................................ 12
ITEM 1B. Unresolved Staff Comments ...................................................................................... 23
ITEM 2.
Properties .................................................................................................................... 23
ITEM 3. Legal Proceedings ...................................................................................................... 23
ITEM 4. Mine Safety Disclosures ............................................................................................. 24

Page Number

Part II

ITEM 5. Market for the Registrant’s Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities ................................................................. 25
Selected Financial Data .............................................................................................. 25

ITEM 6.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and

Results of Operations ........................................................................................... 25
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk .................................... 33
ITEM 8.
Financial Statements and Supplementary Data .......................................................... 33
ITEM 9. Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure ...................................................................................... 78
ITEM 9A. Controls and Procedures ............................................................................................. 78
ITEM 9B. Other Information ....................................................................................................... 78

Part III

ITEM 10. Directors, Executive Officers and Corporate Governance ......................................... 79
ITEM 11. Executive Compensation ............................................................................................ 79
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters ................................................................................................... 79
ITEM 13. Certain Relationships and Related Transactions, and Director Independence ........... 79
ITEM 14. Principal Accounting Fees and Services .................................................................... 79

Part IV

ITEM 15. Exhibits and Financial Statement Schedules .............................................................. 80
ITEM 16. Form 10-K Summary .................................................................................................. 80

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

This Annual Report contains forward-looking statements within the meaning of the “safe harbor” provisions
of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical
fact included in this Annual Report, are forward-looking statements. Reference is made in particular to the
description of our plans and objectives for future operations, assumptions underlying such plans and
objectives, and other forward-looking statements included in this Annual Report. Such statements may be
identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,”
“estimate,” “anticipate,” “intend,” “continue,” “plan,” “predict,” “seek,” “should,” “would,” “could,”
“potential,” “ongoing,” or similar terms, variations of such terms, or the negative of such terms, and include,
but are not limited to, statements regarding projected results of operations, capital expenditures, earnings,
management’s future strategic plans, development of new technologies and services, litigation, regulatory
matters, market acceptance and performance of our services, the success and effectiveness of our
technologies and services, our ability to retain and hire key personnel, the competitive nature of and
anticipated growth in our markets, market position of our services, marketing efforts and partnerships,
liquidity and capital resources, our accounting estimates, and our assumptions and judgments. Such
statements are based on management’s current expectations, estimates and projections about our industry,
management’s beliefs, and certain assumptions made by us, all of which are subject to change.

These forward looking statements are not guarantees of future results and are subject to a number of risks,
uncertainties and assumptions that are difficult to predict and that could cause actual results to differ
materially and adversely from those described in the forward-looking statements, including:

•

the sufficiency and source of capital required to fund our operations and in furtherance of our
business plan;

• our ability to remain listed on NASDAQ and remain in compliance with its listing standards;
•

the global perception of the clinical utility of banked cord blood and the amount of investment in
research and development supporting clinical data for additional applications;

the success of any collaborative arrangements to commercialize our products;

• delays in commencing or completing clinical testing of products;
•
• our reliance on significant distributors or end users;
•

the availability and sufficiency of commercial scale manufacturing facilities and reliance on third
party contract manufacturers;

• our ability to protect our patents and trademarks in the U.S. and other countries; and
• uncertainty regarding the impact of the COVID-19 pandemic on our business and operations.

These forward-looking statements speak only as of the date of this Annual Report and we expressly disclaim
any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the expectations with regard thereto or any change in events,
conditions, or circumstances on which any such statement is based, except as otherwise required by law.
Additional factors that could cause such results to differ materially from those described in the
forward-looking statements are set forth in connection with the forward-looking statements.

TRADEMARKS

This Annual Report contains references to our trademarks and to trademarks belonging to other entities.
Solely for convenience, trademarks and trade names referred to in this Annual Report, including logos,
artwork and other visual displays, may appear without the ® or TM symbols, but such references are not
intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under
applicable law, their rights thereto. We do not intend our use or display of other companies’ trade names or
trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

ITEM 1. BUSINESS

PART I

ThermoGenesis Holdings, Inc. (“ThermoGenesis Holdings”, the “Company”, “our”, or “we”), formerly
known as Cesca Therapeutics Inc.is a pioneer and market leader in the development and commercialization
of automated cell processing technologies for the cell and gene therapy field. The company markets a full
suite of solutions for automated clinical biobanking, point-of-care applications, and large-scale cell
processing and manufacturing for the emerging CAR-T immunotherapy market. Since the 1990’s
ThermoGenesis Holdings has been 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 incorporated in 1986 and is registered in the State of Delaware and headquartered in
Rancho Cordova, CA.

ThermoGenesis Holdings has two separately reported business segments: A “Device Segment” and a
“Clinical Development Segment.” The Device Segment develops and commercializes automated systems
that are used for, clinical grade cell-banking, point-of-care applications, and large-scale cell processing.
The Clinical Development Segment is developing autologous (utilizing the patient’s own cells) cell-based
therapeutics that address significant unmet medical needs for the vascular, cardiology and orthopedic
markets.

Recent Corporate Name Change

On November 1, 2019, Cesca Therapeutics Inc. changed its corporate name to ThermoGenesis Holdings,
Inc. in order to better reflect its new strategic focus on becoming a key solution provider for cell
manufacturing tools and services in the cell and gene therapy markets. In conjunction with the name
change, the Company began trading under the new Nasdaq ticker symbol, THMO. In addition, the Company
changed its CUSIP number to 88362L100.

Our Business Strategy

Our business strategy is to leverage our over 30 years of expertise, our strong intellectual property portfolio
and significant know-how in the development and commercialization of automated cell processing
technologies for the cell and gene therapy field. The company markets a full suite of solutions for automated
clinical biobanking, point-of-care applications, and large scale cell processing and manufacturing for the
emerging CAR-T immunotherapy market.

Clinical Bio-Banking
ThermoGenesis is a market leader in the development and commercialization of automated technologies
for cell-based therapeutics and bioprocessing. With over 300 BioArchive Systems and 500 AXP® Systems
sold, we continue to be the critical supplier of devices and disposables used in the processing of cord blood
samples for the largest and most prestigious cord blood banks worldwide. Our Systems are used in 37
countries and greater than 1,000,000 cord blood units have been processed using our technology to date.

Clinical Bio-Banking Applications:

• AXP® System – The innovative AXP System defines a new processing standard for isolating and
retrieving over 97% of the stem and progenitor cells from collections of umbilical cord blood in an
automated, fully closed, sterile system in 30 minutes. AXP is self-powered, microprocessor-
controlled, and contains flow control optical sensors to achieve precise separation.

• BioArchive® Cryopreservation System – The BioArchive Cryopreservation System is the
industry’s leading, fully automated, robotic, liquid nitrogen controlled-rate-freezing (“CRF”) and
cryogenic storage system for stem cell samples and clinical products. Using proven, computer-
controlled technology, it provides the ultimate performance and protection for today’s invaluable
cord blood samples and future cell therapeutic products. BioArchive is the preferred system for the
highest quality cord blood banks worldwide. A complete technical Master-File has been provided
to the U.S. Food and Drug Administration (“FDA”) to support those highest quality cord blood
banks which have been able to qualify for, and obtain, a Biological License from the FDA to allow
their cord blood units to be used to treat patients with blood cancers.

Point-of-Care Application
The PXP® System is our point-of-care device utilizing technology for processing bone marrow concentrate
and is highly innovative pairing both speed and performance.

PXP® System – The PXP System is an automated, closed system that harvests a precise volume of cell
concentrate from bone marrow aspirates. PXP can generate a concentration of bone marrow in less than 20
minutes, with consistently high MNC and CD34+ stem cell progenitor recovery rates and greater than 98%
depletion of contaminating red blood cells (“RBCs”). Processing data is captured using our proprietary
DataTrak™ software to assist with Good Manufacturing Practice (“GMP”) process monitoring and
reporting information.

CAR-TXpress Platform (Large Scale Cell Processing)

With revolutionary cell-based therapies, such as CAR-T (chimeric antigen receptor T-cell) for cancer
becoming a reality, developers must address a key challenge: how to manufacture high-quality, clinical-
grade cell therapies at commercial scale to provide these groundbreaking treatments to as many patients
as possible. Traditional cell processing methodologies are manual and time consuming, presenting an
obstacle to large-scale manufactures of adoptive cell therapies.

In contrast, ThermoGenesis Holdings is keeping up with the fast-past field by developing the CAR-
TXpress™ Platform designed to automate many of the manual steps involved in cell processing. The CAR-
TXpress Platform is a multi-system package that provides a stream-lined solution for cell processing,
selection, washing, and cryopreservation. The CAR-TXpress Platform can provide a comprehensive and
commercially viable, semi-automated cellular manufacturing and control (“CMC”) solution for the
development of CAR-T therapeutics.

CAR-TXpress eliminates the use of density gradient media for isolation and replaces magnetic bead-based
systems used for selection procedures, thereby dramatically reducing processing time and increasing cell
recoveries, in order to significantly reduce the overall manufacturing time and cost and increase the
yield/efficiency of high value samples.

CAR-TXpress Processing Applications

(“MAF”) with the FDA for the X-Lab. The MAF contains all the relevant information that the
FDA will need to allow principal investigators to include ThermoGenesis Holdings’ systems in
their investigational new drug applications.

• X-Wash® System for Washing and Reformulation – a semi-automated, functionally-closed
system that separates, washes, and volume-reduces units of fresh or thawed units of blood, bone
marrow, leukapheresis or cell cultures and presents these washed cells in a predetermined small
volume. The Company has filed a MAF with the FDA for the X-Wash. The MAF contains all the
relevant information that the FDA will need to allow principal investigators to include
ThermoGenesis Holdings’ systems in their investigational new drug applications.

• X-BACS™ System for Cell Purification – a semi-automated, functionally-closed system employs
a microbubble/antibody reagent to isolate target cells by buoyancy-activated cell sorting (“BACS”).
These microbubble/antibody reagents bind to user-selected target cells to increase their buoyancy
and provide a complete separation from non-target cells during centrifugation, allowing the harvest
of a highly purified population of target cells, with high recovery efficiency and cell viability.

• BioArchive® for Cryogenic Cellular Product Storage – an automated, controlled-rate-freezing,
liquid nitrogen freezer intended for the cryopreservation and single-cassette based storage of
clinical samples. The BioArchive® provides customers who need to store therapeutic cell
populations in cryogenic storage (-196°C) with a solution that combines the individualized
controlled rate freezing of each sample, robotic storage and retrieval of each sample and real-time
chain of custody management.

Cell Manufacturing Services

Through our TotipotentRX subsidiary in Gurgaon, India, we operate an advanced clinical cell
manufacturing, processing, testing, and storage facility, compliant with current GMP, Good Tissue
Practices (“GTP”), and Good Laboratory Practices (“GLP”). We can support the production of a small,
personalized medicine cell prescription or a large-scale batch process. Patient samples, batch samples, and
therapeutic aliquots are all labeled in accordance with ISBT 128 and stored in our own cryogenics’ facility.
In partnership with Fortis Healthcare we also operate commercial service programs supporting bone
marrow transplantation (hematopoietic stem cell transplantation) for hematological and oncological
disorders.

Recent Key Events and Accomplishments

•

ImmuneCyte Joint Venture formed with Healthbanks Biotech (USA) Inc. In October 2019, the
Company entered into a Joint Venture Agreement with Healthbanks Biotech (USA) Inc., a stem
cell bank network (Healthbanks), under which the Company and Healthbanks agreed to form a new
company named ImmuneCyte Life Sciences Inc. (“ImmuneCyte”). The joint venture will
commercialize ThermoGenesis’ proprietary cell processing platform, CAR-TXpress™, for use in
immune cell banking as well as for cell-based contract development and manufacturing services
(CMO/CDMO).

• X-Series Supply Agreement. In August 2019, the Company entered into a Supply Agreement with
Corning Incorporated (“Corning”) in which the Company will distribute its X-Series® cell
processing products to Corning who will market them globally. The X-Series products are major
components of the Company’s CAR-TXpress™ platform, a semi-automated, closed cellular
processing platform used for high efficiency cell purification and cell washing. The X-Series
products, when used in combination with the Company’s proprietary buoyancy activated cell
sorting (“BACS”) technology, can be applied for both research and commercial manufacturing of

a large variety of cell-based therapeutics, including chimeric antigen receptor-T (“CAR-T”) cells.
Under the renewable, five-year agreement, the global distributor will be responsible for marketing
the X-Series products to customers, worldwide, with the exception of China for the first two years.
As per the terms of the agreement, the Company received a $2 million upfront exclusivity fee,
which was paid by the distributor in October 2019.

• Next Generation PXP® - 1000 System. In December 2019, the Company completed the
development process and submitted a Letter to the Design History File and updated the device
listing with the FDA for the PXP®-1000 System. The PXP-1000 is the next generation of
ThermoGenesis’ automated systems and allows fast, automated and reproducible separation of
cellular components from blood in a closed and sterile GMP compliant environment.

• Changed Name and Nasdaq Ticker Symbol. Effective November 1, 2019, the Company changed
its name to ThermoGenesis Holdings, Inc. in order to better reflect its new strategic focus on
becoming a key solution provider for cell manufacturing tools and services in the cell and gene
therapy markets. In conjunction with the name change, the Company began trading under the new
Nasdaq ticker symbol, THMO. In addition, the Company changed its CUSIP number to
88362L100.

• Reverse Stock Split. In June 2019, to be compliant with the Nasdaq Listing Compliance
requirement, the Company effected a one-for-ten reverse stock split of the Company’s common
stock, par value $0.001 per share.

• Launched the AXP II System for Advanced Cord Blood Processing. We completed the commercial
launch of the AXP II system for the advanced, isolation, collection and storage of hematopoietic
stem cell concentrates from cord blood and peripheral blood. AXP II introduced important
enhancements to the AXP device, docking station, and proprietary XpressTRAK® software that
together represent a significant advancement in automated cord blood processing. America’s
largest cord blood bank, CBR® updated to AXP II system.

• Enhanced X-Mini® Release. In April 2019, the Company enhanced its X-Mini CD3 Selection Kit
for the research market. The new X-Mini CD3 Selection Kit provides distinct advantages,
expanding on the ability of the original X-Mini kit to select the CD3+ target cells from prepared
mononuclear cell samples or from a sample of whole blood. Also included in the release of the new
kit is the X-Mini Pressor accessory, used in conjunction with the X-Mini selection kits to eliminate
the X-BACS™ reagent’s buoyancy during the final processing steps.

Sales and Distribution Channels

We market and sell our products through independent distributors, except in North America and India,
where we sell direct to end-user customers.

Research and Development

Our research and development activities for 2019 were geared towards expanding the automated platform
for the immune-oncology applications while maintaining our bio-banking and point-of-care automation
solutions. In 2019, the Company released the enhanced X-Mini CD-3 Selection Kit for the research market
and developed an enhanced PXP-1000 system. We also improved our AXP®, and BioArchive® platforms
with a focus on both performance improvements and ease of use. Emphasis was also placed on enhancing
the capabilities of our contract manufacturing partners and building on our product quality leadership
position.

Collectively, research and development expenses were $2,396,000 and $3,012,000 for the years ended
December 31, 2019 and 2018, respectively. Research and development activities include expenses
associated with the engineering, regulatory, scientific and clinical affairs functions.

Manufacturing and Raw Materials

We source components for our products from multiple suppliers that manufacture to our engineering
specifications. Our high-volume disposable products are manufactured using contract manufacturers. AXP
disposable bagsets are manufactured by Viant Medical and our manual processing bagsets are manufactured
by Pall Medical Corporation. We utilize our manufacturing facility in Rancho Cordova, California for
production of our low volume, high complexity devices. Additionally, in 2019, the Company completed
the construction and qualification of an in-house clean room for the assembly of the X-Series disposable
cartridges. We used this facility for the manufacturing of all disposable cartridges in 2019. Various raw
materials are used to manufacture our products. The raw materials are generally available from multiple
sources. We have not had significant difficulty in obtaining necessary raw materials.

Quality System

Our quality system is compliant with domestic and international standards and is appropriate for the specific
devices we manufacture. Our corporate quality policies govern the methods used in, and the facilities and
controls used for, the design, manufacture, packaging, labeling, storage, installation, and servicing of all
finished devices intended for human use. Such policies are intended to ensure that the products we market
are safe, effective, and otherwise in compliance with the FDA Quality System Regulation (“QSR”) (21
C.F.R. Part 820) and the applicable rules of other governmental agencies.

We and our contract manufacturers are subject to inspections by the FDA and other regulatory agencies to
ensure compliance with applicable regulations, codified in the FDA’s Quality System Regulations
(“QSRs”). Compliance requirements relate to manufacturing processes, product testing, documentation
control and other quality assurance procedures. Our facilities have undergone International Organization of
Standards (“ISO”) 13485:2016 and EU Medical Device Directive (“MDD”) (93/42/EEC) inspections and
we have obtained approval to CE-Mark our products. We have received our updated certificate
demonstrating compliance to this standard under the Medical Device Single Audit Program (“MDSAP”).

Regulatory Scheme and Strategy

The development, manufacture and marketing of our cell therapy products, as well as the design and
implementation of our clinical trials, are subject to regulation by the FDA as well as the equivalent agencies
of other countries including the countries of the European Union and India.

The trials we conduct in India are compliant with the applicable rules of the Indian Council for Medical
Research, Ministry of Health Order No. V.25011/375/2010-HR and requisite institutional ethics committee
(“IEC”) and institutional committee for stem cell research and therapy (“IC-SCRT”) approvals. Both the

U.S. and E.U. regulatory agencies are experienced in dealing with and accepting Indian clinical trial data.
Good Clinical Practice (“GCP”) guidelines necessitates review and approval by an Institutional Review
Board (“IRB”) before initiation of a study, continuing review of an ongoing study by an IRB, and the
documented receipt of a freely given informed consent prior to participation in the study from each subject
participant.

We have a quality and regulatory compliance management system that meets the requirements of the ISO
13485: 2003 standard, the FDA’s QSRs, the EU MDD, Canadian Medical Device Regulations (SOR 98-
282), and all other applicable local, state, national and international regulations.

Medical Devices. The FDA regulates medical devices to ensure their safety and efficacy under the Federal
Food Drug and Cosmetic Act (“FD&C”). Medical devices are defined by language within the FD&C Act
which essentially states that a product is considered a medical device if it is intended to provide a diagnosis
or basis for treatment. Once a company determines that its product is a medical device, it is required to
comply with a number of federal regulations. These include the following:

• 510(k) clearance or Premarket Approval Application (“PMA”) approval from the FDA, prior to

commercialization (unless the device is classified as “exempt”);

• Registration of the company and listing of the medical device with the FDA (within 30 days prior

to commercialization);

• Establishment and adherence to the FDA’s labeling requirements; and
• Establishment and adherence to the FDA’s Quality Systems and Medical Device Reporting

regulations.

The FDA classifies medical devices into three groups: Class I, II or III. These are stratified from lowest to
highest safety risk, and regulatory controls increase based on Class.

Class I Devices
Some of our products are considered to pose little or no risk when used as directed and have been deemed
by the FDA to be “exempt” from FDA approval or clearance processes prior to commercialization. While
pre-marketing FDA review is not mandatory for Exempt Class I medical devices, the manufacturer’s
compliance with QSR is nevertheless a requirement.

Class II Devices
Several of our products, including the BioArchive and the AXP are categorized as U.S. Class II medical
devices and require premarket notification, also known as a section 510(k) clearance, prior to
commercialization. Data submitted as part of a 510(k) process must demonstrate a device is “substantially
equivalent” with a predicate device that is already on the market. Once 510(k) clearance has been secured,
the new medical device may be marketed for its intended use and distributed in the U.S.

Class III Devices
If a product is considered a Class III device, the FDA approval process is more stringent and time-
consuming, and includes the following:

• Extensive pre-clinical laboratory and animal testing;
• Submission and approval of an Investigational Device Exemption (“IDE”) application prior to the

conduct of a clinical study;

• Human clinical studies (or trials) to establish the safety and efficacy of the medical device for the

intended use; and

• Submission and approval of a PMA application to the FDA.

Pre-clinical testing typically involves in vitro laboratory analysis and in vivo animal studies to obtain
information related to such things as product safety, feasibility, biological activity and reproducibility. The
results of pre-clinical studies are submitted to the FDA as part of an IDE application and are reviewed by
the Agency before human clinical trials can begin.

Higher risk clinical trials conducted inside the U.S. are subject to FDA IDE regulation (21 C.F.R. Part 812),
or an Investigational New Drug (“IND”) application (21 C.F.R. Part 312). Clinical trials conducted outside
the U.S., and the data collected therefrom are allowed in accordance with applicable FDA requirements.
The FDA or the sponsor may suspend a clinical trial at any time if either believes that study participants
may be exposed to an unacceptable health risk.

For certain Class III devices, data generated during product development, pre-clinical studies, and human
clinical studies must be submitted to the FDA as a PMA application in order to secure approval for
commercialization in the U.S. The FDA may deny the approval of a PMA application if applicable
regulatory criteria are not satisfied and, in some cases, may mandate additional clinical testing. Product
approvals, once obtained, can be withdrawn if compliance with regulatory standards is not maintained or if
safety concerns arise after the product reaches the market. The FDA might also require post-marketing
testing and surveillance programs to monitor the safety and efficacy of a medical device and has the power
to forbid or limit future marketing of the product based on the results of such programs.

Other U.S. Regulatory Information
Medical device manufacturers must register with the FDA and submit their manufacturing facilities to
biennial inspections to ensure compliance with applicable regulations. Failure to comply with FDA
requirements can result in withdrawal of marketing clearances, fines, injunctions, civil penalties, recall or
seizure of products, total or partial suspension of production or loss of distribution rights. In addition, device
manufacturing facilities in the state of California must be registered with the California State Food and
Drug Branch of the California Department of Public Health and submit to an annual inspection by the State
of California to ensure compliance with applicable state regulations. We are also subject to a variety of
environmental laws as well as workplace safety, hazardous material, and controlled substances regulations.

Also, federal transparency requirements, sometimes referred to as the “Sunshine Act” under the Patient
Protection and Affordable Care Act, require manufacturers of drugs, devices, biologics and medical
supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to

report to the Department of Health and Human Services information related to physician payments and
other transfers of value and physician ownership and investment interests.

Changes in these laws at all levels of government are frequent and could increase our cost of doing business.
If we fail to comply, even inadvertently, with any of these requirements, we could be required to alter our
operations, refund payments to the government, lose our licensure or accreditation, enter into corporate
integrity, deferred prosecution or similar agreements with state or federal government agencies, and become
subject to significant civil and criminal penalties.

International Regulatory Requirements
International regulatory requirements differ somewhat from those of the U.S. In the EU, a single regulatory
approval process has been created and approval is represented by CE-Marking. To be able to affix the CE-
Mark to our medical devices and distribute them in the EU, we must meet minimum standards for safety
and quality (known as the essential requirements) and comply with one or more conformity rules. A notified
body assesses our quality management system and compliance with the Medical Device Directive.
Marketing authorization can be revoked by the applicable governmental agency or notified body in the
event of an unsuccessful quality system annual audit.

In India, the regulatory body having oversight of medical devices, therapies, and cell banking is the Central
Drugs Standard Control Organization (“CDSCO”), and specifically the Drugs Controller General India
office. Our marketing and facilities licenses are subject to revocation by the applicable state Drug Controller
in Haryana or DCGI.

Patents and Proprietary Rights

We believe that patent protection is important for our products and current and proposed business. We
currently have over 30 issued patents globally. The patent positions can be uncertain because they involve
interpretation of complex factual information and an evolving legal environment. The coverage sought in
a patent application can be denied or significantly reduced either before or after the patent is issued. There
can be no assurance that any of our pending patent applications will actually result in an issued patent.
Furthermore, there can be no assurance that any existing or future patent will provide significant protection
or commercial advantage, or that any existing or future patent will not be circumvented by a more basic
patent. Generally, patent applications can be maintained in secrecy for at least 18 months after their earliest
priority date. In addition, publication of discoveries in the scientific or patent literature often lags behind
actual discoveries. Therefore, we cannot be certain that we were the first to invent or the first to file a patent
application for the subject matter covered by each of our pending U.S. and foreign patent applications.

If a third-party files a patent application relating to an invention claimed in our patent application, we may
be required to participate in an interference or derivation proceeding conducted by the U.S. Patent and
Trademark Office to determine who owns the patent. Such proceeding could involve substantial
uncertainties and cost, even if the eventual outcome is favorable to us. There can be no assurance that our
patents, if issued, would be upheld as valid in court.

Agreements

The following are certain material agreements involving our business in effect as of December 31, 2019:

(CMO/CDMO). Under the terms of the JV Agreement, ImmuneCyte will initially be owned 80% by
HealthBanks Biotech and 20% by ThermoGenesis. ImmuneCyte will be among the first immune cell banks
in the U.S. and offer customers the ability to preserve younger, healthier and uncontaminated immune cells
for future potential use in dendritic and chimeric antigen receptor (“CAR-T”) cell therapies, in a GMP
compliant processing environment. The Company’s principal contribution to ImmuneCyte will be a supply
agreement under which ImmuneCyte will have the exclusive right to purchase the Company’s proprietary
cell processing equipment in the immune cell banking business and a non-exclusive right to purchase it for
other cell-based contract development and manufacturing (“CMO/CDMO”) services at a price equal to
115% of the Company’s cost. The Company will also contribute to ImmuneCyte intellectual property and
trademarks relating to the Company’s clinical development assets as a result of the Company’s decision to
discontinue its clinical development program. Healthbanks contributed to ImmuneCyte a paid-up, royalty
free license to use its proprietary business management system, customer relationship management
software, and laboratory information statement, and it will also make available a $1,000,000 unsecured,
non-convertible line of credit to ImmuneCyte to provide initial operating capital. Healthbanks is a
subsidiary of Boyalife Group, Inc. (USA), the owner of Boyalife Asset Holding II, Inc., which is the largest
stockholder of the Company, and is owned by Dr. Xiaochun (Chris) Xu, the Company’s Chief Executive
Officer and Chairman of our Board of Directors.

Corning Incorporated
On August 30, 2019, the Company entered into a Supply Agreement with Corning (the “Supply
Agreement”). The Supply Agreement has an initial term of five years with automatic two-year renewal
terms, unless terminated by either party in accordance with the terms of the Supply Agreement (collectively,
the “Term”). Pursuant to the Supply Agreement, the Company has granted to Corning exclusive worldwide
distribution rights for substantially all X-Series® products under the CAR-TXpress™ platform (the
“Products”) manufactured by its subsidiary, ThermoGenesis Corp., for the duration of the Term, subject to
certain geographical and other exceptions. In addition, the Company has granted Corning rights of first
refusal for the exclusive worldwide distribution of certain future products developed or introduced by the
Company relating to cell isolation or cell selection, including any such products substantially related or
similar to the Products (the “ROFR Products”). As consideration for the exclusive worldwide distribution
rights for the Products and ROFR Products, Corning has agreed to pay a $2,000,000 fee, in addition to any
amounts payable throughout the Term for the Products and any ROFR Products. The Supply Agreement
also contains an option, exercisable by Corning at any time following January 1, 2021, to become the
manufacturer for all or any portion of the Products.

IncoCell Tianjin Ltd
On March 12, 2018, ThermoGenesis Corp. entered into a License Agreement (the “IncoCell Agreement”)
with IncoCell Tianjin Ltd., a wholly-owned subsidiary of Boyalife Group (“IncoCell”). Boyalife Group is
an affiliate of the Company’s Chief Executive Officer and Chairman of our Board of Directors, and Boyalife
(Hong Kong) Limited. Under the terms of the IncoCell Agreement, ThermoGenesis Corp. granted IncoCell
an exclusive license to use the ThermoGenesis Corp. X-Series® products in the conduct of IncoCell’s
contract manufacturing and development operations in the People’s Republic of China, Japan, South Korea,
Taiwan, Hong Kong, Macau, Singapore, Malaysia, Indonesia and India (the “IncoCell Territories”).

Pursuant to the terms of the IncoCell Agreement, ThermoGenesis Corp. granted IncoCell an exclusive
license to purchase and use, at a discounted purchase price, X-Series cellular processing research devices,
consumables, and kits for use in the conduct of contract manufacturing and development services in the
IncoCell Territories. In exchange, ThermoGenesis Corp. is entitled to a percentage of IncoCell’s gross
contract development revenues, including any potential upfront payments, future milestones or royalty
payments, during the term of the IncoCell Agreement. The term of the Agreement is ten years, provided
that either party may terminate the Agreement earlier upon ninety (90) days’ prior notice to the other party.
The Company recorded revenue of $83,000 related to product sales under this agreement for the year ended
December 31, 2019, and $14,000 for the year ended December 31, 2018. The Company recorded no

revenue under the contract development portion of the Agreement for the years ended December 31, 2019
and 2018.

CBR Systems, Inc. (“CBR”)
Effective May 15, 2017 we entered into a Manufacturing and Supply Agreement with CBR which replaced
the prior December 31, 2013 Sale and Purchase Agreement in which we agreed to supply CBR with the
AXP cord blood processing system and disposables. The term of the Manufacturing and supply Agreement
is for three years and will automatically renew in one-year increments unless either party provides written
notice of its intention not to renew six months prior to the end of the term.

In June 2010, we entered into a License and Escrow Agreement in order to alleviate CBR’s concerns about
potential long-term supply risk. We are the sole supplier of critical devices and disposables used in the
processing of cord blood samples in CBR’s operations. Under the License and Escrow Agreement, we
granted CBR a perpetual, non-exclusive, royalty-free license to certain intellectual property necessary for
the manufacture of AXP® devices and disposables. The license is for the sole and limited purpose of
ensuring continued supply of the AXP and related disposables for use by CBR. The licensed intellectual
property is held in escrow and available to CBR only in the event of a default under the License and Escrow
Agreement. Effective May 15, 2017 we entered into a Sixth Amended and Restated Technology License
and Escrow Agreement with CBR. This amendment, among other things, changes the circumstances that
constitute a “Default” thereunder and conditions the circumstances under which CBR may, upon a default
by the Company, purchase licensed products directly from the Company’s manufacturers and suppliers.
The events or conditions of default include: a cash balance coupled with short-term investments net of debt
or borrowed funds that are payable within one year of less than $2,000,000 (amended to $1,000,000 in
March 2020) at any month end or we fail to provide products pursuant to the Manufacturing and Supply
Agreement. We were in compliance with the License and Escrow Agreement at December 31, 2019.

Boyalife W.S.N.
On August 21, 2017, our subsidiary, ThermoGenesis Corp. entered into an International Distributor
Agreement with Boyalife W.S.N., a Chinese corporation and affiliate of the Company. Under the terms of
the agreement, Boyalife W.S.N. was granted the exclusive right, subject to existing distributors and
customers (if any), to develop, sell to, and service a customer base for ThermoGenesis Corp. AXP
(AutoXpress®) System and BioArchive System in the People’s Republic of China (excluding Hong Kong
and Taiwan), Singapore, Indonesia, and the Philippines (the “Territories”). The agreement replaced our
prior distribution agreement with Golden Meditech, which expired in August 2017 and had granted similar
exclusive distribution rights in the Territories. Boyalife W.S.N. is an affiliate of Dr. Xiaochun Xu, our Chief
Executive Officer and Chairman of our Board of Directors, and Boyalife (Hong Kong) Limited, our largest
stockholder. Boyalife W.S.N,’s rights under the agreement include the exclusive right to distribute AXP
Disposable Blood Processing Sets and use rights to the AutoXpress System, BioArchive System and other
accessories used for the processing of stem cells from cord blood in the Territories. Boyalife W.S.N. is also
appointed as the exclusive service provider to provide repairs and preventative maintenance to
ThermoGenesis Corp. products in the Territories. The term of the agreement is for three years with
ThermoGenesis Corp. having the right to renew the agreement for successive two-year periods at its option.

Employees

As of December 31, 2019, we and our subsidiaries had 50 employees, 45 of whom were employed in the
U.S. and 5 of whom were employed in India. We also utilize temporary employees throughout the year to
address business needs and significant fluctuations in orders and product manufacturing. None of our
employees are covered by a collective bargaining agreement, nor have we experienced any work stoppage.

Foreign Sales and Operations

See Note 12 of our Notes to Consolidated Financial Statements for information on our sales and operations
outside of the U.S.

Where you can Find More Information

We are required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and other information, including our proxy statement, with the Securities and Exchange
Commission (“SEC”). The public can obtain copies of these materials by accessing the SEC’s website at
http://www.sec.gov. In addition, as soon as reasonably practicable after these materials are filed with or
furnished to the SEC, we will make copies available to the public free of charge through our website,
http://www.thermogenesis.com. The information on our website is not incorporated into, and is not part of,
this Annual Report on Form 10-K or our other filings with the SEC.

ITEM 1A. RISK FACTORS

An investment in our common stock is subject to risks inherent to our business. The material risks and
uncertainties that management believes affect us are described below. Before making an investment
decision, you should carefully consider the risks and uncertainties described below together with all of the
other information included or incorporated by reference in this Annual Report. The risks and uncertainties
described below are not the only ones we face. Additional risks and uncertainties that we are not aware of
or focused on or that we currently deem immaterial may also impair our business operations. This Annual
Report is qualified in its entirety by these risk factors.

If any of the following risks actually occur, our financial condition and results of operations could be
materially and adversely affected. If this were to happen, the value of our common stock could decline
significantly, and you could lose all or part of your investment.

Risks Related to Our Structure and Business
A third party owns 20% of our subsidiary, CARTXpress Bio, Inc. (CARTXpress Bio), and holds certain
minority investor rights therein. These rights could limit or delay our ability to take certain major actions
relating to CARTXpress Bio. In January 2019, ThermoGenesis Corp. contributed its X-Series business into
a newly formed subsidiary of ThermoGenesis Corp., CARTXpress Bio. Pursuant to the terms of a
reorganization and share exchange agreement, ThermoGenesis Holdings acquired a 20% equity ownership
in ThermoGenesis Corp. from Bay City Capital Fund V, L.P. and certain of its affiliates (“Bay City”). In
exchange, Bay City acquired a 20% ownership in CARTXpress Bio. As a result of these transactions,
ThermoGenesis Corp. became a wholly-owned subsidiary of ThermoGenesis Holdings, and
ThermoGenesis Corp. owns 80% of the outstanding equity of CARTXpress Bio, while Bay City owns the
remaining 20% of the outstanding equity of CARTXpress Bio. While we continue to indirectly own 80%
of the outstanding capital stock of CARTXpress Bio, Bay City was granted certain minority investor rights
in CARTXpress Bio. These rights include board representation rights, a right of first refusal over sales of
CARTXpress Bio. stock by us, co-sale rights with respect to any sale of CARTXpress Bio stock by us,
certain piggyback and Form S-3 registration rights in the event that CARTXpress Bio becomes a publicly
traded company at any time in the future and other rights as detailed in the Investors’ Rights Agreement. In
addition, the board of directors of CARTXpress Bio is comprised of three persons, two of whom are
designated by us and one of whom is designated by Bay City. The foregoing minority investor rights in
CARTXpress Bio could limit or delay our ability or flexibility to take certain major actions or make major
decisions relating to CARTXpress Bio that might be beneficial to our stockholders, unless such actions or
decisions have the consent or support of Bay City. Accordingly, the minority investor rights in
CARTXpress Bio could have a negative impact on the market price of our common stock.

Our largest stockholder has significant influence over us which could limit your ability to influence the
outcome of key transactions, including a change of control, and could negatively impact the market price
of our common stock by discouraging third party investors. As of December 31, 2019, approximately 24%
of our outstanding common stock is owned by Boyalife Asset Holding II, Inc (“Boyalife”). In addition,
pursuant to the terms of the Amended Nomination Agreement we entered into with Boyalife in April 2018,
Boyalife has the right to designate a number of members of our board of directors that is in proportion to
the “Boyalife Ownership Percentage”, which is Boyalife and its affiliates’ combined percentage ownership
of outstanding common stock, treating as outstanding any shares of common stock underlying convertible
securities that are immediately exercisable by Boyalife and its affiliates’ (including under the debt facility)
without any further payment. The Amended Nomination Agreement will terminate according to its terms
when and if the Boyalife Ownership Percentage falls below 20%.

Boyalife is 100% owned by Dr. Xiaochun Xu, our Chief Executive Officer and Chairman of our Board of
Directors. As a result of their ownership and ability to designate members of our Board of Directors,
Boyalife (including Dr. Xu) is able to exercise significant influence over all matters affecting us, including
the election of directors, formation and execution of business strategy and approval of mergers, acquisitions
and other significant corporate transactions, which may have an adverse effect on our stock price and ability
to execute our strategic initiatives. Boyalife and/or Dr. Xu may have conflicts of interest and interests that
are not aligned with those of other investors in all respects. As a result of the concentrated ownership of
our common stock, Dr. Xu may be able to control matters requiring stockholder approval, including the
election of directors, the adoption of amendments to our certificate of incorporation and bylaws, and
approval of a sale of our Company, and other significant corporate transactions. This concentration of
ownership may delay or prevent a change in control and may have a negative impact on the market price
of our common stock by discouraging third party investors from investing or making tender offers for our
shares.

In addition, Boyalife is a material creditor of our company. We are a party to a revolving debt facility with
Boyalife which has a maximum borrowing availability of $10,000,000 and an outstanding balance as of
December 31, 2019 of $8,713,000 in principal and $1,869,000 in accrued interest. In February 2020,
Boyalife converted $3.0 million of the outstanding balance of the convertible note into an aggregate of 1.67
million shares of our common stock. The debt facility matures on March 6, 2022, with accrued interest
due annually on the last day of each calendar year. Because this debt facility is secured by all of our shares
in our ThermoGenesis Corp. subsidiary, an event of default under the debt facility would have a material
adverse impact on our interest in ThermoGenesis Corp. if the lender under the debt facility elected to
foreclose on such security interest.

We utilize debt financing from outside the U.S. and an inability to obtain funds when requested could
adversely impact operations. We use debt financing for working capital and other cash requirements. Our
ability to use this funding source may be impacted by reasons such as default or foreign government policies
that restrict or prohibit transferring funds. In the event that we were not able to obtain funds as needed, it
could result in delays to project funding or non-compliance with cash-based covenants.

We may seek to enter into collaborative arrangements to develop and commercialize products which may
not be successful. We may seek to enter into collaborative arrangements to develop and commercialize
some of our potential products and product candidates both in North America and international markets.
There can be no assurance that we will be able to negotiate collaborative arrangements on favorable terms
or at all or that current or future collaborative arrangements will be successful.

A significant portion of revenue is derived from customers outside the United States. We may lose revenues,
market share, and profits due to exchange rate fluctuations and political and economic changes related to
its foreign business. For the year ended December 31, 2019, sales to customers outside the U.S. comprised
approximately 48% of revenues. This compares to 50% for the year ended December 31, 2018. Our foreign

business is subject to economic, political and regulatory uncertainties and risks that are unique to each area
of the world. Fluctuations in exchange rates may also affect the prices that foreign customers are willing to
pay and may put us at a price disadvantage compared to other competitors. Potentially volatile shifts in
exchange rates may negatively affect our financial position and results.

The loss of a significant distributor or end user customer may adversely affect financial condition and
results of operations. Revenues from our largest customer comprised 28% of revenues for the year ended
December 31, 2019. Revenues from our largest distributor comprised 11% of revenues for the year ended
December 31, 2019. The loss of a large customer or distributor may significantly decrease revenues.

We may be exposed to liabilities under the foreign corrupt practices act and any determination that we
violated these laws could have a material adverse effect on our business. We are subject to the Foreign
Corrupt Practices Act (“FCPA”), and other laws that prohibit improper payments or offers of payments to
foreign governments and their officials and political parties by U.S. persons and issuers as defined by the
statute, for the purpose of obtaining or retaining business. It is our policy to implement safeguards to
discourage these practices by our employees. However, our existing safeguards and any future
improvements may prove to be less than effective, and our employees, consultants, sales agents or
distributors may engage in conduct for which we might be held responsible. Violations of the FCPA may
result in severe criminal or civil sanctions and we may be subject to other liabilities, which could negatively
affect our business, operating results and financial condition.

Adverse results of legal proceedings could have a material adverse effect on us. We are subject to, and may
in the future be subject to, a variety of legal proceedings and claims that arise out of the ordinary conduct
of our business. Results of legal proceedings cannot be predicted with certainty. Irrespective of their merits,
legal proceedings may be both lengthy and disruptive to our operations and may cause significant
expenditure and diversion of management attention. We may be faced with significant monetary damages
or injunctive relief against us that could have a material adverse effect on a portion of our business
operations or a material adverse effect on our financial condition and results of operations.

Risks Related to Our Operations
We do not have commercial-scale manufacturing capability and have minimal commercial manufacturing
experience. We operate GMP manufacturing facilities for device production; however, they are not of
sufficient size for large commercial production. We do not have experience in large scale manufacturing,
and currently rely on third-party contract manufacturers for a significant portion of our device production.
We expect to depend on these contract manufacturers for the foreseeable future. Any performance failure
on the part of our contract manufacturers could delay production of our current or future products, depriving
us of potential product revenues and resulting in additional losses.

We have limited sales, marketing and distribution capabilities which may limit our ability to significantly
increase sales quickly. We have limited internal capabilities in the sales, marketing, and distribution areas.
There can be no assurance that we will be able to establish sales, marketing, and distribution capabilities
internally or make arrangements with current collaborators or others to perform such activities or that such
effort will be successful. If we decide to market any of our new products directly, we must either partner,
acquire or internally develop a marketing and sales force with technical expertise and with supporting
distribution capabilities. The acquisition or development of a sales, marketing and distribution
infrastructure would require substantial resources, which may not be available to us or, even if available,
divert the attention of our management and key personnel, and have a negative impact on further product
development efforts.

Our inability to protect our patents, trademarks, trade secrets and other proprietary rights could adversely
impact our competitive position. We believe that our patents, trademarks, trade secrets and other proprietary
rights are important to our success and our competitive position. Accordingly, we commit substantial

resources to the establishment and protection of our patents, trademarks, trade secrets and proprietary rights.
We use various methods, including confidentiality agreements with employees, vendors, and customers, to
protect our trade secrets and proprietary know-how for our products. We currently hold patents for products,
and have patents pending in certain countries for additional products that we market or intend to market.
However, our actions to establish and protect our patents, trademarks, and other proprietary rights may be
inadequate to prevent imitation of our products by others or to prevent others from claiming violations of
their trademarks and proprietary rights by us. If our products are challenged as infringing upon patents of
other parties, we may be required to modify the design of the product, obtain a license, or litigate the issues,
all of which may have an adverse business effect on us.

We may be subject to claims that our products or processes infringe the intellectual property rights of
others, which may cause us to pay unexpected litigation costs or damages, modify our products or processes
or prevent us from selling our products. Although it is our intention to avoid infringing or otherwise
violating the intellectual property rights of others, third parties may nevertheless claim that our processes
and products infringe their intellectual property and other rights. Our strategies of capitalizing on growing
international demand as well as developing new innovative products across multiple business lines present
similar infringement claim risks both internationally and in the U.S. as we expand the scope of our product
offerings and markets. We compete with other companies for contracts in some small or specialized
industries, which increase the risk that the other companies will develop overlapping technologies leading
to an increased possibility that infringement claims will arise. Whether or not these claims have merit, we
may be subject to costly and time-consuming legal proceedings, and this could divert management’s
attention from operating our business. In order to resolve such proceedings, we may need to obtain licenses
from these third parties or substantially re-engineer or rename our products in order to avoid infringement.
In addition, we might not be able to obtain the necessary licenses on acceptable terms, or at all, or be able
to re-engineer or rename our products successfully.

We commercially, in co-branding with Fortis Healthcare, bank and store private cord blood stem cells in
our TotipotentRX GMP facility. We could be subject to unexpected litigation costs or damages for loss of
one or more family owned units of cord blood or if one of the cord blood units we store causes bodily injury.
We face an inherent business risk of exposure to product liability claims if our products or product
candidates are alleged or found to have caused injury or cannot be used for some reason within our control
and are found to result in injury or death. While we believe that our current liability insurance coverage is
adequate for our present clinical and commercial activities, we may not be able to maintain insurance on
acceptable terms or at all. If we are unable to obtain insurance or any claims against us substantially exceed
our coverage, then our business could be adversely impacted.

We may not be able to protect our intellectual property in countries outside the United States. Intellectual
property law outside the United States is uncertain and in many countries is currently undergoing review
and revisions. The laws of some countries do not protect our patent and other intellectual property rights to
the same extent as United States laws. This is particularly relevant to us as a significant amount of our
current and projected future sales are outside of the United States. Third parties may attempt to oppose the
issuance of patents to us in foreign countries by initiating opposition proceedings. Opposition proceedings
against any of our patent filings in a foreign country could have an adverse effect on our corresponding
patents that are issued or pending in the United States. It may be necessary or useful for us to participate in
proceedings to determine the validity of our patents or our competitors’ patents that have been issued in
countries other than the U.S. This could result in substantial costs, divert our efforts and attention from
other aspects of our business, and could have a material adverse effect on our results of operations and
financial condition.

Any failure to achieve and maintain the high design and manufacturing standards that our products require
may seriously harm our business. Our products require precise, high-quality manufacturing. Achieving
precision and quality control requires skill and diligence by our personnel as well as our vendors. Our

failure to achieve and maintain these high manufacturing standards, including the incidence of
manufacturing errors, design defects or component failures could result in patient injury or death, product
recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other problems that
could seriously hurt our business. Additionally, the large amount of AXP disposable inventory certain
distributors and end-users maintain may delay the identification of a manufacturing error and expand the
financial impact. A manufacturing error or defect, or previously undetected design defect, or uncorrected
impurity or variation in a raw material component, either unknown or undetected, could affect the product.
Despite our very high manufacturing standards, we cannot completely eliminate the risk of errors, defects
or failures. If we or our vendors are unable to manufacture our products in accordance with necessary
quality standards, our business and results of operations may be negatively affected.

Our revenues and operating results may be adversely affected as a result of our required compliance with
the adopted EU directive on the restriction of the use of hazardous substances in electrical and electronic
equipment, as well as other standards around the world. A number of domestic and foreign jurisdictions
seek to restrict the use of various substances, a number of which have been or are currently used in our
products or processes. For example, the EU Restriction of Hazardous Substances in Electrical and
Electronic Equipment (“RoHS”) Directive now requires that certain substances, which may be found in
certain products we have manufactured in the past, be removed from all electronics components. Other
countries, such as China, have enacted or may enact laws or regulations similar to RoHS. Eliminating such
substances from our manufacturing processes requires the expenditure of additional research and
development funds to seek alternative substances for our products, as well as increased testing by third
parties to ensure the quality of our products and compliance with the RoHS Directive. While we have
implemented a compliance program to ensure our product offerings meet these regulations, there may be
instances where alternative substances will not be available or commercially feasible, or may only be
available from a single source, or may be significantly more expensive than their restricted counterparts.
Therefore, we have focused our compliance efforts on those products and geographical areas in which we
have the highest revenue potential. Our failure to comply with past, present and future similar laws could
result in reduced sales of our products, substantial product inventory write-offs, reputation damage,
penalties and other sanctions, any of which could harm our business and operating results.

Our products may be subject to product recalls which may harm our reputation and divert our managerial
and financial resources. The FDA and similar governmental authorities in other countries have the authority
to order the mandatory recall of our products or order their removal from the market if the governmental
entity finds our products might cause adverse health consequences or death. The FDA may also seize
product or prevent further distribution. A government-mandated or voluntary recall by us could occur as a
result of component failures, manufacturing errors or design defects (including labeling defects). In the
past, we have initiated voluntary recalls of some of our products and we could do so in the future. Any
recall of our products may harm our reputation with customers, divert managerial and financial resources
and negatively impact our profitability.

We are dependent on our suppliers and manufacturers to meet existing regulations. Certain of our suppliers
and manufacturers are subject to heavy government regulations, including FDA QSR compliance, in the
operation of their facilities, products and manufacturing processes. Any adverse action by the FDA against
our suppliers or manufacturers could delay supply or manufacture of component products required to be
integrated or sold with our products. Although we attempt to mitigate this risk through inventory held
directly or through distributors, and audit our suppliers, there are no assurances we will be successful in
identifying issues early enough to allow for corrective action or transition to an alternative supplier, or in
locating an alternative supplier or manufacturer to meet product shipment or launch deadlines. As a result,
our sales, contractual commitments and financial forecasts may be significantly affected by any such delays.

Dependence on suppliers for custom components may impact the production schedule. We obtain products
and custom components from a limited number of suppliers. If the supplier raises the price or discontinues

production, we may have to find another qualified supplier to provide the item or re-engineer the item. In
the event that it becomes necessary for us to find another supplier, we would first be required to qualify the
quality assurance systems and product quality of that alternative supplier. Any operational issues with re-
engineering or the alternative qualified supplier may impact the production schedule, therefore delaying
revenues, and this may cause the cost of disposables or key components to increase.

Dependence on contract manufacturers for disposable products. We obtain the majority of our disposable
products from contract manufacturers. Production halts or delays by these manufacturers could have a
significant impact on our business. Our safety stock levels are generally not sufficient to handle an
unexpected shut-down or delay in production by these contract manufacturers. In the event of a significant
unplanned delay in production, we may need to find a new contract manufacturer, which could be a lengthy
process and require a significant financial commitment, impacting our ability to fulfill customer orders and
maintain current sales levels for a period of time until the new contract manufacturer can start production
of our disposable products.

Failure to meet the financial covenant in our Technology License and Escrow Agreement could decrease
our AXP revenues. Under our License and Escrow Agreement with CBR. if we fail to meet the financial
covenant of cash balance and short-term investments net of debt or borrowed funds that are payable within
one year of not less than $2,000,000, they may take possession of the escrowed intellectual property and
initiate manufacturing of the applicable device and disposables. If this were to occur, our revenues would
be negatively impacted. In order to remain compliant, we may have to complete additional financings or
provide consideration to the counter party to modify the obligations.

Failure to retain or hire key personnel may adversely affect our ability to sustain or grow our business.
Our ability to operate successfully and manage our potential future growth depends significantly upon
retaining key research, technical, clinical, regulatory, sales, marketing and managerial personnel. Our future
success partially depends upon the continued services of key technical and senior management personnel.
Our future success also depends on our continuing ability to attract, retain and motivate highly qualified
managerial and technical personnel. The inability to retain or attract qualified personnel could have a
significant negative effect upon our efforts and thereby materially harm our business and future financial
condition.

Most of our operations are conducted at a single location. Any disruption at our facilities could delay
revenues or increase our expenses. Our U.S. device operations are conducted at a single location although
we contract the manufacturing of certain devices, disposables and components. We take precautions to
safeguard our facilities, through insurance, health and safety protocols, and off-site storage of computer
data. However, a natural disaster, such as a fire, flood or earthquake, could cause substantial delays in our
operations, damage or destroy our manufacturing equipment or inventory, and cause us to incur additional
expenses. The insurance we maintain against fires, floods, and other natural disasters may not be adequate
to cover our losses in any particular case.

Failure to maintain and/or upgrade our information technology systems may have an adverse effect on our
operations. We rely on various information technology systems to manage our operations, and we evaluate
these systems against our current and expected requirements. Although we have no current plans to
implement modifications or upgrades to our systems, we will eventually be required to make changes to
legacy systems and acquire new systems with new functionality. Any information technology system
disruptions, if not anticipated and appropriately mitigated, could have an adverse effect on our business and
operations.

If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely
financial statements could be impaired, which could harm our operating results, our ability to operate our
business and investors’ views of us. We are required to establish and maintain adequate internal control

over financial reporting, which are processes designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. We are also required to comply with Section
404 of the Sarbanes-Oxley Act of 2002, which (among other things) requires public companies to conduct
an annual review and evaluation of their internal control over financial reporting. However, as a “smaller
reporting company,” we are not required to obtain an auditor attestation regarding our internal control over
financial reporting. If, in the future, we require an attestation report from our independent registered public
accounting firm and that firm is unable to provide an unqualified attestation report on the effectiveness of
our internal controls over financial reporting, investor confidence and, in turn, our stock price could be
materially adversely affected.

Security breaches and other disruptions could compromise our information and expose us to liability, which
would cause our business and reputation to suffer. In the ordinary course of the Company’s business, the
Company collects and stores sensitive data, including intellectual property, our proprietary business
information and that of our customers, suppliers and business partners and personally identifiable
information of the Company’s employees on its networks. The secure processing, maintenance and
transmission of this information is critical to the Company’s operations and business strategy. Despite the
Company’s security measures, its information, technology and infrastructure may be vulnerable to attacks
by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could
compromise the Company’s networks and the information stored there could be accessed, publicly
disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims
or proceedings or regulatory penalties and could disrupt the Company’s operations and the services it
provides to customers, damage the Company’s reputation, and cause a loss of confidence in the Company’s
products and services, which could adversely affect the Company’s business.

Our business and operations may be adversely affected by the recent 2019 Novel Coronavirus (COVID-
19) outbreak or other similar outbreaks. Any outbreaks of contagious diseases, including the recent
outbreak of the coronavirus and other adverse public health developments in countries where we operate
could have a material and adverse effect on our business, financial condition and results of operations.
These effects could include disruptions or restrictions on our employees’ ability to travel, as well as
temporary closures of our facilities or the facilities of our customers, suppliers, or other vendors in our
supply chain. In addition, the coronavirus may result in a widespread health crisis that could adversely
affect the economies and financial markets of many countries, resulting in an economic downturn that could
affect demand for our products or our ability to obtain financing. Any of these events, which may result in
disruptions to our supply chain or customer demand, could materially and adversely affect our business and
our financial results. The extent to which the coronavirus will impact our business and our financial results
will depend on future developments, which are highly uncertain and cannot be predicted. Such
developments may include the geographic spread of the virus, the severity of the disease, the duration of
the outbreak, the actions that may be taken by various governmental authorities in response to the outbreak
and the possible impact on the U.S. or global economy. As a result, at the time of this filing, it is impossible
to predict the overall impact of the coronavirus on our business, liquidity, capital resources and financial
results.

Risks Related to Our Industry
Our business is heavily regulated, resulting in increased costs of operations and delays in product sales.
Many of our products require FDA approval or clearance to sell in the U.S. and will require approvals from
comparable agencies to sell in foreign countries. These authorizations may limit the U.S. or foreign markets
in which our products may be sold. Further, our products must be manufactured under requirements of our
quality system for continued CE-Marking so they can continue to be marketed and sold in Europe. These
requirements are similar to the QSR of both the FDA and California Department of Public Health. Failure
to comply with or incorrectly interpret these quality system requirements and regulations may subject us to
delays in production while we correct deficiencies found by the FDA, the State of California, or our

notifying body as a result of any audit of our quality system. If we are found to be out of compliance, we
could receive a Warning Letter or an untitled letter from the FDA or even be temporarily shut down in
manufacturing and product sales while the non-conformances are rectified. Also, we may have to recall
products and temporarily cease their manufacture and distribution, which would increase our costs and
reduce our revenues. The FDA may also invalidate our PMA or 510(k) if appropriate regulations relative
to the PMA or 510(k) products are not met. The notified bodies may elect to not renew CE-Mark
certification. Any of these events would negatively impact our revenues and costs of operations.

Changes in governmental regulations may reduce demand for our products or increase our expenses. We
compete in many markets in which we and our customers must comply with federal, state, local and
international regulations, such as environmental, health and safety and food and drug regulations. We
develop, configure and market our products to meet customer needs created by those regulations. Any
significant change in regulations could reduce demand for our products or increase our expenses. For
example, many of our instruments are marketed to the industry for enabling new regenerative therapies.
Changes in the FDA’s regulation of the devices and products directed at regenerative medicine, and
development process for new therapeutic applications could have an adverse effect on the demand for these
products.

To sell in international markets are subject to regulation in foreign countries. In cooperation with our
distribution partners, we market our current and future products both domestically and in many foreign
markets. A number of risks are inherent in international transactions. In order for us to market our products
in certain non-U.S. jurisdictions, we need to obtain and maintain required regulatory approvals or clearances
and must comply with extensive regulations regarding safety, manufacturing processes and quality. These
regulations, including the requirements for approvals or clearances to market, may differ from the FDA
regulatory scheme. International sales also may be limited or disrupted by political instability, price
controls, trade restrictions and changes in tariffs. Additionally, fluctuations in currency exchange rates may
adversely affect demand for our products by increasing the price of our products in the currency of the
countries in which the products are sold.

There can be no assurance that we will obtain regulatory approvals or clearances in all of the countries
where we intend to market our products, or that we will not incur significant costs in obtaining or
maintaining foreign regulatory approvals or clearances, or that we will be able to successfully
commercialize current or future products in various foreign markets. Delays in receipt of approvals or
clearances to market our products in foreign countries, failure to receive such approvals or clearances or
the future loss of previously received approvals or clearances could have a substantial negative effect on
our results of operations and financial condition.

Operating in foreign jurisdictions subjects us to regulation by non-U.S. authorities. We have operations in
India, and as such are subject to Indian regulatory agencies. A number of risks are inherent in conducting
business and clinical operations overseas. In order for us to operate as a majority owned foreign corporation
in India, we are subject to financial regulations imposed by the Reserve Bank of India. This includes the
rules specific to the capital funding, pledging of assets, repatriation of funds and payment of dividends from
and to the foreign subsidiaries and from and to us in the U.S.

In order for us to manufacture and/or market our services and products in India, we need to obtain and
maintain required regulatory approvals or clearances and must comply with extensive regulations regarding
safety, manufacturing processes and quality. These regulations, including the requirements for approvals
or clearances to market, and/or export may differ from the FDA regulatory scheme. Additionally, in order
for us to complete clinical trials, clinical trial services and cell banking in India, and other foreign
jurisdictions, we need to obtain and maintain approvals and licenses which comply with extensive
regulations of the appropriate regulatory body.

International operations also may be limited or disrupted by political, economic or social instability, price
controls, trade restrictions and changes in tariffs as ordered by various governmental agencies. Additionally,
fluctuations in currency exchange rates may adversely affect the cost of production for our products by
increasing the price of materials and other inputs for our products in the currency of the countries in which
the products are sold.

If our competitors develop and market products that are more effective than our product candidates or
obtain regulatory and market approval for similar products before we do, our commercial opportunity may
be reduced or eliminated. The development and commercialization of new pharmaceutical products which
target cardiovascular, orthopedic, chronic dermal wounds and other conditions addressed by our current
and future products is competitive, and we will face competition from numerous sources, including major
biotechnology and pharmaceutical companies worldwide. Many of our competitors have substantially
greater financial and technical resources and development, production and marketing capabilities than we
do. In addition, many of these companies have more experience than we do in pre-clinical testing, clinical
trials and manufacturing of compounds, as well as in obtaining FDA and foreign regulatory approvals. As
a result, there is a risk that one of the competitors will develop a more effective product for the same
indications for which we are developing a product or, alternatively, bring a similar product to market before
we can. With regards to the BioArchive and AXP Systems, numerous larger and better-financed medical
device manufacturers may choose to enter this market.

Changes in healthcare policy could subject us to additional regulatory requirements that may delay the
commercialization of our products and increase our costs. The U.S. government and other governments
have shown significant interest in pursuing healthcare reform. Any government-adopted reform measures
could adversely impact the pricing of our diagnostic products and tests in the U.S. or internationally and
the amount of reimbursement available from governmental agencies or other third-party payors. The
continuing efforts of the U.S. and foreign governments, insurance companies, managed care organizations
and other payors of healthcare services to contain or reduce healthcare costs may adversely affect our ability
to set prices for our products and services that we believe are fair, which may impact our ability to generate
revenues and achieve and maintain profitability.

New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and
judicial decisions, that relate to healthcare availability, methods of delivery or payment for products and
services, or sales, marketing or pricing, may limit our potential revenue or force us to revise our research
and development programs. The pricing and reimbursement environment may change in the future and
become more challenging for several reasons, including policies advanced by the current executive
administration in the U.S., new healthcare legislation or fiscal challenges faced by government health
administration authorities. Specifically, in both the U.S. and certain foreign jurisdictions, there have been
a number of legislative and regulatory proposals to change the healthcare system in ways that could affect
our ability to sell our products profitably.

For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act (“PPACA”), have substantially changed the way healthcare is financed by both
government health plans and private insurers. The PPACA contains a number of provisions that are
expected to impact our business and operations in ways that may negatively affect our revenues in the
future. While it is too early to predict all the specific effects the PPACA or any future healthcare reform
legislation will have on our business, such provisions could materially adversely affect our business,
prospects and financial condition.

The Food and Drug Administration Amendments Act of 2007 gives the FDA enhanced post-marketing
authority, including the authority to require post-marketing studies and clinical studies of products, labeling
changes based on new safety information, and compliance with risk evaluations and mitigation strategies
approved by the FDA. The FDA’s exercise of this authority could result in delays or increased costs during

product development, clinical studies and regulatory review, increased costs to assure compliance with
post-approval regulatory requirements, and potential restrictions on the sale and/or distribution of approved
products, all of which could materially adversely affect our business, prospects and financial condition.

Product liability and uninsured risks may adversely affect the continuing operations. We operate in an
industry susceptible to significant product liability claims. We may be liable if any of our products or
services cause injury, illness, or death. These claims may be brought by individuals seeking relief or by
groups seeking to represent a class. We also may be required to recall certain of our products should they
become damaged or if they are defective. We are not aware of any material product liability claims against
us. However, product liability claims may be asserted against us in the future based on events we are not
aware of at the present time. We maintain a product liability policy and a general liability policy that
includes product liability coverage. However, a product liability claim against us could have a material
adverse effect on our business or future financial condition.

Risks Related to Operating Results and Financial Markets
We have incurred net losses and we anticipate that our losses will continue. We have not been profitable
for a significant period. For the years ended December 31, 2019 and 2018, we had a net loss of $10,099,000
and $40,940,000 respectively and an accumulated deficit at December 31, 2019, of 236,932,000. The report
of our independent auditors on our December 31, 2019 financial statements includes an explanatory
paragraph indicating there is substantial doubt about our ability to continue as a going concern. We will
continue to incur significant costs as we develop and market our current products and related applications.
Although we are executing our business plan to develop, market and launch new products, continuing losses
may impair our ability to fully meet our objectives for new product sales or threaten our ability to continue
as a going concern in future years.

We will likely need to raise additional capital to fund our operations and in furtherance of our business
plan. Due to our recurring losses from operations and the expectation that we will continue to incur losses
in the future, we may need to raise additional capital. We have historically relied upon private and public
sales of our equity, as well as debt financings to fund our operations. In order to raise additional capital, we
may seek to sell additional equity and/or debt securities or obtain a credit facility or other loan, which we
may not be able to do on favorable terms, or at all. Our ability to obtain additional financing will be subject
to a number of factors, including market conditions, our operating performance and investor sentiment. If
we are unable to raise additional capital when required or on acceptable terms, we may have to significantly
delay, scale back or discontinue the development and/or commercialization of one or more of our product
candidates, restrict our operations or obtain funds by entering into agreements on unfavorable terms.

We may incur significant non-operating, non-cash charges resulting from changes in the fair value of
warrants. Our warrants are a derivative instrument; as such they have been recorded at their respective
relative fair values at the issuance date and will be recorded at their respective fair values at each subsequent
balance sheet date. Any change in value between reporting periods will be recorded as a non-operating,
non-cash charge at each reporting date. The impact of these non-operating, non-cash charges could have an
adverse effect on the Company’s financial results. The fair value of the warrants is tied in large part to our
stock price. If the stock price increases between reporting periods, the warrants become more valuable. As
such, there is no way to forecast what the non-operating, non-cash charges will be in the future or what the
future impact will be on our financial statements.

Risks Related to Our Common Stock
If the price of our common stock does not meet the requirements of the NASDAQ capital market stock
Exchange (“NASDAQ”), our shares may be delisted. Our ability to publicly or privately sell equity
securities and the liquidity of our common stock could be adversely affected if we are delisted. The listing
standards of NASDAQ provide, among other things, that a company may be delisted if the bid price of its
stock drops below $1.00 for a period of 30 consecutive business days. Delisting from NASDAQ could

adversely affect our ability to raise additional financing through the public or private sale of equity
securities, would significantly affect the ability of investors to trade our securities and would negatively
affect the value and liquidity of our common stock. Delisting could also have other negative results,
including the potential loss of confidence by employees, the loss of institutional investor interest and fewer
business development opportunities.

Liquidity of our common stock. Although there is a public market for our common stock, trading volume
has been historically low, which could impact the stock price and the ability to sell shares of our common
stock. We can give no assurance that an active and liquid public market for the shares of the common stock
will continue in the future. In addition, future sales of large amounts of common stock could adversely
affect the market price of our common stock and our ability to raise capital. The price of our common stock
could also drop as a result of the exercise of options for common stock or the perception that such sales or
exercise of options could occur. These factors could also have a negative impact on the liquidity of our
common stock and our ability to raise funds through future stock offerings.

We do not pay cash dividends. We have never paid any cash dividends on our common stock and do not
intend to pay cash dividends in the foreseeable future. Instead, we intend to apply earnings, if any, to the
expansion and development of our business. Thus, the liquidity of your investment is dependent upon your
ability to sell stock at an acceptable price. The price can go down as well as up and may limit your ability
to realize any value from your investment, including the initial purchase price.

Our Amended and Restated Bylaws provide that the Court of Chancery of the State of Delaware will be the
sole and exclusive venue for certain litigation that may be initiated by our stockholders, which may limit a
stockholder’s ability to obtain a favorable judicial forum for such disputes with us or our directors, officers
or employees.

Our Amended and Restated Bylaws provide that, unless we consent in writing to the selection of an
alternative venue, the Court of Chancery of the State of Delaware will be the sole and exclusive venue for
(i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim for breach of
a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii)
any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law,
our certificate of incorporation or bylaws or (iv) any action asserting a claim governed by the internal affairs
doctrine, in each case subject to the Court of Chancery of the State of Delaware having personal jurisdiction
over the indispensable parties named as defendants therein. This choice of venue provision will not apply
to actions or proceedings brought to enforce a duty or liability created by the Securities Act or the Exchange
Act.

This choice of venue provision may limit a stockholder’s ability to bring certain claims in a judicial forum
that it finds favorable for disputes with us or our directors, officers, employees or agents, which may
discourage the filing of lawsuits with respect to such claims. If a court were to find this choice of venue
provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with
resolving such action in another jurisdiction, which could adversely affect our business and financial
condition.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We lease a facility with approximately 28,000 square feet of space located in Rancho Cordova, California.
The facility is used by both our Clinical Development and Device Segments and is devoted to warehouse
space, manufacturing of products, office space, a biologics lab, a clean room, and a research and
development lab. The lease expires May 31, 2024.

In Gurgaon India we lease approximately 1,500 square feet for an office facility for our Clinical
Development Segment. The lease expires September 14, 2023 however; either party can terminate the lease
with three months’ notice.

Additionally, in Gurgaon India, as part of our agreement with Fortis Healthcare, we occupy and manage a
2,800 square foot cord blood banking and cellular therapy processing facility in the Fortis Memorial
Research Institute.

We believe our facilities are adequate for our present needs and expect them to remain adequate for the
foreseeable future.

ITEM 3. 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, except as described below,
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.

In fiscal 2016, the Company signed an engagement letter with a strategic consulting firm, Mavericks.
Included in the engagement letter was a success fee due upon the successful conclusion of certain
transactions. On May 4, 2017, a lawsuit was filed in California Superior Court against the Company and
its CEO by the consulting firm as the consulting firm argues that it is owed a transaction fee of $1,000,000
under the terms of the engagement letter due to the conversion of the Boyalife debentures in August 2016.
In October 2017, to streamline the case by providing for the dismissal of claims against the Company’s
CEO based on alter ego theories and without acknowledging any liability, the Company deposited
$1,000,000 with the Court. The trial completed in February 2020 with an adverse jury verdict in favor of
Mavericks in the total amount of $1,000,000. The Action is now in the post-trial phase and no judgment
has been entered as the parties are disputing whether the defense of equitable estoppel should bar entry of
judgment at all and the proper per-judgment interest start date. At present, the Court is already holding a
$1,000,000 cash bond deposited by the Company early in the litigation. After entry of judgment, the Court
will permit release of those funds to the Mavericks. As a result, the Company recorded a $1,400,000 loss
in the quarter ended December 31, 2019. The loss includes the $1,000,000 transaction fee and an estimated
$400,000 in interest due. The final amount of interest due will be determined by the Court. The $1,000,000
deposited with the court will be used to settle the transaction fee.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.

Our common stock, $0.001 par value, is listed on the NASDAQ Capital Market under the symbol THMO.

We have not paid cash dividends on our common stock and do not intend to pay a cash dividend in the
foreseeable future. There were approximately 122 stockholders of record on January 31, 2020, not including
beneficial owners who own their stock in street name through Cede & Co. and others.

The Company did not repurchase any of its shares during the quarter ended December 31, 2019.

ITEM 6. SELECTED FINANCIAL DATA

We are a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and as such, we are not required to provide the disclosure required under
this item.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Certain statements contained in this section and other parts of this Annual Report on Form 10-K which are
not historical facts are forward looking statements and are subject to certain risks and uncertainties. Our
actual results may differ significantly from the projected results discussed in the forward-looking
statements. Factors that might affect actual results include, but are not limited to, those discussed in ITEM
1A “RISK FACTORS” and other factors identified from time to time in our reports filed with the SEC. The
following discussion should be read in conjunction with our consolidated financial statements contained in
this Annual Report.

Overview

ThermoGenesis Holdings, Inc. (“ThermoGenesis Holdings”, the “Company”, “our”, or “we”) 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 incorporated in 1986 and is registered in the
State of Delaware and headquartered in Rancho Cordova, CA. In July 2017, ThermoGenesis Holdings’
subsidiary, ThermoGenesis Corp., completed a strategic acquisition of the business and substantially all of
the assets of SynGen Inc. (“SynGen”), a research and development company for automated cellular
processing.

Following the acquisition of SynGen, we utilized the SynGen assets, together with our own proprietary
technology, to develop a novel proprietary CAR-TXpress™ platform that addresses the critical unmet need
for better efficiency and cost-effectiveness for the emerging immune-oncology field, in particular, the
chimeric antigen receptor (“CAR”) T cell market. Since the first quarter of 2018, the Company developed
and launched various X-Series® products, including: X-Lab®, X-Wash®, X-Mini® and X-BACS™.

Recent Corporate Name Change
On November 1, 2019, Cesca Therapeutics Inc. changed its corporate name to ThermoGenesis Holdings,
Inc. in order to better reflect its new strategic focus on becoming a key solution provider for cell
manufacturing tools and services in the cell and gene therapy markets. In conjunction with the name
change, the Company began trading under the new Nasdaq ticker symbol, THMO. In addition, the Company
changed its CUSIP number to 88362L100.

Reverse Stock Split
On June 4, 2019, the Company effected a one (1) for ten (10) reverse stock split of its issued and outstanding
common stock. The total number of shares of common stock authorized for issuance by the Company of
350,000,000 shares did not change in connection with the reverse stock split.

All historical share amounts disclosed herein 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.

ThermoGenesis Holdings now has two separately reported business segments: A “Device Segment” and a
“Clinical Development Segment.” The Device Segment develops and commercializes automated systems
that used for, clinical grade cell-banking, point-of-care applications, and large scale cell processing. The
Clinical Development Segment is developing autologous (utilizing the patient’s own cells) cell-based
therapeutics that address significant unmet medical needs for the vascular, cardiology and orthopedic
markets.

ThermoGenesis Holdings’ Device Segment
ThermoGenesis Holdings’ Device Segment offers automated devices and technologies for cell-banking,
point-of-care applications, and large scale cell processing. The automated devices include:

Clinical Bio-Banking Applications:

• BioArchive® Cryopreservation System – The BioArchive Cryopreservation System is the
industry’s leading, fully automated, robotic, liquid nitrogen controlled-rate-freezing (“CRF”) and
cryogenic storage system for stem cell samples and clinical products. Using proven, computer-
controlled technology, it provides the ultimate performance and protection for today’s invaluable
cord blood samples and future cell therapeutic products. BioArchive is the preferred system for the
highest quality cord blood banks worldwide. A complete technical Master-File has been provided
to the FDA to support those highest quality cord blood banks which have been able to qualify for,
and obtain, a Biological License from the FDA to allow their cord blood units to be used to treat
patients with blood cancers.

Point-of-Care Applications:

• PXP® System – The PXP System is our newly launched point-of-care device. PXP is an automated,
closed system that harvests a precise volume of cell concentrate from bone marrow aspirates. PXP
can generate a concentration of bone marrow in less than 20 minutes, with consistently high MNC
and CD34+ stem cell progenitor recovery rates and greater than 98% depletion of contaminating
red blood cells (RBCs). Processing data is captured using our proprietary DataTrak™ software to
assist with Good Manufacturing Practice (“GMP”) process monitoring and reporting information.

Large Scale Cell Processing Applications:

• X-Lab® System for Cell Isolation – a semi-automated, functionally-closed, ficoll-free, system for
the rapid isolation of mononuclear cells (“MNCs”) from collected units of peripheral blood, cord
blood, bone marrow aspirate or leukapheresis. The Company had filed a Device Master File
(“MAF”) with the FDA for the X-Lab. The MAF contains all the relevant information that the
FDA will need to allow principal investigators to include ThermoGenesis Holdings’ systems in
their investigational new drug applications.

• X-BACS™ System for Cell Purification – a semi-automated, functionally-closed system employs
a microbubble/antibody reagent to isolate target cells by buoyancy-activated cell sorting (“BACS”).
These microbubble/antibody reagents bind to user-selected target cells to increase their buoyancy
and provide a complete separation from non-target cells during centrifugation and allowing the
harvest of a highly purified population of target cells, with high recovery efficiency and cell
viability.

ThermoGenesis Holdings’ Clinical Development Segment
Using our proprietary automated point-of-care cellular processing technologies, ThermoGenesis Holdings
utilizes autologous (utilizing the patient’s own cells) stem cell-based therapeutics for the vascular and
orthopedic markets that include:

• Cell Manufacturing Services – Through our TotipotentRX subsidiary in Gurgaon, India, we
operate an advanced clinical cell manufacturing, processing, testing, and storage facility, compliant
with current Good Manufacturing Practices (“GMP”), Good Tissue Practices (“GTP”), and Good
Laboratory Practices (“GLP”). We can support the production of a small, personalized medicine
cell prescription or a large scale batch process. Patient samples, batch samples, and therapeutic
aliquots are all labeled in accordance with ISBT 128 and stored in our own cryogenics’ facility. In
partnership with Fortis Healthcare we also operate commercial service programs supporting bone
marrow transplantation (hematopoietic stem cell transplantation) for hematological and
oncological disorders.

• Cell Banking Services – Our NovaCord Cord Blood Bank and Repository is a licensed umbilical
cord blood and tissue bank. It is a collaborative enterprise between TotipotentRX and Fortis
Healthcare. The GMP facility of NovaCord is located inside multi-super specialty Fortis Memorial
Research Institute, in Gurgaon, India where expertise is available for both stem cell banking and
treating patients using advanced cellular therapies.

Results of Operations

Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018 (unaudited)

Net Revenues
Consolidated net revenues for the year ended December 31, 2019 were $13,047,000 compared to
$9,672,000 for the year ended December 31, 2018, an increase of $3,375,000 or 35%. The increase was
driven by AXP revenues which increased by $3,129,000 in 2019 with 688 more cases sold to a distributor
in China, 435 more cases sold to domestic end users, 175 more cases sold to new customer in India and 83
more cases sold to our distributors in Europe (resulting in approximately $2,400,000 more in AXP
disposables revenue in the current year). Additionally, AXP device sales increased by approximately
$700,000 in 2019, driven by customers upgrading to AXP II devices in the current year. CAR-TXpress
sales increased by approximately $600,000 due to 2019 containing a full year of sales while 2018 only had
a partial year due to relaunching the product line in the second half of 2018. BioArchive sales decreased
by approximately $200,000 due to one fewer device being sold in 2019. Sales in the Clinical Development
Segment were approximately $100,000 less than prior year due to reduced clinical services in India.

Revenues were comprised of the following:

Device Segment:
AXP

BioArchive

Manual Disposables
CAR-TXpress
Other

Clinical Development Segment:
Disposables
Other

Year Ended December 31,

2019

2018

$7,522,000
2,910,000
909,000
1,565,000
51,000
12,957,000

68,000
22,000
90,000
$13,047,000

$4,393,000
3,098,000
976,000
907,000
95,000
9,469,000

135,000
68,000
203,000
$9,672,000

Gross Profit
The Company’s gross profit was $5,696,000 or 44% of net revenues for the year ended December 31, 2019
compared to $2,193,000 or 23% for the year ended December 31, 2018, an increase of $3,503,000 or 156%.
The increase was primarily due to AXP sales, generating approximately $1,925,000 more in gross profit
from disposables and approximately $275,000 from sales of AXP II devices. The increase in AXP
disposable gross profit was due to approximately 1,375 more cases being sold in 2019 as compared to 2018
and lower product costs through price efficiencies from contract manufacturers. The other main driver of
the increase is lower overhead costs of approximately $600,000 in 2019 as compared to 2018 as a result of
the June 2018 reorganization. The remainder of the increase is due to increased gross profit from service
revenue of approximately $250,000 and additional sales of CAR-TXpress which resulted in approximately
$300,000 more gross profit.

Sales and Marketing Expenses
Consolidated sales and marketing expenses were $1,656,000 for the year ended December 31, 2019, as
compared to $1,359,000 for the year ended December 31, 2018, an increase of $297,000 or 22%. The
increase was driven by stock compensation expense of approximately $125,000 for performance awards
granted and achieved by employees during the current year and approximately $200,000 in increased
salaries and benefits.

Research and Development Expenses
Consolidated research and development expenses were $2,396,000 for the year ended December 31, 2019,
compared to $3,012,000 for the year ended December 31, 2018, a decrease of $616,000 or 20%. Research
and development in the Device Segment decreased by $406,000 and the Clinical Development Segment
decreased by $210,000. The decrease in both segments is primarily due to a decline in personnel costs
related to corporate reorganization in June 2018.

General and Administrative Expenses
Consolidated general and administrative expenses for the year ended December 31, 2019 were $6,377,000,
compared to $8,286,000 for the year ended December 31, 2018, a decrease of $1,909,000 or 23%. The
decrease was driven by a loss on the disposal of fixed assets in 2018 of approximately $1,300,000 related
to medical devices purchased for clinical trials and implementation costs for a new ERP system as a result
of halting the clinical programs in 2018. Additionally, personnel costs decreased by approximately
$630,000 due to the June 2018 reorganization and other headcount reductions in 2018, severance expenses
of approximately $525,000 in 2018, and a one-time legal settlement of $150,000 in 2018. In 2019, the
Company had stock compensation expense, patent legal expense and travel expenses of approximately
$300,000 less combined as compared to 2018. India general and administrative expenses were also
approximately $300,000 less in 2019 due to lower payroll expenses resulting from a reorganization in India
in the first quarter of 2019 and a renegotiated settlement of an outstanding debt. These decreases were
offset by a $1,400,000 expense as the result of the verdict against the Company in the Mavericks lawsuit.

Impairment Charges
The Company incurred no impairment charges during the year ended December 31, 2019 as compared to
impairment charges of $33,081,000 during the year ended December 31, 2018. During the twelve months
ended December 31, 2018, the Company experienced a significant and sustained decline in its stock price
resulting in its market capitalization falling significantly below the recorded value of its consolidated assets.
The Company performed a quantitative assessment which determined that the carrying amount for the
Company’s goodwill and indefinite lived intangible assets relating to the clinical protocols exceeded its
estimated fair value. As a result, impairment charges of $13,195,000 to goodwill and $19,886,000 to the
Company’s intangible assets in the Clinical Development Segment were recorded during the twelve months
ended December 31, 2018.

Interest Expense
Interest expense increased to $4,479,000 for the year ended December 31, 2019 as compared to $2,697,000
for the year ended December 31, 2018, a difference of $1,782,000. The increase is driven by interest
recorded and the amortization of the debt discount, interest expense and the loss on the extinguishment of
debt related to the January 2019 Note and Amended Note of approximately $950,000, as well as
approximately $800,000 more in interest and amortization of the debt discount on the beneficial conversion
feature related to the Revolving Credit Agreement with Boyalife, for which amortization started in May
2018 and July 2019 Note interest of $105,000.

Loss on Extinguishment of Debt
The Company recorded a loss of extinguishment of debt of $840,000 for the year ended December 31, 2019
as compared to $0 for the year ended December 31, 2018. The increase is due to the loss on the
extinguishment of the January 2019 Note.

Benefit for Income Taxes
For the year ended December 31, 2019, the Company has no income tax benefit compared to $4,730,000
for the year ended December 31, 2018. The benefit for income tax for the year ended December 31, 2018
was due to the impairment of the indefinite lived intangible assets for the clinical protocols and goodwill.
The Company’s deferred tax liability is tied to the intangible assets and goodwill.

Non-GAAP Measures
In addition to the results reported in accordance with US GAAP, we also use a non-GAAP measure,
adjusted EBITDA, to evaluate operating performance and to facilitate the comparison of our historical
results and trends. The Company calculates adjusted EBITDA as income (or loss) from operations less
depreciation, amortization, stock compensation and impairment of intangible assets. This financial measure
is not a measure of financial performance under US GAAP and should not be considered in isolation or as
a substitute for loss as a measure of performance. The calculation of this non-GAAP measure may not be
comparable to similarly titled measures used by other companies. Reconciliations to the most directly
comparable GAAP measure are provided below.

Year Ended December 31,
2018

2019
$(10,099,000)

Net Loss

Deduct:

Interest expense

Loss on extinguishment of debt
Fair value change of derivative instruments and other
Loss on equity method investments
Benefit for income taxes
Loss from operations

Add:
Depreciation and amortization
Stock-based compensation expense
Impairment of intangible asset
Adjusted EBITDA

(4,479,000)
(840,000)
(32,000)
(15,000)
--
$(4,733,000)

805,000
614,000
--
$(3,314,000)

$(40,940,000)

(2,697,000)
--
572,000
--
4,730,000
$(43,545,000)

670,000
652,000
33,081,000
$(9,142,000)

The adjusted EBITDA loss was $3,314,000 for the year ended December 31, 2019 compared to a loss of
$9,142,000 for the year ended December 31, 2018, an increase of $5,828,000 or 64%. The increase was
due to $3,441,000 in additional gross profit as the result of higher sales, decreasing overhead expenses and
lowering disposable costs through price efficiencies from contract manufacturers. Additionally, the
Company decreased salary related expenses in operating expenses by approximately $1,000,000 as a result
of the June 2018 reorganization and the elimination of other positions during 2018. The year ended
December 31, 2018 also included severance expenses of $525,000, a one-time legal settlement of $150,000
and a loss on the disposal of fixed assets of approximately $1,300,000. These decreases were offset by a
$1,400,000 expense as the result of the verdict against the company in the Mavericks lawsuit.

Liquidity and Capital Resources

At December 31, 2019, we had cash and cash equivalents of $3,157,000 and working capital of $3,176,000.
This compared to cash and cash equivalents of $2,400,000 and working capital of $2,261,000 at December
31, 2018. We have primarily financed operations through private and public placement of equity securities
and our line of credit facility.

For the year ended December 31, 2019, we used $3,260,000 of cash for operations primarily the result of
the net loss $10,099,000 in 2019. The loss was offset by approximately $4,800,000 of non-cash charges,
related to the amortization of debt discount, stock-based compensation expense, depreciation and
amortization, reserves for slow-moving inventories and loss on the extinguishment of debt. Other drivers
of the cash from operations was an increase long term deferred revenue and other noncurrent liabilities of
$1,492,000, primarily due to the exclusivity fee received from Corning; an increase in other current

liabilities of $1,143,000 primarily due to the short-term portion and an increase in interest payable and an
increase prepaid expenses and other assets of $540,000. These increases were offset by a reduction in
accounts payable and accrued payroll of $1,381,000 and a decrease in inventories of $610,000.

Cash used in investing activities for the year ended December 31, 2019 was $182,000 as the result of capital
purchases.

Cash generated in financing activities for the year ended December 31, 2019 was $4,199,000, primarily due
to $1,800,000 received from the issuance of long-term debt from convertible notes issued in January 2019
and July 2019, $1,513,000 from the draw-down of funds from our related party long-term convertible
promissory note, the issuance of 444,445 pre-funded warrants in April of 2019 for $756,000 and $154,000
from the exercise of 18,764 warrants and 416,500 pre-funded warrants during the year.

The Company has a Revolving Credit Agreement with Boyalife Asset Holding II, Inc. As of December 31,
2019, the Company had drawn down $8,713,000 of the $10,000,000 available under the Revolving Credit
Agreement. Future draw-downs may be limited for various reasons including default or foreign government
policies that restrict or prohibit transferring funds. At the time of this filing, we are currently unable to
draw down on the line of credit. This may change in the near future but there is no assurance that the line
of credit will become available at such time when it is needed. Boyalife Investment Fund II, Inc. is a wholly-
owned subsidiary of Boyalife Group Inc., which is owned and controlled by the Company’s Chief Executive
Officer and Chairman of our Board of Directors.

The Company has incurred recurring operating losses and as of December 31, 2019 had an accumulated
deficit of $236,932,000. These conditions raise substantial doubt about the Company’s ability to continue
as a going concern within one year from the filing of this report. The Company anticipates requiring
additional capital to grow the business, to fund other operating expenses and to make interest payments on
the line of credit with Boyalife. The Company’s ability to fund its cash needs is subject to various risks,
many of which are beyond its control. The Company may seek additional funding through bank borrowings
or public or private sales of debt or equity securities or strategic partnerships. The Company cannot
guarantee that such funding will be available on a timely basis, in needed quantities or on terms favorable
to us, if at all.

One customer had an accounts receivable balance of $337,000 or 27% and $494,000 or 39% at December
31, 2019 and 2018, respectively. One distributor had an accounts receivable balance of $177,000 or 14%
and $220,000 or 18% at December 31, 2019 and 2018, respectively. A second distributor had an accounts
receivable balance of $170,000 or 14% and $0 at December 31, 2019 and 2018, respectively.

Revenues from one customer totaled $3,575,000 or 28% and $2,120,000 or 22% for the years ended
December 31, 2019 and 2018, respectively. Revenues from one distributor totaled $1,470,000 or 11%, and
$460,000 or 4% for the year ended December 31, 2019 and the year ended December 31, 2018, respectively.

We manage the concentration of credit risk with these customers and distributors through a variety of
methods including, letters of credit with financial institutions, pre-shipment deposits, credit reference
checks and credit limits. Although management believes that these 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.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us 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, we evaluate our estimates, including those related to stock-
based compensation, depreciation, fair values of intangibles and goodwill, bad debts, inventories,
warranties, contingencies and litigation. We base our 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. See Note 2 “Summary of Significant Accounting Policies” to the Notes to the Consolidated
Financial Statements contained in Item 8.

We believe the following critical accounting policies affect the more significant judgments and estimates
used by the Company in the preparation of its consolidated financial statements.

We have no off-balance sheet arrangements.

Off Balance Sheet Arrangements

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, we are
not required to provide the disclosure required under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm ................................................... 34

Consolidated Balance Sheets at December 31, 2019 and 2018 ............................................... 35

Consolidated Statements of Operations and Comprehensive Loss for the years ended

December 31, 2019 and 2018 .................................................................................................. 36

Consolidated Statements of Equity for the years ended December 31, 2019
and 2018 .................................................................................................................................. 37

Consolidated Statements of Cash Flows for the years ended December 31, 2019
and 2018 .................................................................................................................................. 38

Notes to Consolidated Financial Statements ........................................................................... 39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of
ThermoGenesis Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ThermoGenesis Holdings, Inc. (the “Company”),
formerly known as Cesca Therapeutics Inc., as of December 31, 2019 and 2018, the related consolidated statements
of operations and comprehensive loss, equity and cash flows for each of the two years in the period ended December
31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and
2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31,
2019, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going
concern. As more fully described in Note 1, the Company has incurred recurring losses. These recurring losses raise
substantial doubt about the Company's ability to continue as a going concern. Management's plans regard to these
matters are also described in Note 1. The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting
for leases in 2019 due to the adoption of the guidance in ASC Topic 842, Leases (“Topic 842”).

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.

/s/ Marcum LLP
Marcum LLP

We have served as the Company’s auditor since 2015.

New York, NY
March 23, 2020

THERMOGENESIS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS

December 31,

2019

2018

ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable, net of allowance for doubtful accounts of $226,000
($419,000 at December 31, 2018)
Inventories, net of reserves of $350,000 ($258,000 at December 31, 2018)
Prepaid expenses and other current assets
Total current assets

Restricted cash – long term
Equipment and leasehold improvements, net
Right-of-use operating lease assets, net
Goodwill
Intangible assets, net
Other assets
Total assets

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Accrued payroll and related expenses
Deferred revenue – short term
Interest payable – related party
Other current liabilities
Total current liabilities

Convertible promissory note – related party, less debt discount of
$5,195,000 ($6,026,000 at December 31, 2018)
Convertible promissory note, plus debt premium of $46,000 ($0 at December 31,
2018)
Note payable
Operating lease obligations – long term
Deferred revenue – long term
Other noncurrent liabilities
Total liabilities

Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 2,000,000 shares authorized; none issued
and outstanding

$3,157,000
1,000,000

1,278,000
3,824,000
602,000
9,861,000

--
2,028,000
859,000
781,000
1,467,000
218,000
$15,214,000

$1,447,000
288,000
620,000
1,869,000
2,461,000
6,685,000

3,518,000

413,000
1,000,000
761,000
1,901,000
20,000
14,298,000

$2,400,000
--

1,509,000
4,493,000
224,000
8,626,000

1,000,000
2,562,000
--
781,000
1,591,000
51,000
$14,611,000

$2,423,000
703,000
485,000
1,513,000
1,241,000
6,365,000

1,174,000

--
--
--
303,000
38,000
7,880,000

Common stock, $0.001 par value; 350,000,000 shares authorized;
2,843,601 issued and outstanding (2,168,337 at December 31, 2018)
Additional paid in capital
Accumulated deficit
Accumulated other comprehensive loss
Total ThermoGenesis Holdings, Inc. stockholders’ equity

3,000
237,313,000
(236,932,000)
2,000
386,000

Noncontrolling interest
Total equity
Total liabilities and equity

530,000
916,000
$15,214,000
See accompanying notes to consolidated financial statements.

2,000
235,888,000
(227,435,000)
(13,000)
8,442,000

(1,711,000)
6,731,000
$14,611,000

THERMOGENESIS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Net revenues
Net revenues – related party
Total net revenues
Cost of revenues

Gross profit

Expenses:
Sales and marketing
Research and development
General and administrative
Impairment charges
Total operating expenses

Loss from operations

Other income (expense):
Fair value change of derivative instruments
Interest expense
Loss on extinguishment of debt
Loss on equity method investments
Other expenses
Total other expense

Loss before benefit for income taxes
Benefit for income taxes
Net loss

Loss attributable to non-controlling interests
Net loss attributable to common stockholders

COMPREHENSIVE LOSS
Net loss
Other comprehensive loss:
Foreign currency translation adjustments
Comprehensive loss
Comprehensive loss attributable to non-controlling interests
Comprehensive loss attributable to common stockholders

Per share data:
Basic and diluted net loss per common share

Year Ended December 31,

2019

2018

$12,160,000
887,000
13,047,000
7,351,000
5,696,000

1,656,000
2,396,000
6,377,000
--
10,429,000

$9,003,000
669,000
9,672,000
7,479,000
2,193,000

1,359,000
3,012,000
8,286,000
33,081,000
45,738,000

(4,733,000)

(43,545,000)

1,000
(4,479,000)
(840,000)
(15,000)
(33,000)
(5,366,000)

(10,099,000)
--
(10,099,000)

(602,000)
$(9,497,000)

596,000
(2,697,000)
--
--
(24,000)
(2,125,000)

(45,670,000)
4,730,000
(40,940,000)

(1,224,000)
$(39,716,000)

$(10,099,000)

$(40,940,000)

15,000
(10,084,000)
(602,000)
$(9,482,000)

30,000
(40,910,000)
(1,224,000)
$(39,686,000)

$(3.36)

$(21.57)

Weighted average common shares outstanding Basic and diluted

2,828,606

1,841,281

See accompanying notes to consolidated financial statements.

THERMOGENESIS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EQUITY

Balance at December 31, 2017

Stock-based compensation

expense

Issuance of common stock and

pre-funded warrants in
financing, net of offering costs

Exercise of warrants
Discount due to beneficial

conversion features

Cumulative-effect adjustment
from adoption of ASC 606
Foreign currency translation
Net loss
Balance at December 31, 2018

Stock-based compensation
Exercise of pre-funded warrants
Exercise of warrants
Conversion of note payable to

stock

Reorganization of subsidiary and

related change in non-controlling
interest

Discount due to beneficial

conversion features

Issuance of common stock pre-

funded warrants in financing, net
of offering cost

Foreign currency translation
Net loss
Balance at December 31, 2019

Shares
1,090,664

Common
Stock

$1,000

Paid in Capital
in Excess of
Par
$221,381,000

Accumulated
Deficit
$(187,640,000)

AOCL*
$(43,000)

Non-
Controlling
Interests
$(487,000)

Total Equity
$33,212,000

652,000

808,465
269,167

1,000
--

6,628,000
27,000

7,200,000

--
--

652,000

6,629,000
27,000

7,200,000

--
--
--
2,168,337

--
416,500
18,764

240,000

--
--
--
$2,000

--
1,000
--

--
--
--
$235,888,000

(79,000)
--
(39,716,000)
$(227,435,000)

--
30,000
--
$(13,000)

--
--
(1,224,000)
$(1,711,000)

(79,000)
30,000
(40,940,000)
$6,731,000

614,000
41,000
112,000

432,000

(2,843,000)

2,313,000

--
--
--

614,000
42,000
112,000

432,000

2,843,000

2,313,000

--
--
--
2,843,601

--
--
--
$3,000

756,000
--
--
$237,313,000

--
--
(9,497,000)
$(236,932,000)

--
15,000
--
$2,000

--
--
(602,000)
$530,000

756,000
15,000
(10,099,000)
$916,000

* Accumulated other comprehensive loss.

See accompanying notes to consolidated financial statements.

THERMOGENESIS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Stock-based compensation expense
Amortization of debt discount/premium, net

(Recovery of) reserve for excess and slow-moving inventories
(Recovery of) reserve for bad debt expense

Change in fair value of derivative
Deferred income tax benefit
Loss on disposal of equipment
Loss on extinguishment of debt
Impairment of intangible asset

Net change in operating assets and liabilities:
Accounts receivable

Inventories

Prepaid expenses and other assets
Accounts payable

Interest payable - related party

Accrued payroll and related expenses
Deferred revenue
Other current liabilities
Long term deferred revenue and other noncurrent liabilities
Net cash used in operating activities
Cash flows from investing activities:
Capital expenditures
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from long-term debt
Proceeds from convertible promissory note-related party
Payments on finance lease obligations
Proceeds from issuance of common stock and pre-funded warrants
Proceeds from exercise of warrants and pre-funded warrants
Net cash provided by financing activities
Effects of foreign currency rate changes on cash and cash equivalents
Net decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental disclosures of cash flow information:
Cash paid for interest
Supplemental non-cash financing and investing information:
Recording of beneficial conversion feature on debt
Right-to-use asset acquired under operating lease
Conversion of debt to common stock
Fair value of amended convertible note issued in connection with the

extinguishment of original convertible note

Transfer of equipment to inventories
Transfer of inventories to equipment

Year Ended December 31,
2019

2018

$(10,099,000)

$(40,940,000)

805,000
614,000
2,349,000
92,000
(60,000)
(1,000)
--
70,000
840,000
--

301,000
610,000
(525,000)
(966,000)
355,000
(415,000)
135,000
1,143,000
1,492,000
(3,260,000)

(182,000)
(182,000)

1,800,000
1,513,000
(24,000)
756,000
154,000
4,199,000
--
757,000
3,400,000
$4,157,000

670,000
652,000
1,174,000
(11,000)
153,000
(596,000)
(4,730,000)
1,360,000
--
33,081,000

1,045,000
61,000
370,000
214,000
(606,000)
172,000
24,000
922,000
2,000
(6,983,000)

(1,238,000)
(1,238,000)

--
500,000
(45,000)
6,629,000
27,000
7,111,000
(3,000)
(1,113,000)
4,513,000
$3,400,000

$177,000

$667,000

$2,313,000
$966,000
$432,000

$1,473,000
$44,000
$22,000

$7,200,000
--
--

--
$172,000
$420,000

See accompanying notes to consolidated financial statements.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Description of Business, Going Concern and Basis of Presentation

Organization and Basis of Presentation
ThermoGenesis Holdings, Inc. (“ThermoGenesis Holdings,” the “Company,” “we,” “our,” “us”), formerly
known as Cesca Therapeutics Inc., develops, commercializes and markets a range of automated
technologies for CAR-T and other cell-based therapies. The Company currently markets a full suite of
solutions for automated clinical biobanking, point-of-care applications, and automation for immuno-
oncology, including its semi-automated, functionally closed CAR-TXpress™ platform, which streamlines
the manufacturing process for the emerging CAR-T immunotherapy market. The Company was founded in
1986 and is registered in the State of Delaware and headquartered in Rancho Cordova, CA.

The Company provides the AutoXpress® and BioArchive platforms for automated clinical bio-banking,
PXP platform for point-of-care cell-based therapies and CAR-TXpress™ platform under development for
bio-manufacturing for immuno-oncology applications. The Company and its subsidiaries currently
manufactures and markets the following products:

For Clinical Bio-Banking Applications:

• AXP Automated Cell Separation System – an automated, fully closed cell separation system for

isolating and retrieving stem and progenitor cells from umbilical cord blood.

• 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.

For 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.

For Large Scale Cell Processing and Biomanufacturing:

• X-Series Products: X-Lab® for cell isolation, X-Wash® System for cell washing and

reformulation, X-Mini® for high efficiency small scale cell purification, and X-BACS™ System
under development for large scale cell purification using our proprietary buoyance-activated cell
sorting (BACS) technology.

• CAR-TXpress™ Platform – a modular designed, functionally closed platform that addresses the
critical unmet need for large scale cellular processing and chemistry, manufacturing and controls
(“CMC”) needs for manufacturing chimeric antigen receptor (“CAR”) T cell therapies. CAR-
TXpress is owned and developed through a subsidiary in which we own 80% of the equity interest.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Description of Business, Going Concern and Basis of Presentation (Continued)

Organization and Basis of Presentation (Continued)
January 1, 2019, the Company entered into a reorganization of the business and equity ownership of its
majority-owned ThermoGenesis Corp. subsidiary. Pursuant to the reorganization, the assets acquired by
ThermoGenesis Corp. from SynGen Inc. in July 2017 were contributed to a newly formed Delaware
subsidiary of ThermoGenesis Corp. named CARTXpress Bio and the 20% interest in ThermoGenesis Corp.
held by a third party was exchanged for a 20% interest in CARTXpress Bio. As a result, the Company
holds an 80% equity interest in CARTXpress Bio and the Company has become the owner of 100% of
ThermoGenesis Corp. The purpose of the reorganization was to allow CARTXpress Bio to focus on the
development and commercialization of the newly launched CARTXpress Bio cellular manufacturing
platform.

In the reorganization, the Company reacquired the non-controlling interest shares in ThermoGenesis Corp.,
which had an accumulated deficit of $1,711,000, in exchange for a 20% equity interest in the newly formed
subsidiary, CARTXpress Bio, which amounted to approximately $1,100,000. The total amount of
$2,843,000 related to the reorganization of subsidiary and the related increase in non-controlling interest
was offset by a charge to additional paid in capital in stockholders’ equity.

ThermoGenesis Holdings is an affiliate of the Boyalife Group, a global diversified life science holding
company that focuses on stem cell technology and cell-based therapeutics.

Liquidity and Going Concern
The Company has a Revolving Credit Agreement (the “Credit Agreement”) with Boyalife Asset Holding
II, Inc. (See Note 5). As of December 31, 2019, the Company had drawn down $8,713,000 of the
$10,000,000 available under the Credit Agreement. Future draw-downs may be limited for various reasons
including default or foreign government policies that restrict or prohibit transferring funds. At the time of
this filing, the Company is currently unable to draw down on the line of credit. This may change in the
near future; however, there is no assurance that the line of credit will become available at such time when
it is needed. Boyalife Asset Holding II, Inc. is a wholly owned subsidiary of Boyalife Group Inc., which is
owned and controlled by the Company’s Chief Executive Officer and Chairman of our Board of Directors.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Description of Business, Going Concern and Basis of Presentation (Continued)

Liquidity and Going Concern (Continued)
At December 31, 2019, the Company had cash and cash equivalents of $3,157,000 and working capital of
$3,176,000. The Company has incurred recurring operating losses and as of December 31, 2019 has an
accumulated deficit of $236,932,000. These recurring losses raise substantial doubt about the Company’s
ability to continue as a going concern within one year from the filing of this report. The Company will need
to raise additional capital to grow its device business, fund operating expenses and make interest payments
that will become due under the line of credit with Boyalife Asset Holding II, Inc. The Company’s ability
to fund its cash needs is subject to various risks, many of which are beyond its control. The Company plans
to 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.

The accompanying consolidated financial statements have been prepared assuming that the Company will
continue as a going concern; however, the conditions described herein raise substantial doubt about the
Company’s ability to do so. 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 become necessary should the Company be unable to continue as a
going concern.

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. All significant intercompany accounts and
transactions have been eliminated upon consolidation.

Non-controlling Interests
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 the subsidiary.
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 interest reflects only its share of the after-tax earnings or losses of an
affiliated company. The Company's consolidated balance sheets reflect non-controlling interests within the
equity section.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies

Use of Estimates
Preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not
limited to, the allowance for doubtful accounts, carrying amounts of inventories, depreciation and
amortization, warranty obligations, assumptions made in valuing financial instruments issued in various
compensation and financing arrangements, deferred income taxes and related valuation allowance and the
fair values of intangibles and goodwill. Actual results could materially differ from the estimates and
assumptions used in the preparation of the Company’s consolidated financial statements.

Revenue Recognition
Revenue is recognized based on the five-step process outlined in Accounting Standards Codification
(“ASC”) 606:

Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract
have approved the contract and are committed to perform their respective obligations, (b) the entity can
identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the
payment terms for the goods or services to be transferred, (d) the contract has commercial substance and,
(e) it is probable that the entity will collect substantially all of the consideration to which it will be entitled
in exchange for the goods or services that will be transferred to the customer.

Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company
identifies as performance obligations each promise to transfer to the customer either (a) goods or services
that are distinct or (b) a series of distinct goods or services that are substantially the same and have the same
pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services,
the Company must apply judgement to determine whether the goods or services are capable of being distinct
within the context of the contract. If these criteria are not met, the goods or services are accounted for as a
combined performance obligation.

Step 3 – Determine the Transaction Price – The contract terms and customary business practices are used
to determine the transaction price. The transaction price is the amount of consideration expected to be
received in exchange for transferring goods or services to the customer. The Company’s contracts include
fixed consideration.

Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is
to allocate the transaction price to each performance obligation in the contract. If the contract only has one
performance obligation, the entire transaction price will be applied to that obligation. If the contract has
multiple performance obligations, the transaction price is allocated to the performance obligations based
on the relative standalone selling price (“SSP”) at contract inception.

Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – When an asset is
transferred and the customer obtains control of the asset (or the services are rendered), the Company
recognizes revenue. At contract inception, the Company determines if each performance obligation is
satisfied at a point in time or over time. For device sales, revenue is recognized at a point in time when the
goods are transferred to the customer and they obtain control of the asset. For maintenance contracts,
revenue is recognized over time as the performance obligations in the contracts are completed.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)
Device Sales
Device sales include devices and consumables for BioArchive, AXP, CAR-TXpress and manual
disposables. Most devices are sold with contract terms stating that title passes, and the customer takes
control at the time of shipment. Revenue is then recognized when the devices are shipped, and the
performance obligation has been satisfied. If devices are sold under contract terms that specify that the
customer does not take ownership until the goods are received, revenue is recognized when the Company
confirms that the customer has received and taken physical possession of the goods.

Service Revenue
Service revenue principally consists of maintenance contracts for BioArchive, AXP and CAR-TXpress
products. Devices sold have warranty periods of one to two years. After the warranty expires, the Company
offers separately priced annual maintenance contracts. Under these contracts, customers pay in advance.
These prepayments are recorded as deferred revenue and recognized over time as the contract performance
obligations are satisfied. For AXP and CAR-TXpress products, the Company offers one type of
maintenance contract providing preventative maintenance and repair services. Revenue under these
contracts is recognized ratably over time, as the customer has the right to use the service at any time during
the annual contract period and services are unlimited. For BioArchive, the Company offers three types of
maintenance contracts: Gold, Silver and Preventative Maintenance Only. Under the Gold contract,
maintenance and repair services are unlimited and revenue is recognized ratably over time. For the Silver
and Preventative Maintenance contracts, available services are limited, and revenue is recognized during
the contract period when the underlying performance obligations are satisfied. If the services are not used
during the contract period, any remaining revenue is recognized when the contract expires. The renewal
date for maintenance contracts varies by customer, depending when the customer signed their initial
contract.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)
Clinical Services
Service revenue in our Clinical Development Segment includes point of care procedures and cord blood
processing and storage. Point of care procedures are recognized when the procedures are performed. Cord
blood processing and storage is recognized as the performance obligations are satisfied. Processing revenue
is recognized when that performance obligation is completed immediately after the baby’s birth, with
storage revenue recorded as deferred revenue and recognized ratably over time for up to 21 years. As of
December 31, 2019 and 2018, the total deferred cord blood storage revenue is $237,000 and $252,000,
respectively. As of December 31, 2019, those amounts were recorded as $14,000 in current liabilities and
$223,000 in non-current liabilities. As of December 31, 2018, those amounts were recorded as $14,000 in
current liabilities and $238,000 in non-current liabilities. The customer may pay for both services at the
time of processing. The amount of the transaction price allocated to each of the performance obligations is
determined by using the standalone selling price of each component, which the Company applies
consistently to all such arrangements. The Company did not process and store any new cord blood revenue
in 2019. Service revenue recognized in the Clinical Development Segment in 2019 related entirely to
revenue deferred from previous years.

The following table summarizes the revenues of the Company’s reportable segments for the year ended
December 31, 2019:

Device Segment:
AXP

BioArchive

Manual Disposables
CAR-TXpress

Other
Total Device Segment
Clinical Development Segment:
Disposables
Other
Total Clinical Development
Total

Year Ended December 31, 2019

Device
Revenue

Service
Revenue

Other
Revenue

Total
Revenue

$7,313,000
1,472,000
909,000
1,457,000
--
11,151,000

68,000
--
68,000
$11,219,000

$209,000
1,438,000
--
13,000
--
1,660,000

--
22,000
22,000
$1,682,000

$7,522,000
2,910,000
909,000
1,565,000
51,000
12,957,000

$95,000
51,000
146,000

--
--
--
$146,000

68,000
22,000
90,000
$13,047,000

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)
The following table summarizes the revenues of the Company’s reportable segments for the year ended
December 31, 2018:

Year Ended December 31, 2018

Device
Revenue

Service
Revenue

Other
Revenue

Total
Revenue

Device Segment:
AXP

BioArchive

Manual Disposables
CAR-TXpress

Other
Total Device Segment
Clinical Development Segment:

Bone Marrow

Other
Total Clinical Development
Total

$4,131,000
1,792,000
976,000
907,000
--
7,806,000

--
38,000
38,000
$7,844,000

$262,000
1,306,000
--
--
--
1,568,000

135,000
30,000
165,000
$1,733,000

$--
--
--
--
95,000
95,000

$4,393,000
3,098,000
976,000
907,000
95,000
9,469,000

--
--
--
$95,000

135,000
68,000
203,000
$9,672,000

In 2019, there was no right of return provided for distributors or customers. For distributors, the Company
has no control over the movement of goods to the end customer. The Company’s distributors control the
timing, terms and conditions of the transfer of goods to the end customer. Additionally, 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 payment is received. 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, whether
the Company has a pattern of granting concessions for the benefit of the distributor, and whether there are
other conditions that may indicate that the sale to the distributor is not substantive.

Payments from domestic customers are normally due in two months or less after the title transfers, the
service contract is executed, or the services have been rendered. For international customers, payment
terms may extend up to 120 days. All sales have fixed pricing and there are currently no variable
components included in the Company’s revenue.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)
Contract Balances
Generally, all sales are contract sales (with either an underlying contract or purchase order). The Company
does not have any material contract assets. When invoicing occurs prior to revenue recognition a contract
liability is recorded (as deferred revenue on the consolidated balance sheet). Revenues recognized during
the year ended December 31, 2019 that were included in the beginning balance of deferred revenue were
$1,049,000. Short term deferred revenues were $620,000 and $485,000 at December 31, 2019 and 2018,
respectively. Long term deferred revenue, included in other noncurrent liabilities, was $1,901,000 and
$303,000 at December 31, 2019 and 2018, respectively.

Exclusivity Fee
On August 30, 2019, the Company entered into a Supply Agreement with Corning Incorporated (the
“Supply Agreement”). The Supply Agreement has an initial term of five years with automatic two-year
renewal terms, unless terminated by either party in accordance with the terms of the Supply Agreement
(collectively, the “Term”). Pursuant to the Supply Agreement, the Company has granted to Corning
exclusive worldwide distribution rights for substantially all X-Series® products under the CAR-TXpress™
platform (the “Products”) manufactured by its subsidiary, ThermoGenesis Corp., for the duration of the
Term, subject to certain geographical and other exceptions. As consideration for the exclusive worldwide
distribution rights for the Products, Corning has agreed to pay a $2,000,000 exclusivity fee, in addition to
any amounts payable throughout the Term for the Products.

The Company performed an evaluation of the revenue recognition of the $2,000,000 fee under ASC 606.
It determined that the $2,000,000 will be recognized over time, based on the term of the contract. It was
determined that the most likely outcome is the agreement is extended for one additional two-year
term after the initial five-year contract is complete. Consequently, the term to recognize the
exclusivity fee is over seven years. The Company will allocate the upfront fee evenly to each daily
performance obligation of providing exclusivity and recognize the revenue ratably over the seven-
year period. As each day passes, the Company will recognize the portion of the exclusivity fee
allocated to that day. For the year ended December 31, 2019, the Company recorded revenue of
$96,000 related to the exclusivity fee. The remaining balance of the $2,000,000 payment of
$1,904,000 was recorded to deferred revenue, with $286,000 in short-term deferred revenue and
$1,618,000 recorded in long-term deferred revenue.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)
Backlog of Remaining Customer Performance Obligations
The following table includes revenue expected to be recognized and recorded as sales in the future from
the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the end of the
reporting period.

Service revenue
Clinical revenue
Exclusivity Fee
Total

2020
$848,000
14,000
286,000
$1,148,000

2021
$632,000
14,000
286,000
$932,000

2022
$228,000
$14,000
286,000
$528,000

2023
$90,000
14,000
286,000
$390,000

2024 and
beyond

$30,000
181,000
760,000
$971,000

Total
$1,828,000
237,000
1,904,000
$3,969,000

Revenues are net of normal discounts. Shipping and handling fees billed to customers are included in net
revenues, while the related costs are included in cost of revenues.

Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the time of
purchase to be cash equivalents. Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents
is maintained in checking accounts, money market funds and certificates of deposits with reputable financial
institutions that may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit
Insurance Corporation. The Company has cash and cash equivalents of $10,000 and $11,000 at December
31, 2019 and 2018 in India. The Company has not experienced any realized losses on the Company’s
deposits of cash and cash equivalents.

Foreign Currency Translation
The Company’s reporting currency is the US dollar. The functional currency of the Company’s subsidiaries
in India is the Indian rupee (“INR”). Assets and liabilities are translated into US dollars at period end
exchange rates. Revenue and expenses are translated at average rates of exchange prevailing during the
periods presented. Cash flows are also translated at average exchange rates for the period, therefore,
amounts reported on the consolidated statement of cash flows do not necessarily agree with changes in the
corresponding balances on the consolidated balance sheet. Equity accounts other than retained earnings are
translated at the historic exchange rate on the date of investment. A translation gain (loss) of $15,000 and
$30,000 was recorded at December 31, 2019 and 2018, respectively, as a component of other
comprehensive income.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Goodwill, Intangible Assets and Impairment Assessments
Goodwill represents the excess of the purchase price in a business combination over the fair value of net
tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful
life are amortized over their useful lives, which generally range from three to ten years. Each period the
Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events
or changes in circumstances warrant a revision to the remaining periods of amortization.

For goodwill and indefinite-lived intangible assets, the carrying amounts are periodically reviewed for
impairment (at least annually) and whenever events or changes in circumstances indicate that the carrying
value of these assets may not be recoverable. According to ASC 350,”Intangibles-Goodwill and Other”,
the Company can opt to perform a qualitative assessment or a quantitative assessment; however, if the
qualitative assessment determines that it is more likely than not (i.e., a likelihood of more than 50 percent)
the fair value is less than the carrying amount; the Company would recognize an impairment charge for
the amount by which the carrying amount exceeds the reporting unit’s fair value.

Fair Value of Financial Instruments
In accordance with ASC 820, Fair Value Measurements and Disclosures, fair value is defined as the exit
price, or the amount that would be received for the sale of an asset or paid to transfer a liability in an orderly
transaction between market participants as of the measurement date.

The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of
observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs
be used when available. Observable inputs are inputs that market participants would use in valuing the asset
or liability and are developed based on market data obtained from sources independent of the Company.
Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market
participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that
may be used to measure fair value:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Other observable inputs other than Level 1 prices such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are observable
or can be corroborated by observable market data.

Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate
fair value due to their short duration. The fair value of the Company’s derivative obligation liability is
classified as Level 3 within the fair value hierarchy since the valuation model of the derivative obligation
is based on unobservable inputs. The impairment of goodwill and intangible assets is a non-recurring Level
3 fair value measurement.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Accounts Receivable and Allowance for Doubtful Accounts
The Company’s receivables are recorded when billed and represent claims against third parties that will be
settled in cash. The carrying value of the Company’s receivables, net of the allowance for doubtful accounts,
represents their estimated net realizable value. The Company estimates the allowance for doubtful accounts
based on historical collection trends, age of outstanding receivables and existing economic conditions. If
events or changes in circumstances indicate that a specific receivable balance may be impaired, further
consideration is given to the collectability of those balances and the allowance is adjusted accordingly. A
customer’s receivable balance is considered past-due based on its contractual terms. Past-due receivable
balances are written-off when the Company’s internal collection efforts have been unsuccessful in
collecting the amount due.

Inventories
Inventories are stated at the lower of cost or net realizable value and include the cost of material, labor and
manufacturing overhead. Cost is determined on the first-in, first-out basis. The Company writes-down
inventory to its estimated net realizable value when conditions indicate that the selling price could be less
than cost due to physical deterioration, obsolescence, changes in price levels, or other causes, which it
includes as a component of cost of revenues. Additionally, the Company provides valuation allowances for
excess and slow-moving inventory on hand that are not expected to be sold to reduce the carrying amount
of slow-moving inventory to its estimated net realizable value. The valuation allowances are based upon
estimates about future demand from its customers and distributors and market conditions.

Because some of the Company’s products are highly dependent on government and third-party funding,
current customer use and validation, and completion of regulatory and field trials, there is a risk that the
Company will forecast incorrectly and purchase or produce excess inventories. As a result, actual demand
may differ from forecasts and the Company may be required to record additional inventory valuation
allowances that could adversely impact its gross margins. Conversely, favorable changes in demand could
result in higher gross margins when those products are sold.

Equipment and Leasehold Improvements
Equipment consisting of machinery and equipment, computers and software, office equipment and
leasehold improvements is recorded at cost less accumulated depreciation. Repairs and maintenance costs
are expensed as incurred. Depreciation for machinery and equipment, computers and software and office
furniture is computed under the straight-line method over the estimated useful lives. Leasehold
improvements are amortized under the straight-line method over their estimated useful lives or the
remaining lease period, whichever is shorter. When equipment and leasehold improvements are sold or
otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and the
impact of any resulting gain or loss is recognized within general and administrative expenses in the
consolidated statement of operations for the period.

Warranty
We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage
in extensive product quality programs and processes, including actively monitoring and evaluating the
quality of our component suppliers, our 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 our estimates, revisions to the estimated warranty
liability could have a material impact on our financial position, cash flows or results of operations.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Debt Discount and Issue Costs
The Company amortizes debt discount and debt issue costs over the life of the associated debt instrument,
using the straight-line method which approximates the interest rate method.

Derivative Financial Instruments
In connection with the sale of convertible debt and equity instruments, the Company may also issue
freestanding warrants. If freestanding warrants are issued and accounted for as derivative instrument
liabilities (rather than as equity), the proceeds are first allocated to the fair value of those instruments. The
remaining proceeds, if any, are then allocated to the convertible instrument, usually resulting in that
instrument being recorded at a discount from its face amount. Derivative financial instruments are initially
measured at their fair value using a Binomial Lattice Valuation Model and then re-valued at each reporting
date, with changes in the fair value reported as charges or credits to income.

Stock-Based Compensation
We use the Black-Scholes-Merton option-pricing formula in determining the fair value of our options at
the grant date and apply judgment in estimating the key assumptions that are critical to the model such as
the expected term, volatility and forfeiture rate of an option. Our estimate of these key assumptions is based
on historical information and judgment regarding market factors and trends. If any of the key assumptions
change significantly, stock-based compensation expense for new awards may differ materially in the future
from that recorded in the current period. The compensation expense is then amortized over the vesting
period.

The Company has three stock-based compensation plans, which are described more fully in Note 10.

Valuation and Amortization Method – The Company estimates the fair value of stock options granted using
the Black-Scholes-Merton option-pricing formula. This fair value is then amortized on a straight-line basis
over the requisite service periods of the awards, which is generally the vesting period. The formula does
not include a discount for post-vesting restrictions, as we have not issued awards with such restrictions.

Expected Term – For options which the Company has limited available data, the expected term of the option
is based on the simplified method. This simplified method averages an award’s vesting term and its
contractual term. For all other options, the Company's expected term represents the period that the
Company's stock-based awards are expected to be outstanding and was determined based on historical
experience of similar awards, giving consideration to the contractual terms of the stock-based awards,
vesting schedules and expectations of future employee behavior.

Expected Volatility – Expected volatility is based on historical volatility. Historical volatility is computed
using daily pricing observations for recent periods that correspond to the expected term of the options.

Expected Dividend – The Company has not declared dividends and does not anticipate declaring any
dividends in the foreseeable future. Therefore, the Company uses a zero value for the expected dividend
value factor to determine the fair value of options granted.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Stock-Based Compensation (Continued)
Risk-Free Interest Rate – The Company bases the risk-free interest rate used in the valuation method on the
implied yield currently available on U.S. Treasury zero-coupon issues with the same expected term.

Estimated Forfeitures – When estimating forfeitures, the Company considers voluntary and involuntary
termination behavior as well as analysis of actual option forfeitures.

Research and Development
Research and development costs, consisting of salaries and benefits, costs of disposables, facility costs,
contracted services and stock-based compensation from the engineering, regulatory and scientific affairs
departments, that are useful in developing and clinically testing new products, services, processes or
techniques, as well as expenses for activities that may significantly improve existing products or processes
are expensed as incurred. Costs to acquire technologies that are utilized in research and development and
that have no future benefit are expensed when incurred.

Acquired In-Process Research and Development
Acquired in-process research and development that the Company acquires through business combinations
represents the fair value assigned to incomplete research projects which, at the time of acquisition, have not
reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived
intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon
successful completion of each project, the Company will make a determination as to the then useful life of
the intangible asset, generally determined by the period in which the substantial majority of the cash flows
are expected to be generated and begin amortization. The Company tests intangible assets for impairment
at least annually, or more frequently if impairment indicators exist, by first assessing qualitative factors to
determine whether it is more likely than not that the fair value of the intangible asset is less than it’s carrying
amount. If the Company concludes it is more likely than not that the fair value is less than the carrying
amount, a quantitative test that compares the fair value of the intangible asset with its’ carrying value is
performed. If the fair value is less than the carrying amount, an impairment loss is recognized in operating
results.

Patent Costs
The costs incurred in connection with patent applications, in defending and maintaining intellectual
property rights and litigation proceedings are expensed as incurred.

Credit Risk
Currently, the Company primarily manufactures and sells cellular processing systems and thermodynamic
devices principally to the blood and cellular component processing industry and performs ongoing
evaluations of the credit worthiness of the Company’s customers. The Company believes that adequate
provisions for uncollectible accounts have been made in the accompanying consolidated financial
statements. To date, the Company has not experienced significant credit related losses.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Segment Reporting
Operating segments are defined as components of an enterprise about which separate financial information
is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-
making group, whose function is to allocate resources to and assess the performance of the operating
segments. The Company has identified its Chief Executive Officer as the CODM. In determining its
reportable segments, the Company considered the markets and the products or services provided to those
markets.

The Company has two reportable business segments:

• The Device Segment, engages in the development and commercialization of automated
technologies for cell-based therapeutics and bio-processing. The device division is operated
through the Company’s ThermoGenesis Corp. subsidiary.

• The Clinical Development Segment, is developing autologous (utilizing the patient’s own cells)
stem cell-based therapeutics that address significant unmet medical needs for applications within
the vascular, cardiology and orthopedic markets.

Income Taxes
The tax years 1999-2018 remain open to examination by the major taxing jurisdictions to which the
Company is subject; however, there is no current examination. The Company’s policy is to recognize
interest and penalties related to the underpayment of income taxes as a component of income tax expense.
To date, there have been no interest or penalties charged to the Company in relation to the underpayment
of income taxes. There were no unrecognized tax benefits during the periods presented.

The Company’s estimates of income taxes and the significant items resulting in the recognition of deferred
tax assets and liabilities reflect the Company’s assessment of future tax consequences of transactions that
have been reflected in the financial statements or tax returns for each taxing jurisdiction in which the
Company operates. The Company bases the provision for income taxes on the Company’s current period
results of operations, changes in deferred income tax assets and liabilities, income tax rates, and changes in
estimates of uncertain tax positions in the jurisdictions in which the Company operates. The Company
recognizes deferred tax assets and liabilities when there are temporary differences between the financial
reporting basis and tax basis of assets and liabilities and for the expected benefits of using net operating
loss and tax credit loss carryforwards. The Company establishes valuation allowances when necessary to
reduce the carrying amount of deferred income tax assets to the amounts that the Company believes are
more likely than not to be realized. The Company evaluates the need to retain all or a portion of the
valuation allowance on recorded deferred tax assets. When a change in the tax rate or tax law has an impact
on deferred taxes, the differences are expected to reverse. As the Company operates in more than one state,
changes in the state apportionment factors, based on operational results, may affect future effective tax rates
and the value of recorded deferred tax assets and liabilities. The Company records a change in tax rates in
the consolidated financial statements in the period of enactment.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Income Taxes (Continued)
Income tax consequences that arise in connection with a business combination include identifying the tax
basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions
assumed or resulting from the business combination. Deferred tax assets and liabilities related to temporary
differences of an acquired entity are recorded as of the date of the business combination and are based on
the Company’s estimate of the appropriate tax basis that will be accepted by the various taxing authorities
and its determination as to whether any of the acquired deferred tax liabilities could be a source of taxable
income to realize the Company’s pre-existing deferred tax assets.

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. There were 324,445 pre-funded warrants included in the year ended
December 31, 2019 calculation. 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 December 31:

Common stock equivalents of convertible promissory
note and accrued interest
Vested Series A warrants
Unvested Series A warrants(1)
Warrants – other
Stock options
Total

Year Ended December 31,
2019

2018

6,683,646
40,441
69,853
1,281,327
291,807
8,367,074

4,840,556
40,441
69,853
1,616,227
302,364
6,869,441

(1)

____________
The unvested Series A warrants were subject to vesting based upon the amount of funds actually received by the
Company in the second close of the August 2015 financing which never occurred. The warrants will remain
outstanding but unvested until they expire in February 2021.

Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. The
reclassifications did not have an impact on net loss as previously reported.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Recently Adopted Accounting Standards
On January 1, 2018, the Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers
(“Topic 606”)” (“ASC606”) and related updates. Using the modified retrospective method applied to those
contracts which were not completed as of January 1, 2018. Results for the reporting period beginning after
January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to
be reported in accordance with our historic accounting under “Revenue Recognition” (“Topic 605”). The
Company recorded a net increase to accumulated deficit of $79,000 as of January 1, 2018 due to the
cumulative impact of adopting ASC 606, with the impact related to service obligations requiring deferral.
ASC 606 requires the Company to defer costs related to obligations on service contracts with limited
performance obligations. Under previous guidance, these service obligations were amortized on a straight-
line basis.

In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2018-07, “Compensation-Stock Compensation (“Topic 718”): Improvements to Nonemployee
Share-Based Payment Accounting”, which simplifies the accounting for nonemployee share-based
payment transactions. The amendments specify that Topic 718 applies to all share-based payment
transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own
operations by issuing share-based payment awards. The Company adopted the standard on January 1, 2019.
The adoption of this standard had an immaterial impact on the Company’s financial statements.

In February 2016, the FASB issued ASU 2016-02 “Leases,” which increases transparency and
comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet
and disclosing key information about leasing arrangements. The Company adopted the standard on January
1, 2019.

The new standard requires lessees to recognize both the right-of-use assets and lease liabilities in the balance
sheet for most leases, whereas under previous GAAP only finance lease liabilities (previously referred to
as capital leases) were recognized in the balance sheet. In addition, the definition of a lease has been revised
which may result in changes to the classification of an arrangement as a lease. Under the new standard, an
arrangement that conveys the right to control the use of an identified asset by obtaining substantially all of
its economic benefits and directing how it is used as a lease, whereas the previous definition focuses on the
ability to control the use of the asset or to obtain its output. Quantitative and qualitative disclosures related
to the amount, timing and judgements of an entity’s accounting for leases and the related cash flows are
expanded. Disclosure requirements apply to both lessees and lessors, whereas previous disclosures related
only to lessees. The recognition, measurement, and presentation of expenses and cash flows arising from
a lease by a lessee have not significantly changed from previous GAAP. Lessor accounting is also largely
unchanged.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. Summary of Significant Accounting Policies (Continued)

Recently Adopted Accounting Standards (Continued)
The new standard provides a number of transition practical expedients, which the Company has elected,
including:

• A “package of three” expedients that must be taken together and allow entities to (1) not reassess
whether existing contracts contain leases, (2) carryforward the existing lease classification, and (3)
not reassess initial direct costs associated with existing leases, and

• An implementation expedient which allows the requirements of the standard in the period of

adoption with no restatement of prior periods.

The impact of adoption did not have a material impact to the Company as of January 1, 2019 as the
Company’s finance leases are immaterial and its operating leases had remaining terms of less than one year.
In January 2019, the Company signed an amendment to its lease for office space at its corporate
headquarters in Rancho Cordova, CA. The amendment extended the lease term by five years and was
accounted for as a modification. At that time, the Company recorded lease assets and liabilities of $966,000
and no cumulative effect adjustment to retained earnings.

Recently Issued Accounting Standards
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards
Update (“ASU”) 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting of Income Taxes”, which
is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes
certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to
improve consistent application. This guidance is effective for fiscal years and interim periods within those
fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently
evaluating the impact of this standard on its financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (“Topic 820”): Disclosure
Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates,
adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure
framework project. The standard is effective for all entities for financial statements issued for fiscal years
beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is
permitted. The adoption of this guidance is not expected to have a material impact on the Company’s
financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”). The
ASU introduces 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 period beginning
after December 15, 2022, including interim reporting periods within those annual reporting periods. We
expect that the impact of adoption will not have a material impact.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Intangible Assets and Goodwill

U.S. GAAP requires that goodwill and intangible assets with indefinite lives be assessed annually for
impairment. The Company completed its annual impairment test for 2019 in the fiscal fourth quarter. In
performing the assessment, the Company used current market capitalization, discounted future cash flows,
internal forecasts and other factors as the best evidence of fair value. These assumptions represent Level 3
inputs. The assessment determined that the carrying amount for the Company’s fair value of its intangible
assets and goodwill exceeded its carrying value and no impairment loss existed for the year ended December
31, 2019. Future impairment tests will be performed annually in the fiscal fourth quarter, or sooner if
conditions exist that may represent an impairment.

During the year ended December 31, 2018, the Company experienced a significant and sustained decline
in its stock price. The decline resulted in the Company’s market capitalization falling significantly below
the recorded value of its consolidated net assets. As a result, the Company performed a quantitative
assessment as of June 30, 2018 and computed a fair value for its intangible assets and goodwill. The
assessment determined that the carrying amount for the Company’s goodwill exceeded the estimated fair
value in 2018. Additionally, the Company’s indefinite-lived intangible assets, relating to the clinical
protocols was also determined to be impaired. Also, the Company has significantly reduced its operating
activities in India and impaired the remaining goodwill and substantially all of the intangible assets
including the remainder of the clinical protocols, associated with the acquisition of our Totipotent
subsidiaries. As a result, the Company recorded an impairment loss in the year ended December 31, 2018.

Balance at December 31, 2017, net

Intangible Assets
$21,629,000

Goodwill

$13,976,000

Amortization and foreign exchange

(152,000)

Impairment loss

(19,886,000)

(13,195,000)

Balance at December 31, 2018, net

$1,591,000

$781,000

Amortization and foreign exchange

(124,000)

Balance at December 31, 2019, net

$1,467,000

$781,000

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Intangible Assets and Goodwill (Continued)

Intangible assets consist of the following based on the Company’s determination of the fair value of
identifiable assets acquired:

Weighted
Average
Amortization
Period
(in Years)
3
10
7
7
3

As of December 31, 2019

Gross
Carrying
Amount

$53,000
318,000
437,000
66,000
443,000
1,317,000
1,143,000
--
$2,460,000

Accumulated
Amortization
$45,000
79,000
367,000
66,000
436,000
993,000
--
--
$993,000

As of December 31, 2018

Impairment
$--
--
--
--
--
--
--
--
$--

Net
$8,000
239,000
70,000
--
7,000
324,000
1,143,000
--
$1,467,000

Gross
Carrying
Amount

$54,000
318,000
448,000
84,000
451,000
1,355,000
1,143,000
19,870,000
$22,368,000

Accumulated
Amortization
$38,000
48,000
307,000
68,000
430,000
891,000
--
--
$891,000

Impairment

$16,000
--
16,000
--
19,870,000
$19,886,000

Net
$16,000
270,000
141,000
--
21,000
448,000
1,143,000
--
$1,591,000

Trade names
Developed technology
Licenses
Device registration
Customer relationships
Amortizable intangible assets
In process technology
Clinical protocols
Total

The change in the gross carrying amount is due to foreign currency exchange fluctuations and the write-off
of assets for impairment. Amortization of intangible assets was $124,000 for the year ended December 31,
2019 and $131,000 for the year ended December 31, 2018. In process technology has not yet been
introduced to the market place and is therefore not yet subject to amortization. Clinical protocols were not
introduced to the market place and is therefore were not subject to amortization prior to being written off
during the year ended December 31, 2018. The Company’s estimated future amortization expense for
amortizable intangible assets in subsequent years, are as follows:

Year Ended December 31,

2020
2021
2022
2023
2024
Thereafter
Total

109,000
40,000
32,000
32,000
32,000
79,000
$324,000

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. Equipment and Leasehold Improvements, Net

Equipment and leasehold improvements consisted of the following:

Machinery and equipment
Computer and software
Office equipment

Leasehold improvements
Total equipment
Less accumulated depreciation
Total equipment and leasehold
improvements, net

2019
$6,107,000
631,000
256,000

932,000
7,926,000
(5,898,000)

Year Ended December 31,

Estimated Useful Life

2.5-10 years
2-5 years
5-10 years

Shorter of 5 years or
remaining lease term

2018
$6,136,000
664,000
264,000

931,000
7,995,000
(5,433,000)

$2,028,000

$2,562,000

Depreciation expense for the years ended December 31, 2019 and 2018 were $574,000 and $539,000,
respectively.

5. Related Party Transactions

Healthbanks Biotech (USA) Inc.
On November 26, 2019 the Company entered into a joint venture agreement with HealthBanks Biotech
(USA) Inc. (the “JV Agreement”) to form a new company called ImmuneCyte Life Sciences, Inc.
(“ImmuneCyte”) to commercialize the Company’s proprietary cell processing platform, CAR-TXpress™,
for use in immune cell banking as well as for cell-based contract development and manufacturing services
(CMO/CDMO). Under the terms of the JV Agreement, ImmuneCyte will initially be owned 80% by
HealthBanks Biotech and 20% by ThermoGenesis. ImmuneCyte will be among the first immune cell banks
in the U.S. and offer customers the ability to preserve younger, healthier and uncontaminated immune cells
for future potential use in dendritic and chimeric antigen receptor (“CAR-T”) cell therapies, in a GMP
compliant processing environment. The Company’s principal contribution to ImmuneCyte was a supply
agreement under which ImmuneCyte will have the exclusive right to purchase the Company’s proprietary
cell processing equipment in the immune cell banking business and a non-exclusive right to purchase it for
other cell-based contract development and manufacturing (“CMO/CDMO”) services at a price equal to
115% of the Company’s cost. The Company also contributed to ImmuneCyte intellectual property and
trademarks relating to the Company’s clinical development assets which were fully impaired by the
Company in 2018 and had no book value. Healthbanks contributed to ImmuneCyte a paid-up, royalty free
license to use its proprietary business management system, customer relationship management software,
and laboratory information statement, and it will also make available a $1,000,000 unsecured, non-
convertible line of credit to ImmuneCyte to provide initial operating capital. Healthbanks is a subsidiary
of Boyalife Group, Inc. (USA), the owner of Boyalife Asset Holding II, Inc., which is the largest
stockholder of the Company, and is owned by Dr. Xiaochun (Chris) Xu, the Company’s Chief Executive
Officer and Chairman of our Board of Directors.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Related Party Transactions (Continued)

Healthbanks Biotech (USA) Inc. (Continued)
In December 2019, ImmuneCyte closed a $3,000,000 equity investment with a private institution. The
investor received 600,000 shares of Class A common stock at $5.00 per share, representing a 5.66%
ownership in the joint venture. As a result of this equity investment in ImmuneCyte, the Company’s equity
in the joint venture is no longer subject to the anti-dilution provision. After this investment, ImmuneCyte
is owned 75.47% by HealthBanks, 18.87% by ThermoGenesis Holdings and 5.66% by the private
institution.

The Company initially determined that ImmuneCyte would be considered a variable interest entity, as a
result of the significant influence the Company has over operations and its’ lack of sufficient equity at
inception. After the additional investment of $3,000,000, ImmuneCyte’s equity at risk was considered
sufficient and the Company determined it would no longer be classified as a variable interest entity. The
Company’s investment in ImmuneCyte will be accounted for under the equity method based on
management’s conclusion that the Company can exercise significant influence over ImmuneCyte via its
equity interest and the related Supply Agreement. The Company recorded the investment initially at the
value of the nonfinancial assets contributed of $28,000, which consisted of the book value of certain assets
contributed at the time of formation.

For 2019, ImmuneCyte had no revenue or gross profit and net income was a loss of $78,000. The
Company’s portion of that was 18.87% or $15,000. On the Balance Sheet, ImmuneCyte had $3,000,000 in
current assets and $8,000 in non-current assets, as well as $14,000 in current liabilities and $0 in non-current
liabilities.

Convertible Promissory Note and Revolving Credit Agreement
In March 2017, ThermoGenesis Holdings entered into a Credit Agreement with Boyalife Investment Fund
II, Inc., which later merged into Boyalife Asset Holding II, Inc. (the “Lender”). The Lender is a wholly
owned subsidiary of Boyalife Group Inc., which is owned and controlled by the Company’s Chief Executive
Officer and Chairman of our Board of Directors. The Credit Agreement and its subsequent amendments,
grants to the Company the right to borrow up to $10,000,000 (the “Loan”) at any time prior to March 6,
2022 (the “Maturity Date”). The Company has drawn down a total of $8,713,000 and $7,200,000 as of
December 31, 2019 and 2018, respectively. The Company’s ability to draw-down the remaining
$1,287,000 may be impacted by reasons such as default or foreign government policies that restrict or
prohibit transferring funds. At the time of this filing, we are currently unable to draw down on the line of
credit. This may change in the near future but there is no assurance that the line of credit will become
available at such time when it is needed.

The Credit Agreement and the Convertible Promissory Note issued thereunder (the “Note”) provide that
the principal and all accrued and unpaid interest under the Loan will be due and payable on the Maturity
Date, with payments of interest-only due on the last day of each calendar year. The Loan bears interest at
22% per annum, simple interest. The Company has five business days after the Lender demands payment
to pay the interest due before the Loan is considered in default. Subsequent to December 31, 2019, the
Lender has not demanded and the Company has not paid the interest due as of December 31, 2019. The
Note can be prepaid in whole or in part by the Company at any time without penalty.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Related Party Transactions (Continued)

Convertible Promissory Note and Revolving Credit Agreement (Continued)
The Maturity Date of the Note is subject to acceleration at the option of the Lender upon customary events
of default, which include; a breach of the Loan documents, termination of operations, or bankruptcy. The
Lender’s obligation to make advances under the Loan is subject to the Company’s representations and
warranties in the Credit Agreement continuing to be true at all times and there being no continuing event
of default under the Note.

The Credit Agreement and Note were amended in April 2018. The amendment granted the Lender the right
to convert, at any time, outstanding principal and accrued but unpaid interest into shares of Common Stock
at a conversion price of $16.10 per share and if the Company issues shares of Common Stock at a lower
price per share, the conversion price of the Note is lowered to the reduced amount. The Company completed
two transactions in 2018, lowering the conversion price to $1.80.

It was concluded that the conversion option contained a beneficial conversion feature and as a result of the
modifications to the conversion price, the Company recorded a debt discount in the amount of $7,200,000
in 2018 and added $1,513,000 to the debt discount as a result of the draw-down during the quarter ended
March 31, 2019. Such discount represented the fair value of the incremental shares up to the proceeds
received from the convertible notes. The Company amortized $2,344,000 and $1,174,000 of such debt
discount to interest expense for the years ended December 31, 2019 and 2018, respectively. In addition to
the amortization, the Company also recorded interest expense of $1,869,000 and $1,513,000 for the years
ended December 31, 2019 and 2018, respectively.

Distributor Agreement
On August 21, 2017, ThermoGenesis Corp. entered into an International Distributor Agreement with
Boyalife W.S.N. Under the terms of the agreement, Boyalife W.S.N. was granted the exclusive right,
subject to existing distributors and customers (if any), to develop, sell to, and service a customer base for
the ThermoGenesis Corp’s AXP AutoXpress System and BioArchive System in the People’s Republic of
China (excluding Hong Kong and Taiwan), Singapore, Indonesia, and the Philippines (the “Territories”).
Boyalife W.S.N. is related to our Chief Executive Officer and Chairman of our Board of Directors, and an
affiliate of Boyalife (Hong Kong) Limited. Boyalife W.S.N,’s rights under the agreement include the
exclusive right to distribute AXP Disposable Blood Processing Sets and use rights to the AXP AutoXpress
System, BioArchive System and other accessories used for the processing of stem cells from cord blood in
the Territories. Boyalife W.S.N. is also appointed as the exclusive service provider to provide repairs and
preventative maintenance to ThermoGenesis Corp. products in the Territories.

The term of the agreement is for three years with ThermoGenesis Corp. having the right to renew the
agreement for successive two-year periods at its option. However, ThermoGenesis Corp. has the right to
terminate the agreement early if Boyalife W.S.N. fails to meet specified minimum purchase requirements.

Revenues
During the year ended December 31, 2019, the Company recorded $794,000 of revenues from Boyalife
W.S.N. and it’s affiliates and had an accounts receivable balance of $20,000 at December 31, 2019. For
the year ended December 31, 2018, the Company recorded $665,000 of revenues from Boyalife and had an
accounts receivable balance of $0 at December 31, 2018.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Related Party Transactions (Continued)

License Agreement
On March 12, 2018, ThermoGenesis Corp. entered into a License Agreement (the “Agreement”) with
IncoCell Tianjin Ltd., a Chinese company and wholly-owned subsidiary of China-based Boyalife Group
(“IncoCell”). Boyalife Group is an affiliate of the Company’s Chief Executive Officer and Chairman of our
Board of Directors, and Boyalife (Hong Kong) Limited. Under the terms of the Agreement, IncoCell was
granted the exclusive license to use the ThermoGenesis Corp. X-Series products in the conduct of
IncoCell’s contract manufacturing and development operations in the People’s Republic of China, Japan,
South Korea, Taiwan, Hong Kong, Macau, Singapore, Malaysia, Indonesia and India (the “Territories”).

Pursuant to the terms of the Agreement, ThermoGenesis Corp. has granted IncoCell an exclusive license to
purchase and use, at a discounted purchase price, X-Series cellular processing research devices,
consumables, and kits for use in the conduct of contract manufacturing and development services in the
Territories. In exchange, ThermoGenesis Corp. is entitled to a percentage of IncoCell’s gross contract
development revenues, including any potential upfront payments, future milestones or royalty payments,
during the term of the Agreement. The term of the Agreement is ten years, provided that either party may
terminate the Agreement earlier upon ninety (90) days’ prior notice to the other party. For the years ended
December 31, 2019 and 2018, the Company recorded $83,000 and $14,000 of revenues from IncoCell and
had an accounts receivable balance of $83,000 and $14,000 at December 31, 2019 and 2018, respectively.

6. Convertible Promissory Note

On January 29, 2019, the Company agreed to issue and sell an unsecured note payable to an accredited
investor (the “Accredited Investor”) for an aggregate of $800,000 face value (the “January 2019 Note”)
that, after six months, is convertible into shares of the Company's common stock at a conversion price equal
to the lower of (a) $1.80 per share or (2) 90% of the closing sale price of the Company’s common stock on
the date of conversion (subject to a floor conversion price of $0.50).

The January 2019 Note bears interest at the rate of twenty-four percent (24%) per annum and is payable
quarterly in arrears. Unless sooner converted in the manner described below, all principal under the January
2019 Note, together with all accrued and unpaid interest thereupon, will be due and payable eighteen (18)
months from the date of the issuance of the January 2019 Note. The January 2019 Note may be prepaid
without penalty at any time after it becomes convertible (at which time the holder will have the right to
convert it before prepayment thereof).

On the date that is six months after the issuance of the January 2019 Note, and for so long thereafter as any
principal and accrued but unpaid interest under the January 2019 Note remains outstanding, the holder of
the January 2019 Note may convert such holder’s January 2019 Note, in whole or in part, into a number of
shares of the Company’s common stock equal to (i) the principal amount being converted, together with
any accrued or unpaid interest thereon, divided by (ii) the conversion price in effect at the time of
conversion. The January 2019 Note has customary conversion blockers at 4.99% and 9.99% unless
otherwise agreed to by the Company and the holder. It was concluded that the conversion option was
beneficial. Accordingly, the Company recorded a debt discount in the amount of $800,000, upon
stockholder approval of the conversion feature, which occurred on May 30, 2019. The discount represented
the fair value of the incremental shares up to the proceeds received from the convertible note.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. Convertible Promissory Note (Continued)

The January 2019 Note contains customary events of default, including the suspension or failure of the
Company’s common stock to be traded on a trading platform, the Company’s failure to pay interest or
principal when due, or if the Company files for bankruptcy or takes some other similar action for the benefit
of creditors. In the event of any default under the January 2019 Note, the holder may accelerate all
outstanding interest and principal due on the January 2019 Note.

On July 23, 2019, the Company entered into Amendment No. 1 to the January 2019 Note (“Amended
Note”). Under the terms of the amendment, the maturity date of the January 2019 Note was extended from
July 29, 2020 to July 31, 2022. All other terms of the January 2019 Note remain the same. The Amended
Note was accounted for as an extinguishment of the January 2019 Note as the change in the fair value of
the embedded conversion option featured in the January 2019 Note immediately before and after the
amendment exceeded 10% of the carrying amount of the January 2019 Note. Accordingly, the Company
recorded a loss on the constructive extinguishment of this debt in the amount of $840,000 for the year ended
December 31, 2019. The fair value of the Amended Note, which amounted to $1,473,000 was recorded as
liability. The Company also evaluated the conversion option embedded in the Amended Note and
determined it was beneficial. Accordingly, the Company recorded a debt discount in the amount of
$556,000 on the Amended Note for the year ended December 31, 2019. The Company amortized $77,000
of the debt discount for the January 2019 Note to interest expense for the year ended December 31, 2019.
The Company utilized a Monte Carlo simulation model to determine the fair value of the Amended Note.
The key assumptions used in the simulation model were:

Stock price at date of issuance
Exercise price(1)
Risk-free interest rate
Expected dividend yield
Expected term (in years)
Expected volatility

$3.05
$1.80
1.8%
--
3.02
93%

__________________
(1) For the exercise price, the model inputs also accounted for the fair value protection under the Amended
Note, which allows for the holder to convert at the lower of $1.80 share or 90% of the listed price of the
stock on the day of conversion, whichever is lower (subject to a floor of $0.50).

During the year ended December 31, 2019, the holder converted a portion of the face value of the note into
shares of common stock. In total, $432,000 was converted into 240,000 shares of common stock.
Additionally, the unamortized premium for the portion of the note that was converted of $60,000 was
recorded to interest income during the year ended December 31, 2019.

On July 23, 2019, the Company entered into a private placement with the Accredited Investor, pursuant to
which the Company issued and sold to such investor an unsecured convertible promissory note in the
original principal amount of $1,000,000 (the “July 2019 Note”). After six months and subject to the receipt
of stockholder approval of the conversion feature of the July 2019 Note, such note is convertible into shares
of the Company's common stock at a conversion price equal to the lower of (a) $1.80 per share or (b) 90%
of the closing sale price of the Company’s common stock on the date of conversion (subject to a floor
conversion price of $0.50). The July 2019 Note bears interest at the rate of twenty-four percent (24%) per
annum and is payable quarterly in arrears. Unless sooner converted in the manner described below, all
principal under the July 2019 Note, together with all accrued and unpaid interest thereupon, will be due and
payable three years from the date of the issuance on July 31, 2022.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. Convertible Promissory Note (Continued)

However, if stockholder approval of the conversion feature of the July 2019 Note is not obtained at the
Company’s next annual meeting of stockholders (expected to be in the second quarter of 2020), the maturity
date will accelerate to the date that is fourteen days after the next annual meeting.

The July 2019 Note may be prepaid without penalty at any time after it becomes convertible (at which time
the holder will have the right to convert it before prepayment thereof). On the date that is six months after
the issuance of the July 2019 Note and after receiving stockholder approval of the conversion feature
described above, the holder may convert the July 2019 Note, in whole or in part, into a number of shares of
the Company’s common stock equal to (i) the principal amount being converted, together with any accrued
or unpaid interest thereon, divided by (ii) the conversion price in effect at the time of conversion. The
Company has accounted for the July 2019 Note as a debt instrument until such time the conversion feature
is approved by the Company’s stockholders. The Company will account for the conversion feature at the
time of its effectiveness if approved.

On August 28, 2018, the Company completed a private placement transaction with an accredited investor,
in which the Company sold 100,000 shares of Common Stock for a purchase price of $1.80 per share and
296,500 pre-funded warrants for a purchase price of $1.70 per pre-funded warrant. Each pre-funded warrant
is immediately exercisable for one share of Common Stock at an exercise price of $0.10 per share and will
remain exercisable until exercised in full. The Company received $684,000 in gross proceeds, net proceeds
of $623,000 after deducting offering expenses of $61,000. As of December 31, 2019, all of the pre-funded
warrants issued in the August 2018 private placement have been exercised. In addition, subject to certain
exceptions, in the event the Company sold or issued any shares of Common Stock or common stock
equivalents at a lower price through February 26, 2019, the Company was required to issue the investor a
number of shares of Common Stock (or additional pre-funded warrants to purchase shares of common
stock) equal to the number of shares the investor would have received had the purchase price for such shares
been at such lower purchase price. The Company did not sell or issue any shares at a lower price prior to
February 26, 2019. The Company evaluated the pre-funded warrants issued and determined that the
warrants should be classified as equity instruments.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. Derivative Obligations

Series A Warrants
Series A warrants to purchase 40,441 common shares were issued and vested during the year ended June
30, 2016. At the time of issuance, the Company determined that because such warrants can be settled for
cash at the holders’ option in a future fundamental transaction, they constituted a derivative liability. The
Company has estimated the fair value of the derivative liability, using a Binomial Lattice Valuation Model
and the following assumptions:

Market price of common stock
Expected volatility
Contractual term (years)
Discount rate
Dividend rate
Exercise price

Year Ended December 31,
2018
2019
$2.70
$4.40
94%
96%
2.2
1.2
2.48%
1.59%
0%
0%
$80.00
$80.00

Expected volatilities are based on the historical volatility of the Company’s common stock. Contractual
term is based on remaining term of the respective warrants. The discount rate represents the yield on U.S.
Treasury bonds with a maturity equal to the contractual term.

The Company recorded a gain (loss) of $1,000 during the year ended December 31, 2019 and $596,000
during the year ended December 31, 2018, representing the net change in the fair value of the derivative
liability, which is presented as fair value change of derivative instruments, in the accompanying
consolidated statements of operations and comprehensive loss.

The following table represents the Company’s fair value hierarchy for its financial liabilities measured at
fair value on a recurring basis as of December 31, 2019 and 2018:

Derivative Obligation
Balance
Level 1
Level 2
Level 3

Year Ended December 31,
2018
$1,000
$-
$-
$1,000

2019
$--
$-
$-
$--

The following table reflects the change in fair value of the Company’s derivative liability:

Balance – December 31, 2017
Change in fair value of derivative obligation
Balance – December 31, 2018

Change in fair value of derivative obligation

Balance – December 31, 2019

Amount

$597,000
(596,000)
1,000
(1,000)
$--

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. Commitments and Contingencies

Financial Covenants
Effective May 15, 2017, the Company entered into a Sixth Amended and Restated Technology License and
Escrow Agreement with CBR Systems, Inc. which modified the financial covenant that the Company must
meet in order to avoid an event of default. The Company must maintain a cash balance and short-term
investments net of debt or borrowed funds that are payable within one year of not less than $2,000,000
(amended to $1,000,000 in March 2020). The Company was in compliance with this financial covenant as
of December 31, 2019.

Potential Severance Payments
The Company’s Chief Executive Officer has rights upon termination under his employment agreement.
With respect to his agreement at December 31, 2019, potential severance amounted to $2.3 million.

Contingencies and Restricted Cash
In fiscal 2016, the Company signed an engagement letter with a strategic consulting firm (“Mavericks”).
Included in the engagement letter was a success fee due upon the successful conclusion of certain
transactions. On May 4, 2017, a lawsuit was filed in California Superior Court against the Company and
its Chief Executive Officer by the consulting firm, which argued that it was owed a transaction fee of
$1,000,000 under the terms of the engagement letter due to the conversion of the Boyalife debentures in
August 2016. In October 2017, to streamline the case by providing for the dismissal of claims against the
Company’s Chief Executive Officer based on alter ego theories and without acknowledging any liability,
the Company deposited $1,000,000 with the Court, which was recorded as restricted cash. The Company
filed a Motion for Summary Judgment, which was denied by the Court on June 26, 2018. On September
24, 2018, Mavericks filed an amended complaint, adding back the Company’s Chief Executive Officer as
a named defendant, as well as Boyalife Investment, Inc. (a dissolved company) and Boyalife (Hong Kong)
Limited under new theories of liability, namely intentional interference with contract and inducement of
breach of contract. On July 22, 2019, Mavericks filed a Request for Dismissal requesting the Court to
dismiss the served Boyalife entities and the Company’s Chief Executive Officer as well as the intentional
interference with performance of contract and inducing breach of contract causes of action from the lawsuit.
As such, the only remaining claim at present is the original breach of contract claim against the Company.
The trial completed in February 2020 with an adverse jury verdict in favor of Mavericks in the total amount
of $1,000,000. The Action is now in the post-trial phase and no judgment has been entered as the parties
are disputing whether the defense of equitable estoppel should bar entry of judgment at all and the proper
per-judgment interest start date. At present, the Court is already holding a $1,000,000 cash bond deposited
by the Company early in the litigation. After entry of judgment, the Court will permit release of those funds
to the Mavericks. As a result, the Company recorded in other current liabilities a $1,400,000 loss in general
and administrative for the year ended December 31, 2019. The loss includes the $1,000,000 transaction fee
and an estimated $400,000 in interest due. The $1,000,000 deposited with the court will be used to settle
the transaction fee.

In the normal course of operations, the Company may have disagreements or disputes with customers,
employees or vendors. Such potential disputes are seen by management as a normal part of business. As of
December 31, 2019, except as disclosed, management believes any liability that may ultimately result from
the resolution of these matters will not have a material adverse effect on the Company’s consolidated
financial position, operating results or cash flows.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. Commitments and Contingencies (Continued)

Warranty
The Company offers a warranty on all its non-disposable products of one to two years. The Company
warrants disposable products through their expiration date. The Company periodically assesses the
adequacy of the warranty reserves and adjusts as necessary.

Changes in the Company’s warranty reserve, which is included in other current liabilities in the
accompanying consolidated balance sheet is as follows:

Beginning balance
Warranties originated during the year
Claims settled made during the year
Changes in reserve estimate
Ending balance

Year Ended December 31,
2019
2018
$186,000
254,000
(154,000)
(9,000)
$277,000

$291,000
199,000
(252,000)
(52,000)
$186,000

Coronavirus (COVID-19)
In December 2019, a novel strain of coronavirus was reported in Wuhan, China. The World Health
Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.”
The COVID-19 outbreak is disrupting supply chains and affecting production and sales across a range of
industries. The extent of the impact of COVID-19 on our operational and financial performance will depend
on certain developments, including the duration and spread of the outbreak, impact on our customers,
employees and vendors all of which are uncertain and cannot be predicted. At this point, the extent to which
COVID-19 may impact our financial condition or results of operations is uncertain.

9. Leases

Operating Leases
The Company leases the Rancho Cordova, California and Gurgaon, India facilities pursuant to operating
leases. The Rancho Cordova lease expires in May 2024. The Gurgaon lease expires in September 2023;
however, either party can terminate after September 2019 with three months’ notice. As such it was
accounted for as a short-term lease.

Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease
liabilities represent the present value of remaining minimum lease payments. Operating lease assets
represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for
prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating
lease assets. To determine the present value of lease payments not yet paid, we use the Company’s cost of
capital based on existing debt instruments. Our material leases typically contain rent escalations over the
lease term. We recognize expense for these leases on a straight-line basis over the lease term.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. Leases (Continued)

Operating Leases (Continued)
The following summarizes the Company’s operating leases:

Right-of-use operating lease assets, net
Current lease liability
Non-current lease liability

Weighted average remaining lease term
Discount rate

December 31,
2019
$859,000
118,000
761,000

4.4
22%

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

2020
2021
2022
2023
2024
Thereafter
Total lease payment
Less: imputed interest
Present value of operating lease liabilities

301,000
310,000
319,000
328,000
139,000
--
$1,397,000
(538,000)
$859,000

Statement of Cash Flows
In January 2019, the Company signed an amendment to its lease for office space at its corporate
headquarters in Rancho Cordova, CA. The amendment was accounted for as a modification and resulted
in a right-of-use asset of $966,000 being recognized as a non-cash addition on the date of the amendment.
Cash paid for amounts included in the measurement of operating lease liabilities in cash flows from
operating activities were $291,000 for the years ended December 31, 2019.

Operating Lease Costs
Operating lease costs were $410,000 during the year ended December 31, 2019, which included $204,000
for interest expense, $108,000 in amortization expense, $72,000 in variable lease costs and $26,000 for
short term lease costs. These costs are primarily related to long-term operating leases, but also include
immaterial amounts for variable lease costs and short-term leases with terms greater than 30 days.

Finance Leases
Finance leases are included in equipment and other current and non-current liabilities in the accompanying
condensed consolidated balance sheet. The amortization and interest expense are included in general and
administrative expense and interest expense, respectively in the accompanying statements of operations.
These leases are not material as of December 31, 2019.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. Stockholders’ Equity

Common Stock
On December 13, 2019, the Company entered into an At The Market Offering Agreement, by and between
the Company and H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”) (the “ATM Agreement”),
pursuant to which the Company may offer and sell, from time to time through H.C. Wainwright, shares of
Common Stock, having an aggregate offering price of up to $4.4 million (the “HCW Shares”). The offer
and sale of the HCW Shares is made pursuant to a shelf registration statement on Form S-3 and the related
prospectus (File No. 333-235509). Pursuant to the ATM Agreement, H.C. Wainwright may sell the HCW
Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of
the Securities Act, including sales made by means of ordinary brokers’ transactions, including on The
NASDAQ Capital Market, at market prices or as otherwise agreed with H.C. Wainwright. H.C. Wainwright
will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the
HCW Shares from time to time, based upon instructions from the Company, including any price or size
limits or other customary parameters or conditions the Company may impose. The Company is not
obligated to make any sales of the HCW Shares under the ATM Agreement. The offering of HCW Shares
pursuant to the ATM Agreement will terminate upon the earliest of (a) the sale of all of the HCW Shares
subject to the ATM Agreement, (b) the termination of the ATM Agreement by H.C. Wainwright or the
Company, as permitted therein, or (c) August 9, 2022. The Company will pay H.C. Wainwright a
commission rate equal to 3% of the aggregate gross proceeds from each sale of HCW Shares and have
agreed to provide H.C. Wainwright with customary indemnification and contribution rights. The Company
will also reimburse H.C. Wainwright for certain specified expenses in connection with entering into the
ATM Agreement. Subsequent to December 31, 2019, the Company has sold a total of 50,746 shares of
Common Stock for aggregate gross proceeds of $280,000 at an average selling price of $5.44 per share,
resulting in net proceeds of approximately $113,000 after deducting legal expenses, audit fees, commissions
and other transaction costs of approximately $167,000.

On April 18, 2019, the Company entered into a Securities Purchase Agreement with an accredited investor
pursuant to which the Company agreed to issue and sell to such investor (the “April Offering”) 444,445
pre-funded warrants to purchase shares of Common Stock for a purchase price of $1.70 per pre-funded
warrant. Each pre-funded warrant is immediately exercisable for one share of Common Stock at an exercise
price of $0.10 per share and will remain exercisable until exercised in full. The gross proceeds to the
Company, excluding the proceeds, if any, from the exercise of the pre-funded warrants, was approximately
$756,000. The April Offering closed on April 26, 2019 and the pre-funded warrants were accounted for as
equity by the Company. Subject to certain exceptions, in the event the Company sells or issues any shares
of common stock or common stock equivalents at a lower price during the period beginning on the closing
date of the April Offering and ending on the date that is three-hundred and sixty-five (365) days following
such date, the Company is required to issue the investor a number of shares of common stock (or additional
pre-funded warrants to purchase shares of common stock) equal to the number of shares the investor would
have received had the purchase price for such shares been at such lower purchase price. As December 31,
2019, 120,000 of the pre-funded warrants issued in the April Offering had been exercised, leaving 324,445
pre-funded warrants outstanding.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. Stockholders’ Equity (Continued)

Common Stock (Continued)
On August 28, 2018, the Company completed a private placement transaction with an accredited investor,
in which the Company sold 100,000 shares of Common Stock for a purchase price of $1.80 per share and
296,500 pre-funded warrants for a purchase price of $1.70 per pre-funded warrant. Each pre-funded warrant
is immediately exercisable for one share of Common Stock at an exercise price of $0.10 per share and will
remain exercisable until exercised in full. The Company received $623,000 in net proceeds after deducting
offering expenses of $61,000. In addition, subject to certain exceptions, in the event the Company sells or
issues any shares of Common Stock or common stock equivalents at a lower price through February 26,
2019, the Company is required to issue the investor a number of shares of Common Stock (or additional
pre-funded warrants to purchase shares of common stock) equal to the number of shares the investor would
have received had the purchase price for such shares been at such lower purchase price. The Company did
not issue any shares at a lower price prior to February 26, 2019. The Company determined that the pre-
warrants should be classified as equity instruments. As of December 31, 2019, all 296,500 of the pre-
funded warrants issued in the August 2018 private placement have been exercised.

On May 18, 2018, the Company completed a public offering for 647,501 Units and 269,167 Pre-Funded
Units for a purchase price of $6.00 per Unit, resulting in aggregate gross proceeds of approximately
$5,473,000, net proceeds of $4,792,000 after deducting the offering expenses of $679,000. Each Unit
consists of one share of Common Stock, and one common warrant to purchase one share of Common Stock,
and each Pre-Funded Unit consists of one pre-funded warrant to purchase one share of Common Stock and
one common warrant to purchase one share of Common Stock. The common warrants included in the Units
and Pre-Funded Units were immediately exercisable at a price of $6.00 per share of Common Stock, subject
to adjustment in certain circumstances, and will expire five years from the date of issuance. The Company
evaluated the warrants issued and determined that they should be classified as equity instruments. All
269,167 Pre-Funded units issued in the May 2018 public offering were exercised in the second quarter of
fiscal 2018.

On March 28, 2018, the Company sold 60,964 shares of Common Stock at a price of $22.70 per share. The
net proceeds to the Company from the sale and issuance of the shares, after deducting the offering expenses
borne by the Company of approximately $171,000, were $1,213,000. Additionally, the investors received
unregistered warrants in a simultaneous private placement to purchase up to 30,482 shares of common
stock. The warrants have an exercise price of $26.80 per share and were exercisable six months following
the issuance date, or September 28, 2018, and have a term of 5.5 years and were accounted for as equity by
the Company.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. Stockholders’ Equity (Continued)

Warrants
A summary of warrant activity is as follows:

Beginning balance
Warrants granted
Warrants exercised
Warrants expired/canceled
Outstanding
Exercisable

Number of
Shares
1,726,522
444,445
(435,264)
(19,637)
1,716,066
1,646,214

Year Ended December 31,

2019

Weighted-
Average Exercise
Price Per Share

$29.88
$0.10
$0.35

$25.23
$22.91

2018

Weighted-
Average Exercise
Price Per Share

$93.70
$4.20
$0.10

$29.88
$27.80

Number of
Shares

482,873
1,512,816
(269,167)
--
1,726,522
1,656,668

Equity Plans and Agreements
The Amended 2016 Equity Incentive Plan (the “Amended 2016 Plan”) was approved by the stockholders
in May 2017, under which up to 600,000 shares may be issued pursuant to grants of shares, options, or
other forms of incentive compensation. On June 22, 2018, the stockholders approved an amendment to the
Amended 2016 Plan to increase the number of shares that may be issued to 1,325,000 shares. On May 30,
2019, the shareholders approved an amendment to the Amended 2016 Plan to increase the number of shares
that may be issued from 1,325,000 shares to 3,925,000 shares. As of December 31, 2019, 103,803 awards
were available for issuance under the Amended 2016 Plan.

The 2012 Independent Director Plan (the “2012 Plan”) permits the grant of stock or options to independent
directors. A total of 2,500 shares were approved by the stockholders for issuance under the 2012 Plan.
Options are granted at prices that are equal to 100% of the fair market value on the date of grant and expire
over a term not to exceed ten years. Options generally vest in monthly increments over one year, unless
otherwise determined by our Board of Directors. As of December 31, 2019, there were 234 shares available
for issuance.

The 2006 Equity Incentive Plan (the “2006 Plan”) permitted the grant of options, restricted stock units,
stock bonuses and stock appreciation rights to employees, directors and consultants. The 2006 Plan, but not
the awards granted thereunder, expired in 2016. As of December 31, 2019, 3,865 option awards remained
outstanding.

On December 29, 2017, the Board of Directors of ThermoGenesis Corp. adopted the ThermoGenesis Corp.
2017 Equity Incentive Plan (the “ThermoGenesis Plan”) and on the same day granted options to purchase
an aggregate of 280,000 shares of ThermoGenesis Corp. common stock to employees, directors,
consultants, and advisors of ThermoGenesis Corp. The ThermoGenesis Plan was unanimously approved
by the ThermoGenesis stockholders (including the Company) on December 29, 2017. The ThermoGenesis
Plan authorizes the issuance of up to 1,000,000 shares of ThermoGenesis common stock. There are 20,000
shares available for issuance as of December 31, 2019.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. Stockholders’ Equity (Continued)

Equity Plans and Agreements (Continued)
On April 7, 2019, two employees were granted performance-based options to purchase an aggregate of
800,000 shares of Thermo Genesis Corp. common stock at an exercise price of $0.65 if certain milestones
were met. One milestone was met resulting in 300,000 options vesting in the year ended December 31,
2019.

On December 14, 2018, the CEO, the CFO and other employees were granted 214,000 options to purchase
shares of the Company’s common stock at an exercise price of $2.979 per share. The options vest in five
equal installments on the date of grant and the first four anniversaries of the grant date. A portion of the
grant, 169,934 shares were subject to approval of the 2016 Plan Amendment by the Company’s
stockholders, which was approved on May 30, 2019.

Stock Based Compensation
The Company recorded stock-based compensation of $614,000 for the year ended December 31, 2019 and
$652,000 for the year ended December 31, 2018, as comprised of the following:

Cost of revenues
Sales and marketing
Research and development
General and administrative

Year Ended December 31,

2019

$3,000
185,000
98,000
328,000
$614,000

2018

$15,000
63,000
136,000
438,000
$652,000

Stock Options
The Company issues new shares of common stock upon exercise of stock options. The following is a
summary of option activity for the Company’s stock option plans:

Weighted-
Average
Remaining
Contractual
Life

Weighted-
Average
Exercise
Price
$13.99

Aggregate
Intrinsic
Value

$4.38
$9.42
$13.96

$15.72
$19.79

8.3

8.2
7.9

$280,000

$203,000
$115,000

Outstanding at January 1, 2019

Granted
Forfeited/cancelled
Outstanding at December 31, 2019
Vested and Expected to Vest at
December 31, 2019
Exercisable at December 31, 2019

Number
of Shares
302,368

11,450
(22,011)
291,807

224,102
147,124

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. Stockholders’ Equity (Continued)

Stock Options (Continued)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying
awards and the quoted price of the Company’s common stock. There were no options that were exercised
during the years ended December 31, 2019 and 2018.

Non-vested stock option activity for the year ended December 31, 2019, is as follows:

Outstanding at January 1, 2019
Granted
Vested
Cancelled/forfeited
Outstanding at December 31, 2019

Non-vested Stock
Options

212,172
11,450
(63,675)
(15,264)
144,683

Weighted-Average

Grant Date Fair Value
$6.39
$3.30
$6.73
$2.74
$6.38

The fair value of the Company’s stock options granted for the year ended December 31, 2019 and year
ended December 31, 2018 was estimated using the following weighted-average assumptions:

Expected life (years)
Risk-free interest rate
Expected volatility
Dividend yield

Year Ended December 31,

2019
5
1.68%
103%
0%

2018
6
2.7%
103%
0%

The weighted average grant date fair value of options granted during the years ended December 31, 2019
and 2018 was $3.30 and $3.20 respectively.

At December 31, 2019, the total compensation cost related to options granted under the Company’s stock
option plans but not yet recognized was $1,051,000. This cost will be amortized on a straight-line basis
over a weighted-average period of approximately three years and will be adjusted for subsequent changes
in estimated forfeitures. The total fair value of options vested during the year ended December 31, 2019
and year ended December 31, 2018 was $428,000 and $633,000 respectively.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. Concentrations

One customer had an accounts receivable balance of $337,000 or 26% and $494,000 or 33% at December
31, 2019 and 2018, respectively. Revenues from that customer totaled $3,575,000 or 28% and $2,120,000
or 22% for the years ended December 31, 2019 and 2018, respectively. One distributor had an accounts
receivable balance of $177,000 or 14% and $229,000 or 15% at December 31, 2019 and 2018, respectively.
Revenues from that distributor totaled $1,470,000 or 11% and $861,000 or 9% for the years ended
December 31, 2019 and 2018, respectively. A second distributor had an accounts receivable balance of
$170,000 or 13% and $220,000 or 15% at December 31, 2019 and 2018, respectively.

Two suppliers accounted for 57% and 18% of total inventory purchases during the year ended December
31, 2019. Two suppliers accounted for 43% and 14% of total inventory purchases during the year ended
December 31, 2018.

The Company has a contract manufacturer in Costa Rica that produces certain disposables. The Company’s
equipment and leasehold improvements, net of accumulated depreciation, is summarized below by
geographic area:

United States
Costa Rica
India
All other countries
Total equipment, net

Year Ended December 31,
2019
$1,108,000
582,000
225,000
113,000
$2,028,000

2018
$1,614,000
601,000
211,000
136,000
$2,562,000

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. Segment Reporting

The Company has two reportable segments, which are the same as its operating segments:

The Device Segment, engages in the development and commercialization of automated
technologies for cell-based therapeutics and bio-processing. The device division is operated
through the Company’s ThermoGenesis Corp. subsidiary.

The Clinical Development Segment, utilizes autologous (utilizing the patient’s own cells) stem
cell-based therapeutics through the Company’s TotipotentRX subsidiary in Gurgaon, India.

The following table summarizes the operating results of the Company’s reportable segments:

Net revenues
Cost of revenues
Gross profit

Operating expenses
Operating loss

Depreciation and amortization
Stock-based compensation expense
Goodwill
Total assets

Net revenues
Cost of revenues
Gross profit

Operating expenses
Operating loss

Year Ended December 31, 2019

Device

$12,957,000
7,175,000
5,782,000

7,081,000
$(1,299,000)

$530,000
$393,000
$781,000
$13,420,000

Clinical
Development

$90,000
176,000
(86,000)

Total

$13,047,000
7,351,000
5,696,000

3,348,000
$(3,434,000)

10,429,000
$(4,733,000)

$275,000
$221,000
$--
$1,794,000

$805,000
$614,000
$781,000
$15,214,000

Year Ended December 31, 2018

Device

$9,469,000
7,205,000
2,264,000

Clinical
Development

$203,000
274,000
(71,000)

Total
$9,672,000
7,479,000
2,193,000

8,398,000
$(6,134,000)

37,340,000
$(37,411,000)

45,738,000
$(43,545,000)

Depreciation and amortization
Stock-based compensation expense
Goodwill
Total assets

$398,000
$179,000
$781,000
$10,815,000

$272,000
$473,000
--
$3,796,000

$670,000
$652,000
$781,000
$14,611,000

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. Segment Reporting (Continued)

The Company had sales in the following geographical areas for the:

United States
Asia – other
Europe
China
Other

Year Ended December 31,
2019
$6,787,000
2,108,000
1,233,000
2,346,000
573,000
$13,047,000

2018
$4,854,000
1,717,000
1,165,000
1,143,000
793,000
$9,672,000

The Company attributes revenue to different geographic areas based on where items are shipped, or services
are performed.

13.

Income Taxes

Loss before income tax benefits was comprised of $9,934,000 from US and $150,000 from foreign
jurisdictions for the year ended December 31, 2019 and $45,458,000 from US and $212,000 from foreign
jurisdictions for the year ended December 31, 2018.

The reconciliation of federal income tax attributable to operations computed at the federal statutory tax rate
to income tax benefit is as follows for the:

Statutory federal income tax benefit
Intangible assets
Change in valuation allowance
Expiration of net operating losses
United States tax reform rate change
Disallowed financing costs
State and local taxes
Other
Total income tax benefit

Year Ended December 31,
2018
2019

$(2,118,000)
673,000
(681,000)
1,187,000
--
1,119,000
(205,000)
25,000
$--

$(9,591,000)
3,119,000
(2,084,000)
1,271,000
--
240,000
2,344,000
(29,000)
$(4,730,000)

For the year ended December 31, 2019, the Company had no tax expense compared to $4,730,000 of tax
benefit for the year ended December 31, 2018. The income tax expense in 2019 is due to state minimum
taxes. The income tax benefit for the year ended December 31, 2018 was due to the impairment of the
indefinite lived intangible assets for the clinical protocols and goodwill. The Company’s deferred tax
liability is tied to the intangible assets and goodwill.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13.

Income Taxes (Continued)

At December 31, 2019, we had federal net operating loss carryforwards of approximately $121,195,000 to
offset future federal taxable income, with $109,293,000 available through 2037 and $11,902,000 available
indefinitely. We also had state net operating loss carryforwards of approximately $43,870,000 that may
offset future state taxable income through 2039. We also had foreign net operating loss carryforwards of
approximately $2,495,000 that may offset future foreign taxable income through 2027.

At December 31, 2019, the Company has research and experimentation credit carryforwards of $1,591,000
for federal tax purposes that expire in various years between 2020 and 2039, and $1,476,000 for state
income tax purposes that do not have an expiration date.

Significant components of the Company’s deferred tax assets and liabilities for federal and state income
taxes are as follows:

Deferred tax assets:
Net operating loss carryforwards
Income tax credit carryforwards
Stock compensation
Lease Obligation
Deferred Revenue
Other
Total deferred tax assets

Deferred tax liabilities

Indefinite lived intangible assets

Depreciation and amortization

Lease asset
Total deferred tax liabilities

Valuation allowance
Net deferred taxes

Year Ended December 31,
2019

2018

$26,758,000
2,757,000
384,000
185,000
419,000
943,000
31,446,000

--
(408,000)
(180,000)
(588,000)
(30,858,000)
$--

$27,312,000
2,769,000
850,000
--
--
1,027,000
31,958,000

--
(419,000)
--
(419,000)
(31,539,000)
$--

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit
carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely
than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient
taxable income within the carryforward period. Because of the Company's recent history of operating
losses, management believes that recognition of the deferred tax assets arising from the above-mentioned
future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.

The valuation allowance decreased by $681,000 and $2,266,000 during the years ended December 31, 2019
and 2018, respectively.

THERMOGENESIS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13.

Income Taxes (Continued)

The transition tax is based on total post-1986 earnings and profits which were previously deferred from
U.S. income taxes. At December 31, 2019, the Company did not have any undistributed earnings of our
foreign subsidiaries. As a result, no additional income or withholding taxes have been provided for. The
Company does not anticipate any impacts of the global intangible low taxed income (“GILTI”) and base
erosion anti-abuse tax (“BEAT”) and as such, the Company has not recorded any impact associated with
either GILTI or BEAT.

In August 2016, the conversion of the Boyalife debentures effected an “ownership change” as defined under
the provisions of the Tax Reform Act of 1986. As a result, any net operating loss and credit carryovers
existing at that date will be subject to an annual limitation regarding their utilization against taxable income
in future periods. Additionally, before the conversion of the debentures, it is possible that “ownership
changes” occurred, which could create additional limitations on the use of our net operating losses and
credit carryovers. Additionally, ownership changes may have occurred in the periods after 2016 which
could limit our utilization of losses and credits generated in the years 2016 – 2019.

14. Employee Retirement Plan

The Company sponsors an Employee Retirement Plan, generally available to all employees, in accordance
with Section 401(k) of the Internal Revenue Code. Employees may elect to contribute up to the Internal
Revenue Service annual contribution limit. Under this Plan, at the discretion of the Company’s Board of
Directors, the Company may match a portion of the employees’ contributions. The Company made no
discretionary or matching contributions to the Plan for the year ended December 31, 2019 and year ended
December 31, 2018.

15. Subsequent Events

The Company has evaluated events subsequent to the balance sheet date for inclusion in the accompanying
consolidated financial statements through the date of issuance and determined that no subsequent events
have occurred that would require recognition in the consolidated financial statements or disclosures in the
notes thereto other than as disclosed below.

On February 13, 2020, the Company received a conversion notice from Boyalife to convert a total of
$3,000,000 of the outstanding balance of the Second Amended and Restated Convertible Promissory Note
(the “Note”) issued by the Company to Boyalife on April 16, 2018. The amount converted represents the
unpaid accrued interest as of December 31, 2019 of $1,869,000 and $1,131,000 of the outstanding principal
balance. The conversion resulted in the issuance of 1,666,670 shares of the Company’s common stock at a
conversion price of $1.80 per share. Immediately after the conversion, the new outstanding principal
balance of the Note was $7,582,000.

On March 17, 2020, the Company’s wholly owned subsidiary ThermoGenesis Corp. entered into a
Manufacturing and Supply Amending Agreement #1 with CBR with an effective date of March 16, 2020
(the “Amendment”). The Amendment amends the Manufacturing and Supply Agreement entered into on
May 15, 2017 by the Company and CBR (the “Original Agreement”). The Amendment, among other
things, amends the Original Agreement by lowering the default threshold under which CBR may, upon a
default by the Company, purchase licensed products directly from the Company’s manufacturers and
suppliers from $2,000,000 to $1,000,000 for a cash balance coupled with short-term investments net of debt
or borrowed funds that are payable within one year at any month end unless the Company cures such default
within thirty (30) days of the end of such month.

ITEM 9.
ACCOUNTING AND FINANCIAL DISCLOSURE.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of management, including
our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures (as defined by Exchange Act Rule 13a-15(e) and 15d-15(e)) as
of the end of our last fiscal quarter pursuant to Exchange Act Rule 13a-15. The term “disclosure controls
and procedures” means controls and other procedures designed to ensure that information required to be
disclosed 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, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls
and procedures were effective as of December 31, 2019.

Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and
with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, we conducted an evaluation of the effectiveness of its internal control over financial reporting as
of December 31, 2019 based on criteria established in the framework in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
Based on this evaluation, our management concluded that our internal control over financial reporting was
effective as of December 31, 2019.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and presentation.

Attestation Report of Independent Registered Public Accounting Firm
We are a “non-accelerated filer” as defined by Rule 12b-2 of the Exchange Act, and as such, we are not
required to provide an attestation report on the Company’s internal control over financial reporting.

Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the quarter
ended December 31, 2019, that have materially affected, or are reasonably likely to materially affect our
internal controls over financial reporting. We believe that a control system, no matter how well designed
and operated, cannot provide absolute assurance that the objectives of the control system are met, and no
evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any,
within any company have been detected.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item will be included in and is hereby incorporated by reference from our
definitive proxy statement relating to our 2019 annual meeting of stockholders, which we intend to file
within 120 days after the end of our fiscal year ended December 31, 2019.

ITEM 11. EXECUTIVE COMPENSATION.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as a part of this Annual Report on Form 10-K.

PART IV

Page Number

(a) (1) Financial Statements

Report of Independent Registered Public Accounting Firm ................................................... 34

Consolidated Balance Sheets at December 31, 2019 and 2018 ............................................... 35

Consolidated Statements of Operations and Comprehensive Loss for the Year Ended

December 31, 2019 and Year Ended December 31, 2018 ....................................................... 36

Consolidated Statements of Equity for the Year Ended December 31, 2019 and

Year Ended December 31, 2018 .............................................................................................. 37

Consolidated Statements of Cash Flows for the Year Ended December 31, 2019 and the Year
Ended December 31, 2018 ...................................................................................................... 38

Notes to Consolidated Financial Statements ........................................................................... 39

Management’s Report on Internal Control over Financial Reporting is contained as part of this Annual
Report under Item 9A “Controls and Procedures.”

(a) (2) Financial Statement Schedules

Financial statement schedules have been omitted because they are not required.

(b)

Exhibits

Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index on the next page,
which are incorporated herein by this reference.

ITEM 16. FORM 10-K SUMMARY

None.

Exhibit
No.
3.1

3.2

3.3

3.4

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

10.1

10.2

10.3

EXHIBIT INDEX

Document Description
Sixth Amended and Restated Certificate of
Incorporation of ThermoGenesis Holdings, Inc.,
as amended.
Certificate of Amendment to the Sixth
Amended and Restated Certificate of
Incorporation of ThermoGenesis Holdings, Inc.

Certificate of Amendment to the Sixth
Amended and Restated Certificate of
Incorporation of ThermoGenesis Holdings, Inc.

Amended and Restated Bylaws of
ThermoGenesis Holdings, Inc.
Form of Pre-Funded Common Stock Purchase
Warrant.
Form of Convertible Promissory Note

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.
Form of Convertible Promissory Note.

Form of Convertible Promissory Note, dated as
of July 23, 2019, between ThermoGenesis
Holdings, Inc. and Orbrex USA Co.
Form of Indenture, dated December 13, 2019,
between ThermoGenesis Holdings, Inc. and the
Purchaser identified on the signature page
thereto.
Form of Pre-Funded Warrant, dated as of April
26, 2019, between ThermoGenesis Holdings,
Inc. and Yuan Lan Fang.
Description of Securities Registered Under
Section 12 of the Securities Exchange Act of
1934, as amended.
Reorganization and Share Exchange
Agreement, dated January 1, 2019, among
ThermoGenesis Corp., ThermoGenesis
Holdings, Inc., CARTXpress Bio, Inc., Bay
City Capital Fund V. L.P. and Bay City Capital
Fund V. Co-Investment Fund, L.P.
Voting Agreement, dated January 1, 2019,
among CARTXpress Bio, Inc., ThermoGenesis
Corp., Bay City Capital Fund V, L.P., and Bay
City Capital Fund V Co-Investment Fund, L.P.
Right of First Refusal and Co-Sale Agreement,
dated January 1, 2019, among CARTXpress

Incorporation by Reference
Incorporated by reference to Exhibit 3.1 to Form S-8
filed with the SEC on September 12, 2019

Incorporated by reference to Exhibit 3.1 to Form 8-K
filed with the SEC on June 4, 2019.

Incorporated by reference to Exhibit 3.1 to Form 8-K
filed with the SEC on October 31, 2019.

Incorporated by reference to Exhibit 3.2 to Form 8-K
filed with the SEC on October 30, 2019.
Incorporated by reference to Exhibit 4.1 to Form 8-K
filed with the SEC on April 25, 2019.
Incorporated by reference to Exhibit 4.1 to Form 8-K
filed with the SEC on January 31, 2019.
Incorporated by referenced to Exhibit 10.3 to Form 8-
K filed with the SEC on January 4, 2019

Incorporated by reference to Exhibit 4.1 to Form 8-K
filed with the SEC on July 29, 2019.
Incorporated by reference to Exhibit 4.1 to Form 8-K
filed with the SEC on July 29, 2019.

Incorporated by reference to Exhibit 4.5 to the Form
S-3 filed with the SEC on December 13, 2019.

Incorporated by reference to Exhibit 4.1 to Form 8-
K/A filed with the SEC on September 24, 2019.

Filed herewith.

Incorporated by referenced to Exhibit 10.1 to Form 8-
K filed with the SEC on January 4, 2019

Incorporated by referenced to Exhibit 10.2 to Form 8-
K filed with the SEC on January 4, 2019

Incorporated by referenced to Exhibit 10.4 to Form 8-
K filed with the SEC on January 4, 2019

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

Bio, Inc., ThermoGenesis Corp., Bay City
Capital Fund V, L.P., and Bay City Capital
Fund V Co-Investment Fund, L.P.
Investors’ Rights Agreement, dated January 1,
2019, between CARTXpress Bio, Inc., Bay
City Capital Fund V, L.P. and Bay City Capital
Fund V Co-Investment Fund, L.P.
Amended and Restated Certificate of
Incorporation of CARTXpress Bio, Inc.
Securities Purchase Agreement, dated January
29, 2019, between ThermoGenesis Holdings,
Inc. and the Purchaser identified on the
signature pages thereto.
Securities Purchase Agreement, dated April 18,
2019, between ThermoGenesis Holdings, Inc.
and the Purchaser identified on the signature
pages thereto.

Third Amendment to ThermoGenesis Holdings,
Inc. Amended 2016 Equity Incentive Plan
Dated December 14, 2018.

Amendment No. 1 dated July 23, 2019, to the
Convertible Note, dated July 29, 2019, between
ThermoGenesis Holdings, Inc. and Orbrex USA
Co. Limited
Securities Purchase Agreement, dated July 23,
2019, between ThermoGenesis Holdings, Inc.
and the Purchaser identified on the signature
page thereto.
Securities Purchase Agreement dated as of July
23, 2019, between ThermoGenesis Holdings,
Inc, and the Purchaser identified on the
signature pages thereto.
Supply Agreement, dated as of August 30,
2019, between Corning Incorporated and
ThermoGenesis Holdings, Inc.
Supply Agreement, dated November 22, 2019
between ThermoGenesis Holdings, Inc and
ImmuneCyte Life Sciences Inc.
Contribution Agreement, dated November 22,
2019 between ThermoGenesis Holdings, Inc
and ImmuneCyte Life Sciences Inc.
Stockholder’s Agreement, dated November 22,
2019 between ThermoGenesis Holdings, Inc
and ImmuneCyte Life Sciences Inc.
Joint Venture Agreement, dated October 21,
2019, between ThermoGenesis Holdings, Inc.
and Healthbanks Biotech (USA) Inc., and
ImmuneCyte Life Sciences, Inc.

Incorporated by reference to Exhibit 10.3 to Form 8-
K filed with the SEC on January 4, 2019.

Incorporated by reference to Exhibit 10.5 to Form 8-
K filed with the SEC on January 4, 2019
Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on January 31, 2019.

Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on April 25, 2019.

Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on June 4, 2019

Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on July 29, 2019

Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on July 29, 2019.

Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on September 6, 2019.

Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on November 22, 2019.

Incorporated by reference to Exhibit 10.2 to Form 8-
K filed with the SEC on November 22, 2019.

Incorporated by reference to Exhibit 10.3 to Form 8-
K filed with the SEC on November 22, 2019.

Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on October 22, 2019.

Incorporated by reference to Exhibit 10.4 to Form 10-
Q filed with the SEC on August 13, 2019.

Incorporated by reference to Exhibit 10.5 to Form 10-
Q filed with the SEC on August 13, 2019.
Incorporated by reference to Exhibit 10.1 to Form 8-
K filed with the SEC on March 20, 2020

10.17

10.18

10.19

21.1

23.1

31.1

31.2

32
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE

Amendment No.1, dated August 12, 2019 but
effective as of July 23, 2019, to the Convertible
Promissory Note, dated July 23, 2019 between
ThermoGenesis Holdings, Inc. and Orbrex
(USA) Co. Limited
ThermoGenesis Holdings, Inc. Amended 2016
Equity Incentive Plan
Manufacturing and Supply Amending
Agreement #1, effective as of March 16, 2020,
between ThermoGenesis Corp. And CBR
Systems, Inc.
Subsidiaries of ThermoGenesis Holdings, Inc.
Consent of Marcum LLP, Independent
Registered Public Accounting Firm
Certification by the Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
Certification by the Principal Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Section
906 of the Sarbanes Oxley Act of 2002
XBRL Instance Document‡
XBRL Taxonomy Extension Schema Document‡
XBRL Taxonomy Extension Calculation Linkbase Document‡
XBRL Taxonomy Extension Definition Linkbase Document‡
XBRL Taxonomy Extension Label Linkbase Document‡
XBRL Taxonomy Extension Presentation Linkbase Document‡

Filed herewith.

Footnotes to Exhibit Index
^ Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or

exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.

# Represents a management contract or compensatory plan, contract or arrangement.
* Confidential treatment has been requested for certain confidential portions of this exhibit pursuant to Rule 24b-
2 under the Exchange Act. In accordance with Rule 24b-2, these confidential portions have been omitted from
this exhibit and filed separately with the SEC.

‡ XBRL information is furnished and not filed for purpose of Sections 11 and 12 of the Securities Act of 1933

and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not
part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be
incorporated by reference into any registration statement, prospectus or other document.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this Annual Report to be signed on its behalf by the undersigned thereunto duly authorized.

SIGNATURES

Dated: March 23, 2020

By:/s/

ThermoGenesis Holdings, Inc.

Xiaochun “Chris” Xu
Xiaochun “Chris” Xu, Chief
Executive Officer
(Principal Executive Officer)

KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Xiaochun “Chris” Xu and Jeffery Cauble and each of them, jointly and severally,
his attorneys-in-fact, each with full power of substitution, for him in any and all capacities, to sign any and
all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each said attorneys-in-fact or his substitute or substitutes, may do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:/s/ Chris Xu

Dated: March 23, 2020

Chris Xu, Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)

By:/s/

Jeffery Cauble
Jeffery Cauble, Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

Dated: March 23, 2020

By: /s/ Debra Donaghy

Debra Donaghy, Director

Dated: March 23, 2020

By: /s/ Russell Medford

Dated: March 23, 2020

Russell Medford, Director

By: /s/

Joseph Thomis
Joseph Thomis, Director

By: /s/ Mark Westgate

Mark Westgate, Director

Dated: March 23, 2020

Exhibit 23.1

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the incorporation by reference in the Registration Statement of ThermoGenesis Holdings, Inc., formerly
known as Cesca Therapeutics Inc. on Form S-3 (File No. 333-235509), Form S-8 (File No. 333-233731) pertaining to
Amended 2016 Equity Incentive Plan, Form S-3 (File No. 333-231526), Form S-8 (File No. 333-227425) pertaining
to 2016 Equity Incentive Plan, as amended and restated, Form S-8 (File No. 333-218082) pertaining to 2016 Equity
Incentive Plan, Form S-8 (File No. 333-206996) pertaining to 2006 Equity Incentive Plan, Form S-8 (File No. 333-
187197) pertaining to 2006 Equity Incentive Plan and 2012 Independent Director Equity Plan, Form S-8 (File No.
333-171564) pertaining to 2006 Equity Incentive Plan, Form S-8 (File No. 333-140668) pertaining to 2006 Equity
Incentive Plan, Form S-8 (File No. 333-82900) pertaining to Amended 1998 Employee Equity Incentive Plan, 2002
Independent Directors Equity Incentive Plan, and Non- Qualified Independent Director Stock Option Agreement,
Form S-3 (File No. 333-227426), Form S-3, as amended (File No. 333-215638), and Form S-3, as amended (File No.
333-212314) of our report dated March 23, 2020, which includes an explanatory paragraph as to the Company’s ability
to continue as a going concern, with respect to our audits of the consolidated financial statements of ThermoGenesis
Holdings, Inc. as of December 31, 2019 and 2018 and for each of the two years in the period ended December 31,
2019, which report is included in this Annual Report on Form 10-K of ThermoGenesis Holdings, Inc. for the year
ended December 31, 2019.

Our report on the consolidated financial statements refers to a change in the method of accounting for leases due to
the adoption of the guidance in ASC Topic 842 effective January 1, 2019.

/s/ Marcum LLP

Marcum LLP
New York, NY
March 23, 2020

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATIONS
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chris Xu, certify that:

I have reviewed this Annual Report on Form 10-K of ThermoGenesis Holdings, Inc.;

2.
Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this Annual Report;

3.
Based on my knowledge, the financial statements, and other financial information included in this Annual
Report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Annual Report.

4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this Annual Report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and
presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this Annual Report based on such evaluation; and

(d)

Disclosed in this Annual Report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
5.
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and Annual Report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant's internal control over financial reporting.

Dated: March 23, 2020

/s/ Chris Xu
Chris Xu
Chief Executive Officer

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATIONS
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffery Cauble, certify that:

I have reviewed this Annual Report on Form 10-K of ThermoGenesis Holdings, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant's internal control over financial reporting.

Dated: March 23, 2020

/s/ Jeffery Cauble
Jeffery Cauble
Chief Financial Officer

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32

In connection with the Annual Report of ThermoGenesis Holdings, Inc. (the “Company”) on Form 10-
K for the period ended December 31, 2019, as filed with the Securities and Exchange Commission on the
date hereof (the “Annual Report”), each of the undersigned officers of the Company certifies, pursuant to
18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s
knowledge:

(1) The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the

Securities Exchange Act of 1934; and

(2) The information contained in the Annual Report fairly presents, in all material respects, the
financial condition and results of operations of the Company as of the dates and for the periods
expressed in the Annual Report.

Dated: March 23, 2020

/s/Chris Xu
Chris Xu
Chief Executive Officer

Dated: March 23, 2020

/s/ Jeffery Cauble
Jeffery Cauble
Chief Financial Officer