SOURCE: Medistem Laboratories

March 13, 2008 12:45 ET

Medistem Reports 2007 Financial Results

SCOTTSDALE, AZ--(Marketwire - March 13, 2008) - Medistem Laboratories (OTCBB: MDSM) today reported financial results for the year ended December 31, 2007.

The Company reported a net loss of $2,510,000, or $0.02 per share for the year ended December 31, 2007 (which includes non-cash stock based compensation charges of $1,517,000), as compared to a net loss of $3,793,000 or $0.03 per share for the year ended December 31, 2006 (which includes non-cash stock based compensation charges of $2,597,000).

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

Key events in 2007 were as follows:

--  We shifted our business focus from global licensing activities to
    biotech activities aimed at the U.S. market
--  We acquired all intellectual property rights to Endometrial
    Regenerative Cells ("ERC"), a novel source of stem cells derived from
    menstrual blood.  This technology is the primary focus of our business at
    this point in time
--  We expanded our collaborations with leaders in the field, including
    individuals from Lawson Health Research Institute, Scripps Research
    Institute, University of Alberta, Bio-Communications Research Institute,
    Florida University, and Indiana University
--  We renegotiated our license agreement with our Costa Rican licensee to
    remove funding and day-to-day management obligations to the licensee while
    still retaining cash flows from the license agreement.  With this
    modification, the affiliate was deconsolidated in our financial statements
    effective December 31, 2007.  This modification allows us to focus our
    efforts on our biotech activities
--  We successfully completed our internal control evaluation under the
    provisions of Section 404 of the Sarbanes Oxley Act of 2002, noting no
    significant control deficiencies

Neil Riordan, Chief Executive Officer of Medistem, noted, "We are very pleased with the progress we've made in the development of our biotechnology programs. Our lead program involving the ERC cell is showing a great deal of promise and we are excited about its potential application to a wide variety of diseases."

Steve Rivers, Chief Financial Officer, said, "We have not needed a capital raise in almost two years. While we will need to access the capital markets to advance our biotech activities, our investors can feel confident that they are investing in a company that does not carelessly dilute its shareholder base. Further the successful completion of our internal control evaluation without any significant control deficiencies is evidence of the strength of our management team and its commitment to building a strong foundation for growth and discovery."

About Medistem Laboratories, Inc.

Medistem Laboratories 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 is a "universal donor" stem cell derived from the menstrual blood that possesses the ability to differentiate into all major tissue types of the body, produce high amounts of growth factors, and has astonishing replicative ability. Due to Medistem's 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

                                                December 31,  December 31,
                                                    2007          2006
                                                ------------  ------------


Cash and equivalents                            $    179,451  $    986,009
Restricted cash                                       31,000             -
Short-term investments                                     -        20,000
Royalties receivable, net of withholding tax
 payable                                             191,757             -
Prepaid expenses and other current assets             52,421        23,940
                                                ------------  ------------
      Total current assets                           454,629     1,029,949

Property and equipment, net                           24,307       656,564

Intangible assets                                      3,566         3,566

Other amounts due from licensee                      695,127             -

Other assets                                               -        86,900
                                                ------------  ------------
      Total assets                              $  1,177,629  $  1,776,979
                                                ============  ============

                   Liabilities and Stockholders' Equity

Accounts payable                                $     16,523  $    162,014
Accrued expenses                                      19,652        12,847
Due to affiliate                                      21,100             -
Deferred revenue                                           -        15,000
Other liabilities                                     78,032        65,265
                                                ------------  ------------
      Total current liabilities                      135,307       255,126
                                                ------------  ------------
      Total liabilities                              135,307       255,126
                                                ------------  ------------

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 and
 5,142,858 shares issued and outstanding                 457           514
Common stock, $0.0001 par value, 300,000,000
 shares authorized, 133,527,122 and
 130,680,693 shares issued and outstanding            13,352        13,068
Paid-in capital                                   10,260,258     8,230,271
Accumulated deficit                               (9,231,745)   (6,722,000)
                                                ------------  ------------
      Total stockholders' equity                   1,042,322     1,521,853
                                                ------------  ------------

      Total liabilities and stockholders'
       equity                                   $  1,177,629  $  1,776,979
                                                ============  ============

Note:  2006 includes the assets and liabilities of ICM, an entity that was
deconsolidated at December 31, 2007

                        Medistem Laboratories, Inc.
                  Consolidated Statements of Operations

                                                  Year Ended December 31,
                                                    2007          2006
                                                ------------  ------------

Revenues                                        $  2,503,456  $    319,408
Cost of services                                   1,503,797       942,597
                                                ------------  ------------
Gross profit                                         999,659      (623,189)
                                                ------------  ------------
Operating expenses:
  Research and development                           642,759       116,398
  Professional fees                                  504,740       489,278
  General and administrative                       2,330,373     2,491,211
                                                ------------  ------------
    Total operating expenses                       3,477,872     3,096,887
                                                ------------  ------------

Operating loss                                    (2,478,213)   (3,720,076)
Other income (expense):
  Interest expense                                      (772)         (692)
  Interest income                                     22,951        42,545
  Other income (expense)                             (13,850)     (114,706)
                                                ------------  ------------
Total other income (expense)                           8,329       (72,853)
                                                ------------  ------------

Loss before income tax provision and minority
 interests                                        (2,469,884)   (3,792,929)
Minority interest in subsidiary through date of
 deconsolidation                                     (27,868)            -
Income tax provision                                 (11,993)          (50)
                                                ------------  ------------
Net loss                                          (2,509,745)   (3,792,979)
Less:  Accretion of beneficial conversion
 feature relating to convertible preferred
 stock                                                     -      (489,953)
                                                ------------  ------------
Net loss available to common stockholders       $ (2,509,745) $ (4,282,932)
                                                ============  ============

Net loss per share:
  Basic                                         $      (0.02) $      (0.03)
                                                ============  ============
  Diluted                                       $      (0.02) $      (0.03)
                                                ============  ============

Weighted average common shares outstanding
  Basic                                          128,428,326   127,141,868
                                                ============  ============
  Diluted                                        128,428,326   127,141,868
                                                ============  ============

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