SOURCE: Medistem Inc.

August 13, 2008 21:42 ET

Medistem Reports Second Quarter Financial Results

PHOENIX, AZ--(Marketwire - 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

Contact Information

  • 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