sv1za
As
filed with the Securities and Exchange Commission on June 23, 2011
Registration No. 333-174579
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment
No. 1 to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIBROCELL SCIENCE, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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2834 |
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87-0458888 |
(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer Identification
Number) |
405 Eagleview Boulevard
Exton, Pennsylvania 19341
(484) 713-6000
(Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)
Declan Daly
405 Eagleview Boulevard
Exton, Pennsylvania 19341
(484) 713-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Cavas S. Pavri, Esq.
Cozen OConnor
1900 Market Street
Philadelphia, PA 19103
Professional Corporation
(215) 665-5542
Facsimile: (215) 701-2478
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. þ
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. o.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
This information in this prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE 23, 2011
PROSPECTUS
FIBROCELL SCIENCE, INC.
31,116,000 Common Stock
This prospectus relates to the resale of our common stock by certain of our stockholders, or
Selling Stockholders, named in the section of this prospectus titled Selling Security Holders.
The following shares may be offered for resale under this prospectus: (a) 15,558,000 shares of
common stock underlying convertible series D preferred stock, or Series D Preferred Stock, issued
to accredited investors in a private offering, and (b) 15,558,000 shares of common stock underlying
warrants issued to the same investors in the foregoing offering.
Although we will pay substantially all the expenses incident to the registration of the
shares, we will not receive any proceeds from the sales by the Selling Stockholders. We will,
however, to the extent the warrants are exercised for cash, receive proceeds from such exercises;
to the extent we receive such proceeds, they will be used for working capital purposes.
Our common stock is presently quoted for trading under the symbol FCSC on the over the
counter bulletin board, or OTCBB. On June 21, 2011, the last sales price of the common stock, as
reported on the OTCBB was $1.16 per share.
Investing in our common stock is highly speculative and involves a high degree of risk. You
should purchase these securities only if you can afford a complete loss of your investment. You
should carefully consider the risks and uncertainties described under the heading Risk Factors
beginning on page 3 of this prospectus before making a decision to purchase our common stock.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2011
TABLE OF CONTENTS
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PROSPECTUS SUMMARY |
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1 |
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RISK FACTORS |
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3 |
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS |
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USE OF PROCEEDS |
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MARKET PRICE OF AND DIVIDENDS ON OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS |
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20 |
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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS |
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21 |
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BUSINESS |
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29 |
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MANAGEMENT |
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41 |
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RELATED PARTY TRANSACTIONS |
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48 |
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PRINCIPAL STOCKHOLDERS |
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48 |
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DESCRIPTION OF SECURITIES |
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50 |
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SELLING SECURITY HOLDERS |
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58 |
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PLAN OF DISTRIBUTION |
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PROSPECTUS SUMMARY
This summary highlights information set forth in greater detail elsewhere in this prospectus.
It may not contain all the information that may be important to you. You should read the following
summary together with the more detailed information regarding us and our common stock being sold in
this offering, including the information incorporated by reference into this prospectus. Unless the
context requires otherwise, references to the Company, Fibrocell, we, our, and us, refer
to Fibrocell Science, Inc. and its subsidiaries.
Our Company
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, proposed brand name laViv®) and has completed Phase III
clinical studies, and the related Biologics License Application, or BLA, has been submitted to the
Food and Drug Administration, or FDA. In October 2009, the FDAs Cellular, Tissue and Gene
Therapies Advisory Committee reviewed this indication. On December 21, 2009, Fibrocell received a
Complete Response (CR) letter from the FDA related to the BLA for azficel-T, an autologous cell
therapy for the treatment of moderate to severe nasolabial folds/wrinkles in adults. A Complete
Response letter is issued by the FDAs Center for Biologics Evaluation and Research (CBER) when
the review of a file is completed and additional data are needed prior to approval. The Complete
Response letter requested that Fibrocell Science provide data from a histopathological study on
biopsied tissue samples from patients following injection of azficel-T. The histology study
(IT-H-001) evaluated tissue treated with azficel-T as compared to tissue treated with sterile
saline (placebo). The study also provided information about the skin after treatment, including
evaluation of collagen and elastin fibrils, and cellular structure of the sampled tissues.
On May 13, 2010, we announced the initiation of the small histology study of azficel-T,
discussed above. The study had 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). We announced on July 8, 2010, the completion of enrollment of and first treatment visits
for participants in its histology study of azficel-T. The second treatment visits for participants
enrolled in the histology study of azficel-T were completed by the end of July. The third treatment
visits for participants enrolled in the histology study of azficel-T were completed by the end of
August.
The Complete Response letter also requested finalized Chemistry, Manufacturing and Controls
(CMC) information regarding the manufacture of azficel-T as follow-up to discussions that
occurred during the BLA review period, as well as revised policies and procedures.
We announced on December 20, 2010, that we had submitted our complete response to the CR
letter issued by the FDA regarding our BLA for azficel-T. On January 22, 2011, the FDA accepted for
review our complete response submission. Even though the FDA has accepted our response for complete
evaluation, there is no assurance that it will approve our product. The FDA, under the
Prescription Drug User Fee Act (PDUFA), has a target six months review window to completely
evaluate the Companys response. The PDUFA date is June 22, 2011. We announced on March 16, 2011,
that we had submitted a final study report to the FDA for the completed, six-month histological
study examining skin after injections of azficel-T. On June 21, 2011,
the FDA approved laViv (azficel-T).
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.
Recent Financing and Securities Being Offered
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From December 2010 until March 2011, we completed a private offering to accredited investors
pursuant to which we raised a total of $7,779,000 from the issuance of 7,779 shares of Series D
Preferred Stock, which are convertible into 15,558,000 shares of common stock, and warrant to
purchase 15,558,000 shares of common stock at a purchase price of $0.50 per share.
The Selling Stockholders named in this prospectus may offer for resale the following
securities:
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up to 15,558,000 shares of common stock underlying the Series D Preferred Stock; and |
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up to 15,558,000 shares of common stock underlying the warrants issued in the Series D
private offering. |
Although we will pay substantially all the expenses incident to the registration of the
shares, we will not receive any proceeds from the sales by the Selling Stockholders. However, we
may receive proceeds of up to $7,779,000 from the exercise of the outstanding warrants (assuming
the warrants are not exercised on a cash-less basis); if such proceeds are received by us, they
will be used for working capital purposes.
Our Contact Information
Our corporate headquarters is located at 405 Eagleview Boulevard, Exton, Pennsylvania 19341.
Our phone number is (484) 713-6000. Our corporate website is www.fibrocellscience.com. Information
contained on our website or any other website does not constitute part of this prospectus.
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RISK FACTORS
Investing in our company involves a high degree of risk. Before investing in our company you
should carefully consider the following risks, together with the financial and other information
contained in this prospectus. If any of the following risks actually occurs, our business,
prospects, financial condition and results of operations could be adversely affected. In that case,
the trading price of our common stock would likely decline and you may lose all or a part of your
investment.
We could fail to remain a going concern. We will need to raise substantial additional capital to
fund our operations through commercialization of our product candidates, and we do not have any
commitments for that capital.
There exists substantial doubt regarding our ability to continue as a going concern. As of
December 31, 2010 we had cash and cash equivalents of $0.9 million and negative working capital of
less than $0.1 million. We raised approximately $6.1 million less fees as the result of the
issuance of the Series D Preferred Stock and warrants in the period from January 1, 2011 through
March 1, 2011. We received $0.2 million in subscription receivables from a July financing in
mid-March 2011.
As of May 9, 2011, the we had cash and cash equivalents of approximately $2.0 million and
current liabilities of approximately $1.1 million. Our current monthly cash run-rate is
approximately $1.0 million. We are in the process of purchasing manufacturing equipment and
incurring marketing expenditures over the next couple of months to prepare us for launch post a
possible FDA approval. Thus, we will be required to raise additional cash resources in the near
future, or it will likely cease operations. We will need to access the capital markets in the near
future in order 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 its ability to continue as a going concern.
We will need additional capital to achieve commercialization of our product candidates and to
execute our business strategy, and if we are unsuccessful in raising additional capital we will be
unable to achieve commercialization of our product candidates or unable to fully execute our
business strategy on a timely basis, if at all. If we raise additional capital through the issuance
of debt securities, the debt securities may be secured and any interest payments would reduce the
amount of cash available to operate and grow our business. If we raise additional capital through
the issuance of equity securities, such issuances will likely cause dilution to our stockholders,
particularly if we are required to do so during periods when our common stock is trading at low
price levels. If we file for bankruptcy, it is likely that our common stock will become worthless,
given that there currently exists approximately $7.5 million of debt as of March 25, 2011, which
has a priority over common shareholders. In addition, our Series A, B and D Preferred Stock are
senior to our common stock, and would be given a liquidation preference prior to the common stock
in a bankruptcy event. Additionally, we do not know whether any financing, if obtained, will be
adequate to meet our capital needs and to support our growth. If adequate capital cannot be
obtained on satisfactory terms, we may terminate or delay our efforts related to regulatory
approval of one or more of our product candidates, curtail or delay the implementation of
manufacturing process improvements or delay the expansion of our sales and marketing capabilities,
any of which could cause our business to fail.
If we do not obtain additional funding, we will likely enter into bankruptcy and/or cease
operations. Further, if we do raise additional cash resources in the near future, 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.
Our independent registered public accounting firm issued their report for our fiscal year
ended December 31, 2010, which included an explanatory paragraph for our uncertainty to continue as
a going concern. If we became unable to continue as a going concern, we would have to liquidate our
assets and we may likely receive significantly less than the values at which they are carried on
our consolidated financial statements. The inclusion of a going concern explanatory paragraph in
our independent registered public accounting firms audit opinion for the year ended December 31,
2010 may materially and adversely affect our stock price and our ability to raise new capital.
3
Obtaining FDA and other regulatory approvals is complex, time consuming and expensive, and the
outcomes are uncertain.
The process of obtaining FDA and other regulatory approvals is time consuming, expensive and
difficult. Clinical trials are required and the marketing and manufacturing of our product
candidates are subject to rigorous testing procedures.
The commencement and completion of clinical trials for any of our product candidates could be
delayed or prevented by a variety of factors, including:
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delays in obtaining regulatory approvals to commence a study; |
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delays in identifying and reaching agreement on acceptable terms with prospective
clinical trial sites; |
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delays or failures in obtaining approval of our clinical trial protocol from an
institutional review board, or IRB, to conduct a clinical trial at a prospective study
site; |
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delays in the enrollment of subjects; |
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manufacturing difficulties; |
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failure of our clinical trials and clinical investigators to be in compliance with the
FDAs Good Clinical Practices, or GCP;
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failure of our third-party contract research organizations, clinical site organizations
and other clinical trial managers, to satisfy their contractual duties, comply with
regulations or meet expected deadlines; |
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lack of efficacy during clinical trials; or |
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unforeseen safety issues. |
We do not know whether our clinical trials will need to be restructured or will be completed
on schedule, if at all, or whether they will provide data necessary to support necessary regulatory
approval. Significant delays in clinical trials will impede our ability to commercialize our
product candidates and generate revenue, and could significantly increase our development costs.
We utilize bovine-sourced materials to manufacture our Fibrocell Therapy. Future FDA
regulations, as well as currently proposed regulations, may require us to change the source of the
bovine-sourced materials we use in our products or to cease using bovine-sourced materials. If we
are required to use alternative materials in our products, and in the event that such alternative
materials are available to us, or if we choose to change the materials used in our products in the
future, we would need to validate the new manufacturing process and run comparability trials with
the reformulated product, which could delay our submission for regulatory approval.
Even if marketing approval from the FDA is received for one or more of our product candidates,
the FDA may impose post-marketing requirements, such as:
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labeling and advertising requirements, restrictions or limitations, including the
inclusion of warnings, precautions, contra-indications or use limitations that could have a
material impact on the future profitability of our product candidates; |
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testing and surveillance to further evaluate or monitor our future products and their
continued compliance with regulatory standards and requirements; |
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submitting products for inspection; or |
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imposing a risk evaluation and mitigation strategy, or REMS, to ensure that the benefits
of the drug outweigh the risks. |
Because our consolidated financial statements for the year ended December 31, 2009 reflect
fresh-start accounting adjustments made on emergence from bankruptcy and because of the effects of
the transactions that became effective pursuant to the Plan, financial information in our current
and future financial statements will not be comparable to our financial information from prior
periods.
In connection with our emergence from bankruptcy, we adopted fresh-start accounting as of
September 1, 2009 in accordance with ASC 852-10. The adoption of fresh-start accounting resulted in
our becoming a new entity for financial reporting purposes. As required by fresh-start accounting,
our assets and liabilities have been preliminarily adjusted to fair value, and certain assets and
liabilities not previously recognized in our financial statements have been recognized. In addition
to fresh-start accounting, our financial statements reflect all effects of the transactions
implemented by the Plan. Accordingly, the financial statements prior to September 1, 2009 are not
comparable with the financial statements for periods on or after September 1, 2009. Furthermore,
the estimates and assumptions used to implement fresh-start accounting are inherently subject to
significant uncertainties and contingencies beyond our control. Accordingly, we cannot provide
assurance that the estimates, assumptions, and values reflected in the valuations will be realized,
and actual results could vary materially. For further information about fresh-start accounting, see
Note 5 Fresh-Start Accounting in Notes to Consolidated Financial Statements.
Protocol deviations may release the FDA from its binding acceptance of our SPA study design, which
may result in the delay, or non-approval, by the FDA of the Fibrocell Therapy.
5
In connection with preparations for FDA Investigator Inspections related to our nasolabial
folds/wrinkles Phase III studies, we identified protocol deviations related to the timing of visits
and other types of deviations. The possibility exists that our special protocol assessment could no
longer be binding on the FDA if the FDA considers these deviations, individually or in aggregate,
to be significant. Further, future investigator audits may identify deviations unknown at this
time. Accordingly, the possibility exists that although our Phase III studies yielded statistically
significant results, the studies may not be acceptable to the FDA under the SPA.
Clinical trials may fail to demonstrate the safety or efficacy of our product candidates, which
could prevent or significantly delay regulatory approval and prevent us from raising additional
financing.
Prior to receiving approval to commercialize any of our product candidates, we must
demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction
of the FDA and other regulatory authorities in the United States and abroad, that our product
candidates are both safe and effective. We will need to demonstrate our product candidates
efficacy and monitor their safety throughout the process. We have recently completed a pivotal
Phase III clinical trial related to our lead facial aesthetic product candidate. The success of
prior pre-clinical or clinical trials does not ensure the success of these trials, which are being
conducted in populations with different racial and ethnic demographics than our previous trials. If
our current trials or any future clinical trials are unsuccessful, our business and reputation
would be harmed and the price at which our stock trades could be adversely affected. In addition,
if our Phase III clinical trials related to our lead facial aesthetic product candidate is deemed
to be unacceptable or deficient in any way by the FDA, we may be unable to raise additional equity
or debt financing that we may require to continue our operations.
All of our product candidates are subject to the risks of failure inherent in the development
of biotherapeutic products. The results of early-stage clinical trials of our product candidates do
not necessarily predict the results of later-stage clinical trials. Product candidates in
later-stage clinical trials may fail to demonstrate desired safety and efficacy traits despite
having successfully progressed through initial clinical testing. Even if we believe the data
collected from clinical trials of our product candidates is promising, this data may not be
sufficient to support approval by the FDA or any other U.S. or foreign regulatory approval.
Pre-clinical and clinical data can be interpreted in different ways. Accordingly, FDA officials
could reach different conclusions in assessing such data than we do, which could delay, limit or
prevent regulatory approval. In addition, the FDA, other regulatory authorities, our Institutional
Review Boards or we, may suspend or terminate clinical trials at any time.
Unlike our Phase III nasolabial folds/wrinkles trial, our Phase II/III Acne Scar trial is not
subject to a SPA with the FDA. In addition, we have developed a photo guide for use in the
evaluators assessment of acne study subjects. Our evaluator assessment scale and photo guide have
not been previously used in a clinical trial. To obtain FDA approval with respect to the acne scar
indication, we will require FDA concurrence with the use of our evaluator assessment scale and
photo guide.
Any failure or delay in completing clinical trials for our product candidates, or in receiving
regulatory approval for the sale of any product candidates, has the potential to materially harm
our business, and may prevent us from raising necessary, additional financing that we may need in
the future.
Since our emergence from bankruptcy we have completed numerous equity financings of convertible
securities, and it is likely that we will make additional equity financings in the future, which
may materially and adversely affect the price of our common stock. We have a significant number of
convertible securities that may result in significant dilution to our common stockholders.
Sales of substantial amounts of shares of our common stock in the public market, or the
perception that those sales may occur, could cause the market price of our common stock to decline.
We have used and it is likely that we will continue to use our common stock or securities
convertible into or exchangeable for our common stock to fund our working capital needs or to
acquire technology, product rights or businesses, or for other purposes. If we issue additional
equity securities, particularly during times when our common stock is trading at relatively low
price levels, the price of our common stock may be materially and adversely affected.
Since our emergence from bankruptcy we have completed numerous equity financings of
convertible preferred stock and warrants. The conversion or exercise of the preferred stock or
warrants, as applicable, into
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common stock and the sale of such common stock into the market may cause the price of our
common stock to fall. Even if such sales do not occur, the market may anticipate such sales in the
future, which may cause the price of our common stock to fall.
Furthermore, the preferred stock has a conversion feature that we may trigger at our option if
the price of our common stock trades above $1.00 per share. As of March 31, 2011, if such price
occurs and if we trigger the conversion feature, we would be required to issue in excess of 27
million shares of common stock. The issuance of these shares or the sale of these shares may
materially reduce the price of our common stock. On May 24, 2011, we sent a mandatory conversion notice to the holders of our
outstanding Series A and Series B Preferred Stock. Pursuant to the notice, each holder of such
Preferred Stock was notified that since the volume weighted average price of our common stock
had exceeded 200% of the then effective conversion price of the Preferred Stock for twenty
consecutive trading days, we were permitted to force the conversion of the Preferred Stock into
common stock. The conversion will be effective on July 7, 2011; provided that holders of
Preferred Stock have the right to voluntarily convert their shares of Preferred Stock prior to such
date.
We have a significant number of warrants and convertible preferred stock outstanding that contain
anti-dilution and price-protection provisions that may result in the reduction of their exercise
prices or conversion prices in the future.
In October 2009, we completed an offering of Series A Preferred Stock and warrants, and, in
March 2010, we completed an offering of common stock and warrants. In November 2010, we completed
an offering of Series B Preferred Stock and warrants, and, in March 2011, we completed an offering
of Series D Preferred Stock and warrants. Each of the foregoing securities were subject to certain
anti-dilution provisions, which provisions require the lowering of the conversion price or exercise
price, as applicable, to the purchase price of future offerings. Furthermore, with respect to the
warrants, if we complete an offering below the exercise price of such warrants, the number of
shares issuable under the warrants will be proportionately increased such that the aggregate
exercise price payable after taking into account the decrease in the exercise price, shall be equal
to the aggregate exercise price prior to such adjustment. The conversion and exercise price of
securities related to the Series A Preferred Stock and warrants, the common stock and warrants
issued in the March 2010 offering and the Series B Preferred Stock and warrants offering were
adjusted due to the Series D Preferred Stock and warrants offering. If in the future we issue
securities for less than the conversion or exercise price of the securities we issued so far, we
may be required to further reduce the relevant conversion or exercise prices, and the number of
shares underlying the warrants may be increased.
During the term that the warrants and preferred stock are outstanding, the holders of those
securities are given the opportunity to profit from a rise in the market price of our common stock.
In addition, certain of the warrants are not redeemable by us. We may find it more difficult to
raise additional equity capital while these warrants or preferred stock are outstanding. At any
time during which these warrants are likely to be exercised, we may be able to obtain additional
equity capital on more favorable terms from other sources.
We have yet to be profitable, losses may continue to increase from current levels and we will
continue to experience significant negative cash flow as we expand our operations, which may limit
or delay our ability to become profitable.
We have incurred losses since our inception, have never generated significant revenue from
commercial sales of our products, and have never been profitable. We are focused on product
development, and we have expended significant resources on our clinical trials, personnel and
research and development. We expect these costs to continue to rise in the future. We expect to
continue to experience increasing operating losses and negative cash flow as we expand our
operations.
We expect to continue to incur significant additional costs and expenses related to:
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FDA clinical trials and regulatory approvals; |
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expansion of laboratory and manufacturing operations; |
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research and development; |
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brand development; |
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personnel costs;
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development of relationships with strategic business partners, including physicians who
might use our future products; and |
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interest expense and amortization of issuance costs related to our outstanding note
payables. |
If our product candidates fail in clinical trials or do not gain regulatory approval, if our
product candidates do not achieve market acceptance, or if we do not succeed in effectively and
efficiently implementing manufacturing process and technology improvements to make our product
commercially viable, we will not be profitable. If we fail to become and remain profitable, or if
we are unable to fund our continuing losses, our business may fail.
We will continue to experience operating losses and significant negative cash flow until we
begin to generate significant revenue from (a) the sale of our product candidates, which is
dependent on the receipt of FDA approval for our product candidates and is dependent on our ability
to successfully market and sell such product candidates, and (b) our Agera product line, which is
dependent on achieving significant market penetration in its markets.
We may be unable to successfully commercialize any of our product candidates currently under
development.
Before we can commercialize any of our product candidates in the United States, we will need
to:
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conduct substantial additional research and development; |
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successfully complete lengthy and expensive pre-clinical and clinical testing, including
the Phase II/III clinical trial for our acne scar product candidate; |
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successfully improve our manufacturing process; and |
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obtain FDA approvals. |
Even if our product development efforts are successful, we cannot assure that we will be able
to commercialize any of our product candidates currently under development. In that event, we will
be unable to generate significant revenue, and our business will fail.
We have not generated significant revenue from commercial sales of our products to date, and we do
not know whether we will ever generate significant revenue.
We are focused on product development and have not generated significant revenue from
commercial sales of our products to date. Prior to the fourth quarter of 2006 we offered the
Fibrocell Therapy for sale in the United Kingdom. Our United Kingdom operation had been operating
on a negative gross margin as we investigated means to improve manufacturing technologies for the
Fibrocell Process.
We do not currently offer any products for sale that are based upon our Fibrocell Therapy, and
we cannot guarantee that we will ever market any such products. We must demonstrate that our
product candidates satisfy rigorous standards of safety and efficacy before the FDA and other
regulatory authorities in the United States and abroad will approve the product candidates for
commercial marketing. We will need to conduct significant additional research, including
potentially pre-clinical testing and clinical testing before we can file additional applications
with the FDA for approval of our product candidates. We must also develop, validate and obtain FDA
approval of any improved manufacturing process. In addition, to compete effectively our future
products must be easy to use, cost-effective and economical to manufacture on a commercial scale.
We may not achieve any of these objectives, and we may never generate revenue from our product
candidates.
Our ability to effectively commercialize our product candidates depends on our ability to improve
our manufacturing process and validate such future improvements.
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As part of the approval process, we must pass a pre-approval inspection of our manufacturing
facility before we can obtain marketing approval for our product candidates. The Complete Response
letter that we received from the FDA in December 2009 requested finalized CMC information regarding
the manufacture of azficel-T as follow-up to discussions that occurred during the BLA review
period. We cannot guarantee that this CMC information will satisfy the FDAs requirements for
approval. All of our manufacturing methods, equipment and processes for the active pharmaceutical
ingredient and finished product must comply with the FDAs current Good Manufacturing Practices, or
cGMP, requirements. We will also need to perform extensive audits of our suppliers, vendors and
contract laboratories. The cGMP requirements govern all areas of recordkeeping, production
processes and controls, personnel and quality control. To ensure that we meet these requirements,
we will expend significant time, money and effort. Due to the unique nature of our Fibrocell
Therapy, we cannot predict the likelihood that the FDA will approve our facility as compliant with
cGMP requirements even if we believe that we have taken the steps necessary to achieve compliance.
The FDA, in its regulatory discretion, may require us to undergo additional clinical trials
with respect to any new or improved manufacturing process we develop or utilize, in the future, if
any. This could include a requirement to change the materials used in our manufacturing process.
These improvements or modifications could delay or prevent approval of our product candidates. If
we fail to comply with cGMP requirements, pass an FDA pre-approval inspection or obtain FDA
approval of our manufacturing process, we would not receive FDA approval and would be subject to
possible regulatory action. The failure to successfully implement our manufacturing process may
delay or prevent our future profitability.
Even if we obtain FDA approval in the future and satisfy the FDA with regard to a validated
manufacturing process, we still may be unable to commercially manufacture the Fibrocell Therapy
profitably. Our manufacturing cost has been subject to fluctuation, depending, in part, on the
yields obtained from our manufacturing process. There is no guarantee that future manufacturing
improvements will result in a manufacturing cost low enough to effectively compete in the market.
Further, we currently manufacture the Fibrocell Therapy on a limited basis (for research and
development and for trial purposes only) and we have not manufactured commercial levels of the
Fibrocell Therapy in the United States. Such commercial manufacturing volumes, in the future, could
lead to unexpected inefficiencies and result in unprofitable performance results.
We may not be successful in our efforts to develop commercial-scale manufacturing technology and
methods.
In order to successfully commercialize any approved product candidates, we will be required to
produce such products on a commercial scale and in a cost-effective manner. We can provide no assurance that we will be
able to cost-effectively and commercially scale our operations using our current manufacturing
process. If we are unable to develop suitable techniques to produce and manufacture our product
candidates, our business prospects will suffer.
We depend on a third-party manufacturer for our Agera product line, the loss or unavailability of
which would require us to find a substitute manufacturer, if available, resulting in delays in
production and additional expenses.
Our Agera skin care product line is manufactured by a third party. We are dependent on this
third party to manufacture Ageras products, and the manufacturer is responsible for supplying the
formula ingredients for the Agera product lines. If for any reason the manufacturer discontinues
production of Ageras products at a time when we have a low volume of inventory on hand or are
experiencing a high demand for the products, significant delays in production of the products and
interruption of product sales may result as we seek to establish a relationship and commence
production with a new manufacturer, which would negatively impact our results of operation.
The large majority of our revenue, which relates to the Agera business segment, is to one
international customer.
Our revenues, which relate solely to the Agera business segment, are highly concentrated in
one large, international customer. This large customer represented 72% and 64% of 2010 and 2009
consolidated revenues, respectively. Further, this large customer represented 88% and 87% of
consolidated accounts receivable, net, at
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December 31, 2010 and December 31, 2009, respectively. A reduction of revenue related to this
large customer, due to competitor product alternatives, pricing pressures, the financial health of
the large customer, or otherwise, would have a significant, negative impact on the business of
Agera, and the related value thereof.
If our Fibrocell Therapy is found to be unsafe or ineffective, or if our Fibrocell Therapy is
perceived to be unsafe or ineffective, our business would be materially harmed.
Our product candidates utilize our Fibrocell Therapy. In addition, we expect to utilize our
Fibrocell Therapy in the development of any future product candidates. If our Fibrocell Therapy is
found to be, or perceived to be, unsafe or ineffective, we will not be successful in obtaining
marketing approval for any product candidates then pending, and we may have to modify or cease
production of any products that previously may have received regulatory approval. Negative media
exposure, whether founded or unfounded, related to the safety and/or effectiveness of our Fibrocell
Therapy may harm our reputation and/or competitive position.
If physicians do not follow our established protocols, the efficacy and safety of our product
candidates may be adversely affected.
We are dependent on physicians to follow our established protocols both as to the
administration and the handling of our product candidates in connection with our clinical trials,
and we will continue to be dependent on physicians to follow such protocols if our product
candidates are commercialized. The treatment protocol requires each physician to verify the
patients name and date of birth with the patient and the patient records immediately prior to
injection. In the event more than one patients cells are delivered to a physician or we deliver
the wrong patients cells to the physician, which has occurred in the past, it is the physicians
obligation to follow the treatment protocol and assure that the patient is treated with the correct
cells. If the physicians do not follow our protocol, the efficacy and safety of our product
candidates may be adversely affected.
Our business, which depends on one facility, is vulnerable to natural disasters, telecommunication
and information systems failures, terrorism and similar problems, and we are not fully insured for
losses caused by all of these incidents.
We currently conduct all our research, development and manufacturing operations in one
facility located in Exton, Pennsylvania. As a result, if we obtain FDA approval of any of our
product candidates, all of the commercial manufacturing for the U.S. market are currently expected
to take place at a single U.S. facility. If regulatory, manufacturing or other problems require us
to discontinue production at that facility, we will not be able to supply product, which would
adversely impact our business.
Our Exton facility could be damaged by fire, floods, power loss, telecommunication and
information systems failures or similar events. Our insurance policies have limited coverage levels
for loss or damages in these events and may not adequately compensate us for any losses that may
occur. In addition, terrorist acts or acts of war may cause harm to our employees or damage our
Exton facility. The potential for future terrorist attacks, the national and international
responses to terrorist attacks or perceived threats to national security, and other acts of war or
hostility have created many economic and political uncertainties that could adversely affect our
business and results of operations in ways that we cannot predict, and could cause our stock price
to fluctuate or decline. We are uninsured for these types of losses.
As a result of our limited operating history, we may not be able to correctly estimate our future
operating expenses, which could lead to cash shortfalls.
We have a limited operating history and our primary business activities consist of conducting
clinical trials. As such, our historical financial data is of limited value in estimating future
operating expenses. Our budgeted expense levels are based in part on our expectations concerning
the costs of our clinical trials, which depend on the success of such trials and our ability to
effectively and efficiently conduct such trials, and expectations related to our efforts to achieve
FDA approval with respect to our product candidates. In addition, our budgeted expense levels are
based in part on our expectations of future revenue that we may receive from our Agera product
line, and the size of future revenue depends on the choices and demand of individuals. Our limited
operating history and clinical trial
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experience make these costs and revenues difficult to forecast accurately. We may be unable to
adjust our operations in a timely manner to compensate for any unexpected increase in costs or
shortfall in revenue. Further, our fixed manufacturing costs and business development and marketing
expenses will increase significantly as we expand our operations. Accordingly, a significant
increase in costs or shortfall in revenue could have an immediate and material adverse effect on
our business, results of operations and financial condition.
Our operating results may fluctuate significantly in the future, which may cause our results to
fall below the expectations of securities analysts, stockholders and investors.
Our operating results may fluctuate significantly in the future as a result of a variety of
factors, many of which are outside of our control. These factors include, but are not limited to:
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the level of demand for the products that we may develop; |
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the timely and successful implementation of improved manufacturing processes; |
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our ability to attract and retain personnel with the necessary strategic, technical and
creative skills required for effective operations; |
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the amount and timing of expenditures by practitioners and their patients; |
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introduction of new technologies; |
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product liability litigation, class action and derivative action litigation, or other
litigation; |
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the amount and timing of capital expenditures and other costs relating to the expansion
of our operations; |
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the state of the debt and/or equity markets at the time of any proposed offering we
choose to initiate; |
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our ability to successfully integrate new acquisitions into our operations; |
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government regulation and legal developments regarding our Fibrocell Therapy in the
United States and in the foreign countries in which we may operate in the future; and |
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general economic conditions. |
As a strategic response to changes in the competitive environment, we may from time to time
make pricing, service, technology or marketing decisions or business or technology acquisitions
that could have a material adverse effect on our operating results. Due to any of these factors,
our operating results may fall below the expectations of securities analysts, stockholders and
investors in any future period, which may cause our stock price to decline.
We may be liable for product liability claims not covered by insurance.
Physicians who used our facial aesthetic product in the past, or who may use any of our future
products, and patients who have been treated by our facial aesthetic product in the past, or who
may use any of our future products, may bring product liability claims against us. While we have
taken, and continue to take, what we believe are appropriate precautions, we may be unable to avoid
significant liability exposure. We currently keep in force product liability insurance, although
such insurance may not be adequate to fully cover any potential claims or may lapse in accordance
with its terms prior to the assertion of claims. We may be unable to obtain product liability
insurance in the future, or we may be unable to do so on acceptable terms. Any insurance we obtain
or have obtained in the past may not provide adequate coverage against any asserted claims. In
addition, regardless of merit or eventual outcome, product liability claims may result in:
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diversion of managements time and attention;
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expenditure of large amounts of cash on legal fees, expenses and payment of damages; |
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decreased demand for our products or any of our future products and services; or |
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injury to our reputation. |
If we are the subject of any future product liability claims, our business could be adversely
affected, and if these claims are in excess of insurance coverage, if any, that we may possess, our
financial position will suffer.
Our failure to comply with extensive governmental regulation may significantly affect our operating
results.
Even if we obtain regulatory approval for some or all of our product candidates, we will
continue to be subject to extensive ongoing requirements by the FDA, as well as by a number of
foreign, national, state and local agencies. These regulations will impact many aspects of our
operations, including testing, research and development, manufacturing, safety, efficacy, labeling,
storage, quality control, adverse event reporting, import and export, record keeping, approval,
distribution, advertising and promotion of our future products. We must also submit new or
supplemental applications and obtain FDA approval for certain changes to an approved product,
product labeling or manufacturing process. Application holders must also submit advertising and
other promotional material to the FDA and report on ongoing clinical trials. The FDA enforces
post-marketing regulatory requirements, including the cGMP requirements, through periodic
unannounced inspections. We do not know whether we will pass any future FDA inspections. Failure to
pass an inspection could disrupt, delay or shut down our manufacturing operations. Failure to
comply with applicable regulatory requirements could, among other things, result in:
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administrative or judicial enforcement actions; |
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changes to advertising; |
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failure to obtain marketing approvals for our product candidates; |
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revocation or suspension of regulatory approvals of products; |
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product seizures or recalls; |
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court-ordered injunctions; |
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import detentions; |
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delay, interruption or suspension of product manufacturing, distribution, marketing and
sales; or |
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civil or criminal sanctions. |
The discovery of previously unknown problems with our future products may result in
restrictions of the products, including withdrawal from the market. In addition, the FDA may
revisit and change its prior determinations with regard to the safety or efficacy of our future
products. If the FDAs position changes, we may be required to change our labeling or cease to
manufacture and market our future products. Even prior to any formal regulatory action, we could
voluntarily decide to cease the distribution and sale or recall any of our future products if
concerns about their safety or efficacy develop.
In their regulation of advertising and other promotion, the FDA and the FTC may issue
correspondence alleging that some advertising or promotional practices are false, misleading or
deceptive. The FDA and FTC are authorized to impose a wide array of sanctions on companies for such
advertising and promotion practices, which could result in any of the following:
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incurring substantial expenses, including fines, penalties, legal fees and costs to
comply with the FDAs requirements; |
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changes in the methods of marketing and selling products; |
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taking FDA mandated corrective action, which may include placing advertisements or
sending letters to physicians rescinding previous advertisements or promotions; or |
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disruption in the distribution of products and loss of sales until compliance with the
FDAs position is obtained. |
Improper promotional activities may also lead to investigations by federal or state
prosecutors, and result in criminal and civil penalties. If we become subject to any of the above
requirements, it could be damaging to our reputation and restrict our ability to sell or market our
future products, and our business condition could be adversely affected. We may also incur
significant expenses in defending ourselves.
Physicians may prescribe pharmaceutical or biologic products for uses that are not described
in a products labeling or differ from those tested by us and approved by the FDA. While such
off-label uses are common and the FDA does not regulate physicians choice of treatments, the FDA
does restrict a manufacturers communications on the subject of off-label use. Companies cannot
promote FDA-approved pharmaceutical or biologic products for off-label uses, but under certain
limited circumstances they may disseminate to practitioners articles published in peer-reviewed
journals. To the extent allowed by the FDA, we intend to disseminate peer-reviewed articles on our
future products to practitioners. If, however, our activities fail to comply with the FDAs
regulations or guidelines, we may be subject to warnings from, or enforcement action by, the FDA or
other regulatory or law enforcement authorities.
Our sales, marketing, and scientific/educational grant programs, if any in the future, must
also comply with applicable requirements of the anti-fraud and abuse provisions of the Social
Security Act, the False Claims Act, the federal anti-kickback law, and similar state laws, each as
amended. Pricing and rebate programs must comply with the Medicaid rebate requirements of the
Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as
amended. If products are made available to authorized users of the Federal Supply Schedule of the
General Services Administration, additional laws and requirements apply. All of these activities
are also potentially subject to federal and state consumer protection and unfair competition laws.
The distribution of product samples to physicians must comply with the requirements of the
Prescription Drug Marketing Act.
Depending on the circumstances, failure to meet post-approval requirements can result in
criminal prosecution, fines or other penalties, injunctions, recall or seizure of products, total
or partial suspension of production, denial or withdrawal of pre-marketing product approvals, or
refusal to allow us to enter into supply contracts, including government contracts. Any government
investigation of alleged violations of law could require us to expend significant time and
resources in response, and could generate negative publicity.
Legislative or regulatory reform of the healthcare system may affect our ability to sell our future
products profitably.
In the United States and a number of foreign jurisdictions, there have been legislative and
regulatory proposals to change the healthcare system in ways that could impact our ability to sell
our future products profitably. For instance, there currently is no legal pathway for generic or
similar versions of BLA-approved biologics, sometimes called follow-on biologics or
biosimilars, but there is continuing interest by Congress on this issue and on healthcare reform
in general. It is unknown what type of regulatory framework, what legal provisions, and what
timeframes for issuance of regulations or guidance any final legislation on biosimilars would
contain, but the future profitability of any approved biological product could be materially
adversely impacted by the approval of a biosimilar product. The FDAs policies may change and
additional government regulations may be enacted, which could prevent or delay regulatory approval
of our product candidates. We cannot predict the likelihood, nature or extent of adverse government
regulation that may arise from future legislation or administrative action, either in the
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United States or abroad. If we are not able to maintain regulatory compliance, we might not be
permitted to market our future products and our business could suffer.
Any future products that we develop may not be commercially successful.
Even if we obtain regulatory approval for our product candidates in the United States and
other countries, those products may not be accepted by the market. A number of factors may affect
the rate and level of market acceptance of our products, including:
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labeling requirements or limitations; |
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market acceptance by practitioners and their patients; |
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our ability to successfully improve our manufacturing process; |
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the effectiveness of our sales efforts and marketing activities; and |
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the success of competitive products. |
If our current or future product candidates fail to achieve market acceptance, our
profitability and financial condition will suffer.
Our competitors in the pharmaceutical, medical device and biotechnology industries may have
superior products, manufacturing capabilities, financial resources or marketing position.
The human healthcare products and services industry is extremely competitive. Our competitors
include major pharmaceutical, medical device and biotechnology companies. Most of these competitors
have more extensive research and development, marketing and production capabilities and greater
financial resources than we do. Our future success will depend on our ability to develop and market
effectively our future products against those of our competitors. If our future products receive
marketing approval but cannot compete effectively in the marketplace, our results of operations and
financial position will suffer.
We are dependent on our key scientific and other management personnel, and the loss of any of these
individuals could harm our business.
We are dependent on the efforts of our key management and scientific staff. The loss of any of
these individuals, or our inability to recruit and train additional key personnel in a timely
manner, could materially and adversely affect our business and our future prospects. A loss of one
or more of our current officers or key personnel could severely and negatively impact our
operations. We have employment agreements with most of our key management personnel, but some of
these people are employed at-will, and any of them may elect to pursue other opportunities at any
time. We have no present intention of obtaining key man life insurance on any of our executive
officers or key management personnel.
We may need to attract, train and retain additional highly qualified senior executives and
technical and managerial personnel in the future.
In the future, we may need to seek additional senior executives, as well as technical and
managerial staff members. There is a high demand for highly trained executive, technical and
managerial personnel in our industry. We do not know whether we will be able to attract, train and
retain highly qualified technical and managerial personnel in the future, which could have a
material adverse effect on our business, financial condition and results of operations.
If we are unable to effectively promote our brands and establish a competitive position in the
marketplace, our business may fail.
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Our Fibrocell Therapy brand names are new and unproven. We believe that the importance of
brand recognition will increase over time. In order to gain brand recognition, we may increase our
marketing and advertising budgets to create and maintain brand loyalty. We do not know whether
these efforts will lead to greater brand recognition. If we are unable to effectively promote our
brands, including our Agera product line, and establish competitive positions in the marketplace,
our business results will be materially adversely affected.
If we are unable to adequately protect our intellectual property and proprietary technology, the
value of our technology and future products will be adversely affected, and if we are unable to
enforce our intellectual property against unauthorized use by third parties our business may be
materially harmed.
Our long-term success largely depends on our future ability to market technologically
competitive products. Our ability to achieve commercial success will depend in part on obtaining
and maintaining patent protection and trade secret protection of our technology and future
products, as well as successfully defending these patents against third party challenges. In order
to do so we must:
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obtain and protect commercially valuable patents or the rights to patents both
domestically and abroad; |
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operate without infringing upon the proprietary rights of others; and |
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prevent others from successfully challenging or infringing our proprietary rights. |
As of December 31, 2010, we had 10 issued U.S. patents, 3 pending U.S. patent applications, 30
granted foreign patents and no pending international patent application. However, we may not be
able to obtain additional patents relating to our technology or otherwise protect our proprietary
rights. If we fail to obtain or maintain patents from our pending and future applications, we may
not be able to prevent third parties from using our proprietary technology. We will be able to
protect our proprietary rights from unauthorized use only to the extent that these rights are
covered by valid and enforceable patents that we control or are effectively maintained by us as
trade secrets. Furthermore, the degree of future protection of our proprietary rights is uncertain
because legal means afford only limited protection and may not adequately protect our rights or
permit us to gain or keep a competitive advantage.
The patent situation of companies in the markets in which we compete is highly uncertain and
involves complex legal and factual questions for which important legal principles remain
unresolved. No consistent policy regarding the breadth of claims allowed in such companies patents
has emerged to date in the United States. The laws of other countries do not protect intellectual
property rights to the same extent as the laws of the United States, and many companies have
encountered significant problems in protecting and defending such rights in foreign jurisdictions.
The legal systems of certain countries, particularly certain developing countries, do not favor the
enforcement of patents and other intellectual property protection, particularly those relating to
biotechnology and/or pharmaceuticals, which could make it difficult for us to stop the infringement
of our patents in foreign countries in which we hold patents. Proceedings to enforce our patent
rights in the United States or in foreign jurisdictions would likely result in substantial cost and
divert our efforts and attention from other aspects of our business. Changes in either the patent
laws or in interpretations of patent laws in the United States or other countries may diminish the
value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may
be allowed or enforced in our patents or in third-party patents.
Other risks and uncertainties that we face with respect to our patents and other proprietary
rights include the following:
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the inventors of the inventions covered by each of our pending patent applications might
not have been the first to make such inventions; |
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we might not have been the first to file patent applications for these inventions or
similar technology; |
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the future and pending applications we will file or have filed, or to which we will or
do have exclusive rights, may not result in issued patents or may take longer than we
expect to result in issued patents;
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the claims of any patents that are issued may not provide meaningful protection; |
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our issued patents may not provide a basis for commercially viable products or may not
be valid or enforceable; |
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we might not be able to develop additional proprietary technologies that are patentable; |
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the patents licensed or issued to us may not provide a competitive advantage; |
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patents issued to other companies, universities or research institutions may harm our
ability to do business; |
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other individual companies, universities or research institutions may independently
develop or have developed similar or alternative technologies or duplicate our technologies
and commercialize discoveries that we attempt to patent; |
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other companies, universities or research institutions may design around technologies we
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many of our patent claims are method, rather than composition of matter, claims;
generally composition of matter claims are easier to enforce and are more difficult to
circumvent. |
Our business may be harmed and we may incur substantial costs as a result of litigation or other
proceedings relating to patent and other intellectual property rights.
A third party may assert that we, one of our subsidiaries or one of our strategic
collaborators has infringed his, her or its patents and proprietary rights or challenge the
validity or enforceability of our patents and proprietary rights. Likewise, we may need to resort
to litigation to enforce our patent rights or to determine the scope and validity of a third
partys proprietary rights.
We cannot be sure that other parties have not filed for or obtained relevant patents that
could affect our ability to obtain patents or operate our business. Even if we have previously
filed patent applications or obtain issued patents, others may file their own patent applications
for our inventions and technology, or improvements to our inventions and technology. We have become
aware of published patent applications filed after the issuance of our patents that, should the
owners pursue and obtain patent claims to our inventions and technology could require us to
challenge such patent claims. Others may challenge our patent or other intellectual property rights
or sue us for infringement. In all such cases, we may commence legal proceedings to resolve our
patent or other intellectual property disputes or defend against charges of infringement or
misappropriation. An adverse determination in any litigation or administrative proceeding to which
we may become a party could subject us to significant liabilities, result in our patents being
deemed invalid, unenforceable or revoked, or drawn into an interference, require us to license
disputed rights from others, if available, or to cease using the disputed technology. In addition,
our involvement in any of these proceedings may cause us to incur substantial costs and result in
diversion of management and technical personnel. Furthermore, parties making claims against us may
be able to obtain injunctive or other equitable relief that could effectively block our ability to
develop, commercialize and sell products, and could result in the award of substantial damages
against us.
The outcome of these proceedings is uncertain and could significantly harm our business. If we
do not prevail in this type of litigation, we or our strategic collaborators may be required to:
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pay monetary damages; |
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expend time and funding to redesign our Fibrocell Therapy so that it does not infringe
others patents while still allowing us to compete in the market with a substantially
similar product; |
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obtain a license, if possible, in order to continue manufacturing or marketing the
affected products or services, and pay license fees and royalties, which may be
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exclusive, giving our competitors access to the same intellectual property, or the patent
owner may require that we grant a cross-license to our patented technology; or |
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stop research and commercial activities relating to the affected products or services if
a license is not available on acceptable terms, if at all. |
Any of these events could materially adversely affect our business strategy and the value of
our business.
In addition, the defense and prosecution of intellectual property suits, interferences,
oppositions and related legal and administrative proceedings in the United States and elsewhere,
even if resolved in our favor, could be expensive and time consuming and could divert financial and
managerial resources. Some of our competitors may be able to sustain the costs of complex patent
litigation more effectively than we can because they have substantially greater financial
resources.
If we are unable to keep up with rapid technological changes, our future products may become
obsolete or unmarketable.
Our industry is characterized by significant and rapid technological change. Although we
attempt to expand our technological capabilities in order to remain competitive, research and
discoveries by others may make our future products obsolete. If we cannot compete effectively in
the marketplace, our potential for profitability and financial position will suffer.
We have not declared any dividends on our common stock to date, and we have no intention of
declaring dividends in the foreseeable future.
The decision to pay cash dividends on our common stock rests with our Board of Directors and
will depend on our earnings, unencumbered cash, capital requirements and financial condition. We do
not anticipate declaring any dividends in the foreseeable future, as we intend to use any excess
cash to fund our operations. Investors in our common stock should not expect to receive dividend
income on their investment, and investors will be dependent on the appreciation of our common stock
to earn a return on their investment.
Provisions in our charter documents could prevent or delay stockholders attempts to replace or
remove current management.
Our charter documents provide for staggered terms for the members of our Board of Directors.
Our Board of Directors is divided into three staggered classes, and each director serves a term of
three years. At stockholders meetings, only those directors comprising one of the three classes
will have completed their term and be subject to re-election or replacement.
In addition, our Board of Directors is authorized to issue blank check preferred stock, with
designations, rights and preferences as they may determine. Accordingly, our Board of Directors has
in the past and may in the future, without stockholder approval, issue shares of preferred stock
with dividend, liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of the holders of our common stock. This type of preferred stock could
also be issued to discourage, delay or prevent a change in our control.
The use of a staggered Board of Directors, the ability to issue blank check preferred stock,
and the adoption of stockholder rights plans are traditional anti-takeover measures. These
provisions in our charter documents make it difficult for a majority stockholder to gain control of
the Board of Directors and of our company. These provisions may be beneficial to our management and
our Board of Directors in a hostile tender offer and may have an adverse impact on stockholders who
may want to participate in such a tender offer, or who may want to replace some or all of the
members of our Board of Directors.
17
Provisions in our bylaws provide for indemnification of officers and directors, which could require
us to direct funds away from our business and future products.
Our bylaws provide for the indemnification of our officers and directors. We have in the past
and may in the future be required to advance costs incurred by an officer or director and to pay
judgments, fines and expenses incurred by an officer or director, including reasonable attorneys
fees, as a result of actions or proceedings in which our officers and directors are involved by
reason of being or having been an officer or director of our company. Funds paid in satisfaction of
judgments, fines and expenses may be funds we need for the operation of our business and the
development of our product candidates, thereby affecting our ability to attain profitability.
Future sales of our common stock may depress our stock price.
The market price of our common stock could decline as a result of sales of substantial amounts
of our common stock in the public market, or as a result of the perception that these sales could
occur, which could occur if we issue a large number of shares of common stock (or securities
convertible into our common stock) in connection with a future financing. These factors could make
it more difficult for us to raise funds through future offerings of common stock or other equity
securities. As of June 22, 2011, there were 38,292,942 shares of common stock issued and
outstanding. All of our outstanding shares are freely transferable without restriction or further
registration under the Securities Act. In addition to our common stock outstanding, as of such
date, we had preferred stock outstanding that was convertible into a total of 18,432,000 shares of
common stock and warrants outstanding that were exercisable for a total of 34,768,464 shares of
common stock.
There is a limited, volatile and sporadic public trading market for our common stock.
There is a limited, volatile and sporadic public trading market for our common stock. Without
an active trading market, there can be no assurance of any liquidity or resale value of our common
stock, and stockholders may be required to hold shares of our common stock for an indefinite period
of time.
Lack of effectiveness of internal controls over financial reporting could adversely affect the
value of our securities.
As directed by Section 404 of the Sarbanes-Oxley Act, the SEC adopted rules requiring public
companies to include a report of management on the companys internal control over financial
reporting in their annual reports on Form 10-K that contains an assessment by management of the
effectiveness of the companys internal control over financial reporting. Ineffective internal
controls over our financial reporting have occurred in the past and may arise in the future. As a
consequence, our investors could lose confidence in the reliability of our financial statements,
which could result in a decrease in the value of our securities.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus 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:
18
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|
|
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; |
|
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|
|
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; |
|
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|
|
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; |
|
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|
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; |
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|
our ability to reduce our need for fetal bovine calf serum by improved use of less
expensive media combinations and different media alternatives; |
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continued availability of supplies at satisfactory prices; |
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new entrance of competitive products or further penetration of existing products in our
markets; |
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the effect on us from adverse publicity related to our products or the company itself; |
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any adverse claims relating to our intellectual property; |
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the adoption of new, or changes in, accounting principles; |
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our issuance of certain rights to our shareholders that may have anti-takeover effects; |
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our dependence on physicians to correctly follow our established protocols for the safe
administration of our Fibrocell Therapy; and |
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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..
USE OF PROCEEDS
This prospectus relates to the resale of shares of our common stock underlying Series D
Preferred Stock and warrants issued in a private offering. We will not receive any proceeds from
the sale of shares of common stock
19
in this offering. However, to the extent the warrants are exercised for cash, we will receive
proceeds from the exercise of any warrants, up to a maximum amount of $7,779,000, and we will use
any such proceeds for working capital purposes.
MARKET PRICE OF AND DIVIDENDS ON OUR COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
Market Information
On October 21, 2009, our common stock became available for trading OTCBB under the symbol
FCSC. Currently, there is only a limited, sporadic and volatile market for our stock on the
OTCBB. The table below presents the high and low bid price for our common stock each quarter during
the past two years and reflects inter-dealer prices, without retail markup, markdown, or
commission, and may not represent actual transactions.
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
High |
|
|
Low |
|
December 31, 2009 (from October 21, 2009) |
|
$ |
2.40 |
|
|
$ |
0.50 |
|
March 31, 2010 |
|
$ |
1.13 |
|
|
$ |
0.80 |
|
June 30, 2010 |
|
$ |
1.04 |
|
|
$ |
0.65 |
|
September 30, 2010 |
|
$ |
0.85 |
|
|
$ |
0.53 |
|
December 31, 2010 |
|
$ |
0.60 |
|
|
$ |
0.40 |
|
March 31, 2011 |
|
$ |
0.92 |
|
|
$ |
0.50 |
|
The closing price of our common stock on June 22, 2011 was $1.17.
The common stock of our predecessor company, Isolagen, Inc., traded on the NYSE Amex under the
symbol ILE. The common stock ceased trading on the NYSE Amex on May 6, 2009 and in June 2009 the
NYSE Amex delisted the common stock from listing on the NYSE Amex. Upon the effective date of our
bankruptcy plan, the outstanding common stock of Isolagen was cancelled. Consequently, the
stockholders of Isolagen prior to the effective date of the bankruptcy plan no longer have any
interest as stockholders of Fibrocell by virtue of their ownership of Isolagens common stock prior
to the emergence from bankruptcy.
Holders
As of June 22, 2011, there were 38,292,942 shares of our common stock outstanding and held by
189 stockholders of record. As of June 22, 2011, there were 3,250 shares issued and 950 shares
outstanding for Series A preferred stock, 4,640 shares issued and 487 shares outstanding for
Series B preferred stock and 7,779 shares Series D preferred stock issued and outstanding.
Dividends
We have never paid any cash dividends on our common stock and our board of directors does not
intend to do so in the foreseeable future. The declaration and payment of dividends in the future,
of which there can be no assurance, will be determined by the board of directors in light of
conditions then existing, including earnings, financial condition, capital requirements and other
factors.
20
Holders of the Series A, Series B and Series D Preferred Stock are entitled to receive
cumulative dividends at the rate per share (as a percentage of the stated value per share) of 6%
per annum (subject to increase in certain circumstances), payable quarterly in arrears on January
15, April 15, July 15 and October 15, beginning on April 15, 2010, January 15, 2011 and July 15,
2011, respectively. The dividends are payable in cash, or at our option, in duly authorized,
validly issued, fully paid and non-assessable shares of common stock equal to 110% of the cash
dividend amount payable on the dividend payment date, or a combination thereof; provided that we
may not pay the dividends in shares of common stock unless we meet certain conditions described in
the Certificate of Designation, including that the resale of the shares has been registered under
the Securities Act. If we pay the dividend in shares of common stock, the common stock will be
valued for such purpose at 80% of the average of the volume weighted average price for the 10
consecutive trading days ending on the trading day that is immediately prior to the dividend
payment date.
Penny Stock
The SEC has adopted rules that regulate broker-dealer practices in connection with
transactions in penny stocks. Our stock is currently a penny stock. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities registered on certain
national securities exchanges. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the SEC, which: (a) contains a description of the nature and level
of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains
a description of the brokers or dealers duties to the customer and of the rights and remedies
available to the customer with respect to a violation to such duties or other requirements of
securities laws; (c) contains a brief, clear, narrative description of a dealer market, including
bid and ask prices for penny stocks and significance of the spread between the bid and ask price;
(d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines
significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f)
contains such other information and is in such form as the SEC shall require by rule or regulation.
The broker-dealer also must provide to the customer, prior to effecting any transaction in a penny
stock, (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer
and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices
apply, or other comparable information relating to the depth and liquidity of the market for such
stock; and (d) monthly account statements showing the market value of each penny stock held in the
customers account. In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser and receive the
purchasers written acknowledgment of the receipt of a risk disclosure statement, a written
agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably
statement. These disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock if it becomes subject to these penny stock rules.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
General
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 utilizing the Fibrocell Therapy is for the
treatment of nasolabial folds/wrinkles, which completed Phase III clinical studies and the related
Biologics License Application (BLA) was accepted for filing by the Food and Drug Administration
(FDA) during May 2009. On October 9, 2009 the FDA Cellular, Tissue and Gene Therapies Advisory
Committee reviewed our nasolabial folds/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
folds/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 product on October 28, 2009, and
21
the FDA is currently evaluating a proposed brand name, laViv®. 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
announced on December 20, 2010, that it had submitted its complete response to the Complete
Response (CR) letter issued by the FDA regarding the Companys BLA for azficel-T. On January 22,
2011, the FDA accepted for review the Companys complete response submission for azficel-T. Even
though the FDA has accepted the Companys response for complete evaluation, there is no assurance
that it will approve our product. The FDA, under the Prescription Drug User Fee Act (PDUFA), has a
target six months review window to completely evaluate the Companys response upon acceptance of
the response. The PDUFA date is June 22, 2011. The Company announced on March 16, 2011, that it
had submitted a final study report to the FDA for the completed, six-month histological study
examining skin after injections of azficel-T. On June 21, 2011, the
FDA approved laViv (azficel-T).
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.
Critical Accounting Policies
The following discussion and analysis of financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in conformity with
accounting principles generally accepted in the United States of America. However, certain
accounting policies and estimates are particularly important to the understanding of our financial
position and results of operations and require the application of significant judgment by our
management or can be materially affected by changes from period to period in economic factors or
conditions that are outside of the control of management. As a result they are subject to an
inherent degree of uncertainty. In applying these policies, our management uses their judgment to
determine the appropriate assumptions to be used in the determination of certain estimates. Those
estimates are based on our historical operations, our future business plans and projected financial
results, the terms of existing contracts, our observance of trends in the industry, information
provided by our customers and information available from other outside sources, as appropriate. The
following discusses our critical accounting policies and estimates.
Intangible assets: Intangible assets are research and development assets related to the
Successor Companys primary study that was recognized upon emergence from bankruptcy (see Note 5).
Intangibles are tested for recoverability whenever events or changes in circumstances indicate the
carrying amount may not be recoverable. An impairment loss, if any, would be measured as the excess
of the carrying value over the fair value determined by discounted cash flows.
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.
Warrant Liability: We account for our warrants in accordance with U.S. GAAP. The warrants
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
22
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.
Preferred Stock and Derivative Liability: The preferred stock has been classified within the
mezzanine section between liabilities and equity in its consolidated balance sheets in accordance
with ASC 480, Distinguishing Liabilities from Equity (ASC 480) because any holder of Series A, B
or D Preferred may require the Successor Company to redeem all of its Series A, B or D Preferred in
the event of a triggering event which is outside of the control of the Successor Company.
The embedded conversion option for the Series A Preferred, Series B Preferred and Series D
Preferred has been recorded as a derivative liability under ASC 815 in the Successors consolidated
balance sheet as of December 31, 2010 and will be re-measured on the Successor Companys reporting
dates . The fair value of the derivative liability 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 embedded conversion option as a
liability until the preferred stock is converted into common stock.
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.
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.
Emergence from Voluntary Reorganization Under Chapter 11 Proceedings and Reorganization Plan
Fibrocell emerged from Chapter 11 on September 3, 2009. See Note 2 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
23
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 the Consolidated Financial Statements for further details.
For discussions on the results of operations, the Successor Company has combined the results
of operations for the eight months ended August 31, 2009, with the results of operations for the
four months ended December 31, 2009. The combined periods have been compared to the year-ended
December 31, 2010. The Successor Company believes that the combined financial results provide
management and investors a more meaningful analysis of the Companys performance and trends for
comparative purposes.
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 Three Months Ending March 31, 2011 and 2010
Revenues and Cost of Sales. Revenue and cost of sales for the three months ended March 31,
2011 and 2010 were comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Increase |
|
|
|
March 31, |
|
|
(Decrease) |
|
|
|
2011 |
|
|
2010 |
|
|
$ |
|
|
% |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
209 |
|
|
$ |
209 |
|
|
$ |
|
|
|
|
|
% |
Cost of sales |
|
|
98 |
|
|
|
100 |
|
|
|
(2 |
) |
|
|
(2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
111 |
|
|
$ |
109 |
|
|
$ |
(2 |
) |
|
|
(2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The revenue and cost of sales for Agera remained flat comparing the three months ended March
31, 2011 and 2010. 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 peptide technology. As a
percentage of revenue, Agera cost of sales were approximately 47% for the three months ended March
31, 2011 and 48% for the three months ended March 31, 2010.
Selling General and Administrative Expense. Selling, general and administrative expense for
the three months ended March 31, 2011 and 2010 were comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Increase |
|
|
|
March 31, |
|
|
(Decrease) |
|
|
|
2011 |
|
|
2010 |
|
|
$ |
|
|
% |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
Compensation and related expense |
|
$ |
1,264 |
|
|
$ |
951 |
|
|
$ |
313 |
|
|
|
33 |
% |
External services consulting |
|
|
236 |
|
|
|
237 |
|
|
|
(1 |
) |
|
|
(- |
%) |
Facilities and related expense and other |
|
|
854 |
|
|
|
832 |
|
|
|
22 |
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling, general and administrative expense |
|
$ |
2,354 |
|
|
$ |
2,020 |
|
|
$ |
334 |
|
|
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense increased primarily due to an increase in
compensation and related expense related to an increase of $0.6 million for stock compensation
expense offset by a decrease of $0.3 million in payroll expenses, due primarily to no bonuses
accrued in 2011 and decreased payroll taxes.
24
Research and Development Expense. Research and development expense for the three months ended
March 31, 2011 and 2010 were comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Increase |
|
|
|
March 31, |
|
|
(Decrease) |
|
|
|
2011 |
|
|
2010 |
|
|
$ |
|
|
% |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
Compensation and related expense |
|
$ |
524 |
|
|
$ |
364 |
|
|
$ |
160 |
|
|
|
44 |
% |
External services consulting |
|
|
622 |
|
|
|
397 |
|
|
|
225 |
|
|
|
57 |
% |
Lab costs and related expense |
|
|
277 |
|
|
|
223 |
|
|
|
54 |
|
|
|
24 |
% |
Facilities and related expense |
|
|
194 |
|
|
|
209 |
|
|
|
(15 |
) |
|
|
(7% |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development expense |
|
$ |
1,617 |
|
|
$ |
1,193 |
|
|
$ |
424 |
|
|
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense increased primarily due to an increase in compensation and
related expense related to an increase of $0.1 million for stock compensation expense, $0.1 million
for increase headcount and $0.2 million for increased consulting fees. The increase of $0.2
million for external services related primarily to the histology study. Research and development
costs are composed primarily of costs related to our efforts to gain FDA approval for our Fibrocell
Therapy for specific dermal applications in the United States, as well as costs related to other
potential indications for our Fibrocell Therapy, such as acne scars and burn scars. Also, research
and development expense includes costs to develop manufacturing, cell collection and logistical
process improvements. Research and development costs primarily include personnel and laboratory
costs related to these FDA trials and certain consulting costs. The total inception (December 28,
1995) to date cost of research and development as of August 31, 2009 for the Predecessor Company
was $56.3 million and total inception (September 1, 2009) to date cost of research and development
as of March 31, 2011, for the Successor Company was $8.9 million.
The FDA approval process is extremely complicated and is dependent upon our study protocols
and the results of our studies. In the event that the FDA requires additional studies for our
product candidate or requires changes in our study protocols or in the event that the results of
the studies are not consistent with our expectations, the process will be more expensive and time
consuming. Due to the complexities of the FDA approval process, we are unable to predict what the
cost of obtaining approval for our dermal product candidate will be.
Interest Income (Expense). Interest expense for the three months ended March 31, 2011
increased by $0.1 million, or 38%, from the three months ended March 31, 2010 due to higher debt
balances. Our interest expense is related to the notes we issued in connection with our bankruptcy
plan. We have been accreting the interest to principal at the rate of 15% per annum due to
contractual terms.
Change in Revaluation of Warrant and Derivative Liability. During the three months ended
March 31, 2011, we recorded a non-cash expense of $6.3 million and $6.6 million for warrant expense
and derivative revaluation expense, respectively, in our statements of operations due to an
increase in the fair value of the warrant liability and derivative liability related to the
preferred stock series A, B and D financing. This increase in fair value was primarily due to an
increase in the price per share of our common stock on March 31, 2011 as compared to December 31,
2010. During the three months ended March 31, 2010, we recorded a non-cash expense of $1.4 million
for warrant expense in our statements of operations due to an increase in the fair value of the
warrant liability for warrants to purchase preferred stock that were liability-classified.
Net loss attributable to common shareholders. Net loss attributable to common shareholders
decreased approximately $12.3 million to a net loss of $17.1 million for the three months ended
March 31, 2011, as compared to a net loss of $4.7 million for the three months ended March 31, 2010
primarily due to an increase in the fair value of the warrant liability and derivative liability
related to the preferred stock series A, B and D financing.
Results of OperationsComparison of Years Ending December 31, 2010 and 2009
Revenues. Revenue remained constant at $0.9 million for the year ended December 31, 2010 and
for the year ended December 31, 2009. Our revenue from continuing operations is from the operations
of Agera which we
25
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.
Cost Of Sales. Costs of sales decreased $0.1 million to $0.5 million for the year ended
December 31, 2010 as compared to $0.6 million for the year ended December 31, 2009. Our cost of
sales relates to the operation of Agera. As a percentage of revenue, Agera cost of sales were
approximately 55% for the year ended December 31, 2010 and 70% for the year ended December 31,
2009. Cost of sales as a percentage of revenue in 2010 has decreased as compared to 2009 primarily
due to the recording of a reserve for slow moving and obsolete inventory in 2009.
Selling, General And Administrative Expenses. Selling, general and administrative expenses
increased by approximately $0.4 million, or 6%, to $6.5 million for the year ended December 31,
2010 as compared to $6.1 million for the year ended December 31, 2009. The increase primarily
relates to a $0.3 million increase related to general and administrative expenses associated with
consultants for financing and marketing as well as office expenses, $0.3 million increase related
to legal expenses, $0.1 million increase in marketing, offset by a $0.3 million decrease in payroll
related expenses. Legal expenses for the year ended December 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 would have been $0.5 million for both years ended December 31, 2010 and December 31, 2009.
Research And Development. Research and development expenses increased by approximately $1.6
million, or 40%, to $5.5 million for the year ended December 31, 2010 as compared to $3.9 million
for the year ended December 31, 2009. The increase primarily relates to a $0.7 million increase in
payroll related expenses, $0.5 million increase in consulting fees and $0.2 million increase in
laboratory costs associated with clinical and manufacturing activities in our Exton, Pennsylvania
location. Research and development costs are composed primarily of costs related to our efforts to
gain FDA approval for our Fibrocell Therapy for specific dermal applications in the United States,
as well as costs related to other potential indications for our Fibrocell Therapy, such as acne
scars and burn scars. Also, research and development expense includes costs to develop
manufacturing, cell collection and logistical process improvements. Research and development costs
primarily include personnel and laboratory costs related to these FDA trials and certain consulting
costs. The total inception (December 28, 1995) to date cost of research and development as of
August 31, 2009 for the Predecessor Company was $56.3 million and total inception (September 1,
2009) to date cost of research and development as of December 31, 2010, for the Successor Company
was $7.3 million.
The FDA approval process is extremely complicated and is dependent upon our study protocols
and the results of our studies. In the event that the FDA requires additional studies for our
product candidate or requires changes in our study protocols or in the event that the results of
the studies are not consistent with our expectations, the process will be more expensive and time
consuming. Due to the complexities of the FDA approval process, we are unable to predict what the
cost of obtaining approval for our dermal product candidate will be.
Reorganization Items, Net. On June 15, 2009, Isolagen, Inc. and its wholly-owned, U.S.
subsidiary Isolagen Technologies, Inc., filed voluntary petitions for relief under Chapter 11 of
the federal bankruptcy laws in the United States Bankruptcy Court for the District of Delaware, as
more fully discussed under Bankruptcy, Debt and Going Concern. A reorganization gain, net of
reorganization costs, of less than $0.1 million and $73.5 million was recorded for the year ended
December 31, 2010 and December 31, 2009, respectively, which was comprised primarily of legal fees
and the unamortized debt acquisition costs, and gain of discharge of liabilities.
Other Income, Net. In November 2010, we received one grant totaling $0.2 million under the
Qualified Therapeutic Discovery Project Grants Program. The Qualified Therapeutic Discovery Project
Grants Program was included in the healthcare reform legislation, and established a one-time pool
of $1 billion for grants to small biotechnology companies developing novel therapeutics which show
potential to: (a) result in new therapies that either treat areas of unmet medical need, or
prevent, detect, or treat chronic or acute diseases and conditions; (b) reduce long-term health
care costs in the United States; or (c) significantly advance the goal of curing cancer within a
the 30-year period. There are no matching funding requirements or other requirements necessary to
receive the funding.
26
Interest Expense. Interest expense decreased $1.4 million to $1.1 million for the year ended
December 31, 2010, as compared to $2.5 million for the year ended December 31, 2009. Our interest
expense for the year ended December 31, 2010 is related to the 12.5% notes we issued in connection
with our bankruptcy plan. We have been accreting the interest to principal at the rate of 15%. Our
interest expense for the year ended December 31, 2009 is related to our $90.0 million, 3.5%
convertible subordinated notes, as well as the related amortization of deferred debt issuance costs
of $0.1 million and interest expense related to the secured bridge loan and DIP financing until the
emergence out of bankruptcy. 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. There is also interest expense related to the 12.5% notes for the year end December 31,
2009.
Noncontrolling Interest. The noncontrolling interest income was approximately $0.1 million for
the year ended December 31, 2010, as compared to noncontrolling interest income of $0.2 million for
the year ended December 31, 2009. The decrease in noncontrolling interest income of $0.1 million is
due to Ageras decrease in net income in 2010 as compared to 2009.
Net Income/(Loss). Net loss, excluding reorganization items, was relatively constant at $12.9
million for the year ended December 31, 2010 as compared to a net loss of $12.8 million for the
year ended December 31, 2009. Net income of $60.7 million for the year ended December 31, 2009,
included reorganization items of $73.5 million as a result of the emergence out of bankruptcy and
discharge of debt and unsecured liabilities.
Liquidity and Capital Resources
The following table summarizes our cash flows from operating, investing and financing
activities for the three months ended March 31, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
(in thousands) |
|
Statement of Cash Flows Data: |
|
|
|
|
|
|
|
|
Total cash provided by (used in): |
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
(3,155 |
) |
|
$ |
(2,319 |
) |
Investing activities |
|
|
(17 |
) |
|
|
(26 |
) |
Financing activities |
|
|
5,613 |
|
|
|
3,449 |
|
Operating Activities. Cash used in operating activities during the three months ended March
31, 2011 amounted to $3.1 million, an increase of $0.8 million over the three months ended March
31, 2010. 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 $0.1 million, in addition to
operating cash outflows from changes in operating assets and liabilities.
Investing Activities. Minimal or no cash was used in investing activities during the three
months ended March 31, 2011 and during the three months ended March 31, 2010.
Financing Activities. There were $5.6 million cash proceeds from financing activities during
the three months ended March 31, 2011, as compared to $3.4 million received from financing
activities during the three months ended March 31, 2010. During the three months ended March 31,
2011, we raised cash from the issuance of preferred stock and warrants. During the three months
ended March 31, 2010, we raised cash from the issuance of common stock and warrants.
Working Capital
As of March 31, 2011, we had cash and cash equivalents of $3.3 million and working capital of
$2.8 million. The Company has raised approximately $6.1 million less fees as the result of the
issuance of Series D Preferred Stock and warrants in the period from January 1, 2011 through March
1, 2011. As of May 9, 2011, the Company had cash and cash equivalents of approximately $2.0
million and current liabilities of approximately $1.1 million. The Companys current monthly cash
run-rate is approximately $1.0 million. The Company is in the process of purchasing manufacturing
equipment and incurring marketing expenditures over the next couple of months
27
to prepare the Company for launch post a possible FDA approval. Thus, the Company will need
to access the capital markets in the near future in order to fund future operations. There is no
guarantee that any such required financing will be available on terms satisfactory to the 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.
Debt
The Companys outstanding long-term debt at March 31, 2011 and December 31, 2010 consists of
$7.6 million and $7.3 million, respectively, of Unsecured Promissory Notes (New Notes). Unpaid
interest has been accreted to the principal at a rate of 15%. The New Notes have the following
features: (1) 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;
(2) maturing June 1, 2012; (3) at any time prior to the maturity date, the Company may redeem any
portion of the outstanding principal of the New Notes in Cash at 125% of the stated face value of
the New Notes. There is a mandatory redemption feature that requires the Company to redeem all
outstanding new notes if: (1) the Company successfully completes a capital campaign raising in
excess of $10 million during a six month period; or (2) the Successor Company is acquired by, or
sell a majority stake to, an outside party.
28
BUSINESS
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, proposed brand name laViv®) and has completed Phase III
clinical studies, and the related Biologics License Application, or BLA, has been submitted to the
Food and Drug Administration, or FDA. In October 2009, the FDAs Cellular, Tissue and Gene
Therapies Advisory Committee reviewed this indication. On December 21, 2009, Fibrocell received a
Complete Response (CR) letter from the FDA related to the BLA for azficel-T, an autologous cell
therapy for the treatment of moderate to severe nasolabial folds/wrinkles in adults. A Complete
Response letter is issued by the FDAs Center for Biologics Evaluation and Research (CBER) when
the review of a file is completed and additional data are needed prior to approval. The Complete
Response letter requested that Fibrocell Science provide data from a histopathological study on
biopsied tissue samples from patients following injection of azficel-T. The histology study
(IT-H-001) evaluated tissue treated with azficel-T as compared to tissue treated with sterile
saline (placebo). The study also provided information about the skin after treatment, including
evaluation of collagen and elastin fibrils, and cellular structure of the sampled tissues.
On May 13, 2010, we announced the initiation of the small histology study of azficel-T,
discussed above. The study had 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). We announced on July 8, 2010, the completion of enrollment of and first treatment visits
for participants in its histology study of azficel-T. The second treatment visits for participants
enrolled in the histology study of azficel-T were completed by the end of July. The third treatment
visits for participants enrolled in the histology study of azficel-T were completed by the end of
August.
The Complete Response letter also requested finalized Chemistry, Manufacturing and Controls
(CMC) information regarding the manufacture of azficel-T as follow-up to discussions that
occurred during the BLA review period, as well as revised policies and procedures.
We announced on December 20, 2010, that we had submitted our complete response to the CR
letter issued by the FDA regarding our BLA for azficel-T. On January 22, 2011, the FDA accepted for
review our complete response submission. Even though the FDA has accepted our response for complete
evaluation, there is no assurance that it will approve our product. The FDA, under the
Prescription Drug User Fee Act (PDUFA), has a target six months review window to completely
evaluate the Companys response. The PDUFA date is June 22, 2011. We announced on March 16, 2011,
that we had submitted a final study report to the FDA for the completed, six-month histological
study examining skin after injections of azficel-T. On June 21, 2011,
the FDA approved laViv (azficel-T).
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. Fibrocell now operates outside of the restraints of the bankruptcy process, free of
the debts and liabilities discharged by the Plan.
29
Fibrocell Sciences Technology Platform
We use our proprietary Fibrocell Science Process to produce an autologous living cell therapy.
We refer to this autologous living cell therapy as the Fibrocell Therapy. We believe this therapy
addresses the normal effects of aging or injury to the skin. Each of our product candidates is
designed to use Fibrocell Therapy to treat an indicated condition. We use our Fibrocell Science
Process to harvest autologous fibroblasts from a small skin punch biopsy from behind the ear with
the use of a local anesthetic. We chose this location both because of limited exposure to the sun
and to avoid creating a visible scar. In the case of our dental product candidate, the biopsy is
taken from the patients palette. The biopsy is then packed in a vial in a special shipping
container and shipped to our laboratory where the fibroblast cells are released from the biopsy and
initiated into our cell culture process where the cells proliferate until they reach the required
cell count. The fibroblasts are then harvested, tested by quality control and released by quality
assurance prior to shipment. The number of cells and the frequency of injections may vary and will
depend on the indication or application being studied.
If and when approved, we expect our product candidates will offer patients their own living
fibroblast cells in a personalized therapy designed to improve the appearance of damaged skin and
wrinkles; or in the case of restrictive burn scars, improve range of motion. Our product candidates
are intended to be a minimally invasive alternative to surgical intervention and a viable natural
alternative to other chemical, synthetic or toxic treatments. We also believe that because our
product candidates are autologous, the risk of an immunological or allergic response is low. With
regard to the therapeutic markets, we believe that our product candidates may address an
insufficiently met medical need for the treatment of each of restrictive burn scars, acne scars and
dental papillary insufficiency, or gum recession, and potentially help patients avoid surgical
intervention. Certain of our product candidates are still in clinical development and, as such,
benefits we expect to see associated with our product candidates may not be validated in our
clinical trials. In addition, disadvantages of our product candidates may become known in the
future.
Our Strategy
Our business strategy is primarily focused on our approval efforts related to our nasolabial
folds/wrinkles indication, for which we have submitted our response to the FDAs Complete Response
letter and have a PDUFA date of June 22, 2011. Our additional objectives include achieving
regulatory milestones related to our other Phase II/III Acne Scar program and potentially pursuing
other clinical trials in burn scarring, vocal scarring and the dental arena, as funding permits in
the future. Refer to Clinical Development Programs below for current status.
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 nasolabial
folds/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.
Aesthetic Development Programs
Nasolabial Folds/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
folds/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
30
(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 folds/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. A Complete Response letter is issued by the FDAs CBER when the review of a
file is completed and additional data are needed prior to approval. On December 21, 2009, we
received a Complete Response letter from the FDA related to the BLA for azficel-T. 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 histology study (IT-H-001) evaluated
tissue treated with azficel-T as compared to tissue treated with sterile saline (placebo). The
study also provided information about the skin after treatment, including evaluation of collagen
and elastin fibrils, and cellular structure of the sampled tissues.
On May 13, 2010, we announced the initiation of a small histology study (IT-H-001) of
azficel-T, discussed above. The study had 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). We announced on July 8, 2010, the completion of enrollment of and first treatment visits
for participants in our histology study of azficel-T. The second treatment visits for participants
enrolled in the histology study of azficel-T were completed by the end of July. The third treatment
visits for participants enrolled in the histology study of azficel-T were completed by the end of
August.
The Complete Response letter also requested finalized Chemistry, Manufacturing and Controls
(CMC) information regarding the manufacture of azficel-T as follow-up to discussions that
occurred during the BLA review period, as well as revised policies and procedures regarding
shipping practices, and proposed labeling.
We announced on December 20, 2010, that we had submitted our complete response to the Complete
Response (CR) letter issued by the FDA regarding the Companys BLA for azficel-T. On January 22,
2011, the FDA accepted for review the Companys complete response submission for azficel-T. Even
though the FDA has accepted the Companys response for complete evaluation, there is no assurance
that it will approve our product. The FDA, under the Prescription Drug User Fee Act (PDUFA), has
a target six months review window to completely evaluate the Companys response upon acceptance of
the response. The PDUFA date is June 22, 2011. The Company announced on March 16, 2011, that it had
submitted a final study report to the FDA for the completed, six-month histological study examining
skin after injections of azficel-T. On June 21, 2011, the FDA
approved laViv (azficel-T).
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
31
evaluate the use of azficel-T to correct or improve the appearance of acne scars. Each subject
served as their own control, receiving azficel-T on one side of their face and placebo on the
other. The subjects received three treatments two weeks apart. The follow-up and evaluation period
was completed four months after each subjects last injection. In March 2009, the Predecessor
Company disclosed certain trial data results, which included statistically significant efficacy
results for the treatment of moderate to severe acne scars. Compilation of safety data and data
related to the validation of the study photo guide assessment scale discussed below is ongoing and
is also subject to additional financing.
In connection with this acne scar program, the Predecessor Company developed a photo guide for
use in the evaluators assessment of acne study subjects. The Predecessor Company had originally
designed the acne scar clinical program as two randomized, double-blind, Phase III,
placebo-controlled trials. However, our evaluator assessment scale and photo guide have not
previously been utilized in a clinical trial. In November 2007, the FDA recommended that the
Predecessor Company consider conducting a Phase II study in order to address certain study issues,
including additional validation related to our evaluator assessment scale. As such, the Predecessor
Company modified our clinical plans to initiate a single Phase II/III trial. This Phase II/III
study, was powered to demonstrate efficacy, and has allowed for a closer assessment of the
evaluator assessment scale and photo guide that is ongoing. The Successor Company submitted on
August 9, 2010, a clinical study report for its Phase II/III study of azficel-T for the treatment
of moderate to severe acne scars to the FDA. The next step is to initiate a discussion with the FDA
concerning the validation of the evaluator assessment scale and agree the path forward. These
steps will be subject to obtaining sufficient financial resources.
Restrictive Burn Scars Phase II Trial: In January 2007, the Predecessor Company met
with the FDA to discuss our clinical program for the use of azficel-T for restrictive burn scar
patients. This Phase II trial would evaluate the use of azficel-T to improve range of motion,
function and flexibility, among other parameters, in existing restrictive burn scars in
approximately 20 patients. However, the Predecessor Company delayed the screening and enrollment in
this trial until such time as we raise sufficient additional financing and gather additional data
regarding the burn scar market. The development of this program will be subject to obtaining
sufficient financial resources.
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).
Our Target Market Opportunities
Aesthetic Market Opportunity
32
Our product candidate for nasolabial folds/wrinkles and full face rejuvenation are directed
primarily at the aesthetic market. Aesthetic procedures have traditionally been performed by
dermatologists, plastic surgeons and other cosmetic surgeons. According to the American Society for
Aesthetic Plastic Surgery, or ASAPS, the total market for non-surgical cosmetic procedures was
approximately $4.5 billion in 2009. We believe the aesthetic procedure market is driven by:
|
|
|
aging of the baby boomer population, which currently includes ages approximately 46 to
64; |
|
|
|
|
the desire of many individuals to improve their appearance; |
|
|
|
|
impact of managed care and reimbursement policies on physician economics, which has
motivated physicians to establish or expand the menu of elective, private-pay aesthetic
procedures that they offer; and |
|
|
|
|
broadening base of the practitioners performing cosmetic procedures beyond
dermatologists and plastic surgeons to non-traditional providers. |
According to the ASAPS, 10.0 million surgical and non-surgical cosmetic procedures were
performed in 2009, as compared to 10.3 million in 2008. Also according to the ASAPS, approximately
8.5 million non-surgical procedures were performed in 2009 and 2008. We believe that the concept of
non-surgical cosmetic procedures involving injectable materials has become more mainstream and
accepted. According to the ASAPS, the following table shows the top five non-surgical cosmetic
procedures performed in 2009:
|
|
|
|
|
Procedur |
|
Number |
|
Botulinum toxin type A |
|
|
2,557,068 |
|
Hyaluronic acid |
|
|
1,313,038 |
|
Laser hair removal |
|
|
1,280,031 |
|
Microdermabrasion |
|
|
621,943 |
|
Chemical peel |
|
|
529,285 |
|
Procedures among the 35 to 50 year old age group made up approximately 44% of all
cosmetic procedures in 2009. The 51 to 64 year old age group made up 27% of all cosmetic procedures
in 2009, while the 19 to 34 year old age group made up 20% of cosmetic procedures in 2009. The
Botulinum toxin type A injection was the most popular treatment among the 35 to 50 year old age
group.
Therapeutic Market Opportunities
In addition to the aesthetic market, we believe there are opportunities for our Fibrocell
Therapy to treat certain medical conditions such as acne scars, restrictive burn scars and tissue
loss due to papillary recession. Presently, we are studying therapeutic applications of our
technology for acne scars. Indications related to acne scars, restrictive burn scars and
periodontal disease are on internal company hold. We are not aware of other autologous cell-based
treatments for any of these therapeutic applications.
Sales and Marketing
While our Fibrocell Therapy product candidates are still in the pre-approval phase in the
United States, no marketing or sales can occur within the United States. Our Agera skincare
products are primarily sold directly to our established distributors and salons, with historically
and recently very little focus on marketing efforts. We continue to attempt to identify additional
third party distributors for our Agera product line.
Intellectual Property
We believe that patents, trademarks, copyrights, proprietary formulations (related to our
Agera skincare products) and other proprietary rights are important to our business. We also rely
on trade secrets, know-how and continuing technological innovations to develop and maintain our
competitive position. We seek to protect our
33
intellectual property rights by a variety of means, including obtaining patents, maintaining
trade secrets and proprietary know-how, and technological innovation to operate without infringing
on the proprietary rights of others and to prevent others from infringing on our proprietary
rights. Our policy is to seek to protect our proprietary position by, among other methods, actively
seeking patent protection in the United States and certain foreign countries.
As of December 31, 2010, we had 10 issued U.S. patents, 3 pending U.S. patent applications, 30
granted foreign patents and no pending international patent applications. Our issued patents and
patent applications primarily cover the method of using autologous cell fibroblasts for the repair
of skin and soft tissue defects and the use of autologous fibroblast cells for tissue regeneration.
We are in the process of pursuing several other patent applications.
In January 2003, the Predecessor Company acquired two pending U.S. patent applications. As
consideration, the Predecessor Company issued 100,000 shares of its common stock and agreed to pay
a royalty on revenue from commercial applications and licensing, up to a maximum of $2.0 million.
In August 2006, we acquired 57% of the common stock of Agera Laboratories. Agera has a number
of trade names, trademarks, exclusive proprietary rights to product formulations and specified
peptides that are used in the Agera skincare products.
Our success depends in part on our ability to maintain our proprietary position through
effective patent claims and their enforcement against our competitors, and through the protection
of our trade secrets. Although we believe our patents and patent applications provide a competitive
advantage, the patent positions of companies like ours are generally uncertain and involve complex
legal and factual questions. We do not know whether any of our patent applications or those patent
applications which we have acquired will result in the issuance of any patents. Our issued patents,
those that may be issued in the future or those acquired by us, may be challenged, invalidated or
circumvented, and the rights granted under any issued patent may not provide us with proprietary
protection or competitive advantages against competitors with similar technology. In particular, we
do not know if competitors will be able to design variations on our treatment methods to circumvent
our current and anticipated patent claims. Furthermore, competitors may independently develop
similar technologies or duplicate any technology developed by us. Because of the extensive time
required for the development, testing and regulatory review of a potential product, it is possible
that, before any of our products can be commercialized or marketed, any related patent claim may
expire or remain in force for only a short period following commercialization, thereby reducing the
advantage of the patent.
We also rely upon trade secrets, confidentiality agreements, proprietary know-how and
continuing technological innovation to remain competitive, especially where we do not believe
patent protection is appropriate or obtainable. We continue to seek ways to protect our proprietary
technology and trade secrets, including entering into confidentiality or license agreements with
our employees and consultants, and controlling access to and distribution of our technologies and
other proprietary information. While we use these and other reasonable security measures to protect
our trade secrets, our employees or consultants may unintentionally or willfully disclose our
proprietary information to competitors.
Our commercial success will depend in part on our ability to operate without infringing upon
the patents and proprietary rights of third parties. It is uncertain whether the issuance of any
third party patents would require us to alter our products or technology, obtain licenses or cease
certain activities. Our failure to obtain a license to technology that we may require to discover,
develop or commercialize our future products may have a material adverse impact on us. One or more
third-party patents or patent applications may conflict with patent applications to which we have
rights. Any such conflict may substantially reduce the coverage of any rights that may issue from
the patent applications to which we have rights. If third parties prepare and file patent
applications in the United States that also claim technology to which we have rights, we may have
to participate in interference proceedings in the United States Patent and Trademark Office to
determine priority of invention.
We have collaborated and may collaborate in the future with other entities on research,
development and commercialization activities. Disputes may arise about inventorship and
corresponding rights in know-how and
34
inventions resulting from the joint creation or use of intellectual property by us and our
subsidiaries, collaborators, partners, licensors and consultants. As a result, we may not be able
to maintain our proprietary position.
Competition
The pharmaceutical and dermal aesthetics industries are characterized by intense competition,
rapid product development and technological change. Competition is intense among manufacturers of
prescription pharmaceuticals and dermal injection products. Our core products are considered dermal
injection products.
If certain of our product candidates are approved, we will compete with a variety of companies
in the dermatology and plastic surgery markets, many of which offer substantially different
treatments for similar problems. These include silicone injections, laser procedures, facial
surgical procedures, such as facelifts and eyelid surgeries, fat injections, dermabrasion,
collagen, allogenic cell therapies, hyaluronic acid injections and Botulinum toxin injections, and
other dermal fillers. Indirect competition comes from facial care treatment products. Items
catering to the growing demand for therapeutic skin care products include facial scrubs, anti-aging
treatments, tonics, astringents and skin-restoration formulas.
Many of our competitors are large, well-established pharmaceutical, chemical, cosmetic or
health care companies with considerably greater financial, marketing, sales and technical resources
than those available to us. Additionally, many of our present and potential competitors have
research and development capabilities that may allow them to develop new or improved products that
may compete with our product lines. Our products could be rendered obsolete or made uneconomical by
the development of new products to treat the conditions addressed by our products, technological
advances affecting the cost of production, or marketing or pricing actions by one or more of our
competitors. Our facial aesthetics product may compete for a share of the existing market with
numerous products and/or technologies that have become relatively accepted treatments recommended
or prescribed by dermatologists and administered by plastic surgeons and aesthetic dermatologists.
There are several dermal filler products under development and/or in the FDA pipeline for
approval which claim to offer certain facial aesthetic benefits. Depending on the clinical outcomes
of the Fibrocell Therapy trials in aesthetics, the success or failure of gaining approval and the
label granted by the FDA if and when the therapy is approved, the competition for the Fibrocell
Therapy may prove to be direct competition to certain dermal fillers, laser technologies or new
technologies. However, if we gain approval, we believe our Fibrocell Therapy would be a first to
market autologous cellular technology that could complement other modalities of treatment and
represent a significant additional market opportunity.
The field for therapeutic treatments or tissue regeneration for use in wound healing is
rapidly evolving. A number of companies are either developing or selling therapies involving stem
cells, human-based, animal-based or synthetic tissue products. If approved as a therapy for acne
scars, restrictive burn scars or periodontal disease, our product candidates would or may compete
with synthetic, human or animal derived cell or tissue products marketed by companies larger and
better capitalized than us.
The market for skincare products is quite competitive with low barriers to entry.
Government Regulation
Our Fibrocell Therapy technologies are subject to extensive government regulation, principally
by the FDA and state and local authorities in the United States and by comparable agencies in
foreign countries. Governmental authorities in the United States extensively regulate the
pre-clinical and clinical testing, safety, efficacy, research, development, manufacturing,
labeling, storage, record-keeping, advertising, promotion, import, export, marketing and
distribution, among other things, of pharmaceutical products under various federal laws including
the Federal Food, Drug and Cosmetic Act, or FFDCA, the Public Health Service Act, or PHSA, and
under comparable laws by the states and in most foreign countries.
35
Domestic Regulation
In the United States, the FDA, under the FFDCA, the PHSA, and other federal statutes and
regulations, subjects pharmaceutical and biologic products to rigorous review. If we do not comply
with applicable requirements, we may be fined, the government may refuse to approve our marketing
applications or allow us to manufacture or market our products or product candidates, and we may be
criminally prosecuted. The FDA also has the authority to discontinue or suspend manufacture or
distribution, require a product withdrawal or recall or revoke previously granted marketing
authorizations if we fail to comply with regulatory standards or if we encounter problems following
initial marketing.
FDA Approval Process
To obtain approval of a new product from the FDA, we must, among other requirements, submit
data demonstrating the products safety and efficacy as well as detailed information on the
manufacture and composition of the product candidate. In most cases, this entails extensive
laboratory tests and pre-clinical and clinical trials. This testing and the preparation of
necessary applications and processing of those applications by the FDA are expensive and typically
take many years to complete. The FDA may deny our applications or may not act quickly or favorably
in reviewing these applications, and we may encounter significant difficulties or costs in our
efforts to obtain FDA approvals that could delay or preclude us from marketing any products we may
develop. The FDA also may require post-marketing testing and surveillance to monitor the effects of
approved products or place conditions on any approvals that could restrict the commercial
applications of these products. Regulatory authorities may withdraw product approvals if we fail to
comply with regulatory standards or if we encounter problems following initial marketing. With
respect to patented products or technologies, delays imposed by the governmental approval process
may materially reduce the period during which we will have the exclusive right to exploit the
products or technologies.
The FDA does not apply a single regulatory scheme to human tissues and the products derived
from human tissue. On a product-by-product basis, the FDA may regulate such products as drugs,
biologics, or medical devices, in addition to regulating them as human cells, tissues, or cellular
or tissue-based products (HCT/Ps), depending on whether or not the particular product triggers
any of an enumerated list of regulatory factors. A fundamental difference in the treatment of
products under these classifications is that the FDA generally permits HCT/Ps that do not trigger
any of those regulatory factors to be commercially distributed without marketing approval. In
contrast, products that trigger those factors, such as if they are more than minimally manipulated
when processed or manufactured, are regulated as drugs, biologics, or medical devices and require
FDA approval. We have determined that our Fibrocell Therapy triggers regulatory factors that
make it a biologic, in addition to an HCT/P, and consequently, we must obtain approval from FDA
before marketing Fibrocell Therapy and must also satisfy all regulatory requirements for
HCT/Ps.
The process required by the FDA before a new drug or biologic may be marketed in the United
States generally involves the following:
|
|
|
completion of pre-clinical laboratory tests or trials and formulation studies; |
|
|
|
|
submission to the FDA of an IND for a new drug or biologic, which must become effective
before human clinical trials may begin; |
|
|
|
|
performance of adequate and well-controlled human clinical trials to establish the
safety and efficacy of the proposed drug or biologic for its intended use; |
|
|
|
|
detailed information on product characterization and manufacturing process; and |
|
|
|
|
submission and approval of a New Drug Application, or NDA, for a drug, or a Biologics
License Application, or BLA, for a biologic. |
Pre-clinical tests include laboratory evaluation of product chemistry formulation and
stability, as well as animal and other studies to evaluate toxicity. In view of the autologous
nature of our product candidates and our prior clinical experience with our product candidates, we
concluded that it was reasonably safe to initiate clinical
36
trials without pre-clinical studies and that the clinical trials would be adequate to further
assess both the safety and efficacy of our product candidates. Under FDA regulations, the results
of any pre-clinical testing, together with manufacturing information and analytical data, are
submitted to the FDA as part of an IND application. The FDA requires a 30-day waiting period after
the filing of each IND application before clinical trials may begin, in order to ensure that human
research subjects will not be exposed to unreasonable health risks. At any time during this 30-day
period or at any time thereafter, the FDA may halt proposed or ongoing clinical trials, or may
authorize trials only on specified terms. The IND application process may become extremely costly
and substantially delay development of our products. Moreover, positive results of pre-clinical
tests will not necessarily indicate positive results in clinical trials.
The sponsor typically conducts human clinical trials in three sequential phases, which may
overlap. These phases generally include the following:
|
|
|
Phase I: The product is usually first introduced into healthy humans or, on
occasion, into patients, and is tested for safety, dosage tolerance, absorption,
distribution, excretion and metabolism. |
|
|
|
|
Phase II: The product is introduced into a limited subject population to: |
|
|
|
assess its efficacy in specific, targeted indications; |
|
|
|
|
assess dosage tolerance and optimal dosage; and |
|
|
|
|
identify possible adverse effects and safety risks. |
|
|
|
Phase III: These are commonly referred to as pivotal studies. If a product is found
to have an acceptable safety profile and to be potentially effective in Phase II
clinical trials, new clinical trials will be initiated to further demonstrate clinical
efficacy, optimal dosage and safety within an expanded and diverse subject population
at geographically-dispersed clinical study sites. |
|
|
|
|
If the FDA does ultimately approve the product, it may require post-marketing
testing, including potentially expensive Phase IV studies, to confirm or further
evaluate its safety and effectiveness. |
Before proceeding with a study, sponsors may seek a written agreement from the FDA regarding
the design, size, and conduct of a clinical trial. This is known as a Special Protocol Assessment,
or SPA. Among other things, SPAs can cover clinical studies for pivotal trials whose data will form
the primary basis to establish a products efficacy. SPAs thus help establish up-front agreement
with the FDA about the adequacy of a clinical trial design to support a regulatory approval, but
the agreement is not binding if new circumstances arise. Even if the FDA agrees to a SPA, the
agreement may be changed by the sponsor or the FDA on written agreement by both parties, or a
senior FDA official determines that a substantial scientific issue essential to determining the
safety or effectiveness of the product was identified after the testing began. There is no
guarantee that a study will ultimately be adequate to support an approval even if the study is
subject to an SPA. The FDA retains significant latitude and discretion in interpreting the terms of
the SPA agreement and the data and results from any study that is the subject of the SPA agreement.
Clinical trials must meet requirements for Institutional Review Board, or IRB, oversight,
patient informed consent and the FDAs Good Clinical Practices. Prior to commencement of each
clinical trial, the sponsor must submit to the FDA a clinical plan, or protocol, accompanied by the
approval of the committee responsible for overseeing clinical trials at the clinical trial sites.
The FDA or the IRB at each institution at which a clinical trial is being performed may order the
temporary or permanent discontinuation of a clinical trial at any time if it believes that the
clinical trial is
37
not being conducted in accordance with FDA requirements or presents an unacceptable risk to
the clinical trial subjects. Data safety monitoring committees, who monitor certain studies to
protect the welfare of study subjects, may also require that a clinical study be discontinued or
modified.
The sponsor must submit to the FDA the results of the pre-clinical and clinical trials,
together with, among other things, detailed information on the manufacturing and composition of the
product, and proposed labeling, in the form of an NDA, or, in the case of a biologic, a BLA. The
applicant must also submit with the NDA or BLA a substantial user fee payment, unless a waiver or
reduction applies. On February 17, 2009, the US Small Business Administration issued a letter
formally determining that we are a small business and therefore qualify for the Small Business
Exception to the Prescription Drug and User fee Act of 1992 (21 USC § 379h(b)(2)) related to our
BLA submission for the nasolabial folds/wrinkles indication. For fiscal year 2009, this fee was
$1,247,200 for companies that did not receive an exception. The FDA has advised us it is regulating
our Fibrocell Therapy as a biologic. Therefore, we expect to submit BLAs to obtain approval of our
product candidates. In some cases, we may be able to expand the indications in an approved BLA
through a Prior Approval Supplement. Each NDA or BLA submitted for FDA approval is usually reviewed
for administrative completeness and reviewability within 45 to 60 days following submission of the
application. If deemed complete, the FDA will file the NDA or BLA, thereby triggering substantive
review of the application. The FDA can refuse to file any NDA or BLA that it deems incomplete or
not properly reviewable. Once the submission has been accepted for filing, the FDA will review the
application and will usually respond to the applicant in accordance with performance goals the FDA
has established for the review of NDAs and BLAs six months from the receipt of the application
for priority applications and ten months for regular applications. The review process is often
significantly extended by FDA requests for additional information, preclinical or clinical studies,
clarification, or a risk evaluation and mitigation strategy, or REMS, or by changes to the
application submitted by the applicant in the form of amendments.
It is possible that our product candidates will not successfully proceed through this approval
process or that the FDA will not approve them in any specific period of time, or at all. The FDA
may deny or delay approval of applications that do not meet applicable regulatory criteria, or if
the FDA determines that the clinical data do not adequately establish the safety and efficacy of
the product. Satisfaction of FDA pre-market approval requirements for a new biologic is a process
that may take a number of years and the actual time required may vary substantially based upon the
type, complexity and novelty of the product or disease. The FDA reviews these applications and,
when and if it decides that adequate data are available to show that the product is both safe and
effective and that other applicable requirements have been met, approves the drug or biologic for
marketing. Government regulation may delay or prevent marketing of potential products for a
considerable period of time and impose costly procedures upon our activities. Success in early
stage clinical trials does not assure success in later stage clinical trials. Data obtained from
clinical activities is not always conclusive and may be susceptible to varying interpretations that
could delay, limit or prevent regulatory approval. Upon approval, a product candidate may be
marketed only for those indications approved in the BLA or NDA and may be subject to labeling and
promotional requirements or limitations, including warnings, precautions, contraindications and use
limitations, which could materially impact profitability. Once approved, the FDA may withdraw the
product approval if compliance with pre- and post-market regulatory standards is not maintained or
if safety, efficacy or other problems occur after the product reaches the marketplace.
The FDA may, during its review of an NDA or BLA, ask for additional test data. If the FDA does
ultimately approve the product, it may require post-marketing testing, including potentially
expensive Phase IV studies, to confirm or otherwise further evaluate the safety and effectiveness
of the product. The FDA also may require, as a condition to approval or continued marketing of a
drug, a risk evaluation and mitigation strategy, or REMS, if deemed necessary to manage a known or
potential serious risk associated with the product. REMS can include additional educational
materials for healthcare professionals and patients such as Medication Guides and Patient Package
Inserts, a plan for communicating information to healthcare professionals, and restricted
distribution of the product. In addition, the FDA may, in some circumstances, impose restrictions
on the use of the product, which may be difficult and expensive to administer and may require prior
approval of promotional materials. Following approval, FDA may require labeling changes or impose
new post-approval study, risk management, or distribution restriction requirements.
Ongoing FDA Requirements
Before approving an NDA or BLA, the FDA usually will inspect the facilities at which the
product is manufactured and will not approve the product unless the manufacturing facilities are in
compliance with the FDAs
38
current Good Manufacturing Practices, or cGMP, requirements which govern the manufacture,
holding and distribution of a product. Manufacturers of human cellular or tissue-based biologics
also must comply with the FDAs Good Tissue Practices, as applicable, and the general biological
product standards. Following approval, the FDA periodically inspects drug and biologic
manufacturing facilities to ensure continued compliance with the cGMP requirements. Manufacturers
must continue to expend time, money and effort in the areas of production, quality control, record
keeping and reporting to ensure compliance with those requirements. Failure to comply with these
requirements subjects the manufacturer to possible legal or regulatory action, such as suspension
of manufacturing, seizure of product, voluntary recall of product, withdrawal of marketing approval
or civil or criminal penalties. Adverse experiences with the product must be reported to the FDA
and could result in the imposition of marketing restrictions through labeling changes or market
removal. Product approvals may be withdrawn if compliance with regulatory requirements is not
maintained or if problems concerning safety or efficacy of the product occur following approval.
The labeling, advertising, promotion, marketing and distribution of a drug or biologic product
also must be in compliance with FDA and FTC requirements which include, among others, standards and
regulations for direct-to-consumer advertising, industry-sponsored scientific and educational
activities, and promotional activities involving the internet. In general, all product promotion
must be consistent with the FDA approval for such product, contain a balanced presentation of
information on the products uses and benefits and important safety information and limitations on
use, and otherwise not be false or misleading. The FDA and FTC have very broad enforcement
authority, and failure to abide by these regulations can result in penalties, including the
issuance of a Warning Letter directing a company to correct deviations from regulatory standards
and enforcement actions that can include seizures, injunctions and criminal prosecution.
Manufacturers are also subject to various laws and regulations governing laboratory practices,
the experimental use of animals and the use and disposal of hazardous or potentially hazardous
substances in connection with their research. In each of the above areas, the FDA has broad
regulatory and enforcement powers, including the ability to levy fines and civil penalties, suspend
or delay issuance of approvals, seize or recall products and deny or withdraw approvals.
HIPAA Requirements
Other federal legislation may affect our ability to obtain certain health information in
conjunction with our research activities. The Health Insurance Portability and Accountability Act
of 1996, or HIPAA, mandates, among other things, the adoption of standards designed to safeguard
the privacy and security of individually identifiable health information. In relevant part, the
U.S. Department of Health and Human Services, or HHS, has released two rules to date mandating the
use of new standards with respect to such health information. The first rule imposes new standards
relating to the privacy of individually identifiable health information. These standards restrict
the manner and circumstances under which covered entities may use and disclose protected health
information so as to protect the privacy of that information. The second rule released by HHS
establishes minimum standards for the security of electronic health information. While we do not
believe we are directly regulated as a covered entity under HIPAA, the HIPAA standards impose
requirements on covered entities conducting research activities regarding the use and disclosure of
individually identifiable health information collected in the course of conducting the research. As
a result, unless they meet these HIPAA requirements, covered entities conducting clinical trials
for us may not be able to share with us any results from clinical trials that include such health
information.
Other U.S. Regulatory Requirements
In the United States, the research, manufacturing, distribution, sale, and promotion of drug
and biological products are potentially subject to regulation by various federal, state and local
authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services
(formerly the Health Care Financing Administration), other divisions of the U.S. Department of
Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice
and individual U.S. Attorney offices within the Department of Justice, and state and local
governments. For example, sales, marketing and scientific/educational grant programs must comply
with the anti-fraud and abuse provisions of the Social Security Act, the False Claims Act, and
similar state laws, each as amended. Pricing and rebate programs must comply with the Medicaid
rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care
Act of 1992, each as amended. If products are made
39
available to authorized users of the Federal Supply Schedule of the General Services
Administration, additional laws and requirements apply. All of these activities are also
potentially subject to federal and state consumer protection, unfair competition, and other laws.
International Regulation
The regulation of our product candidates outside of the United States varies by country.
Certain countries regulate human tissue products as a pharmaceutical product, which would require
us to make extensive filings and obtain regulatory approvals before selling our product candidates.
Certain other countries classify our product candidates as human tissue for transplantation but may
restrict its import or sale. Other countries have no application regulations regarding the import
or sale of products similar to our product candidates, creating uncertainty as to what standards we
may be required to meet.
Manufacturing
We currently have one operational manufacturing facility located in Exton, Pennsylvania. The
costs incurred in operating our Exton facility (except for costs related to general corporate
administration) are currently classified as research and development expenses as the activities
there have been devoted to the research and development of our clinical applications and the
development of a commercial scale in a cost-effective production method. All component parts used
in our Exton, Pennsylvania manufacturing process are readily available with short lead times, and
all machinery is maintained and calibrated. We believe we have made improvements in our
manufacturing processes, and we expect to continue such efforts in the future.
Our Agera products are manufactured by a third-party contract manufacturer under a contract
manufacturing agreement. The agreement is effective through July 2014.
Research and Development
In addition to our clinical development activities, our research and development activities
include improving our manufacturing processes and reducing manufacturing costs. We expense research
and development costs as they are incurred. For the years ended December 31, 2010 and 2009, we
incurred research and development expenses of $5.5 million and $3.9 million, respectively.
Employees
As
of June 22, 2011, we employed 28 people on a full-time basis, all located in the United
States, and one employee, our Chief Operating and Chief Financial Officer, who is based in Ireland
and works in both Ireland and the United States. We also employ one full-time and one part-time
Agera employees. None of our employees are covered by a collective bargaining agreement, and we
consider our relationship with our employees to be good. We also employ consultants and temporary
labor on an as needed basis to supplement existing staff.
Segment Information
Financial information concerning the Companys business segments and geographic areas of
operation is included in Note 17 in the Notes to the Audited Consolidated Financial Statements
contained in this prospectus.
Corporate History
On August 10, 2001, our company, then known as American Financial Holding, Inc., acquired
Isolagen Technologies through the merger of our wholly-owned subsidiary, Isolagen Acquisition
Corp., and an affiliated entity, Gemini IX, Inc., with and into Isolagen Technologies. As a result
of the merger, Isolagen Technologies became our wholly owned subsidiary. On November 13, 2001, we
changed our name to Isolagen, Inc. 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
40
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.
MANAGEMENT
The following table sets forth the names and ages of all of our directors and executive
officers as of April 15, 2011. Our officers are appointed by, and serve at the pleasure of, the
Board of Directors.
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|
Name |
|
Title |
|
Age |
David Pernock
|
|
Director and Chief Executive Officer
|
|
|
56 |
|
Declan Daly
|
|
Director, Chief Operating Officer and
Chief Financial Officer
|
|
|
48 |
|
Kelvin Moore
|
|
Director
|
|
|
62 |
|
Robert Langer
|
|
Director
|
|
|
62 |
|
Marc Mazur
|
|
Director
|
|
|
52 |
|
George J. Korkos
|
|
Director
|
|
|
79 |
|
Biographical information with respect to our directors and executive officers is provided
below. There are no family relationships between any of our executive officers or directors.
David Pernock. Mr. Pernock has served as a Chairman of the Board of Fibrocell since September
2009 and as our Chief Executive Officer since February 2010. From December 1993 until November
2009, Mr. Pernock held various positions at GlaxoSmithKline, eventually serving as Senior Vice
President of Pharmaceuticals, Vaccines (Biologics), Oncology, Acute Care, and HIV Divisions. From
May 2009 until February 2011, Mr. Pernock served as a director of Martek Biosciences Corporation.
Mr. Pernock holds a B.S. in Business Administration from Arizona State University.
Declan Daly. Mr. Daly has served as Fibrocells Chief Operating Officer and Chief Financial
Officer since September 2009, and as a director of Fibrocell since November 2009. Mr. Daly served
as Isolagens Chief Executive Officer and President from January 2008 until September 3, 2009, as
Chief Financial Officer from June 2006 until March 2008, and as Chief Operating Officer from June
2007 until January 2008. Mr. Daly was elected to the Board of Directors of Isolagen in June 2008.
Mr. Daly served as Executive Vice President and Chief Financial Officer of Inamed Corp. from
November 2004 until March 2006, prior to which he served as Inameds Senior Vice President since
September 2002 and as the Corporate Controller and Principal Accounting Officer since March 2002.
He was previously Vice President of Finance & Administration for Inamed International Corp. from
1998 to 2002. From 1996 to 1998, Mr. Daly was a Senior Manager with BDO Simpson Xavier, Chartered
Accountants or BDO, in Dublin. Prior to joining BDO, he worked with PricewaterhouseCoopers in
Dublin and London. Mr. Daly holds a B.A. in Management Science and Industrial Systems Studies from
Trinity College, Dublin and he is also a Fellow of the Institute of Chartered Accountants in
Ireland.
Kelvin Moore. Mr. Moore has served as a director of Fibrocell since September 2009. Since
March 2009, Mr. Moore has served as the consultant sales director for the UK based Seaborne Group
developing their business in building constructions from converting shipping sea containers. Since
July 2008, Mr. Moore has been a director of Acorn Cultural Developments Limited which is developing
a social networking site. Between June 2004 and May
2008, Mr. Moore was a senior advisor with Exit Strategy Planning dealing with the sale of
businesses. Mr. Moore holds a London University Degree in Geography and Pure Mathematics.
41
Robert Langer. Dr. Langer has served as a director of Fibrocell since September 2009. Dr.
Langer was named an Institute Professor at Massachusetts Institute of Technology in 2006 and has
been on the faculty of Massachusetts Institute of Technology since 1978. Dr. Langer is also a
Director of Alseres Pharmaceuticals, Inc. and Echo Therapeutics, Inc. Dr. Langer received his
Bachelors Degree from Cornell University in 1970 and his Sc.D. from the Massachusetts Institute of
Technology in 1974, both in Chemical Engineering.
Marc B. Mazur. Mr. Mazur has served as a director of Fibrocell since April 2010. Since May
2009, Mr. Mazur has served as the Chairman of Elsworthy Capital Management Ltd., a London-based
European equity hedge fund. From October 2006 until December 2009, Mr. Mazur served as the CEO of
Brevan Howard U.S. Asset Management, the U.S. arm of London-based Brevan Howard. In 2001 Mr. Mazur
founded Ambassador Capital Group, a privately held investment and advisory entity providing
capital, business development and strategic planning advice to companies in the healthcare,
financial services and real estate fields. Mr. Mazur received his B.A. in political science from
Columbia University in 1981 and a J.D. from Villanova University in 1984.
George J. Korkos. Dr. Korkos has served as a director of Fibrocell since July 2010. Since
1965, Dr. Korkos has served as President of both Plastic Surgery Associates and Rejuva Skin Care &
Laser Center, each of which is located in Waukesha, Wisconsin. Dr. Korkos also presently serves as
Associate Clinical Professor at the Medical College of Wisconsin in Milwaukee. Dr. Korkos received
his D.D.S. from Marquette University School of Dentistry, his M.D. and general surgery degrees from
Medical College of Wisconsin, and his degree in plastic and reconstructive surgery from St. Louis
University Medical School.
No director is related to any other director or executive officer of our company or our
subsidiaries, and, there are no arrangements or understandings between a director and any other
person pursuant to which such person was elected as director.
Our Certificate of Incorporation, as amended, provides that the Board of Directors be divided
into three classes. Each director serves a term of three years. At each annual meeting, the
stockholders elect directors for a full term or the remainder thereof, as the case may be, to
succeed those whose terms have expired. Each director holds office for the term for which elected
or until his or her successor is duly elected.
No director or officer of our company has, during the last five years: (i) been convicted of
any criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party
to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, United States federal or state
securities laws or finding any violations with respect to such laws.
Director Independence
Our Board is not subject to any independence requirements. However, our Board has reviewed
the independence of its directors under the requirements set forth by the NASDAQ Stock Market.
During this review, the Board considered transactions and relationships between each director or
any member of his or her immediate family and Fibrocell and its subsidiaries and affiliates. The
purpose of this review was to determine whether relationships or transactions existed that were
inconsistent with a determination that the director is independent.
As a result of this review, Messrs. Moore, Korkos, Mazur and Langer were independent of us
under the standards set forth by NASDAQ; provided that Dr. Langer was found not to meet the
independence requirements needed to serve on our audit committee when such committee is formed. In
determining that Dr. Langer was independent, the Board considered that we are party to a consultant
agreement, pursuant to which Dr. Langer agreed to provide consulting services to us, including
serving as a scientific advisor. The agreement is terminable by either party on 30 days notice. The
agreement provides Dr. Langer annual compensation of $50,000.
Board Committees
We do not currently have an audit committee, compensation committee or nominating committee.
Our full board currently performs the duties and responsibilities of such committees.
42
Executive Officer Compensation
The following table sets forth information regarding compensation with respect to the fiscal
years ended December 31, 2010 and 2009, paid or accrued by us to or on behalf of those persons who,
during the fiscal year ended December 31, 2010, served as our Chief Executive Officer, as well as
our most highly compensated officers during the year ended December 31, 2010 (the named executive
officers).
Summary Compensation Table 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Total |
|
Name and Principal Position |
|
Year |
|
|
($) |
|
|
($) |
|
|
($) (1) |
|
|
($)(1) |
|
|
($) |
|
|
($) |
|
David Pernock,
Chief Executive Officer (2) |
|
|
2010 |
|
|
|
415,385 |
|
|
|
|
|
|
|
|
|
|
|
1,036,491 |
|
|
|
104, 167 |
(3) |
|
|
1,556,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declan Daly, |
|
|
2010 |
|
|
|
300,000 |
|
|
|
71,500 |
|
|
|
|
|
|
|
120,761 |
|
|
|
41,297 |
(4) |
|
|
533,558 |
|
Chief Financial Officer and
Chief Operating Officer |
|
|
2009 |
|
|
|
403,538 |
|
|
|
100,000 |
|
|
|
288,000 |
(5) |
|
|
17,908 |
|
|
|
82,594 |
(4) |
|
|
892,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Maslowski,
Vice President of Operations |
|
|
2010 |
|
|
|
147,019 |
|
|
|
21,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,519 |
|
|
|
|
2009 |
|
|
|
149,279 |
|
|
|
|
|
|
|
|
|
|
|
16,117 |
(7) |
|
|
|
|
|
|
165,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen Donhauser,
Vice President of Quality |
|
|
2010 |
|
|
|
122,131 |
|
|
|
12,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,131 |
|
|
|
|
2009 |
|
|
|
110,936 |
|
|
|
|
|
|
|
|
|
|
|
9,670 |
(8) |
|
|
|
|
|
|
120,606 |
|
|
|
|
(1) |
|
Except as disclosed in footnotes (7) and (8), represents the full grant date fair value of
the stock award or option grant, as applicable, calculated in accordance with FASB ASC Topic
718. For the purposes of making the option calculation for 2010, the following assumptions
were made: : (a) expected life (years) 5.5 for options to Mr. Pernock and 5.25 for options
to Mr. Daly; (b) volatility 64.82% for options to Mr. Pernock and 63.26% for options to Mr.
Daly; (c) dividend yield none; and (d) discount rate 2.38% for options to Mr. Pernock
and 1.43% for options to Mr. Daly. For the purposes of making the stock award calculation in
2009 for Mr. Daly, an assumed value of $0.48 per share was utilized. For the purposes of
making the option calculation for 2009, the following assumptions were made: (a) expected life
(years) 3.5 (for the options issued to Mr. Maslowski and Ms. Donhauser); expected life
(years) 2.5 (for the options issued to Mr. Daly); (b) volatility 65.87%; (c) dividend
yield none; and (d) discount rate 1.64% (for the options issued to Mr. Maslowski and Ms.
Donhauser); discount rate 0.99% (for the options issued to Mr. Daly). |
|
(2) |
|
Mr. Pernock agreed to become our Chief Executive Officer in February 2010. All amounts shown
in the table include all compensation received during 2010. |
|
(3) |
|
Represents a one-time payment of $100,000 for services rendered prior to becoming Chief
Executive Officer, which payment was made during 2010, and $4,167 of Board fees paid prior to
Mr. Pernock becoming Chief Executive Officer. |
|
(4) |
|
Represents a tax gross-up payment made during 2010 and 2009. |
|
(5) |
|
Pursuant to our bankruptcy plan, our management was granted shares of our common stock. Mr.
Daly received 600,000 shares of common stock, of which 300,000 shares vested in September
2009, 150,000 shares vested in September 2010, and the remaining shares shall vest in
September 2011; provided that if we do not renew Mr. Dalys employment agreement at the end of
its term or in the event of a change of control, any unvested shares will automatically vest. |
43
|
|
|
(6) |
|
Consists of an option to purchase 100,000 shares of common stock at an exercise price of
$0.75 per share of which 50,000 shares vested on October 6, 2010 and 50,000 shares vest if our
BLA is approved by the FDA. The grant date fair value in the table above excludes the 50,000
shares that would vest if our BLA is approved by the FDA as that portion of the option is
subject to performance conditions and is not considered to be probable pursuant to FASB ASC
Topic 718. The full grant date fair value of the option assuming the performance conditions
are met was $32,234. |
|
(7) |
|
Consists of an option to purchase 60,000 shares of common stock at an exercise price of $0.75
per share of which 30,000 shares vested on October 6, 2010 and 30,000 shares vest if our BLA
is approved by the FDA. The grant date fair value in the table above excludes the 30,000
shares that would vest if our BLA is approved by the FDA as that portion of the option is
subject to performance conditions and is not considered to be probable pursuant to FASB ASC
Topic 718. The full grant date fair value of the option assuming the performance conditions
are met was $19,341. |
Equity Awards
The following table sets forth certain information concerning our outstanding options for our
named executive officers at December 31, 2010.
Outstanding Equity Awards At Fiscal Year-End2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value |
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
of shares of |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
|
|
|
|
|
|
|
|
shares of stock |
|
|
stock that |
|
|
|
Options |
|
|
Options |
|
|
Option |
|
|
Option |
|
|
that have not |
|
|
have not |
|
|
|
(#) |
|
|
(#) |
|
|
Exercise Price |
|
|
Expiration |
|
|
vested |
|
|
vested |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
($) |
|
|
Date |
|
|
(#) |
|
|
($) |
|
David Pernock |
|
|
611,110 |
(1) |
|
|
1,038,890 |
(1) |
|
|
1.08 |
|
|
|
2/1/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
450,000 |
|
|
|
|
|
|
|
0.75 |
|
|
|
9/30/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declan Daly |
|
|
80,000 |
(2) |
|
|
320,000 |
(2) |
|
|
0.55 |
|
|
|
8/24/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
0.75 |
|
|
|
11/20/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
76,500 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Maslowski |
|
|
50,000 |
(4) |
|
|
50,000 |
(4) |
|
|
0.75 |
|
|
|
10/6/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen Donhauser |
|
|
30,000 |
(5) |
|
|
30,000 |
(5) |
|
|
0.75 |
|
|
|
10/6/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consists of an option to purchase 1,650,000 shares issued in connection with Mr. Pernocks
employment agreement. Of the unexercised portion of the option, 938,890 shares vest in 26
equal installments of 36,111 shares on the first day of each month commencing January 1, 2011,
and 100,000 shares vest upon the closing of a strategic partnership or licensing deal. |
|
(2) |
|
Consists of an option to purchase 400,000 shares issued in connection with Mr. Dalys
employment agreement. Of the unexercised portion of the option, 320,000 shares vest in 32
equal installments of 10,000 shares on the first day of each month commencing January 24,
2011. |
|
(3) |
|
Based on the closing price of our common stock of $0.51 on December 31, 2010. |
44
|
|
|
(4) |
|
Consists of an option to purchase 100,000 shares of common stock at an exercise price of
$0.75 per share of which 50,000 shares vested on October 6, 2010 and 50,000 shares vest if our
BLA is approved by the FDA. |
|
(5) |
|
Consists of an option to purchase 60,000 shares of common stock at an exercise price of $0.75
per share of which 30,000 shares vested on October 6, 2010 and 30,000 shares vest if our BLA
is approved by the FDA. |
None of our named executive officers has exercised any options.
Pension Benefits
None of our named executives participate in or have account balances in qualified or
non-qualified defined benefit plans sponsored by us.
Nonqualified Deferred Compensation
None of our named executives participate in or have account balances in non-qualified defined
contribution plans or other deferred compensation plans maintained by us.
Director Compensation
In September 2009, our Board of Directors approved a compensation plan for its non-executive
directors pursuant to which each such director receives an annual fee of $50,000, payable in
monthly installments, and upon appointment to the Board of Directors receives an initial option
grant to purchase 200,000 shares of Company common stock at the fair market value of the Company on
the date of issuance.
Director Compensation Table2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
|
|
|
|
All other |
|
|
|
|
|
|
Paid in Cash |
|
|
Option Awards |
|
|
compensation |
|
|
Total |
|
Name |
|
($) |
|
|
($)(1) |
|
|
($) |
|
|
($) |
|
Robert Langer |
|
|
37,500 |
|
|
|
|
(3) |
|
|
37,500 |
(2) |
|
|
75,000 |
|
Kelvin Moore |
|
|
37,500 |
|
|
|
|
(3) |
|
|
|
|
|
|
37,500 |
|
Marc Mazur |
|
|
25,000 |
|
|
|
118,378 |
(3) |
|
|
|
|
|
|
143,378 |
|
George Korkos |
|
|
9,946 |
|
|
|
90,738 |
(3) |
|
|
|
|
|
|
100,684 |
|
Paul Hopper |
|
|
37,500 |
|
|
|
|
(3) |
|
|
|
|
|
|
37,500 |
|
|
|
|
(1) |
|
Represents the full grant date fair value of the option grant calculated in accordance with
FASB ASC Topic 718. For the purposes of making the option calculation, the following
assumptions were made: (a) expected life (years) 2.5 for the options issued to Messrs.
Hopper, Langer and Moore and 5.25 for options issued to Mr. Mazur and Dr. Korkos; (b)
volatility 66.75% for the options issued to Messrs. Hopper, Langer and Moore, 64.01% for
options issued to Mr. Mazur, and 63.26% for options issued to Dr. Korkos; (c)
dividend yield none; and (d) discount rate 1.36% for the options issued to Messrs.
Hopper, Langer and Moore, 2.71% and for options issued to Mr. Mazur, and 1.795% for options
issued to Dr. Korkos. |
|
(2) |
|
Consists of consulting fees. |
|
(3) |
|
As of December 31, 2010: (i) Messrs. Langer, Moore, and Hooper each held an option to
purchase 200,000 shares of our common stock with an exercise price of $0.75 per share; (ii)
Mr. Mazur held an option to purchase 200,000 shares of our common stock with an exercise price
of $1.04 per share; and (iii) Dr. Korkos held an option to purchase 200,000 shares of our
common stock with an exercise price of $0.82 per share. |
45
Equity Incentive Plan
We currently have an outstanding equity incentive plan, the Fibrocell Science, Inc. 2009
Equity Incentive Plan, as amended January 14, 2011, that permits us to grant awards in the form of
incentive stock options, as defined in Section 422 of the Internal Revenue Code, or Code, as well
as options which do not so qualify, called non-qualified stock options, stock units, stock awards,
stock appreciation rights, and other stock-based awards. The purpose of the plan is to promote the
interests of Fibrocell, and to motivate, attract and retain the services of the people upon whose
efforts and contributions our success depends.
On January 14, 2011, our board of directors agreed to provide: (i) Mr. Pernock with an option
to purchase 2,100,000 shares of common stock; (ii) Mr. Daly with an option to purchase 1,065,000
shares of common stock; and (iii) Messrs. Kelvin Moore, Robert Langer, Marc Mazur, and George
Korkos each with an option to purchase 200,000 shares of common stock. Each of the foregoing
options has: (i) a ten-year term, (ii) an exercise price equal to the closing price of our common
stock on the date of grant, and (iii) vests 50% on the date of grant; 25% on the one-year
anniversary of the date of grant; and 25% on the two-year anniversary of the date of grant;
provided in each case that the grantee is providing service to us on the vesting date.
On April 11, 2011, our board of directors granted Mr. Pernock an option to purchase 1,500,000
shares of common stock and Mr. Daly an option to purchase 750,000 shares of common stock. Mr.
Penocks option vests as follows: 50% on the date of the grant and 35,714 shares per month for 21
months commencing May 11, 2011, provided Mr. Pernock is providing service to the Company on each
vesting date. Mr. Dalys option vests as follows: 50% on the date of the grant and 13,393 shares
per month for 28 months commencing May 11, 2011, provided Mr. Daly is providing service to the
Company on each vesting date. Both of the foregoing options have a ten-year term and an exercise
price of $0.82 per share.
Management Agreements
On February 1, 2010, the Company entered into an employment agreement with Mr. Pernock
pursuant to which Mr. Pernock agreed to serve as Chief Executive Officer of the Company for an
initial term ending February 1, 2013, which may be renewed for an additional one-year term by
mutual agreement. The agreement provides for an annual salary of $450,000. Mr. Pernock is entitled
to receive an annual bonus each year, payable subsequent to the issuance of the Companys final
audited financial statements, but in no case later than 120 days after the end of its most recently
completed fiscal year. The final determination on the amount of the annual bonus will be made by
the Board of Directors (or the Compensation Committee of the Board of Directors, if such committee
has been formed), based on criteria established by the Board of Directors (or the Compensation
Committee of the Board of Directors, if such committee has been formed). The targeted amount of the
annual bonus shall be 60% of Mr. Pernocks base salary, although the actual bonus may be higher or
lower.
Under the agreement, Mr. Pernock was granted a ten-year option to purchase 1,650,000 shares at
an exercise price per share equal to the closing price of the Companys common stock on the date of
execution of the agreement, or February 1, 2010. The options vest as follows: (i) 250,000 shares
upon execution of the agreement; (ii) 100,000 shares upon the closing of a strategic partnership or
licensing deal with a major partner that enables the Company to significantly improve and/or
accelerate its capabilities in such areas as research, production, marketing and/or sales and
enable the Company to reach or exceed its major business milestones within the Companys
strategic and operational plans, provided Mr. Pernock is the CEO on the closing date of such
partnership or licensing deal (the determination of whether any partnership or licensing deal meets
the foregoing criteria will be made in good faith by the Board upon the closing of such partnership
or licensing deal); and (iii) 1,300,000 shares in equal 1/36th installments (or 36,111 shares per
installment) monthly over a three-year period, provided Executive is the CEO on each vesting date.
The vesting of all options set forth above shall accelerate upon a change in control as defined
in the agreement, provided Mr. Pernock is employed by the Company within 60 days prior to the date
of such change in control.
46
If Mr. Pernocks employment is terminated at the Companys election at any time, for reasons
other than death, disability, cause (as defined in the agreement) or a voluntary resignation, or by
Mr. Pernock for good reason (as defined in the agreement), Mr. Pernock shall be entitled to receive
severance payments equal to twelve months of Mr. Pernocks base salary and of the premiums
associated with continuation of Mr. Pernocks benefits pursuant to COBRA to the extent that he is
eligible for them following the termination of his employment; provided that if anytime within
eighteen months after a change in control either (i) Mr. Pernock is terminated, at the Companys
election at any time, for reasons other than death, disability, cause or voluntary resignation, or
(ii) Mr. Pernock terminates the agreement for good reason, Mr. Pernock shall be entitled to receive
severance payments equal to: (1) two years of Mr. Pernocks base salary, (2) Mr. Pernocks most
recent annual bonus payment, and (3) the premiums associated with continuation of Mr. Pernocks
benefits pursuant to COBRA to the extent that he is eligible for them following the termination of
his employment for a period of one year after termination. All severance payments shall be made in
a lump sum within ten business days of Mr. Pernocks execution and delivery of a general release of
the Company, its parents, subsidiaries and affiliates and each of its officers, directors,
employees, agents, successors and assigns in a form acceptable to the Company. If severance
payments are being made, Mr. Pernock has agreed not to compete with the Company until twelve months
after the termination of his employment.
On August 24, 2010, the Company entered into an amended and restated employment agreement with
Mr. Declan Daly, which replaced and terminated his prior employment agreement with the Company,
pursuant to which Mr. Daly agreed to serve as Chief Operating Officer and Chief Financial Officer
of the Company for an initial term ending August 24, 2013, which may be renewed for an additional
one-year term by mutual agreement. The agreement provides for an annual salary of $300,000. Mr.
Daly is entitled to receive an annual bonus each year, payable subsequent to the issuance of the
Companys final audited financial statements, but in no case later than 120 days after the end of
its most recently completed fiscal year. The final determination on the amount of the annual bonus
will be made by the Board of Directors (or the Compensation Committee of the Board of Directors, if
such committee has been formed), based on criteria established by the Board of Directors (or the
Compensation Committee of the Board of Directors, if such committee has been formed). The targeted
amount of the annual bonus shall be 50% of Mr. Dalys base salary, although the actual bonus may be
higher or lower.
Under the agreement, Mr. Daly was granted a ten-year option to purchase 400,000 shares at an
exercise price per share equal to the closing price of the Companys common stock on the date of
execution of the agreement, or $0.55 per share. The options vest as follows: (i) 40,000 shares upon
execution of the agreement; and (ii) 360,000 shares in equal 1/36th installments (or 10,000 shares
per installment) monthly over a three-year period, provided Mr. Daly is the COO or CFO on each
vesting date. The vesting of all options set forth above shall accelerate upon a change in
control as defined in the agreement, provided Mr. Daly is employed by the Company within 60 days
prior to the date of such change in control.
Mr. Daly is entitled to receive a one-time bonus in the amount of $50,000 upon the U.S. Food
and Drug Administrations approval of the Companys Biologics License Application filing, provided
that Mr. Daly is the CFO or COO at the time of said event.
If Mr. Dalys employment is terminated at the Companys election at any time, for reasons
other than death, disability, cause (as defined in the agreement) or a voluntary resignation, or by
Mr. Daly for good reason (as defined in the agreement), Mr. Daly shall be entitled to receive
severance payments equal to twelve months of Mr. Dalys base salary and of the premiums associated
with continuation of Mr. Dalys benefits pursuant to COBRA to the extent that he is eligible for
them following the termination of his employment; provided that if anytime within eighteen months
after a change in control either (i) Mr. Daly is terminated, at the Companys election at any time,
for reasons other than death, disability, cause or voluntary resignation, or (ii) Mr. Daly
terminates the agreement for good reason, Mr. Daly shall be entitled to receive severance payments
equal to: (1) two years of Mr. Dalys base
salary, (2) Mr. Dalys most recent annual bonus payment, and (3) the premiums associated with
continuation of Mr. Dalys benefits pursuant to COBRA to the extent that he is eligible for them
following the termination of his employment for a period of one year after termination. All
severance payments shall be made in a lump sum within ten business days of Mr. Dalys execution and
delivery of a general release of the Company, its parents, subsidiaries and affiliates and each of
its officers, directors, employees, agents, successors and assigns in a form acceptable to the
Company. If severance payments are being made, Mr. Daly has agreed not to compete with the Company
until twelve months after the termination of his employment.
47
On September 3, 2009, we entered into a consultant agreement, pursuant to which Dr. Langer
agreed to provide consulting services to us, including serving a scientific advisor. The agreement
is terminable by either party on 30 days notice. The agreement provides Dr. Langer annual
compensation of $50,000.
RELATED PARTY TRANSACTIONS
Review and Approval Policies and Procedures for Related Party Transactions
Pursuant to Board policy, our executive officers and directors, and principal stockholders,
including their immediate family members and affiliates, are not permitted to enter into a related
party transaction with us without the prior consent of our audit committee, or other independent
committee of our board of directors in the case it is inappropriate for our audit committee to
review such transaction due to a conflict of interest. Any request for us to enter into a
transaction with an executive officer, director, principal stockholder, or any of such persons
immediate family members or affiliates, in which the amount involved exceeds $120,000 must first be
presented to our audit committee for review, consideration and approval. All of our directors,
executive officers and employees are required to report to our audit committee any such related
party transaction. In approving or rejecting the proposed agreement, our audit committee shall
consider the relevant facts and circumstances available and deemed relevant to the audit committee.
Our audit committee shall approve only those agreements that, in light of known circumstances, are
in, or are not inconsistent with, our best interests, as our audit committee determines in the good
faith exercise of its discretion. We do not currently have an audit committee and our full board
currently performs the duties and responsibilities of the audit committee.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of our common
stock as of May 20, 2011 by:
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each person known by us to be the beneficial owner of more than 5% of our outstanding
shares of common stock; |
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each of our named executive officers and directors; and |
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all of our officers and directors as a group. |
Unless otherwise indicated, we believe that all persons named in the table have sole voting
and investment power with respect to all shares of common stock beneficially owned by them. Unless
otherwise indicated, the address for our named executive officers and directors is c/o Fibrocell
Science Inc., 405 Eagleview Boulevard, Exton, Pennsylvania 19341.
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Common stock |
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Beneficially |
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Percent of |
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Name of Beneficial Owner |
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Owned(1) |
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Class(2) |
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Declan Daly |
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1,747,679 |
(3) |
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5.3 |
% |
David Pernock |
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3,216,160 |
(4) |
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9.2 |
% |
Kelvin Moore |
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300,000 |
(5) |
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Less than 1% |
Robert Langer |
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300,000 |
(5) |
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Less than 1% |
Marc Mazur |
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300,000 |
(6) |
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Less than 1% |
George Korkos |
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200,000 |
(7) |
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Less than 1% |
John Maslowski |
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220,000 |
(8) |
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Less than 1% |
Karen Donhauser |
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80,000 |
(9) |
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Less than 1% |
All Executive Officers and Directors as a Group (8 persons) |
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6,363,839 |
(10) |
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17.0 |
% |
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Five percent or more of shareholders |
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James E. Flynn (11) |
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4,900,717 |
(11) |
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9.98% |
(11) |
Akanthos Capital Management, LLC (12) |
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1,640,565 |
(12) |
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5.2 |
% |
48
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(1) |
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Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act.
Unless otherwise noted, all listed shares of common stock are owned of record by each person
or entity named as beneficial owner and that person or entity has sole voting and dispositive
power with respect to the shares of common stock owned by each of them. As to each person or
entity named as beneficial owners, that persons or entitys percentage of ownership is
determined based on the assumption that any options or convertible securities held by such
person or entity which are exercisable or convertible within 60 days of the date of this
prospectus have been exercised or converted, as the case may be. |
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(2) |
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Based upon 31,602,951 shares of common stock outstanding as of May 20, 2011. |
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(3) |
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Includes 50,000 shares underlying an option exercisable at $0.75 per share, (ii) 150,000
shares underlying an option exercisable at $0.55 per share, (iii) 532,500 shares underlying an
option exercisable at $0.62 per share and (iv) 415,179 shares underlying an option exercisable
at $0.82 per share. |
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(4) |
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Includes: (i) 450,000 shares underlying an option exercisable at $0.75 per share; and (ii)
863,887 shares underlying an option exercisable at $1.08 per share (which represents the
vested portion, plus the shares that will vest within 60 days of the date of this filing, of
an option to purchase 1,650,000 shares issued in connection with Mr. Pernocks employment
agreement), (iii) 1,050,000 shares underlying an option exercisable at $0.62 per share and
(iv) 852,273 shares underlying an option exercisable at $0.82 per share. |
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(5) |
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Consists of 200,000 shares underlying an option exercisable at $0.75 per share and 100,000
shares underlying an option exercisable at $0.62 per share. |
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(6) |
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Consists of 200,000 shares underlying an option exercisable at $1.04 per share and 100,000
shares underlying an option exercisable at $0.62 per share. |
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(7) |
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Consists of 100,000 shares underlying an option exercisable at $0.82 per share and 100,000
shares underlying an option exercisable at $0.62 per share. In addition, Dr. Korkos holds an
option to purchase 100,000 shares at an exercise price of $0.82 per share, which is
exercisable in July 2011. |
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(8) |
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Consists of 50,000 shares underlying an option exercisable at $0.75 per share and 170,000
shares underlying an option exercisable at $0.62 per share. |
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(9) |
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Consists of 30,000 shares at an exercise price of $0.75 per share and 50,000 shares
underlying an option exercisable at $0.62 per share. |
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(10) |
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Includes options to purchase 5,763,839 shares of common stock. |
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(11) |
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The information in the table is based on the beneficial ownership of the reported entities
and their affiliates as reported in the Schedule 13G filed February 3, 2011. Deerfield
Capital, L.P. and Deerfield Special Situations Fund, L.P. have shared investment discretion
over 573,579 shares of common stock and warrants to purchase 1,156,400 shares of common stock.
Deerfield Management Company, L.P. and Deerfield Special Situations Fund International
Limited have shared investment discretion over 1,060,471 shares of common stock and warrants
to purchase 2,110,267 shares of common stock. James E. Flynn has shared investment discretion
over 573,579 shares of common stock and warrants to purchase 1,156,400 shares of common stock
held by Deerfield Special Situations Fund, L.P. and 1,060,471 shares of common stock and
warrants to purchase 2,110,267 shares of common stock held by Deerfield Special Situations
Fund International Limited. The provisions of the warrants beneficially owned by the
reporting person restrict the exercise of such warrants to the extent that, upon such
exercise, the numbers of shares then beneficially owned by the holder and its affiliates and
any other person or entities with which such holder would constitute a Section 13(d) group
would exceed 9.98% of the total number of shares of the issuer then outstanding (the
Ownership Cap). Accordingly, notwithstanding the number of shares reported, the reporting
person disclaimed beneficial ownership of the shares underlying such warrants to the extent
beneficial ownership of such shares would cause all reporting persons, in the aggregate, to
exceed the Ownership Cap. The business address for James E. Flynn, Deerfield Capital, L.P.,
Deerfield Special |
49
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Situations Fund, L.P., and Deerfield Management Company, L.P. is 780 Third
Avenue, 37th Floor, New York, NY 10017. The business address for Deerfield Special
Situations Fund International Limited is c/o Citi Hedge Fund Services (B.V.I.) Ltd., Bison
Court, Columbus Centre, P.O. Box 3460, Road Town, Tortola, D8, British Virgin Islands. |
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(12) |
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The information in the table is based on the beneficial ownership of the reported entities
and their affiliates as reported in the Schedule 13G filed February 14, 2011. The shares in
the table are held for the account of Akanthos Arbitrage Master Fund, L.P. (Akanthos Master
Fund) and for the account of a certain managed account (Managed Account). Akanthos Capital
Management serves as investment manager and general partner to Akanthos Master Fund and serves
as investment advisor to the Managed Account. In such capacity, Akanthos Capital Management,
LLC may be deemed to have voting and dispositive power over the shares held for Akanthos
Master Fund and the Managed Account. Mr. Michael Kao is the manager of Akanthos Capital
Management, LLC. In such capacity, Mr. Kao may be deemed to have voting and dispositive power
over the shares held for Akanthos Master Fund and the Managed Account. The business address
of the principal business office of each of Akanthos Capital Management, LLC and Mr. Kao is
21700 Oxnard St., Suite 1520, Woodland Hills, CA 91367-7584. |
DESCRIPTION OF SECURITIES
General
We are authorized to issue 250,000,000 shares of common stock and 5,000,000 shares of
preferred stock. As of June 22, 2011, we had 38,292,942 shares of
common stock outstanding, 950
shares of Series A Preferred outstanding, 487 shares of Series B Preferred outstanding and 7,779
shares of Series D Preferred outstanding. In addition, as of such date we had:
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14,135,000 shares of common stock issuable upon the exercise of options issued pursuant
to our current stock option plan and outside our stock option plan; |
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1,900,000 shares of common stock issuable upon the conversion of the Series A Preferred; |
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974,000 shares of common stock issuable upon the conversion of the Series B Preferred; |
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1,442,995 shares of common stock for issuance upon exercise of the Class A warrants;
1,624,997 shares of common stock for issuance upon exercise of the Class B warrants; and
188,500 shares of common stock for issuance upon exercise of the warrants issued to the
placement agents for our Series A Preferred offering; |
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4,540,661 shares of common stock issuable upon exercise of common stock purchase
warrants issued in the March 2010 offering and 376,941 shares of common stock underlying
the warrants issued to the placement agents in such offering; and |
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9,372,407 shares of common stock issuable upon exercise of common stock purchase
warrants issued in the July, September, October and November 2010 offerings and 419,324
shares of common stock underlying the warrants issued to the placement agents in such
offerings. |
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Common Stock
Subject to preferences that may be applicable to any preferred stock outstanding at the time,
the holders of our common stock are entitled to receive dividends out of legally available assets
at such times and in such amounts as our Board of Directors may from time to time determine. Each
stockholder is entitled to one vote for each share
of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for
the election of directors is not authorized.
Our common stock is not subject to conversion or redemption and holders of our common stock
are not entitled to preemptive rights. Upon the liquidation, dissolution or winding up of our
company, the remaining assets legally available for distribution to stockholders, after payment of
claims or creditors and payment of liquidation preferences, if any, on outstanding preferred stock,
are distributable ratably among the holders of our common stock and any participating preferred
stock outstanding at that time. Each outstanding share of common stock is fully paid and
nonassessable.
50
Preferred Stock
Our Board of Directors has the authority, without action by our stockholders, to designate and
issue preferred stock in one or more series. Our Board of Directors may also designate the rights,
preferences and privileges of each series of preferred stock, any or all of which may be greater
than the rights of the common stock. It is not possible to state the actual effect of the issuance
of any shares of preferred stock on the rights of holders of the common stock until our Board of
Directors determines the specific rights of the holders of the preferred stock.
However, these effects might include: (a) restricting dividends on the common stock; (b)
diluting the voting power of the common stock; (c) impairing the liquidation rights of the common
stock; and (d) delaying or preventing a change in control of our company without further action by
our stockholders.
As of the date of this prospectus, we have authorized four classes of preferred stock, Series
A Convertible Preferred Stock, or Series A Preferred, Series B Convertible Preferred Stock, or
Series B Preferred, Series C Junior Participating Preferred Stock, or Series C Preferred and Series
D Convertible Preferred Stock, or Series D Preferred. As of May 20, 2011, there were 1,886 shares
of Series A Preferred outstanding, 1,626 shares of Series B Preferred outstanding, no shares of
Series C Preferred outstanding and 7,779 shares of Series D Preferred outstanding.
Series A Preferred
The Series A Preferred shares were issued in October 2009 pursuant to an agreement between us
and certain accredited investors. To designate and establish the shares of Series A Preferred, our
board approved, and on October 8, 2009, we filed with the Delaware Secretary of State, a
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred
Stock, or Certificate of Designation.
Dividends; Rank; Liquidation
Holders of the Series A Preferred are entitled to receive cumulative dividends at the rate per
share (as a percentage of the stated value per share) of 6% per annum (subject to increase in
certain circumstances), payable quarterly in arrears on January 15, April 15, July 15 and October
15. The dividends are payable in cash, or at our option, in duly authorized, validly issued, fully
paid and non-assessable shares of common stock equal to 110% of the cash dividend amount payable on
the dividend payment date, or a combination thereof; provided that we may not pay the dividends in
shares of common stock unless we meet certain conditions described in the Certificate of
Designation. If we pay the dividend in shares of common stock, the common stock will be valued for
such purpose at 80% of the average of the volume weighted average price for the 10 consecutive
trading days ending on the trading day that is immediately prior to the dividend payment date.
The Series A Preferred ranks senior to all shares of common stock.
Upon our liquidation, dissolution or winding-up, whether voluntary or involuntary, the holders
of the Series A Preferred shall be entitled to receive out of our assets, whether capital or
surplus, an amount equal to the stated value of the common stock, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages then due and owing thereon under the
Certificate of Designation, for each share of Series A Preferred before any distribution or payment
shall be made to the holders of any junior securities, and if our assets are insufficient to pay in
full such amounts, then the entire assets to be distributed to the holders of the Series A
Preferred shall be ratably distributed among the holders in accordance with the respective amounts
that would be payable on such shares if all amounts payable thereon were paid in full.
Conversion; Conversion Price; Forced Conversion; Optional Redemption
Each share of Series A Preferred is convertible into a number of shares of common stock equal
to (1) the stated value of the share ($1,000), divided by (2) the conversion price, which is
currently $0.50, but is subject to adjustment as discussed below. We refer to this price as the
Conversion Price.
51
With certain exceptions, if, at any time while the Series A Preferred is outstanding, we sell
or grant any option to purchase or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any sale, grant or any option to purchase or other disposition), any common
stock or common stock equivalents at an effective price per share that is lower than the then
Conversion Price, then the Conversion Price will be reduced to equal the lower price. The
Conversion Price is also subject to proportional adjustment in the event of any stock split, stock
dividend, reclassification or similar event with respect to the common stock.
If the volume weighted average price for each of any 20 consecutive trading days exceeds 200%
of the then effective Conversion Price and various other equity conditions are satisfied (including
that the resale of the shares underlying the Series A Preferred has been registered under the
Securities Act), upon 30 days notice, the Series A Preferred plus all accrued and unpaid dividends
will automatically convert into shares of common stock.
Commencing two years from the date of the agreement pursuant to which we issued the Series A
Preferred, upon 30 days notice and provided various other equity conditions are satisfied
(including that the resale of the shares underlying the Series A Preferred has been registered
under the Securities Act), we may redeem some or all of the then outstanding Series A Preferred for
cash in an amount equal to the 150% of the stated value of the Series A Preferred.
Voting
The holders of the Series A Preferred have no voting rights except with respect to specified
matters affecting the rights of the Series A Preferred.
Negative Covenants
As long as any shares of Series A Preferred are outstanding, we may not, directly or
indirectly: (a) amend our charter documents in any manner that materially and adversely affects any
rights of the holders of the Series A Preferred; (b) pay cash dividends or distributions on our
junior securities (including the common stock); or (c) enter into any transaction with any
affiliate of ours which would be required to be disclosed in any public filing, unless such
transaction is made on an arms-length basis and expressly approved by a majority of our
disinterested directors.
Triggering Events
In the event of a Triggering Event (as defined in the Certificate of Designation and described
below), any holder of Series A Preferred may require us to redeem all of its Series A Preferred, at
a redemption price equal to the greater of (a) 130% of the stated value and (b) the product of (i)
the volume weighted average price on the trading day immediately preceding the date of the
Triggering Event and (ii) the stated value divided by the then Conversion Price, plus all accrued
but unpaid dividends thereon and all liquidated damages and other costs, expenses or amounts due in
respect of the Series A Preferred. Triggering Events include, among other things, bankruptcy
related events, change of control transactions (as defined in the Certificate of Designation), and
various types of failures to perform under, and breaches of, the transaction documents.
Series B Preferred
The Series B Preferred shares were issued in July, September, October and November 2010
pursuant to agreements between us and certain accredited investors. To designate and establish the
shares of Series B Preferred, our board of directors approved, and on July 16, 2010, we filed with
the Delaware Secretary of State, a Certificate of Designation of Preferences, Rights and
Limitations of Series B Convertible Preferred Stock.
Dividends; Rank; Liquidation
Holders of the Series B Preferred are entitled to receive cumulative dividends at the rate per
share (as a percentage of the stated value per share) of 6% per annum (subject to increase in
certain circumstances), payable quarterly in arrears on January 15, April 15, July 15 and October
15, beginning on January 15, 2011. The dividends
52
are payable in cash, or at our option, in duly authorized, validly issued, fully paid and
non-assessable shares of common stock equal to 110% of the cash dividend amount payable on the
dividend payment date, or a combination thereof; provided that we may not pay the dividends in
shares of common stock unless we meet certain conditions described in the Certificate of
Designation. If we pay the dividend in shares of common stock, the common stock will be valued for
such purpose at 80% of the average of the volume weighted average price for the 10 consecutive
trading days ending on the trading day that is immediately prior to the dividend payment date
The Series B Preferred ranks senior to all shares of common stock, and junior to our Series A
Convertible Preferred Stock.
Upon any liquidation, dissolution or winding-up, whether voluntary or involuntary, the holders
of the Series B Preferred shall be entitled to receive out of the assets, whether capital or
surplus, an amount equal to the stated value of the common stock, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages then due and owing thereon under the
Certificate of Designation, for each share of Series B Preferred before any distribution or payment
shall be made to the holders of any junior securities, and if our assets are insufficient to pay in
full such amounts, then the entire assets to be distributed to the holders of the Series B
Preferred shall be ratably distributed among the holders in accordance with the respective amounts
that would be payable on such shares if all amounts payable thereon were paid in full.
Conversion; Conversion Price; Forced Conversion; Optional Redemption
Each share of Series B Preferred is convertible into a number of shares of common stock equal
to (1) the stated value of the share ($1,000), divided by (2) $0.50, subject to adjustment as
discussed below. We refer to this price as the Conversion Price.
With certain exceptions, if, at any time while the Series B Preferred is outstanding, we sell
or grant any option to purchase or sells or grants any right to reprice, or otherwise disposes of
or issues (or announce any sale, grant or any option to purchase or other disposition), any common
stock or common stock equivalents at an effective price per share that is lower than the then
Conversion Price, then the Conversion Price will be reduced to equal the lower price. The
Conversion Price is also subject to proportional adjustment in the event of any stock split, stock
dividend, reclassification or similar event with respect to the common stock.
If the volume weighted average price for each of any 20 consecutive trading days exceeds 200%
of the then effective Conversion Price and various other equity conditions are satisfied (including
that the resale of the shares underlying the Series B Preferred has been registered under the
Securities Act), upon 30 days notice, the Series B Preferred plus all accrued and unpaid dividends
will automatically convert into shares of common stock.
Commencing two years from the date of the agreement pursuant to which we issued the Series B
Preferred, upon 30 days notice and provided various other equity conditions are satisfied
(including that the resale of the shares underlying the Series B Preferred has been registered
under the Securities Act), the Company may redeem some or all of the then outstanding Series B
Preferred for cash in an amount equal to the 150% of the stated value of the Series B Preferred.
Voting
The holders of the Series B Preferred have no voting rights except with respect to specified
matters affecting the rights of the Series B Preferred.
Negative Covenants
As long as any shares of Series B Preferred are outstanding, we may not, directly or
indirectly: (a) amend its charter documents in any manner that materially and adversely affects any
rights of the holders of the Series B Preferred; (b) pay cash dividends or distributions on our
junior securities (including the common stock); or (c) enter into any transaction with any of our
affiliates which would be required to be disclosed in any public filing, unless
53
such transaction is made on an arms-length basis and expressly approved by a majority of our
disinterested directors.
Triggering Events
In the event of a Triggering Event (as defined in the Certificate of Designation and described
below), any holder of Series B Preferred may require us to redeem all of its Series B Preferred, at
a redemption price equal to the greater of (a) 130% of the stated value and (b) the product of (i)
the volume weighted average price on the trading day immediately preceding the date of the
Triggering Event and (ii) the stated value divided by the then Conversion Price, plus all accrued
but unpaid dividends thereon and all liquidated damages and other costs, expenses or amounts due in
respect of the Series B Preferred. Triggering Events include, among other things, bankruptcy
related events, change of control transactions (as defined in the Certificate of Designation), and
various types of failures to perform under, and breaches of, the transaction documents.
Series C Preferred
In 2006, our Board of Directors declared a dividend distribution of one right for each
outstanding share of common stock to stockholders of record at the close of business on May 22,
2006, the record date. Each right entitles the registered holder to purchase from us a unit
consisting of one ten-thousandth of a share of Series C Preferred at a purchase price of $35.00 per
unit, subject to adjustment. The rights are not exercisable until the distribution date and will
expire at 5:00 P.M. (New York City time) on May 12, 2016, unless such date is extended or the
rights are earlier redeemed or exchanged by us. The distribution date occurs upon the earlier of:
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ten business days following a public announcement that a person or group of affiliated
or associated persons has acquired beneficial ownership of 15% or more of our outstanding
common stock (20%, in the case of certain institutional investors) other than as a result
of repurchases of stock by us or certain inadvertent actions by institutional or certain
other stockholders; or |
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ten business days (or such later date as the Board shall determine) following the
commencement of a tender offer or exchange offer that would result in a person or group
becoming an acquiring person. |
Series D Preferred
The Series D Preferred shares were issued in December 2010 in connection with a private
placement of securities. To designate and establish the shares of Series D Preferred, our board of
directors approved, and we filed with the Delaware Secretary of State, a Certificate of Designation
of Preferences, Rights and Limitations of Series D Convertible Preferred Stock.
Dividends; Rank; Liquidation
Holders of the Series D Preferred are entitled to receive cumulative dividends at the rate per
share (as a percentage of the stated value per share) of 6% per annum (subject to increase in
certain circumstances), payable quarterly in arrears on January 15, April 15, July 15 and October
15, beginning on July 15, 2011. The dividends are payable in cash, or at the Companys option, in
duly authorized, validly issued, fully paid and non-assessable shares of Common Stock equal to 110%
of the cash dividend amount payable on the dividend payment date, or a combination thereof;
provided that the Company may not pay the dividends in shares of Common Stock unless the Company
meets certain conditions described in the Certificate of Designation, including that the resale of
the shares has been registered under the Securities Act of 1933, as amended (the Securities Act)
or is otherwise eligible to be resold pursuant to an exemption from the Securities Act. If the
Company pays the dividend in shares of Common Stock, the Common Stock will be valued for such
purpose at 80% of the average of the volume weighted average price for the 10 consecutive trading
days ending on the trading day that is immediately prior to the dividend payment date.
The Series D Preferred ranks senior to all shares of Common Stock, and junior to the Companys
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock.
54
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or
involuntary, the holders of the Series D Preferred shall be entitled to receive out of the assets,
whether capital or surplus, of the Company an amount equal to the stated value of the Common Stock,
plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and
owing thereon under the Certificate of Designation, for each share of Series D Preferred before any
distribution or payment shall be made to the holders of any junior securities, and if the assets of
the Company are insufficient to pay in full such amounts, then the entire assets to be distributed
to the holders of the Series D Preferred shall be ratably distributed among the holders in
accordance with the respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full.
Conversion; Conversion Price; Forced Conversion; Optional Redemption
Each share of Series D Preferred is convertible into a number of shares of Common Stock equal
to (1) the stated value of the share ($1,000), divided by (2) $0.50, subject to adjustment as
discussed below (the Conversion Price).
With certain exceptions, if, at any time while the Series D Preferred is outstanding, the
Company sells or grants any option to purchase or sells or grants any right to reprice, or
otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other
disposition), any Common Stock or Common Stock equivalents at an effective price per share that is
lower than the then Conversion Price, then the Conversion Price will be reduced to equal the lower
price. The Conversion Price is also subject to proportional adjustment in the event of any stock
split, stock dividend, reclassification or similar event with respect to the Common Stock.
Commencing six months from the date of the acquisition of the Series D Preferred, if the
volume weighted average price for each of any 20 consecutive trading days exceeds 200% of the then
effective Conversion Price and various other equity conditions are satisfied (including that the
resale of the shares underlying the Series D Preferred has been registered under the Securities
Act), upon 30 days notice, the Series D Preferred plus all accrued and unpaid dividends will
automatically convert into shares of Common Stock.
Commencing two years from the date of the acquisition of the Series D Preferred, upon 30 days
notice and provided various other equity conditions are satisfied (including that the resale of the
shares underlying the Series D Preferred has been registered under the Securities Act), the Company
may redeem some or all of the then outstanding Series D Preferred for cash in an amount equal to
the 150% of the stated value of the Series D Preferred.
Voting
The holders of the Series D Preferred have no voting rights except with respect to specified
matters affecting the rights of the Series D Preferred.
Negative Covenants
As long as any shares of Series D Preferred are outstanding, the Company may not, directly or
indirectly: (a) amend its charter documents in any manner that materially and adversely affects any
rights of the holders of the Series D Preferred; (b) pay cash dividends or distributions on junior
securities of the Company (including the Common Stock); or (c) enter into any transaction with any
affiliate of the Company which would be required to be disclosed in any public filing, unless such
transaction is made on an arms-length basis and expressly approved by a majority of the
disinterested directors of the Company.
Triggering Events
In the event of a Triggering Event (as defined in the Certificate of Designation and described
below), any holder of Series D Preferred may require the Company to redeem all of its Series D
Preferred, at a redemption price equal to the greater of (a) 130% of the stated value and (b) the
product of (i) the volume weighted average price on the trading day immediately preceding the date
of the Triggering Event and (ii) the stated value divided by the then Conversion Price, plus all
accrued but unpaid dividends thereon and all liquidated damages and other costs, expenses or
amounts due in respect of the Series D Preferred. Triggering Events include, among other things,
55
bankruptcy related events, change of control transactions (as defined in the Certificate of
Designation), and various types of failures to perform under, and breaches of, the transaction
documents.
Warrants
Series A Private Offering
Pursuant to, and contemporaneous with the execution of, the agreement in which we issued the
Series A Preferred, we issued Class A warrants to purchase 501,542 shares of common stock and Class
B warrants to purchase 416,666 shares of common stock to the investors that purchased our Series A
Preferred pursuant to the agreement in which we issued the Series A Preferred. At the same time we
also issued warrants to purchase 250,000 shares of common stock to the placement agents for the
Series A Preferred. Each of the warrants is exercisable upon issuance and has a five-year term. The
initial exercise price of the Class A warrants was $1.62 per share, the initial exercise price of
the Class B warrants was $1.95 per share, and the initial exercise price of the warrants issued to
the placement agents was $1.30 per share.
With certain exceptions, the Class A warrants, Class B warrants and placement agent warrants
provide that if at any time while the warrants are outstanding, we sell or grant any option to
purchase or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any
sale, grant or any option to purchase or other disposition), any common stock or common stock
equivalents at an effective price per share that is lower than the then exercise price of the
relevant warrant, then the exercise price of such warrant will be reduced to equal the lower price
and the number of shares issuable thereunder will be increased such that the aggregate exercise
price after the exercise price adjustment will be equal to the aggregate exercise price prior to
the adjustment. As a result of the purchase price of the securities sold in the Series D offering
(a) the exercise prices for the Class A, Class B and placement agent warrants issued as part of the
Series A Preferred Offering were reduced to $0.50 per share and (b) the numbers of shares
underlying the Class A, Class B and placement agent warrants were increased to 1,624,996,
1,624,997, and 650,000, respectively.
March 2010 Private Offering Warrants
We entered a securities purchase agreement dated March 2, 2010 with certain accredited
investors pursuant to which the Company agreed to sell in the aggregate 5,076,664 shares of our
common stock. In addition to the common stock purchased, each investor received a warrant to
purchase the same number of shares of common stock acquired in the offering at an initial exercise
price of $0.98 per share. Each of the warrants was exercisable immediately and has a five-year
term. The warrants may be exercised on a cash-less basis and are non-redeemable.
With certain exceptions, the warrants provide that if, at any time while the warrants are
outstanding, we sell or grant any option to purchase or sell or grant any right to reprice, or
otherwise dispose of or issue (or announce any sale, grant or any option to purchase or other
disposition), any common stock or common stock equivalents at an effective price per share that is
lower than the then exercise price of the relevant warrant, then the exercise price of such warrant
will be reduced to equal the lower price and the number of shares issuable thereunder will be
increased such that the aggregate exercise price after the exercise price adjustment will be equal
to the aggregate exercise price prior to the adjustment. If we enter into a fundamental transaction
(which term is defined in the warrants), then at the warrant holders option, exercisable at any
time concurrently with, or within 30 days after, the announcement of a fundamental transaction, we
must redeem all or any portion of the warrant from the holder by paying to the holder an amount of
cash equal to the Black Scholes value of the remaining unexercised portion of this warrant on or
prior to the date of the consummation of such fundamental transaction. Any cash payments to be made
pursuant to the preceding sentence shall have priority to payments to holders of common stock in
connection with a fundamental transaction. The assumptions to be used in calculating the Black
Scholes value are set forth in Schedule 1 to the warrant. As a result of the securities sold in the
Series D offering (a) the exercise prices for the warrants and placement agent warrants issued as
part of the March 2010 Private Offering were reduced to $0.50 per share, respectively and (b) the
numbers of shares underlying the warrants and placement agent warrants have been increased to
9,950,261 and 609,200 respectively.
56
Series B Private Offering Warrants
We entered securities purchase agreements with certain accredited investors pursuant to which
we agreed to sell in the aggregate (i) 4,640 shares of Series B Convertible Preferred Stock, with a
stated value of $1,000 per share, and (ii) warrants to purchase 7,733,333 shares of our common
stock at an initial exercise price of $0.8054 per share. Each of the warrants was exercisable
immediately and has a five-year term. The warrants may be exercised on a cash-less basis and are
non-redeemable.
With certain exceptions, the warrants provide that if at any time while the warrants are
outstanding, we sell or grant any option to purchase or sell or grant any right to reprice, or
otherwise dispose of or issue (or announce any sale, grant or any option to purchase or other
disposition), any common stock or common stock equivalents at an effective price per share that is
lower than the then exercise price of the relevant warrant, then the exercise price of such warrant
will be reduced to equal the lower price and the number of shares issuable thereunder will be
increased such that the aggregate exercise price after the exercise price adjustment will be equal
to the aggregate exercise price prior to the adjustment. As a result of the securities sold in the
Series D offering (a) the exercise prices for the warrants and placement agent warrants issued as
part of the July through November 2010 Offerings were reduced to $0.50 per share and (b) the
numbers of shares underlying the warrants and placement agent warrants were increased to 12,456,851
and 708,788, respectively.
Series D Private Offering Warrants
In connection with our Series D offering, we issued warrants to purchase 15,558,000 shares of
our common stock at an exercise price of $0.50 per share. Each of the warrants is exercisable upon
issuance and expires on the fifth anniversary of issuance.
With certain exceptions, the warrants provide that if at any time while the warrants are
outstanding, we sell or grant any option to purchase or sell or grant any right to reprice, or
otherwise dispose of or issue (or announce any sale, grant or any option to purchase or other
disposition), any common stock or common stock equivalents at an effective price per share that is
lower than the then exercise price of the relevant warrant, then the exercise price of such warrant
will be reduced to equal the lower price and the number of shares issuable thereunder will be
increased such that the aggregate exercise price after the exercise price adjustment will be equal
to the aggregate exercise price prior to the adjustment.
12.5% Notes
In our bankruptcy reorganization plan, 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 New Notes. The New
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; |
|
|
|
|
mature June 1, 2012; |
|
|
|
|
at any time prior to the maturity date, we may redeem any portion of the outstanding
principal of the New Notes in cash at 125% of the stated face value of the New Notes;
provided that we will be obligated to redeem all outstanding New 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; |
|
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|
|
the New 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 New Note
holders. |
57
Anti-Takeover Effects of Provisions of Delaware Law
Provisions of Delaware law and our Certificate of Incorporation, as amended, and Bylaws could
make the acquisition of our company through a tender offer, a proxy contest or other means more
difficult and could make the removal of incumbent officers and directors more difficult. We expect
these provisions to discourage coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of our company to first negotiate with our Board of
Directors. We believe that the benefits provided by our ability to negotiate with the proponent of
an unfriendly or unsolicited proposal outweigh the disadvantages of discouraging these proposals.
We believe the negotiation of an unfriendly or unsolicited proposal could result in an improvement
of its terms.
Anti-Takeover Effects of Provisions of Our Charter Documents
Our Certificate of Incorporation, as amended, provides for our Board of Directors to be
divided into three classes serving staggered terms. Approximately one-third of the Board of
Directors will be elected each year. The provision for a classified board could prevent a party who
acquires control of a majority of the outstanding voting stock from obtaining control of the Board
of Directors until the second annual stockholders meeting following the date the acquirer obtains
the controlling stock interest. The classified board provision could discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of our company and
could increase the likelihood that incumbent directors will retain their positions.
Our Bylaws do not permit stockholders to call a special meeting of stockholders. Our Bylaws
provide that special meetings of the stockholders may be called only by a majority of the members
of our Board of Directors, our Chairman of the Board of Directors, our Chief Executive Officer or
our President. Our Bylaws require that all stockholder actions be taken by a vote of the
stockholders at an annual or special meeting, and do not permit our stockholders to act by written
consent without a meeting. Our Bylaws provide for an advance notice procedure for stockholder
proposals to be brought before an annual meeting of our stockholders, including proposed
nominations of persons for election to the Board of Directors. At an annual meeting, stockholders
may only consider proposals or nominations specified in the notice of meeting or brought before the
meeting by or at the direction of the Board of Directors. Stockholders may also consider a proposal
or nomination by a person who was a stockholder of record on the record date for the meeting, who
is entitled to vote at the meeting and who has given to our Secretary timely written notice, in
proper form, of his, her or its intention to bring that business before the meeting. The Bylaws do
not give our Board of Directors the power to approve or disapprove stockholder nominations of
candidates or proposals regarding other business to be conducted at a special or annual meeting of
the stockholders. However, our Bylaws may have the effect of precluding the conduct of business at
a meeting if the proper procedures are not followed. These provisions may also discourage or deter
a potential acquirer from conducting a solicitation of proxies to elect the acquirers own slate of
directors or otherwise attempting to obtain control of our company.
Listing
Our common stock is listed on the OTCBB under the symbol FCSC.
Transfer Agent
The transfer agent for our common stock is American Stock Transfer & Trust Company located at
59 Maiden Lane, New York, New York 11038.
SELLING SECURITY HOLDERS
The following table presents information regarding the Selling Stockholders. The percentage of
outstanding shares beneficially owned is based on 30,911,561 shares of common stock issued and
outstanding on May 9, 2011. Beneficial ownership is determined in accordance with Rule 13d-3 under
the Exchange Act. As to each person or entity named as beneficial owners, that persons or entitys
percentage of ownership is determined based on the assumption that any warrants or convertible
securities held by such person or entity which are exercisable or convertible within 60 days of the
date of this report have been exercised or converted, as the case may be.
The warrants issued in the Series D offering each provide that at no time may a holder
exercise the warrants if the number of shares of common stock to be issued pursuant to such
exercise would exceed, when aggregated with all other shares of common stock owned by such holder
at such time, the number of shares of common stock
58
which would result in such holder beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.99% of the then issued
and outstanding shares of our common stock; provided, however, that upon the holder providing us
with 61 days notice that such holder would like to waive this provision then this provision will be
of no force or effect; provided, further, that this provision will be of no force or effect during
the 61 days immediately preceding the expiration of the warrants.
Except as may be otherwise described below, to the best of our knowledge, the named Selling
Stockholder beneficially owns and has sole voting and investment authority as to all of the shares
set forth opposite his name, none of the selling stockholders is known to us to be a registered
broker-dealer or an affiliate of a registered broker-dealer, and none of the Selling Stockholders
has not held any position or office, or has had any material relationship with us or any of our
affiliates within the past three years. Each of the Selling Stockholders has acquired his, her or
its shares solely for investment and not with a view to or for resale or distribution of such
securities.
Information with respect to beneficial ownership is based upon information provided to us by
the Selling Stockholders. For purposes of presentation, we have assumed that the Selling
Stockholders will sell all shares offered hereby, including the shares issuable on the exercise of
warrants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares of |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Number of Shares |
|
|
Number Of Shares To |
|
|
Approximate |
|
|
|
Beneficially Owned |
|
|
Registered and To |
|
|
Be Beneficially |
|
|
Percentage of |
|
Name of Selling |
|
Prior to the |
|
|
Be Sold In This |
|
|
Owned After The |
|
|
Shares To Be Owned |
|
Stockholders (1) |
|
Offering (2) |
|
|
Offering |
|
|
Offering |
|
|
After the Offering |
|
Martin East & Michelle
East JTWROS |
|
|
460,000 |
(25) |
|
|
360,000 |
|
|
|
100,000 |
|
|
|
* |
|
Ravi Bhardwaj |
|
|
520,000 |
(26) |
|
|
400,000 |
|
|
|
120,000 |
|
|
|
* |
|
Phillip OWilliams |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Elliot Sabbagh |
|
|
966,667 |
(27) |
|
|
400,000 |
|
|
|
566,667 |
|
|
|
1.83 |
% |
Marat Shlimov |
|
|
300,000 |
(28) |
|
|
200,000 |
|
|
|
100,000 |
|
|
|
* |
|
Anthony V. Milone |
|
|
300,000 |
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
% |
Steven Nelson |
|
|
800,000 |
|
|
|
800,000 |
|
|
|
0 |
|
|
|
0 |
% |
Igor Voznenko |
|
|
120,000 |
(29) |
|
|
40,000 |
|
|
|
80,000 |
|
|
|
* |
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares of |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Number of Shares |
|
|
Number Of Shares To |
|
|
Approximate |
|
|
|
Beneficially Owned |
|
|
Registered and To |
|
|
Be Beneficially |
|
|
Percentage of |
|
Name of Selling |
|
Prior to the |
|
|
Be Sold In This |
|
|
Owned After The |
|
|
Shares To Be Owned |
|
Stockholders (1) |
|
Offering (2) |
|
|
Offering |
|
|
Offering |
|
|
After the Offering |
|
Igor Vaysbaum & Marina
Vaysbaum |
|
|
140,000 |
(30) |
|
|
40,000 |
|
|
|
100,000 |
|
|
|
* |
|
Janet Ballard |
|
|
300,000 |
(31) |
|
|
200,000 |
|
|
|
100,000 |
|
|
|
* |
|
Richard Gaddy |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Chen Zhang |
|
|
2,000,000 |
|
|
|
2,000,000 |
|
|
|
0 |
|
|
|
0 |
% |
Baoru Wang |
|
|
2,000,000 |
|
|
|
2,000,000 |
|
|
|
0 |
|
|
|
0 |
% |
Roy Whitehead |
|
|
400,000 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
0 |
% |
Donald B. Hilliker, Jr. |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
% |
Bernard Pallut |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Steve & Mollie Crampin |
|
|
240,000 |
(32) |
|
|
140,000 |
|
|
|
100,000 |
|
|
|
* |
|
Judy Tenenbaum |
|
|
20,000 |
|
|
|
20,000 |
|
|
|
0 |
|
|
|
0 |
% |
Robert C. Howard &
Ellen Bell Howard |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
% |
Douglas Lehman & Staci
Lehman |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
0 |
|
|
|
0 |
% |
Jeremiah Bradley |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Stephen Saffery |
|
|
100,000 |
(33) |
|
|
60,000 |
|
|
|
40,000 |
|
|
|
* |
|
John M. Maslowski |
|
|
24,000 |
|
|
|
24,000 |
|
|
|
0 |
|
|
|
0 |
% |
Ashok Mathias |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
0 |
|
|
|
0 |
% |
Raymond Harwood |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
% |
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares of |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Number of Shares |
|
|
Number Of Shares To |
|
|
Approximate |
|
|
|
Beneficially Owned |
|
|
Registered and To |
|
|
Be Beneficially |
|
|
Percentage of |
|
Name of Selling |
|
Prior to the |
|
|
Be Sold In This |
|
|
Owned After The |
|
|
Shares To Be Owned |
|
Stockholders (1) |
|
Offering (2) |
|
|
Offering |
|
|
Offering |
|
|
After the Offering |
|
Terminal Ventures (3) |
|
|
400,000 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
0 |
% |
Abdallah Farrukh |
|
|
500,000 |
(34) |
|
|
100,000 |
|
|
|
400,000 |
|
|
|
1.29 |
% |
Phil Wade |
|
|
120,000 |
(35) |
|
|
80,000 |
|
|
|
40,000 |
|
|
|
* |
|
Rupert White |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
% |
Margus Ehatamm and
Sarah Ehatamm General
Partnership (4) |
|
|
60,000 |
(36) |
|
|
40,000 |
|
|
|
20,000 |
|
|
|
* |
|
Margus Ehatamm |
|
|
120,000 |
(37) |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
* |
|
Phillip T. Cole &
Josephine M. Cole |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Wyvern Master Fund (5) |
|
|
1,700,000 |
|
|
|
1,700,000 |
|
|
|
0 |
|
|
|
0 |
% |
Brandon Fradd |
|
|
260,000 |
|
|
|
260,000 |
|
|
|
0 |
|
|
|
0 |
% |
Han Solutions LLC (6) |
|
|
540,000 |
|
|
|
540,000 |
|
|
|
0 |
|
|
|
0 |
% |
Pharmacy Ventures, LLC
(7) |
|
|
400,000 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
0 |
% |
James Kunugi |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Vincent Polito |
|
|
44,000 |
|
|
|
44,000 |
|
|
|
0 |
|
|
|
0 |
% |
Super-tek, Inc. (8) |
|
|
971,146 |
(38) |
|
|
168,000 |
|
|
|
803,146 |
|
|
|
2.60 |
% |
George Korkos (40) |
|
|
200,000 |
(39) |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
* |
|
Steven Lipkin |
|
|
48,000 |
|
|
|
48,000 |
|
|
|
0 |
|
|
|
0 |
% |
Murdo M. Grant |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares of |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Number of Shares |
|
|
Number Of Shares To |
|
|
Approximate |
|
|
|
Beneficially Owned |
|
|
Registered and To |
|
|
Be Beneficially |
|
|
Percentage of |
|
Name of Selling |
|
Prior to the |
|
|
Be Sold In This |
|
|
Owned After The |
|
|
Shares To Be Owned |
|
Stockholders (1) |
|
Offering (2) |
|
|
Offering |
|
|
Offering |
|
|
After the Offering |
|
William L. Davis &
Elizabeth Schulz Davis |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
% |
Anthony Dimiceli |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Robert E. Bellus &
MaryAnn Bellus |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
% |
Robert J. Wolffe |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
David Remke |
|
|
80,000 |
|
|
|
80,000 |
|
|
|
0 |
|
|
|
0 |
% |
Michael K. Clark |
|
|
400,000 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
0 |
% |
Shoubai Li & Xiaojing
Li |
|
|
420,000 |
(40) |
|
|
400,000 |
|
|
|
20,000 |
|
|
|
* |
|
Irwin Samelman Family
Trust (9) |
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
0 |
|
|
|
0 |
% |
Andy Fife |
|
|
112,000 |
|
|
|
112,000 |
|
|
|
0 |
|
|
|
0 |
% |
Xuan Shirley Li |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
0 |
|
|
|
0 |
% |
Jeff Conklin |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
% |
Warberg Opportunistic
Trading Fund, LP (10) |
|
|
300,000 |
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
% |
Stephen Slawson |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
James D. Wilson |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Peter Bowden |
|
|
634,452 |
(41) |
|
|
200,000 |
|
|
|
434,452 |
|
|
|
1.41 |
% |
Denis Bowden |
|
|
623,665 |
(42) |
|
|
200,000 |
|
|
|
423,665 |
|
|
|
1.37 |
% |
Robert Bellus |
|
|
240,000 |
(43) |
|
|
40,000 |
|
|
|
200,000 |
|
|
|
* |
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares of |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Number of Shares |
|
|
Number Of Shares To |
|
|
Approximate |
|
|
|
Beneficially Owned |
|
|
Registered and To |
|
|
Be Beneficially |
|
|
Percentage of |
|
Name of Selling |
|
Prior to the |
|
|
Be Sold In This |
|
|
Owned After The |
|
|
Shares To Be Owned |
|
Stockholders (1) |
|
Offering (2) |
|
|
Offering |
|
|
Offering |
|
|
After the Offering |
|
Tao Zhou |
|
|
956,475 |
(44) |
|
|
400,000 |
|
|
|
556,475 |
|
|
|
1.80 |
% |
Zhou Qun |
|
|
600,000 |
|
|
|
600,000 |
|
|
|
0 |
|
|
|
0 |
% |
Bowden Transportation
Svces Ret (11) |
|
|
1,408,872 |
(45) |
|
|
400,000 |
|
|
|
1,008,872 |
|
|
|
3.26 |
% |
Larry Kitchel |
|
|
80,000 |
|
|
|
80,000 |
|
|
|
0 |
|
|
|
0 |
% |
Larry Kitchel & Conna
Kitchel |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
% |
Pierre Matthews |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Basu Bioscience (12) |
|
|
1,450,000 |
(46) |
|
|
800,000 |
|
|
|
650,000 |
|
|
|
2.10 |
% |
Curtis Ballard |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
0 |
|
|
|
0 |
% |
Po Shin Wong |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
% |
Charanjit Singh |
|
|
80,000 |
|
|
|
80,000 |
|
|
|
0 |
|
|
|
0 |
% |
Daryl S. Hersch (13) |
|
|
115,000 |
(47) |
|
|
100,000 |
|
|
|
15,000 |
|
|
|
* |
|
Bette Gasarch |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
% |
Steven W. Lefkowitz |
|
|
500,000 |
(48) |
|
|
300,000 |
|
|
|
200,000 |
|
|
|
* |
|
James D. Wilson Trust
(14) |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
James P. Westbrook |
|
|
153,333 |
(49) |
|
|
40,000 |
|
|
|
113,333 |
|
|
|
* |
|
Mark A. Walkotten & Susan M. Walkotten |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Sanjay Basu |
|
|
120,000 |
|
|
|
120,000 |
|
|
|
0 |
|
|
|
0 |
% |
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares of |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Number of Shares |
|
|
Number Of Shares To |
|
|
Approximate |
|
|
|
Beneficially Owned |
|
|
Registered and To |
|
|
Be Beneficially |
|
|
Percentage of |
|
Name of Selling |
|
Prior to the |
|
|
Be Sold In This |
|
|
Owned After The |
|
|
Shares To Be Owned |
|
Stockholders (1) |
|
Offering (2) |
|
|
Offering |
|
|
Offering |
|
|
After the Offering |
|
Jeffrey Reich |
|
|
350,000 |
(50) |
|
|
300,000 |
|
|
|
50,000 |
|
|
|
* |
|
Investor Company FBO
Rosalind Capital
Partners L.P. (15) |
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
0 |
|
|
|
0 |
% |
Investor Company FBO
Rosalind Master Fund
L.P. (16) |
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
0 |
|
|
|
0 |
% |
Laura Campbell |
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
% |
Jane Scotti |
|
|
800,000 |
|
|
|
800,000 |
|
|
|
0 |
|
|
|
0 |
% |
Zak W. Elgamal |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
0 |
|
|
|
0 |
% |
Investor Company FBO
Biohedge Holdings
Limited (17) |
|
|
1,400,000 |
|
|
|
1,400,000 |
|
|
|
0 |
|
|
|
0 |
% |
Fergus McGovern |
|
|
400,000 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
0 |
% |
LMA SPC for and on
Behalf of the MAP87
Segregated Portfolio
(18) |
|
|
2,554,511 |
(51) |
|
|
1,600,000 |
|
|
|
954,511 |
|
|
|
3.09 |
% |
Akanthos Arbitrage
Master Fund LP (19) |
|
|
5,099,554 |
(52) |
|
|
2,400,000 |
|
|
|
2,699,554 |
|
|
|
8.73 |
% |
AIS Re Ltd. (20) |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
0 |
|
|
|
0 |
% |
Bruce Gustafson |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
% |
Health Alliance
Network Defined
Benefit Plan |
|
|
660,000 |
(53) |
|
|
140,000 |
|
|
|
520,000 |
|
|
|
1.68 |
% |
Context Partners Fund
L.P. (21) |
|
|
542,357 |
(54) |
|
|
400,000 |
|
|
|
142,357 |
|
|
|
* |
|
Focused Managed
Accounts Fund Ltd.
(Focus Context
Segregated Acct) (22) |
|
|
400,000 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
0 |
% |
Rosalind Offshore
Holdings, Inc. (23) |
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
0 |
|
|
|
0 |
% |
Karl Woods (24) |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
% |
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares of |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Number of Shares |
|
|
Number Of Shares To |
|
|
Approximate |
|
|
|
Beneficially Owned |
|
|
Registered and To |
|
|
Be Beneficially |
|
|
Percentage of |
|
Name of Selling |
|
Prior to the |
|
|
Be Sold In This |
|
|
Owned After The |
|
|
Shares To Be Owned |
|
Stockholders (1) |
|
Offering (2) |
|
|
Offering |
|
|
Offering |
|
|
After the Offering |
|
Gavin Scotti, Sr. |
|
|
400,000 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
0 |
% |
Jaime Vargas |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
% |
|
|
|
* |
|
Stockholder owns less than 1%. |
|
(1) |
|
The Selling Stockholders and any broker-dealers or agents that are involved in selling these
shares are deemed to be underwriters within the meaning of the Securities Act for such sales. An
underwriter is a person who has purchased shares from an issuer with a view towards distributing
the shares to the public. In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares purchased by them may be considered to be underwriting
commissions or discounts under the Securities Act. |
|
(2) |
|
The number of shares listed includes both the shares underlying our Series D Preferred stock
and the shares underlying the warrants acquired in our Series D Preferred stock offering. |
|
(3) |
|
Jeffrey Pressman holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(4) |
|
Margus Ehatamm and Sarah Ehatamm hold voting and dispositive power over the securities held by
the selling stockholder. |
|
(5) |
|
Brandon Fradd holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(6) |
|
Roberta Rosenast holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(7) |
|
Anthony Milone and Gavin Scotti hold voting and dispositive power over the securities held by
the selling stockholder. |
|
(8) |
|
Robert Sagarino holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(9) |
|
Irwin Samelman, as Trustee of the Irwin Samelman Family Trust, holds voting and dispositive
power over the securities held by the selling stockholder. |
|
(10) |
|
Daniel I. Warsh and Jonathan Blumberg hold voting and dispositive power over the securities
held by the selling stockholder. |
|
(11) |
|
Peter Bowden holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(12) |
|
Shekhar K. Basu holds voting and dispositive power over the securities held by the selling
stockholder. |
|
|
(13) |
|
Daryl S. Hersch is the principal owner of Celadon Financial
Group, LLC. The selling security holder purchased the securities in
the ordinary course of business; and at the time of the purchase of
the securities to be resold, the selling security holder had no
agreement or understanding, directly or indirectly, with any person
to distribute the securities. |
|
|
(14) |
|
James D. Wilson, as Trustee of the James D. Wilson Trust, holds voting and dispositive power
over the securities held by the selling stockholder. |
|
(15) |
|
Steven Salamon holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(16) |
|
Steven Salamon holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(17) |
|
Steven Salamon holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(18) |
|
Michael Kao holds voting and dispositive power over the securities held by the selling
stockholder. |
65
|
|
|
(19) |
|
Michael Kao holds voting and dispositive power over the securities held by the selling
stockholder. |
|
(20) |
|
Steven Lefkowitz, Robert Chistie, David Kalm. Alan Lyons, Frank Evans, Tom Axon and David
Sykes hold voting and dispositive power over the securities held by the selling stockholder. |
|
(21) |
|
Michael S. Rosen and William D. Fertig hold voting and dispositive power over the securities
held by the selling stockholder. |
|
(22) |
|
Michael S. Rosen and William D. Fertig hold voting and dispositive power over the securities
held by the selling stockholder. |
|
(23) |
|
Steven Salamon holds voting and dispositive power over the securities held by the selling
stockholder. |
|
|
(24) |
|
Karl Woods is a registered representative with Nationwide
Financial Services. The selling security holder purchased the securities in
the ordinary course of business; and at the time of the purchase of
the securities to be resold, the selling security holder had no
agreement or understanding, directly or indirectly, with any person
to distribute the securities. |
|
|
(25) |
|
Includes (i) 50,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 50,000 shares of common stock that were acquired in our Series B offering. |
|
(26) |
|
Includes (i) 60,0000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 60,000 shares of common stock that were acquired in our Series B offering. |
|
(27) |
|
Includes (i) 200,000 shares underlying our Series B Preferred stock (ii) warrants to purchase
200,000 shares of common stock that were acquired in our Series B offering and (iii) 166,667 shares
of common stock. |
|
(28) |
|
Includes (i) 50,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 50,000 shares of common stock acquired in our Series B offering. |
|
(29) |
|
Includes (i) 40,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 40,000 shares of common stock acquired in our Series B offering. |
|
(30) |
|
Includes (i) 50,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 50,000 shares of common stock acquired in our Series B offering. |
|
(31) |
|
Includes (i) 50,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 50,000 shares of common stock acquired in our Series B offering. |
|
(32) |
|
Includes (i) 50,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 50,000 shares of common stock acquired in our Series B offering. |
|
(33) |
|
Includes (i) 20,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 20,000 shares of common stock acquired in our Series B offering. |
|
(34) |
|
Includes (i) 200,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 200,000 shares of common stock acquired in our Series B offering. |
|
(35) |
|
Includes (i) 20,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 20,000 shares of common stock acquired in our Series B offering. |
|
(36) |
|
Includes 20,000 shares of common stock. |
|
(37) |
|
Includes (i) 30,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 30,000 shares of common stock acquired in our Series B offering. |
|
(38) |
|
Includes (i) 271,333 shares acquired in our March 2, 2010 offering and (ii) warrants to
purchase 531,813 shares of common stock acquired in our March 2, 2010 offering. |
66
|
|
|
(39) |
|
George Korkos is a director of the Company. Includes an option to purchase 100,000 shares of
common stock at $.62 per share and 200,000 shares of common stock at
$.82 per share. |
|
(40) |
|
Includes 20,000 shares of Common Stock held in an IRA account. |
|
(41) |
|
Includes (i) 234,452 shares of common stock and (ii) 200,000 shares of restricted stock. |
|
(42) |
|
Includes (i) 223,665 shares of common stock and (ii) 200,000 shares of restricted stock. |
|
(43) |
|
Includes (i) 100,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 100,000 shares of common stock acquired in our Series B offering. |
|
(44) |
|
Includes (i) 375,000 shares underlying our Series A Preferred stock, (ii) warrants to purchase
93,750 shares of common stock acquired in our Series A offering, (iii) 56,142 shares of common
stock obtained in our Dip Financing and (iv) 31,583 shares of common stock obtained in our Exit
Financing. |
|
(45) |
|
Includes (i) 875,539 shares of common stock and (ii) 133,333 shares of restricted stock. |
|
(46) |
|
Includes (i) 200,000 shares underlying our Series A Preferred stock, (ii) warrants to purchase
50,000 shares of common stock acquired in our Series A offering, (iii) 200,000 shares underlying
our Series B Preferred stock and (iv) warrants to purchase 200,000 shares of common stock acquired
in our Series B offering. |
|
(47) |
|
Includes 15,000 shares of common stock. |
|
(48) |
|
Includes (i) 100,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 100,000 shares of common stock acquired in our Series B offering. |
|
(49) |
|
Includes (i) 40,000 shares underlying our Series B Preferred stock and (ii) warrants to
purchase 40,000 shares of common stock acquired in our Series B offering. |
|
(50) |
|
Includes 50,000 shares of our common stock. |
|
(51) |
|
Includes (i) 436,370 shares of our common stock and (ii) warrants to purchase 518,141 shares
of common stock. |
|
(52) |
|
Includes (i) 1,204,195 shares of our common stock and (ii) warrants to purchase 1,495,359
shares of common stock. |
|
(53) |
|
Includes (i) 200,000 shares underlying our Series B Preferred stock, (ii) warrants to purchase
200,000 shares of common stock acquired in our Series B offering, (iii) 60,000 shares acquired in
our March 2, 2010 offering and (iv) warrants to purchase 60,000 shares of common stock acquired in
our March 2, 2010 offering. |
|
(54) |
|
Includes 142,357 shares of our common stock. |
67
In addition to the information set forth above, the table below presents the following
information regarding the Selling Stockholders:
|
|
|
|
the percentage of the overall offering made by each Selling Stockholder; |
|
|
|
|
|
|
the date on which and the manner in which each Selling Stockholder received the
shares and/or the overlying securities; |
|
|
|
|
|
|
the relationship of each Selling Stockholder with the Company, including whether
the Selling Stockholder is an affiliate of the Company; |
|
|
|
|
|
|
any relationships among the Selling Stockholders; |
|
|
|
|
|
|
the dollar value of the shares registered in relation to the proceeds that the
Company received from the Selling Stockholders for the securities, excluding amounts
of proceeds that were returned (or will be returned) to the Selling Stockholders
and/or their affiliates in fees or other payments; and |
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whether or not any of the Selling Stockholders is in the business of buying and
selling securities. |
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Dollar Value of the |
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Shares Registered |
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in Relation to the |
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Proceeds that the |
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Company Received |
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from the Selling |
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Stockholders for |
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the Securities, |
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Excluding Amounts |
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of Proceeds that |
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were Returned (or |
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Will be Returned) |
|
Whether or Not any |
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Date and Manner in |
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to the Selling |
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of the Selling |
|
|
Percentage of the |
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which each Selling |
|
Relationship of |
|
Stockholders and/or |
|
Stockholders is in |
|
|
Overall Offering |
|
Stockholder |
|
each Selling |
|
their Affiliates in |
|
the Business of |
Name of Selling |
|
Made by each |
|
Received the Shares |
|
Stockholder with |
|
Fees or Other |
|
Buying and Selling |
Stockholders |
|
Selling Stockholder |
|
(17) |
|
the Company |
|
Payments (18) |
|
Securities |
Martin East & Michelle East JTWROS (1) |
|
|
1.16% |
|
December 8, 2010 and January 21, 2011 |
|
None |
|
$ |
900 |
|
|
No |
Ravi Bhardwaj |
|
|
1.29% |
|
December 8, 2010 |
|
None |
|
|
-$4,000 |
|
|
No |
Phillip OWilliams |
|
Less than 1% |
|
December 15, 2010 |
|
None |
|
$ |
0 |
|
|
No |
Elliot Sabbagh |
|
|
1.29% |
|
December 15, 2010 and January 21, 2011 |
|
None |
|
$ |
7,000 |
|
|
No |
Marat Shlimov |
|
Less than 1% |
|
December 15, 2010 |
|
None |
|
|
0 |
|
|
No |
Anthony V. Milone |
|
Less than 1% |
|
December 15, 2010 and February 9, 2011 |
|
None |
|
$ |
12,600 |
|
|
No |
68
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|
Dollar Value of the |
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|
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|
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|
Shares Registered |
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|
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in Relation to the |
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|
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|
|
|
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|
|
|
Proceeds that the |
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|
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|
|
|
|
|
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|
|
|
|
Company Received |
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from the Selling |
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|
Stockholders for |
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|
|
|
|
|
|
|
|
|
|
|
the Securities, |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Amounts |
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|
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|
|
|
|
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|
|
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|
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of Proceeds that |
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|
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|
|
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were Returned (or |
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|
|
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|
|
|
|
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|
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Will be Returned) |
|
Whether or Not any |
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|
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|
|
Date and Manner in |
|
|
|
|
|
to the Selling |
|
of the Selling |
|
|
Percentage of the |
|
which each Selling |
|
Relationship of |
|
Stockholders and/or |
|
Stockholders is in |
|
|
Overall Offering |
|
Stockholder |
|
each Selling |
|
their Affiliates in |
|
the Business of |
Name of Selling |
|
Made by each |
|
Received the Shares |
|
Stockholder with |
|
Fees or Other |
|
Buying and Selling |
Stockholders |
|
Selling Stockholder |
|
(17) |
|
the Company |
|
Payments (18) |
|
Securities |
Steven Nelson |
|
|
2.57% |
|
December 17, 2010 |
|
None |
|
$ |
40,000 |
|
|
No |
Igor Voznenko |
|
Less than 1% |
|
December 17, 2010 |
|
None |
|
$ |
2,000 |
|
|
No |
Igor Vaysbaum &
Marina Vaysbaum |
|
Less than 1% |
|
December 17, 2010 |
|
None |
|
$ |
2,000 |
|
|
No |
Janet Ballard (2) |
|
Less than 1% |
|
December 17, 2010 |
|
None |
|
$ |
10,000 |
|
|
No |
Richard Gaddy |
|
Less than 1% |
|
December 17, 2010 |
|
None |
|
$ |
2,000 |
|
|
No |
Chen Zhang |
|
|
6.44% |
|
December 27, 2010 |
|
None |
|
$ |
50,000 |
|
|
No |
Baoru Wang |
|
|
6.44% |
|
December 27, 2010 |
|
None |
|
$ |
50,000 |
|
|
No |
Roy Whitehead |
|
|
1.29% |
|
December 27, 2010 and January 28, 2011 |
|
None |
|
$ |
11,000 |
|
|
No |
Donald B. Hilliker,
Jr. |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
2,100 |
|
|
No |
Bernard Pallut |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
1,400 |
|
|
No |
Steve & Mollie Crampin |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
4,900 |
|
|
No |
Judy Tenenbaum |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
700 |
|
|
No |
Robert C. Howard &
Ellen Bell Howard (3) |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
3,500 |
|
|
No |
Douglas Lehman &
Staci Lehman (4) |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
7,000 |
|
|
No |
Jeremiah Bradley |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
1,400 |
|
|
No |
Stephen Saffery |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
2,100 |
|
|
No |
John M. Maslowski |
|
Less than 1% |
|
January 21, 2011 |
|
Officer |
|
$ |
840 |
|
|
No |
69
|
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|
|
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|
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|
|
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|
|
|
|
|
|
|
Dollar Value of the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Registered |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Relation to the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds that the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Received |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from the Selling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Securities, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Proceeds that |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
were Returned (or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Will be Returned) |
|
Whether or Not any |
|
|
|
|
|
|
Date and Manner in |
|
|
|
|
|
to the Selling |
|
of the Selling |
|
|
Percentage of the |
|
which each Selling |
|
Relationship of |
|
Stockholders and/or |
|
Stockholders is in |
|
|
Overall Offering |
|
Stockholder |
|
each Selling |
|
their Affiliates in |
|
the Business of |
Name of Selling |
|
Made by each |
|
Received the Shares |
|
Stockholder with |
|
Fees or Other |
|
Buying and Selling |
Stockholders |
|
Selling Stockholder |
|
(17) |
|
the Company |
|
Payments (18) |
|
Securities |
Ashok Mathias |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
7,000 |
|
|
No |
Raymond Harwood |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
2,100 |
|
|
No |
Terminal Ventures |
|
|
1.29% |
|
January 21, 2011 |
|
None |
|
$ |
14,000 |
|
|
No |
Abdallah Farrukh |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
3,500 |
|
|
No |
Phil Wade |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
2,800 |
|
|
No |
Rupert White |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
2,100 |
|
|
No |
Margus Ehatamm and
Sarah Ehatamm General
Partnership (5) |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
1,400 |
|
|
No |
Margus Ehatamm (5) |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
2,100 |
|
|
No |
Phillip T. Cole &
Josephine M. Cole (6) |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
1,400 |
|
|
No |
Wyvern Master Fund |
|
|
5.47% |
|
January 21, 2011 |
|
None |
|
$ |
59,500 |
|
|
No |
Brandon Fradd |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
9,100 |
|
|
No |
Han Solutions LLC |
|
|
1.74% |
|
January 21, 2011 and February 9, 2011 |
|
None |
|
$ |
26,600 |
|
|
No |
Pharmacy Ventures, LLC |
|
|
1.29% |
|
January 21, 2011 and February 9, 2011 |
|
None |
|
$ |
25,000 |
|
|
No |
James Kunugi |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
1,400 |
|
|
No |
Vincent Polito |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
1,540 |
|
|
No |
Super-tek, Inc. |
|
Less than 1% |
|
January 21, 2011 |
|
None |
|
$ |
5,880 |
|
|
No |
George Korkos |
|
Less than 1% |
|
January 21, 2011 |
|
Director |
|
$ |
3,500 |
|
|
No |
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar Value of the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Registered |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Relation to the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds that the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Received |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from the Selling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Securities, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Proceeds that |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
were Returned (or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Will be Returned) |
|
Whether or Not any |
|
|
|
|
|
|
Date and Manner in |
|
|
|
|
|
to the Selling |
|
of the Selling |
|
|
Percentage of the |
|
which each Selling |
|
Relationship of |
|
Stockholders and/or |
|
Stockholders is in |
|
|
Overall Offering |
|
Stockholder |
|
each Selling |
|
their Affiliates in |
|
the Business of |
Name of Selling |
|
Made by each |
|
Received the Shares |
|
Stockholder with |
|
Fees or Other |
|
Buying and Selling |
Stockholders |
|
Selling Stockholder |
|
(17) |
|
the Company |
|
Payments (18) |
|
Securities |
Steven Lipkin |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
1,440 |
|
|
No |
Murdo M. Grant |
|
Less than 1% |
|
January 28, 2011 and February 9, 2011 |
|
None |
|
$ |
1,440 |
|
|
No |
William L. Davis &
Elizabeth Schulz
Davis (7) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
3,000 |
|
|
No |
Anthony Dimiceli |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
1,200 |
|
|
No |
Robert E. Bellus &
MaryAnn Bellus (8) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
3,000 |
|
|
No |
Robert J. Wolffe |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
1,200 |
|
|
No |
David Remke |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
2,400 |
|
|
No |
Michael K. Clark |
|
|
1.29% |
|
January 28, 2011 |
|
None |
|
$ |
12,000 |
|
|
No |
Shoubai Li & Xiaojing
Li (9) |
|
|
1.29% |
|
January 28, 2011 |
|
None |
|
$ |
12,000 |
|
|
No |
Irwin Samelman Family
Trust |
|
|
3.22% |
|
January 28, 2011 |
|
None |
|
$ |
30,000 |
|
|
No |
Andy Fife |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
3,360 |
|
|
No |
Xuan Shirley Li (9) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
6,000 |
|
|
No |
Jeff Conklin |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
3,000 |
|
|
No |
Warberg Opportunistic
Trading Fund, LP |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
9,000 |
|
|
No |
Stephen Slawson |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
1,200 |
|
|
No |
James D. Wilson |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
1,200 |
|
|
No |
Peter Bowden (10) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
6,000 |
|
|
No |
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar Value of the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Registered |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Relation to the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds that the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Received |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from the Selling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Securities, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Proceeds that |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
were Returned (or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Will be Returned) |
|
Whether or Not any |
|
|
|
|
|
|
Date and Manner in |
|
|
|
|
|
to the Selling |
|
of the Selling |
|
|
Percentage of the |
|
which each Selling |
|
Relationship of |
|
Stockholders and/or |
|
Stockholders is in |
|
|
Overall Offering |
|
Stockholder |
|
each Selling |
|
their Affiliates in |
|
the Business of |
Name of Selling |
|
Made by each |
|
Received the Shares |
|
Stockholder with |
|
Fees or Other |
|
Buying and Selling |
Stockholders |
|
Selling Stockholder |
|
(17) |
|
the Company |
|
Payments (18) |
|
Securities |
Denis Bowden (10) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
6,000 |
|
|
No |
Robert Bellus (8) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
1,200 |
|
|
No |
Tao Zhou |
|
|
1.29% |
|
January 28, 2011 |
|
None |
|
$ |
12,000 |
|
|
No |
Zhou Qun |
|
|
1.93% |
|
January 28, 2011 and March 1, 2011 |
|
None |
|
$ |
39,000 |
|
|
No |
Bowden Transportation
Svces Ret (10) |
|
|
1.29% |
|
January 28, 2011 |
|
None |
|
$ |
12,000 |
|
|
No |
Larry Kitchel (11) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
2,400 |
|
|
No |
Larry Kitchel & Conna
Kitchel (11) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
1,800 |
|
|
No |
Pierre Matthews |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
1,200 |
|
|
No |
Basu Bioscience (12) |
|
|
2.58% |
|
January 28, 2011 and February 9, 2011 |
|
None |
|
$ |
48,000 |
|
|
No |
Curtis Ballard (2) |
|
Less than 1% |
|
January 28, 2011 |
|
None |
|
$ |
6,000 |
|
|
No |
Po Shin Wong |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
9,000 |
|
|
No |
Charanjit Singh |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
7,200 |
|
|
No |
Daryl S. Hersch |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
9,000 |
|
|
Yes (19) |
Bette Gasarch |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
9,000 |
|
|
No |
Steven W. Lefkowitz |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
27,000 |
|
|
No |
James D. Wilson Trust |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
3,600 |
|
|
No |
James P. Westbrook |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
3,600 |
|
|
No |
72
|
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|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar Value of the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Registered |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Relation to the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds that the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Received |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from the Selling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Securities, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Proceeds that |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
were Returned (or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Will be Returned) |
|
Whether or Not any |
|
|
|
|
|
|
Date and Manner in |
|
|
|
|
|
to the Selling |
|
of the Selling |
|
|
Percentage of the |
|
which each Selling |
|
Relationship of |
|
Stockholders and/or |
|
Stockholders is in |
|
|
Overall Offering |
|
Stockholder |
|
each Selling |
|
their Affiliates in |
|
the Business of |
Name of Selling |
|
Made by each |
|
Received the Shares |
|
Stockholder with |
|
Fees or Other |
|
Buying and Selling |
Stockholders |
|
Selling Stockholder |
|
(17) |
|
the Company |
|
Payments (18) |
|
Securities |
Mark A. Walkotten &
Susan M. Walkotten
(13) |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
3,600 |
|
|
No |
Sanjay Basu (12) |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
10,800 |
|
|
No |
Jeffrey Reich |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
27,000 |
|
|
No |
Investor Company FBO
Rosalind Capital
Partners L.P. (14) |
|
|
3.22% |
|
February 9, 2011 |
|
None |
|
$ |
90,000 |
|
|
No |
Investor Company FBO
Rosalind Master Fund
L.P. (14) |
|
|
3.22% |
|
February 9, 2011 |
|
None |
|
$ |
90,000 |
|
|
No |
Laura Campbell |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
5,400 |
|
|
No |
Jane Scotti (15) |
|
|
2.58% |
|
February 9, 2011 |
|
None |
|
$ |
72,000 |
|
|
No |
Zak W. Elgamal |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
18,000 |
|
|
No |
Investor Company FBO
Biohedge Holdings
Limited |
|
|
4.51% |
|
February 9, 2011 |
|
None |
|
$ |
126,000 |
|
|
No |
Fergus McGovern |
|
|
1.29% |
|
February 9, 2011 |
|
None |
|
$ |
36,000 |
|
|
No |
LMA SPC for and on
Behalf of the MAP87
Segregated Portfolio |
|
|
5.15% |
|
February 9, 2011 |
|
None |
|
$ |
144,000 |
|
|
No |
Akanthos Arbitrage
Master Fund LP |
|
|
7.72% |
|
February 9, 2011 |
|
None |
|
$ |
216,000 |
|
|
No |
AIS Re Ltd. |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
18,000 |
|
|
No |
Bruce Gustafson |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
3,600 |
|
|
No |
Health Alliance
Network Defined
Benefit Plan |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
12,600 |
|
|
No |
Context Partners Fund
L.P. (16) |
|
|
1.29% |
|
February 9, 2011 |
|
None |
|
$ |
36,000 |
|
|
No |
Focused Managed
Accounts Fund Ltd.
(Focus Context
Segregated Acct) (16) |
|
|
1.29% |
|
February 9, 2011 |
|
None |
|
$ |
36,000 |
|
|
No |
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar Value of the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Registered |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Relation to the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds that the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Received |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from the Selling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Securities, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Proceeds that |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
were Returned (or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Will be Returned) |
|
Whether or Not any |
|
|
|
|
|
|
Date and Manner in |
|
|
|
|
|
to the Selling |
|
of the Selling |
|
|
Percentage of the |
|
which each Selling |
|
Relationship of |
|
Stockholders and/or |
|
Stockholders is in |
|
|
Overall Offering |
|
Stockholder |
|
each Selling |
|
their Affiliates in |
|
the Business of |
Name of Selling |
|
Made by each |
|
Received the Shares |
|
Stockholder with |
|
Fees or Other |
|
Buying and Selling |
Stockholders |
|
Selling Stockholder |
|
(17) |
|
the Company |
|
Payments (18) |
|
Securities |
Rosalind Offshore
Holdings, Inc. (14) |
|
|
3.22% |
|
February 9, 2011 |
|
None |
|
$ |
90,000 |
|
|
No |
Karl Woods |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
9,000 |
|
|
Yes (20) |
Gavin Scotti, Sr. (15) |
|
|
1.29% |
|
February 9, 2011 |
|
None |
|
$ |
36,000 |
|
|
No |
Jaime Vargas |
|
Less than 1% |
|
February 9, 2011 |
|
None |
|
$ |
9,000 |
|
|
No |
|
|
|
|
(1) |
|
Martin East and Michelle East are husband and wife. |
|
|
|
(2) |
|
Janet Ballard and Curtis Ballard are ex-husband and wife. |
|
|
|
(3) |
|
Robert C. Howard and Ellen Bell Howard are husband and wife. |
|
|
|
(4) |
|
Douglas and Staci Lehman are husband and wife. |
|
|
|
(5) |
|
Margus Ehatamm is a partner in the Margus Ehatamm and Sarah Ehatamm General Partnership. |
|
|
|
(6) |
|
Phillip T. Cole and Josephine M. Cole are husband and wife. |
|
|
|
(7) |
|
William L. Davis & Elizabeth Schulz Davis are husband and wife. |
|
|
|
(8) |
|
Robert E. Bellus and MaryAnn Bellus are husband and wife. |
|
|
|
(9) |
|
Xuan Shirley Li is Shoubai & Xiaojing Lis daughter. Shoubai & Xioajing Li are husband and
wife. |
|
|
|
(10) |
|
Peter Bowden and Denis Bowden are brothers, and they are both trustees of Bowden
Transportation Svces Ret. |
|
|
|
(11) |
|
Larry Kitchel and Conna Kitchel are husband and wife. |
|
|
|
(12) |
|
Sanjay Basus brother is the owner of Basu Bioscience. |
|
|
|
(13) |
|
Mark A. Walkotten and Susan M. Walkotten are husband and wife. |
|
|
|
(14) |
|
Investor Company FBO Rosalind Capital Partners L.P., Investor Company FBO Rosalind Master Fund
L.P. and Rosalind Offshore Holdings, Inc. are all sub-funds of the same fund. |
|
|
|
(15) |
|
Jane Scotti is Gavin Scotti, Sr.s daughter-in-law. |
|
|
|
(16) |
|
Context Partners Fund L.P. and Focused Managed Accounts Fund Ltd. (Focus Context Segregated
Acct) are both sub funds of the same fund. |
|
74
|
|
|
|
(17) |
|
All of the shares were issued pursuant to a private placement. |
|
|
|
(18) |
|
Calculated as follows: the difference between the conversion price of $.50 per share and the
market price of the common stock on the date of purchase, multiplied by the number of shares of
common stock underlying the Series D Preferred. This amount does not include the shares of common
stock underlying the warrants. |
|
|
|
(19) |
|
Daryl S. Hersch is a principal of Celadon Financial Group, LLC. The selling stockholder
purchased the securities in the ordinary course of business and at the time of the purchase of the
securities to be resold, the selling stockholder had no agreement or understanding, directly or
indirectly, with any person to distribute the securities. |
|
|
|
(20) |
|
Karl Woods is an affiliate of Nationwide Financial Services. The selling stockholder
purchased the securities in the ordinary course of business and at the time of the purchase of the
securities to be resold, the selling stockholder had no agreement or understanding, directly or
indirectly, with any person to distribute the securities. |
|
PLAN OF DISTRIBUTION
Each Selling Stockholder of the common stock and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares of common stock
covered hereby on the principal trading market or any other stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the following methods when
selling shares:
|
|
|
ordinary brokerage transactions and transactions in which the broker-dealer solicits
purchasers; |
|
|
|
|
block trades in which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the transaction; |
75
|
|
|
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account; |
|
|
|
|
an exchange distribution in accordance with the rules of the applicable exchange; |
|
|
|
|
privately negotiated transactions; |
|
|
|
|
settlement of short sales entered into after the effective date of the registration
statement of which this prospectus is a part; |
|
|
|
|
in transactions through broker-dealers that agree with the Selling Stockholders to sell
a specified number of such shares at a stipulated price per share; |
|
|
|
|
through the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise; |
|
|
|
|
a combination of any such methods of sale; or |
|
|
|
|
any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission
in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with FINRA IM-2440.
In connection with the sale of the common stock or interests therein, the Selling Stockholders
may enter into hedging transactions with broker-dealers or other financial institutions, which may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The Selling Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The Selling Stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or create one or more
derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
The Selling Stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be underwriters within the meaning of the Securities Act in connection
with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it
does not have any written or oral agreement or understanding, directly or indirectly, with any
person to distribute the Common Stock. In no event shall any broker-dealer receive fees,
commissions and markups which, in the aggregate, would exceed 8%.
The Company is required to pay certain fees and expenses incurred by the Company incident to
the registration of the shares. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities under the Securities
Act.
Because Selling Stockholders may be deemed to be underwriters within the meaning of the
Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act
including Rule 172 thereunder.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the Selling Stockholders without registration and without regard to any
volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company
to be in compliance with the current public information under Rule 144 under the Securities Act or
any other rule of similar effect or (ii) all of the shares have been sold pursuant to this
prospectus or Rule 144 under the Securities Act or any other rule of similar effect. In addition,
in certain states, the resale shares of Common Stock covered hereby may not be sold unless they
have been
76
registered or qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the
distribution of the resale shares may not simultaneously engage in market making activities with
respect to the common stock for the applicable restricted period, as defined in Regulation M, prior
to the commencement of the distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations thereunder, including
Regulation M, which may limit the timing of purchases and sales of shares of the common stock by
the Selling Stockholders or any other person. We will make copies of this prospectus available to
the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to
each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the
Securities Act).
EXPERTS
The financial statements as of December 31, 2010 and 2009 and for the year ended December 31,
2010 (Successor), for the period from January 1, 2009 to August 31, 2009 (Predecessor as
described in Note 1 of the notes to the consolidated financial statements included herein) and for
the period from the Successors inception (September 1, 2009) through December 31, 2009 included in
this Prospectus and in the Registration Statement have been so included in reliance on the reports
of BDO USA, LLP, an independent registered public accounting firm. The report on the financial
statements contains an explanatory paragraph regarding the Companys ability to continue as a going
concern, appearing elsewhere herein and in the Registration Statement, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with
respect to the common stock offered in this offering. This prospectus does not contain all of the
information set forth in the registration statement. For further information with respect to us and
the common stock offered in this offering, we refer you to the registration statement and to the
attached exhibits. With respect to each such document filed as an exhibit to the registration
statement, we refer you to the exhibit for a more complete description of the matters involved.
You may inspect our registration statement and the attached exhibits and schedules without
charge at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington,
D.C. 20549. You may obtain copies of all or any part of our registration statement from the SEC
upon payment of prescribed fees. You may obtain information on the operation of the public
reference room by calling the SEC at 1-800-SEC-0330.
Our SEC filings, including the registration statement and the exhibits filed with the
registration statement, are also available from the SECs website at www.sec.gov, which contains
reports, proxy and information statements and other information regarding issuers that file
electronically with the SEC.
77
Fibrocell Science, Inc.
(A Development Stage Company)
Index to Unaudited Consolidated Financial Statements
|
|
|
|
|
|
|
PAGE |
Condensed Consolidated Successor Balance Sheets (unaudited) as of
March 31, 2011 and December 31, 2010 |
|
|
F-1 |
|
|
|
|
|
|
Condensed Consolidated Statements of Operations (unaudited) for the
three months ended March 31, 2011 and 2010 (Successor Company),
cumulative period from inception (September 1, 2009) to March 31,
2011 (Successor Company) and cumulative period from inception
(December 28, 1995) to August 31, 2009 (Predecessor Company) |
|
|
F-2 |
|
|
|
|
|
|
Condensed Consolidated Statements of Shareholders Equity (Deficit)
and Comprehensive Income (Loss) from inception (December 28, 1995) to
August 31, 2009 (Predecessor Company) and from inception (September
1, 2009) to March 31, 2011 (Successor Company) (unaudited) |
|
|
F-3 |
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows (unaudited) for the
three months ended March 31, 2011 and 2010 (Successor Company),
cumulative period from inception (September 1, 2009) to March 31,
2011 (Successor Company) and cumulative period from inception
(December 28, 1995) to August 31, 2009 (Predecessor Company) |
|
|
F-16 |
|
|
|
|
|
|
Notes to Unaudited Condensed Consolidated Financial Statements |
|
|
F-17 |
|
Fibrocell Science, Inc.
(A Development Stage Company)
Condensed Consolidated Balance Sheets
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,310,138 |
|
|
$ |
867,738 |
|
Accounts receivable, net |
|
|
172,339 |
|
|
|
229,891 |
|
Inventory, net |
|
|
299,201 |
|
|
|
258,939 |
|
Prepaid expenses and other current assets |
|
|
335,965 |
|
|
|
559,082 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
4,117,643 |
|
|
|
1,915,650 |
|
Property and equipment, net of accumulated depreciation of
$10,558 and $8,085, respectively |
|
|
36,607 |
|
|
|
21,589 |
|
Other assets |
|
|
250 |
|
|
|
250 |
|
Intangible assets |
|
|
6,340,656 |
|
|
|
6,340,656 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
10,495,156 |
|
|
$ |
8,278,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Redeemable Preferred Stock, Shareholders Deficit and
Noncontrolling Interest |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current debt |
|
$ |
32,771 |
|
|
$ |
56,911 |
|
Accounts payable |
|
|
540,929 |
|
|
|
1,096,125 |
|
Accrued expenses |
|
|
751,422 |
|
|
|
789,482 |
|
Deferred revenue |
|
|
14,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
1,339,122 |
|
|
|
1,942,518 |
|
Long-term debt |
|
|
7,564,289 |
|
|
|
7,290,881 |
|
Deferred tax liability |
|
|
2,500,000 |
|
|
|
2,500,000 |
|
Warrant liability |
|
|
19,220,324 |
|
|
|
8,171,518 |
|
Derivative liability |
|
|
8,820,108 |
|
|
|
2,120,360 |
|
Other long-term liabilities |
|
|
227,205 |
|
|
|
255,606 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
39,671,048 |
|
|
|
22,280,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock series A, $0.001 par value; 9,000 shares
authorized; 3,250 shares issued and 2,886 and 2,886 shares
outstanding, respectively |
|
|
1,338,312 |
|
|
|
1,280,150 |
|
Preferred stock series B, $0.001 par value; 9,000 shares
authorized; 4,640 shares issued and 2,693 and 4,640 shares
outstanding, respectively |
|
|
|
|
|
|
|
|
Preferred stock series B, $0.001 par value; subscription receivable |
|
|
|
|
|
|
(210,000 |
) |
Preferred stock series D, $0.001 par value; 8,000 shares
authorized; 7,779 and 1,645 shares issued and outstanding,
respectively |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fibrocell Science, Inc. shareholders deficit: |
|
|
|
|
|
|
|
|
Successor common stock, $0.001 par value; 250,000,000 shares
authorized; 24,559,097 and 20,375,500 shares issued and
outstanding, respectively |
|
|
24,559 |
|
|
|
20,376 |
|
Additional paid-in capital |
|
|
4,055,108 |
|
|
|
2,437,893 |
|
Accumulated deficit during development stage |
|
|
(35,063,900 |
) |
|
|
(17,981,530 |
) |
|
|
|
|
|
|
|
Total Fibrocell Science, Inc. shareholders deficit |
|
|
(30,984,233 |
) |
|
|
(15,523,261 |
) |
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
470,029 |
|
|
|
450,373 |
|
|
|
|
|
|
|
|
Total deficit and noncontrolling interest |
|
|
(30,514,204 |
) |
|
|
(15,072,888 |
) |
|
|
|
|
|
|
|
Total liabilities, preferred stock, shareholders deficit and
noncontrolling interest |
|
$ |
10,495,156 |
|
|
$ |
8,278,145 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-1
Fibrocell Science, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Operations
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Cumulative period |
|
|
|
Cumulative period |
|
|
|
|
|
|
|
|
|
from September 1, |
|
|
|
from December 28, |
|
|
|
For the three |
|
|
For the three |
|
|
2009 (date of |
|
|
|
1995 (date of |
|
|
|
months ended |
|
|
months ended |
|
|
inception) to |
|
|
|
inception) to |
|
|
|
March 31, 2011 |
|
|
March 31, 2010 |
|
|
March 31, 2011 |
|
|
|
August 31, 2009 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
$ |
208,636 |
|
|
$ |
209,070 |
|
|
$ |
1,474,946 |
|
|
|
$ |
4,818,994 |
|
License fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
208,636 |
|
|
|
209,070 |
|
|
|
1,474,946 |
|
|
|
|
5,078,994 |
|
Cost of sales |
|
|
97,858 |
|
|
|
100,519 |
|
|
|
782,554 |
|
|
|
|
2,279,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
110,778 |
|
|
|
108,551 |
|
|
|
692,392 |
|
|
|
|
2,799,659 |
|
Selling, general and administrative expenses |
|
|
2,354,383 |
|
|
|
2,019,913 |
|
|
|
11,578,320 |
|
|
|
|
84,805,520 |
|
Research and development expenses |
|
|
1,616,529 |
|
|
|
1,192,610 |
|
|
|
8,926,044 |
|
|
|
|
56,269,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(3,860,134 |
) |
|
|
(3,103,972 |
) |
|
|
(19,811,972 |
) |
|
|
|
(138,275,730 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
6,989,539 |
|
Reorganization items, net |
|
|
|
|
|
|
3,303 |
|
|
|
(69,174 |
) |
|
|
|
73,538,984 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
244,479 |
|
|
|
|
316,338 |
|
Warrant expense |
|
|
(6,296,330 |
) |
|
|
(1,417,244 |
) |
|
|
(7,080,646 |
) |
|
|
|
|
|
Derivative revaluation expense |
|
|
(6,620,726 |
) |
|
|
|
|
|
|
(6,620,726 |
) |
|
|
|
|
|
Interest expense |
|
|
(273,408 |
) |
|
|
(197,730 |
) |
|
|
(1,565,781 |
) |
|
|
|
(18,790,218 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before
income taxes |
|
|
(17,050,598 |
) |
|
|
(4,715,643 |
) |
|
|
(34,903,819 |
) |
|
|
|
(76,221,087 |
) |
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
|
(17,050,598 |
) |
|
|
(4,715,643 |
) |
|
|
(34,903,819 |
) |
|
|
|
(76,030,333 |
) |
Loss from discontinued operations |
|
|
(12,116 |
) |
|
|
(17,044 |
) |
|
|
(73,034 |
) |
|
|
|
(41,091,311 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(17,062,714 |
) |
|
|
(4,732,687 |
) |
|
|
(34,976,853 |
) |
|
|
|
(117,121,644 |
) |
Deemed dividend associated with beneficial
conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,423,824 |
) |
Preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,589,861 |
) |
Net (income)/loss attributable to
noncontrolling interest |
|
|
(19,656 |
) |
|
|
(15,138 |
) |
|
|
(87,047 |
) |
|
|
|
1,799,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Fibrocell Science,
Inc. common shareholders |
|
$ |
(17,082,370 |
) |
|
$ |
(4,747,825 |
) |
|
$ |
(35,063,900 |
) |
|
|
$ |
(128,335,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations-basic and
diluted |
|
$ |
(0.80 |
) |
|
$ |
(0.30 |
) |
|
$ |
(1.91 |
) |
|
|
$ |
(4.30 |
) |
Loss from discontinued operations-basic
and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.32 |
) |
Income (loss) attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
(0.01 |
) |
|
|
|
0.10 |
|
Deemed dividend associated with
beneficial conversion of preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.65 |
) |
Preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common
shareholders per common sharebasic and
diluted |
|
$ |
(0.80 |
) |
|
$ |
(0.30 |
) |
|
$ |
(1.92 |
) |
|
|
$ |
(7.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of basic and
diluted common shares outstanding |
|
|
21,230,249 |
|
|
|
15,806,989 |
|
|
|
18,237,924 |
|
|
|
|
17,678,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-2
Fibrocell Science, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Shareholders Equity (Deficit) and Comprehensive Income (Loss)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 12/28/95 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,285,291 |
|
|
$ |
2,285 |
|
|
$ |
(1,465 |
) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
820 |
|
Issuance of common stock for cash
on 11/7/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,149 |
|
|
|
11 |
|
|
|
49,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
Issuance of common stock for cash
on 11/29/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,230 |
|
|
|
2 |
|
|
|
9,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
Issuance of common stock for cash
on 12/19/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,690 |
|
|
|
7 |
|
|
|
29,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
Issuance of common stock for cash
on 12/26/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,148 |
|
|
|
11 |
|
|
|
49,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(270,468 |
) |
|
|
(270,468 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/96 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,316,508 |
|
|
$ |
2,316 |
|
|
$ |
138,504 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(270,468 |
) |
|
$ |
(129,648 |
) |
Issuance of common stock for cash
on 12/27/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,182 |
|
|
|
21 |
|
|
|
94,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,000 |
|
Issuance of common stock for
services on 9/1/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,148 |
|
|
|
11 |
|
|
|
36,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,260 |
|
Issuance of common stock for
services on 12/28/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,193 |
|
|
|
287 |
|
|
|
9,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,255 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52,550 |
) |
|
|
(52,550 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/97(Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,636,031 |
|
|
$ |
2,635 |
|
|
$ |
279,700 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(323,018 |
) |
|
$ |
(40,683 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
F-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.
F-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.
F-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.
F-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.
F-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.
F-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.
F-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.
F-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.
F-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.
F-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.
F-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 1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option
awards issued to
directors/employees 1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
324,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
324,377 |
|
Compensation expense on option
awards issued to
non-employees 1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,391 |
|
Compensation expense on shares
issued to management 2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option
awards issued to
directors/employees 2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,011 |
|
Compensation expense on option
awards issued to
non-employees 2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,206 |
|
Compensation expense on shares
issued to management 3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option
awards issued to
directors/employees 3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,231 |
|
Compensation expense on option
awards issued to
non-employees 3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,724 |
|
Compensation expense on shares
issued to management 4Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option
awards issued to
directors/employees 4Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,094 |
|
Compensation expense on option
awards issued to
non-employees 4Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,507 |
|
|
Preferred Stock Series A conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
606,667 |
|
|
|
607 |
|
|
|
363,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
364,000 |
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,931,531 |
) |
|
|
51,898 |
|
|
|
(12,879,633 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,879,633 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 12/31/10 (Successor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
20,375,498 |
|
|
$ |
20,376 |
|
|
$ |
2,437,893 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(17,981,530 |
) |
|
$ |
450,373 |
|
|
$ |
(15,072,888 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Total |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
Compensation expense on
shares issued to
management 1Q11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on
option awards issued to
directors/employees 1Q11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
995,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
995,551 |
|
Compensation expense on
option awards issued to
non-employees 1Q11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,203 |
|
Preferred Stock and
warrants exercised 1Q11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
289,599 |
|
|
|
289 |
|
|
|
241,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
241,831 |
|
Preferred Stock Series A
and B converted 1Q11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,894,000 |
|
|
|
3,894 |
|
|
|
323,919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
327,813 |
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,082,370 |
) |
|
|
19,656 |
|
|
|
(17,062,714 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,062,714 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 3/31/11 (Successor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
24,559,097 |
|
|
$ |
24,559 |
|
|
$ |
4,055,108 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(35,063,900 |
) |
|
$ |
470,029 |
|
|
$ |
(30,514,204 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-15
Fibrocell Science, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
|
|
|
period from |
|
|
|
period from |
|
|
|
|
|
|
|
|
|
September 1, |
|
|
|
December 31, |
|
|
|
For the three |
|
|
For the three |
|
|
2009 (date of |
|
|
|
1995 (date of |
|
|
|
months ended |
|
|
months ended |
|
|
inception) to |
|
|
|
inception) to |
|
|
|
March 31, 2011 |
|
|
March 31, 2010 |
|
|
March 31, 2011 |
|
|
|
August 31, 2009 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(17,082,370 |
) |
|
$ |
(4,747,825 |
) |
|
$ |
(35,063,900 |
) |
|
|
$ |
(115,322,121 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorganization items, net |
|
|
|
|
|
|
|
|
|
|
72,477 |
|
|
|
|
(74,648,976 |
) |
Expense related to equity awards and issuance of stock |
|
|
1,051,754 |
|
|
|
360,768 |
|
|
|
2,925,513 |
|
|
|
|
10,608,999 |
|
Warrant expense |
|
|
6,296,330 |
|
|
|
1,417,244 |
|
|
|
7,080,646 |
|
|
|
|
|
|
Derivative revaluation expense |
|
|
6,620,726 |
|
|
|
|
|
|
|
6,620,726 |
|
|
|
|
|
|
Uncompensated contribution of services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
755,556 |
|
Depreciation and amortization |
|
|
2,473 |
|
|
|
852 |
|
|
|
10,558 |
|
|
|
|
9,091,990 |
|
Provision for doubtful accounts |
|
|
(8,372 |
) |
|
|
(4,948 |
) |
|
|
(62,809 |
) |
|
|
|
337,810 |
|
Provision for excessive and/or obsolete inventory |
|
|
5,387 |
|
|
|
(34,532 |
) |
|
|
(43,315 |
) |
|
|
|
259,427 |
|
Amortization of debt issue costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 loss (gain) on substantial liquidation of
foreign entity |
|
|
(859 |
) |
|
|
2,448 |
|
|
|
(8,545 |
) |
|
|
|
(2,256,408 |
) |
Net (loss) income attributable to non-controlling interest |
|
|
19,656 |
|
|
|
15,138 |
|
|
|
87,047 |
|
|
|
|
(1,799,523 |
) |
Change in operating assets and liabilities, excluding
effects of acquisition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable |
|
|
65,924 |
|
|
|
994 |
|
|
|
137,154 |
|
|
|
|
(91,496 |
) |
Decrease (increase) in other receivables |
|
|
1,674 |
|
|
|
(88 |
) |
|
|
2,381 |
|
|
|
|
218,978 |
|
Decrease (increase) in inventory |
|
|
(45,649 |
) |
|
|
818 |
|
|
|
12,733 |
|
|
|
|
(455,282 |
) |
Decrease in prepaid expenses |
|
|
221,449 |
|
|
|
110,650 |
|
|
|
19,343 |
|
|
|
|
34,341 |
|
Decrease in other assets |
|
|
|
|
|
|
|
|
|
|
4,120 |
|
|
|
|
71,000 |
|
Increase (decrease) in accounts payable |
|
|
(555,196 |
) |
|
|
(23,887 |
) |
|
|
403,528 |
|
|
|
|
57,648 |
|
Increase in accrued expenses, liabilities subject to
compromise and other liabilities |
|
|
238,320 |
|
|
|
583,164 |
|
|
|
1,068,666 |
|
|
|
|
3,311,552 |
|
Increase (decrease) in deferred revenue |
|
|
14,000 |
|
|
|
|
|
|
|
14,000 |
|
|
|
|
(50,096 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(3,154,753 |
) |
|
|
(2,319,204 |
) |
|
|
(16,719,677 |
) |
|
|
|
(148,610,040 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Agera, net of cash acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,016,520 |
) |
Purchase of property and equipment |
|
|
(17,491 |
) |
|
|
(26,335 |
) |
|
|
(47,165 |
) |
|
|
|
(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 |
|
|
(17,491 |
) |
|
|
(26,335 |
) |
|
|
(47,165 |
) |
|
|
|
(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 series
A, net |
|
|
|
|
|
|
|
|
|
|
2,870,000 |
|
|
|
|
12,931,800 |
|
Proceeds from the issuance of redeemable preferred stock series
B, net |
|
|
193,200 |
|
|
|
|
|
|
|
4,212,770 |
|
|
|
|
|
|
Proceeds from the issuance of redeemable preferred stock series
D, net |
|
|
5,642,780 |
|
|
|
|
|
|
|
7,152,180 |
|
|
|
|
|
|
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 |
|
|
(24,139 |
) |
|
|
(20,273 |
) |
|
|
(109,713 |
) |
|
|
|
(79,319 |
) |
Cash dividends paid on preferred stock |
|
|
(198,227 |
) |
|
|
|
|
|
|
(337,977 |
) |
|
|
|
(1,087,200 |
) |
Cash paid for fractional shares of preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(38,108 |
) |
Merger and acquisition expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,547 |
) |
Repurchase of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,024,280 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
5,613,614 |
|
|
|
3,449,127 |
|
|
|
19,056,660 |
|
|
|
|
170,137,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash balances |
|
|
1,030 |
|
|
|
(2,631 |
) |
|
|
10,044 |
|
|
|
|
(36,391 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
2,442,400 |
|
|
|
1,100,957 |
|
|
|
2,299,862 |
|
|
|
|
1,010,276 |
|
Cash and cash equivalents, beginning of period |
|
|
867,738 |
|
|
|
1,362,488 |
|
|
|
1,010,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
3,310,138 |
|
|
$ |
2,463,445 |
|
|
$ |
3,310,138 |
|
|
|
$ |
1,010,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor cash paid for interest |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
$ |
12,715,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor cash paid for dividends |
|
|
198,227 |
|
|
|
|
|
|
|
337,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
197,582 |
|
|
|
48,260 |
|
|
|
197,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor uncompensated contribution of services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
755,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor common stock issued for intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor common stock issued in connection with conversion
of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,814,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor equipment acquired through capital lease |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
167,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor/Predecessor financing of insurance premiums |
|
|
|
|
|
|
|
|
|
|
178,582 |
|
|
|
|
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 |
|
|
4,994,307 |
|
|
|
2,890,711 |
|
|
|
12,381,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor conversion of preferred stock into common stock |
|
|
327,813 |
|
|
|
|
|
|
|
691,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants-cashless |
|
|
241,831 |
|
|
|
|
|
|
|
241,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor accrued derivative liability |
|
|
510,810 |
|
|
|
|
|
|
|
2,631,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-16
Fibrocell Science, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 1Business and Organization
Fibrocell Science, Inc. (Fibrocell or the Company or the Successor) is the parent
company of Fibrocell Technologies (Fibrocell Tech) 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.
Note 2Development-Stage Risks and Liquidity
The Successor Company emerged from Bankruptcy in September 2009 and continues to operate as a
going concern. At March 31, 2011, the Successor Company had cash and cash equivalents of
approximately $3.3 million and working capital of $2.8 million.
As of May 9, 2011, the Company had cash and cash equivalents of approximately $2.0 million and
current liabilities of approximately $1.1 million. The Companys current monthly cash run-rate is
approximately $1.0 million. The Company is in the process of purchasing manufacturing equipment and incurring
marketing expenditures over the next couple of months to prepare the Company for launch post a possible
FDA approval. Thus, the Successor Company will need to access the capital markets in the
near future in order to fund future operations. There is no guarantee that any such required
financing will be available on terms satisfactory to the Successor Company or available at all.
These matters create uncertainty relating to its ability to continue as a going concern. The
accompanying consolidated financial statements do not reflect any adjustments relating to the
recoverability and classification of assets or liabilities that might result from the outcome of
these uncertainties.
Further, if the Successor Company raises additional cash resources in the near future, it may
be raised in contemplation of or in connection with bankruptcy. In the event of a bankruptcy, it
is likely that its common stock and common stock equivalents will become worthless and our
creditors will receive significantly less than what is owed to them.
Through March 31, 2011, 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 2011. During the quarter ended March
31, 2011, the Successor Company financed its operations primarily through its existing cash
received from external financings, but as discussed above it now requires additional financing.
There is substantial doubt about the Successor Companys ability to continue as a going concern.
The Successor Companys ability to complete additional offerings is dependent on the state of
the debt and/or equity markets at the time of any proposed offering, and such markets reception of
the Successor Company and the offering terms. The Successor Companys ability to complete an
offering is also dependent on the status of its FDA regulatory milestones and its clinical trials,
and in particular, the status of its indication for the treatment of nasolabial folds/wrinkles and
the potential approval 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 U.S. generally accepted
accounting principles (GAAP), there exists substantial doubt about the Successor Companys ability
to continue as a going concern, and its ability to continue as a going concern is contingent, among
other things, upon its ability to secure additional adequate financing or capital in the near
future. If the Successor Company does not obtain additional funding, or does not anticipate
additional funding, in the near future, it will likely enter into bankruptcy and/or cease
operations. Further, if it does raise additional cash resources in the near future, it may be
raised in contemplation of or in connection with bankruptcy. If the Successor Company enters into
bankruptcy, it is likely that its common stock and common stock equivalents will become worthless
and its creditors, including preferred stock holders, will receive significantly less than what is
owed to them.
F-17
Note 3Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with GAAP for
interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnote disclosures required by
GAAP for complete consolidated financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a fair presentation have
been included. These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Companys Annual Report on Form 10-K for the year
ended December 31, 2010, filed with the Securities and Exchange Commission (SEC). The results of
the Companys operations for any interim period are not necessarily indicative of the results of
operations for any other interim period or full year.
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.
Earnings (loss) per share data
Basic earnings (loss) per share is calculated based on the weighted average common shares
outstanding during the period. Diluted earnings per share (Diluted EPS) also gives effect to the
dilutive effect of stock options, warrants, restricted stock and convertible preferred stock
calculated based on the treasury stock method.
The Predecessor and Successor Companys potentially dilutive securities consist of potential
common shares related to stock options, warrants, restricted stock and convertible preferred stock.
Diluted EPS includes the impact of potentially dilutive securities except in periods in which
there is a loss because the inclusion of the potential common shares would be anti-dilutive. The
Company does not present diluted earnings per share for periods in which it incurred net losses as
the effect is anti-dilutive.
Note 4Agera 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.
F-18
Note 5Fair Value Measurements
The Company adopted the accounting guidance on fair value measurements for financial assets
and liabilities measured on a recurring basis. The guidance requires fair value measurements be
classified and disclosed in one of the following three categories:
|
|
Level 1: Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities; |
|
|
Level 2: Quoted prices in markets that are not active or inputs which are observable,
either directly or indirectly, for substantially the full term of the asset or liability. |
|
|
Level 3: Prices or valuation techniques that require inputs that are both significant
to the fair value measurement and unobservable (i.e., supported by little or no market
activity). |
The following fair value hierarchy table presents information about each major category of the
Companys financial assets and liability measured at fair value on a recurring basis as of March
31, 2011 and December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurement using |
|
|
|
|
|
|
|
Significant |
|
|
Significant |
|
|
|
|
|
|
Quoted prices in |
|
|
other |
|
|
unobservable |
|
|
|
|
|
|
active markets |
|
|
observable |
|
|
inputs |
|
|
|
|
|
|
(Level 1) |
|
|
inputs (Level 2) |
|
|
(Level 3) |
|
|
Total |
|
Balance at March 31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,310,138 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,310,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability |
|
$ |
|
|
|
$ |
|
|
|
$ |
19,220,324 |
|
|
$ |
19,220,324 |
|
Derivative liability |
|
|
|
|
|
|
|
|
|
|
8,820,108 |
|
|
|
8,820,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
28,040,432 |
|
|
$ |
28,040,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurement using |
|
|
|
|
|
|
|
Significant |
|
|
Significant |
|
|
|
|
|
|
Quoted prices in |
|
|
other |
|
|
unobservable |
|
|
|
|
|
|
active markets |
|
|
observable |
|
|
inputs |
|
|
|
|
|
|
(Level 1) |
|
|
inputs (Level 2) |
|
|
(Level 3) |
|
|
Total |
|
Balance at December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
867,738 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
867,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability |
|
$ |
|
|
|
$ |
|
|
|
$ |
8,171,518 |
|
|
$ |
8,171,518 |
|
Derivative liability |
|
|
|
|
|
|
|
|
|
|
2,120,360 |
|
|
|
2,120,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
10,291,878 |
|
|
$ |
10,291,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation of warrant liability measured at fair value on a recurring basis using
unobservable inputs (Level 3) is as follows:
|
|
|
|
|
|
|
Warrant |
|
|
|
Liability |
|
|
Balance at December 31, 2010 |
|
$ |
8,171,518 |
|
|
Issuance of additional warrants |
|
|
4,994,307 |
|
|
Exercise of warrants |
|
|
(241,831 |
) |
|
Change in fair value of warrant liability |
|
|
6,296,330 |
|
|
|
|
|
|
Balance at March 31, 2011 |
|
$ |
19,220,324 |
|
|
|
|
|
F-19
The fair value of the warrant liability is based on Level 3 inputs. For this liability,
the Company developed its own assumptions that do not have observable inputs or available market
data to support the fair value. See note 9 for further discussion of the warrant liability.
The reconciliation of derivative liability measured at fair value on a recurring basis using
unobservable inputs (Level 3) is as follows:
|
|
|
|
|
|
|
Derivative |
|
|
|
Liability |
|
|
Balance at December 31, 2010 |
|
$ |
2,120,360 |
|
|
Issuance of additional preferred stock |
|
|
510,810 |
|
|
Conversion of preferred stock |
|
|
(431,788 |
) |
|
Change in fair value of derivative liability |
|
|
6,620,726 |
|
|
|
|
|
|
Balance at March 31, 2011 |
|
$ |
8,820,108 |
|
|
|
|
|
The fair value of the derivative liability is based on Level 3 inputs. For this
liability, the Company developed its own assumptions that do not have observable inputs or
available market data to support the fair value. See note 8 for further discussion of the
derivative liability.
Note 6Accrued Expenses
Accrued expenses consist of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
Accrued professional fees |
|
$ |
393,392 |
|
|
$ |
413,384 |
|
Accrued compensation |
|
|
40,676 |
|
|
|
7,076 |
|
Dividend on preferred stock payable |
|
|
190,772 |
|
|
|
191,417 |
|
Accrued other |
|
|
126,582 |
|
|
|
177,605 |
|
|
|
|
|
|
|
|
Accrued expenses |
|
$ |
751,422 |
|
|
$ |
789,482 |
|
|
|
|
|
|
|
|
Note 7Commitments and Contingencies
Legal Proceedings
As of March 31, 2011, there were no legal proceedings.
Note 8Equity
Redeemable Preferred stock
As of March 31, 2011, the number of Redeemable Preferred stock (Preferred) outstanding, with
a par value of $0.001 per share and a stated value of $1,000 per share is as follows:
|
|
|
|
|
Preferred Stock Series A |
|
|
2,886 |
|
Preferred Stock Series B |
|
|
2,693 |
|
Preferred Stock Series D |
|
|
7,779 |
|
|
|
|
|
Total |
|
|
13,358 |
|
|
|
|
|
F-20
The Successor Company records accrued dividends at a rate of 6% per annum on the Series A,
Series B and Series D Preferred. As of March 31, 2011, $190,772 was accrued for dividends payable.
The Successor Company paid cash of $198,227 during the three months ended March 31, 2011.
Preferred Stock Series D
On January 21 and 28, February 9 and March 1, 2011, the Successor Company completed a private
placement of securities of Series D Preferred and warrants. Each of the foregoing securities were
subject to the down-round protection and if at any time while the Series D Preferred is
outstanding, we sell or grant any option to purchase or sell or grant any right to reprice, or
otherwise dispose of or issue (or announce any sale, grant or any option to purchase or other
disposition), any common stock or common stock equivalents at an effective price per share that is
lower than the then Conversion Price, then the Conversion Price will be reduced to equal the lower
price. The preferred stock has been classified within the mezzanine section between liabilities
and equity in its consolidated balance sheets in accordance with ASC 480, Distinguishing
Liabilities from Equity (ASC 480) because any holder of Series D Preferred may require the
Successor Company to redeem all of its Series D Preferred in the event of a triggering event which
is outside of the control of the Successor Company.
The details of the Series D Preferred financing for the three months ended March 31, 2011 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
Number of shares of |
|
|
Number of warrants |
|
Date of Financing |
|
Series D Preferred (1) |
|
|
issued (2) |
|
January 21, 2011 |
|
|
1,234 |
|
|
|
2,665,440 |
|
January 28, 2011 |
|
|
1,414 |
|
|
|
3,054,240 |
|
February 9, 2011 |
|
|
3,436 |
|
|
|
7,421,760 |
|
March 1, 2011 |
|
|
50 |
|
|
|
108,000 |
|
|
|
|
|
|
|
|
|
|
|
6,134 |
|
|
|
13,249,440 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Series D Preferred at a stated par value of $1,000. |
|
(2) |
|
Warrants issued shares of Common Stock at an exercise price of $0.50 per share to
certain accredited investors and placement agents. |
Conversion option of Redeemable Preferred stock
The embedded conversion option for the Series A Preferred, Series B Preferred and Series D
Preferred has been recorded as a derivative liability under ASC 815 in the consolidated balance
sheet as of March 31, 2011 and December 31, 2010. As of March 31, 2011 the derivative liability
was re-measured resulting in an expense of $6,620,726 in our statement of operations. The fair
value of the derivative liability 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 Company will continue to
classify the fair value of the embedded conversion option as a liability and re-measure on the
Companys reporting dates until the preferred stock is converted into common stock.
The embedded conversion option for the Series A Preferred, Series B Preferred and Series D
Preferred was valued at $8,820,108 at March 31, 2011 at fair value using the Black-Scholes option
pricing model. The fair market value of the derivative liability was computed using the
Black-Scholes option-pricing model with the following weighted average assumptions as of the dates
indicated:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
December 31, 2010 |
|
Expected life (years) |
|
1.4 years |
|
|
1.6 years |
|
Interest rate |
|
|
0.6 |
% |
|
|
1.3 |
% |
Dividend yield |
|
|
|
|
|
|
|
|
Volatility |
|
|
62 |
% |
|
|
63 |
% |
F-21
Note 9Warrants
Preferred Stock Series D Warrants and Co-placement Agent Warrants
In connection with the Series D Convertible Preferred Stock transaction, the Successor Company
issued 12,268,000 warrants at an exercise price of $0.50 per share and 981,440 placement agent
warrants at an exercise price of $0.50 per share during the first quarter of 2011. The warrants
are liability classified since they have down-round price protection and they are re-measured on
the Companys reporting dates. The weighted average fair market value of the warrants, at the date
of issuance, granted to the accredited investors and co-placement agents, based on the
Black-Scholes valuation model, is estimated to be $0.45 per warrant.
The fair market value of the warrants was computed using the Black-Scholes option-pricing
model with the following key weighted average assumptions as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
December 31, 2010 |
|
Expected life (years) |
|
4.6 years |
|
|
4.7 years |
|
Interest rate |
|
|
2.2 |
% |
|
|
1.8 |
% |
Dividend yield |
|
|
|
|
|
|
|
|
Volatility |
|
|
62 |
% |
|
|
63 |
% |
|
|
The following table summarizes outstanding warrants to purchase Common Stock as of March
31, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability |
|
|
|
Number of |
|
|
|
|
|
|
Balance as of |
|
|
|
Warrants |
|
|
Expiration Dates |
|
March 31, 2011 |
|
Warrants and
co-placement
warrants issued in
Series A Preferred
Stock offering |
|
|
3,555,493 |
|
|
Oct. 2014 |
|
$ |
1,484,193 |
|
Warrants and
co-placement
warrants issued in
March 2010 offering |
|
|
10,183,469 |
|
|
Mar. 2015 |
|
|
4,380,593 |
|
Warrants and
co-placement
warrants issued in
Series B Preferred
Stock offering |
|
|
12,932,565 |
|
|
Jul.-Nov. 2015 |
|
|
5,774,963 |
|
Warrants and
co-placement
warrants issued in
Series D Preferred
Stock offering |
|
|
16,802,640 |
|
|
Dec. 2015-Mar. 2016 |
|
|
7,580,575 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
43,474,167 |
|
|
|
|
|
|
$ |
19,220,324 |
|
|
|
|
|
|
|
|
|
|
|
|
All warrants have an exercise price of $0.50 per share as a result of the December 2010
Preferred Stock Series D financing transaction. There were 953,568 warrants exercised on a
cashless basis in the first quarter of 2011.
Note 10Stock-based Compensation
Total stock-based compensation expense recognized using the straight-line attribution method
in the consolidated statement of operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
Stock option compensation expense for employees
and directors |
|
$ |
995,551 |
|
|
$ |
324,377 |
|
Restricted stock expense |
|
|
18,000 |
|
|
|
18,000 |
|
Equity awards for nonemployees issued for services |
|
|
38,203 |
|
|
|
18,391 |
|
|
|
|
|
|
|
|
Total stock-based compensation expense |
|
$ |
1,051,754 |
|
|
$ |
360,768 |
|
|
|
|
|
|
|
|
F-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
remaining |
|
|
|
|
|
|
|
|
|
|
average |
|
|
contractual |
|
|
Aggregate |
|
|
|
Number of |
|
|
exercise |
|
|
term (in |
|
|
intrinsic |
|
|
|
shares |
|
|
price |
|
|
years) |
|
|
value |
|
|
Outstanding at December 31, 2010 |
|
|
5,677,000 |
|
|
$ |
0.86 |
|
|
|
7.46 |
|
|
$ |
|
|
Granted |
|
|
5,008,000 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2011 |
|
|
10,685,000 |
|
|
$ |
0.75 |
|
|
|
8.28 |
|
|
$ |
694,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2011 |
|
|
6,379,720 |
|
|
$ |
0.75 |
|
|
|
7.97 |
|
|
$ |
330,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total fair value of shares vested during the three months ended March 31, 2011 was $1.0
million. As of March 31, 2011, there was $1.4 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 1.8 years. As of March 31, 2011, there was $0.3 million of total
unrecognized compensation expense related to performance-based, non-vested employee and consultant
stock options. That cost will be recognized when the performance criteria within the respective
performance-based option grants become probable of achievement. As of March 31, 2011, there was
no intrinsic value to the outstanding and exercisable options.
During the three months ended March 31, 2011 and 2010, the weighted average fair market value
using the Black-Scholes option-pricing model of the options granted was $0.35 and $0.63,
respectively, for this period. The fair market value of the warrants was computed using the
Black-Scholes option-pricing model with the following key weighted average assumptions for the
three months ended as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
March 31, 2010 |
|
Expected life (years) |
|
5.4 years |
|
|
5.5 years |
|
Interest rate |
|
|
2.1 |
% |
|
|
2.4 |
% |
Dividend yield |
|
|
|
|
|
|
|
|
Volatility |
|
|
62 |
% |
|
|
65 |
% |
There were no stock options exercised during the first quarter of March 31, 2011.
Restricted stock
As of March 31, 2011, there was less than $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 less than 1 year.
F-23
Note 11Segment Information and Geographical information
The Successor Company has two reportable segments: Fibrocell Therapy and Agera. The Fibrocell
Therapy segment specializes in the development and commercialization of autologous cellular
therapies for soft tissue regeneration. The Agera segment maintains proprietary rights to a
scientifically-based advanced line of skincare products. There is no intersegment revenue. The
following table provides operating financial information for the continuing operations of the
Successor Companys two reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
Three Months Ended March 31, 2011 |
|
Fibrocell Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
208,636 |
|
|
$ |
208,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss) from
continuing operations |
|
$ |
(17,072,010 |
) |
|
$ |
21,412 |
|
|
$ |
(17,050,598 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information related to
continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
$ |
2,473 |
|
|
$ |
|
|
|
$ |
2,473 |
|
Total assets, including assets from
discontinued operations as of March
31, 2011 |
|
|
9,859,336 |
|
|
|
635,820 |
|
|
|
10,495,156 |
|
Property and equipment, net |
|
|
36,607 |
|
|
|
|
|
|
|
36,607 |
|
Intangible assets, net |
|
|
6,340,656 |
|
|
|
|
|
|
|
6,340,656 |
|
An intercompany receivable as of March 31, 2011, of $0.9 million, due from the Agera segment
to the Fibrocell Therapy segment, is eliminated in consolidation. This intercompany receivable is
primarily due to the intercompany management fee charge to Agera by Fibrocell Technologies, Inc.,
as well as Ageras working capital needs provided by Fibrocell Technologies, Inc., and has been
excluded from total assets of the Fibrocell Therapy segment in the above table. There is no
intersegment revenue. Total assets on the consolidated balance sheet at March 31, 2011 are
approximately $10.5 million, which includes assets of discontinued operations of less than $0.1
million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
Three Months Ended March 31, 2010 |
|
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, including assets from
discontinued operations as of March
31, 2010 |
|
|
9,094,140 |
|
|
|
683,610 |
|
|
|
9,777,750 |
|
Property and equipment, net |
|
|
25,483 |
|
|
|
|
|
|
|
25,483 |
|
Intangible assets, net |
|
|
6,340,656 |
|
|
|
|
|
|
|
6,340,656 |
|
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 Ageras
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.
F-24
Geographical information concerning the Companys revenue is as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Three months ended |
|
|
|
March 31, 2011 |
|
|
March 31, 2010 |
|
United States |
|
$ |
48,123 |
|
|
$ |
60,194 |
|
United Kingdom |
|
|
148,164 |
|
|
|
141,667 |
|
Other |
|
|
12,349 |
|
|
|
7,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
208,636 |
|
|
$ |
209,070 |
|
|
|
|
|
|
|
|
During the three months ended March 31, 2011, revenue from one foreign customer and one
domestic customer represented 71% and 16% of consolidated revenue, respectively. 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.
As of March 31, 2011 and December 31, 2010, one foreign customer represented 86% and 88%,
respectively, of accounts receivable, net.
Note 12Subsequent Events
Subsequent
to March 31, 2011, 3,250 preferred shares were converted into
8,284,000 common
shares and 8,739,319 warrants were exercised. Cash received for the warrants subsequent to March
31, 2011 was $1,652,824.
On May 24, 2011, the Company sent a mandatory conversion notice to the holders of its outstanding Series
A and Series B Preferred Stock. Pursuant to the notice, each holder of such Preferred Stock was notified that since
the volume weighted average price of the Companys common stock had exceeded 200% of the then effective
conversion price of the Preferred Stock for twenty consecutive trading days, the Company was permitted to force
the conversion of the Preferred Stock into common stock. The conversion will be effective on July 7, 2011;
provided that holders of Preferred Stock have the right to voluntarily convert their shares of Preferred Stock prior
to such date.
On June 16, 2011, the Company entered into definitive agreements to complete a private placement,
pursuant to which it agreed to sell an aggregate of 1,908,889 shares of Company common stock to 8 accredited
investors for an aggregate purchase price of $1,718,000 in transactions exempt from registration under the
Securities Act of 1933, in reliance on Section 4(2) thereof and Rule 506 of Regulation D thereunder. Each
purchaser represented that it was an accredited investor as defined in Regulation D. The placement agent for the
transaction received cash compensation of $137,440 and warrants to purchase 152,711 shares of Company
common stock at an exercise price of $0.90 per share.
On
June 21, 2011, the FDA approved laViv (azficel-T).
F-25
Fibrocell Science, Inc.
(A Development Stage Company)
Index to Consolidated Financial Statements
|
|
|
|
|
|
|
PAGE |
|
|
|
|
|
|
|
|
|
F-2 |
|
|
|
|
|
|
|
|
|
F-3 |
|
|
|
|
|
|
|
|
|
F-4 |
|
|
|
|
|
|
|
|
|
F-5 |
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the year ended December
31, 2010 (Successor Company), four months ended December 31, 2009
(Successor Company), cumulative period from inception (September
1, 2009) to December 31, 2010 (Successor Company), eight months
ended August 31, 2009 (Predecessor Company) and cumulative period
from inception (December 28, 1995) to August 31, 2009
(Predecessor Company) |
|
|
F-17 |
|
|
|
|
|
|
|
|
|
F-19 |
|
|
|
|
|
|
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Fibrocell Science, Inc. (a development stage company)
Exton, Pennsylvania
We have audited the accompanying consolidated balance sheets of Fibrocell Science, Inc. (in the
development stage) as of December 31, 2010 and 2009 and the related consolidated statements of
operations, shareholders equity (deficit) and comprehensive loss, and cash flows for the year
ended December 31, 2010 (Successor), for the period from January 1 to August 31, 2009
(Predecessor as described in Note 1 of the notes to the consolidated financial statements) and
for the period from the Successors inception of operations (September 1, 2009) through December
31, 2009. We have also audited the statements of shareholders equity (deficit) for the period from
December 28, 1995 (Predecessors inception) to December 31, 2008. These consolidated financial
statements are the responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. Our audit
included consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial reporting.
Accordingly, we express no opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Fibrocell Science, Inc. at December 31, 2010 and 2009,
and the results of its operations and its cash flows for the year ended December 31, 2010
(Successor), for the period from January 1 to August 31, 2009 (Predecessor) and for the period
from the Successors inception of operations (September 1, 2009) through December 31, 2009 and the
statements of shareholders equity (deficit) for the period from December 28, 1995 (Predecessors
inception) to August 31, 2009 and for the period from the Successors inception of operations
(September 1, 2009) through December 31, 2009, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as
a going concern. As discussed in Note 3 to the financial statements, the Company has suffered
recurring losses from operations, has a net capital deficit, and has limited cash resources that
raise substantial doubt about its ability to continue as a going concern. Managements plan in
regard to these matters is also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ BDO USA, LLP
Houston, Texas
March 30, 2011
F-2
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
867,738 |
|
|
$ |
1,362,488 |
|
Accounts receivable, net |
|
|
229,891 |
|
|
|
269,759 |
|
Inventory, net |
|
|
258,939 |
|
|
|
226,032 |
|
Prepaid expenses and other current assets |
|
|
559,082 |
|
|
|
525,024 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,915,650 |
|
|
|
2,383,303 |
|
Property and equipment, net of accumulated depreciation of $8,085 and $0,
respectively |
|
|
21,589 |
|
|
|
|
|
Other assets |
|
|
250 |
|
|
|
250 |
|
Intangible assets |
|
|
6,340,656 |
|
|
|
6,340,656 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
8,278,145 |
|
|
$ |
8,724,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Redeemable Preferred Stock, Shareholders Deficit and Noncontrolling
Interest |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current debt |
|
$ |
56,911 |
|
|
$ |
47,795 |
|
Accounts payable |
|
|
1,096,125 |
|
|
|
245,023 |
|
Accrued expenses |
|
|
789,482 |
|
|
|
544,260 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
1,942,518 |
|
|
|
837,078 |
|
Long-term debt |
|
|
7,290,881 |
|
|
|
6,000,060 |
|
Deferred tax liability |
|
|
2,500,000 |
|
|
|
2,500,000 |
|
Warrant liability |
|
|
8,171,518 |
|
|
|
635,276 |
|
Derivative liability |
|
|
2,120,360 |
|
|
|
|
|
Other long-term liabilities |
|
|
255,606 |
|
|
|
369,210 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
22,280,883 |
|
|
|
10,341,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock series A, $0.001 par value; 9,000 shares authorized; 3,250 shares
issued and 2,886 shares outstanding |
|
|
1,280,150 |
|
|
|
2,511,070 |
|
Preferred stock series B, $0.001 par value; 9,000 shares authorized; 4,640 shares
issued and outstanding |
|
|
|
|
|
|
|
|
Preferred stock series B, $0.001 par value; subscription receivable |
|
|
(210,000 |
) |
|
|
|
|
Preferred stock series D, $0.001 par value; 8,000 shares authorized; 1,645 shares
issued and outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fibrocell Science, Inc. shareholders deficit: |
|
|
|
|
|
|
|
|
Successor common stock, $0.001 par value; 250,000,000 shares authorized;
20,375,500 issued and outstanding |
|
|
20,376 |
|
|
|
14,692 |
|
Additional paid-in capital |
|
|
2,437,893 |
|
|
|
508,347 |
|
Accumulated deficit during development stage |
|
|
(17,981,530 |
) |
|
|
(5,049,999 |
) |
|
|
|
|
|
|
|
Total Fibrocell Science, Inc. shareholders deficit |
|
|
(15,523,261 |
) |
|
|
(4,526,960 |
) |
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
450,373 |
|
|
|
398,475 |
|
|
|
|
|
|
|
|
Total deficit and noncontrolling interest |
|
|
(15,072,888 |
) |
|
|
(4,128,485 |
) |
|
|
|
|
|
|
|
Total liabilities, preferred stock, shareholders deficit and noncontrolling interest |
|
$ |
8,278,145 |
|
|
$ |
8,724,209 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Cumulative period |
|
|
|
|
|
|
|
Cumulative period |
|
|
|
|
|
|
|
|
|
|
|
from September 1, |
|
|
|
|
|
|
|
from December 28, |
|
|
|
|
|
|
|
For the four months |
|
|
2009 (date of |
|
|
|
For the eight |
|
|
1995 (date of |
|
|
|
For the year ended |
|
|
ended December 31, |
|
|
inception) to |
|
|
|
months ended |
|
|
inception) to August |
|
|
|
December 31, 2010 |
|
|
2009 |
|
|
December 31, 2010 |
|
|
|
August 31, 2009 |
|
|
31, 2009 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
$ |
936,369 |
|
|
$ |
329,941 |
|
|
$ |
1,266,310 |
|
|
|
$ |
538,620 |
|
|
$ |
4,818,994 |
|
License fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
936,369 |
|
|
|
329,941 |
|
|
|
1,266,310 |
|
|
|
|
538,620 |
|
|
|
5,078,994 |
|
Cost of sales |
|
|
502,648 |
|
|
|
182,048 |
|
|
|
684,696 |
|
|
|
|
424,139 |
|
|
|
2,279,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
433,721 |
|
|
|
147,893 |
|
|
|
581,614 |
|
|
|
|
114,481 |
|
|
|
2,799,659 |
|
Selling, general and administrative expenses |
|
|
6,515,581 |
|
|
|
2,708,356 |
|
|
|
9,223,937 |
|
|
|
|
3,427,374 |
|
|
|
84,805,520 |
|
Research and development expenses |
|
|
5,486,319 |
|
|
|
1,823,196 |
|
|
|
7,309,515 |
|
|
|
|
2,107,718 |
|
|
|
56,269,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(11,568,179 |
) |
|
|
(4,383,659 |
) |
|
|
(15,951,838 |
) |
|
|
|
(5,420,611 |
) |
|
|
(138,275,730 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
|
248 |
|
|
|
6,989,539 |
|
Reorganization items, net |
|
|
3,303 |
|
|
|
(72,477 |
) |
|
|
(69,174 |
) |
|
|
|
73,538,984 |
|
|
|
73,538,984 |
|
Other income (expense) |
|
|
244,479 |
|
|
|
|
|
|
|
244,479 |
|
|
|
|
(6,243 |
) |
|
|
316,338 |
|
Warrant expense |
|
|
(465,232 |
) |
|
|
(319,084 |
) |
|
|
(784,316 |
) |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,045,199 |
) |
|
|
(247,174 |
) |
|
|
(1,292,373 |
) |
|
|
|
(2,232,138 |
) |
|
|
(18,790,218 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before
income taxes |
|
|
(12,830,828 |
) |
|
|
(5,022,393 |
) |
|
|
(17,853,221 |
) |
|
|
|
65,880,240 |
|
|
|
(76,221,087 |
) |
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(12,830,828 |
) |
|
|
(5,022,393 |
) |
|
|
(17,853,221 |
) |
|
|
|
65,880,240 |
|
|
|
(76,030,333 |
) |
Income (loss) from discontinued operations |
|
|
(48,805 |
) |
|
|
(12,113 |
) |
|
|
(60,918 |
) |
|
|
|
46,923 |
|
|
|
(41,091,311 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(12,879,633 |
) |
|
|
(5,034,506 |
) |
|
|
(17,914,139 |
) |
|
|
|
65,927,163 |
|
|
|
(117,121,644 |
) |
Deemed dividend associated with beneficial
conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,423,824 |
) |
Preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,589,861 |
) |
Net (income)/loss attributable to
noncontrolling interest |
|
|
(51,898 |
) |
|
|
(15,493 |
) |
|
|
(67,391 |
) |
|
|
|
(205,632 |
) |
|
|
1,799,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Fibrocell
Science, Inc. common shareholders |
|
$ |
(12,931,531 |
) |
|
$ |
(5,049,999 |
) |
|
$ |
(17,981,530 |
) |
|
|
$ |
65,721,531 |
|
|
$ |
(128,335,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations-basic and diluted |
|
$ |
(0.68 |
) |
|
$ |
(0.35 |
) |
|
$ |
(1.01 |
) |
|
|
$ |
1.72 |
|
|
$ |
(4.30 |
) |
Loss from discontinued operations-basic and
diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.32 |
) |
Income attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend associated with beneficial
conversion of preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.65 |
) |
Preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common
shareholders per common sharebasic and
diluted |
|
$ |
(0.68 |
) |
|
$ |
(0.35 |
) |
|
$ |
(1.01 |
) |
|
|
$ |
1.72 |
|
|
$ |
(7.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of basic and diluted
common shares outstanding |
|
|
18,757,756 |
|
|
|
14,380,381 |
|
|
|
17,681,500 |
|
|
|
|
38,230,886 |
|
|
|
17,678,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Statements of Shareholders Equity (Deficit) and Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 12/28/95 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,285,291 |
|
|
$ |
2,285 |
|
|
$ |
(1,465 |
) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
820 |
|
Issuance of common stock for cash
on 11/7/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,149 |
|
|
|
11 |
|
|
|
49,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
Issuance of common stock for cash
on 11/29/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,230 |
|
|
|
2 |
|
|
|
9,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
Issuance of common stock for cash
on 12/19/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,690 |
|
|
|
7 |
|
|
|
29,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
Issuance of common stock for cash
on 12/26/96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,148 |
|
|
|
11 |
|
|
|
49,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(270,468 |
) |
|
|
(270,468 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/96 (Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,316,508 |
|
|
$ |
2,316 |
|
|
$ |
138,504 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(270,468 |
) |
|
$ |
(129,648 |
) |
Issuance of common stock for cash
on 12/27/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,182 |
|
|
|
21 |
|
|
|
94,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,000 |
|
Issuance of common stock for
services on 9/1/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,148 |
|
|
|
11 |
|
|
|
36,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,260 |
|
Issuance of common stock for
services on 12/28/97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,193 |
|
|
|
287 |
|
|
|
9,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,255 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52,550 |
) |
|
|
(52,550 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, 12/31/97(Predecessor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
2,636,031 |
|
|
$ |
2,635 |
|
|
$ |
279,700 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(323,018 |
) |
|
$ |
(40,683 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
(Deficit) |
|
Issuance of common stock for
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.
F-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
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.
F-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) |
|
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.
F-8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Stage |
|
|
(Deficit) |
|
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.
F-9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
Shareholders |
|
|
|
Number |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Equity |
|
|
|
of 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.
F-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 |
|
|
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.
F-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 |
|
|
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.
F-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
Total |
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Shareholders |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
Compensation expense on 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.
F-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
F-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Total |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
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.
F-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional |
|
|
Treasury Stock |
|
|
Other |
|
|
During |
|
|
|
|
|
|
Total |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Paid-In |
|
|
Number of |
|
|
|
|
|
|
Comprehensive |
|
|
Development |
|
|
Noncontrolling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Shares |
|
|
Amount |
|
|
Income (Loss) |
|
|
Stage |
|
|
Interest |
|
|
(Deficit) |
|
Issuance of 5.1 million shares of
common stock in March 2010, net of
issuance costs of $338,100 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
5,076,664 |
|
|
$ |
5,077 |
|
|
$ |
3,464,323 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,469,400 |
|
Warrant fair value associated with
common shares issued in March 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,890,711 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,890,711 |
) |
Compensation expense on shares
issued to management 1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option
awards issued to
directors/employees-1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
324,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
324,377 |
|
Compensation expense on option
awards issued to
non-employees-1Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,391 |
|
Compensation expense on shares
issued to management 2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option
awards issued to
directors/employees-2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,011 |
|
Compensation expense on option
awards issued to
non-employees-2Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,206 |
|
Compensation expense on shares
issued to management 3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option
awards issued to
directors/employees-3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,231 |
|
Compensation expense on option
awards issued to
non-employees-3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,724 |
|
Compensation expense on shares
issued to management 4Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
Compensation expense on option
awards issued to
directors/employees-4Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,094 |
|
Compensation expense on option
awards issued to
non-employees-4Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,507 |
|
Preferred Stock Series A conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
606,667 |
|
|
|
607 |
|
|
|
363,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
364,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,931,531 |
) |
|
|
51,898 |
|
|
|
(12,879,633 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,879,633 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 12/31/10 (Successor) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
20,375,498 |
|
|
$ |
20,376 |
|
|
$ |
2,437,893 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(17,981,530 |
) |
|
$ |
450,373 |
|
|
$ |
(15,072,888 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-16
Fibrocell Science, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
period from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 1, |
|
|
|
|
|
|
Cumulative period |
|
|
|
Twelve months |
|
|
Four months |
|
|
2009 (date of |
|
|
|
|
|
|
from December 31, |
|
|
|
ended |
|
|
ended |
|
|
inception) to |
|
|
|
Eight months |
|
|
1995 (date of |
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
ended August 31, |
|
|
inception) to August |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
|
2009 |
|
|
31, 2009 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(12,931,531 |
) |
|
$ |
(5,049,999 |
) |
|
$ |
(17,981,530 |
) |
|
|
$ |
65,721,531 |
|
|
$ |
(115,322,121 |
) |
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorganization items, net |
|
|
|
|
|
|
72,477 |
|
|
|
72,477 |
|
|
|
|
(74,648,976 |
) |
|
|
(74,648,976 |
) |
Expense related to equity awards and issuance of stock |
|
|
992,541 |
|
|
|
881,218 |
|
|
|
1,873,759 |
|
|
|
|
583,453 |
|
|
|
10,608,999 |
|
Warrant expense |
|
|
465,232 |
|
|
|
319,084 |
|
|
|
784,316 |
|
|
|
|
|
|
|
|
|
|
Uncompensated contribution of services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
755,556 |
|
Depreciation and amortization |
|
|
8,085 |
|
|
|
|
|
|
|
8,085 |
|
|
|
|
|
|
|
|
9,091,990 |
|
Provision for doubtful accounts |
|
|
(7,818 |
) |
|
|
(46,619 |
) |
|
|
(54,437 |
) |
|
|
|
501 |
|
|
|
337,810 |
|
Provision for excessive and/or obsolete inventory |
|
|
(60,366 |
) |
|
|
11,664 |
|
|
|
(48,702 |
) |
|
|
|
169,085 |
|
|
|
259,427 |
|
Amortization of debt issue costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
985,237 |
|
|
|
4,107,067 |
|
Amortization of debt discounts on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(508,983 |
) |
Loss on disposal or impairment of property and equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,668,477 |
|
Foreign exchange gain on substantial liquidation of foreign entity |
|
|
(5,072 |
) |
|
|
(2,614 |
) |
|
|
(7,686 |
) |
|
|
|
30,012 |
|
|
|
(2,256,408 |
) |
Net (loss) income attributable to non-controlling interest |
|
|
51,898 |
|
|
|
15,493 |
|
|
|
67,391 |
|
|
|
|
205,632 |
|
|
|
(1,799,523 |
) |
Change in operating assets and liabilities, excluding effects of acquisition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable |
|
|
47,686 |
|
|
|
23,544 |
|
|
|
71,230 |
|
|
|
|
91,666 |
|
|
|
(91,496 |
) |
Decrease (increase) in other receivables |
|
|
(4,033 |
) |
|
|
4,740 |
|
|
|
707 |
|
|
|
|
23,632 |
|
|
|
218,978 |
|
Decrease (increase) in inventory |
|
|
27,459 |
|
|
|
30,923 |
|
|
|
58,382 |
|
|
|
|
29,543 |
|
|
|
(455,282 |
) |
Decrease (increase) in prepaid expenses |
|
|
42,799 |
|
|
|
(244,905 |
) |
|
|
(202,106 |
) |
|
|
|
628,197 |
|
|
|
34,341 |
|
Decrease (increase) in other assets |
|
|
|
|
|
|
4,120 |
|
|
|
4,120 |
|
|
|
|
(112,441 |
) |
|
|
71,000 |
|
Increase (decrease) in accounts payable |
|
|
851,102 |
|
|
|
107,622 |
|
|
|
958,724 |
|
|
|
|
(230,592 |
) |
|
|
57,648 |
|
Increase (decrease) in accrued expenses, liabilities subject to compromise and other liabilities |
|
|
1,256,140 |
|
|
|
(425,794 |
) |
|
|
830,346 |
|
|
|
|
1,868,162 |
|
|
|
3,311,552 |
|
Increase (decrease) in deferred revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,522 |
) |
|
|
(50,096 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(9,265,878 |
) |
|
|
(4,299,046 |
) |
|
|
(13,564,924 |
) |
|
|
|
(4,662,880 |
) |
|
|
(148,610,040 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Agera, net of cash acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,016,520 |
) |
Purchase of property and equipment |
|
|
(29,674 |
) |
|
|
|
|
|
|
(29,674 |
) |
|
|
|
|
|
|
|
(25,515,170 |
) |
Proceeds from the sale of property and equipment, net of selling costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,542,434 |
|
Purchase of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(152,998,313 |
) |
Proceeds from sales and maturities of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,507,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(29,674 |
) |
|
|
|
|
|
|
(29,674 |
) |
|
|
|
|
|
|
|
(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 series A, net |
|
|
|
|
|
|
2,870,000 |
|
|
|
2,870,000 |
|
|
|
|
|
|
|
|
12,931,800 |
|
Proceeds from the issuance of redeemable preferred stock series B, net |
|
|
4,019,570 |
|
|
|
|
|
|
|
4,019,570 |
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of redeemable preferred stock series D, net |
|
|
1,509,400 |
|
|
|
|
|
|
|
1,509,400 |
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of common stock, net |
|
|
3,469,400 |
|
|
|
1,800,000 |
|
|
|
5,269,400 |
|
|
|
|
|
|
|
|
93,753,857 |
|
Costs associated with secured loan and debtor-in-possession loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(360,872 |
) |
|
|
(360,872 |
) |
Proceeds from secured loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,471 |
|
|
|
500,471 |
|
Proceeds from debtor-in-possession loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,750,000 |
|
|
|
2,750,000 |
|
Payments on insurance loan |
|
|
(63,683 |
) |
|
|
(21,891 |
) |
|
|
(85,574 |
) |
|
|
|
(63,983 |
) |
|
|
(79,319 |
) |
Cash dividends paid on preferred stock |
|
|
(139,750 |
) |
|
|
|
|
|
|
(139,750 |
) |
|
|
|
|
|
|
|
(1,087,200 |
) |
Cash paid for fractional shares of preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(38,108 |
) |
Merger and acquisition expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,547 |
) |
Repurchase of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,024,280 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
8,794,937 |
|
|
|
4,648,109 |
|
|
|
13,443,046 |
|
|
|
|
2,825,616 |
|
|
|
170,137,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash balances |
|
|
5,865 |
|
|
|
3,149 |
|
|
|
9,014 |
|
|
|
|
(6,760 |
) |
|
|
(36,391 |
) |
F-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
period from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 1, |
|
|
|
|
|
|
Cumulative period |
|
|
|
Twelve months |
|
|
Four months |
|
|
2009 (date of |
|
|
|
|
|
|
from December 31, |
|
|
|
ended |
|
|
ended |
|
|
inception) to |
|
|
|
Eight months |
|
|
1995 (date of |
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
ended August 31, |
|
|
inception) to August |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
|
2009 |
|
|
31, 2009 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
(494,750 |
) |
|
|
352,212 |
|
|
|
(142,538 |
) |
|
|
|
(1,844,024 |
) |
|
|
1,010,276 |
|
Cash and cash equivalents, beginning of period |
|
|
1,362,488 |
|
|
|
1,010,276 |
|
|
|
1,010,276 |
|
|
|
|
2,854,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
867,738 |
|
|
$ |
1,362,488 |
|
|
$ |
867,738 |
|
|
|
$ |
1,010,276 |
|
|
$ |
1,010,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor cash paid for interest |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
$ |
12,715,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor cash paid for dividends |
|
|
139,750 |
|
|
|
|
|
|
|
139,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor deemed dividend associated with beneficial conversion of preferred stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
$ |
11,423,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor preferred stock dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,589,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor accrued preferred stock dividend |
|
|
191,417 |
|
|
|
42,740 |
|
|
|
191,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor uncompensated contribution of services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
755,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor common stock issued for intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor common stock issued in connection with conversion of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,814,000 |
|
|
|
10,814,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor equipment acquired through capital lease |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
167,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor/Predecessor financing of insurance premiums |
|
|
97,065 |
|
|
|
81,517 |
|
|
|
178,582 |
|
|
|
|
|
|
|
|
87,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor issuance of notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000,060 |
|
|
|
6,000,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor common stock issued in connection with reorganization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,472,000 |
|
|
|
5,472,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,340,656 |
|
|
|
6,340,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor deferred tax liability in connection with fresh-start |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500,000 |
|
|
|
2,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of Predecessor common stock and fresh start adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,780,320 |
|
|
|
14,780,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor subscription receivable |
|
|
210,000 |
|
|
|
316,192 |
|
|
|
210,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor accrued warrant liability |
|
|
7,071,010 |
|
|
|
316,192 |
|
|
|
7,387,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor conversion of preferred stock into common stock |
|
|
364,000 |
|
|
|
|
|
|
|
364,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor accrued derivative liability |
|
|
2,120,360 |
|
|
|
|
|
|
|
2,120,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-18
Fibrocell Science, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note 1Business and Organization
Fibrocell Science, Inc. (Fibrocell or the Company or the Successor) is the parent
company of Fibrocell Technologies (Fibrocell Tech) 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 folds/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 folds/wrinkles product candidate and that the FDA had accepted (or
filed) the BLA for full review.
On October 9, 2009, the FDA Cellular, Tissue and Gene Therapies Advisory Committee reviewed
the Companys nasolabial folds/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 folds/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 folds/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 folds/wrinkles in adults. A Complete Response letter is issued by the FDAs Center for
Biologics Evaluation and Research (CBER) when the review of a file is completed and additional
data are needed prior to approval. The Complete Response letter requested that Fibrocell Science
provide data from a histopathological study on biopsied tissue samples from patients following
injection of azficel-T. The histology study (IT-H-001) will evaluate tissue treated with azficel-T
as compared to tissue treated with sterile saline (placebo). The study will also provide
information about the skin after treatment, including evaluation of collagen and elastin fibrils,
and cellular structure of the sampled tissues. The Company
submitted a proposed protocol concerning a histopathological study on biopsied samples to the
FDA and to the Companys Investigational Review Board (IRB). The IRB has approved the protocol
and the Company received the comments from the FDA on the protocol in May 2010.
F-19
On May 13, 2010, the Company announced the initiation of the small histology study of
azficel-T, discussed above. The study had a target enrollment of approximately 20 participants from
the completed and statistically significant pivotal Phase III studies of azficel-T (IT-R-005 and
IT-R-006). The Company announced on July 8, 2010, the completion of enrollment of and first
treatment visits for participants in its histology study of azficel-T. The second treatment visits
for participants enrolled in the histology study of azficel-T were completed by the end of July.
The third treatment visits for participants enrolled in the histology study of azficel-T were
completed by the end of August.
The Complete Response letter also requested finalized Chemistry, Manufacturing and Controls
(CMC) information regarding the manufacture of azficel-T as follow-up to discussions that
occurred during the BLA review period, as well as revised policies and procedures.
The Company announced on December 20, 2010, that it had submitted its complete response to the
Complete Response (CR) letter issued by the FDA regarding the Companys BLA for azficel-T. On
January 22, 2011, the FDA accepted for review the Companys complete response submission. Even
though the FDA has accepted the Companys response for complete evaluation, there is no assurance
that it will approve our product. The FDA, under the Prescription Drug User Fee Act (PDUFA), has
a target six months review window to completely evaluate the Companys response. The PDUFA date is
June 22, 2011.
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
Basis of Presentation
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
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 our financial disclosures since all future references to authoritative accounting
literature will be references in accordance with ASC 105.
Financial Reporting by Entities in Reorganization under the Bankruptcy Code
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.
F-20
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 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
Tech), respectively (collectively, the Reorganized Debtors), and the bankruptcy cases remain
pending only to reconcile the claims asserted against the Debtors. Fibrocell now operates outside
of the restraints of the bankruptcy process, free of the debts and liabilities discharged by the
Plan.
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. As such, the cumulative to
date totals commenced on September 1, 2009 for the Successor Company.
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.
For discussions on the results of operations, the Successor Company has combined the results
of operations for the eight months ended August 31, 2009, with the results of operations for the
four months ended December 31, 2009. The combined periods have been compared to the year ended
December 31, 2010. The Successor Company believes that the combined financial results provide
management and investors a more meaningful analysis of the Successor Companys performance and
trends for comparative purposes.
Note 3Going Concern
The Successor Company emerged from Bankruptcy in September 2009 and continues to operate as a
going concern. At December 31, 2010, the Successor Company had cash and cash equivalents of
approximately $0.9 million and negative working capital of less than $0.1 million. The Successor
Company has raised approximately $6.1 million less fees as the result of the issuance of Series D
Preferred Stock and warrants in the period from January 1, 2011 through March 1, 2011. The Company
received $0.2 million in subscription receivables from a July financing in mid-March 2011.
F-21
As of March 24, 2011, the Company had cash and cash equivalents of approximately $3.4 million
and current liabilities of approximately $0.6 million. The Companys current monthly cash run-rate
is approximately $1.0 million. The Company is also planning to purchase manufacturing equipment and
incur marketing expenditures within the next three months to prepare the Company for launch post a
possible FDA approval. Thus, the Successor Company will need to access the capital markets in the
near future in order to fund future operations. There is no guarantee that any such required
financing will be available on terms satisfactory to the Successor Company or available at all.
These matters create uncertainty relating to its ability to continue as a going concern. The
accompanying consolidated financial statements do not reflect any adjustments relating to the
recoverability and classification of assets or liabilities that might result from the outcome of
these uncertainties.
Further, if the Successor Company raises additional cash resources in the near future, it may
be raised in contemplation of or in connection with bankruptcy. In the event of a bankruptcy, it is
likely that its common stock and common stock equivalents will become worthless and our creditors
will receive significantly less than what is owed to them.
Through December 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 2011. During the year ended December
31, 2010, the Successor Company financed its operations primarily through its existing cash
received from external financings, but as discussed above it now requires additional financing.
There is substantial doubt about the Successor Companys ability to continue as a going concern.
The Successor Companys ability to complete additional offerings is dependent on the state of
the debt and/or equity markets at the time of any proposed offering, and such markets reception of
the Successor Company and the offering terms. The Successor Companys ability to complete an
offering is also dependent on the status of its FDA regulatory milestones and its clinical trials,
and in particular, the status of its indication for the treatment of nasolabial folds/wrinkles and
the potential approval of the related BLA, which cannot be predicted. There is no assurance that
capital in any form would be available to the Company, and if available, on terms and conditions
that are acceptable.
As a result of the conditions discussed above, and in accordance with GAAP, there exists
substantial doubt about the Successor Companys ability to continue as a going concern, and its
ability to continue as a going concern is contingent, among other things, upon its ability to
secure additional adequate financing or capital in the near future. If the Successor Company does
not obtain additional funding, or does not anticipate additional funding, in the near future, it
will likely enter into bankruptcy and/or cease operations. Further, if it does raise additional
cash resources in the near future, it may be raised in contemplation of or in connection with
bankruptcy. If the Successor Company enters into bankruptcy, it is likely that its common stock and
common stock equivalents will become worthless and its creditors, including preferred stock, will
receive significantly less than what is owed to them.
Note 4Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts in the consolidated financial statements
and notes. In addition, managements assessment of the Successor Companys ability to continue as a
going concern involves the estimation of the amount and timing of future cash inflows and outflows.
Actual results may differ materially from those estimates.
Cash and Cash Equivalents
The Company considers highly liquid investments with an original maturity of three months or
less when purchased to be cash equivalents.
F-22
Concentration of Credit Risk
As of December 31, 2010, the Successor Company maintains the majority of its cash primarily
with one major U.S. domestic bank. All of our non-interest bearing cash balances were
fully insured at December 31, 2010 due to a temporary federal program in effect from December 31,
2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for
eligible accounts. Beginning 2013, insurance coverage will revert to $250,000 per depositor at each
financial institution, and our non-interest bearing cash balances may again exceed federally
insured limits. The terms of these deposits are on demand to minimize risk. The Successor Company
has not incurred losses related to these deposits. Cash and cash equivalents of approximately $0.1
million, related to Agera and the Successor Companys Swiss subsidiary, is maintained in two
separate financial institutions. The Successor Company invests these funds primarily in demand
deposit accounts.
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 88% and 87% of accounts receivable, net, at December
31, 2010 and 2009, respectively. Management analyzes historical collection trends and changes in
its customer payment patterns, customer concentration, and creditworthiness when evaluating the
adequacy of its allowance for doubtful accounts. In its overall allowance for doubtful accounts,
the Successor Company includes any receivable balances that are determined to be uncollectible.
Based on the information available, management believes the allowance for doubtful accounts is
adequate; however, actual write-offs might exceed the recorded allowance.
The allowance for doubtful accounts was $29,280 and $37,098 at December 31, 2010 and 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 December 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 December 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.
F-23
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.
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.
Other Income, Net
In November 2010, we received one grant totaling $0.2 million under the Qualified Therapeutic
Discovery Project Grants Program. The Qualified Therapeutic Discovery Project Grants Program was
included in the healthcare reform legislation, and established a one-time pool of $1 billion for
grants to small biotechnology companies developing novel therapeutics which show potential to: (a)
result in new therapies that either treat areas of unmet medical need, or prevent, detect, or treat
chronic or acute diseases and conditions; (b) reduce long-term health care costs in the United
States; or (c) significantly advance the goal of curing cancer within a the 30-year period. There
are no matching funding requirements or other requirements necessary to receive the funding.
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.
F-24
Preferred Stock and Derivative Liability
The preferred stock has been classified within the mezzanine section between liabilities and
equity in its consolidated balance sheets in accordance with ASC 480, Distinguishing Liabilities
from Equity (ASC 480) because any holder of Series A, B and D Preferred may require the Successor
Company to redeem all of its Series A, B or D Preferred in the event of a triggering event which is
outside of the control of the Successor Company.
The embedded conversion option for the Series A Preferred, Series B Preferred and Series D
Preferred has been recorded as a derivative liability under ASC 815 in the Successors consolidated
balance sheet as of December 31, 2010 and will be re-measured on the Successor Companys reporting
dates. The fair value of the derivative liability 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 embedded conversion option as a
liability until the preferred stock is converted into common stock.
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 statements of operations. No such charges have been incurred by the
Company. As of December 31, 2010 and December 31, 2009, the Successor Company had no accrued
interest related to uncertain tax positions.
At December 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 2007
through 2010 remain open to examination by the major taxing jurisdictions to which we are subject.
The deferred tax liability at
December 31, 2010 and December 31, 2009, relates to the intangible assets recognized upon
fresh-start accounting.
F-25
Earnings (loss) per share data
Basic earnings (loss) per share is calculated based on the weighted average common shares
outstanding during the period. Diluted earnings per share (Diluted EPS) also gives effect to the
dilutive effect of stock options, warrants, restricted stock and convertible preferred stock
calculated based on the treasury stock method.
The Predecessor and Successor Companys potentially dilutive securities consist of potential
common shares related to stock options, warrants, restricted stock and convertible preferred stock.
Diluted EPS includes the impact of potentially dilutive securities except in periods in which
there is a loss because the inclusion of the potential common shares would be anti-dilutive. The
Company does not present diluted earnings per share for periods in which it incurred net losses as
the effect is anti-dilutive. There were no potentially dilutive securities for the eight months
ended August 31, 2009, due to the cancellation of the convertible notes and the cancellation of all
the outstanding stock option plans and the last known market price was less than exercise price.
Fair Value of Financial Instruments
The carrying values of certain of the Successor Companys financial instruments, including
cash equivalents and accounts payable approximates fair value due to their short maturities. The
fair values of the Successor Companys long-term obligations are based on assumptions concerning
the amount and timing of estimated future cash flows and assumed discount rates reflecting varying
degrees of risk. The carrying values of the Successor Companys long-term obligations approximate
their fair values.
The fair value of the reorganization value which applies in fresh-start accounting was
estimated by applying the income approach and a market approach. This fair value measurement is
based on significant inputs that are not observable in the market and, therefore, represents a
Level 3 measurement as defined in ASC 820, Fair Value Measurements.
Adoption of Standards
In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements
(ASU 2010-06), which amends the existing fair value measurement and disclosure guidance currently
included in ASC Topic 820, Fair Value Measurements and Disclosures, to require additional
disclosures regarding fair value measurements. Specifically, ASU 2010-06 requires entities to
disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value
hierarchy and the reasons for these transfers, the reasons for any transfer in or out of Level 3
and information in the reconciliation of recurring Level 3 measurements about purchases, sales,
issuances and settlements on a gross basis. In addition, ASU 2010-06 also clarifies the
requirement for entities to disclose information about both the valuation techniques and inputs
used in estimating Level 2 and Level 3 fair value measurements. ASU 2010-06 is effective for
interim and annual reporting periods beginning after December 15, 2009, except for additional
disclosures related to Level 3 fair value measurements, which are effective for fiscal years
beginning after December 15, 2010. The adoption of ASU 2010-06 did not impact the Companys
consolidated financial statements or results of operations.
In September 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangements (ASU 2009-13), which requires companies to allocate
revenue in arrangements involving multiple deliverables based on the estimated selling price of
each deliverable when such deliverables are not sold separately either by the company or other
vendors. ASU 2009-13 eliminates the requirement that all undelivered elements must have objective
and reliable evidence of fair value before a company can recognize the portion of the overall
arrangement fee that is attributable to items that already have been delivered. As a result, the
new guidance may allow some companies to recognize revenue on transactions that involve multiple
deliverables earlier than under current requirements. ASU 2009-13 is
effective for revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. Early adoption is permitted at the beginning of a companys
fiscal year. The Company expects to adopt ASU 2009-13 on January 1, 2011 and does not expect ASU
2009-13 to have a material impact on its consolidated financial statements.
F-26
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 balance sheets, and is not being amortized.
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 December 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 year ended December 31, 2010, for the four months ended December 31, 2009 and for the eight
months ended December 31, 2009, the following have been incurred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Year ended |
|
|
Four months ended |
|
|
|
Eight months ended |
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
August 31, 2009 |
|
Professional fees expense |
|
$ |
(13,150 |
) |
|
$ |
(13,825 |
) |
|
|
$ |
(533,271 |
) |
Debt issuance costs related to
DIP facility |
|
|
|
|
|
|
|
|
|
|
|
(295,757 |
) |
Other debt issuance costs |
|
|
|
|
|
|
|
|
|
|
|
(280,964 |
) |
Gain (loss) on discharge of
liabilities subject to
compromise |
|
|
16,453 |
|
|
|
(58,652 |
) |
|
|
|
74,648,976 |
|
|
|
|
|
|
|
|
|
|
|
|
Total reorganization items, net |
|
$ |
3,303 |
|
|
$ |
(72,477 |
) |
|
|
$ |
73,538,984 |
|
|
|
|
|
|
|
|
|
|
|
|
F-27
The $74.6 million gain from discharge of liabilities subject to compromise is the result of
the settlement of 3.5% Subordinated Notes in exchange for $6.0 million in Notes Payable and
3,960,000 shares of the Successor company, Debtor-in-Possession Credit Facility and Prepetition
Secured Loan in exchange for 7,320,000 shares of the Successor Companys common stock and unsecured
claims in exchange for 120,000 shares. On the Effective Date, all stock option plans of the
Predecessor Company were cancelled.
Cash paid for reorganization items during the year ended December 31, 2010 and December 31,
2009 was less than $0.1 million and $0.6 million, respectively. Professional fees include
financial, legal and valuation services directly associated with the reorganization process.
Note 7Agera Laboratories, Inc.
On August 10, 2006, the Predecessor Company acquired 57% of the outstanding common shares of
Agera. Agera is a skincare company that has proprietary rights to a scientifically-based advanced
line of skincare products. Agera markets its product primarily in the United States and Europe. The
results of Ageras operations and cash flows have been included in the consolidated financial
statements from the date of the acquisition. The assets and liabilities of Agera have been included
in the consolidated balance sheets since the date of the acquisition.
Note 8Fair Value Measurements
The Company adopted the accounting guidance on fair value measurements for financial assets
and liabilities measured on a recurring basis. The guidance requires fair value measurements be
classified and disclosed in one of the following three categories:
|
|
|
Level 1: Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities; |
|
|
|
Level 2: Quoted prices in markets that are not active or inputs which are observable,
either directly or indirectly, for substantially the full term of the asset or liability. |
|
|
|
Level 3: Prices or valuation techniques that require inputs that are both significant
to the fair value measurement and unobservable (i.e., supported by little or no market
activity). |
The following fair value hierarchy table presents information about each major category of
the Companys financial assets and liability measured at fair value on a recurring basis
as of December 31, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurement using |
|
|
|
|
|
|
|
Significant |
|
|
Significant |
|
|
|
|
|
|
Quoted prices in |
|
|
other |
|
|
unobservable |
|
|
|
|
|
|
active markets |
|
|
observable |
|
|
inputs |
|
|
|
|
|
|
(Level 1) |
|
|
inputs (Level 2) |
|
|
(Level 3) |
|
|
Total |
|
At December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
867,738 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
867,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability |
|
$ |
|
|
|
$ |
|
|
|
$ |
8,171,518 |
|
|
$ |
8,171,518 |
|
Derivative liability |
|
|
|
|
|
|
|
|
|
|
2,120,360 |
|
|
|
2,120,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
10,291,878 |
|
|
$ |
10,291,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurement using |
|
|
|
|
|
|
|
Significant |
|
|
Significant |
|
|
|
|
|
|
Quoted prices in |
|
|
other |
|
|
unobservable |
|
|
|
|
|
|
active markets |
|
|
observable |
|
|
inputs |
|
|
|
|
|
|
(Level 1) |
|
|
inputs (Level 2) |
|
|
(Level 3) |
|
|
Total |
|
At December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,362,488 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,362,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability |
|
$ |
|
|
|
$ |
|
|
|
$ |
635,276 |
|
|
$ |
635,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation of warrant liability measured at fair value on a recurring basis using
unobservable inputs (Level 3) is as follows:
|
|
|
|
|
|
|
Warrant |
|
|
|
Liability |
|
Balance at January 1, 2009 |
|
$ |
|
|
Issuance of additional warrants |
|
|
316,192 |
|
Change in fair value of warrant liability |
|
|
319,084 |
|
|
|
|
|
Balance at December 31, 2009 |
|
|
635,276 |
|
Issuance of additional warrants |
|
|
7,071,010 |
|
Change in fair value of warrant liability |
|
|
465,232 |
|
|
|
|
|
Balance at December 31, 2010 |
|
$ |
8,171,518 |
|
|
|
|
|
The fair value of the warrant liability is based on Level 3 inputs. For this
liability, the Company developed its own assumptions that do not have observable inputs or
available market data to support the fair value. See note 15 for further discussion of the
warrant liability.
The reconciliation of derivative liability measured at fair value on a recurring basis
using unobservable inputs (Level 3) is as follows:
|
|
|
|
|
|
|
Derivative |
|
|
|
Liability |
|
|
|
|
|
|
Balance at December 31, 2009 |
|
$ |
|
|
Record fair value of derivative liability |
|
|
2,120,360 |
|
|
|
|
|
Balance at December 31, 2010 |
|
$ |
2,120,360 |
|
|
|
|
|
The fair value of the derivative liability is based on Level 3 inputs. For this
liability, the Company developed its own assumptions that do not have observable inputs or
available market data to support the fair value. See note 14 for further discussion of the
derivative liability.
F-29
Note 9Property and Equipment
As of December 31, 2010 and 2009, property and equipment consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Lab equipment |
|
$ |
18,685 |
|
|
$ |
|
|
Computer equipment and software |
|
|
10,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,674 |
|
|
|
|
|
Less: Accumulated depreciation
and amortization |
|
|
(8,085 |
) |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
21,589 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Depreciation expense was $8,085 for the year ending December 31, 2010.
Note 10Accrued Expenses
Accrued expenses consist of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Accrued professional fees |
|
$ |
413,384 |
|
|
$ |
147,410 |
|
Accrued compensation |
|
|
7,076 |
|
|
|
7,208 |
|
Accrued interest |
|
|
|
|
|
|
246,578 |
|
Dividend on preferred stock payable |
|
|
191,417 |
|
|
|
42,740 |
|
Accrued other |
|
|
177,605 |
|
|
|
100,324 |
|
|
|
|
|
|
|
|
Accrued expenses |
|
$ |
789,482 |
|
|
$ |
544,260 |
|
|
|
|
|
|
|
|
Note 11Debt
The Successor Companys outstanding long-term debt at December 31, 2010 and December 31, 2009
consists of $7.3 million and $6 million, respectively, of 12.5% Unsecured Promissory Notes (New
Notes). Unpaid interest has been accreted to the principal at a rate of 15%. The New Notes have
the following features: (1) 12.5% interest payable quarterly in cash or, at the Successor Companys
option, 15% payable in kind by capitalizing such unpaid amount and adding it to the principal as of
the date it was due; (2) maturing June 1, 2012; (3) at any time prior to the maturity date, the
Successor Company may redeem any portion of the outstanding principal of the New Notes in Cash at
125% of the stated face value of the New Notes. There is a mandatory redemption feature that
requires the Successor Company to redeem all outstanding new notes if: (1) the Successor Company
successfully completes a capital campaign raising in excess of $10 million; or (2) the Successor
Company is acquired by, or sell a majority stake to, an outside party. The current debt of $57K is
due in 2011 and the promissory note is due June 2012.
Total debt is comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Current debt |
|
$ |
56,911 |
|
|
$ |
47,795 |
|
|
|
|
|
|
|
|
Total Current Debt |
|
|
56,911 |
|
|
|
47,795 |
|
Promissory Note |
|
|
7,290,881 |
|
|
|
6,000,060 |
|
|
|
|
|
|
|
|
Total debt |
|
$ |
7,347,792 |
|
|
$ |
6,047,855 |
|
|
|
|
|
|
|
|
Note 12Income Taxes
Fibrocell Science, Inc. and Fibrocell Technologies, Inc. file a consolidated U.S. Federal
income tax return. During the third quarter of 2006, the Company acquired a 57% interest in Agera
(see Note 7 Agera Laboratories, Inc.). Agera files a separate U.S. Federal income tax return.
The Companys foreign subsidiaries, which comprise loss from discontinued operations, file income
tax returns in their respective jurisdictions. The geographic source of loss from continuing
operations is the United States.
F-30
The components of the income tax expense/(benefit) related to continuing operations, are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
|
Eight |
|
|
|
|
|
|
|
Four months |
|
|
|
Months |
|
|
|
Year ended |
|
|
ended |
|
|
|
ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
2009 |
|
U.S. Federal: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
|
|
|
$ |
|
|
|
|
$ |
|
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. State: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation between income taxes/(benefit) at the U.S. federal statutory rate and the
amount recorded in the accompanying consolidated financial statements is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
Four months |
|
|
|
Eight months |
|
|
|
Year ended |
|
|
ended |
|
|
|
ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
2009 |
|
Tax expense/(benefit) at U.S. federal statutory rate |
|
$ |
(4,490,789 |
) |
|
$ |
(1,757,838 |
) |
|
|
$ |
23,058,084 |
|
Increase/(decrease) in domestic valuation allowance |
|
|
5,077,136 |
|
|
|
2,303,065 |
|
|
|
|
(30,209,991 |
) |
State income taxes/(benefit) before valuation allowance,
net of federal benefit |
|
|
(789,894 |
) |
|
|
(357,619 |
) |
|
|
|
4,690,990 |
|
Deferred tax impact of reorganization |
|
|
|
|
|
|
(172,395 |
) |
|
|
|
2,261,359 |
|
Other |
|
|
203,547 |
|
|
|
(15,213 |
) |
|
|
|
199,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the Successor Companys net deferred tax liabilities at December 31, 2010
and 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Intangible assets |
|
$ |
2,500,000 |
|
|
$ |
2,500,000 |
|
|
|
|
|
|
|
|
Total deferred tax liabilities |
|
$ |
2,500,000 |
|
|
$ |
2,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
Loss carryforwards |
|
$ |
38,003,210 |
|
|
$ |
32,942,543 |
|
Property and equipment |
|
|
1,460,890 |
|
|
|
1,559,631 |
|
Accrued expenses and other |
|
|
1,285,007 |
|
|
|
1,551,822 |
|
Stock compensation |
|
|
930,103 |
|
|
|
548,078 |
|
|
|
|
|
|
|
|
Total deferred tax assets |
|
|
41,679,210 |
|
|
|
36,602,074 |
|
Less: valuation allowance |
|
|
(41,679,210 |
) |
|
|
(36,602,074 |
) |
|
|
|
|
|
|
|
Total deferred tax assets |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities |
|
$ |
2,500,000 |
|
|
$ |
2,500,000 |
|
|
|
|
|
|
|
|
F-31
As of December 31, 2010, the Company had generated U.S. net operating loss carryforwards of
approximately $81.6 million which expire from 2026 to 2030 and net loss carryforwards in certain
non-US jurisdictions of approximately $24.4 million. The U.S. net operating loss carryforwards
were reduced by approximately $74 million as a result of the Companys emergence from bankruptcy
(see Note 6 Liabilities Subject to Compromise and Reorganization Items). The net operating
loss carryforwards are available to reduce future taxable income. However, a, change in ownership,
as defined by federal income tax regulations, could significantly limit the Companys ability to
utilize its U.S. net operating loss carryforwards. Additionally, because federal tax laws limit
the time during which the net operating loss carryforwards may be applied against future taxes, if
the Company fails to generate taxable income prior to the expiration dates it may not be able to
fully utilize the net operating loss carryforwards to reduce future income taxes. As the Company
has had cumulative losses and there is no assurance of future taxable income, valuation allowances
have been recorded to fully offset the deferred tax asset at December 31, 2010 and 2009. The
valuation allowance increased by $5.1 million during 2010, due to the impact from the current year
net loss, and decreased by $27.3 million during 2009, due primarily to the impact from the
Companys reorganization described above and net loss in that period.
Note 13Commitments and Contingencies
Legal Proceedings
As of December 31, 2010, there were no legal proceedings.
Employment Agreements
On February 1, 2010, the Company entered into an employment agreement with Mr. Pernock
pursuant to which Mr. Pernock agreed to serve as Chief Executive Officer of the Company for an
initial term ending February 1, 2013, which may be renewed for an additional one-year term by
mutual agreement. The agreement provides for an annual salary of $450,000. Mr. Pernock is entitled
to receive an annual bonus each year, payable subsequent to the issuance of the Companys final
audited financial statements, but in no case later than 120 days after the end of its most recently
completed fiscal year. The final determination on the amount of the annual bonus will be made by
the Board of Directors (or the Compensation Committee of the Board of Directors, if such committee
has been formed), based on criteria established by the Board of Directors (or the Compensation
Committee of the Board of Directors, if such committee has been formed). The targeted amount of the
annual bonus shall be 60% of Mr. Pernocks base salary, although the actual bonus may be higher or
lower.
Under the agreement, Mr. Pernock was granted a ten-year option to purchase 1,650,000 shares at
an exercise price per share equal to the closing price of the Companys common stock on the date of
execution of the agreement, or February 1, 2010. The options vest as follows: (i) 250,000 shares
upon execution of the agreement; (ii) 100,000 shares upon the closing of a strategic partnership or
licensing deal with a major partner that enables the Company to significantly improve and/or
accelerate its capabilities in such areas as research, production, marketing and/or sales and
enable the Company to reach or exceed its major business milestones within the Companys strategic
and operational plans, provided Mr. Pernock is the CEO on the closing date of such partnership or
licensing deal (the determination of whether any partnership or licensing deal meets the foregoing
criteria will be made in good faith by the Board upon the closing of such partnership or licensing
deal); and (iii) 1,300,000 shares in equal 1/36th installments (or 36,111 shares per installment)
monthly over a three-year period, provided Executive is the CEO on each vesting date. The vesting
of all options set forth above shall accelerate upon a change in control as defined in the
agreement, provided Mr. Pernock is employed by the Company within 60 days prior to the date of such
change in control.
F-32
If Mr. Pernocks employment is terminated at the Companys election at any time, for reasons
other than death, disability, cause (as defined in the agreement) or a voluntary resignation, or by
Mr. Pernock for good reason (as defined in the agreement), Mr. Pernock shall be entitled to receive
severance payments equal to twelve months of Mr. Pernocks base salary and of the premiums
associated with continuation of Mr. Pernocks benefits pursuant to COBRA to the extent that he is
eligible for them following the termination of his employment; provided that if anytime within
eighteen months after a change in control either (i) Mr. Pernock is terminated, at the Companys
election at any time, for reasons other than death, disability, cause or voluntary resignation, or
(ii) Mr. Pernock terminates the agreement for good reason, Mr. Pernock shall be entitled to receive
severance payments equal to: (1) two years of Mr. Pernocks base salary, (2) Mr. Pernocks most
recent annual bonus payment, and (3) the premiums associated with continuation of Mr. Pernocks
benefits pursuant to COBRA to the extent that he is eligible for them following the termination of
his employment for a period of one year after termination. All severance payments shall be made in
a lump sum within ten business days of Mr. Pernocks execution and delivery of a general release of
the Company, its parents, subsidiaries and affiliates and each of its officers, directors,
employees, agents, successors and assigns in a form acceptable to the Company. If severance
payments are being made, Mr. Pernock has agreed not to compete with the Company until twelve months
after the termination of his employment.
On August 24, 2010, the Company entered into an amended and restated employment agreement with
Mr. Declan Daly, which replaced and terminated his prior employment agreement with the Company,
pursuant to which Mr. Daly agreed to serve as Chief Operating Officer and Chief Financial Officer
of the Company for an initial term ending August 24, 2013, which may be renewed for an additional
one-year term by mutual agreement. The agreement provides for an annual salary of $300,000. Mr.
Daly is entitled to receive an annual bonus each year, payable subsequent to the issuance of the
Companys final audited financial statements, but in no case later than 120 days after the end of
its most recently completed fiscal year. The final determination on the amount of the annual bonus
will be made by the Board of Directors (or the Compensation Committee of the Board of Directors, if
such committee has been formed), based on criteria established by the Board of Directors (or the
Compensation Committee of the Board of Directors, if such committee has been formed). The targeted
amount of the annual bonus shall be 50% of Mr. Dalys base salary, although the actual bonus may be
higher or lower.
Under the agreement, Mr. Daly was granted a ten-year option to purchase 400,000 shares at an
exercise price per share equal to the closing price of the Companys common stock on the date of
execution of the agreement, or $0.55 per share. The options vest as follows: (i) 40,000 shares upon
execution of the agreement; and (ii) 360,000 shares in equal 1/36th installments (or 10,000 shares
per installment) monthly over a three-year period, provided Mr. Daly is the COO or CFO on each
vesting date. The vesting of all options set forth above shall accelerate upon a change in
control as defined in the agreement, provided Mr. Daly is employed by the Company within 60 days
prior to the date of such change in control.
Mr. Daly is entitled to receive a one-time bonus in the amount of $50,000 (the Milestone
Bonus) upon the FDAs approval of the Companys Biologics License Application filing, provided
that Mr. Daly is the CFO or COO at the time of said event.
If Mr. Dalys employment is terminated at the Companys election at any time, for reasons
other than death, disability, cause (as defined in the agreement) or a voluntary resignation, or by
Mr. Daly for good reason (as defined in the agreement), Mr. Daly shall be entitled to receive
severance payments equal to twelve months of Mr. Dalys base salary and of the premiums associated
with continuation of Mr. Dalys benefits pursuant to COBRA to the extent that he is eligible for
them following the termination of his employment; provided that if anytime within eighteen months
after a change in control either (i) Mr. Daly is terminated, at the Companys election at any time,
for reasons other than death, disability, cause or voluntary resignation, or (ii) Mr. Daly
terminates the agreement for good reason, Mr. Daly shall be entitled to receive severance payments
equal to: (1) two years of Mr. Dalys base salary, (2) Mr. Dalys most recent annual bonus payment,
and (3) the premiums associated with continuation of Mr. Dalys benefits pursuant to COBRA to the
extent that he is eligible for them following the termination of his employment for a period of one
year after termination. All severance payments shall be made in a lump sum within ten
business days of Mr. Dalys execution and delivery of a general release of the Company, its
parents, subsidiaries and affiliates and each of its officers, directors, employees, agents,
successors and assigns in a form acceptable to the Company. If severance payments are being made,
Mr. Daly has agreed not to compete with the Company until twelve months after the termination of
his employment.
F-33
Consulting Agreements
In June 2010, we entered into two consulting agreements with two individuals. We issued the
two consultants options to purchase 150,000 shares each. The options have an expiration date five
years from the date of issuance and an exercise price of $0.93 per share.
In September 2010, we entered into a consulting agreement with one individual and issued the
consultant options to purchase 120,000 shares. The options have an expiration date five years from
the date of issuance and an exercise price of $0.59 per share.
Effective upon our exit from bankruptcy on September 3, 2009, we entered into a consultant
agreement, pursuant to which Dr. Langer agreed to provide consulting services to us, including
serving as a scientific advisor. The agreement has a one year term, provided that either party may
terminate the agreement on 30 days notice. The agreement provides Dr. Langer annual compensation
of $50,000.
In October 2009, we entered into two consulting agreements with two individuals. We issued the
two consultants options to purchase 200,000 shares and 150,000 shares, respectively. The options
have an expiration date five years from the date of issuance and an exercise price of $0.75 per
share.
In December 2009, we entered into a consulting agreement with one individual and issued the
consultant options to purchase 100,000 shares. The options have an expiration date five years from
the date of issuance and an exercise price of $1.25 per share.
Leases
The Company has entered into a lease for office, warehouse and laboratory facilities in Exton,
Pennsylvania under a third party non-cancelable operating lease through 2013. Future minimum lease
commitments at December 31, 2010 are as follows:
|
|
|
|
|
Year Ending |
|
|
|
|
December 31, |
|
|
|
|
2011 |
|
$ |
1,194,350 |
|
2012 |
|
|
1,194,350 |
|
2013 |
|
|
298,588 |
|
|
|
|
|
Total |
|
$ |
2,687,288 |
|
|
|
|
|
For each of the years ended December 31, 2010 and 2009, rental expense totaled $1.4 million.
In April 2005, the Company entered into a non-cancelable three year operating lease for
approximately 86,500 square feet in Exton, Pennsylvania. This facility houses members of the senior
management team, quality and manufacturing personnel, and the corporate finance department. The
Company began constructing a production line in a portion of this facility in anticipation of
eventual FDA approval. The facility was completed during September 2005. This production line is
expected to be utilized for the production of clinical supplies. During 2007, the Company extended
the lease through March 31, 2013. Lease expense is recognized on a straight-line basis through
March 31, 2013. The Exton, Pennsylvania minimum lease payments are included in the future minimum
lease commitments table above through March 31, 2013.
Note 14Equity
Redeemable Preferred stock
As of December 31, 2010 the number of Redeemable Preferred stock (Preferred) outstanding,
with a par value of $0.001 per share and a stated value of $1,000 per share is as follows:
|
|
|
|
|
Preferred stock Series A |
|
|
2,886 |
|
Preferred stock Series B |
|
|
4,640 |
|
Preferred stock Series D |
|
|
1,645 |
|
|
|
|
|
Total |
|
|
9,171 |
|
|
|
|
|
F-34
Terms of Redeemable Preferred stock
Dividends; Rank; Liquidation
Holders of the Preferred stock Series A (Series A Preferred), Preferred stock Series B
(Series B Preferred) and Preferred stock Series D (Series D Preferred) are entitled to receive
cumulative dividends at the rate per share (as a percentage of the stated value per share) of 6%
per annum (subject to increase in certain circumstances), payable quarterly in arrears on January
15, April 15, July 15 and October 15. The dividends are payable in cash, or at our option, in duly
authorized, validly issued, fully paid and non-assessable shares of common stock equal to 110% of
the cash dividend amount payable on the dividend payment date, or a combination thereof; provided
that we may not pay the dividends in shares of common stock unless we meet certain conditions
described in the Certificate of Designation, including that the resale of the shares has been
registered under the Securities Act. If we pay the dividend in shares of common stock, the common
stock will be valued for such purpose at 80% of the average of the volume weighted average price
for the 10 consecutive trading days ending on the trading day that is immediately prior to the
dividend payment date.
The Series A Preferred, Series B Preferred and Series D Preferred ranks senior to all shares
of Company common stock (Common Stock). The Series D Preferred ranks junior to the Companys
Series A Preferred and Series B Preferred.
Upon our liquidation, dissolution or winding-up, whether voluntary or involuntary, the holders
of the Series A Preferred, Series B Preferred and Series D Preferred shall be entitled to receive
out of our assets, whether capital or surplus, an amount equal to the stated value of the common
stock, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then
due and owing thereon under the Certificate of Designation, for each share of Series A Preferred,
Series B Preferred and Series D Preferred before any distribution or payment shall be made to the
holders of any junior securities, and if our assets are insufficient to pay in full such amounts,
then the entire assets to be distributed to the holders of the Series A Preferred, Series B
Preferred and Series D Preferred shall be ratably distributed among the holders in accordance with
the respective amounts that would be payable on such shares if all amounts payable thereon were
paid in full.
Conversion; Conversion Price; Forced Conversion; Optional Redemption
Each share of Series A Preferred, Series B Preferred and Series D Preferred is convertible
into a number of shares of common stock equal to (1) the stated value of the share ($1,000),
divided by (2) $0.50 (as a result of the December 2010 Series D Preferred financing), subject to
adjustment as discussed below. We refer to this price as the Conversion Price.
With certain exceptions, if, at any time while the Series A Preferred, Series B Preferred and
Series D Preferred is outstanding, we sell or grant any option to purchase or sell or grant any
right to reprice, or otherwise dispose of or issue (or announce any sale, grant or any option to
purchase or other disposition), any common stock or common stock equivalents at an effective price
per share that is lower than the then Conversion Price, then the Conversion Price will be reduced
to equal the lower price (down-round provision). The Conversion Price is also subject to
proportional adjustment in the event of any stock split, stock dividend, reclassification or
similar event with respect to the common stock.
Commencing six months from the date of the agreement pursuant to which we issued the Series A
Preferred, Series B Preferred and Series D Preferred, if the volume weighted average price for each
of any 20 consecutive trading days exceeds 200% of the then effective Conversion Price and various
other equity conditions are satisfied (including that the resale of the shares underlying the
Series A Preferred, Series B Preferred and Series D Preferred, has been registered under the
Securities Act), upon 30 days notice, the Series A Preferred, Series B Preferred and Series D
Preferred plus all accrued and unpaid dividends will automatically convert into shares of common
stock.
F-35
Commencing two years from the date of the agreement pursuant to which we issued the Series A
Preferred, Series B Preferred and Series D Preferred, upon 30 days notice and provided various
other equity conditions are satisfied (including that the resale of the shares underlying the
Series A Preferred, Series B Preferred and Series D Preferred has been registered under the
Securities Act), we may redeem some or all of the then outstanding Series A Preferred, Series B
Preferred and Series D Preferred for cash in an amount equal to the 150% of the stated value of the
Series A Preferred, Series B Preferred and Series D Preferred.
Voting
The holders of the Series A Preferred, Series B Preferred and Series D Preferred have no
voting rights except with respect to specified matters affecting the rights of the Series A
Preferred, Series B Preferred and Series D Preferred.
Negative Covenants
As long as any shares of Series A Preferred, Series B Preferred and Series D Preferred are
outstanding, we may not, directly or indirectly: (a) amend our charter documents in any manner that
materially and adversely affects any rights of the holders of the Series A Preferred, Series B
Preferred and Series D Preferred; (b) pay cash dividends or distributions on our junior securities
(including the common stock); or (c) enter into any transaction with any affiliate of ours which
would be required to be disclosed in any public filing, unless such transaction is made on an
arms-length basis and expressly approved by a majority of our disinterested directors.
Triggering Events
In the event of a Triggering Event (as defined in the Certificate of Designation and described
below), any holder of Series A Preferred, Series B Preferred and Series D Preferred may require us
to redeem all of its Series A Preferred, Series B Preferred and Series D Preferred, at a redemption
price equal to the greater of (a) 130% of the stated value and (b) the product of (i) the volume
weighted average price on the trading day immediately preceding the date of the Triggering Event
and (ii) the stated value divided by the then Conversion Price, plus all accrued but unpaid
dividends thereon and all liquidated damages and other costs, expenses or amounts due in respect of
the Series A Preferred, Series B Preferred and Series D Preferred. Triggering Events include, among
other things, bankruptcy related events, change of control transactions (as defined in the
Certificate of Designation), and various types of failures to perform under, and breaches of, the
transaction documents.
Preferred Stock Series A
In October 2009, the Successor Company completed an offering of Series A Preferred, 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 recent December 2010 Series D
Preferred offering, or $0.50, and with respect to the warrants, the number of shares issuable under
the warrants issued in the October 2009 Offering were proportionately increased such that the
aggregate exercise price payable, after taking into consideration the decrease in exercise price,
is now 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 in accordance with ASC 480, Distinguishing Liabilities from Equity (ASC 480) because any
holder of Series A Preferred may require the Successor Company to redeem all of its Series A
Preferred in the event of a triggering event which is outside of the control of the Successor
Company. After giving effect to this anti-dilution provision, as of December 31, 2010, there will
be 5,772,000 shares of Common Stock underlying the Series A Preferred, Class A warrants to purchase
1,624,996 shares of Common Stock at an exercise price of $0.50 per share, Class B warrants to
purchase 1,624,996 shares of Common Stock at an exercise price of $0.50 per share and co-placement
warrants to purchase 650,000 shares of Common Stock at an exercise price of $0.50 per share.
Holders of the Series A Preferred are entitled to receive cumulative dividends at the rate per
share of 6% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October
15, beginning on April 15, 2010. As of December 31, 2010, $92,404 was accrued for dividends
payable.
F-36
Preferred Stock Series B
In 2010, the Successor Company completed an offering of Series B Preferred and warrants (the
Warrants). 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 recent December 2010 Series D offering, or $0.50, and with respect to the
warrants, the number of shares issuable under the warrants issued in the 2010 Offerings were
proportionately increased such that the aggregate exercise price payable, after taking into
consideration the decrease in exercise price, is now 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 in accordance with ASC 480,
Distinguishing Liabilities from Equity (ASC 480) because any holder of Series B Preferred may
require the Successor Company to redeem all of its Series B Preferred in the event of a triggering
event which is outside of the control of the Successor Company.
The Successor Company records accrued dividends at a rate of 6% per annum on the Series B
Preferred. The Successor Company records accrued dividends at a rate of 6% per annum on the Series
B Preferred. As of December 31, 2010, $96,581 is accrued for dividends payable.
The details of the 2010 Preferred Stock Series B financing are as follows:
|
|
In the third and fourth quarter of 2010, the Company entered into a Securities Purchase
Agreement (the Purchase Agreement) with certain accredited investors (the Purchasers),
pursuant to which the Company agreed to sell to the Purchasers in the aggregate: (i) 4,640
shares of Series B Preferred, with a par value of $0.001 per share and a stated value of
$1,000 per share Series B Preferred, and (ii) the Warrants to purchase 7,733,334 shares of
Common Stock at an exercise price of $0.8054 per share. As of December 31, 2010, the Company
had not received $210,000 in subscription proceeds representing 210 shares Series B Preferred
and Warrants to purchase 350,000 shares. Upon receipt of these subscription proceeds, the
Company will issue the foregoing securities. |
|
|
The aggregate purchase price for the third and fourth quarter 2010 Series B Preferred
financing paid by the Purchasers for the Series B Preferred and the Warrants was $4,430,000
(representing $1,000 for each share of Series B Preferred together with the Warrants and
adjusted for subscription receivable of $210,000). The Company used the proceeds for working
capital purposes. |
|
|
Viriathus Capital LLC and John Carris Investments LLC were co-placement agents for the
Transaction, and received, in the aggregate, cash compensation of $354,400 and warrants to
purchase 590,657 (adjusted for subscription receivable of $210,000) shares of Common Stock at
an exercise price of $0.60 per share. |
|
|
As a result of the December 2010 Series D Preferred Stock transaction the shares and
warrants were repriced to $0.50 per share. After giving effect to this anti-dilution
provision, as of December 31, 2010, there will be 9,280,000 shares of Common Stock underlying
the Series B Preferred, warrants to purchase 12,456,853 shares of Common Stock at an exercise
price of $0.50 per share and co-placement warrants to purchase 708,789 shares of Common Stock
at an exercise price of $0.50 per share. |
Preferred Stock Series D
On December 15, 17 and 27, 2010, the Successor Company completed a private placement of
securities of Series D Preferred and warrants. Each of the foregoing securities were subject to
the down-round protection and if at any time while the Series D Preferred is outstanding, we sell
or grant any option to purchase or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any sale, grant or any option to purchase or other disposition), any common
stock or common stock equivalents at an effective price per share that is lower than the then
Conversion Price, then the Conversion Price will be reduced to equal the lower price. The
preferred stock has been classified within the mezzanine section between liabilities and equity in
its consolidated balance sheets in accordance with ASC 480, Distinguishing Liabilities from Equity
(ASC 480) because any holder of Series D Preferred may require
the Successor Company to redeem all of its Series D Preferred in the event of a triggering
event which is outside of the control of the Successor Company.
F-37
The Successor Company records accrued dividends at a rate of 6% per annum on the Series D
Preferred. The Successor Company records accrued dividends at a rate of 6% per annum on the Series
D Preferred. As of December 31, 2010, $2,432 is accrued for dividends payable.
The details of the 2010 Series D Preferred financing are as follows:
|
|
1,645 shares of Series D Preferred, with a par value of $0.001 per share and a stated
value of $1,000 per share and (ii) warrants to purchase 3,290,000 shares of Common Stock at
an exercise price of $0.50 per share. |
|
|
The aggregate purchase price paid by the Purchasers for the Series D Preferred and the
Warrants was $1,645,000 (representing $1,000 for each share of Series D Preferred together
with Warrants). |
|
|
The placement agents for the Transactions received cash compensation of $131,600 and
warrants to purchase 263,200 shares of Common Stock at an exercise price of $0.50 per share
(assuming all subscription proceeds are received in the Transactions). |
Conversion option of Redeemable Preferred stock
The embedded conversion option for the Series A Preferred, Series B Preferred and Series D
Preferred has been recorded as a derivative liability under ASC 815 in the Successors consolidated
balance sheet as of December 31, 2010 and will be re-measured on the Successor Companys reporting
dates. The fair value of the derivative liability 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 embedded conversion option as a
liability until the preferred stock is converted into common stock.
The embedded conversion option for the Series A Preferred, Series B Preferred and Series D
Preferred was valued at $2,120,360 at December 31, 2010 at fair value using the Black-Scholes
option pricing model. The fair market value of the derivative liability was computed using the
Black-Scholes option-pricing model with the following weighted average assumptions:
|
|
|
|
|
|
|
December 31, 2010 |
|
Expected life (years) |
|
1.6 years |
|
Interest rate |
|
|
1.6 |
% |
Dividend yield |
|
|
|
|
Volatility |
|
|
63 |
% |
Common Stock Offering
On March 2, 2010, the Company entered into a Securities Purchase Agreement with certain
accredited investors, 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 aggregate purchase price paid by the Purchasers for the common stock and the warrants was
$3,807,500. The Company used the proceeds for working capital purposes.
Viriathus Capital LLC and John Carris Investments LLC were co-placement agents for the
transaction, and received cash compensation of $304,600 and warrants to purchase 406,133 shares of
common stock at an exercise price of $0.75 per share upon the closing.
F-38
Each of the foregoing securities were subject to the down-round protection and if at any
time while the Common Stock is outstanding, we sell or grant any option to purchase or sell or
grant any right to reprice, or otherwise dispose of or issue (or announce any sale, grant or any
option to purchase or other disposition), any common stock or common stock equivalents at an
effective price per share that is lower than the then Conversion Price, then the Conversion Price
will be reduced to equal the lower price. As of result of the December 2010 Series D Preferred
Stock transaction the Warrants were repriced to $0.50 per share. After giving effect to this
anti-dilution provision, as of December 31, 2010, there will be Warrants to purchase 9,950,261
shares of Common Stock at an exercise price of $0.50 per share and co-placement warrants to
purchase 609,200 shares of Common Stock at an exercise price of $0.50 per share.
Note 15Warrants
Preferred Stock Series A Class A and B Warrants and Placement Agent Warrants
As disclosed above in Note 9, the Successor Company issued Class A warrants, Class B warrants
and placement agent warrants in connection with the October 2009 preferred stock transaction. The
warrants are liability classified since they have down-round price protection and they are
re-measured on the Companys reporting dates. As a result of the December 2010 Series D convertible
preferred stock financing and the down-round provision, the Class A warrants, Class B warrants
and placement agent warrants were reissued to purchase approximately 3.9 million shares of Common
Stock at an exercise price of $0.50 per share.
Preferred Stock Series B Warrants and Co-placement Agent Warrants
In connection with the Series B Convertible Preferred Stock transaction, the Successor Company
issued warrants and co- placement agent warrants. 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 December 2010 Series D convertible preferred stock financing and the down-round
provision, the Series B warrants and co-placement agent warrants were reissued to purchase
approximately 13.2 million shares of Common Stock at an exercise price of $0.50 per share.
Preferred Stock Series D Warrants and Co-placement Agent Warrants
In connection with the Series D Convertible Preferred Stock transaction, the Successor Company
issued 3,290,000 warrants at an exercise price of $0.50 per share and 263,200 placement agent
warrants at an exercise price of $0.50 per share. The warrants are liability classified since they
have down-round price protection and they are re-measured on the Companys reporting dates. The
weighted average fair market value of the warrants, at the date of issuance, granted to the
accredited investors and co-placement agents, based on the Black-Scholes valuation model, is
estimated to be $0.31 per warrant.
Common Stock Warrants and Co-placement Agent Warrants
In connection with the March 2, 2010 financing, the Successor Company issued 5,076,664
warrants at an exercise price of $0.98 per share to the accredited investors and 406,133 warrants
at an exercise price of $0.75 to the co-placement agents upon closing. The warrants are liability
classified since they have down-round price protection and they are re-measured on the Companys
reporting dates. The warrants were exercisable immediately after grant and expire five years
thereafter. The fair market value of the warrants, at the date of issuance, granted to the
accredited investors and co-placement agents, based on the Black-Scholes valuation model, is
estimated to be $0.52 per warrant and $0.58 per warrant, respectively. As a result of the
Convertible Preferred Stock Series B financing and the down-round provision, the Common Stock
warrants and placement agent warrants were reissued to purchase 10.6 million shares of Common Stock
at an exercise price of $0.50 per share.
F-39
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 December 31, 2010, and recorded warrant expense of $2.0 million
resulting from the increase in the liability associated with the fair value of the warrants for the
three months ended December 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 warrants are exercisable
upon issuance and expire on the fifth anniversary of issuance. There were no warrants exercised in
2010.
The fair market value of the warrants was computed using the Black-Scholes option-pricing
model with the following key weighted average assumptions as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
Expected life (years) |
|
4.7 years |
|
|
4.8 years |
|
Interest rate |
|
|
1.8 |
% |
|
|
2.7 |
% |
Dividend yield |
|
|
|
|
|
|
|
|
Volatility |
|
|
63 |
% |
|
|
66 |
% |
Roll forward of Successor Company warrant liability from December 31, 2009 through December
31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
Additions |
|
|
Revaluation |
|
|
December 31, 2010 |
|
Preferred stock class A warrants |
|
$ |
275,378 |
|
|
$ |
|
|
|
$ |
120,711 |
|
|
$ |
396,089 |
|
Preferred stock class B warrants |
|
|
207,611 |
|
|
|
|
|
|
|
188,478 |
|
|
|
396,089 |
|
Preferred stock co-placement warrants |
|
|
152,287 |
|
|
|
|
|
|
|
6,150 |
|
|
|
158,437 |
|
Common stock warrants |
|
|
|
|
|
|
2,654,752 |
|
|
|
(123,604 |
) |
|
|
2,531,148 |
|
Common stock placement warrants |
|
|
|
|
|
|
235,958 |
|
|
|
(80,990 |
) |
|
|
154,968 |
|
Preferred stock series B warrants |
|
|
|
|
|
|
2,837,394 |
|
|
|
522,678 |
|
|
|
3,360,072 |
|
Preferred stock series B co-placement warrants |
|
|
|
|
|
|
249,778 |
|
|
|
(58,784 |
) |
|
|
190,994 |
|
Preferred stock series D warrants |
|
|
|
|
|
|
1,011,553 |
|
|
|
(100,717 |
) |
|
|
910,836 |
|
Preferred stock series D co-placement warrants |
|
|
|
|
|
|
81,575 |
|
|
|
(8,690 |
) |
|
|
72,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
635,276 |
|
|
$ |
7,071,010 |
|
|
$ |
465,232 |
|
|
$ |
8,171,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability is comprised of the following as of December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Number of |
|
|
Fair Value of |
|
|
December 31, |
|
|
|
Warrants |
|
|
Warrants |
|
|
2010 |
|
Preferred stock class A warrants |
|
|
1,624,996 |
|
|
$ |
0.24 |
|
|
$ |
396,089 |
|
Preferred stock class B warrants |
|
|
1,624,996 |
|
|
|
0.24 |
|
|
|
396,089 |
|
Preferred stock co-placement warrants |
|
|
650,000 |
|
|
|
0.24 |
|
|
|
158,437 |
|
Common stock warrants |
|
|
9,950,261 |
|
|
|
0.25 |
|
|
|
2,531,148 |
|
Common stock placement warrants |
|
|
609,200 |
|
|
|
0.25 |
|
|
|
154,968 |
|
Preferred stock series B warrants |
|
|
12,456,853 |
|
|
|
0.27 |
|
|
|
3,360,072 |
|
Preferred stock series B
co-placement warrants |
|
|
708,789 |
|
|
|
0.27 |
|
|
|
190,994 |
|
Preferred stock series D warrants |
|
|
3,290,000 |
|
|
|
0.28 |
|
|
|
910,836 |
|
Preferred stock series D
co-placement warrants |
|
|
263,200 |
|
|
|
0.28 |
|
|
|
72,885 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
31,178,295 |
|
|
$ |
0.26 |
|
|
$ |
8,171,518 |
|
|
|
|
|
|
|
|
|
|
|
Warrant liability is comprised of the following as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Number of |
|
|
Fair Value of |
|
|
Balance as of |
|
|
|
Warrants |
|
|
Warrants |
|
|
December 31, 2009 |
|
Preferred stock class A warrants |
|
|
501,543 |
|
|
$ |
0.55 |
|
|
$ |
275,378 |
|
Preferred stock class B warrants |
|
|
416,667 |
|
|
|
0.50 |
|
|
|
207,611 |
|
Preferred stock co-placement warrants |
|
|
250,000 |
|
|
|
0.61 |
|
|
|
152,287 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,168,210 |
|
|
|
|
|
|
$ |
635,276 |
|
|
|
|
|
|
|
|
|
|
|
|
F-40
Note 16Equity-based Compensation
Total stock-based compensation expense recognized using the straight-line attribution method
in the consolidated statement of operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Twelve months |
|
|
Four months |
|
|
|
Eight months |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
2009 |
|
Stock option compensation expense for employees
and directors |
|
$ |
833,713 |
|
|
$ |
326,838 |
|
|
|
$ |
581,707 |
|
Restricted stock expense |
|
|
72,000 |
|
|
|
168,000 |
|
|
|
|
|
|
Equity awards for nonemployees issued for services |
|
|
86,828 |
|
|
|
386,380 |
|
|
|
|
1,746 |
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense |
|
$ |
992,541 |
|
|
$ |
881,218 |
|
|
|
$ |
583,453 |
|
|
|
|
|
|
|
|
|
|
|
|
Successor Company
Our board of directors adopted the 2009 Equity Incentive Plan (the Plan) effective September
3, 2009. The Plan is intended to further align the interests of the Successor Company and its
stockholders with its employees, including its officers, non-employee directors, consultants and
advisors by providing incentives for such persons to exert maximum efforts for the success of the
Successor Company. The Plan allows for the issuance of up to 4,000,000 shares of the Successor
Companys common stock. Subsequent to December 31, 2010, the board of directors of the Company
amended the 2009 Equity Incentive Plan to increase the number of shares available for issuance
under the Plan to 15,000,000 shares of common stock. The types of awards that may be granted under
the Plan include options (both nonqualified stock options and incentive stock options), stock
appreciation rights, stock awards, stock units, and other stock-based awards. Notwithstanding the
foregoing, to the extent the Successor Company is unable to obtain shareholder approval of the Plan
within one year of the effective date, any incentive stock options issued pursuant to the Plan
shall automatically be considered nonqualified stock options, and to the extent a holder of an
incentive stock option exercises his or her incentive stock option prior to such shareholder
approval date, such exercised option shall automatically be considered to have been a nonqualified
stock option. The term of each award is determined by the Board at the time each award is granted,
provided that the terms of options may not exceed ten years.
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.
F-41
During the year ended December 31, 2010, the weighted average fair market value using the
Black-Scholes option-pricing model of the options granted was $0.53 for this period. During the
period September 2009 through December 2009, the weighted average fair market value using the
Black-Scholes option-pricing model of the options granted was $0.33 for this period. 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:
|
|
|
|
|
|
|
|
|
|
|
|
Four Months |
|
|
|
Year Ended |
|
|
Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Expected life |
|
5.1 years |
|
|
2.7 years |
|
Interest rate |
|
2.0 |
% |
|
1.4 |
% |
Di Dividend yield |
|
|
|
|
|
|
Volatility |
|
64% |
|
|
67% |
|
There were no stock options exercised during the year ended December 31, 2010 and the period
September 2009 through December 2009.
A summary of option activity for the year ended December 31, 2010 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Remaining |
|
|
Aggregate |
|
|
|
|
|
|
|
Exercise |
|
|
Contractual |
|
|
Intrinsic |
|
Options |
|
Shares |
|
|
Price |
|
|
Term |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1, 2010 |
|
|
2,807,000 |
|
|
$ |
0.77 |
|
|
|
7.35 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
2,870,000 |
|
|
|
0.95 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2010 |
|
|
5,677,000 |
|
|
$ |
0.86 |
|
|
|
7.46 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at December 31, 2010 |
|
|
3,627,384 |
|
|
$ |
0.84 |
|
|
|
7.16 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the Successor Companys non-vested stock options:
|
|
|
|
|
|
|
|
|
|
|
Non-vested Options |
|
|
|
|
|
|
|
Weighted- |
|
|
|
Number of |
|
|
Average Fair |
|
|
|
Shares |
|
|
Value |
|
Non-vested at January 1, 2010 |
|
|
677,000 |
|
|
$ |
0.36 |
|
Granted |
|
|
2,870,000 |
|
|
|
0.53 |
|
Vested |
|
|
(1,497,384 |
) |
|
|
0.49 |
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-vested at December 31, 2010 |
|
|
2,049,616 |
|
|
$ |
0.50 |
|
|
|
|
|
|
|
|
The total fair value of shares vested during the twelve months ended December 31, 2010
was $0.8 million. As of December 31, 2010, there was $0.7 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 two years. As of December 31, 2010, there was
$0.3 million of total unrecognized compensation expense related to performance-based, non-vested
employee and consultant stock options. That cost will be recognized when the performance criteria
within the respective performance-based option grants become probable of achievement.
F-42
Restricted stock
The following table summarizes the Successors restricted stock activity for the year ended
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
Non-vested Options |
|
|
|
|
|
|
|
Weighted- |
|
|
|
Number of |
|
|
Average Fair |
|
|
|
Shares |
|
|
Value |
|
Non-vested at January 1, 2010 |
|
|
300,000 |
|
|
$ |
0.48 |
|
Granted |
|
|
|
|
|
|
|
|
Vested |
|
|
(150,000 |
) |
|
|
0.48 |
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-vested at December 31, 2010 |
|
|
150,000 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
As of December 31, 2010, there was less than $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 less than 1 year.
Predecessor Company
Prior to September 3, 2009, the Effective Date, 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, (3) the 2005
Stock Option and Appreciation Rights Plan. As a result of the cancellation of the stock options,
the Predecessor Company recorded additional stock compensation expense of $0.3 million for the
unrecognized stock compensation expense.
Note 17Segment Information and Geographical information
The Successor Company has two reportable segments: Fibrocell Therapy and Agera. The Fibrocell
Therapy segment specializes in the development and commercialization of autologous cellular
therapies for soft tissue regeneration. The Agera segment maintains proprietary rights to a
scientifically-based advanced line of skincare products. There is no intersegment revenue. The
following table provides operating financial information for the continuing operations of the
Successor Companys two reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
Successor |
|
|
|
|
|
|
Successor |
|
Year Ended December 31, 2010 |
|
Fibrocell Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
936,369 |
|
|
$ |
936,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss) from continuing
operations |
|
$ |
(12,840,598 |
) |
|
$ |
9,770 |
|
|
$ |
(12,830,828 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information related to
continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
$ |
8,085 |
|
|
$ |
|
|
|
$ |
8,085 |
|
Total assets, including assets from
discontinued operations as of December
31, 2010 |
|
|
7,681,502 |
|
|
|
596,643 |
|
|
|
8,278,145 |
|
Property and equipment, net |
|
|
21,589 |
|
|
|
|
|
|
|
21,589 |
|
Intangible assets, net |
|
|
6,340,656 |
|
|
|
|
|
|
|
6,340,656 |
|
An intercompany receivable as of December 31, 2010, of $0.9 million, due from the Agera
segment to the Fibrocell Therapy segment, is eliminated in consolidation. This intercompany
receivable is primarily due to the intercompany management fee charge to Agera by Fibrocell
Technologies, Inc., as well as Agera working capital needs provided by Fibrocell Technologies,
Inc., and has been excluded from total assets of the Fibrocell Therapy segment in the above table.
There is no intersegment revenue. Total assets on the consolidated balance sheet at December 31,
2010 are approximately $8.3 million, which includes assets of discontinued operations of less than
$0.1 million.
F-43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
Successor |
|
|
|
|
|
|
Successor |
|
Four Months Ended December 31, 2009 |
|
Fibrocell Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
329,941 |
|
|
$ |
329,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss) from continuing
operations |
|
$ |
(5,026,024 |
) |
|
$ |
3,631 |
|
|
$ |
(5,022,393 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information related to
continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Total assets, including assets from
discontinued operations as of December
31, 2009 |
|
|
8,092,816 |
|
|
|
631,393 |
|
|
|
8,724,209 |
|
Property and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net |
|
|
6,340,656 |
|
|
|
|
|
|
|
6,340,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
Predecessor |
|
|
|
|
|
|
Predecessor |
|
Eight Months Ended August 31, 2009 |
|
Isolagen Therapy |
|
|
Agera |
|
|
Consolidated |
|
Total operating revenue |
|
$ |
|
|
|
$ |
538,620 |
|
|
$ |
538,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income from continuing
operations |
|
$ |
65,498,934 |
|
|
$ |
381,306 |
|
|
$ |
65,880,240 |
|
|
|
|
|
|
|
|
|
|
|
An intercompany receivable as of December 31, 2009, of $1.0 million, due from the Agera
segment to the Fibrocell Therapy segment, is eliminated in consolidation. This intercompany
receivable is primarily due to the intercompany management fee charge to Agera by Fibrocell
Technologies, Inc., as well as Agera working capital needs provided by Fibrocell Technologies,
Inc., and has been excluded from total assets of the Fibrocell Therapy segment in the above table.
There is no intersegment revenue. Total assets on the consolidated balance sheet at December 31,
2009 are approximately $8.7 million, which includes assets of discontinued operations of less than
$0.1 million.
Geographical information concerning the Companys revenue is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Year ended December 31, |
|
|
Four months ended |
|
|
|
Eight months ended |
|
|
|
2010 |
|
|
December 31, 2009 |
|
|
|
August 31, 2009 |
|
United States |
|
$ |
237,286 |
|
|
$ |
68,526 |
|
|
|
$ |
187,289 |
|
United Kingdom |
|
|
669,921 |
|
|
|
251,615 |
|
|
|
|
308,244 |
|
Other |
|
|
29,162 |
|
|
|
9,800 |
|
|
|
|
43,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
936,369 |
|
|
$ |
329,941 |
|
|
|
$ |
538,620 |
|
|
|
|
|
|
|
|
|
|
|
|
During 2010, revenue from one foreign customer and one domestic customer represented 72% and
17% of consolidated revenue, respectively. During the four months ended December 31, 2009, revenue
from one foreign customer and one domestic customer represented 79% and 15% of consolidated
revenue, respectively. During the eight months ended August 31, 2009, revenue from one foreign
customer and one domestic customer represented 57% and 23% of consolidated revenue, respectively.
As of December 31, 2010 and December 31, 2009, one foreign customer represented 88% and 87%,
respectively, of accounts receivable, net.
F-44
Note 18Subsequent Events
On January 14, 2011, the board of directors of the Company amended the 2009 Equity Incentive
Plan (the Plan) to increase the number of shares available for issuance under the Plan to
15,000,000 shares of common stock.
On January 14, 2011, the board of directors agreed to provide: (i) Mr. David Pernock, Chief
Executive Officer and President, with an option to purchase 2,100,000 shares of Company common
stock; (ii) Mr. Declan Daly, Chief Financial Officer, with an option to purchase 1,065,000 shares
of Company common stock; and (iii) Messrs. Kelvin Moore, Robert Langer, Marc Mazur, and George
Korkos, each a director of the Company, with an option to purchase 200,000 shares of Company common
stock. Each of the foregoing options has: (i) a ten-year term, (ii) an exercise price equal to the
closing price of the Companys common stock on the date of grant, and (iii) vests 50% on the date
of grant; 25% on the one-year anniversary of the date of grant; and 25% on the two-year anniversary
of the date of grant; provided in each case that the grantee is providing service to the Company on
the vesting date.
On January 21, 2011, the Company completed a private placement of securities in which the
Company sold to certain accredited investors in the aggregate: (i) 1,234 shares of Series D
Convertible Preferred Stock, with a par value of $0.001 per share and a stated value of $1,000 per
share (Series D Preferred), and (ii) warrants to purchase 2,468,000 shares of Company common
stock (Common Stock) at an exercise price of $0.50 per share.
The aggregate purchase price paid by the Purchasers for the Series D Preferred and the
Warrants was $1,234,000 (representing $1,000 for each share of Series D Preferred together with
warrants). The Company intends to use the proceeds for working capital purposes.
The placement agents for the offering received cash compensation of $98,720 and warrants to
purchase 197,440 shares of Common Stock at an exercise price of $0.50 per share.
On January 28, 2011, the Company completed a private placement of securities in which the
Company sold to certain accredited investors in the aggregate: (i) 1,414 shares of Series D at a
stated value of $1,000 per share, and (ii) warrants to purchase 2,828,000 shares of Common Stock at
an exercise price of $0.50 per share.
The aggregate purchase price paid by the Purchasers for the Series D Preferred and the
warrants was $1,414,000 (representing $1,000 for each share of Series D Preferred together with
warrants). The Company intends to use the proceeds for working capital purposes.
The placement agents for the offering received cash compensation of $113,120 and warrants to
purchase 226,240 shares of Common Stock at an exercise price of $0.50 per share.
On February 9, 2011, the Company completed a private placement of securities in which the
Company sold to certain accredited investors in the aggregate: (i) 3,436 shares of Series D at a
stated value of $1,000 per share, and (ii) warrants to purchase 6,872,000 shares of Common Stock at
an exercise price of $0.50 per share.
The aggregate purchase price paid by the Purchasers for the Series D Preferred and the
warrants was $3,436,000 (representing $1,000 for each share of Series D Preferred together with
warrants). The Company intends to use the proceeds for working capital purposes.
The placement agents for the offering received cash compensation of $274,880 and warrants to
purchase 549,760 shares of Common Stock at an exercise price of $0.50 per share.
F-45
On March 1, 2011, the Company completed a private placement of securities in which the Company
sold to certain accredited investors in the aggregate: (i) 50 shares of Series D at a stated value
of $1,000 per share, and (ii) warrants to purchase 100,000 shares of Common Stock at an exercise
price of $0.50 per share.
The aggregate purchase price paid by the Purchasers for the Series D Preferred and the
warrants was $50,000 (representing $1,000 for each share of Series D Preferred together with
warrants). The Company intends to use the proceeds for working capital purposes.
The placement agents for the offering received cash compensation of $4,000 and warrants to
purchase 8,000 shares of Common Stock at an exercise price of $0.50 per share.
As of March 24, 2011, investors in the Series B preferred stock had converted 1,902 preferred
shares into 3,804,000 common shares.
F-46
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than underwriting discounts,
payable by the registrant in connection with the sale of the shares of common stock being
registered. All amounts are estimates except the fees payable to the SEC.
|
|
|
|
|
SEC Registration Fee |
|
$ |
4,443.46 |
|
Accounting Fees and Expenses |
|
$ |
5,000 |
|
Legal Fees and Expenses |
|
$ |
5,000 |
|
Miscellaneous |
|
$ |
5,000 |
|
Total |
|
$ |
19,443.46 |
|
|
|
|
|
Item 14. Indemnification of Directors and Officers
Fibrocells Certificate of Incorporation and Bylaws authorize it to indemnify directors,
officers, employees and agents of Fibrocell against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement, actually and reasonably incurred in connection
with any action, suit or proceeding, if the party to be indemnified acted in good faith and in a
manner that he reasonably believed to be in or not opposed to the best interests of Fibrocell, and,
with respect to any criminal action or proceeding, such party had no reasonable cause to believe
his conduct was unlawful. The Certificate of Incorporation and the Bylaws of Fibrocell also
authorize it to indemnify directors, officers, employees and agents of Fibrocell who are or were a
party to or threatened to be a party to, any threatened, pending, or completed action or suit by or
in the right of Fibrocell to procure a judgment in its favor by reason of the fact the he was a
director, officer, employee or agent of Fibrocell or of another entity at the request of Fibrocell,
against expenses (including reasonable attorneys fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of Fibrocell, except
that no indemnification shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged liable to Fibrocell unless and to the extent that the court in
which such suit or action was brought shall determine on application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
The Bylaws also permit Fibrocell to enter into indemnity agreements with individual directors,
officers, employees, and other agents. Fibrocell reserves the right to enter into such agreements
with its directors and executive officers effective upon the closing of this offering. These
agreements, together with the Bylaws and Certificate of Incorporation, may require Fibrocell, among
other things, to indemnify directors or officers against certain liabilities that may arise by
reason of their status or service as directors (other than liabilities resulting from willful
misconduct of a culpable nature), to advance expenses to them as they are incurred, provided that
they undertake to repay the amount advanced if it is ultimately determined by a court that they are
not entitled to indemnification, and to obtain and maintain directors and officers insurance if
available on reasonable terms.
Fibrocells Certificate of Incorporation provides that directors shall have no personal
liability to Fibrocell or its stockholders for monetary damages for breach of fiduciary duty as a
director, except (i) for any breach of a directors duty of loyalty to Fibrocell or its
stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under section 174 of the General Corporation Law of Delaware
as it may from time to time be amended or any successor provision thereto, or (iv) for any
transaction from which a director derived an improper personal benefit.
Fibrocell currently has directors and officers liability insurance. Delaware General
Corporation Law, Section 145, and the Certificate of Incorporation and Bylaws of Fibrocell provide
for the indemnification of officers, directors and other corporate agents in terms sufficiently
broad to indemnify such persons, under certain circumstances, for liabilities (including
reimbursement of expenses incurred) arising under the Securities Act. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, Fibrocell has been advised
that in the opinion of the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
II-1
Item 15. Recent Sales of Unregistered Securities
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.
Pursuant to the Plan, all Isolagen equity interests, including without limitation its common
stock, options and warrants outstanding as of the effective date were cancelled. On the effective
date, Fibrocell completed an exit financing of common stock in the amount of $2 million. Fibrocell
issued the following shares of common stock pursuant to the Plan:
|
|
|
7,320,000 shares, to its pre-bankruptcy lenders and the lenders that provided its
debtor-in-possession facility, collectively; |
|
|
|
|
3,960,000 shares, to the holders of the 3.5% convertible subordinated notes issued
by Isolagen; |
|
|
|
|
600,000 shares, to its management as of the effective date, which was its chief
operating officer; |
|
|
|
|
120,000 shares, to the holders of its general unsecured claims; and |
|
|
|
|
2,666,666 shares, to the purchasers of shares in the exit financing (its
pre-bankruptcy lenders, the lenders that provided the debtor-in-possession facility and the
holders of the 3.5% convertible subordinated notes were permitted to participate in the exit
financing). |
The common stock issued pursuant to the Plan was issued pursuant to Section 1145 of the United
States Bankruptcy Code, which exempts the issuance of securities from the registration requirements
of the Securities Act of 1933, as amended (Securities Act).
A condition precedent to Fibrocells exit from bankruptcy was that it execute an investment
banking agreement with John Carris Investments LLC and Viriathus Capital LLC. In connection with
this agreement, Fibrocell was required to pay a retainer, which consisted in part of the issuance
of options to purchase an aggregate of 1,000,000 shares of common stock at $0.75 per share. These
securities were issued pursuant to the exemption from registration permitted under Section 4(2) of
the Securities Act.
In October 2009, the Series A Preferred and the Class A and Class B warrants were sold in a
transaction exempt from registration under the Securities Act, in reliance on Section 4(2) thereof
and Rule 506 of Regulation D thereunder. Each purchaser represented that it was an accredited
investor as defined in Regulation D.
In October 2009, Fibrocell entered into two consulting agreements with two individuals.
Fibrocell issued the two consultants options to purchase 200,000 shares and 150,000 shares,
respectively. The options have an expiration date five years from the date of issuance and an
exercise price of $0.75 per share. The options were issued in a transaction exempt from
registration under the Securities Act of 1933, in reliance on Section 4(2) thereof.
II-2
In March 2010, Fibrocell sold common stock and warrants in a transaction exempt from
registration under the Securities Act, in reliance on Section 4(2) thereof and Rule 506 of
Regulation D thereunder. Each purchaser represented that it was an accredited investor as defined
in Regulation D.
In July, September, October and November 2010, Fibrocell sold Series B Preferred and warrants
in a transaction exempt from registration under the Securities Act, in reliance on Section 4(2)
thereof and Rule 506 of Regulation D thereunder. Each purchaser represented that it was an
accredited investor as defined in Regulation D.
In December 2010 through March 2011, Fibrocell sold Series D Preferred and warrants in a
transaction exempt from registration under the Securities Act, in reliance on Section 4(2) thereof
and Rule 506 of Regulation D thereunder. Each purchaser represented that it was an accredited
investor as defined in Regulation D.
In June 2011, Fibrocell sold common stock in a transaction exempt
from registration under the Securities Act, in reliance on Section
4(2) thereof and Rule 506 of Regulation D thereunder. Each purchaser
represented that it was an accredited investor as
defined in Regulation D.
Item 16. Exhibits and Financial Statement Schedules
|
|
|
Exhibit |
|
|
Number |
|
Description |
2.1
|
|
Debtors First Amended Joint Plan of Reorganization dated July
30, 2009 and Disclosure Statement (filed as Exhibit 10.2 to the
Companys Form 10-Q for quarter ended June 30, 2009, filed on
August 12, 2009 and as Exhibit 99.1 to our Form 8-K filed
September 2, 2009) |
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3.1 to our Form 8-K filed September 2,
2009) |
|
|
|
3.2
|
|
Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 to our Form 8-K filed September 2, 2009) |
|
|
|
3.3
|
|
Certificate of Designation of Preferences, Rights and
Limitations of Series A 6% Convertible Preferred Stock
(incorporated by reference to Exhibit 3.1 to our Form 8-K filed
October 14, 2009) |
|
|
|
3.4
|
|
Certificate of Designation of Preferences, Rights and
Limitations of Series B Convertible Preferred Stock, dated July
16, 2010. (incorporated by reference to Exhibit 3.1 to our Form
8-K filed July 20, 2010). |
|
|
|
3.5
|
|
Amended and Restated Certificate of Designation of Preferences,
Rights and Limitations of Series D Convertible Preferred Stock.
(incorporated by reference to Exhibit 3.2 to our Form 8-K filed
December 8, 2010). |
|
|
|
4.1
|
|
Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to our Form 10-Q filed November 23, 2009) |
|
|
|
4.2
|
|
Form of Class A/B Common Stock Purchase Warrant issued in
October 2009 offering (incorporated by reference to Exhibit 4.1
to our Form 8-K filed October 14, 2009) |
|
|
|
4.3
|
|
Form of 12.5% Promissory Note (incorporated by reference to
Exhibit 10.1 to our Form 8-K filed September 10, 2009) |
|
|
|
4.4
|
|
Form of Placement Agent Warrant issued in November 2009
offering (incorporated by reference to Exhibit 4.2 to our Form
10-Q filed November 23, 2009) |
II-3
|
|
|
Exhibit |
|
|
Number |
|
Description |
4.5
|
|
Common Stock Purchase Warrant issued in March 2010 offering
(incorporated by reference to Exhibit 4.1 to our Form 8-K filed
March 3, 2010) |
|
|
|
4.6
|
|
Form of Common Stock Purchase Warrant issued in July 2010
Series B preferred stock offering (incorporated by reference to
Exhibit 4.1 to our Form 8-K filed July 20, 2010) |
|
|
|
4.7
|
|
Form of Placement Agent Warrant issued in July 2010 Series B
preferred stock offering (incorporated by reference to
Exhibit 4.2 to our Form 8-K filed July 20, 2010) |
|
|
|
4.8
|
|
Form of Common Stock Purchase Warrant used for Series B
preferred stock offering (incorporated by reference to
Exhibit 4.1 of the Form 8-K filed October 22, 2010). |
|
|
|
4.9
|
|
Form of Common Stock Purchase Warrant used for the Series D
preferred stock offering (incorporated by reference to
Exhibit 4.1 of the Form 8-K filed February 15, 2011). |
|
|
|
*5
|
|
Opinion of Cozen OConnor |
|
|
|
10.1
|
|
Securities Purchase Agreement dated October 13, 2009 between
the Company and the Series A Preferred Stock Purchasers
(incorporated by reference to Exhibit 10.1 to our Form 8-K
filed October 14, 2009) |
|
|
|
10.2
|
|
Amended and Restated Employment Agreement between the Company
and Declan Daly dated August 24, 2010 (incorporated by
reference to Exhibit 10.1 to our Form 8-K filed August 27,
2010) |
|
|
|
10.3
|
|
Consulting Agreement between the Company and Robert Langer
(incorporated by reference to Exhibit 10.2 to our Form 10-Q
filed November 23, 2009) |
|
|
|
10.4
|
|
2009 Equity Incentive Plan, as amended (incorporated by
reference to Exhibit 4.5 to our Form S-8 filed March 3, 2011) |
|
|
|
10.5
|
|
Lease Agreement between Isolagen, Inc and The Hankin Group
dates April 7, 2005 (previously filed as an exhibit to the
companys Form 8-K, filed on April 12, 2005) |
|
|
|
10.6
|
|
Purchase Option Agreement between Isolagen, Inc and 405
Eagleview Associates dated April 7, 2005 (previously filed as
an exhibit to the companys Form 8-K, filed on April 12, 2005) |
|
|
|
10.7
|
|
Intellectual Property Purchase Agreement between Isolagen
Technologies, Inc., Gregory M. Keller, and PacGen Partners
(previously filed as an exhibit to the companys amended Form
S-1, as filed on October 24, 2003) |
|
|
|
10.8
|
|
Employment Agreement between the Company and David Pernock
(incorporated by reference to Exhibit 10.1 to our Form 8-K
filed February 1, 2010) |
|
|
|
10.9
|
|
Securities Purchase Agreement dated March 2, 2010 (incorporated
by reference to Exhibit 10.1 to our Form 8-K filed March 3,
2010) |
II-4
|
|
|
Exhibit |
|
|
Number |
|
Description |
10.10
|
|
Registration Rights Agreement dated March 2, 2010 (incorporated
by reference to Exhibit 10.1 to our Form 8-K filed March 3,
2010) |
|
|
|
10.11
|
|
Registration Rights Agreement between the Company and the
Series A Preferred Stock Purchasers, dated October 13, 2009
(incorporated by reference to Exhibit 10.2 to our Form 8-K
filed October 14, 2009) |
|
|
|
10.12
|
|
Securities Purchase Agreement between the Company and Series B
Preferred Stock Purchasers (incorporated by reference to
Exhibit 10.1 to our Form 8-K filed July 20, 2010) |
|
|
|
10.13
|
|
Form of Registration Rights Agreement between the Company and
Series B Preferred Stock Purchasers (incorporated by reference
to Exhibit 10.2 to our Form 8-K filed July 20, 2010) |
|
|
|
10.14
|
|
Form of Securities Purchase Agreement between the Company and
Series B Preferred Stock Purchasers (incorporated by reference
to Exhibit 4.1 of the Form 8-K filed October 22, 2010). |
|
|
|
21
|
|
List of Subsidiaries (previously filed as an exhibit to the
companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2006) |
|
|
|
*23.1
|
|
Consent of BDO USA, LLP |
|
|
|
23.2
|
|
Consent of Cozen OConnor (included in Exhibit 5) |
|
|
|
24.1
|
|
Power of Attorney (included on signature page) |
Item 17. Undertakings
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
i. To include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
ii. To reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the effective registration statement.
iii. To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such
information in the registration statement;
2. To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
3. That, for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
i. If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in the registration statement as of the date it
is first used after effectiveness. Provided, however, that no statement made in a
registration
II-5
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the registration statement or made
in any such document immediately prior to such date of first use.
4. That, for the purpose of determining liability of the registrant under the Securities Act
of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser:
i. Any preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
ii. Any free writing prospectus relating to the offering prepared by or on behalf of
the undersigned registrant or used or referred to by the undersigned registrant;
iii. The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
iv. Any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
5. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused
this registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Exton, Commonwealth of Pennsylvania, on
June 23, 2011.
|
|
|
|
|
|
FIBROCELL SCIENCE, INC.
|
|
|
By: |
/s/ David Pernock
|
|
|
|
Name: |
David Pernock |
|
|
|
Title: |
Chief Executive Officer |
|
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates indicated:
|
|
|
|
|
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ David Pernock
David Pernock
|
|
Chairman of the
Board and Chief
Executive Officer
|
|
June 23, 2011 |
|
|
|
|
|
/s/ Declan Daly
Declan Daly
|
|
Director, Chief
Financial Officer,
Chief Operating
Officer and
Controller
|
|
June 23, 2011 |
|
|
|
|
|
|
|
Director
|
|
June 23, 2011 |
|
|
|
|
|
|
|
Director
|
|
June 23, 2011 |
|
|
|
|
|
|
|
Director
|
|
June 23, 2011 |
|
|
|
|
|
|
|
Director
|
|
June 23, 2011 |
|
|
|
| |
*By: |
/s/ Declan Daly
|
| |
|
|
Declan Daly, |
| |
|
|
Attorney-in-fact |
| |
II-7
EXHIBIT INDEX
|
|
|
Exhibit |
|
|
Number |
|
Description |
2.1
|
|
Debtors First Amended Joint Plan of Reorganization dated July
30, 2009 and Disclosure Statement (filed as Exhibit 10.2 to the
Companys Form 10-Q for quarter ended June 30, 2009, filed on
August 12, 2009 and as Exhibit 99.1 to our Form 8-K filed
September 2, 2009) |
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3.1 to our Form 8-K filed September 2,
2009) |
|
|
|
3.2
|
|
Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 to our Form 8-K filed September 2, 2009) |
|
|
|
3.3
|
|
Certificate of Designation of Preferences, Rights and
Limitations of Series A 6% Convertible Preferred Stock
(incorporated by reference to Exhibit 3.1 to our Form 8-K filed
October 14, 2009) |
|
|
|
3.4
|
|
Certificate of Designation of Preferences, Rights and
Limitations of Series B Convertible Preferred Stock, dated July
16, 2010. (incorporated by reference to Exhibit 3.1 to our Form
8-K filed July 20, 2010). |
|
|
|
3.5
|
|
Amended and Restated Certificate of Designation of Preferences,
Rights and Limitations of Series D Convertible Preferred Stock.
(incorporated by reference to Exhibit 3.2 to our Form 8-K filed
December 8, 2010). |
|
|
|
4.1
|
|
Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to our Form 10-Q filed November 23, 2009) |
|
|
|
4.2
|
|
Form of Class A/B Common Stock Purchase Warrant issued in
October 2009 offering (incorporated by reference to Exhibit 4.1
to our Form 8-K filed October 14, 2009) |
|
|
|
4.3
|
|
Form of 12.5% Promissory Note (incorporated by reference to
Exhibit 10.1 to our Form 8-K filed September 10, 2009) |
|
|
|
4.4
|
|
Form of Placement Agent Warrant issued in November 2009
offering (incorporated by reference to Exhibit 4.2 to our Form
10-Q filed November 23, 2009) |
|
|
|
4.5
|
|
Common Stock Purchase Warrant issued in March 2010 offering
(incorporated by reference to Exhibit 4.1 to our Form 8-K filed
March 3, 2010) |
|
|
|
4.6
|
|
Form of Common Stock Purchase Warrant issued in July 2010
Series B preferred stock offering (incorporated by reference to
Exhibit 4.1 to our Form 8-K filed July 20, 2010) |
|
|
|
4.7
|
|
Form of Placement Agent Warrant issued in July 2010 Series B
preferred stock offering (incorporated by reference to
Exhibit 4.2 to our Form 8-K filed July 20, 2010) |
II-8
|
|
|
Exhibit |
|
|
Number |
|
Description |
4.8
|
|
Form of Common Stock Purchase Warrant used for Series B
preferred stock offering (incorporated by reference to
Exhibit 4.1 of the Form 8-K filed October 22, 2010). |
|
|
|
4.9
|
|
Form of Common Stock Purchase Warrant used for the Series D
preferred stock offering (incorporated by reference to
Exhibit 4.1 of the Form 8-K filed February 15, 2011). |
|
|
|
*5
|
|
Opinion of Cozen OConnor |
|
|
|
10.1
|
|
Securities Purchase Agreement dated October 13, 2009 between
the Company and the Series A Preferred Stock Purchasers
(incorporated by reference to Exhibit 10.1 to our Form 8-K
filed October 14, 2009) |
|
|
|
10.2
|
|
Amended and Restated Employment Agreement between the Company
and Declan Daly dated August 24, 2010 (incorporated by
reference to Exhibit 10.1 to our Form 8-K filed August 27,
2010) |
|
|
|
10.3
|
|
Consulting Agreement between the Company and Robert Langer
(incorporated by reference to Exhibit 10.2 to our Form 10-Q
filed November 23, 2009) |
|
|
|
10.4
|
|
2009 Equity Incentive Plan, as amended (incorporated by
reference to Exhibit 4.5 to our Form S-8 filed March 3, 2011) |
|
|
|
10.5
|
|
Lease Agreement between Isolagen, Inc and The Hankin Group
dates April 7, 2005 (previously filed as an exhibit to the
companys Form 8-K, filed on April 12, 2005) |
|
|
|
10.6
|
|
Purchase Option Agreement between Isolagen, Inc and 405
Eagleview Associates dated April 7, 2005 (previously filed as
an exhibit to the companys Form 8-K, filed on April 12, 2005) |
|
|
|
10.7
|
|
Intellectual Property Purchase Agreement between Isolagen
Technologies, Inc., Gregory M. Keller, and PacGen Partners
(previously filed as an exhibit to the companys amended Form
S-1, as filed on October 24, 2003) |
|
|
|
10.8
|
|
Employment Agreement between the Company and David Pernock
(incorporated by reference to Exhibit 10.1 to our Form 8-K
filed February 1, 2010) |
|
|
|
10.9
|
|
Securities Purchase Agreement dated March 2, 2010 (incorporated
by reference to Exhibit 10.1 to our Form 8-K filed March 3,
2010) |
|
|
|
10.10
|
|
Registration Rights Agreement dated March 2, 2010 (incorporated
by reference to Exhibit 10.1 to our Form 8-K filed March 3,
2010) |
|
|
|
10.11
|
|
Registration Rights Agreement between the Company and the
Series A Preferred Stock Purchasers, dated October 13, 2009
(incorporated by reference to Exhibit 10.2 to our Form 8-K
filed October 14, 2009) |
|
|
|
10.12
|
|
Securities Purchase Agreement between the Company and Series B
Preferred Stock Purchasers (incorporated by reference to
Exhibit 10.1 to our Form 8-K filed July 20, 2010) |
|
|
|
10.13
|
|
Form of Registration Rights Agreement between the Company and
Series B Preferred Stock Purchasers (incorporated by reference
to Exhibit 10.2 to our Form 8-K filed July 20, 2010) |
II-9
|
|
|
Exhibit |
|
|
Number |
|
Description |
10.14
|
|
Form of Securities Purchase Agreement between the Company and
Series B Preferred Stock Purchasers (incorporated by reference
to Exhibit 4.1 of the Form 8-K filed October 22, 2010). |
|
|
|
21
|
|
List of Subsidiaries (previously filed as an exhibit to the
companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2006) |
|
|
|
*23.1
|
|
Consent of BDO USA, LLP |
|
|
|
23.2
|
|
Consent of Cozen OConnor (included in Exhibit 5) |
|
|
|
24.1
|
|
Power of Attorney (included on signature page) |
II-10