Medistem Reports Second Quarter Financial Results

SOURCE:

Medistem Inc.

2008-08-13 20:42:00

PHOENIX, AZ–(EMWNews – August 13, 2008) – Medistem Inc. (OTCBB: MEDS) today reported

financial results for the quarter ended June 30, 2008.

The Company reported a net loss of ($264,000), or ($0.05) per share, for

the quarter ended June 30, 2008 as compared to a net loss of ($1,109,000)

or ($0.22) per share for the quarter ended June 30, 2007. The Company also

reported net operating cash flows of $14,000 for the quarter ended June 30,

2008, as compared to net operating cash flows of ($205,000) for the quarter

June 30, 2007.

Comparative balance sheets and income statements are enclosed in this

release.

“This quarter, we have made significant progress toward our goal of filing

an initial IND application by year-end for our proprietary stem cell type,

the endometrial regenerative cell (ERC),” commented Thomas Ichim, CEO.

“Collaborations at Indiana University, The Scripps Research Institute, the

University of Western Ontario and other leading institutions have led to a

whole host of supportive preclinical data demonstrating cell stability and

angiogenic properties that is critical to the commercialization of

ERC-based therapies. Additionally, we continue to publish our findings in

peer-reviewed journals and expand our collaborations as we believe strongly

in the importance of basic scientific research needed for the advancement

of the stem cell industry as a whole.”

About Medistem Inc.

Medistem Inc. is a biotechnology company founded to develop and

commercialize technologies related to adult stem cell extraction,

manipulation, and use for treating inflammatory and degenerative diseases.

The company’s lead product, the endometrial regenerative cell (ERC), is a

“universal donor” stem cell derived from the menstrual blood that possesses

the ability to differentiate into nine tissue types, produce large

quantities of growth factors, and a large proliferative capacity. A peer

reviewed publication describing this novel cell type may be found at

http://www.translational-medicine.com/content/5/1/57. The company is

currently focusing on use of endometrial regenerative cells for treatment

of critical limb ischemia, an advanced form of peripheral artery disease

that causes approximately 160,000 amputations per year.

Cautionary Statement

This press release does not constitute an offer to sell or a solicitation

of an offer to buy any of our securities. This press release may contain

certain forward-looking statements within the meaning of Section 27A of the

Securities Act of 1933, as amended, and Section 21E of the Securities

Exchange Act of 1934, as amended. Forward-looking statements are inherently

subject to risks and uncertainties, some of which cannot be predicted or

quantified. Future events and actual results could differ materially from

those set forth in, contemplated by, or underlying the forward-looking

information.

Factors which may cause actual results to differ from our forward-looking

statements are discussed in our Form 10-K for the year ended December 31,

2007 as filed with the Securities and Exchange Commission.


                              Medistem Inc.

                             Balance Sheets

                              (unaudited)



                                                 June 30,     December 31,

                                                   2008           2007

                                               ------------   ------------

                              Assets



Cash and equivalents                           $    156,284   $    179,451

Restricted cash                                           -         31,000

Royalties receivable                                326,742        225,597

Prepaid expenses and other current assets            39,339         52,421

                                               ------------   ------------

      Total current assets                          522,365        488,469

Property and equipment, net                          18,504         24,307

Intangible assets                                     3,566          3,566

Other amounts due from licensee                     711,501        695,127

                                               ------------   ------------

      Total assets                             $  1,255,936   $  1,211,469

                                               ============   ============



          Liabilities and Stockholders' Equity



Accounts payable                               $     45,817   $     16,523

Accrued expenses                                     23,696         19,652

Due to affiliate                                          -         21,100

Withholding taxes payable                            93,511         33,840

Other liabilities                                    85,324         78,032

                                               ------------   ------------

      Total current liabilities                     248,348        169,147

                                               ------------   ------------

      Total liabilities                             248,348        169,147

                                               ------------   ------------

Stockholders' equity:

Series A convertible preferred stock, $0.0001

 par value, no stated interest rate or dividend

 preference, liquidation preference of $0.35

 per share or $1,800,000 aggregate, 200,000,000

 shares authorized, 4,571,429 shares issued

 and outstanding, convertible into 182,859

 shares of common stock                                 457            457

Common stock, $0.0001 par value, 300,000,000

 shares authorized, 5,341,112 shares issued

 and outstanding                                        534            534

Paid-in capital                                  11,070,818     10,273,077

Accumulated deficit                             (10,064,220)    (9,231,745)

                                               ------------   ------------

      Total stockholders' equity                  1,007,588      1,042,322

                                               ------------   ------------



      Total liabilities and stockholders'

       equity                                  $  1,255,936   $  1,211,469

                                               ============   ============







                              Medistem Inc.

                        Statements of Operations

                              (unaudited)





                    Three Months Ended June 30,  Six Months Ended June 30,

                    --------------------------  --------------------------

                        2008         2007(1)        2008         2007(1)

                    ------------  ------------  ------------  ------------



Revenues            $    160,200  $    470,828  $    531,145  $    948,158

Cost of services           4,373       377,836       208,508       743,614

                    ------------  ------------  ------------  ------------

Gross profit             155,827        92,992       322,637       204,544

                    ------------  ------------  ------------  ------------

Operating expenses:

  Research and

   development            84,848       418,547       133,783       523,645

  Professional fees       35,271        84,151       107,658       174,336

  General and

   administrative        295,576       702,230       906,783     1,162,551

                    ------------  ------------  ------------  ------------

    Total operating

     expenses            415,694     1,204,928     1,148,225     1,860,532

                    ------------  ------------  ------------  ------------



Operating loss          (259,867)   (1,111,936)     (825,588)   (1,655,988)

Other income

 (expense):

  Interest expense             -             -          (245)         (231)

  Interest income            559         5,655         1,396        14,806

  Other income

   (expense)              (4,474)       (3,117)       (8,039)       (7,182)

                    ------------  ------------  ------------  ------------

Total other income

 (expense)                (3,915)        2,538        (6,887)        7,393

                    ------------  ------------  ------------  ------------



Loss before income

 tax benefit            (263,782)   (1,109,398)     (832,475)   (1,648,595)

Income tax benefit             -             -             -             -

                    ------------  ------------  ------------  ------------

Net loss            $   (263,782) $ (1,109,398) $   (832,475) $ (1,648,595)

                    ============  ============  ============  ============



Net loss per share:

  Basic             $      (0.05) $      (0.22) $      (0.16) $      (0.32)

                    ============  ============  ============  ============

  Diluted           $      (0.05) $      (0.22) $      (0.16) $      (0.32)

                    ============  ============  ============  ============





Weighted average

 common shares

 outstanding (2)

  Basic                5,341,112     5,107,228     5,305,486     5,107,228

                    ============  ============  ============  ============

  Diluted              5,341,112     5,107,228     5,305,486     5,107,228

                    ============  ============  ============  ============



(1)  Includes consolidation of licensee, ICM, which was subsequently

     deconsolidated at December 31, 2007

(2)  Retroactively adjusted for the 1-for-25 reverse stock split effective

     August 11, 2008







                              Medistem Inc.

                        Statements of Cash Flows

                              (unaudited)



                                                Six Months Ended June 30,

                                               ------------   ------------

                                                   2008          2007(1)

                                               ------------   ------------

Cash flows from operating activities:

  Net loss                                     $   (832,475)  $ (1,648,595)

  Adjustments to reconcile net loss to net

   cash used in operating activities:

  Depreciation and amortization                       5,056         73,801

  Bad debt expense                                        -          3,500

  Non-cash R&D expenditures                               -        320,000

  Loss on disposal of assets                            747          6,520

  Stock-based compensation                          797,741        713,593

  Changes in assets and liabilities:

    Restricted cash                                  31,000       (111,000)

    Royalties receivable                           (101,145)             -

    Other current assets                             13,082          3,585

    Accounts payable                                 29,294          2,706

    Accrued expenses                                  4,044        311,356

    Due to affiliates                               (21,100)        28,300

    Withholding tax payable                          59,671              -

    Other liabilities                                 7,292          6,099

    Deferred revenue                                      -         23,650

                                               ------------   ------------

          Net cash used in operating

           activities                                (6,793)      (266,485)

                                               ------------   ------------

Cash flows from investing activities:

  Advances to licensee                              (16,374)             -

  Proceeds from sale of fixed assets                      -         10,000

  Purchases of equipment                                  -       (177,255)

                                               ------------   ------------

          Net cash used in investing

           activities                               (16,374)      (167,255)

                                               ------------   ------------



Cash flows from financing activities                      -              -

                                               ------------   ------------

Change in cash and equivalents                      (23,167)      (433,740)

Cash and equivalents, beginning of period           179,451        986,009

                                               ------------   ------------

Cash and equivalents, end of period            $    156,284   $    552,269

                                               ============   ============



(1)  Includes consolidation of licensee, ICM, which was subsequently

     deconsolidated at December 31, 2007

For further information on Medistem Inc., please visit www.medisteminc.com
or contact:

Thomas Ichim, PhD
CEO
9255 Towne Center Drive
Suite 450
San Diego, CA 92122
1-877-ERC-STEM

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