##### 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 March 31, 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




---



##### 



PagePART I FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)
    
    
    F-1Balance 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
    
    
    11Item 3. Quantitative and Qualitative Disclosures about
Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    18PART II OTHER INFORMATIONItem 6. Exhibits
    
    
    18Exhibit 31.1Exhibit 32.1




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 CLEARANT, INC.
 
 BALANCE SHEETS
(in thousands, except par value)
 March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    565
    
    
    $
    1,062Accounts receivable, net of
allowances of $33 and $26 at
March 31, 2008 and December
31, 2007, respectively
    
    
    460
    
    
    
    341Inventory and inventory
related prepayments, net of
reserve of $1,320 and $1,255
at March 31, 2008 and
December 31, 2007,
respectively
    
    
    19
    
    
    
    Prepaids and other
    
    
    34
    
    
    
    68Total current assets
    
    
    1,078
    
    
    
    1,471Property and equipment, net of $91 and
$83 of accumulated depreciation at March
31, 2008 and December 31, 2007,
respectively
    
    
    94
    
    
    
    87Identifiable intangibles, net of $1,246
and $1,217 of accumulated amortization at
March 31, 2008 and December 31, 2007,
respectively
    
    
    973
    
    
    
    991Deposits and other assets
    
    
    59
    
    
    
    60Total assets
    
    $
    2,204
    
    
    $
    2,609Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    1,211
    
    
    $
    1,210Accrued liabilities
    
    
    741
    
    
    
    733Deferred revenue
    
    
    15
    
    
    
    7Bridge loans, net
    
    
    106
    
    
    
    106Total current liabilities
    
    
    2,073
    
    
    
    2,056Deferred revenue  noncurrent
    
    
    
    
    
    
    4Total liabilities
    
    
    2,073
    
    
    
    2,060Stockholders equity:Common stock ($0.0001 par value;
200,000 shares authorized; 48,957
issued and outstanding at March 31,
2008 and December 31, 2007,
respectively)
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    86,496
    
    
    
    86,360Accumulated deficit
    
    
    (86,370
    )
    
    
    (85,816
    )Total stockholders equity
    
    
    131
    
    
    
    549Total liabilities and stockholders equity
    
    $
    2,204
    
    
    $
    2,609
 See accompanying notes to financial statements.
  F-1




---



##### Table of Contents



CLEARANT, INC.
 
 STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
 Three MonthsEnded March 31,2008
    
    
    2007Revenues:Licensing
    
    $
    57
    
    
    $
    40Direct distribution
    
    
    307
    
    
    
    179Fee for service
    
    
    9
    
    
    
    50Contract research and milestones
    
    
    92
    
    
    
    166Total revenues
    
    
    465
    
    
    
    435Cost of revenues
    
    
    213
    
    
    
    148Gross profit
    
    
    252
    
    
    
    287Operating expenses:Sales, general and administrative
    
    
    812
    
    
    
    1,134Research and development
    
    
    3
    
    
    
    40Total operating expenses
    
    
    815
    
    
    
    1,174Loss from operations
    
    
    (563
    )
    
    
    (887
    )Other income (expense):Interest income
    
    
    9
    
    
    
    5Loss on disposal of fixed assets
    
    
    
    
    
    
    (85
    )Loss before provision (benefit) for income
taxes
    
    
    (554
    )
    
    
    (967
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    Net loss attributable to common
stockholders
    
    $
    (554
    )
    
    $
    (967
    )Net loss per share:Basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.34
    )Number of weighted average shares used in
per share calculation:Basic and diluted
    
    
    48,957
    
    
    
    2,870
 See accompanying notes to financial statements.
  F-2




---



##### Table of Contents



CLEARANT, INC.
 
 STATEMENTS OF CASH FLOWS
(in thousands)
 Three Months EndedMarch 31,2008
    
    
    2007Operating activitiesNet loss
    
    $
    (554
    )
    
    $
    (967
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    37
    
    
    
    189Loss on disposal of fixed assets
    
    
    
    
    
    
    85Non-cash stock-based compensation
    
    
    136
    
    
    
    67Issuance of common stock to consultants for services
rendered
    
    
    
    
    
    
    93Changes in operating assets and liabilities:Accounts receivable
    
    
    (119
    )
    
    
    (98
    )Inventory and inventory related prepayments
    
    
    (19
    )
    
    
    (79
    )Prepaids
    
    
    33
    
    
    
    34Accounts payable
    
    
    1
    
    
    
    270Accrued liabilities
    
    
    8
    
    
    
    132Deferred revenue
    
    
    5
    
    
    
    (63
    )Other assets and liabilities
    
    
    
    
    
    
    (170
    )Net cash used in operating activities
    
    
    (472
    )
    
    
    (507
    )Investing activitiesCost of identified intangibles
    
    
    (10
    )
    
    
    (21
    )Capital expenditures
    
    
    (15
    )
    
    
    Net proceeds from sale of fixed assets
    
    
    
    
    
    
    16Net cash used in investing activities
    
    
    (25
    )
    
    
    (5
    )Financing activitiesProceeds from issuance of bridge loan
    
    
    
    
    
    
    200Net cash provided by financing activities
    
    
    
    
    
    
    200Change in cash and cash equivalents
    
    
    (497
    )
    
    
    (312
    )Cash and cash equivalents, beginning of period
    
    
    1,062
    
    
    
    563Cash and cash equivalents, end of period
    
    $
    565
    
    
    $
    251Supplemental 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




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



The Fair Value Option for Financial Assets and
Financial Liabilities
 Definition of Settlement in FASB Interpretation No.
48
 Written Loan Commitments Recorded at Fair Value
Through Earnings
 Business Combinations SFAS No. 141(R)
  NOTE 4  NET LOSS PER SHARE
 Earnings Per Share
  F-7




---



##### Table of Contents



For the Three Months EndedMarch 31,2008
    
    
    2007Stock Options
    
    
    3,416,844
    
    
    
    2,358,000Warrants
    
    
    133,052
    
    
    
    2,195,000
  Three Months EndedMarch 31,2008
    
    
    2007Basic and diluted net loss per share:Numerator:Net loss attributable to common stock
    
    $
    (554
    )
    
    $
    (967
    )Denominator:Weighted average common stock shares
outstanding
    
    
    48,957
    
    
    
    2,870Net loss per share, basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.34
    )
 NOTE 5  INCOME TAXES
 Accounting for Uncertainty in Income Taxes
   NOTE 6  DEBT
   F-8




---



##### Table of Contents



NOTE 7  COMMON STOCK
 Common Stock Transactions and Non-cash Financing Activities
      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
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Outstanding at
March 31, 2008
    
    
    3,244,000
    
    
    $
    0.35-$63.14
    
    
    
    173,000
    
    
    $
    4.90-$57.68
    
    
    
    3,417,000
    
    
    $
    0.35-$63.14
  F-9




---



##### Table of Contents



NOTE 9  COMMITMENTS AND CONTINGENCIES
 ®
 ®
  F-10




---



##### Table of Contents



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




---



##### Table of Contents



Results of Operations
 Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Revenues
  ®
   ®
 Sales, General and Administrative Expenses
  ®
   12




---



##### Table of Contents



Research and Development Expenses
 ®
 Other Income/Expense
  Liquidity and Capital Resources
    Research and Development
  Direct Distribution Strategy
 ®
 ®
  13




---



##### Table of Contents



®
  Limited Cash Availability
    Doubt About Our Ability To Continue As Going Concern
      14




---



##### Table of Contents



Contractual Obligations and Commercial Commitments
  MoreLess than 1
    
    
    
    
    
    
    
    
    
    
    than 5Contractual Obligations
    
    Total
    
    
    Year
    
    
    1 -3 Years
    
    
    3 - 5 Years
    
    
    YearsLease obligations
    
    $
    113
    
    
    $
    100
    
    
    $
    13
    
    
    
    
    
    
    
    
  Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
   Revenue Recognition and Deferred Revenue
 Revenue Recognition ® ® ® Accounting for Shipping and
Handling Fees and Costs
  15




---



##### Table of Contents



Cost of Revenues
 ®
 Inventory and Inventory Related Prepayments
 ®
  Identifiable Intangibles
  Research and Development Costs
  Income Taxes
 Accounting for Income Taxes
 Stock-Based Compensation
 Share Based Payment
 Fair Value of Financial Instruments
   16




---



##### Table of Contents



Legal Proceedings
  Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Definition of Settlement in FASB Interpretation No.
48
 Written Loan Commitments Recorded at Fair Value
Through Earnings
  
 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
 Historically, we have invested our cash
in short term commercial paper, certificates of deposit, money market accounts
and marketable securities. We consider any liquid investment with an original
maturity of three months or less when purchased to be cash equivalents. We
classify investments with maturity dates greater than three months when
purchased as marketable securities, which have readily determined fair values
as available-for-sale securities. We adhere to an investment policy which
requires that all investments be investment grade quality and no more than ten
percent of our portfolio may be invested in any one security or with one
institution. At March 31, 2008, we had no
investments that would create market risk. It is our intention to invest in
highly liquid, high grade commercial paper, variable rate securities and
certificates of deposit. Investments in both fixed rate and floating rate
interest earning instruments carry a degree of interest rate risk. Fixed rate
securities may have their fair market value adversely impacted due to a rise in
interest rates, while floating rate securities with shorter maturities may
produce less income if interest rates fall. The market risk associated with our
investments in debt securities is substantially mitigated by the frequent
turnover of the portfolio.  17




---



##### Table of Contents



ITEM 4. Controls and Procedures
  
 PART II  OTHER INFORMATION
 
 ITEM 6. Exhibits
    18




---



##### Table of Contents



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.
    19




---



##### Table of Contents



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

/s/
Jon GarfieldJon Garfield, Chief Executive Officer andChief Financial Officer  20




---



##### Table of Contents



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.
  21