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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2012	May 04, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Trading Symbol	NBS
Entity Registrant Name	NEOSTEM, INC.
Entity Central Index Key	0000320017
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		132,603,494

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2012	Dec. 31, 2011
Current Assets
Cash and cash equivalents	$ 21,771,389	$ 12,642,147
Accounts receivable trade, net of allowance for doubtful accounts of $630,707 and $501,841, respectively	10,438,972	6,536,176
Inventory	17,982,323	17,153,396
Deferred income taxes	628,499	463,689
Prepaids and other current assets	2,154,614	1,427,328
Assets related to discontinued operations		1,793,457
Total current assets	52,975,797	40,016,193
Property, plant and equipment, net	47,327,890	48,106,439
Land use rights, net	4,875,876	4,872,444
Goodwill	19,666,460	19,613,470
Intangible assets, net	36,273,850	36,932,431
Other assets	6,164,428	5,786,803
Assets, Total	167,284,301	155,327,780
Current Liabilities
Accounts payable	19,395,210	10,237,524
Accrued liabilities	3,430,310	2,796,018
Bank loans	15,810,000	15,712,000
Notes payable	254,387	148,062
Mortgages payable	3,582,072	3,635,061
Income taxes payable	1,073,313	621,553
Deferred income taxes	655,125	651,064
Unearned revenues	2,934,966	2,436,532
Liabilities related to discontinued operations		208,830
Total current liabilities	47,135,383	36,446,644
Long-term Liabilities
Deferred income taxes	9,171,633	9,300,945
Unearned revenues	156,466	169,198
Notes payable	50,775
Derivative liabilities	387,172	474,463
Acquisition-related contingent consideration	3,130,000	3,130,000
Amount due related parties	21,293,056	20,862,686
Total long-term liabilities	34,189,102	33,937,292
Commitments and Contingencies
Redeemable Securities
Convertible Redeemable Series E Preferred Stock; 10,582,011 shares designated, liquidation value $1.00 per share; issued and outstanding 5,486,969 and 6,662,748 shares, at March 31, 2012 and December 31, 2011, respectively	4,182,482	4,811,326
Temporary Equity, Carrying Amount, Total	4,182,482	4,811,326
Shareholders' Equity
Preferred stock; authorized, 20,000,000 shares Series B convertible redeemable preferred stock liquidation value, 1 share of common stock, $.01 par value; 825,000 shares designated; issued and outstanding, 10,000 shares at March 31, 2012 and December 31, 2011	100	100
Common stock, $.001 par value, authorized 500,000,000 shares; issued and outstanding, 129,887,148 and 109,329,587 shares, at March 31, 2012 and December 31, 2011, respectively	129,887	109,330
Additional paid-in capital	211,635,762	200,858,638
Accumulated deficit	(152,550,831)	(143,094,854)
Accumulated other comprehensive income	4,156,186	4,152,343
Total NeoStem, Inc. shareholders' equity	63,371,104	62,025,557
Noncontrolling interests	18,406,230	18,106,961
Total equity	81,777,334	80,132,518
Liabilities and Equity, Total	$ 167,284,301	$ 155,327,780

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2012	Dec. 31, 2011
Accounts receivable trade, allowance for doubtful accounts	$ 630,707	$ 501,841
Convertible Redeemable Series E Preferred Stock, shares designated	10,582,011	10,582,011
Convertible Redeemable Series E Preferred Stock, liquidation value per share	$ 1.00	$ 1.00
Convertible Redeemable Series E Preferred Stock, issued	5,486,969	6,662,748
Convertible Redeemable Series E Preferred Stock, outstanding	5,486,969	6,662,748
Preferred stock, authorized	20,000,000	20,000,000
Preferred stock, Series B convertible redeemable preferred stock liquidation value, share of common stock	1	1
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares designated	825,000	825,000
Preferred stock, issued	10,000	10,000
Preferred stock, outstanding	10,000	10,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	500,000,000	500,000,000
Common stock, issued	129,887,148	109,329,587
Common stock, outstanding	129,887,148	109,329,587

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	Mar. 31, 2012	Mar. 31, 2011
Revenues	$ 22,056,768	$ 19,590,958
Cost of revenues	16,321,520	14,276,501
Gross profit	5,735,248	5,314,457
Research and development	2,714,507	2,755,192
Selling, general, and administrative	9,452,200	9,634,895
Operating Expenses	12,166,707	12,390,087
Operating loss	(6,431,459)	(7,075,630)
Other income (expense):
Other income (expense), net	166,703	(250,437)
Interest expense	(1,096,133)	(852,243)
Nonoperating Income (Expense), Total	(929,430)	(1,102,680)
Loss from continuing operations before provision for income taxes and noncontrolling interests	(7,360,889)	(8,178,310)
Provision for income taxes	122,261	592,648
Net loss from continuing operations	(7,483,150)	(8,770,958)
Loss from discontinued operations - net	(1,723,718)	(928,800)
Net loss	(9,206,868)	(9,699,758)
Less - net income attributable to noncontrolling interests	141,265	473,233
Net loss attributable to NeoStem, Inc.	(9,348,133)	(10,172,991)
Preferred dividends	107,844	186,633
Net loss attributable to NeoStem, Inc. common shareholders	$ (9,455,977)	$ (10,359,624)
Basic and diluted (loss) per share attributable to:
Continuing operations	$ (0.07)	$ (0.12)
Discontinued operations	(0.02)	(0.01)
NeoStem, Inc. common shareholders	$ (0.08)	$ (0.14)
Weighted average common shares outstanding	111,806,949	73,654,165

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)	3 Months Ended
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)	Mar. 31, 2012	Mar. 31, 2011
Net loss	$ (9,206,868)	$ (9,699,758)
Other comprehensive income (loss):
Foreign currency translation elimination on discontinued operations	(169,993)
Foreign currency translation	331,841	1,517,669
Total other comprehensive income	161,848	1,517,669
Comprehensive loss	(9,045,020)	(8,182,089)
Comprehensive income attributable to noncontrolling interests	158,005	1,216,900
Comprehensive net loss attributable to NeoStem, Inc. common shareholders	$ (9,203,025)	$ (9,398,989)

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References

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- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to noncontrolling interests, if any. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References + Details

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the economic entity, including both controlling (parent) and noncontrolling interests. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, including any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References + Details

- Definition

Change in the balance sheet adjustment that results from the process of translating subsidiary financial statements and foreign equity investments into functional currency of the reporting entity for the period being reported, net of tax. If an entity's functional currency is a foreign currency, translation adjustments result from the process of translating that entity's financial statements into the reporting currency. Includes gain (loss) on foreign currency forward exchange contracts. Includes foreign currency transactions designated as hedges of net investment in a foreign entity and intercompany foreign currency transactions that are of a long-term nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements. Includes the gain (loss) on a derivative instrument or nonderivative financial instrument that may give rise to a foreign currency transaction gain (loss) and that have been designated and have qualified as hedging instruments for hedges of the foreign currency exposure of a net investment in a foreign operation.

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- Definition

This element represents Other Comprehensive Income or Loss, Net of Tax, for the period. Includes deferred gains or losses on qualifying hedges, unrealized holding gains or losses on available-for-sale securities, minimum pension liability, and cumulative translation adjustment. While for technical reasons this element has no balance attribute, the default assumption is a credit balance consistent with its label.

+ References

+ Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

CONSOLIDATED STATEMENTS OF EQUITY - 3 months ended Mar. 31, 2012 - USD ($)	Total	Series B Convertible Preferred Stock	Common Stock	Additional Paid in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total NeoStem, Inc. Shareholders' Equity	Non-Controlling Interest in Subsidiary
Beginning Balance (in shares) at Dec. 31, 2011		10,000	109,329,587
Beginning Balance at Dec. 31, 2011	$ 80,132,518	$ 100	$ 109,330	$ 200,858,638	$ 4,152,343	$ (143,094,854)	$ 62,025,557	$ 18,106,961
Net loss	(9,206,868)					(9,348,133)	(9,348,133)	141,265
Foreign currency translation	161,847				3,843		3,843	158,004
Share-based compensation (in shares)			861,004
Share-based compensation	2,476,666		$ 861	2,475,805			2,476,666
Proceeds from issuance of common stock (in shares)			18,465,404
Proceeds from issuance of common stock	7,691,059		$ 18,465	7,672,594			7,691,059
Repayment of Series E Preferred Principal and Dividends (in shares)			1,231,153
Repayment of Series E Preferred Principal and Dividends	522,112		$ 1,231	628,725		(107,844)	522,112
Ending Balance (in shares) at Mar. 31, 2012		10,000	129,887,148
Ending Balance at Mar. 31, 2012	$ 81,777,334	$ 100	$ 129,887	$ 211,635,762	$ 4,156,186	$ (152,550,831)	$ 63,371,104	$ 18,406,230

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	Mar. 31, 2012	Mar. 31, 2011
Cash flows from operating activities:
Net loss	$ (9,206,868)	$ (9,699,758)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock, stock options and warrants issued as payment for compensation, services rendered and interest expense	2,476,666	2,018,902
Depreciation and amortization	2,170,111	2,203,684
Amortization of preferred stock discount and issuance cost	471,934	676,123
Changes in fair value of derivative liability	(87,291)	262,667
Loss on exit of segment	1,138,006
Write off of acquired in-process research and development		927,000
Non-cash interest expense	335,107	83,207
Contributions paid with common stock		607,363
Bad debt expense (recovery)	347,927	(1,516)
Deferred income taxes	(325,905)	(228,352)
Changes in operating assets and liabilities, net of the effect of acquisitions:
Prepaid expenses and other current assets	(614,672)	(125,791)
Accounts receivable	(4,218,650)	(822,776)
Inventory	(726,303)	(3,050,771)
Unearned revenues	477,635	(573,210)
Other assets	(362,258)
Accounts payable, accrued expenses and other current liabilities	10,230,966	(2,471,865)
Net cash provided by (used in) operating activities	2,106,405	(10,195,093)
Cash flows from investing activities:
Cash received in acquisitions		227,942
Change in restricted cash used as collateral for notes payable		(2,625,344)
Acquisition of property and equipment	(110,071)	(707,224)
Net cash used in investing activities	(110,071)	(3,104,626)
Cash flows from financing activities:
Net proceeds from issuance of capital stock	7,691,059	3,592,723
Repayment of mortgage loan	(52,988)	(2,320)
Proceeds of bank loan		1,518,000
Proceeds from notes payable	223,433	7,249,117
Repayment of notes payable	(66,333)	(2,277,000)
Repayment of debt to related party	(34,673)	(3,000,000)
Repayment of preferred stock	(575,000)
Net cash provided by financing activities	7,185,498	7,080,520
Impact of changes of foreign exchange rates	(52,590)	18,679
Net increase/(decrease) in cash and cash equivalents	9,129,242	(6,200,520)
Cash and cash equivalents at beginning of year	12,642,147	15,612,391
Cash and cash equivalents at end of period	21,771,389	9,411,871
Cash paid during the period for:
Interest	620,000	34,500
Taxes	286,100	1,295,800
Supplemental Schedule of non-cash investing activities
Acquisition of property and equipment		389,300
Capitalized interest	55,400	130,100
Supplemental schedule of non-cash financing activities
Common stock and warrants issued with the acquisition of PCT		17,866,200
Common stock issued pursuant to the redemption of Convertible Redeemable Series E 7% Preferred Stock	525,800	783,900
Common stock issued in payment of dividends for the Convertible Redeemable Series E 7% Preferred Stock	$ 104,200	$ 308,700

The Business

3 Months Ended

Mar. 31, 2012

The Business

Note 1 – The Business

Overview

NeoStem, Inc. (“NeoStem” or the “Company”) was incorporated under the laws of the State of Delaware in September 1980 under the name Fidelity Medical Services, Inc. The Company’s corporate headquarters are located at 420 Lexington Avenue, Suite 450, New York, NY 10170. The Company’s telephone number is (212) 584-4180 and its website address is www.neostem.com.

NeoStem, Inc. is an international biopharmaceutical company. In 2011, we operated our business in three reportable segments: (i) Cell Therapy — United States; (ii) Regenerative Medicine — China; and (iii) Pharmaceutical Manufacturing — China. Effective March 31, 2012, we committed to discontinue operations in the Regenerative Medicine – China reportable segment, which is now reported in discontinued operation (see Note 15). We also continue to pursue the divestiture of the Pharmaceutical Manufacturing - China segment and anticipate it will have been exited by the close of 2012.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of March 31, 2012 and the results of its operations and its cash flows for the periods presented. The unaudited consolidated financial statements herein should be read together with the historical consolidated financial statements of the Company for the years ended December 31, 2011 and 2010 included in our Annual Report on Form 10-K for the year ended December 31, 2011. Operating results for the three month period ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of NeoStem, Inc. and its wholly owned and partially owned subsidiaries and affiliates as listed below:

Entity	Percentage of Ownership	Location
NeoStem, Inc.	Parent Company	United States of America
NeoStem Therapies, Inc.	100%	United States of America
Stem Cell Technologies, Inc.	100%	United States of America
Amorcyte, LLC	100%	United States of America
CBH Acquisition LLC	100%	United States of America
China Biopharmaceuticals Holdings, Inc. (CBH)	100% owned by CBH Acquisition LLC	United States of America
Suzhou Erye Pharmaceuticals Company Ltd.	51% owned by CBH	People’s Republic of China
Progenitor Cell Therapy, LLC (PCT)	100%	United States of America
NeoStem Family Storage, LLC	100% owned by PCT	United States of America
Athelos Corporation	80.1% owned by PCT	United States of America
PCT Allendale, LLC	100% owned by PCT	United States of America

Pursuant to the Joint Venture Agreement that governs the ownership and management of Erye, through 2012: (i) 49% of undistributed profits (after tax) will be distributed to Suzhou Erye Economy and Trading Co Ltd. (“EET”), the owner of the remaining 49% interest in Erye and loaned back to Erye for use in connection with its construction of the new Erye facility (to be repaid gradually after construction is completed); (ii) 45% of the net profit after tax due to the Company will be provided to Erye as part of the new facility construction fund, which will be characterized as paid-in capital for our 51% interest in Erye; and (iii) only 6% of the net profit will be distributed to us directly for our operating expenses. The Company is pursuing the divestiture of Erye.

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

In addition to the policies below, our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011. There were no changes during the three months ended March 31, 2012.

Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. The Company applies judgment in connection with establishing the allowance for doubtful accounts. Specifically, the Company analyzes the aging of accounts receivable balances, historical bad debts, customer concentration and credit-worthiness, current economic trends and changes in the Company’s customer payment terms. Significant changes in customer concentrations or payment terms, deterioration of customer credit-worthiness or weakening economic trends could have a significant impact on the collectability of the receivables and the Company’s operating results. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Management regularly reviews the aging of receivables and changes in payment trends by its customers, and records a reserve when it believes collection of amounts due are at risk.

Revenue Recognition

Prescription drugs and intermediary pharmaceutical products: The Company recognizes revenue from pharmaceutical and pharmaceutical intermediary products sales when title has passed, the risks and rewards of ownership have been transferred to the customer, the fee is fixed and determinable, and the collection of the related receivable is reasonably assured which is generally at the time of delivery.

Stem cell related service revenues: The Company recognizes revenue for its cell development and manufacturing services based on the terms of individual contracts. Cell development services generally contain multiple stages, which the Company evaluates for multiple elements. Each stage does not have stand-alone value and are dependent upon one another; therefore the Company recognizes revenue on a completed contract basis. Manufacturing services represent separate and distinct arrangements, and the Company is paid for time and materials or for fixed monthly amounts and revenue is recognized when efforts are expended or contractual terms have been met. The Company separately charges the customers for reimbursable expenses that are specified in each contract. On a monthly basis, the Company bills customers for reimbursable expenses and immediately recognizes reimbursement revenue, as the revenue is deemed earned as reimbursable expenses are incurred.

The Company recognizes revenue related to the collection and cryopreservation of cord blood and autologous adult stem cells when the cryopreservation process is completed which is approximately twenty four hours after cells have been collected. Revenue related to advance payments of storage fees is recognized ratably over the period covered by the advance payments.

Acquisitions

3 Months Ended

Mar. 31, 2012

Acquisitions

Note 3 – Acquisitions

Amorcyte Acquisition

On October 17, 2011 (the “Closing Date”), Amo Acquisition Company I, Inc. (“Subco”), a newly-formed wholly-owned subsidiary of NeoStem, Inc. (“NeoStem” or the “Company”), merged (the “Amorcyte Merger”) with and into Amorcyte, Inc., a Delaware corporation (“Amorcyte”), in accordance with the terms of the Agreement and Plan of Merger, dated as of July 13, 2011 (the “Amorcyte Merger Agreement”), among NeoStem, Amorcyte, Subco, and Amo Acquisition Company II, LLC (“Subco II”). As a result of the consummation of the Amorcyte Merger, Amorcyte is now a wholly-owned subsidiary of NeoStem. Amorcyte is a development stage cell therapy company focusing on novel treatments for cardiovascular disease.

The preliminary fair value of assets acquired and liabilities assumed on October 17, 2011 is as follows (in thousands):

Cash	$	92.9
Prepaid Expenses		178.2
In Process R&D		9,400.0
Goodwill		4,104.5
Accounts Payable & Accrued Liabilities		1,177.1
Deferred Tax Liability		3,774.7
Amount Due Related Party		340.4

The total cost of the acquisition, which is still preliminary, has been allocated to the assets acquired and the liabilities assumed based upon their estimated fair values at the date of the acquisition. The final allocation is pending the receipt of this valuation work and the completion of the Company’s internal review, which is expected during fiscal 2012.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

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-Name Emerging Issues Task Force (EITF)
-Number 88-16
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Paragraph 51, 52
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-Paragraph F4
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+ Details

Cash and Cash Equivalents

3 Months Ended

Mar. 31, 2012

Cash and Cash Equivalents

Note 4 – Cash and Cash Equivalents

Cash and cash equivalents include short-term, highly liquid, investments with maturities of ninety days or less when purchased. As of March 31, 2012, and December 31, 2011, the Company had approximately $764,700 and $791,100, respectively in bank deposits covered by the Federal Deposit Insurance Corporation. As of March 31, 2012 and December 31, 2011, cash and short-term investments held by Erye, our 51%-owned foreign subsidiary, that are not available to fund domestic operations unless repatriated were $14,766,600 and $8,707,500, respectively.

- Definition

The entire disclosure for cash and cash equivalent footnotes, which may include the types of deposits and money market instruments, applicable carrying amounts, restricted amounts and compensating balance arrangements. Cash and equivalents include: (1) currency on hand (2) demand deposits with banks or financial institutions (3) other kinds of accounts that have the general characteristics of demand deposits (4) short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments maturing within three months from the date of acquisition qualify.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 1
-Article 5

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-Name Staff Accounting Bulletin (SAB)
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-Subsection 3

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+ Details

Inventories

3 Months Ended

Mar. 31, 2012

Inventories

Note 5 – Inventories

Inventories consisted of the following (in thousands):

	March 31, 2012		December 31, 2011
Raw materials and supplies	$	6,864.9	$	2,974.8
Work in process		5,037.9		5,086.4
Finished goods		6,079.5		9,092.2
Total inventory	$	17,982.3	$	17,153.4

Loss Per Share

3 Months Ended

Mar. 31, 2012

Loss Per Share

Note 6 – Loss Per Share

Basic loss per share is based on the weighted effect of all common shares issued and outstanding, and is calculated by dividing net loss attributable to common shareholders by the weighted average shares outstanding during the period. Diluted loss per share, which is calculated by dividing net loss attributable to common shareholders by the weighted average number of common shares used in the basic loss per share calculation plus the number of common shares that would be issued assuming conversion of all potentially dilutive securities outstanding, is not presented as such potentially dilutive securities are anti-dilutive in all periods presented. For the three months ended March 31, 2012 and 2011, the Company incurred net losses and therefore no common stock equivalents were utilized in the calculation of loss per share. At March 31, 2012 and 2011, the Company excluded the following potentially dilutive securities:

	March 31,
	2012		2011
Stock Options		21,402,957		15,080,095
Warrants		52,695,366		25,129,066
Series E Preferred Stock, Common stock equivalents		4,034,536		5,149,889
Restricted Shares		401,167		186,666

Fair Value Measurements

3 Months Ended

Mar. 31, 2012

Fair Value Measurements

Note 7 – Fair Value Measurements

Fair value of financial assets and liabilities that are being measured and reported are defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market at the measurement date (exit price). The Company is required to classify fair value measurements in one of the following categories:

Level 1 inputs which are defined as quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 inputs which are defined as inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.

Level 3 inputs are defined as unobservable inputs for the assets or liabilities. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The Company determined the fair value of funds invested in short term investments, which are considered trading securities, to be level 1 inputs measured by quoted prices of the securities in active markets. The short term investments are included within prepaids and other current assets on the balance sheet. The Company determined the fair value of funds invested in money market funds to be level 1. The Company determined the fair value of the embedded derivative liabilities and warrant derivative liabilities to be level 3 inputs. These inputs require material subjectivity because value is derived through the use of a lattice model that values the derivatives based on probability weighted discounted cash flows. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2012, and December 31, 2011 (in thousands):

	March 31, 2012
	Fair Value Measurements Using Fair Value Hierarchy
	Level 1		Level 2		Level 3
Money market investments	$	2,497.6	$	-	$	-
Short term investments		0.6		-		-
Embedded derivative liabilities		-		-		315.3
Warrant derivative liabilities		-		-		71.9
Contingent consideration		-		-		3,130.0

	December 31, 2011
	Fair Value Measurements Using Fair Value Hierarchy
	Level 1		Level 2		Level 3
Money market investments	$	2,497.4	$	-	$	-
Short term investments		0.6		-		-
Embedded derivative liabilities		-		-		391.7
Warrant derivative liabilities		-		-		82.7
Contingent consideration		-		-		3,130.0

The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs. The fair value of contingent consideration obligations is based on a discounted cash flow model using a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on our own assumptions and experience. The value of our contingent consideration is valued using a discount rate of 30%. We base the timing to complete the development and approval of this product on the current development stage of the product and the inherent difficulties and uncertainties in developing a product candidate, such as obtaining U.S. Food and Drug Administration (FDA) and other regulatory approvals. In determining the probability of regulatory approval and commercial success, we utilize data regarding similar milestone events from several sources, including industry studies and our own experience. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense we record in any given period. Changes in the fair value of the contingent consideration obligations are recorded in our consolidated statement of operations. Contingent consideration was recognized on October 17, 2011 in connection with the Amorcyte merger (see Note 3). There were no changes in contingent consideration fair value as of March 31, 2012.

For those financial instruments with significant Level 3 inputs, the following table summarizes the activity for the three months ended March 31, 2012 by type of instrument (in thousands):

	Three Months Ended
	March 31, 2012
	Embedded Derivatives			Warrants
Beginning liability balance	$	391.7		$	82.7
Change in fair value recorded in earnings		(76.4	)		(10.8	)
Ending liability balance	$	315.3		$	71.9

Some of the Company’s financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate fair value due to their liquid or short-term nature, such as cash and cash equivalents, restricted cash, accounts receivable, accounts payable, notes payable and bank loans.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
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+ Details

Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2012

Goodwill and Other Intangible Assets

Note 8 – Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill, by reportable segment during 2012 were as follows (in thousands):

	Cell Therapy - United States		Pharmaceutical Manufacturing - China		Total

Balance as of December 31, 2011	$	11,117.8	$	8,495.7	$	19,613.5

Foreign currency exchange rate changes		-		53.0		53.0

Balance as of March 31, 2012	$	11,117.8	$	8,548.7	$	19,666.5

As of March 31, 2012 and December 31, 2011, the Company’s intangible assets and related accumulated amortization consisted of the following (in thousands):

		March 31, 2012							December 31, 2011
	Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Customer list	10 Years	$	19,488.4	$	(4,588.1	)	$	14,900.3	$	19,373.8	$	(4,076.1	)	$	15,297.7
Manufacturing technology	10 Years		8,810.3		(1,595.4	)		7,214.9		8,779.9		(1,368.9	)		7,411.0
Tradename	10 Years		1,825.5		(343.9	)		1,481.6		1,819.0		(296.9	)		1,522.1
In process R&D	Indefinite		11,201.6		-			11,201.6		11,190.4		-			11,190.4
Standard operating procedures	10 Years		1,111.8		(268.7	)		843.1		1,104.9		(239.4	)		865.5
VSEL patent rights	19 Years		669.0		(149.6	)		519.4		669.0		(140.8	)		528.2
Patents	8 Years		205.5		(92.5	)		113.0		204.3		(86.8	)		117.5
Total Intangible Assets		$	43,312.1	$	(7,038.2	)	$	36,273.9	$	43,141.3	$	(6,208.9	)	$	36,932.4

Total intangible amortization expense was classified in the operating expense categories for the periods included below as follows (in thousands):

	Three Months Ended March 31,
	2012		2011
Cost of revenue	$	248.1	$	341.0
Research and development		13.9		13.7
Selling, general and administrative		533.2		521.7
Total	$	795.2	$	876.4

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Accrued Liabilities

3 Months Ended

Mar. 31, 2012

Accrued Liabilities

Note 9 – Accrued Liabilities

Accrued liabilities are as follows (in thousands):

	March 31, 2012		December 31, 2011
VAT and other taxes	$	1,020.5	$	705.2
Customer security deposits		445.6		444.4
Salaries, employee benefits and related taxes		595.4		365.7
Other		1,368.8		1,280.7
	$	3,430.3	$	2,796.0

Debt

3 Months Ended

Mar. 31, 2012

Debt

Note 10 – Debt

Bank Loans

In June 2011, Erye obtained a bank loan of approximately $1,571,200 from the Agricultural Bank of China according to People’s Bank benchmark interest rates and is due in June 2012.

In October 2011, Erye obtained a bank loan of approximately $8,641,600 from the CITIC Bank International according to People’s Bank benchmark interest rates with additional rate up to 10% and is due in October 2012.

In October 2011, Erye obtained a bank loan of approximately $1,571,200 from the China Merchants Bank according to People’s Bank benchmark interest rates with additional rate up to 10% and is due in July 2012.

In November 2011, Erye obtained a bank loan of approximately $3,928,000 from Commercial Bank of China according to People’s Bank benchmark interest rates and is due in November 2012.

Notes Payable

As of March 31, 2012 and December 31, 2011, the Company had notes payable of approximately $305,200and $148,100, respectively. The notes relate to certain insurance policies and equipment financings, require monthly payments, and mature within one to five years.

Mortgages Payable

On October 31, 2007, PCT issued a note to borrow $3,120,000 (the “Note”) in connection with its $3,818,500 purchase of condominium units in an existing building in Allendale, New Jersey (the “Property”) that PCT uses as a laboratory and stem cell processing facility. The Note is payable in 239 consecutive monthly payments of principal and interest, based on a 20 year amortization schedule; and one final payment of all outstanding principal plus accrued interest then due. The current monthly installment is $20,766, which includes interest at an initial rate of 5.00%; the interest rate and monthly installments payments are subject to adjustment on October 1, 2017. On that date, upon prior written notice, the lender has the option to declare the entire outstanding principal balance, together with all outstanding interest, due and payable in full. The Note is secured by substantially all of the assets of PCT, including a first mortgage on the Property and assignment of an amount approximately equal to eighteen months debt service held in escrow. The Note matures on October 1, 2027 if not called by the lender on October 1, 2017. The note is subject to certain debt service coverage and total debt to tangible net worth financial covenant ratios measured semi-annually. PCT was not in compliance with such covenants at the measurement date of December 31, 2011, and obtained a covenant waiver letter from the lender for all periods through December 31, 2011. The outstanding balance was approximately $2,680,100 at March 31, 2012 of which $116,000 is payable within twelve months. On December 6, 2010 PCT Allendale, a wholly-owned subsidiary of PCT, entered into a note for a second mortgage in the amount of $1 million on the Allendale Property with TD Bank, N.A. This loan is guaranteed by PCT, DomaniCell (a wholly-owned subsidiary of PCT, now known as NeoStem Family Storage, LLC), Northern New Jersey Cancer Associates (“NNJCA”) and certain partners of NNJCA and is subject to a financial covenant starting December 31, 2011. PCT was not in compliance with such covenants at the measurement date of December 31, 2011, and obtained a covenant waiver letter from the lender for all periods through December 31, 2011. The loan is for 124 months at a fixed rate of 6% for the first 64 months. The loan is callable for a certain period prior to the interest reset date. The initial four months was interest only. The outstanding balance as of March 31, 2012 is $901,900 of which $77,700 is payable within twelve months. Both mortgages are classified as current liabilities as of March 31, 2012.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

Preferred Stock

3 Months Ended

Mar. 31, 2012

Preferred Stock

Note 11 – Preferred Stock

Convertible Redeemable Series E 7% Preferred Stock

On November 19, 2010, the Company sold 10,582,011 Preferred Offering Units consisting of (i) one share (“Preferred Share”) of Series E 7% Senior Convertible Preferred Stock, par value $0.01 per share, of the Company, (ii) a warrant to purchase 0.25 of a share of Common Stock (consisting of at issuance an aggregate of 1,322,486 warrants, adjusted to an aggregate of 1,633,466 as of March 31, 2012); and (iii) 0.0155 of a share of Common Stock (an aggregate of 164,418 shares). Each Preferred Offering Unit was priced at $0.945 and total gross and net proceeds received by the Company were $10,000,000 and $8,876,700, respectively.

Dividends on the Preferred Shares accrue at a rate of 7% per annum and are payable monthly in arrears. The Company is required to redeem 1/27 of the Preferred Shares monthly. Monthly dividend and principal payments began on March 21, 2011 and continue on the 19th of each month thereafter with the final payment due on May 20, 2013. Payments can be made in cash or, upon notification to the holders, in shares of Company common stock, provided certain conditions are satisfied or holders of Preferred Shares agree to waive the conditions for that payment period. As of March 31, 2012, the Company had issued 6,388,885 shares of Company common stock in payment of monthly dividends and principal, including required advanced payments.

The Company may pre-pay the outstanding balance of the Preferred Shares in full or in part (in increments of no less than $1,000,000) at 110% of the then outstanding balance with notice of not less than thirty days and adequate opportunity to convert. If the Company chooses to pre-pay, the outstanding balance must be paid in cash and the premium may be paid in cash or shares of Company common stock. An aggregate of $2,500,000 of the proceeds from the Preferred Offering was placed in escrow for a maximum of 2.5 years as security for the Company’s obligations relative to the Preferred Shares, and is included in other assets.

Upon issuance, the Preferred Shares were convertible at an initial conversion price of $2.0004. The conversion price is subject to certain weighted average adjustments upon the occurrence of specific events, including stock dividends, stock splits, combinations and reclassifications of the Company’s common stock and if (with certain exceptions) the Company issues or sells any additional shares of common stock or common stock equivalents at a price per share less than the conversion price then in effect, or without consideration. As of March 31, 2012, the conversion price had been adjusted to $1.36.

The characteristics of the Series E Preferred Stock require that this instrument be treated as mezzanine equity. The Company bifurcated the fair value of the embedded conversion options and redemption options from the preferred stock since the conversion options and certain redemption options were determined to not be clearly and closely related to the Series E Preferred Stock and recorded the fair value of the embedded conversion and redemption options as long-term derivative liabilities. The Company also recorded the fair value of the warrants as a long-term derivative liability. The fair value of the preferred stock (net of issuance costs and discounts), the embedded derivatives, and warrant derivative were approximately $4,182,500, $315,300 and $71,900, respectively, as of March 31, 2012. The Company will report changes in the fair value of the embedded derivatives and warrant derivative in earnings within other income (expense), net. For the three months ended March 31, 2012, the Company recorded a decrease in the fair value of the embedded derivatives of approximately $76,500 and a decrease in the warrant derivative of approximately $10,800.

Shareholders' Equity

3 Months Ended

Mar. 31, 2012

Shareholders' Equity

Note 12 – Shareholders’ Equity

Common Stock

The Company raised an aggregate of approximately $2.25 million in a private placement consummated in February 2012 pursuant to which three entities acquired an aggregate of 3,465,404 shares of Common Stock.

In March 2012, the Company completed an underwritten offering of 15,000,000 units at a purchase price of $0.40 per unit, with each unit consisting of one share of Common Stock and a five year warrant to purchase one share of Common Stock at an exercise price of $0.51 per share (the “Offering”). The Company sold securities in the Offering under the Company’s previously filed shelf registration statement on Form S-3 (333-173855), which was declared effective by the Securities and Exchange Commission on June 13, 2011. The Company received gross proceeds of $6,000,000, prior to deducting underwriting discounts and offering expenses payable by the Company, for net proceeds of approximately $5,297,000. In April 2012, the underwriters in the Offering exercised their over-allotment option for an additional 2,000,000 units. The Company received additional gross proceeds of $800,000, prior to deducting underwriting discounts, for net proceeds of approximately $744,000.

Warrants

The Company has issued common stock purchase warrants from time to time to investors in private placements and public offerings, and to certain vendors, underwriters, placement agents and consultants of the Company. A total of 52,695,366 shares of common stock are reserved for issuance upon exercise of outstanding warrants as of March 31, 2012 at prices ranging from $0.51 to $7.00 and expiring through October 2018.

During the three months ended March 31, 2012 and 2011, the Company issued warrants for services as follows ($ in thousands, except share data):

	Three Months Ended March 31,
	2012		2011

Number of Common Stock Purchase Warrants Issued		125,000		270,000

Value of Common Stock Purchase Warrants Issued	$	50.6	$	280.9

The weighted average estimated fair value of warrants issued for services in the three months ended March 31, 2012 was $0.41. The fair value of warrants at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based upon historical volatility of the Company’s stock. The expected term is based upon the contractual term of the warrants.

The range of assumptions used in calculating the fair values of warrants issued for services during the three months ended March 31, 2012 and 2011 was as follows:

	Three Months Ended March 31,
	2012	2011
Expected term (in years)	5	3 to 5

Expected volatility	82%	82% - 86%

Expected dividend yield	0%	0%

Risk-free interest rate	0.88%	1.29% - 2.24%

Activity related to warrants outstanding was as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance at December 31, 2011		37,389,825		2.35
Granted		15,305,541		0.52
Exercised		-		-
Expired		-		-
Cancelled		-		-
Balance at March 31, 2012		52,695,366	$	1.82		4.01	$	-

At March 31, 2012, the outstanding warrants by range of exercise prices were as follows:

	Warrants Outstanding						Warrants Exercisable
			Weighted Average						Weighted Average
Range of			Remaining		Weighted Average				Remaining		Weighted Average
Exercise Prices	Shares Outstanding		Contractual Life (years)		Exercise Price		Shares Exercisable		Contractual Life (years)		Exercise Price
$ 0.51 - $ 1.45		26,388,500		4.7	$	0.90		10,855,500		4.2	$	1.44
$ 1.46 - $ 2.10		8,114,176		3.7		1.72		8,114,176		3.7		1.72
$ 2.11 - $ 2.53		13,032,512		3.0		2.50		13,032,512		3.0		2.50
$ 2.54 - $ 5.99		2,929,928		4.2		3.73		2,929,928		4.2		3.73
$ 6.00 - $ 7.00		2,230,250		3.1		6.51		1,230,250		0.9		6.11
		52,695,366		4.0	$	1.82		36,162,366		3.6	$	2.23

The Company’s results include share-based compensation expense of approximately $12,500 and $172,800 for the three months ended March 31, 2012 and 2011, respectively. The total fair value of shares vested for warrants issued for services during the three months ended March 31, 2012 was approximately $17,800. As of March 31, 2012, there was approximately $56,700 of total unrecognized service cost related to unvested warrants of which approximately $56,700 is related to warrants that vest over a weighted average life of 1.0 years.

Options

The Company’s results include share-based compensation expense of approximately $1,751,200 and $1,130,300 for the three months ended March 31, 2012 and 2011, respectively. Options vesting on the accomplishment of business milestones will not be recognized for compensation purposes until such milestones are deemed probable of accomplishment. At March 31, 2012 there were options to purchase 404,928 shares outstanding that will vest upon the accomplishment of business milestones and will be accounted for as an operating expense when such business milestones are deemed probable of accomplishment.

The weighted average estimated fair value of stock options granted in the three months ended March 31, 2012 was $0.36. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based upon historical volatility of the Company’s stock. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees.

The range of assumptions used in calculating the fair values of options granted during the three months ended March 31, 2012 and 2011 was as follows:

	Three Months Ended March 31,
	2012	2011
Expected term (in years)	3 to 10	2 to 6

Expected volatility	82% - 83%	82% - 85%

Expected dividend yield	0%	0%

Risk-free interest rate	0.02% - 2.00%	0.80% - 2.53%

Activity related to stock options outstanding under the U.S. Equity Plan was as follows:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance at December 31, 2011		15,043,505			1.68
Granted		4,075,452			0.53
Exercised		-			-
Expired		-			-
Cancelled		(11,000	)		0.57
Balance at March 31, 2012		19,107,957		$	1.44		7.5	$	-

At March 31, 2012, the outstanding options under the U.S. Equity Plan by range of exercise prices were as follows:

	Options Outstanding						Options Exercisable
			Weighted Average						Weighted Average
Range of			Remaining		Weighted Average				Remaining		Weighted Average
Exercise Prices	Shares Outstanding		Contractual Life (years)		Exercise Price		Shares Exercisable		Contractual Life (years)		Exercise Price
$ 0.52 - $ 0.71		5,188,052		8.9		0.56		1,630,990		8.7	$	0.54
$ 0.72 - $ 1.50		2,879,100		8.4		1.46		1,126,232		7.6		1.44
$ 1.51 - $ 1.80		6,629,000		7.7		1.71		4,877,252		7.6		1.71
$ 1.81 - $ 2.00		2,874,255		4.4		1.91		2,705,994		4.4		1.91
$ 2.01 - $ 15.00		1,537,550		6.8		2.29		1,430,883		6.7		2.30
		19,107,957		7.5	$	1.44		11,771,351		6.9	$	1.64

Activity related to stock options outstanding under the Non U.S. Plan was as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at December 31, 2011		2,100,000		1.95
Granted		195,000		0.52
Exercised		-		-
Expired		-		-
Cancelled		-		-
Balance at March 31, 2012		2,295,000	$	1.83		8.12	$	-

At March 31, 2012, the outstanding options under the Non U.S. Plan by range of exercise prices were as follows:

	Options Outstanding						Options Exercisable
			Weighted Average						Weighted Average
Range of			Remaining		Weighted Average				Remaining		Weighted Average
Exercise Prices	Shares Outstanding		Contractual Life (years)		Exercise Price		Shares Exercisable		Contractual Life (years)		Exercise Price
$ 0.52 - $ 1.42		295,000		9.4	$	0.83		145,000		9.8	$	0.52
$ 1.43 - $ 1.71		600,000		8.4		1.65		200,000		8.4		1.65
$ 1.72 - $ 2.08		350,000		7.0		1.74		175,000		7.0		1.74
$ 2.09 $ 2.22		650,000		7.8		2.16		300,000		7.9		2.16
$ 2.23 - $ 2.36		400,000		8.2		2.36		400,000		8.2		2.36
		2,295,000		8.1	$	1.83		1,220,000		8.2	$	1.89

The total fair value of shares vested during the three months ended March 31, 2012 and 2011 was approximately $1,650,300 and $378,800, respectively.

As of March 31, 2012, there was approximately $3,837,800 of total unrecognized compensation costs related to unvested stock option awards of which approximately $3,829,400 is related to stock options that vest over a weighted average life of 1.83 years. The remaining balance of unrecognized compensation costs of $8,400 is related to stock options that vest based on the accomplishment of business milestones which expense begins to be recognized when such milestones become probable of being achieved.

Restricted Stock

During the three months ended March 31, 2012 and 2011, the Company issued restricted stock for services as follows ($ in thousands, except share data):

	Three Months Ended March 31,
	2012		2011

Number of Restricted Stock Issued		189,814		550,320

Value of Restricted Stock Issued	$	91.2	$	819.3

The weighted average estimated fair value of restricted stock issued for services in the three months ended March 31, 2011 was $0.48. The fair value of the restricted stock was determined using the Company’s closing stock price on the date of issuance. The vesting terms of restricted stock issuances are generally within one year. The Company’s results include share-based compensation expense of approximately $663,900 and $691,600 for the three months ended March 31, 2012 and 2011, respectively. As of March 31, 2012, there was approximately $88,500 of unrecognized service cost related to unvested restricted stock.

Shares Remaining Under Equity Plans

The number of remaining shares authorized to be issued under the various equity plans at March 31, 2012 are as follows:

	U.S. Equity Plan			Non-U.S. Plan
Shares Authorized for Issuance under 2003 Equity Plan		2,500,000			-
Shares Authorized for Issuance under 2009 Equity Plan		23,750,000			-
Shares Authorized for Issuance under Non-U.S. Plan		-			5,700,000
		26,250,000			5,700,000
Outstanding Options - U.S. Equity Plan		(19,107,957	)
Exercised Options		(97,500	)		-
Outstanding Options - Non-U.S. Plan					(2,295,000	)
Restricted stock or equity grants issued under Equity Plans		(4,092,577	)		(885,000	)
Total common shares remaining to be issued under the Equity Plans		2,951,966			2,520,000

Share-Based Compensation

The following table summarizes the components of share-based compensation expense in the Consolidated Statements of Income for the three months ended March 31, 2012 and 2011 (in thousands):

	Three Months Ended March 31,
	2012		2011

Cost of revenues	$	83.9	$	12.5
Research and development		161.3		260.1
Selling, general, and administrative		2,223.4		1,638.8
	$	2,468.6	$	1,911.4

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph d

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 1
-Section B
-Paragraph 7, 11A
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
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Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

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+ Details

Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes

Note 13 – Income Taxes

The Tax Reform Act of 1986 enacted a complex set of rules limiting the utilization of net operating loss carryforwards (“NOL”) to offset future taxable income following a corporate ownership change. The Company’s ability to utilize its NOL carryforwards is limited following a change in ownership in excess of fifty percentage points during any three-year period.

Since the year 2000, the Company has had several changes in ownership which has resulted in a limitation on the Company’s ability to apply net operating losses to future taxable income. As of December 31, 2011 the Company has lost $25,994,800 or $8,838,200 in tax benefits, of net operating losses applicable to Federal income taxes which expired due to these limitations and expiration of net operating loss carryforwards. At December 31, 2011, the Company had net operating loss carryforwards of approximately $47,427,300 applicable to future Federal income taxes. The tax loss carryforwards are subject to annual limitations and expire at various dates through 2030. The Company has recorded a full valuation allowance against its net deferred tax asset because it is more likely than not that such deferred tax assets will be realized.

The Company has provided deferred income taxes for the estimated U.S. federal and foreign income tax effects of earnings of subsidiaries expected to be distributed to the Company. Deferred income taxes have been provided on approximately $5,324,300 of undistributed earnings of certain foreign subsidiaries as of December 31, 2011 as such amounts are not considered to be permanently reinvested.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
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+ Details

Segment Information

3 Months Ended

Mar. 31, 2012

Segment Information

Note 14 – Segment Information

The Company operates in two reportable segments: (i) Cell Therapy — United States; and (ii) Pharmaceutical Manufacturing —China. Effective March 31, 2012, the Company no longer operated in the Regenerative Medicine – China reportable segment, which is now reported in discontinued operations (see Note 15). The Company’s operating businesses are organized based on the nature of markets and customers. The Company’s CEO, as chief operating decision maker, evaluates the results of operations along these reporting segments.

The Company’s financial information broken down by reportable segment was as follows (in thousands):

	Three Months Ended March 31,
	2012			2011
Revenues
Pharmaceutical Manufacturing - China (products)	$	18,284.0		$	18,141.9
Cell Therapy - United States (services)		3,772.8			1,449.1
	$	22,056.8		$	19,591.0
Income (loss) from operations
Pharmaceutical Manufacturing - China	$	1,110.9		$	2,119.5
Cell Therapy - United States		(3,065.6	)		(3,776.0	)
Corporate office		(4,476.8	)		(5,419.1	)
	$	(6,431.5	)	$	(7,075.6	)

Total assets	March 31, 2012		December 31, 2011
Pharmaceutical Manufacturing - China	$	116,405.5	$	106,284.8
Cell Therapy - United States		41,347.1		40,653.1
Corporate office		9,531.7		6,596.4
Assets related to discontinued operations		-		1,793.5
	$	167,284.3	$	155,327.8

The Cell Therapy – United States revenues include approximately $1,106,900 and $489,300 for stem cell related services reimbursed expenses for the three months ended March 31, 2012 and 2011, respectively.

Concentration of Risks

For the three months ended March 31, 2012, three major suppliers provided approximately 38.6% of Erye’s purchases of raw materials with each supplier individually accounting for approximately 14.3%, 12.6% and 11.7%, respectively. As of March 31, 2012, the total accounts payable to the three major suppliers represented 37.7% of the total accounts payable balance.

Approximately 85% of Erye’s revenues are derived from products that use penicillin or cephalosporin as the key active ingredient. These products are manufactured on two of the eight production lines in Erye’s manufacturing facility. Any issues or incidents that might disrupt the manufacturing of products requiring penicillin or cephalosporin could have a material impact on the operating results of Erye. Any interruption or cessation in production could impact market sales.

In March 2011, the National Development and Reform Commission in China issued insurance reimbursement price cuts which impacted two of Erye products. The Company recognizes that there will be continuous pressure on Erye product pricing as a result of such actions.

Statutory Reserves

Pursuant to laws applicable to entities incorporated in the PRC, the PRC subsidiaries are prohibited from distributing their statutory capital and are required to appropriate from PRC GAAP profit after tax to other non-distributable reserve funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits (i.e., 50% of the registered capital of the relevant company), the general reserve fund requires annual appropriation at 10% of after tax profit (as determined under accounting principles generally accepted in the PRC at each year-end); the appropriation to the other funds are at the discretion of the subsidiaries.

The general reserve is used to offset extraordinary losses. Subject to approval by the relevant authorities, a subsidiary may, upon a resolution passed by the shareholders, convert the general reserve into registered capital provided that the remaining general reserve after the conversion shall be at least 25% of the registered capital of the subsidiary before the capital increase as a result of the conversion. The staff welfare and bonus reserve is used for the collective welfare of the employees of the subsidiary. The enterprise expansion reserve is for the expansion of the subsidiary’s operations and can also be converted to registered capital upon a resolution passed by the shareholders subject to approval by the relevant authorities. These reserves represent appropriations of the retained earnings determined in accordance with Chinese law, and are not distributable as cash dividends to the parent company, NeoStem. Statutory reserves are $2,478,000 and $2,488,000 as of March 31, 2012 and December 31, 2011, respectively.

Relevant PRC statutory laws and regulations permit payment of dividends by the Company’s PRC subsidiaries only out of their accumulated earnings, if any, as determined in accordance with PRC accounting standards and regulations. As a result of these PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets either in the form of dividends, loans or advances. The restricted amount was $186,000 at March 31, 2012 and $185,000 at December 31, 2011.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

Discontinued Operations

3 Months Ended

Mar. 31, 2012

Discontinued Operations

Note 15 – Discontinued Operations

In 2009, the Company began its Regenerative Medicine-China business in the People’s Republic of China (“China” or “PRC”) through its subsidiary, a wholly foreign owned entity (“WFOE”) and entered into contractual arrangements with certain variable interest entities (“VIEs”). Foreign companies have commonly used VIE structures to operate in the PRC, and while such structures are not uncommon, recently they have drawn greater scrutiny from the local Chinese business community in the PRC who have urged the PRC State Council to clamp down on these structures. In addition, in December 2011, China’s Ministry of Health announced its intention to more tightly regulate stem cell clinical trials and stem cell therapeutic treatments in the PRC, which has created uncertainty regarding the ultimate regulatory environment in the PRC. Accordingly, the Company has been taking steps to restrict, with the expectation of ultimately eliminating, its regenerative medicine business in the PRC. The Company has concluded that as a result of these steps, to discontinue operations in its Regenerative Medicine-China business. The Company has determined that any liability arising from the activities of the WFOE and the VIEs will likely be limited to the net assets currently held by each entity. As of March 31, 2012, the Company recognized the following loss on exit of the Regenerative Medicine-China business (in thousands):

Cash	$	195.1
Prepaid expenses and other current assets		14.9
Property, plant and equipment, net		1,023.7
Other Assets		330.5
Accounts payable		(177.1	)
Accrued liabilities		(79.2	)
Accumulated comprehensive income		(169.9	)
Loss on exit of segment	$	1,138.0

The operations and cash flows of the Regenerative Medicine - China business will be eliminated from ongoing operations as a result of our exit decision. The Company expects to have no continuing involvement in this business going forward. The operating results of the Regenerative Medicine – China business for the three months ended March 31, 2012 and 2011, which are included in discontinued operations, were as follows (in thousands):

	Three Months Ended March 31,
	2012			2011

Revenue	$	52.3		$	50.2
Cost of revenues		(30.6	)		(18.1	)
Research and development		(103.3	)		(158.1	)
Selling, general, and administrative		(497.3	)		(790.1	)
Other income (expense)		(6.8	)		(12.7	)
Loss on exit of segment		(1,138.0	)		-
Loss from discontinued operations	$	(1,723.7	)	$	(928.8	)

The summary of the assets and liabilities related to discontinued operations as of December 31, 2011 was as follows (in thousands):

	December 31, 2011
Assets
Cash and cash equivalents	$	103.3
Prepaid expenses and other current assets		284.4
Property, plant and equipment, net		1,256.8
Other Assets		149.0
	$	1,793.5
Liabilities
Accounts payable	$	177.8
Accrued liabilities		31.0
	$	208.8

- Definition

The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 144
-Paragraph 43-48
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

Related Party Transactions

3 Months Ended

Mar. 31, 2012

Related Party Transactions

Note 16 – Related Party Transactions

At March 31, 2012 and December 31, 2011, Erye owed EET, the 49% shareholder of Erye, approximately $21,293,100 and $20,862,700, respectively, which represents dividends paid and loaned back to Erye. At March 31, 2012 and December 31, 2011 the interest rate on this loan was 6.831% and 6.56% , respectively. In June 2011 Erye paid EET approximately $875,100 consisting of the net of the following: $1,115,000 of unpaid accrued interest at June 30, 2011, approximately $408,700 repayment of a non interest bearing loan due in 2011 and recovery of cash advances to EET of approximately $648,600. In December 2011 Erye paid EET approximately $125,100 of unpaid accrued interest with bank draft due in June 2012.

Pursuant to the terms and conditions of the October 2009 Erye Joint Venture Agreement, dividend distributions to EET and the Company’s subsidiary will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement became effective distributions are made as follows: for undistributed profits generated subsequent to the acquisition date: (i) the 49% of undistributed profits (after tax) of the joint venture due EET will be distributed to EET and lent back to Erye to help finance costs in connection with its construction of and relocation to a new facility (to be repaid gradually after construction is completed); and (ii) of the net profit (after tax) of the joint venture due the Company, 45% will be provided to Erye as part of the new facility construction fund and will be characterized as additional paid-in capital for the Company’s 51% interest in Erye, and 6% will be distributed to the Company. For undistributed profits generated prior to the acquisition date: (i) the 49% of undistributed profits (after tax) of the joint venture due EET will be distributed to EET and lent back to Erye to help finance costs in connection with its construction of and relocation to a new facility (to be repaid gradually after construction is completed); and (ii) of the net profit (after tax) of the joint venture due the Company, 51% will be provided to Erye as part of the new facility construction fund and will be characterized as additional paid-in capital for the Company’s 51% interest in Erye. It was contemplated by the Joint Venture Agreement that the construction would continue for three years. As such, 45% of the dividend we would be entitled to by reason of our 51% ownership would remain in Erye through 2012 to complete the construction while EET would loan back their dividend during the same period at a prevailing bank interest rate. Upon a liquidity event of Erye, as contemplated in the joint venture agreement, the Company will be entitled to the return of its dividend reinvestments to the extent of the proceeds generated by the liquidity event. Repayment of such loans from EET would occur gradually after the construction is completed. In January 2011, a dividend totaling approximately $13,671,100 based on earnings for Fiscal Year 2009 was declared and approximately $6,698,800 was distributed to EET and lent back to Erye and approximately $6,972,300 due the Company was reinvested and re-characterized as additional paid-in capital in the business. In April 2011, a dividend totaling $10,259,700 based on earnings for Fiscal Year 2010 was declared and approximately $5,027,300 was distributed to EET and lent back to Erye, and approximately $5,232,400 due the Company was reinvested and re-characterized as additional paid-in capital in the business. A 10% withholding tax was required on dividends payable to the Company. As a result, Erye withheld approximately $1,220,500 in taxes related to the Company’s Fiscal Year 2009 and 2010 dividend amounts, and such amount has been paid to the local Chinese tax authorities as of December 31, 2011.

Effective March 10, 2011, Matthew Henninger entered into a consulting agreement with PCT, pursuant to which Mr. Henninger was engaged for a three month term to serve as an advisor to PCT with regard to the development of the “Family Plan,” a multi-generational stem cell collection and storage service. The agreement was subsequently amended and extended with the approval of the Audit Committee through December 31, 2011. The term was further extended to March 31, 2012 with the approval of the Audit Committee, in connection with which Mr. Henninger was granted an option to purchase 75,000 shares of NeoStem Common Stock under the 2009 Plan at $0.52 per share (Black Scholes value $20,696) vesting over the term of the extension, $10,000 per month for a three month period and continued insurance reimbursement. Mr. Henninger is in an exclusive relationship with the CEO of NeoStem.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph k

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-Number 210
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+ Details

Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies

Note 17 – Commitments and Contingencies

Lease Commitments

The Company leases office and laboratory facilities and certain equipment under certain noncancelable operating leases that expire from time to time through 2017. A summary of future minimum rental payments required under operating leases that have initial or remaining terms in excess of one year as of March 31, 2012 are as follows (in thousands):

Years ended	Operating Leases
2012		1,056.0
2013		974.3
2014		606.3
2015		560.1
2016		563.9
Thereafter		293.2
Total minimum lease payments	$	4,053.8

Expense incurred under operating leases was approximately $464,000 and $412,600 for the three months ended March 31, 2012 and March 31, 2011, respectively.

Contingencies

Under license agreements with third parties the Company is typically required to pay maintenance fees, make milestone payments and/or pay other fees and expenses and pay royalties upon commercialization of products. The Company also sponsors research at various academic institutions, which research agreements generally provide us with an option to license new technology discovered during the course of the sponsored research.

In connection with the issuance to investors and service providers of many of the shares of the Company’s common stock and warrants to purchase common stock previously disclosed and described herein, the Company granted the holders registration rights providing for the registration of such shares of common stock and shares of common stock underlying warrants on a registration statement to be filed with the Securities and Exchange Commission (“SEC”) so as to permit the resale of those shares. Certain of the registration rights agreements provided for penalties for failure to file or failure to obtain an effective registration statement. With respect to satisfying its obligations to the holders of these registration rights, the Company has been in various situations. The Company had previously filed a registration statement as required for some of the holders, and in May 2011 filed a registration statement for all of the holders (except for holders whose shares of Common Stock were currently salable under Rule 144 of the Securities Act or who waived certain rights); such registration statement was declared effective by the SEC on September 30, 2011. The Company has certain obligations to maintain the effectiveness of this registration statement. Certain holders who had outstanding registration rights had previously waived their registration rights or were subject to lock-up agreements. No holder has yet asserted any claim against the Company with respect to a failure to satisfy any registration obligations. Were someone to assert a claim against the Company for breach of registration obligations, the Company believes it has several defenses that would result in relieving it from some or any liability, although no assurances can be given. The Company also notes that damage claims may be limited, as (i) most shares of Common Stock as to which registration rights attached are either now registered or currently salable under Rule 144 of the Securities Act or are otherwise currently subject to other restrictions on sale and (ii) the shares of Common Stock underlying warrants with registration rights are now registered, and during much of the relevant periods the warrants with registration rights generally have been out of the money, were subject to lock-up agreements and/or the underlying shares of Common Stock were otherwise subject to restrictions on resale. Accordingly, were holders to assert claims against the Company based on breach of the Company’s obligation to register, the Company believes that the Company’s maximum exposure would not be material.

Chinese regulatory approvals — The Company has determined that it did not obtain all Chinese regulatory approvals (and associated registrations) required to reflect the legal title of its interest in Erye as being held by the proper entity within our group which is its current beneficial owner as that term is used under U.S. law. The Company believes it has now determined what governmental approvals (and associated registrations) will need to be issued by the Suzhou Municipal Bureau of Foreign Investment and Commerce and the Suzhou Administration for Industry and Commerce to remediate these deficiencies and the Company has had counsel in China prepare these filings. The Company’s management believes these regulatory deficiencies can be remediated and should not delay a possible divestiture of the Company’s interests in Erye that is currently under evaluation. However, the Company requires the cooperation of the officers of Erye, as to which no assurance can be given, and we could be compelled to seek to replace those officers or to commence legal action to obtain the required consents or otherwise move forward with requisite filings. In addition, even if the filings are made, no assurance can be given that any unremediated regulatory deficiencies would not have an adverse effect on the operating results and liquidity of Erye and the Company and will not impede or delay efforts to divest the Company’s interest in Erye. In addition, the remediation process is expected to trigger certain tax liabilities and penalties, however the ultimate liability will be based on future discussions with the relevant Chinese authorities. The Company cannot reasonably assess the exposure as of March 31, 2012.

Xiangbei Welman Pharmaceutical Co., Ltd. v Suzhou Erye Pharmaceutical Co., Ltd. and Hunan Weichu Pharmacy Co., Ltd. involves a patent infringement dispute with respect to a particular antibiotics complex manufactured by Erye (the "Product"). The Changsha Intermediate Court ruled initially in Welman's favor and Erye appealed that judgment to the Hunan High Court. The Supreme Court of PRC recently rendered a final ruling that Welman is not entitled to the disputed patent right, and on January 16, 2012 the Hunan High Court rejected Welman's suit against Erye on that claimed patent infringement. The initial judgment was rendered on May 13, 2010 in the amount of approximately 5 million RMB (approximately $778,500), which was fully accrued for previously in 2011 and reversed in the fourth quarter of 2011 based on these subsequent rulings.

In 2009, Welman brought a copyright infringement lawsuit against Erye claiming the package inserts with respect to the Product infringed their copyright. Erye was enjoined from copying and using the package inserts on the Product and from selling the Product with the package inserts and Welman was awarded RMB 50,000. Erye has filed application for a retrial of the previous lawsuit brought by Welman to the Hunan High Court, which application filing was accepted by the court, with the court opening date for retrial not determined yet.

In July 2011, a new copyright infringement lawsuit was brought by Welman against Erye claiming that Erye was not complying with the earlier judgment enjoining them from copying and using the package inserts for the Product. The Changsha Intermediate Court was applied to for property preservation and issued a civil decision freezing Erye's bank deposit of up to RMB 50 million (approximately US $7.9 million), or to seal up or detain Erye's other properties of equal value. As of March 31, 2012, approximately 16,808,000RMB (approximately $2,657,400) of cash had been frozen in six Erye bank accounts. Erye has contended that jurisdiction is not proper, and the case is now in review of the Hunan High Court.

A similar copyright infringement lawsuit was recently instituted by Welman against Erye in the Guangzhou Intermediate Court to (i) enjoin Erye from copying and using the package inserts from the Product and selling the drugs with the aforesaid package inserts; and (ii) award Welman economic losses of approximately RMB 2,000,000 (approximately $320,000) against Erye. Now the case was withdrawn by Welman. Welman made an application for preliminary injunction to prohibit Erye from copying and using the package inserts from the Product and selling the drugs with the aforesaid package inserts and Welman's application was denied by the Court on September 6, 2011. Welman subsequently obtained a preliminary injunction from a lower court Guangzhou Haizhu District Court on September 14, 2011. But on October 28, 2011, upon the appeal by Erye, the Haizhu District Court issued a decision withdrawing the preliminary injunction. Welman again applied for on April 13, 2012 and obtained on April 17, 2012 a preliminary injunction from another lower court Guangzhou Baiyun District Court. Erye has applied for court reconsideration on that granted preliminary injunction, during which period the said preliminary injunction is still in enforcement.

- Definition

The entire disclosure for commitments and contingencies.

+ References

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-Name FASB Interpretation (FIN)
-Number 14
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+ Details

Subsequent Events

3 Months Ended

Mar. 31, 2012

Subsequent Events

Note 18 – Subsequent Events

On April 4, 2012, the underwriter from the March 29, 2012 public offering (previously disclosed in our Form 8-K filed on March 29, 2012) of 15,000,000 units exercised its over-allotment option for an additional 2,000,000 units (previously disclosed in our Form 8-K filed on April 5, 2012). Each unit consists of one share of common stock and a warrant to purchase one share of common stock with a per share exercise price of $0.51. Additionally in April 2012, the warrants issued in connection with the offering initially exercisable beginning on September 30, 2012, were accelerated and are now exercisable immediately. The Company received additional gross proceeds of $800,000, prior to deducting underwriting discounts, for net proceeds of approximately $744,000.

On April 26, 2012 (the “Effective Date”), the Compensation Committee of the Board of Directors adopted a program (the “2012 Option Program”) whereby each participating officer was issued on April 26, 2012 an option (the “Option”) to purchase that number of shares of Common Stock equal to that portion of the participating officer’s gross salary (the “Participating Salary”) for the period May 1, 2012 – July 31, 2012 (the “Election Period”) elected by the participating officer divided by $0.25, the Black-Scholes value of an Option issued under the 2012 Option Program. The Option, the issuance of which is in lieu of payment of the Participating Salary, vests at the end of the month in which the Participating Salary to which it relates would have been paid and has a term of ten years despite any termination of employment of the participating officer. The per share exercise price is $0.36, the closing price of the Common Stock on the date of issuance of the Options. The gross Participating Salary for all participating officers is $181,309 and the total number of Options granted under the 2012 Option Program was 725,235.