Hemispherx Biopharma, Inc. To Restate 2009 Financial Statements

PHILADELPHIA, Dec. 28, 2010 (GLOBE NEWSWIRE) -- Hemispherx Biopharma, Inc. (NYSE Amex:HEB) announced its intention to restate its financial statements in its Annual Report on Form 10-K for the year ended December 31, 2009 and in its Forms 10-Q for the periods ended March 31, 2010, June 30, 2010 and September 30, 2010 (including the comparable periods ended June 30, 2009 and September 30, 2009).

In connection with equity financings in May 2009, the Company issued Warrants that contained a provision that could require it to settle the Warrants for cash upon the happening of certain remote events. Generally, the Warrant provision allows the Warrant holders to receive cash upon the happening of certain "Fundamental Transactions", e.g., in certain situations where there would no longer be a significant public market for the Company's common stock such as in the highly unlikely event that the Company took action to go private. The amount of cash to be received by Warrant Holders would equal the Black-Scholes value of the remaining unexercised portion of the Warrant on the date of the consummation of the Fundamental Transaction.

Initially, the Company determined that these Warrants created a related Liability in accordance with ASC 480-10-55-29 & 30 due to the fact that the Warrants could be settled for cash as discussed above. In its estimation of the value of this Liability, the Company interpreted and applied the concept of "Fair Value" from ASC 820 (formally SFAS 157). After reviewing current accounting literature and the findings and opinion of an independent appraiser in determining proper accounting treatment, the Company took into account the extreme unlikelihood of the occurrence of a Fundamental Transaction triggering a right to cash settlement as a probability factor in applying the Black-Scholes-Merton valuation of the Warrants. As a result, the Company deemed the fair value of the Warrants to be immaterial and stated the Warrants' related Liability from May 31, 2009 through December 31, 2009 at zero. 

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