UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2014
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM
TO
Commission File Number: 000-55016
Amarantus Bioscience Holdings, Inc
(Exact name of registrant as specified in
its charter)
Nevada |
|
26-0690857 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
655 Montgomery Street, Suite 900, San
Francisco, CA 94111
(Address of principal executive offices)
(415) 688-4484
(Registrant’s telephone number, including
area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes þ
No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
þ No
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ |
Accelerated filer ¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) |
Smaller reporting company þ |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨
No þ
As November 7, 2014, the issuer had a total of 799,653,708 shares
of common stock, $0.001 par value, outstanding.
TABLE OF CONTENTS
PART I. |
FINANCIAL INFORMATION |
Item 1. |
Condensed Consolidated Financial Statements (Unaudited) |
Amarantus Bioscience Holdings, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share
data)
| |
September 30, 2014 | | |
December 31, 2013 | |
ASSETS | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 680 | | |
$ | 1,033 | |
Restricted cash | |
| 129 | | |
| - | |
Deferred funding fees, net | |
| - | | |
| 109 | |
Prepaid expenses and other current assets | |
| 292 | | |
| 106 | |
Total current assets | |
| 1,101 | | |
| 1,248 | |
Property and equipment, net | |
| 127 | | |
| - | |
Intangible assets, net | |
| 1,529 | | |
| 611 | |
Total assets | |
$ | 2,757 | | |
$ | 1,859 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable (includes related parties $414 and $490, respectively) | |
| 2,276 | | |
| 972 | |
Related party liabilities and accrued interest | |
| 251 | | |
| 248 | |
Accrued expenses | |
| 302 | | |
| 292 | |
Accrued interest | |
| 60 | | |
| 112 | |
Demand promissory note | |
| 500 | | |
| - | |
8% Senior convertible debentures, net of discount | |
| - | | |
| 932 | |
Convertible promissory notes | |
| - | | |
| 124 | |
Derivative liability | |
| - | | |
| 5,859 | |
Total current liabilities | |
| 3,389 | | |
| 8,539 | |
Total liabilities | |
| 3,389 | | |
| 8,539 | |
| |
| | | |
| | |
Commitments and contingencies | |
| - | | |
| - | |
| |
| | | |
| | |
Series D convertible preferred stock, $1,000 stated value; 1,300 shares designated; 1,299.327 issued and outstanding as of December 31, 2013 | |
| - | | |
| 839 | |
| |
| | | |
| | |
Stockholders’ equity (deficit) | |
| | | |
| | |
Convertible preferred stock, $0.001 par value — 10,000,000 shares authorized: | |
| | | |
| | |
Series A, $0.001 par value, 250,000 shares designated, -0- shares issued and outstanding as of September 30, 2014 and December 31, 2013 | |
| - | | |
| - | |
Series B, $0.001 par value, 3,000,000 shares designated, -0- shares issued and outstanding as of September 30, 2014 and December 31, 2013 | |
| - | | |
| - | |
Series C, $0.001 par value, 750,000 shares designated, 750,000 shares issued and outstanding as of September 30, 2014 and December 31, 2013 | |
| 1 | | |
| 1 | |
Series D, $1,000 stated value; 1,300 shares designated; 1,299.327 issued and outstanding as of September 30, 2014 | |
| 839 | | |
| - | |
Common stock, $0.001 par value — 2,000,000,000 and 1,000,000 shares authorized as of September 30,2014 and December 31, 2013, respectively; 786,924,849 and 574,171,945 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | |
| 787 | | |
| 574 | |
Additional paid-in capital | |
| 38,816 | | |
| 18,938 | |
Accumulated deficit | |
| (41,075 | ) | |
| (27,032 | ) |
Total stockholders' equity (deficit) | |
| (632 | ) | |
| (7,519 | ) |
Total liabilities and stockholders' equity (deficit) | |
$ | 2,757 | | |
$ | 1,859 | |
See notes to condensed consolidated financial
statements.
Amarantus Bioscience Holdings, Inc
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per share
data)
| |
Three Months Ended September 30, 2014 | | |
Three Months Ended September 30, 2013 (Restated) | | |
Nine Months Ended September 30, 2014 | | |
Nine Months Ended September 30, 2013 (Restated) | |
| |
| | |
| | |
| | |
| |
Net sales | |
$ | — | | |
$ | — | | |
$ | — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
Operating expense: | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 1,899 | | |
| 289 | | |
| 4,056 | | |
| 1,427 | |
General and administrative | |
| 2,070 | | |
| 390 | | |
| 5.289 | | |
| 2,441 | |
| |
| | | |
| | | |
| | | |
| | |
| |
| 3,969 | | |
| 679 | | |
| 9,345 | | |
| 3,868 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations | |
| (3,969 | ) | |
| (679 | ) | |
| (9,345 | ) | |
| (3,868 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| (46 | ) | |
| (517 | ) | |
| (756 | ) | |
| (1,658 | ) |
Loss on issuance of common stock | |
| (193 | ) | |
| — | | |
| (260 | ) | |
| — | |
Loss on issuance of warrants | |
| — | | |
| — | | |
| (3,868 | ) | |
| — | |
Other Income (Expense) | |
| (74 | ) | |
| — | | |
| (92 | ) | |
| — | |
Change in fair value of warrant & derivative liabilities | |
| (117 | ) | |
| (1,844 | ) | |
| 356 | | |
| (3,349 | ) |
| |
| | | |
| | | |
| | | |
| | |
Total other income (expense) | |
| (430 | ) | |
| (2,361 | ) | |
| (4,620 | ) | |
| (5,007 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (4,399 | ) | |
| (3,040 | ) | |
$ | (13,965 | ) | |
| (8,875 | ) |
| |
| | | |
| | | |
| | | |
| | |
Preferred stock dividend | |
| 26 | | |
| 12 | | |
| 78 | | |
| 12 | |
Net loss attributable to common stockholders | |
| (4,425 | ) | |
| (3,052 | ) | |
| (14,043 | ) | |
| (8,887 | ) |
Basic and diluted net (loss) per common share | |
$ | (0.01 | ) | |
| (0.01 | ) | |
$ | (0.02 | ) | |
| (0.02 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average common shares outstanding | |
| 767,657,531 | | |
| 478,883,561 | | |
| 711,302,222 | | |
| 415,163,655 | |
See notes to condensed
consolidated financial statements.
Amarantus Bioscience Holdings, Inc
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIT)
(Unaudited)
(in thousands, except share and per share
data)
|
|
Convertible
Preferred Stock |
|
|
Common
Stock |
|
|
Additional
Paid-in |
|
|
Deficit
Accumulated
during the
Development |
|
|
Total
Stockholders’
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Stage |
|
|
(Deficit) |
|
Balances
as of December 31, 2013 |
|
|
750,000 |
|
|
$ |
1 |
|
|
|
574,171,945 |
|
|
$ |
574 |
|
|
$ |
18,938 |
|
|
$ |
(27,032 |
) |
|
$ |
(7,519 |
) |
Common stock issued
for services |
|
|
— |
|
|
|
— |
|
|
|
2,500,000 |
|
|
|
2 |
|
|
|
182 |
|
|
|
— |
|
|
|
184 |
|
Common stock issued
for license |
|
|
— |
|
|
|
— |
|
|
|
3,641,002 |
|
|
|
4 |
|
|
|
224 |
|
|
|
— |
|
|
|
228 |
|
Common stock sold |
|
|
— |
|
|
|
— |
|
|
|
4,000,000 |
|
|
|
4 |
|
|
|
396 |
|
|
|
— |
|
|
|
400 |
|
Deferred funding
costs charged to equity upon sale of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(400 |
) |
|
|
— |
|
|
|
(400 |
) |
Common stock issued
for funding fees |
|
|
— |
|
|
|
— |
|
|
|
6,000,000 |
|
|
|
6 |
|
|
|
510 |
|
|
|
— |
|
|
|
516 |
|
Common stock issued
upon conversion of 8% senior convertible debentures |
|
|
— |
|
|
|
— |
|
|
|
77,405,866 |
|
|
|
78 |
|
|
|
3,013 |
|
|
|
— |
|
|
|
3,091 |
|
Common stock issued in settlement of
convertible promissory notes |
|
|
— |
|
|
|
— |
|
|
|
1,095,759 |
|
|
|
1 |
|
|
|
10 |
|
|
|
— |
|
|
|
11 |
|
Common stock issued
for Series D convertible preferred stock dividend |
|
|
— |
|
|
|
— |
|
|
|
866,218 |
|
|
|
1 |
|
|
|
25 |
|
|
|
— |
|
|
|
26 |
|
Loss on issuance
of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
67 |
|
|
|
— |
|
|
|
67 |
|
Common stock
issued upon exercise of common stock warrants |
|
|
— |
|
|
|
— |
|
|
|
60,000,000 |
|
|
|
60 |
|
|
|
3,540 |
|
|
|
— |
|
|
|
3,600 |
|
Deferred funding
costs charged to equity upon exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(190 |
) |
|
|
— |
|
|
|
(190 |
) |
Loss on issuance
of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,867 |
|
|
|
— |
|
|
|
3,867 |
|
8% senior convertible
debentures converted and associated reclassification of derivative liability |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
3,044 |
|
|
|
— |
|
|
|
3,044 |
|
Series D convertible
preferred stock 8% dividend accrued at period end |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
|
|
(26 |
) |
Stock-based compensation
expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
202 |
|
|
|
— |
|
|
|
202 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,542 |
) |
|
|
(5,542 |
) |
Balances as of
March 31, 2014 |
|
|
750,000 |
|
|
$ |
1 |
|
|
|
729,680,790 |
|
|
$ |
730 |
|
|
$ |
33,428 |
|
|
$ |
(32,600 |
) |
|
$ |
1,559 |
|
Common stock issued
for services |
|
|
— |
|
|
|
— |
|
|
|
4,229,818 |
|
|
|
4 |
|
|
|
406 |
|
|
|
— |
|
|
|
410 |
|
Common stock issued
for license |
|
|
— |
|
|
|
— |
|
|
|
1,858,998 |
|
|
|
2 |
|
|
|
124 |
|
|
|
— |
|
|
|
126 |
|
Common stock sold
- LPC |
|
|
— |
|
|
|
— |
|
|
|
1,500,000 |
|
|
|
2 |
|
|
|
144 |
|
|
|
— |
|
|
|
146 |
|
Deferred funding
costs charged to equity upon sale of common stock - LPC |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(118 |
) |
|
|
— |
|
|
|
(118 |
) |
Common stock issued
as consideration for commitment fee - LPC |
|
|
— |
|
|
|
— |
|
|
|
25,463 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
Common stock issued
upon conversion of 8% senior convertible debentures |
|
|
— |
|
|
|
— |
|
|
|
4,567,534 |
|
|
|
4 |
|
|
|
178 |
|
|
|
— |
|
|
|
182 |
|
Common stock issued
in conversion of convertible promissory notes |
|
|
— |
|
|
|
— |
|
|
|
1,062,667 |
|
|
|
1 |
|
|
|
20 |
|
|
|
— |
|
|
|
21 |
|
Common stock issued
for Series D convertible preferred stock dividend |
|
|
— |
|
|
|
— |
|
|
|
866,218 |
|
|
|
1 |
|
|
|
25 |
|
|
|
— |
|
|
|
26 |
|
Common stock
issued upon exercise of common stock warrants |
|
|
— |
|
|
|
— |
|
|
|
2,777,775 |
|
|
|
3 |
|
|
|
164 |
|
|
|
— |
|
|
|
167 |
|
8% senior convertible
debentures converted and associated reclassification of derivative liability |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
230 |
|
|
|
— |
|
|
|
230 |
|
Reclassification
of series D convertible preferred stock into stockholders' equity (deficit) |
|
|
1,299 |
|
|
|
839 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
839 |
|
Series D convertible
preferred stock 8% dividend accrued at period end |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
|
|
(26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
274 |
|
|
|
— |
|
|
|
274 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,025 |
) |
|
|
(4,025 |
) |
Balances
as of June 30, 2014 |
|
|
751,299 |
|
|
$ |
840 |
|
|
|
746,569,263 |
|
|
$ |
747 |
|
|
$ |
34,877 |
|
|
$ |
(36,651 |
) |
|
$ |
(187 |
) |
Amarantus Bioscience Holdings, Inc
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIT), continued
(Unaudited)
(in thousands, except share and per share
data)
|
|
Convertible
Preferred Stock |
|
|
Common
Stock |
|
|
Additional
Paid-in |
|
|
Deficit
Accumulated
during the
Development |
|
|
Total
Stockholders’
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Stage |
|
|
(Deficit) |
|
Balances
as of June 30, 2014 |
|
|
751,299 |
|
|
$ |
840 |
|
|
|
746,569,263 |
|
|
$ |
747 |
|
|
$ |
34,877 |
|
|
$ |
(36,651 |
) |
|
$ |
(187 |
) |
Common stock issued
for services |
|
|
— |
|
|
|
— |
|
|
|
737,277 |
|
|
|
1 |
|
|
|
53 |
|
|
|
— |
|
|
|
54 |
|
Common stock in settlement of convertible
promissory notes |
|
|
— |
|
|
|
— |
|
|
|
4,880,487 |
|
|
|
5 |
|
|
|
102 |
|
|
|
— |
|
|
|
107 |
|
Common stock sold
- LPC |
|
|
— |
|
|
|
— |
|
|
|
9,000,000 |
|
|
|
9 |
|
|
|
1,321 |
|
|
|
— |
|
|
|
1,330 |
|
Common stock issued
as consideration for commitment fee - LPC |
|
|
— |
|
|
|
— |
|
|
|
232,785 |
|
|
|
— |
|
|
|
35 |
|
|
|
— |
|
|
|
35 |
|
Common stock issued
upon conversion of 8% senior convertible debentures |
|
|
— |
|
|
|
— |
|
|
|
4,500,009 |
|
|
|
4 |
|
|
|
176 |
|
|
|
— |
|
|
|
180 |
|
Common stock issued
for Series D convertible preferred stock dividend |
|
|
— |
|
|
|
— |
|
|
|
866,218 |
|
|
|
1 |
|
|
|
25 |
|
|
|
— |
|
|
|
26 |
|
Loss on issuance
of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
193 |
|
|
|
— |
|
|
|
193 |
|
Common stock
issued upon exercise of common stock warrants |
|
|
— |
|
|
|
— |
|
|
|
20,138,810 |
|
|
|
20 |
|
|
|
1,188 |
|
|
|
— |
|
|
|
1,208 |
|
8% senior convertible
debentures and convertible notes converted and associated reclassification of derivative liability |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
407 |
|
|
|
— |
|
|
|
407 |
|
Series D convertible
preferred stock 8% dividend accrued at period end |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
|
|
(26 |
) |
Stock-based compensation
expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
439 |
|
|
|
— |
|
|
|
439 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,399 |
) |
|
|
(4,399 |
) |
Balances as of
September 30, 2014 |
|
|
751,299 |
|
|
|
840 |
|
|
|
786,924,849 |
|
|
$ |
787 |
|
|
$ |
38,816 |
|
|
$ |
(41,075 |
) |
|
$ |
(632 |
) |
See notes to condensed consolidated financial
statements.
Amarantus Bioscience Holdings, Inc
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
(in thousands)
| |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 (Restated) | |
Cash flows from operating activities | |
| | |
| |
Net loss | |
$ | (13,965 | ) | |
$ | (8,875 | ) |
Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | |
Depreciation and amortization | |
| 17 | | |
| - | |
Amortization of debt discount | |
| 582 | | |
| 937 | |
Amortization of deferred financing fees | |
| 145 | | |
| 194 | |
Amortization of intangibles | |
| 86 | | |
| - | |
Stock issued for services | |
| 648 | | |
| 65 | |
Write-off of clinical trial material | |
| 500 | | |
| - | |
Reserve for investment | |
| 25 | | |
| - | |
Loss on stock issuance | |
| 260 | | |
| - | |
Loss on warrant issuance | |
| 3,867 | | |
| - | |
Non-cash interest expense related to demand promissory note, warrants and derivatives | |
| 37 | | |
| - | |
Change in fair value of warrants and derivative liability | |
| (356 | ) | |
| 3,348 | |
Stock-based compensation expense | |
| 914 | | |
| 682 | |
Changes in assets and liabilities: | |
| | | |
| | |
Restricted cash | |
| (129 | ) | |
| - | |
| |
| | | |
| | |
Clinical trial material | |
| (500 | ) | |
| - | |
Deferred funding fees | |
| 116 | | |
| - | |
Prepaid expenses and other current assets | |
| (180 | ) | |
| (162 | ) |
Accounts payable | |
| 947 | | |
| 739 | |
Related party liabilities and accrued interest | |
| 3 | | |
| 25 | |
Accrued expenses and accrued interest | |
| 57 | | |
| 420 | |
Net cash used in operating activities | |
| (6,926 | ) | |
| (2,627 | ) |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Acquisition of property and equipment | |
| (144 | ) | |
| - | |
Investment | |
| (25 | ) | |
| - | |
Acquisition of other assets | |
| (600 | ) | |
| (34 | ) |
Net cash used by investing activities | |
| (769 | ) | |
| (34 | ) |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from demand and convertible notes | |
| 500 | | |
| 3,823 | |
Repayment of convertible promissory notes and accrued interest | |
| (9 | ) | |
| (301 | ) |
Repayment of convertible promissory notes | |
| - | | - |
| (3 | ) |
| |
| | | |
| | |
Proceeds from issuance of common stock | |
| 1,876 | | |
| - | |
Proceeds from exercise of warrants | |
| 4,975 | | |
| - | |
Net cash provided by financing activities | |
| 7,342 | | |
| 3,519 | |
| |
| | | |
| | |
Net (decrease) increase in cash and cash equivalents | |
| (353 | ) | |
| 858 | |
Cash and cash equivalents | |
| | | |
| | |
Beginning of period | |
| 1,033 | | |
| 157 | |
End of period | |
$ | 680 | | |
$ | 1,105 | |
Amarantus Bioscience Holdings, Inc
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS, continued
(Unaudited)
(in thousands)
| |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 (Restated) | |
| |
| | |
| |
Supplemental schedule of non-cash activities: | |
| | | |
| | |
| |
| | | |
| | |
Convertible debentures converted and associated reclassification of derivative liabilities | |
$ | 8,957 | | |
$ | - | |
Debt discount associated with convertible promissory notes | |
| (1,823 | ) | |
| - | |
Convertible promissory notes issued for payables and accrued liabilities | |
| (2 | ) | |
| 161 | |
Convertible notes payable issued for accounts payables | |
| - | | |
| 201 | |
Stock issued for deferred funding fees | |
| 523 | | |
| - | |
Stock subscription | |
| 146 | | |
| - | |
Intangible asset | |
| (50 | ) | |
| - | |
Deferred funding fees charged to equity upon sale of common stock | |
| (518 | ) | |
| - | |
Stock issued to acquire intangible assets | |
| 104 | | |
| 79 | |
Reclass of Series D Preferred from mezzanine to equity | |
| 839 | | |
| - | |
Stock issued to satisfy accounts payable and accrued expenses | |
| 22 | | |
| 1,295 | |
Stock issued for convertible promissory notes | |
| 11 | | |
| 1,198 | |
Stock issued for notes payable | |
| - | | |
| 1,350 | |
Stock issued for warrant obligations | |
| - | | |
| 78 | |
Debt discount for derivative conversion feature | |
| - | | |
| 2,178 | |
Series D convertible preferred stock 8% dividend accrued at period end | |
| - | | |
| (12 | ) |
| |
| | | |
| | |
Supplemental cash flow information | |
| | | |
| | |
| |
| | | |
| | |
Interest payments | |
$ | 1 | | |
$ | - | |
See notes to condensed consolidated financial
statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(in thousands,
except share and per share data)
Amarantus Bioscience Holdings,
Inc. (the “Company”), is a biotechnology company focused on the development of diagnostics and therapeutics for Alzheimer's
disease, Parkinson's disease and ophthalmological disorders. Through September 30, 2014, the Company has been primarily engaged
in biotechnology and diagnostics research and development and raising capital to fund its operations.
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with the accounting principles
generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant
to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”)
and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated
balance sheet as of June 30, 2014, condensed consolidated statements of audited interim financials include all adjustments,
consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial
position, operating results and cash flows for the periods presented.
The results for the statement of operations are not necessarily
indicative of results to be expected for the year ending December 31, 2014 or for any future interim period. The condensed
balance sheet at December 31, 2013 has been derived from audited financial statements; however, it does not include all of
the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed financial statements
should be read in conjunction with the consolidated financial statements for the year ended December 31, 2013, and notes thereto
included in the Company’s annual report on Form 10-K.
Significant Accounting
Policies
There have been no material changes in the Company’s
significant accounting policies to those previously disclosed in the Company’s annual report on Form 10-K, which was
filed with the SEC on April 22, 2014. .
As the Company has not yet commenced
any revenue-generating operations, does not have cash flows from operations, and is dependent on debt and equity funding to finance
its operations, the Company is considered a development stage company, as defined by FASB. The Company’s activities are subject
to significant risks and uncertainties, as described in the liquidity and going concern footnote, including failing to secure additional
funding to operationalize the Company’s current projects and technology before another company develops similar therapeutic
platform technologies.
In June 2014, as discussed below
the Financial Accounting Standards Board issued new guidance that removed all incremental financial reporting requirements from
U.S. GAAP for development stage entities. The Company early adopted this new guidance effective June 30, 2014, as a result of which
all inception-to-date financial information and disclosures have been omitted from this report.
Recently Issued Accounting
Pronouncements
Accounting Standards Update No.
2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment
to Variable Interest Entities Guidance in Topic 810, Consolidation removes all incremental financial reporting requirements
for development stage entities, including the removal of reporting of the cumulative results of operations and cash flows for the
period from inception to the end of the current period. The update is effective for the first annual period beginning after
December 15, 2014. Early adoption is permitted, and the Company has decided to adopt this change effective with its form 10-Q filing
for the period ending June 30, 2014.
Accounting Standard Update No. 2014-12, Compensation
– stock requires that a performance target that affects vesting and that could be achieved after the requisite service
period should be treated as a performance condition that affects vesting, rather than a condition that affects the grant-date fair
value. The effective date will be for fiscal years, and interim periods within those years, beginning after December 15, 2015 for
all entities. Early adoption is permitted. The Company is considering the effect of this FASB issuance, on the financial statements,
and has decided not to early adopt at this time.
Accounting Standard Update No. ASU 2014-15, Presentation
of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue
as a Going Concern. The amendments in this update are effective for the annual period ending after December 15, 2016, and for
annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of
this update on its consolidated financial statements.
|
2. |
LIQUIDITY AND GOING CONCERN |
The Company’s activities
since inception have consisted principally of acquiring product and technology rights, raising capital, and performing research
and development. Successful completion of the Company’s development programs and, ultimately, the attainment of profitable
operations are dependent on future events, including, among other things, its ability to access potential markets; secure financing,
develop a customer base; attract, retain and motivate qualified personnel; and develop strategic alliances. From inception, the
Company has been funded by a combination of equity and debt financings.
The Company expects to continue to incur substantial
losses over the next several years during its development phase. To fully execute its business plan, the Company will need to complete
certain research and development activities and clinical studies. Further, the Company’s product candidates will require
regulatory approval prior to commercialization. These activities may span many years and require substantial expenditures to complete
and may ultimately be unsuccessful. Any delays in completing these activities could adversely impact the Company. The Company plans
to meet its capital requirements primarily through issuances of debt and equity securities and, in the longer term, revenue from
product sales.
As of September 30, 2014, the
Company had cash and cash equivalents of approximately $680. Historically, the Company has net losses and negative cash flows from
operations. The Company believes its current capital resources are not sufficient to support its operations. Management intends
to continue its research efforts and to finance operations of the Company through debt and/or equity financings. Management plans
to seek additional debt and/or equity financing through private or public offerings or through a business combination or strategic
partnership. There can be no assurance that the Company will be successful in obtaining additional financing on favorable terms,
or at all. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of these uncertainties.
|
3. |
RESTATEMENT OF PRIOR QUARTERS |
In the fourth quarter of 2013, we discovered that
some of the amounts we had previously reported in prior quarters had not been recorded correctly. The adjustments to correct for
accounting differences were made in the fourth quarter of 2013 and are primarily related to our accounting for convertible note
obligations.
The following table sets forth the effects of the
restatement on affected items within our previously reported Condensed Consolidated Statement of Operations for the three and nine
months ended September 30, 2013.
| |
Three Months Ended September 30, 2013 | | |
Nine Months Ended September 30, 2013 | |
| |
As Reported | | |
As Restated | | |
As Reported | | |
As Restated | |
Operating loss | |
$ | (679 | ) | |
$ | (679 | ) | |
$ | (3,868 | ) | |
$ | (3,868 | ) |
Non-operating income (loss) | |
| (1,347 | ) | |
| (2,361 | ) | |
| (1,916 | ) | |
| (5,007 | ) |
Net loss | |
| (2,026 | ) | |
| (3,040 | ) | |
| (5,784 | ) | |
| (8,875 | ) |
Net loss per common share, basic and diluted | |
| (0.00 | ) | |
| (0.01 | ) | |
| (0.01 | ) | |
| (0.02 | ) |
Accrued expenses:
| |
As of | |
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
| | |
| |
Accrued compensation and related benefits | |
$ | 276 | | |
$ | 266 | |
Series D convertible preferred dividend payable | |
| 26 | | |
| 26 | |
Total | |
$ | 302 | | |
$ | 292 | |
Related party liabilities:
| |
As of | |
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
| | |
| |
Promissory note – 2% interest | |
$ | 222 | | |
$ | 222 | |
Accrued interest | |
| 29 | | |
| 26 | |
Total | |
$ | 251 | | |
$ | 248 | |
The above promissory note is
due March 5, 2015. At the option of the Company, the note and the accrued interest owed can be converted into common stock of the
Company based on the closing price of the Company’s common stock on the day of the conversion. The conversion price of the
note and accrued interest on the promissory note as of September 30, 2014 was $0.0915 and would convert to approximately 2,743,000
shares.
|
5. |
Fair Value Measurements |
The Company’s financial
assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013, by
level within the fair value hierarchy, are as follows:
Fair Value
Measurements at September 30, 2014
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liability |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Fair Value Measurements
at December 31, 2013
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liability |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,859 |
|
|
$ |
5,859 |
|
For certain convertible note obligations, the Company
is required to measure and record a related derivative liability, representing the estimated fair value of any embedded conversion
options. The following table provides a summary of changes in the fair value of the Company’s Level 3 financial liabilities
from December 31, 2013 to September 30, 2014:
| |
Derivative Liability | |
December 31, 2013 | |
$ | 5,859 | |
Conversion of 8% senior convertible debentures to common stock(1) | |
| (4,784 | ) |
Change in fair value | |
| (666 | ) |
March 31, 2014 | |
| 409 | |
Conversion of 8% senior convertible debentures to common stock(2) | |
| (277 | ) |
Change in fair value | |
| 193 | |
June 30, 2014 | |
| 325 | |
Conversion of 8% senior convertible debentures to common stock(3) | |
| (442 | ) |
Change in fair value | |
| 117 | |
September 30, 2014 | |
$ | 0 | |
|
(1) |
The $4,784 was offset against the debt discount of $1,693 for a net amount of $3,091 included in the statement of equity as result of the conversions of the convertible debt. |
|
(2) |
The $277 was offset against the debt discount of $47 for a net amount of $230 included in the statement of equity as result of the conversions of the convertible debt. |
|
|
|
|
(3) |
The $442 was offset against the debt discount of $36 for a net
amount of $406 included in the statement of equity as result of the conversions of the convertible debt.
|
The weighted average Black-Scholes
inputs associated with the conversion of 8% senior convertible debentures is as follows:
| |
For the Three Months Ended, | | |
| |
| |
March 31,
2014 | | |
June 30,
2014 | | |
September 30,
2014 | | |
Total | |
Number of shares issued (000 omitted) | |
| 77,406 | | |
| 4,567 | | |
| 5,042 | | |
| 87,015 | |
Debenture principal | |
$ | 2,995 | | |
$ | 174 | | |
$ | 202 | | |
$ | 3,371 | |
Fair value of debenture at conversion | |
$ | 4,784 | | |
$ | 277 | | |
$ | 442 | | |
$ | 5,503 | |
Exercise Price | |
$ | 0.04 | | |
$ | 0.04 | | |
$ | 0.04 | | |
| | |
Volatility | |
| 134 | % | |
| 90 | % | |
| 95 | % | |
| | |
Risk-free Rate | |
| 0.07 | % | |
| 0.04 | % | |
| 0.02 | % | |
| | |
Contractual Life | |
| 0.6 | | |
| 0. 25 | | |
| 0. 12 | | |
| | |
Dividend Yield | |
| 0 | % | |
| 0 | % | |
| 0 | % | |
| | |
The weighted average Black-Scholes
inputs associated with the valuation of 8% senior convertible debentures is as follows:
| |
As of | |
| |
March 31, 2014 | | |
June 30, 2014 | | |
September 30,
2014 (1) | |
Exercise Price | |
$ | 0.04 | | |
$ | 0.04 | | |
$ | N/A | |
Volatility | |
| 133 | % | |
| 86 | % | |
| N/A | % |
Risk-free Rate | |
| 0.07 | % | |
| 0.04 | % | |
| N/A | % |
Contractual Life | |
| 0.4 | | |
| 0. 3 | | |
| N/A | |
Dividend Yield | |
| 0 | % | |
| 0 | % | |
| N/A | % |
| (1) | All convertible debentures were converted as of September
30, 2014 |
The following table sets forth the computation of
the basic and diluted net loss per share attributable to the Company’s common stockholders for the periods indicated:
| |
For the Three Months Ended September 30, | | |
For the Nine Months Ended September 30, | |
| |
2014 | | |
2013 (Restated) | | |
2014 | | |
2013 (Restated) | |
Numerator | |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (4,399 | ) | |
$ | (3,040 | ) | |
$ | (13,965 | ) | |
$ | (8,875 | ) |
Preferred stock dividend | |
| 26 | | |
| 12 | | |
| 78 | | |
| 12 | |
Net loss attributable to common stockholders | |
$ | (4,425 | ) | |
$ | (3,052 | ) | |
$ | (14,043 | ) | |
$ | (8,887 | ) |
Denominator | |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding during the period: | |
| | | |
| | | |
| | | |
| | |
Common stock - basic | |
| 767,657,531 | | |
| 478,883,561 | | |
| 711,302,222 | | |
| 415,163,655 | |
Common shares equivalents | |
| — | | |
| — | | |
| — | | |
| — | |
Common stock - diluted | |
| 767,657,531 | | |
| 478,883,561 | | |
| 711,302,222 | | |
| 415,163,655 | |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
Potentially dilutive securities excluded from the
computation of basic and dilutive net loss per share are as follows:
| |
As of September 30, | |
| |
2014 | | |
2013 | |
Outstanding time-based common stock options(1) | |
| 23,344,000 | | |
| 8,352,000 | |
Outstanding performance-based and market-based common stock options(1) | |
| 4,000,000 | | |
| — | |
Outstanding time-based preferred stock options(1) | |
| 2,488,000 | | |
| 2,488,000 | |
Warrants(1) | |
| 46,637,000 | | |
| 84,553,000 | |
Related party liability (1) | |
| 2,743,000 | | |
| 3,918,000 | |
Convertible promissory note (1) | |
| 4,725,000 | | |
| 31,545,000 | |
Convertible preferred stock – Series C(1) | |
| 750,000 | | |
| 750,000 | |
Convertible preferred stock – Series D(1)) | |
| 43,111,000 | | |
| 43,111,000 | |
|
(1) |
The impact of time-based, performance-based and market-based stock options, time-based restricted stock units, warrants, the convertible notes, the 8% senior convertible debentures, and the convertible preferred stock on earnings per share is anti-dilutive in a period of loss from continuing operations. |
The following table summarizes our intangible assets:
| |
As of | |
| |
September
30, 2014 | | |
December
31, 2013 | |
Intangible assets: | |
| | | |
| | |
Intellectual properties | |
$ | 1,685 | | |
$ | 681 | |
Accumulated amortization | |
| (156 | ) | |
| (70 | ) |
Total intangible assets net | |
$ | 1,529 | | |
$ | 611 | |
These intellectual properties costs will be amortized
over the expected remaining useful lives. As of September 30, 2014, amortization expense for the next five years is expected to
be as follows:
2014 (three months) |
|
$ |
33 |
|
2015 |
|
|
128 |
|
2016 |
|
|
128 |
|
2017 |
|
|
128 |
|
2018 |
|
|
128 |
|
thereafter |
|
|
984 |
|
Total |
|
$ |
1,529 |
|
|
8. |
8% Senior convertible debentures |
The following table summarizes
the Company’s outstanding 8% convertible promissory note obligations:
|
|
|
|
Stated |
|
|
|
|
|
|
|
|
Maturity |
|
Interest |
|
|
|
|
Principal Balance Outstanding |
|
Issue Date |
|
Date |
|
Rate |
|
|
Conversion Terms |
|
September 30, 2014 |
|
|
December 31, 2013 |
|
10/2/2013 |
|
10/2/2014 |
|
|
8.0 |
% |
|
Variable conversion price currently at $0.04 |
|
$ |
- |
|
|
$ |
1,789 |
|
9/6/2013 |
|
9/6/2014 |
|
|
8.0 |
% |
|
Variable conversion price, currently at $0.04 |
|
|
- |
|
|
|
1,544 |
|
|
|
Sub total |
|
|
|
|
|
|
|
|
- |
|
|
|
3,333 |
|
|
|
Discount |
|
|
|
|
|
|
|
|
- |
|
|
|
(2,401 |
) |
|
|
Current portion of 8% convertible promissory notes, net |
|
$ |
- |
|
|
$ |
932 |
|
During the nine months ended
September 30, 2014 approximately $3,458 consisting of approximately $3,333 of debentures and approximately $125 of accrued interest
of the 8% senior convertible debentures were converted into 86,473,409 shares of common stock of the Company. Additionally,
$1,823 of the 8% senior convertible debentures related debt discount was reclassified from liability to additional paid in capital.
|
9. |
Convertible Promissory Notes |
The following table summarizes
the Company’s outstanding convertible promissory note obligations:
|
|
|
|
Stated |
|
|
|
|
Principal Balance Outstanding |
|
Issue Date |
|
Maturity Date |
|
Interest
Rate |
|
|
Conversion Terms |
|
September 30,
2014 |
|
|
December 31,
2013 |
|
6/5/2013 |
|
12/2/2013 |
|
|
6.0 |
% |
|
Fixed at $0.02 |
|
|
- |
|
|
|
20 |
|
11/4/2012 |
|
5/3/2013 |
|
|
6.0 |
% |
|
Fixed at $0.01 |
|
|
- |
|
|
|
10 |
|
8/23/2012 |
|
2/19/2013 |
|
|
6.0 |
% |
|
Fixed at $0.015 |
|
|
- |
|
|
|
50 |
|
11/2012 |
|
On Demand |
|
|
None |
|
|
Refundable excess payment |
|
|
- |
|
|
|
1 |
|
6/6/2011 |
|
6/6/2013 |
|
|
5.0 |
% |
|
Variable at $0.04 |
|
|
- |
|
|
|
10 |
|
4/11/2011 |
|
4/11/2013 |
|
|
5.0 |
% |
|
Variable at $0.04 |
|
|
- |
|
|
|
25 |
|
5/1/2011 |
|
5/1/2013 |
|
|
5.0 |
% |
|
Fixed at $0.10 |
|
|
- |
|
|
|
4 |
|
4/1/2011 |
|
4/1/2013 |
|
|
5.0 |
% |
|
Fixed at $0.10 |
|
|
- |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total convertible promissory notes |
|
$ |
- |
|
|
$ |
124 |
|
Convertible notes converted to common
stock or paid
During the nine months ended September 30, 2014 an
aggregate of approximately $115 in notes and $14 in accrued interest were converted into approximately 6,938,000 shares of common
stock.
During the nine months ended September 30, 2014 an
aggregate of approximately $9 in notes and $1 in accrued interest were paid in full to the note holders
|
10. |
DEMAND PROMISSORY NOTE |
On February 14, 2014, the Company executed a Demand
Promissory Note payable to Dominion Capital, LLC in the amount of $500 at an annual interest rate of 12% compounded monthly until
the note is repaid. On March 12, 2014, the Company elected to extend the maturity of the Note from March 14, 2014 to August 14,
2014. On August 14, 2014 the note holder agreed to extend the due date thirty days for a consideration of $10 in cash to September
15, 2014. On September 12 2014 the note holder agreed to extend the due date thirty days for a consideration of $10 in common stock
of the Company to October 15, 2014. On October 12 2014 the note holder agreed to extend the due date thirty days for a consideration
of $10 in common stock of the Company to November 15, 2014.
11. |
commitments
and contingencies |
Commitments:
Lease Arrangements —
The Company leases its main office facility and
laboratory space in two separate locations in San Francisco. During the three months ended September 30, 2014 the Company
entered into a lease agreement and occupied office space at 655 Montgomery Street. The lease has a term which runs from August
2014 through November 2016 and provides for an initial monthly rental payment of $11,996. Future minimum payments
under this lease are:
2014 (three months) | |
$ | 62 | |
2015 | |
| 146 | |
2016 | |
| 139 | |
Total | |
$ | 347 | |
The lease for the other research and development
facility at 953 Indiana Street San Francisco, CA is a month-to-month lease at $6 per month commencing November 1, 2014.
Rent expense for the three months ended September
30, 2014 and 2013 was $57 and $2 respectively, and for the nine months ended September 30, 2014 and 2013 was $120 and $14 respectively.
Research Agreements —
The Company and PGI Drug Discovery, LLC (“PGI”)
entered into a services agreement on January 10,2014 pursuant to which PGI will provide certain services to the Company related
to PGI’s proprietary analytical systems (refer to Note 7. INTANGIBLE ASSETS). The Company agreed to a payment commitment
of $450 at a minimum annual rate of $150, for each of three years, to be paid each calendar quarter in equal installments. The
Services Agreement is for a term of the later of 3 years or the completion of any study plan accepted by the parties under the
services agreement.
Pursuant to the December 12, 2013 license agreement
between the Company and the University of Massachusetts, the Company is required to pay an annual license maintenance fee of $15
as long as the agreement remains in effect and the related patents remain valid. The Company is also obligated to reimburse the
University for all patent costs incurred that are related to the licensed patents for the duration of the license agreement term.
The Company and The Washington University (“WashU”)
entered into a sponsored research agreement whereby the Company is required to pay a total amount of $120 for an employee of WashU
to perform certain research utilizing a proprietary compound of the Company’s subject to certain terms and restrictions
as further described in the Agreement.
On August 5, 2014, the Company entered into a sponsored
research agreement (the “Research Agreement”) with the Buck Institute for Research on Aging pursuant to which Dr.
Heinrich Jasper shall perform certain research utilizing Mesencephalic-Astrocyte-derived Neurotrophic Factor (“MANF”),
subject to certain terms and restrictions as further described in the Research Agreement.
Pursuant to the Agreement,
the Company shall provide financial support for the research plan, including four quarterly payments of $75, based upon the budget
agreed to among the parties as set forth in the Agreement.
On October 1 2014, the Company
entered into a sponsored research agreement (the “Agreement”) with the University of Miami on the use of MANF in retinal
disorders. The agreement calls for three equal payments of $52 on October 30, 2014, April 1, 2015 and upon receipt of the final
written report.
Service Agreements —
On August 26, 2014 the “Company entered into
a master services agreement (the “MSA”) with ICON Clinical Research Limited (“ICON”) pursuant to which
the Company retained ICON to provide the Company with certain central laboratory services in connection with certain research
studies. The services ordered will be set forth in work orders which will consist of a statement of work, a budget and a payment
schedule. The agreement is for a term of four years unless terminated in accordance with its terms. The agreement calls for a
Study Set-Up Fee of $85, and miscellaneous costs of $23, for a total commitment of $108
Technical Acquisition —
Pursuant to the MDx Purchase Agreement and contingent
upon (i) the Company entering into a direct licensing agreement with the University of Leipzig (“Leipzig”) pursuant
to which Leipzig would grant the Company a direct license to certain assets now licensed to MDx by Leipzig, and (ii) MDx terminating
the license agreement it currently holds with Leipzig with the Company’s prior written consent, the Company has agreed to
issue to MDx 6,500,000 shares of the Company’s common stock and will provide MDx with piggy-back registration rights as
it relates to such shares.
Contingencies:
PGI
On January 10, 2014, the Company
entered into a license agreement (“PGI License Agreement”) with PGI Drug Discovery, LLC (“PGI”). Pursuant
to the terms of the agreement, the Company agreed to pay PGI up to an aggregate of $4,000 in development milestones through NDA
submission. Milestone based payments payable by the Company under the PGI License Agreement are as follows: (i) $1,000 upon successful
completion of the first Phase 2b clinical study, and (ii) $3,000 upon submission of a New Drug Application with the United States
Food and Drug Administration or a comparable submission outside of the United States.
LPC
Pursuant to the LPC Purchase Agreement (discussed
in Note 13 – Common Stock Private Placements), the Company may be required to issue up to 3,500,000 shares of common stock
to LPC on a pro rata basis if and when the Company utilizes funding available under the agreement.
MDX
Pursuant to the MDx Purchase Agreement and contingent
upon (i) the Company entering into a direct licensing agreement with the University of Leipzig (“Leipzig”) pursuant
to which Leipzig would grant the Company a direct license to certain assets now licensed to MDx by Leipzig, and (ii) MDx terminating
the license agreement it currently holds with Leipzig with the Company’s prior written consent, the Company has agreed to
issue to MDx 6,500,000 shares of the Company’s common stock and will provide MDx with piggy-back registration rights as
it relates to such shares.
UofM
Pursuant to the December 12, 2013 license agreement
between the Company and the University of Massachusetts (“UofM’), the Company is obligated to pay UofM certain amounts
in the event certain events occur or milestones are achieved. Milestones to be paid under the agreement are as follows: (i) $50
upon first human dosing, (ii) $75 upon initiation of first Phase 2 clinical trial, (iii) $100 upon initiation of first Phase 3
clinical trial, and (iv) $500 upon first product approval in the United States. Following commercial launch, the Company is required
to pay a royalty to the university equal to 2% of net sales, as defined under the agreement, subject to certain royalty minimums
ranging from $125 to $500 per year. The Company is also obligated to pay to the university 10% of any sub-license income generated
under the agreement.
12. |
COMMON
STOCK WARRANTS |
Stock Warrants
On March 7, 2014, the Company
accepted elections by warrant holders to exercise certain warrants in the aggregate amount of 60,000,000 shares of common stock
for gross proceeds of $3,600. Pursuant to the offer to exercise dated February 13, 2014 as supplemented on March 6, 2014, the
holders of outstanding warrants to purchase shares of common stock of the Company at a price of $0.06 (the “Original Warrants”)
were offered the opportunity to exercise their Original Warrants and receive warrants (the “New Warrants”) to purchase
three (3) shares of common stock of the Company for every four (4) Original Warrants exercised. The New Warrants are exercisable
at any time at a price of $0.12 for a term of five (5) years. The New Warrants are callable by the Company if the Volume Weighted
Average Price (VWAP) of the Company’s common stock for each of 20 consecutive trading days exceeds $0.18 and certain equity
conditions are met. The Company may also call the New Warrants if the closing price of the Company’s common stock exceeds
$0.18 on the date that is the earlier of the receipt by the Company of an approval letter for listing of the Company’s common
stock on an exchange or actual listing of the common stock on an exchange. The holders of the New Warrants have piggy-back registration
rights. Upon the closing of the offer to exercise the Company issued New Warrants to purchase 45,000,000 shares of common stock
of the Company.
In the three months ended September
30, 2014, warrant holders exercised 20,138,810 warrants to purchase 20,138,810 shares of the Company’s common stock at the
exercise price of $.06 per share for a total amount of approximately $1,208.
In accordance with ASC 815-40-25-10 the Company determined
that the appropriate accounting treatment of the New Warrants is to determine the fair value of the warrant and to record the
fair value of the warrant as a loss upon Issuance of Warrants in the Other income (expense) section of the statement of operations
along with a credit to Additional paid-In capital. The fair value was determined to be approximately $3,867, using the Black-Scholes
model, which management believes approximates the fair value using the binomial lattice model with the following weighted average
assumptions at issuance:
Annualized volatility (1) | |
| 305 | % |
Contractual term | |
| 5.0 | |
Risk-free investment rate | |
| 1.65 | % |
Dividend yield | |
| 0.0 | % |
(1) - The Company has three years of trading history
that was utilized in computing the annualized volatility as of the date of issuance.
The following table summarizes
the Company’s warrant activity for the nine months ended September 30, 2014.
| |
Number of Warrants | | |
Weighted Average
Exercise Price | | |
Weighted Average
Remaining Contractual Term | |
Outstanding warrants as of December 31, 2013 | |
| 84,553,306 | | |
| 0.06 | | |
| 2.2 | |
Exercised | |
| (82,916,584 | ) | |
| 0.06 | | |
| 2.2 | |
Issued | |
| 45,000,000 | | |
| 0.12 | | |
| 4.7 | |
Outstanding warrants as of September 30, 2014 | |
| 46,636,722 | | |
| 0.10 | | |
| 4.3 | |
13. |
COMMON STOCK PRIVATE PLACEMENTS |
On March 7, 2014, the Company entered into an equity
financing agreement (“LPC Purchase Agreement”) with Lincoln Park Capital Fund LLC (“LPC”) whereby LPC
is obligated to purchase up to $20,000 of the Company’s common stock from time to time over a 30 month period, as directed
by the Company and subject to certain requirements, restrictions and limitations. Under the LPC Purchase Agreement, the per share
purchase price will be the lesser of (1) the lowest sale price of common stock on the purchase date and (2) the average of the
three lowest closing purchase prices during the 10 consecutive business days prior to the purchase date. However, LPC is not obligated
to purchase shares from the Company on any date that the closing price of the common stock is below $0.04, subject to adjustment
upon the occurrence of certain stock related events. The Company may also request that LPC purchase shares under an accelerated
purchase notice whereby the per share purchase price will be the lower of (i) 94% of a volume weighted average price calculation
as determined under the LPC Purchase Agreement or (ii) the closing price of the common stock on the accelerated purchase date.
In consideration for entering into the LPC Purchase
Agreement, the Company agreed to issue 9,500,000 shares of common stock to LPC, 6,000,000 of which were issued upon entering into
the agreement and 3,500,000 of which are contingently issuable on a pro rata basis as the Company utilizes the financing arrangement.
The agreement will automatically terminate upon the earliest of 30 months or upon full utilization of the purchase commitment.
Pursuant to the LPC Purchase Agreement, in the three
months ended March 31, 2014 the Company sold an initial 4,000,000 shares to LPC for an aggregate gross purchase price of $400.
The fair value of the 6,000,000 shares provided to LPC was approximately $516 and was treated as a deferred funding fee. $400
was considered a placement fee against the $400 raised pursuant to execution of the LPC Purchase Agreement. The remaining $116
of deferred funding fees will be offset against future capital raises.
Also pursuant to the agreement, during
the three months ended September 30, 2014, the Company sold an additional 9,000,000 shares for approximately $1,330 and issued
an additional 232,785 commitment fee shares valued at $35 to LPC. The $35 commitment fee was charged to additional paid in capital
in the three months ended September 30, 2014.
2008 Stock Plan
Under the Company’s 2008 Stock Plan (the “Plan”),
the Company may grant up to 46,119,832, of incentive stock options, nonqualified stock options, or stock awards to eligible persons,
including employees, nonemployees, and members of the Board of Directors, consultants, and other independent advisors who provide
services to the Company. In general, options are granted with an exercise price equal to the fair value of the underlying common
stock on the date of the grant. Options granted typically have a contractual life of 10 years and vest over periods ranging
from being fully vested as of the grant date to four years.
The following table is a summary of activity under
the Plan:
| |
| | |
| | |
Outstanding Options Common | |
| |
Common Stock options
outstanding | | |
Weighted Average
Exercise Price | | |
Weighted Average
Remaining Contractual Term | |
Balance – December 31, 2013 | |
| 6,941,288 | | |
| 0.05 | | |
| 9.0 | |
Options granted (weighted-average fair value of $0.08) | |
| | | |
| | | |
| | |
Employee | |
| 12,700,000 | | |
| 0.09 | | |
| 9.5 | |
Non-Employee | |
| 3,301,323 | | |
| 0.08 | | |
| 9.5 | |
Options cancelled | |
| (1,000,000 | ) | |
| 0.08 | | |
| — | |
Options Exercised | |
| — | | |
| — | | |
| — | |
Balance –September 30, 2014 | |
| 21,942,611 | | |
| 0.08 | | |
| 9.1 | |
| |
| | | |
| | | |
| | |
Options vested as of September 30, 2014 | |
| 13,496,489 | | |
| | | |
| | |
The 12,700,000 shares granted to employees include
8,000,000 shares granted to Robert Farrell, the Company’s Chief Financial Officer, 4,000,000 of which are time-based and
vest 25 percent upon grant and 1/36 per month thereafter during continued service; 2,000,000 of which are performance-based and
vest upon continued service and achievement of a specific goal; and 2,000,000 of which are market-based and vest upon continued
service and the Company’s achievement of certain stock price targets. All of the 8,000,000 shares are at an exercise price
of $0.0775 and were granted on March 31, 2014.
During the nine months ended September 30, 2014,
the company granted 2,301,323 net options (granted 3,301,323 less cancelled 1,000,000) to non-employees, resulting in an approximate
expense of $93.
2014 Stock Plan
On August 6, 2014, the Company
adopted the 2014 Stock Plan (the “2014 Plan”), which was approved by the Company’s stockholder at the Company’s
Annual Meeting on September 22, 2014. Under the 2014 Plan, the Company may grant up to 153,380,168 common shares in the form of
incentive stock options, nonqualified stock options or stock awards to eligible persons, including employees, nonemployees, members
of the Board of Directors, consultants, and other independent advisors who provide services to the Company. In general, options
are granted with an exercise price equal to the fair value of the underlying common stock on the date of the grant. Options granted
typically have a contractual life of 10 years and vest over periods ranging from being fully vested as of the grant date to four
years.
| |
| | |
| | |
Outstanding Options Common | |
| |
Common Stock options
outstanding | | |
Weighted Average
Exercise Price | | |
Weighted Average
Remaining Contractual Term | |
Balance – December 31, 2013 | |
| - | | |
| - | | |
| - | |
Options granted (weighted-average fair value of $0.09) | |
| | | |
| | | |
| | |
Employee | |
| 5,400,000 | | |
| 0.09 | | |
| 10.0 | |
Non-Employee | |
| — | | |
| — | | |
| — | |
Options cancelled | |
| — | | |
| — | | |
| — | |
Options Exercised | |
| — | | |
| — | | |
| — | |
Balance –September 30, 2014 | |
| 5,400,000 | | |
| 0.09 | | |
| 10.0 | |
| |
| | | |
| | | |
| | |
Options vested as of September 30, 2014 | |
| 84,791 | | |
| | | |
| | |
2012 Preferred Stock Plan
In July 2012, our Board of Directors
adopted the Management, Employee, Advisor and Director Preferred Stock Option Plan – 2012 Series B Convertible Preferred
Stock Plan (“Preferred Stock Plan”). The purposes of the Preferred Stock Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional incentive to management, employees, advisors and
directors and to promote the success of our business. Options granted under the Preferred Stock Plan currently vest over two or
three years and cannot be converted into common shares or sold for two years from the date of the designation of the Series B
Preferred shares. Each share of Series B Preferred stock converts into fifty shares of common stock. The following table is a
summary of activity under the Preferred Stock Plan:
| |
| | |
| | |
Outstanding Preferred Options | |
| |
Preferred Stock Options Outstanding | | |
Weighted Average Exercise Price | | |
Weighted Average Remaining Contractual
Term | |
Balance – December 31, 2013 | |
| 2,287,500 | | |
| 0.47 | | |
| 8.5 | |
Options granted (weighted-average fair value of $1.61) | |
| | | |
| | | |
| | |
Employee | |
| 200,000 | | |
| 2.21 | | |
| 9.3 | |
Non-Employee | |
| — | | |
| — | | |
| — | |
Options cancelled | |
| — | | |
| — | | |
| — | |
Balance – September 30, 2014 | |
| 2,487,500 | | |
| 0.61 | | |
| 8.1 | |
| |
| | | |
| | | |
| | |
Preferred options vested as of September 30, 2014 | |
| 1,818,099 | | |
| | | |
| | |
Stock-based compensation expense
for all plans is classified in the statements of operations as follows:
| |
Three Months Ended September
30, | | |
Nine Months Ended September
30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
Research and development | |
$ | 124 | | |
$ | 64 | | |
$ | 311 | | |
$ | 366 | |
General and administrative | |
| 315 | | |
| 20 | | |
| 603 | | |
| 316 | |
Total | |
$ | 439 | | |
$ | 84 | | |
$ | 914 | | |
$ | 682 | |
At September 30, 2014, there
was a total of approximately $1,620 of unrecognized compensation cost, net of estimated forfeitures of zero, as the Company
has not experienced any forfeitures to date, related to non-vested stock option awards, which is expected to be recognized over
a weighted-average period of approximately 2.5 years.
The fair value of the Company’s stock-based
awards during the nine months ended September 30, 2014 and 2013 were estimated using the Black-Scholes option-pricing model with
the following approximate assumptions:
| |
Three Months Ended September
30, | | |
Nine Months Ended September
30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
Weighted-average volatility | |
| 289 | % | |
| * | % | |
| 300 | % | |
| 108 | % |
Weighted-average expected term | |
| 5.6 | | |
| * | | |
| 5.44 | | |
| 5 | |
Expected dividends | |
| 0 | % | |
| * | % | |
| 0 | % | |
| 0 | % |
Risk-free investment rate | |
| 1.89 | % | |
| * | % | |
| 1.90 | % | |
| 0.5 | % |
* There were no options granted in the three months
ended September 30, 2013
15. |
SERIES D PREFERRED STOCK |
On June 30, 2014, with the approval of the holder
of the Company’s Series D Preferred Stock, the Company filed an amendment to the Certificate of Designation of the Series
D Preferred Stock to amend the terms of its Series D preferred stock to remove the feature by which stockholder could require
redemption of the stock at cost. Accordingly, since the Series D Preferred Stock now contains mainly equity-like features, the
Company changed the classification of the stock on its balance sheet from temporary equity to permanent equity within
stockholders’ equity (deficit) as of June 30, 2014.
Common Stock Private Placement
In the period between October
1 2014 and November 3, 2014 2014, the Company exercised its rights under the LPC Purchase Agreement to sell 11,514,120 shares
to LPC for a total of $885. As required by the agreement, the Company issued 154,855 commitment fee shares valued at $12 to LPC,
which will be charged to additional paid in capital.
Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements, other than purely historical information,
including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the
assumptions upon which those statements are based, are forward-looking statements.” These forward-looking statements generally
are identified by the words believes,” project,” expects,” anticipates,” estimates,” intends,”
strategy,” plan,” may,” will,” would,” will be,” will continue,” will likely result,”
and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks
and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict
results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse
affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions,
legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles.
These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not
be placed on such statements
Overview
Amarantus Bioscience Holdings, Inc. is a California-based development-stage
biopharmaceutical company founded in January 2008. We focus on developing our intellectual property and proprietary technologies
to develop drug and diagnostic product candidates to treat human disease. We own or have exclusive licenses to various product
candidates in the biopharmaceutical and diagnostic areas of the healthcare industry, with a specific focus on bringing these candidates
to market in the areas of Alzheimer’s disease, Parkinson’s disease, Retinal Degenerative disorders, and other ailments
of the human body, with a particular focus on the nervous system. Our business model is to develop our product candidates through
various de-risking milestones that we believe will be accretive to shareholder value and strategically partner with biopharmaceutical
companies, diagnostic companies, investors, private foundations and other key stakeholders in the specific sub-sector of the healthcare
industry in which we are developing our products in order to achieve regulatory approval in key jurisdictions and thereafter successfully
market and distribute our products.
Certain statements, other than purely historical information,
including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the
assumptions upon which those statements are based, are forward-looking statements.” These forward-looking statements generally
are identified by the words believes,” project,” expects,” anticipates,” estimates,” intends,”
strategy,” plan,” may,” will,” would,” will be,” will continue,” will likely result,”
and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks
and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict
results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse
affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions,
legislative/regulatory changes, The Company’s philosophy is to acquire in-license,
discover and develop drug candidates and diagnostics with the potential to address critically important biological pathways involved
in human disease.
LymPro Test ®
The Lymphocyte Proliferation Test (“LymPro Test ®”,
or “LymPro”) is a diagnostic blood test for Alzheimer’s disease originally developed by the University of Leipzig
in Germany. The test works by evaluating the cell surface marker CD69 on peripheral blood lymphocytes following a mitogenic stimulation.
The underlying scientific basis for LymPro is that Alzheimer’s patients have dysfunctional cellular machinery that inappropriately
allows mature neurons in the brain to enter the mitotic process (cell division /cell cycle). When this happens the neurons start
the cell division process, but cannot complete that process. As a result, a number of cytokines and other genes are upregulated,
ultimately leading to cell death by apoptosis. This inappropriate cell division activation process is also present in the lymphocytes
of Alzheimer’s patients, as lymphocytes share a similar cellular division machinery with brain neurons. We measure the integrity
of this cellular division machinery process by measuring CD69 upregulation in response to the mitogenic stimulation. If CD 69
is upregulated it means that the cellular division machinery process is correct and Alzheimer’s is not present. If CD69
is not upregulated, it means there is a dysfunctional cellular division machinery process, and Alzheimer’s is more likely.
To date, data has been published in peer-reviewed publications on LymPro with 160 patients, demonstrating 92% co-positivity and
91% co-negativity with an overall 95% accuracy rating for LymPro.
Eltoprazine
Eltoprazine is a small molecule drug candidate that is a selective
partial agonist on the 5HT1-A and 5HT1-B receptors of the serotonergic system in the brain originally discovered and developed
by Solvay Pharmaceuticals (now Abbvie). The serotonergic system has been associated with a wide range of disorders motor and behavioral
disorders including aggression, cognition, attention and control. The Company is developing Eltoprazine for the treatment of the
primary side effect of current Parkinson’s disease medication Levadopa-Induced Dyskinesia (“PD LID”), as well
as Adult Attention Deficit Hyperactivity Disorder (“Adult ADHD”). To date, over 700 patients have been dosed with
Eltoprazine at varying doses as high as 30mg; the active dose in both PD LID and Adult ADHD is 5mg. Primary and secondary endpoints
have been met for Eltoprazine in Phase 2 trials in PD LID and Adult ADHD
MANF
Mesencephalic Astrocyte-derived Neurotrophic Factor (“MANF”)
is an endogenous, evolutionally conserved and widely expressed protein that was discovered by the Company’s Chief Scientific
Officer Dr. John Commissiong. MANF acts on a variety of molecular functions, including as a part of the endoplasmic reticulum
stress response (“ER-SR”) system of the unfolded protein response (“UPR”). MANF has demonstrated efficacy
as a disease-modifying treatment in various animal models, including Parkinson’s disease, retinitis pigmentosa, cardiac
ischemia and stroke. The Company has made a strategic decision to focus the development of MANF in orphan indications and is currently
evaluating the most appropriate indication for development based on data currently being assembled internally, by contract research
organizations and academic collaborators.
Other
Exploration of the Company’s PhenoGuard platform for
neurotrophic factor discovery and discovery and evaluation of external drug candidates for potential in-licensure or acquisition.
For the next 12 months, the Company intends to focus primarily
on the commercialization of LymPro, the further clinical development of Eltoprazine, and the preclinical development of MANF.
The Three Months Ended September 30,
2014 compared to Three Months Ended September 30, 2013
During the three months ended September 30, 2014 and 2013,
we generated no revenue.
Research and development costs for the three months ended September
30, 2014 increased $1,610 to $1,899 from $289 for the three months ended September 30, 2013 and reflects an extensive amount of
pre-clinical and clinical work as the Company advances the development of its.
General and administrative expenses for the three months ended
September 30, 2014 increased $1,680 to $2,070 from $390 for the three months ended September 30, 2013 primarily due an increase
in employee compensation related expenses, increases in legal patent and audit related expenses, and increased business development
expenses.
Other income (expense) for the three months ended September
30, 2014 decreased $1,931 to a loss of $430 from a loss of $2,361 for the three months ended September 30, 2013. Interest expense
decreased $471 to $46 from $517 for the three months ended September 30, 2013 primarily due to debt conversion to equity, and
change in fair value of warrants and derivatives liabilities decreased $1,727 to $117 from $1,844.
Net loss for the three months ended September 30, 2014 was
$4,399 as compared to a net loss of $3,040 for the three months ended September 30, 2013. Stock based compensation from grants
under the 2008 Stock Plan, the 2014 Stock Plan and the 2012 Series B Convertible Preferred Stock Option Plan accounted for $439
of the $4,399 net loss for the three months ended September 30, 2014 and $84 of the $3,040 net loss for the three months ended
September 30, 2013.
The Nine Months Ended September 30,
2014 compared to Nine Months Ended September 30, 2013
During the nine months ended September 30, 2014 and 2013, we
generated no revenue.
Research and development costs for the nine months ended September
30, 2014 increased by $ 2,629 to $4,056 from $1,427 for the nine months ended September 30, 2013 primarily due extensive amount
of pre-clinical and clinical work as the company advances the development of its products and the expensing of the clinical materials.
General and administrative expenses for the nine months ended
September 30, 2014 increased by $2,848 to $5,289 from $2,441 for the nine months ended September 30, 2013 primarily due to an
increase in employee compensation related expenses, increases in legal patent and audit related expenses, and increased business
development expenses.
Other income (expense) for the nine months ended September
30, 2014 decreased by $387 to an expense of $4,620 from an expense of $5,007 for the nine months ended September 30, 2013. Interest
expense decreased $902 to $756 from $1,658 for the nine months ended September 30, 2013 primarily due to lower financing costs
on new debt and debt conversion to equity, loss on issuance of warrants increased to $3,868 from $0, and change in fair value
of warrants and derivatives liabilities expense decreased $3,705 to $356 gain from $3,349 loss.
Net loss for the nine months ended September 30, 2014 was $13,965
as compared to a net loss of $8,875for the nine months ended September 30, 2013. Stock based compensation from grants under the
2008 Stock Plan, the 2014 Stock Plan and the 2012 Series B Convertible Preferred Stock Option Plan accounted for $914 of the $13,965
net loss for the nine months ended September 30, 2014 and $682 of the 8,875 net loss for the nine months ended September 30, 2013.
Inflation adjustments have had no material
impact on the Company.
Liquidity and Capital Resources
As of September 30, 2014, the Company
had total current assets of $1,101 consisting of $680 in cash and cash equivalents, $129 in restricted cash, and $292 in prepaid
expenses and other current assets. As of September 30, 2014, the Company had current liabilities in the amount of $3,389, consisting
of:
Accounts payable | |
$ | 2,276 | |
Related party liabilities and accrued interest | |
$ | 251 | |
Accrued expenses | |
$ | 302 | |
Accrued interest | |
$ | 60 | |
Demand promissory note | |
$ | 500 | |
As of September 30, 2014, the Company
had a working capital deficit in the amount of $2,288 compared to a deficit of $7,291 at December 31, 2013.
The table below sets forth selected cash
flow data for the periods presented:
| |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 (restated) | |
Net cash (used in) operating activities | |
$ | (6,926 | ) | |
$ | (2,627 | ) |
Net cash (used in) investing activities | |
| (769 | ) | |
| (34 | ) |
Net cash provided by financing activities | |
| 7,342 | | |
| 3,519 | |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
$ | (353 | ) | |
$ | 858 | |
Since inception, the Company has financed cash flow requirements
through the issuance of common stock and the exercise warrants and loans. As of November7, 2014, the Company had $545 in cash and
cash equivalents, which would provide sufficient liquidity for approximately two months. The Company still has an additional $17,600
of equity capital available under the financing facility with Lincoln Park Capital Fund LLC.
The success of our business plan during
the next 12 months and beyond is contingent upon us generating sufficient revenue to cover our costs of operations, or upon us
obtaining additional financing. Should our revenues be less than anticipated, or should our expenses be greater than anticipated,
then we may seek to obtain business capital through the use of private and public equity fundraising or shareholder loans. There
can be no assurance that such additional financing will be available to us on acceptable terms, or at all. Similarly, there can
be no assurance that we will be able to generate sufficient revenue to cover the costs of our business operations. We will use
all commercially-reasonable efforts at our disposal to raise sufficient capital to run our operations on a go forward basis.
Off Balance Sheet Arrangements
Not applicable
Going Concern
We are a company engaged in biotechnology research and development.
We have suffered recurring losses from operations since inception; we do not have a positive working capital and have generated
negative cash flow from operations. There is substantial doubt about our ability to continue as a going concern.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We
carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2014. This evaluation was carried out under the
supervision and with the participation of Gerald Commissiong, our Principal Executive Officer, and Robert Farrell, our Principal
Financial and Accounting Officer. Based upon that evaluation, our Principal Executive Officer and Principal Financial and Accounting
Officer concluded that, as of September 30, 2014, our disclosure controls and procedures were ineffective to ensure that information
required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized
and reported, within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to
our management, including our chief executive officer and chief financial officer, or person performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
The lack of effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered, was due
to the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation
of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting
with respect to the requirements and application of both United States generally accepted accounting principles and Securities
and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be
effective until the material weaknesses are remediated. We will be unable to remediate the material weakness in our
disclosure controls and procedures until we can hire additional employees. Management will be addressing the internal controls
issues in the coming months.
Changes in Internal Control Over Financial Reporting
There was no change to our internal control over financial
reporting that occurred during our recently completed fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II - OTHER
INFORMATION
Item 1. Legal Proceedings
The Company is not currently involved in any litigation that
it believes could have a material adverse effect on its financial conditions and result of operations.
Item 2. Unregistered Sales
of Equity Securities
On August 9, 2014, the Company issued
347,331 shares of the Company’s restricted common stock as payment for services rendered. These shares were issued pursuant
to an exemption from the registration requirements of the Securities Act of 1933, as amended, afforded the Company under Section
4(a)(2) promulgated.
On August 15, 2014, the Company issued
389,946 shares of the Company’s restricted common stock as payment services rendered... These shares were issued pursuant
to an exemption from the registration requirements of the Securities Act of 1933, as amended, afforded the Company under Section
4a(2) promulgated.
On September 11, 2014, the Company issued
101,112 shares of the Company’s restricted common stock as payment for the extension of the Company’s note payable.
These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended,
afforded the Company under Section 4a(2).
On September 16, 2014, the Company issued
3,752,222 shares of the Company’s restricted common stock, as payment as payment for the conversion of convertible debt
and related accrued interest. These shares were issued pursuant to an exemption from the registration requirements of the Securities
Act of 1933, as amended, afforded the Company under Section 4a(2) .
On September 30, 2014, the Company issued
292,083 shares of the Company’s restricted common, as payment as payment for the conversion of convertible debt and related
accrued interest. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of
1933, as amended, afforded the Company under Section 4a(2) promulgated .
On September 30, 2014, the Company 735,070
shares of the Company’s restricted common, as payment as payment for the conversion of convertible debt and related accrued
interest. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933,
as amended, afforded the Company under Section 4a(2) promulgated .
On October 1, 2014, the Company issued
866,218 shares of the Company’s restricted common as a dividend payment on the Series D convertible preferred stock. These
shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, afforded
the Company under Section 4a(2) promulgated.
Item 3. Defaults upon Senior
Securities
None
Item 6. Exhibits
Exhibit Number |
|
Description of Exhibit |
|
|
|
3.1 |
|
Certificate of Amendment to the Articles
of Incorporation filed with the Secretary of State on October 9, 2014 (Incorporated by reference to the Company’s current
report on Form 8-K filed on October 9, 2014). |
|
|
|
10.1 |
|
Employment Letter, entered into by
and between Gerald E. Commissiong and Amarantus Bioscience Holdings, Inc.
(Incorporated by reference to the Company’s current report on Form 8-K filed on October 9, 2014). |
|
|
|
31.1 |
|
Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 |
|
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted 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 Principal Accounting Office 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 Schema Document |
|
|
|
101.CAL |
|
XBRL Calculation Linkbase Document |
|
|
|
101.DEF |
|
XBRL Definition Linkbase Document |
|
|
|
101.LAB |
|
XBRL Label Linkbase Document |
|
|
|
101.PRE |
|
XBRL Presentation Linkbase Document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Amarantus Bioscience
Holdings, Inc. |
|
|
|
|
Date: |
November 7,
2014 |
|
|
|
|
|
|
By: |
/s/ Gerald E. Commissiong |
|
|
Gerald E. Commissiong |
|
|
Title: Chief Executive Officer and Director |
|
|
(Principal Executive Officer) |
|
|
|
|
|
By: |
/s/ Robert E. Farrell |
|
|
Robert E. Farrell |
|
|
Title: Chief Financial Officer |
|
|
(Principal Financial and Accounting Officer) |
|
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
RULE 13a-14(a) OR RULE 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Gerald Commissiong, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Amarantus BioScience Holdings, Inc.; |
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 7, 2014
|
/s/ Gerald Commissiong |
|
Gerald Commissiong |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14(a) OR RULE 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Robert Farrell, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Amarantus BioScience Holdings Inc.; |
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 7, 2014
|
/s/ Robert Farrell |
|
Robert Farrell |
|
Chief Financial Officer |
|
(Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Gerald Commissiong, the Chief Executive Officer of Amarantus
BioScience Holdings, Inc. (the “Company”), hereby certify, that, to my knowledge:
1. The Quarterly Report
on Form 10-Q for the quarter ended September 30, 2014 (the “Report”) of the Company fully complies with the requirements
of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
2. The information
contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 7, 2014 |
/s/ Gerald Commissiong |
|
Gerald Commissiong |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Robert Farrell, the Chief Financial Officer of Amarantus
BioScience Holdings, Inc. (the “Company”), hereby certify, that, to my knowledge:
1. The Quarterly Report
on Form 10-Q for the quarter ended September 30, 2014 (the “Report”) of the Company fully complies with the requirements
of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
2. The information
contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 7, 2014 |
/s/ Robert Farrell |
|
Robert Farrell |
|
Chief Financial Officer |
|
(Principal Financial Officer) |
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