x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 22-2343568 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
420 LEXINGTON AVE, SUITE 350 NEW YORK, NEW YORK | 10170 |
(Address of principal executive offices) | (zip code) |
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company x |
Page No. | ||
June 30, 2013 | December 31, 2012 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 14,722,478 | $ | 13,737,452 | |||
Accounts receivable, net of allowance for doubtful accounts of $618,876 and $626,054 at June 30, 2013 and December 31, 2012, respectively | 701,619 | 1,053,604 | |||||
Inventory | 31,965 | 1,113,025 | |||||
Prepaids and other current assets | 993,285 | 803,135 | |||||
Total current assets | 16,449,347 | 16,707,216 | |||||
Property, plant and equipment, net | 10,873,757 | 11,153,143 | |||||
Goodwill | 11,117,770 | 11,117,770 | |||||
Intangible assets, net | 14,178,222 | 14,480,827 | |||||
Other assets | 990,717 | 947,307 | |||||
$ | 53,609,813 | $ | 54,406,263 | ||||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 2,410,610 | $ | 2,555,240 | |||
Accrued liabilities | 1,988,491 | 2,284,813 | |||||
Notes payable | 278,330 | 202,558 | |||||
Mortgages payable | 3,345,406 | 3,438,475 | |||||
Unearned revenues | 362,041 | 1,468,341 | |||||
Total current liabilities | 8,384,878 | 9,949,427 | |||||
Long-term Liabilities | |||||||
Deferred income taxes | 4,046,690 | 3,599,122 | |||||
Notes payable | 220,365 | 171,528 | |||||
Derivative liabilities | 32,600 | 101,156 | |||||
Acquisition-related contingent consideration | 7,550,000 | 7,550,000 | |||||
Other long-term liabilities | 383,105 | 214,871 | |||||
Total long-term liabilities | 12,232,760 | 11,636,677 | |||||
Commitments and Contingencies | |||||||
EQUITY | |||||||
Stockholders' Equity | |||||||
Preferred stock, authorized, 20,000,000 shares; Series B convertible redeemable preferred stock liquidation value, 1 share of common stock, $.01 par value; 825,000 shares designated; issued and outstanding, 10,000 shares at June 30, 2013 and December 31, 2012 | 100 | 100 | |||||
Common stock, $.001 par value, authorized 500,000,000 shares; issued and outstanding, 19,584,375 and 16,375,365 shares, at June 30, 2013 and December 31, 2012, respectively | 19,584 | 16,375 | |||||
Additional paid-in capital | 248,877,393 | 231,218,615 | |||||
Treasury stock, at cost | (665,600 | ) | (665,600 | ) | |||
Accumulated deficit | (214,768,296 | ) | (197,392,361 | ) | |||
Total NeoStem, Inc. stockholders' equity | 33,463,181 | 33,177,129 | |||||
Noncontrolling interests | (471,006 | ) | (356,970 | ) | |||
Total equity | 32,992,175 | 32,820,159 | |||||
$ | 53,609,813 | $ | 54,406,263 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | $ | 4,359,406 | $ | 3,372,097 | $ | 6,883,318 | $ | 7,144,829 | |||||||
Cost of revenues | 4,235,024 | 2,735,990 | 6,627,113 | 5,691,696 | |||||||||||
Gross profit | 124,382 | 636,107 | 256,205 | 1,453,133 | |||||||||||
Research and development | 3,972,127 | 2,714,587 | 7,133,453 | 4,661,792 | |||||||||||
Selling, general, and administrative | 4,322,434 | 4,732,953 | 10,124,306 | 11,145,229 | |||||||||||
Operating Expenses | 8,294,561 | 7,447,540 | 17,257,759 | 15,807,021 | |||||||||||
Operating loss | (8,170,179 | ) | (6,811,433 | ) | (17,001,554 | ) | (14,353,888 | ) | |||||||
Other income (expense): | |||||||||||||||
Other income, net | 57,950 | 24,353 | 68,556 | 111,806 | |||||||||||
Interest expense | (65,844 | ) | (450,904 | ) | (109,405 | ) | (975,020 | ) | |||||||
(7,894 | ) | (426,551 | ) | (40,849 | ) | (863,214 | ) | ||||||||
Loss from continuing operations before provision for income taxes and noncontrolling interests | (8,178,073 | ) | (7,237,984 | ) | (17,042,403 | ) | (15,217,102 | ) | |||||||
Provision for income taxes | 447,568 | — | 447,568 | — | |||||||||||
Net loss from continuing operations | (8,625,641 | ) | (7,237,984 | ) | (17,489,971 | ) | (15,217,102 | ) | |||||||
Loss from discontinued operations - net | — | (26,184,931 | ) | — | (27,412,679 | ) | |||||||||
Net loss | (8,625,641 | ) | (33,422,915 | ) | (17,489,971 | ) | (42,629,781 | ) | |||||||
Less - loss from continuing operations attributable to noncontrolling interests | (50,282 | ) | (86,961 | ) | (114,036 | ) | (188,722 | ) | |||||||
Less - loss from discontinued operations attributable to noncontrolling interests | — | (12,830,618 | ) | — | (12,587,593 | ) | |||||||||
Net loss attributable to NeoStem, Inc. | (8,575,359 | ) | (20,505,336 | ) | (17,375,935 | ) | (29,853,466 | ) | |||||||
Preferred dividends | — | (88,391 | ) | — | (196,235 | ) | |||||||||
Net loss attributable to NeoStem, Inc. common stockholders | $ | (8,575,359 | ) | $ | (20,593,727 | ) | $ | (17,375,935 | ) | (30,049,701 | ) | ||||
Amounts Attributable to NeoStem, Inc. common stockholders: | |||||||||||||||
Loss from continuing operations | $ | (8,575,359 | ) | $ | (7,151,023 | ) | $ | (17,375,935 | ) | $ | (15,028,380 | ) | |||
Loss from discontinued operations - net of taxes | — | (13,354,313 | ) | — | (14,825,086 | ) | |||||||||
Preferred dividends | — | (88,391 | ) | — | (196,235 | ) | |||||||||
Net loss attributable to NeoStem, Inc. common stockholders | $ | (8,575,359 | ) | $ | (20,593,727 | ) | $ | (17,375,935 | ) | $ | (30,049,701 | ) | |||
Basic and diluted (loss) per share attributable to NeoStem, Inc. common stockholders: | |||||||||||||||
Continuing operations | $ | (0.46 | ) | $ | (0.53 | ) | $ | (0.99 | ) | $ | (1.22 | ) | |||
Discontinued operations | $ | — | $ | (0.99 | ) | $ | — | (1.20 | ) | ||||||
NeoStem, Inc. common stockholders | $ | (0.46 | ) | $ | (1.53 | ) | $ | (0.99 | ) | $ | (2.44 | ) | |||
Weighted average common shares outstanding | 18,503,236 | 13,441,203 | 17,606,051 | 12,310,949 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net loss | $ | (8,625,641 | ) | $ | (33,422,915 | ) | $ | (17,489,971 | ) | $ | (42,629,781 | ) | |||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation elimination on exit of segment | — | (169,993 | ) | — | (169,993 | ) | |||||||||
Foreign currency translation | — | 35,581 | — | 367,422 | |||||||||||
Total other comprehensive (loss) income | — | (134,412 | ) | — | 197,429 | ||||||||||
Comprehensive loss | (8,625,641 | ) | (33,557,327 | ) | (17,489,971 | ) | (42,432,352 | ) | |||||||
Comprehensive loss attributable to noncontrolling interests | (50,282 | ) | (12,900,144 | ) | (114,036 | ) | (12,600,875 | ) | |||||||
Comprehensive net loss attributable to NeoStem, Inc. common stockholders | $ | (8,575,359 | ) | $ | (20,657,183 | ) | $ | (17,375,935 | ) | $ | (29,831,477 | ) |
Series B Convertible Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Treasury Stock | Total NeoStem, Inc. Stockholders' Equity | Non- Controlling Interest in Subsidiary | Total Equity | |||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2011 | 10,000 | $ | 100 | 10,932,959 | $ | 10,933 | $ | 200,957,035 | $ | 4,152,343 | $ | (143,094,854 | ) | $ | — | $ | 62,025,557 | $ | 18,106,961 | $ | 80,132,518 | ||||||||||||||||||||
Net loss | — | — | — | — | — | — | (29,853,466 | ) | — | (29,853,466 | ) | (12,776,315 | ) | (42,629,781 | ) | ||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | 21,989 | — | — | 21,989 | 175,440 | 197,429 | ||||||||||||||||||||||||||||||
Share-based compensation | — | — | 156,181 | 156 | 3,554,855 | — | — | — | 3,555,011 | — | 3,555,011 | ||||||||||||||||||||||||||||||
Net proceeds from issuance of common stock | — | — | 2,453,358 | 2,454 | 9,948,773 | — | — | — | 9,951,227 | — | 9,951,227 | ||||||||||||||||||||||||||||||
Repayment of Series E Preferred Principal and Dividends | — | — | 219,492 | 219 | 848,183 | — | (196,235 | ) | — | 652,167 | — | 652,167 | |||||||||||||||||||||||||||||
Balance at June 30, 2012 | 10,000 | $ | 100 | 13,761,990 | $ | 13,762 | $ | 215,308,846 | $ | 4,174,332 | $ | (173,144,555 | ) | $ | — | $ | 46,352,485 | $ | 5,506,086 | $ | 51,858,571 | ||||||||||||||||||||
Series B Convertible Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Treasury Stock | Total NeoStem, Inc. Stockholders' Equity | Non- Controlling Interest in Subsidiary | Total Equity | |||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2012 | 10,000 | $ | 100 | 16,375,365 | $ | 16,375 | $ | 231,218,615 | $ | — | $ | (197,392,361 | ) | $ | (665,600 | ) | $ | 33,177,129 | $ | (356,970 | ) | $ | 32,820,159 | ||||||||||||||||||
Net loss | — | — | — | — | — | — | (17,375,935 | ) | — | (17,375,935 | ) | (114,036 | ) | (17,489,971 | ) | ||||||||||||||||||||||||||
Share-based compensation | — | — | 304,402 | 304 | 3,313,893 | — | — | — | 3,314,197 | — | 3,314,197 | ||||||||||||||||||||||||||||||
Net proceeds from issuance of common stock | — | — | 2,883,847 | 2,884 | 14,245,264 | — | — | — | 14,248,148 | — | 14,248,148 | ||||||||||||||||||||||||||||||
Proceeds from warrant exercises | — | — | 20,761 | 21 | 105,860 | — | — | — | 105,881 | — | 105,881 | ||||||||||||||||||||||||||||||
Warrant inducements | — | — | — | — | (6,239 | ) | — | — | — | (6,239 | ) | — | (6,239 | ) | |||||||||||||||||||||||||||
Balance at June 30, 2013 | 10,000 | $ | 100 | 19,584,375 | $ | 19,584 | $ | 248,877,393 | $ | — | $ | (214,768,296 | ) | $ | (665,600 | ) | $ | 33,463,181 | $ | (471,006 | ) | $ | 32,992,175 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (17,489,971 | ) | $ | (42,629,781 | ) | |
Loss from discontinued operations | — | 27,412,679 | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Common stock, stock options and warrants issued as payment for compensation, services rendered | 3,314,197 | 3,555,011 | |||||
Depreciation and amortization | 832,920 | 774,773 | |||||
Amortization of preferred stock discount and issuance cost | — | 872,736 | |||||
Changes in fair value of derivative liability | (68,556 | ) | (111,517 | ) | |||
Bad debt expense (recovery) | (7,178 | ) | 233,800 | ||||
Deferred income taxes | 447,568 | — | |||||
Changes in operating assets and liabilities, net of the effect of acquisitions: | |||||||
Prepaid expenses and other current assets | (190,150 | ) | (195,927 | ) | |||
Accounts receivable | 359,163 | (524,115 | ) | ||||
Inventory | 1,081,060 | (513,598 | ) | ||||
Unearned revenues | (1,106,299 | ) | 497,613 | ||||
Other assets | (25,805 | ) | (180,000 | ) | |||
Accounts payable, accrued expenses and other current liabilities | (272,718 | ) | 963,948 | ||||
Net cash used in operating activities - continuing operations | (13,125,769 | ) | (9,844,378 | ) | |||
Net cash provided by operating activities - discontinued operations | — | 8,992,032 | |||||
Net cash used in operating activities | (13,125,769 | ) | (852,346 | ) | |||
Cash flows from investing activities: | |||||||
Acquisition of property and equipment | (268,535 | ) | (176,011 | ) | |||
Net cash used in investing activities - continuing operations | (268,535 | ) | (176,011 | ) | |||
Net cash used in investing activities - discontinued operations | — | (2,140,792 | ) | ||||
Net cash used in investing activities | (268,535 | ) | (2,316,803 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from exercise of warrants | 105,881 | — | |||||
Net proceeds from issuance of capital stock | 14,248,148 | 9,951,227 | |||||
Repayment of mortgage loan | (93,070 | ) | (93,755 | ) | |||
Proceeds from notes payable | 221,218 | 223,433 | |||||
Repayment of notes payable | (96,608 | ) | (159,460 | ) | |||
Repayment of preferred stock | — | (1,391,926 | ) | ||||
Payment of dividend | — | (31,702 | ) | ||||
Payment for warrant inducement | (6,239 | ) | — | ||||
Net cash provided by financing activities - continuing operations | 14,379,330 | 8,497,817 | |||||
Net cash provided by financing activities - discontinued operations | — | 229,176 | |||||
Net cash provided by financing activities | 14,379,330 | 8,726,993 | |||||
Impact of changes of foreign exchange rates | — | (41,506 | ) | ||||
Net increase in cash and cash equivalents | 985,026 | 5,516,338 | |||||
Cash and cash equivalents at beginning of period | 13,737,452 | 12,745,432 | |||||
Cash and cash equivalents at end of period | 14,722,478 | 18,261,770 | |||||
Less cash and cash equivalents of discontinued operations at end of period | — | 16,149,188 | |||||
Cash and cash equivalents of continuing operations at end of period | $ | 14,722,478 | $ | 2,112,582 | |||
Supplemental Disclosure of Cash Flow Information: | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 126,000 | $ | 1,243,700 | |||
Taxes | — | 811,500 | |||||
Supplemental Schedule of non-cash investing activities: | |||||||
Capitalized interest | — | 106,400 | |||||
Supplemental schedule of non-cash financing activities | |||||||
Common stock issued pursuant to the redemption of Convertible Redeemable Series E 7% Preferred Stock | — | 717,700 | |||||
Common stock issued in payment of dividends for the Convertible Redeemable Series E 7% Preferred Stock | — | 130,700 |
Entity | Percentage of Ownership | Location | ||
NeoStem, Inc. | Parent Company | United States of America | ||
NeoStem Therapies, Inc. | 100% | United States of America | ||
Stem Cell Technologies, Inc. | 100% | United States of America | ||
Amorcyte, LLC | 100% | United States of America | ||
Progenitor Cell Therapy, LLC (PCT) | 100% | United States of America | ||
NeoStem Family Storage, LLC | 100% owned by PCT | United States of America | ||
Athelos Corporation | 80.1% owned by PCT | United States of America | ||
PCT Allendale, LLC | 100% owned by PCT | United States of America | ||
CBH Acquisition LLC | 100% | United States of America | ||
China Biopharmaceuticals Holdings, Inc. (CBH) | 100% owned by CBH Acquisition LLC | United States of America |
• | persuasive evidence of an arrangement exists; |
• | delivery has occurred or the services have been rendered; |
• | the fee is fixed or determinable; and |
• | collectability is probable. |
June 30, | |||||
2013 | 2012 | ||||
Stock Options | 2,647,437 | 2,198,460 | |||
Warrants | 5,430,137 | 5,828,796 | |||
Series E Preferred Stock, Common stock equivalents | — | 336,812 | |||
Restricted Shares | 73,500 | 14,250 |
June 30, 2013 | |||||||||||
Fair Value Measurements Using Fair Value Hierarchy | |||||||||||
Level 1 | Level 2 | Level 3 | |||||||||
Warrant derivative liabilities | $ | — | $ | — | $ | 32.6 | |||||
Contingent consideration | — | — | 7,550.0 |
December 31, 2012 | |||||||||||
Fair Value Measurements Using Fair Value Hierarchy | |||||||||||
Level 1 | Level 2 | Level 3 | |||||||||
Warrant derivative liabilities | $ | — | $ | — | $ | 101.2 | |||||
Contingent consideration | — | — | 7,550.0 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2013 | ||||||||||||||
Warrants | Contingent Consideration | Warrants | Contingent Consideration | ||||||||||||
Beginning liability balance | $ | 90.6 | $ | 7,550.0 | $ | 101.2 | $ | 7,550.0 | |||||||
Change in fair value recorded in earnings | (58.0 | ) | — | (68.6 | ) | — | |||||||||
Ending liability balance | $ | 32.6 | $ | 7,550.0 | $ | 32.6 | $ | 7,550.0 |
June 30, 2013 | December 31, 2012 | ||||||||||||||||||||||||
Useful Life | Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | |||||||||||||||||||
Customer list | 10 years | $ | 1,000.0 | $ | (245.1 | ) | $ | 754.9 | $ | 1,000.0 | $ | (195.1 | ) | $ | 804.9 | ||||||||||
Manufacturing technology | 10 years | 3,900.0 | (955.9 | ) | 2,944.1 | 3,900.0 | (760.9 | ) | 3,139.1 | ||||||||||||||||
Tradename | 10 years | 800.0 | (196.1 | ) | 603.9 | 800.0 | (156.1 | ) | 643.9 | ||||||||||||||||
In process R&D | Indefinite | 9,400.0 | — | 9,400.0 | 9,400.0 | — | 9,400.0 | ||||||||||||||||||
VSEL patent rights | 19 years | 669.0 | (193.7 | ) | 475.3 | 669.0 | (176.1 | ) | 492.9 | ||||||||||||||||
Total Intangible Assets | $ | 15,769.0 | $ | (1,590.8 | ) | $ | 14,178.2 | $ | 15,769.0 | $ | (1,288.2 | ) | $ | 14,480.8 | |||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Cost of revenue | $ | 97.5 | $ | 97.5 | $ | 195.0 | $ | 195.0 | |||||||
Research and development | 8.8 | 8.8 | 17.6 | 17.6 | |||||||||||
Selling, general and administrative | 45.0 | 45.0 | 90.0 | 90.0 | |||||||||||
Total | $ | 151.3 | $ | 151.3 | $ | 302.6 | $ | 302.6 |
2013 | $ | 302.6 | |
2014 | 605.2 | ||
2015 | 605.2 | ||
2016 | 605.2 | ||
2017 | 605.2 | ||
Thereafter | 11,454.8 | ||
$ | 14,178.2 |
June 30, 2013 | December 31, 2012 | ||||||
Salaries, employee benefits and related taxes | $ | 951.8 | $ | 1,597.2 | |||
Professional fees | 520.1 | 606.6 | |||||
Other | 516.6 | 81.0 | |||||
$ | 1,988.5 | $ | 2,284.8 |
Stock Options | Warrants | ||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||
Outstanding at December 31, 2012 | 2,168,668 | $12.85 | 5,528,761 | $15.65 | |||||
Changes during the Year: | |||||||||
Granted | 567,869 | 6.19 | 38,216 | 10.53 | |||||
Exercised | — | — | (20,761 | ) | 5.10 | ||||
Forfeited | (28,382 | ) | 6.60 | — | — | ||||
Expired | (60,718 | ) | 16.51 | (116,079 | ) | 20.61 | |||
Outstanding at June 30, 2013 | 2,647,437 | $11.41 | 5,430,137 | $15.55 | |||||
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Number of Common Stock Purchase Warrants Issued | 20,407 | 18,500 | ||||||
Value of Common Stock Purchase Warrants Issued | $ | 71.6 | $ | 59.0 |
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Number of Restricted Stock Issued | 304,402 | 157,702 | ||||||
Value of Restricted Stock Issued | $ | 1,858.3 | $ | 708.8 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Cost of goods sold | $ | 58.5 | $ | 16.4 | $ | 145.0 | $ | 100.3 | |||||||
Research and development | 129.8 | 98.9 | 347.1 | 260.2 | |||||||||||
Selling, general and administrative | 907.4 | 971.1 | 2,822.1 | 3,194.5 | |||||||||||
Total share-based compensation expense | $ | 1,095.7 | $ | 1,086.4 | $ | 3,314.2 | $ | 3,555.0 | |||||||
Stock Options | Warrants | Restricted Stock | |||||||||
Unrecognized compensation cost | $ | 1,441.7 | $ | 24.1 | $ | 305.2 | |||||
Expected weighted-average period in years of compensation cost to be recognized | 1.41 | 0.47 | 0.24 |
Stock Options | Warrants | ||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Total fair value of shares vested | $ | 1,646.3 | $ | 3,063.2 | $ | 80.9 | $ | 43.6 | |||||||
Weighted average estimated fair value of shares granted | 4.58 | 3.38 | 3.51 | 3.19 |
Cash | $ | 195.1 | |
Prepaid expenses and other current assets | 14.9 | ||
Property, plant and equipment, net | 1,023.7 | ||
Other Assets | 330.5 | ||
Accounts payable | (177.1 | ) | |
Accrued liabilities | (79.2 | ) | |
Accumulated comprehensive income | (169.9 | ) | |
Loss on exit of segment | $ | 1,138.0 |
Six Months Ended June 30, 2012 | |||
Revenue | $ | 52.3 | |
Cost of revenues | (30.6 | ) | |
Research and development | (103.3 | ) | |
Selling, general, and administrative | (497.3 | ) | |
Other income (expense) | (6.8 | ) | |
Loss on exit of segment | (1,138.0 | ) | |
Loss from discontinued operations | $ | (1,723.7 | ) |
Fair value of consideration received | $ | 13,397.9 | |
Carrying value of segment non-controlling interest | 6,015.0 | ||
Carrying value of segment accumulated comprehensive income | 4,387.4 | ||
$ | 23,800.3 | ||
Less carrying amount of assets and liabilities sold: | |||
Cash | $ | 8,457.5 | |
Restricted Cash | 2,918.1 | ||
Accounts Receivable | 6,130.2 | ||
Inventories | 15,077.7 | ||
Prepaid expenses and other current assets | 957.8 | ||
Property, plant and equipment, net | 38,102.0 | ||
Other assets | 5,946.3 | ||
Accounts payable | (9,604.8 | ) | |
Accrued liabilities | (2,008.8 | ) | |
Bank loans | (15,133.5 | ) | |
Notes payable | (6,599.3 | ) | |
Other liabilities | (9,166.8 | ) | |
Amount due related party | (7,859.7 | ) | |
$ | (27,216.7 | ) | |
Loss on exit of segment | $ | (3,416.4 | ) |
Three Months Ended June 30, 2012 | Six Months Ended June 30, 2012 | ||||||
Revenue | $ | 18,934.3 | $ | 37,218.3 | |||
Cost of revenues | (12,214.2 | ) | (25,580.0 | ) | |||
Research and development | (852.3 | ) | (1,619.7 | ) | |||
Selling, general, and administrative | (3,160.1 | ) | (6,200.1 | ) | |||
Other expense | (514.8 | ) | (1,007.4 | ) | |||
Provision for income taxes | (383.2 | ) | (505.5 | ) | |||
Asset impairments | (27,994.6 | ) | (27,994.6 | ) | |||
Loss on sale of segment | — | — | |||||
Loss from discontinued operations | $ | (26,184.9 | ) | $ | (25,689.0 | ) |
Years ended | Operating Leases | |||
2013 | $ | 567.3 | ||
2014 | 878.8 | |||
2015 | 713.7 | |||
2016 | 563.9 | |||
2017 | 293.2 | |||
Total minimum lease payments | $ | 3,016.9 |
Three Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Clinical Services | $ | 3,114.1 | $ | 1,753.7 | |||
Clinical Services Reimbursables | 423.6 | 846.9 | |||||
Processing and Storage Services | 821.7 | 765.1 | |||||
Other | — | 6.4 | |||||
$ | 4,359.4 | $ | 3,372.1 |
• | Clinical Services, representing process development and clinical manufacturing services provided by PCT to its various clients, were approximately $3.1 million for the three months ended June 30, 2013 compared to $1.8 million for the three months ended June 30, 2012, representing an increase of approximately $1.4 million or 78%. The increase in clinical services revenue is primarily due to the completion of three third party process development contracts during the three months ended June 30, 2013, resulting in the recognition of approximately $1.5 million of previously deferred revenue. In accordance with our revenue recognition policy, revenue is recognized upon contract completion for certain clinical service contracts. In the three months ended June 30, 2013, the Company also directed process development and clinical manufacturing efforts to its AMR-001 phase 2 clinical trial, which was initiated in 2012, and other internal research and development programs. |
• | Clinical Services Reimbursables, representing reimbursement of expenses for certain consumables incurred on behalf of our clinical service revenue clients, were approximately $0.4 million for the three months ended June 30, 2013 compared to $0.8 million for the three months ended June 30, 2012, representing a decrease of approximately $0.4 million or 50%. Our reimbursable revenue decreased as a result of lower third party manufacturing and process development activity in the current period, as well as changes in contractual terms with certain clients that shifted clinical service expense reimbursables to a fully absorbed billing rate. Generally, our terms for billing reimbursable expenses do not include |
• | Processing and Storage Services, representing revenues from our oncology, cord blood, and adult stem cell processing and banking activities, were approximately $0.82 million for the three months ended June 30, 2013 compared to $0.77 million for the three months ended June 30, 2012, representing an increase of approximately $0.06 million or 7%. The increase is primarily attributable to increased revenue from our oncology stem cell processing services. |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Clinical Services | $ | 4,479.7 | $ | 3,779.5 | |||
Clinical Services Reimbursables | 786.4 | 1,953.8 | |||||
Processing and Storage Services | 1,617.2 | 1,398.9 | |||||
Other | — | 12.6 | |||||
$ | 6,883.3 | $ | 7,144.8 |
• | Clinical Services were approximately $4.5 million for the six months ended June 30, 2013 compared to $3.8 million for the six months ended June 30, 2012, representing an increase of approximately $0.7 million or 19%. The increase is primarily due to the completion of three third party process development contracts during the six months ended June 30, 2013, resulting in the recognition of approximately $1.1 million of previously deferred revenue. In accordance with our revenue recognition policy, revenue is recognized upon contract completion for certain clinical service contracts. In the six months ended June 30, 2013, the Company also directed process development and clinical manufacturing efforts to its AMR-001 phase 2 clinical trial, which was initiated in 2012, and other internal research and development programs. |
• | Clinical Services Reimbursables were approximately $0.8 million for the six months ended June 30, 2013 compared to $2.0 million for the six months ended June 30, 2012, representing a decrease of approximately $1.2 million or 60%. Our reimbursable revenue decreased as a result of decreased third party manufacturing and process development activity in the current period, as well as changes in contractual terms with certain clients that shifted clinical service expense reimbursables to a fully absorbed billing rate. Generally, our terms for billing reimbursable expenses do not include significant mark up in the acquisition cost of such consumables, and as a result the impact of changes in this revenue category has little or no impact on our net loss. |
• | Processing and Storage Services were approximately $1.6 million for the six months ended June 30, 2013 compared to $1.4 million for the six months ended June 30, 2012, representing an increase of approximately $0.2 million or 16%. The increase is primarily attributable to increased revenue from our oncology stem cell processing service. |
• | Research and development expenses were approximately $4.0 million for the three months ended June 30, 2013 compared to $2.7 million for the three months ended June 30, 2012, representing an increase of approximately $1.3 million, or 46%. Research and development expenses associated with our Phase 2 clinical trial for AMR-001 increased by approximately $1.3 million for the three months ended June 30, 2013 compared to the prior year period. The trial was initiated in January 2012 and is expected to complete enrollment in the second half of 2013. Equity-based compensation included in research and development expenses for the three months ended June 30, 2013 and June 30, 2012 were approximately $0.1 million and $0.3 million, respectively. |
• | Selling, general and administrative expenses were approximately $4.3 million for the three months ended June 30, 2013 compared to $4.7 million for the three months ended June 30, 2012, representing a decrease of approximately $0.4 million, or 9%. Equity-based compensation included in selling, general and administrative expenses for the three months ended June 30, 2013 was approximately $0.9 million, compared to approximately $1.0 million for the three months ended June 30, 2012, representing a decrease of $0.1 million. Non equity-based general and administrative expenses for the three months ended June 30, 2013 were approximately $3.4 million, compared to approximately $3.6 million for the three months ended June 30, 2012, representing a decrease of $0.2 million. Selling expenses also decreased $0.1 million compared to the prior year period. |
• | Research and development expenses were approximately $7.1 million for the six months ended June 30, 2013 compared to $4.7 million for the six months ended June 30, 2012, representing an increase of approximately $2.4 million, or 53%. Research and development expenses associated with our Phase 2 clinical trial for AMR-001 increased by approximately $2.3 million six months ended June 30, 2013 compared to the prior year period. Equity-based compensation included in research and development expenses for the six months ended June 30, 2013 and June 30, 2012 were approximately $0.3 million in each period, respectively. |
• | Selling, general and administrative expenses were approximately $10.1 million for the six months ended June 30, 2013 compared to $11.1 million for the six months ended June 30, 2012, representing a decrease of approximately $1.0 million, or 9%. Equity-based compensation included in selling, general and administrative expenses for the six months ended June 30, 2013 was approximately $2.8 million, compared to approximately $3.2 million for the six months ended June 30, 2012, representing a decrease of $0.4 million. Non equity-based general and administrative expenses for the six months ended June 30, 2013 were approximately $7.2 million, compared to approximately $7.5 million for the six months ended June 30, 2012, representing a decrease of $0.3 million. Selling expenses also decreased $0.4 million compared to the prior year period. |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Net cash used in operating activities - continuing operations | $ | (13,125.8 | ) | $ | (9,844.4 | ) | |
Net cash used in investing activities - continuing operations | (268.5 | ) | (176.0 | ) | |||
Net cash provided by financing activities - continuing operations | 14,379.3 | 8,497.8 |
• | We raised $11.5 million (or $10.5 million in net proceeds after deducting underwriting discounts and commissions and offering expenses) through an underwritten offering of 2.3 million shares of our common stock at a public offering price of $5.00 per share. |
• | We raised gross proceeds of approximately $3.8 million through the issuance of 654,255 shares of Common Stock under the provisions of our equity line of credit with Aspire. |
• | We raised approximately $0.1 million from the exercise of approximately 20,761 warrants. To induce the exercise of certain of these warrants, we provided consideration to the warrant holders in the form of cash. |
• | We raised $6.8 million (or $6.0 million in net proceeds after deducting underwriting discounts and offering expenses) through an underwritten offering of 1.7 million units, each unit consisting of one share of common stock and a five year warrant to purchase one share of common stock at an exercise price of $5.10 per share. |
• | We raised an aggregate of approximately $1.7 million million in private placements through the issuance of 406,818 million units, each unit consisting of one share of common stock and on warrant. |
• | We raised an aggregate of approximately $2.3 million million in private placements through the issuance of 346,540 million shares of common stock. |
• | We paid $1.4 million in cash for principal and dividend payments of our Convertible Redeemable Series E Preferred Stock. |
Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |||||||||||||||
Contractual Obligations | |||||||||||||||||||
Mortgages Payable | $ | 3,345.4 | $ | 214.1 | $ | 449.9 | $ | 2,352 | $ | 329.4 | |||||||||
Capital Lease Obligations | 335.5 | 115.1 | 220.4 | — | — | ||||||||||||||
Operating Lease Obligations | 3,016.9 | 1,002.5 | 1,435.1 | 579.3 | — | ||||||||||||||
$ | 6,697.8 | $ | 1,331.7 | $ | 2,105.4 | $ | 2,931.3 | $ | 329.4 |
3.1 | Amended and Restated Certificate of Incorporation, as amended (as certified March 25, 2011) (filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010). | ||
3.2 | Certificate of Amendment to Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on October 14, 2011 (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K dated October 14, 2011). | ||
3.3 | Certificate of Elimination of the Series E 7% Senior Convertible Preferred Stock of NeoStem, Inc., filed with the Secretary of State of the State of Delaware on October 25, 2012 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated October 25, 2012). | ||
3.4 | Certificate of Amendment of Amended and Restated Certificate of Incorporation of NeoStem, Inc., filed with the Secretary of State of the State of Delaware on July 12, 2013 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated July 12, 2013). | ||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | ||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | ||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | ||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | ||
101.INS | XBRL Instance Document*** | ||
101.SCH | XBRL Taxonomy Extension Schema*** | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase*** | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase*** | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase*** | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase*** |
* | Filed herewith. |
** | Furnished herewith. |
*** | Users of this interactive data file are advised pursuant to Rule 406T of Regulations S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
NEOSTEM, INC. | ||
By: /s/ Robin L. Smith, M.D. Name: Robin L. Smith, M.D. Title: Chief Executive Officer |
Signature | Title | Date | ||
/s/ Robin L. Smith, M.D. Robin L. Smith, M.D. | Director, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | August 8, 2013 | ||
/s/ Larry A. May Larry A. May | Chief Financial Officer (Principal Financial Officer) | August 8, 2013 | ||
/s/ Joseph Talamo Joseph Talamo | Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) | August 8, 2013 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates presented and the results of operations of the Company for the periods presented. |
/s/ Robin Smith, M.D. | |
Robin Smith, M.D. | |
Chief Executive Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates presented and the results of operations of the Company for the periods presented. |
/s/ Larry A. May | |
Larry A. May | |
Chief Financial Officer |
Preferred Stock
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6 Months Ended |
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Jun. 30, 2013
|
|
Preferred Stock [Abstract] | |
Preferred Stock [Text Block] | Preferred Stock Convertible Redeemable Series E 7% Preferred Stock On November 19, 2010, the Company sold 10,582,011 Preferred Offering Units consisting of (i) one share (“Preferred Share”) of Series E 7% Senior Convertible Preferred Stock (the “Series E Preferred Stock”), par value $0.01 per share, of the Company, (ii) a warrant to purchase 0.25 of a share of Common Stock (consisting of at issuance an aggregate of 132,249 warrants, adjusted to an aggregate of 194,405 as of June 30, 2013); and (iii) 0.0155 of a share of Common Stock (an aggregate of 16,442 common shares). Each Preferred Offering Unit was priced at $0.945 and total gross and net proceeds received by the Company were $10.0 million and $8.9 million, respectively. Monthly dividend and principal payments began in March 2011, and continued each month thereafter with the final payment due in May 2013. In October 2012, the Company completed the redemption of all remaining 2,351,558 outstanding shares of its Series E Preferred Stock, for an aggregate cash redemption price of approximately $3.4 million, $2.5 million of which was funded by money placed into escrow when the Series E Preferred stock was issued in November 2010. The cash redemption included the repayment of $3.1 million outstanding principal, an additional early redemption premium of $0.2 million, which was included in dividends, and $36,000 of accrued interest. The Company recorded the fair value of the warrants as a long-term derivative liability. The fair values of the warrant derivatives as of June 30, 2013 and December 31, 2012 were $32,600 and $101,200, respectively. The Company reports changes in the fair value of the warrant derivative in earnings within other income (expense), net (see Note 6). |
Share-Based Compensation Share-Based Compensation (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
Stock Option [Member]
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Jun. 30, 2013
Warrants
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Jun. 30, 2012
Warrants
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Dec. 31, 2012
Warrants
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Jun. 30, 2013
Stock Options [Member]
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Dec. 31, 2012
Stock Options [Member]
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Jun. 30, 2013
Restricted Stock [Member]
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Jun. 30, 2013
Cost of revenue
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Jun. 30, 2012
Cost of revenue
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Jun. 30, 2013
Cost of revenue
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Jun. 30, 2012
Cost of revenue
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Jun. 30, 2013
Research and development
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Jun. 30, 2012
Research and development
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Jun. 30, 2013
Research and development
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Jun. 30, 2012
Research and development
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Jun. 30, 2013
Selling, general and administrative
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Jun. 30, 2012
Selling, general and administrative
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Jun. 30, 2013
Selling, general and administrative
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Jun. 30, 2012
Selling, general and administrative
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Jun. 30, 2013
Stock Option [Member]
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Jun. 30, 2012
Stock Option [Member]
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||
Allocated Share-based Compensation Expense | $ 1,095,700 | $ 1,086,400 | $ 3,314,200 | $ 3,555,000 | $ 58,500 | $ 16,400 | $ 145,000 | $ 100,300 | $ 129,800 | $ 98,900 | $ 347,100 | $ 260,200 | $ 907,400 | $ 971,100 | $ 2,822,100 | $ 3,194,500 | |||||||||
Unrecognized compensation cost | 1,441,700 | 24,100 | 305,200 | ||||||||||||||||||||||
Expected weighted-average period in years of compensation cost to be recognized | 1 year 4 months 28 days | 5 months 19 days | 2 months 27 days | ||||||||||||||||||||||
Total fair value of shares vested | $ 80,900 | $ 43,600 | $ 1,646,300 | $ 3,063,200 | |||||||||||||||||||||
Weighted average estimated fair value of shares granted | $ 3.51 | $ 3.19 | $ 4.58 | $ 3.38 |
Consolidated Statements of Operations (USD $)
|
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
|
Jun. 30, 2012
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Jun. 30, 2013
|
Jun. 30, 2012
|
|
Revenues | $ 4,359,406 | $ 3,372,097 | $ 6,883,318 | $ 7,144,829 |
Cost of revenues | 4,235,024 | 2,735,990 | 6,627,113 | 5,691,696 |
Gross profit | 124,382 | 636,107 | 256,205 | 1,453,133 |
Research and development | 3,972,127 | 2,714,587 | 7,133,453 | 4,661,792 |
Selling, general, and administrative | 4,322,434 | 4,732,953 | 10,124,306 | 11,145,229 |
Operating Expenses | 8,294,561 | 7,447,540 | 17,257,759 | 15,807,021 |
Operating loss | (8,170,179) | (6,811,433) | (17,001,554) | (14,353,888) |
Other income (expense): | ||||
Other income, net | 57,950 | 24,353 | 68,556 | 111,806 |
Interest expense | (65,844) | (450,904) | (109,405) | (975,020) |
Nonoperating Income (Expense), Total | (7,894) | (426,551) | (40,849) | (863,214) |
Loss from continuing operations before provision for income taxes and noncontrolling interests | (8,178,073) | (7,237,984) | (17,042,403) | (15,217,102) |
Provision for income taxes | 447,568 | 0 | 447,568 | 0 |
Net loss from continuing operations | (8,625,641) | (7,237,984) | (17,489,971) | (15,217,102) |
Loss from discontinued operations - net | 0 | (26,184,931) | 0 | (27,412,679) |
Net loss | (8,625,641) | (33,422,915) | (17,489,971) | (42,629,781) |
Less - loss from continuing operations attributable to noncontrolling interests | (50,282) | (86,961) | (114,036) | (188,722) |
Less - loss from continuing operations attributable to noncontrolling interests | 0 | (12,830,618) | 0 | (12,587,593) |
Net loss attributable to NeoStem, Inc. | (8,575,359) | (20,505,336) | (17,375,935) | (29,853,466) |
Preferred dividends | 0 | (88,391) | 0 | (196,235) |
Loss from continuing operations | (8,575,359) | (7,151,023) | (17,375,935) | (15,028,380) |
Loss from discontinued operations - net of taxes | 0 | (13,354,313) | 0 | (14,825,086) |
Preferred dividends | 0 | (88,391) | 0 | (196,235) |
Net loss attributable to NeoStem, Inc. common stockholders | $ (8,575,359) | $ (20,593,727) | $ (17,375,935) | $ (30,049,701) |
Continuing operations | $ (0.46) | $ (0.53) | $ (0.99) | $ (1.22) |
Discontinued operations | $ 0.00 | $ (0.99) | $ 0.00 | $ (1.20) |
NeoStem, Inc. common stockholders | $ (0.46) | $ (1.53) | $ (0.99) | $ (2.44) |
Weighted average common shares outstanding | 18,503,236 | 13,441,203 | 17,606,051 | 12,310,949 |
Cash and Cash Equivalents
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6 Months Ended |
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Jun. 30, 2013
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Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents [Text Block] | Cash and Cash Equivalents As of June 30, 2013 and December 31, 2012, the Company had cash and cash equivalents of approximately $14.7 million and $13.7 million, respectively, including bank deposits of approximately $0.8 million and $0.8 million, respectively, covered by the Federal Deposit Insurance Corporation. |
Subsequent Events
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6 Months Ended |
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Jun. 30, 2013
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Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events Reverse Stock Split On July 16, 2013, the Company effected a 1-for-10 reverse stock split of its common stock. All share and per share amounts of common stock, options and warrants in the accompanying financial statements have been restated for all periods to give retroactive effect to the reverse stock split. The shares of common stock retained a par value of $0.001 per share. Accordingly, the stockholders’ deficit reflects the reverse stock split by reclassifying from “common stock” to “Additional paid-in capital” in an amount equal to the par value of the decreased shares resulting from the reverse stock split. Nasdaq Listing Effective August 5, 2013, the Company moved its listing from NYSE MKT and started trading on NASDAQ Capital Market. Equity Issuances Subsequent to June 30, 2013, pursuant to the Purchase Agreement with Aspire (see Note 13), Aspire has purchased 395,714 shares of the Company's common stock for an aggregate consideration of approximately $2.7 million pursuant to the purchase agreement. Warrant Exercises Subsequent to June 30, 2013, warrant holders exercised an aggregate of 217,735 warrants at an exercise price of $5.10 per share for gross proceeds of approximately $1.1 million. As an inducement to exercise, we paid certain warrant holders $0.30 per share upon each exercise. |
Discontinued Operations The operating results of the Regenerative Medicine – China business (Details) (Regenerative Medicine - China segment [Member], USD $)
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6 Months Ended |
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Jun. 30, 2012
|
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Regenerative Medicine - China segment [Member]
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|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Disposal Group, Including Discontinued Operation, Revenue | $ 52,300 |
Disposal Group, Including Discontinued Operation, Costs of Goods Sold | (30,600) |
Disposal Group Including Discontinued Operation Research and Development | (103,300) |
Disposal Group Including Discontinued Operation Selling General and Administrative | (497,300) |
Disposal Group, Including Discontinued Operation, Operating Expense | (6,800) |
Loss on Exit of Segment | (1,138,000) |
Disposal Group, Including Discontinued Operation, Operating Income (Loss) | $ (1,723,700) |
Shareholders' Equity
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Jun. 30, 2013
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Shareholders’ Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] | Shareholders' Equity Reverse Stock Split On June 28, 2013, the Company’s board of directors unanimously approved a 1-for-10 reverse stock split of the Company’s common stock, which the Company effected on July 16, 2013. All share and per share amounts of common stock, options and warrants in the accompanying financial statements have been restated for all periods to give retroactive effect to the reverse stock split. The shares of common stock retained a par value of $0.001 per share. Accordingly, the stockholders’ deficit reflects the reverse stock split by reclassifying from “common stock” to “Additional paid-in capital” in an amount equal to the par value of the decreased shares resulting from the reverse stock split. Equity Issuances In September 2011, the Company entered into a Common Stock Purchase Agreement, (the “Purchase Agreement”) with Aspire Capital Fund, LLC, an Illinois limited liability company (“Aspire Capital”), which provides that, subject to certain terms and conditions, Aspire Capital is committed to purchase up to an aggregate of $20.0 million worth of shares of the Company’s common stock over the term of the Purchase Agreement (initially 24 months). At the Company’s discretion, it may present Aspire Capital with purchase notices under the Purchase Agreement from time to time, to purchase the Company’s Common Stock, provided certain price and other requirements are met. The purchase price for the shares of stock will be based upon one of two formulas set forth in the Purchase Agreement depending on the type of purchase notice we submit to Aspire Capital from time to time, and will be based on market prices of the Company’s common stock (in the case of regular purchases) or a discount of 5% applied to volume weighted average prices (in the case of VWAP purchases), in each case as determined by parameters defined in the agreement. The Company and Aspire Capital shall not effect any sales under the Purchase Agreement on any date where the closing sales price is less than 75% of the closing sales price on the business day immediately preceding the date of the Purchase Agreement. The Company’s net proceeds will depend on the purchase price and the frequency of the Company’s sales of shares to Aspire Capital; provided, however, that the maximum aggregate proceeds from sales of shares is $20.0 million. The Company’s delivery of purchase notices will be made subject to market conditions, in light of the Company’s capital needs from time to time and under the limitations contained in the Purchase Agreement. As consideration for entering into the Purchase Agreement, effective September 30, 2011, we issued 99,010 shares of our Common Stock to Aspire Capital (the “Commitment Shares”). The issuance of shares of common stock to Aspire Capital pursuant to the Purchase Agreement, including the Commitment Shares, and the sale of those shares from time to time by Aspire Capital to the public, are covered by an effective shelf registration statement on Form S-3. In August 2012, the Company and Aspire entered into an amendment to the Purchase Agreement providing for an extension of the term of the Purchase Agreement until September 30, 2015. Pursuant to the amendment, we agreed to issue to Aspire a five-year warrant to purchase up to 161,290 shares of our common stock at an exercise price of $6.00 per share (the closing price of our common stock on the date the amendment was executed). In the second quarter of 2013, the Company completed an underwritten offering of 2.0 million shares of the Company's common stock, at a public offering price of $5.00 per share. The underwriters also exercised their entire over-allotment option of 300,000 shares. The Company received gross proceeds of $11.5 million, before deducting underwriting discounts and commissions and offering expenses payable by the Company. During the six months ended June 30, 2013, the Company issued 654,255 shares of Common Stock under the provisions of its equity line of credit with Aspire for gross proceeds of approximately $3.8 million. As of June 30, 2013, the remaining amount available to the Company under the Purchase Agreement was $12.9 million. Warrant Exercises To raise capital on terms that we deemed favorable, during the six months ended June 30, 2013, the Board authorized certain inducements to warrant holders to exercise outstanding common stock purchase warrants significantly before their expiration dates. The Company determined in each instance that such inducements were modifications of equity instruments, and an incremental fair value of the inducement was determined using the Black-Scholes option pricing model. During the six months ended ended June 30, 2013, warrant holders exercised an aggregate of 20,761 warrants at an exercise price of $5.10 per share for gross proceeds of approximately $0.1 million. As an inducement to exercise, we paid certain warrant holders $0.30 per share upon each exercise. The incremental fair value of the inducement recorded was $0. Stock Options and Warrants The following table summarizes the activity for stock options and warrants for the six months ended June 30, 2013:
During the six months ended June 30, 2013 and 2012, the Company issued warrants for services as follows ($ in thousands, except share data):
Restricted Stock During the six months ended June 30, 2013 and 2012, the Company issued restricted stock for services as follows ($ in thousands, except share data):
The weighted average estimated fair value of restricted stock issued for services in the six months ended June 30, 2013 and 2012 was $6.10 and $4.49 per share, respectively. The fair value of the restricted stock was determined using the Company’s closing stock price on the date of issuance. The vesting terms of restricted stock issuances are generally within one year. |
Preferred Stock Convertible Redeemable Series E Preferred Stock (Details) (USD $)
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6 Months Ended | 12 Months Ended | 0 Months Ended | 6 Months Ended | 0 Months Ended | ||||||||
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Jun. 30, 2013
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Jun. 30, 2012
|
Dec. 31, 2012
|
Oct. 25, 2012
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Nov. 19, 2010
|
Nov. 19, 2010
Series E Seven Percent Senior Convertible Preferred Stock [Member]
|
Jun. 30, 2013
Series E Seven Percent Senior Convertible Preferred Stock [Member]
|
Jun. 30, 2013
Warrant to purchase 0.25 of a share of Common Stock [Member]
|
Nov. 19, 2010
Warrant to purchase 0.25 of a share of Common Stock [Member]
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Nov. 19, 2010
Warrant to purchase 0.0155 of a share of Common Stock [Member]
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Nov. 19, 2010
Preferred Offering Unit [Member]
|
Jun. 30, 2013
Fair Value, Inputs, Level 3 [Member]
|
Dec. 31, 2012
Fair Value, Inputs, Level 3 [Member]
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Class of Stock [Line Items] | |||||||||||||
Percent of Preferred Shares Required to be Redeemed Monthly | 3.7037% | ||||||||||||
Preferred Offering Units | 10,582,011 | ||||||||||||
Number of Shares of Preferred Stock Included in Preferred Offering Unit | 1 | ||||||||||||
Preferred Stock, Dividend Rate, Percentage | 7.00% | ||||||||||||
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 0.25 | 0.0155 | |||||||||||
Stock and Warrants Issued During Period, Shares, Preferred Stock and Warrants | 194,405 | 132,249 | 16,442 | ||||||||||
Sale of Stock, Price Per Share | $ 0.945 | ||||||||||||
Net proceeds from issuance of capital stock | $ 14,248,148 | $ 9,951,227 | $ 10,000,000 | ||||||||||
Net Proceeds from Issuance or Sale of Equity | 8,900,000 | ||||||||||||
Preferred Stock, Shares Outstanding | 10,000 | 10,000 | 2,351,558 | ||||||||||
Common stock issued in payment of dividends for the Convertible Redeemable Series E 7% Preferred Stock | 3,400,000 | ||||||||||||
Proceeds from (Repurchase of) Redeemable Preferred Stock | 2,500,000 | ||||||||||||
Payments of Dividends, Preferred Stock and Preference Stock | 3,100,000 | ||||||||||||
Payments for Repurchase of Redeemable Preferred Stock | 200,000 | ||||||||||||
Increase (Decrease) in Interest Payable, Net | 36,000 | ||||||||||||
Warrant Derivative Liabilities | $ 32,600 | $ 101,200 |
Discontinued Operations The summary of assets and liabilities related to Regenerative Medicine - China business (Details) (USD $)
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Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2012
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---|---|---|---|
Assets: | |||
Cash and cash equivalents | $ 0 | $ 16,149,188 | |
Assets of Disposal Group, Including Discontinued Operation | $ 23,800,300 |
Cash and Cash Equivalents (Details) (USD $)
|
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2012
|
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Cash and Cash Equivalents [Abstract] | |||
Cash and cash equivalents | $ 14,722,478 | $ 13,737,452 | $ 2,112,582 |
Cash, FDIC Insured Amount | $ 800,000 | $ 800,000 |
Loss Per Share (Tables)
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Jun. 30, 2013
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Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
ScheduleOfDilutiveSecuritiesExcludedFromComputationOfEarningsPerShare [Table Text Block] | At June 30, 2013 and 2012, the Company excluded the following potentially dilutive securities:
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The Business (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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The Business [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsidiary [Table Text Block] | reporting segment through November 13, 2012, representing the date which the segment was sold (see Note 14). These former segments are reported in discontinued operations.
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Accrued Liabilities Accrued Liabilities (Details) (USD $)
|
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Accrued Liabilities [Abstract] | ||
Salaries, employee benefits and related taxes | $ 951.8 | $ 1,597.2 |
Professional fees | 520.1 | 606.6 |
Other | 516.6 | 81.0 |
Accrued Liabilities | $ 1,988.5 | $ 2,284.8 |
Commitments and Contingencies (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | A summary of future minimum rental payments required under operating leases that have initial or remaining terms in excess of one year as of June 30, 2013 are as follows (in thousands):
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Loss Per Share (Details)
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6 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Warrants
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Class of Stock [Line Items] | ||
Dilutive Securities Excluded From Computation Of Earnings Per Share, Shares | 5,430,137 | 5,828,796 |
Series E Preferred Stock, Common stock equivalents
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Class of Stock [Line Items] | ||
Dilutive Securities Excluded From Computation Of Earnings Per Share, Shares | 0 | 336,812 |
Stock Options [Member]
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||
Class of Stock [Line Items] | ||
Dilutive Securities Excluded From Computation Of Earnings Per Share, Shares | 2,647,437 | 2,198,460 |
Restricted Stock [Member]
|
||
Class of Stock [Line Items] | ||
Dilutive Securities Excluded From Computation Of Earnings Per Share, Shares | 73,500 | 14,250 |
Shareholders' Equity Equity Issuances (Details) (USD $)
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6 Months Ended | 0 Months Ended | 0 Months Ended | 2 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Nov. 19, 2010
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Sep. 30, 2012
Private Placement [Member]
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Sep. 30, 2011
Aspire Capital Purchase Agreement [Member]
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Sep. 28, 2011
Aspire Capital Purchase Agreement [Member]
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May 03, 2013
Aegis Capital Purchase Agreement [Member]
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May 01, 2013
Aegis Capital Purchase Agreement [Member]
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Feb. 28, 2013
Aspire Capital Purchase Agreement [Member]
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Jun. 30, 2013
Aspire Capital Purchase Agreement [Member]
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Class of Stock [Line Items] | |||||||||||
Committment Value Under Purchase Agreement | $ 20,000,000 | ||||||||||
Term Of Agreement In Months | 24 | ||||||||||
Discount Applied To Weighted Average Price | 5.00% | ||||||||||
Shares, Issued | 99,010 | ||||||||||
Warrant Inducements (in shares) | 161,290 | ||||||||||
Investment Warrants, Exercise Price | $ 6.00 | ||||||||||
Shares, Issued | 2,000,000 | ||||||||||
Sale of Stock, Price Per Share | $ 0.945 | $ 5 | |||||||||
Proceeds from Issuance of Common Stock Gross | 11,500,000 | ||||||||||
Common Stock, Shares, Issued | 19,584,375 | 16,375,365 | 300,000 | 654,255 | |||||||
Net proceeds from issuance of common stock | 14,248,148 | 9,951,227 | 3,800,000 | ||||||||
Purchase Commitment, Remaining Minimum Amount Committed | $ 12,900,000 |
Shareholders' Equity (Tables)
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Jun. 30, 2013
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Shareholders’ Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | The following table summarizes the activity for stock options and warrants for the six months ended June 30, 2013:
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Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] | During the six months ended June 30, 2013 and 2012, the Company issued warrants for services as follows ($ in thousands, except share data):
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Restricted Stock [Table Text Block] | During the six months ended June 30, 2013 and 2012, the Company issued restricted stock for services as follows ($ in thousands, except share data):
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Summary of Significant Accounting Policies (Policies)
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6 Months Ended | ||||||||||||||||
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Jun. 30, 2013
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||
Receivables, Policy [Policy Text Block] | Accounts Receivable Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. The Company applies judgment in connection with establishing the allowance for doubtful accounts. Specifically, the Company analyzes the aging of accounts receivable balances, historical bad debts, customer concentration and credit-worthiness, current economic trends and changes in the Company’s customer payment terms. Significant changes in customer concentrations or payment terms, deterioration of customer credit-worthiness or weakening economic trends could have a significant impact on the collectability of the receivables and the Company’s operating results. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Management regularly reviews the aging of receivables and changes in payment trends by its customers, and records a reserve when it believes collection of amounts due are at risk. |
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Goodwill and Intangible Assets, Policy [Policy Text Block] | Goodwill and Other Intangible Assets Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. The Company’s intangible assets with an indefinite life are related to in process research and development for AMR-001, the clinical candidate acquired in the Amorcyte acquisition, as the Company expects this research and development to provide the Company with substantial benefit for a period that extends beyond the foreseeable horizon. Amortized intangible assets consist of customer lists, manufacturing technology, and tradename, as well as patents and rights associated primarily with the VSELTM Technology. These intangible assets are amortized on a straight line basis over their respective useful lives. The Company reviews goodwill and indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The Company tests its goodwill and indefinite-lived intangible assets each year on December 31. The Company reviews the carrying value of goodwill and indefinite-lived intangible assets utilizing a discounted cash flow model, and, where appropriate, a market value approach is also utilized to supplement the discounted cash flow model. The Company makes assumptions regarding estimated future cash flows, discount rates, long-term growth rates and market values to determine each reporting unit’s estimated fair value. If these estimates or related assumptions change in the future, the Company may be required to record impairment charges. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition Clinical Services: The Company recognizes revenue for its (i) cell process development and (ii) cell manufacturing services based on the terms of individual contracts. Revenues associated with cell process development services generally contain multiple stages that do not have stand-alone values and are dependent upon one another, and are recognized as revenue on a completed contract basis. We recognize revenues for cell development services when all of the following conditions are met:
The Company considers signed contracts as evidence of an arrangement. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the payment terms are subject to refund or adjustment. The Company assesses cash collectability based on a number of factors, including past collection history with the client and the client's creditworthiness. If the Company determines that collectability is not reasonably assured, it defers revenue recognition until collectability becomes reasonably assured, which is generally upon receipt of the cash. The Company's arrangements are generally non-cancellable, though clients typically have the right to terminate their agreement for cause if the Company materially fails to perform. Cell manufacturing services are generally distinct arrangements whereby the Company is paid for time and materials or for fixed monthly amounts. Revenue is recognized when efforts are expended or contractual terms have been met. Some client agreements include multiple elements, comprised of cell process development and cell manufacturing services. The Company believes that cell process development and cell manufacturing services each have stand-alone value because these services can be provided separately by other companies. In accordance with ASC Update No. 2009-13, “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements,” The Company (1) separates deliverables into separate units of accounting when deliverables are sold in a bundled arrangement and (2) allocates the arrangement's consideration to each unit in the arrangement based on its relative selling price. Clinical Services Reimbursements: The Company separately charges the customers for the expenses associated with certain consumable resources (reimbursable expenses) that are specified in each clinical services contract. On a monthly basis, the Company bills customers for reimbursable expenses and immediately recognizes these billings as revenue, as the revenue is deemed earned as reimbursable expenses are incurred. For the three months ended June 30, 2013 and 2012, clinical services reimbursements were $0.4 million and $0.8 million, respectively. For the six months ended June 30, 2013 and 2012, clinical services reimbursements were $0.8 million and $2.0 million, respectively. Processing and Storage Services: The Company recognizes revenue related to the collection and cryopreservation of cord blood and autologous adult stem cells when the cryopreservation process is completed which is approximately twenty-four hours after cells have been collected. Revenue related to advance payments of storage fees is recognized ratably over the period covered by the advance payments. |
Consolidated Statements of Equity (USD $)
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Total
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Series B Preferred Stock [Member]
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Common Stock [Member]
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Additional Paid-in Capital [Member]
|
Accumulated Other Comprehensive Income (Loss) [Member]
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Accumulated Deficit [Member]
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Treasury Stock [Member]
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Total NeoStem, Inc. Shareholders' Equity [Member]
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Noncontrolling Interest [Member]
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---|---|---|---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2011 | $ 80,132,518 | $ 100 | $ 10,933 | $ 200,957,035 | $ 4,152,343 | $ (143,094,854) | $ 0 | $ 62,025,557 | $ 18,106,961 |
Beginning Balance (shares) at Dec. 31, 2011 | 10,000 | 10,932,959 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (42,629,781) | (29,853,466) | (29,853,466) | (12,776,315) | |||||
Foreign currency translation | 197,429 | 21,989 | 21,989 | 175,440 | |||||
Share-based compensation (in shares) | 156,181 | ||||||||
Share-based compensation | 3,555,011 | 156 | 3,554,855 | 3,555,011 | |||||
Net proceeds from issuance of common stock (in shares) | 2,453,358 | ||||||||
Net proceeds from issuance of common stock | 9,951,227 | 2,454 | 9,948,773 | 9,951,227 | |||||
Repayment of Series E Preferred Principal and Dividends (in shares) | 219,492 | ||||||||
Repayment of Series E Preferred Principal and Dividends | 652,167 | 219 | 848,183 | (196,235) | 652,167 | ||||
Ending Balance at Jun. 30, 2012 | 51,858,571 | 100 | 13,762 | 215,308,846 | 4,174,332 | (173,144,555) | 0 | 46,352,485 | 5,506,086 |
Ending Balance (shares) at Jun. 30, 2012 | 10,000 | 13,761,990 | |||||||
Beginning Balance at Dec. 31, 2012 | 32,820,159 | 100 | 16,375 | 231,218,615 | 0 | (197,392,361) | (665,600) | 33,177,129 | (356,970) |
Beginning Balance (shares) at Dec. 31, 2012 | 10,000 | 16,375,365 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (17,489,971) | (17,375,935) | (17,375,935) | (114,036) | |||||
Share-based compensation (in shares) | 304,402 | ||||||||
Share-based compensation | 3,314,197 | 304 | 3,313,893 | 3,314,197 | |||||
Net proceeds from issuance of common stock (in shares) | 2,883,847 | ||||||||
Net proceeds from issuance of common stock | 14,248,148 | 2,884 | 14,245,264 | 14,248,148 | |||||
Proceeds from warrant exercise (in shares) | 20,761 | ||||||||
Proceeds from warrant exercise | 105,881 | 21 | 105,860 | 105,881 | |||||
Warrant Inducements (in shares) | 0 | ||||||||
Warrant inducements | (6,239) | 0 | (6,239) | (6,239) | |||||
Ending Balance at Jun. 30, 2013 | $ 32,992,175 | $ 100 | $ 19,584 | $ 248,877,393 | $ 0 | $ (214,768,296) | $ (665,600) | $ 33,463,181 | $ (471,006) |
Ending Balance (shares) at Jun. 30, 2013 | 10,000 | 19,584,375 |
The Business
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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The Business [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations [Text Block] | The Business Overview NeoStem, Inc. (“we,” “NeoStem” or the “Company”) is a leader in the emerging cellular therapy industry. Cellular therapy addresses the process by which new cells are introduced into a tissue to prevent or treat disease, or regenerate damaged or aged tissue. Modern cell-based therapies have progressed from the first recorded human to human blood transfusion 200 years ago through to the advanced cellular therapies of today including bone marrow and organ transplantation, tissue banking and reproductive in vitro fertilization and future therapies being investigated to treat cancer, cardiologic, neurologic, ophthalmic and orthopedic diseases among others. We anticipate that cellular therapies will have a large role in the fight against chronic disease and in lessening the economic burden that these diseases pose to modern society. Our business model includes the development of novel proprietary cell therapy products as well as operating a contract development and manufacturing organization (“CDMO”) providing services to others in the regenerative medicine industry. The combination of a therapeutic development business and revenue-generating service provider business provides the Company with unique capabilities for cost effective in-house product development and immediate revenue and cash flow generation. Progenitor Cell Therapy, LLC, our wholly owned subsidiary (“PCT”), is a leading CDMO in the cellular therapy industry. Since its inception in 1997, PCT has provided pre-clinical and clinical current Good Manufacturing Practice (“cGMP”) development and manufacturing services to over 100 clients advancing regenerative medicine product candidates through rigorous quality standards all the way through to human testing. Its core competencies in the cellular therapy industry include manufacturing of cell therapy-based products, product and process development, cell and tissue processing, regulatory support, storage, distribution and delivery and consulting services. PCT has two cGMP, state-of-the art cell therapy research, development, and manufacturing facilities in New Jersey and California, serving the cell therapy community with integrated and regulatory compliant distribution capabilities. Its core competencies in the cellular therapy industry include manufacturing of cell therapy-based products, product and process development, cell and tissue processing, regulatory support, storage, distribution and delivery and consulting services. Our wholly-owned subsidiary, Amorcyte, LLC (“Amorcyte”) is developing AMR-001for the treatment of cardiovascular disease. AMR-001 represents Amorcyte's most clinically advanced therapeutic product candidate and enrollment for the Phase 2 PreSERVE clinical trial to investigate AMR-001's safety and efficacy in preserving heart function after a particular type of acute myocardial infarction (“AMI”) commenced in 2012. We are on track to complete patient enrollment for this study in 2013 with the first data readout available six to eight months after the last patient is infused. If approved by the U.S. Food and Drug Administration ("FDA") and/or other worldwide regulatory agencies, AMR-001 would address a significant unmet medical need in the treatment of AMI, potentially improving the quality and longevity of life for those afflicted, and positioning the Company to capture a meaningful share of the worldwide AMI therapy market. Through our majority-owned subsidiary, Athelos Corporation (“Athelos”), we are collaborating with Becton-Dickinson and the University of California, San Francisco in early stage clinical development of a therapy that utilizes T-cells to treat autoimmune and inflammatory conditions. We plan to investigate the clinical feasibility of nTreg-based therapeutics to prevent and/or treat type 1 diabetes, steroid resistant asthma and solid organ transplantation tolerance. Our pre-clinical assets include our VSELTM (Very Small Embryonic Like) Technology platform for which we expect to file an Investigational New Drug ("IND") with the FDA to initiate a National Institute of Health ("NIH") funded human clinical study to investigate the impact of VSELsTM in periodontitis. We are also working on a Department of Defense funded study of VSELsTM and mesenchymal stem cells for the treatment of chronic wounds. NeoStem's origins are in adult stem cell collection and storage and we believe that as new therapeutics are developed utilizing one's own stored cells (autologous), the market penetration rate for the collection and storage business may rise sharply from its current low single digits percentage level allowing our developing a network to scale rapidly if the demand grows. In 2011, we operated our business in three reportable segments: (i) Cell Therapy — United States; (ii) Regenerative Medicine — China; and (iii) Pharmaceutical Manufacturing — China. In 2012, we exited our operations in China. Effective March 31, 2012, we no longer operated in the Regenerative Medicine – China reportable segment, which was reported in discontinued operations in 2012 (see Note 14). On November 13, 2012, we completed the sale of our 51% interest in Suzhou Erye, which represented the operations in our Pharmaceutical Manufacturing - China segment, and is also reported in discontinued operations (see Note 14). As a result, we currently operate in a single reporting segment - Cell Therapy, which will focus on CDMO and cell therapy development programs. We believe that NeoStem is ideally positioned to be an integrated leader in the cell therapy industry. We have significant basic research and development capabilities, manufacturing facilities on both the east and west coast of the United States, the support of regulatory and logistical expertise and a talented and experienced clinical team. We believe this expertise will allow us to achieve our mission of becoming the premier cell therapy company. Basis of Presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of June 30, 2013 and the results of its operations and its cash flows for the periods presented. The unaudited consolidated financial statements herein should be read together with the historical consolidated financial statements of the Company for the years ended December 31, 2012 and 2011 included in our Annual Report on Form 10-K for the year ended December 31, 2012. Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Principles of Consolidation The Consolidated Financial Statements include the accounts of NeoStem, Inc. and its wholly owned and partially owned subsidiaries and affiliates as listed below, as well as the operations of our former Regenerative Medicine - China segment through the deconsolidation date on March 31, 2012 (see Note 14), and the operations of our former Pharmaceutical Manufacturing - China reporting segment through November 13, 2012, representing the date which the segment was sold (see Note 14). These former segments are reported in discontinued operations.
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Inventories
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6 Months Ended |
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Jun. 30, 2013
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Inventories [Abstract] | |
Inventory Disclosure [Text Block] | Inventories Inventories, representing work in process for costs incurred on projects at PCT that have not been completed, were $0.03 million and $1.1 million as of June 30, 2013 and December 31, 2012, respectively. The Company also has deferred revenue of approximately $0.12 million and $1.2 million of advance billings received as of June 30, 2013 and December 31, 2012, respectively, related to these contracts. |
Summary of Significant Accounting Policies
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6 Months Ended | ||||||||||||||||
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Jun. 30, 2013
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||
Summary of Significant Accounting Policies [Text Block] | Summary of Significant Accounting Policies In addition to the policies below, our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2012. There were no changes during the six months ended June 30, 2013. Accounts Receivable Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. The Company applies judgment in connection with establishing the allowance for doubtful accounts. Specifically, the Company analyzes the aging of accounts receivable balances, historical bad debts, customer concentration and credit-worthiness, current economic trends and changes in the Company’s customer payment terms. Significant changes in customer concentrations or payment terms, deterioration of customer credit-worthiness or weakening economic trends could have a significant impact on the collectability of the receivables and the Company’s operating results. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Management regularly reviews the aging of receivables and changes in payment trends by its customers, and records a reserve when it believes collection of amounts due are at risk. Goodwill and Other Intangible Assets Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. The Company’s intangible assets with an indefinite life are related to in process research and development for AMR-001, the clinical candidate acquired in the Amorcyte acquisition, as the Company expects this research and development to provide the Company with substantial benefit for a period that extends beyond the foreseeable horizon. Amortized intangible assets consist of customer lists, manufacturing technology, and tradename, as well as patents and rights associated primarily with the VSELTM Technology. These intangible assets are amortized on a straight line basis over their respective useful lives. The Company reviews goodwill and indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The Company tests its goodwill and indefinite-lived intangible assets each year on December 31. The Company reviews the carrying value of goodwill and indefinite-lived intangible assets utilizing a discounted cash flow model, and, where appropriate, a market value approach is also utilized to supplement the discounted cash flow model. The Company makes assumptions regarding estimated future cash flows, discount rates, long-term growth rates and market values to determine each reporting unit’s estimated fair value. If these estimates or related assumptions change in the future, the Company may be required to record impairment charges. Revenue Recognition Clinical Services: The Company recognizes revenue for its (i) cell process development and (ii) cell manufacturing services based on the terms of individual contracts. Revenues associated with cell process development services generally contain multiple stages that do not have stand-alone values and are dependent upon one another, and are recognized as revenue on a completed contract basis. We recognize revenues for cell development services when all of the following conditions are met:
The Company considers signed contracts as evidence of an arrangement. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the payment terms are subject to refund or adjustment. The Company assesses cash collectability based on a number of factors, including past collection history with the client and the client's creditworthiness. If the Company determines that collectability is not reasonably assured, it defers revenue recognition until collectability becomes reasonably assured, which is generally upon receipt of the cash. The Company's arrangements are generally non-cancellable, though clients typically have the right to terminate their agreement for cause if the Company materially fails to perform. Cell manufacturing services are generally distinct arrangements whereby the Company is paid for time and materials or for fixed monthly amounts. Revenue is recognized when efforts are expended or contractual terms have been met. Some client agreements include multiple elements, comprised of cell process development and cell manufacturing services. The Company believes that cell process development and cell manufacturing services each have stand-alone value because these services can be provided separately by other companies. In accordance with ASC Update No. 2009-13, “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements,” The Company (1) separates deliverables into separate units of accounting when deliverables are sold in a bundled arrangement and (2) allocates the arrangement's consideration to each unit in the arrangement based on its relative selling price. Clinical Services Reimbursements: The Company separately charges the customers for the expenses associated with certain consumable resources (reimbursable expenses) that are specified in each clinical services contract. On a monthly basis, the Company bills customers for reimbursable expenses and immediately recognizes these billings as revenue, as the revenue is deemed earned as reimbursable expenses are incurred. For the three months ended June 30, 2013 and 2012, clinical services reimbursements were $0.4 million and $0.8 million, respectively. For the six months ended June 30, 2013 and 2012, clinical services reimbursements were $0.8 million and $2.0 million, respectively. Processing and Storage Services: The Company recognizes revenue related to the collection and cryopreservation of cord blood and autologous adult stem cells when the cryopreservation process is completed which is approximately twenty-four hours after cells have been collected. Revenue related to advance payments of storage fees is recognized ratably over the period covered by the advance payments. |
Fair Value Measurements Fair value hierarchy the Company’s financial assets and liabilities (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Fair Value, Inputs, Level 1 [Member]
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant Derivative Liabilities | $ 0 | $ 0 |
Contingent Consideration Classified As Equity Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 2 [Member]
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant Derivative Liabilities | 0 | 0 |
Contingent Consideration Classified As Equity Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 [Member]
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant Derivative Liabilities | 32,600 | 101,200 |
Contingent Consideration Classified As Equity Fair Value Disclosure | $ 7,550,000 | $ 7,550,000 |
Fair Value Measurements (Tables)
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Jun. 30, 2013
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Jun. 30, 2013
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Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | For those financial instruments with significant Level 3 inputs, the following table summarizes the activity for the three and six months ended June 30, 2013 by type of instrument (in thousands):
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Table Text Block] | The Company also determined the fair value of contingent consideration, initially recognized on October 17, 2011 in connection with the Company's acquisition of Amorcyte, to be level 3 inputs. The fair value of contingent consideration obligations is based on a discounted cash flow model using a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on our own assumptions and experience. The value of our contingent consideration was initially calculated using a discount rate of 30%. We base the timing to complete the development and approval of this product on the current development stage of the product and the inherent difficulties and uncertainties in developing a product candidate, such as obtaining U.S. Food and Drug Administration (FDA) and other regulatory approvals. In determining the probability of regulatory approval and commercial success, we utilize data regarding similar milestone events from several sources, including industry studies and our own experience. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense we record in any given period. Changes in the fair value of the contingent consideration obligations are recorded in our consolidated statement of operations. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2013, and December 31, 2012 (in thousands):
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Share-Based Compensation (Tables)
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Jun. 30, 2013
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] | The following table summarizes the components of share-based compensation expense for the three and six months ended June 30, 2013 and 2012 (in thousands):
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Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | Total compensation cost related to nonvested awards not yet recognized and the weighted-average periods over which the awards are expected to be recognized at June 30, 2013 were as follows (dollars in thousands):
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Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value [Table Text Block] | Total fair value of shares vested and the weighted average estimated fair values of shares grant for the six months ended June 30, 2013 and 2012 were as follows (dollars in thousands):
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Summary of Significant Accounting Policies (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Summary of Significant Accounting Policies [Abstract] | ||||
Clinical Services Reimbursement | $ 0.4 | $ 0.8 | $ 0.8 | $ 2.0 |
Discontinued Operations Company recognized loss on exit (Details) (Regenerative Medicine - China segment [Member], USD $)
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1 Months Ended | 6 Months Ended | 1 Months Ended | |||||
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Mar. 31, 2012
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Mar. 31, 2012
Gain (Loss) on Dispostion of Cash and Cash Equivalents [Member]
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Jun. 30, 2012
Gain (Loss) on Disposition of Prepaid Expenses and Other Current Assets [Member]
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Mar. 31, 2012
Gain (Loss) on Disposition of Property, Plant and Equipment, Net [Member]
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Mar. 31, 2012
Gain (Loss) on Disposition of Other Assets [Member]
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Mar. 31, 2012
Gain (Loss) on Disposition of Accounts Payable [Member]
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Mar. 31, 2012
Gain (Loss) on Disposition of Accrued Liabilities [Member]
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Mar. 31, 2012
Gain (Loss) on Disposition of Accumulated Comprehensive Income [Member]
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Loss on exit of segment | $ 1,138,000 | $ 195,100 | $ 14,900 | $ 1,023,700 | $ 330,500 | $ (177,100) | $ (79,200) | $ (169,900) |