Note 1 - Description of Business and Basis of Presentation

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1.

Description of Business and Basis of Presentation

Organization and Basis of Presentation

Cesca Therapeutics Inc. (“Cesca Therapeutics,” “Cesca,” the “Company,” “we,” “our,” “us”), a Delaware corporation, is a regenerative medicine company that was founded in

1986

and is headquartered in Rancho Cordova, CA. We develop, commercialize and market a range of automated technologies and products for cell-based therapeutics. ThermoGenesis Corp. (“ThermoGenesis”), our device

subsidiary, provides the AutoXpress

®

and BioArchive platforms for automated clinical biobanking, PXP™ platform for point-of-care cell-based therapies and CAR-TXpress™ platform under development for bio-manufacturing for immuno-oncology applications. Cesca is also leveraging its proprietary PXP™ technology platform to develop autologous cell-based therapies that address significant unmet needs in the vascular and orthopedic markets.

Cesca is an affiliate of the Boya

life Group, a China-based industry research alliance encompassing top research institutions for stem cell and regenerative medicine.

Liquidit

y

T

he Company has a Revolving Credit Agreement (“Credit Agreement”) with Boyalife Investment Fund II, Inc. (the “Lender”) (Refer to Note

4

). As of

September 30, 2017,

the Company had drawn down

$5,000,000

of the

$10,000,000

available under the Credit Agreement. Boyalife Investment Fund II, Inc. is a wholly owned subsidiary of Boyalife Group Inc., which is owned and controlled by the Company’s Chief Executive Officer and Chairman of the Board.

On

July 7, 2017,

the Company, through its wholly-owned subsidiary, ThermoGenesis, acquired the business and substantially all the assets of SynGen Inc. (“SynGen”). In exchange, ThermoGenesis issued to SynGen shares of ThermoGenesis common stock that, after giving effect to the issuance, constitute

20%

of ThermoGenesis

’ outstanding common shares, and ThermoGenesis also made a

one

-time cash payment of

$1,000,000

to SynGen. (Refer to Note

3

).

At

September

30,

2017,

the Company had cash and cash equivalents of

$2,464,000

and working capital of

$5,312,000.

The Company has incurred recurring operating losses and as of

September 30, 2017

had an accumulated deficit of

$187,707,000.

The Company anticipates requiring additional capital to grow the device business (see Note

8

), initiate the Phase III Critical Limb Ischemia trial, to fund other operating expenses and to make interest payments on the line of credit with Boyalife. These conditions raised substantial doubt about the Company’s ability to meet its obligations. To alleviate the substantial doubt, management plans to use existing cash and cash equivalents balances, revenue generating activities and draw down on the available balance from the line of credit. Other sources of liquidity could include potential issuances of debt or equity securities in public or private financings and strategic partnerships.

Based upon the additional funds available to draw down under the amended Credit Agreement, the Company

’s cash balance, historical trends, expected outflows and projections for revenues, management believes it will have sufficient cash to provide for its projected needs to maintain operations and working capital requirements for at least the next

12

months from the date of this filing.

Principles of Consolidation

The consolidated financial statements include the accounts of Cesca

, its majority-owned subsidiary, ThermoGenesis, and its wholly-owned subsidiaries, TotipotentRX Cell Therapy, Pvt. Ltd. and TotipotentSC Scientific Product Pvt. Ltd. All significant intercompany accounts and transactions have been eliminated upon consolidation.

Noncontrolling Interests

The

20%

ownership interest of

ThermoGenesis that is

not

owned by Cesca, is accounted for as a non-controlling interest as the Company has an

80%

ownership interest in the subsidiary. Earnings or losses attributable to other stockholders of a consolidated affiliated company are classified separately as "noncontrolling interest" in the Company's consolidated statements of operations. Net loss attributable to noncontrolling interest reflects only its share of the after-tax earnings or losses of an affiliated company. The Company's consolidated balance sheets reflect noncontrolling interests within the equity section of the consolidated balance sheets.

Interim Reporting

The a

ccompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such Securities and Exchange Commission (“SEC”) rules and regulations and accounting principles applicable for interim periods. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Operating results for the

three

month period ended

September 30, 2017

are

not

necessarily indicative of the results that

may

be expected for the

six

months ending

December 31, 2017.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form

10

-K for the fiscal year ended

June 30, 2017.