Cesca Therapeutics Inc. – ‘10-K405’ for 6/30/01

On:  Friday, 9/28/01   ·   For:  6/30/01   ·   Accession #:  1095811-1-505269   ·   File #:  333-72035

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Annual Report — [x] Reg. S-K Item 405   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Form 10-K405 Period Ended June 30, 2001               88    411K 
 2: EX-23.2     Consent of Experts or Counsel                          1      6K 

10-K405   —   Form 10-K405 Period Ended June 30, 2001
Document Table of Contents

10-K405
1st Page of 88
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-K
 ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
 SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended: JUNE 30, 2001

 Commission File Number: 0-16375

 THERMOGENESIS CORP.
(Exact name of Registrant as specified in its charter)

 DELAWARE                               94-3018487
       (State or Incorporation)           (I.R.S. Employer Identification No.)

3146 GOLD CAMP DRIVE
RANCHO CORDOVA, CALIFORNIA
----------------------------------------
(Address of principal executive offices)

 95670
(Zip Code)

(916) 858-5100
(Registrant's telephone number, including area code)

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

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 twelve 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.                                       

[X] Yes    [ ] No 

Check if there is no disclosure of delinquent filers in response to Item 405 of 
Regulation S-K, and no disclosure will be contained, to the best of the         
registrant's knowledge, in definitive proxy or information statements           
incorporated by reference in Part III of the Form 10-K or any amendment of this 
Form 10-K. [X].                                                                 

Aggregate Market Value of the voting stock held by non-affiliates of the        
registrant based on the closing sale price on September 17, 2001, was           
$63,612,872.                                                                    

The number of shares of the registrant's common stock, $0.001 par value,        
outstanding on September 17, 2001 was 31,806,436.                               

Documents incorporated by reference: None.                                      

10-K405
2nd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 2nd

 TABLE OF CONTENTS

                                                        [Enlarge/Download Table]

                                                                              Page Number
                                                                              -----------
                                                                                         
ITEM 1.  Business...................................................................3    
         (A) General and Historical Development of Business.........................3    
         (B) Market Overview........................................................4    
         (C) Corporate Strategy....................................................14    
         (D) Description of the Business...........................................20    
         (E) Clinical Summary Status...............................................25    
         (F) Competition...........................................................27    
         (G) Research and Development..............................................28    
         (H) Description of Device Manufacturing...................................29    
         (I) Government Regulation.................................................30    
         (J) Patents and Proprietary Rights........................................32    
         (K) Factors Affecting Operating Results...................................34    
         (L) Distribution Channels.................................................37    
         (M) Licenses and Distribution Rights......................................38    
         (N) Employees.............................................................39    

ITEM 2.  Description of Properties.................................................39    
ITEM 3.  Legal Proceedings.........................................................39    
ITEM 4.  Submission of Matters to a Vote of Security Holders.......................39    
ITEM 5.  Market for the Registrant's Common Stock and Related Stockholder Matters..40    
ITEM 6.  Selected Financial Data...................................................41    
ITEM 7.  Management's Discussion and Analysis of Financial Condition and                 
         Results of Operations.....................................................42    
         (A) Overview..............................................................42    
         (B) Results of Operations.................................................43    
         (C) Liquidity and Capital Resources.......................................45    
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk................46    
ITEM 8.  Financial Statements and Supplementary Data...............................47    
ITEM 9.  Changes in and Disagreements with Accountants on Accounting                     
         and Financial Disclosure..................................................71    
ITEM 10. Directors and Executive Officers of the Registrant........................71    
ITEM 11. Executive Compensation....................................................74    
ITEM 12. Security Ownership of Certain Beneficial Owners and Management............80    
ITEM 13. Certain Relationships and Related Transactions............................81    
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...........82    
         (A) Financial Statements..................................................82    
         (B) Reports on Form 8-K...................................................82    
         (C) Exhibits..............................................................82    

2 

10-K405
3rd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 3rd

PART I

ITEM 1. BUSINESS                                                                

(A) GENERAL AND HISTORICAL DEVELOPMENT OF BUSINESS                              

THERMOGENESIS CORP. ("the Company", "we", "our") designs, manufactures and      
distributes medical devices, and companion sterile single-use disposables that  
our customers use to harvest and cryopreserve biomaterials from single units of 
blood. These therapeutically valuable products include stem cells, surgical     
sealants and growth factors. Our products can be broken down into three general 
categories: stem cell, surgical sealants and plasma freezers and thawers.       

The CryoSeal(R) Fibrin Sealant ("FS") System, which produces and dispenses a    
surgical sealant or "glue", received CE Mark approval in March of 2001 and      
Canadian approval in May of 2001, thus allowing commercialization activities to 
begin in each of these important markets. The Company is currently undergoing   
its European and Canadian market launches. In addition, on August 16, 2001 the  
Company filed an Investigational Device Exemption ("IDE") with the FDA requiring
permission to begin human clinical trials. The Company also continues to support
Asahi Medical's efforts in Japan to gain approval from the Japanese Ministry of 
Health and Welfare to begin human clinical trials during the current fiscal     
year. The Company believes the global market for fibrin sealant is approximately
$400 million annually, with $200 million in Japan, $100 million in Europe and   
$100 million in the U.S. The global market is expected to grow to approximately 
$800 million by the year 2006.                                                  

Launched in fiscal 1998, our BioArchive System has been purchased by 28         
umbilical cord blood stem cell banks in 16 countries worldwide to archive,      
cryopreserve and store stem cell preparations extracted from human              
placentas/umbilical cords, thus providing a source of neonatal stem cells free  
of the ethical issues surrounding embryonic stem cells. To date the Company's   
sales of BioArchive Systems to umbilical cord blood stem cell banks has         
established an available inventory capacity of more than 130,000 specimens      
stored in 36 BioArchive Systems. The Company estimates that storage for over    
1,000,000 specimens will be required by the year 2007 in order to build the     
Human Leukocyte Antigen ("HLA") diversity required to meet the world's need for 
this important new life giving therapy. More than three years after the initial 
launch of the BioArchive System, it remains the only totally integrated, robotic
cryopreservation system available to umbilical cord blood banks. The Company    
expects to service the major share of future capacity needs for the world's     
umbilical cord blood storage requirements, which translates into approximately  
275 BioArchive Systems.                                                         

Initially, the Company developed medical devices for ultra rapid freezing and   
thawing of blood components, which are manufactured and distributed in blood    
banks and hospitals around the world. Beginning in late 1993, and with          
accelerated research and development ("R&D") efforts from 1996 to 1999, the     
Company completed two new technology platforms (BioArchive System and the       
CryoSeal System), each of which is used to produce to multiple biopharmaceutical
products targeted at several important medical and surgical applications. These 
two technology platforms are viewed by the Company as micro-manufacturing       
systems, that utilize single use sterile disposable containers to produce       
biopharmaceutical drugs composed of stem cells, proteins, enzymes or growth     
factors that have therapeutic applications for treatment of serious human       
disease.                                                                        

The Company's completion and transfer of those two technology platforms to      
manufacturing allowed a significant reduction in R&D expenses in fiscal year    
2000. R&D efforts in fiscal year 2001 continued to focus on the development,    
manufacturing transfer and regulatory activities of supporting products for the 
CryoSeal FS System ("FS" refers to Fibrin Sealant, a two-component biomaterial  
which can be used to control bleeding during surgery and as a tissue            
adhesive/sealant). The CP-3, plasma processing                                  

3 

10-K405
4th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 4th

disposable, is used to harvest both components of fibrin sealant                
(cryoprecipitate and thrombin) from a single unit of autologous (the patient's) 
or allogeneic (single donor) plasma when loaded into our CS-1 device. The       
Thrombin Activation Device ("TAD"), which is integrated into the design of the  
CP-3, utilizes proprietary enzyme extraction technology to enable the           
simultaneous preparation of 8.5 ml of thrombin from approximately 10 ml of      
plasma while 5 to 8 ml of cryoprecipitate is harvested from the remainder of    
plasma.                                                                         

The CP-3 features four fibrin sealant kits, each comprised of a pair of         
physically connected 3cc syringes enclosed in a sterile overwrap which can be   
peeled apart to allow the sterile transfer of the kit into the surgical field.  
Each FS kit includes one thrombin syringe and one cryoprecipitate syringe which 
are linked to assure the two components are co-extruded in equal volumes. At the
end of the fibrin sealant production cycle, the operator fills these fibrin     
sealant kits with varying volumes of sealant (1 to 6 ml) depending upon the     
surgical application involved.                                                  

During fiscal year 2001, R&D also developed two additional applicator spray tips
and two drop tips to further optimize the application of CryoSeal Fibrin Sealant
for the various wound sites in the surgical arena. Finally, R&D developed the FS
Warming Tray to pre-heat the fibrin sealant to approximately 37 degreesC to     
optimize both clot times and tensile strength at the wound site. Additionally,  
as of July 15, 2001, R&D completed the CryoSeal FS System pre-clinical trials,  
which evaluated the safety (biocompatibility, toxicity, package integrity,      
etc.), mechanical tensile strength, biochemical make-up and clinical efficacy   
during animal surgery using the CryoSeal Fibrin Sealant.                        

From 1987 to 1998, the Company's primary revenues were from sales of Ultra Rapid
Blood Plasma Freezers and Thawers to hospitals, blood banks, blood transfusion  
centers, and plasma collection centers under FDA approval to market in the      
United States. These product lines feature innovative hardware and software, but
no processing disposables.                                                      

(B) MARKET OVERVIEW                                                             

The Company anticipates significant growth during the next several years in the 
demand for cell therapy products, surgical sealants and growth factor products  
sourced from individual units of blood, rather than pools of blood from         
thousands of different donors, which is the standard industry practice.         
Management believes that if the market for cell therapy expands as anticipated, 
that the market for its BioArchive System, including its related sterile        
disposables (e.g. cell storage containers and bag sets for cell collection,     
selection and transplantation), all of which the Company believes meet current  
FDA safety requirements, will also expand.                                      

(i) CELL THERAPY MARKET                                         

   The emerging cell therapy market driven by newly developed enabling
 technology, which features cell populations that regenerate bone,
       cartilage, and tissues, become cancer vaccines, or replace bone marrow.
 This new strategy for curing disease has dramatically changed the
landscape of new drug development from that of protein-based    
     (recombinant and fractionated proteins) to cell-based. Because of the
serious potential risk of graft vs. host disease ("GVHD"), the  
overwhelming majority of these cell preparations will be        
        individual-specific doses derived from single units of blood, autologous
 or HLA matched single donor. Broadly speaking, cell based therapy
     results from the implantation or transplantation of cells to replace,
   repair, augment, and/or regulate the biological function of tissues
    damaged by trauma, disease processes, or genetic abnormalities. Cell
therapy products can be divided into four segments.             

4 

10-K405
5th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 5th

                                                        [Enlarge/Download Table]

                                      CELL THERAPY MARKET SEGMENTS                           
                -----------------------------------------------------------------------------

--------------  --------------    ------------------    ----------------    -----------------
  ENABLING          CELL          CELL EXPANSION              CELL          CRYOPRESERVATION/
TECHNOLOGIES      SELECTION                               MODIFICATION          ARCHIVING    
--------------  --------------    ------------------    ----------------    -----------------

--------------  --------------    ------------------    ----------------    ---------------  
  PRODUCTS       BONE MARROW           TISSUE            GENE MODIFIED          IMMUNE       
                RESCUE CELLS        REGENERATING             CELLS          MODIFIED CELLS   
                                       CELLS                                                 
--------------  --------------    ------------------    ----------------    ---------------  
                                                                                             
TARGET          -   Leukemias     -   Parkinsons        -   Hemophilia      -   HIV          
DISEASES        -   Lymphomas     -   Multiple          -   Solid           -   Solid        
                -   Genetic           Sclerosis             Tumor               Tumor        
                    Diseases      -   Spinal Cord           Cancers             Cancers      
                                      Damage            -   Alzheimers      -   Hepatitis    
                                  -   Stroke                                -   Malaria      
                                  -   Myocardial                                             
                                      Infarction                                             
--------------  --------------    ------------------    ----------------    ---------------  

--------------  --------------    ------------------    ----------------    ---------------  
ANNUAL            100,000+           1,000,000+           1,000,000+          1,000,000+     
PATIENT                                                                                      
POPULATION                                                                                   
--------------  --------------    ------------------    ----------------    ---------------  

Depending on the desired therapy(s), transferred cells may be   
       patient-derived (autologous) or from a single blood donor (allogeneic);
      and be capable of generation of multiple cells types (pluripotent stem
       cells) or tissue specific precursors (progenitor cells). In many cases,
       cells are isolated, grown to larger numbers, physiologically stimulated
     and/or genetically modified outside the body (ex vivo) prior to their
        therapeutic transfer to the patient. Alternatively, unmodified cells may
    be transferred to the desired site of action and treated with drugs,
   biopharmaceuticals, or gene products delivered locally (in situ) to
        stimulate the cells to grow, differentiate, secrete or otherwise provide
       the desired cell function (excrete insulin for example). In some cases,
        the organization of cells into tissues is facilitated by biological gels
        which are gradually eliminated over time (resorbable, biodegradable) and
  replaced by normal tissue. In all cases, the goal is to provide an
  appropriate mix of functionally differentiated cells in sufficient
        numbers and quality to improve the targeted immune system, gene activity
or restore the targeted tissue function(s).                     

       CLINICAL VALUE OF UMBILICAL CORD BLOOD STEM CELLS IN BONE MARROW RESCUE

      The clinical value of transplanting the hematopoietic stem cells found
   in umbilical cord blood has been well documented in the bone marrow
        rescue treatment of leukemias, lymphomas, diverse inherited anemias, and
   hypoproliferative stem cell disorders. (Rubinstein et al. "Outcomes
  among 562 recipients of placental-blood transplants from unrelated
 donors." The New England Journal of Medicine. Volume 339, No. 22,
     November 26, 1998; pp. 1565-1577). Dr. Rubinstein's benchmark article
        analyzes the outcomes of 562 post-100 day placental cord blood umbilical
cord blood transplant recipients and concludes the following:   

           -       Umbilical cord blood transplants regularly engraft,
                    produce low rates of GVHD and achieve survival rates
              comparable to those from unrelated bone marrow
transplants.                    

               -       Cell dose/Kg patient weight is important for timing and
incidence of engraftment; and   

           -       HLA compatibility was important for engraftment and
survival.                       

       These clinical results make clear that thousands of patients' lives can
     be saved each year if a significant inventory of umbilical cord blood
units is cryo-preserved and archived, ready for                 

5 

10-K405
6th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 6th

   immediate transplant as soon as the patient is diagnosed. Estimates
     vary, but there is some consensus that a cryopreserved umbilical cord
        blood inventory of 1 million (less than 20% of the 5.6 million potential
bone marrow donors currently in the international bone marrow   
      registries) would provide excellent HLA matches (6 of 6 or 5 of 6) and
        high cell doses (greater than 1 X 10(11) cells/Kg body mass) to the tens
       of thousands of patients annually which physicians wish to treat with a
stem cell transplant.                                           

    Transplant candidates also include the patients undergoing stem cell
transplants to treat solid tumor cancers (-e.g. breast cancer). 
       Unfortunately, autologous transplant outcomes have not been superior to
patient receiving only chemotherapy and radiation. This patient 
      population would now have access to a well-matched unrelated umbilical
cord blood unit which could establish a new, rather than        
       previously-defeated, immune system to resist the re-emergence of cancer
cells not killed by the chemotherapy and radiation treatment.   

        An equally important benefit of this large-standing inventory is that it
    would allow the exploration of the treatment of other major diseases
    that may well be cured by stem cell transplants, such as sickle-cell
       anemia (80,000 patients per year) ("Sickle Cell Anemia." National Hear,
      Lung, and Blood Institute (NIH), NIH Publication No. 96-4057, November
1996; p.2), AIDS (200,000 patients per year) ("Surveillance for 
AIDS-defining Opportunistic Illnesses, 1992-1997." Morbidity and
   Mortality Weekly Report: CDC Surveillance Summaries. Volume 48, No.
 SS-2, April 16, 1999) and thalassemia (600,000 patients per year)
    ("Thalaessmia (Cooley's Anemia) Clinical Research Network." National
       Heart, Lung, and Blood Institute (NIH), RFA HL-99-016, March 11, 1999).
    An exploratory clinical study reported an 81% cure rate for treating
sickle cell anemia with a stem cell transplant.                 

  UMBILICAL CORD BLOOD VS. OTHER SOURCES OF HEMATOPOIETIC STEM CELLS

       There are three typical sources of hematopoietic stem cells utilized in
       bone marrow rescue therapy: 1) bone marrow, 2) peripheral blood, and 3)
        umbilical cord blood. Clinical consensus is building that umbilical cord
   blood is the best source of hematopoietic stem cells. See following
chart comparing the three sources:                              

6 

10-K405
7th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 7th

                                                        [Enlarge/Download Table]

 Source of Stem Cells                Advantages                        Disadvantages            
 --------------------                ----------                        -------------            
                                                                                                
Bone Marrow              -   Established process             -   Required near-perfect HLA      
                         -   Established registry                match                          
                         -   High cell numbers collected     -   Experimental procedure         
                                                             -   Donor requires                 
                                                                 hospitalization and anesthesia 
                                                             -   Donor pain                     
                                                             -   $25K - 30K cost                
                                                             -   Unavailable when needed        

Peripheral Blood         -   Anesthesia not required of      -   Apheresis requires three       
                             donor                               collections (four hours each)  
                         -   High cell numbers collected     -   Experimental procedure         
                                                             -   Donor pain                     
                                                             -   Autologous stem cell units     
                                                                 retain cancer cells            
------------------------ ----------------------------------- -----------------------------------
Umbilical Cord Blood     -   Convert what was previously     -   Limited volume of placental    
                             biologic waste into cell            blood (average 80 ml)          
                             therapy                         -   Experimental procedure         
                         -   No donor risk or pain                                              
                         -   Cryopreservation for stored                                        
                             inventory                                                          
                         -   Requires only four out of six                                      
                             HLA matching, therefore                                            
                             higher probability of finding                                      
                             a match                                                            
                         -   Immediately available                                              
                         -   Reduced GVHD                                                       
                         -   Higher concentrations of stem                                      
                             cells                                                              
                         -   Expected licensure by FDA in                                       
                             2000                                                               

        One of the major advantages with umbilical cord blood stem cells is that
    they are harvested from the placenta/umbilical cord after birth of a
       newly delivered baby and until recently, normally discarded as biologic
        waste. Without risk or pain to the donor, harvests can take place in all
       hospitals in which babies are born. They can be banked in large numbers
    to optimize the probability of finding a match soon after diagnosis.
       Currently every industrialized country has announced plans to operate a
      umbilical cord blood stem cell bank to provide stem cell therapies for
their citizens.                                                 

THE MARKET NEED FOR UMBILICAL CORD BLOOD STEM CELL BANKS        

     The Company believes the market for these BioArchive nitrogen storage
        facilities will be predominately driven by the demand for umbilical cord
       blood stem cell donations and transplants needed for bone marrow rescue
    therapy (see above table), and more recently, the research involving
   umbilical cord blood stem cells as an alternative to embryonic stem
cells. This is a new and still emerging market.                 

     Umbilical cord blood samples are collected by draining blood from the
 placenta and umbilical cord, which previously had been considered
  medical waste. The stem cells are then concentrated within a final
        volume of 20 ml typically using the Company's proprietary processing bag
sets.                                                           

7 

10-K405
8th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 8th

    In order to achieve an optimum tissue match with patients of diverse
       ethnic backgrounds, a large number of umbilical cord blood samples must
        be banked, catalogued, and available for retrieval. Statistical analysis
    suggests that one million samples will provide sufficient volume and
       diversity to produce a high cell dose and an excellent tissue match for
   95% of the world's patients who may require a transplant. These two
   factors, individually, and especially in combination, significantly
     increase the likelihood of patient survival. The Company expects that
      the health authorities in most countries will establish umbilical cord
    blood stem cell banks in order to help build this one million sample
inventory.                                                      

        Diseases currently being treated by umbilical cord stem cell transplants
are listed bellow (Scientific American. :Twelve Major Cancers." 
September, 1966):                                               

                                                                [Download Table]

LEUKEMIAS:                             IMMUNE DISEASES:                
----------                             ----------------                
                                                                       
Acute Myelogenous Leukemia (AML)       Hemoglobinopathies (variety)    
Acute Lymphoblastic Leukemia (ALL)     Wiskott-Aldrich Syndrome        
Chronic Myelogenous Leukemia (CML)     Severe Combined Immunodeficiency
                                       Disease                         
                                       Agranulocytosis (Kostmann's     
                                       Syndrome)                       

                                                                [Download Table]

ANEMIAS:                               MISCELLANEOUS:     
--------                               --------------     
                                                          
Sickle Cell Anemia                     Reticular Dygenesis
Aplastic Anemia                        Neuroblastoma      
Thalassemia                                               
Fanconi's Anemia                                          
Congenital Hypoplastic Anemia                             

                                                                [Download Table]

LYMPHOMAS:                             GERM CELL TUMORS:   
----------                             -----------------   
                                                           
Non-Hodgkin's Lymphoma                 Multiple Myeloma    
Hodgkin's Lymphoma                     Myelodysplasia      
                                       Rheumatoid Arthritis
                                       Gaucher's Disease   
                                       Hurler's Syndrome   

SOLID TUMORS:                                                       
-------------                                                       
Ovarian Cancer                                                      
Small Cell Lung Cancer                                              
Breast Cancer                                                       
Medulloblastoma                                                     
Testicular Cancer                                                   
Ewing's Sacroma                                                     

ENABLING TECHNOLOGIES FOR THE CELL THERAPY MARKETPLACE          

      The primary driver in cell therapy research will be the development of
      critical enabling technologies that advance the science and remove the
     limitations of the current cell processing techniques. These enabling
        technologies will transform therapies that were experimental, expensive,
  and inefficient into a well-structured, attainable, cost effective
alternative to the current protein based treatments.            

There are four critical enabling technologies: (1)              
      cryopreservation/archiving, (2) cell selection, (3) cell expansion and
 (4) cell modification, that can best be understood by examining a
typical production cycle for a cell therapy product.            

8 

10-K405
9th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 9th

 CELL THERAPY PRODUCT PRODUCTION CYCLE

                                                                [Download Table]
                                                                        
-----------------------                                                 
 Collection of Cells                                                    
-----------------------                                                 

-----------------------    ---------------------   ---------------------
  CRYOPRESERVATION/           Cell Selection        CRYOPRESERVATION/   
      ARCHIVING                   and/or                ARCHIVING       
                              Cell Expansion                            
                                  and/or                                
                            Cell Modification                           
-----------------------    ---------------------   ---------------------

                                                   ---------------------
                                                         Thawing,       
                                                   Transfusion of Cells 
                                                   ---------------------

1. CRYOPRESERVATION/ARCHIVING                   

             The ability to deliver cell populations optimized for numbers
         (recovery) and viability exactly at the time a patient is
               optimally prepared to receive them will be a critical factor in
             successful cellular therapy. Compared to proteins that can be
              lyophilized and stored at room temperature for long periods of
             time without loss of function, the viability of cells at room
             temperature and even at refrigerated temperature is short and
          fragile. The BioArchive technology enables the processing,
          cryopreservation and archiving of single unit patient cell
             specimens in liquid nitrogen (-196 degree centigrade) without
           harmful Transient Warming Events ("TWE's") will provide the
                logistical flexibility and therapeutic efficacy needed to ensure
the future growth of the industry.              

2. CELL SELECTION                               

               An adequate supply of high-quality purified cell types requires
          cell selection methods capable of isolating rare or unique
cells.                                          

                In order to remove only a specific cell, scientists had to first
              be able to reliably identify the cell. Once the cells could be
                identified, it would then be possible to develop techniques that
     removed the cells from other cells in the collection.

    Currently, several methods are used for the clinical
              purification of cell subsets. These methods can separate cells
           from bone marrow, peripheral blood stem cell collection and
               whole blood (for stem cells and immune cells, or umbilical cord
              blood, or embryonic stem cells). The process of cell selection
can be used for the following four applications:

                1.      Remove excess red cells and plasma leaving all the white
cells in a fixed small volume.  

            2.      Separate only desired cell type from a population of
cells.                          

  3.      Extract a stem cell at a specific stage of
                       differentiation or a dendritic cell at a specific stage
of maturation.                  

              4.      Deplete tumor cells that may be contaminating the cell
preparation.                    

                The major objective of any cell selection or purification system
         is the recovery of a pure, viable cell population without
               significant loss of target cells. The BioArchive method of cell
              selection (No.1 above) is embodied in sterile, single use cell
           processing bag sets that are being sold to cord blood banks
through out the world.                          

9 

10-K405
10th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 10th

3. CELL EXPANSION                               

             The major challenge for clinical application of hematopoietic
             stem cells from cord blood is ex vivo expansion. Expansion of
             rare cells is an attractive strategy to ensure that there are
         enough stem cells for an effective graft when the initial
              numbers collected from a unit of cord blood or a donor are too
  small to achieve the required therapeutic benefit.

          Cell dose, or the number of cells, is widely recognized by
               transplant clinicians to be a major factor in the speed of bone
      marrow engraftment. Ex vivo expansion of hematopoietic
                precursors, progenitors and stem cells represents the modern era
             of cellular therapeutics in the 21st century. For the last 10
     years, increasing means for identifying and purifying
           hematopoietic stem cells and cytokines have facilitated and
       improved the development of ex vivo stem cell expansion
           technology. However, technology has not yet reached a stage
               where ex vivo-expanded hematopoietic progenitors and stem cells
can be used routinely for replacement therapy.  

               There has been recent progress toward development of clinically
          useful protocols for stem cell expansion. Currently, there
        exists few results from clinical trials that address the
             efficacy of such procedures. The clinical feasibility of stem
               cell expansion will be determined by successful solution of the
following:                                      

                        -       Selection of an optimal stem cell population for
expansion;      

                  -       Determining desired characteristics of the
                            expanded stem cell population to be used for
engraftment; and

                      -       Development of new reagents and procedures for
                       expansion and infusion of hematopoietic
           progenitors and stem cells.

             A bank of stem cells expanded from a pool of HLA-typed donors
             could provide transplantable stem cells beneficial for a wide
                range of diseases, even in the largest adult patients. Stable in
           vitro maintenance of the stem cell characteristic over many
        doublings of the population would also allow for genetic
manipulation.                                   

4. CELL MODIFICATION                            

            Cell modification includes the technologies required for: a)
             stimulating stem cells to differentiate into the various cell
               types required for use as regenerative therapies; b) activating
           antigens to immune cells to achieve the desired therapeutic
                effect; and c) the insertion of a functional gene to correct the
function of an aberrant gene in the patient.    

(ii) THE COMMERCIAL FIBRIN SEALANT MARKET                       

        Fibrin sealants are used by surgeons as hemostatic agents (material used
       to control or stop bleeding) or to seal tissue together during surgery.
While sutures and staples will bring tissue edges together very 
       effectively, they do not have inherent sealing and clotting activity. A
1990 review article in the journal, Transfusion, described the  
 motivation behind the Company's development of its fibrin sealant
production system:                                              

          "Despite the development of modern surgical techniques and
           improvement in introperative hemostasis, the search for the
          perfect hemostatic agent continues. Technological advances

10

10-K405
11th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 11th

             have included improved suture materials, metallic staples and
               clips, and a variety of natural and synthetic hemostasis agents
               including collagen products (i.e., collagen fleece), absorbable
  gelatin sponges, oxidized cellulose, and synthetic
                cyanoacrylate-based glues. Fibrin glue (fibrin sealant) has been
               advocated by many surgeons as the material that best approaches
            the ideal operative sealant. Abundant reports have appeared,
touting its beneficial properties.              

                As a naturally occurring and human-derived product, the material
           appears to have no tissue toxicity, promotes a firm seal in
            seconds to minutes, is reabsorbed in days to weeks following
           application, and appears to promote local tissue growth and
           repair. The use of this material outside the United States,
          particularly in Europe, has flourished. Its use within the
          United States has lagged more than a decade behind Europe,
           largely because of the lack of ready access to commercially
              prepared materials." (J.W. Gibble and P.M. Ness, "Fibrin Glue:
               The Perfect Operative Sealant," Transfusion, Volume 30:8, 1990)

       The fibrin clot is formed by mixing fibrinogen-rich cryoprecipitate and
     thrombin. Fibrin is completely biodegradable. Its physical/mechanical
       properties enable it to serve both as a hemostatic (clot-forming) agent
        and sealant (biologic glue). The formation of a fibrin clot is a natural
        wound healing mechanism of the body, and therefore completely natural --
     it is the body's own acute tissue adhesive. Fibrin dissolves over the
       four weeks following surgery in such a way as to allow blood to provide
      nutrients and healing factors to the cut tissue edge, and nothing else
in the surgeon's armamentarium provides this capability.        

Fibrin sealants are used today for a wide variety of surgical   
procedures. These include the major blood-loss surgeries of the 
      cardiovascular, pulmonary, and liver regions. Fibrin sealants are used
      to seal needle holes, pulmonary leaks, and to seal slow oozing wounds.
  Fibrin sealants provide excellent adhesion for skin graft, plastic
   surgery procedures, and sealing the dura to prevent cerebral spinal
fluid leaks.                                                    

CURRENT MARKET SPENDING FOR FIBRIN SEALANTS                     

      The Company estimates current worldwide revenue for fibrin sealants to
       be between $300 and $400 million. Calendar year 1999 was the first full
       year in which commercial fibrin sealants (Tisseel (Baxter) and HemaSeal
   (HemaCure) fibrin sealants were sold in the United States. With the
        expected FDA clearance of new products and continued educational efforts
    by existing fibrin sealant suppliers driving growth in the number of
      surgical procedures using fibrin sealant in the U.S. market, worldwide
revenues are expected to grow to over $800 million by 2006.     

     In Europe and Japan, approved commercial fibrin sealants sourced from
   pooled blood plasma have enjoyed a long-term presence and represent
about 90% of the procedures utilizing surgical sealants in those
       markets. These commercial fibrin glues cost generally $40 to $80 per ml
delivered to the wound site. Given their cost they are typically
    purchased in smaller volumes of about 5 ml per procedure. Management
  believes that commercial fibrin sealants are used in about 300,000
       European and 330,000 Japanese surgical procedures. Baxter's Tissucol (a
    pre-frozen version of Tisseel) has the largest share of the European
    market and Aventis's Beriplast has the largest share of the Japanese
market.                                                         

THE NEED FOR BIOMATERIALS PREPARED FROM SINGLE UNITS OF BLOOD-  
Blood-based biomaterials such as fibrin sealants, platelet gels,
      platelet derived growth factors ("PDGF"), thrombin and cryoprecipitate
     prepared from individual units of blood or blood plasma, a technology
pioneered by the Company, possess significant advantages in the 
    marketplace. For example, commercial fibrin sealant is prepared from
        pools of plasma purchased from more than 10,000 individuals. The risk of

11

10-K405
12th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 12th

        viral or prion transmission by blood products continues to increase each
      year as new infectious viruses or other pathogens are discovered. This
        risk rises dramatically when the source plasma is a pool of 10,000 units
rather than a single unit.                                      

    -       For example, the sometimes lethal Nile River
                   Encephalitis virus transmitted by mosquitoes is now
                found in states throughout the east coast and is
                      spreading west. As there is no screening test for this
                        virus used by any blood center in the western world, our
                 blood supply is potentially being contaminated by
                      unwitting blood donors who only experienced a flu like
                        effect. Transfusion Transmitted Virus ("TTV") is thought
                     to be a form of hepatitis yet to be characterized and
                   along with Parvovirus B19, is resistant to the most
            commonly used solvent detergent ("SD") viral
                   inactivation technology. Prions, infectious protein
                    particles which cause spongiform encephalopathies in
              cows (Mad Cow Disease) and humans (new variant
                      Creutzfelt Jacob Disease or nvCJD), are 100% lethal to
                        infected patients, resistant to all known forms of viral
                 inactivation technology, elude all forms of rapid
                     detection, and cannot be diagnosed in patients except
            through a biopsy of the dead victim's brain.

               -       Blood products sourced from pools of human plasma often
                        contain additional proteins derived from animals such as
                   cows (bovine lung aprotinin and bovine thrombin are
                       ingredients of currently available commercial sealants)
                        or snakes (batroxibin, which is sourced from snake venom
                 is used as a substitute for human thrombin by one
                   sealant currently being marketed in Europe). Animal
                       proteins may provide a vehicle for the contamination of
                    pooled plasma products by viruses or prions (several
                   cases have been documented where victims contracted
                      nvCJD as a result of taking growth hormones containing
bovine substances).             

              -       In addition, it has been reported that animal proteins
            have triggered allergic reactions leading to
                    anaphylactic shock in exposed patients. Also, Factor
                    V-based bleeding disorders have occurred in patients
                exposed to bovine Factor V present in commercial
preparations of bovine thrombin.

             -       Government restrictions on allowable blood donors has
                  led to a shortage in the nations blood supply. The
                       August 1999 ruling by the FDA preventing anyone who had
                    spent extended amounts of time in the United Kingdom
                    between the years 1980 and the present from donating
                    blood in U.S. blood centers, was estimated at having
                    eliminated -500,000 donors from the U.S. donor pool.
                        This ruling was recently expanded to a two step increase
                     in restrictions, narrowing the window of visiting the
                 U.K. to 3 months from 6 months, and expanding the
                    restricted donor list to U.S. personnel stationed at
                      military bases in Europe, and ultimately expanding the
                       restrictions to anyone who has lived anywhere in Europe
                   for five or more years. These restrictions can only
                    increase the magnitude of the nation's current blood
                       shortage. Concurrent to the ever increasing shortage of
                      blood donors is a corresponding increase in the demand
                      for autologous blood products, and / or products which
                  can reduce the need for allogeneic blood products.

(iii) THE ULTRA RAPID FREEZER MARKET                            

  Blood banks preserve blood and plasma products by freezing them in
    sterile plastic bags and then thawing them before use. Blood centers
     separate whole blood collected from donors into its components, which
       includes: erythrocyte concentrates, platelet concentrates, fresh frozen
     plasma and Cryoprecipitated AHF. Fresh frozen plasma ("FFP") contains
the labile as well as the stable components of the coagulation, 
fibrinolytic, and complement systems; the proteins that maintain

12

10-K405
13th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 13th

    pressure and modulate immunity; and other proteins that have diverse
  activities. At specialized plasma fractionation facilities, frozen
        plasma is further processed into plasma derivatives for use in component
therapy, such as albumin, Factor VIII and IX, antithrombin III, 
immunoglobulins, etc. The typical uses for FFP are for direct   
transfusion, and as a source of material for the preparation of 
     Cryoprecipitated AHF. The use of FFP in the U.S. has reached almost 2
   million units annually in the USA. One reason for the growth is the
      widespread acceptance of the concept of specialized component therapy,
which is replacing the transfusion of whole blood.              

     A unit of plasma is defined as the fluid portion of one unit of human
    blood that has been centrifuged to segregate and concentrate the red
       blood cells ("RBC") and platelets. The plasma fraction is then moved to
        a satellite bag and frozen solid at -18 degrees C (or colder) within six
hours of collection. Upon freezing, this plasma is labeled FFP. 
     Ultra-rapid freezing through the point of fusion provides for optimum
recovery of the labile Factor VIII proteins within FFP.         

       Conventional freezing systems rely on air blast freezing; however, this
   method requires a considerable length of time (90 ~ 120 minutes) to
thoroughly freeze a unit of FFP.                                

      Rapid freezing is one of the easiest steps that a blood bank or center
       can take to dramatically improve the quality of their processed plasma.
    Studies at blood centers in the Hague (the Netherlands) and Hokkaido
      (Japan) showed that the Factor VIII protein yield from cryoprecipitate
   from plasma could be increased by as much as 18 to 32% by using the
   Company's Ultra Rapid Plasma Freezer instead of air blast freezers.

     The market for Ultra Rapid Plasma Freezers is concentrated within the
     blood banks, blood transfusion centers, and plasma collection centers
        around the world. The Company believes that a blood bank would typically
       require two to six freezers depending on facility size and the level of
     redundant freezing capacity desired. The Company estimates that there
      are about 750 blood bank or plasma fractionation facilities that could
       require a plasma freezer in the developed world; these facilities would
      utilize an installed base of about 2,500 units. Assuming an eight-year
        life cycle for a freezer, the available annual market is about 312 units
or 12.5% of those in the field.                                 

Another category of customer is the facilities where plasma     
    fractionators collect blood plasma from paid donors. These customers
       require large, high-capacity freezers. There are approximately 330 such
        facilities in the U.S. and Canada. In fiscal year 1996 and 1997, Aventis
   BioServices (formerly known as Centeon), one of the world's largest
 fully integrated plasma collection companies, purchased 76 MP2000
  freezers from the Company for their 32 domestic facilities. During
       fiscal year 2000 and fiscal year 2001, Aventis acquired nine MP2000 and
   eleven MP1100 MicroCascade freezers for use in several of its newly
     acquired facilities. In August 2001, Aventis placed an order with the
Company for thirty (30) MP2200 and five (5) MP1100 MicroCascade 
Freezers.                                                       

(iv) THE ULTRA RAPID THAWER MARKET                                              

    Stored Frozen RBC or FFP require thawing before their transfusion. A
       process of rapid homogenous thawing of frozen plasma or red blood cells
is desirable so that emergency transfusions can be quickly      
        administrated. Rapid thawing also reduces the time available for loss of
 labile proteins (i.e.--FVIII) or growth of bacteria that may have
     contaminated the unit during phlebotomy. Conventional thawing methods
        often utilize simple 37 degrees C open air water baths which thaw frozen
       plasma slowly (i.e. ~30 minutes), and were susceptible to contamination
       by airborne bacteria requiring repeated decontamination of the water to
    maintain acceptable environment and conditions for thawing. With the
      advent of the Company's which utilize sealed, membrane pocket thawers,
     the hospital blood bank can thaw frozen blood plasma in approximately
ten minutes with substantially reduced maintenance requirements.

13

10-K405
14th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 14th

      Since the market for Thawers is essentially all hospitals that perform
  surgery, the number of potential thawer customers is significantly
   larger than the number of potential freezer customers, however, the
    average sale price for a thawer is roughly 1/10th of a typical Ultra
Rapid Plasma Freezer. The Company believes that there are 5,000 
 potential thawer customers in the United States and another 9,000
       customers around the world. The typical thawer customer has two thawers
on site.                                                        

(C) CORPORATE STRATEGY                                                          

Our goal is to become the dominant developer, manufacturer and distributor of   
medical devices and disposables used by our customers to "micro-manufacture"    
biomaterials from individual units of blood. The term micro-manufacture refers  
specifically to the use of proprietary medical devices and sterile, single use  
processing disposables, to process individual units of blood or blood components
into therapeutically useful biomaterials in "real time" (approximately 1 hour or
less). The Company believes its enabling technology provides the means to enter 
and achieve a significant market share in each biopharmaceutical blood component
market. The Company believes that there is a rapidly growing need for           
biomaterials which can be micro-manufactured from individual units of whole     
blood, blood plasma, or platelets and has initiated an aggressive intellectual  
property program to ensure that the competitive advantage gained by the         
introduction of these new novel micro-manufacturing platforms is retained by the
Company.                                                                        

(i) STRATEGY FOR CELL THERAPY MARKET                            

The BioArchive System has been designed as a special-purpose    
        cryo-preservation system for blood components. The Company believes that
 most collected umbilical cord blood samples will be stored in the
     Company's BioArchive Systems. Given that each BioArchive system holds
      3,626 samples, the Company anticipates that approximately 276 Systems,
      placed in 30 countries, will be required to archive the one million in
       HLA typed stem cell units needed to provide optimum transplant units to
all patients in need.                                           

     The Company expects that within five years, more than 10,000 patients
    each year will seek umbilical cord blood transplants from the global
        network of umbilical cord blood stem cell banks utilizing the BioArchive
System.                                                         

    THE COMPANY'S STRATEGY FOR ESTABLISHING THE BIOARCHIVE SYSTEM AS THE
    MARKET LEADER FOR CRYOPRESERVING UMBILICAL CORD BLOOD STEM CELLS HAS
EIGHT COMPONENTS, INCLUDING:                                    

     (a)     PROVIDE TOTAL SOLUTION FOR THE UMBILICAL CORD BLOOD STEM CELL
BANKING MARKETPLACE:                            

              -       THE BIOARCHIVE SYSTEM (Instrument, computer, ancillary
                   equipment, and processing disposables) provides the
                     umbilical cord blood stem cell bank customer with all
                        the sterile bag sets, cryoprotectants and devices needed
                        to collect, process, cryopreserve, archive, retrieve and
                  transfuse umbilical cord blood stem cell units for
transplant.                     

            -       A LABORATORY APPLICATIONS SPECIALIST with a Ph.D. in
                        blood transfusion medicine is available to provide total
                    pre- and post-sales support in the form of training,
                     troubleshooting, process improvement, assistance with
                      system validation, preparation for accreditation audit
and in-servicing support.       

        -       FIELD SERVICE ENGINEERS ("FSE's") provide global
                       installation, problem diagnosis and repair services. As
                     each BioArchive features a modem connected diagnostic
software program, the           

14

10-K405
15th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 15th

                       FSE's can troubleshoot customer complaints in real time
                      anywhere in the world and often resolve issues without
       physically being at the customers site.

          -       WEB PAGE COMMUNICATION of technical information is
                      available to the installed BioArchive customer base in
             real time through downloads via the Internet.

               -       RESEARCH COLLABORATIONS with cord blood banks encourage
                    researchers to consider the Company as a partner for
     commercializing new product concepts.

       (b)     USE OF PROPRIETARY TECHNOLOGY AS A BARRIER TO ENTRY, INCLUDING:

              The U.S. Patent Office has issued seven patents to the Company
      covering the BioArchive Platform technology base. Five
                additional patent applications are currently under review by the
                U.S. Patent Office. The BioArchive's most important intellectual
property includes:                              

                -       FIRST BARCODE SCANNING SYSTEM (PERISCOPE/ROBOTIC ARM) TO
                     READ BARCODES IN LIQUID NITROGEN (LN2), thus enabling
                      positive specimen identification prior to the specimen
                    being exposed to the cell damaging effects of TWE's.

                -       PERISCOPE MOTION CONTROL SYSTEM enables the periscope to
                precisely move between ambient and --196 degrees
                       centigrade LN2 temperatures despite undergoing dramatic
              dimensional changes as a result of the extreme
temperature shift.              

          -       ROBOTIC HARDWARE AND SOFTWARE CONTROL SYSTEMS that
                     enable the periscope/robotic arm to place a umbilical
                      cord blood canister at any one of 3,626 register hooks
                within the interior of the system's dewar with a
             positional accuracy of 1/1,000ths of an inch.

          -       INTEGRATED CONTROLLED RATE FREEZER ("CRF") modules
                        enable the BioArchive System to freeze approximately 70%
                      faster than conventional CRF devices. Further, because
                       of this design, the specimen is immediately transferred
                  post-freeze into liquid nitrogen without requiring
                    exposure to ambient temperatures. A conventional CRF
                    system requires the use of a separate CRF instrument
                     which forces the specimen to be exposed to TWE's that
                  can reduce cell viability during the transfer of a
                   frozen unit from the CRF, through the warm air to a
  separate nitrogen storage freezer.

              -       AN AUTOMATICALLY UPDATED DATABASE OF SPECIMEN RECORDS,
                    including International Society of Blood Transfusion
          ("ISBT") barcodes and CRF freeze profiles.

    (c)     ENGAGE INTERNATIONAL CORD BLOOD BANK STANDARDS COMMITTEES TO
         ADOPT SPECIFICATIONS ALIGNED WITH THE BIOARCHIVE PLATFORM
DESIGN:                                         

          -       The Company supports the FDA's stated intention to
                        license hematopoietic stem cells sourced from cord blood
                       as the first stem cell therapy product and has provided
                   TWE data on these cells to the FDA docket for their
review.                         

            -       The Company participates directly, when invited, and
                   indirectly through its customers who are invited to
                      participate on committees charged with the development
                of regional or national standards for Cord Blood
Banking.                        

15

10-K405
16th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 16th

 (d)     CONSTRUCT COMPELLING ECONOMIC MODEL WHICH HIGHLIGHTS COST
       EFFECTIVENESS OF THE BIOARCHIVE SYSTEM IN COMPARISON TO
        ALTERNATIVE METHODS WHICH UTILIZE CONVENTIONAL CRYOGENIC
DEVICES:                                        

                -       The Company provides a software program to its customers
                 to project cost of personnel, facilities, LN2 and
                   equipment to store 10,000 PCB units over a ten-year
                  operational period with the BioArchive System. The
                 comparative costs with conventional equipment are
                   typically 50% higher (G. Sirchia et al. Transfusion
1999;39:645-650).               

      (e)     CREATE THE AWARENESS THAT THE BIOARCHIVE CORD BLOOD STEM CELLS
AS HAVE THE HIGHEST PROBABILITY OF ENGRAFTMENT: 

        -       Encourage scientific publications in peer review
                        journals and scientific conferences that demonstrate the
               high levels of cell recovery and cell viability
      associated with the BioArchive System.

            -       Effectively communicate this concept to the ultimate
                   end-user, the transplant physician, such that these
                     end-users preferably demand cord blood specimens from
                      BioArchive-based umbilical cord blood stem cell banks.

         -       Support scientific research that demonstrates the
                benefits of the totally integrated design of the
                       BioArchive System with respect to reducing loss of cell
                   viability due to the TWEs that are unavoidable when
    using traditional cryogenic devices.

        (f)     PRESENT BIOARCHIVE SYSTEM'S ABILITY TO COMPLY WITH CGTP STANDARD
          CORD BLOOD BANKS AS A COMPETITIVE ADVANTAGE FOR BIOARCHIVE
             CUSTOMERS OVER CORD BLOOD BANKS WHO UTILIZE ONLY CONVENTIONAL
CRYOGENIC EQUIPMENT:                            

               -       Detail the BioArchive's features and benefits which are
              fully compliant with the FDA's cGTP standards,
including:                      

                  -       Establishment Registration and Listing for
                                Manufacturers of Human Cellular and Tissue-Based
                     Products (63 FR 26744, May 14, 1998).

                     -       Suitability Determination for Donors of Human
                                Cellular and Tissue-Based Products (64 FR 52696,
    September 30, 1999).

               -       Current Good Tissue Practice (CGTP) for
                                Manufacturers of Human Cellular and Tissue-Based
                           Products; Inspection and Enforcement (66 FR
       1508, January 8, 2000).

       (g)     RAPIDLY ESTABLISH GLOBAL NETWORK OF BIOARCHIVE-BASED CORD BLOOD
BANKS:                                          

          -       From May of 1998 to June 30, 2001, the Company has
                       shipped 36 BioArchive Systems to 28 cord blood banks in
16 countries.                   

     (h)     EXPAND UTILIZATION OF THE BIOARCHIVE PLATFORM INTO OTHER CELL
THERAPY MARKET SEGMENTS:                        

           -       Aggressively interact with researchers and start-up
                       companies in closely related cell therapy markets, such
                      as cancer vaccines and tissue regeneration products to
                  understand their customer requirements in order to
                        integrate the BioArchive System into their manufacturing
processes.                      

             -       UTILIZE ENABLING TECHNOLOGY TO GAIN MARKETSHARE AMONG
                     CELL THERAPY COMPANIES- During 2001, the cell therapy
                      market exploded onto the financial and ethical arenas.
The Company is                  

16

10-K405
17th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 17th

                 perfectly positioned to gain market share in this
                       rapidly evolving marketplace because of its proprietary
                        positions in key enabling technologies for cell therapy.

                -       CRYOPRESERVATION AND ARCHIVING- The BioArchive System is
               a new cryopreservation technology that has been
                    developed to enable the individual-specific cellular
                   therapy strategies where only unique HLA-matched or
                  autologous cell populations can save an individual
patient's life.                 

                    The BioArchive System is able to start and stop "the
                 biological clock" of cells in order to optimize a
                     verifiable and validated manufacturing process and to
              preserve the cells until the optimum moment to
              transplant the patient without comprising cell
                    viability. These capabilities will be critical for a
                    company seeking FDA licensure for their cell therapy
products.                       

              -       CELL SELECTION- The Company, in collaboration with the
                      New York Blood Center ("NYBC"), has developed a single
                     use disposable bag set with companion cryoprotectant,
                        that is being used in 16 countries to select therapeutic
                     doses of hematopoietic stem cells from umbilical cord
                       blood. The Company is seeking partners or technology to
                   enable the separation of specific subgroups of stem
  cells within umbilical cord blood.

             -       CELL EXPANSION- The Company and its partner, the NYBC
                        accurately anticipated the development of cell expansion
                   technology during the development of its BioArchive
                      Freeze Bag. The BioArchive Freeze Bag divides the cell
                        specimen into two aliquots, one large and one small. The
                      small aliquot can be sterilely removed and used as the
                      starting material for a cell expansion procedure. As a
                     result, the Company is actively seeking collaboration
                       partners to explore the integration of a validated cell
                     expansion protocol into the BioArchive processing and
                   cryopreservation products. We do not currently have
                products directed at this segment of the market.

          -       CELL MODIFICATION- The Company is actively seeking
                    collaboration partners to explore the integration of
                      validated cell modifying processes for stem cells into
          the BioArchive disposable processing sets.

           With the ethical debate surrounding the embryonic stem cell
                research market and the recent decision by President Bush to set
             aside $250 million to fund research on alternative sources of
            stem cells to embryonic stem cells, the Company will further
              accelerate its efforts to acquire additional cell selection as
          cell expansion and notification technology to increase the
        therapeutic value of the BioArchive cord blood stem cell
inventory as well.                              

(ii) STRATEGY FIBRIN SEALANT MARKET                             

        The Company's market penetration strategy for the CryoSeal FS System has
six main elements:                                              

        (a)     WHERE REGULATORY STANDARDS PERMIT, THE COMPANY WILL OFFER EITHER
            AUTOLOGOUS OR ALLOGENEIC CRYOSEAL FIBRIN SEALANT IN ORDER TO
          PENETRATE THE ENTIRE FIBRIN SEALANT MARKET. The allogeneic
         source plasma would be single donor (virally screened NAT
          testing, NAT tested donor retested, or virally inactivated
            (psoralen or methelene blue) as determined by the regulatory
      standards of the country and the surgeons and patients
              preferences. While the Company has not moved from its original
             position that the safest blood product is an autologous blood
             product (sourced from the patient's own blood), the Company's
                market research has determined surgeons consider licensed single
               donor allogeneic blood products such as viral screened units of
red cells,                                      

17

10-K405
18th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 18th

           platelets, plasma or Cryoprecipitated AHF, to be acceptably
               safe, and routinely use them on their surgical patients. In the
                United States, where surgeons are still learning and adapting to
          the use of fibrin sealant, the Company is predicting rapid
            growth in the marketplace over the next five years due to an
            increase in the number of surgical procedures performed with
               fibrin sealant. In Europe and Japan, where fibrin sealants have
                been used for approximately 15 years and a mature fibrin sealant
                market is in place, the Company is predicting a significant rate
         of conversion from pooled plasma products and/or products
              containing animal substances such as bovine lung aprotinin and
              bovine thrombin, to autologous or single donor blood products,
such as CryoSeal Fibrin Sealant.                

       (b)     THE TARGET CUSTOMER FOR THE CRYOSEAL FS SYSTEM IS THE COMPONENT
        PRODUCING BLOOD CENTER EITHER WITHIN THE LARGEST SURGERY
               HOSPITAL OR REGIONAL BLOOD CENTERS THAT SUPPLY BLOOD COMPONENTS
          TO MULTIPLE HOSPITALS. The CryoSeal FS System is a medical
          device designed to micro-manufacture fibrin sealant. Blood
         centers generate revenue by manufacturing seven different
           licensed blood products, including: whole blood, red cells,
              platelets, fresh frozen plasma, and Cryoprecipitated AHF. Each
            blood center has facilities, equipment and trained personnel
             already in place for the routine production of licensed blood
              products. The Company's market research with a number of blood
           centers both in the U.S. and abroad, has confirmed that the
            CryoSeal FS System could be easily and seamlessly integrated
       into the typical blood center manufacturing operations.
              Therefore the Company intends to direct its efforts at selling
         CryoSeal FS Systems to blood component producing centers.

      (c)     MANY BLOOD COMPONENT PRODUCING CENTERS ARE OPERATING AT A LOSS
               AND WILL WELCOME THE PROFITABLE REVENUE STREAM FROM THE SALE OF
             CRYOSEAL FS KITS TO THEIR HOSPITAL CUSTOMERS. The reasons for
               this financial stress of the blood centers are many, including:
      capitation of prices on blood products by managed care
        providers, increased competition among blood centers for
       regional markets forcing blood products to be priced as
         commodities, and the cost incurred to produce safer blood
              products, e.g. leukocyte reduction filtration, viral detection
           and inactivation, etc. The CryoSeal FS System would provide
         these blood centers with a manufacturing platform for the
               production of CryoSeal Fibrin Sealant, a new FDA licensed blood
           product with which to generate both significant revenue and
           profit. The blood centers could immediately begin to divert
              plasma away from their low profit margin commodity product(s),
       e.g. fresh frozen plasma, to the production of a highly
              profitable product, CryoSeal Fibrin Sealant. The served market
                for each blood center would be identical to their current served
        markets for existing blood products - the hospitals with
               surgeries. The Company, in turn, would provide additional sales
                and marketing support to create awareness and product demand for
              CryoSeal Fibrin Sealant and the FS Applicator System among the
surgeons within the hospitals.                  

   (d)     THE COMPANY'S BLOOD COMPONENT PRODUCING CENTER DISTRIBUTION
                STRATEGY SIGNIFICANTLY REDUCES ITS DEPENDENCE ON LARGE CORPORATE
PARTNERS. Implementation of the "blood center   
             micro-manufacturing strategy" enables the Company to sell the
             micro-manufacturing components of the CryoSeal FS System (the
              CS-1 instrument, the CP-3 plasma processing disposable and the
           Thrombin Reagent) to the regional US Blood Centers or large
          surgery hospital blood centers, its current customer base,
             rather than the operating rooms of the approximately 4,000 US
               hospitals. The impact on the Company is that the Company's need
                for a strategic partner with distribution channels to the entire
         hospital sector is significantly reduced. The Company has
              effectively sold its coreline products, the Ultra Rapid Plasma
                Freezers, to blood centers on a global basis since the Company's
          inception in 1987 and it's thawers to the large hospitals.
              Selling to the "hundreds" of blood component producing centers
              rather than the "thousands" of general hospitals significantly
               increases the ratio of disposables to instruments manufactured.
              It further reduces the Company's financial burden of having to
            carry several thousand CS-1 instruments on the balance sheet
            that would have been "placed", rented or leased to hospitals
around the world in return for a "supply"       

18

10-K405
19th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 19th
              contract for disposables. If one uses the U.S. hospital sector
          as a model, the reduction in instruments manufactured, and
                placed in hospitals versus blood centers could be as much as 90%
             (4,000 vs. 400, assuming 100 blood centers acquired 3 units).
               Additionally, the units sold/placed with blood centers would be
         utilized at near capacity, while units sold to individual
        hospitals would not. This shift in ratio toward CryoSeal
            disposables should have a significant positive impact on the
Company's future profitability and cash flow.   

       (e)     THE NEWLY DESIGNED CP-3 PROCESSING DISPOSABLE ALLOWS UP TO FOUR
               OVERWRAPPED FIBRIN SEALANT KITS TO BE PRODUCED FROM ONE UNIT OF
           PLASMA - THUS IMPROVING THE EASE OF USE AND REDUCING COSTS.
                CryoSeal Fibrin Sealant costs can now be distributed across four
        different surgeries/patients, resulting in a significant
        reduction in the cost per ml of CryoSeal Fibrin Sealant.
         CryoSeal Fibrin Sealant will now be cost competitive with
            commercial fibrin sealants, even in surgical procedures that
              require only small volumes (1 to 2 ml). Further, since each FS
            Kit incorporates the same syringes used in the FS Applicator
            System, the OR's nursing staff will experience a significant
              improvement in prep time. Finally, the approximately 10-minute
                preparation time for CryoSeal Fibrin Sealant in the OR should be
             sufficiently short to enable its use in Emergency Room Trauma
              cases, a currently unserved market for the existing commercial
       fibrin sealants which take up to 30 minutes to prepare.

      (f)     THE CRYOSEAL PLATFORM LENDS ITSELF TO THE DEVELOPMENT OF OTHER
              IMPORTANT THERAPEUTIC BIOMATERIALS FROM A SINGLE UNIT OF HUMAN
                BLOOD, including: (a) autologous Platelet Derived Growth Factors
            for the treatment of chronic skin ulcers, including diabetic
                skin ulcers, venous stasis skin ulcers and decubitis (bed sores)
            skin ulcers, (b) individual thrombin preparations for use in
                general hemostasis as well as in the preparation of platelet gel
            preparations, and (c) autologous fibrin sealant in extremely
           small volumes for use in plastic surgery, eye surgery, oral
         surgery, etc. markets unserved by the currently available
commercial fibrin sealants.                     

(iii) STRATEGY FOR ULTRA RAPID PLASMA FREEZER & THAWER MARKETS  

   The Company's market penetration strategy for the ThermoLine Plasma
Freezers and Thawers includes the following activities:         

       (a)     HIRING A FIELD SALES EXECUTIVE FOR NORTH AMERICA TO CALL ON KEY
       ACCOUNTS AS WELL AS MANAGING THE IN-HOUSE TELEMARKETING
       REPRESENTATIVES. The impact has been increased customer
             satisfaction, and renewed sales activities from the installed
       customer base. Internally, the Company made incremental
             investments in the telemarketing personnel, computer software
            and contact database(s) to ensure maximum sales coverage and
        lead follow-up. Additionally, for the European and Asian
               markets, dedicated sales executives were put in place to ensure
          optimal support to distributors for the Ultra Rapid Plasma
               Freezers and Thawers, and to call on existing and potential new
  accounts to create more demand for these products.

      (b)     DEVELOPING INCREMENTAL IMPROVEMENTS TO THE FREEZERS, including
the development of the:                         

           -       MP1100 MODEL provides accelerated freezing of fresh
            frozen plasma to -30 degrees C in 22 minutes
                     (approximately 33% faster than the Company's previous
                   freezers and four times faster than competitive air
                      blast freezers). The advantage of the MicroCascade(TM)
               mobile freezer technology is that expensive and
                 inflexible remote condenser installations are not
                 required. This flexibility allows laboratories to
                      quickly start up or modify their production routing by
                      rolling in the MP1100, plugging it into the electrical
                   outlet and immediately begin flash freezing plasma.

19

10-K405
20th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 20th

        -       MP2200 MODEL features semi-automatic defrost and
                    cleaning (filtration) of the heat transfer liquid to
                      improve the operational reliability of the freezer and
       lower overall system operational costs.

(D) DESCRIPTION OF THE BUSINESS                                                 

(i) BIOARCHIVE PLATFORM PRODUCTS                                

The BIOARCHIVE SYSTEM Provides the means for cord blood banks to
  collect, process, cryopreserve, and retrieve for transplantation a
readily accessible inventory of individual units of HLA typed,  
        infectious and genetic disease screened, cord blood stem cell specimens.
  Cord blood derived stem cells have been proven to be comparable or
        superior to bone marrow derived stem cells for the treatment of diseases
    such as leukemia, lymphoma and genetic disorders such as sickle cell
      anemia and thalassemia. The BioArchive System was designed to improve,
 standardize and automate what had previously been a primitive and
    totally manual process for collecting, processing and cryopreserving
   cord blood. The Company's collection and processing disposables are
        licensed to Pall Corp. for manufacturing and distribution in the USA and
      Europe, and Nipro Corporation in Japan. The proprietary collection and
    processing bag sets used in conjunction with the BioArchive System's
    integrated CRF technology allows a stem and progenitor cell recovery
    viability to be greater than 90%. The NYBC is a co-developer of this
    technology and has participated in the validation of key performance
parameters of the BioArchive System.                            

The BioArchive System features a robotic cryogenic device that  
       automatically freezes, archives and manages an inventory of up to 3,626
      PCB units of stem and progenitor cells for transplant. The proprietary
 device also controls and records the freezing profile of each PCB
   donation in nitrogen vapor, after which the PCB unit is robotically
   transferred to a specified indexed location in liquid nitrogen. The
       BioArchive System tracks the storage address of each PCB stem cell unit
      and assures that only the specifically chosen, HLA-matched PCB unit is
retrieved when selected for a human transplant recipient without
   exposing the other archived samples to detrimental warming effects.

20

10-K405
21st Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 21st

        As of June 30, 2001, our BioArchive cord blood bank customer list was as
follows:                                                                        

                                                        [Enlarge/Download Table]

                                 PCB CUSTOMERS                           PLACED UNITS
                                 -------------                           ------------
                                                                                     
New York Blood Center, USA                                                    4      
Duke University Medical Center, USA                                           3      
San Diego Blood Center, USA                                                   1      
Corielle Research Institute, USA                                              1      
NuStem Technologies, USA                                                      1      
Centro Nacional de la Transfusion Sanguinea Blood Bank, Mexico                1      
University of Dusseldorf, Germany                                             1      
Finnish Red Cross Blood Transfusion Service, Finland                          1      
Galacian Transfusion Center, Spain                                            1      
Institute de Recerca Oncologica, Spain                                        1      
London Cord Blood Bank, England                                               1      
Leuven University Cord Blood Bank, Belgium                                    1      
Liege University Hospital, Belgium                                            1      
Catholic University of Leuven Medical Center, Belgium                         1      
EFS Bordeaux Blood Center, France                                             1      
EFS Besancon Blood Center, France                                             1      
Hokkaido Red Cross Blood Center, Japan                                        1      
Institute of Medical Science, University of Tokyo, Japan                      3      
Nihon University Medical Center, Japan                                        1      
Hyogo Cord Blood Bank, Japan                                                  1      
Buddhist Compassion Relief Tzu-Chi Foundation Cord Blood Bank, Taiwan         1      
Gene Born Biotech, Taiwan                                                     1      
Malaysian National Transfusion Services, Malaysia                             1      
Guangdong Hematopoietic Stem Cell Technology Center, PRC                      1      
Chinese Academy of Medical Sciences & Peking Union Medical College, PRC       1      
Blood Transfusion Hematology Center, Vietnam                                  1      
Medipost Cryo-Stem Cell Institute, South Korea                                1      
Central Blood Bank of the Magen David Adom, Israel                            1      
Reliance Industries Cell Biology & Tissue Engineering, India                  1      
                                     TOTAL                                    36     

       This global standardization is critical to the Company's marketing plan
      because it drives repeat purchases as each cord blood bank expands its
     inventory, and it improves the probability that second and third tier
     purchasers and academic researchers also purchase BioArchive Systems.

        The BioArchive System, by virtue of its integrated design, significantly
    reduces the incidence of TWEs that occur when conventional cryogenic
equipment are used to process stem cell units. At The Fifth     
     International Symposium of Hematopoietic Stem Cell Transplantation in
        Tokyo, Japan on June 23, 2001, ex vivo data was presented that TWEs that
    occur routinely in processing stem cells with conventional cryogenic
  devices can result in losses of stem and progenitor cell viability
exceeding 50% - as measured by colony forming assays.           

       An additional customer base for the BioArchive System is expected to be
    the approximately 400 centers in the United States which collect and
       cryopreserve autologous hematopoietic stem and progenitor cells sourced
       from the peripheral blood of patients with solid tumors, such as breast
       cancer, who will subsequently undergo chemotherapy and radiation. After
this treatment, the                                             

21

10-K405
22nd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 22nd

    previously harvested and stored cells are returned to the patient to
       reconstitute their hematopoietic system. Duke University Medical Center
   acquired its second BioArchive System for cryopreserving peripheral
blood stem cells. Once the validation clinical trial at Duke is 
       completed, the Company intends to aggressively pursue the placements of
  BioArchive Systems into this segment of the stem cell marketplace.

BIOARCHIVE PLATFORM DISPOSABLES                                 

  In addition to the three bag sets utilized to collect, process and
    transfuse umbilical cord blood stem cells which are manufactured and
    distributed under license by Pall Medical Corporation for Europe and
North America and Nipro Corporation (formerly known as Nissho   
Corporation) for Japan, the Company manufactures and sells three
     additional disposables for the protection of the umbilical cord blood
      units during inter-laboratory transfers and shipment to the transplant
  centers which the Company believes will provide an ongoing revenue
stream.                                                         

       (a)     CANISTERS: The freezing bag is placed in the magnetic stainless
        steel canister before it is frozen and it remains in the
           canister while it is stored in liquid nitrogen. The thermal
                properties of the canister augment heat transfer during freezing
           and physically protect the unit when it is removed from the
BioArchive System.                              

       (b)     CANISTER SLEEVE: The insulated canister sleeve is inserted into
             the retrieval cartridge prior to a specimen retrieval. During
               the retrieval process, the --196 degrees centigrade canister is
                robotically retrieved from its storage address and inserted into
                the insulated canister sleeve; where it protects the contents of
        the canister from warming and cushions the canister from
physical shocks.                                

   (c)     OVERWRAP BAG: The overwrap bag is formed from --200 degrees
            centigrade glass transition plastic and provides a secondary
barrier against contamination by pathogens.     

(ii) CRYOSEAL PLATFORM PRODUCTS                                 

  The CryoSeal FS System prepares a surgical sealant, referred to as
        fibrin sealant, from a single unit of human plasma in about an hour. The
       CryoSeal FS System is comprised of a freestanding, portable instrument,
the CS-1, which in conjunction with the CP-3 plasma processing  
disposable and a proprietary reagent, prepares both components  
       (fibrinogen-rich cryoprecipitate and thrombin) of a fibrin sealant from
 a single unit of human plasma. The plasma may be sourced from the
      patient (autologous) or from a single donor (allogeneic). The CryoSeal
        Fibrin Sealant may be prepared on the day of surgery or up to six months
prior to surgery, providing it is stored frozen at --18 degrees 
    centigrade or colder. Using allogeneic plasma, each CP-3 enables the
        operator to prepare up to four individual Fibrin Sealant kits ranging in
      volume from 1 ml to 6 mls, from a single unit of plasma. Additionally,
   the Company has developed a series of specially designed disposable
  fibrin sealant applicators (the FS Applicator System) to apply the
fibrin sealant to the surgical site in the operating room.      

22

10-K405
23rd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 23rd

       (a)     CS-1 INSTRUMENT: The CryoSeal FS System instrument (referred to
as the CS-1) is a compact, upright device that  
               semi-automatically prepares Cryoprecipitate and Thrombin from a
             single unit of human plasma. The CS-1 instrument requires the
         CP-3 plasma processing disposable and Thrombin Reagent to
            function. The CS-1 consists of the following key subsystems:

-       Heat transfer plate                     

-       Heat transfer plate rocking mechanism   

-       Refrigeration unit                      

-       Heater mechanism                        

-       Vacuum system                           

-       Peristaltic pump                        

-       Microprocessor control system           

          -       User interface display panel and operation buttons

-       TAD Clips                               

   (b)     The CP-3 PLASMA PROCESSING DISPOSABLE is comprised of three
integrated subsystems, including:               

              -       The CRYOPRECIPITATE CHAMBER which consists of a clear,
                        plastic container pointed at one end, with a flat bottom
                and raised upper portion containing a 0.2 micron
                  filtered air vent. The air vent sterilizes the air
                 allowing passage of the internal air displaced by
incoming plasma.                

               -       The TAD which features a tubular reaction chamber where
                     10 ml of plasma is mixed with proprietary beads and a
                        proprietary Thrombin Reagent to form activated thrombin.
                   Two valves control the directional flow of thrombin
                        solution through a filter to remove polymerized protein.

             -       FIBRIN SEALANT KITS: The CP-3 model utilizes four (4)
                        pairs of physically connected 3 cc syringes to store the
                     Cryoprecipitate and Thrombin (within each pair of 3cc
                      syringes, one syringe contains Cryoprecipitate and the
                other an equal volume of Thrombin). Each pair of
                       syringes is simultaneously filled in equal volumes from
                      0.5cc to 3cc. Each pair of 3cc syringes is enclosed in
                        an individual sterile overwrap. When the filling process
                    has been completed, the individual overwraps FS kits
                        sterilely are disconnected from the CP-3. The individual
                      overwrap kits maybe stored frozen for up to six months
               at --18 degrees centigrade or colder until use.

 (c)     FS APPLICATOR SYSTEM: FS System's FS Applicator System is
                designed to enable the surgeon to efficiently apply the CryoSeal
          Fibrin Sealant during a wide array of surgical procedures,
         including liver resectioning. The FS Applicator System is
             comprised of two applicators, the Metered Applicator, and the
       Non-Metered Applicator, as well as the FS Warming Tray.

               -       The METERED APPLICATOR consists of a pistol-like handle
                     into which are placed the 3cc syringes containing the
                   thrombin and cryoprecipitate preparations. When the
                 appropriate tip is positioned in place on the tip
                        manifold, each trigger pull dispenses 200 microliters of
                     fibrin sealant. The Metered Applicator allows precise
                     control of the fibrin sealant dosing. The NON-METERED
                 APPLICATOR consists of the above two 3cc syringes
                       physically connected to one another by both an end-cap,
                        which doubles as a thumb rest, and a frame that provides
                    finger holds. The Non-Metered Applicator is suitable
                       when the surgeon desires to apply fibrin sealant over a
   large surface area in minimal time.

23

10-K405
24th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 24th

                -       The FS Applicators possess two types of dispensing tips:
                     a) THE SPRAY TIP, which is offered in 3 styles (ST-2,
                  ST-3, AND ST-4), each providing specific levels of
                  pre-mixing of the CryoSeal Fibrin Sealant prior to
                      aerosolization, which in turn produces clot times from
                      instantaneous to several seconds, and b) THE LINE/DROP
                       TIP, which is offered in 2 models (DT-5 AND DT-10), for
                        laparoscopic application of CryoSeal Fibrin Sealant. The
                     Spray Tip is designed to apply a homogeneous layer of
                      CryoSeal Fibrin Sealant over a large surface area in a
                       short timeframe, while the Line/Drop Tip is designed to
                      apply CryoSeal Fibrin Sealant to a small surface area.

              -       FS WARMING TRAY: Experimental studies performed by the
         Company demonstrated that pre-warming the
            cryoprecipitate and thrombin preparations to
                        approximately 37 degrees centigrade immediately prior to
                    application in the surgical field results in greater
                     clinical efficacy. The FS Warming Tray is designed to
                 quickly warm three fully assembled Fibrin Sealant
                    Applicators to 37 degrees centigrade. A timer button
            located on the side of the device is pressed
                        approximately 10 minutes prior to the surgeon requesting
                   the CryoSeal Fibrin Sealant. When the indicator LED
                        turns solid green in color, the FS Applicator will be at
                    37 degrees centigrade and can be removed from the FS
                     Warming Tray and handed to the surgeon ready for use.

CRYOSEAL PLATFORM DEVELOPMENT PROGRAMS                          

(a)     CRYOFACTOR APDGF SYSTEM                                 

               The CryoFactor APDGF System is intended to harvest a full array
           of autologous platelet derived growth factors immersed in a
        solution of adhesive proteins from a patient's own blood
           donation for the treatment of chronic dermal wounds such as
              diabetic, decubitus and venous stasis skin ulcers. This growth
             factor solution is produced by the CS-1 with special software
                and disposable processing containers. Formal clinical trials and
          FDA approval will be required to market the product in the
United States.                                  

               -       CRYOFACTOR APDGF CP-4 PLASMA PROCESSING DISPOSABLE: The
                 CP-4 is the primary disposable for harvesting and
                  concentrating solutions of platelet derived growth
                     factors from platelet rich plasma. The CP-4, like its
                        predecessors, will require FDA approval to market in the
                       United States. Research and development of this product
                        will be dependent on cash flows during fiscal year 2002.

           -       CRYOFACTOR PATIENT KIT: The Patient Kit will be the
                        means by which the therapeutic CryoFactor APDGF solution
                        is alliquoted into individual dosages for application by
                      the patient or home care specialist. The design is not
finalized at this time.         

(b)     MICROSEAL SYSTEM                                        

              MicroSeal is a bench top system that is intended to prepare up
              to 1ml of Fibrin Sealant from only 35cc of patient blood. This
                volume of Fibrin Sealant is sufficient for the many thousands of
             microsurgeries that occur each year that could benefit from a
              safe, effective biological tissue sealant or hemostatic agent,
              such as: closing macular holes in the eye, minimizing scarring
           in fallopian tube surgery, sealing excised cataract wounds,
                bonding skin flaps in minor cosmetic surgery, repairing ruptured
             eardrums, sealing vascular stents and providing hemostasis in
               oral surgeries. This system represents a miniaturization of the
  technologies that comprise the CryoSeal FS System.

24

10-K405
25th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 25th

(iii) THERMOLINE PRODUCTS                                       

      (a)     ULTRA RAPID PLASMA FREEZERS: The Company's line of Ultra Rapid
            Plasma Freezers use heat transfer liquids, rather than gases
               such as air, carbon dioxide or nitrogen to transfer heat to and
                from a biological substance, such as human plasma. The Company's
               patented thin flexible plastic membrane system is automatically
             interposed between the heat transfer liquid and the container
               housing the blood component. While flash-freezing blood plasma,
     this flexible membrane allows the use of a non-toxic,
              low-viscosity silicone heat transfer liquid to be refrigerated
              to -40 degrees centigrade and pumped into the freezing chamber
              in order to achieve a rapid transfer of heat without leaving a
                residue on the exterior surface of the blood container. Tests of
               the technology performed by the Hague Center of the Netherlands
                Red Cross reports that 300 ml bags of plasma were core frozen in
               30 minutes versus 90 to 120 minutes in air blast freezers which
             resulted in 18 to 32% more Factor VIII in the cryoprecipitate
               from the frozen plasma. Further, the flexible membrane freezing
             technology also allows the plasma bag to freeze in a vertical
              position causing air bubbles to rise to the top surface of the
             bag, so that plasma, when frozen, does not get trapped in the
         ports and lost when separated from the bags at the plasma
           fractionators, a notable advantage over conventional freeze
            methods which require the bags to lay on trays and freeze on
their sides.                                    

         The Company offers a complete range of Ultra Rapid Plasma
                Freezers based on both size and capacity, product format (plasma
             bag vs. bottle), condenser/compressor location (integrated or
       mounted externally to the outside of the blood center's
              facility) and performance (based on size and technology of the
          condenser/compressor used). Models include: the MP500, the
           MP750, the MP1000 external condenser/compressor, the MP1100
         MicroCascade, the MP2000 one liter bottle system, and the
               MP2200, the newest model with a new improved defrost/filtration
system.                                         

  (b)     The Company's Ultra Rapid Plasma Thawers utilize algaecide
           treated water to rapidly transfer heat through the patented
          closed flexible membrane system into the frozen plasma. In
          thawing tests performed by the Company, which compared the
              performance of the Company's thawer versus a microwave thawer,
             it was demonstrated that frozen plasma rose to a transfusable
   temperature (20 degrees centigrade) faster and more
             homogeneously in the Company's thawer than when thawed in the
           microwave thawer. The Company's proprietary "closed" design
              significantly reduces the risk, relative to "open" systems, of
            contamination of the blood product by the contaminated water
from the water bath during the thawing cycle.   

               The Company has three models of thawers. They vary primarily by
                capacity. The MT202 thaws two bags simultaneously, and the MT204
and MT210 four and ten bags, respectively.      

(E) CLINICAL SUMMARY STATUS                                                     

(i) BIOARCHIVE SYSTEM:                                          

       (a)     IN VITRO TESTS: The PCB stem and progenitor cell processing bag
         sets were tested by the NYBC Placental Blood Program, the
                world's largest Umbilical Cord Blood Stem Cell Bank. The Company
             believes that the 95% recovery of viable stem and progenitors
             cells reported by NYBC are the highest of any cord blood stem
cell processing system available today.         

     (b)     USA IN VIVO TESTS: Patient outcome data derived from patients
                receiving PCB transplants prepared with the Company's processing
      bag sets (manufactured and distributed by Pall Medical
     Corporation and Nipro Corporation) and the BioArchive
cryopreservation device will be provided        

25

10-K405
26th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 26th

                to the FDA by the umbilical cord blood stem cell banks under the
               terms of their Investigational New Drugs ("INDs") in the United
             States. These centers include the NYBC and the NIH Cord Blood
      Banks at Duke University Medical Center and Georgetown
              University Medical Center (now integrated into Duke University
Medical Center's cord blood bank).              

     (c)     FOREIGN IN VIVO TESTS: It is anticipated that similar patient
           outcome data will be provided to the appropriate regulatory
            authorities directly by the Cord Blood Banks in each foreign
               country in which the BioArchive Systems are in operation. As of
                June 30, 2001, those countries included Finland, United Kingdom,
              Germany, France, Spain, Belgium, Japan, South Korea, Malaysia,
   Vietnam, The People's Republic of China and Taiwan.

(ii) CRYOSEAL FS SYSTEM:                                        

        (1)     As of July 15, 2001 the Company successfully completed the three
             pre-clinical studies designed to characterize CryoSeal Fibrin
Sealant for our IDE submission to the FDA:      

     -       CHEMICAL CHARACTERIZATION OF THE THROMBIN AND
                     FIBRINOGEN-RICH CRYOPRECIPITATE. In vitro assays were
                   performed to demonstrate the reproducibility of the
                        system and its performance across a significant sampling
                   of donor plasmas, the impact of system variables on
                      system performance, including fresh vs. frozen plasma,
                    starting plasma volume and the type of anticoagulant
                     present, the protein composition as well as the short
                 and long term stability of the final thrombin and
cryoprecipitate preparations.   

             -       DETERMINATION OF TENSILE STRENGTH OF THE THROMBIN AND
                 FIBRINOGEN-RICH CRYOPRECIPITATE. In vitro tensile
                    (mechanical) strength measurements were performed on
                       CryoSeal Fibrin Sealant, as well as a commercial fibrin
                   sealant, using equipment designed for such purpose.

             -       DEMONSTRATION OF CLINICAL EFFICACY OF CRYOSEAL FIBRIN
                        SEALANT DURING PIG LIVER RESECTIONING. An in vivo animal
                      model, pig liver resectioning, was performed to refine
                        the technique of applying the CryoSeal Fibrin Sealant to
               the surgical site, determination of the time to
                    hemostasis and the verification of the safety of the
procedure.                      

       (2)     In March of 2001, CE Mark approval was granted by the Company's
         notifying body, thus approving the CryoSeal FS System for
                commercial activities within the European Community. A number of
              clinical studies are planned during the current fiscal year to
                demonstrate the product's efficacy with a wide array of surgical
procedures.                                     

        (3)     In May of 2001, a license was granted by the Canadian government
         approving CryoSeal FS System for commercialization within
           Canada. A number of clinical studies are planned during the
                current fiscal year to demonstrate the product's efficacy with a
number of different surgical procedures.        

        (4)     In August 2001 an IDE was filed with the FDA requesting approval
     to initiate phase III human clinical trials for liver
               resectioning. Approval of the results of the phase III clinical
      trials will enable the Company to immediately initiate
              commercial activities for the CryoSeal FS System in the United
           States. Other than initial filing of applications and final
                agency action or approval of such applications, the Company does
         not comment on the day-to-day details of ongoing clinical
activities.                                     

26

10-K405
27th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 27th

(F) COMPETITION                                                                 

(i) CORD BLOOD BANKING AND CELL THERAPY                         

   The Company believes that the competition for selling equipment and
     disposables to the cell therapy market, as well as the commercial and
  public umbilical cord blood stem cell banking market is limited to
    manufacturers of individual cryogenic components (dewars, controlled
        rate freezers, etc.) of conventional systems, such as Taylor Wharton and
      MVE. Three years after initiating commercial activities with the first
  totally integrated cryopreservation system (BioArchive System) for
    umbilical cord blood stem cell banking, the competition is still the
    manufacturers of individual conventional cryogenic equipment such as
        dewars, controlled rate freezers, etc. The vast majority of cell therapy
   companies rushing to initiate human clinical trials are utilizing a
  variety of existing cell selection and cryogenic manufacturing and
  delivery processes that limit their attractiveness with regards to
        product expiration dating, patient scheduling and actual product design.
    The Company anticipates greater demand for the BioArchive System and
compatible disposables as cell therapy companies work to develop
     products that are more end user friendly and provide the manufacturer
with greater logistical flexibility. This could lead to other   
     competitors emerging to provide various products which deliver one or
     more of the needed enabling technologies for the future growth of the
cell therapy industry.                                          

(ii) COMMERCIAL FIBRIN SEALANTS                                 

 The Company is aware of six companies which have developed or are
       developing commercial fibrin glues: Baxter, Hemacure, Aventis, American
     Red Cross, Vivolution and Omrix Pharmaceuticals. To date, only Baxter
       and Hemacure have received FDA approval to market their products in the
 US. In addition, Cohesion Medical and Fusion Technologies produce
      similar products that are biological sealants, but are not true fibrin
   sealants in that they do not provide concentrated fibrinogen to the
     wound site, which significantly reduces their visco-elastic and burst
        strength relative to fibrin sealants. Furthermore, both products contain
bovine thrombin and bovine collagen, which increase the risk of 
  transmission of non-human viruses and prions. In addition, Focal's
 FocalSeal-L a synthetic sealant made from polyethyl glycol (PEG),
 received FDA approval in May 2000 for sealing air leaks in lungs.

(iii) FREEZERS: NORTH AMERICAN COMPETITORS                      

      In North America, the three major manufacturers of plasma freezers are
   the Company, SPX/SGA Division and Forma Scientific. The chart below
lists management's view of the relative technologies.           

                                                                [Download Table]

      COMPANY                FREEZING METHOD   
      -------                ---------------   
                                               
THERMOGENESIS CORP.        Liquid Heat Transfer
Forma Scientific           Air Blast           
SPX/SGA Division           Air Blast           

27

10-K405
28th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 28th

(iv) THAWERS: NORTH AMERICAN COMPETITORS                        

     In North America, the three major manufacturers of plasma thawers are
    the Company, Helmer and Cytotherm. Management's view of the relative
technologies follows:                                           

                                                                [Download Table]

         COMPANY       THAWING METHOD          ADVANTAGE          LIMITATIONS      
         -------       --------------          ---------          -----------      
                                                                                   
THERMOGENESIS CORP. -   Membrane pockets  -  Rapid thaw       -  Unit capacity     
                        and semi-closed   -  Low maintenance     limited to number 
                        system            -  Plasma is           of pockets        
                    -   Heat transfer        contained in                          
                        fluid                membrane pocket                       

Helmer              -   Water bath                            -  Contamination of  
                    -   Open air system                          water             
                                                              -  Frequent water    
                                                                 changes           
                                                              -  Longer thaw period

Cytotherm           -   Water bath                            -  Same as Helmer    
                    -   Open air system                                            

(G) RESEARCH AND DEVELOPMENT                                                    

The future R&D activities of the Company will be devoted to the completion of   
the CryoSeal FS System's pivotal human clinical trial for the control of        
bleeding during liver resectioning surgery, and the development of two new      
products derived from the CryoSeal FS System research programs.                 

      -       THE MICROSEAL SYSTEM is a miniaturized version of the CryoSeal
               FS System designed for the treatment of outpatient (ambulatory)
             acute wound care, which requires only small volumes of fibrin
            sealant. Beginning with the reforms in Medicare in the early
             1980's and accelerating with the efforts to reduce healthcare
         costs in the early 1990's and the substantial advances in
                minimally invasive surgery techniques, outpatient surgeries have
              grow dramatically. According to Center for Disease Control and
           Prevention ("CDC") data, annual outpatient surgeries in the
          U.S.A. have grown from less than 2 million in 1981 to 31.5
                million in 1996. Each year, surgeries of the nervous system (1.2
              million), eyes (5.3 million), ears (0.8 million), nose, mouth,
          and pharynx (2 million), respiratory system (4.3 million),
          cardiovascular system (0.9 million), digestive system (6.9
             million), urinary system (1.4 million), female genital organs
        (1.9 million), musculoskeletal system (4.2 million), and
             integumentary system (2.3 million) are done with the surgical
              incision and subsequent bleeding reduced sufficiently to allow
                the patient to go home the same day. In the United States, these
          surgeries take place in approximately 5,000 hospital-based
           surgicenters, 1,700 stand-alone surgicenters, and the 9,000
             offices of plastic surgeons, oral and maxillofacial surgeons,
             reproductive surgeons and podiatric surgeons. The Company has
                targeted development of its MicroSeal System for these minimally
invasive surgical theatres.                     

           When development is completed, the Company intends that the
            MicroSeal System will be a small bench top device with small
             processing and application disposables that will require less
                than 35 ml of blood drawn in a syringe to harvest 1 ml of Fibrin
              Sealant. There are millions of micro-surgeries that occur each
                year that could benefit from a safe, effective biological tissue
              sealant or hemostatic agent, such as: hemostasis in endoscopic
           surgeries, sealing arterial catherizations, closing macular
                holes in the eye, minimizing scarring in fallopian tube surgery,
            sealing excised cataract wounds, bonding skin flaps in minor
 cosmetic surgery, and repairing rupture eardrums.

28

10-K405
29th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 29th

-       THE CRYOFACTOR SYSTEM relies upon the CryoSeal Platform 
               thermodynamic processing device as well as modifications to the
       software and blood processing disposable to harvest and
      concentrate autologous platelet derived growth factors
              ("APDGF"). The Company intends that the CryoFactor System will
            be a product targeted for sale, through distributors, to the
               chronic wound care centers in hospitals, stand alone wound care
           centers, and long term care facilities for the treatment of
            chronic dermal wounds such as diabetic, decubitus and venous
stasis ulcers.                                  

 -       BIOARCHIVE CELL THERAPY SYSTEM relies upon the BioArchive
               Platform thermodynamic robotic cryopreservation system, as well
              as modifications to the software, internal registry system and
           disposables (canister and freeze container) to cryopreserve
               various classes of human blood cells that have been temporarily
         removed from the patient's body in order that they can be
            immunogenically or genetically altered in order to boost the
                patient's ability to fight off a deadly disease, such as cancer.
          The target market is the many start-up companies that have
             recently moved into this potentially very large and long term
market.                                         

The Company has incurred R&D expenses of $1,782,000, $1,624,000, and $2,061,000 
for fiscal years ending June 30, 2001, 2000 and 1999, respectively.             

(H) DESCRIPTION OF DEVICE MANUFACTURING                                         

The Company is currently manufacturing all major instruments and equipment sold 
by the Company, as well as manufacturing a limited number of its disposable     
products (Thrombin Reagent and the BioArchive Overwrap Bag). The Company        
believes that vendors used by the Company are capable of producing sufficient   
quantities of all required components. Products manufactured or sold by the     
Company are warranted against defect in manufacture for a period of 12 months   
from shipment when used for the equipment's intended purpose, which warranties  
exclude consequential damages to the extent allowed by law.                     

 PLASTIC DISPOSABLES MANUFACTURING- The Company has identified and
 established supply agreements with contract manufacturers that we
believe have the technical capability and production capacity to
manufacture our CryoSeal CP-2, CP-3 and FS Applicator System    
        disposables, as well as the BioArchive canister and foam sleeve. Each of
  the CryoSeal disposables contract manufacturers have facilities in
        Mexico that will offer in the future cost reductions when product demand
reaches certain volumes.                                        

THROMBIN REAGENT AND BIOARCHIVE OVERWRAP BAG MANUFACTURING- The 
      manufacturing process for the Thrombin Reagent occurs at two different
  facilities, THERMOGENESIS CORP. and at a contract manufacturer. We
       perform the initial manufacturing processes at our facilities in Rancho
       Cordova, CA. After filling and stoppering of the syringes, the syringes
  are shipped to our contract manufacturer where they are terminally
    sterilized, individually labeled and packaged. Our Quality Assurance
  Department is responsible for final product release. All processes
       associated with the manufacture of the BioArchive overwrap bag occur at
the Company's Rancho Cordova facility.                          

   INSTRUMENT MANUFACTURING- ThermoGenesis manufactures the BioArchive
       instrument, the Auto-Expressor, CS-1 instrument, FS Warming Tray, Ultra
  Rapid Plasma Freezers and Ultra Rapid Plasma Thawers at its Rancho
      Cordova, CA facility. The Company assembles the hardware from multiple
      subassemblies supplied by a wide base of skilled vendors. However, the
 Company manufactures certain sub-assemblies, e.g., the BioArchive
   robotic, barcode-reading periscope, in their entirety at the Rancho
Cordova facility. All parts and subassemblies are procured from 
  qualified suppliers. Trained ThermoGenesis employees assemble both
        products and perform final QC release based on performance criteria. All
       processes are monitored and either verified or validated to ensure non-

29

10-K405
30th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 30th

        conforming product is not produced. Manufacturing documentation for each
  device is compiled in a device history record by instrument serial
number.                                                         

The majority of the materials used to produce the Company's products are readily
available from numerous sources. Based upon current information from            
manufacturers, the Company does not anticipate any shortage of supply. In 1992, 
the Company introduced a replacement heat transfer liquid and refrigerant which 
is free of chlorofluro-carbons ("CFC") for use in the Company's proprietary     
process. The replacement chemicals are readily available and the Company does   
not anticipate any shortages or constraints on supplies.                        

(I) GOVERNMENT REGULATION                                                       

The research and development, clinical testing, manufacture and marketing of    
medical devices are subject to regulation by the FDA and by regulatory agencies 
in other countries. These national agencies and other federal state and local   
entities regulate, among other things, research and development activities and  
the testing (in vitro and in clinical trials), manufacture, safety,             
effectiveness, labeling, storage, record keeping, approval, advertising and     
promotion of our products.                                                      

The extent of the process required by the FDA before a medical device may be    
marketed in the United States depends on the type of device and/or whether a    
similar device has previously been cleared by the FDA. If the medical device is 
a new entity that has not been cleared such as the CryoSeal FS System, the      
process includes the following:                                                 

-       Extensive pre-clinical laboratory and animal testing;   

-       Submission of an IDE application;                       

     -       Human clinical trials to establish the safety and efficacy of
   the medical device for the intended indication; and

      -       Submission to the FDA for approval of a Pre-Market Application
("PMA")                                         

Pre-clinical tests include laboratory evaluation of product                     
chemistry/biochemistry and animal studies to assess the potential safety and    
efficacy of the product. Safety testing includes tests such as cytoxicity,      
biocompatibility, package integrity and stability. Pre-clinical tests must be   
performed by laboratories that comply with the FDA's Good Laboratory Practices  
(GLP's) regulations. The results of the pre-clinical tests are submitted to the 
FDA as part of an IDE application and are reviewed by the FDA before human      
clinical trials can begin. Human clinical trials can begin shortly after IDE    
approval is granted.                                                            

Clinical trials involve the application of the medical device or biologic       
produced by the medical device to patients by a qualified medical investigator  
according to an approved protocol. Clinical trials are conducted in accordance  
with protocols that detail the objectives of the study, the parameters to be    
used to monitor participant safety and efficacy or other criteria to be         
evaluated. Each protocol is submitted to the FDA as part of the IDE. Each       
clinical study is conducted under the auspices of an independent Institutional  
Review Board, ("IRB"). The IRB considers, among other things, ethical factors,  
the potential risks to subjects participating in the trial and the possible     
liability of the institution. The IRB also approves the consent form signed by  
the trial participants.                                                         

Clinical trials are typically conducted as a phase III clinical trial. A safety 
pilot trial may be performed prior to initiating the phase III clinical trial to
determine the efficacy of the product for specific targeted                     

30

10-K405
31st Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 31st

indications to determine dosage tolerance, optimal dosage and means of          
application and identify possible adverse effects and safety risks. Phase III   
trials are undertaken to confirm the clinical efficacy and safety of the        
biologic in question within an expanded patient population at geographically    
dispersed clinical study sites. The FDA, the clinical trial sponsor, the        
investigators or the IRB may suspend clinical trials at any time if any one of  
them believe that study participants are being exposed to an unacceptable health
risk.                                                                           

The results of product development, pre-clinical studies and clinical studies   
are submitted to the FDA as a PMA for approval of the marketing and commercial  
shipment of the medical device. The FDA may deny a PMA if applicable regulatory 
criteria are not satisfied or may require additional clinical testing. Even if  
the appropriate data is submitted, the FDA may ultimately decide the PMA does   
not satisfy the criteria for approval. Product approvals, once obtained, may be 
withdrawn if compliance with regulatory standards are not maintained or if      
safety concerns arise after the product reaches the market. The FDA may require 
post-marketing testing and surveillance programs to monitor the effect of the   
medical devices that have been commercialized and has the power to prevent or   
limit future marketing of the product based on the results of such programs.    

Each domestic manufacturing establishment must be registered with and approved  
by the FDA. Domestic manufacturing establishments are subject to biennial       
inspections by the FDA for compliance with current good manufacturing practices.
We are also subject to U.S. federal, state, and local regulations regarding     
workplace safety, environmental protection and hazardous materials and          
controlled substance regulations, among others. The Company has a California    
Environmental Protection Agency Identification number for the disposal of       
bio-hazardous waste from its research and development bio lab.                  

Some of our products which have a lower potential safety risk to the intended   
user or patient, and which have similar, competitive products previously cleared
by the FDA for the same intended indication, may utilize a simpler and shorter  
regulatory path called a 510(k) application to gain commercial access to the    
marketplace. The 510(k) differs from the PMA process primarily in the lack of a 
requirement to perform human clinical trials, however, laboratory data and      
safety data for the proposed product are still required to be submitted to the  
FDA for review. This regulatory process requires that the Company demonstrate   
substantial equivalence to a product which was on the market prior to May 29,   
1976, or which has been found substantially equivalent after that date.         

Some of our products that have minimal risk to the intended user and do not     
involve direct patient interaction may be deemed by the FDA as being exempt from
FDA review. These products still require compliance with good manufacturing     
practices and Quality System Regulations (QSR's).                               

The product development, pre-clinical and clinical testing, manufacturing,      
labeling, distribution, sales, marketing, advertising and promotion of the      
Company's research, investigational, and medical devices are subject to         
extensive government regulation in the United States, and also in other         
countries. Products manufactured in the United States which have not been       
cleared by the FDA through a 510(k) submission, or which have not been approved 
through the PMA process, must comply with the requirements of Section 802 of the
FDCA prior to export. These devices which are capable of being cleared by the   
FDA under a 510(k) submission do not require FDA approval for export; however,  
the Company's products must still comply with certain safety and quality system 
requirements.                                                                   

Failure to comply with applicable FDA requirements can result in fines,         
injunctions, civil penalties, recall or seizure of products, total or partial   
suspension of production, distribution, sales and marketing, or refusal of the  
FDA to grant clearance of a PMA or clearance of a 510(k). Actions by the FDA    
might also include withdrawal of marketing clearances and criminal prosecution. 
Such actions could have a material adverse effect on the Company's business,    
financial condition, and results of operation.                                  

31

10-K405
32nd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 32nd

(J) PATENTS AND PROPRIETARY RIGHTS                                              

The Company believes that patent protection is important for products and       
potential segments of its current and proposed business. In the United States,  
the Company currently holds 19 patents, and has seven (7) patents pending to    
protect the designs of products which the Company intends to market. There can  
be no assurance, however, as to the breadth or degree of protection afforded to 
the Company or the competitive advantage derived by the Company from current    
patents and future patents, if any. Although the Company believes that its      
patents and the Company's existing and proposed products do not infringe upon   
patents of other parties, it is possible that the Company's existing patent     
rights may be challenged and found invalid or found to violate proprietary      
rights of others. In the event any of the Company's products are challenged as  
infringing, the Company would be required to modify the design of its product,  
obtain a license or litigate the issue. There is no assurance that the Company  
would be able to finance costly patent litigation, or that it would be able to  
obtain licenses or modify its products in a timely manner. Failure to defend a  
patent infringement action or to obtain a license or implementation of          
modifications would have a material adverse effect on the Company's continued   
operations.                                                                     

While patents have been issued or are pending, the Company realizes (a) that the
Company will benefit from patents issued only if it is able to market its       
products in sufficient quantities of which there is no assurance; (b) that      
substitutes for these patented items, if not already in existence, maybe        
developed (c) that the granting of a patent is not determination of the validity
of a patent, such validity can be attacked in litigation or the Company or owner
of the patent may be forced to institute legal proceedings to enforce validity; 
and (d) that the costs of such litigation, if any, could be substantial and     
could adversely affect the Company.                                             

The following three tables document the intellectual property rights of the     
Company's three major product lines as well as the status of those patent       
applications that are filed but not yet issued.                                 

CRYOSEAL SYSTEM                                                                 

                                                                [Download Table]

                                                     U.S.     INTERNATIONAL
PATENT DESCRIPTION                                  STATUS       STATUS    
------------------                                  ------    -------------
                                                                           
Device for fractionating constituent components     Issued:          --    
of a substance using cryoprecipitation              1993                   

Fibrinogen processing apparatus, method and         Issued:     Pending    
container                                           1996                   

Fibrinogen processing apparatus, method and         Issued:     Pending    
container (div.)                                    1998                   

A sprayer for fibrin glue                           Issued:     Pending    
                                                    1998                   

Fibrinogen processing apparatus, method and         Issued:     Pending    
container (div.)                                    1999                   

Fibrin glue line and dot dispenser                  Issued:     Pending    
                                                    1999                   

Fibrinogen apparatus, method and container          Issued:     Pending    
(continuation)                                      2000                   

Spray gun (design)                                  Issued:          --    
                                                    1999                   

Apparatus and method of preparation of stable,      Issued      Pending    
long term thrombin from plasma and thrombin         2001                   
formed                                                                     

32

10-K405
33rd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 33rd

                                                                [Download Table]

                                                     U.S.     INTERNATIONAL
PATENT DESCRIPTION                                  STATUS       STATUS    
------------------                                  ------    -------------
                                                                           
thereby (Thrombin II)                                                      

Apparatus and method of preparation of stable,      Pending          --    
long term thrombin from plasma and thrombin                                
formed thereby (Thrombin III)                                              

Autologous Thrombin (Thrombin III and IV)                --     Pending    

Fibrin Apparatus, Method and Container              Pending     Pending    

BIOARCHIVE SYSTEM                                                               

                                                                [Download Table]

                                                    U.S.        INTERNATIONAL
PATENT DESCRIPTION                                  STATUS      STATUS       
                                                                             
Method and apparatus for cryogenic storage of       Issued:     Pending      
thermolabile products                               1997                     

Method for concentrating white cells from whole     Issued:          --      
blood by adding a red cell sedimentation reagent    1998                     
to whole anticoagulated blood                                                

High concentration of white cells, a method of      Issued:     Pending      
agglomeration of the high concentration and a bag   1999                     
set for use in conjunction therewith                                         

Method and apparatus for cryogenic storage of       Issued:     Pending      
thermolabile products (div.)                        1999                     

Centrifugation bag with yieldable partitions        Issued:     Pending      
                                                    2000                     

Freezing and thawing bag, mold apparatus and        Issued:     Pending      
method                                              2000                     

Method and apparatus for cyrogenic storage of       Pending     Pending      
thermolabile products                                                        

Freezing and thawing bag, mold, apparatus and       Pending     Pending      
method (div)                                                                 

Method and bag set for concentrating white cells    Pending     Pending      
(continuation)                                                               

Retrieval cartridge (design)                        Issued:     Issued       
                                                    1999        1998         

Cryogenic storage of thermolabile products (as      Issued      Pending      
amended)                                            2000                     

Method and apparatus for altering the osmotic            --     Pending      
pressure of cryopreserved white stem cells                                   

THERMOLINE PRODUCTS                                                             

                                                                [Download Table]

                                                     U.S.      INTERNATIONAL
PATENT DESCRIPTION                                  STATUS        STATUS    
------------------                                  ------     -------------
                                                                            
Rapid cooling through a thin flexible membrane      Issued:               --
                                                    1992                    

Device for Thawing Frozen Transfusion Material      Issued:               --
and Method Therefore                                1993                    

33

10-K405
34th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 34th

(K) FACTORS AFFECTING OPERATING RESULTS                                         

We Have Incurred Net Losses since Our Inception and Expect Losses to Continue.  
Except for net income of $11,246 for fiscal 1994, we have not been profitable   
since our inception. For the fiscal year ended June 30, 2001, we had a net loss 
of $6,153,000, and an accumulated deficit at June 30, 2001, of $44,072,000. The 
report of independent auditors on our June 30, 2001, financial statements       
includes an explanatory paragraph indicating there is substantial doubt about   
our ability to continue as a going concern. Although we are executing on our    
business plan to market launch new products, continuing losses will impair our  
ability to fully meet our objectives for new product sales and will further     
impair our ability to meet continuing operating expenses that may result in     
staff reductions and curtailment of clinical trials currently planned. See Risk 
Factor entitled " If We Are Unable to Raise Funds Our Growth May Be Adversely   
Affected" below.                                                                

If We Are Unable to Raise Funds Our Growth May Be Adversely Affected.           
Historically, we have had to seek capital for our growth and operations due to  
lack of revenues. Based on proceeds of approximately $7.0 million received in   
our most recent private placement, we believe we will have sufficient working   
capital for our fiscal year 2002 operations including CryoSeal human clinical   
trial expenses of $2.5 million. However, if actual sales do not meet            
expectations, or marketing, production and clinical trial costs increase        
significantly, we will need additional financing to complete and implement our  
long-term business objectives. Further, delays in obtaining required            
governmental clearances for, or additional testing requirements prior to,       
marketing our new products will result in decreased revenues and increased costs
that may require us to seek additional financing. In the event that there is a  
cash shortage and we are unable to obtain a debt financing, additional equity   
financing will be required which will have the effect of diluting the ownership 
of existing stockholders.                                                       

We Have Limited Testing Data and Must Complete Further Testing Successfully in  
Order to Obtain Regulatory Permission to Initiate Human Clinical Trials Required
to Market our CryoSeal Fibrin Sealant System. The Company has completed certain 
in vitro and in vivo testing of its CryoSeal FS System, and further clinical    
studies are to begin in the near future in Italy, Japan, Canada, and the United 
States with the CryoSeal FS System. Other in vitro studies have occurred with   
the BioArchive System and stem cell units processed with the BioArchive products
have been transplanted successfully into humans. While these studies provide a  
basis to achieve regulatory permission to promote these systems for some of the 
indications that management believes can be achieved, they do not provide a     
basis to achieve all of the indications. Further clinical studies must be       
performed. There can be no assurance that the clinical studies can be           
successfully completed within the Company's expected time frame and budget, or  
that the Company's products will prove effective in the required clinical       
trials. If the Company is unable to conclude successfully the clinical trials of
its products in development, the Company's business, financial condition and    
results of operations could be adversely affected.                              

Our Failure to Develop New Products Will Adversely Effect Our Future Growth.    
Historically, substantially all of our sales have been from products related to 
freezing, thawing, and storing of blood plasma. Because we expect this segment  
of the blood plasma market to have limited growth potential, new products for   
the biotechnology market will have to be successfully developed and marketed for
future growth. We are currently focusing on developing and marketing novel blood
processing systems such as the CryoSeal FS System for the automated production  
of autologous or allogeneic blood components used as a fibrin sealant. Although 
this product uses technology related to our core competence, it also represents 
a departure from our former core blood plasma business. Further, although we    
have had discussions with experts in areas of application for this product, it  
is still in its development and/or initial market phase. No assurance can be    
given that potential products can be successfully developed, and if developed,  
that a market will also develop for them.                                       

34

10-K405
35th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 35th

If We Fail to Maintain Our Listing, Liquidity of the Company's Stockholders Will
Be Adversely Affected. The Nasdaq SmallCap Market on which our common stock is  
traded has established certain maintenance listing requirements that must be    
satisfied in order for a company's shares to continue to be listed. Currently,  
our common stock meets the Nasdaq SmallCap Market maintenance listing           
requirements. However, if we continue to incur losses, this may affect our      
ability to meet the net tangible assets of $2 million requirement or minimum Bid
Price of $1 per share requirement as set by the Nasdaq SmallCap Market. We      
cannot assure that we will always be able to meet the Nasdaq SmallCap Market    
listing in the future. Failure to meet the Nasdaq SmallCap Market listing       
requirements could result in the delisting of our common stock from the Nasdaq  
SmallCap Market which may adversely affect the liquidity of our shares.         

Our Business is Heavily Regulated, Resulting in Increased Costs of Operations   
and Delays in Product Sales. Most of our products require FDA approval to sell  
in the U.S. and will require clearance from comparable agencies to sell our     
products in foreign countries. These clearances may limit the U.S. or foreign   
market in which our products may be sold or circumscribe applications for U.S.  
or foreign markets in which our products may be sold. The majority of our       
products related to freezing blood components are currently exempt from the     
requirement to file a 510(k) pre-market application. These products are         
currently marketed and sold worldwide. Further, our products must be            
manufactured under principals of our quality system for continued Certificate   
European (CE) marking that allows our products to be marketed and sold in       
Europe, which are similar to the quality system regulations of both the FDA and 
California Department of Health. Failure to comply with those quality system    
requirements and regulations may subject the Company to delays in production    
while it corrects any deficiency found by either the FDA, the State of          
California or the Company's notifying European body during any audit of our     
quality system. With limited working capital and resources there is no assurance
that we will not be found to be out of compliance, resulting in warning letters 
or, in worst case, temporary shut down of manufacturing while the               
non-conformances are rectified.                                                 

Influence By the Government and Insurance Companies May Adversely Impact Sales  
of Our Products. Our business may be materially affected by continuing efforts  
by government, third party payers such as medicare, medicaid, and private health
insurance plans, to reduce the costs of healthcare. For example, in certain     
foreign markets the pricing and profit margins of certain healthcare products   
are subject to government controls. In addition, increasing emphasis on managed 
care in the U.S. will continue to place pressure on the pricing of healthcare   
products. As a result, continuing effort to contain healthcare costs may result 
in reduced sales or price reductions for our products. To date, we are not aware
of any direct impact on our pricing or product sales due to such efforts by     
governments to contain healthcare costs, and we do not anticipate any immediate 
impact in the near future.                                                      

Our Inability to Protect Our Patents, Trademarks, and Other Proprietary Rights  
could Adversely Impact Our Competitive Position. We believe that our patents,   
trademarks, and other proprietary rights are important to our success and our   
competitive position. Accordingly, we devote substantial resources to the       
establishment and protection of our patents, trademarks, and proprietary rights.
We currently hold patents for products, and have patents pending 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 theirs trademarks and proprietary rights by us. If  
our products are challenged as infringing upon patents of other parties, we will
be required to modify the design of the product, obtain a license, or litigate  
the issue, all of which may have an adverse business effect on us.              

Failure to protect Our Trade Secrets May Assist Our Competitors. We use various 
methods, including the use of confidentiality agreements with employees,        
vendors, and customers, to protect our trade secrets and proprietary know-how   
for our products. However, such methods may not provide complete                

35

10-K405
36th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 36th

protection and there can be no assurance that others will not obtain our        
know-how, or independently develop the same or similar technology. We prepare   
and file for patent protection on aspects of our technology which we think will 
be integrated into final products early in design phases, thereby limiting the  
potential risks.                                                                

Competition in Our Industry is Intense and Will Likely Involve Companies With   
Greater Resources Than We Have. We hope to develop a competitive advantage in   
the medical applications of our products, but there are many competitors that   
are substantially larger and who possess greater financial resources and        
personnel than we have. Our current principal market is the users of ultra-rapid
blood plasma freezing and thawing equipment. There are four companies that sell 
freezers to the blood plasma freezing industry which are larger and possess     
greater financial and other resources than we do. The CryoSeal System may face  
competition from major plasma fractionaters that currently sell fibrin glue     
sourced from pooled plasma outside the U.S. With regard to the BioArchive       
System, numerous larger and better-financed medical device manufacturers may    
choose to enter this market as it develops.                                     

We Have a Limited Marketing and Sales Force for New Products Which May Delay Our
Goal of Increased Sales Levels. We currently sell our existing medical devices  
through a direct sales and marketing force, and our foreign distribution        
network. Although we have entered into exclusive distribution agreements for the
area of the two new platform products and we continue to seek strategic         
partners, there are no assurances that the distributors will produce significant
sales of the systems.                                                           

Our Lack of Production Experience May Delay Producing Our New Products. We      
currently manufacture our blood plasma thawers and freezers that are less       
technologically sophisticated products. Although we have redesigned our         
manufacturing facility to accommodate the BioArchive System and the CryoSeal    
System, we do not have significant experience in manufacturing those more       
complex medical devices or in the manufacture of disposables. There can be no   
assurance that our current resources and manufacturing facility could handle a  
significant increase in orders for either the BioArchive System or the CryoSeal 
System. If we are unable to meet demand for sales of the new systems, we would  
need to contract with third-party manufacturers for the backlog, and no         
assurances can be made that such third-party manufacturers can be retained, or  
retained on terms favorable to us and our pricing of the equipment. Inability to
have products manufactured by third parties at a competitive price will erode   
anticipated margins for such products, and negatively impact our profitability. 

Our New Products Are at Initial Market Introduction, and We Are Not Sure the    
Market Will Accept Them. The market acceptance of our new products in           
development will depend upon the medical community and third-party payers       
accepting the products as clinically useful, reliable, accurate, and cost       
effective compared to existing and future products or procedures. Market        
acceptance will also depend on our ability to adequately train technicians on   
how to use the CryoSeal System and the BioArchive System. Even if our new       
product systems are clinically adopted, the use may not be recommended by the   
medical profession or hospitals unless acceptable reimbursement from health care
and third party payers is available. Failure of either of these new systems to  
achieve significant market share could have material adverse effects on our long
term business, financial condition, and results of operation.                   

Failure to Keep Our Senior Management Team May Adversely Affect Our Operations. 
We are dependent upon the experience and services of Philip H. Coelho, Chairman 
and Chief Executive Officer, and James H. Godsey, President and Chief Operating 
Officer. The loss of either person would adversely affect our operations. We    
have obtained key man life insurance covering Mr. Coelho in the amount of       
$2,000,000 as some protection against the risk.                                 

36

10-K405
37th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 37th

Product Liability and Uninsured Risks May Adversely Affect the Continuing       
Operations. We may be liable if any of our products cause injury, illness, or   
death. 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 claim against us. Further, we maintain a general liability    
policy that includes product liability coverage of $1,000,000 per occurrence and
$2,000,000 per year in the aggregate. However, a product liability claim against
us could have a material adverse effect on our business or financial condition. 

Dependence on Suppliers for Custom Components may Impact the Production         
Schedule. The Company obtains certain custom components from one supplier. If   
the supplier raises the price of the component or discontinues production, the  
Company will have to find another qualified supplier to provide the component.  
However, any transfer between qualified suppliers may impact the production     
schedule, thus delaying revenues, and/or cause the price of the key components  
to increase.                                                                    

(L) DISTRIBUTION CHANNELS                                                       

The Company sells its medical products to blood banks, hospitals and plasma     
collection companies in over 30 countries including the United States,          
Australia, Belgium, Canada, CIS Countries (formerly known as the Union of Soviet
Socialist Republics), France, Japan, Korea, Sweden, and Vietnam. The following  
describes briefly our channels of distribution and our marketing strategy. The  
Company's senior sales executives cover all product lines (BioArchive, CryoSeal,
and ThermoLine) in specific geographic regions (North and South America;        
Europe/Middle East; Asia).                                                      

(i) CRYOSEAL FS SYSTEM                                          

      The Company's strategy for entering each of the key markets for fibrin
  sealant has traditionally been to align itself with a partner with
      established distribution channels in the geographically targeted areas
   for market penetration. Asahi Medical Co. Ltd. was selected for the
      Japan fibrin sealant market. Having implemented the strategy of having
       the blood centers serve as micro-manufacturing centers for CryoSeal FS,
        the Company's distribution strategy for both the U.S. and Europe is that
       any potential partner should have strengths in the Blood Bank community
as well as the hospital operating room.                         

(ii) BIOARCHIVE SYSTEM                                          

    The Company markets the BioArchive System either directly or through
 distributors internationally and directly in the domestic markets
 through contacts in the cord blood banking field. The Company has
      established formal relationships with Pall Medical, A Division of Pall
       Corporation, for the manufacture and distribution of the disposable bag
sets that are designed for use with the BioArchive System, and  
      cooperates with Pall Medical on marketing efforts and strategy for all
    markets excluding Japan. This arrangement was amended in May 1999 to
 grant the Company the right to distribute the disposable bag sets
       outside of North America and Europe under the Company's name, and again
     in May of 2000, to directly market the bag sets in Europe in exchange
        for an additional royalty fee from Pall Medical and the continued use of
       Pall Europe's distribution centers. The Company previously licensed the
manufacture and distribution of the bag sets in Japan to Nissho 
      Corporation, and also appointed Air Water as its exclusive distributor
for service and sales of the BioArchive System in Japan.        

37

10-K405
38th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 38th

(iii) THERMOLINE FREEZERS AND THAWERS                           

       The Company has primarily targeted the blood processing industry, which
      consists of approximately 5,000 hospitals and blood collection centers
 in the United States and approximately 20,000 hospitals and blood
  collection centers in the industrial nations outside of the United
       States. The Company formulates the following marketing strategy for the
   distribution and sale of its blood plasma freezers and thawers: the
      United States accounts are serviced either by employees of the Company
 or a manufacturing representative and internationally by regional
        manufacturing representatives or distributors. The primary thrust of the
   Company's marketing efforts focused on hospitals, blood transfusion
agencies and plasma collection companies.                       

(M) LICENSES AND DISTRIBUTION RIGHTS                                            

In June 1995, the Company granted the Japanese distribution rights to its       
BioArchive System to Air Water, Japan. The Company received $350,000 for the    
distribution rights and access to the necessary technology. In May of 1999, the 
Company granted development, manufacturing and distribution (Japan and Asia)    
rights to Air Water for a downsized version of the BioArchive System. The       
Company received $300,000 for the technology rights and the rights to           
manufacture and sell the new "mini" BioArchive System in the non-Japan and      
non-Asia marketplace.                                                           

In June 1996, the Company entered into an exclusive manufacturing license and   
distribution agreement in Japan for the CryoSeal System (including the TAD      
technology only when it is integrated into the CP-3 disposable set) with Asahi  
Medical Co., Ltd., of Japan a division of Asahi Chemical. Asahi Medical is a    
leading supplier of artificial kidneys, blood purification systems and leukocyte
removal systems, with annual revenues of $270 million. Asahi will manufacture   
the CP-2 or CP-3 disposable bag sets, purchase the CryoSeal System thermodynamic
processing device (CS-1) and ST-1 and DT-1 surgical applicators from the        
Company, and market the CryoSeal System in Japan in return for a license fee, a 
commitment to purchase a certain volume of the CS-1 devices and related surgical
applicators from the Company and a 10% royalty on the sale of the sterile bag   
set. The Company recognized $400,000 of revenue for the license fee in fiscal   
year 1996 and more recently, an additional licensing fee was recognized as      
revenue for amending the original contract to include the ATAK technology.      
Furthermore, Asahi Medical took a significant equity position in the Company as 
part of the ATAK licensing agreement.                                           

In March 1997, the Company and NYBC, as licensors, entered into a license       
agreement with Pall Medical, a subsidiary of Pall Corporation, as Licensees     
through which Pall Medical became the exclusive world-wide manufacturer         
(excluding Japan) for a system of sterile, disposable containers developed by   
the Company and NYBC for the processing of hematpoietic stem cells sourced from 
PCB. The system is designed to simplify and streamline the harvesting of stem   
cell rich blood from detached placenta/umbilical cords and the concentration,   
cryopreservation (freezing) and transfusion of the PCB stem cells while         
maintaining the highest stem cell population and viability from each PCB        
donation. These units of PCB stem cells will be "banked" in frozen storage for  
hematopoietic reconstitution of patients afflicted with such diseases as        
aplastic anemia, hypoproliferative stem and progenitor cell disorders, leukemia,
lymphomas and gaucher disease. In May of 1999, the Company and Pall Medical     
amended the original agreement, and the Company regained the rights to          
distribute the bag sets outside North America & Europe under the Company's name,
and in May of 2000, the Company negotiated rights to directly market the bag    
sets in Europe in exchange for an additional royalty fee, while continuing to   
utilize Pall Europe's distribution centers.                                     

38

10-K405
39th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 39th

(N) EMPLOYEES                                                                   

As of June 30, 2001, the Company had 68 full-time employees. The Company also   
utilizes temporary employees throughout the year to address business needs and  
significant fluctuations in orders and product manufacturing. The Company has a 
full time human resources manager and considers its employee relations to be    
good.                                                                           

FINANCIAL INFORMATION ON FOREIGN SALES AND OPERATIONS                           

The Company has no foreign manufacturing operations. For fiscal year 2001,      
foreign sales were approximately $2,603,000, or 45% of net revenues. For fiscal 
year 2000, foreign sales were approximately $1,618,000, or 38% of net revenues. 
For fiscal year 1999, foreign sales were approximately $2,475,000, or 48% of net
revenues.                                                                       

ITEM 2. DESCRIPTION OF PROPERTIES                                               

The company leases an approximately 11,000 square foot facility located in      
Rancho Cordova, California. This facility is used for the manufacturing and     
assembly of the Company's medical devices. The lease expires in January 2002.   
The Company is currently negotiating a one year extension on this lease.        

The Company leases an approximately 17,400 square foot facility, also located in
Rancho Cordova, California, which is used as the main administrative and sales  
office, and used as the Company's R&D engineering office. This lease expires in 
December 2001. The Company is currently negotiating a one year extension on this
lease.                                                                          

At fiscal year end, the Company did not own or lease any other facilities, with 
the exception of short-term warehouse space leased and utilized from time to    
time. Management intends to lease an additional approximately 2,500 square foot 
office facility for personnel associated with manufacturing to coincide with the
other lease extensions.                                                         

Management believes that these facilities will be adequate to handle expected   
operations through fiscal 2002.                                                 

ITEM 3. LEGAL PROCEEDINGS                                                       

The Company and its property are not a party to any pending legal proceedings.  
In the normal course of operations, the Company may have disagreements or       
disputes with vendors over the quality or conformance of products manufactured  
for the Company. These disputes are seen by the Company's management as a normal
part of business, and there are no pending actions and currently no threatened  
actions that management believes would have a significant material impact on the
Company's financial position, results of operations or cash flows.              

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                     

The Company did not submit any matters to security holders during the fourth    
quarter of its last fiscal year ended June 30, 2001.                            

39

10-K405
40th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 40th

 PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The Company's common stock, $.001 par value, is traded on the Nasdaq SmallCap   
Market under the symbol KOOL. The following table sets forth the range of high  
and low bid prices for the Company's common stock for the past two fiscal years 
as reported by Nasdaq. The ranges listed represent actual transactions, without 
adjustment for retail markups, markdowns or commissions, as reported by Nasdaq. 

                                                                [Download Table]

Fiscal 2001                High    Low    Fiscal 2000                High    Low  
-----------               ------  ------  -----------               ------  ------
                                                                                  
First Quarter (Sep. 30)   $3.938  $1.563  First Quarter (Sep. 30)   $2.156  $1.125
Second Quarter (Dec. 31)  $3.125  $1.250  Second Quarter (Dec. 31)  $2.750  $1.500
Third Quarter (Mar. 31)   $3.000  $1.500  Third Quarter (Mar. 31)   $4.125  $2.219
Fourth Quarter (June 30)  $3.000  $2.020  Fourth Quarter (June 30)  $2.375  $1.563

The Company has not paid cash dividends on its common stock and does not intend 
to pay a cash dividend in the foreseeable future. There were approximately 460  
stockholders of record on June 30, 2001 (not including street name holders).    

40

10-K405
41st Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 41st

ITEM 6. SELECTED FINANCIAL DATA                                                 

 THERMOGENESIS CORP.
 FIVE-YEAR REVIEW OF SELECTED FINANCIAL DATA

                                                        [Enlarge/Download Table]

Summary of Operations                      2001           2000          1999          1998           1997    
                                        -----------   -----------   ------------   -----------   ----------- 
                                                                                                             
Net Revenues                            $ 5,792,000   $ 4,211,000   $  5,108,000   $ 4,482,000   $ 6,614,000 

Cost of revenues                         (5,012,000)   (4,246,000)    (4,435,000)   (5,608,000)   (4,327,000)
                                        -----------   -----------   ------------   -----------   ----------- 

Gross profit (loss)                         780,000       (35,000)       673,000    (1,126,000)    2,287,000 
General and administration               (1,860,000)   (2,092,000)    (2,924,000)   (2,133,000)   (1,370,000)

Selling and service                      (2,029,000)   (2,103,000)    (1,744,000)   (2,369,000)   (2,144,000)

Research and development                 (1,782,000)   (1,624,000)    (2,061,000)   (3,922,000)   (3,618,000)
Interest and other income                   130,000        77,000         81,000        70,000       114,000 
Interest and other expense               (1,110,000)      (41,000)      (123,000)      (70,000)      (75,000)
                                        -----------   -----------   ------------   -----------   ----------- 

Net loss before cumulative effect                                                                            
   of accounting change under                                                                                
   SAB 101                               (5,871,000)   (5,818,000)    (6,098,000)   (9,550,000)   (4,806,000)
Cumulative effect of accounting change                                                                       
   under SAB 101                           (282,000)           --             --            --            -- 
                                        -----------   -----------   ------------   -----------   ----------- 
Net loss                                $(6,153,000)  $(5,818,000)  $ (6,098,000)  $(9,550,000)  $(4,806,000)
                                        ===========   ===========   ============   ===========   =========== 
Per share data:                                                                                              
Net loss before preferred stock                                                                              
  dividend or discount and                                                                                   
  cumulative effect of accounting                                                                            
  change under E1TF 00-27               $(6,153,000)  $(5,818,000)  $ (6,098,000)  $(9,550,000)  $(4,806,000)
Preferred stock dividend or                                                                                  
  discount                                 (100,000)     (905,000)    (3,907,000)           --            -- 
Cumulative effect of accounting                                                                              
  change under E1TF 00-27                  (580,000)           --             --            --            -- 
                                        -----------   -----------   ------------   -----------   ----------- 
Net loss to common stockholders         $(6,833,000)  $(6,723,000)  $(10,005,000)  $(9,550,000)  $(4,806,000)
                                        ===========   ===========   ============   ===========   =========== 
Basic and diluted net loss per                                                                               
  share before cumulative effect                                                                             
  of accounting changes                 $     (0.22)  $     (0.30)  $      (0.52)  $     (0.54)  $     (0.32)
Cumulative effect of accounting                                                                              
  change under SAB 101                        (0.01)           --             --            --            -- 
Cumulative effect of accounting                                                                              
  change under E1TF 00-27                     (0.02)           --             --            --            -- 
                                        -----------   -----------   ------------   -----------   ----------- 
Basic and diluted net loss per                                                                               
  common share                          $     (0.25)  $     (0.30)  $      (0.52)  $     (0.54)  $     (0.32)
                                        ===========   ===========   ============   ===========   =========== 
Pro Forma amounts assuming the                                                                               
  accounting change under SAB 101 is                                                                         
  applied retroactively:                                                                                     
  Net loss to common                                                                                         
    stockholders                        $(6,551,000)  $(6,299,000)  $(10,255,000)  $(9,588,000)  $(4,613,000)
                                        ===========   ===========   ============   ===========   =========== 
Basic and diluted net loss                                                                                   
  per share                             $     (0.24)  $     (0.28)  $      (0.53)  $     (0.54)  $     (0.31)
                                        ===========   ===========   ============   ===========   =========== 

41

10-K405
42nd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 42nd

                                                        [Enlarge/Download Table]

Balance Sheet Data             2001         2000         1999         1998         1997    
--------------------------  -----------  -----------  -----------  -----------  -----------
                                                                                           
Cash and short term                                                                        
  investments               $ 5,366,000  $ 2,550,000  $ 2,327,000  $ 1,975,000  $ 3,511,000

Working capital             $ 7,098,000  $ 4,613,000  $ 5,085,000  $ 3,666,000  $ 6,407,000

Total assets                $ 9,553,000  $ 6,735,000  $ 8,133,000  $ 7,799,000  $10,188,000

Total liabilities           $ 1,621,000  $ 1,043,000  $ 1,413,000  $ 2,226,000  $ 2,163,000

Total shareholders' equity  $ 7,932,000  $ 5,692,000  $ 6,720,000  $ 5,573,000  $ 8,025,000

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS  
OF OPERATIONS                                                   

CERTAIN STATEMENTS CONTAINED IN THIS SECTION AND OTHER PARTS OF THIS REPORT ON  
FORM 10-K WHICH ARE NOT HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS AND ARE 
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES. THE COMPANY'S 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 1 -- BUSINESS - UNDER THE SUBSECTION        
ENTITLED "FACTORS AFFECTING OPERATING RESULTS", AND OTHER FACTORS IDENTIFIED    
FROM TIME TO TIME IN THE COMPANY'S REPORTS FILED WITH THE U.S. SECURITIES AND   
EXCHANGE COMMISSION.                                                            

The following discussion should be read in conjunction with the Company's       
financial statements contained in this report.                                  

(a) Overview                                                                    

The Company designs, manufactures and distributes medical devices and companion 
sterile single use processing disposables that our customers use to harvest or  
cryopreserve biomaterial products from single units of blood. Initially the     
Company developed medical devices for ultra rapid freezing and thawing of blood 
components, which the Company manufactures and distributes to blood banks,      
hospitals and plasma collection centers. All of the Company's products are      
medical devices purchased as capital equipment or the related disposables.      

The Company has incurred recurring operating losses and has an accumulated      
deficit of $44,072,000 as of June 30, 2001. The report of independent auditors  
on the Company's June 30, 2001 financial statements includes an explanatory     
paragraph indicating there is substantial doubt about the Company's ability to  
continue as a going concern. The Company believes that it has developed a viable
plan to address these issues and that its plan will enable the Company to       
continue as a going concern through the end of fiscal year 2002. This plan      
includes the realization of revenues from the commercialization of new products,
the consummation of debt or equity financing in amounts sufficient to fund      
further growth, and the reduction of certain operating expenses as necessary.   
Although the Company believes that its plan will be realized, there is no       
assurance that these events will occur. The financial statements do not include 
any adjustments to reflect the uncertainties related to the recoverability and  
classification of assets or the amounts and classification of liabilities that  
may result from the inability of the Company to continue as a going concern.    

42

10-K405
43rd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 43rd

The Company made the transition to the calendar year 2000 without "Year 2000"   
interruptions. The Company did not incur any material costs to be "Year 2000"   
compliant.                                                                      

(b) Results of Operations                                                       

The Years Ended June 30, 2001 and 2000                                          

The following is Management's discussion and analysis of certain significant    
factors which have affected the Company's financial condition and results of    
operations during the periods included in the accompanying financial statements.

Revenue Recognition                                                             

Effective July 1, 2000, the Company changed its method of accounting for revenue
recognition for BioArchive systems and certain licensing agreements in          
accordance with Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
Financial Statements". Previously, the Company recognized revenue for BioArchive
units upon the delivery of the equipment to the customers. The costs of training
and installation were accrued in the same period the installation and training  
was performed and the related training and installation revenue was recognized. 
Under the new accounting method for BioArchive systems adopted retroactive to   
July 1, 2000, the Company now recognizes revenue for BioArchive systems upon    
completion of training and installation of the equipment at the end-user's site.
Furthermore, due to business customs in Japan and the Company's interpretation  
of Japanese law, all significant equipment sales to Japan are recognized upon   
customer acceptance, which occurs after the completion of training and          
installation. Previously, the Company recognized revenue for licensing          
agreements when payment was received and the Company performed all services     
required under the agreement. Under the new accounting method which was adopted 
retroactive to July 1, 2000 for licensing agreements pursuant to which the      
Company receives up-front licensing fees for products or technologies that will 
be provided by the Company over the term of the arrangements, the Company now   
defers the up-front fees and recognizes the fees as revenue on a straight-line  
method over the term of the respective contracts. The cumulative effect of the  
change on prior years resulted in an increase in the net loss of $282,000 (net  
of income taxes of $0), which is included in the net loss before the cumulative 
effect of a change in accounting principle for the year ended June 30, 2001, and
$13,000 has been included in deferred revenue as of June 30, 2001. The $282,000 
is comprised of revenues of $664,000 less cost of revenues of $382,000. The     
effect of the change on the year ended June 30, 2001 was to decrease the net    
loss before the cumulative effect of the accounting change by $179,000 ($0.01   
per share). The $179,000 is comprised of revenues of $272,000 less cost of      
revenues of $93,000.                                                            

New Accounting Pronouncements                                                   

On November 16, 2000, the Emerging Issues Task Force ("EITF") issued EITF 00-27,
"Application of EITF Issue No. 98-5, Accounting for Convertible Securities with 
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios to  
Certain Convertible Instruments". EITF 00-27 requires that any beneficial       
conversion feature associated with a convertible instrument be calculated using 
the intrinsic value of a conversion option after first allocating the proceeds  
received to the convertible instrument and any other detachable instruments     
included in the exchange (such as detachable warrants). As a result of adopting 
EITF 00-27, the Company has recorded a one-time, non-cash charge to accumulated 
deficit of $580,000, for the year ending June 30, 2001, as the cumulative effect
of accounting change under EITF 00-27 for the embedded beneficial conversion    
feature associated with the Series B Preferred Stock financing which occurred in
December 1999.                                                                  

43

10-K405
44th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 44th

Revenues:                                                                       

Net revenues increased $1,581,000 or 38% from fiscal 2000 to fiscal 2001. The   
increase in sales was primarily a result of increases in the sale of BioArchive 
and ThermoLine (plasma freezers and thawers) products. BioArchive revenues      
increased $526,000 or 44% over the prior year due to the resources added in     
fiscal 2000 to accelerate the BioArchive sales process. ThermoLine revenues     
increased $739,000 or 26% over the prior year. The increase is primarily due to 
a restructured sales department which includes an experienced field-based sales 
executive to call on customers in North America and provide sales leadership for
the telemarketing sales force. Additionally, freezer sales increased due to     
increased sales to Europe. Specifically, the distributor to the CIS countries   
(formerly known as the USSR) accounted for 11% of the freezer sales for this    
year.                                                                           

Net revenues decreased from fiscal year 1999 to fiscal year 2000 by $897,000 or 
18%. Licensing fees decreased $400,000 and the BioArchive product line revenues 
decreased by $498,000 from fiscal year 1999 sales as the number of units placed 
fell from nine to six. The technical and regulatory hurdles within each country 
that are required to authorize this new medical therapy, prepare the cord blood 
bank site and obtain the necessary budget allocations are more time consuming   
and complex than originally estimated by the Company. Thus, customers did not   
move quickly through the sales pipeline. The Company added more resources during
fiscal year 2000 in order to accelerate this process in fiscal year 2001.       

Cost of Revenues:                                                               

As a percentage of revenues, the Company's cost of revenues decreased from 101% 
to 87%. The cost of revenues percentage decrease is due to the mix of products  
sold, the inventory management procedures the Company implemented over the past 
year and the Company's cost reduction efforts. However, cost of revenues remains
higher than expected primarily due to the significant overhead costs associated 
with building and maintaining an infrastructure that is required to meet FDA    
regulatory requirements and standards for production of Class II medical        
devices. The Company has built up the infrastructure for the BioArchive and     
CryoSeal product lines.                                                         

As a percentage of revenues, the Company's cost of revenues increased to 101% in
fiscal 2000 from 87% in fiscal 1999. This percentage increase is due to the     
decrease in licensing fee revenue from fiscal 2000 to fiscal 1999 which has no  
associated cost of revenue and the lower sales volume in the BioArchive product 
line.                                                                           

General and Administrative Expenses:                                            

This expense category includes Finance, Administration and General Support      
departments.                                                                    

General and administrative expenses decreased $232,000 or 11% from fiscal 2000  
to fiscal 2001. The decrease is a primarily due to personnel reductions which   
occurred during the prior fiscal year and the Company has elected not to replace
the vacant positions.                                                           

General and administrative expenses decreased $832,000 or 28% from fiscal year  
1999 to fiscal year 2000. The expense decrease was due to company wide cost     
cutting measures which were implemented in prior years and continued in fiscal  
year 2000. Specifically, the decrease was due to personnel reductions and       
transferring or allocating personnel to other functions, namely sales and       
marketing and R&D. Additionally, in fiscal year 1999 there were expenses of     
$328,000 associated with software licensing and executive bonuses. These        
expenses did not occur in fiscal 2000.                                          

44

10-K405
45th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 45th

Selling and Service Expenses:                                                   

This expense category includes Sales and Marketing, and Field and Customer      
Service departments.                                                            

Selling and Service expenses decreased $74,000 or 4% from fiscal 2000 to fiscal 
2001. The decrease was primarily the result of cost control measures focused on 
travel and the use of outside consultants.                                      

Selling and Service expenses increased $359,000 or 21% from fiscal year 1999 to 
fiscal year 2000. The increased sales and marketing resources were dedicated to 
expanding the global sales force for BioArchive Systems from one to three. The  
additional resources are further expanding the efforts to satisfy the customers'
needs for technical support to satisfy scientific and regulatory requirements   
for establishing cord blood banks in their respective countries, thus           
accelerating their process through the sales pipeline.                          

Research and Development Expenses:                                              

Research and Development expenses increased $158,000 or 10% from fiscal 2000 to 
fiscal 2001. The pre clinical trials for the CryoSeal FS system accounted for   
approximately $55,000 of the increase. The additional increase is due to the    
addition of personnel engaged in regulatory and quality system activities.      

Research and development expenses were reduced $437,000 or 21% in fiscal year   
2000. This decrease was due to a continuing reduction in personnel due to the   
transfer of the BioArchive and CryoSeal platforms to manufacturing. Even with   
these reductions, R&D personnel made significant advancements in finalizing the 
manufacturing transfer of two disposables associated with the CryoSeal platform.

Management believes that product development and refinement is essential to     
maintaining the Company's market position. Therefore, the Company considers     
these costs as continuing costs of doing business. No assurances can be given   
that the products or markets recently developed or under development will be    
successful.                                                                     

Interest and Other Expense:                                                     

Interest and other expense increased $1,069,000 from fiscal 2000 to fiscal 2001.
The increase is due to the debt financing which occurred in December 2000. The  
amortization of the warrants and the beneficial conversion feature, which are   
non-cash charges, accounted for $1,013,000 of the interest expense for the year 
ended June 30, 2001.                                                            

Interest and other expense decreased $82,000 from fiscal 1999 to fiscal 2000.   
The decrease is due to the interest paid and warrants issued on the short-term  
debt agreement entered into in November 1998. The fair value of the warrants,   
$70,000 was included in interest expense for fiscal 1999.                       

(c) Liquidity and Capital Resources                                             

The Company has used significant cash resources for operating activities since  
its formation in 1987, and more rapidly in the last four fiscal years primarily 
to develop new products and markets. Based on its fiscal 2002 operating plan,   
the Company believes it will be able to sustain operations through the end of   
the fiscal year, with no outside financing. However, the operating plan is      
dependent on an increase in revenues from the BioArchive and CryoSeal platforms.
The Company has undertaken efforts to locate and secure adequate resources to   
avoid any disruption to the CryoSeal FS human clinical trials or operations due 
to new product revenue fluctuations. However, there can be no assurance that    
this funding will be received or that the Company will be able to execute on    
this plan.                                                                      

45

10-K405
46th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 46th

In fiscal 2001, the Company raised net proceeds of $5,139,000 through the       
private placement of 3,944,047 shares of common stock. Additionally, the Company
received $386,000, from the exercise of stock options and warrants. To date, the
Company has used the proceeds to pay off $220,000 of short-term debt received in
December 2000. Also, the Company used $4,294,000 of cash in operating           
activities.                                                                     

The Company generally does not require extensive capital equipment to produce or
sell its current products. However, when significant capital equipment is       
required, the Company purchases from a vendor base. In fiscal 1999, the Company 
spent $115,000 primarily for test equipment associated with the BioArchive and  
CryoSeal Systems and to build a clean room to manufacture the BioArchive        
periscope. In fiscal 2000, the Company spent $145,000 primarily for tooling and 
molds for the production of the CP-2 and TAD and software licenses to ensure    
compliance with licensing requirements. In fiscal 2001, the Company spent       
$235,000 primarily for molds for the production of the TAD and CP-3. Although   
future capital expenditures may be anticipated, the Company believes that the   
amounts expended will be consistent with, or lower than fiscal year 2001. The   
Company has no significant outstanding capital commitments at June 30, 2001.    

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

All sales, domestic and foreign, are made in U.S. dollars and therefore currency
fluctuation are believed to have no impact on the Company's net revenues. The   
Company has no long-term investments or debt, other than capital lease          
obligations, and therefore is not subject to interest rate risk. Management does
not believe that inflation has had or will have a significant impact on the     
Company's results of operations.                                                

46

10-K405
47th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 47th

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                             

                                                        [Enlarge/Download Table]

                                                                                      Page 
                                                                                     Number
                                                                                           
Report of Ernst & Young LLP, Independent Auditors                                      48  

Balance Sheets at June 30, 2001 and 2000                                               49  

Statements of Operations for the years ended June 30, 2001, 2000 and 1999              51  

Statements of Shareholders' Equity for the years ended June 30, 2001, 2000 and 1999    52  

Statements of Cash Flows for the years ended June 30, 2001, 2000 and 1999              53  

Notes to Financial Statements                                                          54  

47

10-K405
48th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 48th

 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders THERMOGENESIS CORP.                     

We have audited the accompanying balance sheets of THERMOGENESIS CORP. as of    
June 30, 2001 and 2000, and the related statements of operations, shareholders' 
equity, and cash flows for each of the three years in the period ended June 30, 
2001. Our audits also included the financial statement schedule listed in the   
Index at Item 14.(a)(2). These financial statements and schedule are the        
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements and schedule based on our audits.         

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free  
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement       
presentation. We believe that our audits provide a reasonable basis for our     
opinion.                                                                        

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of THERMOGENESIS CORP. at June 30,
2001 and 2000, and the results of its operations and its cash flows for each of 
the three years in the period ended June 30, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the   
related financial statement schedule, when considered in relation to the basic  
financial statements taken as a whole, presents fairly in all material respects 
the information set forth therein.                                              

The accompanying financial statements have been prepared assuming that          
THERMOGENESIS CORP. will continue as a going concern. As more fully described in
Note 1, the Company has incurred recurring operating losses and has an          
accumulated deficit of $44,072,000 as of June 30, 2001. These conditions raise  
substantial doubt about the Company's ability to continue as a going concern.   
Management's plans in regard to these matters are also described in Note 1. The 
financial statements do not include any adjustments to reflect the uncertainties
related to the recoverability and classification of assets or the amounts and   
classification of liabilities that may result from the outcome of this          
uncertainty.                                                                    

As discussed in Note 1 to the financial statements, in 2001 the Company changed 
its method of accounting for revenue recognition in accordance with guidance    
provided in SEC Staff Accounting Bulletin No. 101 (SAB 101), "Revenue           
Recognition in Financial Statements." Also discussed in Note 1, in 2001 the     
Company changed its method of accounting for convertible securities with        
beneficial conversion features in accordance with the consensus reached by the  
Emerging Issues Task Force ("EITF") in issue No. 00-27, "Application of EITF    
Issue No. 98-5, Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios, to Certain Convertible   
Instruments."                                                                   

                               /s/   ERNST & YOUNG LLP

Sacramento, California                                                          
August 24, 2001                                                                 

48

10-K405
49th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 49th

 THERMOGENESIS CORP.
BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                               June 30, 2001  June 30, 2000
                                                               -------------  -------------
                                                                                           
ASSETS                                                                                     

Current Assets:                                                                            

  Cash and cash equivalents                                      $3,544,000     $  810,000 

  Short term investments                                          1,822,000      1,740,000 

  Accounts receivable, net of allowance for doubtful                                       
    accounts of $84,000 ($84,000 at June 30, 2000)                1,369,000        627,000 

  Inventory                                                       1,843,000      2,275,000 

  Other current assets                                               96,000        150,000 
                                                                 ----------     ---------- 

    Total current assets                                          8,674,000      5,602,000 

Equipment at cost less accumulated depreciation of $1,974,000                              
    ($1,506,000 at June 30, 2000)                                   811,000      1,080,000 

Other assets                                                         68,000         53,000 
                                                                 ----------     ---------- 

                                                                 $9,553,000     $6,735,000 
                                                                 ==========     ========== 

 See accompanying notes.

49

10-K405
50th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 50th

 THERMOGENESIS CORP.
BALANCE SHEETS (CONTINUED)

                                                        [Enlarge/Download Table]

                                                        June 30, 2001   June 30, 2000 
                                                        -------------   ------------- 
                                                                                      
LIABILITIES AND SHAREHOLDERS' EQUITY                                                  

Current liabilities:                                                                  

  Accounts payable                                       $    709,000    $    512,000 

  Accrued payroll and related expenses                        182,000         132,000 

  Deferred revenue                                            233,000          13,000 

  Accrued liabilities                                         452,000         332,000 
                                                         ------------    ------------ 

Total current liabilities                                   1,576,000         989,000 

Long-term portion of capital lease obligations                 45,000          54,000 

Commitments and contingencies                                                         

Shareholders' equity:                                                                 

  Series B convertible preferred stock, $0.001 par                                    
     value, 4,080 shares authorized, no shares issued                                 
     and outstanding (4,040 at June 30, 2000)                      --              -- 

  Series A convertible preferred stock, $0.001 par                                    
     value, 1,200,000 shares authorized 158,000 issued                                
     and outstanding (166,000 at June 30, 2000)                                       
     ($1,185,000 aggregate involuntary liquidation                                    
     value at June 30, 2001)                                       --              -- 

  Preferred stock, $.001 par value; 795,920 shares                                    
     authorized; no shares issued and outstanding                  --              -- 

  Common stock, $.001 par value; 50,000,000 shares                                    
     authorized: 31,794,769 issued and outstanding                                    
     (24,804,056 at June 30, 2000)                             32,000          26,000 

  Paid in capital in excess of par                         52,397,000      43,005,000 

  Shareholder note receivable                                (425,000)             -- 

  Accumulated deficit                                     (44,072,000)    (37,339,000)
                                                         ------------    ------------ 

Total shareholders' equity                                  7,932,000       5,692,000 
                                                         ------------    ------------ 

                                                         $  9,553,000    $  6,735,000 
                                                         ============    ============ 

 See accompanying notes.

50

10-K405
51st Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 51st

 THERMOGENESIS CORP.
STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                                       Years ended June 30                       
                                                  -------------------------------------------------------------- 
                                                      2001                     2000                     1999     
                                                  ------------             ------------             ------------ 
                                                                                                                 
Revenues:                                                                                                        
   Product and other revenues                     $  5,006,000             $  3,696,000             $  4,703,000 
   Service revenues                                    786,000                  515,000                  405,000 
                                                  ------------             ------------             ------------ 

      Net revenues                                   5,792,000                4,211,000                5,108,000 
                                                  ------------             ------------             ------------ 
Cost of revenues:                                                                                                
  Costs of product and other revenues                4,408,000                3,782,000                4,114,000 
  Cost of service revenues                             604,000                  464,000                  321,000 
                                                  ------------             ------------             ------------ 

      Total costs of revenues                        5,012,000                4,246,000                4,435,000 
                                                  ------------             ------------             ------------ 

Expenses:                                                                                                        
  General and administrative                         1,860,000                2,092,000                2,924,000 
  Selling and service                                2,029,000                2,103,000                1,744,000 
  Research and development                           1,782,000                1,624,000                2,061,000 
                                                  ------------             ------------             ------------ 
      Total expenses                                 5,671,000                5,819,000                6,729,000 
                                                  ------------             ------------             ------------ 
Loss before interest and other                      (4,891,000)              (5,854,000)              (6,056,000)

Interest and other expense                          (1,110,000)                 (41,000)                (123,000)
Interest and other income                              130,000                   77,000                   81,000 
                                                  ------------             ------------             ------------ 
      Total interest and other income                                                                            
        (expense)                                     (980,000)                  36,000                  (42,000)
                                                  ------------             ------------             ------------ 
Net loss before cumulative effect of                                                                             
     accounting change under SAB 101                (5,871,000)              (5,818,000)              (6,098,000)
Cumulative effect of accounting change under                                                                     
     SAB 101                                          (282,000)                      --                       -- 
                                                  ------------             ------------             ------------ 
Net loss                                          ($ 6,153,000)            ($ 5,818,000)            ($ 6,098,000)
                                                  ============             ============             ============ 
Per share data:                                                                                                  
Net loss before preferred stock dividend or                                                                      
     discount and cumulative effect of                                                                           
     accounting change under EITF 00-27           ($ 6,153,000)            ($ 5,818,000)            ($ 6,098,000)
Preferred stock dividend or discount                  (100,000)                (905,000)              (3,907,000)
Cumulative effect of accounting change under                                                                     
     EITF 00-27                                       (580,000)                      --                       -- 
                                                  ------------             ------------             ------------ 

Net loss to common stockholders                   ($ 6,833,000)            ($ 6,723,000)            ($10,005,000)
                                                  ============             ============             ============ 
Basic and diluted net loss per share before                                                                      
     cumulative effect of accounting changes      ($      0.22)            ($      0.30)            ($      0.52)
Cumulative effect of accounting change under                                                                     
     SAB 101                                             (0.01)                      --                       -- 
Cumulative effect of accounting change under                                                                     
     EITF 00-27                                          (0.02)                      --                       -- 
                                                  ------------             ------------             ------------ 

Basic and diluted net loss per common share       ($      0.25)            ($      0.30)            ($      0.52)
                                                  ============             ============             ============ 

Shares used in computing per share data             27,668,523               22,288,912               19,242,310 
                                                  ============             ============             ============ 
Pro forma amounts assuming the accounting change                                                                 
    under SAB 101 is applied retroactively:                                                                      
    Net loss to common stockholders               ($ 6,551,000)            ($ 6,299,000)            ($10,255,000)
                                                  ============             ============             ============ 
    Basic and diluted net loss per share          ($      0.24)            ($      0.28)            ($      0.53)
                                                  ============             ============             ============ 

 See accompanying notes.

51

10-K405
52nd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 52nd

 THERMOGENESIS CORP.
STATEMENTS OF SHAREHOLDERS' EQUITY

                                                        [Enlarge/Download Table]

                                   Series A    Series B            Paid in capital                 Shareholder      Total    
                                   preferred   preferred   Common     in excess     Accumulated       note      shareholders'
                                     stock       stock     stock        of par        Deficit       receivable     equity    
                                   ---------   ---------  -------  ---------------  ------------   -----------  -------------
                                                                                                                             
Balance at June 30, 1998                                  $19,000    $ 26,294,000   $(20,739,000)               $ 5,574,000  
Issuance of 1,750 common shares                                                                                              
    for exercise of options                                    --           4,000             --                      4,000  
Issuance of 1,077,540 convertible                                                                                            
    preferred shares in private                                                                                              
    placement                        $ 1,000                   --       6,226,000             --                  6,227,000  
Convertible preferred stock                                                                                                  
    discount                              --                   --       3,605,000     (3,605,000)                        --  
Amortization of options issued                                                                                               
    previously for services               --                   --          56,000             --                     56,000  
Issuance of 142,413 common                                                                                                   
    shares for services                   --                   --         187,000             --                    187,000  
Issuance of 90,000 common stock                                                                                              
    warrants                              --                   --          70,000             --                     70,000  
Convertible preferred stock                                                                                                  
    accretion                             --                   --         302,000       (302,000)                        --  
Issuance of 967,700 common shares                                                                                            
    upon conversion of preferred                                                                                             
    stock                                 --                1,000          (1,000)            --                         --  
Issuance of 560,000 common shares         --                1,000         699,000             --                    700,000  
Net loss                                  --                   --              --     (6,098,000)                (6,098,000) 
                                     -------      ---     -------    ------------   ------------    ---------   -----------  
Balance at June 30, 1999               1,000      $--      21,000      37,442,000    (30,744,000)                 6,720,000  

Issuance of 4,040 Series B                                                                                                   
    preferred stock                       --       --          --       3,686,000             --                  3,686,000  
Issuance of 595,322 shares for                                                                                               
    exercise of options and                                                                                                  
    warrants                              --       --       1,000       1,025,000             --                  1,026,000  
Convertible preferred stock                                                                                                  
    discount                              --       --          --         777,000       (777,000)                        --  
Issuance of 21,202 common shares                                                                                             
    for services                          --       --          --          18,000             --                     18,000  
Amortization of options issued                                                                                               
    previously for services               --       --          --          60,000             --                     60,000  
Issuance of 3,590,000 common                                                                                                 
    shares upon conversion of                                                                                                
    Series A preferred stock          (1,000)      --       4,000          (3,000)            --                         --  
Net loss                                  --       --          --              --     (5,818,000)                (5,818,000) 
                                     -------      ---     -------    ------------   ------------    ---------   -----------  
Balance at June 30, 2000                  --       --      26,000      43,005,000    (37,339,000)                 5,692,000  
Issuance of 3,944,047 common                                                                                                 
    shares in private placement           --       --       4,000       6,990,000             --                  6,994,000  
Issuance of 388,750 shares for                                                                                               
    exercise of options and                                                                                                  
    warrants                              --       --          --         811,000             --                    811,000  
Shareholder note receivable for                                                                                              
    exercise of options                   --       --          --              --             --    $(425,000)     (425,000) 
Cumulative effect of accounting                                                                                              
    change under EITF 00-27               --       --          --         580,000       (580,000)          --            --  
Beneficial conversion feature             --       --          --         548,000             --           --       548,000  
Issuance of 415,000 common stock                                                                                             
    warrants                              --       --          --         465,000             --           --       465,000  
Issuance of 2,617,940 common                                                                                                 
    shares upon conversion of                                                                                                
    Series B preferred stock              --       --       2,000          (2,000)            --           --            --  
Issuance of 40,000 common shares                                                                                             
    upon conversion of Series A                                                                                              
    preferred stock                       --       --          --              --             --           --            --  
Net loss                                  --       --          --              --     (6,153,000)          --    (6,153,000) 
                                     -------      ---     -------    ------------   ------------    ---------   -----------  
Balance at June 30, 2001             $    --      $--     $32,000    $ 52,397,000   $(44,072,000)   $(425,000)  $ 7,932,000  
                                     =======      ===     =======    ============   ============    =========   ===========  

 See accompanying notes.

52

10-K405
53rd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 53rd

 THERMOGENESIS CORP.
STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                            Years ended June 30                     
                                                        ----------------------------------------------------------- 
                                                            2001                    2000                    1999    
                                                        -----------             -----------             ----------- 
                                                                                                                    
Cash flows from operating activities:                                                                               
  Net loss                                              $(6,153,000)            $(5,818,000)            $(6,098,000)
  Adjustments to reconcile net loss to net                                                                          
    cash used in operating activities:                                                                              
        Depreciation and amortization                       485,000                 617,000                 548,000 
        Debt discount and beneficial conversion                                                                     
        feature                                           1,013,000                      --                      -- 
        Issuance of common stock for services                    --                  18,000                 257,000 
        Amortization of stock options issued for                                                                    
        services                                                 --                  60,000                  56,000 
        Loss on sale of equipment                            19,000                  25,000                      -- 
    Net changes in operating assets and liabilities                                                                 
      Accounts receivable                                  (742,000)                577,000                  77,000 
      Inventory                                             432,000                 442,000                (416,000)
      Other current assets                                   54,000                  72,000                 (42,000)
      Other assets                                          (15,000)                 98,000                 (34,000)
      Accounts payable                                      197,000                (127,000)               (661,000)
      Accrued payroll and related expenses                   50,000                (104,000)               (110,000)
      Deferred revenue                                      220,000                   9,000                  (2,000)
      Accrued liabilities                                   146,000                (181,000)                (11,000)
                                                        -----------             -----------             ----------- 
             Net cash used in operating activities       (4,294,000)             (4,312,000)             (6,436,000)
                                                        -----------             -----------             ----------- 
Cash flows from investing activities:                                                                               
         Purchases of short-term investments             (1,822,000)             (1,740,000)                     -- 
         Sales of short-term investments                  1,740,000                      --                      -- 
         Capital expenditures                              (235,000)               (145,000)               (115,000)
                                                        -----------             -----------             ----------- 
             Net cash used in investing activities         (317,000)             (1,885,000)               (115,000)
                                                        -----------             -----------             ----------- 
Cash flows from financing activities:                                                                               
  Exercise of stock options and warrants                    386,000               1,026,000                   4,000 
  Issuance of convertible preferred stock                        --               3,686,000               6,227,000 
  Payments on capital lease obligations                     (35,000)                (32,000)                (28,000)
  Proceeds from short-term debt                           2,075,000                      --                      -- 
  Payment of short-term debt                               (220,000)                     --                      -- 
  Issuance of common stock                                5,139,000                      --                 700,000 
                                                        -----------             -----------             ----------- 
             Net cash provided by financing activities    7,345,000               4,680,000               6,903,000 
                                                        -----------             -----------             ----------- 
Net increase (decrease) in cash and cash equivalents      2,734,000              (1,517,000)                352,000 
Cash and cash equivalents at beginning of year              810,000               2,327,000               1,975,000 
                                                        -----------             -----------             ----------- 
Cash and cash equivalents at end of year                $ 3,544,000             $   810,000             $ 2,327,000 
                                                        ===========             ===========             =========== 

Supplemental cash flow information:                                                                                 
  Cash paid during the year for interest                $    83,000             $    13,000             $    32,000 
                                                        ===========             ===========             =========== 

Supplemental non-cash flow information:                                                                             
  Equipment acquired by capital lease obligations                --             $    65,000                      -- 
                                                        ===========             ===========             =========== 
  Issuance of shareholder note receivable               $   425,000                      --                      -- 
                                                        ===========             ===========             =========== 
  Conversion of short-term debt to equity               $ 1,855,000                      --                      -- 
                                                        ===========             ===========             =========== 

 See accompanying notes.

53

10-K405
54th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 54th

             THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

Organization and Business                                                       

THERMOGENESIS CORP. ("the Company") was incorporated in Delaware in July 1986.  
The Company designs, manufactures and distributes equipment to process          
therapeutically valuable blood components including stem cells and surgical     
sealants. Initially the Company developed medical devices for ultra rapid       
freezing and thawing of blood components, which the Company manufactures and    
distributes in their respective niche markets in blood banks and hospitals.     

Revenue Recognition                                                             

Effective July 1, 2000, the Company changed its method of accounting for revenue
recognition for BioArchive systems and certain licensing agreements in          
accordance with Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
Financial Statements". Previously, the Company recognized revenue for BioArchive
units upon the delivery of the equipment to the customers. The costs of training
and installation were accrued in the same period the installation and training  
was performed and the related training and installation revenue was recognized. 
Under the new accounting method for BioArchive systems adopted retroactive to   
July 1, 2000, the Company now recognizes revenue for BioArchive systems upon    
completion of training and installation of the equipment at the end-user's site.
Furthermore, due to business customs in Japan and the Company's interpretation  
of Japanese law, all significant equipment sales to Japan are recognized upon   
customer acceptance, which occurs after the completion of training and          
installation. Previously, the Company recognized revenue for licensing          
agreements when payment was received and the Company performed all services     
required under the agreement. Under the new accounting method which was adopted 
retroactive to July 1, 2000 for licensing agreements pursuant to which the      
Company receives up-front licensing fees for products or technologies that will 
be provided by the Company over the term of the arrangements, the Company now   
defers the up-front fees and recognizes the fees as revenue on a straight-line  
method over the term of the respective contracts. The cumulative effect of the  
change on prior years resulted in an increase in the net loss of $282,000 (net  
of income taxes of $0), which is included in the net loss before the cumulative 
effect of a change in accounting principle for the year ended June 30, 2001, and
$13,000 has been included in deferred revenue as of June 30, 2001. The $282,000 
is comprised of revenues of $664,000 less cost of revenues of $382,000. The     
effect of the change on the year ended June 30, 2001 was to decrease the net    
loss before the cumulative effect of the accounting change by $179,000 ($0.01   
per share). The $179,000 is comprised of revenues of $272,000 less cost of      
revenues of $93,000.                                                            

For the year ended June 30, 2001, the Company recognized $526,000 in revenue    
that was included in the cumulative effect adjustment as of July 1, 2000. The   
effect of that revenue in the year ended June 30, 2001 was to reduce the net    
loss by $269,000 (after reduction for income taxes of $0).                      

Revenues from the sale of the Company's CryoSeal and ThermoLine products are    
recognized upon transfer of title. The Company ships all products F.O.B.        
shipping point at its office. There is no conditional evaluation on any product 
sold and recognized as revenue. All foreign sales are denominated in U.S.       
dollars. The Company's foreign sales are generally through distributors. There  
is no right of return provided for distributors. Service revenue is generated   
from contracts for providing maintenance of equipment. Service revenue is       
recognized at the time the service is completed.                                

54

10-K405
55th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 55th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                       

Basis of Presentation                                                           

The Company has incurred recurring operating losses and has an accumulated      
deficit of $44,072,000 as of June 30, 2001. The report of independent auditors  
on the Company's June 30, 2001 financial statements includes an explanatory     
paragraph indicating there is substantial doubt about the Company's ability to  
continue as a going concern. The Company believes that it has developed a viable
plan to address these issues and that its plan will enable the Company to       
continue as a going concern through the end of fiscal year 2002. This plan      
includes the realization of revenues from the commercialization of new products,
the consummation of debt or equity financing in amounts sufficient to fund      
further growth, and the reduction of certain operating expenses as necessary.   
Although the Company believes that its plan will be realized, there is no       
assurance that these events will occur. The financial statements do not include 
any adjustments to reflect the uncertainties related to the recoverability and  
classification of assets or the amounts and classification of liabilities that  
may result from the inability of the Company to continue as a going concern.    

Use of Estimates                                                                

The preparation of financial statements in conformity with generally accepted   
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at   
the date of the financial statements and the reported amounts of revenues and   
expenses during the reporting period. Actual results could differ from those    
estimates.                                                                      

Cash, Cash Equivalents and Short Term Investments                               

The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. Short term investments are         
certificates of deposit with maturities greater than 90 days, but not exceeding 
six months.                                                                     

Fair Value of Financial Instruments                                             

Carrying amounts of financial instruments held by the Company, which include    
cash equivalents, short term investments, accounts receivable, accounts payable 
and accrued liabilities, approximate fair value due to their short duration.    

Inventory                                                                       

Inventory is stated at the lower of cost or market and includes the cost of     
material, labor and manufacturing overhead. Cost is determined on the first-in, 
first-out basis.                                                                

Equipment                                                                       

Depreciation is computed under the straight-line method over the useful lives of
two to ten years.                                                               

55

10-K405
56th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 56th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                       

Stock Based Compensation                                                        

The Company has adopted the disclosure provision for stock-based compensation of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", but continues to account for such items using the intrinsic value
method as outlined under Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees".                                                 

The Company uses the Black-Scholes option pricing model to measure the fair     
value of the equity instruments issued (which were determined to be more        
reliably measurable than the fair value of consideration received) using the    
stock price and other measurement assumptions as of the date a commitment for   
performance by the counterparty to earn the equity instrument was reached. The  
fair value of the equity instruments issued is recognized in the same period as 
if the Company had paid cash for the services.                                  

Credit Risk                                                                     

The Company manufactures and sells thermodynamic devices principally to the     
blood component processing industry and performs ongoing evaluations of the     
credit worthiness of its customers. The Company believes that adequate          
provisions for uncollectible accounts have been made in the accompanying        
financial statements.                                                           

Income Taxes                                                                    

The liability method is used for accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between 
the financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that are scheduled to be in effect when the
differences are expected to reverse. The Company used the flow-through method to
account for income tax credits.                                                 

Net Loss per Share                                                              

Net loss per share is computed by dividing the net loss to common shareholders  
by the weighted average number of common shares outstanding. Common stock       
equivalents have not been included because the effect would be anti-dilutive.   

Reclassifications                                                               

Certain amounts in the prior year's financial statements have been reclassified 
to conform with the 2001 presentations.                                         

56

10-K405
57th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 57th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                       

New Accounting Pronouncements                                                   

On November 16, 2000, the Emerging Issues Task Force ("EITF") issued EITF 00-27,
"Application of EITF Issue No. 98-5, Accounting for Convertible Securities with 
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios to  
Certain Convertible Instruments". EITF 00-27 requires that any beneficial       
conversion feature associated with a convertible instrument be calculated using 
the intrinsic value of a conversion option after first allocating the proceeds  
received to the convertible instrument and any other detachable instruments     
included in the exchange (such as detachable warrants). As a result of adopting 
EITF 00-27, the Company has recorded a one-time, non-cash charge to accumulated 
deficit of $580,000, for the year ending June 30, 2001, as the cumulative effect
of accounting change under EITF 00-27 for the embedded beneficial conversion    
feature associated with the Series B Preferred Stock financing which occurred in
December 1999.                                                                  

In June, 2001, the FASB issued Statements of Financial Accounting Standards     
(SFAS) No. 141, "Business Combinations" and No. 142, "Goodwill and Other        
Intangible Assets." Under the new rules, goodwill and indefinite lived          
intangible assets are no longer amortized but are reviewed annually for         
impairment. Separable intangible assets that are not deemed to have an          
indefinite life will continue to be amortized over their useful lives. We do not
anticipate the adoption of SFAS No. 141 or SFAS No. 142 will have a significant 
impact on the financial position or results of operations of the Company.       

2. INVENTORY                                                                    

Inventory consisted of the following at June 30:                                

                                                                [Download Table]

                              2001                  2000   
                           ----------            ----------
                                                           
Raw materials              $  929,000            $1,051,000
Work in process               238,000               295,000
Finished goods                676,000               929,000
                           ----------            ----------
                           $1,843,000            $2,275,000
                           ==========            ==========

57

10-K405
58th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 58th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. EQUIPMENT                                                                    

Equipment consisted of the following at June 30:                                

                                                        [Enlarge/Download Table]

                                                              2001          2000     
                                                           -----------   ----------- 
                                                                                     
                          Office equipment                 $   371,000   $   361,000 
                          Computer and purchased software      800,000       776,000 
                          Machinery and equipment            1,319,000     1,154,000 
                          Leasehold improvements               295,000       295,000 
                                                           -----------   ----------- 
                                                             2,785,000     2,586,000 

Less accumulated depreciation and amortization              (1,974,000)   (1,506,000)
                                                           -----------   ----------- 

                                                           $   811,000   $ 1,080,000 
                                                           ===========   =========== 

4. ACCRUED LIABILITIES                                                          

Accrued liabilities consisted of the following at June 30:                      

                                                                [Download Table]

                                       2001                2000  
                                     --------            --------
                                                                 
Accrued warranty reserves            $207,000            $173,000
Customer deposits                      98,000              45,000
Capital lease obligations              11,000              37,000
Other accrued liabilities             136,000              77,000
                                     --------            --------

                                     $452,000            $332,000
                                     ========            ========

5. COMMITMENTS AND CONTINGENCIES                                                

Operating Leases                                                                

The Company leases its manufacturing and corporate facilities and certain       
equipment pursuant to operating leases. The annual future cash obligations under
these leases are as follows:                                                    

                                                                [Download Table]
                         
2002             $154,000
2003               17,000
2004                8,000
                 --------
Total            $179,000
                 ========

Rent expense was $300,000, $297,000 and $310,000 for the years ended June 30,   
2001, 2000 and 1999.                                                            

58

10-K405
59th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 59th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)                                    

Capital Leases                                                                  

The Company leases certain equipment under capital leases. The following amounts
are included in equipment as assets under these capital leases as of June 30:   

                                                                [Download Table]

                                             2001                2000  
                                           --------            --------
                                                                       
Cost                                       $108,000            $199,000
Less:  accumulated amortization              53,000             112,000
                                           --------            --------

Net assets under capital leases            $ 55,000            $ 87,000
                                           ========            ========

The future minimum lease payments under capital leases are as follows:          

                                                                [Download Table]
                                                            
Year ending June 30:                                        
                                   2002            $ 23,000 
                                   2003              22,000 
                                   2004              22,000 
                                   2005              17,000 
                                                   -------- 

Total minimum lease payments                         84,000 

Less:  amount representing interest                 (28,000)
                                                   -------- 

Present value of minimum lease payments              56,000 

Less:  current portion                              (11,000)
                                                   -------- 

Long term portion                                  $ 45,000 
                                                   ======== 

Contingencies                                                                   

The Company and its property are not a party to any pending legal proceedings.  
In the normal course of operations, the Company may have disagreements or       
disputes with vendors over the quality or conformance of products manufactured  
for the Company. These disputes are seen by the Company's management as a normal
part of business, and there are no currently threatened actions that management 
believes would have a significant material impact on the Company's financial    
position, results of operations or cash flow.                                   

59

10-K405
60th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 60th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. SHAREHOLDERS' EQUITY                                                         

Series B Convertible Preferred Stock                                            

On December 22, 1999, and January 4, 2000 the Company completed a private       
placement of 4,040 shares of Series B Convertible Preferred Stock ("Series B")  
raising an aggregate of $4,040,000, before direct expenses. The purchasers and  
the placement agent of the Series B also received five-year warrants            
representing the right to acquire 444,562 common shares and 40,000 common shares
respectively, at an exercise price of $2.72628. There were no warrants exercised
as of June 30, 2001. All of the Series B shares were converted into common      
shares by June 30, 2001. The significant features of the Series B were as       
follows:                                                                        

       Dividends -- Dividends at the rate of $60 per annum per share of Series
      B are payable in cash or, at the Company's option, may be added to the
       value of the Series B subject to conversion and to the $1,000 per share
       liquidation preference. No dividends were declared as of June 30, 2001.
The accumulated amount of the dividend, $99,742 and $128,000 was
     included in the preferred stock dividend for calculating net loss per
share for the years ended June 30, 2001 and 2000, respectively. 

     Conversion Rights -- The Series B contained a provision which allowed
  conversion into common shares based on a fixed conversion price of
  $1.6425 which represents the average market price of the Company's
     common stock for the ten days prior to the initial reset date of June
       22, 2000. Thereafter, the conversion price is adjusted every six months
      to the lesser of (a) 130% of the fixed conversion price of $2.2719, or
  (b) 90% of the average market price for the ten days prior to such
        adjustment date. The value assigned to the Beneficial Conversion Feature
     ("BCF"), determined using 90% of the average market price for the ten
    days prior to the date the Series B was sold, compared to the quoted
       market price of the Company's common stock on the date the Series B was
     sold, amounted to $777,000. The preferred stock discount for the year
      ended June 30, 2000 includes $777,000 of amortization. As described in
Note 1, the Company recorded $580,000 in additional BCF upon the
       adoption of EITF 00-27 in fiscal year 2001. As of June 30, 2001, all of
the Series B have been converted into shares of common stock.   

60

10-K405
61st Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 61st

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. SHAREHOLDER'S EQUITY (CONTINUED)                                             

Series A Convertible Preferred Stock                                            

In January 1999, the Company completed a private placement of 1,077,540 shares  
of Series A Convertible Preferred Stock ("Series A"), raising $6,227,000, net of
commissions and direct expenses. Commissions of 7% of the gross proceeds and    
warrants to purchase 200,000 shares of common stock at $1.70 per share were     
issued to the placement agent. The significant features of the Series A are as  
follows:                                                                        

  Voting Rights -- the holders of shares of Series A are entitled to
        voting rights equal to the number of shares of common stock to be issued
upon conversion of the Series A.                                

        Liquidation Preferences -- In the event of liquidation or dissolution of
    the Company, the Series A stockholders are entitled to priority over
     common stockholders with respect to distribution of Company assets or
      payments to stockholders. The liquidation preference is equal to $6.25
per share compounded annually at 8% per share per year.         

   Redemption -- When issued, the Series A contained redemption rights
   which allowed the Series A to be redeemable upon the request of any
 holder at any time following the fifth anniversary of the date of
     issuance. The redemption price shall be the liquidation preference as
      stated above. However, on July 30, 1999, the common stockholders voted
        to remove the redemption rights associated with the Series A. Removal of
the redemption rights allows the Series A to be included as     
       Stockholders' Equity. The excess of he Series A's redemption price over
  its carrying value was accreted by periodic charges to accumulated
deficit from the date of issuance through July 30, 1999.        

      Conversion Rights -- Holders of the Series A have the right to convert
     the Series A at the option of the holder, at any time, into shares of
   common stock of the Company at the conversion rate of one preferred
        share for five shares of common stock. The conversion rate is subject to
      adjustment for changes in the company's capital structure, which would
  otherwise have a dilutive effect on the conversion rate. The value
      assigned to the Beneficial Conversion Feature, as determined using the
        quoted market price of the Company's common stock on the date the Series
      A was sold, amounted to $3,605,000, which represents a discount to the
      value of the Series A. As of June 30, 200l, 919,540 shares of Series A
have been converted.                                            

   Automatic Conversion -- At the option of the Company, each share of
       Series A may be converted into shares of common stock at the conversion
        rate of 1:5 provided that the shares of the company's common stock trade
at an average price equal to or greater than $5 per share for 30
consecutive trading days.                                       

Dividends -- The holder of Series A shall be entitled to receive
dividends at the same rate and at the same time as any dividends
declared on the Company's common stock.                         

61

10-K405
62nd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 62nd

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. SHAREHOLDER'S EQUITY (CONTINUED)                                             

Common Stock                                                                    

The Company completed a private financing on April 27, 2001, in which it        
received $6,994,000 net of expenses. The proceeds from the offering were        
received from the sale of 3,944,047 shares of common stock at $1.80 per share   
and the issuance of five year warrants to the purchasers representing the right 
to acquire an additional 788,809 shares of common stock in the aggregate, at an 
exercise price of $2.88 per share. The warrants vest immediately. There were no 
warrants exercised as of June 30, 2001. Of the $7,099,000 financed, $420,000 was
received from members of the Company's board of directors or officers.          

As of June 30, 2001, the Company had 7,023,426 shares of common stock reserved  
for future issuance.                                                            

Warrants                                                                        

In December 2000, the Company completed a debt financing for a total of         
$2,075,000. The debt matured on September 19, 2001 or on the fifth day following
an equity or debt financing of at least $1,000,000, which ever occurred first.  
The interest rate is 10% per annum. Of the $2,075,000 financed, $560,000 was    
received from members of the Company's board of directors or officers. The      
Company used the proceeds from the April 2001 private financing to pay off the  
debt financing. The holders of the debt received warrants representing the right
to acquire 415,000 shares of common stock for an exercise price of $1.625. The  
warrants vest immediately and expire in December 2005. There were no warrants   
exercised as of June 30, 2001. The fair value assigned to the warrants, as      
determined using the Black-Scholes model, amounted to $465,000, which represents
a discount to the short-term debt. The discount is included in interest expense 
for the year ending June 30, 2001. Additionally, a contingent beneficial        
conversion feature of $548,000 associated with the holders right to participate 
in a future equity offering has been calculated at the date of issue. The       
contingency was resolved upon completion of the private financing in April 2001 
and the $548,000 has been included in interest expense for the year ending June 
30, 2001.                                                                       

As part of the placement agent's compensation in the 1999 private placement of  
Series A convertible preferred stock, warrants to purchase 200,000 shares of    
common stock at an exercise price of $1.70 were issued. The warrants were fully 
vested upon issuance. There were 100,000 warrants exercised in fiscal 2000. The 
warrants expire in January 2004.                                                

As part of a short-term debt agreement entered into in November 1998, the       
Company issued warrants to purchase 90,000 shares of common stock at an exercise
price of $1.50. The warrants were fully vested upon issuance. The warrants      
expire in November 2001. The estimated fair value of the warrants on the date of
issue, $70,000, has been included in interest expense for the year ending June  
30, 1999. There were 64,738 warrants exercised in fiscal 2000.                  

As part of the placement agent's compensation in a 1997 private financing,      
warrants to purchase 258,100 shares of common stock at an exercise price of     
$3.00 were issued. The warrants were fully vested upon issuance. The warrants   
expire in December 2002. No warrants have been exercised as of June 30, 2001.   

62

10-K405
63rd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 63rd

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. SHAREHOLDER'S EQUITY (CONTINUED)                                             

Warrants (Continued)                                                            

In conjunction with a private placement in November 1996, seven-year warrants   
were issued, representing the right to acquire 1,478,001 shares of common stock 
at an exercise price of $2.94 per share. The warrants were fully vested upon    
issuance and expire in November 2003. No warrants have been exercised as of June
30, 2001.                                                                       

In conjunction with a private placement in 1997, warrants to purchase 278,100   
shares of common stock at an exercise price of $3.00 were issued. The warrants  
were fully vested upon issuance. There were 84,000 warrants exercised in fiscal 
2001. The remaining warrants expired in December 2000.                          

Stock Options                                                                   

The Amended 1994 Stock Option Plan ("1994 Plan") permits the grant of stock or  
options to employees, directors and consultants. A total of 1,450,000 shares    
were approved by the stockholders for issuance under the 1994 Plan. Options are 
granted at prices which 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
ratably over a five-year period, unless otherwise determined by the Board of    
Directors.                                                                      

The Amended 1998 Stock Option Plan ("1998 Plan") permits the grant of stock or  
options to employees, directors and consultants. A total of 798,000 shares were 
approved by the stockholders for issuance under the 1998 Plan. An additional    
1,000,000 shares were approved by the stockholders in December 1999. Options are
granted at prices which 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
ratably over a three-year period, unless otherwise determined by the Board of   
Directors.                                                                      

On July 31, 1996 and May 29, 1996, the Company issued options to purchase       
200,000 and 100,000 shares, respectively, of the company's common stock for     
consulting services. The exercise price is equal to the fair market value as    
determined by the closing bid price for the Company's common stock on the date  
of grant. The Company has recorded stock compensation expense recognizing the   
estimated fair value of the options of $60,000 and $56,000 for the years ended  
June 30, 2000 and 1999, respectively.                                           

The Company has also issued options to directors and employees as compensation  
for services. These options vest and are exercisable over a variety of periods  
as determined by the Company's Compensation Committee of the Board of Directors.

63

10-K405
64th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 64th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. SHAREHOLDER'S EQUITY (CONTINUED)                                             

Stock Options (Continued)                                                       

A summary of stock option activity for the three years ended June 30, 2001      
follows:                                                                        

                                                                [Download Table]

                                         Number of        Weighted-Average
                                          Options          Exercise Price 
                                        Outstanding          per Share    
                                        -----------       ----------------
                                                                          
Balance at June 30, 1998                 1,975,332             $2.71      
Options granted                            178,500             $2.30      
Options canceled                          (530,332)            $2.41      
Options exercised                           (1,750)            $2.08      
                                        ----------                        
Balance at June 30, 1999                 1,621,750             $2.76      
                                        ==========             =====      
Exercisable at June 30, 1999             1,281,692             $2.75      
                                        ==========             =====      

Options granted                            938,745             $1.34      
Options canceled                          (247,416)            $2.09      
Options exercised                         (380,584)            $1.85      
                                        ----------                        
Balance at June 30, 2000                 1,932,495             $2.33      
                                        ==========             =====      
Exercisable at June 30, 2000             1,513,895             $2.50      
                                        ==========             =====      

Options granted                            997,040             $1.90      
Options canceled                          (515,500)            $3.20      
Options exercised                         (304,750)            $1.82      
                                        ----------                        
Balance at June 30, 2001                 2,109,285             $1.98      
                                        ==========             =====      
Exercisable at June 30, 2001             1,373,407             $2.04      
                                        ==========             =====      

The following table summarizes information about stock options outstanding at   
June 30, 2001:                                                                  

                                                                [Download Table]

                              Weighted-Average  Weighted-                 Weighted- 
                                 Remaining       Average                   Average  
   Range of         Number      Contractual     Exercise      Number      Exercise  
Exercise Prices  Outstanding        Life          Price     Exercisable     Price   
---------------  -----------  ----------------  ----------  -----------   ----------
                                                                                    
$1.13 - $1.50        417,500       1.10 years   $     1.13       413,167  $     1.13
$1.72 - $2.31      1,233,785       2.16 years   $     1.91       521,895  $     1.95
$2.38 - $3.31        458,000       0.57 years   $     2.99       438,345  $     3.01
                   ---------                                   ---------            

Total              2,109,285       1.60 years   $     1.99     1,373,407  $     2.04
                   =========                                   =========            

SFAS 123 requires the use of option valuation models to provide supplemental    
information regarding options granted after June 30, 1995. Pro forma information
regarding net loss and net loss per share shown below was determined as if the  
Company had accounted for its employee stock options under the fair value method
of that statement.                                                              

64

10-K405
65th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 65th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. SHAREHOLDERS' EQUITY (CONTINUED)                                             

Stock Options (Continued)                                                       

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options. The Company's employee stock options have         
characteristics significantly different from those of traded options such as    
vesting restrictions and extremely limited transferability. In addition, the    
assumptions used in option valuation models (see below) are highly subjective,  
particularly the expected stock price volatility of the underlying stock.       
Because changes in these subjective input assumptions can materially affect the 
fair value estimates, in management's opinion, the existing models do not       
provide a reliable single measure of the fair value of its employee stock       
options.                                                                        

For purposes of pro forma disclosures, the estimated fair value of the options  
is amortized over the options' vesting periods. The Company's pro forma         
information is as follows for the years ended June 30:                          

                                                                [Download Table]

                        2001          2000          1999    
                    -----------   -----------   ----------- 
                                                            
Net Loss                                                    
  As reported       $(6,153,000)  $(5,818,000)  $(6,089,000)
  Pro Forma         $(7,006,000)  $(6,542,000)  $(6,594,000)

Net loss per share                                          
  As reported       $     (0.23)  $     (0.30)  $     (0.52)
  Pro Forma         $     (0.25)  $     (0.34)  $     (0.55)

The fair value of each option grant is estimated on the date of grant using the 
Black-Scholes option-pricing model with the following weighted average          
assumptions: Expected volatility of 1.08%; an expected life of 2.2 years; a     
risk-free interest rate of 4.38% and no expected dividends. The weighted average
grant date fair value of options granted during the years ended June 30, 2001,  
2000 and 1999 was $1.13, $0.88 and $1.70, respectively.                         

7. SHAREHOLDER NOTE RECEIVABLE                                                  

In October 2000, the Company entered into a note receivable with the Company's  
Chief Executive Officer and Chairman of the Board for $425,000. The principal   
amount of the note represents the amount due to the Company for the exercise of 
options for 200,000 shares of common stock at an exercise price of $2.13. The   
note is full recourse, bears interest at 6.3% and is due October 31, 2001.      

8. MAJOR CUSTOMERS AND FOREIGN SALES                                            

During the fiscal year ended June 30, 2001, revenues from a significant customer
totaled $1,285,000 or 22% of net revenues. During the fiscal year ended June 30,
2000, revenues from a significant customer totaled $1,089,000 or 26% of net     
revenues. During the fiscal year ended June 30, 1999, revenues from a           
significant customer totaled $525,000 or 10% of net revenues.                   

65

10-K405
66th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 66th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. MAJOR CUSTOMERS AND FOREIGN SALES (CONTINUED)                                

The Company had sales to customers outside the United States as follows for the 
years ended June 30:                                                            

                                                                [Download Table]

                       2001                  2000                  1999   
                    ----------            ----------            ----------
                                                                          
Europe              $  981,000            $  820,000            $1,114,000

Asia                 1,511,000               590,000             1,178,000

Other                  111,000               208,000               183,000
                    ----------            ----------            ----------

                    $2,603,000            $1,618,000            $2,475,000
                    ==========            ==========            ==========

9. INCOME TAXES                                                                 

The reconciliation of federal income tax attributable to operations computed at 
the federal statutory tax rate of 34% to income tax expense is as follows for   
the years ended June 30:                                                        

                                                                [Download Table]

                                           2001          2000          1999     
                                        -----------   -----------   ----------- 
                                                                                
Statutory federal income tax benefit    $(1,996,000)  $(1,971,000)  $(2,074,000)
Net operating loss with no tax benefit    1,996,000     1,971,000     2,074,000 
                                        -----------   -----------   ----------- 

         Total federal income tax                                               
                                        $        --   $        --   $        -- 
                                        ===========   ===========   =========== 

At June 30, 2001, the Company had net operating loss carryforwards for federal  
and state income tax purposes of approximately $37,051,000 and $9,488,000       
respectively, that are available to offset future income. The federal and state 
loss carryforwards expire in various years between 2002 and 2021, and 2002 and  
2011, respectively.                                                             

At June 30, 2001, the Company has research and experimentation credit           
carryforwards of approximately $308,000 for federal tax purposes that expire in 
various years between 2002 and 2021, and $191,000 for state income tax purposes 
that do not have an expiration date.                                            

66

10-K405
67th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 67th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES (CONTINUED)                                                     

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

                                                                [Download Table]

                                              June 30, 2001   June 30, 2000 
                                              -------------   ------------- 
                                                                            
Deferred tax assets:                                                        
             Net operating loss carryfowards   $ 13,161,000    $ 11,268,000 
             Income tax credits                     434,000         413,000 
             Capitalized research costs             403,000         412,000 
             Other                                  573,000         266,000 
                                               ------------    ------------ 

Total deferred taxes                             14,571,000      12,359,000 
Valuation allowance                             (14,571,000)    (12,359,000)
                                               ------------    ------------ 

Net deferred taxes                                                          
                                               $         --    $         -- 
                                               ============    ============ 

The valuation allowance increased by approximately $2.2 million, $2.1 million,  
and $2.6 million in 2001, 2000 and 1999, respectively. Approximately $226,000 of
the valuation allowance is related to the benefits of stock option deductions,  
which will be credited to paid-in capital when realized.                        

Because of the "change of ownership" provisions of the Tax Reform Act of 1986, a
portion of the Company's federal net operating loss and credit carryovers may be
subject to an annual limitation regarding their utilization against taxable     
income in future periods.                                                       

10. 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 Board of          
Directors, the Company may match a portion of the employees' contributions. No  
Company contributions have been made to the Plan as of June 30, 2001.           

11. UNAUDITED QUARTERLY FINANCIAL DATA                                          

Based on the guidance provided by the SEC in SAB No. 101, the Company determined
that it was preferable to recognize revenue on BioArchive systems only when     
training and installation are complete and to recognize revenue on up-front fees
associated with certain licensing agreements on a straight line method over the 
respective term of the agreements (Note 1). The Company's previous revenue      
recognition policy was to recognize revenue for BioArchive systems upon delivery
of equipment and licensing fees when paid and the services were performed. The  
Company recorded a non-cash increase in its net loss of $282,000 (after         
reduction for income taxes of $0), or $0.01 per share, to reflect the cumulative
effect of the accounting change as of the beginning of the fiscal year. The     
Company's revenue recognition policies are disclosed in Note 1.                 

67

10-K405
68th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 68th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. UNAUDITED QUARTERLY FINANCIAL DATA (CONTINUED)                              

The Company has included the following information below to demonstrate the     
effect on the quarters ended September 30, 2000, December 31, 2000 and March 31,
2001 as if the provisions of SAB 101 had been applied as of the beginning of    
fiscal year 2001:                                                               

                                                        [Enlarge/Download Table]

                                             First Quarter Ended                  Second Quarter Ended         
                                              September 30, 2000                    December 31, 2000          
                                     -----------------------------------   ----------------------------------- 
                                          As                                    As                             
                                      Previously                 As         Previously                 As      
                                       Reported               Restated       Reported               Restated   
                                     ------------           ------------   ------------           ------------ 
                                                                                                               
Net revenues                         $    801,000           $    864,000   $  1,729,000           $  1,597,000 
Gross margin                             (125,000)               (51,000)       304,000                375,000 
Net loss before cumulative of                                                                                  
    accounting change under SAB 101    (1,423,000)            (1,349,000)  $ (1,110,000)            (1,039,000)
Cumulative effect of accounting                                                                                
    change under SAB 101                       --               (282,000)            --                     -- 
                                     ------------           ------------   ------------           ------------ 
Net loss                             $ (1,423,000)          $ (1,631,000)  $ (1,110,000)          $ (1,039,000)
                                     ============           ============   ============           ============ 
Per  share data:                                                                                               
Net loss before preferred stock                                                                                
    dividend and cumulative effect                                                                             
    of accounting change under                                                                                 
    EITF 00-27                       $ (1,423,000)          $ (1,631,000)  $ (1,110,000)          $ (1,039,000)
Preferred stock dividend                  (50,000)               (50,000)       (23,000)               (23,000)
Cumulative effect of accounting                                                                                
    change under EITF 00-27                    --                     --       (580,000)              (580,000)
                                     ------------           ------------   ------------           ------------ 
Net loss to common stockholders      $ (1,473,000)          $ (1,681,000)  $ (1,713,000)          $ (1,642,000)
                                     ============           ============   ============           ============ 
Basic and diluted net loss per                                                                                 
    share before cumulative effect                                                                             
    of accounting changes            $      (0.06)          $      (0.06)  $      (0.04)          $      (0.04)
Cumulative effect of accounting                                                                                
    change under SAB 101                       --                  (0.01)            --                     -- 
Cumulative effect of accounting                                                                                
    change under EITF 00-27                    --                     --          (0.02)                 (0.02)
                                     ------------           ------------   ------------           ------------ 
Basic and diluted net loss per                                                                                 
    common share                     $      (0.06)          $      (0.07)  $      (0.06)          $      (0.06)
                                     ============           ============   ============           ============ 
Shares used in computing per                                                                                   
    share data                         25,448,760             25,448,760     26,588,866             26,588,866 
                                     ============           ============   ============           ============ 

68

10-K405
69th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 69th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. UNAUDITED QUARTERLY FINANCIAL DATA (CONTINUED)                              

                                                        [Enlarge/Download Table]

                                                Third Quarter Ended                                 
                                                   March 31, 2001                                   
                                        -------------------------------------                       
                                            As                                                      
                                        Previously                    As        Fourth Quarter Ended
                                         Reported                  Restated         June 30, 2001   
                                        ------------             ------------   --------------------
                                                                                                    
Net revenues                            $  2,033,000             $  1,703,000        $  1,628,000   
Gross Margin                                 327,000                  256,000             200,000   
Net loss before cumulative effect                                                                   
    of accounting change under SAB 101    (1,278,000)              (1,349,000)         (2,134,000)  
Cumulative effect of accounting                                                                     
    change under SAB 101                          --                       --                  --   
                                        ------------             ------------        ------------   
Net loss                                $ (1,278,000)            $ (1,349,000)       $ (2,134,000)  
                                        ============             ============        ============   
Per share data:                                                                                     
Net loss before preferred stock                                                                     
    dividend and cumulative effect                                                                  
    of accounting change under                                                                      
    EITF 00-27                          $ (1,278,000)            $ (1,349,000)       $ (2,134,000)  
Preferred stock dividend                     (19,000)                 (19,000)             (8,000)  
Cumulative effect of accounting                                                                     
    change under EIFT 00-27                       --                       --                  --   
                                        ------------             ------------        ------------   
Net loss to common stockholders         $ (1,297,000)            $ (1,368,000)       $ (2,142,000)  
                                        ============             ============        ============   
Basic and diluted net loss per                                                                      
    share before cumulative effect                                                                  
    of accounting changes               $      (0.05)            $      (0.05)       $      (0.07)  
Cumulative effect of accounting                                                                     
    change under SAB 101                          --                       --                  --   
Cumulative effect of accounting                                                                     
    change under EITF 00-27                       --                       --                  --   
                                        ------------             ------------        ------------   
Basic and diluted net loss per                                                                      
    common share                        $      (0.05)            $      (0.05)       $      (0.07)  
                                        ============             ============        ============   
Shares used in computing per                                                                        
    share data                            27,128,028               27,128,028          31,505,471   
                                        ============             ============        ============   

69

10-K405
70th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 70th

 THERMOGENESIS CORP.
 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. UNAUDITED QUARTERLY FINANCIAL DATA (CONTINUED)                              

                                                        [Enlarge/Download Table]

                             First Quarter           Second Quarter         Third Quarter       Fourth Quarter  
                                 Ended                   Ended                 Ended                Ended       
                           September 30, 1999       December 31, 1999       March 31, 2000      June 30, 2000   
                           -------------------   ----------------------  ------------------  -------------------
                                                                                                                
Net revenues                          $999,000              $1,313,000            $945,000             $954,000 
Gross Margin                          (252,000)                 47,000              42,000              128,000 
Net loss                           ($1,752,000)            ($1,380,000)        ($1,179,000)         ($1,507,000)
                           ====================  ======================  ==================  ===================
Per share data:                                                                                                 
Net loss                           ($1,752,000)            ($1,380,000)        ($1,179,000)         ($1,507,000)
Preferred stock discounts                                                                                       
  and dividends                             --                (313,000)           (245,000)            (347,000)
                           --------------------  ----------------------  ------------------  -------------------
Net loss to common                                                                                              
  stockholders                     ($1,752,000)            ($1,693,000)        ($1,424,000)         ($1,854,000)
                           ====================  ======================  ==================  ===================
Basic and diluted net                                                                                           
  loss per common share                 ($0.08)                 ($0.08)             ($0.06)              ($0.07)
                           ====================  ======================  ==================  ===================
Shares used in computing                                                                                        
  per share data                     20,804,942              21,036,929          22,522,703           24,791,075
                           ====================  ======================  ==================  ===================

70

10-K405
71st Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 71st

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND        
FINANCIAL DISCLOSURE                                          

None                                                                            

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    

                                                                [Download Table]

      NAME          AGE  SINCE        POSITION WITH THE COMPANY    
      ----          ---  -----        -------------------------    
                                                                   
Philip H. Coelho    57    1986  Chief Executive Office and Chairman
                                of the Board                       

James Godsey, Ph.D. 50    1997  President and Chief Operating      
                                Officer, Director                  

Patrick McEnany     54    1997  Director                           

Hubert Huckel, M.D. 70    1997  Director                           

David Howell        56    1999  Director                           

Spencer Browne      50    2000  Director                           

Sam Acosta          58    1997  V.P. Manufacturing Operations      

Renee Ruecker       37    1998  V.P. Finance/Accounting            

Dan Segal           46    2000  V.P. Sales/Marketing               

KEY EMPLOYEE                                                       

Michelle Badal      41    2000  Director of Regulatory Affairs and 
                                Quality System                     

(a) CORPORATE DIRECTORS                                                         

The following is the business background for the Directors of the Company.      

PHILIP H. COELHO was named President of the Company on September 1989, and      
currently serves as Chief Executive Officer and Chairman of the Board. From     
October 1986 to September 1989, Mr. Coelho was Vice President and Director of   
Research, Development and Manufacturing. Mr. Coelho was President of Castleton, 
Inc. from October 1983 until October 1986. Castleton developed and previously   
licensed the Insta Cool Technology to the Company. Mr. Coelho has a Bachelor of 
Science degree in Mechanical Engineering from the University of California,     
Davis, and is the inventor or co-inventor on the majority of the Company's      
patents.                                                                        

71

10-K405
72nd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 72nd

JAMES H. GODSEY, PH.D. joined the Company as its President and Chief Operating  
Officer in November 1997 and was appointed to the Board in 1998. Previously, Dr.
Godsey was with Dade MicroScan, a division of DADE BEHRING INC., where he was   
Vice President of Planning and Technology Integration, responsible for          
technology assessment activities, including the evaluation and acquisition of   
other medical device companies and medical device products. Dr. Godsey also     
served as Product Line General Manager of Dade MicroScan Inc. and Bartels       
Diagnostics Inc. from August 1993 to June 1995, overseeing annual product sales 
of $150 million and served as Vice President of Research & Development from     
February 1987 to August 1993. Dr. Godsey received his Doctorate in Bacterial    
Physiology from St. John's University in New York, a Masters of Science in      
Bacterial Physiology from the University of Missouri, and a Bachelor of Science 
from Southeast Missouri State University.                                       

PATRICK MCENANY rejoined the Board of Directors in 1997. From 1991 to April of  
1997 Mr. McEnany was Chairman and President of Royce Laboratories. In April     
1997, Royce Laboratories merged with and became a subsidiary of Watson          
Pharmaceuticals, Inc. From 1973 to 1985, Mr. McEnany was the President, Chief   
Executive Officer and Chief Financial Officer of Zenex Synthetic Lubricants,    
Inc. ("Zenex"), a company engaged in the distribution of synthetic lubricants.  
In February 1985, Zenex merged with Home Intensive Care, Inc. ("HIC"), a        
provider of home infusion therapy services and Mr. McEnany continued to serve as
a director and chairman of the audit committee until HIC was acquired by WR     
Grace & Co. in 1993. From December 1984 through the present, Mr. McEnany also   
served as the President of Equisource Capital, Inc., a consulting company in the
areas of corporate finance and investment banking. He also served as Vice       
Chairman and director of the National Association of Pharmaceutical             
Manufacturers. Beginning in June 2000, Mr. McEnany also serves on the Board of  
Directors of Medwaste, Inc., (Nasdaq OTCBB), holding company engaged in the     
management of medical waste management services, and serves on the Board of     
Directors of the Jackson Memorial Hospital Foundation, located in Miami,        
Florida. Mr. McEnany was formerly a director of the Company from 1985 through   
1991.                                                                           

HUBERT E. HUCKEL, M.D. joined the Board of Directors in 1997 and also currently 
serves as a member of the Board of Directors of Titan Pharmaceuticals, Inc.,    
Gynetics Inc. & The Work Group. In 1964, Dr. Huckel joined Hoechst A.G., a      
Frankfurt, Germany based chemical-pharmaceutical company ranking in the top 5 of
such companies world wide. Dr. Huckel moved to Hoechst U.S. subsidiaries in 1966
where he held various operations and executive management positions, advancing  
to Chairman of Hoechst Roussel Pharmaceutical, Inc., president of the Life      
Sciences Group, and member of the Executive Committee at Hoechst Celanese Corp.,
a Fortune 100 company. Dr. Huckel earned his medical degree from the University 
of Vienna, Austria, in 1956.                                                    

DAVID HOWELL joined the Board of Directors in 1999 and is currently a General   
Partner of Howell Resource Partners, a privately owned Connecticut Partnership  
which invests in privately owned companies and real estate projects. Mr. Howell 
has previously served as CEO or COO of several privately owned companies,       
including Controlonics Corporation in Westford, Massachusetts (1981 through     
1985), and The Straus Adler Company in New Haven, Connecticut (President        
1988-1991; Chairman 1991-1996). Mr. Howell also previously served as a member of
the Board of Directors of Callaway Golf Company in Carlsbad California prior to 
its public offering in 1992.                                                    

SPENCER BROWNE is a principle of Strategic Asset Management, LLC, a             
privately-held investment and management consulting firm that he co-founded in  
1996. Mr. Browne has served as a Director of Annaly Mortgage Management, a New  
York Stock Exchange traded company, since 1997. Mr. Browne has held various     
executive and management positions with several publicly traded companies       
engaged in businesses related to the residential and commercial mortgage loan   
industry. From August 1993 until September 1996, Mr. Browne served as President,
Chief Executive Officer and a director of Asset Investors Corporation (AIC), a  
New York Stock Exchange traded company he co-founded in 1986. He                

72

10-K405
73rd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 73rd

also served as President, Chief Executive Officer and a director of Commercial  
Assets, Inc., an American Stock Exchange traded company affiliated with AIC,    
from its formation in October 1993 until September 1996. In addition, from June 
1990 until March 1996, Mr. Browne served as President and a director of M.D.C.  
Holdings, Inc., a New York Stock Exchange traded company and the parent company 
of a major homebuilder in Colorado.                                             

(b) CORPORATE OFFICERS                                                          

The following table sets fourth certain information with respect to executive   
officers of the Company. There is no family relationship between any of the     
officers and directors.                                                         

SAM ACOSTA joined the Company in December 1997 as V.P. Manufacturing Operations.
Prior to joining the Company, Mr. Acosta was V.P. of Manufacturing at Dade      
International, MicroScan, formerly Baxter Diagnostics. Mr. Acosta was           
responsible for manufacturing engineering, materials management and             
distributions and quality control. Mr. Acosta received his Bachelor of Arts     
Degree in Business Administration from California State University Sacramento.  

RENEE RUECKER joined the Company in August 1997 as Director of Finance. Ms.     
Ruecker assumed the position of V.P. Finance/Accounting in August 1998. Prior to
joining the Company, Ms. Ruecker was a manager in the Audit and Business        
Advisory Department at Price Waterhouse LLP. Ms. Ruecker received her Bachelor  
of Science Degree in Business Administration from the California Polytechnic    
State University in San Luis Obispo, and she is a certified public accountant.  

DAN SEGAL has been with the Company since 1997 and has held various positions   
including Director of Sales & Marketing Blood Products and Director of Corporate
Sales. Mr. Segal assumed the position of V.P. Sales/Marketing in August 2000.   
Mr. Segal's experience prior to joining the Company includes over 13 years in   
the Specialty Surgical Device & Implant market and 2 years in the blood         
processing products market, where he held various positions in Sales &          
Marketing. Mr. Segal graduated from Sonoma State College with a BA in Business  
Management.                                                                     

(c) KEY EMPLOYEE                                                                

MICHELLE BADAL joined the Company in May 2000 as Director of Regulatory Affairs 
and Quality System. Prior to joining the Company, Ms. Badal was the Manager of  
Quality Assurance, Compliance at ALZA Corporation. Ms. Badal's experience       
includes over 17 years in regulatory and quality working in medical devices and 
pharmaceutical industries. She received her Bachelor of Science in Biological   
Sciences at California State University, Sacramento.                            

(d) COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934           

Based solely upon a review of Forms 3, 4 and 5 delivered to the Company as filed
with the Securities and Exchange Commission ("Commission"), directors and       
officers of the Company timely filed all required reports pursuant to Section   
16(a) of the Securities Exchange Act of 1934, except Philip Coelho who was one  
day late on a Form 4 and two days late on his Form 5, Patrick McEnany was one   
day late on his Form 5 and Spencer Browne was one day late filing his Form 3.   
The late filings were primarily due to traveling and holidays.                  

73

10-K405
74th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 74th

ITEM 11. EXECUTIVE COMPENSATION                                                 

The following table sets forth the aggregate cash compensation paid in the past 
three years for all services of Executive Officers of the Company.              

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                       ANNUAL COMPENSATION                                  LONG-TERM COMPENSATION     
                     ------------------------------------------------------------      ------------------------------- 
                                                                          OTHER                            SECURITIES  
NAME AND PRINCIPAL                                                        ANNUAL        RESTRICTED         UNDERLYING  
POSITION             YEAR           SALARY            BONUS                COMP.       STOCK AWARD(S)     OPTIONS/SARs 
------------------   ----          --------          -------              -------      --------------     ------------ 
                                                                                                                       
Philip H. Coelho,    1999          $160,000          $65,000(1)           $15,751(2)         $ 0                -0-    
Chairman and Chief   2000          $180,000          $     0              $ 6,908(3)         $ 0            150,000(4) 
Executive Officer    2001          $181,000          $     0              $30,000(5)         $ 0            350,000(6) 

James Godsey,        1999          $160,000          $55,000              $10,920(7)         $ 0                -0-    
President and Chief  2000          $160,000          $     0              $ 9,689(8)         $ 0            184,000(9) 
Operating Officer    2001          $164,000          $     0              $ 6,000(10)        $ 0            144,000(11)

Sam Acosta, V.P      1999          $135,000          $45,000              $ 3,632(12)        $ 0                -0-    
Manufacturing        2000          $135,000          $     0              $ 2,594(13)        $ 0            121,445(14)
                     2001          $136,000          $     0              $ 9,000(15)        $ 0             95,040(16)

Renee Ruecker, V.P   1999          $ 94,000          $40,000(17)          $     0            $ 0                -0-    
Finance/Accounting   2000          $ 95,000          $     0              $ 3,000(18)        $ 0            118,800(19)
                     2001          $109,000          $     0              $ 1,000(20)        $ 0                -0-    

Dan Segal, V.P       1999          $ 92,000          $     0              $ 6,000(21)        $ 0              1,000(22)
Sales/Marketing      2000          $ 93,000          $17,000              $ 6,000(23)        $ 0              5,000(24)
                     2001          $113,000          $     0              $ 4,000(25)        $ 0             50,000(26)

(1)     Represents an award of $54,738 shares of common stock.                  

(2)     Represents payment of $9,600 annual automobile allowance and $6,151 in  
accrued vacation pay.                                           

(3)     Represents payment of $6,908 in accrued vacation pay.                   

(4)     Includes 150,000 stock options granted on July 29, 1999, at $1.125 per  
share.                                                          

(5)     Represents payment of $7,000 in accrued vacation, $3,000 for a term life
 insurance policy for the benefit of Mr. Coelho and $20,000 as the
  difference between the price paid and the closing market value for
28,705 common shares in the April 2001 private financing.       

(6)     Includes 350,000 stock options granted on December 14, 2000 at $1.875.  

(7)     Represents payments of $6,000 annual automobile allowance and $4,920 in 
accrued vacation pay.                                           

(8)     Represents payment of $6,000 annual automobile allowance and $3,689 in  
accrued vacation pay.                                           

(9)     Includes 100,000 stock options granted on July 29, 1999, at $1.125 per  
     share and 84,000 stock options granted on May 11, 2000, at $1.969 per
share.                                                          

74

10-K405
75th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 75th

(10)    Represents payment of accrued vacation.                                 

(11)    Includes 144,000 stock options granted on December 14, 2000 at $1.875.  

(12)    Represents payments of $3,632 in accrued vacation pay.                  

(13)    Represents $2,594 in accrued vacation pay.                              

(14)    Includes 66,000 stock options granted on July 29, 1999, at $1.125 per   
  share and 55,445 stock options granted on May 11, 2000, at $1.1969

(15)    Represents payment of $3,000 in accrued vacation and $6,000 as the      
        difference between the price paid and the closing market value for 8,610
common shares in the April 2001 private financing.              

(16)    Includes 95,040 stock options granted on December 14, 2000 at $1.875.   

(17)    Includes $5,000 cash bonus and 29,474 shares of common stock.           

(18)    Represents payment of accrued vacation.                                 

(19)    Includes 60,000 stock options granted on July 29, 1999 at $1.125 and    
58,800 stock options granted on May 11, 2000 at $1.969.         

(20)    Represents payment of accrued vacation.                                 

(21)    Represents annual automobile allowance.                                 

(22)    Includes 1,000 stock options granted on January 13, 1999 at $2.1875.    

(23)    Represents annual automobile allowance.                                 

(24)    Includes 5,000 stock options granted on July 29, 1999 at $1.125.        

(25)    Represents accrued vacation pay.                                        

(26)    Includes 50,000 stock options granted on July 27, 2000 at $1.875.       

EMPLOYMENT AGREEMENTS                                                           

In June 1999, the Company and Mr. Coelho entered into an employment agreement   
whereby Mr. Coelho agreed to serve as Chief Executive Officer of the Company and
receive compensation equal to $179,600 per year, subject to annual increases as 
may be determined by the Board of Directors. Mr. Coelho is eligible to receive  
bonuses based on his performance and the attainment of objectives established by
the Company. Bonuses shall not exceed thirty-five percent of his base salary in 
effect for any given year, and shall be subject to Compensation Committee       
oversight for meeting stated objectives. The employment agreement may be        
terminated by Mr. Coelho or by the Company with or without cause. In the event  
Mr. Coelho is terminated by the Company without cause, Mr. Coelho will be       
entitled to receive severance pay equal to the greater of six months of his     
annual salary or the remaining term of the agreement. In addition, the          
employment agreement provides that in the event Mr. Coelho is terminated other  
than "for cause" upon a change of control, Mr. Coelho shall be paid an amount   
equal to three times his annual salary. The phrase "change of control" is       
defined to include (i) the issuance of 33% or more of the outstanding securities
to any individual, firm, partnership, or entity, (ii) the issuance of 33% or    
more of the outstanding securities in connection with a merger, or (iii) the    
acquisition of the Company in a merger or other business combination. The       
employment agreement expires by its terms in June 2002.                         

In November 2000, the Company entered into an employment agreement with Dr.     
Godsey whereby Dr. Godsey agreed to serve as President and Chief Operating      
Officer and receive compensation equal to $166,000, subject to annual increases 
as may be determined by the Board of Directors. Dr. Godsey is eligible to       
receive bonuses based on his performance and the attainment of objectives       
established by the Company. Bonuses shall not exceed thirty-five percent of his 
base salary in effect for any given year, and shall be subject to Compensation  
Committee oversight for meeting stated objectives. The employment agreement may 
be terminated prior to the expiration of the agreement, upon the mutual         
agreement of the Company and Dr. Godsey. In addition, the employment agreement  
provides that in the event Dr. Godsey is terminated other than "for cause" upon 
a change of control, Dr. Godsey will be paid an amount equal to three times his 
annual salary. The phrase "change of control" is defined to include (i) the     
issuance of 33% or more of the outstanding securities to any individual, firm,  
partnership, or entity, (ii) the issuance of 33% or more of the outstanding     
securities in connection with a merger, or (iii) the acquisition of the Company 
in a merger or other business combination. The employment agreement expires by  
its terms in November 2003.                                                     

75

10-K405
76th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 76th

In December 2000, the Company entered into an employment agreement with Mr.     
Acosta whereby Mr. Acosta agreed to serve as V.P. of Manufacturing Operations   
and receive compensation equal to $135,000 subject to annual increases as may be
determined by the Board of Directors. Mr. Acosta is eligible to receive bonuses 
based on his performance and the attainment of objectives established by the    
Company. Bonuses shall not exceed thirty-five percent of his base salary in     
effect for any given year and shall be subject to Compensation Committee        
oversight for meeting stated objectives. The employment agreement may be        
terminated prior to the expiration of the agreement, upon the mutual agreement  
of the Company and Mr. Acosta. In addition, the employment agreement provides   
that in the event Mr. Acosta is terminated other than "for cause" upon a change 
of control, Mr. Acosta will be paid an amount equal to three times his annual   
salary. The phrase "change of control" is defined to include (i) the issuance of
33% or more of the outstanding securities to any individual, firm, partnership, 
or entity, (ii) the issuance of 33% or more of the outstanding securities in    
connection with a merger, or (iii) the acquisition of the Company in a merger or
other business combination. The employment agreement expires by its terms in    
December 2003.                                                                  

In August 1999, the Company entered into an employment agreement with Ms. Renee 
Ruecker whereby Ms. Ruecker agreed to serve as Vice President of                
Finance/Accounting and receive compensation equal to $95,000 subject to annual  
increases as may be determined by the Board of Directors. In April 2000, that   
contract was extended for an additional two-year term and the base salary was   
increased to $110,000. Ms. Ruecker is eligible to receive bonuses based on her  
performance and the attainment of objectives established by the Company. Ms.    
Ruecker's bonuses shall not exceed thirty-five percent of her base salary in    
effect for any given year and shall be subject to Compensation Committee        
oversight for meeting stated objectives. The employment agreement may be        
terminated prior to the expiration of the agreement, upon the mutual agreement  
of the Company and Ms. Ruecker. In addition, the employment agreement provides  
that in the event Ms. Ruecker is terminated other than "for cause" upon a change
of control, Ms. Ruecker will be paid an amount equal to three times her annual  
salary. The phrase "change of control" is defined to include (i) the issuance of
33% or more of the outstanding securities to any individual, firm, partnership, 
or entity, (ii) the issuance of 33% or more of the outstanding securities in    
connection with a merger, or (iii) the acquisition of the Company in a merger or
other business combination. The employment agreement, as extended, expires by   
its terms in February 2003.                                                     

In August 2000, the Company entered into an employment agreement with Mr. Dan   
Segal whereby Mr. Segal agreed to serve as Vice President of Sales/Marketing and
receive compensation equal to $116,000 subject to annual increases as may be    
determined by the Board of Directors. Mr. Segal is eligible to receive bonuses  
based on his performance and the attainment of objectives established by the    
Company. Mr. Segal's bonuses shall not exceed thirty-five percent of his base   
salary in effect for any given year and shall be subject to Compensation        
Committee oversight for meeting stated objectives. The employment agreement may 
be terminated prior to the expiration of the agreement, upon the mutual         
agreement of the Company and Mr. Segal. In addition, the employment agreement   
provides that in the event Mr. Segal is terminated other than "for cause" upon a
change of control, Mr. Segal will be paid an amount equal to three times his    
annual salary. The phrase "change of control" is defined to include (i) the     
issuance of 33% or more of the outstanding securities to any individual, firm,  
partnership, or entity, (ii) the issuance of 33% or more of the outstanding     
securities in connection with a merger, or (iii) the acquisition of the Company 
in a merger or other business combination. The employment agreement, as         
extended, expires by its terms in August 2002.                                  

76

10-K405
77th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 77th

OPTIONS GRANTED IN LAST FISCAL YEAR                                             

 INDIVIDUAL GRANTS

                                                        [Enlarge/Download Table]

                           Percent of                                                      
                              Total                             Potential Realized Value   
               Number of     Options                             at Assumed Annual Rates   
               Securities  Granted to                                of Stock Price        
               Underlying   Employees   Exercise               Appreciation for Option Term
                Options     in Fiscal  Base Price  Expiration  ----------------------------
Name            Granted       Year       ($/sh)       Date        5%(1)            10%(1)  
               ----------  ----------  ----------  ----------  ---------          ---------
                                                                                           
Sam Acosta        95,040        10%     $  1.875    12/14/03    $ 28,089          $ 58,984 

Philip Coelho    350,000        35%     $  1.875    12/14/03    $103,441          $217,219 

Jim Godsey       144,000        14%     $  1.875    12/14/03    $ 42,559          $ 89,370 

Dan Segal         50,000         5%     $  1.875     7/27/03    $ 14,777          $ 31,031 

FOOTNOTES TO TABLE                                                              

(1)     The 5% and 10% assumed rates of appreciation are mandated by the rules  
  of the Securities and Exchange Commission and do not represent the
  Company's estimate or projection of future common stock prices, or
actual performance.                                             

 TEN-YEAR OPTIONS/SAR REPRICINGS

There were no repricing of options for the fiscal year ended June 30, 2001.     

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION      
VALUES                                                                          

The following table sets forth executive officer options exercised and option   
values for fiscal year ended June 30, 2001 for all executive officers at the end
of the year.                                                                    

77

10-K405
78th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 78th

                                                        [Enlarge/Download Table]

                                                                         Value of      
                                                                       Unexercised     
                                                Number of Options  In-the-Money Options
                                                at June 30, 2001     at June 30, 2001  
               Shares Acquired                   (Exercisable/         (Exercisable/   
    Name        Or Exercised    Value Realized   Unexercisable)      Unexercisable)(1) 
    ----       ---------------  --------------  -----------------  ------------------- 
                                                                                       
Philip Coelho      200,000         $     0      266,667 / 233,334   $172,500 / $52,500 

James Godsey        50,000         $63,050       132,000 / 96,000    $21,804 / $21,600 

Sam Acosta           2,500         $ 3,488       150,625 / 63,360    $76,304 / $14,256 

Renee Ruecker        4,000         $ 5,500        93,400 / 31,400     $58,451 / $3,851 

Dan Segal                0         $     0        56,000 / 50,000     $4,875 / $11,250 

(1) Based on June 30, 2001 year end closing bid price of $2.10.                 

DIRECTORS COMPENSATION                                                          

All directors who are not employees of the Company are paid a meeting fee of    
$1,000 per Board meeting attended in person ($500 for attendance by telephonic  
conference). In addition, members of the Board's Compensation Committee receive 
$500 per meeting attended in person ($250 for attendance by telephonic          
conference) and options to purchase 4,000 shares of common stock upon completion
of each full year of service on such Committee pursuant to the Amended 1994     
Stock Option Plan. Members of the Audit Committee receive $500 per meeting in   
person ($250 for attendance by telephonic conference).                          

FIVE YEAR COMMON STOCK PERFORMANCE GRAPH                                        

The following graph compares the performance of the Company's common stock      
during the period June 30, 1994 to June 30, 2001, with Nasdaq Stock Market Index
and the Company's peer group of Nasdaq stocks.                                  

The graph depicts the results of investing $100 in the Company's common stock,  
and the identified index at closing prices on June 30, 1994.                    

(Graph Omitted) 

There can be no assurance that the Company's stock performance will continue    
into the future with the same or similar trends depicted in the graph above. The
market price of the Company's common stock in recent years has fluctuated       
significantly and it is likely that the price of the stock will fluctuate in the
future. The Company does not endorse any predictions of future stock            
performance. Furthermore, the stock performance chart is not considered by the  
Company to be (i) soliciting material, (ii) deemed filed with the Securities and
Exchange Commission, and (iii) to be incorporated by reference in any filings by
the Company under the Securities Act of 1933, or the Securities Exchange Act of 
1934.                                                                           

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION                  

The Compensation Committee renewed the employment agreements of Dr. Godsey and  
Mr. Acosta during fiscal year 2001, and entered into a new contract with Mr.    
Segal.                                                                          

78

10-K405
79th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 79th

Compensation Philosophy                                                         

The Committee continues to emphasize the important link between the Company's   
performance, which ultimately benefits all shareholders, and the compensation of
its executives. Therefore, the primary goal of the Company's executive          
compensation policy is to closely align the interests of the shareholders with  
the interests of the executive officers. In order to achieve this goal, the     
Company attempts to (i) offer compensation opportunities that attract and retain
executives whose abilities and skills are critical to the long-term success of  
the Company and reward them for their efforts in ensuring the success of the    
Company and (ii) encourage executives to manage from the perspective of owners  
with an equity stake in the Company. The Company currently uses three integrated
components - Base Salary, Incentive Compensation and Stock Options - to achieve 
these goals. More recently, the Committee has begun to focus more on principles 
of pay for performance and stock ownership, through option grants, to provide   
adequate incentive for completing tasks and operational hurdles the Company is  
facing. The following outlines the overall compensation components.             

Base Salary                                                                     

The Base Salary component of total compensation is designed to compensate       
executives competitively within the industry and the marketplace. Base Salaries 
of the executive officers are established by the Committee based upon Committee 
compensation data, the executive's job responsibilities, level of experience,   
individual performance and contribution to the business. In making base salary  
decisions, the Committee exercised its discretion and judgment based upon       
regional and personal knowledge of industry practice and did not apply any      
specific formula to determine the weight of any one factor.                     

Incentive Bonuses                                                               

The Incentive Bonus component of executive compensation is designed to reflect  
the Committee's belief that a portion of the compensation of each executive     
officer should be contingent upon the performance of the Company, as well as the
individual contribution of each executive officer. The Incentive Bonus is       
intended to motivate and reward executive officers by allowing the executive    
officers to directly benefit from the success of the Company. In fiscal year    
1999, bonuses were paid through cash or stock to each of the named executive    
officers. During the past fiscal year, no bonuses were paid. The Committee has  
directed that a formal written incentive plan that outlined key milestones      
critical to the Company's success be developed and implemented, and that the    
plan be weighted heavily towards achieving profitability before any bonus       
compensation would be earned. The Committee further expressed its intention that
no cash bonuses would be paid until profitability is achieved and that all      
additional incentive compensation would be in the form of restricted stock      
grants or options. All executive Employment contracts provide generally for a   
discretionary bonus of up to 35% of the executive's base salary which will be   
determined by the Committee based on individual performance criteria and Company
performance during the year.                                                    

Long Term Incentives                                                            

The Committee provides the Company's executive officers with long-term incentive
compensation in the form of stock option grants under the Company's Amended 1994
Stock Option Plan and the 1998 Employee Equity Incentive Plan. The Committee    
believes that stock options provide the Company's executive officers with the   
opportunity to purchase and maintain an equity interest in the Company and to   
share in the appreciation of the value of the Company's Common Stock. The       
Committee believes that stock options directly motivate an executive to maximize
long-term shareholder value. All options granted to executive officers to date  
have been granted at the fair market value of the Company's Common Stock on the 
date of grant, except for the repricing of options granted to Mr. Coelho on May 
29, 1996 which were repriced on April 2, 1997. The Committee considers each     
option subjectively,                                                            

79

10-K405
80th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 80th

considering factors such as the individual performance of the executive officer 
and the anticipated contribution of the executive officer to the attainment of  
the Company's long-term strategic performance goals. The number of Stock Options
granted in prior years are also taken into consideration.                       

In conclusion, the Committee believes that the Company's current compensation   
levels are consistent with Company goals.                                       

 Respectfully Submitted,
                    THERMOGENESIS CORP. COMPENSATION COMMITTEE

David Howell, Chairman
Spencer Browne        
Hubert Huckel, M.D.   
Patrick McEnany       

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

PRINCIPAL STOCKHOLDERS                                                          

The following table sets forth certain information as of June 30, 2001, with    
respect to the beneficial ownership of the Company's common stock for each      
person known to the Company to own beneficially 5% or more of the outstanding   
shares of the Company's common stock. As of September 17, 2001, there were      
31,806,436 shares of common stock outstanding. Unless otherwise listed, the     
address for each stockholder is 3146 Gold Camp Dr., Rancho Cordova, California  
95670.                                                                          

                                                                [Download Table]

Name of Shareholder                    Number of Shares(1)      Percent
-------------------                    -------------------      -------
                                                                       
Atlas II, LP                              2,427,910 (2)          7.5%  
  630 Fifth Ave., 20th Floor, New                                      
  York, NY. 10100                                                      

Philip H. Coelho                           681,375(3)            2.1%  

James Godsey                               132,000(4)             *%   

Patrick McEnany                            159,158(5)             *%   

Hubert Huckel, M.D.                        115,000(6)             *%   

David Howell                               421,846(7)             *%   

Spencer Browne                             452,432(8)            1.4%  

Officers & Directors as a group (9)         2,300,642            7.0%  

*       Less than 1%.                                                           

(1)     The ownership includes only options exercisable on or before September  
     17, 2001. The total outstanding includes shares assumed exercised for
percentage ownership computation.                               

(2)     Includes 583,485 shares issuable upon the exercise of warrants.         

(3)     Includes 266,667 shares issuable upon the exercise of options and 21,003
shares issuable upon the exercise of warrants.                  

80

10-K405
81st Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 81st

(4)     Includes 132,000 shares issuable upon the exercise of options.          

(5)     Includes 85,000 shares issuable upon the exercise of options and 10,000 
       shares issuable upon exercise of warrants. Also includes 829 shares and
     20,000 shares issuable upon the exercise of warrants owned by McEnany
     Holding, Inc. Mr. McEnany is the sole shareholder of McEnany Holding,
Inc.                                                            

(6)     Includes 85,000 shares issuable upon the exercise of options and 10,000 
      shares issuable upon exercise of warrants. Also includes 20,000 shares
        issuable upon the exercise of warrants owned by HEH Investment Partners,
     LP. Dr. Huckel is the general partner of HEH Investment Partners, LP.

(7)     Includes 65,000 shares issuable upon the exercise of options and 19,000 
       shares issuable upon exercise of warrants. Also includes 208,205 shares
     and 59,641 shares issuable upon the exercise of warrants owned by New
England Venture Partners, LP. Mr. Howell is the President and a 
       shareholder of the General Partner of New England Venture Partners, LP.
       Mr. Howell disclaims ownership of 89.8% of New England Venture Partners
LP.                                                             

(8)     Includes 65,000 shares issuable upon the exercise of options and 15,555 
shares issuable upon exercise of warrants.                      

(9)     Includes 144,125 shares issuable upon the exercise of options and 4,722 
  shares issuable upon the exercise of warrants owned by Sam Acosta.
      Includes 93,400 shares issuable upon the exercise of options and 4,000
     shares issuable upon the exercise of warrants owned by Renee Ruecker.
     Includes 56,000 shares issuable upon the exercise of options owned by
Dan Segal.                                                      

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

In October 2000, the Company entered into a note receivable with the Company's  
Chief Executive Officer and Chairman of the Board for $425,000. The principal   
amount of the note represents the amount due to the Company for the exercise of 
options for 200,000 shares of common stock at an exercise price of $2.13. The   
note is full recourse, bears interest at 6.3%, and is due October 31, 2001.     

The Company completed a private financing on April 27, 2001, in which it        
received $7,099,000 before expenses. The proceeds from the offering were        
received from the sale of 3,944,047 shares of common stock at $1.80 per share   
and the issuance of five year warrants to the purchasers representing the right 
to acquire an additional 788,809 shares of common stock in the aggregate, at an 
exercise price of $2.88 per share. Of the $7,099,000 financed, $420,000 was     
received from members of the Company's board of directors, officers or their    
affiliates. The related parties participating in the financing were David       
Howell, New England Venture Partners, LP, Spencer Browne, Philip Coelho and Sam 
Acosta.                                                                         

In December 2000, the Company completed a debt financing for a total of         
$2,075,000. The debt matured on September 19, 2001 or on the fifth day following
an equity or debt financing of at least $1,000,000, which ever occurred first.  
The interest rate is 10% per annum. Of the $2,075,000 financed, $560,000 was    
received from members of the Company's board of directors, officers or their    
affiliates. The holders of the debt received warrants representing the right to 
acquire 415,000 shares of common stock for an exercise price of $1.625. The     
related parties participating in the debt financing were David Howell, New      
England Venture Partners, LP, Spencer Browne, Philip Coelho, Sam Acosta, HEH    
Investment Partners, LP, McEnany Holding Inc. and Renee Ruecker.                

81

10-K405
82nd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 82nd

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K        

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

                                                        [Enlarge/Download Table]

                                                                                Page Number
                                                                                -----------
                                                                                           
(a) (1) Financial Statements                                                               

        Report of Ernst & Young, LLP, Independent Auditors...........................48    

        Balance Sheets at June 30, 2001 and 2000.....................................49    

        Statements of Operations for the years ended                                       
           June 30, 2001, 2000 and 1999..............................................51    

        Statements of Shareholders' Equity for the years                                   
           ended June 30, 2001, 2000 and 1999........................................52    

        Statements of Cash Flows for the years ended                                       
           June 30, 2001, 2000 and 1999..............................................53    

        Notes to Financial Statements................................................54    

(a) (2) Financial Statement Schedules                                                      

        Schedule II, Valuation and Qualifying Accounts...............................87    

(b)     Reports on Form 8-K                                                     

None                                                            

(c)     Exhibits                                                                

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

82

10-K405
83rd Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 83rd

                                                        [Enlarge/Download Table]

Exhibit  Description                                                                           
-------  -----------                                                                           
                                                                                               
3.1      (a) Amended and Restated Certificate of Incorporation (4)                             
         (b) Revised Bylaws (4)                                                                
4.1             Certificate of Designation Series A Convertible Redeemable Preferred Stock (12)
4.2             Certificate of Designation of Series B Convertible Preferred Stock (16)        
4.3             Warrant (form) (16)                                                            
4.4             Registration Rights Agreement Dated December 22, 1999 (form) (16)              

10.1     (a) Letter of Agreement with Liquid Carbonic, Inc. (1)                                
         (b) Letter of Agreement with Fujitetsumo USA (1)                                      
         (c) Letter of Agreement with Fujitetsumo Japan (1)                                    
         (d) License Agreement between Stryker Corp. and THERMOGENESIS CORP. (5)               
         (e) Lease of Office and Manufacturing Space (4)                                       
         (f) Executive Development and Distribution Agreement between THERMOGENESIS CORP. and  
             Daido Hoxan Inc. (3)                                                              
         (g) Administrative Office Lease (6)                                                   
         (h) Employment Agreement for James H. Godsey (11)                                     
         (i) Employment Agreement for Sam Acosta (11)                                          
         (j) License Agreement and Distribution with Asahi Medical (9)                         
         (k) License Agreement with Pall/Medsep Corporation (10)                               
         (l) Distribution Agreement with Dideco S.p.A. (13)                                    
         (m) Employment Agreement for Philip H. Coelho (15)                                    
         (n) Employment Agreement for Renee Ruecker (15)                                       
         (o) Amendment to License Agreement with Asahi Medical (15)                            
         (p) Subscription Agreement dated December 22, 1999 (form) (16)                        
         (q) Employment Agreement for Dan Segal (17)                                           

23.2     Consent of Ernst & Young LLP, independent auditors                                    

Footnotes to Index                                                              

(1)     Incorporated by reference to Registration Statement No. 33-37242 of     
THERMOGENESIS Corp., Corporation filed on February 7, 1991.     

(2)     Incorporated by reference to Form 8-K for July 19, 1993.                

(3)     Incorporated by reference to Form 8-K for June 9, 1995.                 

(4)     Incorporated by reference to Form 10-KSB for the year ended June 30,    
1994.                                                           

(5)     Incorporated by reference to Form 8-K for September 27, 1995.           

(6)     Incorporated by reference to Form 10-QSB for the quarter ended December 
31, 1995.                                                       

(7)     Incorporated by reference to Form 8-K for November 27, 1996.            

(8)     Incorporated by reference to Form 10-KSB for the year ended June 30,    
1996.                                                           

(9)     Incorporated by reference to Form 8-K for May 29, 1996.                 

(10)    Incorporated by reference to Form 8-K for March 27, 1997.               

(11)    Incorporated by reference to Form 10-K for the year ended June 30, 1997.

(12)    Incorporated by reference to Form 8-K for January 14, 1998.             

(13)    Incorporated by reference to Form 8-K for February 16, 1998.            

(14)    Incorporated by reference to Form 10-K for the year ended June 30, 1998.

(15)    Incorporated by reference to Form 10-K for the year ended June 30, 1999.

(16)    Incorporated by reference to Form 8-K for December 23, 1999.            

(17)    Incorporated by reference to Form 10-K for June 30, 2000.               

83

10-K405
84th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 84th

GLOSSARY OF CERTAIN TECHNICAL TERMS                                             

510(k): Formal notification to FDA obtain clearance to market the medical       
device. The device must be substantially equivalent to devices manufactured     
prior to 1976, or which have been found substantially equivalent after that     
date.                                                                           

AUTOLOGOUS: Autogenous; related to self; originating within an organism itself, 
as obtaining blood from the patient for use in the same patient.                

COAGULATION: (1) the process of clot formation; (2) in surgery, the disruption  
of tissue by physical means to form a blockage or clot.                         

THERMOLINE PRODUCTS: (1) Device for the ultra-rapid freezing of human blood     
plasma; (2) Portable device for the ultra-rapid freezing of human blood plasma; 
(3) Device for the rapid thawing of frozen plasma for hospital patient care; (4)
device for the hermetic sealing of blood tissue containers.                     

CRYOPRECIPITATE: Any precipitate (substance that is separated out of a solution 
f plasma) that results from cooling, as cryoglobulin or antihemophilic factor.  
When used in the context of the CryoSeal FS System, cryoprecipitate means a     
"fibrinogen-rich" cryoprecipitate.                                              

CRYOPRECIPITATED AHF: A preparation of antihemophilic factor, which is obtained 
from a single unit of plasma collected and processed in a closed systems.       

CRYOPRESERVATION: Maintaining the life of excised tissue or organs by freezing  
and storing at very low temperatures.                                           

CRYOSEAL: System for harvesting fibrinogen-rich cryoprecipitate from a donor's  
blood plasma, a blood component that is currently licensed by the FDA for the   
treatment of clotting protein deficient patients.                               

DEWAR: Container that keeps its contents at a constant and generally low        
temperature by means of two external walls between which a vacuum is maintained.

FACTOR V: Plasma protein which accelerates blood coagulation.                   

FACTOR VIII: Antihemophilic factor ("AHF"): a factor or component of blood      
participating only in blood coagulation. Deficiency of this factor, when        
transmitted as a sex-linked recessive trait, causes classical hemophilia        
(hemophilia A).                                                                 

FACTOR XIII: Fibrin stabilizing factor ("FSF"): a factor that chemically joins  
fibrin strands so that they become stable and insoluble in urea, thus enabling  
fibrin to form a firm blood clot.                                               

FIBRONECTIN: An adhesive compound of protein and carbohydrate: one form         
circulates in plasma, another is a cell-surface protein which mediates cellular 
adhesive interactions. Fibronectins are important in connective tissue, and they
are also involved in aggregation of platelets.                                  

FIBRINOGEN: A blood protein that is converted to fibrin in the clotting of      
blood.                                                                          

HEMATOLOGY: That branch of medical science, which treats blood and blood forming
tissues.                                                                        

84

10-K405
85th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 85th

HEMATOPOETIC: Pertaining to or affecting the formation of blood cells. As agent 
that promotes the formation of blood cells.                                     

HEMOSTATIC: (1) checking the flow of blood; (2) an agent that stops the flow of 
blood.                                                                          

LYOPHILIZED: Freeze dried.                                                      

PLATELET DERIVED GROWTH FACTOR ("PDGF"): A substance contained in platelets and 
capable of inducing proliferation of vascular cells, vascular smooth muscle     
cells; its action contributes to the repair of damaged vascular walls.          

PLURIPOTENT: The ability to develop into all three embryonic tissue layers which
in turn form all the cells of every body organ. Used to describe stem cells that
can form and all cells and tissues in the body.                                 

PROGENITOR: A parent or ancestor.                                               

PROGENITOR CELLS: Cells which are capable of producing progeny cells for a      
specific tissue.                                                                

STEM CELLS: Undifferentiated, primitive cells in the bone marrow with the       
ability both to multiply and to differentiate into specific blood cells.        

THERMOLABILE: Easily altered or decomposed by heat.                             

THROMBIN: Generated in blood clotting that acts on fibrinogen to produce fibrin.

85

10-K405
86th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 86th

 THERMOGENESIS CORP.
SIGNATURES

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

                               THERMOGENESIS CORP.

                   By: /s/  PHILIP H. COELHO
                                              ----------------------------------
                                            Philip H. Coelho, Chairman & CEO

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

                                                                [Download Table]
                                                                             
By: /s/     PHILIP H. COELHO                       Dated:  September 21, 2001
            -----------------------------------                              
            Philip H. Coelho, chief Executive                                
            Officer and chairman of the Board                                
            (Principal Executive Officer)                                    

By: /s/     RENEE M. RUECKER                       Dated:  September 21, 2001
            -----------------------------------                              
            Renee M. Ruecker, V.P. Finance                                   
            (Principal Financial and                                         
            Accounting Officer)                                              

By: /s/     JAMES H. GODSEY                        Dated:  September 21, 2001
            -----------------------------------                              
            James H. Godsey, President/COO                                   
            and Director                                                     

By: /s/     HUBERT HUCKEL                          Dated:  September 21, 2001
            -----------------------------------                              
            Hubert Huckel, Director                                          

By: /s/     PATRICK MCENANY                        Dated:  September 21, 2001
            -----------------------------------                              
            Patrick McEnany, Director                                        

By: /s/     DAVID HOWELL                           Dated:  September 21, 2001
            -----------------------------------                              
            David Howell, Director                                           

86

10-K405
87th Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 87th

By: /s/     SPENCER BROWNE                         Dated:  September 21, 2001   
-----------------------------------                     
Spencer Browne, Director                                

87

10-K405
Last Page of 88
TOC
1st
Previous
Next
↓Bottom
Just 88th

 SCHEDULE II

 THERMOGENESIS CORP.
 VALUATION AND QUALIFYING ACCOUNTS

                                                        [Enlarge/Download Table]

                                    Balance     Charged                              
                                      at        to costs     Write-offs    Balance   
                                   beginning      and         (net of     at end of  
                                   of period    expenses     recoveries)    period   
                                  -----------  -----------  ------------  -----------
                                                                                     
Allowance of Doubtful Accounts:                                                      

For the year ended June 30, 2001     $84,000      $42,000       $42,000      $84,000 

For the year ended June 30, 2000     $95,000      $43,000       $54,000      $84,000 

For the year ended June 30, 1999     $97,910      $46,877       $49,787      $95,000 

88

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K405’ Filing		Date		First		Last			Other Filings
		10/31/01		65		81			4
Filed on:		9/28/01
		9/21/01		86		87
		9/19/01		62		81
		9/17/01		1		80
		8/24/01		48
		8/16/01		3
		7/15/01		4		26
For Period End:		6/30/01		1		88
		6/23/01		21
		4/27/01		62		81
		3/31/01		68		69			10-Q
		12/31/00		68					10-Q
		12/14/00		74		75			DEF 14A
		11/16/00		43		57
		9/30/00		68					10-Q
		7/27/00		75
		7/1/00		43		54
		6/30/00		29		88			10-K
		6/22/00		60
		5/11/00		74		75
		3/31/00		70					10-Q,  4/A
		1/8/00		16
		1/4/00		60
		12/31/99		70					10-Q
		12/23/99		83					8-K
		12/22/99		60		83
		9/30/99		16		70			10-Q
		7/30/99		61
		7/29/99		74		75
		6/30/99		29		88			10-K,  10KSB/A
		4/16/99		6
		3/11/99		6
		1/13/99		75
		11/26/98		5
		6/30/98		52		83			10-K,  DEF 14A,  PRE 14A
		5/14/98		16
		2/16/98		83
		1/14/98		83
		6/30/97		83					10-K,  10-K/A,  DEF 14A
		4/2/97		79
		3/27/97		83					8-K
		11/27/96		83					8-K
		7/31/96		63
		6/30/96		83					10KSB,  10KSB/A,  DEF 14A
		5/29/96		63		83			8-K
		12/31/95		83					10QSB,  10QSB/A
		9/27/95		83
		6/30/95		64					10KSB/A,  10KSB40/A,  PRE 14A
		6/9/95		83
		6/30/94		78		83
		7/19/93		83
									List all Filings