8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1 to

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 29, 2010

Transgenomic, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-30975	91-1789357
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
12325 Emmet Street Omaha, NE		68164
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (402) 452-5400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

This Current Report on Form 8-K/A is filed as an amendment to the Current Report on Form 8-K filed by Transgenomic, Inc. (“We” or “Company”) on January 4, 2011 reporting that We acquired substantially all of Clinical Data, Inc.’s assets and rights relating to FAMILION Testing and Pharmacogenomics Biomarker Development Business ( “FAMILION” or “FAMILION Product Line”). This Amendment No. 1 is being filed to include the financial information required under Item 9.01 that We previously omitted in accordance with Item 9.01(a)(4) and Item 9.01(b)(2).

Historical audited financial statements of an acquired business are required if the acquisition exceeds certain quantitative tests of significance. FAMILION represents a significant acquisition at a level requiring two years of historical audited financial statements. We concluded that it was impracticable to prepare full financial statements of FAMILION and, in January 2011, began a dialogue with the staff of the Division of Corporate Finance of the Securities and Exchange Commission (the “Staff”) regarding the financial statements and pro forma financial information of the acquired FAMILION Product Line required by Item 9.01 of Form 8-K. In a letter dated January 19, 2010, the Staff indicated that, on the basis of the unique facts and circumstances, the Division would not object to the presentation of statements of assets acquired and liabilities assumed and statements of revenues and direct expenses of the acquired FAMILION Product Line in lieu of full financial statements.

The conclusion that it was impracticable to prepare full historical financial statements for the FAMILION Product Line was based on a number of factors, including:

• FAMILION was neither a separate legal entity nor an entity that had been subject to discrete financial reporting. On a historical basis, separate financial statements for FAMILION had never been prepared.

• Clinical Data, Inc. did not maintain separate general and administrative support functions for FAMILION.

• Certain expenses, such as interest and income taxes, had never been allocated to FAMILION.

In addition to the conclusion that full financial statements were impracticable, We believe that the historical information that follows is a more meaningful financial reporting alternative than full financial statements since it provides information that is specific to the FAMILION Product Line.

Since We filed our Form 10-K on March 14, 2011, prior to this Form 8-K/A, a pro forma balance sheet is neither required nor presented.

Item 9.01 of the Current Report on Form 8-K filed by Transgenomic, Inc. on January 4, 2011 is hereby amended to read as follows:

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements of Business Acquired.

The unaudited statements of (i) assets acquired and liabilities assumed, (ii) revenues and direct expenses, (iii) changes in parent company’s net investment and (iv) cash flows of the acquired FAMILION Product Line as of and for the nine months ended December 29, 2010 and the audited statements of (i) assets acquired and liabilities assumed, (ii) revenues and direct expenses, (iii) changes in parent company’s net investment and (iv) cash flows of the acquired FAMILION Product Line as of and for the fiscal years ended March 31, 2010 and 2009 are filed as Exhibit 99.2 to this Amendment No. 1 on Form 8-K and incorporated herein by reference.

(b) Forward Looking Financial Information.

The unaudited forward looking financial information is filed as Exhibit 99.3 to this Amendment No. 1 on Form 8-K and incorporated herein by reference.

(d) Exhibits

The exhibits to this report are listed in the Exhibit Index beginning on page 4 hereof.

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 14, 2011	Transgenomic, Inc.
	By:	/s/ Brett Frevert
		Brett Frevert
		Chief Financial Officer

3

EXHIBIT INDEX

Exhibit No.	Description
2.1*	Asset Purchase Agreement, dated November 29, 2010 by and among PGxHealth, LLC, Clinical Data, Inc. and Transgenomic, Inc.
2.2*	Amendment to Asset Purchase Agreement, dated December 29, 2010, by and among PGxHealth, LLC, Clinical Data, Inc. and Transgenomic, Inc.
99.1*	Press Release of Transgenomic, Inc. dated December 29, 2010
99.2	Unaudited statement of revenues and direct expenses of the FAMILION Product Line for the period April 1, 2010 – December 29, 2010 and audited statement of assets acquired and liabilities assumed and statements of revenue and direct expenses as of and for the fiscal years ended December 31, 2010 and 2009
99.3	Unaudited Pro Forma Financial Statements and Supplementary Data

* Previously filed as an exhibit to the Current Report on Form 8-K filed on January 4, 2011 incorporated herein by reference.

4

EX-99.2

Exhibit 99.2

Special-Purpose Carve-Out

Financial Statements of the FAMILION Product Line

A Product Line of Clinical Data, Inc.

For the period April 1, 2010 to December 29,2010 (Unaudited) and as of March 31, 2010 and 2009 and for the years then ended

together with the Report of Independent Registered Public Accounting Firm

5

REPORT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Clinical Data, Inc.

We have audited the accompanying carve out statements of assets acquired and liabilities assumed of FAMILION Testing and Pharmacogenomics Biomarker Development Business of Clinical Data, Inc. (FAMILION Product Line) as defined in Note 1 to the carve out financial statements as of March 31, 2010 and 2009 and the related carve out statements of revenue and direct expenses, carve out statement changes in parent company’s net investment, and carve out statement of cash flows for the years then ended. These carve out financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these carve out financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the carve out financial statements are free of material misstatement. We were not engaged to perform an audit of the FAMILION Product Line’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the FAMILION Product Line’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the carve out financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the carve out financial statements referred to above present fairly, in all material respects, the carve out assets acquired and liabilities assumed of the FAMILION Product Line as described in Note 1 at March 31, 2010 and 2009 and the carve out revenue and direct expenses, the changes in parent company’s net investment and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ McGladrey & Pullen, L.L.P.

Omaha, Nebraska

March 14, 2011

6

FAMILION PRODUCT LINE

A Product Line Owned by Clinical Data, Inc.

Carve Out Statements of Assets Acquired and Liabilities Assumed

(Dollars in thousands)

	as of March 31
	2010			2009
ASSETS
CURRENT ASSETS:
Accounts receivable, net of allowances of $3,290 and $1,619, respectively	$	2,808		$	2,471
Prepaid expenses		803			796
Total current assets		3,611			3,267
PROPERTY AND EQUIPMENT:
Computer equipment and software		2,099			1,124
Lab equipment, leasehold improvements and fixtures		1,416			1,809
		3,515			2,933
Less accumulated depreciation		(2,321	)		(1,700	)
		1,194			1,233
OTHER ASSETS:
Intangible assets, net		3,882			4,748
Total assets	$	8,687		$	9,248
LIABILITIES AND PARENT COMPANY’S NET INVESTMENT
CURRENT LIABILITIES:
Accrued expenses	$	1,796		$	1,562
Capital lease obligations, current portion		93			88
Total current liabilities		1,889			1,650
LONG-TERM LIABILITIES:
Capital lease obligations, less current portion		71			164
Total liabilities		1,960			1,814
PARENT COMPANY’S NET INVESTMENT:		6,727			7,434
Total liabilities and parent company’s net investment	$	8,687		$	9,248

The accompanying notes are an integral part of these carve out financial statements.

7

FAMILION PRODUCT LINE

A Product Line Owned By Clinical Data, Inc.

Carve Out Statements of Revenue and Direct Expenses

(Dollars in thousands)

	Period April 1, 2010 to December 29,			for the Years Ended March 31,
	2010			2010			2009
	(Unaudited)
NET SALES	$	10,507		$	13,043		$	10,442
COST OF GOODS SOLD		3,974			5,556			5,593
Gross profit		6,533			7,487			4,849
OPERATING EXPENSES:
General and administrative		3,837			5,049			4,028
Research and development		2,563			2,833			493
Sales and marketing		3,654			7,112			7,024
Total Operating Expenses:		10,054			14,994			11,545
LOSS FROM OPERATIONS		(3,521	)		(7,507	)		(6,696	)
Interest Expense		6			13			4
Net Loss	$	(3,527	)	$	(7,520	)	$	(6,700	)

The accompanying notes are an integral part of these carve out financial statements.

8

FAMILION PRODUCT LINE

A Product Line Owned by Clinical Data, Inc.

Carve Out Statement of Changes in Parent Company’s Net Investment

(Dollars in thousands)

Balance at March 31, 2008	$	3,672
Transfers from parent, net		10,462
Net loss 3/10/09		(6,700	)
Balance at March 31, 2009		7,434
Transfers from parent, net		6,813
Net loss 3/10/10		(7,520	)
Balance at March 31, 2010	$	6,727
Balance at March 31, 2010	$	6,727
Transfers from parent, net (Unaudited)		3,324
Net loss 12/29/10 (Unaudited)		(3,527	)
Balance at December 29, 2010 (Unaudited)	$	6,524

The accompanying notes are an integral part of these carve out financial statements.

9

FAMILION PRODUCT LINE

A Product Line Owned By Clinical Data, Inc.

Carve Out Statements of Cash Flows

(Dollars in thousands)

	Period April 1, 2010  to December 29, 2010			Year Ended March 31, 2010			Year Ended March 31, 2009
	(Unaudited)
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net (Loss)	$	(3,527	)	$	(7,520	)	$	(6,700	)
Adjustments to reconcile net (loss) to net cash flows used in operating activities:
Depreciation and amortization, net of basis adjustments		1,202			1,519			905
Changes in operating assets and liabilities:
Accounts receivable		(275	)		(337	)		(1,229	)
Prepaid expenses		240			(7	)		(410	)
Accrued expenses		(902	)		234			1,188
Net cash flows used in operating activities		(3,262	)		(6,111	)		(6,246	)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment		—			(614	)		(1,206	)
Increase in tangible assets		—			—			(2,955	)
Net cash flows used in investing activities		—			(614	)		(4,161	)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Principal payments on long term capital lease obligations		(62	)		(88	)		(55	)
Net cash flows provided by used in financing activities		(62	)		(88	)		(55	)
Net Transfers from parent		3,324			6,813			10,462
NET CHANGE IN CASH AND CASH EQUIVALENTS		—			—			—
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		—			—			—
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	—		$	—		$	—
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for interest	$	6		$	13		$	4
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Acquisition of equipment through capital leases		—			—		$	307

The accompanying notes are an integral part of these carve out financial statements.

10

FAMILION PRODUCT LINE

A Product Line Owned by Clinical Data, Inc.

Notes to Carve Out Financial Statements

For the Period April 1, 2010 to December 29, 2010 –(Unaudited)

For the Years Ended March 31, 2010 and 2009

A. BUSINESS DESCRIPTION

FAMILION Product Line is a family of proprietary genetic tests for cardiac syndromes, including cardiac channelopathies and cardiomyopathies and an expanded menu of genetic tests for these inherited cardiac syndromes. In addition, it has expertise in the development and commercialization of other genetic and pharmacogenetic biomarker tests related to these inheritable diseases and to drug response.

Clinical Data, Inc. (“CLDA”) sold the FAMILION Product Line to Transgenomic, Inc. (“TBIO” or “We”). The sale included the CLIA laboratory located in New Haven, Connecticut, all tangible personal property, intellectual property rights, accounts receivable, and contractual rights owned or used by the CLDA in connection with the FAMILION Product Line, including the sublease of certain leases for the facilities and equipment.

The accompanying carve out financial statements and related notes thereto represent the carve out statements of assets acquired and liabilities assumed, carve out statements of revenue and direct expenses, carve out statements of changes in parent company investment and carve out statements of cash flows of the FAMILION Product Line. The carve out financial statements have been prepared in accordance with Regulation S-X, Article 8, and Division of Corporation Finance Financial Reporting Manual Topic 2065, “Acquisition of Selected Parts of an Entity may result in Less than Full Financial Statements”.

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying FAMILION Product Line carve out statements of assets acquired and liabilities assumed and carve out statements of revenue and direct expenses were derived from the historical accounting records of CLDA as described more fully in the Explanatory Note above which are incorporated into these Footnotes by reference.

Basis of Presentation

The accompanying carve out statement of assets acquired and liabilities assumed as of December 29, 2010, and the carve out statement of revenues and direct expenses, carve out statement changes in parent company’s net investment, and carve out statement of cash flows for the nine months ended December 29, 2010, are unaudited and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. These unaudited statement of assets acquired and liabilities assumed, the related carve out statement of revenues and direct expenses, carve out statement changes in parent company’s net investment, and carve out statement of cash flows and notes should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended March 31, 2010, contained in herein. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. In addition, estimates and assumptions associated with the determination of the fair value of certain assets and related impairments require considerable judgment by management. Actual results could differ from the estimates and assumptions used in preparing these financial statements.

Revenue Recognition

Genetic Tests: Revenue for genetic tests is recognized for services rendered when the testing process is complete and test results are reported to the ordering physician. FAMILION maintains relationships and performs tests for certain healthcare providers as well as healthcare insurance companies. Revenue from these arrangements is recognized net of contractual allowances.

Intellectual Property Licensing Fees: FAMILION recognizes revenue based on estimates of royalties earned during the period when royalties can be reasonably estimated. For those arrangements for which royalties cannot be reasonably estimated, FAMILION recognizes revenue upon receipt of royalty statements from the licensee.

11

FAMILION PRODUCT LINE

A Product Line Owned by Clinical Data, Inc.

Notes to Carve Out Financial Statements

For the Period April 1, 2010 to December 29, 2010 –(Unaudited)

For the Years Ended March 31, 2010 and 2009

Accounts Receivable

Accounts receivable are carried at original invoice and shown net of allowance for doubtful accounts and contractual allowances. The estimate made for doubtful accounts is based on a review of all outstanding amounts on a quarterly basis. We determine the allowance for doubtful accounts and contractual allowances by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Account receivables are written off when deemed uncollectible. Recoveries of account receivables previously written off are recorded when received. Management also evaluates contract terms and history of collections with third party payors. We do not charge interest on past due accounts.

Allowances for doubtful accounts and contractual allowances are maintained for estimated losses resulting from the inability of our customers to make required payments and to estimate discounts given to third party payors. These estimated allowances of $3.3 million and $1.6 million March 31, 2010 and 2009, respectively, are periodically reviewed, analyzing the customers’ payment history and information known to us regarding customers’ credit worthiness as well as the contract terms and history of collections with third-party payors. We believe that most of our bad debt expense is primarily the result of missing or incorrect billing information on requisitions and Advance Beneficiary Notices received from healthcare providers and the failure of patients to pay the portion of the receivable that is their responsibility, rather than credit related issues. Deteriorating economic conditions may adversely impact our bad debt expense. In general, we perform the requested tests and report test results regardless of whether the billing information is correct or complete. We subsequently attempt to contact the healthcare provider or patient to obtain any missing information and to rectify incorrect billing information. Missing or incorrect information on requisitions complicates and slows down the billing process, creates backlogs of unbilled requisitions and generally increases the aging of accounts receivable and bad debt expense. The increased use of electronic billing reduces the incidence of missing or incorrect information. The increase in 2010 reflects the increase in gross revenue. If the financial condition of our customers were to deteriorate additional allowances may be required. Actual losses incurred and contractual write-offs have not been significantly different than management’s estimates in recent history.

Research and Development Costs

FAMILION recognizes research and development expenses as incurred. Research and development expenses are comprised of costs incurred by FAMILION in performing research and development activities including: salary and benefits, laboratory supplies and other direct expenses, contractual services, including facilities costs and depreciation expense.

Fair Value

Unless specified otherwise book value approximates fair value.

The carrying amounts of accounts receivable are considered reasonable estimates of their fair value, due to the short maturity of these instruments.

Intangible Assets

Intangible assets are stated at cost, net of accumulated amortization. These costs are capitalized and amortized on a straight-line basis over the estimated periods benefited by the asset (5 to 20 years).

The intangible asset balances are as follows:

(in thousands)	March 31, 2010			March 31, 2009
Completed technology	$	2,955		$	2,955
Purchased in-process research and development		3,000			3,000
Customer relationships		400			400
Patents & Intellectial Property		100			100
		6,455			6,455
Less: accumulated amortization		(2,573	)		(1,707	)
Intangible Assets, net	$	3,882		$	4,748

12

FAMILION PRODUCT LINE

A Product Line Owned by Clinical Data, Inc.

Notes to Carve Out Financial Statements

For the Period April 1, 2010 to December 29, 2010 –(Unaudited)

For the Years Ended March 31, 2010 and 2009

Amortization expense for the period beginning April 1, 2010 and ended December 29, 2010 (Unaudited) and the years ended March 31, 2010 and 2009 was $649,000, $865,000 and $600,000, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the related assets as follows:

Lab equipment, leasehold improvements and fixtures	1 to 10 years
Computer equipment and software	3 to 7 years

Depreciation expense for the period beginning April 1, 2010 and ended December 29, 2010 (Unauditied) and the years ended March 31, 2010 and 2009 was $553,000, $654,000 and $305,000, respectively.

Cost of Goods Sold.

Cost of goods sold presents the cost of laboratory operations and is primarily comprised of payroll and benefits and laboratory supplies.

C. SUBSEQUENT EVENTS

Events or transactions that occur after the balance sheet date, but before the financial statements are complete, are reviewed to determine if they should be recognized. As of March 14, 2011 there are no material subsequent events required to be disclosed.

13

EX-99.3

Exhibit 99.3

Index to Pro Forma Financial Statements and Supplementary Data

	Page
Unaudited Pro Forma Combined and Consolidated Financial Information		F-2
Unaudited Pro Forma Combined and Consolidated Statement of Operations		F-3
Notes to the Unaudited Pro Forma Combined and Consolidated Statement of Operations		F-4

F-1

Unaudited Pro Forma Combined and Consolidated Financial Information

On December 29, 2010, Transgenomic, Inc. (“TBIO”) completed the acquisition from Clinical Data, Inc (“CLDA”) of substantially all of CLDA’s assets and rights relating to the FAMILION Product Line, a family of proprietary genetic tests for cardiac syndromes, including cardiac channelopathies and cardiomyopathies and an expanded menu of genetic tests for these inherited cardiac syndromes. In addition, it has expertise in the development and commercialization of other genetic and pharmacogenetic biomarker tests related to these inheritable diseases and to drug response.

The pro forma combined and consolidated financial statements should be read in conjunction with TBIO’s historical audited consolidated financial statements and notes thereto in Form 10-K filed on March 14, 2011, TBIO’s Current Report Form 8-K filed on January 4, 2011 and the historical audited special-purpose carve out financial statements and notes thereto of the FAMILION Product Line, A Product Line Owned by CLDA, as of and for the years ended March 31, 2010 and 2009 which are included as Exhibit 99.2 to this Current Report on Form 8-K/A.

The unaudited pro forma combined and consolidated financial information, while helpful in illustrating the financial characteristics of the acquisition of the FAMILION Product Line to the combined and consolidated company under one set of assumptions, it does not reflect the benefits of any potential cost savings or opportunities to earn additional revenue and, accordingly, does not attempt to predict or suggest future results. It also is not necessarily indicative of the combined and consolidated financial condition or results of operations of future periods or the combined and consolidated financial condition or results of operations that actually would have been realized had the acquisition occurred during this period.

F-2

Transgenomic, Inc. and Subsidiaries

Unaudited Pro Forma Combined and Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

	For the Year Ended December 31, 2010
	Transgenomic, Inc.			FAMILION Product  Line			Pro forma Adjustments			Pro forma Combined
NET SALES	$	20,048		$	13,685			—		$	33,733
COST OF GOODS SOLD		10,284			5,052			—			15,336
Gross profit		9,764			8,633			—			18,397
OPERATING EXPENSES:
Selling, general and administrative		11,071			10,566			(1,005	) (a)		20,632
Research and development expense		2,305			3,280			—			5,585
Total costs and expenses		13,376			13,846			(1,005	)		26,217
(Loss) from operations		(3,612	)		(5,213	)		1,005			(7,820	)
Other Income (expense):
Interest income (expense), net		(4	)		(9	)		(1,332	) (b)		(1,345	)
Fair value adjustment		—			—			967	(c)		967
Other income		632			—			—			632
Other income (expense), net		628			(9	)		(365	)		254
(Loss) from continuing operations before provision for income taxes		(2,984	)		(5,222	)		640			(7,566	)
Less: Provision for income taxes		150			—			—	(d)		150
Net (loss)		(3,134	)		(5,222	)		640			(7,716	)
Preferred Dividends								600	(e)		600
Net (loss) attributable to the common shareholders	$	(3,134	)	$	(5,222	)	$	40		$	(8,316	)
(Loss) per share of common stock:
Basic and fully diluted	$	(0.06	)							$	(0.17	)
Weighted average number of shares outstanding:
Basic and fully diluted		49,243,839									49,243,839

See accompanying notes to unaudited pro forma combined and consolidated statements of operations.

F-3

Transgenomic, Inc. and Subsidiaries

Unaudited Pro Forma Combined and Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

1. Basis of Presentation

The statements contained in this section are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by the words “believe,” “expect, “anticipate,” “intend,” “estimate” and similar expressions. These forward-looking statements are based largely on management’s expectations and are subject to a number of uncertainties. Actual results could differ materially from these forward-looking statements. We do not undertake any obligation to update publicly or revise any forward-looking statements.

We acquired the FAMILION Product Line (family of genetic tests and biomarkers) from PGxHealth (“PGx”) with total consideration of $18.8 million. PGx is a subsidiary of Clinical Data, Inc. (NasdaqGM:CLDA). We secured $6.0 million of financing from entities affiliated with Third Security, LLC, a leading life sciences investment firm, to fund the cash portion of our acquisition of the FAMILION Product Line (“Third Security Financing”). This strategic acquisition provides us with proprietary genetic commercial tests that have an established revenue base, proprietary biomarker assays, an additional CLIA-certified laboratory operation and established test reimbursement and coverage policies that offer access to testing for an estimated 280 million patients. Total consideration also included assumed liabilities of $.453 million and incurred contingent liabilities of $2.7 million.

Under the terms of the Third Security Financing, We issued an aggregate of 2,586,205 shares of the Company’s newly created Series A convertible preferred stock to certain affiliates of Third Security for an aggregate purchase price of $6.0 million. Additionally We issued such affiliates of Third Security warrants to purchase an aggregate of up to 1,293,102 shares of Series A preferred stock at an exercise price of $2.32 per share. The Series A preferred shares issuable pursuant to the purchase agreement and upon exercise of the warrants are convertible into shares of our common stock at a conversion price of $0.58 per share, for an aggregate of 15,517,228 million shares of common stock. Upon full exercise of the warrants, We will receive approximately $3.0 million.

The pro forma combined and consolidated financial statements should be read in conjunction with our historical audited consolidated financial statements and notes thereto in Form 10-K filed on March 14, 2011, (ii) our Current Report Form 8-K filed on January 4, 2011 and (iii) the historical audited special-purpose carve out financial statements and notes thereto of the FAMILION Product Line, as of and for the years ended March 31, 2010 and 2009, which are included as Exhibit 99.2 to this Current Report on Form 8-K/A.

The unaudited pro forma combined and consolidated financial information, while helpful in illustrating the financial characteristics of the acquisition of FAMILION Product Line to the combined and consolidated company under one set of assumptions, does not reflect the benefits of any potential cost savings or opportunities to earn additional revenue and, accordingly, does not attempt to predict or suggest future results. It also is not necessarily indicative of the combined and consolidated financial condition or results of operations of future periods or the combined and consolidated financial condition or results of operations that actually would have been realized had the acquisition occurred during this period.

F-4

Transgenomic, Inc. and Subsidiaries

Unaudited Pro Forma Combined and Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

2. Purchase Price

Consideration	Dollars  in Thousands
Cash	$	6,000
Notes payable		9,628
Assumed Liabilities		452
Contingent Liabilities		2,736
Fair value of consideration transferred	$	18,816

The following represents the purchase price allocation:

	Dollars in Thousands		Estimated Useful Life
Accounts Receivable, net	$	3,222
Property and Equipment		639		3 years
Identifiable Intangible assets – acquired technology		6,535		7 - 8 years
Identifiable Intangible assets – third party payor relationships		367		N/A
Identifiable Intangible assets – assay royalties		1,434		7 years
Identifiable Intangible assets – trade names and trademarks		344		7 years
Unidentifiable Intangible assets – goodwill		6,275		N/A
Total Purchase Price	$	18,816

Acquisition related costs included in selling, general and administrative expenses in our Income Statement (TBIO December 31, 2010 Form 10-K) for the year ended December 31, 2010 were $0.8 million. We incurred $0.2 million in acquisition related costs to issue preferred stock which were recorded against our preferred stock (TBIO December 31, 2010 Form 10-K).

F-5

Transgenomic, Inc. and Subsidiaries

Unaudited Pro Forma Combined and Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

3. Proforma Adjustments

Adjustments included in the column under the heading “Pro Forma Adjustments” in the Unaudited Pro Forma Combined and Consolidated Statements of Operations correspond with the following:

(a)	Expense for acquisition related costs	$	(800	)
	Annual amortization expense recognized on identified intangible assets (see Note 2 above) resulting from acquisition assuming that the useful life is 7 - 8 years.		1,165
	Annual depreciation expense recognized on identified property and equipment (see Note 2 above) resulting from acquisition assuming that the useful life is 3 years		213
	Remove historical FAMILION amortization and depreciation	$	(1,583	)
		$	(1,005	)
(b)	Annual interest expense based on notes to seller	$	899
	Estimated preferred stock, warrant and conversion feature accretion		433
		$	1,332
(c)	Estimated warrant and conversion feature fair value adjustment	$	(967	)
(d)	There is no pro forma income tax provision.	$	—
(e)	Preferred stock dividend	$	600

F- 6