Unassociated Document

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GKSBqeemWqwgSsHxM7770Thfd4SQ3gapSpdz7Hl7ZVAQBj8ZJ0QmRDwc6tDfbPgX ranKRcWRiwBMrCN8c+wMxw== 0001144204-08-046731.txt : 20080814 0001144204-08-046731.hdr.sgml : 20080814 20080814111848 ACCESSION NUMBER: 0001144204-08-046731 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080630 FILED AS OF DATE: 20080814 DATE AS OF CHANGE: 20080814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Forticell BioScience, Inc. CENTRAL INDEX KEY: 0000889992 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 113068704 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27368 FILM NUMBER: 081016302 BUSINESS ADDRESS: STREET 1: 3960 BROADWAY STREET 2: BLDG 28 CITY: NEW YORK STATE: NY ZIP: 10032 BUSINESS PHONE: (212) 740-6999 MAIL ADDRESS: STREET 1: 3960 BROADWAY, CITY: NEW YORK STATE: NY ZIP: 10032 FORMER COMPANY: FORMER CONFORMED NAME: ORTEC INTERNATIONAL INC DATE OF NAME CHANGE: 19950822 10-Q 1 v122727_10q.htm Unassociated Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ______________ to ____________

Commission File Number: 0-27368

FORTICELL BIOSCIENCE, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

11-3068704

(I.R.S. Employer Identification No.)

3960 Broadway

New York, New York 10032

(Address of principal executive offices)

(212) 740-6999

(Issuer's telephone number)

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	x

(Do not check if a smaller reporting company)

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of shares outstanding of the issuer's common stock is 13,358,015 (as of July 31, 2008).

FORTICELL BIOSCIENCE, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

QUARTER ENDED JUNE 30, 2008

ITEMS IN FORM 10-Q

		Page

Part I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	3
Item 2.	Management's discussion and analysis of financial condition and results of operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4T.	Controls and Procedures	23

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	24
Item 2.	Unregistered sales of Equity Securities and Use of Proceeds	24
Item 3.	Default Upon Senior Securities	24
Item 4.	Submission of Matters to a Vote of Security Holders	24
Item 5.	Other Information	24
Item 6.	Exhibits	24

Part I, Item 1. FINANCIAL STATEMENTS

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED BALANCE SHEET

	June 30,			December 31,
	2008			2007
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	52,371		$	1,301,795
New York State tax credits receivable		250,000			500,000
Prepaid and other current assets		234,884			149,997
Total current assets		537,255			1,951,792
Property and equipment, net		170,596			200,272
Patent application costs, net		362,480			409,080
Deposits and other assets		60,509			223,927
Total assets	$	1,130,840		$	2,785,071

LIABILITIES AND SHAREHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued expenses	$	2,931,169		$	2,768,232
Bridge note financing		225,000			-
Insurance premium financing payable		84,612			-
Current maturity of promissory note		67,632			67,632
Capital lease obligation - current		-			2,113
Total current liabilities		3,308,413			2,837,977

COMMITMENTS AND CONTINGENCIES

Shareholders’ deficit:
Convertible Preferred stock, $.001 par value; authorized, 1,000,000 shares:
Series A, stated value $10,000 per share; authorized 20,000 shares; 1,167.292 and 1,201.581 shares issued and outstanding; liquidation preference of $11,672,920 and $12,015,810		6,438,006			6,735,940
Less: subscription receivable to purchase 4 shares		-			(40,000	)
Series A-1, stated value $10,000 per share; authorized 500 shares; 500 shares issued and outstanding; liquidation preference $5,000,000		5,493,700			5,493,700
Series A-2, stated value $10,000 per share; authorized 500 shares; 500 shares issued and outstanding; liquidation preference $5,000,000		2,050,000			2,050,000
Series D-1, stated value $10 per share; authorized 20,000 shares; 5,948.6148 shares issued and outstanding; liquidation preference $59,486		15,090,903			15,090,903
Series D-2, stated value $10 per share; authorized 20,000 shares; no shares issued and outstanding; liquidation preference $0		-			-
Common stock, $.001 par value; authorized 300,000,000 shares; 13,358,015 and 11,972,235 shares issued and outstanding		13,358			11,972
Additional paid-in capital		136,602,767			136,327,084
Deficit accumulated during the development stage		(167,859,068	)		(165,632,347	)
Deferred compensation		-			(80,329	)
Accumulated other comprehensive income		(7,239	)		(9,829	)
Total shareholders’ deficit		(2,177,573	)		(52,906	)
Total liabilities and shareholders’ deficit	$	1,130,840		$	2,785,071

See accompanying notes to condensed unaudited financial statements.

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

													Cumulative
													From
													March 12,1991
	Three Months Ended June 30,						Six Months Ended June 30,						(inception) to
	2008			2007			2008			2007			June 30, 2008
Product revenue	$	-		$	-		$	-		$	-		$	265,665

Expenses
Product and laboratory costs		81,869			214,275			804,868			427,492			37,072,556
Personnel		140,888			2,735,255			856,494			3,684,715			51,664,214
General and administrative		227,557			1,357,168			475,353			1,624,985			24,641,584
Rent		147,192			182,580			294,384			365,160			6,176,381
Consulting		-			-			-			-			5,702,651
Interest and other expense		9,328			3,978,174			11,402			6,764,499			45,117,577
Interest and other income		(265,125	)		(65,856	)		(322,780	)		(89,888	)		(3,296,171	)
Gain on extinguishment of revenue interest assignment obligation		-			(35,527,695	)		-			(35,527,695	)		(35,527,695	)
Purchased in-process research and development costs		-			-			-			-			11,073,743
Change in fair value of warrants		-			-			-			-			(12,042,565	)
Loss on settlement of promissory notes		-			-			-			-			13,081,453
Lease termination costs		-			-			-			-			1,119,166
Loss on extinguishments of debt and Series A preferred shares		-			-			-			-			1,004,027
		341,709			(27,126,099	)		2,119,721			(22,750,732	)		145,786,921

Income (loss) before income tax benefit		(341,709	)		27,126,099			(2,119,721	)		22,750,732			(145,521,256	)

Income tax benefit		-			(62,500	)		-			(125,000	)		(739,000	)
Net income (loss)		(341,709	)		27,188,599			(2,119,721	)		22,875,732			(144,782,256	)

Preferred stock dividends		-			-			-			-			3,162,609
Preferred stock and warrants deemed dividends and discounts		-			5,649,196			107,000			5,649,196			19,914,203
Net income (loss) applicable to common shareholders	$	(341,709	)	$	21,539,403		$	(2,226,721	)	$	17,226,536		$	(167,859,068	)

Net income (loss) per share
Basic	$	(0.02	)	$	2.17		$	(0.16	)	$	1.74
Diluted	$	(0.02	)	$	0.45		$	(0.16	)	$	0.36

Weighted average shares outstanding
Basic		14,323,282			9,934,616			13,850,943			9,879,387
Diluted		14,323,282			48,332,724			13,850,943			48,275,493

See accompanying notes to condensed unaudited financial statements.

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

																	Deficit
																	accumulated							Total
														Additional			during the							shareholders’
	Common stock				Preferred stock series									paid-in			development			Treasury		Deferred		equity
	Shares		Amount		B		C		D		D-1		E	capital			stage			stock		compensation		(deficit)
March 12, 1991 (inception) to December 31, 1991 Founders		10,358	$	10		-		-		-		-	-	$	860			-			-		-	$	870
First private placement ($45 per share)		1,450		2		-		-		-		-	-		64,998			-			-		-		65,000
The Director ($172.50 and $795 per share)		994		1		-		-		-		-	-		249,999			-			-		-		250,000
Second private placement ($1413.75 per share)		354		-		-		-		-		-	-		500,000			-			-		-		500,000
Share issuance expense		-		-		-		-		-		-	-		(21,118	)		-			-		-		(21,118	)
Net loss		-		-		-		-		-		-	-		-			(281,644	)		-		-		(281,644	)
Balance at December 31, 1991		13,156		13		-		-		-		-	-		794,739			(281,644	)		-		-		513,108
Second private placement ($1,413.75 per share)		176		-		-		-		-		-	-		250,006			-			-		-		250,006
Second private placement ($1,413.75 per share)		152		-		-		-		-		-	-		215,467			-			-		-		215,467
Stock purchase agreement with the Director
($1,413.75 per share)		212		-		-		-		-		-	-		299,998			-			-		-		299,998
Share issuance expense		-		-		-		-		-		-	-		(35,477	)		-			-		-		(35,477	)
Net loss		-		-		-		-		-		-	-		-			(785,941	)		-		-		(785,941	)
Balance at December 31, 1992		13,696		13		-		-		-		-	-		1,524,733			(1,067,585	)		-		-		457,161
Third private placement ($1,500 per share)		731		1		-		-		-		-	-		1,096,499			-			-		-		1,096,500
Third private placement ($1,500 per share)		150		-		-		-		-		-	-		225,000			-			-		-		225,000
Stock purchase agreement with Home
Insurance ($1,350 per share)		741		1		-		-		-		-	-		999,998			-			-		-		999,999
Stock purchase agreement with the Director ($1,413.75 per share)		142		-		-		-		-		-	-		200,000			-			-		-		200,000
Shares issued in exchange for commission		4		-		-		-		-		-	-		6,000			-			-		-		6,000
Share issuance expenses		-		-		-		-		-		-	-		(230,207	)		-			-		-		(230,207	)
Net loss		-		-		-		-		-		-	-		-			(1,445,624	)		-		-		(1,445,624	)
Balance at December 31, 1993		15,464		15		-		-		-		-	-		3,822,023			(2,513,209	)		-		-		1,308,829
Fourth private placement ($1,500 per share)		263		-		-		-		-		-	-		397,712			-			-		-		397,712
Stock purchase agreement with Home
Insurance ($1,500 per share)		333		1		-		-		-		-	-		499,999			-			-		-		500,000
Share issuance expense		-		-		-		-		-		-	-		(8,697	)		-			-		-		(8,697	)
Net loss		-		-		-		-		-		-	-		-			(1,675,087	)		-		-		(1,675,087	)
Balance at December 31, 1994		16,060		16											4,711,037			(4,188,296	)		-		-		522,757
Rent forgiveness by Director		-		-		-		-		-		-	-		40,740			-			-		-		40,740
Net loss		-		-		-		-		-		-	-		-			(1,022,723	)		-		-		(1,022,723	)
Balance at December 31, 1995		16,060		16		-		-		-		-	-		4,751,777			(5,211,019	)		-		-		(459,226	)
Initial public offering		8,000		8		-		-		-		-	-		5,999,992			-			-		-		6,000,000
Exercise of warrants		226		-		-		-		-		-	-		33,885			-			-		-		33,885
Fifth private placement ($973.50 per share)		6,394		6		-		-		-		-	-		6,220,791			-			-		-		6,220,797
Share issuance expenses		-		-		-		-		-		-	-		(1,580,690	)		-			-		-		(1,580,690	)
Stock options issued for services		-		-		-		-		-		-	-		152,000			-			-		-		152,000
Net loss		-		-		-		-		-		-	-		-			(2,649,768	)		-		-		(2,649,768	)
Balance at December 31, 1996		30,680		30		-		-		-		-	-		15,577,755			(7,860,787	)		-		-		7,716,998
Exercise of warrants		7,726		8		-		-		-		-	-		10,822,783			-			-		-		10,822,791
Share issuance expenses		-		-		-		-		-		-	-		(657,508	)		-			-		-		(657,508	)
Stock options and warrants issued for services		-		-		-		-		-		-	-		660,000			-			-		-		660,000
Net loss		-		-		-		-		-		-	-		-			(4,825,663	)		-		-		(4,825,663	)
Balance at December 31, 1997 (carried forward)		38,406		38		-		-		-		-	-		26,403,030			(12,686,450	)		-		-		13,716,618

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

																			Deficit
																			accumulated								Total
																Additional			during the								shareholders’
	Common Stock				Preferred stock series											paid-in			development			Treasury			Deferred		equity
	Shares		Amount		B			C		D		D-1		E		capital			stage			stock			compensation		(deficit)
Balance at December 31, 1997 (brought forward)		38,406		38		-			-		-		-		-		26,403,030			(12,686,450	)		-			-		13,716,618
Exercise of warrants		1,477		2		-			-		-		-		-		1,281,955			-			-			-		1,281,957
Stock options and warrants issued for services		-		-		-			-		-		-		-		1,920,111			-			-			-		1,920,111
Sixth private placement
Common shares issued ($1500.38 per share)		1,333		1		-			-		-		-		-		1,788,697			-			-			-		1,788,698
Warrants to purchase 334 shares at $1,800 per share		-		-		-			-		-		-		-		211,302			-			-			-		211,302
Share issuance expenses		-		-		-			-		-		-		-		(48,000	)		-			-			-		(48,000	)
Purchase of 44 shares of treasury stock (at cost)		-		-		-			-		-		-		-		-			-			(67,272	)		-		(67,272	)
Net loss		-		-		-			-		-		-		-		-			(8,412,655	)		-			-		(8,412,655	)
Balance at December 31, 1998		41,216		41		-			-		-		-		-		31,557,095			(21,099,105	)		(67,272	)		-		10,390,759
Exercise of warrants		94		-		-			-		-		-		-		14,103			-			-			-		14,103
Stock options and warrants issued for services		-		-		-			-		-		-		-		64,715			-			-			-		64,715
Seventh private placement
Common shares issued ($1,312.50 per share)		2,594		3		-			-		-		-		-		3,168,782			-			-			-		3,168,785
Warrants to purchase 519 shares – 210 at $1,875
per share an d 209 at $2,175 per share		-		-		-			-		-		-		-		236,291			-			-			-		236,291
Placement agent warrants to purchase 260 shares
at $1,575 per share		-		-		-			-		-		-		-		232,000			-			-			-		232,000
Eighth private placement ($825 per share)		10,909		11		-			-		-		-		-		8,999,991			-			-			-		9,000,002
Share issuance expenses		-		-		-			-		-		-		-		(619,908	)		-			-			-		(619,908	)
Purchase of 61 shares of treasury stock (at cost)		-		-		-			-		-		-		-		-			-			(75,518	)		-		(75,518	)
Net loss		-		-		-			-		-		-		-		-			(10,040,509	)		-			-		(10,040,509	)
Balance at December 31, 1999		54,813		55		-			-		-		-		-		43,653,069			(31,139,614	)		(142,790	)		-		12,370,720
Exercise of options and warrants		1,170		1		-			-		-		-		-		327,281			-			-			-		327,282
Stock options and warrants issued for services		-		-		-			-		-		-		-		56,265			-			-			-		56,265
Ninth private placement
Common stock issued ($2,250 per share)		444		-		-			-		-		-		-		1,000,005			-			-			-		1,000,005
Placement agent warrants (18 at $2,250 per share)		-		-		-			-		-		-		-		23,000			-			-			-		23,000
Tenth private placement ($1,012.50 per share)		8,318		8		-			-		-		-		-		8,421,063			-			-			-		8,421,071
Share issuance expenses		-		-		-			-		-		-		-		(641,500	)		-			-			-		(641,500	)
Purchase of 29 shares of treasury stock (at cost)		-		-		-			-		-		-		-		-			-			(34,855	)		-		(34,855	)
Net loss		-		-		-			-		-		-		-		-			(12,129,663	)		-			-		(12,129,663	)
Balance at December 31, 2000		64,745		64		-			-		-		-		-		52,839,183			(43,269,277	)		(177,645	)		-		9,392,325
Stock options to purchase 400 shares for services		-		-		-			-		-		-		-		188,080			-			-			-		188,080
Net loss		-		-		-			-		-		-		-		-			(15,885,377	)		-			-		(15,885,377	)
Balance at December 31, 2001		64,745		64		-			-		-		-		-		53,027,263			(59,154,654	)		(177,645	)		-		(6,304,972	)
Exercise of options and warrants		2,381		2		-			-		-		-		-		355			-			-			-		357
Stock options and warrants issued for services		-		-		-			-		-		-		-		113,060			-			-			-		113,060
Warrants issued with convertible debentures		-		-		-			-		-		-		-		440,523			-			-			-		440,523
Warrants issued with redeemable preferred stock		-		-		-			-		-		-		-		559,289			-			-			-		559,289
Convertible debenture conversion benefit		-		-		-			-		-		-		-		1,042,663			-			-			-		1,042,663
Redeemable convertible preferred conversion benefit		-		-		-			-		-		-		-		1,097,886			-			-			-		1,097,886
Issuance of series B preferred stock
(938 shares at $10,000 per share)		-		-		9,382,742			-		-		-		-		-			-			-			-		9,382,742
Warrants issued and exercised with preferred stock		62,552		63		(3,479,043	)		-		-		-		-		3,486,318			-			-			-		7,338
Shares issuance costs – preferred stock		-		-		(866,612	)		-		-		-		-		304,615			-			-			-		(561,997	)
Preferred stock dividends		25,021		25		-			-		-		-		-		1,125,909			(1,125,934	)		-			-		-
Net loss		-		-		-			-		-		-		-		-			(21,578,021	)		-			-		(21,578,021	)
Balance at December 31, 2002 (carried forward)		154,699		154		5,037,087			-		-		-		-		61,197,881			(81,858,609	)		(177,645	)		-		(15,801,132	)

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

																				Deficit
																				accumulated								Total
																	Additional			during the								shareholders’
	Common stock				Preferred stock series												paid-in			development			Treasury			Deferred		equity
	Shares		Amount		B			C			D		D-1		E		capital			stage			stock			compensation		(deficit)
Balance at December 31, 2002 (brought forward)		154,699		154		5,037,087			-			-		-		-		61,197,881			(81,858,609	)		(177,645	)		-		(15,801,132	)
Exercise of options and warrants		26,583		27		-			-			-		-		-		12,939			-			-			-		12,966
Issuance of preferred stock:
series B (200 shares), series C (948 shares)		-		-		2,000,000			5,690,000			-		-		-		-			-			-			-		7,690,000
Warrants issued with preferred stock		-		-		(490,567	)		(1,225,632	)		-		-		-		1,716,199			-			-			-		-
Warrant to purchase 5,000 shares at $30 per share
issued for services		-		-		-			-			-		-		-		87,000			-			-			-		87,000
Share issuance costs – preferred stock		-		-		(393,488	)		(797,327	)		-		-		-		359,078			-			-			-		(831,737	)
Conversion of series B preferred stock
(605 shares) into common stock		161,437		162		(3,253,571	)		-			-		-		-		3,253,409			-			-			-		-
Conversion of series B preferred stock into
series D preferred stock (483 shares)		-		-		(2,628,602	)		-			2,628,602		-		-		-			-			-			-		-
Preferred stock deemed dividends and discounts		-		-		-			-			-		-		-		4,269,000			(4,269,000	)		-			-		-
Preferred stock dividends		6,154		6		-			-			-		-		-		923,071			(923,077	)		-			-		-
Common stock dividend to be distributed on
series C preferred stock		-		-		-			-			-		-		-		336,550			(336,550	)		-			-		-
Common stock to be issued in connection with
promissory notes (10,467 shares)		-		-		-			-			-		-		-		287,000			-			-			-		287,000
Adjustment for one for ten reverse stock split		5		-		-			-			-		-		-		-			-			-			-		-
Net loss		-		-		-			-			-		-		-		-			(15,920,504	)		-			-		(15,920,504	)
Balance at December 31, 2003		348,878		349		270,859			3,667,041			2,628,602		-		-		72,442,127			(103,307,740	)		(177,645	)		-		(24,476,407	)
Issued in connection with promissory notes
Previously issued notes (FY 2002 above)		10,467		11		-			-			-		-		-		(11	)		-			-			-		-
Issued in current fiscal year		22,122		22		-			-			-		-		-		746,180			-			-			-		746,202
Common stock (18,468) and 34.31 shares of
series D preferred to be issued in connection
with agreements which extended due date of
promissory notes		-		-		-			-			-		-		-		828,540			-			-			-		828,540
Issued in connection with exercise of warrants		2,164		2		-			-			-		-		-		323			-			-			-		325
Conversion of 35.62 shares of series C preferred
stock into common stock		7,125		7		-			(137,752	)		-		-		-		137,745			-			-			-		-
Payment of dividends on 35.62 shares of series C
preferred stock in common stock		916		1		-			-			-		-		-		30,098			(30,099	)		-			-		-
Common stock and series D preferred (233.83
shares) issued in connection with special
warrant offer ($15.06 per share)		33,132		33		-			-			939,050		-		-		498,936			-			-			-		1,438,019
Common stock dividend to be distributed on
series B and series C preferred stock		-		-		-			-			-		-		-		613,805			(613,805	)		-			-		-
Option to purchase 6,667 shares at $30 per share
issued to director for services		-		-		-			-			-		-		-		398,574			-			-			-		398,574
Warrant to purchase 5,000 shares at $30 issued for
services		-		-		-			-			-		-		-		94,393			-			-			-		94,393
Warrant to purchase 937 shares at $48.75
issued in connection with lease		-		-		-			-			-		-		-		18,500			-			-			-		18,500
Share issuance expenses		-		-		-			-			-		-		-		(26,600	)		-			-			-		(26,600	)
Special warrant offer deemed dividends		-		-		-			-			-		-		-		1,123,000			(1,123,000	)		-			-		-
Net loss		-		-		-			-			-		-		-		-			(15,377,900	)		-			-		(15,377,900	)
Balance at December 31, 2004 (carried forward)		424,804		425		270,859			3,529,289			3,567,652		-		-		76,905,610			(120,452,544	)		(177,645	)		-		(36,356,354	)

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

																				Deficit
																				accumulated									Total
																	Additional			during the									shareholders’
	Common stock				Preferred stock series												paid-in			development			Treasury			Deferred			equity
	Shares		Amount		B			C			D		D-1		E		capital			stage			stock			compensation			(deficit)
Balance at December 31, 2004 (brought forward)		424,804		425		270,859			3,529,289			3,567,652		-		-		76,905,610			(120,452,544	)		(177,645	)		-			(36,356,354	)
Common stock and series D preferred (34.31
shares) issued in connection with agreements
which extended due date of promissory notes		18,468		18		-			-			274,500		-		-		(274,518	)		-			-			-			-
January 2005 Private Placement:
Common stock issued		432,264		432		-			-			-		-		-		4,775,668			-			-			-			4,776,100
Common stock and series D preferred (1,720.16
shares) issued for promissory note conversion		530,208		530		-			-			5,733,853		-		-		14,895,029			-			-			-			20,629,412
Common stock and series D preferred (1,086.21
shares) issued in connection with Series C
preferred exchange		218,912		219		-			(3,529,289	)		3,620,702		-		-		6,261,816			(6,353,448	)		-			-			-
Common stock issued for exercise of additional
investment right from private placement		10,217		10		-			-			-		-		-		114,937			-			-			-			114,947
Common stock issued in connection with
February 2005 private placement		8,000		8		-			-			-		-		-		86,265			-			-			-			86,273
Common stock issued in connection with
exchange for series B preferred stock		14,710		15		(270,859	)		-			-		-		-		270,844			-			-			-			-
Common stock issued to officers		109,667		110		-			-			-		-		-		751,474			-			-			(462,445	)		289,139
Common stock issued upon exercise of warrants		243,901		244		-			-			-		-		-		3,415			-			-			-			3,659
October 2005 Private Placement:
Common stock issued		972,718		973		-			-			-		-		-		3,172,643			-			-			-			3,173,616
Common stock and Series D preferred (2,714.62
shares) and warrants issued for promissory notes		423,128		423		-			-			2,714,624		-		-		3,622,670			-			-			-			6,337,717
Return of excess preferred stock dividend		-		-		-			-			-		-		-		(17,891	)		17,891			-			-			-
Modifications of Series E warrant prices		-		-		-			-			-		-		-		3,490,140			(1,264,247	)		-			-			2,225,893
Warrants to purchase 5,000 shares issued for services		-		-		-			-			-		-		-		7,189			-			-			-			7,189
Share issuance expenses		-		-		-			-			-		-		-		(14,234	)		-			-			-			(14,234	)
Net loss		-		-		-			-			-		-		-		-			(32,586,847	)		-			-			(32,586,847	)
Balance at December 31, 2005 (carried forward)		3,406,997		3,407		-			-			15,911,331		-		-		114,051,057			(160,639,195	)		(177,645	)		(462,445	)		(31,313,490	)

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

																					Deficit
																					accumulated									Total
																		Additional			during the									shareholders’
	Common stock					Preferred stock series												paid-in			development			Treasury			Deferred			equity
	Shares			Amount		B		C		D			D-1		E			Capital			stage			stock			compensation			(deficit)
Balance at December 31, 2005 (brought forward)		3,406,997			3,407		-		-		15,911,331			-		-			114,051,057			(160,639,195	)		(177,645	)		(462,445	)		(31,313,490	)
Exercise of Series E warrants		139,207			139		-		-		-			-		-			58			-			-			-			197
Warrant issued for vendor settlement		-			-		-		-		-			-		-			54,982			-			-			-			54,982
Warrant issued with promissory notes		-			-		-		-		-			-		-			7,262			-			-			-			7,262
Common stock and warrants issued for
Production suite charges (includes warrants to
purchase 73,674 shares at $11.25 per share)		363,360			364		-		-		-			-		-			1,422,475			-			-			-			1,422,839
Placement agent fees		113,147			113		-		-		-			-		-			424,187			-			-			-			424,300
Hapto acquisition (includes warrants to purchase
200,000 shares at $4.50 per share)		2,031,119			2,031		-		-		-			-		-			10,692,540			-			-			-			10,694,571
Common stock issued upon conversion of
323.4008 shares of Series D preferred stock		86,240			86		-		-		(820,428	)		-		-			820,342			-			-			-			-
April 2006 private placement
Issuance of 6,176 shares of Series E preferred stock		-			-		-		-		-			-		6			-			-			-			-			6
Bridge loan converted into 301.333 shares of Series E preferred stock		-			-		-		-		-			-		-			-			-			-			-			-
Dividends on Series E preferred stock		-			-		-		-		-			-		151,035			-			(151,035	)		-			-			-
Conversion of 6,176 Series E preferred		2,822,078			2,822		-		-		-			-		(151,041	)		148,219			-			-			-			-
Fair value of warrants reclassified as liabilities		-			-		-		-		-			-		-			(11,951,000	)		-			-			-			(11,951,000	)
Reduction of warrant liability		-			-		-		-		-			-		-			5,736,591			-			-			-			5,736,591
Modifications of Series E and F warrant prices		-			-		-		-		-			-		-			277,972			(277,972	)		-			-			-
Transfer of Preferred stock series: D to D-1		-			-		-		-		(15,090,903	)		15,090,903		-			-			-			-			-			-
Retirement of treasury shares		(134	)		-		-		-		-			-		-			(177,645	)		-			177,645
Share-based compensation		-			-		-		-		-			-		-			41,200			-			-			-			41,200
Share issuance expenses		-			-		-		-		-			-		-			(57,118	)		-			-			-			(57,118	)
Shares issued pursuant to deferred compensation plan		1,333			1		-		-		-			-		-			415			-			-			(416	)		-
Restricted share awards		-			-		-		-		-			-		-			165,000			-			-			(165,000	)		-
Amortization of deferred compensation		-			-		-		-		-			-		-			-			-			-			334,678			334,678
Adjustment for one for fifteen reverse stock split		523			1		-		-		-			-		-			(1	)		-			-			-			-
Net loss		-			-		-		-		-			-		-			-			(18,000,091	)		-			-			(18,000,091	)
Balance at December 31, 2006 (carried forward)		8,963,870			8,964		-		-		-			15,090,903		-			121,656,536			(179,068,293	)		-			(293,183	)		(42,605,073	)

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

																				Deficit
																				accumulated			Accumulated						Total
																	Additional			during the			other						shareholders’
	Common stock						Preferred stock series										paid-in			development			comprehensive			Deferred			equity
	Shares			Amount			A			A-1			A-2		D-1		capital			stage			income (loss)			compensation			(deficit)
Balance at December 31, 2006 (brought forward)		8,963,870			8,964			-			-			-		15,090,903		121,656,536			(179,068,293	)		-			(293,183	)		(42,605,073	)
Comprehensive income:
Net income		-			-			-			-			-		-		-			19,955,482			-			-			19,955,482
Foreign currency translation		-			-			-			-			-		-		-			-			(9,829	)		-			(9,829	)
Total comprehensive income																														19,945,653
Share-based compensation		-			-			-			-			-		-		271,407			-			-			-			271,407
Common stock and 250,000 stock options
paid to directors		110,000			110			-			-			-		-		61,915			-			-			-			62,025
Series A Financing - gross proceeds
- A:1,191.668 shares , A-1 & A-2: 500 shares each @ $10,000, $11,000, and $4,100, ,respectively per share		-			-			11,916,680			5,500,000			2,050,000		-		-			-			-			-			19,466,680
- Value of attached series A: 11,916,680, M: 15,466,680 , and M-1: 7,733,340 warrants		-			-			(3,789,566	)		-			-		-		3,789,566			-			-			-			-
- Placement, professional, and other fees		-			-			(1,463,014	)		(6,300	)		-		-		-			-			-			-			(1,469,314	)
- Subscriber note receivable for 4 shares		-			-			(40,000	)		-			-		-		-			-			-			-			(40,000	)
- Accretion of discount related to Series A and A-1 preferred stock		-			-			-			-			-		-		5,231,744			(5,231,744	)		-			-			-
- Series A warrants issued in connection with
bridge financing to purchase 2,899,000 shares		-			-			-			-			-		-		1,003,747			-			-			-			1,003,747
- Series A: 9.913 shares to settle prior liabilities		-			-			71,840			-			-		-		-			-			-			-			71,840
Warrants and options issued in connection with cancellation Agreement for former officers:
- Five-year warrants to purchase 4,157,617 shares		-			-			-			-			-		-		1,855,515			-			-			-			1,855,515
-Issuance of option to purchase 20 shares of series A preferred stock with attached warrants		-			-			-			-			-		-		198,000			-			-			-			198,000
-Surrender of options to purchase 508,909 shares		-			-			-			-			-		-		(92,498	)		-			-			-			(92,498	)
Equity issued pursuant to advisory agreement:
- Warrants to purchase 2,000,000 shares		-			-			-			-			-		-		796,706			-			-			-			796,706
- Warrants to be exchanged for common stock		931,032			931			-			-			-		-		280,712			-			-			-			281,643
Effect of price reductions made to series H warrants		-			-			-			-			-		-		1,043,305			(1,043,305	)		-			-			-
Series H warrants converted to common and series A warrants to purchase 365,192 shares		2,002,444			2002			-			-			-		-		242,485			(244,487	)		-			-			-
Share vested pursuant to 2003 restricted share grant		(35,127	)		(35	)		-			-			-		-		-			-			-			-			(35	)
Legal expenses incurred		-			-			-			-			-		-		(12,056	)		-			-			-			(12,056	)
Adjustment for one for fifteen reverse stock split		16			-			-			-			-		-		-			-			-			-			-
Amortization of deferred compensation		-			-			-			-			-		-		-			-			-			212,854			212,854
Balance at December 31, 2007 (carried forward)		11,972,235			11,972			6,695,940			5,493,700			2,050,000		15,090,903		136,327,084			(165,632,347	)		(9,829	)		(80,329	)		(52,906	)

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

																	Deficit
																	accumulated			Accumulated						Total
														Additional			during the			other						shareholders’
	Common stock				Preferred stock series									paid-in			development			comprehensive			Deferred			equity
	Shares		Amount		A			A-1		A-2		D-1		capital			stage			income (loss)			compensation			(deficit)
Balance at December 31, 2007 (brought forward)		11,972,235		11,972		6,695,940			5,493,700		2,050,000		15,090,903		136,327,084			(165,632,347	)		(9,829	)		(80,329	)		(52,906	)
Comprehensive loss:
Net loss		-		-		-			-		-		-		-			(2,119,721	)		-			-			(2,119,721	)
Foreign currency translation		-		-		-			-		-		-		-			-			2,590			-			2,590
Total comprehensive loss																											(2,117,131	)
Share-based compensation		-		-		-			-		-		-		(52,536	)		-			-			-			(52,536	)
Exercise of option to purchase 20 shares of Series A with attached warrants		-		-		200,000			-		-		-		(198,000	)		-			-			-			2,000
Value of attached warrants: 200,000 Series A, 200,000 Series M-1 and100,000 Series M warrants		-		-		(89,000	)		-		-		-		89,000			-			-			-			-
Accretion of discount related to exercise of option to purchase 20 shares of Series A preferred stock		-		-		-			-		-		-		107,000			(107,000	)		-			-			-
Conversion of 50.289 shares of Series A		1,005,780		1,006		(368,934	)		-		-		-		367,928			-			-			-			-
Issuance pursuant to 2006 Restricted Share Award		380,000		380		-			-		-		-		(380	)		-			-			-			-
Expenses incurred in connection with capital raising		-		-		-			-		-		-		(37,329	)		-			-			-			(37,329	)
Amortization of deferred compensation		-		-		-			-		-		-		-			-			-			80,329			80,329
Balance at June 30, 2008		13,358,015	$	13,358	$	6,438,006		$	5,493,700	$	2,050,000	$	15,090,903	$	136,602,767		$	(167,859,068	)	$	(7,239	)	$	-		$	(2,177,573	)

See accompanying notes to condensed unaudited financial statements.

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

							Cumulative from
							March 12, 1991
	Six months ended June 30,						(inception) to
	2008			2007			June 30, 2008
Cash flows from operating activities
Net loss	$	(2,119,721	)	$	22,875,732		$	(144,782,257	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		89,179			90,380			6,034,883
Gain on extinguishment of debt		-			(35,527,695	)		(35,527,695	)
Loss on settlement of promissory note		-			-			13,081,453
Cost to terminate lease on New Jersey facility		-			-			836,032
Net equity issuances for cancellation agreement		-			1,761,702			1,961,017
Amortization of deferred compensation		80,329			186,418			917,000
Non-cash equity compensation		-			1,087,130			4,413,580
Non-cash interest		-			1,806,095			3,853,679
Non-cash imputed interest		-			4,951,000			38,966,586
Non-cash production suite charges		-			-			1,422,839
Share-based compensation		(52,536	)		64,151			322,061
Gain on loan adjustment		-			-			(236,000	)
Loss on extinguishment of debt and series A preferred stock		-			-			1,004,027
Purchased in-process research and development		-			-			11,073,742
Change in warrant value		-			-			(12,042,565	)
Other		-			-			33,122
Changes in operating assets and liabilities
New York State tax credits receivable		250,000			(125,000	)		500,000
Prepaid and other current assets		(76,668	)		165,225			(881,106	)
Accounts payable and accrued liabilities		315,589			(1,192,237	)		5,057,611
Net cash used in operating activities		(1,513,828	)		(3,857,099	)		(103,991,991	)

Cash flows from investing activities
Purchases of property and equipment		(2,067	)		(4,289	)		(4,770,293	)
Proceeds from sale of property and equipment		-			-			145,926
Payments for patent applications		(5,733	)		(34,810	)		(1,134,395	)
Organization costs		-			-			(10,238	)
Deposits		-			-			(885,029	)
Cash paid for Hapto, net of cash received		-			-			(204,402	)
Purchases of marketable securities		-			-			(594,986	)
Sale of marketable securities		-			-			522,532
Net cash used in investing activities		(7,800	)		(39,099	)		(6,930,885	)

Cash flows from financing activities
Proceeds from issuance of notes payable		225,000			1,949,000			17,572,126
Proceeds from issuance of common stock		-			-			61,701,458
Proceeds from exercise of warrants		-			-			1,362,860
Proceeds from insurance premium financing		139,390			138,000			953,790
Share issuance expenses and other financing costs		(37,329	)		(1,120,365	)		(6,960,064	)
Purchase of treasury stock		-			-			(177,645	)
Proceeds from issuance of loan payable		-			-			1,446,229
Proceeds from obligations under revenue interest assignment		-			-			10,000,000
Proceeds from issuance of convertible debentures		-			-			5,908,000
Proceeds from issuance of preferred stock-
Series A		2,000			5,791,475			9,583,975
Series B		-			-			3,070,000
Series C		-			-			5,690,000
Series E		-			-			5,526,829
Advances received		-			-			130,000
Repayment of capital lease obligations		(2,113	)		(4,233	)		(614,314	)
Repayment of loan payable		-			(6,751	)		(1,287,547	)
Repayment of obligations under revenue interest assignment		-			-			(11,414	)
Repayment of insurance premium financing payable		(54,778	)		(60,404	)		(869,178	)
Repayment of promissory notes		-			(307,500	)		(1,543,251	)
Repayment of notes payable		-			-			(515,500	)
Net cash provided by financing activities		272,170			6,379,222			110,966,354
Effect of exchange rate changes on cash and cash equivalents		34			4,755			8,893
Net Increase (Decrease) In Cash And Cash Equivalents		(1,249,424	)		2,487,779			52,371
CASH AND CASH EQUIVALENTS
Beginning of period		1,301,795			13,039			-
End of period	$	52,371		$	2,500,818		$	52,371

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

						Cumulative from
						March 12, 1991
	Six months ended June 30,					(inception) to
	2008			2007		June30, 2008
Supplemental disclosures of cash flow information:
Non cash investing and financing activities
Accounts payable converted to preferred stock	$	-		$	-	$	71,840
Accounts payable converted to promissory notes		-			-		837,468
Accounts payable offset against security deposits		(163,725	)		-		(163,725	)
Advances converted to promissory notes		-			-		130,000
Assets acquired under capital leases		-			-		628,523
Deferred compensation		-			-		917,000
Deferred offering costs included in accrued professional fees		-			-		314,697
Financing costs – other long-term obligations		-			-		59,500
Forgiveness of rent payable		-			-		40,740
Reversal of subscription receivable		40,000			-		40,000
Share issuance expenses – warrants		-			-		255,000
Dividends on preferred stock paid in common shares
Series B		-			-		2,099,011
Series C		-			-		576,013
Series E							151,035
Accretion of discount on preferred stock and warrants		107,000			4,408,165		18,626,411
Series A preferred stock converted to common stock		368,934			-		368,934
Series B preferred stock converted to common stock		-			-		270,859
Series C preferred stock exchanged for common stock		-			-		3,529,289
Series D preferred stock-
Issuance in lieu of common stock		-			-		12,343,678
Converted to common stock		-			-		820,428
Exchanged for Series D-1 preferred stock		-			-		15,090,903
Series E preferred stock converted to common stock		-			-		151,041
Share issuance expenses for preferred stock incurred through issuance of warrants
Series B		-			-		391,307
Series C		-			-		272,386
Share issuance of series D preferred stock in exchange for series B preferred stock		-			-		2,628,602
Promissory notes-
Repaid with common stock		-			-		13,112,626
Interest thereon paid with common stock		-			-		658,776
Forgiven for warrant participation		-			-		100,000
Repaid with preferred stock		-			2,701,500		2,951,500
Revenue interest assignment obligation repaid with preferred shares		-			7,550,000		7,550,000
Warrant issued in connection with lease		-			-		18,500
Warrant issued in connection with liability settlement		-			-		54,982
Warrants exchanged for common stock and warrants		-			1,241,031		1,287,792
Common stock and warrants issued to settle liability		-			-		659,800
Treasury shares retired		-			-		177,645
Conversion of series C preferred stock into common stock		-			-		137,645
Contribution of capital of amount due to founder		-			-		398,967
Equipment transferred in satisfaction of deposit		-			-		100,000
Discount on promissory notes		-			-		1,033,202

Cash paid for interest	$	2,648		$	74,259	$	980,728

Cash paid for income taxes	$	-		$	-	$	203,411

See accompanying notes to condensed unaudited financial statements

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - FINANCIAL STATEMENTS

The condensed consolidated balance sheets as of June 30, 2008, the condensed consolidated statements of operations for the three and six-month periods ended June 30, 2008 and 2007 and for the period from March 12, 1991 (inception) to June 30, 2008, and cash flows for the six-month periods ended June 30, 2008 and 2007, and for the period from March 12, 1991 (inception) to June 30, 2008, and the condensed consolidated statements of shareholders' equity (deficit) for the period from March 12, 1991 (inception) to June 30, 2008, have been prepared by us and are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position as of June 30, 2008 and 2007, results of operations for the three and six-month periods ended June 30, 2008 and 2007 and for the period from March 12, 1991 (inception) to June 30, 2008, and cash flows for the six-month periods ended June 30, 2008 and 2007, and from March 12, 1991 (inception) through June 30, 2008, and statements of shareholders' equity (deficit) for the period from March 12, 1991 (inception) to June 30, 2008, have been made. The December 31, 2007 balance sheet information has been derived from the audited December 31, 2007 financial statements. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto in our December 31, 2007 annual report on Form 10-KSB filed with the Securities and Exchange Commission. The results of operations for the three and six-month period ended June 30, 2008, are not necessarily indicative of the operating results for the full year or any other interim period.

NOTE 2 – STATUS OF PRE-MARKET APPROVAL APPLICATION FOR ORCEL

In response to our email inquiry to the FDA regarding the status of our Pre-Market Approval Application (PMA) for the use of ORCEL in the treatment of venous leg ulcers we received an email on April 3, 2008 stating that the FDA would be sending us a formal response in the next week or so and that it would likely conclude that our PMA was not approvable. No additional information was provided other than the fact that the FDA staff had concerns regarding our data. Since a non approvable letter would make it difficult to impossible for us to raise additional financing, to minimize expenses we immediately terminated our entire workforce, except for some key management personnel. As of June 30, 2008 we employed two persons, our chief scientific officer, and our chief executive officer. Our chief financial officer was appointed to additionally serve as our chief executive officer after the layoffs.

On April 24, 2008, we received a formal response from the FDA to our application for pre-market approval to sell ORCEL for the treatment of venous leg ulcers. The FDA’s extensive and detailed letter asked for clarification on a variety of safety, efficacy and statistical issues, and questioned the handling of various aspects of the combined clinical data. The FDA also suggested remedies for the deficiencies that they noted. Provided management can remedy the concerns of the FDA, we believe there is the possibility of a future approval of our PMA. We have until October 23, 2008 to submit a response to the FDA. We estimate the costs involved in responding to this letter can range anywhere from $300,000 to $600,000. However, since we have very limited cash available, we do not have the funds to do the work necessary to respond to the FDA’s letter and unless we can secure additional funds we will not be able to respond to the FDA’s letter. Depending on the outcome of our response we may be requested to conduct additional clinical trials whose cost could be substantial.

NOTE 3 - BASIS OF PRESENTATION

We are a development stage enterprise which had no operating revenue prior to December 2001. During 2001, we received Food and Drug Administration (FDA) approval for the use of the fresh form of our ORCEL product for the treatment of patients with recessive dystrophic epidermolysis bullosa and for donor sites in burn patients. We began marketing and selling our product for use on patients with one of these indications using a contract sales organization. Our sales and marketing efforts were active only for a brief period and accordingly our revenues were not significant. We terminated our sales efforts and elected to focus our attention on completing development of a cryopreserved form of our product for treatment of chronic wounds affecting larger patient populations.

We believe that our cash and cash equivalents on hand at June 30, 2008, $52,371, and the additional funds we will need to raise in 2008, may enable us to continue our operations for the next twelve months. See Note 9 regarding funds received in July 2008. We continue to seek additional funds through the sale of our securities to the public and through private placements, debt financing or other short-term loans. We may not be able to secure any future financing nor may we be able to reach the larger patient population markets of persons with venous leg ulcers and diabetic foot ulcers, with funds that we may be able to raise. We are also likely to continue to encounter difficulties which are common to development stage companies, including unanticipated costs relating to development, delays in the testing of products, regulatory approval and compliance and competition. If we are not able to secure financing through the end of the FDA process and /or if we do not obtain FDA clearance for the sale of ORCEL in its cryopreserved form for the treatment of venous leg ulcers, it may be difficult to impossible for us to raise capital to continue our business operations. There can be no assurances that we can raise additional funds. Even if we are able to raise additional funds we will have to rely on certain of our former employees resuming their positions with us, or our finding adequate replacements for them, in order to continue our business operations.

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The amount of cash we consume each month fluctuates, depending, among other things, on whether we are incurring expenses for services provided by third party suppliers in connection with either clinical trial or contract manufacturing activities and what payments we have to make on our outstanding debt. Our capital funding requirements depend on numerous factors, including:

the progress and magnitude of our research and development programs;

the time involved in obtaining regulatory approvals for the commercial sale of our ORCEL product in its cryopreserved form to treat venous leg ulcers and, later, diabetic foot ulcers;

the costs involved in filing and maintaining patent claims;

technological advances;

competitive and market conditions;

the successful implementation of the agreements we have entered into with Lonza for manufacturing our ORCEL product or to secure a similar arrangement with another manufacturer;

our ability to establish and maintain other collaborative arrangements, and

arrangements we may make to market our ORCEL product for commercial sales and the cost and effectiveness of such arrangements.

While we have arranged for payment of some of our obligations over a period of time, and have to make other payments of past due obligations to our current and ongoing suppliers, our ability to make payments we have agreed to pay and to insure continued receipt of needed supplies, and to continue reducing our past due obligations, will depend on our ability to secure needed financing. As of June 30, 2008, we owed $2.1 million to trade creditors of which approximately $0.8 million or 38% was owed to our contract manufacturer, Lonza Walkersville, Inc. Approximately $1.25 million of the remaining approximately $1.3 million is past due.

The accompanying financial statements have been prepared assuming that we will continue as a going concern. We incurred a net loss applicable to common shareholders of $2.2 million during the six months ended June 30, 2008, and, as of that date, our current liabilities exceeded our current assets by $2.8 million, our total liabilities exceeded our total assets by $2.2 million and we have a deficit accumulated in the development stage of $167.9 million. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

Successful future operations depend upon the successful development and marketing of our ORCEL product. Historically we have funded our operating losses by periodically raising additional capital. If additional funding is not available to us, we will not be able to continue operations. No adjustments have been made to the accompanying financials as a result of this uncertainty.

NOTE 4 – SHARE BASED COMPENSATION

Stock Options

In July 2005, the Board of Directors and stockholders approved the adoption of the 2005 Stock Option Plan (the “2005 Plan”). The 2005 Plan provides for the grant of options to purchase up to 66,667 shares of our common stock. These options may be granted to employees, our officers, our non-employee directors, consultants, and advisors. The 2005 Plan provides for granting of options to purchase our common stock at not less than the fair value of such shares on the date of the grant. As of June 30, 2008, 11,947 shares of our common stock remained available for grant under the 2005 Plan.

On August 24, 2006 the Board of Directors adopted the Forticell Bioscience, Inc. 2006 Stock Award and Incentive Plan (the “2006 Plan”). The 2006 Plan, as amended and approved by shareholders on December 20, 2007, provides for grants of up to 6,000,000 shares of our common stock that may be awarded to our employees, directors, consultants and advisors. The awards maybe in the form of restricted stock or incentive stock options. The grants will be made by the compensation committee of the Board of Directors or, in some cases, by a sub-committee of the compensation committee, and may require a performance component. The members of that sub-committee are both non-employee directors. As of June 30, 2008, 4,082,500 shares of our common stock remained available for grant under the 2006 Plan.

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Our Board of Directors or its Stock Option Committee has determined the exercise price for all stock options awarded. The exercise price for all stock options awarded is the market price of our common stock on the date the option is granted.

There were no stock options granted during the quarters and six months ended June 30, 2008 and June 30, 2007.

Changes in options outstanding under the plans for the six months ended June 30, 2008 were as follows:

	Shares			Weighted-		Aggregate		Weighted-
	subject			average		intrinsic		average
	to option			exercise price		value		remaining life
December 31, 2007		3,516,897		$	0.77
Cancelled		(2,044,677	)		0.97
Outstanding June 30, 2008		1,472,220		$	0.50	$	-		6.27
Exercisable June 30, 2008		375,388		$	0.63	$	-		6.26

Also outstanding was an option to purchase 6,667 shares of common stock at an exercise price of $30 expiring in November 2009 which was granted outside of our employee stock option plan.

The following table summarizes information concerning currently outstanding and exercisable options:

			Weighted						Weighted
			average		Weighted				average		Weighted
			remaining		average				remaining		average
	Number		contractual		exercise		Number		contractual		exercise
Range of exercise price ($)	Outstanding		life (years)		price ($)		exercisable		life (years)		price ($)
0.38 - 0.52		1,467,500		6.28		0.45		372,501		6.28		0.45
3.15 - 3.15		3,334		3.15		4.63		1,667		4.63		3.15
27.00 - 27.75		833		3.10		27.60		667		3.02		27.56
45.00 - 67.50		533		1.55		55.78		533		1.55		55.78
705.00 - 705.00		20		0.33		705.00		20		0.33		705.00
		1,472,220		6.27		0.50		375,388		0.63		6.26

Share-based compensation expense is included in personnel expense. Share-based compensation expense was reduced by $52,536 for the six months ended June 30, 2008 as a result of forfeitures of stock options related to our workforce reduction in the second quarter of 2008, and $5,775 for the comparable 2007 period.

All share-based option awards granted after January 1, 2006 were based on the grant date fair value in accordance with the provisions of SFAS 123(R).

Performance Shares

During 2003, an allocation of restricted shares of common stock were granted to officers and certain employees. The issuance of these shares was contingent on our achieving certain milestones. The compensation cost for these shares issued pursuant to this allocation was amortized over the 29-month vesting period ending May 31, 2007. Included in personnel expense is a charge of $128,183 for the six months ended June 30, 2007, reflecting the amortization of this compensation cost.

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other Plans

On December 11, 2006 the Board of Directors awarded 500,000 shares of restricted stock from the 2006 Plan, of which 200,000 shares was awarded to a member of management and 300,000 shares to two senior level employees. These shares were issued after January 1, 2008 and vest over a five-month period ending May 31, 2008. The shares granted to any of these employees, or pro-rata portions thereof, would be forfeited if during any time over this seventeen-month period, such employee’s employment with us was terminated. Due to the expected high probability that these members of management would be retained through May 31, 2008, we amortized a charge of $114,000 related to these awards over the 17 month period of service. No other performance criteria were established for these awards. As a result of our workforce reduction in the second quarter of 2008, we recorded a credit related to the forfeiture of 120,000 shares, which we included in personnel expense.

On October 22, 2007, our Board of Directors awarded 300,000 restricted shares of our common stock to our then chief executive officer which vested in equal annual tranches of 100,000 each over a three year period as long as our then chief executive continued to be employed by us. All such awards were made under the 2006 Plan. Due to the expected high probability that our then chief executive would be retained through October 22, 2010, we amortized a charge of $68,400 for this restricted share award over the 36 month period of service. No other performance criteria was established for this award. As a result of our workforce reduction in the second quarter of 2008, we recorded a credit related to the forfeiture of these 300,000 shares, which we included in personnel expense.

During the six months ended June 30, 2008 we included in personnel expense net charges aggregating $80,329 for the above restricted share issuances under our 2006 Plan in December 2006 and October 2007.

NOTE 5 - NET LOSS PER SHARE

As of June 30, 2008, an aggregate of 50,697,952 outstanding warrants and options and an aggregate of 35,932,137 shares of common stock issuable upon the conversion of our preferred stock outstanding were excluded from the weighted average share calculations, as the effect was antidilutive. Basic and diluted loss per share for the quarter and six months ended June 30, 2008 includes warrants to purchase 978,600 shares of common stock, exercisable at no more than $.015 per share reflected as outstanding from the date of grant.

As of June 30, 2007, basic and diluted earnings per share includes warrants to purchase 811,333 and 708,336 shares of common stock, exercisable at $.015 and $.01 per share, respectively, reflected as outstanding from the date of grant. Diluted earnings per share also includes an aggregate of 31,558,657 common shares issuable upon exercise of outstanding preferred stock, as well as approximately 6,837,000 shares issuable upon exercise of warrants and stock options whose prices are below the average market prices for the three and six month periods ended.

NOTE 6 - WARRANTS

The following represents warrant activity during the six months ended June 30, 2008:

Balance at December 31, 2007	51,179,352
Granted	500,000
Expired	(2,800	)
Balance at June 30, 2008	51,676,552

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following at June 30, 2008:

Accounts payable	$	2,149,009
Accrued compensation		412,271
Accrued expenses		54,020
Accrued professional fees		65,750
Deferred income		125,000
Due to Hadasit		125,119
	$	2,931,169

Included in accounts payable and accrued expenses is $826,703 owed to Lonza Inc. with whom we have a manufacturing agreement.

NOTE 8 – FINANCING

On February 2, 2008, we entered into a commercial premium finance agreement with First Insurance Funding Corp. of New York in the amount of $139,390. The financing agreement bore interest at 7.3 % and required ten monthly payments of $14,393 beginning March 2008. The financing was utilized to fund the premium payments for our directors and officers insurance policy.

On March 13, 2008, we obtained the consents of our Series A and A-1 Preferred Stock Holders to borrow up to $4,000,000. These consents were required by agreements we made with the investors who purchased our Series A and acquired our Series A-1 and A-2 preferred stock in June – July 2007.

On March 25, 2008, one of the purchasers of our Series A preferred stock loaned us $150,000. We will pay the lender 14% interest per annum and warrants in the form of our Series A warrants we issued in our June-July 2007 private placement. Such warrants will be exercisable (a) at the exercise price of, and (b) for the number of shares per dollar issuable upon exercise of, warrants we may issue in our next financing. We are obligated to repay the loans and interest on the earlier of a demand made by the holder after June 25, 2008 or the first closing of a larger loan or from the sale of our equity securities, from either of which we will try to secure not less than $3,000,000 after we receive the FDA “100-Day letter” commenting on the results of our completed clinical trial for use of our ORCEL product to treat venous stasis ulcers. We received that “100-Day letter” from the FDA on April 24, 2008.

On April 3, 2008, another purchaser of our Series A preferred stock loaned us $75,000 on similar terms.

The following equity transactions occurred during the six months ended June 30, 2008:

Our former chief executive officer, Ron Lipstein, and our former chairman, Steven Katz, exercised stock options paying $1,200 and $800, respectively, to purchase 12 and 8 Series A Preferred shares (convertible into 240,000 and 160,000 common shares respectively) with attached warrants. The attached warrants they received were as follows: Series A warrants to purchase 120,000 and 80,000 common shares exercisable at $1 per share, Series M warrants to purchase 120,000 and 80,000 common shares at $0.50 per share, and Series M-1 warrants to purchase 60,000 and 40,000 shares at $1 per share. We recorded the unamortized portion of the beneficial conversion discount of $107,000 upon the exercise of the option.

An aggregate of 380,000 shares to our CFO (200,000) and two other members of management issued pursuant to our December 11, 2006 restricted stock award grants, became vested.

Holders of an aggregate 50.289 Series A Preferred shares, including the above 20 Series A Preferred shares issued to a former chairman and a former chief executive, elected to convert such shares into an aggregate of 1,005,780 shares of our common stock.

FORTICELL BIOSCIENCE, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9 - SUBSEQUENT EVENTS

On July 1, 2008, we received a notice of eviction from our landlord, Columbia University. On August 7, 2008, the case was adjourned in consideration of an August 2008 use and occupancy payment of $28,281.

On July 2, 2008, the $75,000 April 3, 2008 bridge note holder (see note 8) loaned us an additional $225,000 at 12% interest due December 31, 2008. Such note provides for conversion into equity at the option of the holder. The conversion price will be 150% of the volume weighted average closing price of the our common stock during the ten trading days following the holder’s notice of conversion, except that the conversion price will not be less than $1.00 per share of our common stock.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements and notes thereto. This discussion may be deemed to include forward-looking statements.

Forward Looking Information May Prove Inaccurate

This Quarterly Report on Form 10-Q contains certain forward looking statements and information relating to us that are based on the beliefs of management, as well as assumptions made by and information currently available to us. When used in this document, the words "anticipate," "believe," "estimate," and "expect" and similar expressions, as they relate to us, are intended to identify forward looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including those described in this discussion and elsewhere in this Quarterly Report on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. We do not intend to update these forward-looking statements.

Status of Pre-Market Approval Application for ORCEL

On April 24, 2008, we received a formal response from the FDA to our application for pre-market approval to sell ORCEL for the treatment of venous leg ulcers. The FDA’s extensive and detailed letter asked for clarification on a variety of safety, efficacy and statistical issues, and questioned the handling of various aspects of the combined clinical data. The FDA also suggested remedies for the deficiencies that they noted. Provided management can remedy the concerns of the FDA, we believe there is a possibility of a future approval of our PMA. We have until October 23, 2008 to submit a response to the FDA. We estimate the costs involved in responding to this letter can range anywhere from $300,000 to $600,000. However, since we have very limited cash available, we do not have the funds to do the work necessary to respond to the FDA’s letter and unless we can secure additional funds we will not be able to respond to the FDA’s letter. Depending on the outcome of our response we may be requested to conduct additional clinical trials whose cost could be substantial.

Results of Operations

Three months ended June 30, 2008 vs. June 30, 2007

Net loss applicable to common shareholders from development stage operations for the three months ended June 30, 2008 declined by $21.8 million to $0.3 million from net income to common shareholders of $21.5 million in the corresponding 2007 period. Our 2007 results included approximately $4 million of imputed interest expense related to a debt obligation to Paul Royalty which we exchanged for Series A-1 and A-2 convertible preferred stock in June 2007 and recorded a related gain of $35.5 million. 2007 results reflect a $1.1 million consulting charge in general and administrative expenses related to placement advisory fees and a $1.8 million severance charge in personnel expense related to the cancellation of our employment agreements with former officers. Additionally we recorded $5.6 million of deemed dividends primarily as a result of beneficial conversions inherent in our Series A preferred stock at their date of issue. Our 2008 results generally reflect lower expenses across the board as a result of our lack of funds which resulted in our staff layoff after we heard from the FDA in April 2008. Personnel expense included a $163,000 credit in the quarter for the reversal of charges related to stock options and restricted shares granted to a former officer and certain employees when we terminated most of our workforce. Rent expense reflects a reduction in leased space in 2008.

Six months ended June 30, 2008 vs. June 30, 2007

Net loss applicable to common shareholders from development stage operations for the six months ended June 30, 2008 declined by $19.4 million to $2.2 million from net income to common shareholders of $17.2 million in the corresponding 2007 period. Our 2007 results included approximately $6.8 million of imputed interest expense related to a debt obligation to Paul Royalty which we exchanged for Series A-1 and A-2 convertible preferred stock in June 2007 and recorded a related gain of $35.5 million. 2007 results reflect a $1.1 million consulting charge in general and administrative expenses related to placement advisory fees and a $1.8 million severance charge in personnel expense related to the cancellation of our employment agreements with former officers. Our 2008 results generally reflect lower expenses across the board as a result of our lack of funds which resulted in our staff layoff after we heard from the FDA in April 2008. Product and laboratory expenses were slightly higher in 2008 than in 2007 reflecting cash flow problems we had in the first six months of 2007. Rent expense reflects a reduction in leased space in 2008. Our 2008 results included a $107,000 charge for the unamortized portion of a beneficial conversion discount related to the exercise of an option to purchase 20 shares of Series A preferred with attached warrants by a certain former chief executive officer and our former chairman. Personnel expense was reduced by a $163,000 credit in the second quarter for the reversal of charges related to stock options and restricted shares granted to a former officer and certain employees when we terminated most of our workforce.

Liquidity and Capital Resources

As of June 30, 2008, we had a cash balance of $52,371, working capital deficiency of $2,771,158 and stockholders’ deficiency of $2,177,573. As of December 31, 2007, we had a cash balance of $1,301,795, working capital deficiency of $886,185 and stockholders’ deficiency of $52,906. We realized a net loss of $2,119,721 for the six months ended June 30, 2008.

Net cash used in operating activities was $1,513,828 for the six months ended June 30, 2008, as compared to $3,857,099 used for the six months ended June 30, 2007. This reflects significantly higher payroll and other obligations during the 2007 period.

Net cash provided by financing activities for the six months ended June 30, 2008 was $272,170 compared to $6,379,222 provided for in the six months ended June 30, 2007. We closed our Series A private placement in June 2007.

Net cash used in investing activities during the six months ended June 30, 2008 was $7,800, as compared to $39,099 cash used in investing activities for the six months ended June 30, 2007. We purchased additional equipment in the first half of 2007 and had a number of patent renewals in that period. At this time, we do not have any material commitments or plans for capital expenditures. We intend, however, to make additional capital expenditures, to the extent our financial condition permits, and as may be required in connection with rendering our services in the future.

We believe that our cash and cash equivalents on hand at June 30, 2008, $52,371, and the additional funds we will need to raise in 2008, may enable us to continue our operations for the next twelve months. See Note 9 to the accompanying financial statements regarding funds received in July 2008. We continue to seek additional funds through the sale of our securities to the public and through private placements, debt financing or other short-term loans. We may not be able to secure any future financing nor may we be able to reach the larger patient population markets of persons with venous leg ulcers and diabetic foot ulcers, with funds that we may be able to raise. We are also likely to continue to encounter difficulties which are common to development stage companies, including unanticipated costs relating to development, delays in the testing of products, regulatory approval and compliance and competition. If we are not able to secure financing through the end of the FDA process and /or if we do not obtain FDA clearance for the sale of ORCEL in its cryopreserved form for the treatment of venous leg ulcers, it may be difficult to impossible for us to raise capital to continue our business operations. There can be no assurances that we can raise additional funds. Even if we are able to raise additional funds we will have to rely on certain of our former employees resuming their positions with us, or our finding adequate replacements for them, in order to continue our business operations.

the progress and magnitude of our research and development programs;

the time involved in obtaining regulatory approvals for the commercial sale of our ORCEL product in its cryopreserved form to treat venous leg ulcers and, later, diabetic foot ulcers;

the costs involved in filing and maintaining patent claims;

technological advances;

competitive and market conditions;

the successful implementation of the agreements we have entered into with Lonza for manufacturing our ORCEL product or to secure a similar arrangement with another manufacturer;

our ability to establish and maintain other collaborative arrangements, and

arrangements we may make to market our ORCEL product for commercial sales and the cost and effectiveness of such arrangements.

The table below summarizes contractual obligations and commitments as of June 30, 2008, including principal and interest payments on our debt:

	Total		Less than 1 year
Insurance premium financing payable	$	84,612	$	84,612
Current maturity of promissory note		67,632		67,632
Bridge note financing		225,000		225,000
Total	$	377,244	$	377,244

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of June 30, 2008.

Effect of Inflation

Our business is impacted by inflation as it relates to the higher supply costs associated with our various development activities.

Seasonality

Being that we are a development stage company our business is not considered seasonal in nature.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Equity Price Risk – Our Series A and A-1 Preferred Stock and Series A and M-1 warrants have certain anti-dilution provisions that would require a waiver by the majority holders of each series of those preferred shares and those warrants to avoid a reduction in the conversion prices of the preferred shares and the exercise prices of the warrants, and a corresponding increase in the number of shares of our common stock into which the preferred shares are convertible or for which those warrants are exercisable, if we sell our common stock (or other securities convertible into, or exercisable for shares of our common stock) at a price lower than the conversion prices of those preferred shares or the exercise prices of those warrants.

Interest Rate Risk – This risk is immaterial due to our low level of outstanding debt.

Item 4T. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Our Principal Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, as of June 30, 2008 (“Evaluation Date”) have concluded that our disclosure controls and procedures were effective in timely alerting us to material information relating to us, required to be included in our periodic filings with the Securities and Exchange Commission.

(b) Management’s Report on Internal Control over Financial Reporting.

Our management assessed the effectiveness of our internal control over financial reporting based on criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Based on this assessment, management determined that our internal controls over financial reporting were operating effectively as of June 30, 2008.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management, including such certifying officers, does not expect that our disclosure controls and procedures will prevent all errors and all improper conduct. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, a design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any, have been detected. These inherent limitations include the realities that judgments and decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more persons, or by management override of the control. Further, the design of any system of controls is also based in part upon assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations and a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

There were no changes in our internal controls or in other factors that could materially affect, or are likely to materially affect, our internal controls over financial reporting in the second quarter of 2008.

PART II

Item 1. LEGAL PROCEEDINGS

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

(a)	Exhibit No.	Description
	31.1 *	Rule 13a-14(a) / 15d- 14 (a) Certification of Principal Executive Officer.
	31.2 *	Rule 13a-14(a) / 15d- 14 (a) Certification of Principal Financial Officer.
	32.1 *	Section 1350 Certification of Principal Executive Officer.
	32.2 *	Section 1350 Certification of Principal Financial Officer.

_____________________

* filed herewith

SIGNATURES

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

	Registrant:

	FORTICELL BIOSCIENCE, INC.

Date: August 14, 2008	By:	/s/ Alan W. Schoenbart
		Alan W. Schoenbart
		Chief Executive Officer

Date: August 14, 2008	By:	/s/ Alan W. Schoenbart
		Alan W. Schoenbart
		Chief Financial Officer

EX-31.1 2 v122727_ex31-1.htm

EXHIBIT 31.1

CERTIFICATION

I, Alan W. Schoenbart, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Forticell Bioscience, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and we have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

A1l significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 14, 2008

/s/ Alan W. Schoenbart

Alan W. Schoenbart

Principal Executive Officer

EX-31.2 3 v122727_ex31-2.htm

EXHIBIT 31.2

CERTIFICATION

I, Alan W. Schoenbart, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Forticell Bioscience, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 14, 2008

/s/ Alan W. Schoenbart

Alan W. Schoenbart

Principal Financial Officer

EX-32.1 4 v122727_ex32-1.htm

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Forticell Bioscience, Inc. ("Forticell"), hereby certifies that Forticell’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Forticell.

Dated: August 14, 2008

/s/ Alan W. Schoenbart

Alan W. Schoenbart

Principal Executive Officer

EX-32.2 5 v122727_ex32-2.htm

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Dated: August 14, 2008

/s/ Alan W. Schoenbart

Alan W. Schoenbart

Principal Financial Officer

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