##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2008.
 o
    
    Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to.
 Commission File Number 000-50309
 
 Clearant, Inc.
  
 Delaware
(State or other jurisdiction of incorporation)
    
    91-2190195
(I.R.S. Employer Identification Number)
 1801 Avenue of the Stars, Suite 435
Los Angeles, California 90067
 (310) 479-4570
 þ o
  o Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
    
    þ Smaller reporting company
 o þ




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##### 



PagePART I FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Balance Sheets
    
    
    F-1Statements of Operations
    
    
    F-2Statements of Cash Flow
    
    
    F-3Notes to Financial Statements (Unaudited)
    
    
    F-4 - F-10Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures
about Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    19PART II OTHER INFORMATIONItem 6. Exhibits
    
    
    19Exhibit 31.1Exhibit 32.1




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 CLEARANT, INC.
 
 BALANCE SHEETS
 (in thousands, except par value)
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    362
    
    
    $
    1,062Accounts receivable, net of
allowances of $75 and $26 at
June 30, 2008 and December
31, 2007, respectively
    
    
    323
    
    
    
    341Inventory and inventory
related prepayments, net of
reserve of $1,320 and $1,255
at June 30, 2008 and December
31, 2007, respectively
    
    
    16
    
    
    
    Prepaids and other
    
    
    123
    
    
    
    68Total current assets
    
    
    824
    
    
    
    1,471Property and equipment, net of $129 and
$83 of accumulated depreciation at June
30, 2008 and December 31, 2007,
respectively
    
    
    56
    
    
    
    87Identifiable intangibles, net of $1,260
and $1,217 of accumulated amortization at
June 30, 2008 and December 31, 2007,
respectively
    
    
    972
    
    
    
    991Deposits and other assets
    
    
    59
    
    
    
    60Total assets
    
    $
    1,911
    
    
    $
    2,609Liabilities and Stockholders Equity (Deficit)Current liabilities:Accounts payable
    
    $
    1,170
    
    
    $
    1,210Accrued liabilities
    
    
    832
    
    
    
    733Deferred revenue
    
    
    9
    
    
    
    7Bridge loans, net
    
    
    106
    
    
    
    106Total current liabilities
    
    
    2,117
    
    
    
    2,056Deferred revenue  noncurrent
    
    
    
    
    
    
    4Total liabilities
    
    
    2,117
    
    
    
    2,060Stockholders equity (deficit):Preferred
stock ($0.0001 par value; 50,000 shares authorized; 0 issued and
outstanding at June 30, 2008 and December 31, 2007;
respectively)
    
    
    
    
    
    
    Common stock ($0.0001 par value;
200,000 shares authorized; 48,957
issued and outstanding at June 30,
2008 and December 31, 2007,
respectively)
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    86,633
    
    
    
    86,360Accumulated deficit
    
    
    (86,844
    )
    
    
    (85,816
    )Total stockholders equity (deficit)
    
    
    (206
    )
    
    
    549Total liabilities and stockholders equity
    
    $
    1,911
    
    
    $
    2,609
 See accompanying notes to financial statements.
  F-1




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CLEARANT, INC.
 
 STATEMENTS OF OPERATIONS
 (in thousands, except for per share data)
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Licensing
    
    $
    14
    
    
    $
    21
    
    
    $
    71
    
    
    $
    61Direct distribution
    
    
    455
    
    
    
    125
    
    
    
    762
    
    
    
    304Fee for service
    
    
    27
    
    
    
    19
    
    
    
    36
    
    
    
    69Contract research and milestones
    
    
    8
    
    
    
    3
    
    
    
    100
    
    
    
    169Total revenues
    
    
    504
    
    
    
    168
    
    
    
    969
    
    
    
    603Cost of revenues
    
    
    289
    
    
    
    92
    
    
    
    502
    
    
    
    240Gross profit
    
    
    215
    
    
    
    76
    
    
    
    467
    
    
    
    363Operating expenses:Sales, general and administrative
    
    
    690
    
    
    
    901
    
    
    
    1,502
    
    
    
    2,035Research and development
    
    
    2
    
    
    
    19
    
    
    
    5
    
    
    
    59Total operating expenses
    
    
    692
    
    
    
    920
    
    
    
    1,507
    
    
    
    2,094Loss from operations
    
    
    (477
    )
    
    
    (844
    )
    
    
    (1,040
    )
    
    
    (1,731
    )Other income (expense):Interest income (expense)
    
    
    3
    
    
    
    (6
    )
    
    
    12
    
    
    
    (1
    )Gain on extinguishment of debt
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Loss on disposal of fixed assets
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (86
    )Loss before provision (benefit) for
income taxes
    
    
    (474
    )
    
    
    (848
    )
    
    
    (1,028
    )
    
    
    (1,814
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (474
    )
    
    $
    (848
    )
    
    $
    (1,028
    )
    
    $
    (1,814
    )Net loss per share:Basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.11
    )
    
    $
    (0.02
    )
    
    $
    (0.34
    )Number of weighted average shares
used in per share calculation:Basic and diluted
    
    
    48,957
    
    
    
    7,778
    
    
    
    48,957
    
    
    
    5,358
 See accompanying notes to financial statements.
  F-2




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CLEARANT, INC.
 
 STATEMENTS OF CASH FLOWS
 (in thousands)
  Six Months EndedJune 30,2008
    
    
    2007Operating activitiesNet loss
    
    $
    (1,028
    )
    
    $
    (1,814
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    89
    
    
    
    277Loss on disposal of fixed assets
    
    
    
    
    
    
    86Stock-based compensation
    
    
    273
    
    
    
    160Issuance of common stock to consultants for services
rendered
    
    
    
    
    
    
    93Changes in operating assets and liabilities:Accounts receivable
    
    
    18
    
    
    
    (269
    )Inventory and inventory related prepayments
    
    
    (16
    )
    
    
    (70
    )Prepaids
    
    
    (56
    )
    
    
    175Accounts payable
    
    
    (40
    )
    
    
    204Accrued liabilities
    
    
    99
    
    
    
    296Deferred revenue
    
    
    (1
    )
    
    
    (66
    )Other assets and liabilities
    
    
    1
    
    
    
    (178
    )Net cash used in operating activities
    
    
    (661
    )
    
    
    (1,106
    )Investing activitiesCost of identified intangibles
    
    
    (24
    )
    
    
    (30
    )Capital expenditures
    
    
    (15
    )
    
    
    Net proceeds from sale of fixed assets
    
    
    
    
    
    
    22Net cash used in investing activities
    
    
    (39
    )
    
    
    (8
    )Financing activitiesIssuance of common stock, net of costs of $316
    
    
    
    
    
    
    2,026Proceeds from issuance of bridge loan
    
    
    
    
    
    
    200Net cash provided by financing activities
    
    
    
    
    
    
    2,226Change in cash and cash equivalents
    
    
    (700
    )
    
    
    1,112Cash and cash equivalents, beginning of period
    
    
    1,062
    
    
    
    563Cash and cash equivalents, end of period
    
    $
    362
    
    
    $
    1,675Supplemental Disclosure of Non-cash Financing Activities:Issuance of common stock for accounts payable
    
    $
    
    
    
    $
    109Issuance of common stock to consultants for services
    
    $
    
    
    
    $
    103
 See accompanying notes to financial statements.
  F-3




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CLEARANT, INC.
 
 NOTES TO FINANCIAL STATEMENTS
 (in thousands, except for share and per share data)
  NOTE 1  BASIS OF PRESENTATION
   NOTE 2  GOING CONCERN
  NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Revenue Recognition and Deferred Revenue
 Revenue Recognition ® ® ® Accounting for
Shipping and Handling Fees and Costs
  F-4




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Cost of revenues
 ®
 Use of Estimates
  Cash Equivalents and Concentration of Credit Risk
  Inventory and Inventory Related Prepayments
 ®
  Property and Equipment
  Long-Lived Assets
  Identifiable Intangibles
 Accounting for the Impairment or
Disposal of Long-Lived Assets
  F-5




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Research and Development Costs
  Income Taxes
 Accounting for Income Taxes
   Stock-Based Compensation
 Share Based Payment
   Fair Value of Financial Instruments
  Recent Accounting Pronouncements
 Business Combinations
  F-6




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Disclosures
about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 NOTE 4  NET LOSS PER SHARE
 Earnings Per Share
  For the Six Months Ended June 30,2008
    
    
    2007Stock Options
    
    
    3,358,212
    
    
    
    3,976,000Warrants
    
    
    133,052
    
    
    
    2,195,000
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Basic and diluted net loss per share:Numerator:Net loss attributable to common stock
    
    $
    (474
    )
    
    $
    (848
    )
    
    $
    (1,028
    )
    
    $
    (1,814
    )Denominator:Weighted average common stock shares
outstanding
    
    
    48,957
    
    
    
    7,778
    
    
    
    48,957
    
    
    
    5,358Net loss per share, basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.11
    )
    
    $
    (0.02
    )
    
    $
    (0.34
    )
 NOTE 5  INCOME TAXES
 Accounting for Uncertainty in Income Taxes
  F-7




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NOTE 6  DEBT
  NOTE 7  COMMON STOCK
 Common Stock Transactions and Non-cash Financing Activities
       F-8




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NOTE 8  STOCK-BASED AWARDS
 Stock Options
  Employees
    
    
    Non-Employees
    
    
    TotalExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at
December 31, 2007
    
    
    3,244,000
    
    
    $
    0.35-$63.14
    
    
    
    173,000
    
    
    $
    4.90-$57.68
    
    
    
    3,417,000
    
    
    $
    0.35-$63.14Granted
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Exercised
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Change in Status
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Canceled
    
    
    59,000
    
    
    $
    0.35-$57.68
    
    
    
    
    
    
    $
    
    
    
    
    59,000
    
    
    $
    0.35-$57.68Outstanding at June
30, 2008
    
    
    3,185,000
    
    
    $
    0.35-$63.14
    
    
    
    173,000
    
    
    $
    4.90-$57.68
    
    
    
    3,358,000
    
    
    $
    0.35-$63.14
    NOTE 9  COMMITMENTS AND CONTINGENCIES
 ®
 ®
  F-9




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NOTE 10  SUBSEQUENT EVENTS
       F-10




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion of our financial condition and results of operations should be read in
conjunction with our financial statements and the related notes, and the other financial
information included in this report. As used in this report, the terms Clearant, Company, we,
our, and like references mean Clearant, Inc., a Delaware corporation.
 Forward-Looking Statements
 The forward-looking comments contained in this report involve risks and uncertainties. Our actual
results may differ materially from those discussed here due to factors such as, among others,
limited operating history, difficulty in developing, exploiting and protecting proprietary
technologies, results of additional clinical studies, acceptance and success of our direct
distribution of allografts, intense competition and substantial regulation in the healthcare
industry. Additional factors that could cause or contribute to such differences can be found in the
following discussion and in the Risks Factors set forth in Item 1 of our Form 10-KSB dated
December 31, 2007, filed with the Securities and Exchange Commission on April 1, 2008 (the Form
10-KSB).
 Overview
 ®
 ®  ®
 
    
    Inactivate a broad range of known pathogens irrespective of size, origin or structure;
    
    Achieve sterility, in some cases with margins of safety greater than that of a medical device;
    
    Be used in either intermediate or final stages of production;
    
    Protect the mechanical and biological properties of the biological product being treated; and
    
    Be applied to a product after it has been sealed into its final package.
 ® ® ® ® ®
 ® ®
  11




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Results of Operations
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Revenues
  ® ®
   ®
 Sales, General and Administrative Expenses
  ®
  Research and Development Expenses
 ®
  12




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Other Income/Expense
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Revenues
  ® ®
   ®
 Sales, General and Administrative Expenses
  ®
  13




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Research and Development Expenses
 ®
 Other Income/Expense
  Preferred Stock Dividend and Financing Costs
  Liquidity and Capital Resources
    Doubt About Our Ability To Continue As Going Concern
   14




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Research and Development
  Tissue Agreement
 ®
 ®
 Limited Cash Availability
     15




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Contractual Obligations and Commercial Commitments
  Payments Due By PeriodMoreLess than 1
    
    
    1 -3
    
    
    3 - 5
    
    
    than 5Contractual Obligations
    
    Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsOperating Lease Obligations
    
    $
    83
    
    
    $
    72
    
    
    $
    11
    
    
    
    
    
    
    
    
  Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
   16




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Revenue Recognition and Deferred Revenue
 Revenue Recognition ® ® ® Accounting for Shipping and Handling Fees and Costs
 Cost of Revenues
 ®
 Inventory and Inventory Related Prepayments
 ®
  Identifiable Intangibles
  Income Taxes
 Accounting for Income Taxes
  17




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Stock-Based Compensation
 Share Based Payment
 Recent Accounting Pronouncements
 SFAS No. 141(R), Business Combinations
  Disclosures
about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 
 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    18




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ITEM 4. Controls and Procedures
 Disclosure Controls and Procedures
    Changes in Internal Control
  
 PART II  OTHER INFORMATION
 
 ITEM 6. Exhibits
    19




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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
   
    
    general economic conditions;
    
    the effectiveness of our planned advertising, marketing and promotional
campaigns;
    
    physician and patient acceptance of our products and services, including
newly introduced products;
    
    anticipated trends and conditions in the industry in which we operate,
including regulatory changes;
    
    our future capital needs and our ability to obtain financing; and
    
    other risks and uncertainties as may be detailed from time to time in our
public announcements and filings with the SEC.
    20




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SIGNATURES
  Date: August 14, 2008
    CLEARANT, INC.By:

/s/ Jon GarfieldJon Garfield, Chief Executive Officer andChief Financial Officer  21




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EXHIBIT INDEX
 Exhibit No.
    
    DescriptionExhibit 31.1
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.Exhibit 32.1
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
  22