Atlanta --
November 28, 2005. On November 22, 2005, BioStem, Inc. (Nasdaq OTC:
BTEM) entered into an Agreement and Plan of Merger with Cryobanks International,
Inc., a Delaware corporation (ÒCryobanksÓ).
Pursuant to the terms of the Merger Agreement, BioStem will
divest itself of its two operating subsidiaries, and will have no more than
$25,000 of accrued but unpaid liabilities on the effective date of the
merger. On the effective date of
the merger, BioStem will issue 120,000,000 shares of its common stock to the
shareholders of Cryobanks, and the board of directors of Cryobanks will be
appointed to BioStemÕs board, and the current members of BioStemÕs board will
resign.
Immediately prior to the effective date of the merger,
approximately 159,150,044 currently outstanding shares of BioStem held by
BioStem management and five unrelated shareholders, will be cancelled in
exchange for the transfer by BioStem of all of the common stock of its current
two operating subsidiaries, BH Holdings, Inc. and ABS Holdings, Inc. to such
shareholders Accordingly,
immediately prior to the merger, BioStem will have 15,650,000 shares of common
stock outstanding, and warrants to purchase 2,000,000 shares of common stock
with an exercise price of $1.00 per share.
A condition to the effectiveness and closing of the merger
is the successful completion of a financing by Cryobanks which results in net
proceeds to Cryobanks of at least $10.0 million. Half of the proceeds of such financing will be used to
retire certain preferred stock of Cryobanks, and the balance for working
capital and general corporate purposes.
Cryobanks will issue securities which will be convertible into
approximately 10,000,000 shares of BioStem common stock, and warrants to
purchase 3,000,000 shares of BioStem common stock at $1.10 per share, on the
effective date of the merger, although Cryobanks has the option of increasing
the financing by as much as 15%. Accordingly,
after the merger and assuming its successful closing, there will be
approximately 145,650,000 shares of BioStem outstanding, plus warrants to
purchase a total of 5,000,000 shares at $1.00 to $1.10 per share, and Cryobanks
will be a wholly-owned subsidiary of BioStem.
The boards of directors of both BioStem and Cryobanks have
approved the merger agreement, and the majority shareholders of both companies
have consented to the merger agreement.
About Cryobanks:
Cryobanks International, Inc. is a leader in the
collection, processing, and banking of stem cells derived from the umbilical
cord immediately after birth, and with a current cord blood bank inventory of
over 8,500 units, plus over 1,000 research units, Cryobanks believes it has the
largest cord blood bank of any private company in the United States. The units of cord blood are processed
and stored by Cryobanks for use in unrelated transplants (where the donor is a
histocompatible match, but is anonymous and unrelated to the recipient) and for
personal storage and use. Cryobanks
intends to become the largest provider of cord blood stem cells (CBSCs) for
transplant and research purposes in the world.
Cryobanks is engaged in three core businesses, all
related to Cord Blood collection, storage and use. The first business is the collection and storage of Cord
Blood units of donated by the parents at birth for unrelated cord blood
transplants (ÒDonor UnitsÓ). While
Cryobanks bears the cost of collection and processing, these Donor Units have
three distinct uses for therapeutic purposes: for Cord Blood transplant, for
research in the discovery of new therapeutics, and for sale of the stem cells
for other research purposes.
Currently, Cryobanks lists its unrelated transplantable units on three key
worldwide registries.
The second business involves the collection of Cord Blood
units for personal storage, to be used, if necessary, by the donor family or
its designees. In this case, the
donating family pays for collection, processing and storage, plus an annual fee
for continued storage.
The third business involves technology licensing. Cryobanks has been asked by many
international groups to help them set up Cord Blood collection and storage
facilities. Cryobanks has developed
a model for assisting other parties in this endeavor and already has agreements
to assist in the formation of several facilities, seven in India and one in
Greece. The Athens, Greece
location will be operational in 2005. The first Indian facility located in New
Delhi will be operational in May of 2006. The next six Indian locations will open over the course of
the following twenty-four months. Cryobanks estimates that it can assist the
development of four to six foreign facilities each year for which it will
receive a large up-front cash fee plus a percentage of the gross revenues of
each facility.
Cryobanks will also use donated cord blood units for
research purposes. Cryobanks
expects to help sponsor research in areas related to stem cell therapy. In return, Cryobanks will have first
rights to licensing and royalty income when and if the therapies based on this
research are developed. Cryobanks
has signed one Material Transfer Agreement with a well-known cancer research
center and has four other agreements pending. Additionally, Cryobanks expects
to secure a major research project to be conducted in Israel.
Cryobanks has entered into, or is
currently negotiating several research projects and other opportunities. Additional agreements are in the areas
of neural, spinal cord, and heart repair using stem cells. In addition, Cryobanks has identified
opportunities for growth and expansion via acquisition of other Cord Blood
programs or technology which could lead to significant acceleration of growth
and revenues. For example, as of
September 2004, the National Marrow Donor Program (NMDP) has agreed to serve as
the Institutional Review Board (IRB) for Cryobanks which is expected to greatly
facilitate the use of its donor cord blood samples in clinical settings.
Cryobanks International
represents a unique established facility involved in technology that has the
potential to be highly profitable and can provide substantial income and also
enter diversified yet related businesses.
In addition, management hopes that the expanded Company activities will
be directly responsible for the saving of lives and discovery of new therapies.
Cryobanks is accredited by the
American Association of Blood Banks, New York State licensed, and FDA
registered. Cryobanks also holds
memberships in the American Association of Bioanalysts and American Association
of Tissue Banks. Currently,
Cryobanks is the only facility accepting donated cord blood units from anywhere
in the continental United States, every day of the week. This effort is leading to CryobanksÕ
goal of developing the largest database of quality transplantable cord blood
stem cell units worldwide. It is
the mission of Cryobanks to ensure that anyone in need of a cord blood stem
cell transplant will have a matched unit to access.
Cryobanks strives to be the
leading bank for stored Cord Blood in the world. Cryobanks believes that the potential markets for CBSCs and
related products, services and technologies are large. With its background, personnel, technological
know-how, and facilities, Cryobanks is in the unique position of being able to
address multiple business opportunities – all related to CBSCs.
It is important to note that Cryobanks does not use stem
cells derived from fetal (embryonic) tissue and is therefore not subject to the
many ethical and emotional issues surrounding fetal stem cell research. Cryobanks uses only stem cells obtained
from umbilical cords.
Cryobanks has already placed about 8,585 units on various
registries and expects very substantial growth in the number of units in its
cord blood bank.
The description transactions contained in this press
release, and the description of Cryobanks, are qualified in their entirety by
reference to the Current Report on Form 8-K filed with the SEC, which can be
obtained by visiting the SECÕs website at
http://www.sec.gov/edgar/searchedgar/companysearch.html.
Safe
Harbor Statement
This press release contains "forward looking
statements." These statements
relate to future events or our future financial performance and transactions,
and involve known and unknown risks, uncertainties and other factors that may
cause our actual results, levels of activity, performance or achievements, to
be materially different from those contemplated by the forward looking
statements. There can be no
assurance that the acquisition described herein will successfully close. We undertake no ongoing obligation,
other than that imposed by law, to update these statements. Factors that could affect our results,
levels of activity, performance or achievements and cause them to materially
differ from those contained in the forward looking statements include the
failure of Cryobanks to complete its financing, and other factors that can be
found in our filings with the Securities and Exchange Commission, including our
annual reports on Form 10-K, current reports on Form 8-K and quarterly reports
on Form 10-Q, as amended.