SOURCE: Medistem Laboratories

August 13, 2007 08:07 ET

Medistem Laboratories Reports Second Quarter 2007 Financial Results

Company Expands Research Collaborations, Publishes on Autism, and Posts Positive Preclinical Findings

SCOTTSDALE, AZ--(Marketwire - August 13, 2007) - Medistem Laboratories (OTCBB: MDSM) (FRANKFURT: S2U) today reported financial results for the quarter ended June 30, 2007.

Key events in the second quarter of 2007 were as follows:

--  Signed collaborative research and development agreement with a
    research institute surrounding a type of adult stem cell
--  Developed additional intellectual property and published a peer review
    paper proposing a clinical trial using stem cell therapy for autism.
--  Presented positive preclinical data on our pipeline candidate MDS-786,
    showing stem cells have the ability to differentiate cancer cells.

The Company reported a net loss of $1,109,398 or ($0.01) per share for the quarter ended June 30, 2007 (which includes non-cash stock based compensation charges of $332,856). Revenues were $470,828 for the second quarter of 2007 as compared to $477,330 for the first quarter of 2007 and $214,408 in the fourth quarter of 2006.

By comparison, the Company reported a net loss of $539,197 or ($0.00) per share for the quarter ended March 31, 2007 (which includes non-cash stock based compensation charges of $380,737).

The increase in the net loss in the second quarter of 2007 as compared to the first quarter of 2007 was due primarily to increased investments in research and development as well as a $272,900 expense related to a contractual settlement.

Comparative balance sheets and income statements are enclosed in this release.

Steve Rivers, Chief Financial Officer, stated, "After coming off three consecutive quarters of greater than 100% quarter-over-quarter revenue growth, we needed to make investments in our business infrastructure to drive future revenue increases. We have made such investments in the second quarter of 2007 and are optimistic about the future."

Neil Riordan, Chief Executive Officer, commented, "Medistem's growth continues, as exemplified by our addition of scientific collaborators and our research and development activities. We are particularly pleased by the positive preclinical results for the MDS-786 candidate, which was presented at the ISCT meeting in Australia, and the publication of our paper demonstrating the rationale for using adult stem cells in the treatment of autism. Going forward, we are looking to formulate clinical trial scenarios for autism, as well as finish up preclinical testing and FDA packet submission for our first 2 indications; critical limb ischemia and autoimmune diseases."

About Medistem Laboratories, Inc.

Medistem Laboratories is a biotechnology company that discovers, develops, and commercializes adult stem cell products that address serious medical conditions. While drug discovery and development is its primary focus, Medistem has compiled a body of proprietary technologies it outlicenses to commercial entities in markets where stem cell administration is permissible. Due to its licensee relationships and collaborative efforts with respected institutions, Medistem believes it is well positioned to be a leading developer of adult stem cell products.

Cautionary Statement

This document does not constitute an offer to sell or a solicitation of an offer to buy any of our securities. This document contains 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. These forward-looking statements may include projections of matters that affect revenue, the ability to develop or license certain technologies; operating expenses or net earnings; projections of capital expenditures; projections of growth; hiring plans; plans for future operations; financing needs or plans; plans relating to the company's products and services; and assumptions relating to the foregoing.

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.

Some of the important factors that could cause the company's actual results to differ materially from those projected in forward-looking statements made by the company include, but are not limited to, the following: technology development limitations, intense competition, risk of business interruption, management of rapid growth, need for additional financing, regulatory approvals and requirements, dependence on key personnel and research, management and other administrative costs.

These factors are discussed in greater detail in the company's quarterly and annual periodic reports, all as filed with the Securities and Exchange Commission.

                        Medistem Laboratories, Inc.
                        Consolidated Balance Sheets

                                                    June 30,    March 31,
                                                      2007         2007
                                                  -----------  -----------


Cash and equivalents                              $   552,269  $   820,781
Restricted cash                                       111,000       28,000
Short-term investments                                 20,000       20,000
Prepaid expenses and other current assets              16,855       15,800
                                                  -----------  -----------
   Total current assets                               700,124      884,581
Property and equipment, net                           614,992      565,998
Intangible assets                                       3,566        3,566
Other assets                                           60,000       86,900
                                                  -----------  -----------
   Total assets                                   $ 1,378,682  $ 1,541,045
                                                  ===========  ===========

        Liabilities, Minority Interest and Stockholders' Equity

Accounts payable                                  $     9,314  $    26,455
Accrued expenses                                      324,203       48,151
Due to affiliate                                       28,300       20,800
Accrued registration rights penalties                  71,364       68,246
Deferred revenue                                       38,650       14,000
                                                  -----------  -----------
   Total current liabilities                          471,831      177,652
                                                  -----------  -----------
   Total liabilities                                  471,831      177,652
                                                  -----------  -----------
Minority interest                                           -            -
                                                  -----------  -----------
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, 5,142,858 shares issued and
 outstanding                                              514          514
Common stock, $0.0001 par value, 300,000,000
 shares authorized, 131,405,693 shares issued
 and outstanding                                       13,140       13,140
Paid-in capital                                     9,263,792    8,610,936
Accumulated deficit                                (8,370,595)  (7,261,197)
                                                  -----------  -----------
   Total stockholders' equity                         906,851    1,363,393
                                                  -----------  -----------

   Total liabilities, minority interest and
    stockholders' equity                          $ 1,378,682  $ 1,541,045
                                                  ===========  ===========

                        Medistem Laboratories, Inc.
                  Consolidated Statements of Operations

                                                    Three Months Ended
                                                  June 30,      March 31,
                                                    2007          2007
                                                ------------  ------------

Revenues                                        $    470,828  $    477,330
Operating expenses:
   Laboratory and clinical expenses                  377,836       365,778
   Research and development                          418,547       105,098
   Professional fees                                  84,151        90,185
   General and administrative                        702,230       460,321
                                                ------------  ------------
      Total operating expenses                     1,582,764     1,021,382
                                                ------------  ------------

Operating loss                                    (1,111,936)     (544,052)
Other income (expense):
   Interest expense                                        -          (231)
   Interest income                                     5,655         6,298
   Other income (expense)                             (3,117)       (1,212)
                                                ------------  ------------
Total other income (expense)                           2,538         4,855
                                                ------------  ------------

Loss before income tax provision                  (1,109,398)     (539,197)

Income tax provision                                       -             -
                                                ------------  ------------
Net loss                                        $ (1,109,398) $   (539,197)
                                                ============  ============

Net loss per share:
   Basic                                        $      (0.01) $      (0.00)
                                                ============  ============
   Diluted                                      $      (0.01) $      (0.00)
                                                ============  ============

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