As filed with the Securities and Exchange Commission on April 6, 2007

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
ON

FORM SB-2

UNDER
THE SECURITIES ACT OF 1933

ADVANCED CELL TECHNOLOGY, INC.

(Name of small business issuer in its charter)

 

1201 Harbor Bay Parkway
Alameda, CA 94502
(510) 748-4900

(Address and telephone number of principal executive offices)

William M. Caldwell, IV, Chief Executive Officer
Advanced Cell Technology, Inc.
1201 Harbor Bay Parkway
Alameda, CA 94502
(510) 748-4900

(Name, address and telephone number of agent for service)

Copies of all communications to:

 

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of the registration statement, as determined by the Registrant.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box x.

CALCULATION OF REGISTRATION FEE

 

(1)                Includes shares of our common stock, par value $.001 per share, which may be offered pursuant to this registration statement, which shares are issuable upon conversion or redemption of certain convertible debentures and upon the exercise of certain warrants, which were issued in 2005 and 2006. Should the conversion price of the debentures be adjusted resulting in our having insufficient shares, we will not rely upon Rule 416, but will file a new registration statement to cover the resale of such additional shares should that become necessary. In addition, should a decrease in the exercise price of the warrants occur as a result of an issuance or sale of shares below the then exercise price result in our having insufficient shares, we will not rely upon Rule 416, but will file a new registration statement to cover the resale of such additional shares should that become necessary.

(2)                Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) under the Securities Act of 1933, as amended (the “Act”), based on the average of the high and low prices for the Company’s common stock as reported on the OTC Bulletin Board on January 22, 2007.

(3)                Includes shares of our common stock, par value $.001 per share, which shares are issuable upon conversion or redemption of certain convertible debentures and upon the exercise of certain warrants, each of which were issued in 2005. These securities were previously registered on Registration Statement No. 333-129019, on Form SB-2 which was filed on October 14, 2005, originally declared effective on October 28, 2005, and subsequently amended.

(4)                Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) under the Act, based on the average of the high and low prices for the Company's common stock as reported on the OTC Bulletin Board on October 12, 2005 in connection with the filing of Registration Statement No. 333-129019, which was filed on October 14, 2005.

(5)                The registration fee for these securities was paid and is transferred and carried forward to this registration statement pursuant to Rule 429 under the Securities Act.

(6)                As noted in footnote (5), above, the registration fee was partially offset by an aggregate amount of $4,493.58 that was previously paid to register securities subject to this registration statement that were previously registered on Registration Statement No. 333-129019 on Form SB-2 filed on October 14, 2005. Pursuant to Rule 429 under the Securities Act, the previously paid registration fees for these securities is transferred and carried forward to this registration statement. The remaining amount of $1,319.04 for the total registration fee has been paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

EXPLANATORY NOTE

The registrant is filing a single prospectus in this registration statement pursuant to Rule 429 under the Securities Act of 1933, as amended, in order to satisfy the requirements of the Securities Act and the rules and regulations thereunder for this offering and other offerings registered on earlier registration statements. The combined prospectus in this registration statement relates to, and shall act, upon effectiveness, as a post-effective amendment to Registration Statement No. 333-129019, which was filed on October 14, 2005, originally declared effective October 28, 2005, and subsequently amended.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING SECURITY HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

PROSPECTUS

ADVANCED CELL TECHNOLOGY, INC.

13,516,367* SHARES OF COMMON STOCK

*Does not include 20,397,296 previously registered shares that are covered by this Prospectus

This prospectus relates to the resale to the public by the selling security holders of up to 13,516,367 shares of our common stock, par value $.001 per share, underlying (i) convertible debentures issued in 2006 in the aggregate original principal amount of $10,981,250, convertible at a conversion price of $0.288, (ii) common stock purchase warrants issued in 2006 at an exercise price of $0.3168, (iii) common stock purchase warrants, with an exercise price of $0.3168, issued to a broker-dealer as commissions paid in connection with the private placement of the 2006 debentures and the 2006 warrants, (iv) convertible debentures issued in 2005 in the aggregate principal amount of $22,276,250, convertible at a conversion price of $0.90, and (v) common stock purchase warrants issued in 2005 at an exercise price of either $0.95 or $0.90.

The conversion price of each of the convertible debentures and the exercise price of the warrants described above is subject to anti-dilution and other customary adjustments.

This prospectus also covers the resale to the public by the selling security holders of up to 20,397,296 shares of common stock previously registered pursuant to that certain Registration Statement No. 333-129019, which was filed on October 14, 2005, originally declared effective October 28, 2005, and subsequently amended, including (i) shares of common stock underlying convertible debentures issued in 2005 and held by certain selling security holders, and (ii) shares of common stock issuable upon the exercise of common stock purchase warrants issued in 2005 and held by certain of the selling security holders.

This prospectus will act as a single combined prospectus as permitted by Rule 429 of the Securities Act of 1933, as amended. The selling security holders named herein may sell common stock from time to time in the principal market on which the stock is traded at the prevailing market price or in negotiated transactions. We will not receive any proceeds from the sales by the selling security holders, but we receive funds from the exercise of warrants held by selling security holders, if and when exercised. We will pay the expenses of registering these shares.

Our common stock is quoted on the OTC Bulletin Board under the symbol “ACTC.” On March 22, 2007,  the closing bid and ask prices for one share of our common stock were $0.76 and $0.79, respectively, as reported by the OTC Bulletin Board. These over-the-counter quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

These securities are speculative and involve a high degree of risk. You should consider carefully the “Risk Factors” beginning on Page 6 of this prospectus before making a decision to purchase our stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                          , 2007

TABLE OF CONTENTS

Prospectus Summary		1
Overview of Business		1
Recent Developments		2
Risk Factors		4
Corporate History		4
The Offering		5
Risk Factors		6
Risks Relating to Our Early Stage of Development		6
Risks Relating to Competition		8
Risks Relating to Our Technology		8
Risks Relating to the September 2005 and September 2006 Financings		11
Risks Relating to Government Regulation		12
Risks Relating to Our Reliance on Third Parties		14
General Risks Relating to Our Business		15
Risks Relating to Our Common Stock		18
Use of Proceeds		20
Selling Security Holders		20
Plan of Distribution		49
Legal Proceedings		51
Directors, Executive Officers, Promoters and Control Persons		52
Security Ownership of Certain Beneficial Owners and Management		55
Description of Securities		56
Common Stock		57
Interest of Named Experts and Counsel		57
Experts		57
Counsel		57
Disclosure of Commission Position of Indemnification For Securities Act Liabilities		57
Description of Business		58
Management’s Discussion and Analysis or Plan of Operation		80
Overview		80
Significant Accounting Policies		80
Results of Operations		83
Recent Accounting Pronouncements		84
Liquidity and Capital Resources		88
Properties		88
Certain Relationships and Related Transactions, and Director Independence		89
Market For Common Equity and Related Stockholder Matters		92
Executive Compensation		94
Summary Compensation Table		94
Outstanding Equity Awards at Last Fiscal Year-End		98
Director Compensation Arrangements		99
Corporate Governance		99
Financial Statements		102
Changes In Certifying Accountants		102
Additional Information		104
Index To Financial Statements		F-1
Notes to Consolidated Financial Statements		F-8

 

PROSPECTUS SUMMARY

The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the “Risk Factors” section, the financial statements and the notes to the financial statements.

Overview of Business

We are a biotechnology company focused on developing and commercializing human stem cell technology in the emerging field of regenerative medicine. Our plan is to successfully develop and commercialize products for use in treatment of a wide array of chronic degenerative diseases and in regenerative repair of acute disease, such as trauma, infarction and burns. All of our technologies are at the basic research or in the pre-clinical stage of development.

Our embryonic stem cell research and development is supported by our portfolio of patents and patent applications and a research and development team that includes some of the world’s leading scientists in the field of stem cell research and development. We have three core categories of research programs:

·       Cellular Reprogramming—the transformation of a patient’s own cells into embryonic stem cells which can then be differentiated into therapeutically useful cells for treatment of disease.

·       Reduced Complexity Program—the production of stem cell therapies for “off-the-shelf” deployment to treat acute disease in time critical situations not amenable to reprogramming technologies.

·       Stem Cell Differentiation—the development of technologies designed to control the differentiation and re-differentiation of stem cells into specific cell types, such as hematopoietic, myocardial, skin, retinal, and neuronal cells, for therapeutic application.

The core of our technology platform is the ability to produce embryonic stem cells that are immunologically compatible with the patient. If successfully developed, our cellular reprogramming technologies will produce cells that will maximize the potential for effective use as transplants to replace diseased or destroyed cells in human patients. Our technology avoids reliance on more limited approaches that involve use of cell lines that are not histocompatible with the recipient, or therapies based upon use of adult stem cells. We believe that successful commercialization of stem cell technologies will require the ability to produce cells that are immunologically compatible with the patient, have the proliferative capacity of young cells and have specific therapeutic application. Our research and development programs are dedicated to production of stem cell therapies that share these characteristics.

We believe that successful development of our technologies could provide cell-based therapies for a broad range of diseases, including:

·       hematopoietic cells for blood diseases and cancer

·       myocardial and endothelial vascular tissue for cardiovascular disease

·       skin cells for dermatological conditions

·       retinal pigment epithelium cells as treatment for macular degeneration and retinal pigmentosis

·       neuronal cells for spinal cord injury, Parkinson’s disease and other neuro-degenerative diseases

·       pancreatic islet β cells for diabetes

·       liver cells for hepatitis and cirrhosis

·       cartilage cells for arthritis

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·       lung cells for a variety of pulmonary diseases

Our headquarters are located at 1201 Harbor Bay Parkway, Alameda, California, 94502, where we maintain one of our primary research facilities. Our other research facility is located in Worcester, Massachusetts.

Recent Developments

Financing.   As disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission, or SEC, on September 19, 2005, on September 15, 2005 we entered into a Securities Purchase Agreement pursuant to which certain purchasers, whom we refer to as the 2005 Purchasers, agreed to purchase from us amortizing convertible debentures and warrants to purchase shares of our common stock, referred to as the 2005 Debentures and the 2005 Warrants respectively. The Securities Purchase Agreement also provided the 2005 Purchasers with investment rights to purchase additional convertible debentures and warrants in the future. On September 6, 2006, we closed the exercise by certain of the 2005 Purchasers of this additional investment right, or AIR, under Section 4.18 of the Securities Purchase Agreement. In connection with the closing of the AIR, we entered into a new Securities Purchase Agreement, dated as of August 30, 2006 and executed and delivered on September 6, 2006, with the 2005 Purchasers exercising the AIR, whom we refer to as the Purchasers. The Purchasers purchased from us additional amortizing convertible debentures and warrants to purchase shares of our common stock, referred to as the 2006 Debentures and the 2006 Warrants respectively. We also entered into a Registration Rights Agreement with the Purchasers, which required us to file a registration statement with the Securities and Exchange Commission following the AIR closing registering on behalf of the Purchasers the resale of the shares of common stock issuable upon conversion or redemption of the 2006 Debentures and upon the exercise of the 2006 Warrants.

The 2006 Debentures issued at the closing of the AIR exercise will be due and payable in full three years from the closing, and will not bear interest. The 2006 Debentures begin amortizing 180 days after the closing with 1¤30th of the principal amount due monthly over thirty months in cash or stock. The aggregate cash purchase price for the 2006 Debentures purchased at the AIR closing was $8,750,000, which is a 20.3187% discount to the full principal amount of the 2006 Debentures of $10,981,250. At any time from the closing date until the maturity date of the 2006 Debentures, the Purchasers have the right to convert the debentures, in whole or in part, into our common stock at the then effective conversion price. The 2006 Debentures are initially convertible into 38,129,340 shares of common stock at a price of $0.288 per share. The conversion price will be subject to adjustment under circumstances set forth in the 2006 Debentures. The Purchasers also received the 2006 Warrants, which are exercisable for five years for 19,064,670 additional shares of common stock at a price of $0.3168 per share. The 2006 Debentures and the 2005 Debentures are hereinafter referred to collectively as the debentures or the convertible debentures, and the 2006 Warrants and the 2005 Warrants are hereinafter referred to collectively as the warrants.

The 2006 Debentures and the 2006 Warrants contain covenants that will limit our ability to, among other things: incur or guarantee additional indebtedness; incur or create liens; amend our certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the holders of the debentures; and repay or repurchase more than a de minimis number of shares of common stock other than as permitted in the debentures and other documents executed with the Purchasers. The 2006 Debentures include customary default provisions and an event of default includes, among other things, a change of control of us, the sale of all or substantially all of our assets, the lapse of the effectiveness of the registration statement for more than 30 consecutive trading days or 60 non-consecutive days during any 12-month period (with certain exceptions), the failure by us to timely deliver certificates to holders upon conversion and a default by us in any obligations under any indebtedness of at least $150,000 which results in such indebtedness being accelerated. Upon the occurrence of an event of default, each 2006 Debenture may become immediately due and payable, either automatically or by declaration of the holder of such

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debenture. The aggregate amount payable upon an acceleration by reason of an event of default will be equal to the greater of 120% of the principal amount of the debentures to be prepaid or the principal amount of the debentures to be prepaid, divided by the conversion price on the date specified in the debenture, multiplied by the closing price on the date set forth in the debenture.

In connection with this transaction, each Purchaser has contractually agreed to restrict its ability to convert the debentures, exercise the warrants and additional investment rights and receive shares of our common stock such that the number of shares of our common stock held by each such Purchaser and its affiliates after such conversion or exercise does not exceed 4.99% of the number of shares of our common stock outstanding immediately after giving effect to such conversion or exercise.

Certain of our officers have entered into a lock-up agreement that restricts their right to dispose of any shares of our common stock for a period of one year following the effective date of a registration statement registering the shares of our common stock as provided in the Registration Rights Agreement.

In connection with this financing, we paid a cash fee of $783,875.40 and issued a warrant to purchase 3,050,347 shares of common stock at an exercise price of $0.3168 per share, to T.R. Winston & Company, LLC, the placement agent for the securities sold in this transaction.

As reported in our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 11, 2007, we closed amendments to the transaction documents described above. The amendments contained the basic terms described below.

The transaction documents associated with the 2005 Debentures and 2005 Warrants were amended in the following material respects:

·       The conversion price of the 2005 Debentures was reset to $0.90.

·       The exercise price of the 2005 Warrants was reset to $0.95.

·       The 2005 Debentures were amended to waive the corporate milestones contained therein and give us the right to pay mandatory monthly redemptions in registered shares (or shares of common stock eligible for immediate resale under Rule 144) or cash, in our discretion.

·       The Registration Rights Agreement was amended so as to limit the number of shares of common stock required to be registered to an amount not in excess of the limits imposed by the Securities and Exchange Commission’s application of Rule 415 to secondary, resale registration statements, provided that we shall register not less than 30% of our issued and outstanding common stock (less shares held by our affiliates) every six months until the registration requirements of the applicable registration rights agreement are satisfied in their entirety, and provided further that we continue to exercise best efforts to satisfy the registration requirements of the original registration rights agreement as promptly as possible.

·       The definition of “Exempt Issuance” was expanded to include certain additional recipients of options issued under our approved stock option plans.

The transaction documents associated with the 2006 Debentures and 2006 Warrants were amended in the following material respects:

·       The 2006 Debentures were amended to waive the corporate milestones contained therein and give us the right to pay mandatory monthly redemptions in registered shares (or shares of common stock eligible for immediate resale under Rule 144) or cash, in our discretion.

·       The commencement of monthly redemptions was deferred until September 7, 2007.

·       The monthly redemption conversion price was reduced to the lesser of (a) the conversion price and (b) 70% of the average of the 10 closing prices immediately preceding the applicable monthly redemption.

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·       We were authorized to withdraw our pending registration statement, subject to satisfaction of the provisions of the amended registration rights agreement described immediately below.

·       The registration rights agreement was amended as follows:  (a) to require the filing of this registration statement by the later of the 10th trading day following the effective date of the amendment, or January 19, 2007; (b) the number of shares of common stock required to be registered is limited to an amount not in excess of the limits imposed by the Securities and Exchange Commission’s application of Rule 415 to secondary, resale registration statements, provided that we register not less than 30% of our issued and outstanding common stock (less shares held by our affiliates) every six months until the registration requirements of the applicable registration rights agreement are satisfied in their entirety, and provided further that we continue to exercise best efforts to satisfy the registration requirements of the original registration rights agreement as promptly as possible.

·       We agreed to limit cash expenditures to an amount not in excess of $1.3 million per calendar month, subject to certain specified exceptions.

·       The definition of “Exempt Issuance” was expanded to include certain additional recipients of options issued under our approved stock option plans.

Warrant Repricing.   We concluded a repricing of the 2005 Warrants and our $1.27 warrants on August 28, 2006. The repricing transaction resulted in the exercise of certain of the 2005 Warrants for 4,541,672 shares of our common stock, generating proceeds to us of approximately $4,314,589. Replacement warrants identical in all respects to the exercised 2005 Warrants, except for an adjusted strike price of $1.60, subsequently adjusted to $0.95 pursuant to the anti-dilution provisions thereof, were issued to the warrant holders that exercised their warrants in the repricing transaction. Certain of the shares issuable upon the exercise of the replacement warrants issued to the Purchasers are included in the registration statement of which this prospectus is part. The holders of 2005 Warrants that did not participate in the repricing transaction were entitled to an adjustment in the exercise or conversion price, as applicable, of their 2005 Warrants and 2005 Debentures pursuant to the antidilution provisions thereof.

We issued a warrant to purchase 1,525,174 shares of common stock at an exercise price of $0.3168 per share to T.R. Winston & Company, LLC as commission for broker services provided in connection with the closing of the warrant repricing.

All of the above securities were issued pursuant to an exemption from registration pursuant to Section 4(2) of the Securities Act of 1933.

Risk Factors

Investing in our common stock is subject to numerous risks, including the risk of delays in or discontinuation of our research and development due to lack of financing, inability to obtain necessary regulatory approvals to market the products, unforeseen safety issues relating to the products and dependence on third party collaborators to conduct research and development of the products. Because we are an early stage company with a very limited history of operations, we are also subject to many risks associated with early-stage companies. For a more detailed discussion of some of the risks you should consider before purchasing shares of our common stock, you are urged to carefully review and consider the section entitled “Risk Factors” beginning on page 6 of this prospectus.

Corporate History

We were incorporated under Nevada law in May of 2000. On January 31, 2005, we completed an acquisition of Advanced Cell, Inc., a Delaware corporation, formerly known as Advanced Cell Technology, Inc. and referred to as ACT, pursuant to the terms of an agreement and plan of merger dated

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January 3, 2005. At the time of the transaction, we had only nominal assets and no operating activities. Pursuant to the terms of the merger, a wholly owned subsidiary of ours merged with and into ACT, with ACT surviving the merger as our wholly owned subsidiary. As a result of the merger, all of the outstanding shares of the capital stock of ACT were converted, on a pro rata basis, into the right to receive an aggregate of approximately 18,000,000 shares of our common stock. In addition, all outstanding options and warrants to acquire shares of the capital stock of ACT were converted into the right to receive shares of our common stock, and we adopted the ACT stock option plan and all options granted thereunder. Upon completion of the merger, all of our pre-merger officers and directors resigned and were replaced by ACT’s officers and directors. As a result of the merger, we effected a complete change of business operations and terminated our pre-merger business and succeeded to, and are continuing the business operations and research efforts of, ACT in the field of biotechnology.

On November 18, 2005, as described above, we reincorporated the company from the State of Nevada to the State of Delaware pursuant to a merger of the company with and into a newly formed Delaware corporation. Immediately following the reincorporation, we completed the merger of ACT with and into the company, so that the separate existence of ACT has ceased.

Our principal executive offices are located at 1201 Harbor Bay Parkway, Alameda, California, 94502, and our telephone number is (510) 748-4900.

The Offering

The selling security holders identified on page 22 of this prospectus are offering on a resale basis the following shares:

(1)          Does not include 20,397,296 shares of common stock covered by this prospectus which were previously registered on Registration Statement No. 333-129019, which was filed on October 14, 2005, originally declared effective on October 28, 2005, and subsequently amended.

(2)          Based on the number of shares outstanding on January 19, 2007, not including shares issuable upon conversion or exercise of securities convertible or exercisable into shares of common stock.

(3)          Based on the number of shares outstanding on January 19, 2007, assuming (i) conversion of the 2005 and 2006 Debentures, (ii) exercise of the 2005 and 2006 Warrants sold in the recent financing, (iii) exercise of those certain warrants issued in 2006 to certain selling security holders as consideration for their exercise of common stock purchase warrants previously issued to them in 2005, but not assuming (A) conversion or exercise of any other securities convertible or exercisable into shares of common stock and (B) the conversions and exercises referred to in preceding clauses (i) through (iii) are limited to the total number of shares registered hereunder and under the Registration Statement (No. 333-129019) filed in October of 2005.

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RISK FACTORS

You should carefully consider each of the following risk factors and all of the other information provided in this prospectus before purchasing our common stock. The risks described below are those we currently believe may materially affect us. An investment in our common stock involves a high degree of risk, and should be considered only by persons who can afford the loss of their entire investment. This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as “may,” “assumes,” “forecasts,” “positions,” “predicts,” “strategy,” “will,” “expects,” “estimates,” “anticipates,” “believes,” “projects,” “intends,” “plans,” “budgets,” “potential,” “continue” and variations thereof, and other statements contained in quarterly report, and the exhibits hereto, regarding matters that are not historical facts and are forward-looking statements. Because these statements involve risks and uncertainties, as well as certain assumptions, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to risks inherent in: our early stage of development, including a lack of operating history, lack of profitable operations and the need for additional capital; the development and commercialization of largely novel and unproven technologies and products; our ability to protect, maintain, and defend our intellectual property rights: uncertainties regarding our ability to obtain the capital resources needed to continue research and development operations and to conduct research, preclinical development and clinical trials necessary for regulatory approvals; uncertainty regarding the outcome of clinical trials and our overall ability to compete effectively in a highly complex, rapidly developing, capital intensive and competitive industry.

Risks Relating to Our Early Stage of Development

We have a limited operating history on which potential investors may evaluate our operations and prospects for profitable operations.   We have a limited operating history on which a potential investor may base an evaluation of us and our prospects. If we are unable to begin and sustain profitable operations, investors may lose their entire investment in us. We are in the pre-clinical stage, and our prospects must be considered speculative in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development, particularly in light of the uncertainties relating to the new, competitive and rapidly evolving markets in which we anticipate we will operate. To attempt to address these risks, we must, among other things, further develop our technologies, products and services, successfully implement our research, development, marketing and commercialization strategies, respond to competitive developments and attract, retain and motivate qualified personnel. A substantial risk is involved in investing in us because, as an early stage company,

·       we have fewer resources than an established company,

·       our management may be more likely to make mistakes at such an early stage, and

·       we may be more vulnerable operationally and financially to any mistakes that may be made, as well as to external factors beyond our control.

These difficulties are compounded by our heavy dependence on emerging and sometimes unproven technologies. In addition, some of our significant potential revenue sources involve ethically sensitive and controversial issues which could become the subject of legislation or regulations that could materially restrict our operations and, therefore, harm our financial condition, operating results and prospects for bringing our investors a return on their investment.

We have a history of operating losses, and we cannot assure you that we will achieve future revenues or operating profits.   We have generated modest revenue to date from our operations. Historically, we have had net operating losses each year since our inception. We have limited current potential sources of revenue from license fees and product development revenues, and we cannot assure you that we will be able to develop such revenue sources or that our operations will become profitable, even if we are able to commercialize our technologies or any products or services developed from those technologies. If we

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continue to suffer losses as we have in the past, investors may not receive any return on their investment and may lose their entire investment.

Although we have revenues from license fees and royalties, we have no commercially marketable products and no immediate ability to generate revenue from commercial products, nor any assurance of being able to develop our technologies for commercial applications. As a result, we may never be able to operate profitably. We are just beginning to identify products available for pre-clinical trials and may not receive significant revenues from commercial sales of our products for the next several years, if at all, although we do generate revenues from licensing activities. We have marketed only a limited amount of services based on our technologies and have little experience in doing so. Our technologies and any potential products or services that we may develop will require significant additional effort and investment prior to material commercialization and, in the case of any biomedical products, pre-clinical and clinical testing and regulatory approvals. We cannot assure you that we will be able to develop any such technologies or any products or services, or that such technologies, products or services will prove to be safe and efficacious in clinical trials, meet applicable regulatory standards, be capable of being produced in commercial quantities at acceptable costs or be successfully marketed. For that reason, we may not be able to generate revenues from commercial production or operate profitably.

We have sold the agricultural portion of our business in order to finance operations. The agricultural applications of our technology generally have a more rapid realization of revenues due to more limited regulatory requirements and testing. Our ability to generate revenue from any agricultural applications of our technology is limited to existing license royalties, if any.

We will require substantial additional funds to continue operating which may not be available on acceptable terms, if at all.   We have losses from operations, negative cash flows from operations and a substantial stockholders’ deficit that raise substantial doubt about the Company’s ability to continue as a going concern. We do not believe that our cash from all sources, including cash, cash equivalents and anticipated revenue stream from licensing fees and sponsored research contracts is sufficient for us to continue operations beyond December 31, 2007 without raising additional financing.

Management continues to evaluate alternatives and sources for additional funding, which may include public or private investors, strategic partners, and grant programs available through specific states or foundations, although there is no assurance that such sources will result in raising additional capital. Lack of necessary funds may require us to delay, scale back or eliminate some or all of our research and product development programs and /or our capital expenditures, to license our potential products or technologies to third parties, to consider business combinations related to ongoing business operations, or shut down some, or all, of our operations.

In addition, our cash requirements may vary materially from those now planned because of results of research and development, potential relationships with strategic partners, changes in the focus and direction of our research and development programs, competition, litigation required to protect our technology, technological advances, the cost of pre-clinical and clinical testing, the regulatory process of the United States Food and Drug Administration, or FDA, and foreign regulators, whether any of our products become approved or the market acceptance of any such products and other factors. Our current cash reserves are not sufficient to fund our operations through the commercialization of our first products or services.

We have limited clinical testing, regulatory, manufacturing, marketing, distribution and sales capabilities which may limit our ability to generate revenues.   Because of the relatively early stage of our research and development programs, we have not yet invested significantly in clinical testing, regulatory, manufacturing, or in marketing, distribution or product sales resources. We cannot assure you that we will be able to develop any such resources successfully or as quickly as may be necessary. The inability to do so may harm our ability to generate revenues or operate profitably.

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Risks Relating to Competition

Our competition includes both public and private organizations and collaborations among academic institutions and large pharmaceutical companies, most of which have significantly greater experience and financial resources than we do.   The biotechnology and pharmaceutical industries are characterized by intense competition. We compete against numerous companies, both domestic and foreign, many of which have substantially greater experience and financial and other resources than we have. Several such enterprises have initiated cell therapy research programs and/or efforts to treat the same diseases targeted by us. Companies such as Geron Corporation, Genzyme Corporation, StemCells, Inc., Aastrom Biosciences, Inc. and Viacell, Inc., as well as others, many of which have substantially greater resources and experience in our fields than we do, are well situated to effectively compete with us. Any of the world’s largest pharmaceutical companies represents a significant actual or potential competitor with vastly greater resources than ours.

These companies hold licenses to genetic selection technologies and other technologies that are competitive with our technologies. These and other competitive enterprises have devoted, and will continue to devote, substantial resources to the development of technologies and products in competition with us.

Private and public academic and research institutions also compete with us in the research and development of human therapeutic or agricultural products. In the past several years, the pharmaceutical industry has selectively entered into collaborations with both public and private organizations to explore the possibilities that stem cell therapies may present for substantive breakthroughs in the fight against disease.

In addition, many of our competitors have significantly greater experience than we have in the development, pre-clinical testing and human clinical trials of biotechnology and pharmaceutical products, in obtaining FDA and other regulatory approvals of such products and in manufacturing and marketing such products. Accordingly our competitors may succeed in obtaining FDA approval for products more rapidly or effectively than we can. Our competitors may also be the first to discover and obtain a valid patent to a particular stem cell which may effectively block all others from doing so. It will be important for us or our collaborators to be the first to discover any stem cell that we are seeking to discover. Failure to be the first could prevent us from commercializing all of our research and development affected by that discovery. Additionally, if we commence commercial sales of any products, we will also be competing with respect to manufacturing efficiency and sales and marketing capabilities, areas in which we have no experience.

The United States is encountering tremendous competition from many foreign countries that are providing an environment more attractive for stem cell research. The governments of numerous foreign countries are investing in stem cell research, providing facilities, personnel and legal environments intended to attract biotechnology companies and encourage stem cell research and development of stem cell-related technologies.

These efforts by foreign countries may make it more difficult to effectively compete in our industry and may generate competitors with substantially greater resources than ours.

Risks Relating to Our Technology

We rely on nuclear transfer and embryonic stem cell technologies that we may not be able to successfully develop, which will prevent us from generating revenues, operating profitably or providing investors any return on their investment.   We have concentrated our research on our nuclear transfer and embryonic stem cell technologies, and our ability to operate profitably will depend on being able to successfully develop these technologies for human applications. These are emerging technologies with, as

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yet, limited human applications. We cannot guarantee that we will be able to successfully develop our nuclear transfer and embryonic stem cell technologies or that such development will result in products or services with any significant commercial utility. We anticipate that the commercial sale of such products or services, and royalty/licensing fees related to our technology, would be our primary sources of revenues. If we are unable to develop our technologies, investors will likely lose their entire investment in us.

The outcome of pre-clinical, clinical and product testing of our products is uncertain, and if we are unable to satisfactorily complete such testing, or if such testing yields unsatisfactory results, we will be unable to commercially produce our proposed products. Before obtaining regulatory approvals for the commercial sale of any potential human products, our products will be subjected to extensive pre-clinical and clinical testing to demonstrate their safety and efficacy in humans. We cannot assure you that the clinical trials of our products, or those of our licensees or collaborators, will demonstrate the safety and efficacy of such products at all, or to the extent necessary to obtain appropriate regulatory approvals, or that the testing of such products will be completed in a timely manner, if at all, or without significant increases in costs, program delays or both, all of which could harm our ability to generate revenues. In addition, our prospective products may not prove to be more effective for treating disease or injury than current therapies. Accordingly, we may have to delay or abandon efforts to research, develop or obtain regulatory approval to market our prospective products. Many companies involved in biotechnology research and development have suffered significant setbacks in advanced clinical trials, even after promising results in earlier trials. The failure to adequately demonstrate the safety and efficacy of a therapeutic product under development could delay or prevent regulatory approval of the product and could harm our ability to generate revenues, operate profitably or produce any return on an investment in us.

While the marketing of cloned or transgenic animals does not currently require regulatory approval, such approval may be required in the future. We cannot assure you that we would obtain such approvals or that our licensees’ products would be accepted in the marketplace. This lack of approval could reduce or preclude any royalty revenues we might receive from our licensees in that field.

We may not be able to commercially develop our technologies and proposed product lines, which, in turn, would significantly harm our ability to earn revenues and result in a loss of investment.   Our ability to commercially develop our technologies will be dictated in large part by forces outside our control which cannot be predicted, including, but not limited to, general economic conditions, the success of our research and pre-clinical and field testing, the availability of collaborative partners to finance our work in pursuing applications of nuclear transfer technology and technological or other developments in the biomedical field which, due to efficiencies, technological breakthroughs or greater acceptance in the biomedical industry, may render one or more areas of commercialization more attractive, obsolete or competitively unattractive. It is possible that one or more areas of commercialization will not be pursued at all if a collaborative partner or entity willing to fund research and development cannot be located. Our decisions regarding the ultimate products and/or services we pursue could have a significant adverse affect on our ability to earn revenue if we misinterpret trends, underestimate development costs and/or pursue wrong products or services. Any of these factors either alone or in concert could materially harm our ability to earn revenues and could result in a loss of any investment in us.

If we are unable to keep up with rapid technological changes in our field or compete effectively, we will be unable to operate profitably.   We are engaged in activities in the biotechnology field, which is characterized by extensive research efforts and rapid technological progress. If we fail to anticipate or respond adequately to technological developments, our ability to operate profitably could suffer. We cannot assure you that research and discoveries by other biotechnology, agricultural, pharmaceutical or other companies will not render our technologies or potential products or services uneconomical or result in products superior to those we develop or that any technologies, products or services we develop will be preferred to any existing or newly-developed technologies, products or services.

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We may not be able to protect our proprietary technology, which could harm our ability to operate profitably.   The biotechnology and pharmaceutical industries place considerable importance on obtaining patent and trade secret protection for new technologies, products and processes. Our success will depend, to a substantial degree, on our ability to obtain and enforce patent protection for our products, preserve any trade secrets and operate without infringing the proprietary rights of others. We cannot assure you that:

·       we will succeed in obtaining any patents in a timely manner or at all, or that the breadth or degree of protection of any such patents will protect our interests,

·       the use of our technology will not infringe on the proprietary rights of others,

·       patent applications relating to our potential products or technologies will result in the issuance of any patents or that, if issued, such patents will afford adequate protection to us or not be challenged invalidated or infringed, and

·       patents will not issue to other parties, which may be infringed by our potential products or technologies.

We are aware of certain patents that have been granted to others and certain patent applications that have been filed by others with respect to nuclear transfer technologies. The fields in which we operate have been characterized by significant efforts by competitors to establish dominant or blocking patent rights to gain a competitive advantage, and by considerable differences of opinion as to the value and legal legitimacy of competitors’ purported patent rights and the technologies they actually utilize in their businesses.

Our business is highly dependent upon maintaining licenses with respect to key technology.   Several of the key patents we utilize are licensed to us by third parties. These licenses are subject to termination under certain circumstances (including, for example, our failure to make minimum royalty payments or to timely achieve development and commercialization benchmarks). The loss of any of such licenses, or the conversion of such licenses to non-exclusive licenses, could harm our operations and/or enhance the prospects of our competitors.

Certain of these licenses also contain restrictions, such as limitations on our ability to grant sublicenses that could materially interfere with our ability to generate revenue through the licensing or sale to third parties of important and valuable technologies that we have, for strategic reasons, elected not to pursue directly. The possibility exists that in the future we will require further licenses to complete and/or commercialize our proposed products. We cannot assure you that we will be able to acquire any such licenses on a commercially viable basis.

We may not be able to adequately protect against piracy of intellectual property in foreign jurisdictions.   Considerable research in the areas of stem cells, cell therapeutics and regenerative medicine is being performed in countries outside of the United States, and a number of our competitors are located in those countries. The laws protecting intellectual property in some of those countries may not provide protection for our trade secrets and intellectual property adequate to prevent our competitors from misappropriating our trade secrets or intellectual property. If our trade secrets or intellectual property are misappropriated in those countries, we may be without adequate remedies to address the issue.

Certain of our technology is not protectable by patent.   Certain parts of our know-how and technology are not patentable. To protect our proprietary position in such know-how and technology, we intend to require all employees, consultants, advisors and collaborators to enter into confidentiality and invention ownership agreements with us. We cannot assure you, however, that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the

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event of any unauthorized use or disclosure. Further, in the absence of patent protection, competitors who independently develop substantially equivalent technology may harm our business.

Patent litigation presents an ongoing threat to our business with respect to both outcomes and costs.   We have previously been involved in patent interference litigation, and it is possible that further litigation over patent matters with one or more competitors could arise. We could incur substantial litigation or interference costs in defending ourselves against suits brought against us or in suits in which we may assert our patents against others. If the outcome of any such litigation is unfavorable, our business could be materially adversely affected. To determine the priority of inventions, we may also have to participate in interference proceedings declared by the United States Patent and Trademark Office, which could result in substantial cost to us. Without additional capital, we may not have the resources to adequately defend or pursue this litigation.

Risks Relating to the September 2005 and September 2006 Financings

If we are required for any reason to repay our outstanding debentures we would be required to deplete our working capital, if available, or raise additional funds. Our failure to repay the convertible debentures, if required, could result in legal action against us, which could require the sale of substantial assets.  We have outstanding, as of December 31, 2006, $23,505,214 aggregate original principal amount of convertible debentures with an original issue discount of 20.3187% with $10,824,375 in 2006 Debentures and $12,680,839 in 2005 Debentures. We are required to redeem on a monthly basis, by payment with cash or with shares of our common stock, 1/30th of the aggregate original principal amount of the debentures. Unless waived by the holders of the debentures, in order to redeem with shares of our common stock we must satisfy certain conditions which have yet to be satisfied, including such conditions as the listing of our shares of common stock on either the NASDAQ National Market, the NASDAQ Small Cap Market, or the American Stock Exchange. These monthly payments will impact the amount of working capital available to us.

The 2005 Debentures are due and payable on September 14, 2008, unless sooner converted into shares of our common stock, and the 2006 Debentures are due and payable on February 28, 2010, unless sooner converted into shares of our common stock. Any event of default could require the early repayment of the convertible debentures, including the accruing of interest on the outstanding principal balance of the debentures if the default is not cured with the specified grace period. We anticipate that the full amount of the convertible debentures will be converted into shares of our common stock, in accordance with the terms of the convertible debentures. If, prior to the maturity date, we are required to repay the convertible debentures in full, we would be required to use our limited working capital and raise additional funds. If we were unable to repay the notes when required, the debenture holders could commence legal action against us to recover the amounts due. Any such action could require us to curtail or cease operations.

There are a large number of shares underlying our convertible debentures in full, and warrants that are registered and available for sale and the sale of these shares may depress the market price of our common stock. As of March 1, 2007, we had:

·       certain outstanding 2005 Debentures that may be converted into an estimated 6,412,894 shares of common stock based on a conversion price of $0.90, and

·       outstanding 2005 Warrants to purchase 1,463,223 shares of common stock with an exercise price of $0.95 that were issued in connection with the sale of the 2005 Debentures, and

·       outstanding 2006 Debentures that may be converted into an estimated 37,584,635 shares of common stock based on a conversion price of $0.288, and

·       outstanding 2006 Warrants to purchase 19,064,670 shares of common stock with an exercise price of $0.3168 that were issued in connection with the sale of the 2006 Debentures, and

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·       outstanding replacement warrants to purchase 4,541,672 shares of common stock with an exercise price of $0.95, and

·       outstanding warrants to purchase 4,575,521 shares of common stock with an exercise price of $0.3168 that were issued in connection with the sale of the 2006 Debentures.

Sales of a substantial number of shares of our common stock in the public market could adversely affect the market price for our common stock and make it more difficult for you to sell shares of our common stock at times and prices that you feel are appropriate.

The issuance of shares upon conversion of the convertible debentures and exercise of outstanding warrants will cause immediate and substantial dilution to our existing stockholders.   The issuance of shares upon conversion of the convertible debentures and exercise of warrants, including the replacement warrants, will result in substantial dilution to the interests of other stockholders since the selling security holders may ultimately convert and sell the full amount issuable on conversion. Although no single selling security holder may convert its convertible debentures and/or exercise its warrants if such conversion or exercise would cause it to own more than 4.99% of our outstanding common stock, this restriction does not prevent each selling security holder from converting and/or exercising some of its holdings and then converting the rest of its holdings. In this way, each selling security holder could sell more than this limit while never holding more than this limit. There is no upper limit on the number of shares that may be issued which will have the effect of further diluting the proportionate equity interest and voting power of holders of our common stock, including investors in this offering. In addition, the issuance of the 2006 Debentures and the 2006 Warrants triggered certain anti-dilution rights for certain third parties currently holding securities of the Company resulting in substantial dilution to the interests of other stockholders.

Payment of mandatory monthly redemptions in shares of common stock will result in substantial dilution.   We expect to satisfy all or a significant portion of our obligation to redeem 1/30th of the aggregate original principal amount of debentures per month through issuance of additional shares of our common stock. This approach will result in substantial dilution to the interests of other stockholders.

If we fail to effect and maintain registration of the common stock issued or issuable pursuant to conversion of our debentures, or upon exercise of our warrants, we may be obligated to pay the investors of those securities liquidated damages.   We have various obligations to file and obtain the effectiveness of certain registration statements which include certain outstanding common stock and common stock underlying outstanding  debentures and common stock underlying the warrants. If we fail to meet any obligations we have to have effective and current registration statements available (including the current registration statement related to the common stock underlying our debentures and warrants), we may become obligated to pay liquidated damages to investors to the extent they may be entitled to such damages. In addition, pursuant to the amendments to the 2005 and 2006 financing documents described above, we are contractually obligated to file additional registration statements at various times in the future. Because of the SEC’s recent interpretation of Rule 415, we cannot offer any assurances that we will be able to obtain the effectiveness of any registration statement or post-effective amendments that we may file.

Risks Relating to Government Regulation

Companies such as ours engaged in research using nuclear transfer and embryonic stem cells are currently subject to strict government regulations, and our operations could be harmed by any legislative or administrative efforts impacting the use of nuclear transfer technology or human embryonic material.   Our business is focused on human cell therapy, which includes the production of human differentiated cells from stem cells and involves the use of nuclear transfer technology, human oocytes, and embryonic material. Nuclear transfer technology, commonly known as therapeutic cloning, and research utilizing embryonic stem cells are controversial subjects, and are currently subject to intense scrutiny, both in the

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United States, the United Nations and throughout the world, particularly in the area of nuclear transfer of human cells and the use of human embryonic material.

We cannot assure you that our operations will not be harmed by any legislative or administrative efforts by politicians or groups opposed to the development of nuclear transfer technology generally or the use of nuclear transfer for therapeutic cloning of human cells specifically. Further, we cannot assure you that legislative or administrative restrictions directly or indirectly delaying, limiting or preventing the use of nuclear transfer technology or human embryonic material or the sale, manufacture or use of products or services derived from nuclear transfer technology or human embryonic material will not be adopted in the future.

Restrictions on the use of human embryonic stem cells, and the ethical, legal and social implications of that research, could prevent us from developing or gaining acceptance for commercially viable products in these areas.   Some of our most important programs involve the use of stem cells that are derived from human embryos. The use of human embryonic stem cells gives rise to ethical, legal and social issues regarding the appropriate use of these cells. In the event that our research related to human embryonic stem cells becomes the subject of adverse commentary or publicity, the market price for our common stock could be significantly harmed. Some political and religious groups have voiced opposition to our technology and practices. We use stem cells derived from human embryos that have been created for in vitro fertilization procedures but are no longer desired or suitable for that use and are donated with appropriate informed consent for research use. Many research institutions, including some of our scientific collaborators, have adopted policies regarding the ethical use of human embryonic tissue. These policies may have the effect of limiting the scope of research conducted using human embryonic stem cells, thereby impairing our ability to conduct research in this field.

Potential and actual legislation and regulation at the federal or state level related to our technology could limit our activities and ability to develop products for commercial sales, depriving us of our anticipated source of future revenues. Legislative bills could be introduced in the future aiming to prohibit the use or commercialization of somatic cell nuclear transfer technology or of any products resulting from it, including those related to human therapeutic cloning and regenerative medicine. Such legislation could have a significant influence on our ability to pursue our research, development and commercialization plans in the United States.

Any future or additional government-imposed restrictions in these or other jurisdictions with respect to use of embryos or human embryonic stem cells in research and development could have a material adverse effect on us, by, among other things:

·       harming our ability to establish critical partnerships and collaborations,

·       delaying or preventing progress in our research and development,

·       limiting or preventing the development, sale or use of our products, and

·       causing a decrease in the price of our stock.

Because we or our collaborators must obtain regulatory approval to market our products in the United States and other countries, we cannot predict whether or when we will be permitted to commercialize our products.   Federal, state and local governments in the United States and governments in other countries have significant regulations in place that govern many of our activities. We are or may become subject to various federal, state and local laws, regulations and recommendations relating to safe working conditions, laboratory and manufacturing practices, the experimental use of animals and the use and disposal of hazardous or potentially hazardous substances used in connection with our research and development work. The preclinical testing and clinical trials of the products that we or our collaborators develop are subject to extensive government regulation that may prevent us from creating commercially viable products from our discoveries. In addition, the sale by us or our collaborators of any commercially

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viable product will be subject to government regulation from several standpoints, including manufacturing, advertising and promoting, selling and marketing, labeling, and distributing.

If, and to the extent that, we are unable to comply with these regulations, our ability to earn revenues will be materially and negatively impacted. The regulatory process, particularly in the biotechnology field, is uncertain, can take many years and requires the expenditure of substantial resources. Biological drugs and non-biological drugs are rigorously regulated. In particular, proposed human pharmaceutical therapeutic product candidates are subject to rigorous preclinical and clinical testing and other requirements by the FDA in the United States and similar health authorities in other countries in order to demonstrate safety and efficacy. We may never obtain regulatory approval to market our proposed products. For additional information about governmental regulations that will affect our planned and intended business operations, see “DESCRIPTION OF BUSINESS—Government Regulation” below.

Our products may not receive FDA approval, which would prevent us from commercially marketing our products and producing revenues. The FDA and comparable government agencies in foreign countries impose substantial regulations on the manufacture and marketing of pharmaceutical products through lengthy and detailed laboratory, pre-clinical and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Satisfaction of these regulations typically takes several years or more and varies substantially based upon the type, complexity and novelty of the proposed product. We cannot yet accurately predict when we might first submit any Investigational New Drug, or IND, application to the FDA, or whether any such IND application would be granted on a timely basis, if at all, nor can we assure you that we will successfully complete any clinical trials in connection with any such IND application. Further, we cannot yet accurately predict when we might first submit any product license application for FDA approval or whether any such product license application would be granted on a timely basis, if at all. As a result, we cannot assure you that FDA approvals for any products developed by us will be granted on a timely basis, if at all. Any such delay in obtaining, or failure to obtain, such approvals could have a material adverse effect on the marketing of our products and our ability to generate product revenue. For additional information about governmental regulations that will affect our planned and intended business operations, see “DESCRIPTION OF BUSINESS—Government Regulation” below.

For-profit entities may be prohibited from benefiting from grant funding.   There has been much publicity about grant resources for stem cell research, including Proposition 71 in California, which is described more fully under the heading “DESCRIPTION OF BUSINESS—California Proposition 71” below. There is ongoing litigation in California that may delay, or prevent the sale of State bonds that would fund the activities contemplated by California voters. In addition, rules and regulations related to any funding that may ultimately be provided, the type of entity that will be eligible for funding, the science to be funded, and funding details have not been finalized. As a result of these uncertainties regarding Proposition 71, we cannot assure you that funding, if any, will be available to us, or any for-profit entity.

The government maintains certain rights in technology that we develop using government grant money and we may lose the revenues from such technology if we do not commercialize and utilize the technology pursuant to established government guidelines.   Certain of our and our licensors’ research has been or is being funded in part by government grants. In connection with certain grants, the U.S. government retains rights in the technology developed with the grant. These rights could restrict our ability to fully capitalize upon the value of this research.

Risks Relating to Our Reliance on Third Parties

We depend on our collaborators to help us develop and test our proposed products, and our ability to develop and commercialize products may be impaired or delayed if collaborations are unsuccessful.   Our strategy for the development, clinical testing and commercialization of our proposed products requires that we enter into collaborations with corporate partners, licensors, licensees and others. We are dependent upon the subsequent success of these other parties in performing their respective responsibilities and the

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continued cooperation of our partners. Our collaborators may not cooperate with us or perform their obligations under our agreements with them. We cannot control the amount and timing of our collaborators’ resources that will be devoted to our research and development activities related to our collaborative agreements with them. Our collaborators may choose to pursue existing or alternative technologies in preference to those being developed in collaboration with us.

Under agreements with collaborators, we may rely significantly on such collaborators to, among other things:

·       design and conduct advanced clinical trials in the event that we reach clinical trials,

·       fund research and development activities with us,

·       pay us fees upon the achievement of milestones, and

·       market with us any commercial products that result from our collaborations.

The development and commercialization of potential products will be delayed if collaborators fail to conduct these activities in a timely manner or at all. In addition, our collaborators could terminate their agreements with us and we may not receive any development or milestone payments. If we do not achieve milestones set forth in the agreements, or if our collaborators breach or terminate their collaborative agreements with us, our business may be materially harmed.

Our reliance on the activities of our non-employee consultants, research institutions, and scientific contractors, whose activities are not wholly within our control, may lead to delays in development of our proposed products.   We rely extensively upon and have relationships with scientific consultants at academic and other institutions, some of whom conduct research at our request, and other consultants with expertise in clinical development strategy or other matters. These consultants are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. We have limited control over the activities of these consultants and, except as otherwise required by our collaboration and consulting agreements to the extent they exist, can expect only limited amounts of their time to be dedicated to our activities.

In addition, we have formed research collaborations with academic and other research institutions throughout the world. These research facilities may have commitments to other commercial and non-commercial entities. We have limited control over the operations of these laboratories and can expect only limited amounts of time to be dedicated to our research goals.

We also rely on other companies for certain process development or other technical scientific work. We have contracts with these companies that specify the work to be done and results to be achieved, but we do not have direct control over their personnel or operations. If any of these third parties are unable or refuse to contribute to projects on which we need their help, our ability to generate advances in our technologies and develop our products could be significantly harmed.

General Risks Relating to Our Business

We may be subject to litigation that will be costly to defend or pursue and uncertain in its outcome.   Our business may bring us into conflict with our licensees, licensors, or others with whom we have contractual or other business relationships, or with our competitors or others whose interests differ from ours. If we are unable to resolve those conflicts on terms that are satisfactory to all parties, we may become involved in litigation brought by or against us. That litigation is likely to be expensive and may require a significant amount of management’s time and attention, at the expense of other aspects of our business. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require us to pay damages, enjoin us from certain activities, or otherwise affect our legal or contractual rights, which could have a significant adverse effect on our business.

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We may not be able to obtain third-party patient reimbursement or favorable product pricing, which would reduce our ability to operate profitably.   Our ability to successfully commercialize certain of our proposed products in the human therapeutic field may depend to a significant degree on patient reimbursement of the costs of such products and related treatments at acceptable levels from government authorities, private health insurers and other organizations, such as health maintenance organizations. We cannot assure you that reimbursement in the United States or foreign countries will be available for any products we may develop or, if available, will not be decreased in the future, or that reimbursement amounts will not reduce the demand for, or the price of, our products with a consequent harm to our business. We cannot predict what additional regulation or legislation relating to the health care industry or third-party coverage and reimbursement may be enacted in the future or what effect such regulation or legislation may have on our business. If additional regulations are overly onerous or expensive, or if health care related legislation makes our business more expensive or burdensome than originally anticipated, we may be forced to significantly downsize our business plans or completely abandon our business model.

Our products are likely to be expensive to manufacture, and they may not be profitable if we are unable to control the costs to manufacture them.   Our products are likely to be significantly more expensive to manufacture than most other drugs currently on the market today. Our present manufacturing processes produce modest quantities of product intended for use in our ongoing research activities, and we have not developed processes, procedures and capability to produce commercial volumes of product. We hope to substantially reduce manufacturing costs through process improvements, development of new science, increases in manufacturing scale and outsourcing to experienced manufacturers. If we are not able to make these or other improvements, and depending on the pricing of the product, our profit margins may be significantly less than that of most drugs on the market today. In addition, we may not be able to charge a high enough price for any cell therapy product we develop, even if they are safe and effective, to make a profit. If we are unable to realize significant profits from our potential product candidates, our business would be materially harmed.

To be successful, our proposed products must be accepted by the health care community, which can be very slow to adopt or unreceptive to new technologies and products.   Our proposed products and those developed by our collaborative partners, if approved for marketing, may not achieve market acceptance since hospitals, physicians, patients or the medical community in general may decide not to accept and utilize these products. The products that we are attempting to develop represent substantial departures from established treatment methods and will compete with a number of more conventional drugs and therapies manufactured and marketed by major pharmaceutical companies. The degree of market acceptance of any of our developed products will depend on a number of factors, including:

·       our establishment and demonstration to the medical community of the clinical efficacy and safety of our proposed products;

·       our ability to create products that are superior to alternatives currently on the market;

·       our ability to establish in the medical community the potential advantage of our treatments over alternative treatment methods; and

·       reimbursement policies of government and third-party payors.

If the health care community does not accept our products for any of the foregoing reasons, or for any other reason, our business would be materially harmed.

Our current source of revenues depends on the stability and performance of our sublicensees.   Our ability to collect royalties on product sales from our sublicensees will depend on the financial and operational success of the companies operating under a sublicense. Revenues from those licensees will depend upon the financial and operational success of those third parties. We cannot assure you that these licensees will be successful in obtaining requisite financing or in developing and successfully marketing

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their products. These licensees may experience unanticipated obstacles including regulatory hurdles, and scientific or technical challenges, which could have the effect of reducing their ability to generate revenues and pay us royalties.

We depend on key personnel for our continued operations and future success, and a loss of certain key personnel could significantly hinder our ability to move forward with our business plan.   Because of the specialized nature of our business, we are highly dependent on our ability to identify, hire, train and retain highly qualified scientific and technical personnel for the research and development activities we conduct or sponsor. The loss of one or more certain key executive officers, or scientific officers, would be significantly detrimental to us. In addition, recruiting and retaining qualified scientific personnel to perform research and development work is critical to our success. Our anticipated growth and expansion into areas and activities requiring additional expertise, such as clinical testing, regulatory compliance, manufacturing and marketing, will require the addition of new management personnel and the development of additional expertise by existing management personnel. There is intense competition for qualified personnel in the areas of our present and planned activities, and there can be no assurance that we will be able to continue to attract and retain the qualified personnel necessary for the development of our business. The failure to attract and retain such personnel or to develop such expertise would adversely affect our business.

Our credibility as a business operating in the field of human embryonic stem cells is largely dependent upon the support of our Ethics Advisory Board.   Because the use of human embryonic stem cells gives rise to ethical, legal and social issues, we have instituted an Ethics Advisory Board. Our Ethics Advisory Board is made up of highly qualified individuals with expertise in the field of human embryonic stem cells. We cannot assure you that these members will continue to serve on our Ethics Advisory Board, and the loss of any such member may affect the credibility and effectiveness of the Board. As a result, our business may be materially harmed in the event of any such loss.

Our insurance policies may be inadequate and potentially expose us to unrecoverable risks.   We have limited director and officer insurance and commercial insurance policies. Any significant insurance claims would have a material adverse effect on our business, financial condition and results of operations. Insurance availability, coverage terms and pricing continue to vary with market conditions. We endeavor to obtain appropriate insurance coverage for insurable risks that we identify, however, we may fail to correctly anticipate or quantify insurable risks, we may not be able to obtain appropriate insurance coverage, and insurers may not respond as we intend to cover insurable events that may occur. We have observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance. Such conditions have resulted in higher premium costs, higher policy deductibles, and lower coverage limits. For some risks, we may not have or maintain insurance coverage because of cost or availability.

We have no product liability insurance, which may leave us vulnerable to future claims we will be unable to satisfy.   The testing, manufacturing, marketing and sale of human therapeutic products entail an inherent risk of product liability claims, and we cannot assure you that substantial product liability claims will not be asserted against us. We have no product liability insurance. In the event we are forced to expend significant funds on defending product liability actions, and in the event those funds come from operating capital, we will be required to reduce our business activities, which could lead to significant losses.

We cannot assure you that adequate insurance coverage will be available in the future on acceptable terms, if at all, or that, if available, we will be able to maintain any such insurance at sufficient levels of coverage or that any such insurance will provide adequate protection against potential liabilities. Whether or not a product liability insurance policy is obtained or maintained in the future, any product liability claim could harm our business or financial condition.

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We presently have members of management and other key employees located in various locations throughout the country which adds complexities to the operation of the business.   Presently, we have members of management and other key employees located in both California and Massachusetts, which adds complexities to the operation of our business. We intend to maintain our research facilities in Massachusetts and we have established corporate offices and an additional research facility in California. We will likely continue to incur significant costs associated with maintaining multiple locations.

We face risks related to compliance with corporate governance laws and financial reporting standards.   The Sarbanes-Oxley Act of 2002, as well as related new rules and regulations implemented by the Securities and Exchange Commission and the Public Company Accounting Oversight Board, require changes in the corporate governance practices and financial reporting standards for public companies. These new laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 relating to internal control over financial reporting, referred to as Section 404, have materially increased our legal and financial compliance costs and made some activities more time-consuming and more burdensome. Section 404 requires that by 2007 our management assess our internal control over financial reporting annually and include a report on its assessment in our annual report. In 2008 our independent registered public accounting firm may be required to audit both the design and operating effectiveness of our internal controls and management’s assessment of the design and the operating effectiveness of our internal control over financial reporting.

Risks Relating to Our Common Stock

Stock prices for biotechnology companies have historically tended to be very volatile.   Stock prices and trading volumes for many biotechnology companies fluctuate widely for a number of reasons, including but not limited to the following factors, some of which may be unrelated to their businesses or results of operations:

·       clinical trial results

·       the amount of cash resources and ability to obtain additional funding

·       announcements of research activities, business developments, technological innovations or new products by companies or their competitors

·       entering into or terminating strategic relationships

·       changes in government regulation

·       disputes concerning patents or proprietary rights

·       changes in revenues or expense levels

·       public concern regarding the safety, efficacy or other aspects of the products or methodologies being developed

·       reports by securities analysts

·       activities of various interest groups or organizations

·       media coverage

·       status of the investment markets

This market volatility, as well as general domestic or international economic, market and political conditions, could materially and adversely affect the market price of our common stock and the return on your investment.

A significant number of shares of our common stock have or will become available for sale and their sale could depress the price of our common stock.   On January 31, 2006, a significant number of our

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outstanding securities that were previously restricted became eligible for sale under Rule 144 of the Securities Act. In addition, on January 31, 2007, a significant number of our outstanding securities that were previously restricted became eligible for sale under Rule 144(k) of the Securities Act, and their sale will not be subject to any volume limitations.

Not including the shares of common stock underlying the 2005 Debentures, the 2005 Warrants, the 2006 Debentures, the 2006 Warrants, and the replacement warrants, there are presently approximately 8,100,000 outstanding options, warrants and other securities convertible or exercisable into shares of our common stock.

We may also sell a substantial number of additional shares of our common stock in connection with a private placement or public offering of shares of our common stock (or other series or class of capital stock to be designated in the future). The terms of any such private placement would likely require us to register the resale of any shares of capital stock issued or issuable in the transaction. We have also issued common stock to certain parties, such as vendors and service providers, as payment for products and services. Under these arrangements, we may agree to register the shares for resale soon after their issuance. We may also continue to pay for certain goods and services with equity, which would dilute your interest in the company.

Sales of a substantial number of shares of our common stock under any of the circumstances described above could adversely affect the market price for our common stock and make it more difficult for you to sell shares of our common stock at times and prices that you feel are appropriate.

We do not intend to pay cash dividends on our common stock in the foreseeable future.   Any payment of cash dividends will depend upon our financial condition, results of operations, capital requirements and other factors and will be at the discretion of our board of directors. We do not anticipate paying cash dividends on our common stock in the foreseeable future. Furthermore, we may incur additional indebtedness that may severely restrict or prohibit the payment of dividends.

Our securities are quoted on the OTC Bulletin Board, which may limit the liquidity and price of our securities more than if our securities were quoted or listed on the Nasdaq Stock Market or a national exchange.   Our securities are currently quoted on the OTC Bulletin Board, an NASD-sponsored and operated inter-dealer automated quotation system for equity securities not included in the Nasdaq Stock Market. Quotation of our securities on the OTC Bulletin Board may limit the liquidity and price of our securities more than if our securities were quoted or listed on The Nasdaq Stock Market or a national exchange. Some investors may perceive our securities to be less attractive because they are traded in the over-the-counter market. In addition, as an OTC Bulletin Board listed company, we do not attract the extensive analyst coverage that accompanies companies listed on Nasdaq or any other regional or national exchange. Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded in the over-the-counter market. These factors may have an adverse impact on the trading and price of our securities.

Our common stock is subject to “penny stock” regulations and restrictions on initial and secondary broker-dealer sales.   The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any listed, trading equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Penny stocks are subject to certain additional oversight and regulatory requirements. Brokers and dealers affecting transactions in our common stock in many circumstances must obtain the written consent of a customer prior to purchasing our common stock, must obtain information from the customer and must provide disclosures to the customer. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to sell your shares of our common stock in the secondary market.

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USE OF PROCEEDS

We will not receive proceeds from the sale of shares under this prospectus by the selling security holders. We may, however, receive the exercise price of the warrants if and when those warrants are exercised by the selling security holders. Whether we receive any proceeds depends upon whether the holders of the warrants utilize their cashless exercise rights. Such amounts, if any, that we receive upon exercise of the warrants will be used for general corporate purposes.

SELLING SECURITY HOLDERS

The securities are being offered by the named selling security holders below. The selling security holders hold common stock (or securities convertible or exercisable into common stock), the terms of which are described below under “DESCRIPTION OF SECURITIES.” The selling security holders may, from time to time, offer and sell any or all of the shares that are registered or will be registered under this prospectus, although they are not obligated to do so.

The shares of common stock listed in Selling Security Holder Table A are being registered for the first time pursuant to this Registration Statement. The shares of common stock listed in Selling Security Holder Table B were previously registered for resale on Registration Statement No. 333-129019, which was filed on October 14, 2005, originally declared effective on October 28, 2005, and subsequently amended. Pursuant to Rule 429 promulgated under the Securities Act of 1933, this prospectus and the registration  statement of which it forms a part updates such Registration Statement.

The selling security holders listed in Selling Security Holder Table A below hold either (i) the 2006 Debentures, (ii) the 2006 Warrants, (iii) the 2005 Debentures, (iv) the 2005 Warrants, (v) the replacement 2005 Warrants, each of which are convertible or exercisable into shares of common stock, and/or (vi) common stock underlying the above-listed securities. These shares of common stock underlying the 2005 Debentures and the 2005 Warrants shown in Table B were previously registered for resale on Registration Statement No. 333-129019 which was filed on October 14, 2005. The selling security holders listed in Selling Security Holder Table B below each received (i) the 2005 Debentures, which are convertible into shares of our common stock, and (ii) the 2005 Warrants, which our exercisable into shares of common stock, in connection with the closing of the private placement in September 2005. As a result of certain contractual obligations, we are registering pursuant to this Registration Statement shares of common stock underlying these securities.

The last column of each of these tables  assumes the sale of all of our shares offered by this prospectus listed in that table. The registration of the offered shares does not mean that any or all of the selling security holders will offer or sell any of these shares. Except as set forth in the notes to these tables, there is not nor has there been a material relationship between us and any of the selling stockholders within the past three years. We believe, based on information supplied by the following selling security holders, that the natural persons named in the “Information Regarding Institutional Selling Security Holders” section of this prospectus following these tables exercise the sole or shared voting and/or dispositive powers with respect to the shares registered for resale in this prospectus.

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SELLING SECURITY HOLDER TABLE A

(CURRENT REGISTRATION SHARES)

(1)          These totals are based on selling security holder information on or about March 1, 2007, and assume full conversion of debentures and exercise of warrants. Some of the shares of common stock underlying the debentures and warrants included in these totals may have already been sold, transferred or disposed of by the selling security holders. The number of shares of common stock shown in the first column includes (A) shares of common stock underlying (i) convertible debentures issued in 2006 in the aggregate original principal amount of $10,981,250, convertible at a conversion price of $0.288, (ii) common stock purchase warrants issued in 2006 at an exercise price of $0.3168,

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(iii) common stock purchase warrants, with an exercise price of $0.3168, issued to a broker-dealer as commissions paid in connection with the private placement of the 2006 debentures and the 2006 warrants, (iv) convertible debentures issued in 2005 in the aggregate principal amount of $22,276,250, convertible at a conversion price of $0.90, and/or (v) common stock purchase warrants issued in 2005 at an exercise price of either $0.95 or $0.90, and (B) shares of common stock issued upon conversion, redemption, and/or exercise of the above referenced securities. The number of shares of common stock shown in the third column represents the difference between the number of shares shown in the first column and the number of shares shown in the second column.

(2)          The number of shares of common stock included in the second column represents shares of common stock underlying (i) convertible debentures issued in 2006 in the aggregate original principal amount of $10,981,250, convertible at a conversion price of $0.288, (ii) common stock purchase warrants issued in 2006 at an exercise price of $0.3168, (iii) common stock purchase warrants, with an exercise price of $0.3168, issued to a broker-dealer as commissions paid in connection with the private placement of the 2006 debentures and the 2006 warrants, (iv) convertible debentures issued in 2005 in the aggregate principal amount of $22,276,250, convertible at a conversion price of $0.90, and/or (v) common stock purchase warrants issued in 2005 at an exercise price of either $0.95 or $0.90.

(3)          Each selling security holder's percentage of ownership after the sale of all shares of common stock covered by this prospectus is based on (i) the number of shares of common stock outstanding as of March 1, 2007, plus (ii) the number of shares of common stock issuable upon conversion of the 2005 Debentures and the 2006 Debentures and upon exercise of the 2005 Warrants, the 2006 Warrants, and the replacement warrants, as of March 1, 2007. Some of the shares of common stock underlying the debentures and warrants included in these totals may have already been sold, transferred or disposed of by the selling security holders. Each selling security holder has contractually agreed to restrict its ability to convert the debentures, exercise the warrants and additional investment rights and receive shares of our common stock such that the number of shares of our common stock held by each such selling security holder and its affiliates after such conversion or exercise does not exceed 4.99% of the number of shares of our common stock outstanding immediately after giving effect to such conversion or exercise.

(4)          The number of shares of common stock shown in the first column represents (i) 345,092 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 136,413 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 1,089,410 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 544,705 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 563,212 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(5)          The number of shares of common stock shown in the first column represents (i) 409,239 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 3,268,229 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 1,634,114 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 2,052,852 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(6)          The number of shares of common stock shown in the first column represents (i) 1,135,278 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 409,239 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 3,268,229 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,634,114 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,353,074 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

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(7)          The number of shares of common stock shown in the first column represents (i) 123,519 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,409 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,084,638 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

       (8) The number of shares of common stock shown in the first column represents (i) 158,037 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 54,565 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 435,764 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 217,882 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 205,282 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

                        Alan C. Shapiro may be deemed the beneficial owner of these securities and is a director of Advanced Cell Technology, Inc. As of March 1, 2007, Dr. Shapiro owned 87,063 shares of common stock and 100,000 shares of common stock subject to stock options that were currently exercisable or exercisable within 60 days of December 31, 2006.

       (9) The number of shares of common stock shown in the first column represents (i) 40,924 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 326,823 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 163,411 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 258,531 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(10) The number of shares of common stock shown in the first column represents (i) 40,924 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 326,823 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 163,411 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 258,531 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(11) The number of shares of common stock shown in the first column represents (i) 179,074 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,410 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,411,579 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(12)          The number of shares of common stock shown in the first column represents (i) 345,741 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,410 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,346,362 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(13) The number of shares of common stock shown in the first column represents (i) 81,848 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 653,646 shares of common

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stock issuable upon conversion of a 2006 Debenture, (iii) 326,823 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 512,788 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(14) The number of shares of common stock shown in the first column represents (i) 39,553 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,410 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,582,828 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(15) The number of shares of common stock shown in the first column represents (i) 481,528 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 204,620 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 653,646 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 326,823 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 440,010 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(16) The number of shares of common stock shown in the first column represents (i) 355,357 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 545,652 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 5,338,108 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 2,669,054 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 2,519,358 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(17) The number of shares of common stock shown in the first column represents (i) 54,565 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 435,764 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 217,882 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 276,899 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(18) The number of shares of common stock shown in the first column represents (i) 440,013 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 186,395 shares of common stock issuable upon exercise of a 2005 Warrant, (iii) 136,413 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iv) 2,577,979 shares of common stock issuable upon conversion of a 2006 Debenture, (v) 1,288,990 shares of common stock issuable upon exercise of a 2006 Warrant, and (vi) an aggregate of 960,960 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(19) The number of shares of common stock shown in the first column represents (i) 21,962 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 86,422 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 690,250 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 345,125 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 380,421 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

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(20) The number of shares of common stock shown in the first column represents (i) 186,404 shares of common stock issuable upon conversion of a 2005 Warrant and (ii) an aggregate of 28,851 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(21) The number of shares of common stock shown in the first column represents (i) 285,092 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 136,413 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 1,089,410 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 544,705 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 573,410 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(22) The number of shares of common stock shown in the first column represents (i) 136,413 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 1,089,410 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 544,705 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 474,004 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(23) The number of shares of common stock shown in the first column represents (i) 632,148 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 218,261 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 1,743,056 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 871,527 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 415,314 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(24) The number of shares of common stock shown in the first column represents (i) 197,546 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 68,207 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 544,705 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 272,353 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 123,860 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(25) The number of shares of common stock shown in the first column represents (i) 316,074 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 109,130 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 871,528 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 435,764 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 410,570 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

(26) The number of shares of common stock shown in the first column represents (i) 68,207 shares of common stock issuable upon exercise of a 2005 Warrant, (ii) 272,353 shares of common stock issuable upon exercise of a 2006 Warrant, and (iii) an aggregate of 912,804 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

(27) The number of shares of common stock shown in the first column represents (i) 329,639 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 204,620 shares of common stock issuable upon exercise of a 2005 Warrant, (iii) 1,634,115 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 817,058 shares of common stock issuable upon exercise of a 2006

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Warrant, and (v) an aggregate of 550,660 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

(28) The number of shares of common stock shown in the first column represents (i) 197,546 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 68,207 shares of common stock issuable upon exercise of a 2005 Warrant, and (iii) an aggregate of 96,482 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

(29) The number of shares of common stock shown in the first column represents (i) 790,186 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,409 shares of common stock issuable upon exercise of a 2006 Warrant, (v) an aggregate of 318,752 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder, and (vi) 2,607,689 shares of common stock (a) held by the selling security holder and certain of its affiliates as of March 1, 2007 and (b) issuable upon exercise of warrants issued in 2004 to the selling security holder and certain of its affiliates, unrelated to the September 2005 and September 2006 financings.

As of December 31, 2006, Anthem Ventures Fund, LP was the beneficial owner of 11.2% of our outstanding common stock.

(30) The number of shares of common stock shown in the first column represents (i) 39,509 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 13,641 shares of common stock issuable upon exercise of a 2005 Warrant, (iii) 108,941 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 54,471 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 34,557 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

(31) The number of shares of common stock shown in the first column represents (i) 34,103 shares of common stock issuable upon exercise of a 2005 Warrant, (ii) 272,354 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 136,176 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 129,277 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

(32) The number of shares of common stock shown in the first column represents (i) 34,104 shares of common stock issuable upon exercise of a 2005 Warrant, (ii) 272,351 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 136,176 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 129,277 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

  (33) The number of shares of common stock shown in the first column represents (i) 581,120 shares of common stock issuable upon exercise of a 2005 Warrant, (ii) 581,120 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 4,575,521 shares of common stock issuable upon exercise of a common stock purchase warrant with an exercise price of $0.3168, and (iv) 581,120 shares of common stock issued upon the exercise of a 2005 Warrant held by the security holder.

T.R. Winston & Company, LLC provided broker services to us in connection with the September 2005 financing, the warrant repricing, and the September 2006 financing.

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SELLING SECURITY HOLDER TABLE B

(PREVIOUSLY REGISTERED SHARES)

Name				Total Shares of Common Stock Owned as of the date of this Prospectus(1)				Shares of Common Stock Included in Prospectus(2)				Common Stock Owned After Completion of Offering(1)				Percentage of Common Stock Owned After Completion of Offering(3)
Newberg Family Trust UTD 12/18/90(4)					2,678,832				532,011				2,115,620				1.8	%
JMB Capital Partners, LP(5)					7,364,434				1,596,033				5,311,582				4.4	%
Jay Goldman Master Limited Partnership(6)					7,799,934				1,596,033				6,203,901				5.1	%
CAMOFI Master LDC(7)					4,749,211				1,064,022				3,664,573				3.0	%
Shapiro Family Trust Dated September 25, 1989(8)					1,071,530				212,803				858,726				0.7	%
G. Tyler Runnels or Jasmine Niklas Runnels TTEES The Runnels Family Trust dtd 1-11-2000(9)					789,689				159,603				531,158				0.4	%
High Tide, LLC(10)					789,689				159,603				531,158				0.4	%
JMG Triton Offshore Fund, Ltd.(11)					5,131,708				1,064,022				3,720,130				3.1	%
JMG Capital Partners, LP(12)					5,233,158				1,064,022				3,886,796				3.2	%
Cranshire Capital, LP(13)					1,575,105				319,207				1,062,317				0.9	%
MM & B Holdings, a California general partnership(14)					5,163,436				1,064,022				3,580,608				3.0	%
JGB Capital, LP(15)					2,106,627				798,016				1,308,611				1.1	%
Bristol Investment Fund, Ltd.(16)					11,427,529				2,128,043				8,908,171				7.4	%
Overbrook Fund I, LLC(17)					985,110				212,804				708,211				0.6	%
Portside Growth and Opportunity Fund(18)					5,590,750				1,052,874				4,629,790				3.6	%
Rockmore Investment Master Trust Ltd.(19)					1,524,180				327,904				1,143,759				0.9	%
Omicron Master Trust(20)					215,255				215,255				—				0.0	%
Smithfield Fiduciary, LLC(21)					2,629,030				532,011				2,055,620				1.7	%
Alpha Capital(22)					2,244,530				532,011				1,770,528				1.5	%
Midsummer Investment, Ltd.(23)					3,880,306				851,217				3,029,089				2.5	%
Bushido Capital Master Fund, LP(24)					1,206,671				266,005				940,665				0.8	%
John A. Kryzanowski(25)					2,143,066				425,609				1,717,457				1.4	%
DAFNA LifeScience, Ltd.(26)					1,253,364				266,005				340,560				0.3	%
Whalehaven Capital Fund Limited(27)					3,536,091				798,016				2,738,075				2.3	%
Stonestreet, LP(28)					362,235				266,005				96,229				0.1	%
Anthem Ventures Fund, LP(29)					7,257,681				1,064,022				6,193,660				5.1	%
Evan S. Malik(30)					251,119				53,201				197,918				0.2	%
Gamma Opportunity Fund Capital Partners LP Class A(31)					571,910				133,003				442,633				0.4	%
Gamma Opportunity Fund Capital Partners LP Class C(32)					571,908				133,003				442,631				0.4	%
T.R. Winston & Company, LLC(33)					6,318,881				1,510,911				5,156,641				4.3	%

        (1) These totals are based on selling security holder information on or about March 1, 2007, and assume full conversion of debentures and exercise of warrants. Some of the shares of common stock underlying the debentures and warrants included in these totals may have already been sold, transferred or disposed of by the selling security holders. The number of shares of common stock shown in the first column includes (A) shares of common stock underlying (i) convertible debentures issued in 2006 in the aggregate original principal amount of $10,981,250, convertible at a conversion price of $0.288, (ii) common stock purchase warrants issued in 2006 at an exercise price of $0.3168, (iii) common stock purchase warrants, with an exercise price of $0.3168, issued to a broker-dealer as commissions paid in connection with the private placement of the 2006 debentures and the 2006 warrants, (iv) convertible debentures issued in 2005 in the aggregate principal amount of $22,276,250, convertible at a conversion price of $0.90, and/or (v) common stock purchase warrants issued in 2005 at an exercise price of either $0.95 or $0.90, and (B) shares of common stock issued upon conversion, redemption, and/or exercise of the above referenced securities. The number of shares shown in the third column represents the difference between the number of shares shown in the first column and the number of shares shown in the second column; provided,

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however, the number of shares shown in the third column does not include those shares that have been issued to each selling security holder which are not salable on a resale basis pursuant to a prospectus included in an effective registration statement (which such shares are included in the first column).

        (2) Pursuant to a registration rights agreement with the selling security holders, we were required to register and to include in this prospectus 130% of the number of shares into which the 2005 Debentures and the 2005 Warrants held by the selling security holders could be converted and/or exercised. All or a portion of the shares of common stock identified in this column with respect to each selling security holder may have previously been sold as of March 1, 2007.

        (3) Each selling security holder's percentage of ownership after the sale of all shares of common stock covered by this prospectus is based on (i) the number of shares of common stock outstanding as of March 1, 2007, plus (ii) the number of shares of common stock issuable upon conversion of the 2005 Debentures and the 2006 Debentures and upon exercise of the 2005 Warrants, the 2006 Warrants, and the replacement warrants, as of March 1, 2007. Some of the shares of common stock underlying the debentures and warrants included in these totals may have already been sold, transferred or disposed of by the selling security holders. Each selling security holder has contractually agreed to restrict its ability to convert the debentures, exercise the warrants and additional investment rights and receive shares of our common stock such that the number of shares of our common stock held by each such selling security holder and its affiliates after such conversion or exercise does not exceed 4.99% of the number of shares of our common stock outstanding immediately after giving effect to such conversion or exercise.

        (4) The number of shares of common stock shown in the first column represents (i) 345,092 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 136,413 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 1,089,410 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 544,705 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 563,212 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

        (5) The number of shares of common stock shown in the first column represents (i) 409,239 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 3,268,229 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 1,634,114 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 2,052,852 shares of common stock issued upon conversion and /or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

        (6) The number of shares of common stock shown in the first column represents (i) 1,135,278 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 409,239 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 3,268,229 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,634,114 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,353,074 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

        (7) The number of shares of common stock shown in the first column represents (i) 123,519 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,409 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,084,638 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

        (8) The number of shares of common stock shown in the first column represents (i) 158,037 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 54,565 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 435,764 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 217,882 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 205,282 shares of common stock issued upon conversion and /or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

                        Alan C. Shapiro may be deemed the beneficial owner of these securities and is a director of Advanced Cell Technology, Inc. As of March 1, 2007, Dr. Shapiro owned 87,063 shares of common stock and 100,000 shares of

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common stock subject to stock options that were currently exercisable or exercisable within 60 days of December 31, 2006.

        (9) The number of shares of common stock shown in the first column represents (i) 40,924 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 326,823 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 163,411 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 258,531 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (10) The number of shares of common stock shown in the first column represents (i) 40,924 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 326,823 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 163,411 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 258,531 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (11) The number of shares of common stock shown in the first column represents (i) 179,074 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,410 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,411,579 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (12) The number of shares of common stock shown in the first column represents (i) 345,741 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,410 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,346,362 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (13) The number of shares of common stock shown in the first column represents (i) 81,848 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 653,646 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 326,823 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 512,788 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (14) The number of shares of common stock shown in the first column represents (i) 39,553 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,410 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 1,582,828 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (15) The number of shares of common stock shown in the first column represents (i) 481,528 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 204,620 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 653,646 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 326,823 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 440,010 shares of common stock issued upon conversion and /or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (16) The number of shares of common stock shown in the first column represents (i) 355,357 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 545,652 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 5,338,108 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 2,669,054 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 2,519,358 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (17) The number of shares of common stock shown in the first column represents (i) 54,565 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 435,764 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 217,882 shares of common stock issuable upon exercise of a 2006 Warrant,

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and (iv) an aggregate of 276,899 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (18) The number of shares of common stock shown in the first column represents (i) 440,013 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 186,395 shares of common stock issuable upon exercise of a 2005 Warrant, (iii) 136,413 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iv) 2,577,979 shares of common stock issuable upon conversion of a 2006 Debenture, (v) 1,288,990 shares of common stock issuable upon exercise of a 2006 Warrant, and (vi) an aggregate of 960,960 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (19) The number of shares of common stock shown in the first column represents (i) 21,962 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 86,422 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 690,250 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 345,125 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 380,421 shares of common stock issued upon conversion and /or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (20) The number of shares of common stock shown in the first column represents (i) 186,404 shares of common stock issuable upon conversion of a 2005 Warrant and (ii) an aggregate of 28,851 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (21) The number of shares of common stock shown in the first column represents (i) 285,092 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 136,413 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 1,089,410 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 544,705 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 573,410 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (22) The number of shares of common stock shown in the first column represents (i) 136,413 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (ii) 1,089,410 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 544,705 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 474,004 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (23) The number of shares of common stock shown in the first column represents (i) 632,148 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 218,261 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 1,743,056 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 871,527 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 415,314 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (24) The number of shares of common stock shown in the first column represents (i) 197,546 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 68,207 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 544,705 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 272,353 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 123,860 shares of common stock issued upon conversion and /or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (25) The number of shares of common stock shown in the first column represents (i) 316,074 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 109,130 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 871,528 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 435,764 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 410,570 shares of common stock issued upon conversion and /or monthly redemption of a 2005 Debenture and/or the exercise of a 2005 Warrant held by the security holder.

  (26) The number of shares of common stock shown in the first column represents (i) 68,207 shares of common stock issuable upon exercise of a 2005 Warrant, (ii) 272,353 shares of common stock issuable upon exercise of a

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2006 Warrant, and (iii) an aggregate of 912,804 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

  (27) The number of shares of common stock shown in the first column represents (i) 329,639 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 204,620 shares of common stock issuable upon exercise of a 2005 Warrant, (iii) 1,634,115 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 817,058 shares of common stock issuable upon exercise of a 2006 Warrant, and (v) an aggregate of 550,660 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

  (28) The number of shares of common stock shown in the first column represents (i) 197,546 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 68,207 shares of common stock issuable upon exercise of a 2005 Warrant, and (iii) an aggregate of 96,482 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

  (29) The number of shares of common stock shown in the first column represents (i) 790,186 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 272,826 shares of common stock issuable upon exercise of a 2005 Warrant, (iii) 2,178,819 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 1,089,409 shares of common stock issuable upon exercise of a 2006 Warrant, (v) an aggregate of 318,752 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder, and (vi) 2,607,689 shares of common stock (a) held by the selling security holder and certain of its affiliates as of March 1, 2007 and (b) issuable upon exercise of warrants issued in 2004 to the selling security holder and certain of its affiliates, unrelated to the September 2005 and September 2006 financings.

  (30) The number of shares of common stock shown in the first column represents (i) 39,509 shares of common stock issuable upon conversion of a 2005 Debenture, (ii) 13,641 shares of common stock issuable upon exercise of a 2005 Warrant, (iii) 108,941 shares of common stock issuable upon conversion of a 2006 Debenture, (iv) 54,471 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 34,557 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

As of December 31, 2006, Anthem Ventures Fund, LP was the beneficial owner of 11.2% of our outstanding common stock.

  (31) The number of shares of common stock shown in the first column represents (i) 34,103 shares of common stock issuable upon exercise of a 2005 Warrant, (ii) 272,354 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 136,176 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 129,277 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

  (32) The number of shares of common stock shown in the first column represents (i) 34,104 shares of common stock issuable upon exercise of a 2005 Warrant, (ii) 272,351 shares of common stock issuable upon conversion of a 2006 Debenture, (iii) 136,176 shares of common stock issuable upon exercise of a 2006 Warrant, and (iv) an aggregate of 129,277 shares of common stock issued upon conversion and/or monthly redemption of a 2005 Debenture held by the security holder.

  (33) The number of shares of common stock shown in the first column represents (i) 581,120 shares of common stock issuable upon exercise of a 2005 Warrant, (ii) 581,120 shares of common stock issuable upon exercise of a replacement 2005 Warrant, (iii) 4,575,521 shares of common stock issuable upon exercise of a common stock purchase warrant with an exercise price of $0.3168, and (iv) 581,120 shares of common stock issued upon the exercise of a 2005 Warrant held by the security holder.

T.R. Winston & Company, LLC provided broker services to us in connection with the September 2005 financing, the warrant repricing, and the September 2006 financing.

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Additional Disclosure

Dollar Value of Underlying Securities Registered for Resale in this Prospectus

The total dollar value of the securities underlying the 2005 Debentures and the 2006 Debentures that we have registered for resale (using the number of underlying securities that we have registered for resale and the market price per share for those securities on the date of the sale of the 2005 Debentures and 2006 Debentures, respectively) are as follows:

September 2005 Financing

*                    This amount does not include an additional number of shares that were registered for resale in excess of the actual number of shares underlying the 2005 Debentures, in accordance with our contractual obligations.

September 2006 Financing

*                    These registered shares are available for resale upon conversion and/or redemption of the 2006 Debentures, as well as upon (i) conversion and/or redemption of the 2005 Debentures and (ii) exercise of the 2005 Warrants, the 2006 Warrants and the Replacement Warrants.

Payments Made in Connection with September 2005 Financing and September 2006 Financing

The following tables disclose the dollar amount of each payment (including the value of any payments to be made in common stock) in connection with the September 2005 financing and the September 2006 financing that we have made or may be required to make to any selling security holder, any affiliate of a selling security holder, or any person with whom any selling security holder has a contractual relationship regarding the transaction (including any interest payments, liquidated damages, payments made to “finders” or “placement agents”, and any other payments or potential payments). The net proceeds to the Company from the sale of the 2005 Debentures and the 2006 Debentures and the total possible payments to all selling security holders and any of their affiliates in the first year following the sale of the 2005 Debentures and the 2006 Debentures, respectively, are also provided.

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September 2005 Financing

(1)          T.R. Winston & Company, LLC served as the placement agent for the securities sold in the September 2005 financing.

(2)          On September 15, 2005, we issued a warrant to purchase 1,162,239 shares of common stock at an exercise price of $2.53 per share to T.R. Winston & Company, LLC in connection with the September 2005 financing. The market price per share on the date of issuance was $2.20. The initial fair value of the warrant was estimated at approximately $1,379,000 using the Black Scholes pricing model. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 64%, (3) risk-free interest rate of 3.99%, and (4) expected life of 5 years.

(3)          Feldman & Weinstein served as counsel to the selling security holders in connection with the September 2005 financing.

September 2006 Financing

(1)          T.R. Winston & Company, LLC served as the placement agent for the securities sold in the September 2006 financing.

(2)          On September 6, 2006, we issued a warrant to purchase 4,575,521 shares of common stock at an exercise price of $0.3168 per share to T.R. Winston & Company, LLC in connection with the September 2006 financing and the warrant repricing. The market price per share on the date of issuance was $0.81. The initial fair value of the warrant was estimated at approximately $3,600,000 using the Black Scholes pricing model. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%, (2) expected volatility of 176%, (3) risk-free interest rate of 4.81%, and (4) expected life of 5 years.

(3)          The value of the warrant issued to T.R. Winston & Company, LLC described in footnote 2 includes the value of the portion of the warrant issued to T.R. Winston & Company, LLC as consideration for services provided to the Company in connection with the warrant repricing.  The “net proceeds” line item does not, however, include $4,314,589 in proceeds received by the Company as a result of the exercise of certain of the 2005 Warrants in connection with the warrant repricing.

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Potential Profits on Conversion of 2005 Debentures and 2006 Debentures

The following tables show the total possible profit that the selling security holders could realize as a result of the conversion discount for the securities underlying the 2005 Debentures and the 2006 Debentures.

September 2005 Financing

Selling Security Holder		Market Price per Share of Common Stock on Closing Date					Conversion Price of 2005 Debentures(1)					Total Possible Shares Underlying 2005 Debentures				Combined Market Price of Shares Underlying 2005 Debentures					Combined Conversion Price of Shares Underlying 2005 Debentures					Total Possible Discount to Market Price(2)
Newberg Family Trust UTD 12/18/90			$	2.20				$	2.30				272,826				$	600,217				$	627,500				$	(27,283	)
JMB Capital Partners, LP			$	2.20				$	2.30				818,478				$	1,800,652				$	1,882,500				$	(81,848	)
Jay Goldman Master Limited Partnership			$	2.20				$	2.30				818,478				$	1,800,652				$	1,882,500				$	(81,848	)
CAMOFI Master LDC			$	2.20				$	2.30				545,652				$	1,200,435				$	1,255,000				$	(54,565	)
Shapiro Family Trust Dated September 25, 1989			$	2.20				$	2.30				109,130				$	240,087				$	251,000				$	(10,913	)
G. Tyler Runnels or Jasmine Niklas Runnels TTEES The Runnels Family Trust dtd 1-11-2000			$	2.20				$	2.30				81,848				$	180,065				$	188,250				$	(8,185	)
High Tide, LLC			$	2.20				$	2.30				81,848				$	180,065				$	188,250				$	(8,185	)
JMG Triton Offshore Fund, Ltd.			$	2.20				$	2.30				545,652				$	1,200,435				$	1,255,000				$	(54,565	)
JMG Capital Partners, LP			$	2.20				$	2.30				545,652				$	1,200,435				$	1,255,000				$	(54,565	)
Cranshire Capital, LP			$	2.20				$	2.30				163,696				$	360,130				$	376,500				$	(16,370	)
MM & B Holdings, a California general partnership			$	2.20				$	2.30				545,652				$	1,200,435				$	1,255,000				$	(54,565	)
JGB Capital, LP			$	2.20				$	2.30				409,239				$	900,326				$	941,250				$	(40,924	)
Bristol Investment Fund, Ltd.			$	2.20				$	2.30				1,091,304				$	2,400,870				$	2,510,000				$	(109,130	)
Overbrook Fund I, LLC			$	2.20				$	2.30				109,130				$	240,087				$	251,000				$	(10,913	)
Portside Growth and Opportunity Fund			$	2.20				$	2.30				272,826				$	600,217				$	627,500				$	(27,283	)
Rockmore Investment Master Fund Ltd.			$	2.20				$	2.30								$	—				$	—				$	—
Omicron Master Trust			$	2.20				$	2.30								$	1,200,435				$	1,255,000				$	(54,565	)
Smithfield Fiduciary, LLC			$	2.20				$	2.30				272,826				$	600,217				$	627,500				$	(27,283	)
Alpha Capital			$	2.20				$	2.30				272,826				$	600,217				$	627,500				$	(27,283	)
Midsummer Investment, Ltd.			$	2.20				$	2.30				436,522				$	960,348				$	1,004,000				$	(43,652	)
Bushido Capital Master Fund, LP			$	2.20				$	2.30				136,413				$	300,109				$	313,750				$	(13,641	)
John A. Kryzanowski			$	2.20				$	2.30				218,261				$	480,174				$	502,000				$	(21,826	)
DAFNA LifeScience, Ltd.			$	2.20				$	2.30				136,413				$	300,109				$	313,750				$	(13,641	)
Whalehaven Capital Fund Limited			$	2.20				$	2.30				409,239				$	900,326				$	941,250				$	(40,924	)
Stonestreet, LP			$	2.20				$	2.30				136,413				$	300,109				$	313,750				$	(13,641	)
Anthem Ventures Fund, LP			$	2.20				$	2.30				545,652				$	1,200,435				$	1,255,000				$	(54,565	)
Evan S. Malik			$	2.20				$	2.30				27,283				$	60,022				$	62,750				$	(2,728	)
Gamma Opportunity Fund Capital Partners LP Class A			$	2.20				$	2.30				68,207				$	150,054				$	156,875				$	(6,821	)
Gamma Opportunity Fund Capital Partners LP Class C			$	2.20				$	2.30				68,207				$	150,054				$	156,875				$	(6,821	)
T.R. Winston & Company LLC			—					—					—				$	—				$	—				$	—
Total													9,139,673				$	21,307,717				$	22,276,250				$	(968,533	)

(1)             In connection with an amendment to the 2005 Debenture financing documents executed on January 11, 2007, the conversion price of the 2005 Debentures was reduced from $2.30 to $0.90. On January 11, 2007, the market price per share of our common stock was $0.86.

(2)             This amount does not include Original Issue Discount.

34

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September 2006 Financing

Selling Security Holder		Market Price per Share of Common Stock on Closing Date					Conversion Price of 2006 Debentures					Total Possible Shares Underlying 2006 Debentures				Combined Market Price of Shares Underlying 2006 Debentures					Combined Conversion Price of Shares Underlying 2006 Debentures					Total Possible Discount to Market Price*
Newberg Family Trust UTD 12/18/90			$	0.81				$	0.288				1,089,410				$	882,422				$	313,750				$	568,672
JMB Capital Partners, LP			$	0.81				$	0.288				3,268,229				$	2,647,265				$	941,250				$	1,706,015
Jay Goldman Master Limited Partnership			$	0.81				$	0.288				3,268,229				$	2,647,265				$	941,250				$	1,706,015
CAMOFI Master LDC			$	0.81				$	0.288				2,178,819				$	1,764,843				$	627,500				$	1,137,343
Shapiro Family Trust Dated September 25, 1989			$	0.81				$	0.288				435,764				$	352,969				$	125,500				$	227,469
G. Tyler Runnels or Jasmine Niklas Runnels TTEES The Runnels Family Trust dtd 1-11-2000			$	0.81				$	0.288				326,823				$	264,727				$	94,125				$	170,602
High Tide, LLC			$	0.81				$	0.288				326,823				$	264,727				$	94,125				$	170,602
JMG Triton Offshore Fund, Ltd.			$	0.81				$	0.288				2,178,819				$	1,764,843				$	627,500				$	1,137,343
JMG Capital Partners, LP			$	0.81				$	0.288				2,178,819				$	1,764,843				$	627,500				$	1,137,343
Cranshire Capital, LP			$	0.81				$	0.288				653,646				$	529,453				$	188,250				$	341,203
MM & B Holdings, a California general partnership			$	0.81				$	0.288				2,178,819				$	1,764,843				$	627,500				$	1,137,343
JGB Capital, LP			$	0.81				$	0.288				653,646				$	529,453				$	188,250				$	341,203
Bristol Investment Fund, Ltd.			$	0.81				$	0.288				5,338,108				$	4,323,867				$	1,537,375				$	2,786,492
Overbrook Fund I, LLC			$	0.81				$	0.288				435,764				$	352,969				$	125,500				$	227,469
Portside Growth and Opportunity Fund			$	0.81				$	0.288				2,577,979				$	2,088,163				$	742,458				$	1,345,705
Rockmore Investment Master Fund Ltd.			$	0.81				$	0.288				690,250				$	559,103				$	198,792				$	360,311
Omicron Master Trust			$	0.81				$	0.288				0				$	—				$	—				$	—
Smithfield Fiduciary, LLC			$	0.81				$	0.288				1,089,410				$	882,422				$	313,750				$	568,672
Alpha Capital			$	0.81				$	0.288				1,089,410				$	882,422				$	313,750				$	568,672
Midsummer Investment, Ltd.			$	0.81				$	0.288				1,743,056				$	1,411,875				$	502,000				$	909,875
Bushido Capital Master Fund, LP			$	0.81				$	0.288				544,705				$	441,211				$	156,875				$	284,336
John A. Kryzanowski			$	0.81				$	0.288				871,528				$	705,938				$	251,000				$	454,938
DAFNA LifeScience, Ltd.			$	0.81				$	0.288				544,705				$	441,211				$	156,875				$	284,336
Whalehaven Capital Fund Limited			$	0.81				$	0.288				1,634,115				$	1,323,633				$	470,625				$	853,008
Stonestreet, LP			$	0.81				$	0.288				0				$	—				$	—				$	—
Anthem Ventures Fund, LP			$	0.81				$	0.288				2,178,819				$	1,764,843				$	627,500				$	1,137,343
Evan S. Malik			$	0.81				$	0.288				108,941				$	88,242				$	31,375				$	56,867
Gamma Opportunity Fund Capital Partners LP Class A			$	0.81				$	0.288				272,352				$	220,605				$	78,437				$	142,168
Gamma Opportunity Fund Capital Partners LP Class C			$	0.81				$	0.288				272,352				$	220,605				$	78,437				$	142,168
T.R. Winston & Company, LLC			—					—					—				$	—				$	—				$	—
Total													38,129,340				$	30,884,765				$	10,981,250				$	19,903,515

*                     This amount does not include Original Issue Discount.

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Total Potential Profit from Other Securities

The following tables show the total possible profit to be realized as a result of any conversion discounts for securities underlying any other warrants, options, notes or other securities of the Company in connection with the September 2005 financing and the September 2006 financing that are held by the selling security holders or any affiliates of the selling security holders.

September 2005 Financing

Selling Security Holder		Market Price per Share of Common Stock on Closing Date					Exercise Price of 2005 Warrants(1)					Total Possible Shares Underlying 2005 Warrants				Combined Market Price of Shares Underlying 2005 Warrants					Combined Conversion Price of Shares Underlying 2005 Warrants					Total Possible Discount to Market Price(2)
Newberg Family Trust UTD 12/18/90			$	2.20				$	2.53				136,413				$	300,109				$	345,125				$	(45,016	)
JMB Capital Partners, LP			$	2.20				$	2.53				409,239				$	900,326				$	1,035,375				$	(135,049	)
Jay Goldman Master Limited Partnership			$	2.20				$	2.53				409,239				$	900,326				$	1,035,375				$	(135,049	)
CAMOFI Master LDC			$	2.20				$	2.53				272,826				$	600,217				$	690,250				$	(90,033	)
Shapiro Family Trust Dated September 25, 1989			$	2.20				$	2.53				54,565				$	120,043				$	138,050				$	(18,007	)
G. Tyler Runnels or Jasmine Niklas Runnels TTEES The Runnels Family Trust dtd 1-11-2000			$	2.20				$	2.53				40,924				$	90,033				$	103,538				$	(13,505	)
High Tide, LLC			$	2.20				$	2.53				40,924				$	90,033				$	103,538				$	(13,505	)
JMG Triton Offshore Fund, Ltd.			$	2.20				$	2.53				272,826				$	600,217				$	690,250				$	(90,033	)
JMG Capital Partners, LP			$	2.20				$	2.53				272,826				$	600,217				$	690,250				$	(90,033	)
Cranshire Capital, LP			$	2.20				$	2.53				81,848				$	180,065				$	207,075				$	(27,010	)
MM & B Holdings, a California general partnership			$	2.20				$	2.53				272,826				$	600,217				$	690,250				$	(90,033	)
JGB Capital, LP			$	2.20				$	2.53				204,620				$	450,163				$	517,688				$	(67,524	)
Bristol Investment Fund, Ltd.			$	2.20				$	2.53				545,652				$	1,200,435				$	1,380,500				$	(180,065	)
Overbrook Fund I, LLC			$	2.20				$	2.53				54,565				$	120,043				$	138,050				$	(18,007	)
Portside Growth and Opportunity Fund			$	2.20				$	2.53				136,413				$	300,109				$	345,125				$	(45,016	)
Rockmore Investment Master Fund Ltd.			$	2.20				$	2.53				—				—					—					—
Omicron Master Trust			$	2.20				$	2.53				272,826				$	600,217				$	690,250				$	(90,033	)
Smithfield Fiduciary, LLC			$	2.20				$	2.53				136,413				$	300,109				$	345,125				$	(45,016	)
Alpha Capital			$	2.20				$	2.53				136,413				$	300,109				$	345,125				$	(45,016	)
Midsummer Investment, Ltd.			$	2.20				$	2.53				218,261				$	480,174				$	552,200				$	(72,026	)
Bushido Capital Master Fund, LP			$	2.20				$	2.53				68,207				$	150,054				$	172,563				$	(22,508	)
John A. Kryzanowski			$	2.20				$	2.53				109,130				$	240,087				$	276,100				$	(36,013	)
DAFNA LifeScience, Ltd.			$	2.20				$	2.53				165,132				$	363,289				$	417,783				$	(54,493	)
Whalehaven Capital Fund Limited			$	2.20				$	2.53				495,395				$	1,089,868				$	1,253,349				$	(163,480	)
Stonestreet, LP			$	2.20				$	2.53				165,132				$	363,289				$	417,783				$	(54,493	)
Anthem Ventures Fund, LP			$	2.20				$	2.53				660,526				$	1,453,158				$	1,671,132				$	(217,974	)
Evan S. Malik			$	2.20				$	2.53				33,026				$	72,658				$	83,557				$	(10,899	)
Gamma Opportunity Fund Capital Partners LP Class A			$	2.20				$	2.53				82,566				$	181,645				$	208,891				$	(27,247	)
Gamma Opportunity Fund Capital Partners LP Class C			$	2.20				$	2.53				82,567				$	181,647				$	208,894				$	(27,247	)
T.R. Winston & Company, LLC			$2.20					$2.53					1,162,239				$	2,556,926				$	2,940,465				$	(383,539	)
Total													6,993,539				$	15,385,785				$	17,693,653				$	(2,307,868	)

 

36

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(1)             In connection with an amendment to the 2005 Debenture financing documents executed on January 11, 2007, the exercise price of the 2005 Warrants was reduced from $2.53 to $0.95. On January 11, 2007 the market price per share of our common stock was $0.86.

(2)             Given that the exercise price for each of the warrants identified in this table is in excess of the market price on the date of issuance, all of the warrants identified herein are "out-of-the-money" and therefore have a negative value ascribed to them.

September 2006 Financing

Selling Security Holder		Market Price per Share of Common Stock on Closing Date					Exercise Price of 2006 Warrants					Total Possible Shares Underlying 2006 Warrants				Combined Market Price of Shares Underlying 2006 Warrants					Combined Exercise Price of Shares Underlying 2006 Warrants					Total Possible Discount to Market Price
Newberg Family Trust UTD 12/18/90			$	0.81				$	0.3168				544,705				$	441,211				$	172,671				$	268,540
JMB Capital Partners, LP			$	0.81				$	0.3168				1,634,114				$	1,323,632				$	518,014				$	805,618
Jay Goldman Master Limited Partnership			$	0.81				$	0.3168				1,634,114				$	1,323,632				$	518,014				$	805,618
CAMOFI Master LDC			$	0.81				$	0.3168				1,089,409				$	882,421				$	345,343				$	537,079
Shapiro Family Trust Dated September 25, 1989			$	0.81				$	0.3168				217,882				$	176,484				$	69,069				$	107,416
G. Tyler Runnels or Jasmine Niklas Runnels TTEES The Runnels Family Trust dtd 1-11-2000			$	0.81				$	0.3168				163,411				$	132,363				$	51,801				$	80,562
High Tide, LLC			$	0.81				$	0.3168				163,411				$	132,363				$	51,801				$	80,562
JMG Triton Offshore Fund, Ltd.			$	0.81				$	0.3168				1,089,410				$	882,422				$	345,343				$	537,079
JMG Capital Partners, LP			$	0.81				$	0.3168				1,089,410				$	882,422				$	345,343				$	537,079
Cranshire Capital, LP			$	0.81				$	0.3168				326,823				$	264,727				$	103,603				$	161,124
MM & B Holdings, a California general partnership			$	0.81				$	0.3168				1,089,410				$	882,422				$	345,343				$	537,079
JGB Capital, LP			$	0.81				$	0.3168				326,823				$	264,727				$	103,603				$	161,124
Bristol Investment Fund, Ltd.			$	0.81				$	0.3168				2,669,054				$	2,161,934				$	846,090				$	1,315,844
Overbrook Fund I, LLC			$	0.81				$	0.3168				217,882				$	176,484				$	69,069				$	107,416
Portside Growth and Opportunity Fund			$	0.81				$	0.3168				1,288,990				$	1,044,082				$	408,610				$	635,472
Rockmore Investment Master Fund Ltd.			$	0.81				$	0.3168				345,125				$	279,551				$	109,405				$	170,147
Omicron Master Trust			$	0.81				$	0.3168				0				$	—				$	—				$	—
Smithfield Fiduciary, LLC			$	0.81				$	0.3168				544,705				$	441,211				$	172,671				$	268,540
Alpha Capital			$	0.81				$	0.3168				544,705				$	441,211				$	172,671				$	268,540
Midsummer Investment, Ltd.			$	0.81				$	0.3168				871,527				$	705,937				$	276,274				$	429,663
Bushido Capital Master Fund, LP			$	0.81				$	0.3168				272,353				$	220,606				$	86,336				$	134,270
John A. Kryzanowski			$	0.81				$	0.3168				435,764				$	352,969				$	138,137				$	214,832
DAFNA LifeScience, Ltd.			$	0.81				$	0.3168				272,353				$	220,606				$	86,336				$	134,270
Whalehaven Capital Fund Limited			$	0.81				$	0.3168				817,058				$	661,817				$	259,007				$	402,810
Stonestreet, LP			$	0.81				$	0.3168				0				$	—				$	—				$	—
Anthem Ventures Fund, LP			$	0.81				$	0.3168				1,089,409				$	882,421				$	345,343				$	537,079
Evan S. Malik			$	0.81				$	0.3168				54,471				$	44,122				$	17,267				$	26,854
Gamma Opportunity Fund Capital Partners LP Class A			$	0.81				$	0.3168				136,176				$	110,303				$	43,168				$	67,135
Gamma Opportunity Fund Capital Partners LP Class C			$	0.81				$	0.3168				136,176				$	110,303				$	43,168				$	67,135
T.R. Winston & Company, LLC			$	0.81				$	0.3168				4,575,521				$	3,706,172				$	1,450,440				$	2,255,732
Total													23,640,191				$	19,148,555				$	7,493,941				$	11,654,619

 

37