ISCO to create new European subsidiary with $10 million capital funding

International Stem Cell Corporation (OTCBB:ISCO), www.intlstemcell.com, announced today that it had entered into a Memorandum of Understanding with ARG Vermogensverwaltung AG ("ARG"), a German Investment Fund, to create a new European subsidiary ("ISCO Europe") to be funded with up to $10 million of capital derived from ARG and other independent sources in Europe. Shares of ISCO Europe are expected to trade on the Deutsche Bourse independently of the company's shares in the US. ISCO Europe's shares will not be convertible into ISCO shares on any US exchange.

ISCO Europe will be licensed by ISCO to develop and market therapeutic products derived from ISCO's technology throughout the Euro Currency Countries and Switzerland. New technologies developed by either ISCO or ISCO Europe will be made mutually available, thus expanding the total funding available to ISCO worldwide without issuing new ISCO shares and enhancing the potential market and scientific development capacity of both companies.

It is expected that the new subsidiary will be funded initially by a private equity investment by ARG and that ARG will then assist in forming an investment group to invest up to $10 million concurrently with the listing of ISCO Europe on the Deutsche Bourse, the largest Securities Exchange in Europe. Following the financing of ISCO Europe, ISCO is expected to retain ownership of 80% or more of this new subsidiary.

"Although negotiations are still at the non-binding memorandum of understanding stage, this transaction, when completed, will expand ISCO's access to capital for worldwide expansion and ISCO's access to new scientific development without requiring equity dilution of ISCO's current shareholders. We are creating an investment, research and development, marketing and distribution entity by adding capital and human resources from Europe to help fulfill ISCO's goal of supplying its proprietary cells and cell therapies to the world," said Kenneth Aldrich, Chairman and co-founder of ISCO.