UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
 Amendment No. 2
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 00-50626
 CYCLACEL PHARMACEUTICALS, INC.
  Delaware
    
    91-1707622(State or Other Jurisdiction 
of Incorporation or 
Organization)
    
    (I.R.S. Employer
Identification No.)200 Connell Drive 
Suite 1500, Berkeley Heights, 
New Jersey
    
    07922(Address of principal executive offices)
    
    (Zip Code)
   Name of Each Exchange on WhichTitle of Each Class
    
    RegisteredCommon Stock, $0.001 par value 
Preferred Stock, $0.001 par value
    
    The NASDAQ Stock Market LLC
The NASDAQ Stock Market LLC
  o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ[Do not check if a smaller
reporting company]
 o þ




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##### 



Explanatory Note
 Amendment Original Filing we us, our Company SEC Amended
Filing




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##### 



Item 8. Financial Statements and Supplementary Data
 INDEX TO CYCLACEL PHARMACEUTICALS, INC. FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    2Consolidated Balance Sheets as of December 31, 2008 and 2009
    
    
    3Consolidated Statements of Operations for the years ended
December 31, 2007, 2008 and 2009 and the period from August
13, 1996 (inception) to December 31, 2009
    
    
    4Consolidated Statements of Stockholders Equity (Deficit)
for the period from August 13, 1996 (inception) to December
31, 2009
    
    
    5Consolidated Statements of Cash Flows for the years ended
December 31, 2007, 2008 and 2009 and the period from August
13, 1996 (inception) to December 31, 2009
    
    
    12Notes to Consolidated Financial Statements
    
    
    15
  1




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##### 



CYCLACEL PHARMACEUTICALS,
INC.
(A Development Stage Company) REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders

Cyclacel Pharmaceuticals, Inc. We have audited the
accompanying consolidated balance sheets of Cyclacel Pharmaceuticals, Inc. (a
development stage company) as of December 31, 2009 and 2008, and the
related consolidated statements of operations, stockholders equity, and
cash flows for each of the three years in the period ended December 31,
2009 and the period from August 13, 1996 (inception) to
December 31, 2009. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Cyclacel Pharmaceuticals,
Inc.(a development stage company) at December 31, 2009 and 2008, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2009 and for the period from
August 13, 1996 (inception) to December 31, 2009, in conformity
with U.S. generally accepted accounting principles. As discussed in Note
20 to the consolidated financial statements, the net loss per share and the
consolidated statements of cash flows have been restated to correct the
Companys computation of its net loss per share and the presentation of
preferred dividends in its consolidated statements of cash flows. We also have audited,
in accordance with the standards of the Public Company Accounting Oversight
Board (United States), Cyclacel Pharmaceuticals Inc.s internal control
over financial reporting as of December 31, 2009, based on criteria
established in Internal Control  Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated March 29, 2010, except for the effects of the material weakness
described in the sixth paragraph of that report, as to which the date is
May 17, 2010, expressed an adverse opinion thereon. /s/ Ernst & Young
LLP
 London, England 
March 29
2010, except for Note 20, 
as to which the date is May 17, 2010  2




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##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 
 CONSOLIDATED BALANCE SHEETS
 (In $000s, except share amounts)
 December 31,2008
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    
    24,220
    
    
    
    11,493Short-term investments
    
    
    1,502
    
    
    
    Inventory
    
    
    508
    
    
    
    145Prepaid expenses and other current assets
    
    
    2,784
    
    
    
    1,731Total current assets
    
    
    29,014
    
    
    
    13,369Property, plant and equipment (net)
    
    
    1,748
    
    
    
    901Deposits and other assets
    
    
    195
    
    
    
    196Total assets
    
    
    30,957
    
    
    
    14,466LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    
    754
    
    
    
    1,709Accrued and other current liabilities
    
    
    6,801
    
    
    
    6,709Warrant liability
    
    
    43
    
    
    
    342Current portion of other accrued restructuring charges
    
    
    1,029
    
    
    
    1,062Total current liabilities
    
    
    8,627
    
    
    
    9,822Other accrued restructuring charges, net of current
    
    
    1,062
    
    
    
    Other long term payables
    
    
    626
    
    
    
    Total liabilities
    
    
    10,315
    
    
    
    9,822Commitments and contingencies (Note 11)Stockholders equity:Preferred stock, $0.001 par value; 5,000,000 shares
authorized at December 31, 2008 and 2009,
respectively; 2,046,813 shares issued and outstanding
at December 31, 2008 and 2009, respectively.
Aggregate preference in liquidation of $20,673,000 and $21,696,218 at
December 31, 2008 and December 31, 2009, respectively
    
    
    2
    
    
    
    2Common stock, $0.001 par value; 100,000,000 shares
authorized at December 31, 2008 and 2009,
respectively; 20,433,129 and 25,743,363 shares issued
and outstanding at December 31, 2008 and 2009,
respectively
    
    
    20
    
    
    
    26Additional paid-in capital
    
    
    223,377
    
    
    
    226,881Accumulated other comprehensive (loss)/income
    
    
    (42
    )
    
    
    20Deficit accumulated during the development stage
    
    
    (202,715
    )
    
    
    (222,285
    )Total stockholders equity
    
    
    20,642
    
    
    
    4,644Total liabilities and stockholders equity
    
    
    30,957
    
    
    
    14,466
   3




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##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In $000s, except share and per share amounts)
 Period fromAugust 13,1996Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    (inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2007(1)
    
    

2008(1)
    
    
    2009(1)
    
    
    2009(1)Revenues:Collaboration and research and development revenue
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    3,000Product Revenue
    
    
    
    
    
    
    838
    
    
    
    910
    
    
    
    1,748Grant revenue
    
    
    119
    
    
    
    39
    
    
    
    1
    
    
    
    3,636129
    
    
    
    877
    
    
    
    911
    
    
    
    8,384Operating expenses:Cost of goods sold
    
    
    
    
    
    
    429
    
    
    
    545
    
    
    
    974Research and development
    
    
    19,569
    
    
    
    18,869
    
    
    
    9,766
    
    
    
    170,179Selling, general and administrative
    
    
    12,033
    
    
    
    15,354
    
    
    
    8,538
    
    
    
    71,846Goodwill and intangibles impairment
    
    
    
    
    
    
    7,934
    
    
    
    
    
    
    
    7,934Other restructuring costs
    
    
    1,554
    
    
    
    489
    
    
    
    366
    
    
    
    2,634Total operating expenses
    
    
    33,156
    
    
    
    43,075
    
    
    
    19,215
    
    
    
    253,567Operating loss
    
    
    (33,027
    )
    
    
    (42,198
    )
    
    
    (18,304
    )
    
    
    (245,183
    )Other income (expense):Costs associated with aborted 2004 IPO
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,550
    )Payment under guarantee
    
    
    
    
    
    
    
    
    
    
    (1,652
    )
    
    
    (1,652
    )Change in valuation of derivative
    
    
    (93
    )
    
    
    
    
    
    
    
    
    
    
    (308
    )Change in valuation of warrants liability
    
    
    3,205
    
    
    
    3,502
    
    
    
    (299
    )
    
    
    6,408Warrant re-pricing
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    (44
    )Foreign exchange gains / (losses)
    
    
    490
    
    
    
    (4,501
    )
    
    
    (144
    )
    
    
    (4,187
    )Interest income
    
    
    3,554
    
    
    
    1,380
    
    
    
    102
    
    
    
    13,643Interest expense
    
    
    (223
    )
    
    
    (318
    )
    
    
    (177
    )
    
    
    (4,634
    )Total other income, net
    
    
    6,933
    
    
    
    63
    
    
    
    (2,214
    )
    
    
    5,676Loss before taxes
    
    
    (26,094
    )
    
    
    (42,135
    )
    
    
    (20,518
    )
    
    
    (239,507
    )Income tax benefit
    
    
    2,041
    
    
    
    1,749
    
    
    
    948
    
    
    
    17,222Net loss
    
    
    (24,053
    )
    
    
    (40,386
    )
    
    
    (19,570
    )
    
    
    (222,285
    )Dividends on
preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,123
    )Dividends on
convertible exchangeable preferred shares
    
    
    (307
    )
    
    
    (1,227
    )
    
    
    (1,228
    )
    
    
    (2,762
    )Net loss
applicable to common shareholders
    
    
    (24,360
    )
    
    
    (41,613
    )
    
    
    (20,798
    )
    
    
    (263,170
    )Net loss per share  basic and diluted
    
    $
    (1.23
    )
    
    $
    (2.04
    )
    
    $
    (0.94
    )Weighted average common shares outstanding
    
    
    19,873,911
    
    
    
    20,433,129
    
    
    
    22,196,840
 
 (1)
The
effects of the corrections of the errors reported in Note 20  Restatement  Net
Loss Per Share Disclosure and Consolidated Statement of Cash Flows, of the audited financial statements are reflected in
years 2007 through and including 2009.   4




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##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 (In $000s, except share and per share amounts)
 DeficitAccumulated
    
    
    
    
    
    
    accumulatedAdditional
    
    
    other
    
    
    
    
    
    
    duringpaid in
    
    
    comprehensive
    
    
    Deferred
    
    
    developmentPreferred Stock
    
    
    Common Stock
    
    
    capital
    
    
    income/(loss)
    
    
    compensation
    
    
    stage
    
    
    TotalNo.
    
    
    $000
    
    
    No.
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000On incorporation,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issue of shares for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (4
    )Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (290
    )
    
    
    (290
    )Comprehensive loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (294
    )Balance at March 31, 1997
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (4
    )
    
    
    
    
    
    
    (290
    )
    
    
    (293
    )Issue of shares for cash, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    266,778
    
    
    
    
    
    
    
    4,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,217Issue of shares for IP rights agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262Deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,002
    
    
    
    
    
    
    
    (2,002
    )
    
    
    
    
    
    
    Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    302Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    55Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,534
    )
    
    
    (2,534
    )Comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,479
    )Balance at March 31, 1998
    
    
    
    
    
    
    
    
    
    
    266,778
    
    
    
    
    
    
    
    6,482
    
    
    
    51
    
    
    
    (1,700
    )
    
    
    (2,824
    )
    
    
    2,009Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406
    
    
    
    
    
    
    
    406Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    11Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,964
    )
    
    
    (3,964
    )Comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,953
    )Balance at March 31, 1999
    
    
    
    
    
    
    
    
    
    
    266,778
    
    
    
    
    
    
    
    6,482
    
    
    
    62
    
    
    
    (1,294
    )
    
    
    (6,788
    )
    
    
    (1,538
    )
   5




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##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (contd)
 (In $000s, except share and per share amounts)
 DeficitAccumulated
    
    
    
    
    
    
    accumulatedAdditional
    
    
    other
    
    
    
    
    
    
    duringpaid in
    
    
    comprehensive
    
    
    Deferred
    
    
    developmentPreferred Stock
    
    
    Common Stock
    
    
    capital
    
    
    income/(loss)
    
    
    compensation
    
    
    stage
    
    
    TotalNo.
    
    
    $000
    
    
    No.
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Issue of shares for cash, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    538,889
    
    
    
    1
    
    
    
    12,716
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,717Issue of shares on conversion of
bridging loan
    
    
    
    
    
    
    
    
    
    
    90,602
    
    
    
    
    
    
    
    1,638
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,638Issue of shares in lieu of cash bonus
    
    
    
    
    
    
    
    
    
    
    9,060
    
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164Issue of shares for research &
development agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    409
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    409Exercise of share options
    
    
    
    
    
    
    
    
    
    
    2,265
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40Deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    (167
    )
    
    
    
    
    
    
    Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    433
    
    
    
    
    
    
    
    433Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (194
    )
    
    
    
    
    
    
    
    
    
    
    (194
    )Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,686
    )
    
    
    (5,686
    )Comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,880
    )Balance at March 31, 2000
    
    
    
    
    
    
    
    
    
    
    907,594
    
    
    
    1
    
    
    
    21,616
    
    
    
    (132
    )
    
    
    (1,028
    )
    
    
    (12,474
    )
    
    
    7,983Deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    294
    
    
    
    
    
    
    
    (294
    )
    
    
    
    
    
    
    Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    275
    
    
    
    
    
    
    
    275Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (466
    )
    
    
    
    
    
    
    
    
    
    
    (466
    )Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,382
    )
    
    
    (10,382
    )Comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,848
    )Balance at March 31, 2001
    
    
    
    
    
    
    
    
    
    
    907,594
    
    
    
    1
    
    
    
    21,910
    
    
    
    (598
    )
    
    
    (1,047
    )
    
    
    (22,856
    )
    
    
    (2,590
    )
   6




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (contd)
 (In $000s, except share and per share amounts)
 DeficitAccumulated
    
    
    
    
    
    
    accumulatedAdditional
    
    
    other
    
    
    
    
    
    
    duringpaid in
    
    
    comprehensive
    
    
    Deferred
    
    
    developmentPreferred Stock
    
    
    Common Stock
    
    
    capital
    
    
    income/(loss)
    
    
    compensation
    
    
    stage
    
    
    TotalNo.
    
    
    $000
    
    
    No.
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Issue of shares for cash, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    5,451
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of share options for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106Issue of shares for license agreement
    
    
    
    
    
    
    
    
    
    
    4,510
    
    
    
    
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183Fair value of warrants issued to
shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,215
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,215Deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    363
    
    
    
    
    
    
    
    (363
    )
    
    
    
    
    
    
    Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    672
    
    
    
    
    
    
    
    672Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    191
    
    
    
    
    
    
    
    
    
    
    
    191Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,853
    )
    
    
    (14,853
    )Comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,662
    )Balance at March 31, 2002
    
    
    
    
    
    
    
    
    
    
    917,555
    
    
    
    1
    
    
    
    23,777
    
    
    
    (407
    )
    
    
    (738
    )
    
    
    (37,709
    )
    
    
    (15,076
    )Exercise of share options for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    305
    
    
    
    
    
    
    
    305Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,846
    )
    
    
    
    
    
    
    
    
    
    
    (1,846
    )Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,542
    )
    
    
    (15,542
    )Comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,388
    )Balance at March 31, 2003
    
    
    
    
    
    
    
    
    
    
    917,555
    
    
    
    1
    
    
    
    23,705
    
    
    
    (2,253
    )
    
    
    (349
    )
    
    
    (53,251
    )
    
    
    (32,147
    )
   7




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (contd)
 (In $000s, except share and per share amounts)
 DeficitAccumulated
    
    
    
    
    
    
    accumulatedAdditional
    
    
    other
    
    
    
    
    
    
    duringpaid in
    
    
    comprehensive
    
    
    Deferred
    
    
    developmentPreferred Stock
    
    
    Common Stock
    
    
    capital
    
    
    income/(loss)
    
    
    compensation
    
    
    stage
    
    
    TotalNo.
    
    
    $000
    
    
    No.
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Issue of shares for cash, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    1,510,288
    
    
    
    1
    
    
    
    27,634
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,635Exercise of share options for cash
    
    
    
    
    
    
    
    
    
    
    6,549
    
    
    
    
    
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115Conversion of Preferred C Ordinary
shares
    
    
    
    
    
    
    
    
    
    
    3,769,139
    
    
    
    4
    
    
    
    58,144
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,148Amortization of deferred
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217
    
    
    
    
    
    
    
    217Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,343
    )
    
    
    
    
    
    
    
    
    
    
    (1,343
    )Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,977
    )
    
    
    (14,977
    )Comprehensive loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,320
    )Balance at December 31, 2003
    
    
    
    
    
    
    
    
    
    
    6,203,531
    
    
    
    6
    
    
    
    109,598
    
    
    
    (3,596
    )
    
    
    (132
    )
    
    
    (68,228
    )
    
    
    37,648Issues of shares for cash, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    430,571
    
    
    
    1
    
    
    
    8,540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,541Exercise of warrants for cash
    
    
    
    
    
    
    
    
    
    
    22,630
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   8




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (contd)
 DeficitAccumulated
    
    
    
    
    
    
    accumulatedAdditional
    
    
    other
    
    
    
    
    
    
    duringpaid-in
    
    
    comprehensive
    
    
    Deferred
    
    
    developmentPreferred Stock
    
    
    Common Stock
    
    
    capital
    
    
    income/(loss)
    
    
    compensation
    
    
    stage
    
    
    TotalNo.
    
    
    $000
    
    
    No.
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,050
    )
    
    
    
    
    
    
    132
    
    
    
    
    
    
    
    (1,918
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,424
    
    
    
    
    
    
    
    
    
    
    
    2,424Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,742
    )
    
    
    (22,742
    )Comprehensive loss for the
year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,318
    )Balance at December 31, 2004
    
    
    
    
    
    
    
    
    
    
    6,656,732
    
    
    
    7
    
    
    
    116,088
    
    
    
    (1,172
    )
    
    
    
    
    
    
    (90,970
    )
    
    
    23,953Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,786
    )
    
    
    
    
    
    
    
    
    
    
    (1,786
    )Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,048
    )
    
    
    (18,048
    )Comprehensive loss for the
year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,834
    )Balance at December 31, 2005
    
    
    
    
    
    
    
    
    
    
    6,656,732
    
    
    
    7
    
    
    
    116,088
    
    
    
    (2,958
    )
    
    
    
    
    
    
    (109,018
    )
    
    
    4,119Issue of shares to certain
directors and officers
    
    
    
    
    
    
    
    
    
    
    648,413
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issue of shares on
conversion of Loan Note
Instrument
    
    
    
    
    
    
    
    
    
    
    456,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reverse Acquisition
    
    
    2,046,813
    
    
    
    2
    
    
    
    1,967,928
    
    
    
    2
    
    
    
    16,251
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,255Loan from Cyclacel Group
plc waived
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,420Issue of common stock and
warrants for cash
    
    
    
    
    
    
    
    
    
    
    6,428,572
    
    
    
    6
    
    
    
    42,356
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,362Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,600Change in unrealized loss
on investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    416
    
    
    
    
    
    
    
    
    
    
    
    416Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,258
    )
    
    
    (29,258
    )
   9




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (contd)
 DeficitAccumulated
    
    
    
    
    
    
    accumulatedAdditional
    
    
    other
    
    
    
    
    
    
    duringpaid-in
    
    
    comprehensive
    
    
    Deferred
    
    
    developmentPreferred Stock
    
    
    Common Stock
    
    
    capital
    
    
    income/(loss)
    
    
    compensation
    
    
    stage
    
    
    TotalNo.
    
    
    $000
    
    
    No.
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Comprehensive loss for the
year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,842
    )Balance at December 31, 2006
    
    
    2,046,813
    
    
    
    2
    
    
    
    16,157,953
    
    
    
    16
    
    
    
    194,714
    
    
    
    (2,537
    )
    
    
    
    
    
    
    (138,276
    )
    
    
    53,919Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,053
    )
    
    
    (24,053
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (93
    )
    
    
    
    
    
    
    
    
    
    
    (93
    )Comprehensive loss for the
year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,146
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,733
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,733Issue of common stock upon
exercise of stock options
    
    
    
    
    
    
    
    
    
    
    25,508
    
    
    
    
    
    
    
    163
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163Issue of common stock for
cash on registered direct
offering, net of expenses
    
    
    
    
    
    
    
    
    
    
    4,249,668
    
    
    
    4
    
    
    
    33,353
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,357Preferred stock dividends
declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (307
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (307
    )Issue of warrants in
connection with registered
direct offering
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,750
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,750
    )Balance at December 31, 2007
    
    
    2,046,813
    
    
    
    2
    
    
    
    20,433,129
    
    
    
    20
    
    
    
    222,906
    
    
    
    (2,630
    )
    
    
    
    
    
    
    (162,329
    )
    
    
    57,969Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,386
    )
    
    
    (40,386
    )Unrealized foreign exchange
on intercompany loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,330
    )
    
    
    
    
    
    
    
    
    
    
    (12,330
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,918
    
    
    
    
    
    
    
    
    
    
    
    14,918Comprehensive loss for the
year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,798
    )
   10




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (contd)
 DeficitAccumulated
    
    
    
    
    
    
    accumulatedAdditional
    
    
    other
    
    
    
    
    
    
    duringpaid-in
    
    
    comprehensive
    
    
    Deferred
    
    
    developmentPreferred Stock
    
    
    Common Stock
    
    
    capital
    
    
    income/(loss)
    
    
    compensation
    
    
    stage
    
    
    TotalNo.
    
    
    $000
    
    
    No.
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,698
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,698Preferred stock dividends
declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,227
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,227
    )Balance at December 31, 2008
    
    
    2,046,813
    
    
    
    2
    
    
    
    20,433,129
    
    
    
    20
    
    
    
    223,377
    
    
    
    (42
    )
    
    
    
    
    
    
    (202,715
    )
    
    
    20,642Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,570
    )
    
    
    (19,570
    )Unrealized foreign exchange
on intercompany loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,651
    
    
    
    
    
    
    
    
    
    
    
    5,651Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,589
    )
    
    
    
    
    
    
    
    
    
    
    (5,589
    )Warrant re-pricing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44Issue of common stock for
cash on registered direct
offering, net of expenses
    
    
    
    
    
    
    
    
    
    
    4,000,000
    
    
    
    4
    
    
    
    2,843
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,847Issue of common stock upon
draw down of Committed
Equity Finance Facility
    
    
    
    
    
    
    
    
    
    
    1,255,024
    
    
    
    2
    
    
    
    1,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,030Issue of common stock upon
exercise of stock options,
restricted stock units and
restricted stock
    
    
    
    
    
    
    
    
    
    
    55,210
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810Preferred stock dividends
declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,228
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,228
    )Balance at 31 December, 2009
    
    
    2,046,813
    
    
    
    2
    
    
    
    25,743,363
    
    
    
    26
    
    
    
    226,881
    
    
    
    20
    
    
    
    
    
    
    
    (222,285
    )
    
    
    4,644
   11




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Period fromAugust 13,1996Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    (inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2007(2)
    
    
    2008
    
    
    2009(1)
    
    

2009(1)(2)$000
    
    
    $000
    
    
    $000
    
    
    $000Operating activities:Net loss
    
    
    (24,053
    )
    
    
    (40,386
    )
    
    
    (19,570
    )
    
    
    (222,285
    )Adjustments to reconcile net loss to net cash
used in operating activities:Accretion of guaranteed stock
    
    
    10
    
    
    
    (10
    )
    
    
    
    
    
    
    Amortization of interest payable on notes
payable
    
    
    19
    
    
    
    79
    
    
    
    2
    
    
    
    100Amortization of investment premiums, net
    
    
    (844
    )
    
    
    (1,444
    )
    
    
    20
    
    
    
    (2,297
    )Change in valuation of derivative
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    308Change in valuation of warrants
    
    
    (3,205
    )
    
    
    (3,502
    )
    
    
    299
    
    
    
    (6,408
    )Warrant re-pricing
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    44Depreciation
    
    
    946
    
    
    
    1,154
    
    
    
    668
    
    
    
    11,857Amortization of intangible assets
    
    
    178
    
    
    
    708
    
    
    
    
    
    
    
    886Fixed asset impairment
    
    
    
    
    
    
    
    
    
    
    221
    
    
    
    221Unrealized foreign exchange (gains) losses
    
    
    (449
    )
    
    
    4,831
    
    
    
    
    
    
    
    7,747Deferred revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98
    )Compensation for warrants issued to non
employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,215Shares issued for IP rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    446Gain on disposal of property, plant and
equipment
    
    
    
    
    
    
    2
    
    
    
    83
    
    
    
    112Goodwill and intangibles impairment
    
    
    
    
    
    
    7,934
    
    
    
    
    
    
    
    7,934Stock-based compensation
    
    
    1,733
    
    
    
    1,698
    
    
    
    810
    
    
    
    16,395Provision for restructuring
    
    
    1,554
    
    
    
    
    
    
    
    
    
    
    
    1,779Amortization of issuance costs of Preferred
Ordinary C shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,517Changes in operating assets and liabilities:Prepaid expenses and other current assets
    
    
    (653
    )
    
    
    1,732
    
    
    
    1,716
    
    
    
    (748
    )Accounts payable and other current
liabilities
    
    
    308
    
    
    
    (2,701
    )
    
    
    821
    
    
    
    (2,823
    )Net cash used in operating activities
    
    
    (24,363
    )
    
    
    (29,905
    )
    
    
    (14,886
    )
    
    
    (183,098
    )
 
 (1)
    
    An amount of $307,000, representing a preferred stock dividend
payment incorrectly classified in operating activities has now been
correctly disclosed in Net cash provided by (used in) financing
activities. (2)
    
    An amount of $1,223,000 representing a payment of a derivative liability in 2007
was incorrectly classified as financing activities has now been
correctly disclosed in Net cash used in operating activities.(Period from inception $2,144)   12




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF CASH FLOWS (contd)
 Period fromAugust 13, 1996Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    (inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2007(2)
    
    
    2008
    
    
    2009(1)
    
    

2009(1)(2)$000
    
    
    $000
    
    
    $000
    
    
    $000Investing activities:Purchase of ALIGN
    
    
    (3,763
    )
    
    
    
    
    
    
    
    
    
    
    (3,763
    )Purchase of property, plant and equipment
    
    
    (1,773
    )
    
    
    (366
    )
    
    
    (15
    )
    
    
    (8,823
    )Proceeds from sale of property, plant
and equipment
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    117Purchase of short-term investments on
deposit, net of maturities
    
    
    (153,597
    )
    
    
    (3,057
    )
    
    
    
    
    
    
    (156,657
    )Cash proceeds from redemption of short
term securities
    
    
    136,440
    
    
    
    30,765
    
    
    
    1,483
    
    
    
    162,729Net cash provided by (used in) investing
activities
    
    
    (22,693
    )
    
    
    27,342
    
    
    
    1,559
    
    
    
    (6,397
    )Financing activities:Payments of capital lease obligations
    
    
    (89
    )
    
    
    (11
    )
    
    
    
    
    
    
    (3,719
    )Proceeds from issuance of ordinary and
preferred ordinary shares, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,858Proceeds from issuance of common stock
and warrants, net of issuance costs
    
    
    33,357
    
    
    
    
    
    
    
    3,845
    
    
    
    79,828Proceeds from the exercise of stock
options and issue of warrants, net of
issuance costs
    
    
    163
    
    
    
    
    
    
    
    7
    
    
    
    170Preferred dividend payment
    
    
    
    
    
    
    (1,227
    )
    
    
    (307
    )
    
    
    (1,534
    )Repayment of government loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (455
    )Government loan received
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    414Loan received from Cyclacel Group plc
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,103Proceeds of committable loan notes
issued from shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,883Loans received from shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,645Cash and cash equivalents assumed on
stock purchase of Xcyte
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,915Costs associated with stock purchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,951
    )Net cash provided by (used in) financing
activities
    
    
    33,431
    
    
    
    (1,238
    )
    
    
    3,545
    
    
    
    201,157Effect of exchange rate changes on cash
and cash equivalents
    
    
    374
    
    
    
    (2,966
    )
    
    
    (2,945
    )
    
    
    (168
    )Net (decrease) increase in cash and cash
equivalents
    
    
    (13,251
    )
    
    
    (6,767
    )
    
    
    (12,727
    )
    
    
    11,493Cash and cash equivalents, beginning of
period
    
    
    44,238
    
    
    
    30,987
    
    
    
    24,220
    
    
    
    Cash and cash equivalents, end of period.
    
    
    30,987
    
    
    
    24,220
    
    
    
    11,493
    
    
    
    11,493
 
 (1)
    
    An amount of $307,000 representing a preferred stock dividend
payment incorrectly classified in operating activities has now been
correctly disclosed in Net cash provided by (used in) financing
activities. (2)
    
    An amount of $1,223,000 representing a payment of a derivative liability in 2007
was incorrectly classified as financing activities has now been
correctly disclosed in Net cash used in operating activities. (Period
from inception $2,144)   13




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF CASH FLOWS (contd)
 Period fromAugust 13, 1996Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    (inception) toDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2008
    
    
    2009
    
    
    2009$000
    
    
    $000
    
    
    $000
    
    
    $000Supplemental cash flow information:Cash received during the period for:Interest
    
    
    2,437
    
    
    
    723
    
    
    
    59
    
    
    
    11,704Taxes
    
    
    2,045
    
    
    
    2,033
    
    
    
    1,523
    
    
    
    16,440Cash paid during the period for:Interest
    
    
    (858
    )
    
    
    
    
    
    
    (78
    )
    
    
    (1,759
    )Schedule of non-cash transactionsAcquisitions of equipment purchased
through capital leases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,470Issuance of common shares in connection
with license agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    592Issuance of Ordinary shares on
conversion of bridging loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,638Issuance of Preferred Ordinary
C shares on conversion of secured
convertible loan notes and accrued
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,893Issuance of Ordinary shares in lieu of
cash bonus
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164Issuance of
other long term payable on ALIGN
acquisition
    
    
    1,122
    
    
    
    
    
    
    
    
    
    
    
    1,122Accrued
dividends on preferred stock(1)
    
    
    307
    
    
    
    
    
    
    
    921
    
    
    
    1,228
 
 (1)
    
    The above supplemental cash flow information has been restated to disclose the accrued dividends on
preferred stock.   14




---



##### 



CYCLACEL PHARMACEUTICALS, INC.
(A Development Stage Company)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1 Organization of the Company
   
    
    Acute myeloid leukemia, or AML in the elderly;
 
    
    Myelodysplastic syndromes, or MDS; and
 
    
    Non-small cell lung cancer or NSCLC.
 ® ® ®
   Basis of Presentation
  2 Summary of Significant Accounting Policies
 Use of Estimates
   15




---



##### 



Concentration of Credit Risk and Other Risks and Uncertainties
    Foreign currency and currency translation
   Segments
 Segment Reporting
 Cash and Cash Equivalents
   16




---



##### 



Short-term Investments
   Trade Accounts Receivable and Allowance for Doubtful Accounts
  Inventory
    17




---



##### 



Fair Value of Financial Instruments
  Property, Plant and Equipment
  Goodwill and intangible assets
 Intangibles  Goodwill and Other
 Business Combinations
 Impairment of Long-lived Assets
 Property, Plant, and Equipment
    18




---



##### 



Revenue Recognition
 Product sales
  Revenue Recognition -Products Revenue
Recognition  Overall
 Collaboration, research and development, and grant revenue
    Clinical Trial Accounting
  Research and Development Expenditures
   19




---



##### 



Patent Costs
  Leased Assets
   Income Taxes
  Income taxes
  Net Loss Per Common Share
 Earnings Per
Share
 Years ended December 31,2007
    
    
    2008
    
    
    2009Stock options
    
    
    2,592,246
    
    
    
    3,674,899
    
    
    
    3,349,876Restricted Stock and Restricted Stock Units
    
    
    
    
    
    
    141,700
    
    
    
    91,145Convertible preferred stock
    
    
    870,980
    
    
    
    870,980
    
    
    
    870,980Cyclacel stock to be issued on October 5, 2008
    
    
    46,044
    
    
    
    
    
    
    
    Common stock issuable to Kingsbridge
    
    
    
    
    
    
    
    
    
    
    328,602Common stock warrants
    
    
    3,809,703
    
    
    
    3,809,272
    
    
    
    7,044,363Total shares excluded from calculation
    
    
    7,318,973
    
    
    
    8,496,851
    
    
    
    11,684,966
  Years ended December 312007
    
    
    2008
    
    
    2009($000s except for per share amounts)Net loss reported
    
    
    (24,053
    )
    
    
    (40,386
    )
    
    
    (19,570
    )Less: dividends on convertible exchangeable
preferred shares
    
    
    (307
    )
    
    
    (1,227
    )
    
    
    (1,228
    )Net loss
applicable to common shareholders
    
    
    (24,360
    )
    
    
    (41,613
    )
    
    
    (20,798
    )Weighted average common shares outstanding
    
    
    19,873,911
    
    
    
    20,433,129
    
    
    
    22,196,840Loss per
share  basic and diluted
    
    
    ($1.23
    )
    
    
    ($2.04
    )
    
    
    ($0.94
    )
  20




---



##### 



Derivative Instruments
 Derivatives and Hedging
   Stock-based Compensation
 Compensation  Stock Compensation
   21




---



##### 



Comprehensive Income (Loss)
 Comprehensive Income
 Restructuring Expense
 Exit or Disposal Cost Obligation
  Recent Accounting Pronouncements
  22




---



##### 



Subsequent Events
  23




---



##### 



The FASB Accounting Standards Codification the
Hierarchy of Generally Accepted Accounting Principles
 3 Significant Contracts
 Distribution, Licensing and Research Agreements
    4 Acquisition
   24




---



##### 



5 Cash and Cash Equivalents
  December 31,2008
    
    
    2009$000
    
    
    $000Cash
    
    
    4,580
    
    
    
    2,996Deposits with original maturity of less than three months
    
    
    19,640
    
    
    
    8,49724,220
    
    
    
    11,493
 6 Short-term Investments
  December 31, 2008Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealizedcost
    
    
    gains
    
    
    losses
    
    
    Fair value$000
    
    
    $000
    
    
    $000
    
    
    $000Corporate bonds & commercial paper
    
    
    1,501
    
    
    
    1
    
    
    
    
    
    
    
    1,502
    Fair value measurements
 Fair
 Value Measurements and Disclosures (ASC 820)
 
    
    Level 1: Quoted prices (unadjusted) in active markets that are accessible at the
measurement date for assets or liabilities. The fair value hierarchy gives the highest
priority to Level 1 inputs.
 
    
    Level 2: Inputs other than quoted prices within Level 1 that are observable for the
asset or liability, either directly or indirectly.
 
    
    Level 3: Unobservable inputs that are used when little or no market data is available.
The fair value hierarchy gives the lowest priority to Level 3 inputs.
  25




---



##### 



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total$000
    
    
    $000
    
    
    $000
    
    
    $000Warrants
    
    
    
    
    
    
    342
    
    
    
    
    
    
    
    342
 7 Prepaid Expenses and Other Current Assets
  December 31,2008
    
    
    2009$000
    
    
    $000Research and development tax credit receivable
    
    
    1,530
    
    
    
    1,096Prepayments
    
    
    1,017
    
    
    
    456Other current assets
    
    
    237
    
    
    
    1792,784
    
    
    
    1,731
 8 Property, Plant and Equipment
  Useful lives in years from
    
    December 31,date of acquisition
    
    2008
    
    
    2009$000
    
    
    $000Leasehold improvements
    
    Life of lease (15 yrs)
    
    
    811
    
    
    
    860Research and laboratory equipment
    
    3 to 5 yrs
    
    
    7,170
    
    
    
    7,894Office equipment and furniture
    
    3 to 5 yrs
    
    
    1,859
    
    
    
    1,2809,840
    
    
    
    10,034Less: accumulated depreciation
and amortization
    
    
    
    
    (8,003
    )
    
    
    (8,912
    )Impairment
    
    
    
    
    (89
    )
    
    
    (221
    )1,748
    
    
    
    901
     26




---



##### 



9 Intangible Assets and Goodwill
  BeneficialcontractLicense
    
    
    Customer
    
    
    ALIGN trade
    
    
    Non-compete
    
    
    pricingagreements
    
    
    relationships
    
    
    name
    
    
    agreements
    
    
    arrangement
    
    
    TotalIntangible AssetsUseful lives in years from date of acquisition
    
    7 yrs
    
    
    7 yrs
    
    
    2 yrs
    
    
    2 yrs
    
    
    2 yrs
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Balance as of December 31, 2007
    
    
    2,945
    
    
    
    516
    
    
    
    88
    
    
    
    343
    
    
    
    413
    
    
    
    4,305Less: amortization
    
    
    (295
    )
    
    
    (51
    )
    
    
    (38
    )
    
    
    (147
    )
    
    
    (177
    )
    
    
    (708
    )Less: impairment charge
    
    
    (2,650
    )
    
    
    (465
    )
    
    
    (50
    )
    
    
    (196
    )
    
    
    (236
    )
    
    
    (3,597
    )Balance as of December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Intangibles
 ® ® ®
  Goodwill
 Business Combinations
   27




---



##### 



10 Accrued and Other Current Liabilities
  December 31,2008
    
    
    2009$000
    
    
    $000Accrued research and development
    
    
    3,653
    
    
    
    2,654Accrued IP / Patent costs
    
    
    264
    
    
    
    283Accrued compensation
    
    
    707
    
    
    
    136Amount payable under license agreement
    
    
    594
    
    
    
    651Amount payable under guarantee
    
    
    
    
    
    
    796Preference dividend
    
    
    307
    
    
    
    1,228Other current liabilities
    
    
    1,276
    
    
    
    9616,801
    
    
    
    6,709
 11 Commitments and contingencies
 General
  Leases
  Operatingleaseobligations$ 0002010
    
    
    1,6062011
    
    
    6712012
    
    
    4152013
    
    
    4072014
    
    
    407Thereafter
    
    
    4,396
  28




---



##### 



Guarantee
   29




---



##### 



Purchase Obligations
  Preferred Dividends
  Legal proceedings
  12 Stockholders Equity
 Preferred stock
    30




---



##### 



Year from November 1, 2009 to October 31, 2010
    
    $
    10.30Year from November 1, 2010 to October 31, 2011
    
    $
    10.24Year from November 1, 2011 to October 31, 2012
    
    $
    10.18Year from November 1, 2012 to October 31, 2013
    
    $
    10.12Year from November 1, 2013 to October 31, 2014
    
    $
    10.06November 1, 2014 and thereafter
    
    $
    10.00
    31




---



##### 



Common Stock
 March 2006 Stock Purchase Agreement
  April 2006 Securities Purchase Agreement
  February 2007 Registered Direct Offering
   July 2009 Registered Direct Financing
   32




---



##### 



December 2007 Committed Equity Financing Facility (CEFF)
     33




---



##### 



Common Stock Warrants
  WeightedExpiration
    
    
    Common Shares
    
    
    AverageIssued in Connection With
    
    Date
    
    
    Issuable
    
    
    Exercise PriceMarch 2006 stock issuance
    
    
    2013
    
    
    
    2,571,429
    
    
    
    7.00February 2007 stock issuance
    
    
    2014
    
    
    
    1,062,412
    
    
    
    8.44December 2007 CEFF
    
    
    2012
    
    
    
    175,000
    
    
    
    1.40July 2009 Series I stock issuance
    
    
    2010
    
    
    
    2,500,000
    
    
    
    1.00July 2009 Series II stock issuance
    
    
    2014
    
    
    
    735,522
    
    
    
    1.00Total
    
    
    
    
    
    
    7,044,363
    
    
    
    4.32
 Exercise of Stock Options
  13 Stock-Based Compensation Arrangements
  1 4
   Year ended
    
    
    Year ended
    
    
    Year endedDecember 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2008
    
    
    2009($000s)Research and development
    
    
    837
    
    
    
    736
    
    
    
    271Selling, general and administrative
    
    
    896
    
    
    
    962
    
    
    
    539Stock-based compensation costs
before income taxes
    
    $
    1,733
    
    
    $
    1,698
    
    
    $
    810
  34




---



##### 



2006 Plans
      Acceleration of Options
    Cyclacel Plans
   35




---



##### 



Xcyte Plans
     WeightedWeighted
    
    
    averageNumber of
    
    
    average
    
    
    remaining
    
    
    Aggregateoptions
    
    
    exercise
    
    
    contractual
    
    
    intrinsicCyclacel Pharmaceuticals, Inc.
    
    outstanding
    
    
    price
    
    
    term (years)
    
    
    valueBalance as of December 31, 2007
    
    
    2,592,346
    
    
    $
    6.39
    
    
    
    9.14
    
    
    
    Granted
    
    
    1,469,575
    
    
    $
    1.18Exercised
    
    
    
    
    
    
    Cancelled/forfeited
    
    
    (387,022
    )
    
    $
    5.92Options outstanding at December 31, 2008
    
    
    3,674,899
    
    
    $
    4.36
    
    
    
    8.74
    
    
    
    2Granted
    
    
    221,000
    
    
    $
    0.39Exercised
    
    
    (17,180
    )
    
    $
    0.43
    
    
    
    
    
    
    
    7Cancelled/forfeited
    
    
    (528,843
    )
    
    $
    3.76Options outstanding at December 31, 2009
    
    
    3,349,876
    
    
    $
    4.21
    
    
    
    7.76
    
    
    
    698Unvested at December 31, 2009
    
    
    1,381,616
    
    
    $
    2.62
    
    
    
    8.43
    
    
    
    484Vested and exercisable at December 31,
2009
    
    
    1,968,260
    
    
    $
    5.34
    
    
    
    7.79
    
    
    
    
  36




---



##### 



Weighted AverageExercise
    
    Number
    
    
    remaining
    
    
    Numberprice
    
    outstanding
    
    
    contractual life
    
    
    exercisable$0.31  1.98
    
    
    1,176,146
    
    
    
    8.92
    
    
    
    365,6762.15  4.95
    
    
    223,667
    
    
    
    8.04
    
    
    
    107,1345.26  5.81
    
    
    619,030
    
    
    
    7.79
    
    
    
    324,7386.30  8.30
    
    
    1,309,033
    
    
    
    6.71
    
    
    
    1,148,71215.00  45.30
    
    
    22,000
    
    
    
    5.12
    
    
    
    22,0003,349,876
    
    
    
    
    
    
    
    1,968,260
  Year ended
    
    Year ended
    
    Year endedDecember 31,
    
    December 31,
    
    December 31,2007
    
    2008
    
    2009Expected term (years)
    
    4.25  6.00
    
    4.25  6.00
    
    0.75  5 YrsRisk free interest rate
    
    3.28  5.07%
    
    1.54  3.76%
    
    0.325  .84%Volatility
    
    65  80%
    
    45  75%
    
    65  169%Dividends
    
    0.00%
    
    0.00%
    
    0.00%Resulting weighted average grant date fair value
    
    $3.68
    
    $0.68
    
    $0.39
    37




---



##### 



Restricted Stock
  Weighted Average GrantRestricted Stock Units
    
    
    Date Value Per ShareNon-vested at December 31, 2007
    
    
    
    
    
    
    Granted
    
    
    50,000
    
    
    $
    0.44Non-vested at December 31, 2008
    
    
    50,000
    
    
    $
    0.44Granted
    
    
    
    
    
    
    Vested
    
    
    (13,542
    )
    
    $
    0.44Cancelled
    
    
    
    
    
    
    Non-vested at December 31, 2009
    
    
    36,458
    
    
    $
    0.44
  38




---



##### 



Restricted Stock Units
  Weighted Average GrantRestricted Stock Units
    
    
    Date Value Per ShareNon-vested at December 31, 2007
    
    
    
    
    
    
    Granted
    
    
    91,700
    
    
    $
    0.44Non-vested at December 31, 2008
    
    
    91,700
    
    
    $
    0.44Granted
    
    
    
    
    
    
    Vested
    
    
    (24,488
    )
    
    $
    0.44Cancelled
    
    
    (12,525
    )
    
    $
    0.44Non-vested at December 31, 2009
    
    
    54,687
    
    
    $
    0.44
 14 Restructuring
    39




---



##### 



Lease restructuring
    
    
    Sales taxcharges
    
    
    assessment
    
    
    Total$000
    
    
    $000
    
    
    $000Balance at December 31, 2007
    
    
    2,995
    
    
    
    270
    
    
    
    3,265Cash payments
    
    
    (1,106
    )
    
    
    
    
    
    
    (1,106
    )Adjustments for lease-related
deferred expenses and liabilities
    
    
    202
    
    
    
    
    
    
    
    202Balance at December 31, 2008
    
    
    2,091
    
    
    
    270
    
    
    
    2,361Cash payments
    
    
    (1,156
    )
    
    
    (372
    )
    
    
    (1,528
    )Adjustments for lease-related
deferred expenses and liabilities
    
    
    127
    
    
    
    
    
    
    
    125Adjustment for sales tax assessment
    
    
    
    
    
    
    102
    
    
    
    102Balance at December 31, 2009
    
    
    1,062
    
    
    
    
    
    
    
    1,062Current
    
    
    1,062
    
    
    
    
    
    
    
    1,062Long term liabilities
    
    
    
    
    
    
    
    
    
    
    
 Lease restructuring charges
   Sales tax assessment
   15 Pension Plans
  4 01(k) Plan
   40




---



##### 



16 Taxes
  Year ended
    
    
    Year ended
    
    
    Year endedDecember 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2008
    
    
    2009$000
    
    
    $000
    
    
    $000Domestic
    
    
    (5,448
    )
    
    
    (11,337
    )
    
    
    (3,013
    )Foreign
    
    
    (20,646
    )
    
    
    (30,798
    )
    
    
    (17,505
    )Total loss before taxes
    
    
    (26,094
    )
    
    
    (42,135
    )
    
    
    (20,518
    )
  Year ended
    
    
    Year ended
    
    
    Year endedDecember 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2008
    
    
    2009$000
    
    
    $000
    
    
    $000Current  domestic
    
    
    (2
    )
    
    
    (4
    )
    
    
    (12
    )Current  foreign
    
    
    2,043
    
    
    
    1,753
    
    
    
    960Current  total
    
    
    2,041
    
    
    
    1,749
    
    
    
    948
   Year ended
    
    
    Year ended
    
    
    Year endedDecember 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2008
    
    
    2009$000
    
    
    $000
    
    
    $000Loss before income taxes
    
    
    (26,094
    )
    
    
    (42,135
    )
    
    
    (20,518
    )Income tax expense computed at statutory
federal tax rate
    
    
    (8,872
    )
    
    
    (14,361
    )
    
    
    (6,976
    )State income tax (net of federal benefit)
    
    
    1
    
    
    
    3
    
    
    
    8Disallowed expenses and non-taxable
income
    
    
    (3,005
    )
    
    
    (1,939
    )
    
    
    (773
    )Tax losses
    
    
    4,349
    
    
    
    3,584
    
    
    
    2,322Research and development tax relief
    
    
    (2,551
    )
    
    
    (2,191
    )
    
    
    (1,185
    )Valuation allowance
    
    
    7,272
    
    
    
    11,161
    
    
    
    4,605Change in state tax rate
    
    
    (268
    )Research and development tax credit rate
difference
    
    
    510
    
    
    
    438
    
    
    
    237Foreign tax rate differential
    
    
    525
    
    
    
    1,556
    
    
    
    814(2,039
    )
    
    
    (1,749
    )
    
    
    (948
    )
  41




---



##### 



2008
    
    
    2009$000
    
    
    $000Net operating loss carryforwards
    
    
    35,140
    
    
    
    42, 534Depreciation, amortization and impairment of
property and equipment
    
    
    2,178
    
    
    
    1,996Lease restructuring charges
    
    
    817
    
    
    
    399Tax Credits
    
    
    61
    
    
    
    Stock Options
    
    
    582
    
    
    
    775Accrued Expenses
    
    
    1,563
    
    
    
    2,684Other
    
    
    110
    
    
    
    67Translation adjustment
    
    
    (2,814
    )
    
    
    (3,097
    )Deferred Tax Assets
    
    
    37,637
    
    
    
    45,358Valuation allowance for deferred tax assets
    
    
    (37,637
    )
    
    
    (45,358
    )Net deferred taxes
    
    
    
    
    
    
    
   2008
    
    
    2009$000
    
    
    $000Accumulated tax losses
    
    
    110,478
    
    
    
    131,685
     42




---



##### 



17 Segment and Geographic Information
   2007
    
    
    2008
    
    
    2009$000
    
    
    $000
    
    
    $000RevenueUnited States
    
    
    
    
    
    
    838
    
    
    
    910United Kingdom
    
    
    129
    
    
    
    39
    
    
    
    1129
    
    
    
    877
    
    
    
    911Net lossUnited States
    
    
    (1,783
    )
    
    
    (11,341
    )
    
    
    (3,007
    )United Kingdom
    
    
    (22,270
    )
    
    
    (29,045
    )
    
    
    (16,563
    )(24,053
    )
    
    
    (40,386
    )
    
    
    (19,570
    )Total AssetsUnited States
    
    
    66,947
    
    
    
    22,842
    
    
    
    10,460United Kingdom
    
    
    8,965
    
    
    
    8,115
    
    
    
    4,00675,912
    
    
    
    30,957
    
    
    
    14,466Long Lived Assets, netUnited States
    
    
    532
    
    
    
    516
    
    
    
    330United Kingdom
    
    
    2,484
    
    
    
    1,232
    
    
    
    5713,016
    
    
    
    1,748
    
    
    
    901
  43




---



##### 



18 Selected Quarterly Information (unaudited)
  For the three months endedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2009
    
    
    2009
    
    
    2009
    
    
    2009$000, except per share amountsRevenues
    
    
    228
    
    
    
    266
    
    
    
    230
    
    
    
    187Loss before taxes
    
    
    (5,421
    )
    
    
    (7,278
    )
    
    
    (3,329
    )
    
    
    (4,490
    )Net loss applicable to common shareholders
    
    
    (5,370
    )
    
    
    (7,352
    )
    
    
    (3,431
    )
    
    
    (4,645
    )Net loss per share  basic and diluted (1)
    
    $
    (0.26
    )
    
    $
    (0.36
    )
    
    $
    (0.15
    )
    
    $
    (0.19
    )
 For the three months endedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2008
    
    
    2008
    
    
    2008
    
    
    2008$000, except per share amountsRevenues
    
    
    177
    
    
    
    180
    
    
    
    269
    
    
    
    251Loss before taxes
    
    
    (6,927
    )
    
    
    (8,969
    )
    
    
    (18,058
    )
    
    
    (8,181
    )Net loss applicable to common shareholders
    
    
    (6,559
    )
    
    
    (8,851
    )
    
    
    (17,954
    )
    
    
    (8,249
    )Net loss per share  basic and diluted (1)
    
    $
    (0.32
    )
    
    $
    (0.43
    )
    
    $
    (0.88
    )
    
    $
    (0.40
    )
 (1)
    
    The addition of loss per common share by quarter may not equal the total loss per common
share for the year or year to date due to rounding. 19 Subsequent Events
         44




---



##### 



20 Restatement  Net Loss
Per Share Disclosures and Consolidated Statement of Cash Flows
 Net loss per share
 Preferred Stock
    Year ended December 312007
    
    
    2008
    
    
    2009($000s except for per share amounts)Net loss as reported
    
    
    (24,053
    )
    
    
    (40,386
    )
    
    
    (19,570
    )Restatement changesLess: preferred dividends
    
    
    (307
    )
    
    
    (1,227
    )
    
    
    (1,228
    )Net loss attributable to common shareholders
    
    
    (24,360
    )
    
    
    (41,613
    )
    
    
    (20,798
    )Weighted-average shares outstanding during the period
    
    
    19,873,911
    
    
    
    20,433,129
    
    
    
    22,196,840Loss per share (basic and diluted) as reported
    
    
    ($1.21
    )
    
    
    ($1.98
    )
    
    
    ($0.88
    )Restatement changes
    
    
    ($0.02
    )
    
    
    ($0.06
    )
    
    
    ($0.06
    )Basic and diluted, as restated
    
    
    ($1.23
    )
    
    
    ($2.04
    )
    
    
    ($0.94
    )
 Cash flows disclosures
   45




---



##### 



Item 9T. Controls and Procedures
 (a) Disclosure
Controls We maintain disclosure
controls and procedures that are designed to ensure that information required
to be disclosed in our Exchange Act reports is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow for timely decisions regarding
required disclosure. As described below, a material weakness was identified in
our internal control over financial reporting. Exchange Act Rule 12b-2 (17
CFR 240.12b-2) and Rule 1-02 of Regulation S-X (17 CFR 210.1-02)
define a material weakness as a deficiency, or combination of deficiencies, in
internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of the registrants annual or
interim financial statements will not be prevented or detected on a timely
basis. As a result of the material weakness, our chief executive officer and
chief financial officer have concluded that, as of December 31, 2009, the
end of the period covered by this report, our disclosure controls and
procedures were not effective at a reasonable assurance level. (b) Managements Annual Report on Internal Control
Over Financial Reporting Internal control over financial
reporting refers to the process designed by, or under the supervision of, our
Chief Executive Officer and Chief Financial Officer, and effected by our Board
of Directors, management and other personnel, 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, and includes those policies and procedures that:  1.
  
  Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the assets
of the Company;  2.
  
  Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and  3.
  
  Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Companys assets that
could have a material effect on the financial statements. Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act
Rules 13a-15(f) and 15d-15(f). Under the supervision and with the
participation of our management, including our Chief Executive Officer and
Chief Financial Officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the framework in
Internal Control  Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as
of December 31, 2009. Internal control over
financial reporting cannot provide absolute assurance of achieving financial
reporting objectives because of its inherent limitations. Internal control over
financial reporting is a process that involves human diligence and compliance
and is subject to lapses in judgment and breakdowns resulting from human
failures. Internal control over financial reporting also can be circumvented by
collusion or improper override. Because of such limitations, there is a risk
that material misstatements may not be prevented or detected on a timely basis
by internal control over financial reporting. However, these inherent
limitations are known features of the financial reporting process, and it is
possible to design into the process safeguards to reduce, though not eliminate,
this risk. A material weakness is
a deficiency, or a combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a
material misstatement of our annual or interim financial statements will not be
prevented or detected on a timely basis. In the Companys
Annual Report on Form 10-K for the year ended December 31, 2009, filed on
March 29, 2010, management concluded that our internal control over
financial reporting was effective as of December 31, 2009. Subsequently,
our management identified a deficiency in respect of our internal control over
financial reporting, specifically in our controls over the computation of net
loss per share and the financial statement presentation of our preferred stock
dividends in the statement of cash flows that constitutes a material weakness
as described in SECs guidance regarding Managements Report on
Internal Control Over Financial Reporting as of December 31, 2009. As a
result of this deficiency, the financial statements included in Form 10-K for
the year ended December 31, 2009, included errors related to the
presentation and disclosure of our preferred stock dividends in the net loss
per share disclosure and in the statement of cash flows. As a result of this
material weakness, management concluded that we did not maintain effective
internal control over financial reporting as of December 31, 2009, based
on the criteria established in Internal Control  Integrated
Framework, issued by the COSO. Ernst & Young LLP,
an independent registered public accounting firm, has audited our consolidated
financial statements and has also issued an attestation report on the
effectiveness of our internal controls over financial reporting as of
December 31, 2009 which is set forth below: (c) Report of
Independent Registered Public Accounting Firm The Board of Directors
and Stockholders of Cyclacel Pharmaceuticals, Inc. We have audited
Cyclacel Pharmaceuticals, Incs internal control over financial reporting
as of December 31, 2009 based on criteria established in Internal
Control  Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Cyclacel
Pharmaceuticals, Inc.s management is responsible for maintaining
effective internal control over financial reporting, and for its assessment of
the effectiveness of internal control over financial reporting included in the
accompanying Managements Annual Report on Internal Control
over Financial Reporting. Our responsibility is to express an
opinion on the Companys internal control over financial reporting based
on our audit. 46




---



##### 



We conducted our audit
in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion. A companys
internal control over financial reporting is a process designed 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. A companys internal control
over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have
a material effect on the financial statements. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. In our report dated
March 29, 2010, we expressed an unqualified opinion that Cyclacel
Pharmaceuticals, Inc. maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2009, based upon the
COSO criteria. Management has subsequently determined that a deficiency in
internal controls relating to the computation of Cyclacel Pharmaceuticals,
Inc.s net loss per share and the presentation of its preferred stock
dividends in the statement of cash flows existed as of the previous assessment
date, and has further concluded that such deficiency represented a material
weakness as of December 31, 2009. As a result, management revised its
assessment, as presented in item 9T, Managements Annual Report on
Internal Control over Financial Reporting, to conclude that Cyclacel
Pharmaceuticals, Inc.s internal control over financial reporting was not
effective as of December 31, 2009. Accordingly, our present opinion on the
effectiveness of Cyclacel Pharmaceuticals, Inc.s internal control over
financial reporting as of December 31, 2009, as expressed herein, is
different from that expressed in our previous report. A material weakness is
a deficiency, or combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a
material misstatement of the Companys annual or interim financial
statements will not be prevented or detected on a timely basis. Management
identified a material weakness related to its internal control over financial
reporting, specifically related to the operational failure of the controls in
place to ensure the correct computation of its net loss per share and
presentation of preferred stock dividends in the statement of cash flows. The
material weakness resulted in the restatement of Cyclacel Pharmaceuticals,
Inc.s financial statements including the net loss per share
 basic and diluted and the statement of cash flows for each of the three years
in the period ended December 31, 2009. We have audited, in accordance with
the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of Cyclacel Pharmaceuticals, Inc. as of
December 31, 2009 and 2008, and the related consolidated statements of
operations, shareholders equity, and cash flows for each of the three
years in the period ended December 31, 2009 and the period from
August 13, 1996 (inception) to December 31, 2009. This material
weakness was considered in determining the nature, timing, and extent of audit
tests applied in our audits of the consolidated financial statements and this
report does not affect our report dated March 29, 2010, except for Note 20
as to which the date is May 17, 2010, on those financial statements. In our opinion,
because of the effect of the material weakness described above on the
achievement of the objectives of the control criteria, Cyclacel
Pharmaceuticals, Inc. has not maintained effective internal control over
financial reporting as of December 31, 2009, based on the COSO criteria. /s/ Ernst &
Young LLP London, England March 29, 2010, except for the
effects of the material weakness described in the sixth paragraph above, as to
which the date is May 17, 2010 (d) Remediation Activities To remediate the
material weakness in our internal control over financial reporting as described
above, management is enhancing its controls over financial statement
presentation and disclosures in this area, specifically by adding additional
review procedures over the Companys computation of net loss per share
and in the presentation and disclosure of preferred stock dividends in the
statement of cash flows. We anticipate that the actions described above will
remediate the December 31, 2009 material weakness. The material weakness
will only be considered remediated when the revised internal controls are
operational for a period of time and are tested and management has concluded
that the controls are operating effectively. (e) Changes in
Internal Control over Financial Reporting Except as described
above, there have been no significant changes in our internal control over
financial reporting during the year ended December 31, 2009 that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.  47




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Item 15.
    
    Exhibits and Financial Statement Schedules
       EXHIBITNUMBER
    
    DESCRIPTION1.1
    
    
    Placement Agent Agreement, dated July 23, 2009, by and between the Company and Lazard Capital Markets LLC (previously filed as
Exhibit 1.1 to the Registrants Current Report on Form 8-K, originally filed with the SEC on July 24, 2009, and incorporated herein
by reference).1.2
    
    
    Placement Agent Agreement, dated January 11, 2010, by and between the Company and ROTH Capital Partners, LLC (previously filed as
Exhibit 1.1 to the Registrants Current Report on Form 8-K, originally filed with the SEC on January 11, 2010, and incorporated
herein by reference).1.3
    
    
    Placement Agent Agreement, dated January 21, 2010, by and between the Company and ROTH Capital Partners, LLC (previously filed as
Exhibit 1.1 to the Registrants Current Report on Form 8-K, originally filed with the SEC on January 21, 2010, and incorporated
herein by reference).3.1
    
    
    Amended and Restated Certificate of Incorporation of Xcyte Therapies, Inc. (previously filed as Exhibit 3.1 to the Registrants
Registration Statement on Form S-1, File No. 333-109653, originally filed with the SEC on October 10, 2003, as subsequently
amended, and incorporated herein by reference).3.1.1
    
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Xcyte Therapies, Inc. (previously filed as
Exhibit 3.3.1 to the Registrants Quarterly Report on Form 10-Q, for the quarterly period ended March 31, 2006, originally filed
with the SEC on May 16, 2006, and incorporated herein by reference).3.2
    
    
    Amended and Restated Bylaws of Xcyte Therapies, Inc. (Previously filed as Exhibit 3.3 to Registrants Registration Statement on
Form S-1, File No. 333-109653, originally filed with the SEC on October 10, 2003, as subsequently amended, and incorporated herein
by reference).3.2.1
    
    
    Amendment No. 1 to the Amended and Restated Bylaws of Xcyte Therapies, Inc. (previously filed as Exhibit 3.01 to the Registrants
Current Report on Form 8-K, originally filed with the SEC on September 8, 2008, and incorporated herein by reference).3.3
    
    
    Preferred Stock Certificate of Designations (previously filed as Exhibit 3.2 to the Registrants Current Report on Form 8-K,
originally filed with the SEC on November 5, 2004, and incorporated herein by reference).4.1
    
    
    Specimen of Common Stock Certificate (previously filed as Exhibit 4.1 to Registrants Registration Statement on Form S-1, File
No. 333-109653, originally filed with the SEC on October 10, 2003, as subsequently amended, and incorporated herein by reference).4.2
    
    
    Specimen of Preferred Stock Certificate of Designation (previously filed as Exhibit 3.2 to Registrants Registration Statement on
Form S-1, File No. 333-119585, originally filed with the SEC on October 7, 2004, as subsequently amended, and incorporated herein
by reference).4.3
    
    
    Form of Warrant to purchase shares of Cyclacel Pharmaceuticals, Inc. Common Stock (previously filed as Exhibit 99.3 to the
Registrants Current Report on Form 8-K, originally filed with the SEC on April 28, 2006, and incorporated herein by reference).4.4
    
    
    Form of Warrant to purchase shares of Cyclacel Pharmaceuticals, Inc. Common Stock (previously filed as Exhibit 10.2 to the
Registrants Current Report on Form 8-K, originally filed with the SEC on February 15, 2007, and incorporated herein by reference).4.5
    
    
    Form of Warrant to purchase shares of Cyclacel Pharmaceuticals, Inc. Common Stock, dated December 10, 2007, issued to Kingsbridge
Capital Limited (previously filed as Exhibit 4.1 to the Registrants Current Report on Form 8-K, originally filed with the SEC on
December 11, 2007, and incorporated herein by reference).4.6
    
    
    Registration Rights Agreement, dated December 10, 2007, by and between Cyclacel Pharmaceuticals, Inc. and Kingsbridge
Capital Limited (previously filed as Exhibit 4.2 to the Registrants Current Report on Form 8-K, originally filed with
the SEC on December 11, 2007, and incorporated herein by reference).4.7
    
    
    Amended and Restated Warrant to purchase Common Stock, dated as of November 24, 2009, issued by the Company to
Kingsbridge Capital Limited. (previously filed as Exhibit 4.1 to the Registrants Current Report on Form 8-K,
originally filed with the SEC on November 25, 2009, and incorporated herein by reference).4.8
    
    
    Form of Series I Warrant to purchase shares of Cyclacel Pharmaceuticals, Inc. Common Stock (previously filed as
Exhibit 4.1 to the Registrants Current Report on Form 8-K, originally filed with the SEC on July 24, 2009, and
incorporated herein by reference).4.9
    
    
    Form of Series II Warrant to purchase shares of Cyclacel Pharmaceuticals, Inc. Common Stock (previously filed as
Exhibit 4.2 to the Registrants Current Report on Form 8-K, originally filed with the SEC on July 24, 2009, and
incorporated herein by reference).4.10
    
    
    Form of Warrant to purchase shares of Cyclacel Pharmaceuticals, Inc. Common Stock (previously filed as Exhibit 4.1 to
the Registrants Current Report on Form 8-K, originally filed with the SEC on January 11, 2010, and incorporated
herein by reference).4.11
    
    
    Form of Warrant to purchase shares of Cyclacel Pharmaceuticals, Inc. Common Stock (previously filed as Exhibit 4.1 to
the Registrants Current Report on Form 8-K, originally filed with the SEC on January 21, 2010, and incorporated
herein by reference).10.1
    
    
    Stock Purchase Agreement, dated December 15, 2005, between Xcyte Therapies, Inc., and Cyclacel Group plc (previously
filed as Exhibit 2.1 to the Registrants Current Report on Form 8-K, originally filed with the SEC on December 20,
2005, and incorporated herein by reference).
  48




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EXHIBITNUMBER
    
    DESCRIPTION10.2
    
    
    Amendment No. 1 to the Stock Purchase Agreement, dated January 13, 2006, between Xcyte Therapies Inc., and Cyclacel
Group plc (previously filed as exhibit 2.1 to the Registrants current report on Form 8-K filed with the Commission on
January 19, 2006, and incorporated herein by reference).10.3
    
    
    Form of Securities Purchase Agreement, dated April 26, 2006 (previously filed as Exhibit 99.2 to the Registrants
Current Report on Form 8-K, originally filed with the SEC on April 28, 2006, and incorporated herein by reference).10.4
    
    
    Form of Subscription Agreement, dated February 13, 2007, by and between Cyclacel Pharmaceuticals, Inc. and certain
purchasers (previously filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K, originally filed with the
SEC on February 15, 2007, and incorporated herein by reference).10.5
    
    
    Form of Placement Agent Agreement, dated February 13, 2007, by and among Cyclacel Pharmaceuticals, Inc., Lazard
Capital Markets LLC, Needham & Company, LLC and ThinkEquity Partners LLC (previously filed as Exhibit 10.3 to the
Registrants Current Report on Form 8-K, originally filed with the SEC on February 15, 2007, and incorporated herein
by reference).10.6
    
    
    Asset Purchase Agreement by and among ALIGN Pharmaceuticals, LLC, ALIGN Holdings, LLC and Achilles Acquisition, LLC,
dated October 5, 2007 (previously filed as Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q, for the
quarterly period ended September 30, 2007, originally filed with the SEC on November 7, 2007, and incorporated herein
by reference).10.7
    
    
    Common Stock Purchase Agreement, dated December 10, 2007, by and between Cyclacel Pharmaceuticals, Inc. and
Kingsbridge Capital Limited (previously filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K,
originally filed with the SEC on December 11, 2007, and incorporated herein by reference).10.8
    
    
    Employment Offer Letter by and between Achilles Acquisition, LLC and William C. Collins, dated October 3, 2007
(previously filed as Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q, for the quarterly period ended
September 30, 2007, originally filed with the SEC on November 7, 2007, and incorporated herein by reference).10.9
    
    
    Amended and Restated 2006 Equity Incentive Plan (previously filed as Exhibit 10.1 to the Registrants Current Report
on Form 8-K, originally filed with the SEC on June 19, 2007, and incorporated herein by reference).10.10
    
    
    Employment Agreement by and between Cyclacel Pharmaceuticals, Inc. and Spiro Rombotis, dated as of January 1, 2008
(previously filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K, originally filed with the SEC on
March 24, 2008, and incorporated herein by reference).10.11
    
    
    Employment Agreement by and between Cyclacel Pharmaceuticals, Inc. and Paul McBarron, dated as of January 1, 2008
(previously filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K, originally filed with the SEC on
April 2, 2008, and incorporated herein by reference).10.12
    
    
    Amendment No. 1, dated as of December 31, 2008, to Employment Agreement by and between Cyclacel Pharmaceuticals, Inc.
and Spiro Rombotis, dated as of January 1, 2008 (previously filed as Exhibit 10.1 to the Registrants Quarterly Report
on Form 10-Q, for the quarterly period ended March 31, 2009, originally filed with the SEC on May 15, 2009, and
incorporated herein by reference).10.13
    
    
    Amendment No. 1 to Common Stock Purchase Agreement, dated as of November 24, 2009, by and between the Company and
Kingsbridge Capital Limited (previously filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K,
originally filed with the SEC on November 25, 2009, and incorporated herein by reference).10.14
    
    
    Form of Subscription Agreement between the Company and certain investors (previously filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K, originally filed with the SEC on July 24, 2009, and incorporated herein by
reference).10.15
    
    
    Form of Subscription Agreement between the Company and certain investors (previously filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K, originally filed with the SEC on January 11, 2010, and incorporated herein by
reference).10.16
    
    
    Form of Subscription Agreement between the Company and certain investors (previously filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K, originally filed with the SEC on January 21, 2010, and incorporated herein by
reference).10.17
    
    
    Agreement between the Company and Scottish Enterprise dated March 27, 2006 (previously filed as Exhibit 10.2 to the
Registrants Quarterly Report on Form 10-Q, for the quarterly period ended June 30, 2009, originally filed with the
SEC on August 13, 2009, and incorporated herein by reference).10.18
    
    
    Addendum to Agreement between the Company and Scottish Enterprise dated June 22, 2009 (previously filed as Exhibit
10.3 to the Registrants Quarterly Report on Form 10-Q, for the quarterly period ended June 30, 2009, originally filed
with the SEC on August 13, 2009, and incorporated herein by reference).21
    
    
    Subsidiaries of Cyclacel Pharmaceuticals, Inc. (previously filed)23.1
    *
    
    Consent of Independent Registered Public Accounting Firm.31.1
    *
    
    Certificate of Spiro Rombotis, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    Certification of Paul McBarron, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    **
    
    Certification of Spiro Rombotis, pursuant to Section 906 of the Sarbanes-Oxley Act of2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States
Code).32.2
    **
    
    Certification of Paul McBarron, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
 
    
    Indicates management compensatory plan, contract or arrangement.*
    
    Filed herewith.**
    
    Furnished herewith.  49




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SIGNATURES
  CYCLACEL PHARMACEUTICALS, INC.Date: May 19, 2010
    By:
    /s/ Paul McBarronPaul McBarronChief Operating Officer &
Executive Vice President, Finance  Signature
    
    Title
    
    Date/s/ Spiro Rombotis

Spiro Rombotis
    
    President & Chief Executive Officer
(Principal Executive Officer)
and Director
    
    May 19, 2010/s/ Paul McBarron

Paul McBarron
    
    Chief Operating Officer &
Executive Vice President, Finance
(Principal Financial and
Accounting Officer) and Director
    
    May 19, 2010/s/ Dr. David UPrichard
    
    Chairman
    
    May 19, 2010Dr. David UPrichard/s/ Dr. Christopher Henney
    
    Vice Chairman
    
    May 19, 2010Dr. Christopher Henney/s/ Dr. Nicholas Bacopoulos
    
    Director
    
    May 19, 2010Dr. Nicholas Bacopoulos/s/ Sir John Banham
    
    Director
    
    May 19, 2010Sir John Banham/s/ Daniel Spiegelman
    
    Director
    
    May 19, 2010Daniel Spiegelman