2. BASIS OF PRESENTATION AND LIQUIDTY	6 Months Ended
Jun. 30, 2014
Notes to Financial Statements
2. BASIS OF PRESENTATION AND LIQUIDTY	NOTE 2 – BASIS OF PRESENTATION AND LIQUIDTY Basis of Presentation As of February 6, 2013, in connection with the Merger, Cellular Biomedicine Group, Ltd. became the accounting acquirer thus resulting in a reverse merger for accounting purposes. Therefore, the accompanying financial statements are on a consolidated basis subsequent to February 6, 2013, but only reflect the operations of CBMG BVI prior to the date of acquisition. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of June 30, 2014 and the results of its operations and its cash flows for the periods presented. The unaudited Condensed Consolidated Financial Statements herein should be read together with the historical consolidated financial statements of the Company for the years ended December 31, 2013 and 2012 included in our Annual Report on Form 10-K for the year ended December 31, 2013. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. Liquidity The accompanying Unaudited Condensed Consolidated Financial Statements were prepared on a going concern basis in accordance with U.S. GAAP. The going concern basis of presentation assumes that the Company will continue in operation for the next twelve months and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the Company’s inability to continue as a going concern. In order for the Company to continue operations beyond the next twelve months and be able to discharge its liabilities and commitments in the normal course of business, the Company must establish sustained positive operating results through increased sales, successfully manage its costs and implement cost cutting measures, if necessary, and implement better planning and forecasting strategies to avoid further unforeseen expenses, potentially raise additional equity or debt capital. There can be no assurance that the Company will be able to achieve sustainable positive operating results or cost reductions or obtain additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to management. If the Company does not continue to achieve positive operating results and does not raise sufficient additional capital, material adverse events may occur including, but not limited to, (1) a reduction in the nature and scope of the Company’s operations, (2) the Company’s inability to fully implement its current business plan. There can be no assurance that the Company will successfully improve its liquidity position. The accompanying Unaudited Condensed Consolidated Financial Statements do not reflect any adjustments that might be required if our liquidity position does not improve. In the three months ended June 30, 2014, the Company experienced an increase in revenue of approximately $118,000, compared to the three months ended June 30, 2013, and a $179,000 increase in revenue for the six months ended June 30, 2014 over the comparable six months of 2013. These revenues are not a result of primary operations as the Company is still developing the market and partnerships needed for the treatments that have been or are being developed and approved. In addition, future revenue from the primary operations is contingent upon successful completion of clinical trials and regulatory approval of our treatment methodologies. There can be no assurance the Company will be successful in generating revenue from primary operations. In the three months ended June 30, 2014, the Company experienced a loss from continuing operations of approximately $2.2 million compared to the loss of approximately $2.2 million for the three months ended June 30, 2013, and a $4.1 million loss from continuing operations for the six months ended June 30, 2014 compared to a loss from continuing operations of $6.9 million for the comparable period in 2013. At June 30, 2014, the Company had a substantial working capital surplus totaling $11.7 million, which improved by $6.3 million from the working capital surplus of $5.4 million at December 31, 2013. As of the date of this report, our stock price is trading above the $8.00 exercise price for the option to purchase 1 million shares, which was issued in connection with our recent $10 million financing. The option is immediately exercisable and redeemable after 18 months following the date of issuance once our stock price meets certain market conditions. We do not plan to rely on market conditions to support the additional $8 million capital infusion from a potential option exercise. As a developmental stage company, based on our currently anticipated course of business, there is a significant risk that, while we believe we have sufficient cash to meet our ordinary course obligations for at least the next twelve months, we will need to continue to raise capital to meet our cash needs and consider alternatives to the $8 million option exercise, though there can be no guarantee that any capital raise will be successful or provide favorable value for the Company’s stockholders.

2. BASIS OF PRESENTATION AND LIQUIDTY

6 Months Ended

Jun. 30, 2014

NOTE 2 – BASIS OF PRESENTATION AND LIQUIDTY

Basis of Presentation

As of February 6, 2013, in connection with the Merger, Cellular Biomedicine Group, Ltd. became the accounting acquirer thus resulting in a reverse merger for accounting purposes. Therefore, the accompanying financial statements are on a consolidated basis subsequent to February 6, 2013, but only reflect the operations of CBMG BVI prior to the date of acquisition.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of June 30, 2014 and the results of its operations and its cash flows for the periods presented. The unaudited Condensed Consolidated Financial Statements herein should be read together with the historical consolidated financial statements of the Company for the years ended December 31, 2013 and 2012 included in our Annual Report on Form 10-K for the year ended December 31, 2013. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

Liquidity

The accompanying Unaudited Condensed Consolidated Financial Statements were prepared on a going concern basis in accordance with U.S. GAAP. The going concern basis of presentation assumes that the Company will continue in operation for the next twelve months and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the Company’s inability to continue as a going concern. In order for the Company to continue operations beyond the next twelve months and be able to discharge its liabilities and commitments in the normal course of business, the Company must establish sustained positive operating results through increased sales, successfully manage its costs and implement cost cutting measures, if necessary, and implement better planning and forecasting strategies to avoid further unforeseen expenses, potentially raise additional equity or debt capital. There can be no assurance that the Company will be able to achieve sustainable positive operating results or cost reductions or obtain additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to management.

If the Company does not continue to achieve positive operating results and does not raise sufficient additional capital, material adverse events may occur including, but not limited to, (1) a reduction in the nature and scope of the Company’s operations, (2) the Company’s inability to fully implement its current business plan. There can be no assurance that the Company will successfully improve its liquidity position. The accompanying Unaudited Condensed Consolidated Financial Statements do not reflect any adjustments that might be required if our liquidity position does not improve.

In the three months ended June 30, 2014, the Company experienced an increase in revenue of approximately $118,000, compared to the three months ended June 30, 2013, and a $179,000 increase in revenue for the six months ended June 30, 2014 over the comparable six months of 2013. These revenues are not a result of primary operations as the Company is still developing the market and partnerships needed for the treatments that have been or are being developed and approved. In addition, future revenue from the primary operations is contingent upon successful completion of clinical trials and regulatory approval of our treatment methodologies. There can be no assurance the Company will be successful in generating revenue from primary operations. In the three months ended June 30, 2014, the Company experienced a loss from continuing operations of approximately $2.2 million compared to the loss of approximately $2.2 million for the three months ended June 30, 2013, and a $4.1 million loss from continuing operations for the six months ended June 30, 2014 compared to a loss from continuing operations of $6.9 million for the comparable period in 2013. At June 30, 2014, the Company had a substantial working capital surplus totaling $11.7 million, which improved by $6.3 million from the working capital surplus of $5.4 million at December 31, 2013.

As of the date of this report, our stock price is trading above the $8.00 exercise price for the option to purchase 1 million shares, which was issued in connection with our recent $10 million financing. The option is immediately exercisable and redeemable after 18 months following the date of issuance once our stock price meets certain market conditions. We do not plan to rely on market conditions to support the additional $8 million capital infusion from a potential option exercise. As a developmental stage company, based on our currently anticipated course of business, there is a significant risk that, while we believe we have sufficient cash to meet our ordinary course obligations for at least the next twelve months, we will need to continue to raise capital to meet our cash needs and consider alternatives to the $8 million option exercise, though there can be no guarantee that any capital raise will be successful or provide favorable value for the Company’s stockholders.