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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549





FORM 10-K/A

Amendment 2







|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | -------------------------------------------------------------------------------

For the fiscal year ended March 31, 2008



| ̈ | 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

000-51931





Stem Cell Therapy
International, Inc.

(Exact Name of Registrant as Specified in Charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Nevada                                                         |  | 88-0374180                             
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification Number)

2203 N. Lois Avenue, 9th Floor, Tampa, FL 33607

(Address of Principal Executive Offices)

(813) 600-4088

(Registrants Telephone Number, Including Area Code)





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     ̈  YES    x  NO

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.     ̈  YES    x  NO

Check whether the issuer (1) 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.    x  YES     ̈  NO

Check if no disclosure of
delinquent filers in response to Item 405 of Regulation S-B is contained in this form, and no disclosure will be contained, to the best of registrants knowledge, in definitive proxy of information statements incorporated by reference in
Part III of this Form 10-K/A or any amendment to this Form 10-K/A  x

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act)     ̈  YES    x  NO

Aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates of the registrant at March 31, 2008, was $3,069,028 based upon the closing sale price of $0.075 or the Registrants common
stock, $.001 par value, as reported by the National Association of Securities Dealers OTC Bulletin Board on July 10, 2008.

There were 40,920,369
shares of the Registrants $.001 par value common stock outstanding as of March 31, 2008.

Transitional Small Business Format (check
one)    Yes   ̈    NO  x









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EXPLANATORY NOTE



The Company has filed the attached Form 10-K/A Amendment No. 2 in response to an SEC Comment Letter dated January 7, 2009.



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STEM CELL THERAPY INTERNATIONAL, INC.

FORM 10-K/A INDEX



|         |  |                                                                                                                  |  |    
|-------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ---
|Part I   |  |                                                                                                                  |  |    
|         |  |                                                                                                                 
|Item 1.  |  | Description of Business                                                                                          |  | 3  
|         |  |                                                                                                                 
|Item 1A. |  | Risk Factors                                                                                                     |  | 20 
|         |  |                                                                                                                 
|Item 2.  |  | Description of Property                                                                                          |  | 23 
|         |  |                                                                                                                 
|Item 3.  |  | Legal Proceedings                                                                                                |  | 23 
|         |  |                                                                                                                 
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                              |  | 24 
|         |  |                                                                                                                 
|Part II  |  |                                                                                                                  |  |    
|         |  |                                                                                                                 
|Item 5.  |  | Market for Common Equity and Related Stockholder Matters                                                         |  | 24 
|         |  |                                                                                                                 
|Item 6.  |  | Managements Discussion and Analysis                                                                             |  | 25 
|         |  |                                                                                                                 
|Item 7.  |  | Consolidated Financial Statements                                                                                |  | F-1
|         |  |                                                                                                                 
|Item 8.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                             |  | 31 
|         |  |                                                                                                                 
|Item 8A. |  | Controls and Procedures                                                                                          |  | 31 
|         |  |                                                                                                                 
|Item 8B  |  | Other Information                                                                                                |  | 32 
|         |  |                                                                                                                 
|Part III |  |                                                                                                                  |  |    
|         |  |                                                                                                                 
|Item 9.  |  | Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act |  | 32 
|         |  |                                                                                                                 
|Item 10. |  | Executive Compensation                                                                                           |  | 34 
|         |  |                                                                                                                 
|Item 11. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                   |  | 35 
|         |  |                                                                                                                 
|Item 12. |  | Certain Relationships and Related Transactions                                                                   |  | 37 
|         |  |                                                                                                                 
|Item 13. |  | Exhibits and Reports on Form 8-K                                                                                 |  | 37 
|         |  |                                                                                                                 
|Item 14. |  | Principal Accountants Fees and Services                                                                          |  | 38 



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STEM CELL THERAPY INTERNATIONAL, INC.

This Annual Report on Form 10-K/A and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are based on current expectations, estimates and projections about Stem Cell Therapy International, Inc.s industry, management beliefs, and assumptions made by management. Words such as
anticipates, expects, intends, plans, believes, seeks, estimates, variations of such words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results and outcomes may differ materially from what is expressed
or forecasted in any such forward-looking statements.

PART I



|ITEM 1. | DESCRIPTION OF BUSINESS
|------- | -----------------------

COMPANY HISTORY

Stem Cell Therapy International, Inc. (the Company) has been engaged in the licensing of stem cell technology, the sale of stem cell products,
and the referral of patients to affiliated stem cell clinics through its wholly-owned subsidiary Stem Cell Therapy International Corp (Stem Cell Florida), which the Company acquired in 2005. The complete history of the Company and
its operating subsidiary is as follows:

The Companys operating subsidiary is Stem Cell Florida. Stem Cell Florida was incorporated
in Nevada on December 2, 2004, with the primary purpose of establishing stem cell transplantation clinics and stem cell marketing. Prior to the reverse acquisition, as discussed below, and since inception, Stem Cell Florida was a development
stage company whose activities had been limited to raising capital, organizational matters, and the structuring of its business plan. Stem Cell Florida remains in a developmental stage, as the Company continues to focus primarily on developing its
business strategy and financing the Company.

The Company was originally incorporated in Nevada on December 28, 1992 as Arklow
Associates, Inc. On March 20, 1997, the Company changed its name to The Ultimate Cigar Company, Inc. On July 22, 1999, the Company changed its name to Ultimate Direct, Inc. On January 11, 2005, the Company changed its name to
Altadyne, Inc.

On March 20, 2005, R Capital Partners, Inc., a Nevada Corporation (R Capital), acquired the Company (then
Altadyne, Inc., a shell company).

On September 1, 2005, R Capital, Stem Cell Florida, and the Company (then Altadyne, Inc.) entered
into a Reorganization and Stock Purchase Agreement. At that point, the Company had no assets, liabilities or ongoing operations. Pursuant to the agreement, Altadyne acquired 100% of the issued and outstanding shares of common stock of Stem Cell
Florida in a non-cash transaction and Stem Cell Florida became a wholly-owned subsidiary of Altadyne. As consideration for 100% of the shares of Stem Cell Florida, the shareholders of Stem Cell Florida acquired (1) shares newly issued by the
Company (then Altadyne, Inc.), and (2) certain shares transferred by R Capital. Of the 22,500,000 shares originally held by R Capital, R Capital retained 4,349,196 shares and transferred 4,000,000 shares to finders unaffiliated with R Capital.
R Capital transferred the remaining 14,150,804 shares held by it to the shareholders of Stem Cell Florida and others. In addition, the Company issued 11,030,000 new shares to the shareholders of Stem Cell Florida and others. The recipients of these
25,180,804 shares include the shareholders of Stem Cell Florida, unaffiliated consultants in exchange for services, and members of the Presidents family in exchange for a reduction in debt owed to the President.

As a result of this transaction, Stem Cell Florida became a wholly owned subsidiary of the Company (then Altadyne, Inc.), and the shareholders of Stem
Cell Florida became shareholders of the Company. The Company assumed operation of the business of Stem Cell Florida, which was to establish stem cell therapy clinics and stem cell marketing. On October 5, 2005, the Company changed its name to
Stem Cell Therapy International, Inc. to reflect the new business of the Company.



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On March 10, 2008, the Company entered into a Reorganization and Stock Purchase Agreement and its
amendments (the Agreement) with Histostem Co., Ltd., a Korean company (Histostem). Pursuant to the Agreement (as subsequently amended), the Company will acquire 90% of the issued and outstanding stock of Histostem, and
Histostems shareholders will acquire a controlling interest in the Company. The original definitive agreement called for closing of the acquisition by April 30, 2008. Subsequent to Closing, the Company will be held approximately 60% by
Histostem and 40% by the existing shareholders of the Company. Upon completion of the acquisition, the Company will be renamed AmStem International Corp., increase the authorized number of shares to 500,000,000 and seek a new symbol on the
over-the-counter bulletin board.

On April 22, 2008, the Company amended the Agreement to state that Histostem shall have received
funding at the date of the actual closing at a minimum of 2 million dollars towards the initial round of funding of at least 10 million dollars. Subsequent to that amendment, the actual closing deadline of April 30, 2008 was no longer
in effect.

On June 19, 2008, the Company entered into a second Amendment to the Reorganization and Stock Purchase Agreement. In
accordance with the terms of this second Amendment, the Company and Histostem issued and delivered shares reflecting the acquisition of Histostem into Escrow by the Company pending resolution of outstanding litigation between Histostem Korea and
Histostem, Inc. (a United States corporation unrelated to Histostem) (Histostem USA). This essentially effectuates an immediate closing of the Histostem acquisition. In the Amendment the parties also agreed to complete a one for three
reverse stock split of the Companys common stock. That reverse stock split will be completed after filing, mailing and completion of a 14C Information Statement to the Companys shareholders and appropriate notice and filings with the
NASD.

COMPANY AND BUSINESS OVERVIEW

The
Companys executive management team are: David Stark, President; Andrew J. Norstrud, Chief Financial Officer; and Lixian Jiang, Chief Operating Officer and Patent Trademark Counsel.

We have been indirectly involved, as a middle man, in research and development and practical application within the field of regenerative
medicine. SCTI provides allo (human) stem cell biological solutions that are currently being used in the treatment of patients suffering from degenerative disorders of the human body.

Our mission has been to make available our stem cell products to treatment facilities around the world, so that patients suffering from biological and
neurological disorders, previously deemed incurable by traditional medicine, may find a solution to their disabling and crippling conditions within the new field of stem cell transplantation therapy. Our products include solutions containing allo
stem cell biological solutions, adult stem cells (stem cells that remain undifferentiated in a mature organism) and stem cells which are extracted from umbilical cord blood.

Members of our U.S. and European Medical and Scientific Advisory Boards review each patients condition and medical history. They establish an
individual treatment protocol for each patient that includes the appropriate stem cell transplantation therapy, the number of stem cell doses required, special diet and lifestyle recommendations as well as physical therapy and specific exercise and
recovery programs. There are no set criteria to determine these questions; the members of each Board use their professional expertise and judgment to determine the treatment protocol on a case by case basis. The Boards consist of independent
consultants.

Stem cell transplantation therapy is a field of medicine which uses techniques and technologies that rely on replacing
diseased, damaged or dysfunctional cells with healthy, functioning ones. This therapy is similar to the process of organ transplantation where the treatment only consists of the transplantation of allo stem cells into the body rather than entire
organs, thus eliminating any chance of rejection, or the need for expensive and potentially dangerous immune suppression drug therapy (the use of drug therapy to suppress the immune system, in order to prevent the immune system from attacking a
transplanted organ). See Mayo Clinic Medical Services, Stem Cell Transplant, at www.mayoclinic.com/health/stem-cell-transplant/CA00067.

These new techniques are being applied to potentially finding a cure for a wide range of human disorders, including neurological diseases such as Alzheimers, Parkinsons Disease, ALS (which is also commonly known as Lou
Gehrigs disease), leukemia, muscular dystrophy, multiple sclerosis, arthritis, spinal cord injuries, brain injury, stroke, heart disease, liver and retinal disease, diabetes as well as certain types of cancer and can alleviate the side effects
of chemotherapy. See List of Diseases Potentially Treated by the Companys Technology below for a more complete discussion.



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Since 1981, the study and production of biological preparations from animal and human cells were being
carried out within the framework of the scientific programs under the aegis of the National Academy of Sciences, the Medical Academy of Sciences, the Ministry of Public Health and the Coordination Center for Organ, Tissue, and Cells Transplantation
within the Ukraine Ministry of Public Health. The applications of biological stem cell preparations have been sanctioned by the Ministry of Public Health of the Ukraine since 1991 (The end of communist control in the Ukraine). See P. Filaroski,
ALS Victim Hunts for Cure in Ukraine Clinic Offers Hope in Stem Cell Treatment, The Florida Union-Times, July 17, 2002.

We also have affiliate treatment facilities in Tijuana, Mexico and Shenzhen, China.

The Companys offices are presently
located at 2203 N Lois Ave 9th Floor, Tampa, FL 33607. The Companys website is HTTP://WWW.SCTICORP.COM.

PRINCIPAL PRODUCTS AND SERVICES

We do not directly offer any medical advise, diagnosis or treatment involving Stem Cells, and we do not create stem cells. Instead, we essentially act
as a middle man between stem cell product suppliers, clinics, and patients.

To date, we have referred patients for treatment
to facilities in Kiev, Ukraine, Tijuana, Mexico and Shenzhen, China. All of these clinics are independently owned and operated by the treating physicians at each location. Our involvement is to refer patients for treatment to either facility. We
also purchase the stem cell biological solution used for the treatment of the patients from each location. Beyond the referral service and the purchase of the stem cell biological solution, we have no involvement or control on how the clinics are
staffed or operated, that function remains with the local treating physicians. These clinics operate independently of our operations, receive patients from sources in addition to our referrals and are controlled by their principals without
management assistance or direction from our operations.

While we may enter into relationships with other facilities in the future, to date
we only have utilized the services of the three independent clinics for referrals of our patients. Since September 2006, all referrals of patients have been to treatment facilities located in Mexico and China.

Accordingly, our primary source of revenue has been derived from: (1) providing referral services, including information and education services, to
patients, and (2) purchasing stem cell products that they will use on the patients that we refer to them. The amount we charge for these services is comparable to other companies providing this type of referral service. We have negotiated with
the treatment facilities we utilize and will negotiate with other future clinics we intend to utilize for the pricing of the biological solution of stem cell materials which we supply to them. The terms and conditions, including any potential volume
discounts, are negotiated on an individual basis.

We have established a Medical and Scientific Board of Advisors (the Advisory Board) who
act as consultants and whose responsibility is to determine any potential patients medical condition based on specific medical test results and other information that is provided by the patients treating physician. These consultants are
neurosurgeons, M.D.s, Ph.D.s, scientists and research fellows, all of whom are currently working in the field of stem cell treatment and research. The Advisory Board determines the viability of the stem cell transplantation therapy for
each potential patient and whether or not the potential patient will benefit from stem cell treatment. If the Advisory Board determines that a patients condition will not improve upon receiving the stem cell transplantation, then the patient
is not accepted for treatment. However, if the Advisory Board determines that the patient may benefit from stem cell transplantation, then management, the Advisory Board and the patient determine which treatment facility will provide the best
possible treatment for the patients condition. Each member of the Advisory Board received a one-time award of 10,000 shares of restricted common stock as compensation for the services provided to the Company. These shares are awarded without
regard to how many patients are recommended for stem cell therapy, if any. Management believes that it has recruited industry respected individuals to form the Advisory Board and encourages those members to recommend only what is in the best
interest of each patient. A potential conflict of interest may exist as the members of the Advisory Board are compensated with restricted common stock and the value of that



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common stock may be influenced by the number of patient procedures recommended by the Advisory Board. In addition, two members of the Advisory Board are
located in Mexico and provide treatment services to patients, which could result in an additional conflict of interest.

In addition, some
members of the Advisory Board are requested to perform additional services, such as evaluating new technologies and products that are available for stem cell treatment. In exchange for these services, these members are compensated with additional
shares of restricted common stock equivalent in value to the services provided, as determined by the Companys management.

Although
the market for our services is in its infancy and still developing, the potential market includes any person with a disease or injury that becomes treatable by stem cell therapy. Thus, our market depends largely on the Research and Development
efforts of our affiliates and others from which we may obtain licenses in the future.

Information, Education and Referral Services

Through our website and organizations like the StrokeNetwork.org, DifferentStrokes.org, the MS Society, we have a worldwide referral network of potential
patients seeking stem cell treatment. We offer information, education and referral services for those individuals with degenerative conditions seeking stem cell and related therapies in a lawful jurisdiction outside of the United States.

Sales of Stem Cell Products

Once we have referred
patients to an affiliated clinic, we supply that clinic with the stem cell products that they will use on the referred patients which is acquired from local stem cell manufacturers. Our principal stem cell products are solutions containing allo stem
cell biological solutions, either adult stem cells or stem cells which are extracted from umbilical cord blood. We do not directly collect, culture or clone stem cell lines. We provide stem cell products and technology to clinics in Mexico and China
(although we may have future affiliations), which are highly specialized, professional medical treatment facilities around the world in locations where Stem Cell Transplantation therapy is approved by the appropriate local government agencies.

OVERVIEW OF STEM CELLS AND THEIR BENEFITS

Stem Cell Transplantation is a minimal surgical procedure that has been used successfully for more than 70 years as a treatment of many diseases for which modern medicine has had no therapy, or in which traditional therapies stopped being
effective. A documented 5 million patients have already been treated using Stem Cell Transplantation worldwide to-date, evidenced by over 140,000 publications in MEDLINE. For a complete resource on stem cells and stem cell transplantation,
visit www.nlm.nih.gov/medlineplus/stemcellsandstemcell transplantation.html.

Stem cell transplantation is not a wonder
drug, or a transplantation of some wonder cell that will cure everything. The body of every member of the animal kingdom, including man, is built from about 200 kinds of cells, see P. Dasgupta, Much Ado about Stem
Cells, The Statesman SciTech Supplement, Aug. 20, 2001, available at http://cactus.eas.asu.edu/ Partha/columns.htm, and since 1998 the Companys affiliated entities have been able to prepare stem cell transplants and make such transplants
available for patient treatment, without immunosuppression.

This is the result of more than 20 years of ongoing research by many
individuals and companies, and clinical experience with stem cell transplantation in patients suffering from those diseases where physicians recognized that their patient needed an outright transplantation of allo stem cells to replace the dead or
non-functioning cells, or a direct stimulation of regeneration (i.e. repair) of the damaged cells and tissues of various organs.

There are
crucial differences in the mechanism of the action of Stem Cell Transplantation as opposed to traditional drug (chemical) therapy and organ transplantation; Cell transplantation is a vastly different approach to existing medical therapy. Everything
in the living body is in constant motion: electrons, protons, and other elementary particles of each atom, all atoms, all molecules, all cell organelles (the specialized parts of a cell, analogous to a cells organs), as well as all
fluids, which represent between 75% and 55% of body weight. See University of Massachusetts, Amherst Dining Services, The Six Basic Nutrients, at



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http://www.umass.edu/diningservices/nutrition/six_basic_nutrients.html. Further, there is electromagnetic radiation associated with all such movement,
a subject almost completely neglected by medical science. The final result of all of this activity is that every cell in your body (with the possible exception of certain neurons) is programmed to die. All cells of our body are being continuously
replaced, albeit each kind with different speed. See generally Christopher Potten and James Wilson, Apoptosis: the Life and Death of Cells, Cambridge University Press (2004) for a complete discussion on the death and replacement of the
bodys cells.

It is common knowledge among the medical community that generally in every disease the principal cells of a diseased
organ die faster than the sick body is able to replace them. When the quantity of principal cells of a diseased organ drops below a certain limit, the organ dies. If it is a vitally important organ, without which one cannot live, such as the heart,
liver or brain, for example, and surgeons cannot replace such a dying organ, the sick organism will die, as well. Current medicine knows of one treatment only when it becomes mandatory to replace dead cells, tissues, or organstransplantation.
Transplantations of organs from human donors, such as heart, kidney, liver, etc., have become fairly common nowadays. See The Future of Organ Transplantations, at http://www.itvisus.com/programs/cemr/press_futureorgan.asp. These are life
saving major surgical procedures, usually done as a treatment of last resort.

Besides the obvious surgical risk, there is
always a problem of rejection. See Transplant Rejection, at http://en.wikipedia.org/wiki/Transplant_rejection. The body of the recipient patient rejecting a transplanted organ from another body is almost always guaranteed as an issue in
transplantation surgery, and the only way to prevent it is by taking immunosuppressants (drugs used to suppress the immune system) for the rest of the patients life. These drugs can stop a rejection for some time, but only at the expense of
serious, often life-endangering, complications. By suppressing the patients immune system it leaves the patient vulnerable to many types of infectious diseases. See Immunosuppression, at http://en.wikipedia.org/wiki/
Immunosuppression.

Some organs cannot be transplanted, such as the brain, spinal cord, eyes, neural system or the immune system, so that
many diseases cannot be treated by organ transplantation. See Whole Body Transplant at http://en.wikipedia.org/wiki/B rain_transfer; Boulder Eye Surgeons, Basic Eye Facts, at
http://www.bouldereyesurgeons.com/basiceyefacts.htm; F. Wilt, Continuation of Discussion of Cloning, at http://mcb.berkeley.edu/courses/mcb31/lect10.html.

Transplantation of bone marrow hematopoitic stem cells was introduced into clinical practice in the 1950s, approximately the same time as the first
successful organ transplantation. See The Fred Hutchison Cancer Research Center, The History of Transplantation, at http://www.fhcrc.org/science/clinical/ltfu/faqs/transplantation.html; The Southeast Tissue Alliance, History of
Organ and Tissue Transplantation, at http://www.donorcare.org/ about_history.html. The Company believes that stem cell transplantation will dominate the medicine of the 21st century. The main reasons for such statements are:

1) Stem cell transplantation is a minor procedure for a patient, (no more than an Intra Muscular injection or an Intra Venus drip like a transfusion) and for that reason
the Company believes it can be, and should be, used in the earlier stages of those diseases that current medicine cannot cure, or even treat. It means that there is no logical reason to wait until the end-stage, as is the case with organ
transplantation, and has been the case with stem cell transplantation until now.

2) One of the reasons why stem cell transplantation is such a simple
procedure for a patient to go through is the principle of homing. Homing means that the respective stem cells do not have to be implanted directly into a damaged organ, (e.g. liver stem cells into liver), they can be implanted into more
accessible superficial tissues, (e.g. under certain connective tissues of an abdominal muscle), because they will find their way into the damaged organ, as if attracted by it. See National Heart, Lung, and Blood Institute, Homing
Determinants in Stem/Progenitor Cells, 25 NIH Guide No. 24 (1996), available at http://grants.nih.gov/grants/guide/rfa-files/RFA-HL-96-020.html.

3) The Company believes that every diseased organ in the human body can be treated by stem cell transplantation.

4) Besides serving as a
replacement for dead cells of a diseased organ, the transplanted cells can bring back to life (or repair) those cells of such organ which actually have not died, just stopped functioning properly as a result of the disease. In other words, besides
transplanting new stem cells there is another mechanism of action of stem cell



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transplantation: a direct stimulation of regeneration (or repair) of existing organs at the cellular level. See O. Lindvall et al., Stem Cells For the
Treatment of Neurological Disorders, 441 Nature 1094 (2006), available at http://www.nature.com/nature/journal/v441/n7097/full/nature04960.html

5)
If stem cells are properly prepared, such as by the methods employed by the Company, they can be implanted without immunosuppression, and thus avoid all complications caused by the use of such medications. For clinical examples of the use of stem
cells without the need for immunosuppression, See Makkar, R. et al., Intramyocardial Injection of Allogenic Bone Marrow-Derived Mesenchymal Stem Cells Without Immunosuppression Preserves Cardiac Function in a Porcine Model of Myocardial
Infarction, 10 J. Cardiovascular Pharmacology & Therapeutics 225 (2005), available at http://cpt.sagepub.com; Johns Hopkins Heart Institute, Stem Cell Therapy Effectively Treats Heart Attacks in Animals, at
http://www.hopkinsmedicine.org/ Press_releases/2004/

WHAT IS STEM CELL TRANSPLANTATION?

Stem cells can be compared to floating voters - they have yet to make up their minds. They are unspecialized cells that can renew themselves indefinitely
and develop into specialized, more mature cells. They have the potential to be useful in repairing or replacing damaged body parts, and the hope is that they could be the basis for future treatments of many diseases, including Alzheimers and
Parkinsons diseases, spinal cord injuries, multiple sclerosis and diabetes.

Stem cells can potentially be derived from several
sources: (1) from embryos while they are still microscopic clusters of cells; (2) from fetal tissue, usually from aborted fetuses; and (3) perhaps with greater technical difficulty, from adult organs, for example from bone marrow
during transplantation. See St. Judes Childrens Research Hospital, Stem Cell Sources, at http://www.stjude.org/stem-cell-trans/0,2527,419_4135_6103,00.html.

Possible sources of embryonic stem cells are embryos left over from fertility treatment that would otherwise be discarded, and specially created embryos.
Embryos could be specially created using standard in vitro fertilization (IVF) techniques, whereby a sperm cell and an egg cell are combined. Other methods are cloning techniques, such as cell nuclear replacement (where the nucleus of an adult cell
is introduced into an unfertilized egg), and parthenogenesis (where an egg cell is activated into commencing development without being fertilized). A potential advantage of cloning is that it could avoid the recognition by the recipients
immune system of the tissue developed from the stem cells as foreign, and rejection of the tissue. Once isolated, stem cells can be cultured and stored. As well as being potentially useful in treating disease (therapeutic cloning), cloned embryos
could be implanted into a woman with a view to the birth of a child (reproductive cloning). See The Royal Society, Stem Cells and Cloning, at http://www.royalsoc.ac.uk/landing.asp?id=1202 for a complete resource on stem cells and
cloning. Neither the Company nor its affiliates have any plans to clone human embryos.

Human embryonic stem cells were successfully
isolated and cultured from embryos in the United States in 1998. These embryos were produced for clinical purposes, and donated for the research. See What is the History of Stem Cell Research? at http://www.allaboutpopular
issues.org/history-of-stem-cell-research-faq.htm.

In summary:



| |  | Stem Cell Transplantation is a surgical procedure that has its origins in bone marrow transplants first performed in the 1950s, and has the potential to treat many
conditions for which modern medicine has had no therapy, or for which state-of-art therapies stopped being effective;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Stem cell transplantation is not a wonder drug;
|- |  | -------------------------------------------------



| |  | Stem cell transplantation directly stimulates repair of the damaged cells of any and all organs and tissues, and replaces dead or non-functioning cells;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Stem cells can be of human (allo-) or animal (xeno-) origin; and
|- |  | ----------------------------------------------------------------



| |  | Stem cell transplantation can be done through implantation by injection, minor or major surgery, or by surface application.
|- |  | ---------------------------------------------------------------------------------------------------------------------------



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ILLUSTRATIONS OF STEM CELLS AND HOW THEY WORK

When an egg is fertilized, the cells start to divide, first into two, then four, eight cells, and more and more cells. Cell division continues, after four
days from fertilization, the conceptus (fertilized, pre-birth entity) becomes a multi-cell ball called a blastocyst. After ten days, the blastocyst will begin to form an embryo. The precursor stem cells of any and all organs or tissues are harvested
along with other members of the cell family from the fetus at 27 days and can be transplanted into a patient to treat a variety of conditions. Stem cells can regenerate into new cells, repairing or replacing the damaged cells. Chemokine Receptors

HEART WITH DAMAGED OR INJURED CELLS (DIAGRAM 2)

HEALTHY STEM
CELLS

Healthy stem cells circulate and are attracted to damaged or injured cells Chemokine Receptors

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BASIC STEM CELL CYCLE

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The following photographs are an example of a topological application of stem cells for burn patients. The patient depicted
in the following graphics was treated by our affiliate clinic in Kiev, which is run by ICT. All photographs of the patient were produced by ICT.

Burn
patients state, before and after stem cell vs. traditional tissue regeneration therapy. (Course of this treatment was 30 days)

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Burn patients condition 30 days after beginning stem cell therapy and tissue regeneration therapy. Stem
cell biological solution applied 10 days prior to picture being taken.

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STEM CELL INDUSTRY CONSIDERATIONS

In the nascent, but rapidly growing field of stem cell therapies, products are a long way from being commercialized. However, the market potential for stem cell therapies products is very large. See generally
Cell Therapy Commercialization: Applying Stem Cell and Related Strategies, Drug and Market Development Publishing, January, 2006.

Much has been made of President Bushs 2001 executive order limiting the use of federal funds for human embryonic stem-cell research. With this absence of federal funding for stem cell research, researchers and stem-cell supporters are
seeking private investment to drive the science and the industry forward.

According to an abundant and diverse body of clinical studies,
scientists believe embryonic stem cells, which can grow and assimilate into any type of body tissue, could eventually provide a unique way to repair damaged or diseased tissue and treat or cure ailments including Parkinsons disease,
Alzheimers, diabetes and even spinal cord injuries. See List of Diseases Potentially Treatable by the Companys Technology, below page 15. Supporters say the laboratory creation and study of these lines, which could number in
the hundreds, is crucial to the advancement of the research.

Private donations have also spurred discovery of new stem-cell lines at
Harvard, which subsequently created the Stem Cell Institute, and the University of Wisconsin, the University of California and Johns Hopkins have all made advancements in stem-cell research.



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According to an editorial published in RED HERRING (Feb 2003), stem cell therapies are poised to capture
what could be the biggest new market to hit biotech in a decade, nearly equal to the whole biotech industry at present. This estimate doesnt even address the market for stem cells capable of repairing damaged vital organs like the brain,
heart, and kidneys.

Californias Proposition 71 currently allocates $3 billion funding for stem cell research and development. Other
states are rapidly following suit. On April 7, 2006, for example, the governor of Maryland signed a new bill into law setting aside $15 million for stem cell research.

According to the website of the U.S. NIDDK (National Institute of Diabetes, Digestive & Kidney Diseases) 18.2 million people - 6.3% of the
population - suffer from diabetes mellitus in the U.S. in 2000 and over 194 million globally.

LIST OF DISEASES POTENTIALLY TREATED BY THE
COMPANYS TECHNOLOGY:

Together with independent clinical research studies, our affiliates successful clinical results with about
thirty patients, which the company considers quite an adequate number considering the developmental stage our industry is in, have demonstrated several categories of diseases that potentially can be cured or otherwise treated by the use of stem cell
transplantation therapy.

The following is a non-exhaustive list of diseases that have either actually been treated with stem cell therapy,
or have had positive clinical results that indicate that the disease may be treatable in the not-so-distant future:

Cancers and other Malignant Growths



| |  |  | Acute and Chronic Leukemia
| | - |  | --------------------------



| |  |  | Myelodysplastic Syndromes (Pre-Leukemia)
| | - |  | ----------------------------------------



| |  |  | Hodgkins Disease and other Lymphomas
| | - |  | -------------------------------------



| |  |  | Neuroblastoma
| | - |  | -------------



| |  |  | Brain Tumors
| | - |  | ------------



| |  |  | Ewing Sarcoma
| | - |  | -------------



| |  |  | Ovarian Cancer
| | - |  | --------------



| |  |  | Renal Cell Carcinoma
| | - |  | --------------------



| |  |  | Small-Cell Lung Cancer
| | - |  | ----------------------



| |  |  | Testicular Cancer
| | - |  | -----------------

Sources:
Family Cord Blood Services, Stem Cell Applications, at http://www.familycordbloodservices.com/applications_list.cfm (hereinafter FCBS); Cord Blood Registry, Current Stem Cell Applications, at
http://www.cordblood.com/cord_blood_banking_with_ cbr/banking/diseases_treated.asp (hereinafter CBR); Czyz, J. et al., Outcome and Prognostic Factors in Advanced Hodgkins Disease Treated with High-Dose Chemotherapy and
Autologous Stem Cell Transplantation: a Study of 341 Patients 15 ANNALS OF ONCOLOGY 1222 (2004), available at http://annonc.oxfordjournals.org.

Immunodeficiencies



| |  |  | Autoimmune Diseases
| | - |  | -------------------



| |  |  | HIV/AIDs
| | - |  | --------



| |  |  | Multiple Sclerosis
| | - |  | ------------------



| |  |  | Rheumatoid Arthritis
| | - |  | --------------------



| |  |  | Systemic Lupus Erythematosus
| | - |  | ----------------------------



| |  |  | Histiocytic Disorders
| | - |  | ---------------------



| |  |  | Familial Erythrophagocytic Lymphohistiocytosis
| | - |  | ----------------------------------------------



| |  |  | Hemophagocytosis
| | - |  | ----------------



| |  |  | Histiocytosis-X
| | - |  | ---------------



| |  |  | Langerhans Cell Histiocytosis
| | - |  | ------------------------------



| |  |  | Congenital Immunodeficiencies
| | - |  | -----------------------------



| |  |  | Absense of T & B Cells
| | - |  | ----------------------



| |  |  | Absense of T Cells
| | - |  | ------------------



| |  |  | Ataxia-Telangiectasia
| | - |  | ---------------------



| |  |  | Bare Lymphocyte Syndrome
| | - |  | ------------------------



| |  |  | Common Variable Immunodeficiency
| | - |  | --------------------------------



| |  |  | DiGeorge Syndrome
| | - |  | -----------------



| |  |  | Kostmann Syndrome
| | - |  | -----------------



| |  |  | Leukocyte Adhesion Deficiency
| | - |  | -----------------------------



| |  |  | Omenns Syndrome
| | - |  | ----------------



| |  |  | Severe Combined Immunodeficiency
| | - |  | --------------------------------



| |  |  | Wiskott-Aldrich Syndrome
| | - |  | ------------------------



| |  |  | X-Linked Lympho-proliferative Disorder
| | - |  | --------------------------------------



| |  |  | Other Immune Disorders
| | - |  | ----------------------



| |  |  | Neutrophil Actin Dysgenesis
| | - |  | ---------------------------



| |  |  | Reticular Dysgenesis
| | - |  | --------------------



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| |  |  | Chediak-Higashi Syndrome
| | - |  | ------------------------



| |  |  | Chronic Granulomatous disease
| | - |  | -----------------------------

Sources: CBR; FCBS; Hearthstone Communications, Ltd., Womens Health Information: Diseases Treated by Cord Blood, (2006) at http://www.womens-health.co.uk/diseases_treated.html (hereinafter
Hearthstone); E. Rivero, UCLA AIDS and Stem Cell Researchers Discover Way to Develop T-cells From Human Embryonic Stem Cells, Raising Hopes for a Gene Therapy to Combat AIDS, UCLA NEWS, July 3, 2006,
available at http://www.newsroom.ucla.edu; Z. Galic, et al., T lineage Differentiation from Human Embryonic Stem Cells, PROC. NATL. ACAD. SCI. (2006), published online
before print at http://www.pnas.org; R. Burt et al., Hematopoietic Stem Cell Transplantation: A New Therapy for Autoimmune Disease 4 THE ONCOLOGIST 77 (1999), available athttp://alphamedpress.org.

Metabolic Diseases



| |  |  | Endocrine Diseases:
| | - |  | -------------------



| |  |  | Diabetes Type 1 & 2
| | - |  | -------------------



| |  |  | Diabetic complications
| | - |  | ----------------------



| |  |  | Hypothyroidism
| | - |  | --------------



| |  |  | Suprarenal insufficiency
| | - |  | ------------------------



| |  |  | Cystic Fibrosis
| | - |  | ---------------



| |  |  | Leukodystrophy:
| | - |  | ---------------



| |  |  | Krabbes Disease (globoid cell leukodystrophy)
| | - |  | ----------------------------------------------



| |  |  | Adrenoleukodystrophy
| | - |  | --------------------



| |  |  | Metachromatic Leukodystrophy
| | - |  | ----------------------------



| |  |  | Gauchers disease
| | - |  | -----------------



| |  |  | Niemann-Pick Disease
| | - |  | --------------------



| |  |  | Mucoplysaccharide Deficiencies:
| | - |  | -------------------------------



| |  |  | Mucopolysaccharidoses (MPS)
| | - |  | ---------------------------



| |  |  | Hurlers Syndrome (MPS-IH)
| | - |  | --------------------------



| |  |  | Scheie Syndrome (MPS-IS)
| | - |  | ------------------------



| |  |  | Hunters Syndrome (MPS-II)
| | - |  | --------------------------



| |  |  | Sanfilippo Syndrome (MPS-III)
| | - |  | -----------------------------



| |  |  | Morquio Syndrome (MPS-IV)
| | - |  | -------------------------



| |  |  | Maroteaux-Lamy Syndrome (MPS-VI)
| | - |  | --------------------------------



| |  |  | Sly Syndrome, Beta-Glucuronidase Deficiency (MPS-VII)
| | - |  | -----------------------------------------------------

Sources:CBR; Hearthstone; D. Castillo, In Stem Cells, Researchers see Hope for Cures MISSOURIAN NEWS, April 28, 2006, available at
http://www.columbiamissourian.com/news/story.php?ID=19662 (hereinafter Castillo).

Neurological Diseases



| |  |  | Adulthood/Age-Related:
| | - |  | ----------------------



| |  |  | Alzheimers Disease
| | - |  | -------------------



| |  |  | Huntingtons Disease
| | - |  | --------------------



| |  |  | Lou Gehrigs Disease
| | - |  | --------------------



| |  |  | Parkinsons Disease
| | - |  | -------------------



| |  |  | Neurological Birth Defects:
| | - |  | ---------------------------



| |  |  | Autism
| | - |  | ------



| |  |  | Cerebral Palsy
| | - |  | --------------



| |  |  | Downs Syndrome
| | - |  | ---------------



| |  |  | Epilepsy
| | - |  | --------



| |  |  | Serious traumas of the spinal cord and cerebrum
| | - |  | -----------------------------------------------



| |  |  | Other Nervous System Disorders:
| | - |  | -------------------------------



| |  |  | Depression
| | - |  | ----------



| |  |  | Loss of Memory
| | - |  | --------------



| |  |  | Migraine
| | - |  | --------



| |  |  | Cerebral spastic infantile paralysis
| | - |  | ------------------------------------



| |  |  | Neuritis
| | - |  | --------



| |  |  | Consequences of a cranio-cerebral trauma
| | - |  | ----------------------------------------



| |  |  | Encephalitis
| | - |  | ------------



| |  |  | Stroke and its Consequences
| | - |  | ---------------------------

Sources:CBR; Castillo; Business Communications Company, Inc., Downs Syndrome Stem Cells Studied, APPLIED GENETICS NEWS, Feb. 2002, available at
http://www.findarticles.com; R. Parker, Depression Tied To Hippocampal Stem Cells, FUTURE PUNDIT, Oct. 30, 2002, available at http://www.futurepundit.com/archives/000477.html; Harvard Stem Cell
Institute, Nervous System Diseases Program, at http://stemcell.harvard.edu/research/disease/neuro; Center for Immunotherapy and Cell-Based Technologies, Stem cell therapy for the spinal cord injury treatment at
http://www.transplantation.ru/spinal-cord-injury-treatment.php.

Blood and Bone Marrow Disorders



| |  |  | Myeloproliferative Disorders
| | - |  | ----------------------------



| |  |  | Acute Myelofibrosis
| | - |  | -------------------



| |  |  | Agnogenic Myeloid Metaplasia
| | - |  | ----------------------------



| |  |  | Essential Thromocythermia
| | - |  | -------------------------



| |  |  | Polycythemia Vera
| | - |  | -----------------



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| |  |  | Inherited Red Cell Abnormalities:
| | - |  | ---------------------------------



| |  |  | Beta Thalassemia Major
| | - |  | ----------------------



| |  |  | Blackfan-Diamond Anemia
| | - |  | -----------------------



| |  |  | Pure Red Cell Aplasia
| | - |  | ---------------------



| |  |  | Sickle Cell Anemia
| | - |  | ------------------



| |  |  | Inherited Platelet Abnormalities
| | - |  | --------------------------------



| |  |  | Amegakaryocytosis/ Congen-ital Thrombocytopenia
| | - |  | -----------------------------------------------



| |  |  | Plasma Cell Disorders
| | - |  | ---------------------



| |  |  | Multiple Myeloma
| | - |  | ----------------



| |  |  | Plasma Cell Leukemia
| | - |  | --------------------



| |  |  | Waldenstroms Macroglobulinemia
| | - |  | -------------------------------



| |  |  | Stem Cell Disorders
| | - |  | -------------------



| |  |  | Congenital Cytopenia
| | - |  | --------------------



| |  |  | Dyskeratosis Congenita
| | - |  | ----------------------



| |  |  | Fanconi Anemia
| | - |  | --------------



| |  |  | Multiple Myeloma
| | - |  | ----------------



| |  |  | Paroxysmal Nocturnal Hemoglobinuria
| | - |  | -----------------------------------



| |  |  | Plasma Cell Leukemia
| | - |  | --------------------



| |  |  | Severe Aplastic Anemi
| | - |  | ---------------------

Sources:CBR; FCBS; Hearthstone.

Other Organ-Specific Diseases



| |  |  | Cardiovascular system diseases:
| | - |  | -------------------------------



| |  |  | Myocardial infarction (heart attack)
| | - |  | ------------------------------------



| |  |  | Cerebral atherosclerosis (Stroke)
| | - |  | ---------------------------------



| |  |  | Essential hypertension
| | - |  | ----------------------



| |  |  | Ischemic heart disease
| | - |  | ----------------------



| |  |  | Neurocirculatory dystonia.
| | - |  | --------------------------



| |  |  | Muscular Dystrophy
| | - |  | ------------------



| |  |  | Systemic diseases of connective tissue:
| | - |  | ---------------------------------------



| |  |  | Atrophic arthritis
| | - |  | ------------------



| |  |  | Systemic angiitis
| | - |  | -----------------



| |  |  | Systemic lupus
| | - |  | --------------



| |  |  | Systemic scleroderma
| | - |  | --------------------



| |  |  | Systemic sclerosis
| | - |  | ------------------



| |  |  | Rheumatism
| | - |  | ----------



| |  |  | Respiratory diseases:
| | - |  | ---------------------



| |  |  | Bronchial Asthma
| | - |  | ----------------



| |  |  | Bronchitis
| | - |  | ----------



| |  |  | Chronic Pneumonias
| | - |  | ------------------



| |  |  | Chronic Obstructive Pulmonary disease
| | - |  | -------------------------------------



| |  |  | Congenital Lung Hyoplasia
| | - |  | -------------------------



| |  |  | Pulmonary Fibrosis
| | - |  | ------------------



| |  |  | Liver diseases:
| | - |  | ---------------



| |  |  | Cirrhosis
| | - |  | ---------



| |  |  | Viral and Toxic Hepatitis
| | - |  | -------------------------



| |  |  | Liver Fibrosis
| | - |  | --------------



| |  |  | Kidney and urinary tract diseases:
| | - |  | ----------------------------------



| |  |  | Pyelonephritis
| | - |  | --------------



| |  |  | Cystitis
| | - |  | --------



| |  |  | Urethritis
| | - |  | ----------



| |  |  | Urinary Incontinence
| | - |  | --------------------



| |  |  | Obstetrics and gynecology:
| | - |  | --------------------------



| |  |  | Premature detachment of the placenta
| | - |  | ------------------------------------



| |  |  | Pre-term delivery
| | - |  | -----------------



| |  |  | Toxicosis of pregnancy
| | - |  | ----------------------



| |  |  | Fetal hypotrophy
| | - |  | ----------------



| |  |  | Menopause
| | - |  | ---------



| |  |  | Climacteric neuroses
| | - |  | --------------------



| |  |  | Skin diseases:
| | - |  | --------------



| |  |  | Psoriasis
| | - |  | ---------



| |  |  | Tropic ulcers
| | - |  | -------------



| |  |  | Dermatitis
| | - |  | ----------



| |  |  | Ocular diseases:
| | - |  | ----------------



| |  |  | Retinal Degeneration
| | - |  | --------------------



| |  |  | Dental and oral cavity diseases.
| | - |  | --------------------------------



| |  |  | Osteopetrosis
| | - |  | -------------



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Sources:CBR; FCBS; Castillo; J. Morser et al., Eds., STEM CELLS
IN REPRODUCTION AND IN THE BRAIN (2006); S. Terai et al., Improved Liver Function in Liver Cirrhosis Patients after Autologous Bone Marrow Cell Infusion
Therapy, STEM CELLS (2006), electronically published ahead of print, abstract available at http://stemcells.alphamedpress.org/cgi/content/abstract/2005-0542v1;The Royal Society, Dr Fiona Watt
FRSGetting under the skin, at http://www.royalsoc.ac.uk/page.asp?id=1567 (2006); L. Hemphill, Dental stem cells have been characterized for tooth tissue engineering, at http://www.eurekalert.org (2006); R. Nash et al.,
Allogeneic Marrow Transplantation in Patients with Severe Systemic Sclerosis: Resolution of Dermal Fibrosis, 54 ARTHRITIS & RHEUMATISM J. 1982 (2006); L. Bergeron, Behind method for activating
adult stem cells, a shaggy-mouse story, STANFORD REPORT, August 24, 2005, available at http://news-service.stanford.edu/news/2005/august24/mice-082405.html; Home Office (UK), Stem Cell Therapy
for Ocular Disease, ANIMALS IN SCIENTIFIC PROCEDURES (2006), Abstract available at http://scienceandresearch.homeoffice.gov.uk/animal-research/publications; S. Ricardo,
Stem Cells in Renal Regeneration and Repair, at http://www.med.monash.edu.au/anatomy/research/kidney-scarring.html (2005); Stem Cell Network, Research Overview, at http://www.stemcellnetwork.ca/research/overview.php
(2005); Harvard Stem Cell Institute, Cardiovascular Disease, at http://stemcell.harvard.edu/research/disease/cardio (2005); Stem Cells To Treat Liver Harm BBC NEWS, December 16, 2004,
available at http://news.bbc.co.uk; I. Neuringer and S. Randel, Stem Cells and Repair of Lung Injuries, 5 RESPIRATORY RESEARCH 6 (2004), available at http://respiratory-research.com; Stem
Cells Offer Hope for Urinary Incontinence HEALTH DAY NEWS, Nov. 29, 2004, available at http://www.medicineonline.com/conditions/article.html?articleID=3055; A. Perillo et al., Stem cells in
gynecology and obstetrics, 46 PANMINERVA MEDICA 49 (2004), available at http://www.minervamedica.it/index2.t; Healing the Heart with Stem Cells BLOOD WEEKLY, Sept.
4, 2003, available at http://www.newsrx.com/newsletters/Blood-Weekly/2003-09-04.html; Bone Marrow Cells Capable of Becoming Kidney Cells, DAILY UNIVERSITY SCIENCE NEWS,
July 25, 2001, available at http://unisci.com; Department of Health and Human Services, Can Stem Cells Repair a Damaged Heart? inStem Cells: Scientific Progress and Future Research Directions (2001), available at
http://stemcells.nih.gov/info/scireport; P. Goodenough, Adult Stem Cells May Help Treat Kidney Disease, at http://www.cnsnews.com/Culture/archive/200107/CUL20010725b.html (2001); Department of Health and Human Services, Stem
Cells and Diabetes, inStem Cells: Scientific Progress and Future Research Directions, (2001), available athttp://stemcells.nih.gov/info/scireport; R. K. Burt et al., Intense Immune Suppression for Systemic
Lupusthe Role of Hematopoietic Stem Cells, 20 J. CLINICAL IMMUNOLOGY 31 (2000); C. Padovan et al., Angiitis of the Central Nervous System after Allogeneic Bone Marrow Transplantation? 30
STROKE 1651 (1999), available at http://stroke.ahajournals.org/cgi/content/full/30/8/1651; J. Mastrandrea et al., Hemopoietic Progenitor Cells in Atopic Dermatitis Skin Lesions, 9 J. INVESTIGATIONAL
ALLERGOLOGY & CLINICAL IMMUNOLOGY 386 (1999).

Other Applications



| |  |  | Surgical Diseases
| | - |  | -----------------



| |  |  | Osteomyelitis
| | - |  | -------------



| |  |  | Fractures
| | - |  | ---------



| |  |  | Reconstructive Operations on Bone Tissue
| | - |  | ----------------------------------------



| |  |  | Male and female sexuality:
| | - |  | --------------------------



| |  |  | Impotency
| | - |  | ---------



| |  |  | Sterility
| | - |  | ---------



| |  |  | Contraception
| | - |  | -------------



| |  |  | Gerontology and Anti-Aging
| | - |  | --------------------------



| |  |  | Rejuvenation SC Therapy
| | - |  | -----------------------



| |  |  | Increasing vitality
| | - |  | -------------------



| |  |  | Slowing down pre-senility
| | - |  | -------------------------



| |  |  | Relieving age-related pathologies
| | - |  | ---------------------------------



| |  |  | Prolonging life
| | - |  | ---------------



| |  |  | Improving memory
| | - |  | ----------------



| |  |  | Improving quality of life
| | - |  | -------------------------



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Sources:C. Weinand et al., Hydrogel-Beta-TCP Scaffolds and Stem Cells for Tissue
Engineering Bone, 38 BONE 555 (2006); T. Rando, Stem Cells, Ageing and the Quest for Immortality, 441 NATURE 1080 (2006), available at http://www.nature.com/nature/journal/v441
/n7097/full/nature04958.html; Center for Immunotherapy and Cell-Based Technologies, Stem Cell Therapy for Chronical Osteomyelitis, at http://www.transplantation.ru/osteomyelitis.php (2006);National Institutes of Health, Clinical
Trials, Autologous Implantation of Mesenchymal Stem Cells for the Treatment of Distal Tibial Fractures at http://www.clinicaltrials.gov/ct/gui/show/NCT00250302 (2005); Researchers Identify Gene Linked To Sperm-producing Stem
Cells In Mammals, SCIENCE DAILY, May 24, 2004, available at http://www.sciencedaily.com/releases/2004/05/040524060300.htm; M. MATTSON, ED., STEM
CELLS: A CELLULAR FOUNTAIN OF YOUTH (ADVANCES IN CELL AGING & GERONTOLOGY) Elsevier
Publishing Company (2002); R. Parker, Depression Tied To Hippocampal Stem Cells, at http://www.futurepundit.com/archives/000477.html (2002).

Based on the enormous amount of positive clinical studies in such a broad array of different diseases, the Company firmly believes that every diseased organ may become treatable with stem cells, including diseases of
the digestive tract, ear, nose and throat diseases, infectious diseases, allergies, and other long-term chronic diseases of the internal organs.

Our affiliate clinics in Kiev, Ukraine, Tijuana, Mexico and Shenzhen, China have treated several different diseases, as described below. Even though the Company is still in its developmental and planning stage, to date we have already
referred several patients for treatment to each of the above treatment facilities.

LICENSE AGREEMENT WITH INSTITUTE OF CELL THERAPY

Effective September 1, 2005, the Company entered into a ten year licensing agreement with the Institute of Cell Therapy, a company incorporated and
organized under the laws of Kiev, Ukraine (ICT). Pursuant to the agreement, the Company issued ICT 5,000,000 shares of the Companys common stock recorded at the fair market value of the Companys common stock of $5,000. The
agreement grants the Company a right and license in most parts of the world to utilize patents, processes and products owned or produced by ICT in connection with the operation of the Companys business. In exchange for the license, the Company
agrees to exclusively purchase all biological solution of stem cell Allo Transplant materials from ICT. Such Allo Transplant materials shall be at a cost of $6,500 per patient per condition. The licensing agreement guarantees a minimum purchase of
60 portions per twelve month period. In the event that the Company is unable to purchase the minimum quantities, ICT will be entitled to draw upon the irrevocable letter of credit at the rate of $2,000 for every portion less than the minimum
required purchase. The Company had provided ICT with a $120,000 irrevocable letter of credit in ICTs favor for the first three years of the agreement. In the event the Letter of Credit is drawn upon, the Company agreed to replenish the Letter
of Credit to the extent of any such draws. As of September 2006, the Company had not met the first years minimum purchase requirement and ICT withdrew $116,000 on the letter of credit, which has been included in the cost of goods sold in the
accompanying Consolidated Statements of Operations for the year ended March 31, 2007 and the period from inception through March 31, 2008. However, ICT was unable to provide the product as requested and the Company was required to purchase
the stem cell materials from alternative sources. Management believes that ICTs inability to provide the requested stem cell materials relieves the Company of its obligations to replenish the letter of credit and to fulfill the minimum
purchase requirements. As such, the accompanying consolidated financial statements do not reflect any liability for the Companys failure to purchase the minimum amount of stem cell materials under the above mentioned license agreement and as
of the date of this filing, ICT has not made any claims against the Company. The agreement with ICT was terminated during the year ended March 31, 2008.

NUMBER OF PATIENTS TREATED BY THE COMPANYS AFFILIATES:

The company does not directly treat patients with Stem Cell Therapy,
but instead refers patients to clinics affiliated with the Company. The following table reflects the treatments to date by clinics affiliated with the Company, including the types of diseases treated and the number of patients treated for each
disease:



|                                                                  |  |                           
|----------------------------------------------------------------- |  | --------------------------
|Diseases treated with SCTI Patient specific Stem cell transplants |  | Numbers of PatientsTreated
|Type 1 Diabetes & Type 2 Diabetic complications                   |  | 5                         
|Stroke                                                            |  | 1                         
|Multiple Sclerosis                                                |  | 2                         
|Acute Leukemia                                                    |  | 4                         
|Rectal Cancer                                                     |  | 1                         
|Congenital Aplastic Anemia                                        |  | 2                         
|Acquired Aplastic Anemia                                          |  | 4                         
|Closed abdominal injury, traumatic kidney rupture, nephrectomy    |  | 1                         
|Neuro-degenerative diseases                                       |  | 3                         
|Sigmoid colon cancer                                              |  | 1                         
|Severe Skin Burn Patient                                          |  | 1                         
|Liver cirrhosis                                                   |  | 1                         
|Ovarian carcinoma                                                 |  | 3                         



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##### Table of Contents

The Company is presently affiliated with the following two clinics:



| | 1. | Tijuana, Mexico: Dr. Salvador Vargass clinic has been offering stem cell transplants since 2000.
| | -- | -------------------------------------------------------------------------------------------------



| | 2. | Shenzhen, China
| | -- | ---------------

The clinics in Tijuana, Mexico and
Shenzhen, China are independently owned and operated. We have no ownership and we do not treat any patients.

Instead of treating patients,
we provide information and education services to patients interested in Stem Cell Therapy, and if they elect to pursue the treatment we refer the patients to our Medical and Scientific Advisory Board, a group of independent consultants. The Board
determines if the patient is a good candidate for Stem Cell Therapy, and if they are, the Company refers the patients to one of our affiliated clinics. After we refer the patients to the independent clinics, the Company has no further discretion
regarding the diagnosis, treatment, progress, or prognosis of the patient.

MANUFACTURING

Basic Approach

The basis of stem cell therapy is the presence of preparations of allo stem cell biological
solutions. The Company holds licensing rights to a patented unique biological solution, which consists of hematopoietic human stem cells, numerous low-molecular proteins, nutrients, hormones and human growth factors (compounds made by the body to
regulate cell division and cell survival). For further reference this whole set will be called a biological solution.

Stem
cells are a fundamental principle of an organism; they give rise to all 220 types of specialized cells and tissues of an organism. They are present in the human embryo, placental complex, an adults bone marrow and also in insignificant number
in other tissues. Their main feature is an ability to regenerate: they are capable of making identical copies of themselves for the lifetime of the organism. To put it simply, they are theoretically eternal. In reality, as a result of enduring
infections, traumas, hereditary infringements, harmful factors of the environment and emotional stresses stem cells lose their ability of endless regeneration and basically that is the starting point of the aging processes and appearance of the
long-term diseases which in turn stop the processes of the stem cells division. If at birth their content equals one stem cell to 10 thousand, then at the age of 50 it is already one to half a million and at the age of 70, one to a million of
the hematopoietic cells. See generally Christopher Potten and James Wilson, Apoptosis: the Life and Death of Cells, Cambridge University Press (2004).

The isolation process of stem cells for medical purposes is the most expensive part of modern biotechnology for stem cells. Today there have been effective methods worked out for the isolation of stem cells from an
embryo, fetus and umbilical cord blood (the rest of the blood in an umbilical cord and placenta after delivery). Modern technology allows for the preparation of these cells for the treatment of many diseases.

The Company believes that the most promising way to create this individualized medication, which could be used in the case of disease or the loss of any
organ, is to keep stem cells in a frozen condition, collecting the rest of the umbilical cord blood during a birth and using preparations created on their basis. Upon introduction into the organism of a patient, stem cells find the struck organs,
the so-called target organs, where they migrate and provide powerful restoration of whole biological structures, normalize the metabolism, harmonize the immune status of an organism, and make active antineoplastic factors (compounds that prevent the
growth and development of malignant cells). This way cell suspension introduction results in the increase of the number of leukocytes (white blood cells) in ontological patients with chemo rays depression of hemopoiesis (the formation of blood cells
in the body) from 2 to 5 thousand for two weeks.

Stem cells actively perform their main responsibility - they replace the sick and
old cells of an aging organism rejuvenating it, which cannot be done by any other medicine. Also, highly active regulating factors are present within the cells suspension which exist and work only during an embryonic period of the organisms
development. That is why the



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cells suspension introduction in the adult organism and engraftment of stem cells among the aging and pathologically altered cells of this organism creates a
unique situation when the most powerful development, renewal and functions ensuring factors that only exist start constantly influencing the cells and organs of the adult organism.

These biological preparations in their complex state influence:



| |  |  | normalization and stimulation of the metabolism
| | - |  | -----------------------------------------------



| |  |  | rise in the activity of the immune and neuro-endocrinal systems
| | - |  | ---------------------------------------------------------------



| |  |  | strongly marked antineoplastic action;
| | - |  | --------------------------------------



| |  |  | delay pre-senility, dynamically rejuvenating the organism
| | - |  | ---------------------------------------------------------



| |  |  | strongly marked medical effects upon diversified pathologies
| | - |  | ------------------------------------------------------------

In the Ukraine the study and production of biological preparations from the animal and human cells were being carried out within the framework of the scientific programs under the aegis of the National Academy of
Sciences, Medical Academy of Sciences, Ministry of Public Health, Coordination Center of the organs, tissues, and cells transplantation of the Ministry of Public Health of Ukraine.

The application of allo (human) biological preparations have been allowed by the Ministry of Public Health of Ukraine since 1991.

CRYOPRESERVATION

Long-term methods of storage have been
used in medical practice for a long time. Among those commonly famous methods of storage there is lyophilization (freeze-drying), treatment by alcohol or formalin solutions and some others. But the basic drawback of such methods of storage is
dehydration of protein compounds which cause cells and tissues to completely lose their main biological features - ability to function after transfusion.

Nowadays, low temperatures are the only way to allow for the storage of cells and tissues for long time intervals (running for years) in a viable condition. Storage in liquid nitrogen at the temperature of -196 C is
the basic method of the long-term storage of biological objects today. The development of personal modern technologies of cryogenic-preservation, corresponding to world standards as well as observing the demands of producing biological preparations,
their testing, marking and storing in accordance with statements of the European Tissue Banks Association, allowed ICT to create high-quality cryogenically-preserved embryonic stem cells, tissue preparations and extracts for clinical application and
system of examination and treatment of patients with minimum risk and maximum effect with the most diversified pathologies.

QUALITY CONTROL

The efficiency of stem cell therapy is ensured through the latest special methods of bacteriological and virological control which guarantee the highest
quality of preparations. Every preparation prepared for use is supplied with its own certificate containing test results which certify the safety of this biological preparation. The patients safety assurance totally corresponds with
international Standards of Activity of the European and American Tissue Banks Association.

The Company warrants that a batch of allo stem
cell biological solution for transplants are individually prepared for a specific patient have been manufactured in accordance with and in strict compliance with Good Manufacturing Practice (GMP), and following the regulations of the U.
S. Food and Drug Administration (the FDA) as well as the respective regulatory agencies of the European Union. GMP is a set of guidelines established by the FDA regarding the production or manufacture of any drug or biological products.
The FDA certifies and enforces US manufacturers that comply with the GMP standards. Although the Company is not GMP certified or GMP enforceable since its manufacturing facilities are located outside of the U.S., we have voluntarily complied with
all GMP standards. More information on GMP standards is available at www.gmp-online-consultancy.com.

The Company follows all steps
recommended by the FDA and the respective counterpart regulatory agencies of the EU. We have put into practice all of these recommendations to aid and assure top quality preparations of each allo stem cell biological solution therapy batch. In
addition, many other specimens, samples of each stem cell transplant(s) prepared by the Company are kept in liquid nitrogen at its laboratories, pursuant to FDA regulations.



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RESEARCH AND DEVELOPMENT

We do not directly engage in Research and Development. Instead, we rely on the technology that results from Research and Development activities performed through contractual arrangements and possibly the technology
that results from such arrangements in the future.

PRICING

Our stem preparations are priced competitively with others in our industry, reflecting pricing which has been the same as it has been in Germany for the past approximate 10 years.

The complex approach to stem cell transplantation is based upon cleansing and detoxification and balancing of all metabolic processes, whereby the
patient will be prepared to accept the stem transplants for their maximum healing effects.

COMPETITION

We are unaware of any competitor that has the same business model in the manufacturing process and cryo-preservation process of allo stem cell biological
solution and other products. To our knowledge, these procedures have only been used by our affiliates. Further, we are unaware of any competitor engaged in the business of providing educational, informational, and referral services to potential
candidates for stem cell therapy.

Although we have not noted any Companies that offer an identical array of services, there are several
stem cell companies that compete with us on an individual service level. First, there are the stem cell research and development companies that are only doing scientific work with stem cells, but are not in the business of treating patients. Second,
there are companies that have their own treatment facilities and their own source of stem cells. Third, there are the companies that supply the stem cells for research and treatment of patients.

There is no assurance that the Company will be able to compete successfully against any such current and any developing future competitors, and
competitive pressures faced by the Company may have a material adverse effect on the Companys business, prospects, financial condition and results of operations. Further, as a strategic response to changes in the competitive environment, the
Company may from time to time make certain pricing, service or marketing decisions or acquisitions that could have a material adverse effect on its business, prospects, financial condition and results of operations. New technologies and the
expansion of existing technologies may increase the competitive pressures on the Company.

In our research, the closest competitor that we
have to our business model is a company called VesCell (www.vescell.com). This company has licensed a proprietary technology from their partner TheraVitae that uses the patients own blood to draw out the stem cells which are then culture grown and
are then used as an injection back into the patient. VesCell has a number of affiliate treatment facilities which are located in Thailand and Singapore where these procedures are performed. VesCell also has a number of treating physicians at each
affiliate hospital or clinic facility that actually perform the stem cell transplantation procedure. The cost of the VesCell therapy is $34,500, USD, per treatment.

Currently, the Company has two affiliate treatment facilities outside of the United States: Shenzhen, China and Tijuana, Mexico.

REGULATION

As the technological milestones for stem cell transplantation have been announced, governments have begun to impose
regulation. Many developed countries have now drawn up legislation or codes, or signed up to Conventions, regulating the creation and use of embryonic stem cells. Some regimes have already been shown to be lagging behind the technology.

From a regulatory viewpoint stem cell transplant represents a very unique product, which really is not really a product at all, because it
does not fulfill the legal definition of a medicinal product. The FDAs regulations label live cell transplants as products, while under German law they are classified neither as drugs nor as medications, because:



| |  |  | they are individually prepared for each patient,
| | - |  | ------------------------------------------------



| |  |  | they are for one time use only, by implantation on a pre-determined date,
| | - |  | -------------------------------------------------------------------------



| |  |  | the implantation is carried out by a physician who wrote a prescription for the stem cell transplants used,
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | stem cell transplants have no shelf-life, and
| | - |  | -----------------------------------------------



| |  |  | they are not distributed through the usual channels.
| | - |  | ----------------------------------------------------



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The response of many governments to reproductive cloning is a complete ban, but approaches to therapeutic
cloning vary quite widely. The United States presidency and various European bodies and institutions are taking a restrictive approach to embryonic stem cells, while the United Kingdom has passed relatively permissive legislation.

The United States

The United States regulation falls
into two main areas: control of federal funds for research, and the broader question of regulation of the activities themselves. Following an announcement by President Bush on August 9, 2001, United States federal funds became available only
for stem cell research on embryonic cell lines already in existence. Before that, more liberal National Institutes of Health (NIH) Guidelines had recommended that funds were to be available for the creation and use of stem cells from
spare IVF embryos. The 64 embryonic cell lines identified by US officials as already being in existence, and therefore a suitable subject for federally funded research, were generated by various institutes in the United States, Sweden, Australia,
India, and Israel. We currently plan to seek research funding from the NIH, and will consider seeking research funding from other government health agencies in the future.

Separately from the funding issue, the regulation of embryonic stem cell research is being actively considered by the US Government. On July 31,
2001, the House of Representatives voted for a broad ban on human cloning that would prohibit cloning for research purposes as well as for reproduction. The resulting law imposes heavy financial penalties and terms of imprisonment on those who
generate cloned embryos, and thus affects both privately funded and NIH-supported research. Fortunately, the Companys lines of allo transplants are outside of this regulation, both because we do not engage in any cloning activities, and
because we do not engage in any stem cell production, research, or development in the United States. Further, since all of our stem cell activities are performed in jurisdictions where such activities are legal, we do not currently have any
obligation to obtain government approval for our activities, and do not currently have any compliance costs. However, there is no assurance that we will not face costs or the need for government approval with regard to future regulations or the
regulations of any country into which we may expand our operations in the future. Germany and the Rest of Europe

Germanys highest
court re-affirmed its approval of therapeutic use of cell allo transplantation on February 16, 2000, by its decision in the case number 1 BvR 420/97. Germany had previously approved of this use in the early fifties.

This German decision had serious implication for the remainder of the European Community (EC) as well. Under the European Community Council
Directives, all Member States of EC are obliged to accept laws and regulations of other member States of European Community dealing with medical therapeutics for human use, and that includes stem cell transplantation.

All applicable regulations of the Public Health Service, and EU Directives, were incorporated in our manufacturing technology, and that was of enormous
importance in order to attain the heretofore unknown state-of-art level of safety of stem cell transplantation.

The European
Community Councils Directives are in harmony with this German legal concept, and thus European Community Member States do not classify stem cell allo and/or xeno-transplants as products either.

EMPLOYEES

As of March 31, 2008, the Company employed 3
full-time employees, and one part-time employee. The Company also engages independent contractors and other temporary employees in its operations and finance and administration departments. None of the Companys employees is represented by a
labor union, and the Company considers its employee relations to be good. Competition for qualified personnel in the Companys industry is intense, particularly among Doctors and other technical staff. The Company believes that its future
success will depend in part on its continued ability to attract, hire and retain qualified personnel.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

THE FOLLOWING RISK FACTORS SHOULD BE
CONSIDERED CAREFULLY IN EVALUATING THE COMPANY, ITS BUSINESS, CONDITION AND PROSPECTS (FINANCIAL AND OTHERWISE). THESE RISK FACTORS ARE NOT NECESSARILY EXHAUSTIVE AND ADDITIONAL RISK FACTORS, IF ANY, MAY BE MATERIAL OR HAVE SIGNIFICANCE TO AN
INDIVIDUAL INVESTOR. MANY INVESTMENT OPPORTUNITIES INVOLVE RISK FACTORS OR A RISK OF LOSS AND THE EXISTENCE OF THE NORMAL AND CERTAIN EXTRAORDINARY RISKS.



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USE OF FORWARD-LOOKING LANGUAGE; FORECASTS UNRELIABLE: All statements, trend analysis and other
information contained in this document relative to markets for the Companys products and trends in net sales, gross margin and anticipated expense levels, as well as other statements including words such as anticipate,
believe, plan, estimate, expect and intend and other similar expressions, constitute forward-looking statements. These forward-looking statements are subject to business and economic risks,
and the Companys actual results of operations may differ materially from those contained in the forward-looking statements.

LIMITED
OPERATING HISTORY; ACCUMULATED DEFICIT; ANTICIPATED LOSSES: The Company has a limited operating history on which to base an evaluation of its business and prospects. The Companys prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of development. Nonetheless, there is no assurance that the Company will be successful in addressing such risks, and the failure to do so could have a material adverse effect on
the Companys business, prospects, financial condition and results of operations.

UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY; As a result of the Companys limited operating history and the emerging nature of the biotechnological markets in which it competes, the Company is unable to accurately forecast its
revenues. The Companys current and future expense levels are based largely on its investment plans and estimates of future revenues and are to a large extent fixed and expected to increase.

Sales and operating results generally depend on the volume of, timing of and ability to fulfill the number of orders received for the biological solution
and the number of patients treated which are difficult to forecast. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues in relation to
the Companys planned expenditures would have an immediate adverse effect on the Companys business, prospects, financial condition and results of operations. Further, as a strategic response to changes in the competitive environment, the
Company may from time to time make certain pricing, service or marketing decisions which could have a material adverse effect on its business, prospects, financial condition and results of operations.

The Company expects to experience significant fluctuations in its future quarterly operating results due to a variety of factors, many of which are
outside the Companys control. Factors that may adversely affect the Companys quarterly operating results include (i) the Companys ability to retain existing patients, attract new patients at a steady rate and maintain patient
satisfaction, (ii) the Companys ability to manage its production facility and maintain gross margins, (iii) the announcement or introduction of new treatments and/or patents by the Company and its competitors, (iv) price
competition or higher prices in the industry, (v) the level of use of the Internet and on-line patient services, (vi) the Companys ability to upgrade and develop its systems and infrastructure and attract new personnel in a timely
and effective manner, (vii) the level of traffic on the Companys website, (viii) technical difficulties, system downtime, (ix) the amount and timing of operating costs and capital expenditures relating to expansion of the
Companys business, operations and infrastructure, (x) governmental regulation, and (xi) general economic conditions.

MANAGEMENT OF POTENTIAL GROWTH: LIMITED SENIOR MANAGEMENT RESOURCES: While we cannot be sure we will be successful in growing the Companys operations, our goal is to rapidly and significantly expand our operations to address potential
growth and market opportunities. We intend to seek to accomplish this by adding additional affiliate clinics, and by our marketing efforts. By adding affiliates, our intention is to seek to not only increase the number of patients that can be
treated, but increase the visibility of stem cell therapy in general. We believe that the combination of word of mouth and our marketing efforts may lead to a significant growth in demand for our products and services.

This expansion if successful could place a significant strain on the Companys management, operational and financial resources. The Company will be
required to hire new employees including senior management, key managerial, technical and operations personnel who would have to be fully integrated into the Company, operational and financial systems, procedures and controls, and to expand, train
and manage its already growing employee base.

The Company also would be required to add finance, administrative and operations staff.
Further, the Companys management would be required to maintain and expand its relationships with Affiliate Treatment Clinics and Medical Facilities, University Labs, Private Labs and Treating Physicians globally.

If we grow rapidly, there is no assurance that the Companys planned personnel, systems, procedures and controls would be adequate to support the
Companys future operations, that the management would be able to hire train, retain, motivate and manage required personnel or that Company management would be able to successfully identify, manage and exploit existing and potential market
opportunities. If the Company is unable to manage growth effectively, its business, prospects, financial condition and results of operations will be materially adversely affected.



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DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL PERSONNEL: The Companys performance is
substantially dependent on the continued services and on the performance of its senior management and other key personnel, particularly the Companys President, David Stark and Chief Financial Officer, Andrew Norstrud. The Companys
performance also depends on the Companys ability to employ, retain and motivate its other officers and key employees. The loss of the services of any of its executive officers or future key employees could have a material adverse effect on the
Companys business, prospects, financial condition and results of operations. The Company is currently negotiating long-term employment agreements with its executive officers and intends to obtain key person life insurance policies.
The Companys future success also depends on its ability to identify, attract, hire, train, retain and motivate other highly skilled doctors, scientists, qualified PhDs, technical, managerial, marketing and customer service personnel.
Competition for such personnel is intense, and there is no assurance that the Company will be able to successfully attract, assimilate or retain sufficiently qualified personnel. The failure to retain and attract the necessary doctors, scientists,
qualified PhDs, technical, managerial, marketing and customer service personnel could have a material adverse effect on the Companys business, prospects, financial condition and results of operations.

COMPETITION: While we are presently unaware of any competitor that has the same business model in the manufacturing process and cryo-preservation process
of allo stem cell biological solution and other products, competitors may already exist or may develop with respect to our specific business model.

Although we have not noted any Companies that offer an identical array of services, there are several stem cell companies that compete with us on an individual service level. First, there are the stem cell research and development companies
that are only doing scientific work with stem cells, but are not in the business of treating patients. Second, there are companies that have their own treatment facilities and their own source of stem cells. Third, there are the companies that
supply the stem cells for research and treatment of patients.

There is no assurance that the Company will be able to compete successfully
against any such current and any developing future competitors, and competitive pressures faced by the Company may have a material adverse effect on the Companys business, prospects, financial condition and results of operations. Further, as a
strategic response to changes in the competitive environment, the Company may from time to time make certain pricing, service or marketing decisions or acquisitions that could have a material adverse effect on its business, prospects, financial
condition and results of operations. New technologies and the expansion of existing technologies may increase the competitive pressures on the Company.

TRADEMARKS AND PROPRIETARY RIGHTS: The Company regards its copyrights, service marks, trademarks, trade dress, trade secrets and similar intellectual property as important, and critical to its success. In addition,
certain aspects of trademark and copyright law, trade secret protection and confidentiality and/or license agreements with its employees may be relied upon to protect its proprietary rights. The Company is pursuing the registration of its trademarks
and service marks in the U.S. and internationally, and has applied for the registration of certain of its trademarks and service marks. Effective trademark, service mark, copyright and trade secret protection may not be available in every country.
The Company expects that it may license in the future certain parts of its proprietary rights, such as trademarks or copyrighted material, to third parties.

There is no assurance that the steps taken by the Company to protect its proprietary rights will be adequate or that third parties will not infringe or misappropriate the Companys copyrights, trademarks, trade
dress and similar proprietary rights. In addition, there is no assurance that other parties will not assert infringement claims against the Company. The Company is not currently aware of any legal proceedings pending against it.

GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES: The Company is subject to regulation by domestic and foreign governmental agencies with respect to many
aspects of stem cell transplantation. In addition, new legislation or regulation could occur. Any such new legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to the Companys
business, or the application of existing laws and regulations to stem cell transplantation technology could have a material adverse effect on the Companys business, prospects, financial condition and results or operations.

NO ASSURANCE OF PUBLIC MARKET FOR COMMON STOCK, POSSIBLE LACK OF MARKET MAKERS; VOLATILITY. Although the Companys stock is currently quoted on the
Over-the-Counter Bulletin Board, there is no assurance that a public trading market will continue or develop for the Common Stock. There is also no assurance that the existing trading or any such future market will be characterized as active.



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Development of an active trading market for the Companys Common Stock may depend upon the interest
of securities market makers and the investing public which may depend in turn on the Companys revenues and profits. The prices of securities of companies which are in limited supply in the public securities markets, which could describe the
Company, are typically volatile.

POSSIBLE NEGATIVE EFFECT OF COMMON STOCK AVAILABLE FOR FUTURE SALE: A substantial component of the Common
Stock issued by the Company is restricted stock as defined in SEC Rule 144, promulgated under the Securities Act of 1933. The offer of a significant number of restricted shares of Common Stock in the future in the public market, at or
about the same time pursuant to Rule 144 or pursuant to a subsequent registration statement under the Securities Act of 1933 could have a depressive effect on the public market price of the Companys common stock.

TRADING LIMITATIONS ON STOCK AT A MARKET PRICE OF LESS THAN $5.00 PER SHARE: Management cannot predict the market price of the Common Stock in the public
market. At any time that the market price is less than $5.00 per share, certain larger stock brokerage firms may prohibit purchase or sale of the Shares within their clients accounts.

All securities brokerage firms effecting purchase orders for clients in the Companys common stock at a time when the common stock has a market bid
price of less than $5.00 per share are required by federal law to send a standardized notice to such clients regarding the risks of investing in penny stocks, to provide additional bid, ask and broker compensation and other information
to the stockholders and to make a written determination that the Companys common stock is a suitable investment for the client and receive the clients written agreement to the transaction, unless the client is an established client of
the firm, prior to effecting a transaction for the client. These business practices may inhibit the development of a public trading market for the Companys common stock during periods that the price of the common stock in the public market is
less than $5.00 by both limiting the number of brokerage firms which may participate in the market and increasing the difficulty in selling the Companys common stock.

NEED FOR FINANCING. In order to continue as a going concern, the Company will require significant additional financing or a merger partner with
substantial resources. We cannot guarantee that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. Even if we are able to expand our business, we cannot provide
certainty that we will be successful or that investors will derive a profit from an investment in our equity. Subsequent to year end, the Company entered into a merger agreement to acquire another Company that should positively impact the
Companys liquidity, however, as of the date of this filing, the agreement has not yet closed, while management believes the transaction will be consummated, there can be no assurance in that regard.



|ITEM 2. | DESCRIPTION OF PROPERTY
|------- | -----------------------

We lease office space and
office equipment under an operating lease on a month-to-month basis. We lease the executive office suite from Wilder Corporation for approximately $820. Our office is located at 2203 N. Lois Avenue, Suite #901, Tampa, FL 33607. The office is
approximately three hundred seventy-four (374) square feet and is in a condition adequate to our needs. The terms of the lease agreement require 30 days written notice to terminate the lease.

Rent expense amounted to $18,048 and $23,298 for the years months ended March 31, 2008 and 2007.

The Company is not involved in investments in (i) real estate or interests in real estate, (ii) real estate mortgages, and
(iii) securities of or interests in persons primarily engaged in real estate activities, as all of its land rights are used for production purposes.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

The Company is
currently involved in a legal dispute over the payment and performance of a consulting agreement. The Company contends that the contract never became effective, and therefore the consultant was not entitled to receive compensation. The consultant
contends that the Company and its representatives induced them to begin performance of the services early, based on certain promises. The original contract calls for the consultant to be awarded the compensation of 3,000,000 shares of the
Companys common stock valued at $390,000. The Company currently holds the stock certificates and intends to vigorously defend its position however, the outcome of the proceedings cannot be determined.



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The Company expects to be subject to legal proceedings and claims from time to time in the ordinary course of its
business, including, but not limited to, claims of alleged infringement of the trademarks and other intellectual property rights of third parties by the Company and its licensees. Such claims, even if not meritorious, could result in the expenditure
of significant financial and managerial resources.



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

During the
year ended March 31, 2008, the Companys shareholders agreed to change the name of the Company to Amstem International Corp. and increased the authorized common stock to 500,000,000 shares. The Company filed and distributed a Schedule 14C
to reflect that change.

PART II



|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | --------------------------------------------------------

MARKET
INFORMATION

Stem Cell Therapy International, Inc. common stock is quoted in United States markets on the Over the Counter Bulletin
Board (OTCBB).

Currently there are 400,000 warrants and 3,650,000 outstanding options to purchase stock.

PENNY STOCK REGULATIONS:

Our common stock is quoted
on the OTCBB, under the symbol SCII. On July 10, 2008 the last reported sale price of our common stock was $0.075 per share. The Companys common stock is subject to provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the Exchange Act), commonly referred to as the penny stock rule. Section 15(g) sets forth certain requirements for transactions in penny stocks, and Rule 15g-9(d) incorporates
the definition of penny stock that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions.
As long as the Companys common stock is deemed to be a penny stock, trading in the shares will be subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and
accredited investors.

The following table shows the high and low per share price quotations of Stem Cell Therapy International, Inc.
common stock as reported in the OTCBB for the periods presented. High and low bid quotations reflect inter-dealer prices without adjustment for retail mark-ups, markdowns or commissions and may not necessarily represent actual transactions. We
completed our acquisition of Stem Cell Therapy Corp.(Stem Cell Florida) in the third calendar quarter of 2005. Our stock has been thinly traded.



|                    |  |      |      |     |   |      
|------------------- |  | ---- | ---- | --- | - | -----
|                    |  | HIGH |      | LOW
|(Calendar Quarters) |  |      |      |     |   |      
|2008                |  |      |      |     |   |      
|First Quarter       |  | $    | 0.27 |     | $ | 0.08 
|2007                |  |      |      |     |   |      
|Fourth Quarter      |  | $    | 0.21 |     | $ | 0.05 
|Third Quarter       |  | $    | 0.40 |     | $ | 0.15 
|Second Quarter      |  | $    | 0.43 |     | $ | 0.07 
|First Quarter       |  | $    | 0.30 |     | $ | 0.098
|2006                |  |      |      |     |   |      
|Fourth Quarter      |  | $    | 0.35 |     | $ | 0.10 
|Third Quarter       |  | $    | 0.40 |     | $ | 0.23 
|Second Quarter      |  | $    | 0.75 |     | $ | 0.40 
|First Quarter       |  | $    | 1.00 |     | $ | 0.47 

As of March 31, 2008 there were approximately 280 holders of record of Stem Cell Therapy
International, Inc. common stock. Many of these shares are held in street name, and consequently we have numerous additional beneficial owners.



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DIVIDENDS

The Company has
never declared or paid a dividend on its Common Stock, and does not anticipate paying any cash dividends on its Common Stock in the foreseeable future. The Company expects to retain, if any, its future earnings for expansion or development of the
Companys business. The decision to pay dividends, if any, in the future is within the discretion of the Board of Directors and will depend upon the Companys earnings, capital requirements, financial condition and other relevant factors
such as contractual obligations. There can be no assurance that dividends can or will ever be paid.

RECENT SALES OF UNREGISTERED SECURITIES

Effective May 11, 2007, the Company issued 250,000 shares of common stock to Mirador Consulting Group in connection with consulting services to be
provided to the Company. These shares were issued without any public offering in accordance with Section 4(2) of the Securities Act of 1933, as amended.

Effective June 25, 2007, the Company issued 300,000 shares of common stock to Interactive Resources Group Inc. in connection with consulting services to be provided to the Company. These shares were issued
without any public offering in accordance with Section 4(2) of the Securities Act of 1933, as amended.

During the year ended
March 31, 2008, the Company issued 2,000,000 shares of common stock to accredited investors in connection with a private placement offering in exchange for $250,000, this amount includes $43,976 of offering costs. These shares were issued under
Regulation D.

During the year ended March 31, 2008, the Company issued 375,000 shares of common stock in conversion of common stock
warrants. These shares were issued without any public offering in accordance with Section 4(2) of the Securities Act of 1933, as amended.

Effective February 22, 2008, the Company issued 500,000 shares of common stock to Elite International Partners in connection with consulting services to be provided to the Company. These shares were issued without any public offering
in accordance with Section 4(2) of the Securities Act of 1933, as amended.

Effective March 1, 2008, the Company issued 500,000
shares of common stock to Cutler Law Group in connection with legal services to be provided to the Company. These shares were issued without any public offering in accordance with Section 4(2) of the Securities Act of 1933, as amended.

Effective March 1, 2008, the Company issued 250,000 shares of common stock to an employee in connection with the execution of an
employment agreement. These shares were issued without any public offering in accordance with Section 4(2) of the Securities Act of 1933, as amended.

Effective March 5, 2008, the Company issued 250,000 shares of common stock to First Capital Partners in connection with consulting services to be provided to the Company. These shares were issued without any
public offering in accordance with Section 4(2) of the Securities Act of 1933, as amended.



|ITEM 6. | MANAGEMENTS DISCUSSION AND ANALYSIS
|------- | ------------------------------------

THE FOLLOWING
INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS OF STEM CELL THERAPY INTERNATIONAL, INC. AND THE NOTES THERETO APPEARING ELSEWHERE IN THIS FILING. STATEMENTS IN THIS MANAGEMENTS DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION AND ELSEWHERE IN THIS ANNUAL REPORT THAT ARE NOT STATEMENTS OF HISTORICAL OR CURRENT FACT CONSTITUTES FORWARD-LOOKING STATEMENTS.

The following management discussion should be read together with the Stem Cell Therapy International, Inc. consolidated financial statements included in this annual report. See Index to Consolidated Financial Statements at page
F-1. Those financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America.



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GENERAL OVERVIEW

Stem Cell Therapy International, Inc. (the Company) was originally incorporated in Nevada on December 28, 1992 as Arklow Associates, Inc., and after several name changes was renamed Altadyne, Inc. By
March, 2005, the Company (then Altadyne, Inc.) had no assets, liabilities, or ongoing business. On March 20, 2005, R Capital Partners (R Capital) acquired the Company (then Altadyne, Inc.), and on September 1, 2005, the Company
(then Altadyne), acquired Stem Cell Therapy International Corp., a Nevada corporation (Stem Cell Florida) in what was effectively a reverse acquisition. Following the transaction, Stem Cell Florida became a wholly owned subsidiary of the
Company, and Stem Cell Floridas shareholders became shareholders of the Company. On October 5, 2005, the Company changed its name to Stem Cell Therapy International, Inc. to reflect the new business of the Company. This transaction is
accounted for as a reverse merger, with Stem Cell Florida treated as the accounting acquirer for financial statement purposes.

Stem Cell
Florida was incorporated in Nevada on December 2, 2004. Following the reverse acquisition, the Company assumed and is continuing the operations of Stem Cell Florida. The Companys executive management team are: Calvin C. Cao, Chairman and
Chief Executive Officer (subsequent to year end, submitted his resignation), David Stark, President, Andrew J. Norstrud, Chief Financial Officer, and Lixian Jiang, Chief Operating Officer and Patent Trademark Counsel.

We are indirectly involved, as a middle man, in research and development and practical application within the field of regenerative medicine.
We provide allo (human) stem cell biological solutions that are currently being used in the treatment of patients suffering from degenerative disorders of the human body. We have established agreements with highly specialized, professional medical
treatment facilities around the world in locations where Stem Cell Transplantation therapy is approved by the appropriate local government agencies.

We initially devoted most of our efforts toward organization and fund raising for planned clinics and patient operations and limited revenues have been generated from any such operations. The Company has experienced
recurring losses from operations since its inception and at March 31, 2008, we had a working capital deficit of $820,951 and an accumulated deficit from operations of $1,969,717. As noted in the independent audit report for the audited Stem
Cell Therapy International, Inc. financial statements for the period from inception to March 31, 2008, these factors raise doubt about the ability of the Company to continue as a going concern. Realization of the Companys business plan is
dependent upon the Companys ability to meet its future financing requirements, and the success of future operations. This is because we have not generated substantial revenues since inception. Our only other source for cash at this time is
through investments or loans from management. We must raise cash to implement our project and stay in business.

On March 10, 2008,
the Company entered into a Reorganization and Stock Purchase Agreement and its amendments (the Agreement) with Histostem Co., Ltd., a Korean company (Histostem). Pursuant to the Agreement (as subsequently amended), the
Company will acquire 90% of the issued and outstanding stock of Histostem, and Histostems shareholders will acquire a controlling interest in the Company. The original definitive agreement called for closing of the acquisition by
April 30, 2008. Subsequent to Closing, the Company will be held approximately 60% by Histostem and 40% by the existing shareholders of the Company. Upon completion of the acquisition, the Company will be renamed AmStem International Corp.,
increase the authorized number of shares to 500,000,000 and seek a new symbol on the over-the-counter bulletin board.

On April 22,
2008, the Company amended the Agreement to state that Histostem shall have received funding at the date of the actual closing at a minimum of 2 million dollars towards the initial round of funding of at least 10 million dollars. Subsequent to
that amendment, the actual closing deadline of April 30, 2008 was no longer in effect.

On June 19, 2008, the Company entered
into a second Amendment to the Reorganization and Stock Purchase Agreement. In accordance with the terms of this second Amendment, the Company and Histostem issued and delivered shares reflecting the acquisition of Histostem into Escrow by the
Company pending resolution of outstanding litigation between Histostem Korea and Histostem, Inc. (a United States corporation unrelated to Histostem) (Histostem USA). This essentially effectuates an immediate closing of the Histostem
acquisition. In the Amendment the parties also agreed to complete a one for three reverse stock split of the Companys common stock. That reverse stock split will be completed after filing, mailing and completion of a 14C Information Statement
to the Companys shareholders and appropriate notice and filings with the NASD.

CRITICAL ACCOUNTING POLICIES

The accounting policies of the Company are in accordance with generally accepted accounting principles of the United States of America, and their basis of
application is consistent. Outlined below are those policies considered particularly significant:

The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



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Common stock transactions for services are recorded at either the fair value of the stock issued or the
fair value of the services rendered, which ever is more evident on the day that the transactions are executed. The certificates must be issued subsequent to the transaction date.

We apply Staff Accounting Bulletin No. 104 Revenue Recognition (SAB No. 104) to our revenue arrangements. Currently,
our only revenue transactions derive from the licensing of stem cell technology, the sale of stem cell products, and providing informational and referral services; we have no plans to enter into any other revenue transaction in the near future. In
accordance with SAB No. 104, we recognize revenue related to these licenses, sales and services upon delivering the license or product, or rendering the services, respectively, as long as (1) there is persuasive evidence of an arrangement,
(2) the sales price is fixed or determinable, and (3) collection of the related receivable is reasonably assured. Any payments received prior to delivery of the products or services are included in deferred revenue and recognized once the
products are delivered or the services are performed.

Research and development costs are charged to operations when incurred and are
included in operating expenses.

RESULTS OF OPERATIONS

As
of March 31, 2008 and for the years March 31, 2008 and 2007

We had revenue of $132,960 during the year ended March 31,
2008 as compared to $345,510 of revenue for the comparable period in 2007. Revenues during 2008 reflected the treatment of four patients and nine patients were treated during the same period ended 2007.

Our cost of goods sold for the stem cell biological material delivered during the year ended March 31, 2008 was $52,268 as compared to $289,993 for
the same period ended 2007. The decrease in cost of goods sold is due to the decreased number of treatments and during the year ended March 31, 2007, a $116,000 charge for an additional payment made to ICT for not meeting the contractual
minimum purchase requirement, which, due to ICTs failure to be able to deliver the product, has caused the minimum purchase requirement to be terminated.

Gross margin for the year ended March 31, 2008 was $80,692 as compared to $55,517 for the year ended March 31, 2007. Gross margin as a percentage of revenue for the year ended March 31, 2008 was 61% as
compared to 16% for the year ended March 31, 2007. The increased gross margin is primarily due to using alternative vendors for treatment supplies and the Company did not enter into any agreements with a minimum purchase requirement.

Selling, general and administrative expenses increased $944,548 or 132% to $1,658,775 for the year ended March 31, 2008 as compared
to $714,227 for the year ended March 31, 2007. Selling, general and administrative expenses for the year ended March 31, 2008 primarily consists of the following items:



| |  |  | Payroll expense was $227,296 for the year ended March 31, 2008, which is an increase of $51,091 over the year ended March 31, 2007. This increase was due
to the Board of Directors approval of salary increases for the two executives and the addition of a Chief Financial Officer.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Professional fees-legal and accounting amounted to $496,594 for fiscal year 2008 as compared to $92,244 for fiscal year 2007. The increase in legal and accounting
was due to the Company performing due diligence for potential merger candidates and the addition of another legal firm to assist the Company during the year ended March 31, 2008.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Professional fees-consulting amounted to $701,456 for the year ended March 31, 2008 as compared to $357,282 for 2007.
| | - |  | ---------------------------------------------------------------------------------------------------------------------

During the year ended March 31, 2008, the Company issued 3,000,000 shares of common stock valued at $390,000 for investor relations; this contract
was terminated in February The Company is currently involved in a



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legal dispute over the payment and performance of the consulting agreement. The Company contends that the contract never became effective, and therefore the
consultant was not entitled to receive compensation. The consultant contends that the Company and its representatives induced them to begin performance of the services early, based on certain promises. The Company currently holds the stock
certificates and intends to vigorously defend its position however, the outcome of the proceedings cannot be determined.

Our net loss for
the year ended March 31, 2008 was $1,579,717 as compared to $657,046 during the same period in 2007. The loss primarily reflects increases in payroll expenses, professional fees and stock compensation expense.

LIQUIDITY AND CAPITAL RESOURCES

The Companys
financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended March 31, 2008 and the period since December 2, 2004 (date of inception) through March 31, 2008, the Company has
had a net loss of $1,579,717 and $2,769,165, respectively and cash used by operations of $168,708 and $455,330, respectively, and negative working capital of $430,576 at March 31, 2008.

As of March 31, 2008, the Company has not emerged from the development stage. In view of these matters, recoverability of recorded asset amounts
shown in the accompanying financial statements is dependent upon the Companys ability to begin significant operations and to achieve a level of profitability. Since inception, the Company has financed its activities principally from
shareholder advances and some relatively minor sales of equity securities (as set forth below). The Company intends on financing its future development activities and its working capital needs largely from the sale of equity securities until such
time that funds provided by operations are sufficient to fund working capital requirements.

Effective June 27, 2007, the Company
entered into an agreement with Newbridge Securities, Corp. (Newbridge) to assist the Company on a best efforts basis in raising approximately $250,000 in a private offering of up to 2 million shares of restricted common
stock at a price of $.125 per share.

On March 10, 2008, the Company entered into a Reorganization and Stock Purchase Agreement and
its amendments (the Agreement) with Histostem Co., Ltd., a Korean company (Histostem). Pursuant to the Agreement, (as subsequently amended) the Company will acquire 90% of the issued and outstanding stock of Histostem and
Histostems shareholders will acquire a controlling interest in the Company. The definitive agreement called for closing of the acquisition by April 30, 2008. The newly combined entities will be held approximately 60% by Histostem and 40%
by the existing shareholders of the Company. Upon completion of the acquisition, the Company will be renamed AmStem International Corp., increase the authorized number of shares of common stock and seek a new symbol on the over-the-counter bulletin
board.

On April 22, 2008, the Company amended the Agreement to state that Histostem shall have received funding at the date of the
actual closing at a minimum of 2 million dollars towards the initial round of funding of at least 10 million dollars. Subsequent to that amendment, the actual closing deadline of April 30, 2008 was no longer in effect.

On June 19, 2008, the Company entered into a second Amendment to the Reorganization and Stock Purchase Agreement. In accordance with the terms of this
second Amendment, the Company and Histostem issued and delivered shares reflecting the acquisition of Histostem into Escrow by the Company pending resolution of outstanding litigation between Histostem Korea and Histostem, Inc. (a United States
corporation unrelated to Histostem) (Histostem USA). This essentially effectuates an immediate closing of the Histostem acquisition. In the Amendment the parties also agreed to complete a one for three reverse stock split of the
Companys common stock. That reverse stock split will be completed after filing, mailing and completion of a 14C Information Statement to the Companys shareholders and appropriate notice and filings with the NASD.

In April 2008, the Company entered into a consulting agreement with Mirador Consulting, Inc. to provide management consulting services for three months.
The Company has agreed to issued 200,000 shares of common stock valued at $25,000.

In April 2008, the Company entered into a consulting
agreement with Hunden Consulting Group to provide investor relations services for one year. Fees shall be paid to the consultant only if the consultant introduces the Company, in writing, to a third party investor or merger candidate, then the fees
shall equal 10% of the total investment or loan to the Company and if a merger transaction occurs between the Company and a party introduced by the Consultant, the Consultant would be entitled to receive a 5% commission.



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On May 28, 2008, the Company entered into a consulting agreement with Shea Financial, LLC to provide
fund raising services for a term of three months in exchange for the right to purchase 500,000 shares of common stock at $0.05 per share upon a funding commitment to the Company of at least $10 million from consultant funding and $2,500,000 at the
closing. To date, the Company has not received any funding under this agreement.

On June 5, 2008, the Company entered into an
agreement with Ventana Group to extend a Credit Facility of up to $2,500,000 in bridge financing. The loan will mature the sooner of 180 days from the date of funding with interest accruing at a rate of 1.25% and principal and interest due at
maturity. Ventana has the option to convert all or any portion of the loan to equity, with the conversion terms to be determined at a later date. The Company has agreed to pay Ventana a 5% loan fee based on the amount of the draw down on the credit
facility and to issue a warrant to purchase shares of common stock equal to 25% of the loan commitment ($2,500,000). The number of warrants and strike price shall be determined using the 45 day average trading price per share of the stock at the
time of execution, less a 10% discount. The warrant will be exercisable for 3 years from the date of issuance. As of the date of this filing, no funding has been received, nor can there be any assurance regarding the closing of this funding.

On June 12, 2008, the Company sold 388,889 shares of common stock along with an option to purchase an additional 722,222 shares of
common stock at $0.09 per share to an accredited investor for an aggregate price of $35,000.

Subsequent to year end, the Company borrowed
money from related parties totaling $45,000. The notes are due on demand and bear interest at 7% per year.

Seasonality

As a result of the Companys limited operating history and the emerging nature of the biotechnological markets in which it competes, the Company is
unable to accurately forecast its revenues. The Companys current and future expense levels are based largely on its investment plans and estimates of future revenues and are to a large extent fixed and expected to increase.

OFF-BALANCE SHEET ARRANGEMENTS

The Company is not
currently engaged in any off-balance sheet arrangements, as defined by Item 303(c)(2) of Regulation S-B. The Company has not engaged in any off-balance sheet arrangement during the last fiscal year, and is not reasonably likely to engage in any
off-balance sheet arrangement in the near future.

NEW ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial
Liabilities, which permits an entity to measure certain financial assets and financial liabilities at fair value. Under SFAS 159, entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent
reporting date. The fair value option may be elected on a instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value option election is irrevocable, unless a new election date
occurs. SFAS 159 establishes presentation and disclosure requirements to help financial statement users understand the effect of the entitys election on its earnings but does not eliminate disclosure requirements of other accounting standards.
Assets and liabilities that are measured at fair value must be displayed on the face of the balance sheet. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. The Company does not expect the
adoption of SFAS 159 to have a material impact on the financial statements.

In December 2007, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), Business Combinations, which replaces SFAS No 141. The statement retains the purchase method of accounting for acquisitions, but
requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the
capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. SFAS No. 141R is effective for business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or after December 15, 2008.

In December 2007, the FASB issued SFAS
No. 160. Noncontrolling Interests in Consolidated Financial Statements and Amendment of ARB No. 51. SFAS 160 establishes accounting and reporting standards pertaining to ownership interests in subsidiaries held by
parties other than the parent, the amount of net income attributable to the parent and to



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the noncontrolling interest, changes in a parents ownership interest, and the valuation of any retained noncontrolling equity investment when a
subsidiary is deconsolidated. This statement also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for
fiscal years beginning on or after December 15, 2008. The adoption of SFAS 160 is not currently expected to have a material effect on the Companys financial position, results of operations, or cash flows.

In March 2008, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entitys financial
position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The company is currently evaluating the
impact of adopting SFAS. No. 161 on its financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounting Principles. The current GAAP hierarchy, as set forth in the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standard No. 69, The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles, has been criticized because (1) it is directed to the auditor rather than the entity, (2) it is complex, and (3) it ranks FASB Statements of Financial Accounting Concepts. The FASB believes
that the GAAP hierarchy should be directed to entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. Accordingly, the FASB
concluded that the GAAP hierarchy should reside in the accounting literature established by the FASB and is issuing this Statement to achieve that result. This Statement is effective 60 days following the SECs approval of the Public Company
Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The adoption of SFAS No. 162 is not expected to have a material impact on the
Companys financial position.

Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC
did not or are not believed by management to have a material impact on the Companys present or future financial statements.



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|ITEM 7. | FINANCIAL STATEMENTS
|------- | --------------------

Table of Contents:



|                                                                                                                                                                       |  |    
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|Report of Independent Registered Certified Public Accounting Firm-Aidman, Piser & Company P.A.                                                                         |  | F-2
|                                                                                                                                                                       | 
|Consolidated Balance Sheets as of March 31, 2008 and 2007                                                                                                              |  | F-3
|                                                                                                                                                                       | 
|Consolidated Statements of Operations for the years ended March 
31, 2008 and 2007 and for the period from December 2, 2004 (Date of Inception) through March 31, 2008 |  | F-4
|                                                                                                                                                                       | 
|Consolidated Statement of Changes in Stockholders (Deficit) for the period from December 
2, 2004 (Date of Inception) through March 31, 2008                          |  | F-5
|                                                                                                                                                                       | 
|Consolidated Statements of Cash Flows for the years ended March 
31, 2008 and 2007 and for the period from December 2, 2004 (Date of Inception) through March 31, 2008 |  | F-8
|                                                                                                                                                                       | 
|Notes to Consolidated Financial Statements                                                                                                                             |  | F-9



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Stem Cell Therapy
International, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of Stem Cell Therapy International, Inc and Subsidiary as
of March 31, 2008 and 2007 and the related consolidated statements of operations, changes in stockholders deficit, and cash flows for the years then ended, and for the period from December 2, 2004 (date of inception) through
March 31, 2008. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Stem Cell
Therapy International, Inc. and Subsidiary as of March 31, 2008 and 2007 and the consolidated results of their operations and their cash flows for the years then ended and for the period from December 2, 2004 (date of inception) through
March 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial
statements have been prepared assuming that Stem Cell Therapy International, Inc. and Subsidiary will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company incurred significant losses and used cash
in operating activities during the year ended March 31, 2008, and had a deficit in working capital at March 31, 2008. These factors, among others as discussed in Note 2 to the consolidated financial statements, raise substantial doubt
about the Companys ability to continue as a going concern. Managements plans in regards to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.

/s/ Aidman, Piser & Company, P.A.

Tampa, Florida

July 14, 2008



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##### Table of Contents

Stem Cell Therapy International, Inc. and Subsidiary

(a development stage enterprise)

Consolidated Balance Sheets



|                                                                                                                                |  |           |            |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                |  | March 31, |           
|                                                                                                                                |  | 2008      |            |   | 2007 |  
|Assets                                                                                                                          |  |           |            |   |      |   |            |  
|Current assets:                                                                                                                 |  |           |            |   |      |   |            |  
|Cash                                                                                                                            |  | $         | 2,387      |   |      | $ | 27,905     |  
|Inventory                                                                                                                       |  |           |           |   |      |   | 5,988      |  
|Prepaid expenses                                                                                                                |  |           | 358,738    |   |      |   | 47,317     |  
|                                                                                                                                |  |           |            |   |      |   |            |  
|Total current assets                                                                                                            |  |           | 361,125    |   |      |   | 81,210     |  
|                                                                                                                                |  |          
|Certificate of deposit, restricted                                                                                              |  |           |           |   |      |   | 3,919      |  
|Deposits                                                                                                                        |  |           | 2,169      |   |      |   | 2,169      |  
|Prepaid expenses                                                                                                                |  |           | 10,792     |   |      |   | 51,209     |  
|                                                                                                                                |  |           |            |   |      |   |            |  
|Total assets                                                                                                                    |  | $         | 374,086    |   |      | $ | 138,507    |  
|                                                                                                                                |  |           |            |   |      |   |            |  
|                                                                                                                                |  |          
|Liabilities and stockholders deficit                                                                                           |  |           |            |   |      |   |            |  
|Current liabilities:                                                                                                            |  |           |            |   |      |   |            |  
|Accounts payable                                                                                                                |  | $         | 126,670    |   |      | $ | 62,875     |  
|Accrued expenses                                                                                                                |  |           | 99,000     |   |      |   | 75,000     |  
|Accrued payroll and payroll related expenses                                                                                    |  |           | 358,831    |   |      |   | 170,557    |  
|Deferred revenue                                                                                                                |  |           |           |   |      |   | 50,000     |  
|Stockholder advances                                                                                                            |  |           |           |   |      |   | 48,753     |  
|Due to related party                                                                                                            |  |           | 207,200    |   |      |   | 225,200    |  
|                                                                                                                                |  |           |            |   |      |   |            |  
|Total current liabilities                                                                                                       |  |           | 791,701    |   |      |   | 632,385    |  
|                                                                                                                                |  |          
|Commitments and contingencies (Note 8)                                                                                          |  |           |           |   |      |   |           |  
|                                                                                                                                |  |          
|Stockholders deficit:                                                                                                          |  |           |            |   |      |   |            |  
|Preferred stock; $.001 par value; 10,000,000 shares authorized and 500,000 issued and outstanding                               |  |           | 500        |   |      |   | 500        |  
|Common stock; $.001 par value; 100,000,000 shares authorized and 40,920,369 and 34,495,369 issued and outstanding,
respectively |  |           | 40,920     |   |      |   | 34,495     |  
|Additional paid-in capital                                                                                                      |  |           | 2,310,130  |   |      |   | 660,575    |  
|Deficit accumulated during development stage                                                                                    |  |           | (2,769,165 | ) |      |   | (1,189,448 | )
|                                                                                                                                |  |           |            |   |      |   |            |  
|Total stockholders deficit                                                                                                     |  |           | (417,615   | ) |      |   | (493,878   | )
|                                                                                                                                |  |           |            |   |      |   |            |  
|Total liabilities and stockholders deficit                                                                                     |  | $         | 374,086    |   |      | $ | 138,507    |  
|                                                                                                                                |  |           |            |   |      |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



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##### Table of Contents

Stem Cell Therapy International, Inc. and Subsidiary

(a development stage enterprise)

Consolidated Statements of Operations



|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|--------------------------------------------------------- |  | --------------------- | ---------- | - | ------------------------------------------------------------------ | - | ---------- | - |  | - | ---------- | -
|                                                          |  | Years Ended March 31, |            |   | Period fromDecember 2, 2004(Date
ofInception)throughMarch 31, 2008 |  
|                                                          |  | 2008                  |            |   | 2007                                                               |   |           
|Revenue                                                   |  | $                     | 132,960    |   |                                                                    | $ | 345,510    |   |  | $ | 559,404    |  
|Cost of goods sold:                                       |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|General                                                   |  |                       | 52,268     |   |                                                                    |   | 173,993    |   |  |   | 278,361    |  
|Loss on firm purchase commitment                          |  |                       |           |   |                                                                    |   | 116,000    |   |  |   | 116,000    |  
|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|Gross margin                                              |  |                       | 80,692     |   |                                                                    |   | 55,517     |   |  |   | 165,043    |  
|                                                          |  |                       |           
|Operating expenses:                                       |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|Selling, general & administrative expenses                |  |                       | 1,658,775  |   |                                                                    |   | 714,227    |   |  |   | 2,936,354  |  
|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|                                                          |  |                       |           
|Loss from operations                                      |  |                       | (1,578,083 | ) |                                                                    |   | (658,710   | ) |  |   | (2,771,311 | )
|                                                          |  |                       |           
|Interest income, net                                      |  |                       | (1,634     | ) |                                                                    |   | 1,664      |   |  |   | 2,146      |  
|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|Net loss before taxes                                     |  |                       | (1,579,717 | ) |                                                                    |   | (657,046   | ) |  |   | (2,769,165 | )
|Income tax expense                                        |  |                       |           |   |                                                                    |   |           |   |  |   |           |  
|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|                                                          |  |                       |           
|Net loss                                                  |  |                       | (1,579,717 | ) |                                                                    |   | (657,046   | ) |  |   | (2,769,165 | )
|Less dividends on preferred stock                         |  |                       |           |   |                                                                    |   |           |   |  |   | (10,000    | )
|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|                                                          |  |                       |           
|Loss attributable to common shareholders                  |  | $                     | (1,579,717 | ) |                                                                    | $ | (657,046   | ) |  | $ | (2,779,165 | )
|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|                                                          |  |                       |           
|Net loss per share, basic & diluted                       |  | $                     | (.04       | ) |                                                                    | $ | (.02       | ) |  | $ | (.09       | )
|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  
|                                                          |  |                       |           
|Weighted average number of common shares, basic & diluted |  |                       | 36,950,506 |   |                                                                    |   | 34,310,534 |   |  |   | 31,182,100 |  
|                                                          |  |                       |            |   |                                                                    |   |            |   |  |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



F-4



---

##### Table of Contents

Stem Cell Therapy International, Inc. and Subsidiary

(A Development Stage Enterprise)

Consolidated Statement of Changes in Stockholders Deficit

For the period from December 2, 2004 (Date of
Inception) through March 31, 2008



|                                                                                  |  |              |   |  |                 |        |                          |        |         |                                          |   |     |       |   |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------- |  | ------------ | - |  | --------------- | ------ | ------------------------ | ------ | ------- | ---------------------------------------- | - | --- | ----- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                  |  | Common Stock |   |  | Preferred Stock |        | AdditionalPaid-InCapital |        |         | DeficitAccumulatedDuringDevelopmentStage |   |     | Total |  
|                                                                                  |  | Shares       |   |  | Amount          |        |                          | Shares |         | Amount                                   |   |     |      
|Issuance of common stock for cash (December 2004)                                 |  | 11,600,000   |   |  | $               | 11,600 |                          |        |        |                                          | $ |    |       | $ |        |   |  | $ |        |   |  | $ | 11,600  |  
|Exercise of stock options for services (December 2004)                            |  | 500,000      |   |  |                 | 500    |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 500     |  
|Issuance of common stock and options for acquisition deposit (December 2004)      |  | 5,000,000    |   |  |                 | 5,000  |                          |        |        |                                          |   |    |       |   | 2,749   |   |  |   |        |   |  |   | 7,749   |  
|Stock options issued for services                                                 |  |             |   |  |                 |       |                          |        |        |                                          |   |    |       |   | 906     |   |  |   |        |   |  |   | 906     |  
|Issuance of common stock for services (January 2005)                              |  | 2,170,000    |   |  |                 | 2,170  |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 2,170   |  
|Issuance of common stock for cash (January 2005)                                  |  | 200,000      |   |  |                 | 200    |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 200     |  
|Issuance of common stock for cash (February 2005)                                 |  | 1,100,000    |   |  |                 | 1,100  |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 1,100   |  
|Issuance of common stock for cash (March 2005)                                    |  | 650,000      |   |  |                 | 650    |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 650     |  
|Net loss for the period                                                           |  |             |   |  |                 |       |                          |        |        |                                          |   |    |       |   |        |   |  |   | (26,241 | ) |  |   | (26,241 | )
|                                                                                  |  |              |   |  |                 |        |                          |        |         |                                          |   |     |       |   |         |   |  |   |         |   |  |   |         |  
|                                                                                  |  |              |   |  |                 |        |                         
|Balance, March 31, 2005                                                           |  | 21,220,000   |   |  |                 | 21,220 |                          |        |        |                                          |   |    |       |   | 3,655   |   |  |   | (26,241 | ) |  |   | (1,366  | )
|                                                                                  |  |              |   |  |                 |        |                         
|Cancellation of common stock issued and options awarded for services (May 2005)   |  | (5,600,000   | ) |  |                 | (5,600 | )                        |        |        |                                          |   |    |       |   | (2,749  | ) |  |   |        |   |  |   | (8,349  | )
|Issuance of common stock for services (September 2005)                            |  | 379,000      |   |  |                 | 379    |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 379     |  
|Issuance of common stock for intangible asset                                     |  | 5,000,000    |   |  |                 | 5,000  |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 5,000   |  
|Reverse acquisition, September 1, 2005                                            |  | 6,310,678    |   |  |                 | 6,311  |                          |        |        |                                          |   |    |       |   | (906    | ) |  |   |        |   |  |   | 5,405   |  
|Issuance of common stock for a reduction in stockholder advances (September 2005) |  | 3,000,000    |   |  |                 | 3,000  |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 3,000   |  
|Issuance of common stock for services (September 2005)                            |  | 3,030,000    |   |  |                 | 3,030  |                          |        |        |                                          |   |    |       |   |        |   |  |   |        |   |  |   | 3,030   |  
|Issuance of preferred stock for cash (September 2005)                             |  |             |   |  |                 |       |                          |        | 500,000 |                                          |   | 500 |       |   | 34,500  |   |  |   |        |   |  |   | 35,000  |  
|Dividend on preferred stock                                                       |  |             |   |  |                 |       |                          |        |        |                                          |   |    |       |   | (10,000 | ) |  |   |        |   |  |   | (10,000 | )
|Issuance of common stock for services (September 2005)                            |  | 6,400        |   |  |                 | 6      |                          |        |        |                                          |   |    |       |   | 11,994  |   |  |   |        |   |  |   | 12,000  |  
|Issuance of common stock for services (October 2005)                              |  | 11,882       |   |  |                 | 12     |                          |        |        |                                          |   |    |       |   | 11,988  |   |  |   |        |   |  |   | 12,000  |  
|Issuance of common stock for services (October 2005)                              |  | 20,000       |   |  |                 | 20     |                          |        |        |                                          |   |    |       |   | 20,980  |   |  |   |        |   |  |   | 21,000  |  
|Issuance of common stock for services (October 2005)                              |  | 10,000       |   |  |                 | 10     |                          |        |        |                                          |   |    |       |   | 17,490  |   |  |   |        |   |  |   | 17,500  |  
|Issuance of common stock for services (October 2005)                              |  | 10,000       |   |  |                 | 10     |                          |        |        |                                          |   |    |       |   | 14,490  |   |  |   |        |   |  |   | 14,500  |  
|Issuance of common stock for services (November 2005)                             |  | 13,953       |   |  |                 | 14     |                          |        |        |                                          |   |    |       |   | 11,986  |   |  |   |        |   |  |   | 12,000  |  
|Issuance of common stock for services (December 2005)                             |  | 30,000       |   |  |                 | 30     |                          |        |        |                                          |   |    |       |   | 29,070  |   |  |   |        |   |  |   | 29,100  |  
|Issuance of common stock for services (December 2005)                             |  | 12,000       |   |  |                 | 12     |                          |        |        |                                          |   |    |       |   | 11,988  |   |  |   |        |   |  |   | 12,000  |  
|Issuance of common stock for services (January 2006)                              |  | 10,000       |   |  |                 | 10     |                          |        |        |                                          |   |    |       |   | 7,555   |   |  |   |        |   |  |   | 7,565   |  



F-5



---

##### Table of Contents

Stem Cell Therapy International, Inc.

(A Development Stage Enterprise)

Statements of Changes in Stockholders
Deficit (Continued)

For the period from December 2, 2004 (Date of Inception) through March 31, 2008



|                                                      |  |              |  |                 |  |                          |  |                                          |  |         |       |            |   |  |          |  
|----------------------------------------------------- |  | ------------ |  | --------------- |  | ------------------------ |  | ---------------------------------------- |  | ------- | ----- | ---------- | - |  | -------- | -
|                                                      |  | Common Stock |  | Preferred Stock |  | AdditionalPaid-InCapital |  | DeficitAccumulatedDuringDevelopmentStage |  |         | Total |           
|                                                      |  | Shares       |  | Amount          |  | Shares                   |  | Amount                                   |  |         |      
|Issuance of common stock for services (January 2006)  |  | 10,000       |  | 10              |  |                         |  |                                         |  | 7,555   |       |           |   |  | 7,565    |  
|Issuance of common stock for services (January 2006)  |  | 14,118       |  | 14              |  |                         |  |                                         |  | 11,986  |       |           |   |  | 12,000   |  
|Issuance of common stock for services (January 2006)  |  | 20,000       |  | 20              |  |                         |  |                                         |  | 16,980  |       |           |   |  | 17,000   |  
|Issuance of common stock for services (February 2006) |  | 14,118       |  | 14              |  |                         |  |                                         |  | 11,986  |       |           |   |  | 12,000   |  
|Issuance of common stock for services (February 2006) |  | 24,000       |  | 24              |  |                         |  |                                         |  | 20,376  |       |           |   |  | 20,400   |  
|Issuance of common stock for services (February 2006) |  | 48,000       |  | 48              |  |                         |  |                                         |  | 40,752  |       |           |   |  | 40,800   |  
|Issuance of common stock for services (February 2006) |  | 48,000       |  | 48              |  |                         |  |                                         |  | 40,752  |       |           |   |  | 40,800   |  
|Issuance of common stock for services (March 2006)    |  | 30,361       |  | 30              |  |                         |  |                                         |  | 11,970  |       |           |   |  | 12,000   |  
|                                                      |  |              |  |                 |  |                          | 
|Net loss for the year ended March 31, 2006            |  |             |  |                |  |                         |  |                                         |  |        |       | (506,161   | ) |  | (506,161 | )
|                                                      |  |              |  |                 |  |                          |  |                                          |  |         |       |            |   |  |          |  
|                                                      |  |              |  |                 |  |                          | 
|Balance, March 31, 2006                               |  | 33,672,510   |  | 33,672          |  | 500,000                  |  | 500                                      |  | 324,398 |       | (532,402   | ) |  | (173,832 | )
|                                                      |  |              |  |                 |  |                          | 
|Issuance of common stock for services (April 2006)    |  | 25,276       |  | 26              |  |                         |  |                                         |  | 21,974  |       |           |   |  | 22,000   |  
|Issuance of common stock for services (May 2006)      |  | 16,484       |  | 16              |  |                         |  |                                         |  | 11,.984 |       |           |   |  | 12,000   |  
|Issuance of common stock for services (June 2006)     |  | 422,599      |  | 423             |  |                         |  |                                         |  | 167,577 |       |           |   |  | 168,000  |  
|Issuance of common stock for services (July 2006)     |  | 330,265      |  | 330             |  |                         |  |                                         |  | 122,670 |       |           |   |  | 123,000  |  
|Issuance of common stock for services (August 2006)   |  | 28,235       |  | 28              |  |                         |  |                                         |  | 11,972  |       |           |   |  | 12,000   |  
|                                                      |  |              |  |                 |  |                          | 
|Net loss for the year ended March 31, 2007            |  |             |  |                |  |                         |  |                                         |  |        |       | (657,046   | ) |  | (657,046 | )
|                                                      |  |              |  |                 |  |                          |  |                                          |  |         |       |            |   |  |          |  
|                                                      |  |              |  |                 |  |                          | 
|Balance, March 31, 2007                               |  | 34,495,369   |  | 34,495          |  | 500,000                  |  | 500                                      |  | 660,575 |       | (1,189,448 | ) |  | (493,878 | )

The accompanying notes are an integral part of the consolidated financial statements.



F-6



---

##### Table of Contents

Stem Cell Therapy International, Inc.

(A Development Stage Enterprise)

Statements of Changes in Stockholders
Deficit (Continued)

For the period from December 2, 2004 (Date of Inception) through March 31, 2008



|                                                                     |  |              |  |                 |        |                          |         |        |                                          |     |  |       |           |   |  |   |            |   |  |   |            |  
|-------------------------------------------------------------------- |  | ------------ |  | --------------- | ------ | ------------------------ | ------- | ------ | ---------------------------------------- | --- |  | ----- | --------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                     |  | Common Stock |  | Preferred Stock |        | AdditionalPaid-InCapital |         |        | DeficitAccumulatedDuringDevelopmentStage |     |  | Total |          
|                                                                     |  | Shares       |  | Amount          |        | Shares                   |         | Amount |                                          |     | 
|Issuance of common stock for services (May 2007)                     |  | 250,000      |  |                 | 250    |                          |        |        |                                          |    |  |       | 44,750    |   |  |   |           |   |  |   | 45,000     |  
|Issuance of common stock for services (June 2007)                    |  | 300,000      |  |                 | 300    |                          |        |        |                                          |    |  |       | 116,700   |   |  |   |           |   |  |   | 117,000    |  
|Issuance of common stock for cash, net of offering costs (July 2007) |  | 2,000,000    |  |                 | 2,000  |                          |        |        |                                          |    |  |       | 204,024   |   |  |   |           |   |  |   | 206,024    |  
|Issuance of warrants for consulting services (September 2007)        |  |             |  |                 |       |                          |        |        |                                          |    |  |       | 23,750    |   |  |   |           |   |  |   | 23,750     |  
|Exercise of warrants (September 2007)                                |  | 125,000      |  |                 | 125    |                          |        |        |                                          |    |  |       | (125      | ) |  |   |           |   |  |   |           |  
|Share-based compensation to employees                                |  |             |  |                 |       |                          |        |        |                                          |    |  |       | 505,716   |   |  |   |           |   |  |   | 505,716    |  
|Issuance of warrants for consulting services (October 2007)          |  |             |  |                 |       |                          |        |        |                                          |    |  |       | 419,864   |   |  |   |           |   |  |   | 419,864    |  
|Issuance of warrants for consulting services (December 2007)         |  |             |  |                 |       |                          |        |        |                                          |    |  |       | 10,000    |   |  |   |           |   |  |   | 10,000     |  
|Exercise of warrants (December 2007)                                 |  | 125,000      |  |                 | 125    |                          |        |        |                                          |    |  |       | (125      | ) |  |   |           |   |  |   |           |  
|Exercise of options (January 2008)                                   |  | 2,000,000    |  |                 | 2,000  |                          |        |        |                                          |    |  |       |          |   |  |   |           |   |  |   | 2,000      |  
|Issuance of common stock for services (February 2008)                |  | 500,000      |  |                 | 500    |                          |        |        |                                          |    |  |       | 62,000    |   |  |   |           |   |  |   | 62,500     |  
|Issuance of common stock for services (March 2008)                   |  | 750,000      |  |                 | 750    |                          |        |        |                                          |    |  |       | 176,750   |   |  |   |           |   |  |   | 177,500    |  
|Share-based compensation to employees (March 2008)                   |  | 250,000      |  |                 | 250    |                          |         |        |                                          |     |  |       | 54,750    |   |  |   |           |   |  |   | 55,000     |  
|Issuance of warrants for consulting services (March 2008)            |  |             |  |                 |       |                          |        |        |                                          |    |  |       | 28,700    |   |  |   |           |   |  |   | 28,700     |  
|Exercise of warrants (March 2008)                                    |  | 125,000      |  |                 | 125    |                          |        |        |                                          |    |  |       | (125      | ) |  |   |           |   |  |   |           |  
|Share-based compensation to employees (March 2008)                   |  |             |  |                 |       |                          |        |        |                                          |    |  |       | 2,926     |   |  |   |           |   |  |   | 2,926      |  
|                                                                     |  |              |  |                 |        |                          |        
|Net loss for the year ended March 31, 2008                           |  |             |  |                 |       |                          |        |        |                                          |    |  |       |          |   |  |   | (1,579,717 | ) |  |   | (1,579,717 | )
|                                                                     |  |              |  |                 |        |                          |         |        |                                          |     |  |       |           |   |  |   |            |   |  |   |            |  
|                                                                     |  |              |  |                 |        |                          |        
|Balance, March 31, 2008                                              |  | 40,920,369   |  | $               | 40,920 |                          | 500,000 |        | $                                        | 500 |  | $     | 2,310,130 |   |  | $ | (2,769,165 | ) |  | $ | (417,615   | )
|                                                                     |  |              |  |                 |        |                          |         |        |                                          |     |  |       |           |   |  |   |            |   |  |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



F-7



---

##### Table of Contents

Stem Cell Therapy International, Inc. and Subsidiary

(a development stage enterprise)

Consolidated
Statements of Cash Flows



|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|----------------------------------------------------------------------------------- |  | --------------------- | ---------- | - | ------------------------------------------------------------------ | - | -------- | - |  | - | ---------- | -
|                                                                                    |  | Years Ended March 31, |            |   | Period fromDecember 2, 2004(Date
ofInception)throughMarch 31, 2008 |  
|                                                                                    |  | 2008                  |            |   | 2007                                                               |   |         
|Operating activities:                                                               |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Net loss                                                                            |  | $                     | (1,579,717 | ) |                                                                    | $ | (657,046 | ) |  | $ | (2,769,165 | )
|Adjustments to reconcile net loss to net cash used by operating activities:         |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Share-based compensation to non-employees                                           |  |                       | 601,366    |   |                                                                    |   | 325,539  |   |  |   | 1,164,178  |  
|Share-based compensation to employees                                               |  |                       | 563,642    |   |                                                                    |   |         |   |  |   | 563,642    |  
|Investment income reinvested                                                        |  |                       |           |   |                                                                    |   | (2,943   | ) |  |   | (2,943     | )
|Amortization                                                                        |  |                       |           |   |                                                                    |   | 375      |   |  |   | 668        |  
|Write off of intangible asset                                                       |  |                       |           |   |                                                                    |   | 4,333    |   |  |   | 4,333      |  
|(Increase) decrease in:                                                             |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Inventory                                                                           |  |                       | 5,988      |   |                                                                    |   | (5,988   | ) |  |   |           |  
|Prepaid expenses                                                                    |  |                       | 11,943     |   |                                                                    |   | (8,117   | ) |  |   | (375       | )
|Deposits                                                                            |  |                       |           |   |                                                                    |   | (580     | ) |  |   | (2,169     | )
|Increase in:                                                                        |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Accounts payable                                                                    |  |                       | 65,795     |   |                                                                    |   | 34,505   |   |  |   | 128,670    |  
|Accrued payroll                                                                     |  |                       | 188,275    |   |                                                                    |   | 135,557  |   |  |   | 358,831    |  
|Accrued expenses                                                                    |  |                       | 24,000     |   |                                                                    |   |         |   |  |   | 99,000     |  
|Deferred revenue                                                                    |  |                       | (50,000    | ) |                                                                    |   | 50,000   |   |  |   |           |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Net cash used by operating activities                                               |  |                       | (168,708   | ) |                                                                    |   | (124,365 | ) |  |   | (455,330   | )
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|                                                                                    |  |                       |           
|Investing activities:                                                               |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Proceeds from certificate of deposit, restricted                                    |  |                       | 3,919      |   |                                                                    |   | 119,024  |   |  |   | 2,943      |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Net cash provided (used) by investing activities                                    |  |                       | 3,919      |   |                                                                    |   | 119,024  |   |  |   | 2,943      |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|                                                                                    |  |                       |           
|Financing activities:                                                               |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Proceeds from advances from stockholder                                             |  |                       |           |   |                                                                    |   | 376      |   |  |   | 52,528     |  
|Repayment of stockholder advances                                                   |  |                       | (48,753    | ) |                                                                    |   |         |   |  |   | (49,528    | )
|(Repayment) advances from related party, net                                        |  |                       | (18,000    | ) |                                                                    |   | 228      |   |  |   | 207,200    |  
|Payment of stock offering costs                                                     |  |                       | (43,976    | ) |                                                                    |   |         |   |  |   | (43,976    | )
|Proceeds from sale of stock                                                         |  |                       | 250,000    |   |                                                                    |   |         |   |  |   | 288,550    |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Net cash provided by financing activities                                           |  |                       | 139,271    |   |                                                                    |   | 604      |   |  |   | 454,774    |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|                                                                                    |  |                       |           
|Net (decrease) increase in cash                                                     |  |                       | (25,518    | ) |                                                                    |   | (4,737   | ) |  |   | 2,387      |  
|Cash at beginning of period                                                         |  |                       | 27,905     |   |                                                                    |   | 32,642   |   |  |   |           |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Cash at end of period                                                               |  | $                     | 2,387      |   |                                                                    | $ | 27,905   |   |  | $ | 2,387      |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|                                                                                    |  |                       |           
|Supplemental disclosure of cash flow information and non-cash financing activities: |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|                                                                                    |  |                       |           
|Cash paid for interest                                                              |  | $                     | 1,645      |   |                                                                    | $ | 1,554    |   |  | $ | 3,308      |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Common stock issued for a reduction in advance from stockholder                     |  | $                     |           |   |                                                                    | $ |         |   |  | $ | 3,000      |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Common stock issued for a reduction in accounts payable                             |  | $                     | 2,000      |   |                                                                    | $ |         |   |  | $ | 2,000      |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  
|Common stock issued for purchase of intangible asset                                |  | $                     |           |   |                                                                    | $ |         |   |  | $ | 5,000      |  
|                                                                                    |  |                       |            |   |                                                                    |   |          |   |  |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



F-8



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##### Table of Contents

Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to
Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through
March 31, 2008



|1. | BACKGROUND INFORMATION, BASIS OF PRESENTATION AND BUSINESS REORGANIZATION
|-- | -------------------------------------------------------------------------

Company background:

Stem Cell Therapy International, Inc. (the Company), was originally
incorporated in the state of Nevada on December 28, 1992 as Arklow Associates, Inc. The Companys operating business is Stem Cell Therapy International Corp. (Stem Cell Florida) a wholly owned subsidiary, which is a development
stage enterprise, and was incorporated in the state of Nevada on December 2, 2004. To date, the Companys activities have been limited to raising capital, organizational matters and the structuring of its business plan. The corporate
headquarters is located in Tampa, Florida.

To date, the Company has been engaged in the licensing of stem cell technology, the sale of stem
cell products, and information, education, and referral services relating to potential stem cell therapy patients. The Company purchases allo stem cell biological solutions that are currently being used in the treatment of patients suffering from
degenerative disorders of the human body such as Alzheimers, Parkinsons Disease, ALS, leukemia, muscular dystrophy, multiple sclerosis, arthritis, spinal cord injuries, brain injury, stroke, heart disease, liver and retinal disease,
diabetes as well as certain types of cancer.

Business reorganization:

Effective September 1, 2005, Stem Cell Florida entered into a Reorganization and Stock Purchase Agreement (the Agreement) with the
Company, then named Altadyne, Inc., a company quoted on the Pink Sheets, which had no assets, liabilities or ongoing operations. Under the terms of the agreement, the Company, (then Altadyne) acquired 100% of the issued and outstanding shares of
common stock of Stem Cell Florida in a non-cash transaction and Stem Cell Florida became a wholly owned subsidiary of the Company. Subsequent to the merger, Altadyne changed its name to Stem Cell Therapy International Inc. This transaction is
accounted for as a reverse merger, with Stem Cell Florida treated as the accounting acquirer for financial statement purposes.

The results
of operations for Stem Cell Florida, the accounting acquirer, for the period from December 2, 2004 (Date of Inception) have been included in the consolidated statements of operations of the Company.

Principles of consolidation:

The
accompanying consolidated financial statements include the accounts of Stem Cell Therapy International, Inc. and its wholly-owned subsidiary, Stem Cell Therapy International Corp. All intercompany accounts and transactions have been eliminated.



|2. | LIQUIDITY AND MANAGEMENTS PLANS
|-- | --------------------------------

The
accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. For the year ended March 31, 2008 and the period since December 2, 2004 (date of inception) through March 31,
2008, the Company has had net losses of $1,579,717 and $2,769,165, respectively, and cash used in operations of $168,708 and $455,330, respectively, and has negative working capital of $430,576 at March 31, 2008. As of March 31, 2008, the
Company has not emerged from the development stage. In view of these matters, the ability of the Company to continue as a going concern is dependent upon the Companys ability to generate additional financing and ultimately increase operations
and to achieve a level of profitability. Since inception, the Company has financed its activities principally from the use of equity securities to pay for services and related party advances. The Company intends on financing its future development
activities and its working capital needs largely from the sale of equity securities and loans from the Companys Chief Executive Officer, until such time that funds provided by operations are sufficient to fund working capital requirements.
There can be no assurance that the Company will be successful at achieving its financing goals at reasonably commercial terms, if at all.



F-9



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##### Table of Contents

Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|2. | LIQUIDITY AND MANAGEMENTS PLANS (CONTINUED)
|-- | --------------------------------------------



On March 10, 2008, the Company entered into a Reorganization and Stock Purchase Agreement (the
Agreement) with Histostem Co., Ltd., a Korean company (Histostem). Pursuant to the Agreement (as subsequently amended), the Company will acquire 90% of the issued and outstanding stock of Histostem from Histostems
shareholders, and Histostems shareholders will acquire a controlling interest in the Company. The original definitive agreement called for closing of the acquisition by April 30, 2008. Subsequent to the closing, the company will be held
approximately 60% by Histostem and 40% by the existing shareholders of the Company. Upon completion of the acquisition, the Company will be renamed AmStem International Corp., increase the number of authorized shares of common stock and will seek a
new symbol on the over-the-counter bulletin board.

On April 22, 2008, the Company amended the Agreement to state that Histostem shall
have received funding at the date of the actual closing at a minimum of 2 million dollars towards the initial found of funding of at least 10 million dollars. Subsequent to that amendment, the actual closing deadline of April 30, 2008
was no longer in effect.

On June 19, 2008, the Company entered into a second Amendment to the Reorganization and Stock Purchase Agreement.
In accordance with the terms of this second Amendment, the Company and Histostem issued and delivered shares reflecting the acquisition of Histostem into Escrow by the Company pending resolution of outstanding litigation between Histostem Korea and
Histostem, Inc. (a United States corporation unrelated to Histostem) (Histostem USA). This essentially effectuates an immediate closing of the Histostem acquisition. In the Amendment the parties also agreed to complete a one for three
reverse stock split of the Companys common stock. That reverse stock split will be completed after filing, mailing and completion of a 14C Information Statement to the Companys shareholders and appropriate notice and filings with the
NASD.



|3. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------

Use of
estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of credit risk:

Cash balances are maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of
insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk.

Impairment of long-lived assets:

The Company evaluates the recoverability of its long-lived assets or asset groups whenever
adverse events or changes in business climate indicate that the expected undiscounted future cash flows from the related assets may be less than previously anticipated. If the net book value of the related assets exceeds the undiscounted future cash
flows of the assets, the carrying amount would be reduced to the present value of their expected future cash flows and an impairment loss would be recognized. During the year ended March 31, 2007, the Company impaired the remaining balance of
$4,333 of intangible assets with a charge to the consolidated statement of operations.

Revenue recognition:

Revenue is derived from the sale of stem cell products, and providing informational and referral services. Revenue related to these licenses, sales and
services is recognized upon delivering the license or product, or rendering the services, respectively. Any payments received prior to delivery of the products or services are included in deferred revenue and recognized once the products are
delivered or the services are performed.



F-10



---

##### Table of Contents

Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|3. | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | -------------------------------------------



Income taxes:

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their
respective income tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that included the enactment date. Due to the Companys continued losses, the Company has placed a full valuation allowance against the deferred
tax asset.

Loss per common share:

Basic and diluted loss per share are computed based on the weighted average number of common shares outstanding during the period. Common stock equivalents are not considered in the calculation of diluted earnings per
share for the periods presented if their effect would be anti-dilutive. The Company had no common stock equivalents outstanding at March 31, 2008 or 2007.

Stock-based compensation:

In April 2006, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 123R  Share-based Payments (FAS 123R) replacing Accounting for Stock-Based Compensation (FAS 123), which are similar and require the use of the fair-value based method to
determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants and options). The adoption of SFAS 123R had no significant impact on the Companys results of operations.

Recently issued accounting pronouncements:

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements(SFAS 157). SFAS 157 clarifies the principle that fair value should be based on the assumptions that market
participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. SFAS 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007. The adoption of SFAS 157 on April 1, 2008 is not expected to have a material impact on the Companys financial position, results of operations or cash flows. In February 2008, the FASB issued a staff
position that delays the effective date of SFAS 157 for all nonfinancial assets and liabilities except for those recognized or disclosed at least annually.

In February 2007, the FASB issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities, which permits an entity to measure certain financial
assets and financial liabilities at fair value. Under SFAS 159, entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected on a
instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value option election is irrevocable, unless a new election date occurs. SFAS 159 establishes presentation and disclosure
requirements to help financial statement users understand the effect of the entitys election on its earnings but does not eliminate disclosure requirements of other accounting standards. Assets and liabilities that are measured at fair value
must be displayed on the face of the balance sheet. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. The Company does not expect the adoption of SFAS 159 to have a material impact on the
financial statements.

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 141 (revised 2007), Business Combinations, which replaces SFAS No 141. The statement retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in
the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at
fair value, and requires the expensing of acquisition-related costs as incurred. SFAS No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2008.



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##### Table of Contents

Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|3. | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | -------------------------------------------



In December 2007, the FASB issued SFAS No. 160. Noncontrolling Interests in
Consolidated Financial Statements-and Amendment of ARB No. 51. SFAS 160 establishes accounting and reporting standards pertaining to ownership interests in subsidiaries held by parties other than the parent, the amount of net income
attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest, and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. This statement also
establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for fiscal years beginning on or after December 15,
2008. The adoption of SFAS 160 is not currently expected to have a material effect on the Companys financial position, results of operations, or cash flows.

In March 2008, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entitys financial position, financial performance, and cash flows. It is
effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The company is currently evaluating the impact of adopting SFAS. No. 161 on its financial
statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. The
current GAAP hierarchy, as set forth in the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standard No. 69, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles, has been
criticized because (1) it is directed to the auditor rather than the entity, (2) it is complex, and (3) it ranks FASB Statements of Financial Accounting Concepts. The FASB believes that the GAAP hierarchy should be directed to
entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. Accordingly, the FASB concluded that the GAAP hierarchy should reside in
the accounting literature established by the FASB and is issuing this Statement to achieve that result. This Statement is effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The adoption of SFAS No. 162 will not have a material impact on the Companys financial statements.

Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not or are not believed by management to have a
material impact on the Companys present or future financial statements.



|4. | RELATED PARTY TRANSACTIONS
|-- | --------------------------

Stockholder advances
consisted of advances from an officer and significant stockholder of the Company to assist the Company in meeting its financial obligations. These advances were non-interest bearing, unsecured and due on demand. The stockholder advances were repaid
during the year ended March 31, 2008.

Due to related party of $207,200, represents advances from the majority stockholder to assist
the Company with its financial obligations. These advances were non-interest bearing, unsecured and due on demand.

The above amounts are
not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with independent parties.



|5. | STOCKHOLDERS DEFICIT
|-- | ---------------------

Capitalization:

The Company has 100,000,000 shares of common stock authorized. In addition, there are 10,000,000 authorized shares of participating
convertible preferred stock, $.001 par value, the issuance of which is subject to approval by the Board of Directors. The Board of Directors has the authority to declare dividends. The voting rights of the convertible preferred stockholders are
equivalent to that of the common stockholders. Each share of convertible preferred stock can be converted at any time by the holder into one share of common stock. As of March 31, 2008, the Company had 500,000 shares of convertible preferred
stock issued and outstanding. Upon issuance of the preferred stock, management determined that the convertible preferred stock contained a beneficial conversion feature calculated as of the date of commitment, September 15, 2005, based on the
fair value of the closing price of the common stock, $0.07 per share, and an exercise price of $0.05 per share, calculated as $25,000 paid for the preferred stock divided by the 500,000 shares of convertible preferred stock received. Each share of
the preferred stock is convertible into one share of common stock with no additional investment. The beneficial conversion was recorded as a dividend, as the preferred stock can be converted at any time after the issue date.



F-12



---

##### Table of Contents

Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|5. | STOCKHOLDERS DEFICIT (CONTINUED)
|-- | ---------------------------------



Stock options and warrants:

During the year ended March 31, 2008, the Company issued 3,650,000 stock options to employees and 2,775,000 common stock warrants to consultants. The
options and warrants entitle the holders to purchase 6,425,000 shares of the Companys common stock, at any time, at an exercise price of between $0.001  $0.25 per share and begin expiring in 2012.

The fair value of each option was estimated on the date of grant using the Black Scholes model that uses assumptions noted in the following table.
Expected volatility is based on the weekly trading of two similar Companys underlying common stock (as the Company does not have an adequate trading history for an accurate calculation) and other factors. Expected term is based upon the use of
the simplified method.



|                        |  |               |  |                     
|----------------------- |  | ------------- |  | --------------------
|Expected volatility     |  |               |  | 102.9% - 169.7%     
|Expected dividends      |  |               |  | 0                   
|Expected term           |  |               |  | 2.75 years -10 years
|Risk-free interest rate |  | 1.99% - 4.59%

The value of the options granted totaled $508,642 and has been included in selling, general and
administrative expenses in the accompanying Condensed Consolidated Statement of Operations for the year ended March 31, 2008.



|                                    |  |           |  |                |             |                               |   |                                     |  |   |    
|----------------------------------- |  | --------- |  | -------------- | ----------- | ----------------------------- | - | ----------------------------------- |  | - | ---
|                                    |  | Shares    |  | ExercisePrices |             | WeightedAverageExercise Price |   | WeightedAverageGrant DateFair Value
|Options Outstanding and Exercisable |  |           |  |                |             |                               |   |                                     |  |   |    
|                                    |  |           |  |               
|Outstanding at March 31, 2007       |  |          |  |                |            |                               |   |                                    |  |   |   
|                                    |  |           |  |               
|Options granted                     |  | 3,650,000 |  | $              | 0.19  0.25 |                               | $ | 0.20                                |  | $ | .18
|                                    |  |           |  |               
|Options exercised                   |  |          |  |                |            |                               |   |                                    |  |   |   
|                                    |  |           |  |               
|Options cancelled or expired        |  |          |  |                |            |                               |   |                                    |  |   |   
|                                    |  |           |  |                |             |                               |   |                                     |  |   |    
|                                    |  |           |  |               
|Outstanding at March 31, 2008       |  | 3,650,000 |  | $              | 0.19  0.25 |                               | $ | 0.20                                |  |   |    
|                                    |  |           |  |                |             |                               |   |                                     |  |   |    
|                                    |  |           |  |               
|Exercisable at March 31, 2008       |  | 2,900,000 |  | $              | 0.19  0.25 |                               |   |                                     |  |   |    
|                                    |  |           |  |                |             |                               |   |                                     |  |   |    

The following table summarizes information about options outstanding and exercisable as of March 31, 2008:



|                       |  |                     |  |                              |  |                      |      |                               |            |                   |           |                      |   |     
|---------------------- |  | ------------------- |  | ---------------------------- |  | -------------------- | ---- | ----------------------------- | ---------- | ----------------- | --------- | -------------------- | - | ----
|                       |  | Outstanding Options |  | Exercisable Options         
|Range ofExercise Price |  | NumberOutstanding   |  | WeightedAverageRemainingLife |  | WeightedAveragePrice |      | WeightedAverageRemaining Life |            | NumberExercisable |           | WeightedAveragePrice
|$0.19-$0.25            |  | 3,650,000           |  | 8.37 Years                   |  | $                    | 0.20 |                               | 9.45 Years |                   | 2,900,000 |                      | $ | 0.19

There was no aggregate intrinsic value of options outstanding at March 31, 2008, based on the Companys
closing stock price of $0.17. Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of the options.



F-13



---

##### Table of Contents

Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|5. | STOCKHOLDERS DEFICIT (CONTINUED)
|-- | ---------------------------------



The fair value of each warrant was estimated on the date of grant using the Black Scholes model that uses assumptions
noted in the following table. Expected volatility is based on the weekly trading of two similar Companys underlying common stock (as the Company does not have an adequate trading history for an accurate calculation) and other factors.



|                        |  |  |  |              
|----------------------- |  |  |  | -------------
|Expected volatility     |  |  |  | 88% - 163.2% 
|Expected dividends      |  |  |  | 0            
|Expected term           |  |  |  | 1 - 10 years 
|Risk-free interest rate |  |  |  | 1.99% - 4.71%

The value of the warrants granted totaled $603,445, of which $487,501 has been included in operating expenses in
the accompanying condensed consolidated statement of operations for the year ended March 31, 2008 and $115,944, is included in prepaid expenses in the accompanying March 31, 2008 condensed consolidated balance sheet.



|                              |  |            |   |  |                |               |                              |   |                                     |  |   |     
|----------------------------- |  | ---------- | - |  | -------------- | ------------- | ---------------------------- | - | ----------------------------------- |  | - | ----
|                              |  | Shares     |   |  | ExercisePrices |               | WeightedAverageExercisePrice |   | WeightedAverageGrant DateFair Value
|Outstanding and Exercisable   |  |            |   |  |                |               |                              |   |                                     |  |   |     
|                              |  |            |   | 
|Outstanding at March 31, 2007 |  |           |   |  |                |              |                              |   |                                    |  |   |    
|                              |  |            |   | 
|Warrants granted              |  | 2,775,000  |   |  | $              | 0.001  $0.15 |                              | $ | 0.02                                |  | $ | 0.22
|                              |  |            |   | 
|Warrants exercised            |  | (2,375,000 | ) |  | $              | 0.001         |                              | $ | 0.001                               |  |   |    
|                              |  |            |   | 
|Warrants cancelled or expired |  |           |   |  |                |              |                              |   |                                    |  |   |    
|                              |  |            |   |  |                |               |                              |   |                                     |  |   |     
|                              |  |            |   | 
|Outstanding at March 31, 2008 |  | 400,000    |   |  | $              | 0.15          |                              | $ | 0.15                                |  |   |     
|                              |  |            |   |  |                |               |                              |   |                                     |  |   |     
|                              |  |            |   | 
|Exercisable at March 31, 2008 |  | 400,000    |   |  | $              | 0.15          |                              | $ | 0.15                                |  |   |     
|                              |  |            |   |  |                |               |                              |   |                                     |  |   |     

The following table summarizes information about warrants outstanding and exercisable as of March 31, 2008:



|                       |  |                      |  |                              |  |                      |      |                               |            |                   |         |                      |   |     
|---------------------- |  | -------------------- |  | ---------------------------- |  | -------------------- | ---- | ----------------------------- | ---------- | ----------------- | ------- | -------------------- | - | ----
|                       |  | Outstanding Warrants |  | Exercisable Warrants        
|Range ofExercise Price |  | NumberOutstanding    |  | WeightedAverageRemainingLife |  | WeightedAveragePrice |      | WeightedAverageRemaining Life |            | NumberExercisable |         | WeightedAveragePrice
|$0.15                  |  | 400,000              |  | 9.51 Years                   |  | $                    | 0.15 |                               | 9.51 Years |                   | 400,000 |                      | $ | 0.15

The aggregate intrinsic value of warrants outstanding at March 31, 2008, based on the Companys closing
stock price of $0.17 was $8,000. Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of the warrants.



|6. | EARNINGS PER SHARE
|-- | ------------------

Earnings per common share are computed in
accordance with SFAS No. 128, Earnings per Share, which requires companies to present basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing net income by the weighted average
number of shares of common stock outstanding during the year. Diluted earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding and dilutive options and warrants outstanding
during the year. The basic and diluted weighted average number of shares was 36,950,506, 34,310,534 and 31,182,100 for the years ended March 31, 2008 and 2007 and the period from December 2, 2004 (Date of Inception) through March 31,
2008, respectively.

Common stock equivalents for the years ended March 31, 2008 and 2007 and the period from December 2, 2004 (Date of
Inception) through March 31, 2008 were anti-dilutive due to the net losses sustained by the Company during these periods.



F-14



---

##### Table of Contents

Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|7. | INCOME TAXES
|-- | ------------

Deferred income tax assets and liabilities are
recognized for the expected future tax consequences of events that have been reflected in the consolidated financial statements. Deferred tax assets and liabilities are determined based on the differences between the book values and the tax bases of
particular assets and liabilities and the tax effects of net operating loss and capital loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized as income or expense in the period that included the enactment date.

The Company has incurred operating losses since its inception and, therefore, no tax liabilities have been incurred for the periods presented. The amount of unused tax
losses available to carry forward and apply against taxable income in future years totaled approximately $1,750,000 at March 31, 2008. The loss carry forwards expire beginning in 2025. Internal Revenue Code Sec. 382 places limitations on the
utilization of net operating losses. Due to the limitation and the Companys historical losses, the Company has placed a full valuation allowance against that asset of approximately $959,300.

The income tax provision differs from the amount of tax determined by applying the Federal statutory rate as follows:



|                                          |  |                |          |   |                                                  |   |          |   |  |   |          |  
|----------------------------------------- |  | -------------- | -------- | - | ------------------------------------------------ | - | -------- | - |  | - | -------- | -
|                                          |  |                |          |   | Period fromDecember 2, 2004ThroughMarch 31, 2008 |  
|                                          |  | Years Ended    |          |  
|                                          |  | March 31, 2008 |          |   | March 31, 2007                                   |   |         
|Income tax benefit at statutory rate      |  | $              | (537,100 | ) |                                                  | $ | (223,400 | ) |  | $ | (941,500 | )
|Increase (decrease) in income tax due to: |  |                |          |   |                                                  |   |          |   |  |   |          |  
|Nondeductible expenses                    |  |                | 82,000   |   |                                                  |   | 600      |   |  |   | 82,700   |  
|State income taxes, net                   |  |                | (57,300  | ) |                                                  |   | (23,900  | ) |  |   | (100,500 | )
|Change in valuation allowance             |  |                | 512,400  |   |                                                  |   | 246,700  |   |  |   | 959,300  |  
|                                          |  |                |          |   |                                                  |   |          |   |  |   |          |  
|                                          |  | $              |         |   |                                                  | $ |         |   |  | $ |         |  
|                                          |  |                |          |   |                                                  |   |          |   |  |   |          |  

There was no current or deferred provision or benefit for income taxes for the year ended
March 31, 2008 and 2007 and for the period from December 2, 2004 (Date of Inception) through March 31, 2008. The components of deferred tax assets as of March 31, 2008 and 2007 are as follows:



|                                |  |                |          |   |                |   |          |  
|------------------------------- |  | -------------- | -------- | - | -------------- | - | -------- | -
|                                |  | March 31, 2008 |          |   | March 31, 2007 |  
|Deferred tax (liability) asset: |  |                |          |   |                |   |          |  
|Accrued payroll                 |  | $              | 144,200  |   |                | $ | 64,200   |  
|Options and warrants            |  |                | 156,300  |   |                |   | 0        |  
|Net operating loss carryforward |  |                | 658,800  |   |                |   | 382,700  |  
|                                |  |                |          |   |                |   |          |  
|                                |  |                | 959,300  |   |                |   | 446,900  |  
|Valuation allowance             |  |                | (959,300 | ) |                |   | (446,900 | )
|                                |  |                |          |   |                |   |          |  
|Total deferred taxes            |  | $              | 0        |   |                | $ | 0        |  
|                                |  |                |          |   |                |   |          |  



|8. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------

Consulting
agreements:

The Company has entered into several consulting agreements with other companies and individuals to provide consulting and
advisory services to the Company. The agreements provide for terms ranging from one to three years. Additionally, the consulting agreements required the issuance of 4,789,000 shares of the Companys common stock valued at $544,409 on the date
of the performance commitment. As of March 31, 2008, the Company had issued these shares of common stock and has included $48,208 in prepaid expenses for services not yet performed pursuant to the agreements.



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Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|8. | COMMITMENTS AND CONTINGENCIES (CONTINUED)
|-- | -----------------------------------------



The Company has entered into several consulting agreements with doctors to provide consulting and
advisory services to the Company. The agreements provide for six months to one year service terms. In exchange for these services, the Company issued a total of 110,000 shares of common stock valued at $114,230 on the date of the performance
commitment. As of March 31, 2008, the Company had issued these shares of common for services performed pursuant to the agreements.

The
Company is currently involved in a legal dispute over the payment and performance of a consulting agreement. The Company contends that the contract never became effective, and therefore the consultant was not entitled to receive compensation. The
consultant contends that the Company and its representatives induced them to begin performance of the services early, based on certain promises. The original contract calls for the consultant to be awarded the compensation of 3,000,000 shares of the
Companys common stock valued at $390,000. The Company currently holds the stock certificates and intends to vigorously defend its position however, the outcome of the proceedings cannot be determined

Licensing agreement:

Effective
September 1, 2005, the Company entered into a ten year licensing agreement with the Institute of Cell Therapy, a company incorporated and organized under the laws of Kiev, Ukraine (ICT). Pursuant to the agreement, the Company issued
ICT 5,000,000 shares of the Companys common stock recorded at the fair market value of the Companys common stock of $5,000. The agreement grants the Company a right and license in most parts of the world to utilize patents, processes and
products owned or produced by ICT in connection with the operation of the Companys business. In exchange for the license, the Company agrees to exclusively purchase all biological solution of stem cell Allo Transplant materials from ICT. Such
Allo Transplant materials shall be at a cost of $6,500 per patient per condition. The licensing agreement guarantees a minimum purchase of 60 portions per twelve month period. In the event that the Company is unable to purchase the minimum
quantities, ICT will be entitled to draw upon the irrevocable letter of credit at the rate of $2,000 for every portion less than the minimum required purchase. The Company had provided ICT with a $120,000 irrevocable letter of credit in ICTs
favor for the first three years of the agreement. In the event the Letter of Credit is drawn upon, the Company agreed to replenish the Letter of Credit to the extent of any such draws. As of September 2006, the Company had not met the first
years minimum purchase requirement and ICT withdrew $116,000 on the letter of credit, which has been included in the cost of goods sold in the accompanying Consolidated Statements of Operations for the year ended March 31, 2007 and the
period from inception through March 31, 2008. However, ICT was unable to provide the product as requested and the Company was required to purchase the stem cell materials from alternative sources. Management believes that ICTs inability
to provide the requested stem cell materials relieves the Company of its obligations to replenish the letter of credit and to fulfill the minimum purchase requirements. As such, the accompanying consolidated financial statements do not reflect any
liability for the Companys failure to purchase the minimum amount of stem cell materials under the above mentioned license agreement and as of the date of this filing, ICT has not made any claims against the Company. The agreement with ICT was
terminated during the year ended March 31, 2008.

Financing agreement:

During the year ended March 31, 2007, the Company entered into an agreement to locate financing with a third party for three years. As consideration
for these consulting services, the Company has agreed to issue 500,000 shares of restricted common stock and a 10% finders fee for any funds brought into the Company. As of March 31, 2008, the Company has not entered into any funding
agreements, and therefore the third party is not owed any consideration.



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Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|8. | COMMITMENTS AND CONTINGENCIES (CONTINUED)
|-- | -----------------------------------------



Consulting Agreement:

Effective September 12, 2007, the Company entered into a consulting agreement with Newbridge for business and financial related advice and services
through September 11, 2008. As compensation for these services, the Company has agreed to pay $4,000 per month and issue a total of 500,000 warrants. At March 31, 2008, 375,000 of the warrants valued as $62,450 have been issued, with the
remaining 125,000 warrants are to be issued in June 2008. In the event Newbridge assists with an offering or sale of the Companys securities, Newbridge will be entitled to receive a financing fee to be determined at the time of such financing.
Also, should any transactions be consumated by the Company, in which Newbridge introduced the other party, during the six months following termination of the agreement, Newbridge will be entitled to receive a transaction fee based on the aggregate
consideration received, computed as follows: 5% for the first million dollars; 4% for the second million dollars; 3% for the third million dollars; 2% for the fourth million dollars and 1% of the balance of the value of the transaction. In May 2008,
the Company terminated this agreement in exchange 500,000 shares of the Companys common stock and $24,000 cash.

In February 2008, the
Company entered into a consulting agreement with Elite International Partners, Inc. to provide consulting services relative to business licensing matters in foreign and domestic markets for a period of six months. In exchange for these services, the
Company has issued the consultant 500,000 shares of restricted common stock valued at $62,500. As of March 31, 2008, the Company has expensed $10,417 to consulting expense with the balance of $52,083 included in prepaid expenses.

In March 2008, the Company entered into a consulting services agreement with First Capital Partners LLC to provide consulting services through June 2008
in exchange for 250,000 shares of the Companys restricted common stock valued at $67,500. For the year ended March 31, 2008, the Company has recorded $22,500 as consulting expense in the accompanying statement of operations and the
remainder of $45,000 in prepaid expenses.

Employment Agreements

In September 2007, the Company entered into employment agreements with the Companys Chief Executive Officer, Chief Financial Officer and Chief
Operating Officer. Under the employment agreement for the Chief Executive Officer, the employment term is five years and with an annual base salary of $150,000, with minimum annual increases of $10,000. The Chief Financial Officer and Chief
Operating Officer each have employment agreements for a term of two years, with an annual base salary of $60,000. Additional performance-based bonuses are provided for, and the employees were granted options to purchase 2,900,000 shares of Company
stock. Benefits under the agreement are accelerated on a change of control, and the employee is subject to certain non-competition covenants.

In March 2008, the Company entered into an employment agreement with the Companys President. Under the employment agreement, the employment term is one year and with payments of $8,500 per month for the first 90 days, and
subsequently, an annual base salary of $225,000. Additional performance-based bonuses are provided for, and the employee was granted options to purchase 750,000 shares of Company stock at $0.25 per share. Benefits under the agreement are accelerated
on a change of control, and the employee is subject to certain non-competition covenants. Upon execution of the employment agreement, the Company issued the individual 250,000 shares of the Companys common stock valued at $55,000.



|9. | MERGER AND REORGANIZATION AGREEMENT
|-- | -----------------------------------

On March 10, 2008, the
Company entered into a Reorganization and Stock Purchase Agreement and its amendments (the Agreement) with Histostem Co., Ltd., a Korean company (Histostem). Pursuant to the Agreement (as subsequently amended), the Company
will acquire 95% of the issued and outstanding stock of Histostem and Histostems shareholders will acquire a controlling interest in the Company. The original definitive agreement called for closing of the acquisition by April 30, 2008.
Subsequent to Closing, the Company will be held approximately 60% by Histostem and 40% by the existing shareholders of the Company. Upon completion of the acquisition, the Company will be renamed AmStem International Corp., increase the authorized
number of shares to 500,000,000 and seek a new symbol on the over-the-counter bulletin board.



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Stem Cell Therapy International, Inc.

(a development stage enterprise)

Notes to Consolidated Financial Statements

For the Years Ended March 31, 2008 and 2007

and for the period from December 2, 2004 (Date of Inception)

through March 31, 2008



|9. | MERGER AND REORGANIZATION AGREEMENT (continued)
|-- | -----------------------------------------------



On April 22, 2008, the Company amended the Agreement to state that Histostem shall have received funding at the
date of the actual closing at a minimum of 2 million dollars towards the initial round of funding of at least 10 million dollars. Subsequent to that amendment, the actual closing deadline of April 30, 2008 was no longer in effect and
the closing shall take place as promptly as possible after the execution of the amendment.

On June 19, 2008, the Company entered into
a second Amendment to the Reorganization and Stock Purchase Agreement. In accordance with the terms of this second Amendment, the Company and Histostem issued and delivered shares reflecting the acquisition of Histostem into Escrow by the Company
pending resolution of outstanding litigation between Histostem Korea and Histostem, Inc. (a United States corporation unrelated to Histostem) (Histostem USA). This essentially effectuates an immediate closing of the Histostem
acquisition. In the Amendment the parties also agreed to complete a one for three reverse stock split of the Companys common stock. That reverse stock split will be completed after filing, mailing and completion of a 14C Information Statement
to the Companys shareholders and appropriate notice and filings with the NASD.



|10. | SUBSEQUENT EVENTS
|--- | -----------------

In April 2008, the Company
entered into a consulting agreement with Mirador Consulting, Inc. to provide management consulting services for three months. The Company has agreed to issued 200,000 shares of common stock valued at $25,000.

In April 2008, the Company entered into a consulting agreement with Hunden Consulting Group to provide investor relations services for one year. Fees
shall be paid to the consultant only if the consultant introduces the Company, in writing, to a third party investor or merger candidate, then the fees shall equal 10% of the total investment or loan to the Company and if a merger transaction occurs
between the Company and a party introduced by the Consultant, the Consultant would be entitled to receive a 5% commission.

On May 28,
2008, the Company entered into a consulting agreement with Shea Financial, LLC to provide consulting services for a term of three months in exchange for the right to purchase 500,000 shares of common stock at $0.05 per share upon a funding
commitment to the Company of at least $10 million from consultant funding and $2,500,000 at the closing. To date, the Company has not received any funding under this agreement.

On June 5, 2008, the Company entered into an agreement with Ventana Group to extend a Credit Facility of up to $2,500,000 in bridge financing. The
loan will mature 6 months from the date of the promissory note with one 90 day extension upon payment of an additional 2% fee. The promissory note will accrue interest at a rate of 1.25%, with principal and interest due at maturity. Ventana has the
option to convert all or any portion of the loan to equity, with the conversion terms to be determined at a later date. The Company has agreed to pay Ventana a 5% loan fee based on the amount of the draw down on the credit facility and to issue a
warrant to purchase shares of common stock equal to 25% of the loan commitment ($2,500,000). The number of warrants and strike price will be $1.00. The warrant will be exercisable for 5 years from the date of issuance. As of the date of this filing,
no funding has been received, nor can there be any assurance regarding the closing of this funding.

On June 12, 2008, the Company sold
388,889 shares of common stock along with an option to purchase an additional 722,222 shares of common stock at $0.09 per share to an accredited investor for an aggregate price of $35,000.

Subsequent to year end, the Company borrowed money from related parties totaling $45,000. The notes are due on demand and bear interest at 7% per
year.



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|ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

On July 14, 2008, Aidman, Piser & Company, P.A. (Aidman Piser) resigned as our independent registered public accounting firm.
Aidman Pisers practice was acquired by Cherry, Bekaert & Holland, L.L.P. (Cherry Bekaert) in a transaction pursuant to which Aidman Piser merged its operations into Cherry Bekaert and certain of the professional staff and
shareholders of Aidman Piser joined Cherry Bekaert either as employees or partners of Cherry Bekaert and will continue to practice as members of Cherry Bekaert. The Audit Committee of our Board of Directors is currently identifying potential
independent registered public accounting firms to interview and engage for the year ending March 31, 2009, and we expect to make an announcement with regard to this matter in the near future.

The report of Aidman Piser regarding our financial statements for the fiscal year ended March 31, 2008 does not contain any adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that substantial doubt was raised as to our ability to continue as a going concern. During the past year and during the period
from the end of the most recently completed year through July 14, 2008, the date of resignation, there were no disagreements with Aidman Piser on any matter of accounting principles or practices, financial statement disclosure or auditing scope
or procedures, which disagreements, if not resolved to the satisfaction of Aidman Piser would have caused it to make reference to such disagreements in its reports.

We provided Aidman Piser with a copy of the this Annual Report on Form 10- K/A prior to its filing with the Securities and Exchange Commission and requested that Aidman Piser furnish the Company with a letter
addressed to the Securities and Exchange Commission stating whether it agrees with the statements set forth above in this Item 8 and, if it does not agree, the respects in which it does not agree. A copy of the letter, dated July 14, 2008,
is filed as Exhibit 10.30 to this Report.



|ITEM 8A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

The Companys Chief Executive Officer
and Chief Financial Officer have evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the fiscal period ending March 31, 2008 covered by
this Annual Report on Form 10- K/A. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Companys disclosure controls and procedures were not effective as
required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the Companys Chief Executive Officer and Chief Financial Officer does not relate to reporting periods after March 31, 2008.

Managements Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of
America.

The Companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the
Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management, under the supervision of the Companys Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of internal
control over financial reporting based on the framework in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the
Companys internal control over financial reporting was not effective as of March 31, 2008 under the criteria set forth in the Internal ControlIntegrated Framework.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a
material misstatement of the Companys annual or interim financial statements will not be prevented or detected on a timely basis. The Chief Financial Officer has determined that material weaknesses exist during the year ended March 31,
2008, due to the lack of an independent Audit Committee, as well as a lack of segregation of duties, i.e. all of the accounting tasks are performed by a single individual. Currently, the Companys Chief Financial Officer and Chief Executive
Officer review all transactions. Until the Company raises additional capital, it cannot remediate these weaknesses.



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This annual report does not include an attestation report of the Companys registered public accounting firm
regarding internal control over financial reporting. Managements report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only managements report in
this Annual Report on Form 10- K/A.

Changes in Internal Control Over Financial Reporting

No change in the Companys internal control over financial reporting occurred during the year ended March 31, 2008, that materially affected, or is reasonably
likely to materially affect, the Companys internal control over financial reporting.



|ITEM 8B | OTHER INFORMATION
|------- | -----------------

None

PART III



|ITEM 9. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|------- | --------------------------------------------------

The following
table sets forth the names and ages of our current directors and executive officers, their principal offices and positions and the date each such person became a director or executive officer. The Board of Directors elects our executive officers
annually. Our directors serve one-year terms or until their successors are elected and accept their positions. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. There are no family
relationships or understandings between any of the directors and executive officers. In addition, there was no arrangement or understanding between any executive officer and any other person pursuant to which any person was selected as an executive
officer.



|                                      |  |     |  |                                                                  
|------------------------------------- |  | --- |  | -----------------------------------------------------------------
|Name of Director or Executive Officer |  | Age |  | Current Position and Office                                      
|David Stark                           |  |     |  | President                                                        
|Andrew J. Norstrud                    |  | 34  |  | Chief Financial Officer                                          
|Lixian (John) Jiang                   |  | 36  |  | Chief Operating Officer and Patent Trademark Counsel and Director

PRESIDENT  DAVID STARK:

David Stark, Q.M.E., CCRA, joined the Company in 2008 and is also currently the President and CEO of Stark-SMO, a Site Management Organization whose
services focus primarily on the research of stem cells and cord and tissue repositories. Due to his extensive and broad experiences in the inner workings of the research and regulatory aspects of clinical trials and FDA approval for Biologics,
Dr. Stark brings a unique vision to the industry, and is a clear, motivated designer of superior approaches to research challenges. Formerly the Director of the National Institute of Clinical Research (NICR), he has been fully responsible for
the design, organization and implementation of clinical trials for FDA approval for numerous biological and stem cell research. He has a broad background in designing, conducting, and monitoring clinical trials of new pharmaceuticals and
Biologics. Through his diverse and devoted networking within the industry, working with such companies as Genentech, Suni Medical imaging Inc. and UCSF medical school, Stark-SMO has assembled a wide network of more than 5233 physicians in
hospitals and private practice throughout the United States, and even extending to the international community. His focus now is on clinical trial management for Stem Cell research, small start up biotech companies and device inventors (array genome
chips). In addition to his solid accomplishments on the industry side of clinical drug and device development, Dr. Stark is familiar with the FDA and has fostered a good working relationship with that governmental organization. Currently he has
work on over 130 clinical and over 63 device trials from protocol development to FDA approval.

CHIEF FINANCIAL OFFICER  ANDREW J.
NORSTRUD:

Mr. Norstrud joined the Company in September 2007. He is also currently the Chief Financail Officer of Jagged Peak,
Inc. and previously with Segmentz, Inc., where he served as Chief Financial Officer, and played an instrumental role in the company achieving its strategic goals by pursuing and attaining growth initiatives, building an exceptional financial team,
completing and integrating strategic acquisitions and implementing the structure required of public companies. Previously, Mr. Norstrud has worked for Grant Thornton LLP, Norco Accounting and Consulting, Aerosonic and PricewaterhouseCoopers LLP
and has extensive experience with young, rapid growth public companies. Mr. Norstrud earned a Master of Accounting with a systems emphasis from the University of Florida and is a Florida licensed Certified Public Accountant.



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CHIEF OPERATING OFFICER AND PATENT TRADEMARK COUNSEL  LIXIAN (JOHN) JIANG

Lixian (John) Jiang is a senior Attorney from China and a Patent Agent in the United States. Mr. Jiang specializes in intellectual property law,
China tax law and corporate law. He has worked in a number of top specialty law firms before he joined the Company in June of 2006. In addition, Mr. Jiang is a stem cell scientist with a PhD Candidate who is expecting to get his formal degree
certificate in August 2006 Convocation Ceremony from the University of South Florida Medical School.

From December 2002 through August
2003, Mr. Jiang served as a Patent and Trademark Attorney in Shanghai, China for Sounding Intellectual Property Counsel Sino Co. Ltd. In this capacity, he performed inventor interviews, patent prior art searches in the area of medical science
and chemistry, drafted and prosecuted patent applications in the areas of mechanic, chemistry and medical sciences, prosecuted trademark applications, performed intellectual property litigation in petition, infringement and disputation, and docketed
patent/trademark files and maintained dockets of all due dates for patent and trademarks.

From December 2003 through June 2006,
Mr. Jiang served as a Patent Prosecution Agent for Cedar Patent LLC, in Tampa, Florida. In this capacity, he performed inventor interviews, drafted computer science patent applications in the area of MSQL database and Macromedia flash
communication server software, performed prior art searches for medical science and chemistry patents, drafted and prosecuted medical science patent applications in the fields of Chinese medicine, western blotting, PCR, immunohistochemistry
staining, cell cryo-preservation, gene transfer, including a patent for PEP nadir and its apparatus, drafted more than 5 mechanical patent applications, prosecuted Trademark applications and docketed patent/ trademark files; and maintained docket of
all due dates for patent and trademark cases

Lixian (John) Jiang is currently employed in the capacity of Chief Operating Officer and
Patent Trademark Counsel of the Company and reports directly to the Board of Directors and the Chief Executive Officer of the Company. He was reelected in March 2007 and his term expires March 2008, or when his replacement is duly elected and
qualified.

Lixian (John) Jiang is responsible for the supervision and the operations of the facility in China of the Company and a local
Beijing hospital. He will commence establishing the Companys stem cell cryo-preservation bank in China, coordination of patient treatment procedures with the hospital(s) in China, and the ongoing management and oversight of the general
business operations in China of the Company, providing legal representation and directing the market of China Operations, as well as being the legal advisor for all of the Companys patents and trademarks in stem cell and biotechnology in
China.

EUROPEAN SCIENTIFIC AND MEDICAL ADVISORY BOARD  EUROPE

The Company has also engaged the following persons as independent consultants to assist as part of its Scientific and Medical Advisory Board in Europe:

SERGEI MARTYNENKO,Senior Administrator and Director of the clinic in Kiev, Ukraine. Mr . Martynenko organizational, administrative and communications skills provide a vital link of information and
technology exchange between the Kiev based manufacturing, research and development facility and the SCTI affiliated patient treatment facility.

DR.
YURIV GLADKIKH, Chief of Scientist: A graduate of the Kiev Medical Institute of A.A. Bohomolets, Dr. Gladkikh has worked in Europe and Asia in the field of management and organization of health protection, as well as research in cryobiology
and cryo-medicine, internal diseases, virology, quantum, cell and tissue therapy, modern methods of diagnostics and laboratory researches, epidemiology and infectious diseases.

DR. GALINA LOBYNTSEVA, Chief of Manufacture: A graduate of Kharkov State University with a specialty in genetics, Dr. Lobyntseva has been in the forefront of research in embryonic hematopoitic cells and
work on methods for long-term storage of the cells at low temperatures. She has been working with Cryobiology and Cryomedicine at the National Academy of Sciences of the Ukraine since its foundation in 1972. Ms. Lobyntseva has received 15
authors certificates and patents. Dr. Lobyntseva is also responsible for the Quality Control, testing and Quality Certification of every dose of the allo stem cell biological solution.

DR. DIMITRIY LOBYNTSEVIS, Director of Research: A graduate of the Odessa Academy of Cold with a specialty in cryogenic technique and technologies,
Dr. Lobyntsevis the author of five patents in the Ukraine and co-author of volume one of Human Stem Embryonic Hemopoitic Cells. Theory and Clinical Practice.

DR. VLADIMIR GLADKIKH, Medical Director: A graduate of the Vinnitsa National Medical University with a specialty in surgery, Dr. Gladkikh is engaged in research in the field of vascular surgery.



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SCIENTIFIC AND MEDICAL ADVISORY BOARD  UNITED STATES AND MEXICO

The Company has also engaged the following persons as independent consultants to assist as part of its Scientific and Medical Advisory Board in the United
States and Mexico:

DR. NICHOLAS KIPSHIDZE, MD., PH. D.  Lenox Hill Hospital, NYC

DR. WEIWEN DENG, MD., PH.D.  Research Instructor, Tulane University, LA

DR. ALEXEY BERSENEV, MD., PH.D.  Thomas Jefferson University, PA

IGOR KATKOV, PH.D.  Project
Scientist, Level V, UCSD & Burnham Institute, La Jolla, CA

DR. SALVADOR VARGAS, MD.,  Betania West Institute, Tijuana, Mexico

DR. LUIS JORGE QUINTERO, MD.,  Neurosurgery, Tijuana, Mexico

DR. NIKITA TREGUBOV, MD.,  Internal Medicine, Walter Reed Army Institute of Research, Seminole, FL

Each member of the Advisory Board, that is not a member of the management of ICT, receives 10,000 shares of restricted common stock as compensation for services provided to the Company as a member of the Advisory Board. These shares are
awarded without regard to the number of patients recommended for stem cell therapy, if any.

Management believes that it has recruited
industry respected individuals to form the Advisory Board and encourages all members of the Advisory Board to recommend only what is in the best interest of each patient. A potential conflict of interest exists as the member of the MSAB are
compensated in restricted stock and the value of that stock may be influenced by the number of patient procedures recommended by the Advisory Board. In addition, two members of the Advisory Board located in Mexico are also treating physicians, which
could result in a potential conflict of interest.

Some members of the Advisory Board are requested to perform additional services such as
evaluate new technologies and products that are available for stem cell treatment. These Advisory Board members are compensated with additional shares of the Company stock as determined by the Company.

AUDIT COMMITTEE

The Audit Committee consists of the entire Board, as
there are no independent Board members. The Audit Committee reviews the results and scope of the audit and other services provided by the Companys independent auditors and reviews and evaluates the Companys internal control functions. As
an advisory function of the committee, members also participate in financings and review budgets versus historical results throughout the year. The Board of Directors determined that Andrew Norstrud qualifies as an audit committee financial expert
as defined under the regulations of the Securities and Exchange Commission.

CODE OF ETHICS

The Companys Board of Directors has adopted a Code of Ethics applicable to all of the Companys employees, including the Companys President, Chief
Operating Officer, Chief Financial Officer, and Principal Accounting Officer. A copy of the Companys Code of Ethics is attached as an exhibit to the March 31, 2008 Annual Report on Form 10- K/A. The Company intends to provide any
disclosures which are required by the rules of the Securities and Exchange Commissions, or which the Company would otherwise determine to be appropriate, with respect to amendments of, and waivers from the Companys Code of Ethics.



|ITEM 10. | EXECUTIVE COMPENSATION
|-------- | ----------------------

Except as noted in the table below, no
Executive or employee was compensated over $100,000 for fiscal years ended 2007 or 2008.



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SUMMARY COMPENSATION TABLE



|                                              |      |                            |         |           |   |          |   |                |   |                     |   |                          |         |          |  
|--------------------------------------------- | ---- | -------------------------- | ------- | --------- | - | -------- | - | -------------- | - | ------------------- | - | ------------------------ | ------- | -------- | -
|                                              |      | Summary Compensation Table |         |           |   |          |   |                |  
|Name Principal Positions                      |      | YearEnded                  |         | Salary($) |   | Bonus($) |   | StockAwards($) |   | OptionAwards($) (A) |   | All OtherCompensation($) |         | Total($) |  
|Calvin Cao,CEO                                |      | 2007                       |         | 80,000    |   |         |   |               |   | 348,770             |   |                         |         | 428,770  | *
|                                              | 2008 |                            | 150,000 |           |  |          |  |                |  |                     |  |                          | 150,000 | *       
|                                              |      |                            |         |           |   |          |  
|David Stark,President                         |      | 2008                       |         |          |   |         |   | 55,000         |   | 70,219              |   |                         |         | 125,219  | *
|                                              |      |                            |         |           |   |          |  
|Peter Sidorenko,(terminated January 2007) COO |      | 2007                       |         | 45,000    |   |         |   |               |   |                    |   |                         |         | 45,000   | *
|                                              |      |                            |         |           |   |          |  
|Lixian (John) Jiang,COO                       |      | 2008                       |         | 60,000    |   |         |   |               |   | 87,192              |   |                         |         | 147,192  | *
|                                              |      |                            |         |           |   |          |  
|Andrew Norstrud,CFO                           |      | 2008                       |         | 60,000    |   |         |   |               |   | 69,754              |   |                         |         | 129,754  | *
|                                              |      |                            |         |           |   |          |  
|Daniel Sullivan,CFO                           |      | 2007                       |         |          |   |         |   |               |   |                    |   |                         |         |         |  



|* | Total compensation also includes accrued compensation that has not been paid.
|- | -----------------------------------------------------------------------------

The Company does not have any annuity, retirement, pension, deferred or incentive compensation plan or arrangement under which any executive officers are entitled to benefits, nor does the Company have any long-term incentive plan pursuant
to which performance units or other forms of compensation are paid. Executive officers may participate in group life, health and hospitalization plans if and when such plans are available generally to all employees. All other compensation consisted
solely of health care premiums.

DIRECTOR COMPENSATION

Directors of the Company who are not employees or consultants do not receive any compensation for their services as members of the Board of Directors, but are reimbursed for expenses incurred in connection with their attendance at meetings
of the Board of Directors.



|     |  |                             |   |                |   |                 |  |                                         |   |                                                                      |   |                          |  |          |   |  |   |   |  |   |  
|---- |  | --------------------------- | - | -------------- | - | --------------- |  | --------------------------------------- | - | -------------------------------------------------------------------- | - | ------------------------ |  | -------- | - |  | - | - |  | - | -
|Name |  | FeesEarned orPaid inCash($) |   | StockAwards($) |   | OptionAwards($) |  | Non-EquityIncentive PlanCompensation($) |   | Change inPension ValueandNonqualifiedDeferredCompensationEarnings($) |   | All OtherCompensation($) |  | Total($)
|     |  | $                           |  |                | $ |                |  | $                                       |  |                                                                      | $ |                         |  | $        |  |  | $ |  |  | $ | 



|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- | --------------------------------------------------------------

The
following table shows the beneficial ownership of Stem Cell Therapy International, Inc. common stock as of March 31, 2008. The table shows each person known to us who owns beneficially more than five percent of the outstanding common stock of
Stem Cell Therapy International, Inc. based on 40,920,369 shares being outstanding as of March 31, 2008, and the total amount of common stock of Stem Cell Therapy International, Inc. owned by each of its Directors and Executive Officers and for
all of its Directors and Executive Officers as a group.



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|                                                                                                  |  |                                              |     |  |                              |  
|------------------------------------------------------------------------------------------------- |  | -------------------------------------------- | --- |  | ---------------------------- | -
|Name and Address or Number in Group                                                               |  | Amount and Nature ofBeneficial Ownership (1) |     |  | Percentageof Class (2)       |  
|Global Capital Corp. 2203 N. Lois Avenue, 9thFloor Tampa, FL 33607                                |  | 4,000,000                                    |     |  | 9.8                          | %
|                                                                                                  |  |                                             
|Institute of Cell Therapy c/o Alan Brutten, Attorney at Law 1341 Ocean Parkway Brooklyn, NY 11230 |  | 5,000,000                                    |     |  | 12.2                         | %
|                                                                                                  |  |                                             
|Thuy-Van Chau 2203 N. Lois Avenue, 9th Floor Tampa, FL 33607                                      |  | 3,000,000                                    |     |  | 7.3                          | %
|                                                                                                  |  |                                             
|Vivian Cao Irrevocable Trust 2203 N. Lois Avenue, 9th Floor Tampa, FL 33607                       |  | 2,000,000                                    |     |  | 4.9                          | %
|                                                                                                  |  |                                             
|Christopher Cao Irrevocable Trust 2203 N. Lois Avenue, 9thFloor Tampa, FL 33607                   |  | 2,000,000                                    |     |  | 4.9                          | %
|                                                                                                  |  |                                             
|Calvin C. Cao 2203 N. Lois Avenue, 9thFloor Tampa, FL 33607                                       |  | 11,000,000                                   | (1) |  | 26.9                         | %
|                                                                                                  |  |                                             
|Daniel J. Sullivan 2203 N. Lois Avenue, 9thFloor Tampa, FL 33607                                  |  | 200,000                                      |     |  | .4                           | %
|                                                                                                  |  |                                             
|Andrew J. Norstrud 15837 Trackside Drive Odessa, FL 33556                                         |  | 400,000                                      |     |  | 1.0                          | %
|                                                                                                  |  |                                             
|M. Richard Cutler c/o Cutler Law Group 3206 West Wimbledon Drive Augusta, GA 30909                |  | 3,174,196                                    | (2) |  | 7.8                          | %
|                                                                                                  |  |                                             
|RHL Management, Inc. c/o Cutler Law Group 3206 West Wimbledon Drive Augusta, GA 30909             |  | 500,000                                      |     |  | 100% Series A PreferredStock |  
|                                                                                                  |  |                                             
|All Directors and Executive Officers as a Group (2 persons)                                       |  | 11,600,000                                   |     |  | 28.3                         | %



|(1) | Consists of 4,000,000 shares held by Global Capital Corp., 2,000,000 shares held by Vivian Cao Irrevocable Trust and 2,000,000 shares held by Christopher Cao Irrevocable Trust and
3,000,000 shares held by Thuy-Van Chau.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Consists of 1,792,259 shares held by Cutler Law Group and 1,381,937 shares held by R Capital Partners, Inc.
|--- | -----------------------------------------------------------------------------------------------------------

BENEFICIAL OWNERSHIP OF SECURITIES: Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, involving the determination of beneficial owners of securities,
includes as beneficial owners of securities, any person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and
any person who has the right to acquire beneficial ownership of the security within sixty days through means including the exercise of any option, warrant or conversion of a security.



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|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

Due
to related party of $207,200, represents advances from the majority stockholder to assist the Company with its financial obligations. These advances are non-interest bearing, unsecured and due on demand.

The above terms and amounts are not necessarily indicative of the terms and amounts that would have been received had comparable transactions been entered into with
independent party.



|ITEM 13. | EXHIBITS AND REPORTS ON FORM 8-K
|-------- | --------------------------------

(a) Exhibit Index. The
following exhibits are filed with or incorporated by reference into this quarterly report:



|      |  |                                                                                                                                                                                         
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|3.1   |  | Articles of Incorporation of Stem Cell Therapy International, Inc., as amended*                                                                                                         
|      | 
|3.2   |  | Articles of Incorporation of Stem Cell Therapy Corp.*                                                                                                                                   
|      | 
|3.3   |  | Certificate of Designation of Series A Preferred Stock*                                                                                                                                 
|      | 
|3.4   |  | By-laws of Stem Cell Therapy International, Inc.*                                                                                                                                       
|      | 
|10.1  |  | Business Consulting and Services Agreement dated as of December 16, 2004 between Stem Cell Therapy International Corp. and PMS SA.*                                                     
|      | 
|10.2  |  | Consulting Agreement dated as of January 4, 2005 between Stem Cell Therapy International Corp. and RES Holdings Corp.*                                                                  
|      | 
|10.3  |  | Investor and Media Relations Contract dated as of February 10, 2005 between Stem Cell Therapy International Corp. and Stern & Co.*                                                      
|      | 
|10.4  |  | Executive Suite Lease Agreement dated as of February 15, 2005 between Stem Cell Therapy International Corp. and Wilder Corporation.*                                                    
|      | 
|10.5  |  | Engagement Letter dated as of May 3, 2005 between the Company and Westminster Securities Corporation.*                                                                                  
|      | 
|10.6  |  | Reorganization and Stock Purchase Agreement dated as of September 1, 2005 between the Company (then Altadyne, Inc.), Stem Cell Therapy International Corp. and R Capital Partners,
Inc.*
|      | 
|10.7  |  | Licensing Agreement dated as of September 1, 2005 between the Company and Institute of Cell Therapy.*                                                                                   
|      | 
|10.8  |  | Consulting Agreement dated as of September 1, 2005 between the Company and European Consulting Group, LLC.*                                                                             
|      | 
|10.9  |  | Consulting Agreement dated as of September 1, 2005 between the Company and Global Management Enterprises, LLC.*                                                                         
|      | 
|10.10 |  | Consulting Agreement dated as of September 1, 2005 between the Company and USA Consulting Group, LLC.*                                                                                  
|      | 
|10.11 |  | Professional Services Agreement dated as of September 7, 2005 between the Company and Bridgehead Group Limited , Inc.*                                                                  
|      | 
|10.12 |  | Public Relations Agreement dated as of September 19, 2005 between the Company and Stern & Co.*                                                                                          
|      | 
|10.13 |  | Advisory Physician Agreement dated as of October 4, 2005 between the Company and Alexey Bersenev.*                                                                                      
|      | 
|10.14 |  | Medical and Scientific Advisory Board Member Agreement dated as of October 10, 2005, between the Company and Dr. Weiwen Deng.*                                                          
|      | 
|10.15 |  | Medical and Scientific Advisory Board Member Agreement dated as of October 24, 2005, between the Company and Dr. Jorge Quintero.*                                                       
|      | 
|10.16 |  | Medical and Scientific Advisory Board Member Agreement dated as of October 24, 2005, between the Company and Dr. Salvador Vargas.*                                                      
|      | 
|10.17 |  | Medical and Scientific Advisory Board Member Agreement dated as of December 2, 2005 between the Company and Dr. Igor Katkov.*                                                           



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|      |  |                                                                                                                                     
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.18 |  | Medical and Scientific Advisory Board Member Agreement dated as of December 2, 2005, between the Company and Dr. Nikita Tregubov.*  
|      | 
|10.19 |  | Business Advisory Board Agreement dated as of December 5, 2005 between the Company and Fred J. Villella.*                           
|      | 
|10.20 |  | Business Development Advisory Agreement dated as of January 1, 2006 between the Company and Alexander Kulik.*                       
|      | 
|10.21 |  | Termination and Modification of Engagement Letter dated January 4, 2006 between the Company and Westminster Securities Corporation.*
|      | 
|10.22 |  | Business Consulting and Services Agreement dated January 20, 2006 between the Company and Julio C. Ferreira dba Sphaera Inte-Par.*  
|      | 
|10.23 |  | Business Development Advisory Agreement dated as of February 7, 2006 between the Company and Gus Yepes.*                            
|      | 
|10.25 |  | Treating Physician Agreement dated as of October 24, 2005 between the Company and Dr. Salvador Vargas.*                             
|      | 
|10.26 |  | Treating Physician Agreement dated as of October 24, 2005 between the Company and Dr. Jorge Quintero.*                              
|      | 
|10.27 |  | Consulting Agreement dated as of June 9, 2006 between the Company and Rick Langley.**                                               
|      | 
|10.28 |  | Patient Treatment Agreement dated November 1, 2006 between the Company and Shenzhen Beike Biotechnology Company Limited.***         
|      | 
|10.29 |  | Consulting Agreement dated as of October 12, 2006 between the Company and SOS Resource Services, Inc.***                            
|      | 
|10.30 |  | Letter from Aidman Piser & Company, P.A.***                                                                                         
|      | 
|14.1  |  | Code of Ethics                                                                                                                      
|      | 
|21.   |  | List of Subsidiaries*                                                                                                               
|      | 
|31.1  |  | Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                    
|      | 
|31.2  |  | Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350                                                            
|      | 
|32    |  | Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350                                                            



|* | Previously filed with the Companys initial filing of Form 10-SB, file number 000-51931, filed on April 25, 2006, and incorporated by this reference as an exhibit to this
Form 10-QSB.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Previously filed with the Companys filing of Form 10-QSB, filed on November 14, 2006 and incorporated by this reference as an exhibit.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------

|*** | Previously filed with the Companys filing of Form 10-KSB/A, filed on July 15, 2008 and incorporated by the reference as an exhibit.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

(b) Reports on Form 8-K.

Form 8-K filed on February 27, 2008,
reporting that the Company had entered into a Memorandum of Understanding with Histostem, Co. Ltd., to acquire 100% of its issued and outstanding common stock in exchange for stock is the Company.

Form 8-K filed on March 10, 2008, reporting that the Company entered into a Reorganization and Stock Purchase Agreement with Histostem. Pursuant to the Agreement,
the Company will acquire 95% of the issued and outstanding common stock of Histostem in exchange for a controlling interest in the Company. The agreement is scheduled to close on April 30, 2008.

Form 8-K filed on April 22, 2008, reporting that the Company entered into an amendment of the agreement with Histostem filed on March 10, 2008.

Form 8-K filed on June 17, 2008, reporting that the Company entered into Amendment No. 2 to the Reorganization and Stock Purchase Agreement with Histostem Co.,
Ltd., a Korean company originally executed on March 10, 2008.



|ITEM 14. | PRINCIPAL ACCOUNTANTS FEES AND SERVICES
|-------- | ---------------------------------------

Audit Fees

During 2008 and 2007, we incurred fees for services from our principal accountants of approximately $54,500 and $55,700, respectively, for audit and
review services associated with our filings.



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Non-Audit related fees

None

Tax Fees

None

All Other Fees

None

Audit Committee Pre-Approval Process, Policies and Procedures

Our
principal auditors have performed their audit procedures in accordance with pre-approved policies and procedures established by our Board of Directors. Our principal auditors have informed our Board of Directors of the scope and nature of each
service provided. With respect to the provisions of services other than audit, review, or attest services, our principal accountants brought such services to the attention of our Board of Directors prior to commencing such services.

SIGNATURES

In accordance with the requirements of
the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                       |  |                                                     
|---------------------- |  | ----------------------------------------------------
|Date: February 3, 2009
|                       | 
|By:                    |  | /s/ Calvin Cao                                      
|Name:                  |  | Calvin Cao                                          
|Title:                 |  | Former CEO                                          
|                       | 
|By:                    |  | /s/ David Stark                                     
|Name:                  |  | David Stark                                         
|Title:                 |  | President                                           
|                      
|Date: February 3, 2009
|                       | 
|By:                    |  | /s/ Andrew J. Norstrud                              
|Name:                  |  | Andrew J. Norstrud                                  
|Title:                 |  | Chief Financial Officer and Chief Accounting Officer



39