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 March 31, 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 May 11, 2010, issuer had 19,768,676 shares issued and outstanding of common stock, par
value $0.001.
PART I FINANCIAL INFORMATION
ITEM 1. Financial statements.
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Successor Balance Sheets
(unaudited)
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March 31, |
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December 31, |
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2010 |
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2009 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
2,463,445 |
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$ |
1,362,488 |
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Accounts receivable, net |
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273,713 |
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269,759 |
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Inventory, net |
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259,746 |
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226,032 |
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Prepaid expenses and other current assets |
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414,457 |
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525,024 |
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Total current assets |
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3,411,361 |
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2,383,303 |
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Property and equipment, net of accumulated depreciation of $852 and
$0, respectively |
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25,483 |
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Other assets |
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250 |
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250 |
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Intangible assets |
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6,340,656 |
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6,340,656 |
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Total assets |
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$ |
9,777,750 |
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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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$ |
27,522 |
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$ |
47,795 |
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Accounts payable |
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221,136 |
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245,023 |
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Accrued expenses |
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1,203,897 |
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544,260 |
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Total current liabilities |
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1,452,555 |
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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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4,943,232 |
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635,276 |
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Other long-term liabilities |
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340,809 |
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369,210 |
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Total liabilities |
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15,236,656 |
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10,341,624 |
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Commitments and contingencies |
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Redeemable preferred stock series A, $1,000 par value; 9,000 shares
authorized; 3,250 shares issued |
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2,462,809 |
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2,511,070 |
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Equity |
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Fibrocell Science, Inc. shareholders deficit: |
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Successor common stock, $.001 par value; 250,000,000 shares authorized |
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19,769 |
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14,692 |
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Additional paid-in capital |
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1,442,727 |
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508,347 |
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Accumulated deficit during development stage |
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(9,797,824 |
) |
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(5,049,999 |
) |
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Total Fibrocell Science, Inc. shareholders deficit |
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(8,335,328 |
) |
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(4,526,960 |
) |
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Noncontrolling interest |
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413,613 |
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398,475 |
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Total deficit and noncontrolling interest |
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(7,921,715 |
) |
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(4,128,485 |
) |
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Total liabilities, redeemable preferred stock, shareholders deficit and
noncontrolling interest |
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$ |
9,777,750 |
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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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Predecessor |
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Cumulative period |
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Cumulative period |
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from September 1, |
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from December 28, |
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2009 (date of |
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1995 (date of |
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For the three months |
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inception) to March |
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For the three months |
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inception) to August |
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ended March 31, 2010 |
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31, 2010 |
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ended March 31, 2009 |
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31, 2009 |
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Revenue |
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Product sales |
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$ |
209,070 |
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$ |
539,011 |
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$ |
158,889 |
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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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209,070 |
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539,011 |
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158,889 |
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5,078,994 |
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Cost of sales |
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100,519 |
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282,567 |
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63,790 |
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2,279,335 |
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Gross profit |
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108,551 |
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256,444 |
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95,099 |
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2,799,659 |
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Impairment of long-lived assets |
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6,732,754 |
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Selling, general and administrative expenses |
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2,019,913 |
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4,728,269 |
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1,199,564 |
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78,072,766 |
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Research and development expenses |
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1,192,610 |
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3,015,806 |
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1,007,907 |
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56,269,869 |
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Operating loss |
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(3,103,972 |
) |
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(7,487,631 |
) |
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(2,112,372 |
) |
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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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240 |
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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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Other income |
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316,338 |
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Warrant expense |
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(1,417,244 |
) |
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(1,736,328 |
) |
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Interest expense |
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(197,730 |
) |
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(444,904 |
) |
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(972,875 |
) |
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(18,790,218 |
) |
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Loss from continuing operations before income taxes |
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(4,715,643 |
) |
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(9,738,036 |
) |
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(3,085,007 |
) |
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(76,221,087 |
) |
Income tax benefit |
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190,754 |
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Loss from continuing operations |
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(4,715,643 |
) |
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(9,738,036 |
) |
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(3,085,007 |
) |
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(76,030,333 |
) |
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Loss from discontinued operations, net of tax |
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(17,044 |
) |
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(29,157 |
) |
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(26,500 |
) |
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(41,091,311 |
) |
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Net loss |
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(4,732,687 |
) |
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(9,767,193 |
) |
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(3,111,507 |
) |
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(117,121,644 |
) |
Deemed dividend associated with beneficial
conversion |
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(11,423,824 |
) |
Preferred stock dividends |
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(1,589,861 |
) |
Plus/(less): Net loss/(income) attributable to
noncontrolling interest |
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(15,138 |
) |
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(30,631 |
) |
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13,929 |
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1,799,523 |
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Net loss attributable to Fibrocell Science, Inc.
common shareholders |
|
$ |
(4,747,825 |
) |
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$ |
(9,797,824 |
) |
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$ |
(3,097,578 |
) |
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$ |
(128,335,806 |
) |
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Per share information: |
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Loss from continuing operations-basic and diluted |
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$ |
(0.30 |
) |
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$ |
(0.65 |
) |
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$ |
(0.08 |
) |
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$ |
(4.30 |
) |
Loss from discontinued operations-basic and diluted |
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(2.32 |
) |
Income attributable to noncontrolling interest |
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0.10 |
|
Deemed dividend associated with beneficial
conversion of preferred stock |
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(0.65 |
) |
Preferred stock dividends |
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(0.09 |
) |
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Net loss attributable to common shareholders per
common share-basic and diluted |
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$ |
(0.30 |
) |
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$ |
(0.65 |
) |
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$ |
(0.08 |
) |
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$ |
(7.26 |
) |
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Weighted average number of basic and diluted
common shares outstanding |
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15,806,989 |
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14,994,710 |
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37,663,283 |
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17,678,219 |
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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 Shareholders Equity
(Deficit) and Comprehensive Income (Loss)
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Accumulated |
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Series A |
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Series B |
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Accumulated |
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Deficit |
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Total |
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Preferred Stock |
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Preferred Stock |
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Common Stock |
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Additional |
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Treasury Stock |
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Other |
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During |
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Shareholders |
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Number of |
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Number of |
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Number of |
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Paid-In |
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Number of |
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Comprehensive |
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Development |
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Equity |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Shares |
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Amount |
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Income |
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Stage |
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|
(Deficit) |
|
Issuance of common stock for
cash on 12/28/95 |
|
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|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,285,291 |
|
|
$ |
2,285 |
|
|
$ |
(1,465 |
) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
820 |
|
Issuance of common stock for
cash on 11/7/96 |
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
11,149 |
|
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|
11 |
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|
49,989 |
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|
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|
|
|
|
|
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|
|
|
|
|
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|
50,000 |
|
Issuance of common stock for
cash on 11/29/96 |
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|
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|
|
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2,230 |
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|
2 |
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|
9,998 |
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|
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|
10,000 |
|
Issuance of common stock for
cash on 12/19/96 |
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|
|
|
|
|
|
|
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6,690 |
|
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|
7 |
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29,993 |
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|
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|
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|
|
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|
|
|
|
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|
30,000 |
|
Issuance of common stock for
cash on 12/26/96 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
11,148 |
|
|
|
11 |
|
|
|
49,989 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
50,000 |
|
Net loss |
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|
(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.
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
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 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.
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) |
|
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.
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) |
|
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.
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) |
|
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.
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 (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.
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 |
|
|
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.
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 (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.
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 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.
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
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) |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,747,825 |
) |
|
|
15,138 |
|
|
|
(4,732,687 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,732,687 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 3/31/10 (Successor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
19,768,831 |
|
|
$ |
19,769 |
|
|
$ |
1,442,727 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(9,797,824 |
) |
|
$ |
413,613 |
|
|
$ |
(7,921,715 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
14
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
period from |
|
|
|
|
|
|
period from |
|
|
|
Three months |
|
|
September 1, 2009 |
|
|
|
Three months |
|
|
December 28, 1995 |
|
|
|
ended |
|
|
(date of inception) |
|
|
|
ended |
|
|
(date of inception) |
|
|
|
March 31, 2010 |
|
|
to March 31, 2010 |
|
|
|
March 31, 2009 |
|
|
to August 31, 2009 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(4,747,825 |
) |
|
$ |
(9,797,824 |
) |
|
|
$ |
(3,097,578 |
) |
|
$ |
(115,322,121 |
) |
Adjustments to reconcile net (loss) income to net cash used in
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorganization items, net |
|
|
|
|
|
|
72,477 |
|
|
|
|
|
|
|
|
(74,648,976 |
) |
Expense related to equity awards and issuance of stock |
|
|
360,768 |
|
|
|
1,241,986 |
|
|
|
|
140,544 |
|
|
|
10,608,999 |
|
Warrant expense |
|
|
1,417,244 |
|
|
|
1,736,328 |
|
|
|
|
|
|
|
|
|
|
Uncompensated contribution of services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
755,556 |
|
Depreciation and amortization |
|
|
852 |
|
|
|
852 |
|
|
|
|
|
|
|
|
9,091,990 |
|
Provision for doubtful accounts |
|
|
(4,948 |
) |
|
|
(51,567 |
) |
|
|
|
252 |
|
|
|
337,810 |
|
Provision for excessive and/or obsolete inventory |
|
|
(34,532 |
) |
|
|
(22,868 |
) |
|
|
|
|
|
|
|
259,427 |
|
Amortization of debt issue costs |
|
|
|
|
|
|
|
|
|
|
|
187,310 |
|
|
|
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 |
|
|
2,448 |
|
|
|
(166 |
) |
|
|
|
20,156 |
|
|
|
(2,256,408 |
) |
Net (loss) income attributable to non-controlling interest |
|
|
15,138 |
|
|
|
30,631 |
|
|
|
|
(13,929 |
) |
|
|
(1,799,523 |
) |
Change in operating assets and liabilities, excluding effects of
acquisition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable |
|
|
994 |
|
|
|
24,538 |
|
|
|
|
48,378 |
|
|
|
(91,496 |
) |
Decrease (increase) in other receivables |
|
|
(88 |
) |
|
|
4,652 |
|
|
|
|
10,587 |
|
|
|
218,978 |
|
Decrease (increase) in inventory |
|
|
818 |
|
|
|
31,741 |
|
|
|
|
(1,605 |
) |
|
|
(455,282 |
) |
Decrease (increase) in prepaid expenses |
|
|
110,650 |
|
|
|
(134,255 |
) |
|
|
|
211,212 |
|
|
|
34,341 |
|
Decrease in other assets |
|
|
|
|
|
|
4,120 |
|
|
|
|
|
|
|
|
71,000 |
|
Increase (decrease) in accounts payable |
|
|
(23,887 |
) |
|
|
83,735 |
|
|
|
|
(225,214 |
) |
|
|
57,648 |
|
Increase in accrued expenses, liabilities subject to compromise
and other liabilities |
|
|
583,164 |
|
|
|
157,370 |
|
|
|
|
684,472 |
|
|
|
3,311,552 |
|
Decrease in deferred revenue |
|
|
|
|
|
|
|
|
|
|
|
(7,522 |
) |
|
|
(50,096 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(2,319,204 |
) |
|
|
(6,618,250 |
) |
|
|
|
(2,042,937 |
) |
|
|
(148,610,040 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Agera, net of cash acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,016,520 |
) |
Purchase of property and equipment |
|
|
(26,335 |
) |
|
|
(26,335 |
) |
|
|
|
|
|
|
|
(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 |
|
|
(26,335 |
) |
|
|
(26,335 |
) |
|
|
|
|
|
|
|
(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 redeemable preferred stock, net |
|
|
|
|
|
|
2,870,000 |
|
|
|
|
|
|
|
|
12,931,800 |
|
Proceeds from the issuance of common stock, net |
|
|
3,469,400 |
|
|
|
5,269,400 |
|
|
|
|
|
|
|
|
93,753,857 |
|
Costs associated with secured loan and debtor-in-possession loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(360,872 |
) |
Proceeds from secured loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,471 |
|
Proceeds from debtor-in-possession loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,750,000 |
|
Payments on insurance loan |
|
|
(20,273 |
) |
|
|
(42,164 |
) |
|
|
|
(23,492 |
) |
|
|
(79,319 |
) |
Cash dividends paid on preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 (used in) financing activities |
|
|
3,449,127 |
|
|
|
8,097,236 |
|
|
|
|
(23,492 |
) |
|
|
170,137,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash balances |
|
|
(2,631 |
) |
|
|
518 |
|
|
|
|
(19,829 |
) |
|
|
(36,391 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
1,100,957 |
|
|
|
1,453,169 |
|
|
|
|
(2,086,258 |
) |
|
|
1,010,276 |
|
Cash and cash equivalents, beginning of period |
|
|
1,362,488 |
|
|
|
1,010,276 |
|
|
|
|
2,854,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
2,463,445 |
|
|
$ |
2,463,445 |
|
|
|
$ |
768,042 |
|
|
$ |
1,010,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
period from |
|
|
|
|
|
|
period from |
|
|
|
Three months |
|
|
September 1, 2009 |
|
|
|
Three months |
|
|
December 28, 1995 |
|
|
|
ended |
|
|
(date of inception) |
|
|
|
ended |
|
|
(date of inception) |
|
|
|
March 31, 2010 |
|
|
to March 31, 2010 |
|
|
|
March 31, 2009 |
|
|
to August 31, 2009 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor cash paid for interest |
|
$ |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
$ |
12,715,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
48,260 |
|
|
|
91,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
344,000 |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor common stock issued in connection with reorganization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,472,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,340,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor deferred tax liability in connection with fresh-start |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of Predecessor common stock and fresh start adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,780,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor accrued warrant liability |
|
|
2,890,711 |
|
|
|
3,206,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
16
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. Marc Mazur was appointed to
the Board of Directors in April 2010. 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, 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.
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).
17
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 an 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.
18
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 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. In addition, the Company has
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 FDA requested the comparative histological data from this study in a Complete Response
letter issued to the Company on December 21, 2009 related to the Biologics License Application
(BLA) for azficel-T for the treatment of moderate to severe nasolabial fold wrinkles in adults.
The histology study 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.
Basis of Presentation
For discussions on the results of operations, the Successor Company has compared the three
months ended March 31, 2010 (Successor Company) to the three months ended March 31, 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 March 31, 2010, and the
results of its operations and cash flows for the three months ended March 31, 2010 and the
cumulative period from September 1, 2009 (date of inception) to March 31, 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.
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. This will have an impact on the Companys financial
disclosures since all future references to authoritative accounting literature will be references
in accordance with ASC 105.
19
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 March 31, 2010, the Successor Company had cash and cash equivalents of
approximately $2.5 million and working capital of $2.0 million. In early March 2010, the Successor
Company raised approximately $3.8 million less fees as a result of the issuance of common stock and
warrants. The Successor Company believes that its existing capital resources are adequate to
sustain its operation through approximately mid-June 2010. As such, the Successor Company will
require additional cash resources prior to or during approximately mid-June 2010, 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 prior to mid-June 2010, 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 March 31, 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 three months ended
March 31, 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.
20
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 prior to or during approximately mid-June 2010. If
the Successor Company does not obtain additional funding, or does not anticipate additional
funding, prior to or during approximately mid-June 2010, it will likely enter into bankruptcy
and/or cease operations. Further, if it does raise additional cash resources prior to mid-June
2010, 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 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 March 31, 2010, the Successor Company maintains the majority of its cash primarily with
one major U.S. domestic bank. The amounts held in this bank 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 $0.2 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.
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 86% and 87% of accounts receivable, net, at March
31, 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.
21
The allowance for doubtful accounts related to continuing operations was $32,150 and $37,098
at March 31, 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 March 31, 2010, Ageras inventory
of $0.3 million consisted of $0.2 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 March 31, 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.
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.
22
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.
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 statement of operations. No such charges have been incurred by the
Company. As of March 31, 2010 and December 31, 2009, the Successor Company had no accrued interest
related to uncertain tax positions.
At March 31, 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 March 31, 2010 relates to the intangible assets recognized upon fresh-start
accounting.
23
Loss per share data
Basic 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. There
were no potentially dilutive securities issued or outstanding for the three months ended March 31,
2010.
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.
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 March
31, 2010, and is not being amortized.
24
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
25
|
|
|
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 March 31, 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.
For the three months ended March 31, 2010, there was $13,150 in professional fees offset by the
gain from discharge of a liability of $16,453.
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.
26
Note 8Accrued Expenses
Accrued expenses are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Accrued professional fees |
|
$ |
414,662 |
|
|
$ |
147,410 |
|
Accrued compensation |
|
|
146,691 |
|
|
|
7,208 |
|
Accrued interest |
|
|
443,671 |
|
|
|
246,578 |
|
Dividend on preferred stock payable |
|
|
91,000 |
|
|
|
42,740 |
|
Accrued other |
|
|
107,873 |
|
|
|
100,324 |
|
|
|
|
|
|
|
|
Accrued expenses |
|
$ |
1,203,897 |
|
|
$ |
544,260 |
|
|
|
|
|
|
|
|
Note 9-Equity
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).
The aggregate purchase price paid by the Purchasers for the common stock and the warrants was
$3,807,500. 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
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.
Redeemable Preferred Stock
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 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 recorded accrued dividends at a rate of 6% per annum
on the Series A Preferred stock of $91,000 as of March 31, 2010.
Note 10-Warrants
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
$0.75 per share.
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.
27
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 March
31, 2010, and recorded warrant expense of $1.4 million resulting from the increase in the
liability associated with the fair value of the warrants for the three months ended March 31, 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 fair market value of the warrants was computed using the Black-Scholes option-pricing
model with the following key assumptions as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
March 2, |
|
|
March 31, |
|
|
|
2010 |
|
|
2010 |
|
Expected life (years) |
|
5 years |
|
|
4.9 years |
|
Interest rate |
|
|
2.3 |
% |
|
|
2.6 |
% |
Dividend yield |
|
|
|
|
|
|
|
|
Volatility |
|
|
65 |
% |
|
|
65 |
% |
Warrant liability is comprised of the following as of March 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Number of |
|
|
Fair Value of |
|
|
Balance as of |
|
|
|
Warrants |
|
|
Warrants |
|
|
March 31, 2010 |
|
Preferred Stock Class A Warrants |
|
|
1,083,333 |
|
|
$ |
0.64 |
|
|
$ |
692,872 |
|
Preferred Stock Class B Warrants |
|
|
1,083,334 |
|
|
|
0.64 |
|
|
|
692,873 |
|
Preferred Stock Co-placement |
|
|
433,333 |
|
|
|
0.64 |
|
|
|
277,149 |
|
Common Stock Warrants |
|
|
5,076,667 |
|
|
|
0.59 |
|
|
|
3,013,705 |
|
Common Stock Placement Warrants |
|
|
406,333 |
|
|
|
0.66 |
|
|
|
266,633 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
8,083,000 |
|
|
|
|
|
|
$ |
4,943,232 |
|
|
|
|
|
|
|
|
|
|
|
|
Note 11Equity-based Compensation
Total stock-based compensation expense recognized using the straight-line attribution method
in the consolidated statement of operations is as follows:
|
|
|
|
|
|
|
Successor |
|
|
|
Three months ended |
|
|
|
March 31, 2010 |
|
Stock option compensation expense for employees and directors |
|
$ |
324,377 |
|
Restricted stock expense |
|
|
18,000 |
|
Equity awards for nonemployees issued for services |
|
|
18,391 |
|
|
|
|
|
Total stock-based compensation expense |
|
$ |
360,768 |
|
|
|
|
|
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 approximately $149,000 in the first quarter of 2010.
28
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. 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 |
|
|
|
March 31, 2010 |
|
Expected life (years) |
|
5.5 years |
|
Interest rate |
|
|
2.4 |
% |
Dividend yield |
|
|
|
|
Volatility |
|
|
65 |
% |
There were no stock options exercised during the three months ended March 31, 2010.
The total fair value of shares vested during the first quarter
2010 was $0.2 million. As of March 31, 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 2.6 years. As of March 31, 2010, there was $0.2 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 March 31, 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
1.42 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.
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:
Three Months Ended March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
Successor |
|
|
|
|
|
|
Successor |
|
|
|
Fibrocell Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
209,070 |
|
|
$ |
209,070 |
|
|
|
|
|
|
Segment income (loss) from
continuing operations |
|
$ |
(4,726,548 |
) |
|
$ |
10,905 |
|
|
$ |
(4,715,643 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information related to
continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
$ |
852 |
|
|
$ |
|
|
|
$ |
852 |
|
Total assets as of March 31, 2010 |
|
|
9,094,140 |
|
|
|
683,610 |
|
|
|
9,777,750 |
|
Property and equipment, net |
|
|
25,483 |
|
|
|
|
|
|
|
25,483 |
|
Intangible assets |
|
|
6,340,656 |
|
|
|
|
|
|
|
6,340,656 |
|
29
An intercompany receivable as of March 31, 2010, 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, 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
March 31, 2010 are approximately $9.8 million.
Three Months Ended March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
Predecessor |
|
|
|
Isolagen Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
158,889 |
|
|
$ |
158,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment loss from continuing operations |
|
$ |
(3,014,739 |
) |
|
$ |
(70,268 |
) |
|
$ |
(3,085,007 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information related to
continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Total assets, including assets from
discontinued operations as of March
31, 2009 |
|
|
1,639,628 |
|
|
|
869,016 |
|
|
|
2,508,644 |
|
Property and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
An intercompany receivable of $1.0 million, due from the Agera segment to the Isolagen Therapy
segment as of March 31, 2009, is eliminated in consolidation. This intercompany receivable is
primarily due to the intercompany management fee charge to Agera by Isolagen, as well as Agera
working capital needs provided by Isolagen, and has been excluded from total assets of the Isolagen
Therapy segment in the above table. Total assets on the consolidated balance sheet at March 31,
2009 are approximately $2.5 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 |
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Three months ended |
|
|
|
Three months ended |
|
|
|
March 31, 2010 |
|
|
|
March 31, 2009 |
|
United States |
|
$ |
60,194 |
|
|
|
$ |
73,490 |
|
United Kingdom |
|
|
141,667 |
|
|
|
|
59,044 |
|
Other |
|
|
7,209 |
|
|
|
|
26,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
209,070 |
|
|
|
$ |
158,889 |
|
|
|
|
|
|
|
|
|
During the three months ended March 31, 2010, revenue from one foreign customer and one
domestic customer represented 68% and 19% of consolidated revenue, respectively. During the three
months ended March 31, 2009, revenue from one foreign customer and one domestic customer
represented 37% and 31% of consolidated revenue, respectively.
As of March 31, 2010 and December 31, 2009, one foreign customer represented 86% and 87%,
respectively, of accounts receivable, net.
30
Note 13Subsequent Events
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 FDA requested the comparative histological data from this study in a Complete Response
letter issued to the Company on December 21, 2009 related to the Biologics License Application
(BLA) for azficel-T for the treatment of moderate to severe nasolabial fold wrinkles in adults.
The histology study 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.
Effective April 1, 2010, the board of directors of Fibrocell Science, Inc. approved the
appointment of Marc Mazur to the Companys board of directors. On his appointment, Mr. Mazur
received an option to purchase 200,000 shares of Company common stock at an exercise price equal to
the fair market value of the Companys common stock on the date of issuance, of which 100,000
shares vest immediately and 100,000 shares vest in 12 months.
31
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;
32
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 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 we provide data from a histopathological study on biopsied tissue samples from patients
following injection of azficel-T. The 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. In addition, the Company has 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 is
currently awaiting the FDAs comments on the protocol.
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.
33
Our 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, our 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. Marc Mazur was appointed to the Board in April 2010. 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 also acted as interim chief
executive officer until February 1, 2010 when David Pernock became the chief executive officer.
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.
Going Concern
The Successor Company emerged from Bankruptcy in September 2009 and continues to operate as a
going-concern. At March 31, 2010, we had cash and cash equivalents of approximately $2.5 million
and working capital of $2.0 million. In early March 2010, we raised approximately $3.8 million less
fees as a result of the issuance of common stock and warrants. We believe that our existing capital
resources are adequate to sustain our operation through approximately mid-June 2010. As such, we
will require additional cash resources prior to or during approximately mid-June 2010, or we 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 our 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.
34
Through March 31, 2010, we have been primarily engaged in developing our initial product
technology. In the course of our development activities, we have sustained losses and expect such
losses to continue through at least 2010. Our 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. Our ability to complete an
offering is also dependent on the status of our FDA regulatory milestones and our clinical trials,
and in particular, the status of our 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 us, and if available, on terms and conditions that are acceptable.
As a result of the conditions discussed above, and in accordance with generally accepted
accounting principles in the United States, there exists substantial doubt about our ability to
continue as a going concern, and our ability to continue as a going concern is contingent, among
other things, upon our ability to secure additional adequate financing or capital prior to or
during approximately mid-June 2010. If we do not obtain additional funding, or do not anticipate
additional funding, prior to or during approximately mid-June 2010, we will likely enter into
bankruptcy and/or cease operations. Further, if we do raise additional cash resources prior to
mid-June 2010, it may be raised in contemplation of or in connection with bankruptcy. If we enter
into bankruptcy, it is likely that our common stock and common stock equivalents will become
worthless and our creditors 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.
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
35
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 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. In addition, the Company has 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 FDA requested
the comparative histological data from this study in a Complete Response letter issued to the
Company on December 21, 2009 related to the Biologics License Application (BLA) for azficel-T
for the treatment of moderate to severe nasolabial fold wrinkles in adults.
The histology
study 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 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 is currently in
the process of finalizing the Clinical Study Program Report and 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.
36
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.
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.
37
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.
In March 2010, the FASB ratified EITF Issue No. 08-9, 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.
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.
38
For discussions on the results of operations, the Successor Company has compared the results
of operations for the three months ended March 31, 2010, with the results of operations for the
three months ended March 31, 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 March 31, 2010 and 2009
REVENUES. Revenue remained relatively constant at $0.2 million for the three months ended
March 31, 2010 and for the three months ended March 31, 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. 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 remained constant at $0.1 million for the three months ended
March 31, 2010 and March 31, 2009. Our cost of sales relates to the operation of Agera. As a
percentage of revenue, Agera cost of sales were approximately 48% for the three months ended March
31, 2010 and 40% for the three months ended March 31, 2009. Cost of sales as a percentage of
revenue has increased primarily due to the impact of a physical inventory adjustment in the first
quarter of 2010 and increased costs of components.
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses
increased by approximately $0.8 million, or 68%, to $2.0 million for the three months
ended March 31, 2010 as compared to $1.2 million for the three months ended March 31, 2009. The increase primarily relates to a $0.3 million increase
in payroll related expenses, $0.2 million increase related to general and administrative expenses
associated with consultants for financing and marketing as well as office expenses and $0.3 million increase related to
legal expenses. Legal expenses for the three months ended March 31, 2009 were ($0.2) 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 three months ended March 31, 2010 and March 31, 2009 would have been consistent at $0.1
million.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by approximately $0.2
million, or 18%, to $1.2 million for the three months ended March 31, 2010 as compared to $1.0 for
the three months ended March 31, 2009. The increase primarily relates to a $0.1 million increase
in payroll related expenses and $0.1 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) 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
March 31, 2010, for the Successor Company was $3.0 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.
LOSS FROM DISCONTINUED OPERATIONS. Discontinued operations had a loss of less than $0.1
million for the three months ended March 31, 2010 and the three months ended March 31, 2009.
Administrative
costs related primarily to the Swiss operations comprised approximately less than $0.1 million
during the three months ended March 31, 2010 and the three months ended March 31, 2009.
39
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
three months ended March 31, 2010, which was comprised primarily of administrative costs offset by
the gain of discharge of liabilities.
INTEREST EXPENSE. Interest expense decreased $0.8 million to $0.2 million for the three months
ended March 31, 2010, as compared to $1.0 million for the three months ended March 31, 2009. Our
2010 interest expense is related to our $6.0 million (in original principal amount) 12.5% notes.
Our 2009 interest expense is related to our 3.5% convertible subordinated notes, of which $89.7
million was outstanding at March 31, 2009, as well as the related amortization of deferred debt
issuance costs of $0.2 million, for the three months ended March 31, 2009. With the emergence out
of bankruptcy, the 3.5% convertible subordinated notes were exchanged for $6.0 million of debt and
3,960,000 shares of the new common stock.
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS. Net loss attributable to common shareholders
increased approximately $1.6 million to a net loss of $4.7 million for the three months ended March
31, 2010, as compared to a net loss of $3.1 million for the three months ended March 31, 2009. This
increase in loss primarily represents the recording of the revaluation of the warrant liability for
the preferred stock issued in October 2009 and the warrant liability attached to the common shares
issued in March 2010.
Liquidity and Capital Resources
Cash Flows
Net cash provided by (used in) operating, investing and financing activities for the three
months ended March 31, 2010 and 2009, respectively, were as follows:
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Three Months Ended March 31, |
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2010 |
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2009 |
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Cash flows from operating activities |
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(2.3 |
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$ |
(2.0 |
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Cash flows from investing activities |
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Cash flows from financing activities |
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3.4 |
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OPERATING ACTIVITIES. Cash used in operating activities during the three months ended March
31, 2010 amounted to $2.3 million, an increase of $0.3 million over the three months ended March
31, 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 $0.2 million, in addition to
operating cash inflows from changes in operating assets and liabilities.
Our negative operating cash flows for the three months ended March 31, 2010 were funded from
cash on hand at December 31, 2009, which were primarily the result of previously completed debt and
equity offerings as well as funds received from the secured bridge loan, DIP financing, exit
financing and the funds received for the issuance of preferred stock in 2009. Funds were also
received from the proceeds of the issuance of common stock in March 2010, discussed further below.
INVESTING ACTIVITIES. Less than $0.1 million cash was provided by or used for investing
activities during the three months ended March 31, 2010 and the three months ended March 31, 2009.
FINANCING ACTIVITIES. There was $3.4 million, net of fees, cash proceeds from financing
activities during the three months ended March 31, 2010, as compared to no cash received from
financing activities during the three months ended March 31, 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.
40
Working Capital
As of March 31, 2010, we had cash and cash equivalents of approximately $2.5 million and
working capital of $2.0 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. We believe that our existing capital resources are adequate to sustain our operation
through approximately mid-June 2010. As such, we will require additional cash resources prior to or
during approximately mid-June 2010, or we will likely cease operations. Even if we are able to
obtain financing prior to mid-June 2010, we will need to access the capital markets in the future
in order to continue to fund future operations. There is no guarantee that any such required
financing will be available on terms satisfactory to us or available at all. These matters create
uncertainty relating to our 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 three months
ended March 31, 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.
Foreign Exchange Rate Risk
We do not believe that we have significant foreign exchange rate risk at March 31, 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. |
41
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
The information set forth in our Form 8-K filed March 3, 2010 regarding our offering of common
stock and warrants during the three months ended March 31, 2010 is incorporated herein by
reference.
ITEM 6. EXHIBITS
(a) Exhibits
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EXHIBIT NO. |
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IDENTIFICATION OF EXHIBIT |
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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: |
/s/ Declan Daly
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Declan Daly |
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Chief Financial Officer |
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Date: May 14, 2010
42