Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ |
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2010
OR
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o |
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Fibrocell Science, Inc.
(Exact name of registrant as specified in its Charter.)
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Delaware
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001-31564
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87-0458888 |
(State or other jurisdiction
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(Commission File Number)
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(I.R.S. Employer |
of incorporation)
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Identification No.) |
405 Eagleview Boulevard
Exton, Pennsylvania 19341
(Address of principal executive offices, including zip code)
(484) 713-6000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for any shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is shell company (as defined in Rule 12b-2 of
the Exchange Act) Yes o No þ
Indicate by check mark whether the registrant has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court. Yes þ No o
As of November 9, 2010, issuer had 20,375,343 shares issued and outstanding of common stock,
par value $0.001.
TABLE OF CONTENTS
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1 |
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2 |
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Consolidated Statements of Operations (unaudited)
Nine months ended June 30, 2010 (Successor Company), cumulative period from
inception (September 1, 2009) to September 30, 2010 (Successor Company), one
month ended
September 30, 2009 (Successor Company), eight months ended August 31, 2009
(Predecessor Company) and cumulative period from inception (December 28, 1995) to
August 31, 2009 (Predecessor Company) |
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3 |
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4 |
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Consolidated Statements of Cash Flows (unaudited)
Nine months ended September 30, 2010 (Successor Company), cumulative period from
inception (September 1, 2009) to September 30, 2010 (Successor Company), one month
ended September 30, 2009 (Successor company), eight months ended August 31,
2009 (Predecessor Company) and cumulative period from inception (December 28,
1995) to August 31, 2009 (Predecessor Company) |
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16 |
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18 |
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36 |
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48 |
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48 |
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49 |
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49 |
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49 |
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49 |
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Exhibit 31.1 |
Exhibit 31.2 |
Exhibit 32.1 |
Exhibit 32.2 |
PART I FINANCIAL INFORMATION
ITEM 1. Financial statements.
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Successor Balance Sheets
(unaudited)
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September 30, |
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December 31, |
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2010 |
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2009 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
205,083 |
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$ |
1,362,488 |
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Accounts receivable, net |
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278,815 |
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269,759 |
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Inventory, net |
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208,111 |
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226,032 |
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Prepaid expenses and other current assets |
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562,957 |
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525,024 |
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Total current assets |
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1,254,966 |
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2,383,303 |
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Property and equipment, net of accumulated depreciation of $5,612 and $0, respectively |
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24,062 |
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Other assets |
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250 |
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250 |
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Intangible assets |
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6,340,656 |
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6,340,656 |
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Total assets |
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$ |
7,619,934 |
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$ |
8,724,209 |
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Liabilities, Redeemable Preferred Stock, Shareholders Deficit and Noncontrolling
Interest |
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Current liabilities: |
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Current debt |
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$ |
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$ |
47,795 |
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Accounts payable |
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1,073,376 |
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245,023 |
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Accrued expenses |
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2,094,432 |
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544,260 |
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Total current liabilities |
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3,167,808 |
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837,078 |
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Long-term debt |
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6,000,060 |
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6,000,060 |
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Deferred tax liability |
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2,500,000 |
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2,500,000 |
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Warrant liability |
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4,653,838 |
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635,276 |
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Other long-term liabilities |
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284,007 |
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369,210 |
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Total liabilities |
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16,605,713 |
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10,341,624 |
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Commitments and contingencies |
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Preferred
stock series A, $0.001 par value; 9,000 shares authorized; 3,250
shares issued and outstanding |
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2,365,309 |
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2,511,070 |
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Preferred
stock series B, $0.001 par value; 9,000 shares authorized; 2,977 shares issued and outstanding |
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391,766 |
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Preferred stock series B, $0.001 par value; subscription receivable |
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(792,000 |
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Fibrocell Science, Inc. shareholders deficit: |
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Successor common stock, $0.001 par value; 250,000,000 shares authorized |
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19,769 |
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14,692 |
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Additional paid-in capital |
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1,924,899 |
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508,347 |
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Accumulated deficit during development stage |
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(13,331,244 |
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(5,049,999 |
) |
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Total Fibrocell Science, Inc. shareholders deficit |
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(11,386,576 |
) |
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(4,526,960 |
) |
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Noncontrolling interest |
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435,722 |
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398,475 |
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Total deficit and noncontrolling interest |
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(10,950,854 |
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(4,128,485 |
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Total liabilities, preferred stock, shareholders deficit and noncontrolling interest |
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$ |
7,619,934 |
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$ |
8,724,209 |
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The accompanying notes are an integral part of these consolidated financial statements.
1
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(unaudited)
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Successor |
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Successor |
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Predecessor |
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For the three months |
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For the one month |
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For the two months |
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ended September 30, |
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ended September 30, |
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ended August 31, |
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2010 |
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2009 |
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2009 |
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Revenue |
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Product sales |
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$ |
243,677 |
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$ |
75,029 |
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$ |
130,740 |
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Total revenue |
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243,677 |
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75,029 |
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130,740 |
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Cost of sales |
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118,916 |
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53,323 |
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252,420 |
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Gross profit |
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124,761 |
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21,706 |
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(121,680 |
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Selling, general and administrative expenses |
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1,583,418 |
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1,372,122 |
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1,158,959 |
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Research and development expenses |
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1,387,466 |
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556,242 |
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614,511 |
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Operating loss |
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(2,846,123 |
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(1,906,658 |
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(1,895,150 |
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Other income (expense) |
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Interest income |
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1 |
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1 |
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Reorganization items, net |
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74,132,188 |
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Other expense |
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(6,243 |
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Warrant income |
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1,265,571 |
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Interest expense |
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(211,919 |
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(58,333 |
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(290,063 |
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Income (loss) from continuing operations |
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(1,792,471 |
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(1,964,990 |
) |
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71,940,733 |
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Income (loss) from discontinued operations, net of tax |
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(8,575 |
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5,799 |
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216,203 |
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Net income (loss) |
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(1,801,046 |
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(1,959,191 |
) |
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72,156,936 |
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Net income (loss) attributable to noncontrolling interest |
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(20,859 |
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1,644 |
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(214,292 |
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Net income (loss) attributable to Fibrocell Science, Inc. common shareholders |
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(1,821,905 |
) |
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$ |
(1,957,547 |
) |
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$ |
71,942,644 |
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Per share information: |
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Income (loss) from continuing operations-basic and diluted |
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$ |
(0.09 |
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$ |
(0.13 |
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$ |
1.85 |
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Net income (loss) attributable to common shareholders per common sharebasic
and diluted |
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$ |
(0.09 |
) |
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$ |
(0.13 |
) |
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$ |
1.85 |
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Weighted average number of basic and diluted common shares outstanding |
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19,557,842 |
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14,666,666 |
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38,820,380 |
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The accompanying notes are an integral part of these consolidated financial statements.
2
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(unaudited)
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Successor |
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Successor |
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Successor |
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Predecessor |
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Predecessor |
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Cumulative period |
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Cumulative period |
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For the nine |
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For the one |
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from September 1, |
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from December 28, |
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months ended |
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month ended |
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2009 (date of |
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For the eight |
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1995 (date of |
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September 30, |
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September 30, |
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inception) to |
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months ended |
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inception) to |
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2010 |
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2009 |
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September 30, 2010 |
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August 31, 2009 |
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August 31, 2009 |
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Revenue |
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Product sales |
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$ |
716,809 |
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$ |
75,029 |
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$ |
1,046,750 |
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$ |
538,620 |
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$ |
4,818,994 |
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License fees |
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260,000 |
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Total revenue |
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716,809 |
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75,029 |
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1,046,750 |
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538,620 |
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5,078,994 |
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Cost of sales |
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395,351 |
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53,323 |
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577,399 |
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424,139 |
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2,279,335 |
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Gross profit |
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321,458 |
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21,706 |
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469,351 |
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114,481 |
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2,799,659 |
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Selling, general and administrative expenses |
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5,424,661 |
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1,372,122 |
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8,133,017 |
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3,427,374 |
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84,805,520 |
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Research and development expenses |
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4,053,817 |
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556,242 |
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5,877,013 |
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2,107,718 |
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56,269,869 |
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Operating loss |
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(9,157,020 |
) |
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(1,906,658 |
) |
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(13,540,679 |
) |
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(5,420,611 |
) |
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(138,275,730 |
) |
Other income (expense) |
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Interest income |
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1 |
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1 |
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248 |
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6,989,539 |
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Reorganization items, net |
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3,303 |
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(69,174 |
) |
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73,538,984 |
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|
73,538,984 |
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Other income (expense) |
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(6,243 |
) |
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316,338 |
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Warrant income |
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1,560,757 |
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1,241,673 |
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Interest expense |
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(612,917 |
) |
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(58,333 |
) |
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(860,091 |
) |
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(2,232,138 |
) |
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(18,790,218 |
) |
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Income (loss) from continuing operations
before income taxes |
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(8,205,877 |
) |
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(1,964,990 |
) |
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(13,228,270 |
) |
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65,880,240 |
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(76,221,087 |
) |
Income tax benefit |
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190,754 |
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Income (loss) from continuing operations |
|
|
(8,205,877 |
) |
|
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(1,964,990 |
) |
|
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(13,228,270 |
) |
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65,880,240 |
|
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|
(76,030,333 |
) |
Income (loss) from discontinued operations |
|
|
(38,121 |
) |
|
|
5,799 |
|
|
|
(50,234 |
) |
|
|
|
46,923 |
|
|
|
(41,091,311 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(8,243,998 |
) |
|
|
(1,959,191 |
) |
|
|
(13,278,504 |
) |
|
|
|
65,927,163 |
|
|
|
(117,121,644 |
) |
Deemed dividend associated with beneficial
conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,423,824 |
) |
Preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,589,861 |
) |
Net income/(loss) attributable to
noncontrolling interest |
|
|
(37,247 |
) |
|
|
1,644 |
|
|
|
(52,740 |
) |
|
|
|
(205,632 |
) |
|
|
1,799,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Fibrocell
Science, Inc. common shareholders. |
|
$ |
(8,281,245 |
) |
|
$ |
(1,957,547 |
) |
|
$ |
(13,331,244 |
) |
|
|
$ |
65,721,531 |
|
|
$ |
(128,335,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations-basic and diluted |
|
$ |
(0.45 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.77 |
) |
|
|
$ |
1.72 |
|
|
$ |
(4.30 |
) |
Loss from discontinued operations-basic
and
diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.32 |
) |
Income attributable to noncontrolling
interest |
|
|
|
|
|
|
|
|
|
|
(0.01 |
) |
|
|
|
|
|
|
|
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend associated with
beneficial conversion of preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.65 |
) |
Preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common
shareholders per common sharebasic and
diluted |
|
$ |
(0.45 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.78 |
) |
|
|
$ |
1.72 |
|
|
$ |
(7.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of basic and
diluted common shares outstanding |
|
|
18,291,301 |
|
|
|
14,666,666 |
|
|
|
17,104,057 |
|
|
|
|
38,230,886 |
|
|
|
17,678,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
3
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Statements of Shareholders Equity (Deficit) and Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Accumulated Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
(Deficit) |
|
Issuance of common stock for
cash on 12/28/95 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,285,291 |
|
|
$ |
2,285 |
|
|
$ |
(1,465 |
) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
820 |
|
Issuance of common stock for
cash on 11/7/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,149 |
|
|
|
11 |
|
|
|
49,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
Issuance of common stock for
cash on 11/29/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,230 |
|
|
|
2 |
|
|
|
9,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
Issuance of common stock for
cash on 12/19/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,690 |
|
|
|
7 |
|
|
|
29,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
Issuance of common stock for
cash on 12/26/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,148 |
|
|
|
11 |
|
|
|
49,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(270,468 |
) |
|
|
(270,468 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/96 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,316,508 |
|
|
$ |
2,316 |
|
|
$ |
138,504 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(270,468 |
) |
|
$ |
(129,648 |
) |
Issuance of common stock for
cash on 12/27/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,182 |
|
|
|
21 |
|
|
|
94,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,000 |
|
Issuance of common stock for
services on 9/1/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,148 |
|
|
|
11 |
|
|
|
36,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,260 |
|
Issuance of common stock for
services on 12/28/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,193 |
|
|
|
287 |
|
|
|
9,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,255 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52,550 |
) |
|
|
(52,550 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/97(Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,636,031 |
|
|
$ |
2,635 |
|
|
$ |
279,700 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(323,018 |
) |
|
$ |
(40,683 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
(Deficit) |
|
Issuance of common
stock for cash on
8/23/98 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
4,459 |
|
|
$ |
4 |
|
|
$ |
20,063 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
20,067 |
|
Repurchase of
common stock on
9/29/98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400 |
|
|
|
(50,280 |
) |
|
|
|
|
|
|
|
|
|
|
(50,280 |
) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(195,675 |
) |
|
|
(195,675 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/98
(Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,640,490 |
|
|
$ |
2,639 |
|
|
$ |
299,763 |
|
|
|
2,400 |
|
|
$ |
(50,280 |
) |
|
$ |
|
|
|
$ |
(518,693 |
) |
|
$ |
(266,571 |
) |
Issuance of
common stock for
cash on 9/10/99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,506 |
|
|
|
53 |
|
|
|
149,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,306,778 |
) |
|
|
(1,306,778 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/99
(Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,692,996 |
|
|
$ |
2,692 |
|
|
$ |
449,710 |
|
|
|
2,400 |
|
|
$ |
(50,280 |
) |
|
$ |
|
|
|
$ |
(1,825,471 |
) |
|
$ |
(1,423,349 |
) |
Issuance of
common stock for
cash on 1/18/00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,583 |
|
|
|
54 |
|
|
|
1,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,923 |
|
Issuance of
common stock for
services on
3/1/00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,698 |
|
|
|
69 |
|
|
|
(44 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
Issuance of
common stock for
services on
4/4/00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,768 |
|
|
|
28 |
|
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(807,076 |
) |
|
|
(807,076 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/00
(Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,843,045 |
|
|
$ |
2,843 |
|
|
$ |
451,517 |
|
|
|
2,400 |
|
|
$ |
(50,280 |
) |
|
$ |
|
|
|
$ |
(2,632,547 |
) |
|
$ |
(2,228,467 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
(Deficit) |
|
Issuance of common
stock for services
on 7/1/01 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
156,960 |
|
|
$ |
157 |
|
|
$ |
(101 |
) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
56 |
|
Issuance of common
stock for services
on 7/1/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000 |
|
|
|
125 |
|
|
|
(80 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45 |
|
Issuance of common
stock for
capitalization of
accrued salaries on
8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000 |
|
|
|
70 |
|
|
|
328,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
328,125 |
|
Issuance of common
stock for
conversion of
convertible debt on
8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,750,000 |
|
|
|
1,750 |
|
|
|
1,609,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,611,346 |
|
Issuance of common
stock for
conversion of
convertible
shareholder notes
payable on 8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
208,972 |
|
|
|
209 |
|
|
|
135,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,667 |
|
Issuance of common
stock for bridge
financing on
8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000 |
|
|
|
300 |
|
|
|
(192 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108 |
|
Retirement of
treasury stock on
8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,280 |
) |
|
|
(2,400 |
) |
|
|
50,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock for net
assets of Gemini on
8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,942,400 |
|
|
|
3,942 |
|
|
|
(3,942 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock for net
assets of AFH on
8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,899,547 |
|
|
|
3,900 |
|
|
|
(3,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock for cash on
8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,346,669 |
|
|
|
1,347 |
|
|
|
2,018,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,020,000 |
|
Transaction and
fund raising
expenses on 8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,547 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,547 |
) |
Issuance of common
stock for services
on 8/10/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60 |
|
Issuance of common
stock for cash on
8/28/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,667 |
|
|
|
27 |
|
|
|
39,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
Issuance of common
stock for services
on 9/30/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
314,370 |
|
|
|
314 |
|
|
|
471,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
471,555 |
|
The accompanying notes are an integral part of these consolidated financial statements.
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
(Deficit) |
|
Uncompensated contribution of
services3rd quarter |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
55,556 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
55,556 |
|
Issuance of common stock for
services on 11/1/01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,933 |
|
|
|
146 |
|
|
|
218,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,900 |
|
Uncompensated contribution of
services4th quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,652,004 |
) |
|
|
(1,652,004 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/01 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
15,189,563 |
|
|
$ |
15,190 |
|
|
$ |
5,321,761 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(4,284,551 |
) |
|
$ |
1,052,400 |
|
Uncompensated contribution of
services1st quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
Issuance of preferred stock
for cash on 4/26/02 |
|
|
905,000 |
|
|
|
905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,817,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,818,236 |
|
Issuance of preferred stock
for cash on 5/16/02 |
|
|
890,250 |
|
|
|
890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,772,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,773,129 |
|
Issuance of preferred stock
for cash on 5/31/02 |
|
|
795,000 |
|
|
|
795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,473,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,474,175 |
|
Issuance of preferred stock
for cash on 6/28/02 |
|
|
229,642 |
|
|
|
230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
712,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
713,221 |
|
Uncompensated contribution of
services2nd quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
Issuance of preferred stock
for cash on 7/15/02 |
|
|
75,108 |
|
|
|
75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
233,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
233,961 |
|
Issuance of common stock for
cash on 8/1/02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,400 |
|
|
|
38 |
|
|
|
57,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,600 |
|
Issuance of warrants for
services on 9/06/02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,388 |
|
Uncompensated contribution of
services3rd quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
Uncompensated contribution of
services4th quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
Issuance of preferred stock
for dividends |
|
|
143,507 |
|
|
|
144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
502,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(502,661 |
) |
|
|
|
|
Deemed dividend associated
with beneficial conversion of
preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,178,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,178,944 |
) |
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,433,055 |
) |
|
|
(5,433,055 |
) |
Other comprehensive income,
foreign currency translation
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,875 |
|
|
|
|
|
|
|
13,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,419,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/02 (Predecessor) |
|
|
3,038,507 |
|
|
$ |
3,039 |
|
|
|
|
|
|
$ |
|
|
|
|
15,227,963 |
|
|
$ |
15,228 |
|
|
$ |
25,573,999 |
|
|
|
|
|
|
$ |
|
|
|
$ |
13,875 |
|
|
$ |
(20,399,211 |
) |
|
$ |
5,206,930 |
|
The accompanying notes are an integral part of these consolidated financial statements.
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
(Deficit) |
|
Issuance of common stock for
cash on 1/7/03 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
61,600 |
|
|
$ |
62 |
|
|
$ |
92,338 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
92,400 |
|
Issuance of common stock for
patent pending acquisition on
3/31/03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
100 |
|
|
|
539,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540,000 |
|
Cancellation of common stock
on 3/31/03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(79,382 |
) |
|
|
(79 |
) |
|
|
(119,380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(119,459 |
) |
Uncompensated contribution of
services1st quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
Issuance of preferred stock
for cash on 5/9/03 |
|
|
|
|
|
|
|
|
|
|
110,250 |
|
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
2,773,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,773,328 |
|
Issuance of preferred stock
for cash on 5/16/03 |
|
|
|
|
|
|
|
|
|
|
45,500 |
|
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
1,145,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,145,750 |
|
Conversion of preferred stock
into common stock2nd qtr |
|
|
(70,954 |
) |
|
|
(72 |
) |
|
|
|
|
|
|
|
|
|
|
147,062 |
|
|
|
147 |
|
|
|
40,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,701 |
|
Conversion of warrants into
common stock2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,598 |
|
|
|
114 |
|
|
|
(114 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uncompensated contribution of
services2nd quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
Issuance of preferred stock
dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,087,200 |
) |
|
|
(1,087,200 |
) |
Deemed dividend associated
with beneficial conversion of
preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,244,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,244,880 |
) |
|
|
|
|
Issuance of common stock for
cash3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
202,500 |
|
|
|
202 |
|
|
|
309,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
310,000 |
|
Issuance of common stock for
cash on 8/27/03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,359,331 |
|
|
|
3,359 |
|
|
|
18,452,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,455,561 |
|
Conversion of preferred stock
into common
stock3rd qtr |
|
|
(2,967,553 |
) |
|
|
(2,967 |
) |
|
|
(155,750 |
) |
|
|
(156 |
) |
|
|
7,188,793 |
|
|
|
7,189 |
|
|
|
(82,875 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(78,809 |
) |
Conversion of warrants into
common stock3rd
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212,834 |
|
|
|
213 |
|
|
|
(213 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense on
warrants issued to
non-employees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412,812 |
|
Issuance of common stock for
cash4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136,500 |
|
|
|
137 |
|
|
|
279,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
279,500 |
|
Conversion of warrants into
common stock4th
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,268,294 |
) |
|
|
(11,268,294 |
) |
Other comprehensive income,
foreign currency translation
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,505 |
|
|
|
|
|
|
|
360,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,907,789 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/03 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
26,672,192 |
|
|
$ |
26,672 |
|
|
$ |
50,862,258 |
|
|
|
|
|
|
$ |
|
|
|
$ |
374,380 |
|
|
$ |
(33,999,585 |
) |
|
$ |
17,263,725 |
|
The accompanying notes are an integral part of these consolidated financial statements.
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
(Deficit) |
|
Conversion of warrants into common
stock1st qtr |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
78,526 |
|
|
$ |
79 |
|
|
$ |
(79 |
) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Issuance of common stock for cash in
connection with exercise of stock
options1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
15 |
|
|
|
94,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,000 |
|
Issuance of common stock for cash in
connection with exercise of
warrants1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
|
4 |
|
|
|
7,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,720 |
|
Compensation expense on options and warrants
issued to non-employees and
directors1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,410,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,410,498 |
|
Issuance of common stock in connection with
exercise of warrants2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,828 |
|
|
|
52 |
|
|
|
(52 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for
cash2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200,000 |
|
|
|
7,200 |
|
|
|
56,810,234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,817,434 |
|
Compensation expense on options and warrants
issued to non-employees and
directors2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,462 |
|
Issuance of common stock in connection with
exercise of warrants3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,431 |
|
|
|
7 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash in
connection with exercise of stock
options3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000 |
|
|
|
110 |
|
|
|
189,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,000 |
|
Issuance of common stock for cash in
connection with exercise of
warrants3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,270 |
|
|
|
28 |
|
|
|
59,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,695 |
|
Compensation expense on options and warrants
issued to non-employees and
directors3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
229,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
229,133 |
|
Issuance of common stock in connection with
exercise of warrants4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,652 |
|
|
|
28 |
|
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense on options and warrants
issued to non-employees, employees, and
directors4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127,497 |
|
Purchase of treasury stock4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000,000 |
|
|
|
(25,974,000 |
) |
|
|
|
|
|
|
|
|
|
|
(25,974,000 |
) |
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21,474,469 |
) |
|
|
(21,474,469 |
) |
Other comprehensive income, foreign currency
translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,725 |
|
|
|
|
|
|
|
79,725 |
|
Other comprehensive income, net unrealized
gain on available-for-sale investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,005 |
|
|
|
|
|
|
|
10,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21,384,739 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/04 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
34,194,899 |
|
|
$ |
34,195 |
|
|
$ |
109,935,174 |
|
|
|
4,000,000 |
|
|
$ |
(25,974,000 |
) |
|
$ |
464,110 |
|
|
$ |
(55,474,054 |
) |
|
$ |
28,985,425 |
|
The accompanying notes are an integral part of these consolidated financial statements.
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
(Deficit) |
|
Issuance of common stock for
cash in connection with
exercise of stock
options1st qtr |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
25,000 |
|
|
$ |
25 |
|
|
$ |
74,975 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
75,000 |
|
Compensation expense on
options and warrants issued to
non-employees1st
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,565 |
|
Conversion of warrants into
common stock2nd
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,785 |
|
|
|
28 |
|
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense on
options and warrants issued to
non-employees2nd
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(61,762 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(61,762 |
) |
Compensation expense on
options and warrants issued to
non-employees3rd
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(137,187 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(137,187 |
) |
Conversion of warrants into
common stock3rd
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,605 |
|
|
|
12 |
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense on
options and warrants issued to
non-employees4th
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,844 |
|
Compensation expense on
acceleration of
options4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,950 |
|
Compensation expense on
restricted stock award issued
to employee4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
606 |
|
Conversion of predecessor
company shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,777,584 |
) |
|
|
(35,777,584 |
) |
Other comprehensive loss,
foreign currency translation
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,372,600 |
) |
|
|
|
|
|
|
(1,372,600 |
) |
Foreign exchange gain on
substantial liquidation of
foreign entity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133,851 |
|
|
|
|
|
|
|
133,851 |
|
Other comprehensive loss, net
unrealized gain on
available-for-sale investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,005 |
) |
|
|
|
|
|
|
(10,005 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(37,026,338 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/05 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
34,260,383 |
|
|
$ |
34,260 |
|
|
$ |
109,879,125 |
|
|
|
4,000,000 |
|
|
$ |
(25,974,000 |
) |
|
$ |
(784,644 |
) |
|
$ |
(91,251,638 |
) |
|
$ |
(8,096,897 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
Compensation expense on
options and warrants issued
to
non-employees1st
qtr |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
42,810 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
42,810 |
|
Compensation expense on
option awards issued to
employees and
directors1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,336 |
|
Compensation expense on
restricted stock issued to
employees1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,750 |
|
|
|
129 |
|
|
|
23,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,497 |
|
Compensation expense on
options and warrants issued
to
non-employees2nd
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,177 |
|
Compensation expense on
option awards issued to
employees and
directors2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
407,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
407,012 |
|
Compensation expense on
restricted stock to
employees2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,210 |
|
Cancellation of unvested
restricted stock
2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(97,400 |
) |
|
|
(97 |
) |
|
|
97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for
cash in connection with
exercise of stock
options2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
10 |
|
|
|
16,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,500 |
|
Compensation expense on
options and warrants issued
to
non-employees3rd
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,627 |
|
Compensation expense on
option awards issued to
employees and
directors3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
389,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
389,458 |
|
Compensation expense on
restricted stock to
employees3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,605 |
|
Issuance of common stock for
cash in connection with
exercise of stock
options3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,000 |
|
|
|
76 |
|
|
|
156,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,900 |
|
Acquisition of Agera |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,182,505 |
|
|
|
2,182,505 |
|
Compensation expense on
options and warrants issued
to
non-employees4th
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,772 |
|
Compensation expense on
option awards issued to
employees and
directors4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
390,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
390,547 |
|
Compensation expense on
restricted stock to
employees4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
Cancellation of unvested
restricted stock
award4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,002 |
) |
|
|
(15 |
) |
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,821,406 |
) |
|
|
(78,132 |
) |
|
|
(35,899,538 |
) |
Other comprehensive gain,
foreign currency translation
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
657,182 |
|
|
|
|
|
|
|
|
|
|
|
657,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,242,356 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 12/31/06 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
34,362,731 |
|
|
$ |
34,363 |
|
|
$ |
111,516,561 |
|
|
|
4,000,000 |
|
|
$ |
(25,974,000 |
) |
|
$ |
(127,462 |
) |
|
$ |
(127,073,044 |
) |
|
$ |
2,104,373 |
|
|
$ |
(39,519,209 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
Compensation expense on
options and warrants issued
to
non-employees1st
qtr |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
39,742 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
39,742 |
|
Compensation expense on
option awards issued to
employees and
directors1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
448,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
448,067 |
|
Compensation expense on
restricted stock issued to
employees1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
Issuance of common stock for
cash in connection with
exercise of stock
options1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
15 |
|
|
|
23,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,100 |
|
|
|
Expense in connection with
modification of employee
stock options 1st
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,178,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,178,483 |
|
Compensation expense on
options and warrants issued
to
non-employees2nd
qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,981 |
|
Compensation expense on
option awards issued to
employees and
directors2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
462,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
462,363 |
|
Compensation expense on
restricted stock issued to
employees2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
Compensation expense on
option awards issued to
employees and
directors3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
478,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
478,795 |
|
Compensation expense on
restricted stock issued to
employees3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
Issuance of common stock upon
exercise of
warrants3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
492,613 |
|
|
|
493 |
|
|
|
893,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
894,304 |
|
Issuance of common stock for
cash, net of offering
costs3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,767,647 |
|
|
|
6,767 |
|
|
|
13,745,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,752,167 |
|
Issuance of common stock for
cash in connection with
exercise of stock
options3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,666 |
|
|
|
2 |
|
|
|
3,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,166 |
|
Compensation expense on
option awards issued to
employees and
directors4thqtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
378,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
378,827 |
|
Compensation expense on
restricted stock issued to
employees4thqtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,573,114 |
) |
|
|
(246,347 |
) |
|
|
(35,819,461 |
) |
Other comprehensive gain,
foreign currency translation
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
846,388 |
|
|
|
|
|
|
|
|
|
|
|
846,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,973,073 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 12/31/07 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
41,639,657 |
|
|
$ |
41,640 |
|
|
$ |
129,208,631 |
|
|
|
4,000,000 |
|
|
$ |
(25,974,000 |
) |
|
$ |
718,926 |
|
|
$ |
(162,646,158 |
) |
|
$ |
1,858,026 |
|
|
$ |
(56,792,935 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
Compensation expense on vested options related
to non-employees1st qtr |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
44,849 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
44,849 |
|
Compensation expense on option awards issued
to employees and directors1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,305 |
|
Expense in connection with modification of
employee stock options 1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,262,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,262,815 |
|
|
|
Retirement of restricted stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(165 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Compensation expense on vested options related
to non-employees2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,697 |
|
Compensation expense on option awards
issued to employees and
directors2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,754 |
|
Compensation expense on vested options
related to non-employees3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,687 |
|
Compensation expense on option awards
issued to employees and directors3rd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171,012 |
|
Compensation expense on vested options
related to non-employees4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(86,719 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(86,719 |
) |
Compensation expense on option awards
issued to employees and directors4th qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,196 |
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31,411,179 |
) |
|
|
(1,680,676 |
) |
|
|
(33,091,855 |
) |
Reclassification of foreign exchange gain on
substantial liquidation of foreign entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,152,569 |
) |
|
|
|
|
|
|
|
|
|
|
(2,152,569 |
) |
Other comprehensive gain, foreign currency
translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,433,643 |
|
|
|
|
|
|
|
|
|
|
|
1,433,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33,810,781 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 12/31/08 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
41,639,492 |
|
|
$ |
41,639 |
|
|
$ |
131,341,227 |
|
|
|
4,000,000 |
|
|
$ |
(25,974,000 |
) |
|
$ |
|
|
|
$ |
(194,057,337 |
) |
|
$ |
177,350 |
|
|
$ |
(88,471,121 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Total |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
Compensation expense on vested options related to non-employees1st qtr |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
1,746 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,746 |
|
Compensation expense on option awards issued to employees and directors1st qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,798 |
|
Conversion of debt into common stock 1st qtr 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,564 |
|
|
|
38 |
|
|
|
343,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
344,000 |
|
Compensation expense on option awards issued to employees and directors2nd qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,616 |
|
Conversion of debt into common stock 2nd qtr 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,143,324 |
|
|
|
1,143 |
|
|
|
10,468,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,470,000 |
|
Compensation expense on option awards issued to employees and directors2 months ended 8/31/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,382 |
|
Balance of expense due to cancellation of options issued to employees and directors in bankruptcy2 months ended 8/31/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
294,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
294,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,721,531 |
|
|
|
205,632 |
|
|
|
65,927,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,927,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 8/31/09 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
42,820,380 |
|
|
$ |
42,820 |
|
|
$ |
142,737,500 |
|
|
|
4,000,000 |
|
|
$ |
(25,974,000 |
) |
|
$ |
|
|
|
$ |
(128,335,806 |
) |
|
$ |
382,982 |
|
|
$ |
(11,146,504 |
) |
Cancellation of Predecessor common stock and fresh start adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(42,820,380 |
) |
|
|
(42,820 |
) |
|
|
(150,426,331 |
) |
|
|
(4,000,000 |
) |
|
|
25,974,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(124,495,151 |
) |
Elimination of Predecessor accumulated deficit and accumulated other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,335,806 |
|
|
|
|
|
|
|
128,335,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 9/1/09 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
(7,688,831 |
) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
382,982 |
|
|
$ |
(7,305,849 |
) |
Issuance of 11.4 million shares of common stock in connection with emergence from Chapter 11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,400,000 |
|
|
|
11,400 |
|
|
|
5,460,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,472,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 9/1/09 (Successor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
11,400,000 |
|
|
$ |
11,400 |
|
|
$ |
(2,228,231 |
) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
382,982 |
|
|
$ |
(1,833,849 |
) |
Issuance of 2.7 million shares of common stock in connection with the exit financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,666,666 |
|
|
|
2,667 |
|
|
|
1,797,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,800,000 |
|
Issuance of common stock on Oct. 28, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,501 |
|
|
|
25 |
|
|
|
58,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,652 |
|
Compensation expense on shares issued to management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000 |
|
|
|
600 |
|
|
|
167,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,000 |
|
Compensation expense on option awards issued to directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
326,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
326,838 |
|
Compensation expense on option awards issued to non-employees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
386,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
386,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,049,999 |
) |
|
|
15,493 |
|
|
|
(5,034,506 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,034,506 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 12/31/09 (Successor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
14,692,167 |
|
|
$ |
14,692 |
|
|
$ |
508,347 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(5,049,999 |
) |
|
$ |
398,475 |
|
|
$ |
(4,128,485 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Total |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
Issuance of 5.1 million shares of common stock in March 2010, net of issuance costs of $338,100 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
5,076,664 |
|
|
$ |
5,077 |
|
|
$ |
3,464,323 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,469,400 |
|
Warrant fair value associated with common shares issued in March 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,890,711 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,890,711 |
) |
Compensation expense on shares issued to management 1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option awards issued to directors/employees-1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
324,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
324,377 |
|
Compensation expense on option awards issued to non-employees-1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,391 |
|
Compensation expense on shares issued to management 2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option awards issued to directors/employees-2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,011 |
|
Compensation expense on option awards issued to non-employees-2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,206 |
|
Compensation expense on shares issued to management 3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option awards issued to directors/employees-3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,231 |
|
Compensation expense on option awards issued to non-employees-3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,281,245 |
) |
|
|
37,247 |
|
|
|
(8,243,998 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,243,998 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 9/30/10 (Successor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
19,768,831 |
|
|
$ |
19,769 |
|
|
$ |
1,924,899 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(13,331,244 |
) |
|
$ |
435,722 |
|
|
$ |
(10,950,854 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
15
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
|
|
|
period from |
|
|
|
|
|
|
|
period from |
|
|
|
|
|
|
|
|
|
|
|
September 1, |
|
|
|
|
|
|
|
December 28, |
|
|
|
Nine months |
|
|
One month |
|
|
2009 (date of |
|
|
|
Eight months |
|
|
1995 (date of |
|
|
|
ended |
|
|
ended |
|
|
inception) to |
|
|
|
ended |
|
|
inception) to |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
August 31, |
|
|
August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
|
2009 |
|
|
2009 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(8,281,245 |
) |
|
$ |
(1,957,547 |
) |
|
$ |
(13,331,244 |
) |
|
|
$ |
65,721,531 |
|
|
$ |
(115,322,121 |
) |
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorganization items, net |
|
|
|
|
|
|
|
|
|
|
72,477 |
|
|
|
|
(74,648,976 |
) |
|
|
(74,648,976 |
) |
Expense related to equity awards and issuance of stock |
|
|
842,940 |
|
|
|
745,616 |
|
|
|
1,724,158 |
|
|
|
|
583,453 |
|
|
|
10,608,999 |
|
Warrant income |
|
|
(1,560,757 |
) |
|
|
|
|
|
|
(1,241,673 |
) |
|
|
|
|
|
|
|
|
|
Uncompensated contribution of services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
755,556 |
|
Depreciation and amortization |
|
|
5,612 |
|
|
|
|
|
|
|
5,612 |
|
|
|
|
|
|
|
|
9,091,990 |
|
Provision for doubtful accounts |
|
|
(12,839 |
) |
|
|
668 |
|
|
|
(59,458 |
) |
|
|
|
501 |
|
|
|
337,810 |
|
Provision for excessive and/or obsolete inventory |
|
|
(51,165 |
) |
|
|
5,126 |
|
|
|
(39,501 |
) |
|
|
|
169,085 |
|
|
|
259,427 |
|
Amortization of debt issue costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
985,237 |
|
|
|
4,107,067 |
|
Amortization of debt discounts on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(508,983 |
) |
Loss on disposal or impairment of property and equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,668,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange (gain) loss on substantial liquidation of foreign entity |
|
|
(3,031 |
) |
|
|
(7,084 |
) |
|
|
(5,645 |
) |
|
|
|
30,012 |
|
|
|
(2,256,408 |
) |
Net loss (income) attributable to non-controlling interest |
|
|
37,247 |
|
|
|
(1,644 |
) |
|
|
52,740 |
|
|
|
|
205,632 |
|
|
|
(1,799,523 |
) |
Change in operating assets and liabilities, excluding effects of acquisition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable |
|
|
3,783 |
|
|
|
15,226 |
|
|
|
27,327 |
|
|
|
|
91,666 |
|
|
|
(91,496 |
) |
Decrease (increase) in other receivables |
|
|
(105 |
) |
|
|
4,126 |
|
|
|
4,635 |
|
|
|
|
23,632 |
|
|
|
218,978 |
|
Decrease (increase) in inventory |
|
|
69,086 |
|
|
|
23,508 |
|
|
|
100,009 |
|
|
|
|
29,543 |
|
|
|
(455,282 |
) |
Decrease (increase) in prepaid expenses |
|
|
(37,812 |
) |
|
|
(301,488 |
) |
|
|
(282,717 |
) |
|
|
|
628,197 |
|
|
|
34,341 |
|
Decrease (increase) in other assets |
|
|
|
|
|
|
4,120 |
|
|
|
4,120 |
|
|
|
|
(112,441 |
) |
|
|
71,000 |
|
Increase (decrease) in accounts payable |
|
|
828,353 |
|
|
|
4,184 |
|
|
|
935,975 |
|
|
|
|
(230,592 |
) |
|
|
57,648 |
|
Increase (decrease) in accrued expenses, liabilities subject to compromise and other liabilities |
|
|
1,228,707 |
|
|
|
(192,824 |
) |
|
|
802,913 |
|
|
|
|
1,868,162 |
|
|
|
3,311,552 |
|
Decrease in deferred revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,522 |
) |
|
|
(50,096 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(6,931,226 |
) |
|
|
(1,658,013 |
) |
|
|
(11,230,272 |
) |
|
|
|
(4,662,880 |
) |
|
|
(148,610,040 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Agera, net of cash acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,016,520 |
) |
Purchase of property and equipment |
|
|
(29,675 |
) |
|
|
|
|
|
|
(29,675 |
) |
|
|
|
|
|
|
|
(25,515,170 |
) |
Proceeds from the sale of property and equipment, net of selling costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,542,434 |
|
Purchase of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(152,998,313 |
) |
Proceeds from sales and maturities of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,507,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(29,675 |
) |
|
|
|
|
|
|
(29,675 |
) |
|
|
|
|
|
|
|
(20,480,569 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from convertible debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,450,000 |
|
Offering costs associated with the issuance of convertible debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,746,193 |
) |
Proceeds from notes payable to shareholders, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,667 |
|
Proceeds from the issuance of preferred stock, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,931,800 |
|
Proceeds from the issuance of redeemable preferred stock series A, net |
|
|
|
|
|
|
|
|
|
|
2,870,000 |
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of redeemable preferred stock series B, net |
|
|
2,388,168 |
|
|
|
|
|
|
|
2,388,168 |
|
|
|
|
|
|
|
|
|
|
Deposit received for issuance of shares in October 2010 |
|
|
130,000 |
|
|
|
|
|
|
|
130,000 |
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of common stock, net |
|
|
3,469,400 |
|
|
|
1,800,000 |
|
|
|
5,269,400 |
|
|
|
|
|
|
|
|
93,753,857 |
|
Costs associated with secured loan and debtor-in-possession loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(360,872 |
) |
|
|
(360,872 |
) |
Proceeds from secured loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,471 |
|
|
|
500,471 |
|
Proceeds from debtor-in-possession loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,750,000 |
|
|
|
2,750,000 |
|
Payments on insurance loan |
|
|
(47,795 |
) |
|
|
(8,304 |
) |
|
|
(69,686 |
) |
|
|
|
(63,983 |
) |
|
|
(79,319 |
) |
Cash dividends paid on preferred stock |
|
|
(139,750 |
) |
|
|
|
|
|
|
(139,750 |
) |
|
|
|
|
|
|
|
(1,087,200 |
) |
Cash paid for fractional shares of preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(38,108 |
) |
Merger and acquisition expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,547 |
) |
Repurchase of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,024,280 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
5,800,023 |
|
|
|
1,791,696 |
|
|
|
10,448,132 |
|
|
|
|
2,825,616 |
|
|
|
170,137,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash balances |
|
|
3,473 |
|
|
|
3,174 |
|
|
|
6,622 |
|
|
|
|
(6,760 |
) |
|
|
(36,391 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
(1,157,405 |
) |
|
|
136,857 |
|
|
|
(805,193 |
) |
|
|
|
(1,844,024 |
) |
|
|
1,010,276 |
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
|
|
|
period from |
|
|
|
|
|
|
|
period from |
|
|
|
|
|
|
|
|
|
|
|
September 1, |
|
|
|
|
|
|
|
December 28, |
|
|
|
Nine months |
|
|
One month |
|
|
2009 (date of |
|
|
|
Eight months |
|
|
1995 (date of |
|
|
|
ended |
|
|
ended |
|
|
inception) to |
|
|
|
ended |
|
|
inception) to |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
August 31, |
|
|
August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
|
2009 |
|
|
2009 |
|
Cash and cash equivalents, beginning of period |
|
|
1,362,488 |
|
|
|
1,010,276 |
|
|
|
1,010,276 |
|
|
|
|
2,854,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
205,083 |
|
|
$ |
1,147,133 |
|
|
$ |
205,083 |
|
|
|
$ |
1,010,276 |
|
|
$ |
1,010,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor cash paid for interest |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
$ |
12,715,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor cash paid for dividends |
|
|
139,750 |
|
|
|
|
|
|
|
139,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor deemed dividend associated with beneficial conversion of preferred stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
$ |
11,423,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor preferred stock dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,589,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor accrued preferred stock dividend |
|
|
85,183 |
|
|
|
|
|
|
|
85,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor uncompensated contribution of services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
755,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor common stock issued for intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor common stock issued in connection with conversion of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,814,000 |
|
|
|
10,814,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor equipment acquired through capital lease |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
167,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor/Predecessor financing of insurance premiums |
|
|
|
|
|
|
|
|
|
|
81,517 |
|
|
|
|
|
|
|
|
87,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor issuance of notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000,060 |
|
|
|
6,000,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor common stock issued in connection with reorganization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,472,000 |
|
|
|
5,472,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,340,656 |
|
|
|
6,340,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor deferred tax liability in connection with fresh-start |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500,000 |
|
|
|
2,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of Predecessor common stock and fresh start adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,780,320 |
|
|
|
14,780,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
subscription receivable |
|
|
792,000 |
|
|
|
|
|
|
|
792,000 |
|
|
|
|
|
|
|
|
|
|
Successor accrued warrant liability |
|
|
5,579,319 |
|
|
|
|
|
|
|
5,895,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
17
Fibrocell Science, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note 1Emergence from Voluntary Reorganization Under Chapter 11 Proceedings and Reorganization Plan
Background
On June 15, 2009 Isolagen, Inc. (the Predecessor) and Isolagens wholly owned subsidiary,
Isolagen Technologies, Inc. (Isolagen Tech) (Isolagen and Isolagen Tech are referred as the
Debtors), each filed a voluntary petition for reorganization under Chapter 11 of the United
States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the
District of Delaware in Wilmington (the Bankruptcy Court) under Case Nos. 09-12072 and 09-12073,
respectively.
On August 27, 2009 (the Confirmation Date), the Bankruptcy Court entered an order (the
Confirmation Order) confirming the Debtors Joint First Amended Plan of Reorganization dated July
30, 2009, as supplemented by the Plan Supplement dated August 21, 2009 (as so modified and
supplemented, the Plan). The effective date of the Plan (Effective Date) was September 3, 2009.
Isolagen and Isolagen Tech emerged from bankruptcy as the reorganized debtors, Fibrocell Science,
Inc. (Fibrocell or the Company or the Successor) and Fibrocell Technologies, Inc. (Fibrocell
Technologies), respectively (collectively, the Reorganized Debtors). Fibrocell now operates
outside of the restraints of the bankruptcy process, free of the debts and liabilities discharged
by the Plan.
The Predecessor Companys officers and directors as of the effective date were all deemed to
have resigned and a new board of directors was appointed. As of the effective date, the Successor
Companys initial board of directors consisted of: David Pernock, Paul Hopper and Kelvin Moore.
Dr. Robert Langer was appointed to the Board in late September 2009. Declan Daly remained as chief
operating officer and chief financial officer of the reorganized company, and in November 2009, he
was appointed to the Board of Directors. Mr. Daly received 5% of the Common Stock of the Successor
as of the date of his appointment, which is subject to a two-year vesting schedule whereby 50%
vested on the Effective Date, 25% shall vest on the first anniversary and 25% shall vest on the
second anniversary. Mr. Daly was the acting interim chief executive officer until February 1, 2010.
On February 1, 2010, David Pernock became the Chief Executive Officer. Marc Mazur was appointed to
the Board of Directors in April 2010. George J. Korkos, M.D., D.D.S., F.A.C.S. was appointed to the
Board of Directors in July 2010.
Plan of Reorganization
Pursuant to the Plan, all of the Predecessor Companys equity interests, including without
limitation its common stock, options and warrants outstanding as of the effective date were
cancelled. On the effective date, the Successor Company completed an exit financing of common stock
in the amount of $2 million, after which the equity holders of the Successor Company were:
7,320,000 shares, to our pre-bankruptcy lenders and the lenders that provided us our
debtor-in-possession facility, collectively;
3,960,000 shares, to the holders of our 3.5% convertible subordinated notes;
600,000 shares, to our management as of the effective date, which was our chief
operating officer;
120,000 shares, to the holders of our general unsecured claims; and
2,666,666 shares, to the purchasers of shares in the $2 million exit financing (our
pre-bankruptcy lenders, the lenders that provided us our debtor-in-possession facility and
the holders of our 3.5% convertible subordinated notes were permitted to participate in our
exit financing).
18
In the Plan, in addition to the common stock set forth above, each holder of Isolagens 3.5%
convertible subordinated notes, due November 2024, in the approximate non-converted aggregate
principal amount of $81 million, received, in full and final satisfaction, settlement, release and
discharge of and in exchange for any and all
claims arising out of the 3.5% convertible subordinated notes, its pro rata share of an
unsecured note in the principal amount of $6 million, or the Notes. The Notes have the following
features:
12.5% interest payable quarterly in cash or, at the Companys option, 15% payable in
kind by capitalizing such unpaid amount and adding it to the principal as of the date it was
due;
matures June 1, 2012;
at any time prior to the maturity date, the Company may redeem any portion of the
outstanding principal of the Notes in cash at 125% of the stated face value of the Notes;
provided that the Company will be obligated to redeem all outstanding Notes upon the
following events: (a) the Company or its subsidiary, Fibrocell Technologies, Inc. (formerly,
Isolagen Technologies, Inc.) successfully complete a capital campaign raising in excess of
$10,000,000; or (b) the Company or its subsidiary, Fibrocell Technologies, Inc., are
acquired by, or sell a majority stake to, an outside party;
the Notes contain customary representations, warranties and covenants, including a
covenant that the Company and its subsidiary, Fibrocell Technologies, Inc., shall be
prohibited from the incurrence of additional debt without obtaining the consent of 66 2/3%
of the Note holders.
Trading of Common Stock
The Predecessors common stock ceased trading on the NYSE Amex on May 6, 2009 and in June 2009
the NYSE Amex delisted the Predecessors common stock from listing on the NYSE Amex. Upon the
Effective Date, the outstanding common stock of the Predecessor Company was cancelled for no
consideration. Consequently, the Predecessors stockholders prior to the Effective Date no longer
have any interest as stockholders of the Predecessor Company by virtue of their ownership of the
Predecessors common stock prior to the emergence from bankruptcy. On October 21, 2009, the
Successor Company was available for trading on the OTC Bulletin Board under the symbol FCSC.
Note 2Basis of Presentation, Business and Organization
Fibrocell is the parent company of Fibrocell Technologies and Agera Laboratories, Inc., a
Delaware corporation (Agera). Fibrocell Technologies is the parent company of Isolagen Europe
Limited, a company organized under the laws of the United Kingdom (Isolagen Europe), Isolagen
Australia Pty Limited, a company organized under the laws of Australia (Isolagen Australia), and
Isolagen International, S.A., a company organized under the laws of Switzerland (Isolagen
Switzerland).
The Company is an aesthetic and therapeutic company focused on developing novel skin and
tissue rejuvenation products. The Companys clinical development product candidates are designed to
improve the appearance of skin injured by the effects of aging, sun exposure, acne and burns with a
patients own, or autologous, fibroblast cells produced in the Companys proprietary Fibrocell
Process. The Company also markets an advanced skin care line with broad application in core target
markets through its Agera subsidiary.
In October 2006, the Predecessor Company reached an agreement with the U.S. Food and Drug
Administration (FDA) on the design of a Phase III pivotal study protocol for the treatment of
nasolabial fold wrinkles. The randomized, double-blind protocol was submitted to the FDA under the
agencys Special Protocol Assessment (SPA) regulations. Pursuant to this assessment process, the
FDA has agreed that the Predecessor Companys study design for two identical trials, including
patient numbers, clinical endpoints, and statistical analyses, is acceptable to the FDA to form the
basis of an efficacy claim for a marketing application. The randomized, double-blind, pivotal Phase
III trials will evaluate the efficacy and safety of our product against placebo in approximately
400 patients with approximately 200 patients enrolled in each trial. The Predecessor Company
completed enrollment of the study and commenced injection of subjects in early 2007. All injections
were completed in January 2008 and top line results from this trial were publically announced in
August 2008. The data analysis, including safety data, was publically released in October 2008. The
related Biologics License Application (BLA) was submitted to the FDA in March 2009. In May 2009,
the Predecessor Company announced that the
FDA had completed its initial review of the Companys BLA related to its nasolabial fold
wrinkles product candidate and that the FDA had accepted (or filed) the BLA for full review.
19
On October 9, 2009, the FDA Cellular, Tissue and Gene Therapies Advisory Committee reviewed
the Companys nasolabial fold wrinkles product candidate. The Committee voted 11 yes to 3 no
that the data presented on our product demonstrated efficacy, and 6 yes to 8 no that the data
demonstrated safety; both for the proposed indication of treatment of nasolabial fold wrinkles. The
Committees recommendations are not binding on the FDA, but the FDA will consider their
recommendations during their review of our application. The United States Adopted Names (USAN)
Council adopted the USAN name, azficel-T, for our nasolabial fold wrinkles product candidate on
October 28, 2009, and the FDA is currently evaluating a proposed brand name, Laviv.
On December 21, 2009, Fibrocell received a Complete Response letter from the FDA related to
the BLA for azficel-T, an autologous cell therapy for the treatment of moderate to severe
nasolabial fold wrinkles in adults. A Complete Response letter is issued by the FDAs Center for
Biologics Evaluation and Research (CBER) when the review of a file is completed and additional data
are needed prior to approval. The Complete Response letter requested that Fibrocell Science provide
data from a histopathological study on biopsied tissue samples from patients following injection of
azficel-T. The histology study (IT-H-001) will evaluate tissue treated with azficel-T as compared
to tissue treated with sterile saline (placebo). The study will also provide information about the
skin after treatment, including evaluation of collagen and elastin fibrils, and cellular structure
of the sampled tissues. The Company submitted a proposed protocol concerning a histopathological
study on biopsied samples to the FDA and to the Companys Investigational Review Board (IRB).
The IRB has approved the protocol and the Company received the comments from the FDA on the
protocol in May 2010.
On May 13, 2010, the Company announced the initiation of a small histology study of azficel-T,
an autologous cell therapy currently under review by the U.S. Food and Drug Administration (FDA)
for the treatment of moderate to severe nasolabial fold wrinkles. The study has a target enrollment
of approximately 20 participants from the completed and statistically significant pivotal Phase III
studies of azficel-T (IT-R-005 and IT-R-006). The Company announced on July 8, 2010, the completion
of enrollment of and first treatment visits for participants in its histology study of azficel-T.
The second treatment visits for participants enrolled in the histology study of azficel-T were
completed by the end of July. The third treatment visits for participants enrolled in the
histology study of azficel-T were completed by the end of August.
The Complete Response letter also requested finalized Chemistry, Manufacturing and Controls
(CMC) information regarding the manufacture of azficel-T as follow-up to discussions that occurred
during the BLA review period, as well as revised policies and procedures.
The Company anticipates filing its response to the FDAs Complete Response letter by the end
of 2010. There is no assurance that the FDA will accept the Companys response as it may find that
the Companys response does not provide sufficient information to address its Complete Response
letter. Even if the FDA accepts the Companys response for complete evaluation, there is no
assurance that it will approve our product. The FDA, under the Prescription Drug User Fee Act
(PDUFA), has a target six months review window to completely evaluate the Companys response upon
acceptance of the response.
Basis of Presentation
For discussions on the results of operations, the Successor Company has compared the three and
nine months ended September 30, 2010 (Successor Company) to the three and nine months ended
September 30, 2009 (Predecessor Company). The Successor Company believes that the financial
results provide management and investors a more meaningful analysis of the Successor Companys
performance and trends for comparative purposes.
The consolidated financial statements and notes thereto presented herein are unaudited. In the
opinion of management, all adjustments (consisting of normal accruals) have been made that are
necessary to present fairly the financial position of the Company as of September 30, 2010, and the
results of its operations and cash flows for the nine months ended September 30, 2010 and the
cumulative period from September 1, 2009 (date of inception) to
September 30, 2010. These financial statements should be read in conjunction with the
financial statements that were included in the Companys Annual Report on Form 10-K for the period
ended December 31, 2009.
20
In June 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Codification 105 (ASC), Generally Accepted Accounting Principles, which became the single source
of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP),
superseding existing FASB, American Institute of Certified Public Accountants (AICPA), Emerging
Issues Task Force (EITF), and related accounting literature. This pronouncement reorganizes the
thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a
consistent structure. Also included is relevant Securities and Exchange Commission (SEC) guidance
organized using the same topical structure in separate sections and will be effective for financial
statements issued for reporting periods that end after September 15, 2009. The impact on the
Companys financial disclosures is that references to authoritative accounting literature will be
references in accordance with ASC 105.
Financial Reporting by Entities in Reorganization under the Bankruptcy Code
Overall, ASC 852-10, Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code, (ASC 852) applies to the Companys financial statements for the periods that the Company
operated under the provisions of Chapter 11. ASC 852 does not change the application of generally
accepted accounting principles in the preparation of financial statements. However, for periods
including and subsequent to the filing of the Chapter 11 petition, ASC 852 does require that the
financial statements distinguish transactions and events that are directly associated with the
reorganization from the ongoing operations of the business. Accordingly, certain revenues,
expenses, gains, and losses that were realized or incurred during the Chapter 11 proceedings have
been classified as reorganization items, net on the accompanying consolidated statements of
operations.
As of September 1, 2009, the Successor Company adopted fresh-start accounting in accordance
with ASC 852-10. The Successor Company selected September 1, 2009, as the date to effectively
apply fresh-start accounting based on the absence of any material contingencies at the September 3,
2009 effective date and the immaterial impact of transactions between September 1, 2009 and
September 3, 2009. The adoption of fresh-start accounting resulted in the Successor Company
becoming a new entity for financial reporting purposes. The Successor Company is a development
stage company in accordance with ASC 915, Development Stage Entities.
Accordingly, the financial statements prior to September 1, 2009 are not comparable with the
financial statements for periods on or after September 1, 2009. References to Successor or
Successor Company refer to the Company on or after September 1, 2009, after giving effect to the
cancellation of Isolagen, Inc. common stock issued prior to the Effective Date, the issuance of new
Fibrocell Science, Inc. common stock in accordance with the Plan, and the application of
fresh-start accounting. References to Predecessor or Predecessor Company refer to the Company
prior to September 1, 2009. See Note 5 Fresh-Start Accounting in the notes to these
Consolidated Financial Statements for further details.
Note 3Going Concern
The Successor Company emerged from Bankruptcy in September 2009 and continues to operate as a
going concern. At September 30, 2010, the Successor Company had cash and cash equivalents of
approximately $0.2 million and negative working capital of $1.1 million. In early July 2010, the
Successor Company raised approximately $2.7 million less fees as a result of the issuance of
preferred stock and warrants. In early September 2010, the Successor Company raised approximately
$0.7 million less fees as a result of the issuance of preferred stock and warrants. The Successor
Company has also raised approximately $1.0 million less fees as the result of the issuance of
preferred stock and warrants in the period from October 1, 2010 to November 12, 2010.
The Company has not yet received $0.7 million in subscription proceeds from the above raises.
Although the Company believes that these outstanding funds will be received, there is no guarantee
that these funds will be received.
21
As
of November 12, 2010, the Company had cash and cash equivalents
of approximately $0.2 million and liabilities of approximately
$1.6 million. Thus, the Successor
Company will require to raise additional cash resources in the very near future, or it will likely cease
operations. The Successor Company will need to access the capital markets in the future in order to
fund future operations. There is no guarantee that any such required financing will be available on
terms satisfactory to the Successor Company or available at all. These matters create uncertainty
relating to its ability to continue as a going concern. The accompanying consolidated financial
statements do not reflect any adjustments relating to the recoverability and classification of
assets or liabilities that might result from the outcome of these uncertainties.
Further, if the Successor Company raises additional cash resources in the very near future, it
may be raised in contemplation of or in connection with bankruptcy. In the event of a bankruptcy,
it is likely that its common stock and common stock equivalents will become worthless and our
creditors will receive significantly less than what is owed to them.
Through September 30, 2010, the Successor Company has been primarily engaged in developing its
initial product technology. In the course of its development activities, the Company has sustained
losses and expects such losses to continue through at least 2010. During the nine months ended
September 30, 2010, the Successor Company financed its operations primarily through its existing
cash, but as discussed above it now requires additional financing. There is substantial doubt about
the Successor Companys ability to continue as a going concern.
The Successor Companys ability to complete additional offerings is dependent on the state of
the debt and/or equity markets at the time of any proposed offering, and such markets reception of
the Successor Company and the offering terms. The Successor Companys ability to complete an
offering is also dependent on the status of its FDA regulatory milestones and its clinical trials,
and in particular, the status of its indication for the treatment of nasolabial fold wrinkles and
the status of the related BLA, which cannot be predicted. There is no assurance that capital in any
form would be available to the Company, and if available, on terms and conditions that are
acceptable.
As a result of the conditions discussed above, and in accordance with GAAP, there exists
substantial doubt about the Successor Companys ability to continue as a going concern, and its
ability to continue as a going concern is contingent, among other things, upon its ability to
secure additional adequate financing or capital in the very near future. If the Successor Company
does not obtain additional funding, or does not anticipate additional funding, in the very near
future, it will likely enter into bankruptcy and/or cease operations. Further, if it does raise
additional cash resources in the very near future, it may be raised in contemplation of or in
connection with bankruptcy. If the Successor Company enters into bankruptcy, it is likely that its
common stock and common stock equivalents will become worthless and
its creditors, including preferred stock, will receive
significantly less than what is owed to them.
Note 4Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts in the consolidated financial statements
and notes. In addition, managements assessment of the Successor Companys ability to continue as a
going concern involves the estimation of the amount and timing of future cash inflows and outflows.
Actual results may differ materially from those estimates.
Cash and Cash Equivalents
The Company considers highly liquid investments with an original maturity of three months or
less when purchased to be cash equivalents.
Concentration of Credit Risk
As of September 30, 2010, the Successor Company maintains the majority of its cash primarily
with one major U.S. domestic bank. The amounts held in this bank do not exceed the insured limit of
$250,000. The terms of these deposits are on demand to minimize risk. The Successor Company has not
incurred losses related to these deposits. Cash and cash equivalents of approximately $0.1 million,
related to Agera and the Successor Companys
Swiss subsidiary, is maintained in two separate financial institutions. The Successor Company
invests these funds primarily in demand deposit accounts.
22
Allowance for Doubtful Accounts
The Successor Company maintains an allowance for doubtful accounts related to its accounts
receivable that have been deemed to have a high risk of collectability. Management reviews its
accounts receivable on a monthly basis to determine if any receivables will potentially be
uncollectible. One foreign customer represents 89% and 87% of accounts receivable, net, at
September 30, 2010 and December 31, 2009, respectively. Management analyzes historical collection
trends and changes in its customer payment patterns, customer concentration, and creditworthiness
when evaluating the adequacy of its allowance for doubtful accounts. In its overall allowance for
doubtful accounts, the Successor Company includes any receivable balances that are determined to be
uncollectible. Based on the information available, management believes the allowance for doubtful
accounts is adequate; however, actual write-offs might exceed the recorded allowance.
The allowance for doubtful accounts was $24,259 and $37,098 at September 30, 2010 and December
31, 2009, respectively.
Inventory
Agera purchases the large majority of its inventory from one contract manufacturer. Agera
accounts for its inventory on the first-in-first-out method. At September 30, 2010, Ageras
inventory of $0.2 million consisted of $0.1 million of raw materials and $0.1 million of finished
goods. At December 31, 2009, Ageras inventory of $0.2 million consisted of $0.2 million of raw
materials and less than $0.1 million of finished goods.
Property and equipment
Property and equipment is carried at cost less accumulated depreciation and amortization.
Generally, depreciation and amortization for financial reporting purposes is provided by the
straight-line method over the estimated useful life of three years, except for leasehold
improvements which are amortized using the straight-line method over the remaining lease term or
the life of the asset, whichever is shorter. The cost of repairs and maintenance is charged as an
expense as incurred.
Intangible assets
Intangible assets are research and development assets related to the Successor Companys
primary study that was recognized upon emergence from bankruptcy (see Note 5). Intangibles are
tested for recoverability whenever events or changes in circumstances indicate the carrying amount
may not be recoverable. An impairment loss, if any, would be measured as the excess of the carrying
value over the fair value determined by discounted cash flows. There was no impairment of the
intangible assets as of September 30, 2010.
Revenue recognition
The Successor Company recognizes revenue over the period the service is performed in
accordance with ASC 605, Revenue Recognition (ASC 605). In general, ASC 605 requires that four
basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists, (2) delivery has occurred or services rendered, (3) the fee is fixed and
determinable and (4) collectability is reasonably assured.
Revenue from the sale of Ageras products is recognized upon transfer of title, which is upon
shipment of the product to the customer. The Successor Company believes that the requirements of
ASC 605 are met when the ordered product is shipped, as the risk of loss transfers to our customer
at that time, the fee is fixed and determinable and collection is reasonably assured. Any advanced
payments are deferred until shipment.
23
Shipping and handling costs
Agera charges its customers for shipping and handling costs. Such charges to customers are
presented net of the costs of shipping and handling, as selling, general and administrative
expense, and are not significant to the consolidated statements of operations.
Advertising cost
Agera advertising costs are expensed as incurred and include the costs of public relations and
certain marketing related activities. These costs are included in selling, general and
administrative expenses in the accompanying consolidated statements of operations.
Research and development expenses
Research and development costs are expensed as incurred and include salaries and benefits,
costs paid to third-party contractors to perform research, conduct clinical trials, develop and
manufacture drug materials and delivery devices, and a portion of facilities cost. Research and
development costs also include costs to develop manufacturing, cell collection and logistical
process improvements.
Clinical trial costs are a significant component of research and development expenses and
include costs associated with third-party contractors. Invoicing from third-party contractors for
services performed can lag several months. The Successor Company accrues the costs of services
rendered in connection with third-party contractor activities based on its estimate of management
fees, site management and monitoring costs and data management costs. Actual clinical trial costs
may differ from estimated clinical trial costs and are adjusted for in the period in which they
become known.
Warrant Liability
The warrants for the Successor Company are measured at fair value and liability-classified
under ASC 815, Derivatives and Hedging, (ASC 815) because the warrants contain down-round
protection and therefore, do not meet the scope exception for treatment as a derivative under ASC
815. Since down-round protection is not an input into the calculation of the fair value of the
warrants, the warrants cannot be considered indexed to the Companys own stock which is a
requirement for the scope exception as outlined under ASC 815. The fair value of the warrants is
determined using the Black-Scholes option pricing model and is affected by changes in inputs to
that model including our stock price, expected stock price volatility, the contractual term, and
the risk-free interest rate. The Successor Company will continue to classify the fair value of the
warrants as a liability until the warrants are exercised, expire or are amended in a way that would
no longer require these warrants to be classified as a liability.
Stock-based Compensation
The Successor Company accounts for stock-based awards to employees and non-employees using the
fair value based method to determine compensation for all arrangements where shares of stock or
equity instruments are issued for compensation. The Successor Company uses a Black-Scholes
options-pricing model to determine the fair value of each option grant as of the date of grant for
expense incurred. The Black-Scholes model requires inputs for risk-free interest rate, dividend
yield, volatility and expected lives of the options. Expected volatility is based on historical
volatility of the Companys competitors stock since the Predecessor Company ceased trading as part
of the bankruptcy and emerged as a new entity. The risk-free rate for periods within the
contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of
the grant. The expected lives for options granted represents the period of time that options
granted are expected to be outstanding and is derived from the contractual terms of the options
granted. The Successor Company estimates future forfeitures of options based upon expected
forfeiture rates.
Income taxes
An asset and liability approach is used for financial accounting and reporting for income
taxes. Deferred income taxes arise from temporary differences between income tax and financial
reporting and principally relate to recognition of revenue and expenses in different periods for
financial and tax accounting purposes and are measured using currently enacted tax rates and laws.
In addition, a deferred tax asset can be generated by net operating loss
(NOLs) carryover. If it is more likely than not that some portion or all of a deferred tax
asset will not be realized, a valuation allowance is recognized.
24
In the event the Company is charged interest or penalties related to income tax matters, the
Company would record such interest as interest expense and would record such penalties as other
expense in the consolidated statements of operations. No such charges have been incurred by the
Company. As of September 30, 2010 and December 31, 2009, the Successor Company had no accrued
interest related to uncertain tax positions.
At September 30, 2010 and December 31, 2009, the Company has provided a full valuation
allowance for the net deferred tax assets, the large majority of which relates to the future
benefit of loss carryovers. In addition, as a result of fresh-start accounting, the Successor
Company may be limited by section 382 of the Internal Revenue Service Code. The tax years 2006
through 2009 remain open to examination by the major taxing jurisdictions to which we are subject.
The deferred tax liability at September 30, 2010 and December 31, 2009, relates to the intangible
assets recognized upon fresh-start accounting.
Earnings (loss) per share data
Basic earnings (loss) per share is calculated based on the weighted average common shares
outstanding during the period. Diluted earnings per share (Diluted EPS) also gives effect to the
dilutive effect of stock options, warrants, restricted stock and convertible preferred stock
calculated based on the treasury stock method.
The Predecessor and Successor Companys potentially dilutive securities consist of potential
common shares related to stock options, warrants, restricted stock and convertible preferred stock.
Diluted EPS includes the impact of potentially dilutive securities except in periods in which
there is a loss because the inclusion of the potential common shares would be anti-dilutive. The
Company does not present diluted earnings per share for years in which it incurred net losses as
the effect is anti-dilutive. There were no potentially dilutive securities for the eight months
ended August 31, 2009, due to the cancellation of the convertible notes and the cancellation of all
the outstanding stock option plans and the last known market price was less than exercise price.
Fair Value of Financial Instruments
The carrying values of certain of the Successor Companys financial instruments, including
cash equivalents and accounts payable approximates fair value due to their short maturities. The
fair values of the Successor Companys long-term obligations are based on assumptions concerning
the amount and timing of estimated future cash flows and assumed discount rates reflecting varying
degrees of risk. The carrying values of the Successor Companys long-term obligations approximate
their fair values.
The fair value of the reorganization value which applies in fresh-start accounting was
estimated by applying the income approach and a market approach. This fair value measurement is
based on significant inputs that are not observable in the market and, therefore, represents a
Level 3 measurement as defined in ASC 820, Fair Value Measurements.
Adoption of Standards
In March 2010, the FASB amended the disclosure requirements so that SEC filers are no longer
required to disclose the date through which subsequent events have been evaluated in originally
issued and revised financial statements. This revised guidance is effective immediately and we
adopted this pronouncement on March 31, 2010 and have revised the disclosures as required.
On December 15, 2009, the FASB issued ASU No. 2010-06 Fair Value Measurements and Disclosures
Topic 820 Improving Disclosures about Fair Value Measurements. This ASU requires some new
disclosures and clarifies some existing disclosure requirements about fair value measurement as set
forth in Codification Subtopic 820-10. The FASBs objective is to improve these disclosures and,
thus, increase the transparency in financial reporting. The adoption of this ASU did not have a
material impact on the Companys consolidated financial statements.
25
Note 5Fresh-Start Accounting
On September 1, 2009, the Successor Company adopted fresh-start accounting upon the emergence
of bankruptcy in accordance with ASC 852-10, Reorganization. Fresh-start accounting results in the
Company becoming a new entity for financial reporting purposes. Accordingly, the Companys
consolidated financial statements for periods prior to September 1, 2009 are not comparable to
consolidated financial statements presented on or after September 1, 2009. The Company selected
September 1, 2009, as the date to apply fresh-start accounting based on the absence of any material
contingencies at the September 3, 2009 effective date and the immaterial impact of transactions
between September 1, 2009 and September 3, 2009.
Under ASC 852-10, the Successor Company must determine a value to be
assigned to the equity of the emerging company as of the date of the adoption of fresh-start
accounting. The Successor Company obtained an independent appraisal to value the equity and it
served as the fair market value of the emerging Companys equity.
Fresh-start accounting reflects the value of the Successor Company as determined in the
confirmed Plan. Under fresh-start accounting, the Successor Companys assets values are remeasured
and allocated in conformity with ASC 805-20, Business Combinations, Identifiable Assets and
Liabilities, and any Noncontrolling Interest. Fresh-start accounting also requires that all
liabilities should be stated at fair value. The portion of the reorganization value which was
attributed to identified intangible assets was $6,340,656. This value is related to research and
development assets that are not subject to amortization. In accordance with ASC 805-20, this
amount is reported as intangibles in the consolidated financial statements as of September 30,
2010, and is not being amortized.
The following fresh-start Consolidated Balance Sheet presents the financial effects on the
Successor Company with the implementation of the Plan and the adoption of fresh-start accounting.
The effect of the consummation of the transactions contemplated in the Plan included the settlement
of liabilities and the issuance of common stock.
The effects of the Plan and fresh-start reporting on the Successor Companys Consolidated
Balance Sheet are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
|
Reclassifications |
|
|
|
Fresh Start |
|
|
Successor |
|
|
|
August 31, |
|
|
And Plan of |
|
|
|
Accounting |
|
|
September 1, |
|
|
|
2009 |
|
|
Reorganization |
|
|
|
Adjustments |
|
|
2009 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,010,277 |
|
|
$ |
|
|
|
|
$ |
|
|
|
$ |
1,010,277 |
|
Accounts receivable, net |
|
|
246,684 |
|
|
|
|
|
|
|
|
|
|
|
|
246,684 |
|
Inventory, net |
|
|
268,619 |
|
|
|
|
|
|
|
|
|
|
|
|
268,619 |
|
Prepaid expenses |
|
|
221,225 |
|
|
|
|
|
|
|
|
|
|
|
|
221,225 |
|
Other current assets |
|
|
4,140 |
|
|
|
|
|
|
|
|
|
|
|
|
4,140 |
|
Current assets of discontinued operations, net |
|
|
785 |
|
|
|
|
|
|
|
|
|
|
|
|
785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,751,730 |
|
|
|
|
|
|
|
|
|
|
|
|
1,751,730 |
|
Intangible assets |
|
|
|
|
|
|
|
|
|
|
|
6,340,656 |
(e) |
|
|
6,340,656 |
|
Other assets |
|
|
1,671 |
|
|
|
|
|
|
|
|
|
|
|
|
1,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,753,401 |
|
|
$ |
|
|
|
|
$ |
6,340,656 |
|
|
$ |
8,094,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Shareholders Equity/(Deficit) and Noncontrolling Interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current debt |
|
$ |
8,304 |
|
|
$ |
|
|
|
|
$ |
|
|
|
$ |
8,304 |
|
Accounts payable |
|
|
137,401 |
|
|
|
|
|
|
|
|
|
|
|
|
137,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses |
|
|
849,395 |
|
|
|
|
|
|
|
|
|
|
|
|
849,395 |
|
Liabilities subject to compromise |
|
|
82,181,741 |
|
|
|
(82,181,741 |
)(a) |
|
|
|
|
|
|
|
|
|
Prepetition secured loan, subject to compromise |
|
|
500,471 |
|
|
|
(500,471 |
)(b) |
|
|
|
|
|
|
|
|
|
Debtor-in-possession loan |
|
|
2,750,000 |
|
|
|
(2,750,000 |
)(b) |
|
|
|
|
|
|
|
|
|
Current liabilities of discontinued operations |
|
|
25,668 |
|
|
|
|
|
|
|
|
|
|
|
|
25,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
86,452,980 |
|
|
|
(85,432,212 |
) |
|
|
|
|
|
|
|
1,020,768 |
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
|
Reclassifications |
|
|
|
Fresh Start |
|
|
Successor |
|
|
|
August 31, |
|
|
And Plan of |
|
|
|
Accounting |
|
|
September 1, |
|
|
|
2009 |
|
|
Reorganization |
|
|
|
Adjustments |
|
|
2009 |
|
Other long term liabilities of continuing operations |
|
|
407,078 |
|
|
|
|
|
|
|
|
|
|
|
|
407,078 |
|
Notes payable |
|
|
|
|
|
|
6,000,060 |
(a) |
|
|
|
|
|
|
|
6,000,060 |
|
Deferred tax liability |
|
|
|
|
|
|
|
|
|
|
|
2,500,000 |
(f) |
|
|
2,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
86,860,058 |
|
|
|
(79,432,152 |
) |
|
|
|
2,500,000 |
|
|
|
9,927,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity (Deficit): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor common stock |
|
|
42,821 |
|
|
|
(42,821 |
)(c) |
|
|
|
|
|
|
|
|
|
Predecessor additional paid-in capital |
|
|
142,737,499 |
|
|
|
(25,931,179 |
)(c) |
|
|
|
(116,806,320 |
)(g) |
|
|
|
|
Predecessor treasury stock |
|
|
(25,974,000 |
) |
|
|
25,974,000 |
(c) |
|
|
|
|
|
|
|
|
|
Successor common stock |
|
|
|
|
|
|
11,400 |
(a)(b) |
|
|
|
|
|
|
|
11,400 |
|
Successor additional paid-in capital |
|
|
|
|
|
|
5,460,600 |
(a)(b) |
|
|
|
(7,688,831 |
)(g) |
|
|
(2,228,231 |
) |
|
|
Accumulated deficit during development stage |
|
|
(202,295,959 |
) |
|
|
73,960,152 |
(a)(b)(c)(d) |
|
|
|
128,335,807 |
(g) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity (deficit) |
|
|
(85,489,639 |
) |
|
|
79,432,152 |
|
|
|
|
3,840,656 |
|
|
|
(2,216,831 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
382,982 |
|
|
|
|
|
|
|
|
|
|
|
|
382,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity (deficit) and noncontrolling interests |
|
|
(85,106,657 |
) |
|
|
79,432,152 |
|
|
|
|
3,840,656 |
|
|
|
(1,833,849 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities, shareholders equity/(deficit) and noncontrolling interests |
|
$ |
1,753,401 |
|
|
$ |
|
|
|
|
$ |
6,340,656 |
|
|
$ |
8,094,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to Plan of Reorganization and fresh-start accounting adjustments
|
|
|
(a) |
|
This adjustment reflects the discharge of liabilities subject to compromise in accordance with
the Plan of Reorganization and the issuance of $6 million in Notes payable and the issuance of
4,080,000 shares of Successor Company common stock in satisfaction of such claims. |
|
(b) |
|
This adjustment reflects the discharge of prepetition loan and debtor in-possession loan in
accordance with the Plan of Reorganization and the issuance of 7,320,000 shares of the Successor
Company common stock in satisfaction of such claims. |
|
(c) |
|
This adjustment reflects the cancellation of the Predecessor Companys common stock, additional
paid-in capital and treasury stock. |
|
(d) |
|
To reset accumulated deficit to zero for the consolidated subsidiaries included in the Plan of Reorganization. |
|
(e) |
|
This adjustment reflects the portion of the reorganization value which was attributed to identified intangible assets. |
|
(f) |
|
To record deferred tax liability as a result of the impact of fresh-start accounting fair value adjustments. |
|
(g) |
|
To reset Predecessor additional paid-in capital, accumulated deficit to zero and record net fresh-start adjustments. |
Note 6Liabilities Subject to Compromise and Reorganization Items
Liabilities subject to compromise refers to pre-petition obligations that were impacted by the
Chapter 11 reorganization process. For further information regarding the discharge of liabilities
subject to compromise, see Note 5- Fresh-Start Accounting in the notes of these Financial
Statements. As of September 30, 2010, there were no liabilities subject to compromise.
The Company incurred certain professional fees and other expenses directly associated with the
bankruptcy proceedings. In addition, the Company has made adjustments to the carrying value of
certain prepetition liabilities. Such costs and adjustments are classified as reorganization
items, net and are presented separately in the unaudited consolidated statements of operations.
There were no reorganization costs for the three months ended September 30, 2010. For the nine
months ended September 30, 2010, there was $13,150 in professional fees offset by the gain from
discharge of a liability of $16,453 for a net gain of $3,303.
27
For the nine months ended September 30, 2009, the following have been incurred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
One month ended |
|
|
|
Two months ended |
|
|
Eight months ended |
|
|
|
September 30, 2009 |
|
|
|
August 31, 2009 |
|
|
August 31, 2009 |
|
Professional fees (expense) |
|
$ |
|
|
|
|
$ |
(334,738 |
) |
|
$ |
(533,271 |
) |
Debt issuance costs related to DIP facility |
|
|
|
|
|
|
|
(182,050 |
) |
|
|
(295,757 |
) |
Other debt issuance costs |
|
|
|
|
|
|
|
|
|
|
|
(280,964 |
) |
Gain on discharge of liabilities subject to compromise |
|
|
|
|
|
|
|
74,648,976 |
|
|
|
74,648,976 |
|
|
|
|
|
|
|
|
|
|
|
|
Total reorganization items, net |
|
$ |
|
|
|
|
$ |
74,132,188 |
|
|
$ |
73,538,984 |
|
|
|
|
|
|
|
|
|
|
|
|
The $74.6 million gain from discharge of liabilities subject to compromise is the result
of the settlement of 3.5% Subordinated Notes in exchange for $6.0 million in Notes Payable and
3,960,000 shares, Debtor-in-Possession Credit Facility and Prepetition Secured Loan in exchange for
7,320,000 shares of the Successor Companys common stock and unsecured claims in exchange for
120,000 shares. On the Effective Date, all stock option plans of the Predecessor company were
cancelled.
Cash paid for reorganization items during the three and nine months ended September 30, 2009
was $0.4 and $0.6 million, respectively. Professional fees include financial, legal and valuation
services directly associated with the reorganization process.
Note 7Agera Laboratories, Inc.
On August 10, 2006, the Predecessor Company acquired 57% of the outstanding common shares of
Agera. Agera is a skincare company that has proprietary rights to a scientifically-based advanced
line of skincare products. Agera markets its product primarily in the United States and Europe. The
results of Ageras operations and cash flows have been included in the consolidated financial
statements from the date of the acquisition. The assets and liabilities of Agera have been included
in the consolidated balance sheets since the date of the acquisition.
Note 8Accrued Expenses
Accrued expenses are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Accrued professional fees |
|
$ |
447,790 |
|
|
$ |
147,410 |
|
Accrued compensation |
|
|
360,136 |
|
|
|
7,208 |
|
Accrued interest |
|
|
858,538 |
|
|
|
246,578 |
|
Dividend on preferred stock payable |
|
|
85,183 |
|
|
|
42,740 |
|
Accrued other |
|
|
342,785 |
|
|
|
100,324 |
|
|
|
|
|
|
|
|
Accrued expenses |
|
$ |
2,094,432 |
|
|
$ |
544,260 |
|
|
|
|
|
|
|
|
28
Note 9-Equity
Preferred Stock Series A
In October 2009, the Successor Company completed an offering of Series A Preferred Stock,
Class A Warrants and Class B Warrants (the October 2009 Offering). Each of the foregoing
securities were subject to the down-round protection, which provisions require the lowering of
the conversion price or exercise price, as applicable, to the purchase price in the current
offering, or $0.75, and with respect to the warrants, the number of shares issuable under the
warrants issued in the October 2009 Offering will be proportionately increased such that the
aggregate exercise price payable, after taking into consideration the decrease in exercise price,
shall be equal to the aggregate exercise price prior to such adjustment. The preferred stock has
been classified within the mezzanine section between liabilities and equity in its consolidated
balance sheets because any holder of Series A Preferred Stock may require the Successor Company to
redeem all of its Series A Preferred Stock in the event of a triggering event which is outside of
the control of the Successor Company. The Successor Company records accrued dividends at a rate of
6% per annum on the Series A Preferred stock. A dividend payment of $91,000 was paid in April 2010
for the dividends accrued as of March 31, 2010 and $48,750 was paid in July 2010 for the dividends
accrued as of June 30, 2010. As of September 30, 2010, $48,750 is accrued for dividends payable.
Preferred Stock Series B
On July 16, 2010, the Company entered into a Securities Purchase Agreement (the Purchase
Agreement) with certain accredited investors (the Purchasers), pursuant to which the Company
agreed to sell to the Purchasers in the aggregate: (i) 2,702 shares of Series B Convertible
Preferred Stock, with a par value of $0.001 per share and a stated value of $1,000 per share
(Series B Preferred), and (ii) warrants to purchase 4,503,334 shares of Company common stock
(Common Stock) at an exercise price of $0.8054 per share (the Warrants). Of the foregoing, to date, the Company has not received $210,000 in subscription proceeds
representing 210 shares Series B Preferred and Warrants to purchase 350,000 shares. The Successor Company records accrued dividends at a rate of 6% per annum on
the Series B Preferred stock. As of September 30, 2010, $36,433 is accrued for dividends payable.
The aggregate purchase price paid by the Purchasers for the Series B Preferred and the
Warrants was $2,702,000 (representing $1,000 for each share of Series B Preferred together with the
Warrants). The Company used the proceeds for working capital purposes.
Viriathus Capital LLC and John Carris Investments LLC were co-placement agents for the
Transaction, and received, in the aggregate, cash compensation of $216,160 and warrants to purchase
360,267 shares of Common Stock at an exercise price of $0.60 per share.
On September 8, 2010, the Company entered into Securities Purchase Agreements (the Purchase
Agreements) with certain accredited investors (the Purchasers), pursuant to which the Company
agreed to sell to the Purchasers in the aggregate: (i) 725 shares of Series B Convertible Preferred
Stock, with a par value of $0.001 per share and a stated value of $1,000 per share (Series B
Preferred), and (ii) warrants to purchase 1,208,333 shares of Company common stock (Common
Stock) at an exercise price of $0.8054 per share (the Warrants) (the Transactions).
The aggregate purchase price to be paid by the Purchasers for the Series B Preferred and the
Warrants will be $725,000 (representing $1,000 for each share of Series B Preferred together with
Warrants). Of the foregoing, to date, the Company has not received $450,000 in subscription
proceeds representing 450 shares Series B Preferred and Warrants to purchase 750,000 shares. Upon
receipt of these subscription proceeds, the Company will issue the foregoing securities. The
remaining securities sold in the Transactions have been issued. The Company intends to use the
proceeds for working capital purposes.
Viriathus Capital LLC and John Carris Investments LLC were co-placement agents for the
Transactions, and will receive cash compensation of $58,000 and warrants to purchase 96,667 shares
of Common Stock at an exercise price of $0.60 per share (assuming all subscription proceeds are
received in the Transactions).
Common Stock Offering
On March 2, 2010, the Company entered into a Securities Purchase Agreement (the Purchase
Agreement) with certain accredited investors (the Purchasers), pursuant to which the Company
sold to the Purchasers in the aggregate 5,076,664 shares of common stock at a purchase price of
$0.75 per share. Each Purchaser also received a warrant to purchase the same number of shares of
common stock acquired in the offering at an exercise price of $0.98 per share (the Warrants).
29
The aggregate purchase price paid by the Purchasers for the common stock and the warrants was
$3,807,500. The Company used the proceeds for working capital purposes.
Viriathus Capital LLC and John Carris Investments LLC were co-placement agents for the
transaction, and received cash compensation of $304,600 and warrants to purchase 406,133 shares of
common stock at an exercise price of $0.75 per share upon the closing.
Note 10-Warrants
Preferred Stock Series A Class A and B Warrants and Placement Agent Warrants
As disclosed above in Note 9, the Successor Company issued Class A warrants, Class B warrants
and placement agent warrants in connection with the October 2009 preferred stock transaction. The
warrants are liability classified since they have down-round price protection and they are
re-measured on the Companys reporting dates. As a result of the March 2, 2010 common stock
financing and the down-round provision, the Class A warrants, Class B warrants and placement
agent warrants were reissued to purchase 2.6 million shares of Common Stock at an exercise price of
$0.60 per share.
Preferred Stock Series B Warrants and Co-placement Agent Warrants
In connection with the Series B Convertible Preferred Stock transaction, the Successor Company
issued 5,711,666 warrants at an exercise price of $0.8054 per share and 456,934 placement agent
warrants at an exercise price of $0.60 per share. The warrants are liability classified since they
have down-round price protection and they are re-measured on the Companys reporting dates. The
weighted average fair market value of the warrants, at the date of issuance, granted to the
accredited investors and co-placement agents, based on the Black-Scholes valuation model, is
estimated to be $0.43 per warrant and $0.46 per warrant, respectively.
Common Stock Warrants and Co-placement Agent Warrants
In connection with the March 2, 2010 financing, the Successor Company issued 5,076,664
warrants at an exercise price of $0.98 per share to the accredited investors and 406,133 warrants
at an exercise price of $0.75 to the co-placement agents upon closing. The warrants are liability
classified since they have down-round price protection and they are re-measured on the Companys
reporting dates. The warrants were exercisable immediately after grant and expire five years
thereafter. The fair market value of the warrants, at the date of issuance, granted to the
accredited investors and co-placement agents, based on the Black-Scholes valuation model, is
estimated to be $0.52 per warrant and $0.58 per warrant, respectively. As a result of the
Convertible Preferred Stock Series B financing and the down-round provision, the Common Stock
warrants and placement agent warrants were reissued to purchase 8.8 million shares of Common Stock
at an exercise price of $0.60 per share.
The Successor Company recognizes these warrants as a liability at the fair value on each
reporting date due to the down-round price protection provision. The Company measured the fair
value of these warrants as of September 30, 2010, and recorded warrant income of $1.3 million
resulting from the decrease in the liability associated with the fair value of the warrants for the
three months ended September 30, 2010. The Company computed the value of the warrants using the
Black-Scholes method. The fair value of the warrants will continue to be classified as a liability
until such time as the warrants are exercised, expire or an amendment of the warrant agreements
renders these warrants to be no longer classified as a liability.
The weighted average fair market value of the warrants was computed using the Black-Scholes
option-pricing model with the following key assumptions as of the date indicated:
|
|
|
|
|
|
|
September 30, |
|
|
|
2010 |
|
Expected life (years) |
|
|
4.5 years |
|
Interest rate |
|
|
1.1 |
% |
Dividend yield |
|
|
|
|
Volatility |
|
|
63 |
% |
30
Rollforward of warrant liability from December 31, 2009 through September 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
Additions |
|
|
Revaluation |
|
|
September 30, 2010 |
|
Preferred stock class A warrants |
|
$ |
275,378 |
|
|
$ |
|
|
|
$ |
68,565 |
|
|
$ |
343,943 |
|
Preferred stock class B warrants |
|
|
207,611 |
|
|
|
|
|
|
|
136,332 |
|
|
|
343,943 |
|
Preferred stock co-placement warrants |
|
|
152,287 |
|
|
|
|
|
|
|
(14,710 |
) |
|
|
137,577 |
|
Common stock warrants |
|
|
|
|
|
|
2,654,752 |
|
|
|
(453,877 |
) |
|
|
2,200,875 |
|
Common stock placement warrants |
|
|
|
|
|
|
235,958 |
|
|
|
(101,211 |
) |
|
|
134,747 |
|
Preferred stock series B warrants |
|
|
|
|
|
|
2,466,374 |
|
|
|
(1,100,968 |
) |
|
|
1,365,406 |
|
Preferred stock series B co-placement warrants |
|
|
|
|
|
|
222,235 |
|
|
|
(94,888 |
) |
|
|
127,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
635,276 |
|
|
$ |
5,579,319 |
|
|
$ |
(1,560,757 |
) |
|
$ |
4,653,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability is comprised of the following as of September 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Number of |
|
|
Fair Value of |
|
|
Balance as of |
|
|
|
Warrants |
|
|
Warrants |
|
|
September 30, 2010 |
|
Preferred stock class A warrants |
|
|
1,354,164 |
|
|
$ |
0.25 |
|
|
$ |
343,943 |
|
Preferred stock class B warrants |
|
|
1,354,164 |
|
|
|
0.25 |
|
|
|
343,943 |
|
Preferred stock co-placement warrants |
|
|
541,667 |
|
|
|
0.25 |
|
|
|
137,577 |
|
Common stock warrants |
|
|
8,291,885 |
|
|
|
0.27 |
|
|
|
2,200,875 |
|
Common stock placement warrants |
|
|
507,666 |
|
|
|
0.27 |
|
|
|
134,747 |
|
Preferred stock series B warrants |
|
|
5,711,666 |
|
|
|
0.24 |
|
|
|
1,365,406 |
|
Preferred stock series B co-placement warrants |
|
|
456,934 |
|
|
|
0.28 |
|
|
|
127,347 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
18,218,146 |
|
|
|
|
|
|
$ |
4,653,838 |
|
|
|
|
|
|
|
|
|
|
|
Warrant liability is comprised of the following as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Number of |
|
|
Fair Value of |
|
|
Balance as of |
|
|
|
Warrants |
|
|
Warrants |
|
|
December 31, 2009 |
|
Preferred stock class A warrants |
|
|
501,543 |
|
|
$ |
0.55 |
|
|
$ |
275,378 |
|
Preferred stock class B warrants |
|
|
416,667 |
|
|
|
0.50 |
|
|
|
207,611 |
|
Preferred stock co-placement warrants |
|
|
250,000 |
|
|
|
0.61 |
|
|
|
152,287 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,168,210 |
|
|
|
|
|
|
$ |
635,276 |
|
|
|
|
|
|
|
|
|
|
|
Note 11Equity-based Compensation
Total stock-based compensation expense recognized in the three and nine months ended September
30, 2010, using the straight-line attribution method in the consolidated statement of operations is
as follows:
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, 2010 |
|
|
September 30, 2010 |
|
Stock option compensation expense for employees
and directors |
|
$ |
183,231 |
|
|
$ |
729,619 |
|
Restricted stock expense |
|
|
18,000 |
|
|
|
54,000 |
|
Equity awards for nonemployees issued for services |
|
|
7,724 |
|
|
|
59,321 |
|
|
|
|
|
|
|
|
Total stock-based compensation expense |
|
$ |
208,955 |
|
|
$ |
842,940 |
|
|
|
|
|
|
|
|
31
Total stock-based compensation expense recognized in the one month ended September 30, 2009
(successor) and the eight months ending August 31, 2009 (Predecessor) using the straight-line
attribution method in the consolidated statement of operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
|
|
|
One month ended |
|
|
Eight months ended |
|
|
|
September 30, 2009 |
|
|
August 31, 2009 |
|
Stock option compensation expense for employees
and directors |
|
$ |
286,622 |
|
|
$ |
581,707 |
|
Restricted stock expense |
|
|
150,000 |
|
|
|
|
|
Equity awards for nonemployees issued for services |
|
|
308,994 |
|
|
|
1,746 |
|
|
|
|
|
|
|
|
Total stock-based compensation expense |
|
$ |
745,616 |
|
|
$ |
583,453 |
|
|
|
|
|
|
|
|
On February 23, 2010, modifications were made to all fiscal year 2009 grants for
directors and employees. The modifications provided for all options granted under the 2009 Plan in
fiscal year 2009 to extend to a ten year term and allowed Directors to extend the exercise period
after departure to one year. As a result of the modifications, the Successor Company recognized
incremental compensation cost of $163,445 in the nine months ended September 30, 2010.
On February 1, 2010, the Successor Company granted options to purchase 1,650,000 shares of
common stock to the chief executive officer. The weighted average fair market value using the
Black-Scholes option-pricing model of these options granted was $0.63.
On April 1, 2010 and June 16, 2010, the Successor Company granted options to purchase 800,000
shares of common stock to a director and consultants. The weighted average fair market value using
the Black-Scholes option-pricing model of these options granted was $0.46.
During the three months ended September 30, 2010, the Successor Company granted 720,000 shares
of common stock to directors and consultant. The weighted average fair value using the
Black-Scholes option-pricing model of these options granted was $0.34. The fair market value of
the stock options at the date of grant was estimated using the Black-Scholes option-pricing model
with the following weighted average assumptions:
|
|
|
|
|
|
|
Successor |
|
|
|
Three Months Ended |
|
|
|
September 30, 2010 |
|
Expected life (years) |
|
|
4.9 years |
|
Interest rate |
|
|
1.5 |
% |
Dividend yield |
|
|
|
|
Volatility |
|
|
63 |
% |
There were no stock options exercised during the three and nine months ended September 30,
2010.
The total fair value of shares vested during the third quarter 2010 was $0.2
million. As of September 30, 2010, there was $0.9 million of total unrecognized compensation
cost, related to non-vested stock options which vest over time. That cost is expected to be
recognized over a weighted-average period of 2.2 years. As of September 30, 2010, there was
$0.3 million of total unrecognized compensation expense related to performance-based,
non-vested employee and consultant stock options. That cost will be recognized when the
performance criteria within the respective performance-based option grants become probable of
achievement.
Restricted stock
As of September 30, 2010, there was $0.1 million of total unrecognized
compensation cost related to non-vested restricted stock that is expected to be recognized over a
weighted-average period of 0.9 years.
Predecessor Company
Prior to September 3, 2009, the Predecessor Company maintained stock-based incentive
compensation plans for employees and directors of the Company. On the Effective Date, the following
stock option plans were terminated (and any and all awards granted under such plans were terminated
and will no longer be of any force or effect): (1) the 2001 Stock Option and Appreciation Rights
Plan, (2) the 2003 Stock Option and Appreciation Rights Plan, and (3) the 2005 Stock Option and
Appreciation Rights Plan.
32
Note 12Segment Information and Geographical information
The Successor Company has two reportable segments: Fibrocell Therapy and Agera. The Fibrocell
Therapy segment specializes in the development and commercialization of autologous cellular
therapies for soft tissue regeneration. The Agera segment maintains proprietary rights to a
scientifically-based advanced line of skincare products. There is no intersegment revenue. The
following table provides operating financial information for the continuing operations of the
Successor Companys two reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
Successor |
|
|
|
|
|
|
Successor |
|
Three Months Ended September 30, 2010 |
|
Fibrocell Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
243,677 |
|
|
$ |
243,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment loss from continuing operations |
|
$ |
(1,816,681 |
) |
|
$ |
24,210 |
|
|
$ |
(1,792,471 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information related to continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
$ |
2,472 |
|
|
$ |
|
|
|
$ |
2,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
Successor |
|
|
|
|
|
|
Successor |
|
Nine Months Ended September 30, 2010 |
|
Fibrocell Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
716,809 |
|
|
$ |
716,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss) from continuing operations |
|
$ |
(8,219,599 |
) |
|
$ |
13,722 |
|
|
$ |
(8,205,877 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information related to continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
$ |
5,612 |
|
|
$ |
|
|
|
$ |
5,612 |
|
Total assets as of September 30, 2010 |
|
|
7,030,849 |
|
|
|
589,085 |
|
|
|
7,619,934 |
|
Property and equipment, net |
|
|
24,062 |
|
|
|
|
|
|
|
24,062 |
|
Intangible assets |
|
|
6,340,656 |
|
|
|
|
|
|
|
6,340,656 |
|
An intercompany receivable as of September 30, 2010, of $0.9 million, due from the Agera
segment to the Fibrocell Therapy segment, is eliminated in consolidation. This intercompany
receivable is primarily due to the intercompany management fee charge to Agera by Fibrocell
Technologies, as well as Agera working capital needs provided by Fibrocell Technologies, and has
been excluded from total assets of the Fibrocell Therapy segment in the above table. There is no
intersegment revenue. Total assets on the consolidated balance sheet at September 30, 2010 are
approximately $7.6 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
Predecessor |
|
One Month Ended September 30, 2009 |
|
Isolagen Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
75,029 |
|
|
$ |
75,029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment loss from continuing operations |
|
$ |
(1,953,067 |
) |
|
$ |
(11,923 |
) |
|
$ |
(1,964,990 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
Predecessor |
|
Two
Months Ended August 31, 2009 |
|
Isolagen Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
130,740 |
|
|
$ |
130,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income from continuing operations |
|
$ |
71,465,993 |
|
|
$ |
474,740 |
|
|
$ |
71,940,733 |
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
Predecessor |
|
Eight Months Ended August 31, 2009 |
|
Isolagen Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
538,620 |
|
|
$ |
538,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment loss from continuing operations |
|
$ |
65,498,934 |
|
|
$ |
381,306 |
|
|
$ |
65,880,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information related to continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Total assets as of September 30, 2009 |
|
|
7,886,894 |
|
|
|
592,746 |
|
|
|
8,479,640 |
|
Property and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
An intercompany receivable as of September 30, 2009, of $1.0 million, due from the Agera
segment to the Fibrocell Therapy segment, is eliminated in consolidation. This intercompany
receivable is primarily due to the intercompany management fee charge to Agera by Fibrocell
Technologies, Inc., as well as Agera working capital needs provided by Fibrocell Technologies,
Inc., and has been excluded from total assets of the Fibrocell Therapy segment in the above table.
There is no intersegment revenue. Total assets on the consolidated balance sheet at September 30,
2009 are approximately $8.5 million, which includes assets of discontinued operations of less than
$0.1 million.
Geographical information concerning the Successor Companys and Predecessor Companys
operations and assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
Revenue |
|
|
|
Revenue |
|
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Three months ended |
|
|
One month ended |
|
|
|
Two months ended |
|
|
|
September 30, 2010 |
|
|
September 30, 2009 |
|
|
|
August 31, 2009 |
|
United States |
|
$ |
54,367 |
|
|
$ |
16,259 |
|
|
|
$ |
40,656 |
|
United Kingdom |
|
|
181,931 |
|
|
|
58,567 |
|
|
|
|
84,134 |
|
Other |
|
|
7,379 |
|
|
|
203 |
|
|
|
|
5,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
243,677 |
|
|
$ |
75,029 |
|
|
|
$ |
130,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
Revenue |
|
|
|
Revenue |
|
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Nine months ended |
|
|
One month ended |
|
|
|
Eight months ended |
|
|
|
September 30, 2010 |
|
|
September 30, 2009 |
|
|
|
September 30, 2009 |
|
United States |
|
$ |
176,215 |
|
|
$ |
16,259 |
|
|
|
$ |
187,289 |
|
United Kingdom |
|
|
472,721 |
|
|
|
58,567 |
|
|
|
|
308,244 |
|
Other |
|
|
67,873 |
|
|
|
203 |
|
|
|
|
43,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
716,809 |
|
|
$ |
75,029 |
|
|
|
$ |
538,620 |
|
|
|
|
|
|
|
|
|
|
|
|
During the three months ended September 30, 2010, revenue from one foreign customer and one
domestic customer represented 75% and 15% of consolidated revenue, respectively. During the one
month ended September 30, 2009, revenue from one foreign customer and one domestic customer
represented 78% and 17% of consolidated revenue, respectively. During the two months ended August
31, 2009 revenue from one foreign customer and one domestic customer represented 64% and 20% of
consolidated revenue, respectively.
34
During the nine months ended September 30, 2010, revenue from one foreign customer and one
domestic customer represented 73% and 17% of consolidated revenue, respectively. During the one
month ended September 30, 2009, revenue from one foreign customer and one domestic customer
represented 78% and 17% of consolidated revenue, respectively. During the eight months ended
August 31, 2009, revenue from one foreign customer and one domestic customer represented 57% and
23% of consolidated revenue, respectively.
As of September 30, 2010 and December 31, 2009, one foreign customer represented 89% and 87%,
respectively, of accounts receivable, net.
Note 13Subsequent Events
The Successor Company has also raised approximately $1.0 million less fees as the result of
the issuance of preferred stock and warrants in the period from
October 1, 2010 to November 12,
2010.
Viriathus Capital LLC and John Carris Investments LLC were co-placement agents for the
Transactions, and will receive cash compensation of $71,040 and warrants to purchase 118,400 shares
of Common Stock at an exercise price of $0.60 per share (assuming all subscription proceeds are
received in the Transactions).
The Company announced on November 3, 2010, that it has signed an agreement to establish a
joint venture (JV) with Hefei Meifu Bio-Tech Limited Co. (Meifu) for developing and marketing
autologous fibroblast therapies in Asia, excluding Japan. The JV will be called Fibrocell Science
Asia Co. Ltd.
Under the terms of the agreement, Fibrocell will provide access to its intellectual property,
clinical data and manufacturing processes. Meifu will be responsible for all costs associated with
construction and operation of a manufacturing facility in Hefei and commercialization, as well as
all ongoing operational, research and development expenses.
35
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with our consolidated
financial statements, including the notes thereto.
Forward-Looking Information
This report contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, as well as information relating to Fibrocell that is based on managements exercise of
business judgment and assumptions made by and information currently available to management. When
used in this document and other documents, releases and reports released by us, the words
anticipate, believe, estimate, expect, intend, the facts suggest and words of similar
import, are intended to identify any forward-looking statements. You should not place undue
reliance on these forward-looking statements. These statements reflect our current view of future
events and are subject to certain risks and uncertainties as noted below. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our
actual results could differ materially from those anticipated in these forward-looking statements.
Actual events, transactions and results may materially differ from the anticipated events,
transactions or results described in such statements. Although we believe that our expectations are
based on reasonable assumptions, we can give no assurance that our expectations will materialize.
Many factors could cause actual results to differ materially from our forward looking statements.
Several of these factors include, without limitation:
our ability to finance our business and continue in operations;
whether the results of our full Phase III pivotal study and our BLA filing will
result in approval of our product candidate, and whether any approval will occur on a timely
basis;
our ability to meet requisite regulations or receive regulatory approvals in the
United States, Europe, Asia and the Americas, and our ability to retain any regulatory
approvals that we may obtain; and the absence of adverse regulatory developments in the
United States, Europe, Asia and the Americas or any other country where we plan to conduct
commercial operations;
whether our clinical human trials relating to the use of autologous cellular therapy
applications, and such other indications as we may identify and pursue can be conducted
within the timeframe that we expect, whether such trials will yield positive results, or
whether additional applications for the commercialization of autologous cellular therapy can
be identified by us and advanced into human clinical trials;
our ability to develop autologous cellular therapies that have specific applications
in cosmetic dermatology, and our ability to explore (and possibly develop) applications for
periodontal disease, reconstructive dentistry, treatment of restrictive scars and burns and
other health-related markets;
our ability to decrease our manufacturing costs for our Fibrocell Therapy product
candidates through the improvement of our manufacturing process, and our ability to validate
any such improvements with the relevant regulatory agencies;
our ability to reduce our need for fetal bovine calf serum by improved use of less
expensive media combinations and different media alternatives;
continued availability of supplies at satisfactory prices;
new entrance of competitive products or further penetration of existing products in
our markets;
the effect on us from adverse publicity related to our products or the company
itself;
36
any adverse claims relating to our intellectual property;
the adoption of new, or changes in, accounting principles;
our issuance of certain rights to our shareholders that may have anti-takeover
effects;
our dependence on physicians to correctly follow our established protocols for the
safe administration of our Fibrocell Therapy; and
other risks referenced from time to time elsewhere in this prospectus and in our
filings with the SEC.
These factors are not necessarily all of the important factors that could cause actual results
of operations to differ materially from those expressed in these forward-looking statements. Other
unknown or unpredictable factors also could have material adverse effects on our future results. We
undertake no obligation and do not intend to update, revise or otherwise publicly release any
revisions to these forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of any unanticipated events. We cannot assure you that
projected results will be achieved.
Overview
We are an aesthetic and therapeutic development stage biotechnology company focused on
developing novel skin and tissue rejuvenation products. Our clinical development product candidates
are designed to improve the appearance of skin injured by the effects of aging, sun exposure, acne
and burn scars with a patients own, or autologous, fibroblast cells produced by our proprietary
Fibrocell process. Our clinical development programs encompass both aesthetic and therapeutic
indications. Our most advanced indication is for the treatment of nasolabial folds wrinkles (United
States adopted name, or USAN, is azficel-T) and has completed Phase III clinical studies, and the
related Biologics License Application, or BLA, has been submitted to the Food and Drug
Administration, or FDA. In October 2009, the FDAs Cellular, Tissue and Gene Therapies Advisory
Committee reviewed this indication. On December 21, 2009, Fibrocell received a Complete Response
letter from the FDA related to the BLA for azficel-T, an autologous cell therapy for the treatment
of moderate to severe nasolabial fold wrinkles in adults. A Complete Response letter is issued by
the FDAs Center for Biologics Evaluation and Research (CBER) when the review of a file is
completed and additional data are needed prior to approval. The Complete Response letter requested
that Fibrocell Science provide data from a histopathological study on biopsied tissue samples from
patients following injection of azficel-T. The histology study (IT-H-001) will evaluate tissue
treated with azficel-T as compared to tissue treated with sterile saline (placebo). The study will
also provide information about the skin after treatment, including evaluation of collagen and
elastin fibrils, and cellular structure of the sampled tissues. The Company submitted a proposed
protocol concerning a histopathological study on biopsied samples to the FDA and to the Companys
Investigational Review Board (IRB). The IRB has approved the protocol and the Company received
the comments from the FDA on the protocol in May 2010.
On May 13, 2010, the Company announced the initiation of a small histology study of azficel-T,
an autologous cell therapy currently under review by the U.S. Food and Drug Administration (FDA)
for the treatment of moderate to severe nasolabial fold wrinkles. The study has a target enrollment
of approximately 20 participants from the completed and statistically significant pivotal Phase III
studies of azficel-T (IT-R-005 and IT-R-006). The Company announced on July 8, 2010, the completion
of enrollment of and first treatment visits for participants in its histology study of azficel-T.
The second treatment visits for participants enrolled in the histology study of azficel-T were
completed by the end of July. The third treatment visits for participants enrolled in the histology
study of azficel-T were completed by the end of August.
The Complete Response letter also requested finalized Chemistry, Manufacturing and Controls
(CMC) information regarding the manufacture of azficel-T as follow-up to discussions that occurred
during the BLA review period, as well as revised policies and procedures.
37
The Company anticipates filing its response to the FDAs Complete Response letter by the end
of 2010. There is no assurance that the FDA will accept the Companys response as it may find that
the Companys response does not provide sufficient information to address its Complete Response
letter. Even if the FDA accepts the Companys response for complete evaluation, there is no
assurance that it will approve our product. The FDA, under the Prescription Drug User Fee Act
(PDUFA), has a target six months review window to completely evaluate the Companys response upon
acceptance of the response.
During 2009 we completed a Phase II/III study for the treatment of acne scars. During 2008 we
completed our open-label Phase II study related to full face rejuvenation.
We also develop and market an advanced skin care product line through our Agera subsidiary, in
which we acquired a 57% interest in August 2006.
Exit from Bankruptcy
On August 27, 2009, the United States Bankruptcy Court for the District of Delaware in
Wilmington entered an order, or Confirmation Order, confirming the Joint First Amended Plan of
Reorganization dated July 30, 2009, as supplemented by the Plan Supplement dated August 21, 2009,
or the Plan, of Isolagen, Inc. and Isolagens wholly owned subsidiary, Isolagen Technologies, Inc.
The effective date of the Plan was September 3, 2009. Isolagen, Inc. and Isolagen Technologies,
Inc. were subsequently renamed Fibrocell Science, Inc. and Fibrocell Technologies, Inc.,
respectively.
Pursuant to the Plan, all our equity interests, including without limitation our common stock,
options and warrants outstanding as of the effective date were cancelled. On the effective date, we
completed an exit financing of common stock in the amount of $2 million, after which the equity
holders of our Successor Company were:
7,320,000 shares, to our pre-bankruptcy lenders and the lenders that provided us our
debtor-in-possession facility, collectively;
3,960,000 shares, to the holders of our 3.5% convertible subordinated notes;
600,000 shares, to our management as of the effective date, which was our chief
operating officer;
120,000 shares, to the holders of our general unsecured claims; and
2,666,666 shares, to the purchasers of shares in the $2 million exit financing (our
pre-bankruptcy
_____
lenders, the lenders that provided us our debtor-in-possession facility
and the holders of our 3.5% convertible subordinated notes were permitted to participate in
our exit financing).
In the Plan, in addition to the common stock set forth above, each holder of Isolagens 3.5%
convertible subordinated notes, due November 2024, in the approximate non-converted aggregate
principal amount of $81 million, received, in full and final satisfaction, settlement, release and
discharge of and in exchange for any and all claims arising out of the 3.5% convertible
subordinated notes, its pro rata share of an unsecured note in the principal amount of $6 million,
or the Notes. The Notes have the following features:
12.5% interest payable quarterly in cash or, at our option, 15% payable in kind by
capitalizing such unpaid amount and adding it to the principal as of the date it was due;
matures June 1, 2012;
at any time prior to the maturity date, we may redeem any portion of the outstanding
principal of the Notes in cash at 125% of the stated face value of the Notes; provided that we will
be obligated to redeem all outstanding Notes upon the following events: (a) we or our subsidiary,
Fibrocell Technologies, Inc. (formerly, Isolagen Technologies, Inc.) successfully complete a
capital campaign raising in excess of $10,000,000; or (b) we or our subsidiary, Fibrocell
Technologies, Inc., are acquired by, or sell a majority stake to, an outside party;
the Notes contain customary representations, warranties and covenants, including a covenant
that we and our subsidiary, Fibrocell Technologies, Inc., shall be prohibited from the incurrence
of additional debt without obtaining the consent of 66 2/3% of the Note holders.
38
Going Concern
The Successor Company emerged from Bankruptcy in September 2009 and continues to operate as a
going concern. At September 30, 2010, the Successor Company had cash and cash equivalents of
approximately $0.2 million and negative working capital of $1.1 million. In early July 2010, the
Successor Company raised approximately $2.7 million less fees as a result of the issuance of
preferred stock and warrants. In early September 2010, the Successor Company raised approximately
$0.7 million less fees as a result of the issuance of preferred stock and warrants. The Successor
Company has also raised approximately $1.0 million less fees as the result of the issuance of
preferred stock and warrants in the period from October 1, 2010 to November 12, 2010.
The Company has not yet received $0.7 million in subscription proceeds from the above raises.
Although the Company believes that these outstanding funds will be received, there is no guarantee
that these funds will be received.
As
of November 12, 2010, the Company had cash and cash equivalents of approximately $0.2
million and liabilities of approximately $1.6 million. Thus, the Successor Company will require
to raise additional cash resources in the very near future, or it will likely cease operations. The
Successor Company will need to access the capital markets in the future in order to fund future
operations. There is no guarantee that any such required financing will be available on terms
satisfactory to the Successor Company or available at all. These matters create uncertainty
relating to its ability to continue as a going concern. The accompanying consolidated financial
statements do not reflect any adjustments relating to the recoverability and classification of
assets or liabilities that might result from the outcome of these uncertainties.
Further, if the Successor Company raises additional cash resources in the very near future, it
may be raised in contemplation of or in connection with bankruptcy. In the event of a bankruptcy,
it is likely that its common stock and common stock equivalents will become worthless and our
creditors will receive significantly less than what is owed to them.
Through September 30, 2010, the Successor Company has been primarily engaged in developing its
initial product technology. In the course of its development activities, the Company has sustained
losses and expects such losses to continue through at least 2010. During the nine months ended
September 30, 2010, the Successor Company financed its operations primarily through its existing
cash, but as discussed above it now requires additional financing. There is substantial doubt about
the Successor Companys ability to continue as a going concern.
The Successor Companys ability to complete additional offerings is dependent on the state of
the debt and/or equity markets at the time of any proposed offering, and such markets reception of
the Successor Company and the offering terms. The Successor Companys ability to complete an
offering is also dependent on the status of its FDA regulatory milestones and its clinical trials,
and in particular, the status of its indication for the treatment of nasolabial fold wrinkles and
the status of the related BLA, which cannot be predicted. There is no assurance that capital in any
form would be available to the Company, and if available, on terms and conditions that are
acceptable.
As a result of the conditions discussed above, and in accordance with GAAP, there exists
substantial doubt about the Successor Companys ability to continue as a going concern, and its
ability to continue as a going concern is contingent, among other things, upon its ability to
secure additional adequate financing or capital in the very near future. If the Successor Company
does not obtain additional funding, or does not anticipate additional funding, in the very near
future, it will likely enter into bankruptcy and/or cease operations. Further, if it does raise
additional cash resources in the very near future, it may be raised in contemplation of or in
connection with bankruptcy. If the Successor Company enters into bankruptcy, it is likely that its
common stock and common stock equivalents will become worthless and
its creditors, including preferred stock, will receive
significantly less than what is owed to them.
Clinical Development Programs
Our product development programs are focused on the aesthetic and therapeutic markets. These
programs are supported by a number of clinical trial programs at various stages of development.
39
Our aesthetics development programs include product candidates to treat targeted areas or
wrinkles and to provide full-face rejuvenation that includes the improvement of fine lines,
wrinkles, skin texture and appearance. Our therapeutic development programs are designed to treat
acne scars, restrictive burn scars and dental papillary recession. All of our product candidates
are non-surgical and minimally invasive. Although the discussions below may include estimates of
when we expect trials to be completed, the prediction of when a clinical trial will be completed is
subject to a number of factors and uncertainties. Also, please refer to Part I, Item 1A of our Form
10-K for the year ended December 31, 2009, for a discussion of certain of our risk factors related
to our clinical development programs, as well as other risk factors related to our business.
Aesthetic Development Programs
Nasolabial Fold Wrinkles Phase III Trials: In October 2006, we reached an agreement
with the FDA, on the design of a Phase III pivotal study protocol for the treatment of nasolabial
fold wrinkles (lines which run from the sides of the nose to the corners of the mouth). The
randomized, double-blind protocol was submitted to the FDA under the agencys Special Protocol
Assessment, or SPA. Pursuant to this assessment process, the FDA has agreed that our study design
for two identical trials, including subject numbers, clinical endpoints, and statistical analyses,
is adequate to provide the necessary data that, depending on the outcome, could form the basis of
an efficacy claim for a marketing application. The pivotal Phase III trials evaluated the efficacy
and safety of our Fibrocell therapy (USAN name azficel-T) against placebo in approximately 400
subjects total with approximately 200 subjects enrolled in each trial. The injections were
completed in January 2008 and the trial data results were disclosed in October 2008. The Phase III
trial data results indicated statistically significant efficacy results for the treatment of
nasolabial fold wrinkles. The Phase III data analysis, including safety results, was disclosed in
October 2008. We submitted the related BLA to the FDA in March 2009. In May 2009, the FDA accepted
our BLA submission for filing. On October 9, 2009, the FDAs Cellular, Tissue and Gene Therapies
Advisory Committee reviewed azficel-T. The committee voted 11 yes to 3 no that the data
presented on azficel-T demonstrated efficacy, and 6 yes to 8 no that the data demonstrated
safety, both for the proposed indication. The Committees recommendations are not binding on the
FDA, but the FDA will consider their recommendations during their review of our application. On
December 21, 2009, Fibrocell Science received a Complete Response letter from the FDA related to
the BLA for azficel-T. A Complete Response letter is issued by the FDAs Center for Biologics
Evaluation and Research (CBER) when the review of a file is completed and additional data are
needed prior to approval. The Complete Response letter requested that Fibrocell Science provide
data from a histopathological study on biopsied tissue samples from patients following injection of
azficel-T. The histology study (IT-H-001) will evaluate tissue treated with azficel-T as compared
to tissue treated with sterile saline (placebo). The study will also provide information about the
skin after treatment, including evaluation of collagen and elastin fibrils, and cellular structure
of the sampled tissues. The Company submitted a proposed protocol concerning a histopathological
study on biopsied samples to the FDA and to the Companys Investigational Review Board (IRB).
The IRB has approved the protocol and the Company received the comments from the FDA on the
protocol in May 2010. The Company submitted a proposed protocol concerning a histopathological
study on biopsied samples to the FDA and to the Companys Investigational Review Board (IRB).
The IRB has approved the protocol and the Company received the comments from the FDA on the
protocol in May 2010.
On May 13, 2010, the Company announced the initiation of a small histology study (IT-H-001) of
azficel-T, an autologous cell therapy currently under review by the U.S. Food and Drug
Administration (FDA) for the treatment of moderate to severe nasolabial fold wrinkles. The study
has a target enrollment of approximately 20 participants from the completed and statistically
significant pivotal Phase III studies of azficel-T (IT-R-005 and IT-R-006). The Company announced
on July 8, 2010, the completion of enrollment of and first treatment visits for participants in its
histology study of azficel-T. The second treatment visits for participants enrolled in the
histology study of azficel-T were completed by the end of July. The third treatment visits for
participants enrolled in the histology study of azficel-T were completed by the end of August.
The Complete Response letter also requested finalized Chemistry, Manufacturing and Controls
(CMC) information regarding the manufacture of azficel-T as follow-up to discussions that occurred
during the BLA review period, as well as revised policies and procedures regarding shipping
practices, and proposed labeling. The Company is currently working on obtaining the finalized CMC
information for the FDA as well as the revised policies and procedures regarding shipping practices
and the proposed labeling.
40
The Company anticipates filing its response to the FDAs Complete Response letter by the end
of 2010. There is no assurance that the FDA will accept the Companys response as it may find that
the Companys response does not provide sufficient information to address its Complete Response
letter. Even if the FDA accepts the Companys response for complete evaluation, there is no
assurance that it will approve our product. The FDA, under the Prescription Drug User Fee Act
(PDUFA), has a target six months review window to completely evaluate the Companys response upon
acceptance of the response.
The United States Adopted Names (USAN) Council adopted the USAN name, azficel-T, on October
28, 2009, and the FDA is currently evaluating a proposed brand name, Laviv.
Full Face Rejuvenation Phase II Trial: In March 2007, the Predecessor Company
commenced an open label (unblinded) trial of approximately 50 subjects. Injections of azficel-T
began to be administered in July 2007. This trial was designed to further evaluate the safety and
use of azficel-T to treat fine lines and wrinkles for the full face. Five investigators across the
United States participated in this trial. The subjects received two series of injections
approximately one month apart. In late December 2007, all 45 remaining subjects completed
injections. The subjects were followed for twelve months following each subjects last injection.
Data results related to this trial were disclosed in August 2008, which included top line positive
efficacy results related to this open label Phase II trial.
Additional safety data from this trial, collected through telephone calls placed to
participating subjects twelve months from the date of their final study treatment, were submitted
to the FDA on November 1, 2009. No changes to the safety profile of azficel-T were identified
during our review of this data.
Therapeutic Development Programs
Acne Scars Phase II/III Trial: In November 2007, the Predecessor Company commenced
an acne scar Phase II/III study. This study included approximately 95 subjects. This placebo
controlled trial was designed to evaluate the use of azficel-T to correct or improve the appearance
of acne scars. Each subject served as their own control, receiving azficel-T on one side of their
face and placebo on the other. The subjects received three treatments two weeks apart. The
follow-up and evaluation period was completed four months after each subjects last injection. In
March 2009, the Predecessor Company disclosed certain trial data results, which included
statistically significant efficacy results for the treatment of moderate to severe acne scars.
Compilation of safety data and data related to the validation of the study photo guide assessment
scale discussed below is ongoing and is also subject to additional financing.
In connection with this acne scar program, the Predecessor Company developed a photo guide for
use in the evaluators assessment of acne study subjects. The Predecessor Company had originally
designed the acne scar clinical program as two randomized, double-blind, Phase III,
placebo-controlled trials. However, our evaluator assessment scale and photo guide have not
previously been utilized in a clinical trial. In November 2007, the FDA recommended that the
Predecessor Company consider conducting a Phase II study in order to address certain study issues,
including additional validation related to our evaluator assessment scale. As such, the Predecessor
Company modified our clinical plans to initiate a single Phase II/III trial. This Phase II/III
study, was powered to demonstrate efficacy, and has allowed for a closer assessment of the
evaluator assessment scale and photo guide that is ongoing. The Successor Company submitted on
August 9, 2010, a clinical study report for its Phase II/III study of azficel-T for the treatment
of moderate to severe acne scars to the FDA. The next step is to initiate a discussion with the FDA
concerning the validation of the evaluator assessment scale and agree the path forward. These
steps will be subject to obtaining sufficient financial resources.
Restrictive Burn Scars Phase II Trial: In January 2007, the Predecessor Company met
with the FDA to discuss our clinical program for the use of azficel-T for restrictive burn scar
patients. This Phase II trial would evaluate the use of azficel-T to improve range of motion,
function and flexibility, among other parameters, in existing restrictive burn scars in
approximately 20 patients. However, the Predecessor Company delayed the screening and enrollment in
this trial until such time as we raise sufficient additional financing and gather additional data
regarding the burn scar market.
41
Dental Study Phase II Trial: In late 2003, the Predecessor Company completed a Phase
I clinical trial for the treatment of condition relating to periodontal disease, specifically to
treat Interdental Papillary Insufficiency. In the second quarter of 2005, the Predecessor Company
concluded the Phase II dental clinical trial with the use of azficel-T and subsequently announced
that investigator and subject visual analog scale assessments demonstrated that the azficel-T was
statistically superior to placebo at four months after treatment. Although results of the
investigator and subject assessment demonstrated that the azficel-T was statistically superior to
placebo, an analysis of objective linear measurements did not yield statistically significant
results.
In 2006, the Predecessor Company commenced a Phase II open-label dental trial for the
treatment of Interdental Papillary Insufficiency. This single site study included 11 subjects. All
study treatment and follow up visits were completed, but full analysis of the study was previously
placed on internal hold due to our financial resource constraints. The Company is also currently
reviewing potential other clinical paths in the dental arena.
Agera Skincare Systems
The Successor Company markets and sells a skin care product line through our majority-owned
subsidiary, Agera Laboratories, Inc., which the Predecessor Company acquired in August 2006. Agera
offers a complete line of skincare systems based on a wide array of proprietary formulations,
trademarks and nano-peptide technology. These skincare products can be packaged to offer
anti-aging, anti-pigmentary and acne treatment systems. Agera primarily markets its products in
both the United States and Europe (primarily the United Kingdom).
Critical Accounting Policies
The following discussion and analysis of financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in conformity with
accounting principles generally accepted in the United States of America. However, certain
accounting policies and estimates are particularly important to the understanding of our financial
position and results of operations and require the application of significant judgment by our
management or can be materially affected by changes from period to period in economic factors or
conditions that are outside of the control of management. As a result, they are subject to an
inherent degree of uncertainty. In applying these policies, our management uses their judgment to
determine the appropriate assumptions to be used in the determination of certain estimates. Those
estimates are based on our historical operations, our future business plans and projected financial
results, the terms of existing contracts, our observance of trends in the industry, information
provided by our customers and information available from other outside sources, as appropriate. The
following discusses our critical accounting policies and estimates.
Intangible assets: Intangible assets are research and development assets related to the
Successor Companys primary study that was recognized upon emergence from bankruptcy (see Note 5).
Intangibles are tested for recoverability whenever events or changes in circumstances indicate the
carrying amount may not be recoverable. An impairment loss, if any, would be measured as the excess
of the carrying value over the fair value determined by discounted cash flows. There was no
impairment of the intangible assets as of September 30, 2010.
Warrant Liability: The warrants for the Successor Company are measured at fair value and
liability-classified under ASC 815, Derivatives and Hedging, (ASC 815) because the warrants
contain down-round protection and therefore, do not meet the scope exception for treatment as a
derivative under ASC 815. Since down-round protection is not an input into the calculation of
the fair value of the warrants, the warrants cannot be considered indexed to the Companys own
stock which is a requirement for the scope exception as outlined under ASC 815. The fair value of
the warrants is determined using the Black-Scholes option pricing model and is affected by changes
in inputs to that model including our stock price, expected stock price volatility, the contractual
term, and the risk-free interest rate. We will continue to classify the fair value of the warrants
as a liability until the warrants are exercised, expire or are amended in a way that would no
longer require these warrants to be classified as a liability.
Stock-Based Compensation: We account for stock-based awards to employees and non-employees
using the fair value based method to determine compensation for all arrangements where shares of
stock or equity instruments are issued for compensation. We use a Black-Scholes options-pricing
model to determine the fair value of each option grant as of the date of grant for expense
incurred. The Black-Scholes model requires inputs for risk-free interest rate, dividend yield,
volatility and expected lives of the options. Expected volatility is based on historical
volatility of our competitors stock since the Predecessor Company ceased trading as part of the
bankruptcy and emerged as a new entity. The risk-free rate for periods within the contractual life
of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The
expected lives for options granted represents the period of time that options granted are expected
to be outstanding and is derived from the contractual terms of the options granted. We estimate
future forfeitures of options based upon expected forfeiture rates.
Income taxes: An asset and liability approach is used for financial accounting and reporting
for income taxes. Deferred income taxes arise from temporary differences between income tax and
financial reporting and principally relate to recognition of revenue and expenses in different
periods for financial and tax accounting purposes and are measured using currently enacted tax
rates and laws. In addition, a deferred tax asset can be generated by net operating loss (NOLs)
carryover. If it is more likely than not that some portion or all of a deferred tax asset will not
be realized, a valuation allowance is recognized.
In the event the Company is charged interest or penalties related to income tax matters, the
Company would record such interest as interest expense and would record such penalties as other
expense in the consolidated statements of operations. No such charges have been incurred by the
Company. As of September 30, 2010 and December 31, 2009, the Successor Company had no accrued
interest related to uncertain tax positions.
At September 30, 2010 and December 31, 2009, the Company has provided a full valuation
allowance for the net deferred tax assets, the large majority of which relates to the future
benefit of loss carryovers. In addition, as a result of fresh-start accounting, the Successor
Company may be limited by section 382 of the Internal Revenue Service Code. The tax years 2006
through 2009 remain open to examination by the major taxing jurisdictions to which we are subject.
The deferred tax liability at September 30, 2010 and December 31, 2009, relates to the intangible
assets recognized upon fresh-start accounting.
42
Research and Development Expenses: Research and development costs are expensed as incurred
and include salaries and benefits, costs paid to third-party contractors to perform research,
conduct clinical trials, develop and manufacture drug materials and delivery devices, and a portion
of facilities cost. Clinical trial costs are a significant component of research and development
expenses and include costs associated with third-party contractors. Invoicing from third-party
contractors for services performed can lag several months. We accrue the costs of services rendered
in connection with third-party contractor activities based on our estimate of management fees, site
management and monitoring costs and data management costs. Actual clinical trial costs may differ
from estimated clinical trial costs and are adjusted for in the period in which they become known.
Recently Issued Accounting Pronouncements
In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements,
or ASU 2009-13. ASU 2009-13, amends existing revenue recognition accounting pronouncements that
are currently within the scope of FASB ASC Topic 605. This consensus provides accounting principles
and application guidance on how the arrangement should be separated, and the consideration
allocated. This guidance changes how to determine the fair value of undelivered products and
services for separate revenue recognition. Allocation of consideration is now based on managements
estimate of the selling price for an undelivered item where there is no other means to determine
the fair value of that undelivered item. This new approach is effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or after June 15,
2010. We are currently evaluating the guidance to determine the impact on the Companys results of
operations, cash flows, and financial position.
In March 2010, the FASB ratified ASU 2010-17, Milestone Method of Revenue Recognition, that
the milestone method is a valid application of the proportional performance model for revenue
recognition if the milestones are substantive and there is substantive uncertainty about whether
the milestones will be achieved. The Task Force agreed that whether a milestone is substantive is a
judgment that should be made at the inception of the arrangement. To meet the definition of a
substantive milestone, the consideration earned by achieving the milestone (1) would have to be
commensurate with either the level of effort required to achieve the milestone or the enhancement
in the value of the item delivered, (2) would have to relate solely to past performance, and (3)
should be reasonable relative to all deliverables and payment terms in the arrangement. No
bifurcation of an individual milestone is allowed and there can be more than one milestone in an
arrangement. The new guidance will be effective for interim and annual periods beginning on or
after June 15, 2010. We are currently evaluating the guidance to determine the impact on the
Companys results of operations, cash flows, and financial position.
Emergence from Voluntary Reorganization Under Chapter 11 Proceedings and Reorganization Plan
Fibrocell emerged from Chapter 11 on September 3, 2009. See Note 1 in the accompanying
Consolidated Financial Statements.
Basis of Presentation
As of September 1, 2009, the Successor Company adopted fresh-start accounting in accordance
with ASC 852-10, Reorganizations. The Successor Company selected September 1, 2009, as the date to
effectively apply fresh-start accounting based on the absence of any material contingencies at the
August 27, 2009 confirmation hearing and the immaterial impact of transactions between August 27,
2009 and September 1, 2009. The adoption of fresh-start accounting resulted in the Successor
Company becoming a new entity for financial reporting purposes.
Accordingly, the financial statements prior to September 1, 2009 are not comparable with the
financial statements for periods on or after September 1, 2009. References to Successor or
Successor Company refer to the Company on or after September 1, 2009, after giving effect to the
cancellation of Isolagen, Inc. common stock issued prior to the Effective Date, the issuance of new
Fibrocell Science, Inc. common stock in accordance with the Plan, and the application of
fresh-start accounting. References to Predecessor or Predecessor Company refer to the Company
prior to September 1, 2009. See Note 5 Fresh Start Accounting in the notes to these
Consolidated Financial Statements for further details.
43
For discussions on the results of operations, the Successor Company has compared the results
of operations for the three and nine months ended September 30, 2010, with the results of
operations for the three and nine months ended September 30, 2009. The Successor Company believes
that the comparison of the financial results provide management and investors a more meaningful
analysis of the Companys performance and trends.
The following discussion should be read in conjunction with the Consolidated Financial
Statements and the accompanying Notes to the Consolidated Financial Statements in Part 1, Item 1 of
this report.
Results of OperationsComparison of the three months ended September 30, 2010 and 2009
REVENUES. Revenue remained relatively constant at $0.2 million for the three months ended
September 30, 2010 and 2009. Our revenue from continuing operations is from the operations of
Agera, which we acquired on August 10, 2006. Agera markets and sells a complete line of advanced
skin care systems based on a wide array of proprietary formulations, trademarks and non-peptide
technology. For the three months ended September 30, 2010 and 2009, 75% and 69%, respectively, of
Ageras revenue were to one foreign customer. As such, total revenue is subject to fluctuation
depending primarily on the orders received and orders fulfilled with respect to this large
customer.
COST OF SALES. Cost of sales decreased approximately $0.2 million to $0.1 million for the
three months ended September 30, 2010 as compared to $0.3 million for the three months ended
September 30, 2009. Our cost of sales relates to the operation of Agera. As a percentage of
revenue, Agera cost of sales was approximately 49% for the three months ended September 30, 2010
and 149% for the three months ended September 30, 2009. The decrease is due to a write off of slow
moving and obsolete inventory that occurred during the three months ended September 30, 2009.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses
decreased by approximately $0.9 million, or 37%, to $1.6 million for the three months ended
September 30, 2010 as compared to $2.5 million for the three months ended September 30, 2009. The
decrease primarily relates to a $0.9 million decrease in payroll related expenses and $0.1 million
decrease in office expenses and promotion expense offset by $0.1 million increase related to
consultants for financing and marketing. In the three months ending September 30, 2009, there was
a recognition of the balance of the cancelled stock options which had increased the payroll
expense.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by approximately $0.2
million, or 19%, to $1.4 million for the three months ended September 30, 2010 as compared to $1.2
million for the three months ended September 30, 2009. The increase primarily relates to a $0.2
million increase in payroll related expenses. Research and development costs are composed primarily
of costs related to our efforts to gain FDA approval for our Fibrocell Therapy for specific dermal
applications in the United States, as well as costs related to other potential indications for our
Fibrocell Therapy, such as acne scars and burn scars. Also, research and development expense
includes costs to develop manufacturing, cell collection and logistical process improvements.
Research and development costs primarily include personnel and laboratory costs related to these
FDA trials and certain consulting costs. The total inception (December 28, 1995) to date cost of
research and development as of August 31, 2009 for the Predecessor Company was $56.3 million and
total inception (September 1, 2009) to date cost of research and development as of September 30,
2010, for the Successor Company was $5.9 million.
The FDA approval process is extremely complicated and is dependent upon our study protocols
and the results of our studies. In the event that the FDA requires additional studies for our
product candidate or requires changes in our study protocols or in the event that the results of
the studies are not consistent with our expectations, the process will be more expensive and time
consuming. Due to the complexities of the FDA approval process, we are unable to predict what the
cost of obtaining approval for our dermal product candidate will be.
REORGANIZATION ITEMS, NET. On June 15, 2009, Isolagen, Inc. and its wholly-owned, U.S.
subsidiary Isolagen Technologies, Inc., filed voluntary petitions for relief under Chapter 11 of
the federal bankruptcy laws in the United States Bankruptcy Court for the District of Delaware, as
more fully discussed under Note 1 in the accompanying Consolidated Financial Statements. There were
no reorganization costs for the three months ended September 30, 2010 as compared to reorganization
gain, net of reorganization costs, of $74.1 million recorded for the three months ended September
30, 2009, which were comprised primarily of legal fees and the unamortized debt acquisition costs
and gain on discharge of debt.
44
INTEREST EXPENSE. Interest expense decreased $0.1 million to $0.2 million for the three months
ended September 30, 2010, as compared to $0.3 million for the three months ended September 30,
2009. Our 2010 interest expense is related to our $6.0 million (in original principal amount) 12.5%
notes. Our interest expense for the three months ended September 30, 2009, was primarily related to
our 3.5% convertible subordinated notes, which with the emergence out of bankruptcy was exchanged
for $6.0 million of debt and 3,960,000 shares of new common stock. As of September 30, 2010 and
2009, $6.0 million of debt was outstanding. There was no amortization of debt issuance costs for
the three months ended September 30, 2009 because of the bankruptcy. There was an expense of $0.2
million of debt issuance costs related to the DIP financing in the three months ending September
30, 2009.
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS. Net loss attributable to common shareholders
decreased approximately $2.3 million to a net loss of $1.8 million for the three months ended
September 30, 2010, as compared to a net loss of $4.1 million (excluding the reorganization gain of
$74.1 million) for the three months ended September 30, 2009. This decrease in loss primarily
represents the recording of the warrant liability revaluation gain of $1.3 million for the
preferred stock warrants issued in October 2009, July 2010 and September 2010 and the warrants
attached to the common shares issued in March 2010.
Results of OperationsComparison of the nine months ended September 30, 2010 and 2009
REVENUES. Revenue increased approximately $0.1 million for the nine months ended September 30,
2010 to $0.7 million as compared to $0.6 million for the nine months ended September 30, 2009. Our
revenue from continuing operations is from the operations of Agera which we acquired on August 10,
2006. Agera markets and sells a complete line of advanced skin care systems based on a wide array
of proprietary formulations, trademarks and non-peptide technology. For the nine months ended
September 30, 2010 and 2009, 73% and 60%, respectively, of Ageras revenue were to one foreign
customer. As such, total revenue is subject to fluctuation depending primarily on the orders
received and orders fulfilled with respect to this large customer. Due to our financial statement
presentation of our United Kingdom operation as a discontinued operation, our revenue for all
periods presented is representative of only Agera, as all historical United Kingdom revenue is
reflected in loss from discontinued operations.
COST OF SALES. Cost of sales decreased approximately $0.1 million to $0.4 million for the nine
months ended September 30, 2010 as compared to $0.5 million for the nine months ended September 30,
2009. Our cost of sales relates to the operation of Agera. As a percentage of revenue, Agera cost
of sales was approximately 55% and 78% for the nine months ended September 30, 2010 and 2009,
respectively. The decrease is due to a write off of slow moving and obsolete inventory that
occurred during the nine months ended September 30, 2009.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses
increased by approximately $0.6 million, or 13%, to $5.4 million for the nine months ended
September 30, 2010 as compared to $4.8 million for the nine months ended September 30, 2009. The
increase primarily relates to a $0.4 million increase related to general and administrative
expenses associated with consultants for financing and marketing as well as office expenses, $0.4
million increase related to legal expenses, offset by a $0.2 million decrease in payroll related
expenses. Legal expenses for the nine months ended September 30, 2009 were less than ($0.1)
million due to a $0.3 million reimbursement received from our insurance carrier related to defense
costs associated with our class action and derivative matters. Had we not received this
reimbursement, legal expenses for the nine months ended September 30, 2010 and September 30, 2009
would have been $0.4 million and $0.2 million, respectively.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by approximately $1.4
million, or 52%, to $4.1 million for the nine months ended September 30, 2010 as compared to $2.7
million for the nine months ended September 30, 2009. The increase primarily relates to a $0.5
million increase in payroll related expenses, $0.6 million increase in consulting fees and $0.3
million increase in laboratory costs associated with clinical and manufacturing activities in our
Exton, Pennsylvania location. Research and development costs are composed primarily of costs
related to our efforts to gain FDA approval for our Fibrocell Therapy for specific dermal
applications in the United States, as well as costs related to other potential indications for our
Fibrocell Therapy, such as acne scars and burn scars. Also, research and development expense
includes costs to develop manufacturing, cell collection and logistical process improvements.
Research and development costs primarily include personnel and laboratory costs related to these
FDA trials and certain consulting costs. The total inception (December 28, 1995) to date cost of
research and development as of August 31, 2009 for the Predecessor Company was $56.3 million and
total inception (September 1, 2009) to date cost of research and development as of September 30,
2010, for the Successor Company was $5.9 million.
45
The FDA approval process is extremely complicated and is dependent upon our study protocols
and the results of our studies. In the event that the FDA requires additional studies for our
product candidate or requires changes in our study protocols or in the event that the results of
the studies are not consistent with our expectations, the process will be more expensive and time
consuming. Due to the complexities of the FDA approval process, we are unable to predict what the
cost of obtaining approval for our dermal product candidate will be.
REORGANIZATION ITEMS, NET. On June 15, 2009, Isolagen, Inc. and its wholly-owned, U.S.
subsidiary Isolagen Technologies, Inc., filed voluntary petitions for relief under Chapter 11 of
the federal bankruptcy laws in the United States Bankruptcy Court for the District of Delaware, as
more fully discussed under Note 1 in the accompanying Consolidated Financial Statements. A
reorganization gain, net of reorganization costs, of less than $0.1 million was recorded for the
nine months ended September 30, 2010, which was comprised primarily of administrative costs offset
by the gain of discharge of liabilities. Reorganization gain, net or reorganization costs, of $73.5
million were recorded for the nine months ended September 30, 2009, which were comprised primarily
of legal fees and the unamortized debt acquisition costs, and gain on discharge of liabilities.
INTEREST EXPENSE. Interest expense decreased $1.7 million to $0.6 million for the nine months
ended September 30, 2010, as compared to $2.3 million for the nine months ended September 30, 2009.
Our 2010 interest expense is related to our $6.0 million (in original principal amount) 12.5%
notes. Our 2009 interest expense was primarily related to our 3.5% convertible subordinated notes,
which with the emergence out of bankruptcy was exchanged for $6.0 million of debt and 3,960,000
shares of the new common stock. There was related amortization of debt issuance costs of
$1.0 million for the nine months ended September 30, 2009.
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS. Net loss attributable to common shareholders
decreased approximately $1.5 million to a net loss of $8.3 million for the nine months ended
September 30, 2010, as compared to a net loss of $9.8 million (excluding the reorganization gain of
$73.5 million) for the nine months ended September 30, 2009.
Liquidity and Capital Resources
Cash Flows
Net cash provided by (used in) operating, investing and financing activities for the nine
months ended September 30, 2010, the one month ended September 30, 2009 and the eight months ended
August 31, 2009, respectively, were as follows:
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Successor |
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Successor |
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Predecessor |
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Nine Months |
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One Month |
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Eight Months |
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Ended |
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Ended |
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Ended |
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September 30, |
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September 30, |
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August 31, |
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2010 |
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2009 |
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2009 |
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(in millions) |
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Cash flows from operating activities |
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$ |
(6.9 |
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$ |
(1.6 |
) |
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$ |
(4.7 |
) |
Cash flows from investing activities |
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Cash flows from financing activities |
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5.8 |
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1.8 |
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2.8 |
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OPERATING ACTIVITIES. Cash used in operating activities during the nine months ended
September 30, 2010 amounted to $6.9 million, an increase of $0.6 million over the nine months ended
September 30, 2009. The increase in our cash used in operating activities over the prior year is
primarily due to an increase in net losses (adjusted for non-cash items) of $0.9 million, in
addition to an increase of $0.3 million of operating cash inflows from changes in operating assets
and liabilities.
46
Our negative operating cash flows for the nine months ended September 30, 2010 were funded
from cash on hand at December 31, 2009, which was primarily the result of the issuance of preferred
stock in 2009. Funds were also received from the proceeds of the issuance of common stock in March
2010 and the issuance of preferred stock series B in July 2010 and September 2010, discussed
further below.
INVESTING ACTIVITIES. Less than $0.1 million cash was provided by or used for investing
activities during the nine months ended September 30, 2010 and the nine months ended September 30,
2009.
FINANCING ACTIVITIES. There was $5.8 million, net of fees, cash proceeds from financing
activities during the nine months ended September 30, 2010, as compared to cash received of $4.6
million from financing activities during the nine months ended September 30, 2009. In March 2010,
we sold to investors in the aggregate 5,076,664 shares of Company common stock at a purchase price
of $0.75 per share. Each purchaser also received a warrant to purchase the same number of shares of
common stock acquired in the offering at an exercise price of $0.98 per share. In July and
September 2010, we sold to investors in the aggregate 5,711,666 shares of Company Preferred Stock
Series B at a purchase price of $.60 per share. Each purchaser also received a warrant to purchase
one share of common stock for every share of Preferred Stock Series B owned at a purchase price of
$0.8054 per share.
Working Capital
As of September 30, 2010, we had cash and cash equivalents of approximately $0.2 million and
negative working capital of $1.1 million. As discussed in the above paragraph, in early March 2010,
we raised approximately $3.4 million, net of fees as a result of the issuance of common stock and
warrants.
In early July 2010, the Successor Company raised approximately $2.7 million less fees as a
result of the issuance of preferred stock and warrants. In early September 2010, the Successor
Company raised approximately $0.7 million less fees as a result of the issuance of preferred stock
and warrants. The Successor Company has also raised approximately $1.0 million less fees as the
result of the issuance of preferred stock and warrants in the period
from October 1, 2010 to
November 12, 2010. Total funds raised for the Preferred Stock Series B for the period July 1, 2010 through November
12, 2010 is approximately $4.0 million, net of fees.
The Company has not yet received $0.7 million in subscription proceeds from the above raises.
Although the Company believes that these outstanding funds will be received, there is no guarantee
that these funds will be received.
As
of November 12, 2010, the Company had cash and cash equivalents of approximately $0.2
million and liabilities of approximately $1.6 million. Thus, the Successor Company will require
to raise additional cash resources in the very near future, or it will likely cease operations. The
Successor Company will need to access the capital markets in the future in order to fund future
operations. There is no guarantee that any such required financing will be available on terms
satisfactory to the Successor Company or available at all. These matters create uncertainty
relating to its ability to continue as a going concern. The accompanying consolidated financial
statements do not reflect any adjustments relating to the recoverability and classification of
assets or liabilities that might result from the outcome of these uncertainties.
Factors Affecting Our Capital Resources
Inflation did not have a significant impact on the Companys results during the nine months
ended September 30, 2010.
Off-Balance Sheet Transactions
We do not engage in material off-balance sheet transactions.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential loss arising from adverse changes in market rates and prices,
such as foreign currency exchange rates or interest rates.
47
Foreign Exchange Rate Risk
We do not believe that we have significant foreign exchange rate risk at September 30, 2010.
We do not enter into derivatives or other financial instruments for trading or speculative
purposes.
ITEM 4. CONTROLS AND PROCEDURES
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(a) |
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Disclosure Controls and Procedures. Our management, with the participation of our Chief
Executive Officer and Chief Financial Officer (the Certifying Officers), have evaluated
the effectiveness of our disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) as of the end of the period covered by this report. Based on that
evaluation, the Certifying Officers have concluded that our disclosure controls and
procedures were effective for the purpose of ensuring that material information required to
be in this quarterly report is made known to them by others on a timely basis and that
information required to be disclosed by us in the reports that we file or submit under the
Exchange Act is accumulated and communicated to our management, including its principal
executive and principal financial officers, as appropriate to allow timely decisions
regarding required disclosure. |
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(b) |
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Changes in Internal Controls. There has been no change in our internal control over
financial reporting that occurred during our most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, our internal control over financial
reporting. |
48
PART II OTHER INFORMATION
ITEM 1A. RISK FACTORS
There have been no material changes to the Risk Factors disclosed in our December 31, 2009
Form 10-K. Investors should consider the risks and uncertainties set forth in our December 31,
2009 Form 10-K, or updates to such risks and uncertainties, prior to making an investment decision
with respect to our securities.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We
filed our Form 8-K on July 19, 2010 and October 22, 2010 regarding
our offering of Preferred Stock Series B and warrants in
July 2010 and September through October 2010, respectively.
ITEM 5. OTHER INFORMATION
Effective November 11, 2010, Paul Hopper gave his resignation to the Board of Directors. His
resignation was not a result of any disagreements relating to the Companys operations, policies or
practices and there were no disagreements between him and any officer or director of the Company.
ITEM 6. EXHIBITS
(a) Exhibits
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EXHIBIT NO. |
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IDENTIFICATION OF EXHIBIT |
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3.1 |
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Certificate of Designation of Preferences, Rights and
Limitations of Series B Convertible Preferred Stock, dated July 16, 2010 (incorporated by reference to Exhibit 3.1 to our
Form 8-K filed July 19, 2010) |
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4.1 |
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Common Stock Purchase Warrant (incorporated by reference to
Exhibit 4.1 to our Form 8-K filed July 19, 2010) |
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4.2 |
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Placement Agent Warrant (incorporated by reference to Exhibit
4.2 to our Form 8-K filed July 19, 2010) |
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4.3 |
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Common Stock Purchase Warrant for the transactions entered
into on September 8, 2010, October 13, 2010 and October 20,
2010. (incorporated by reference to Exhibit 4.1 to our Form
8-K filed October 22, 2010) |
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10.1 |
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Securities Purchase Agreement dated July 16, 2010 between the
Company and the Series B Preferred Stock Purchasers
(incorporated by reference to Exhibit 10.1 to our Form 8-K
filed July 19, 2010) |
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10.2 |
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Registration Rights Agreement used for the transaction dated
July 16, 2010 between the Company and the Series B Preferred
Stock Purchasers (incorporated by reference to Exhibit 10.2 to
our Form 8-K filed July 19, 2010) |
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10.3 |
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Employment Agreement by and between Fibrocell Science, Inc.
and Declan Daly dated August 24, 2010 (incorporated by
reference to Exhibit 10.1 to our Form 8-K filed August 27,
2010) |
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10.4 |
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Securities Purchase Agreements dated September 8, 2010,
October 13, 2010 and October 20, 2010 between the Company and
the Series B Preferred Stock Purchasers (incorporated by
reference to Exhibit 10.1 to our Form 8-K filed October 22,
2010) |
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10.5 |
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Registration Rights Agreements used for the transactions dated
September 8, 2010, October 13, 2010 and October 20, 2010
between the Company and the Series B Preferred Stock
Purchasers (incorporated by reference to Exhibit 10.2 to our
Form 8-K filed October 22, 2010) |
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*31.1 |
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Certification pursuant to Rule 13a-14(a) and 15d-14(a),
required under Section 302 of the Sarbanes-Oxley Act of 2002 |
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*31.2 |
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Certification pursuant to Rule 13a-14(a) and 15d-14(a),
required under Section 302 of the Sarbanes-Oxley Act of 2002 |
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*32.1 |
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Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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*32.2 |
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Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
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Fibrocell Science, Inc. |
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By:
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/s/ Declan Daly |
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Declan Daly
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Chief Financial Officer |
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Date: November 15, 2010
49