<SEC-DOCUMENT>0001144204-12-038286.txt : 20120803
<SEC-HEADER>0001144204-12-038286.hdr.sgml : 20120803
<ACCEPTANCE-DATETIME>20120705170046
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ACCESSION NUMBER:		0001144204-12-038286
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20120705

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NeoStem, Inc.
		CENTRAL INDEX KEY:			0000320017
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090]
		IRS NUMBER:				222343568
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		420 LEXINGTON AVENUE
		STREET 2:		SUITE 450
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10170
		BUSINESS PHONE:		212-584-4171

	MAIL ADDRESS:	
		STREET 1:		420 LEXINGTON AVENUE
		STREET 2:		SUITE 450
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10170

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PHASE III MEDICAL INC/DE
		DATE OF NAME CHANGE:	20030819

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CORNICHE GROUP INC /DE
		DATE OF NAME CHANGE:	19951117

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FIDELITY MEDICAL INC
		DATE OF NAME CHANGE:	19951025
</SEC-HEADER>
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<TYPE>CORRESP
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<FILENAME>filename1.htm
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">VIA EDGAR</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">July 5, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Ms. Tia Jenkins</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Senior Assistant Chief Accountant</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Office of Beverages, Apparel and Mining</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Division of Corporate Finance</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">United States Securities and Exchange Commission</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">100 F. Street, N.E.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Washington, D.C. 20549</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: 0.5in">&nbsp;</P>

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<TD STYLE="width: 1.5in"></TD><TD STYLE="width: 0.5in"><B>Re:</B></TD><TD><B>NeoStem, Inc. (the &ldquo;Company&rdquo;)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>Response to</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>Form 10-K for the Fiscal Year
Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>Filed March 20, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>Form 10-Q for the Fiscal Quarter
Ended March 31, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>Filed May 11, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>Response dated June 15, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>Response dated June 28, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>File No. 001-33650</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dear Ms. Jenkins:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">We are in receipt
of your supplemental response (the &ldquo;Staff Response Letter&rdquo;) to NeoStem, Inc. (the &ldquo;Company&rdquo; or &ldquo;NeoStem&rdquo;)
to our letter dated June 15, 2012 (the &ldquo;Letter&rdquo;) </FONT>regarding the Company's Annual Report on Form 10-K for the
Year Ended December 31, 2011 filed March 20, 2012 (the &ldquo;Form 10-K&rdquo;) and Form 10-Q for the Fiscal Quarter Ended March
31, 2012 filed May 11, 2012 (the &ldquo;Form 10-Q&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For ease of reference, set forth in bold
below are the comments as reflected in the Staff Response Letter, the Company&rsquo;s response is set forth below the comment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Form 10-K for the fiscal year ended December 31, 2011</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Notes to Consolidated Financial Statements, Page 111</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 1, The Company, page 111</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

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<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>1.</B></TD><TD><B>We note your response to comment one of our letter dated June 11, 2012 indicating that the results of operations associated
with the pharmaceutical manufacturing-China segment should not be presented as discontinued operations at either December 31, 2011
or March 31, 2012 as the criteria in ASC 205-20-45-1 and ASC 360-10-45-9 were not met. We further note that on June 18, 2012 you
announced that you entered into a definitive agreement to sell your 51% interest in Suzhou Erye Pharmaceutical Com. Ltd (&ldquo;Erye&rdquo;)
for $12,280,000 in cash. Closing of the transaction is expected to occur by the fourth quarter of 2012. With regard to the equity
purchase agreement to sell your 51% interest in Erye, please tell us how you to plan to present this business segment for the interim
period ended June 30, 2012, specifically addressing your consideration of ASC 205-20-45-1 and ASC 360-10-45-9. </B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>RESPONSE:</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">It is the Company&rsquo;s intention, in
consideration of<U> </U>ASC 205-20-45-1 and ASC 360-10-45-9, to report the financial position, results of operations and related
cash flow for our pharmaceutical manufacturing &ndash;China segment as a discontinued operation in connection with the filing of
our quarterly report on Form 10Q as of June 30, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">See accounting evaluation in Appendix A for our consideration
and evaluation of the various factors outlined in ASC 205-20-45-1 and ASC 360-10-45-9.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">Please contact me if you have any questions
relating to the matters discussed in this letter. I may be reached at (212) 584-4171 or the address set forth at the top of this
letter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Very truly yours,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">/s/ Catherine M. Vaczy</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Catherine M. Vaczy</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Vice President and General Counsel</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cc: Alan Wovsaniker, Esq., Lowenstein Sandler</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">APPENDIX A</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
<TR>
    <TD STYLE="width: 38%; border-top: Black 1pt solid; border-left: Black 1pt solid; font-size: 10pt; font-style: italic; font-weight: bold; text-align: center; vertical-align: bottom; padding-right: 2pt; padding-left: 2pt">Accounting Standards Codification</TD>
    <TD STYLE="width: 31%; border: windowtext 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>&nbsp;</I></B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>March 31, 2012</I></B></P></TD>
    <TD STYLE="width: 31%; border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>&nbsp;</I></B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>June 30, 2012</I></B></P></TD></TR>
<TR>
    <TD STYLE="border-top: Black 1pt solid; border-right: Black 1pt solid; border-left: Black 1pt solid; text-align: left; vertical-align: top; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ASC 205-20-45-1&nbsp;&nbsp;</B>The results of operations
        of a<FONT STYLE="text-underline-style: none"> component of an entity </FONT>that either has been disposed of or is classified as
        held for sale under the requirements of paragraph 360-10-45-9, shall be reported in discontinued operations in accordance with
        paragraph 205-20-45-3: if <U>both</U> of the following conditions are met:</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; vertical-align: top; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">Segment was not disposed of or classified as held for sale, per ASC 360-10-45-9 guidance (see below)</TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">A definite agreement to sell our 51% interest in Eyre Pharmaceutical Company, Ltd. was signed June 18, 2012 which is expected to close no later than December 31, 2012. Per the criteria of ASC 360-10-45-9 guidance below, the operations of the Pharmaceutical Manufacturing &ndash; China segment met the requirements to be classified as held for sale.</TD></TR>
<TR>
    <TD STYLE="border-top: windowtext 1pt solid; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; border-left: Black 1pt solid; vertical-align: top; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">a. The operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity as a result of the disposal transaction.</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; vertical-align: top; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">n/a</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The results of operations and related cash flows will be eliminated
        from the ongoing operations of the Company upon the closing date expected to be no later than December 31, 2012.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">b. The entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">n/a</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company will not have any continuing involvement in the
        operations after the closing date expected to be no later than December 31, 2012.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD></TR>
<TR>
    <TD STYLE="border-top: windowtext 1pt solid; border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; border-left: Black 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt"><B>ASC 360-10-45-9&nbsp;&nbsp;</B>A long-lived asset (disposal group) to be sold shall be classified as held for sale in the period in which <U>all</U> of the following criteria are met:</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; vertical-align: top; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">a. Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group).</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Management and the Board of Directors approved a plan to pursue
        a possible divestiture; a financial advisor was engaged in 2011</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Management and the Board of Directors approved a plan to consider
        a possible divestiture; a financial advisor was engaged in 2011</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="border: windowtext 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt; text-align: center"><FONT STYLE="font-size: 10pt"><B><I>&nbsp;Accounting
    Standards Codification</I></B></FONT></TD>
    <TD STYLE="border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt; text-align: center"><FONT STYLE="font-size: 10pt"><B><I>&nbsp;March
    31, 2012</I></B></FONT></TD>
    <TD STYLE="border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt; text-align: center"><FONT STYLE="font-size: 10pt"><B><I>&nbsp;June
    30, 2012</I></B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 38%; border: windowtext 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">b. The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups).</TD>
    <TD STYLE="width: 31%; border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company did not obtain all Chinese regulatory approvals
        (and associated registrations) required to reflect the legal title of its interest in Erye. The Company&rsquo;s management believes
        these regulatory deficiencies can be remediated and should not delay a possible divestiture of the Company&rsquo;s interests in
        Erye that is currently under evaluation. However, the Company requires the cooperation of the officers of Erye, as to which no
        assurance can be given. In addition, even if the filings are made, no assurance can be given that any unremediated regulatory deficiencies
        would not impede or delay efforts to divest the Company&rsquo;s interest in Erye.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? No</P></TD>
    <TD STYLE="width: 31%; border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Prior to the execution of the June 18, 2012 Equity Purchase
        Agreement, we had noted that we did not satisfy this criteria due to issues with Chinese regulatory approvals, which needed to
        be remediated and could not be without the cooperation of Erye's officers.&nbsp; Since the sale is to affiliates of Erye's officers,
        and because those officers already control the 49% owner of Erye, we have been advised that no remediation will be required for
        a sale to the 49% owner.&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt"><FONT STYLE="color: black">The definitive
        agreement calls for NeoStem shareholder approval due to the relationship between the Purchaser and Seller; however, </FONT>as of
        July 5, 2012, our executive officers and directors collectively owned approximately 22% of the voting power, who are expected to
        vote in favor of the Erye Sale. The Company believes it will receive the requisite approval from the majority of its shareholders
        to approve the sale of Erye.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD></TR>
<TR>
    <TD STYLE="border-right: windowtext 1pt solid; border-left: windowtext 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">c. An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated.</TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A financial advisor was engaged in 2011 plan to pursue a possible
        divestiture</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A financial advisor was engaged in 2011 plan to pursue a possible
        divestiture</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border: windowtext 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt"><FONT STYLE="color: black">d. The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale, within one year. The term probable</FONT><FONT STYLE="color: blue"><B> </B></FONT><FONT STYLE="color: black">refers to a future sale that is likely to occur.</FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No assurance can be given that any unremediated regulatory deficiencies
        would not impede or delay efforts to divest the Company&rsquo;s interest in Erye. No assurances can be given to complete a sale
        within one year.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? No</P></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A definite agreement to sell our 51% interest in Eyre Pharmaceutical
        Company, Ltd. was signed June 18, 2012 with a closing date expected to be no later than December 31, 2012. Prior to the execution
        of the June 18, 2012 Equity Purchase Agreement, we had noted that we did not satisfy this criteria due to issues with Chinese regulatory
        approvals, which needed to be remediated and could not be without the cooperation of Erye's officers.&nbsp; Since the sale is to
        affiliates of Erye's officers, and because those officers already control the 49% owner of Erye, we have been advised that no remediation
        will be required for a sale to the 49% owner.&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
<TR>
    <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; vertical-align: top; font-size: 10pt; padding-right: 2pt; padding-left: 2pt; text-align: center"><FONT STYLE="font-size: 10pt"><B><I>&nbsp;&nbsp;Accounting
    Standards Codification</I></B></FONT></TD>
    <TD STYLE="border: windowtext 1pt solid; padding-right: 2pt; padding-left: 2pt; text-align: center"><FONT STYLE="font-size: 10pt"><B><I>&nbsp;March
    31, 2012</I></B></FONT></TD>
    <TD STYLE="border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top; padding-right: 2pt; padding-left: 2pt; text-align: center"><FONT STYLE="font-size: 10pt"><B><I>&nbsp;June
    30, 2012</I></B></FONT></TD></TR>
<TR>
    <TD STYLE="width: 38%; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">e. The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value. The price at which a long-lived asset (disposal group) is being marketed is indicative of whether the entity currently has the intent and ability to sell the asset (disposal group). A market price that is reasonable in relation to fair value indicates that the asset (disposal group) is available for immediate sale, whereas a market price in excess of fair value indicates that the asset (disposal group) is not available for immediate sale.</TD>
    <TD STYLE="width: 31%; border: windowtext 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company actively marketed the divestiture of Erye, but did
        not establish a selling price. Offers received would be evaluated based a number of factors, including: (i) whether the consideration
        is fair, or if it contains any contingencies, (ii) whether the prospective buyer is a Chinese company, (iii) whether the regulatory
        issues would need resolution prior to closing (iv) the financial health of the prospective buyer.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? No</P></TD>
    <TD STYLE="width: 31%; vertical-align: top; border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A definite agreement to sell our 51% interest in Eyre Pharmaceutical
        Company, Ltd. was signed June 18, 2012 with a closing date expected to be no later than December 31, 2012.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD></TR>
<TR>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; vertical-align: top; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">f. Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; vertical-align: top; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Management and the Board of Directors approved a plan to pursue
        a possible divestiture; however, if fair offers are not received, or if regulatory issues cannot be remediated to the satisfaction
        of a potential buyer, the Company may decide to delay or withdraw any divestiture activities.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? No</P></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 2pt; padding-left: 2pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Prior to the execution of the June 18, 2012 Equity Purchase
        Agreement, we had noted that we did not satisfy this criteria due to issues with Chinese regulatory approvals, which needed to
        be remediated and could not be without the cooperation of the Erye's officers.&nbsp; Since the sale is to affiliates of Erye's
        officers, and because those officers already control the 49% owner of Erye, we have been advised that no remediation will be required
        for a sale to the 49% owner.&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Criteria met? Yes</P></TD></TR>
<TR>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; font-size: 10pt; text-align: center; padding-right: 2pt; padding-left: 2pt">&nbsp;</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; font-size: 10pt; padding-right: 2pt; padding-left: 2pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; font-size: 10pt; text-align: center; padding-right: 2pt; padding-left: 2pt">Held for Sale Classification Met?</TD>
    <TD STYLE="border-right: windowtext 1pt solid; border-bottom: windowtext 1pt solid; font-size: 10pt; text-align: center; padding-right: 2pt; padding-left: 2pt">No</TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; font-size: 10pt; text-align: center; padding-right: 2pt; padding-left: 2pt">Yes</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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