International Stem Cell Corporation Announces Second Quarter 2011 Financial Results and Corporate Events

International Stem Cell Corporation (OTCBB: ISCO), a biotechnology company that developed a powerful new stem cell technology called "parthenogenesis" which promises to significantly advance the field of regenerative medicine, today announced financial results for the quarter ended June 30, 2011 and for the first six months of the fiscal year and provided an update on corporate events.

ISCO reported year-to-date revenues of $2.6 million compared to $0.7 million for the same time period in 2010, representing an increase of 271%. The increase in our revenues relates to sales generated by ISCO's wholly-owned subsidiaries Lifeline Skin Care (LSC) which contributed $1.7 million and Lifeline Cell Technology (LCT) which contributed $0.9 million of revenues.

Total year-to-date expenses, excluding cost of sales increased $2.0 million or 38%, compared to the first six months of the previous year. The most significant reasons for the increase in total expenses related to increases in R&D and G&A. Research & Development expenses increased primarily due to increased activity on our scientific projects. General & Administrative expenses increased primarily due to increased headcount, non-cash stock-based compensation and increased expenses related to business development activity and general corporate expenses.

Our cash balance at June 30, 2011 was $3.6 million. Net cash used in operating activities for the six months ended June 30, 2011 was $3.0 million.

Second Quarter 2011 Highlights:

-- The first U.S.-based donor was enrolled in ISCO's program to establish a bank of clinical-grade human parthenogenetic stem cells (hpSCs) capable of being immune-matched to millions of patients.

-- We strengthened our senior management team to assist in the continued development of the Company. Kurt May was appointed Senior Vice President responsible for mergers and acquisitions and development of new international collaborations. Donna Queen was added to the management team as Vice President of LSC, where she is responsible for marketing and business development.

-- We started a series of preclinical animal studies of neuronal cells derived from hpSCs. The studies will evaluate the in vivo safety and tumorigenicity of neuronal cells as well as their ability to develop into functioning dopaminergic neuron–like cells to treat Parkinson's disease.

-- We successfully completed the first series of preclinical testing of hepatocytes derived from hpSCs. In the transplantation mouse model, inoculated cells were capable of engrafting and surviving in specific niches within the liver, and were further developing into cells with essential hepatocyte-like features.

About International Stem Cell Corporation

International Stem Cell Corporation is focused on the therapeutic applications of human parthenogenetic stem cells and the development and commercialization of cell-based research and cosmetic products. ISCO's core technology, parthenogenesis, results in the creation of pluripotent human stem cells from unfertilized oocytes (eggs). hpSCs avoid ethical issues associated with the use or destruction of viable human embryos. ISCO scientists have created the first parthenogenic, homozygous stem cell line that can be a source of therapeutic cells with minimal immune rejection after transplantation into hundreds of millions of individuals of differing genders, ages and racial background. This offers the potential to create the first true stem cell bank, UniStemCell™. ISCO also produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology, and cell-based skin care products through its subsidiary Lifeline Skin Care. More information is available at www.internationalstemcell.com.

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International Stem Cell Corporation and Subsidiaries (A Development Stage Company) Condensed Consolidated Statements of Financial Condition June 30, 2011 December 31, 2010 (Restated)(1) (Unaudited) Assets Cash and cash equivalents $ 3,581,933 $ 5,782,027 Accounts receivable 341,666 738,506 Inventory 1,329,433 856,083 Prepaid expenses and other current assets 290,196 228,338 Total current assets 5,543,228 7,604,954 Property and equipment, net 1,495,916 1,295,328 Patent licenses, net 1,056,562 986,714 Deposits and other assets 16,279 39,812 Total assets $ 8,111,985 $ 9,926,808 Liabilities and Stockholders' Equity Accounts payable $ 1,032,531 $ 582,824 Accrued expenses 855,315 545,781 Deferred revenue 137,834 759,667 Advances 250,000 250,000 Warrants to purchase common stock 1,027,171 2,399,605 Total current liabilities 3,302,851 4,537,877 Commitments and contingencies Stockholders' Equity Common stock, $.001 par value, 200,000,000 shares authorized, 76,599,928 shares and 74,771,107 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively 76,600 74,771 Convertible preferred stock, $.001 par value, 20,000,000 shares authorized, 2,800,043 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively 2,800 2,800 Subscription receivable on common stock - (4,875 ) Additional paid-in capital 59,780,363 56,170,006 Deficit accumulated during the development stage (55,050,629 ) (50,853,771 ) Total stockholders' equity 4,809,134 5,388,931 Total liabilities and stockholders' equity $ 8,111,985 $ 9,926,808 (1) The Company restated its financial statements for the year ended December 31, 2010, and the quarter ended March 31, 2011. International Stem Cell Corporation and Subsidiaries (A Development Stage Company) Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, Six Months Ended June 30, Inception (August 2001) through June 30, 2011 (Restated)(1) 2011 2010 (Restated)(1) 2011 (Restated)(1) 2010 (Restated)(1) Revenues Product sales $ 1,114,309 $ 441,118 $ 2,629,225 $ 713,744 $ 5,728,390 Royalties and license - - - - 135,000 Total revenue $ 1,114,309 $ 441,118 $ 2,629,225 $ 713,744 $ 5,863,390 Development expenses Cost of sales 362,131 214,330 791,125 360,706 2,506,597 Research and development 1,128,869 754,000 2,132,279 1,338,069 15,992,557 Marketing 345,800 291,576 664,006 424,994 3,063,155 General and administrative 2,135,732 2,033,615 4,368,470 3,408,821 27,692,292 Total development expenses 3,972,532 3,293,521 7,955,880 5,532,590 49,254,601 Loss from development activities (2,858,223 ) (2,852,403 ) (5,326,655 ) (4,818,846 ) (43,391,211 ) Other income (expense) Settlement with related company - - - - (92,613 ) Miscellaneous expense (12,040 ) (256 ) (11,140 ) (20,649 ) (28,652 ) Dividend income - 350 - 25,999 92,875 Interest expense - (6,805 ) - (14,079 ) (2,225,074 ) Sublease income 2,450 2,125 4,650 3,525 303,083 Change in market value of warrants 478,669 7,083,365 1,349,518 (1,347,960 ) (2,380,664 ) Total other income (expense) 469,079 7,078,779 1,343,028 (1,353,164 ) (4,331,045 ) Income (loss) before income taxes (2,389,144 ) 4,226,376 (3,983,627 ) (6,172,010 ) (47,722,256 ) Provision for income taxes - - - - 6,800 Net income (loss) $ (2,389,144 ) $ 4,226,376 $ (3,983,627 ) $ (6,172,010 ) $ (47,729,056 ) Dividends on preferred stock $ (107,203 ) $ - $ (213,231 ) $ (1,238,067 ) $ (7,751,380 ) Net income (loss) attributable to common stockholders $ (2,496,347 ) $ 4,226,376 $ (4,196,858 ) $ (7,410,077 ) $ (55,480,436 ) Basic earnings per common share $ (0.03 ) $ 0.06 $ (0.06 ) $ (0.11 ) Diluted earnings per common share $ (0.03 ) $ 0.04 $ (0.06 ) $ (0.11 ) Share used in per share calculations: Weighted average shares outstanding 76,340,016 68,676,504 75,842,071 64,789,250 Weighted average shares outstanding on a Fully Diluted Basis 76,340,016 114,797,830 75,842,071 64,789,250 (1) The Company restated its financial statements for the year ended December 31, 2010, and the quarter ended March 31, 2011. International Stem Cell Corporation Kenneth C. Aldrich, Chairman 760-940-6383 kaldrich@intlstemcell.com Or Ray Wood, CFO 760-940-6383 rwood@intlstemcell.com