================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the quarter ended June 30, 2007

                                       or

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the transition period from ___________ to ________________

         Commission File Number:   0-10379

                           STEM CELL INNOVATIONS, INC.
             (Exact Name of Registrant as Specified in its Charter)

           Delaware                                              22-2313648
--------------------------------                           ---------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

1812 Front Street, Scotch Plains, New Jersey                        07076
--------------------------------------------                     ----------
(Address of principal executive offices)                         (Zip code)

                                 (908) 663-2150
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such shorter  period) that the  registrant  was
required  to file  such  reports  and  (2)  has  been  subject  to  such  filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

Number of shares  outstanding of each of issuer's  classes of common stock as of
July 18, 2007.

                        Common Stock      1,095,115,144 shares

================================================================================

<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    PAGE
                                                                                    ----
<S>        <C>                                                                      <C>
PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements (Unaudited)
           Consolidated Condensed Balance Sheet - June 30, 2007                        1

           Consolidated Condensed Statements of Operations - Three Months and
           Six Months Ended June 30, 2007 and 2006                                     2

           Consolidated Condensed Statement of Capital Deficiency - Six Months
           Ended June 30, 2007                                                         4

           Consolidated Condensed Statements of Cash Flows - Six Months
           Ended June 30, 2007 and 2006                                                5

           Notes to Consolidated Condensed Financial Statements                        6

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                                  17

Item 3.    Controls and Procedures                                                    21

PART II.   OTHER INFORMATION                                                          22

Item 1.    Legal Proceedings                                                          22

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                22

Item 3.    Defaults on Senior Securities                                              22

Item 4.    Submission of Matters to a Vote of Security Holders                        22

Item 5.    Other Information                                                          22

Item 6.    Exhibits and Reports on Form 8-K                                           22
</TABLE>

<PAGE>

ITEM. 1    FINANCIAL STATEMENTS

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEET

                                                                     JUNE 30,
                                                                       2007
                                                                   ------------
                                                                    (Unaudited)
ASSETS (Note 4)
Current assets
  Cash and cash equivalents                                        $    209,108
  Other receivables                                                      91,274
  Prepaid expenses and other current assets                              73,669
                                                                   ------------
Total current assets                                                    374,051
                                                                   ------------

Property, plant and equipment, net                                      744,182
Acquired intangibles, net                                             4,666,059
Deferred finance costs, net                                           1,276,237
Other assets                                                              9,879
                                                                   ------------
Total assets                                                       $  7,070,408
                                                                   ============

LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities
  Accounts payable and accrued expenses                            $  1,462,102
  Convertible notes payable, net of debt discount                     1,363,722
  Notes payable                                                         350,000
  Deferred revenues                                                     201,750
                                                                   ------------
Total current liabilities                                             3,377,574
                                                                   ------------
Long-term liabilities
  Notes payable - Stockholders/Directors                                400,000
  Convertible notes payable, net of debt discount                       804,685
  Amount due Eaglestone (including Series 2 preferred stock)          5,981,082
  Derivative instrument liability                                       400,000
  Other liabilities                                                     216,753
                                                                   ------------
Total long-term liabilities                                           7,802,520
                                                                   ------------

Commitments and contingencies

Capital Deficiency
Preferred stock, par value $.01 per share;
  authorized-5,000,000 shares;  Series 1 Convertible
  Preferred Stock; None issued and outstanding                               --
  Series 2 Preferred Stock; 2,000,000 issued and outstanding                 --
Common stock, par value $.01 per share; authorized-4,000,000,000
  shares; issued  and outstanding-1,095,115,144 shares               10,951,151
Additional paid-in capital                                           15,098,488
Accumulated deficit                                                 (30,159,325)
                                                                   ------------
Total capital deficiency                                             (4,109,686)
                                                                   ------------
Total liabilities and capital deficiency                           $  7,070,408
                                                                   ============

The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.

                                        1
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                ----------------------------------
                                                                                    JUNE 30,           JUNE 30,
                                                                                      2007               2006
                                                                                ---------------    ---------------
<S>                                                                              <C>               <C>
Revenue
  Royalty income                                                                 $           --    $        10,282
  Contract Research                                                                      19,942             15,203
                                                                                ---------------    ---------------
  Total revenue                                                                          19,942             25,485
                                                                                ---------------    ---------------
Costs and expenses
  General and administrative                                                          1,030,855          1,017,158
  Research and development                                                              443,890            189,540
  Depreciation and amortization                                                         266,885            234,191
                                                                                ---------------    ---------------
Total costs and expenses                                                              1,741,630          1,440,889
                                                                                ---------------    ---------------

Loss from operations before other items                                              (1,721,688)        (1,415,404)

Interest expense including accretion of debt discount of $677,615 in 2007 and
  $200,904 in 2006 and amortization of deferred financing costs of $241,210 in
  2007 and $295,503 in 2006                                                          (1,023,048)          (546,774)
Reduction in derivative instrument liability                                            600,000                 --
Charge related to Eaglestone debt                                                    (1,200,000)                --
                                                                                ---------------    ---------------
Net loss                                                                        $    (3,344,736)   $    (1,962,178)
                                                                                ===============    ===============
Basic and diluted net loss per share attributable to common stockholders        $            --    $          (.04)
                                                                                ===============    ===============
Weighted average number of shares outstanding -
  basic and diluted, (common shares limited to
  authorized shares available through July 5, 2006)                               1,091,120,639         55,000,000
                                                                                ===============    ===============
Proforma basic and diluted net loss per share (assuming sufficient authorized
  shares)                                                                                          $            --
                                                                                                   ===============
Proforma weighted average number of shares outstanding -
  basic and diluted (assuming sufficient authorized shares)                                          1,043,174,828
                                                                                                   ===============
</TABLE>

The  accompanying  notes are an integral  part of these  unaudited  consolidated
condensed financial statements.

                                        2
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          SIX MONTHS ENDED
                                                                                ----------------------------------
                                                                                    JUNE 30,          JUNE 30,
                                                                                      2007              2006
                                                                                ---------------    ---------------
<S>                                                                              <C>               <C>
Revenue
  Royalty income                                                                 $           --    $        17,282
  Contract Research                                                                     106,516             19,278
                                                                                ---------------    ---------------
  Total revenue                                                                         106,516             36,560
                                                                                ---------------    ---------------
Costs and expenses
  General and administrative                                                          2,229,368          6,691,734
  Research and development                                                              756,246            248,248
  Depreciation and amortization                                                         541,641            353,698
                                                                                ---------------    ---------------
Total costs and expenses                                                              3,527,255          7,293,680
                                                                                ---------------    ---------------
Loss from operations before other items                                              (3,420,739)        (7,257,120)

Interest expense including accretion of debt discount of $1,431,715 in 2007
  and $304,580 in 2006, amortization of deferred financing costs of $474,666 in
  2007 and $311,173 in 2006 and a charge for beneficial conversion expense of
  none in 2007 and $1,794,375 in 2006                                                (2,100,206)        (2,564,646)
Reduction in derivative instrument liability                                          1,400,000                 --
Charge related to Eaglestone debt                                                    (1,200,000)                --
                                                                                ---------------    ---------------
Net loss                                                                             (5,320,945)        (9,821,766)
Less:  Amount attributable to preferred stock beneficial conversion feature                  --         (1,563,500)
                                                                                ---------------    ---------------
Net loss attributable to common stockholders                                    $    (5,320,945)   $   (11,358,266)
                                                                                ===============    ===============
Basic and diluted net loss per share attributable to common stockholders        $            --    $          (.21)
                                                                                ===============    ===============
Weighted average number of shares outstanding -
  basic and diluted, (common shares limited to
  authorized shares available through July 5, 2006)                               1,083,120,669         55,000,000
                                                                                ===============    ===============
Proforma basic and diluted net loss per share (assuming sufficient authorized
  shares)                                                                                          $          (.01)
                                                                                                   ===============
Proforma weighted average number of shares outstanding -
basic and diluted (assuming sufficient authorized shares)                                              877,249,451
                                                                                                   ===============
</TABLE>

The  accompanying  notes are an integral  part of these  unaudited  consolidated
condensed financial statements.

                                        3
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
             CONSOLIDATED CONDENSED STATEMENT OF CAPITAL DEFICIENCY
                         SIX MONTHS ENDED JUNE 30, 2007

                                   (unaudited)

<TABLE>
<CAPTION>
                                                  Common Stock                Additional
                                        --------------------------------        Paid-In        Accumulated
                                            Shares            Amount            Capital          Deficit            Total
                                        --------------    --------------    --------------    --------------    --------------
<S>                                      <C>              <C>               <C>               <C>               <C>
Balances at January 1, 2007              1,064,565,144    $   10,645,651    $   14,098,207    $  (24,838,380)   $      (94,522)

Shares issued as placement agent fee           250,000             2,500            10,000                              12,500
Conversion of notes into common stock       19,600,000           196,000           392,000                            588,,000
Stock based compensation for
  directors and employees                                                          546,066                             546,066
Stock based compensation for
  consultants                                                                       28,816                              28,816

Capital contribution of imputed
  interest on convertible notes                                                     39,399                              39,399

Shares issued as compensation for
  services                                     700,000             7,000            84,000                              91,000

Issuance of common stock in exchange
  for warrants                              10,000,000           100,000          (100,000)

Net Loss                                                                                          (5,320,945)       (5,320,945)
                                        --------------    --------------    --------------    --------------    --------------
Balances at June 30, 2007                1,095,115,144    $   10,951,151    $   15,098,488    $  (30,159,325)   $   (4,109,686)
                                        ==============    ==============    ==============    ==============    ==============
</TABLE>

The  accompanying  notes are an integral  part of these  unaudited  consolidated
condensed financial statements.

                                        4
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  Six Months Ended
                                                                                      June 30,
                                                                         ----------------------------------
                                                                               2007              2006
                                                                         ---------------    ---------------
<S>                                                                      <C>                <C>
Cash flows from operating activities:
    Net loss                                                             $    (5,320,945)   $    (9,821,766)
    Adjustments to reconcile net loss
      to net cash used in operating activities:
        Beneficial conversion charge                                                  --          1,794,375
        Depreciation and amortization                                            541,641            353,698
        Gain on reduction of derivative instrument liability                  (1,400,000)                --
        Charge related to Eaglestone debt                                      1,200,000                 --
        Stock based compensation charge                                          574,882          4,023,053
        Common stock issued for services                                          91,000                 --
        Imputed  interest charge                                                  39,399             35,250
        Accretion of debt discount                                             1,431,715            374,442
        Amortization of deferred finance costs                                   474,666            311,173
Change in operating assets and liabilities:
        Accounts receivable                                                           --              7,000
        Other receivables                                                         39,781             27,616
        Prepaid expenses and other current assets                                 18,231            (19,758)
        Accounts payable and accrued expenses                                     53,062           (174,218)
        Deferred revenues                                                        201,750                 --
                                                                         ---------------    ---------------
        Net cash used in operating activities                                 (2,054,818)        (3,089,135)
                                                                         ---------------    ---------------
Cash flows from investing activities:
Cost of acquiring Plurion intangibles                                                 --           (178,500)
Additions to property, plant and equipment                                       (53,480)          (160,662)
                                                                         ---------------    ---------------
Net cash used in investing activities                                            (53,480)          (339,162)
                                                                         ---------------    ---------------
Cash flows from financing activities:
    Collection of receivables from 2005 financing                                     --            395,066
    Net proceeds from issuance of Series 1 preferred stock                            --          1,326,700
    Net proceeds from issuance of convertible notes payable                      975,000          1,994,800
    Proceeds from issuance of notes payable                                      350,000                 --
    Proceeds from merger with public shell treated as capital                         --          1,115,922
                                                                         ---------------    ---------------
Net cash provided by financing activities                                      1,325,000          4,832,488
                                                                         ---------------    ---------------
Net (decrease) increase in cash and cash equivalents                            (783,298)         1,404,191

Cash and cash equivalents at beginning of period                                 992,406             65,537
                                                                         ---------------    ---------------
Cash and cash equivalents at end of period                               $       209,108    $     1,469,728
                                                                         ===============    ===============

Noncash investing and financing activities:
Acquisition of Intangibles:
        License and Patent                                                                  $     5,700,000
        Less: Liabilities assumed                                                                   (88,000)
                                                                                            ---------------
                                                                                                  5,612,000
                                                                                            ===============
Exchange of notes and accrued  interest
for Series 1 preferred stock                                                                $     3,611,518
                                                                                            ===============
Conversion of convertible notes for common stock                         $       588,000    $        69,862
                                                                         ===============    ===============
Financing fees paid in common stock                                      $        12,500
                                                                         ===============
Debt discount  recorded in connection with February, 2007 financing      $       500,000
                                                                         ===============
</TABLE>

The  accompanying  notes are an integral  part of these  unaudited  consolidated
condensed financial statements.

                                        5
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 1.  THE COMPANY AND THE BASIS OF PRESENTATION

         Stem Cell  Innovations,  Inc. (the "Company")  through its wholly owned
subsidiaries,  Amphioxus  Cell  Technologies,  Inc.  ("ACT"),  which is based in
Houston,  Texas,  and Stem  Cell  Innovations  BV  which  is  based  in  Leiden,
Netherlands,  is a cell biology  company.  It utilizes its proprietary C3A human
liver cell line in the field of drug  discovery  and  toxicology  testing and is
also engaged in the development  and production of its  proprietary  pluripotent
stem cells.  These human  cell-based  disease  models  create a platform for the
discovery, testing and development of all therapeutic modalities including small
molecules, cell-based therapeutics, small interfering RNAs and antibodies.

         On February 14, 2006, the Company merged with ACT (the "Merger").  Upon
the completion of the Merger,  the stockholders of ACT controlled  approximately
77% of the merged  entity.  The Merger was accounted  for as a reverse  purchase
with ACT being the accounting  acquirer.  Immediately prior to the completion of
the Merger,  ACT acquired  from  Plurion,  Inc.  ("Plurion")  all of its assets,
consisting of a patent and an  assignment of its license to certain  patents and
patent  applications in the field of pluripotent stem cells, and assumed certain
liabilities of Plurion.

         The accompanying  unaudited condensed consolidated financial statements
have been prepared in accordance with accounting  principles  generally accepted
in the United States of America ("GAAP") for interim  financial  information and
pursuant to the rules and regulations of the Securities and Exchange  Commission
(the  "SEC").  Accordingly,  they  do not  include  all of the  information  and
footnotes required by GAAP for complete financial statements.  In the opinion of
management, the accompanying statements include all adjustments (consisting only
of normal recurring items) that are considered necessary for a fair presentation
of the financial  position of Stem Cell  Innovations,  Inc. and subsidiaries and
the  results of its  operations  and cash flows for the periods  presented.  The
results of its operations  for the six-month  period ended June 30, 2007 are not
necessarily  indicative  of the  operating  results  for the  full  year.  It is
suggested  that  these  financial  statements  be read in  conjunction  with the
financial  statements  and related  disclosures  for the year ended December 31,
2006 included in the Annual Report of Stem Cell Innovations, Inc. on Form 10-KSB
filed with the SEC.

         The financial  statements have been prepared  assuming that the Company
will continue as a going concern which  contemplates  the  realization of assets
and  satisfaction  of liabilities in the normal course of business.  The Company
has incurred  cumulative losses of $30,159,325 through the period ended June 30,
2007 and has been dependent on funding  operations through the issuances of debt
and equity securities. At June 30, 2007 cash amounted to approximately $209,000.
Management believes that current cash resources will be insufficient to fund its
operations through June 30, 2008. Management will attempt to continue to finance
the Company's  operations by (i) a private or public placement of equity or debt
securities,  (ii)  licensing its human  pluripotent  stem cells  (PluricellsTM),
(iii) increasing sales of its ACTIVTox products, and (iv) reducing expenditures.
However, it is uncertain as to whether the Company will be able to achieve these
objectives.  These  factors,  among others,  raise  substantial  doubt about the
Company's  ability to continue as a going concern.  The financial  statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and  classification  of  liabilities  that
might be necessary should the Company be unable to continue as a going concern.

                                        6
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of  consolidation - The  consolidated  financial  statements
include  the  operations  of the  Company,  ACT,  Stem Cell  Innovations  BV and
Interferon Sciences Development  Corporation ("ISD"), the Company's wholly owned
subsidiaries.  The operations of Stem Cell  Innovations,  Inc. are included from
the date of the Merger.

         Acquired  intangibles - Acquired intangibles consist of the license and
patent purchased from Plurion,  are stated at cost and are being amortized using
the   straight-line   method  over  the   estimated   remaining   useful   lives
(approximately  six years) of the  patents.  The Company  reviews  its  acquired
intangibles for impairment whenever events or changes in circumstances  indicate
that  the  carrying   amount  of  the   intangibles   may  not  be  recoverable.
Recoverability of intangibles to be held and used is measured by a comparison of
the carrying  amount of the  intangibles to future net cash flows expected to be
generated by the intangibles. If such intangibles are considered to be impaired,
the  impairment to be recognized is measured by the amount by which the carrying
amount of the  intangibles  exceed the estimated fair value of the  intangibles.
Intangibles  to be disposed of are reported at the lower of the carrying  amount
or estimated fair value less cost to sell.

         Research  and  Development  - Research  and  development  expenses  are
charged to operations as incurred.

         Revenue  and  royalty  recognition  - Revenue  is  recognized  when the
products  are  shipped  and title  passes.  Revenue  from  contract  research is
recognized  when the research and testing is completed.  Revenue from  royalties
were  recognized  over the royalty period based upon periodic  reports  received
from the licensee. See Note 10.

         Derivative  Instruments  -  We  have  issued  and  outstanding  certain
financial  instruments  with features  which we analyze in  accordance  with the
pronouncements  relating to accounting  for derivative  instruments  and hedging
activities to determine if these  instruments  are  derivatives or have embedded
derivatives that must be bifurcated.  Under the applicable accounting literature
the estimated value of the embedded  derivative,  if any, is bifurcated from its
host  instrument on the date of sale or issuance of the securities or debt based
on  a  valuation  utilizing  the  appropriate   valuation  model.  The  embedded
derivative  liability is classified as such and is marked-to-market and adjusted
to fair value at each  reporting  date and the change in fair value is record to
other (income) expense,  net. In addition,  freestanding  warrants are accounted
for as  equities  or  liabilities  in  accordance  with  the  provisions  of the
applicable  accounting  literature.  As the conversion rate or exercise price of
all outstanding  instruments vary with the fair value of our common stock,  they
are recorded as an obligation at fair value,  marked-to-market at each reporting
date, and are carried on a separate line of the  accompanying  balance sheet. If
there is more than one embedded  derivative,  their value is  considered  in the
aggregate. See Note 5.

         Recently  Issued  Accounting  Pronouncements  - In February  2007,  the
Financial  Accounting  Standards  Board  (FASB)  issued  Statement  of Financial
Accounting Standards (SFAS) No. 159, "The Fair Value Option for Financial Assets
and Financial  Liabilities,  Including an Amendment of FASB  Statement No. 115,"
which will become  effective in 2008.  SFAS No. 159 permits  entities to measure
eligible  financial assets,  financial  liabilities and firm commitments at fair
value, on an instrument-by-instrument basis, that are otherwise not permitted to
be  accounted  for at fair  value  under  other  generally  accepted  accounting
principles.  The fair value  measurement  election is irrevocable and subsequent
changes in fair value must be recorded in earnings. The Company expects to adopt
this  Statement in the first  quarter of 2008 and is assessing  SFAS No. 159 and
has not yet determined the impact that the adoption of SFAS No. 159 will have on
its consolidated financial statements.

                                        7
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

         In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting
for Defined  Benefit Pension and Other  Postretirement  Plans -- An Amendment of
FASB  Statements 87, 88, 106 and 132 (R)". SFAS No. 158 requires the recognition
of an  asset  for  a  plan's  overfunded  status  or a  liability  for a  plan's
underfunded  status in the statement of financial  position,  measurement of the
funded  status of a plan as of the date of its  year-end  statement of financial
position and  recognition  for changes in the funded status of a defined benefit
postretirement  plan in the year in which the changes  occur as a  component  of
other  comprehensive  income. The Company adopted the provisions of SFAS No. 158
in the  first  quarter  of 2007.  The  adoption  of SFAS No.  158 did not have a
material effect on the Company's consolidated financial statements.

         In  September  2006,  the FASB  finalized  SFAS No.  157,  "Fair  Value
Measurements"  which will become effective in 2008. This Statement  defines fair
value,  establishes a framework for measuring fair value and expands disclosures
about fair value  measurements;  however, it does not require any new fair value
measurements.  The provisions of SFAS No. 157 will be applied  prospectively  to
fair value measurements and disclosures  beginning in the first quarter of 2008.
The  Company  is  evaluating  the  impact  of SFAS No.  157 on its  consolidated
financial statements.

         In the  first  quarter  of 2007,  the  Company  adopted  SFAS No.  156,
"Accounting  for Servicing of Financial  Assets--an  amendment of FASB Statement
No.  140," that  provides  guidance  on  accounting  for  separately  recognized
servicing assets and servicing liabilities. In accordance with the provisions of
SFAS No. 156, separately  recognized servicing assets and servicing  liabilities
must be initially measured at fair value, if practicable.  Subsequent to initial
recognition,  the  Company  may use either the  amortization  method or the fair
value  measurement   method  to  account  for  servicing  assets  and  servicing
liabilities  within the scope of this Statement.  The adoption of this Statement
did  not  have  a  material  effect  on  the  Company's  consolidated  financial
statements.

      In  the  first  quarter  of  2007,  the  Company  adopted  SFAS  No.  155,
"Accounting  for Certain  Hybrid  Financial  Instruments--an  amendment  of FASB
Statements  No. 133 and 140," which  permits  fair value  remeasurement  for any
hybrid financial  instrument that contains an embedded derivative that otherwise
would require  bifurcation  in accordance  with the  provisions of SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging Activities." The adoption of
this  Statement  did not have a material  effect on the  Company's  consolidated
financial statements.

         The  Company  adopted  FASB  Interpretation  No.  48,  "Accounting  for
Uncertainty in Income Taxes -- an Interpretation of FASB Statement No. 109" (FIN
48) on January 1, 2007.  FIN 48  clarifies  the  accounting  and  reporting  for
uncertainties in income tax law. This Interpretation  prescribes a comprehensive
model for the financial  statement  recognition,  measurement,  presentation and
disclosure of uncertain  tax  positions  taken or expected to be taken in income
tax  returns.  The  adoption  of FIN 48 did not have a  material  effect  on the
Company's consolidated  financial statements.  The tax years 2003-2006 generally
remain  open to  examination  by the  major  taxing  jurisdictions  to which the
Company is  subject.  However,  the  Company  utilized a net  operating  loss of
approximately  $0.4  million  in its 2004 tax year that was  generated  in 1989.
Thus,  the  1989 tax year  remains  open to  examination  to the  extent  of the
utilization.  Furthermore,  the  Company  has the  opportunity  to  utilize  net
operating  losses  generated  from the 1992  through  2002 tax years  that could
potentially  open up those  years to  examination  to the  extent  that such net
operating losses are utilized in the future.

                                        8
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 3.  LOSS PER SHARE AND PRO FORMA LOSS PER SHARE

         Basic  loss per share has been  computed  using  the  weighted  average
number of shares outstanding.  The shares of common stock of ACT, the accounting
acquirer,  were exchanged for 37,891 shares of Series 1 mandatorily  convertible
preferred  stock of the  Company  which  represented  378,910,706  shares of the
Company's   common  stock  upon  their   mandatory   conversion  in  July  2006.
Accordingly,  the weighted average number of shares outstanding has been limited
to the 55,000,000 shares of common stock authorized for issuance through July 5,
2006.  For the  three  months  and six  months  ended  June 30,  2007 and  2006,
potential  common stock shares are not included in the  calculation  of loss per
share as the effect would be antidilutive.  On July 6, 2006, the stockholders of
the Company  approved  increasing the number of shares of common stock which the
Company is authorized to issue to 4,000,000,000.  As of June 30, 2007, there are
1,095,115,144  shares of common  stock  outstanding,  warrants  to  purchase  an
additional  182,967,802  shares of common  stock,  25,500,000  issuable upon the
exercise of stock options,  and 76,404,599  shares of common stock issuable upon
conversion  of the notes.  For the three  months  and six months  ended June 30,
2006, the  presentation  of proforma loss per share is intended to represent the
amounts per share that would have been  recognized if the Company had sufficient
authorized  common  stock  and had  issued  common  stock  in lieu of  Series  1
Preferred Stock. The proforma weighted average shares  outstanding for the three
months and six months  ended June 30, 2006  assumes  the Company had  sufficient
authorized  common stock to convert all of the Series 1 Preferred Stock and that
the conversions took place as of the beginning of the period.

                                        9
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 4.  NOTES PAYABLE AND REDEEMABLE SERIES 2 PREFERRED

         At June 30, 2007, the Company's long term  obligations are set forth in
the table below.

<TABLE>
         <S>                                                                         <C>
         Notes payable - Stockholder/Directors
         Interest at the rate of 4% per annum payable at maturity. Notes due
         June 15, 2009, subject to earlier repayment under certain conditions.       $          400,000

         Convertible notes payable, net of debt discount
         $1,692,137 principal amount of non-interest bearing notes, due
         December 31, 2008 and convertible into an aggregate of 56,404,600
         shares of common stock                                                                 804,685

         Amount due Eaglestone
         Composed of (i) the Eaglestone Note, in the principal amount of
         $2,935,000, bearing interest at the rate of 4% per annum and due June
         15, 2009 and (ii) 2,000,000 shares of  Series 2 Preferred Stock,
         mandatorily redeemable on June 15, 2009 for $3,065,000.                              5,981,082
                                                                                     -------------------
                                                                         Total       $        7,185,767
</TABLE>

         The Company had the right to repay the Eaglestone Note and the Series 2
Preferred at any time prior to May 14, 2007 for  $4,782,757.  Because the amount
due to Eaglestone  was not paid by May 14, 2007, in the quarter  ending June 30,
2007, the Company  recorded a charge to operations of  $1,200,000,  which is the
difference  between (i)  $4,782,757 and (ii) the face amount of the note and the
redemption  amount  of  Series  2  Preferred  (which  as of March  31,  2007 was
$5,982,757).  During the six months  ended June 30, 2007,  the Company  recorded
$2,986 under the terms of the Accelerated  Repayment  Amount,  which reduced the
amount payable under the Eaglestone Note.

         On November 16, 2006,  the Company  completed a private  placement of a
convertible  secured note and  warrants to an  accredited  investor  pursuant to
which  the  Company  sold an  aggregate  of  $1,000,000  principal  amount  of a
convertible  secured note, bearing interest at the rate of 10% per annum and due
November 16, 2007. The convertible  secured note is convertible  into 10,000,000
shares  of  common  stock  and is  collateralized  by all of the  assets  of the
Company.  The investor also received  warrants to purchase  10,000,000 shares of
common  stock at an  exercise  price  of $.12 per  share.  The  warrants  expire
November 16, 2011.  The Company valued the warrants as of November 16, 2006, the
measurement  date, at  $1,500,000,  utilizing the  Black-Scholes  option pricing
model,  assuming (i) an expected dividend yield of 0%, (ii) a risk-free interest
rate of 4.69%,  (iii) an expected  volatility of 172%, and (iv) an expected term
of five  years.  Based upon such  valuation,  the  Company  recorded a charge to
interest  expense  of  $500,000  and a  corresponding  liability  of  $1,500,000
relating to the warrants issued. Therefore, the note was effectively recorded at
$0. The value is being accreted back to face value over the term of the note. We
incurred  placement fees and other legal expenses of approximately  $96,000,  in
connection  with  this  transaction.  These  costs  were  recorded  as  deferred
financing costs which are being amortized.

                                       10
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

         On  February  23,  2007,  the  Company  sold to the same  investor,  an
additional  $1,000,000  principal  amount of a convertible  secured note bearing
interest at the rate of 10% per annum and due November 16, 2007. The convertible
secured note is convertible  into 10,000,000  shares of common stock and is also
collateralized  by all of the assets of the Company.  The investor also received
warrants to purchase  10,000,000  shares of common stock at an exercise price of
$.12 per share.  The warrants  expire  February 23, 2012. The Company valued the
warrants as of February 23, 2007, the measurement  date, at $500,000,  utilizing
the Black-Scholes option pricing model,  assuming (i) an expected dividend yield
of 0%, (ii) a risk-free interest rate of 4.71%, (iii) an expected  volatility of
168%, and (iv) an expected term of five years.  Based upon such  valuation,  the
Company  recorded a $500,000  liability  relating to the  warrants  issued and a
$500,000 liability relating to the note. The value is being accreted to the face
value over the term of the note.

         The Company incurred placement fees of $37,500, in connection with this
transaction.  The Company recorded these costs as deferred financing costs which
are being amortized.

         On May 23, 2007,  the Company  received  $100,000 from a stockholder of
the Company and issued a note,  with interest at the rate of 10% per annum,  due
May 23,  2008.  The  Company  received  an  additional  $250,000  from  the same
stockholder  during June 2007,  which is also due May 23, 2008, with interest at
10% per annum.

NOTE 5.  DERIVATIVE INSTRUMENT LIABILITY

         The  warrants  issued in  connection  with the  November  16,  2006 and
February 23, 2007 notes contain certain anti-dilution adjustments to protect the
holder of the warrants in the event that the Company  subsequently issues shares
of  common  stock or other  convertible  securities  with a price  per  share or
exercise  price  less than the  exercise  price of the  warrants.  The number of
additional  shares   underlying   potential  future  issuances  of  warrants  is
indeterminate.  There is no obligation to register the common shares  underlying
the warrants except in the event that the Company decides to register any of its
common stock for cash  ("piggyback  registration  rights").  EITF 00-19 requires
liability   treatment   for  a  contract   that  contains  a  provision  for  an
indeterminate  number of shares to be delivered in a share  settlement  that the
Company believes is beyond its control. The warrants contain such a provision as
a result  of the  anti-dilution  feature  contained  in the  relevant  contract.
Accordingly,  the Company has  accounted  for the warrants as a  liability.  The
liability  for the  warrants is  measured  and  recorded at its fair value.  The
liability  for the warrants will be marked to market for each future period they
remain  outstanding and the change in the value will be recorded as a charge (or
credit) to operations.

         At June 30,  2007,  the Company had a derivative  instrument  liability
associated with the warrants issued in connection with the November 16, 2006 and
February 23, 2007 notes of $400,000 and a change in fair value of the  liability
of $600,000 and  $1,400,000,  which was  recorded as a reduction  in  derivative
instrument  liability  for the three  months and six months ended June 30, 2007,
respectively.

NOTE 6.  STOCK-BASED COMPENSATION

         The  Company  adopted  SFAS 123R on  January 1,  2006,  which  requires
companies to recognize  compensation  expense for all equity-based  compensation
awards  issued to employees  that are expected to vest.  SFAS 123R  requires all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the financial statements based on their fair values.

         On July 6, 2006, the stockholders approved the Company's 2006 Incentive
Stock Plan (the "2006 Plan").  Pursuant to the 2006 Plan,  the Company may grant
awards of  non-qualified  stock options,  incentive  stock  options,  restricted
stock, stock units,  performance shares,  performance units and other incentives
payable  in cash  or in  shares  of the  Company's  Common  Stock  to  officers,
employees or members of the Board of  Directors.  The Company is  authorized  to
grant an aggregate of 100,000,000 shares under the 2006 Plan.

                                       11
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

         Prior to adopting  SFAS 123,  the  Company  accounted  for  stock-based
employee compensation under APB 25 and its related interpretations.  The Company
has applied the modified prospective method in the adoption of SFAS 123R.

         Under SFAS  123R,  the  Company  recognizes  compensation  expense on a
straight-line   basis  over  the  requisite   service  period  for   stock-based
compensation  awards. The Company applies a forfeiture  estimate to compensation
expense  recognized  for awards that are  expected to vest during the  requisite
service period,  and revises that estimate if subsequent  information  indicates
that the actual forfeitures will differ from the estimate.

         The  Company  has  retained   the   services  of  a  consultant   on  a
month-to-month  basis to aid in  business  development  in  Europe.  As  partial
compensation  for such  services,  the  Company  has issued  options to purchase
7,500,000  shares of its common  stock,  exercisable  at a price $.14 per share.
3,750,000 of such options are currently exercisable,  1,875,000 vest on December
14,  2007  and  the  remaining  1,875,000  vest on  December  14,  2008.  If the
consulting  agreement is terminated by either the consultant or the Company, the
Consultant  will have 30 days to exercise  all vested  options and any  unvested
options  shall be  terminated.  Accordingly,  the  Company  recorded a charge of
$6,176 and $28,816  associated with the estimated fair value of such options for
the  three-month  and six-month  period ended June 30, 2007,  respectively.  The
estimated fair value of such options was determined  utilizing the Black-Scholes
option  pricing  model,  assuming (i) an expected  dividend  yield of 0%, (ii) a
risk-free interest rate of 4.97%, (iii) an expected volatility of 179%, and (iv)
an expected term of 4.46 years. The Company will remeasure the fair value of the
options  based on changes in the market  price of its common stock at the end of
each quarter.

         During  the six months  ended June 30,  2007,  the  Company  recognized
$574,882  (which  included  $28,816  of  stock-based   compensation  expense  in
connection with the issuance of non-qualified  stock options to a consultant) of
stock-based  compensation expense under the fair value method in accordance with
SFAS 123R. All of the  compensation  expense resulted from the issuance of stock
options.  As of June 30, 2007, the Company had only non-qualified  stock options
outstanding.

         The stock options were granted with an exercise price equal to the fair
market value of the  Company's  Common  Stock at the date of grant,  vest over a
period up to three years, and expire five years from the date of grant.

         Summarized information for the Company's non-qualified stock options is
as follows:

<TABLE>
<CAPTION>
                                                    Weighted      Weighted
                                      Number        average        average       Aggregate
                                        of          exercise      remaining      intrinsic
                                      options        price          years          value
                                   ------------   ------------   ------------   ------------
<S>                                  <C>          <C>                    <C>    <C>
Outstanding at December 31, 2006     25,500,000   $        .17           4.90   $          0

Outstanding at June 30, 2007         25,500,000            .17           4.40   $          0
                                   ============
Vested and expected to vest          25,500,000            .17           4.40   $          0
                                   ============
Exercisable at June 30, 2007         10,875,000            .17           4.39   $          0
                                   ============
</TABLE>

                                       12
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

         The Company did not grant any stock options during the six months ended
June 30, 2007.

         As of June  30,  2007,  the  Company  had  $1,681,478  of  unrecognized
compensation related to the unvested portion of outstanding stock options issued
to employees expected to be recognized through November 2009.

         The  Company  also  uses  historical  data in  order  to  estimate  the
volatility  factor for a period equal to the  duration of the  expected  life of
stock options  granted.  The Company believes that the use of historical data to
estimate these factors  provides a reasonable basis for these  assumptions.  The
risk-free  interest rate for the periods  within the expected life of the option
is based on the U.S. Treasury yield curve in effect at the time of grant.  Under
SFAS  123(R)  forfeitures  are  estimated  at the time of  valuation  and reduce
expense ratably over the vesting period. This estimate is adjusted  periodically
based on the extent to which  actual  forfeitures  differ,  or are  expected  to
differ, from the previous estimate. As of June 30, 2007, the Company anticipates
all outstanding options will vest.

         A summary of the status of the Company's nonvested  non-qualified stock
options as of December  31, 2006,  and changes  during the six months ended June
30, 2007, is presented below:

                                                       Weighted
                                                       Average
                                      Number of       Grant-Date
                                       Options        Fair Value
                                     ----------       ----------
Nonvested at December 31, 2006       17,250,000       $      .16
      Options granted                        --               --
      Options vested                  2,625,000       $      .20
      Options forfeited                      --               --
                                     ----------
Nonvested at June 30, 2007           14,625,000       $      .15

NOTE 7.  RELATED PARTY TRANSACTIONS

Consulting Agreement

         The Company has a consulting arrangement with the Chairman of the Board
of the Company,  which provides for a monthly consulting fee of $10,000 and a 3%
success  fee on  corporate  transactions  other  than sales of  products  in the
ordinary  course  of  business.   Either  party  can  terminate  the  consulting
arrangement  on 30 days  notice.  During the six months  ended June 30, 2007 and
2006,  the Company  paid the  Chairman  $60,000 and  $60,000,  respectively.  In
addition, in connection with the acquisition of Plurion's assets by the Company,
he  received,  in March 2006, a fee of $171,000  which has been  included in the
cost of the acquisition.

Agreement with prior Management of the Company

         In  connection  with  the  Merger,  the  three  senior  members  of the
Company's  management  terminated their existing employment  agreements with the
Company, which entitled them to receive an aggregate of $1,407,141.  In exchange
for the termination of their existing  employment  agreements,  these members of
management received an aggregate of $972,685 (which was charged to operations in
the

                                       13
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

quarter  ended  March  31,  2006),  $170,000  of which  was used by each of them
($510,000 in the aggregate) to purchase shares of Series 1 Preferred convertible
into 5,666,666 shares of Common Stock and Warrants to purchase  2,833,333 shares
of Common Stock, and each entered into new one-year  employment  agreements with
the Company.  These agreements provided for an aggregate compensation of $23,000
per month. In connection  with the shares and warrants  purchased by management,
the Company recorded a charge of $3,995,000 in the quarter ended March 31, 2006.

Securities Exchange Agreement

         On February 7, 2007,  the Company  entered into a  Securities  Exchange
Agreement with a stockholder who owns  approximately 17% of the Company's common
stock.  Under the terms of the Securities  Exchange  Agreement,  the stockholder
exchanged warrants to purchase  15,000,000 shares of the Company's common stock,
exercisable  until  March  2008,  at a price of $.01 per share,  for  10,000,000
shares of the Company's common stock.

Loan from Stockholder

            During  the  quarter  ended  June 30,  2007,  the  Company  received
$350,000 from a stockholder  of the Company and issued a note,  with interest at
the rate of 10% per annum,  due May 23, 2008. The Company received an additional
$150,000 from the same  stockholder  after the end of the quarter ended June 30,
2007, on the same terms.

NOTE 8.  WARRANTS

         At June 30, 2007,  the Company had warrants  outstanding to purchase an
aggregate of 182,967,802  shares of common stock. The following table sets forth
the warrants outstanding by exercise price and expiration date:

Number of Shares Issuable upon Exercise   Exercise Price    Expiration Date
---------------------------------------   --------------    ----------------
              22,950,000                  $          .01          July, 2007*
              13,045,000                  $          .03          July, 2011**
             126,972,802                  $          .06          July, 2011**
              10,000,000                  $          .12      November, 2011***
              10,000,000                  $          .12      February, 2012****
             -----------
             182,967,802

--------------
         *        In earlier  periods  the Company  issued  warrants to purchase
                  51,000,000  shares  in  connection  with  a  convertible  note
                  financing.   During  the  year  ended   December   31,   2006,
                  stockholders  exercised  such warrants to purchase  28,050,000
                  shares, on a cashless basis and received  26,758,445 shares of
                  common stock. The remaining  warrants  expired  unexercised in
                  July, 2007.

         **       Includes  120,450,302  warrants  exercisable at $.06 per share
                  issued  in  February  2006,  in  connection  with the  private
                  offerings of convertible securities.  Also includes 13,045,000
                  warrants  exercisable at $.03 per share and 6,522,500 warrants
                  exercisable  at  $.06  per

                                       14
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

                  share which were issued to the  placement  agent in connection
                  with the notes  issued in a private  placement.  The  warrants
                  were  valued  at an  aggregate  of  $1,995,885  and are  being
                  amortized as interest  expense over the term of the notes. The
                  warrants  were valued using the Black Scholes  option  pricing
                  model, based upon the closing price of the common stock on the
                  date of issue and assuming a  volatility  of 145%, a risk-free
                  rate of 4.57% and an expected term of five years. The warrants
                  can be exercised on a cashless exercise basis.

         ***      Includes  warrants  exercisable  at $.12 per  share  issued in
                  November  2006,  in  connection   with  the  issuance  of  the
                  convertible  secured note.  The warrants can be exercised on a
                  cashless exercise basis. See Note 5.

         ****     Includes  warrants  exercisable  at $.12 per  share  issued in
                  February  2007,  in  connection   with  the  issuance  of  the
                  convertible  secured note.  The warrants can be exercised on a
                  cashless exercise basis. See Note 5.

NOTE 9.  RESEARCH AGREEMENTS

         In December 2006,  the Company  entered into an agreement with Biofocus
Discovery Limited pursuant to which the Company will provide human motor neurons
made  utilizing  our  proprietary  Pluricell  technology.  The Company  received
(euro)100,000  (approximately  $135,000) in the first quarter of 2007, which was
recorded  as  deferred  revenues  on the June 30,  2007  consolidated  condensed
balance  sheet,   and  is  eligible  to  receive  an  additional   (euro)350,000
(approximately $472,000) upon the completion of certain agreed upon milestones.

         In June 2007,  the Company  entered into an  agreement  with the High Q
Foundation  pursuant to which the Company will provide medium spiny neurons made
utilizing our proprietary Pluricell technology.  The Company received $67,000 in
the second quarter of 2007, which was recorded as deferred  revenues on the June
30, 2007  consolidated  condensed  balance sheet,  and is eligible to receive an
additional $1,005,000 upon the completion of certain agreed upon milestones.

NOTE 10.  TERMINATION OF ROYALTY RIGHTS

         In March 2003,  the Company sold to Hemispherx  Biopharma,  Inc. all of
its  inventory  related to ALFERON N Injection  and a license to sell  ALFERON N
Injection.  In  connection  with the sale,  the Company  continued  to receive a
royalty on products  containing natural alpha interferon.  On July 26, 2006, the
Company  terminated  its  royalty  right  in  exchange  for  250,000  shares  of
Hemispherx  Biopharma common stock. The Company recognized income of $620,000 in
the quarter ended September 30, 2006,  based on the fair value of the Hemispherx
Biopharma  common stock  received on the sale of the royalty  right.  During the
period from August through October, 2006, the Company sold the 250,000 shares of
the Hemispherx  Biopharma common stock and realized net proceeds of $536,000 and
recorded a loss of $83,719.

                                       15
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 11.  PROPOSED TRANSACTION WITH PLURISTEM LIFE SYSTEMS, INC. AND
          PLURISTEM, LTD.

         On February 21, 2007, the Company entered into a letter  agreement with
Pluristem Life Systems, Inc. ("PLS") and its wholly owned subsidiary,  Pluristem
Ltd. for a proposed transaction pursuant to which the Company agreed to issue to
PLS 27 million  shares of the Company's  common stock in exchange for 66 million
shares of PLS  common  stock  (representing  approximately  7% of the PLS common
stock) and warrants to purchase an  additional  66 million  shares of PLS common
stock at a price of $.03 per  share.  The  common  stock of PLS is traded in the
over-the-counter  market  and  quoted on the  Bulletin  Board  under the  symbol
PLRS.OB.  In addition,  the Company has agreed to license certain  technology of
Pluristem Ltd. for an upfront  license fee of 23 million shares of the Company's
common  stock and the  obligation  to make  certain  milestone  payments and pay
certain  royalties.  The  Chairman  of  the  Board  of  the  Company,  who  owns
approximately 8% of the Company's common stock, will also become the Co-Chairman
of the PLS Board of Directors.

         This  letter  agreement  is intended to be binding but does not contain
all the terms which will be included in the definitive  agreements.  The Company
is in the  process of  finalizing  the  definitive  agreements  related to these
transactions.

                                       16
<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The following  discussion  of our financial  condition and results of operations
should be read in  conjunction  with the financial  statements and notes thereto
appearing in this Quarterly Report on Form 10-QSB.

OVERVIEW

         Stem Cell  Innovations,  Inc. (the "Company")  through its wholly owned
subsidiaries,  Amphioxus  Cell  Technologies,  Inc.  ("ACT"),  which is based in
Houston,  Texas,  and Stem  Cell  Innovations  BV,  which  is  based in  Leiden,
Netherlands,  is a cell biology company. We have an ongoing business relating to
the use of our C3A human  liver  cell line in the  field of drug  discovery  and
toxicology  testing.  We have not yet developed any  substantial  market for our
primary products. Our principal revenues have been contract research and testing
and  consulting  services  for other  companies,  which have  historically  been
minimal.  To achieve  profitable  operations,  we,  alone or with  others,  must
successfully  develop,  introduce and market our drug  discovery and  toxicology
testing and other products.  We intend to attempt to develop our C3A human liver
cell line for the  production  of human serum  proteins,  including the clotting
factors, Factor VIII and Factor IX, used by hemophiliacs to allow their blood to
clot. In addition,  we intend to broaden the  application  of our expertise into
the area of  pluripotent  cell  biology.  Our  acquisition  of Plurion's  assets
consisted  substantially of fundamental  intellectual property applicable to the
development and use of human pluripotent  cells,  often referred to as embryonic
stem or germ cells.  We are in the  process of  developing  differentiated  cell
lines from our proprietary  human  pluripotent  cells,  adding to the cell types
that may be used as a screen for drug  discovery  and  toxicity,  as well as for
cellular  replacement  therapy.  In December  2006, we entered into an agreement
with Biofocus  Discovery  Limited pursuant to which we would provide human motor
neurons made utilizing our proprietary  Pluricell  technology  which would allow
them to discover genes which could be potentially useful in the development of a
treatment  for  Amyotrophic   Lateral  Sclerosis.   We  received   (euro)100,000
(approximately  $135,000)  in the  first  quarter  of 2007 and are  eligible  to
receive an additional (euro)350,000 (approximately $472,000) upon the completion
of certain  agreed upon  milestones.  In June 2007, we entered into an agreement
with the High Q  Foundation  pursuant  to which  we will  provide  medium  spiny
neurons made utilizing our proprietary  Pluricell  technology  which would allow
them to discover genes which could be potentially useful in the development of a
treatment for Huntington  Disease.  We received $67,000 in the second quarter of
2007 and are eligible to receive an additional $1,005,000 upon the completion of
certain agreed upon milestones.

         Until March 2003, the Company was a biopharmaceutical company (formerly
known as Interferon Sciences,  Inc. ("ISI")) engaged in the study,  manufacture,
and sale of ALFERON(R) N Injection,  a highly  purified,  multispecies,  natural
source alpha interferon  product.  In March 2003, the Company sold to Hemispherx
Biopharma,  Inc.  all of its  inventory  related  to ALFERON N  Injection  and a
license to sell ALFERON N Injection.  In connection  with the sale,  the Company
continued to receive a royalty on products  containing natural alpha interferon.
On July 26,  2006,  the Company  terminated  its royalty  right in exchange  for
250,000 shares of Hemispherx Biopharma common stock.

         Pursuant  to the  terms  of the  Agreement  and  Plan of  Merger  dated
February 14, 2006 (the "Merger  Agreement") by and among the Company,  ACT and a
wholly-owned   subsidiary   of  the   Company,   Amphioxus   Acquisition,   Inc.
("Acquisition  Sub"),  ACT merged with and into  Acquisition Sub (the "Merger"),
such that  Acquisition  Sub was the surviving  corporation,  changed its name to
Amphioxus Cell  Technologies,  Inc. and became a wholly-owned  subsidiary of the
Company.  Upon the completion of the Merger,  the stockholders of ACT controlled
approximately  77% of the merged entity.  The Merger has been accounted for as a
reverse purchase with ACT being the accounting acquirer.

                                       17
<PAGE>

         The operations of the Company include the historical  operations of ACT
and the operations of ISI from February 15, 2006.

LIQUIDITY AND CAPITAL RESOURCES

         During the quarter ended June 30, 2007, the Company  received  $350,000
from a stockholder  of the Company and issued a note,  with interest at the rate
of 10% per annum, due May 23, 2008. The Company received an additional  $150,000
from the same  stockholder  after the end of the quarter ended June 30, 2007, on
the  same  terms.  See  Note 4 of  Notes  to  Consolidated  Condensed  Financial
Statements.

         On  February  23,  2007,  the  Company  sold to an  existing  investor,
$1,000,000  principal amount of a secured  convertible note, bearing interest at
the rate of 10% per annum and due  November 16,  2007.  The note is  convertible
into  10,000,000  shares of common  stock and is secured by all of the assets of
the Company.  The investor also received warrants to purchase  10,000,000 shares
of common stock at an exercise price of $.12 per share.  After fees and expenses
of $25,000,  the Company received net proceeds of $975,000.  See Note 4 of Notes
to Consolidated Condensed Financial Statements.

         At June 30, 2007,  the Company had  approximately  $209,000 in cash and
cash  equivalents.  Until  utilized,  such cash and cash  equivalents  are being
invested  principally  in short-term  interest-bearing  investments.  Management
believes that current cash resources will be insufficient to fund its operations
for the next twelve months.  Management is attempting to continue to finance the
Company's  operations  by (i) a private  or public  placement  of equity or debt
securities,  (ii)  licensing its human  pluripotent  stem cells  (PluricellsTM),
(iii) increasing sales of its ACTIVTox products, and (iv) reducing expenditures.
However, it is uncertain as to whether the Company will be able to achieve these
objectives.  Insufficient funds will require the Company to curtail or terminate
its activities.  These factors,  among others, raise substantial doubt about the
Company's ability to continue as a going concern.

         The Company's Common Stock is traded in the over-the-counter market and
quoted on the OTC Bulletin  Board,  which may have a material  adverse effect on
the  liquidity  of its  Common  Stock and on its  ability  to obtain  additional
financing.

RESULTS OF OPERATIONS

         SIX MONTHS ENDED JUNE 30, 2007 VERSUS SIX MONTHS ENDED JUNE 30, 2006

         For the six months ended June 30, 2007 (the "2007 Period") and June 30,
2006 (the "2006  Period"),  the Company  recorded  total revenue of $106,516 and
$36,560,  respectively.  For the 2007 Period, the increase in total revenues was
primarily due to contract research.

         General and  administrative  expenses consist primarily of (i) salaries
and wages, (ii) legal,  professional and consulting fees, and (iii) equity-based
compensation.  For the 2007 Period,  general and  administrative  expenses  were
$2,229,368  as  compared  to  $6,691,734  for the 2006  Period.  The 2007 Period
included a recovery  of  $125,000  related to a loan  written  off in an earlier
year. The 2006 Period expenses include (i) equity-based  compensation charges of
$3,995,000, and (ii) expenses of $892,508 of expenses related to the Merger.

         Research and development  expenses for the 2007 Period were $756,246 as
compared to $248,248 in the 2006 Period.  The research and development  incurred
in the 2007 Period related to Company's stem cell program and ACTIVTox  program.
The increase for the 2007 Period was due to the substantially improved liquidity
of the Company.

                                       18
<PAGE>

         Interest  expense  for the 2007  Period was  $2,100,206  as compared to
$2,564,646 for the 2006 Period.  The 2006 Period included  $1,794,375 related to
the  beneficial  conversion  feature  of the  notes of the  Company  which  were
exchanged  for Series 1 Preferred  and  Warrants.  The 2007 Period  included (i)
accretion  of debt  discount  in the amount of  $1,431,715  related to the notes
payable and (ii) the amortization of deferred financing costs of $474,666.

         During the 2007  Period,  the Company  recorded a reduction in the fair
value of the derivative instrument liability of $1,400,000.

         During the 2007 Period,  the Company  recorded a charge  related to the
Eaglestone debt of $1,200,000.

         Depreciation  and  amortization  for the 2007  Period was  $541,641  as
compared to $353,698  for the 2006  Period.  The increase in the 2007 Period was
attributable to amortization related to the patents acquired from Plurion in the
Merger.

         As a  result  of the  foregoing,  the  Company  incurred  a net loss of
$5,320,945 for the 2007 Period as compared to a net loss of $9,821,766.

         THREE  MONTHS  ENDED JUNE 30, 2007 VERSUS  THREE  MONTHS ENDED JUNE 30,
2006

         For the three months  ended June 30, 2007 (the "2007  Period") and June
30, 2006 (the "2006 Period"),  the Company recorded total revenue of $19,942 and
$25,485,  respectively. For the 2006 Period, the total revenues included royalty
income of  $10,282.  See Note 10 of Notes to  Consolidated  Condensed  Financial
Statements.

         General and  administrative  expenses consist primarily of (i) salaries
and wages, (ii) legal,  professional and consulting fees, and (iii) equity-based
compensation.  For the 2007 Period,  general and  administrative  expenses  were
$1,030,855 as compared to $1,017,158  for the 2006 Period.  The 2007 Period also
included a recovery  of  $125,000  related to a loan  written  off in an earlier
year.

         Research and development  expenses for the 2007 Period were $443,890 as
compared to $189,540 in the 2006 Period.  The research and development  incurred
in the 2007 Period related to Company's stem cell program and ACTIVTox  program.
The increase for the 2007 Period was due to the substantially improved liquidity
of the Company.

         Interest  expense  for the 2007  Period was  $1,023,048  as compared to
$546,774 for the 2006  Period.  The 2007 Period  included (i)  accretion of debt
discount  in the amount of  $677,615  related to the notes  payable and (ii) the
amortization of deferred financing costs of $241,210.

         During the 2007  Period,  the Company  recorded a reduction in the fair
value of the derivative instrument liability of $600,000.

         During the 2007 Period,  the Company  recorded a charge  related to the
Eaglestone debt of $1,200,000.

         Depreciation  and  amortization  for the 2007  Period was  $266,885  as
compared to $234,191  for the 2006  Period.  The increase in the 2007 Period was
attributable to amortization related to the patents acquired from Plurion in the
Merger.

                                       19
<PAGE>

         As a  result  of the  foregoing,  the  Company  incurred  a net loss of
$3,344,736 for the 2007 Period as compared to a net loss of $1,962,178.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In February  2007,  the  Financial  Accounting  Standards  Board (FASB)
issued  Statement of Financial  Accounting  Standards  (SFAS) No. 159, "The Fair
Value  Option for  Financial  Assets and  Financial  Liabilities,  Including  an
Amendment of FASB Statement No. 115," which will become  effective in 2008. SFAS
No.  159  permits  entities  to measure  eligible  financial  assets,  financial
liabilities and firm  commitments at fair value, on an  instrument-by-instrument
basis,  that are otherwise not permitted to be accounted for at fair value under
other  generally  accepted  accounting  principles.  The fair value  measurement
election is irrevocable and subsequent changes in fair value must be recorded in
earnings.  The  Company  will adopt this  Statement  in fiscal  year 2008 and is
assessing  SFAS No. 159 and have not yet determined the impact that the adoption
of SFAS No. 159 will have on its consolidated financial statements.

         In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting
for Defined  Benefit Pension and Other  Postretirement  Plans -- An Amendment of
FASB  Statements 87, 88, 106 and 132 (R)". SFAS No. 158 requires the recognition
of an  asset  for  a  plan's  overfunded  status  or a  liability  for a  plan's
underfunded  status in the statement of financial  position,  measurement of the
funded  status of a plan as of the date of its  year-end  statement of financial
position and  recognition  for changes in the funded status of a defined benefit
postretirement  plan in the year in which the changes  occur as a  component  of
other  comprehensive  income. The Company adopted the provisions of SFAS No. 158
in the  first  quarter  of 2007.  The  adoption  of SFAS No.  158 did not have a
material effect on the Company's consolidated financial statements.

         In  September  2006,  the FASB  finalized  SFAS No.  157,  "Fair  Value
Measurements"  which will become effective in 2008. This Statement  defines fair
value,  establishes a framework for measuring fair value and expands disclosures
about fair value  measurements;  however, it does not require any new fair value
measurements.  The provisions of SFAS No. 157 will be applied  prospectively  to
fair value measurements and disclosures  beginning in the first quarter of 2008.
The  Company  is  evaluating  the  impact  of SFAS No.  157 on its  consolidated
financial statements.

         In the  first  quarter  of 2007,  the  Company  adopted  SFAS No.  156,
"Accounting  for Servicing of Financial  Assets--an  amendment of FASB Statement
No.  140," that  provides  guidance  on  accounting  for  separately  recognized
servicing assets and servicing liabilities. In accordance with the provisions of
SFAS No. 156, separately  recognized servicing assets and servicing  liabilities
must be initially measured at fair value, if practicable.  Subsequent to initial
recognition,  the  Company  may use either the  amortization  method or the fair
value  measurement   method  to  account  for  servicing  assets  and  servicing
liabilities  within the scope of this Statement.  The adoption of this Statement
did  not  have  a  material  effect  on  the  Company's  consolidated  financial
statements.

         In the  first  quarter  of 2007,  the  Company  adopted  SFAS No.  155,
"Accounting  for Certain  Hybrid  Financial  Instruments--an  amendment  of FASB
Statements  No. 133 and 140," which  permits  fair value  remeasurement  for any
hybrid financial  instrument that contains an embedded derivative that otherwise
would require  bifurcation  in accordance  with the  provisions of SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging Activities." The adoption of
this  Statement  did not have a material  effect on the  Company's  consolidated
financial statements.

                                       20
<PAGE>

         The  Company  adopted  FASB  Interpretation  No.  48,  "Accounting  for
Uncertainty in Income Taxes -- an Interpretation of FASB Statement No. 109" (FIN
48) on January 1, 2007.  FIN 48  clarifies  the  accounting  and  reporting  for
uncertainties in income tax law. This Interpretation  prescribes a comprehensive
model for the financial  statement  recognition,  measurement,  presentation and
disclosure of uncertain  tax  positions  taken or expected to be taken in income
tax  returns.  The  adoption  of FIN 48 did not have a  material  effect  on the
Company's consolidated  financial statements.  The tax years 2003-2006 generally
remain  open to  examination  by the  major  taxing  jurisdictions  to which the
Company is  subject.  However,  the  Company  utilized a net  operating  loss of
approximately  $0.4  million  in its 2004 tax year that was  generated  in 1989.
Thus,  the  1989 tax year  remains  open to  examination  to the  extent  of the
utilization.  Furthermore,  the  Company  has the  opportunity  to  utilize  net
operating  losses  generated  from the 1992  through  2002 tax years  that could
potentially  open up those  years to  examination  to the  extent  that such net
operating losses are utilized in the future.

CAUTIONARY STATEMENTS

Cautionary   Statement  Pursuant  to  Safe  Harbor  Provisions  of  the  Private
Securities Litigation Reform Act of 1995:

         Except  for the  historical  information  presented  in this  document,
including financial  information for the six months ended June 30, 2007 and June
30, 2006,  this  Quarterly  Report on Form 10-QSB,  including  the item entitled
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  and documents and information  incorporated by reference into this
Quarterly  Report on Form 10-QSB contain  "forward-looking  statements" (as such
term is defined in the Private Securities  Litigation Reform Act of 1995). These
statements  are  identified by the use of  forward-looking  terminology  such as
"believes",   "plans",   "intend",   "scheduled",    "potential",    "continue",
"estimates", "hopes", "goal", "objective",  expects", "may", "will", "should" or
"anticipates" or the negative thereof or other variations  thereon or comparable
terminology, or by discussions of strategy that involve risks and uncertainties.
The safe harbor  provisions  of Section 21E of the  Securities  Exchange  Act of
1934,  as amended,  and Section 27A of the  Securities  Act of 1933, as amended,
apply to forward-looking statements made by us.

         We caution you that no statements contained in this Quarterly Report on
Form  10-QSB  should  be  construed  as  a  guarantee  or  assurance  of  future
performance  or results.  These  forward-looking  statements  involve  risks and
uncertainties,  including those identified  within this Form 10-QSB.  The actual
results  that  we  achieve  may  differ  materially  from  any   forward-looking
statements due to such risks and uncertainties. These forward-looking statements
are based on current  expectations,  and we assume no  obligation to update this
information.   We  urge  you  to  carefully  review  and  consider  the  various
disclosures  made by us in this Form  10-QSB that  attempt to advise  interested
parties of the risks and factors that may affect our business and the market for
our stock.

Item 3.  Controls and Procedures

         The Company's management, including the Chief Executive Officer and the
Chief  Financial  Officer,   have  conducted  an  evaluation  of  the  Company's
disclosure  controls and  procedures as of the end of the period covered by this
report and have concluded  that these controls and procedures  were effective to
provide  reasonable  assurance that the information  required to be disclosed by
the Company in the reports the  Company  files or submits  under the  Securities
Exchange Act of 1934 is recorded, processed,  summarized and reported within the
time periods  specified in the SEC's rules and forms, and to provide  reasonable
assurance  that  information  required  to be  disclosed  by the Company in such
reports is accumulated and communicated to the Company's  management,  including
its Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding the required disclosure.

         There  have  been no  significant  changes  in  internal  control  over
financial reporting, for the period covered by this report, that have materially
affected or are reasonably likely to materially  affect,  the Company's internal
control over financial reporting.

                                       21
<PAGE>

                  STEM CELL INNOVATIONS, INC. AND SUBSIDIARIES

                           PART II. OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

                  None.

ITEM 2.           UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

                  None.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

                  None.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  None.

ITEM 5.           OTHER INFORMATION

                  On June 28, 2007,  the Company  received a comment letter from
the Securities and Exchange  Commission.  The sole comment in the letter related
to the Company's  accounting  with respect to its  obligations due to Eaglestone
Investment  Partners,  L.P.  See  Note  4 of  Notes  to  Consolidated  Condensed
Financial  Statements.  The Company carried the $6 million of obligations due to
Eaglestone  in July  2009 at $4.8  million,  which  was the  amount at which the
Company  had the right to defease  such  obligations  prior to May 14,  2007 and
disclosed  the  consequences  to not repaying the  obligations  prior to May 14,
2007. The Company has responded to the comment letter.

ITEM 6.           EXHIBITS

                  31.1  Certification  of  Chief  Executive  Officer  and  Chief
Financial Officer of the Company

                  32.1  Certification  of  Chief  Executive  Officer  and  Chief
Financial  Officer of the Company pursuant to 18 U.S.C.  Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                       22
<PAGE>

                           STEM CELL INNOVATIONS, INC.

                                  June 30, 2007

                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  in its  behalf by the
undersigned thereunto duly authorized.


                                                     STEM CELL INNOVATIONS, INC.


DATE:  August 14, 2007                               By: /s/ Dr. James H. Kelly
                                                         -----------------------
                                                         Chief Executive
                                                         and Chief Financial
                                                         Officer

                                       23