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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 March 31, 2009.
 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
    
    91-2190195(State or other jurisdiction of incorporation)
    
    (I.R.S. Employer Identification Number)
 1801 Avenue of the Stars, Suite 435
Los Angeles, California 90067    (310) 479-4570
 þ o
 þ o
  o Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
    
    þ Smaller reporting company
 o þ




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##### 



PagePART 1 FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Balance Sheets
    
    
    F-1Statements of Operations
    
    
    F-2Statements of Cash Flow
    
    
    F-3Notes to Financial Statements (Unaudited)
    
    
    F-4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    19Item 4. Controls and Procedures
    
    
    20PART II OTHER INFORMATIONItem 6. Exhibits
    
    
    20Exhibit 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)
 March 31, 2009
    
    
    December 31, 2008(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    230
    
    
    $
    265Accounts receivable, net of allowances
of $72 and $91 at March 31, 2009 and
December 31, 2008, respectively
    
    
    320
    
    
    
    276Inventory and inventory related
prepayments, net of reserve of $1,311
and $1,315 at March 31, 2009 and
December 31, 2008, respectively
    
    
    15
    
    
    
    15Prepaids and other
    
    
    32
    
    
    
    62Total current assets
    
    
    597
    
    
    
    618Property and equipment, net of $158 and
$146 of accumulated depreciation at March
31, 2009 and December 31, 2008,
respectively
    
    
    32
    
    
    
    44Identifiable intangibles, net of $1,296
and $1,285 of accumulated amortization at
March 31, 2009 and December 31, 2008,
respectively
    
    
    976
    
    
    
    970Deposits and other assets
    
    
    82
    
    
    
    85Total assets
    
    $
    1,687
    
    
    $
    1,717Liabilities and Stockholders DeficitCurrent liabilitiesAccounts payable
    
    $
    1,110
    
    
    $
    1,070Accrued liabilities
    
    
    801
    
    
    
    736Deferred revenue
    
    
    14
    
    
    
    7Bridge loans
    
    
    106
    
    
    
    106Total current liabilities
    
    
    2,031
    
    
    
    1,919Convertible promissory note  related
party, net of discount of $152 and $135 at
March 31, 2009 and December 31, 2008,
respectively
    
    
    999
    
    
    
    758Total liabilities
    
    
    3,030
    
    
    
    2,677Stockholders deficit:Preferred stock ($0.0001 par value;
50,000 shares authorized; 1 share
issued and outstanding at March 31,
2009 and December 31, 2008,
respectively)
    
    
    
    
    
    
    Common stock ($0.0001 par value;
200,000 shares authorized; 48,957 and
48,957 issued and outstanding at
March 31, 2009 and December 31, 2008,
respectively)
    
    
    5
    
    
    
    5Additional paid-in-capital
    
    
    87,128
    
    
    
    87,013Accumulated deficit
    
    
    (88,476
    )
    
    
    (87,978
    )Total stockholders deficit
    
    
    (1,343
    )
    
    
    (960
    )Total liabilities and stockholders deficit
    
    $
    1,687
    
    
    $
    1,717
 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 MonthsEnded March 31,2009
    
    
    2008Revenues:Licensing
    
    $
    7
    
    
    $
    57Direct distribution
    
    
    437
    
    
    
    307Fee for service
    
    
    24
    
    
    
    9Contract research and milestones
    
    
    6
    
    
    
    92Total revenues
    
    
    474
    
    
    
    465Cost of revenues
    
    
    259
    
    
    
    213Gross profit
    
    
    215
    
    
    
    252Operating expenses:Sales, general and administrative
    
    
    671
    
    
    
    812Research and development
    
    
    
    
    
    
    3Total operating expenses
    
    
    671
    
    
    
    815Loss from operations
    
    
    (456
    )
    
    
    (563
    )Other income (expense):Interest income (expense)
    
    
    (42
    )
    
    
    9Loss before provision (benefit) for income taxes
    
    
    (498
    )
    
    
    (554
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    Net loss
    
    $
    (498
    )
    
    $
    (554
    )Net loss per share:Basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.01
    )Number of weighted average shares used in per share calculation:Basic and diluted
    
    
    48,957
    
    
    
    48,957
 See accompanying notes to financial statements.
  F-2




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CLEARANT, INC.
 
 STATEMENTS OF CASH FLOWS
 (in thousands)
  Three Month EndedMarch 31,2009
    
    
    2008Operating activitiesNet loss
    
    $
    (498
    )
    
    $
    (554
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    22
    
    
    
    37Accretion of debt discount
    
    
    8
    
    
    
    Non-cash stock-based compensation
    
    
    115
    
    
    
    136Changes in operating assets and liabilities:Accounts receivable
    
    
    (44
    )
    
    
    (119
    )Inventory and inventory related prepayments
    
    
    
    
    
    
    (19
    )Prepaids
    
    
    30
    
    
    
    33Accounts payable
    
    
    40
    
    
    
    1Accrued liabilities
    
    
    45
    
    
    
    8Deferred revenue
    
    
    7
    
    
    
    5Other assets and liabilities
    
    
    1
    
    
    
    Net cash used in operating activities
    
    
    (274
    )
    
    
    (472
    )Investing activitiesCost of identified intangibles
    
    
    (16
    )
    
    
    (10
    )Capital expenditures
    
    
    
    
    
    
    (15
    )Net cash used in investing activities
    
    
    (16
    )
    
    
    (25
    )Financing activitiesProceeds from convertible promissory note  related party, net of fees of $28
    
    
    255
    
    
    
    Net cash provided by financing activities
    
    
    255
    
    
    
    Change in cash and cash equivalents
    
    
    (35
    )
    
    
    (497
    )Cash and cash equivalents, beginning of period
    
    
    265
    
    
    
    1,062Cash and cash equivalents, end of period
    
    
    230
    
    
    $
    565Supplemental Disclosure of Cash Flow Information:Cash paid for interest
    
    $
    34
    
    
    $
    
 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
   F-4




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NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Revenue Recognition and Deferred Revenue
 Revenue Recognition ® ® ® Accounting for
Performance of Construction-Type and Certain Production-Type Contracts Accounting for Shipping and Handling Fees and Costs
 Cost of revenues
 ®
 Use of Estimates
  Cash Equivalents and Concentration of Credit Risk
  Accounts Receivable and Allowance for Doubtful Accounts
   F-5




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Inventory and Inventory Related Prepayments
 ®
  Property and Equipment
  Fair Value Measurements
 Fair Value Measurements
      Long-Lived Assets
   F-6




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Identifiable Intangibles
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Research and Development Costs
  Income Taxes
 Accounting for Income Taxes
   Accounting for Uncertainty in Income Taxes
 Stock-Based Compensation
 Share Based Payment
  Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
or in Conjunction with Selling, Goods or Services
   F-7




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Fair Value of Financial Instruments
 Fair Value Measurements
 Recent Accounting Pronouncements
 Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and
Identifying Transactions That Are Not Orderly Recognition and Presentation of Other-Than-Temporary Impairments Interim Disclosures about Fair Value of Financial Instruments
  NOTE 4  NET LOSS PER SHARE
 Earnings Per Share
  F-8




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For the Three MonthsEnded March 31,2009
    
    
    2008Stock Options
    
    
    2,557,855
    
    
    
    3,416,844Warrants
    
    
    2,113,052
    
    
    
    133,052
  Three Months EndedMarch 31,2009
    
    
    2008Basic and diluted net loss per share:Numerator:Net loss attributable to common stock
    
    $
    (498
    )
    
    $
    (554
    )Denominator:Weighted average common stock shares outstanding
    
    
    48,957
    
    
    
    48,957Net loss per share, basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.01
    )
 NOTE 5  INCOME TAXES
   NOTE 6  CONVERTIBLE SECURED PROMISSORY NOTE  RELATED PARTY
  Application of Issue
No. 98-5 to Certain Convertible Instruments
 Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants
  F-9




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Accounting for Derivative Financial Statements Indexed to,
and Potentially Settled in a Companys own stock
   NOTE 7  STOCK-BASED AWARDS
 Stock Options
  Employees
    
    
    Non-Employees
    
    
    TotalShares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOutstanding at December 31, 2008
    
    
    2,585,000
    
    
    $
    0.35-$63.14
    
    
    
    173,000
    
    
    $
    0.70-$57.68
    
    
    
    2,758,000
    
    
    $
    0.35-$63.14Granted
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Exercised
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Change in Status
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Canceled
    
    
    200,000
    
    
    $
    0.45
    
    
    
    
    
    
    $
    
    
    
    
    200,000
    
    
    $
    0.45Outstanding at March 31, 2009
    
    
    2,385,000
    
    
    $
    0.35-$63.14
    
    
    
    
    
    
    $
    
    
    
    
    2,558,000
    
    
    $
    0.35-$63.14
     F-10




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NOTE 8  COMMITMENTS AND CONTINGENCIES
 ®
 ®
  F-11




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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-K dated
December 31, 2008, filed with the Securities and Exchange Commission on March 24, 2009. (the Form
10-K).
 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.
 ® ® ® ® ®
 ® ®
  12




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Results of Operations
 Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Revenues
  ®
   ®
 Cost of Revenues
  Sales, General and Administrative Expenses
  ®
   13




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Research and Development Expenses
 ®
 Other Income/Expense
  Liquidity and Capital Resources
   Research and Development
  Direct Distribution Strategy
 ®
 ®
  14




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®
  Limited Cash Availability
    Doubt About Our Ability To Continue As Going Concern
   
    
    $400,000 due and paid on July 8, 2008;
 
    
    $400,000 due on August 22, 2008, of which $252,000 was received on September 5, 2008,
and $148,000 was received on October 1, 2008;
  15




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
    
    $600,000 due on October 6, 2008, of which $68,000 was received on December 12, 2008,
$50,000 was received on January 8, 2009, $155,000 was received on February 26, 2009, and
$77,000 was received on March 12, 2009; and
 
    
    $600,000 due on February 16, 2009, which has not been received.
  
    
    $160,000 due on February 20, 2009, of which we received $155,000 on February 26, 2009
and $5,000 on March 12, 2009,
 
    
    $100,000 due by March 10, 2009, of which we received $72,000 on March 12, 2009; and
 
    
    $222,000 due before March 31, 2009, which has not been received.
        16




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Contractual Obligations and Commercial Commitments
  Less than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligation
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsLease obligations
    
    $
    111
    
    
    $
    106
    
    
    $
    5
    
    
    
    
    
    
    
    
  Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
   Revenue Recognition and Deferred Revenue
 Revenue Recognition ® ® ® Accounting for Performance of Construction-Type and Certain Production-Type
Contracts Accounting for
Shipping and Handling Fees and Costs
  17




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Cost of Revenues
 ®
 Inventory and Inventory Related Prepayments
 ®
  Identifiable Intangibles
  Research and Development Costs
  Income Taxes
 Accounting for Income Taxes
 Accounting for Uncertainty in Income Taxes
 Stock-Based Compensation
 Share Based Payment
  18




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Fair Value of Financial Instruments
 Fair Value Measurements
 Legal Proceedings
  Recent Accounting Pronouncements
 Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and
Identifying Transactions That Are Not Orderly Recognition and Presentation of Other-Than-Temporary Impairments Interim Disclosures about Fair Value of Financial Instruments
  
 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
   19




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ITEM 4. Controls and Procedures
  
 PART II  OTHER INFORMATION
 
 ITEM 6. Exhibits
 Exhibit 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.
  20




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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.
    21




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SIGNATURES
  Date:  May 15, 2009
    CLEARANT, INC.By:
    /s/ Jon GarfieldJon Garfield, Chief Executive Officerand Chief Financial OfficerBy:
    /s/ Susan EtzelSusan Etzel, Chief Accounting Officer  22




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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.
  23