As filed with the Securities and Exchange Commission on July 15, 2009

Registration No. 333-        

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

 

FORM S-4
  
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

 

NEOSTEM, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		8090		22-2343568
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

420 Lexington Avenue, Suite 450
New York, NY 10170
(212) 584-4180

(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant’s Principal Executive Offices)

Catherine M. Vaczy, Esq.
Vice President and General Counsel
NeoStem, Inc.
420 Lexington Avenue, Suite 450
New York, NY 10170
(212) 584-4180

(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)

 

Copies to:

Alan Wovsaniker, Esq.
Anita Chapdelaine, Esq.
Meredith Prithviraj, Esq.
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, NJ 07068
(973) 597-2500

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and prior to the effective time of the proposed merger described in this Registration Statement.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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CALCULATION OF REGISTRATION FEE (NEOSTEM, INC.)

Title of Each Class of Securities to Be Registered		Amount to Be Registered				Proposed Maximum Offering Price per Share(2)				Proposed Maximum Aggregate Offering Price(2)				Amount of Registration Fee(4)
Common Stock, par value $0.001 per share			7,150,000	(1)			N/A			$	8,540,432	(3)		$	477
Common Stock, par value $0.001 per share			6,458,009	(5)			N/A			$	15,040,385	(6)		$	839
Common Stock, par value $0.001 per share			17,158	(7)			N/A			$	90,000	(7)		$	5
Series C Convertible Preferred Stock, par value $0.01 per share			8,177,512	(5)			N/A			$	0	(6)		$	0
Common Stock underlying Series C Convertible Preferred Stock			9,086,124				N/A				N/A			$	0
Class C Warrants to purchase Common Stock			2,012,097	(8)			N/A			$	10,462,873	(9)		$	584
Common Stock underlying Class C Warrants			2,012,097				N/A				N/A			$	0
Class E Warrants to purchase Common Stock			1,611,700	(10)			N/A			$	10,462,873	(11)		$	584
Common Stock underlying Class E Warrants			1,611,700				N/A				N/A			$	0
Common Stock, par value $0.001 per share			328,338				1.92	(12)		$	630,409	(12)		$	35
Total			38,464,735				N/A			$	45,226,972			$	2,524

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION DATED [], 2009

TO THE STOCKHOLDERS OF NEOSTEM, INC.
AND CHINA BIOPHARMACEUTICALS HOLDINGS, INC.

A MERGER AND OTHER PROPOSALS — YOUR VOTE IS VERY IMPORTANT!

The board of directors of each of NeoStem, Inc., a Delaware corporation (“NeoStem”), and China Biopharmaceuticals Holdings, Inc., a Delaware corporation (“CBH”), have approved the merger (the “Merger”) of CBH with and into CBH Acquisition LLC, a wholly-owned subsidiary of NeoStem (“Subco”), pursuant to the Agreement and Plan of Merger, dated November 2, 2008, as such agreement may be amended from time to time (the “Agreement and Plan of Merger”), among NeoStem, CBH, Subco and China Biopharmaceuticals Corp., a British Virgin Islands company and wholly-owned subsidiary of CBH (“CBC”). The Agreement and Plan of Merger provides that at the time of the Merger, the only material assets of CBH will be CBH’s 51% ownership interest in Suzhou Erye Pharmaceuticals Company Ltd. (“Erye”), a Sino-foreign joint venture with limited liability organized under the laws of the People’s Republic of China (“China” or the “PRC”) and at least $550,000 cash, as more particularly described herein. A condition of the Merger is that CBH sell or transfer its subsidiary CBC, which has no meaningful operation or assets, prior to the Merger. NeoStem is engaged in a platform business of operating a commercial autologous adult stem cell bank, is pioneering the pre-disease collection, processing and long-term storage of stem cells from adult donors for use for their own future medical treatment and has entered into research and development through the acquisition of a worldwide exclusive license to technology to identify and isolate very small embryonic-like stem cells and is also pursuing other technologies to advance its position in the field of stem cell tissue regeneration. CBH is a bio-pharmaceutical company focused on developing, manufacturing and distributing innovative drugs in the PRC primarily through its 51% ownership interest in Erye, a company engaged in research and development, production and sales of pharmaceutical products as well as chemicals used in pharmaceutical products in the PRC.

Pursuant to the terms of the Merger, all of the shares of common stock, par value $0.01 per share, of CBH (the “CBH Common Stock”), issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will be converted into the right to receive, in the aggregate, 7,150,000 shares of common stock, par value $0.001 per share, of NeoStem (the “NeoStem Common Stock”). Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia Capital Partners, L.P. (“RimAsia”), a principal stockholder of NeoStem and the sole holder of shares of Series B Convertible Preferred Stock, par value $0.01 per share, of CBH (the “CBH Series B Preferred Stock”), all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, (i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of Series C Convertible Preferred Stock, par value $0.01 per share, of NeoStem (the “NeoStem Series C Preferred Stock”), each with a liquidation preference of $1.125 per share and initially convertible into 9,086,124 shares of NeoStem Common Stock at an initial conversion price of $0.90 per share.

At the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Steven Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of CBH to Messrs. Globus and Mao. NeoStem will bear 50% of up to $450,000 of CBH’s expenses post-merger, and satisfaction of the liabilities of Messrs. Globus and Mao will count toward that obligation.

For assistance in effecting the Merger, 125,000 shares of NeoStem Common Stock will be issued to Suzhou Erye Economy and Trading Co. Ltd. (“EET”), which is a limited liability company organized under the laws of the PRC and the holder of 49% of the interests in Erye and 100% interest in Fullbright Finance Limited, a greater than 5% beneficial owner of NeoStem, or to EET’s designee. In addition, an aggregate of 203,338 shares of NeoStem Common Stock will be issued to Shi Mingsheng (the Chairman of the Board of Directors of Erye and a holder of approximately two-thirds of EET) and Madam Zhang Jian (General Manager of Erye and a holder of approximately 10% of EET) in connection with the transactions contemplated by the Merger after the timely receipt of all PRC approvals.

Pursuant to the terms of the Exchange Offer (as defined on page [293]) and only in the event the Merger is consummated and the related post-closing obligations are satisfied, each holder of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may exchange all of such holder’s warrants to purchase

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one share of CBH Common Stock for Class C Warrants to purchase 0.24038 shares of NeoStem Common Stock at an exercise price of $2.50 per share. It is a condition to the consummation of the transactions contemplated by the Agreement and Plan of Merger that the holders of ALL of the outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) must tender their Existing CBH Warrants in exchange for the Class C Warrants being offered by NeoStem in the Exchange Offer; however, such condition may be waived by NeoStem in its sole discretion. In the event NeoStem, in its sole discretion, waives such closing condition and the transactions contemplated by the Agreement and Plan of Merger are consummated, then holders of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may, in accordance with the terms of such holder’s warrants, elect to receive a cash payment for their Existing CBH Warrants equal to the Black Scholes value of the warrant on the date of such request. If the holder of the warrant does not make such election, then all of such holder’s warrants to purchase shares of CBH Common Stock shall be replaced with a new warrant (each a “NeoStem Class E Warrant”) substantially in the form of such holder’s existing warrant evidencing the right to purchase 0.19255 shares of NeoStem Common Stock with the exercise price per share adjusted such that the aggregate exercise price of the NeoStem Class E Warrant is the same as the aggregate exercise price of the warrant in effect immediately prior to the Effective Time.

The exchange ratio shall be equal to the quotient of 7,150,000 divided by the sum of (x) the number of shares of CBH Common Stock outstanding at the Effective Time, and (y) the number of shares of CBH Common Stock issuable upon exercise of in-the-money warrants of CBH immediately prior to the Effective Time, estimated at June 30, 2009 to be 0.19255.

Upon consummation of the Merger, NeoStem will own 51% of the ownership interests in Erye, and EET will own the remaining 49% ownership interest. In connection with the execution of the Agreement and Plan of Merger, Subco and EET have negotiated a revised joint venture agreement (the “Joint Venture Agreement”), which, subject to approval by the requisite PRC governmental authorities, will become effective and will govern the rights and obligations with respect to their respective ownership interests in Erye. Pursuant to the terms and conditions of the Joint Venture Agreement, dividend distributions to EET and Subco will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses. In the event of the sale of all of the assets of Erye or liquidation of Erye, NeoStem will be entitled to receive the return of such additional paid-in capital before distribution of Eyre’s assets is made based upon the ownership percentages of NeoStem and EET. Upon an initial public offering of Erye which raises at least 50,000,000 RMB (or approximately U.S. $7,300,000), NeoStem will be entitled to receive the return of such additional paid-in capital.

Pursuant to the Agreement and Plan of Merger, NeoStem’s Board of Directors will be increased from five directors to seven directors. Eric Wei will be added to the Board of Directors of NeoStem immediately after the Effective Time, and Shi Mingsheng will be added to the Board of Directors immediately after receipt of all PRC approvals following the Effective Time. The four directors elected at NeoStem’s annual meeting held in May 2009 (Robin L. Smith, Richard Berman, Steven S. Myers and Joseph Zuckerman) as well as the director appointed by the NeoStem Board of Directors on June 9, 2009 (Drew Bernstein) will continue to serve. Therefore, the NeoStem Board of Directors will consist of the following seven members promptly following the consummation of the Merger and the receipt of all PRC approvals: Robin L. Smith (Chairman), current Chairman of the Board and Chief Executive Officer of NeoStem; Eric Wei, the managing partner of RimAsia; Shi Mingsheng, a Director of and the Chief Operating Officer of CBH, the Chairman of the Board of Directors of Erye, and a holder of approximately two-thirds of EET (which is the holder of a 49% interest in Erye and a 100% interest in Fullbright Finance Limited, a greater than 5% beneficial owner of NeoStem); and Richard Berman, Drew Bernstein, Steven S. Myers and Joseph Zuckerman, each of the latter four a current director of NeoStem (the latter four are independent directors, as defined under the NYSE Amex

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listing standards). In the event that NeoStem Proposal No. 8 attains stockholder approval at the special meeting and the Board of Directors determines to file the Board Classification Amendment (as defined therein) with the Secretary of State of the State of Delaware, NeoStem’s Board of Directors would be divided into three separate classes of directors, as nearly equal in number as possible, with each respective class to serve a three-year term. The classes would be elected on a rotating or staggered basis, with each class being elected at the annual stockholder meeting coinciding with the expiration of that class’s term. For details regarding the proposed classification of NeoStem’s Board, see NeoStem Proposal No. 8 of this joint proxy statement/ prospectus.

NeoStem believes, as its business moves into China, that it would also be desirable to have one or more independent directors who reside in the PRC and have relevant experience. The Nominating Committee of NeoStem’s Board of Directors intends to continue its search for such potential director candidates.

NeoStem is requesting that its stockholders approve or otherwise vote in favor of the following:

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CBH is requesting that its stockholders vote to approve the following:

NeoStem Common Stock is listed on the NYSE Amex under the trading symbol “NBS,” and NeoStem Common Stock closed at $1.92 per share on July 10, 2009. CBH Common Stock is quoted on the Over-the-Counter Bulletin Board under the symbol “CHBP.OB,” and CBH Common Stock closed at $0.23 per share on July 10, 2009.

This joint proxy statement/prospectus provides you with detailed information about the proposed Merger, a description of which begins on page [1]. THE MERGER AND THE BUSINESS OF THE COMBINED COMPANY INVOLVE A HIGH DEGREE OF RISK. Government regulation in the People’s Republic of China may interfere with or prohibit all or certain of the Company’s business initiatives in China, and NeoStem lacks any prior experience in doing business in China. You should carefully read the section entitled “Risk Factors” beginning on page [33] for a discussion of specific risks that you should consider in determining how to vote on the proposed Merger.

Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved the securities to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [], 2009 and is first being mailed to stockholders of NeoStem and to stockholders of CBH on or about [], 2009.

Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend either meeting, please complete, date, sign and return the enclosed proxy as promptly as possible in order to ensure your representation at the meeting.

We strongly support the proposed transactions and join with our boards of directors in enthusiastically recommending that you vote in favor of the proposals presented to you for approval. In considering the Merger, the boards of directors of NeoStem and CBH considered the several factors set forth in this joint proxy statement/prospectus.

Robin L. Smith Chief Executive Officer NeoStem, Inc.		Chris Peng Mao Chief Executive Officer China Biopharmaceuticals Holdings, Inc.

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NEOSTEM, INC.
  
Notice of Special Meeting of Stockholders
To Be Held August [], 2009

A special meeting of stockholders of NeoStem, Inc. (“NeoStem”) will be held at the offices of NeoStem, Inc. located at 420 Lexington Avenue, Suite 450, New York, NY 10170, on August [], 2009, at 11:00 a.m., local time, for the following purposes:

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The foregoing items of business are more fully described in the joint proxy statement/prospectus that accompanies this notice. The board of directors has fixed the close of business on July 2, 2009 as the record date for the determination of stockholders entitled to notice of and to vote at this special meeting and at any adjournment or postponement thereof.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS OF NEOSTEM, INC. TO BE HELD ON AUGUST [], 2009. THIS PROXY STATEMENT AND THE ACCOMPANYING FORM OF PROXY CARD ARE AVAILABLE AT HTTP://WWW.VFNOTICE.COM/NEOSTEM. Under new rules issued by the Securities and Exchange Commission, we are providing access to our proxy materials both by sending you this full set of proxy materials, and by notifying you of the availability of our proxy materials on the Internet.

		By Order of the Board of Directors of NeoStem, Inc.
		Robin L. Smith, M.D. Chief Executive Officer

New York, New York
[] [], 2009

All stockholders are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy as promptly as possible in order to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for that purpose. Even if you have given your proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain from the record holder a proxy issued in your name.

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CHINA BIOPHARMACEUTICALS HOLDINGS, INC.
  
Notice of Special Meeting of Stockholders
To Be Held August [], 2009

The special meeting of stockholders of China Biopharmaceuticals Holdings, Inc. (“CBH”) will be held at the offices of NeoStem, Inc. located at 420 Lexington Avenue, Suite 450, New York, NY 10170 on August [], 2009, at 9:00 a.m., local time, for the following purposes:

The foregoing items of business are more fully described in the joint proxy statement/prospectus that accompanies this notice. The board of directors has fixed the close of business on July 2, 2009 as the record date for the determination of stockholders entitled to notice of and to vote at this special meeting and at any adjournment or postponement thereof.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS OF CHINA BIOPHARMACEUTICALS HOLDINGS, INC. TO BE HELD ON AUGUST [], 2009. THIS PROXY STATEMENT AND THE ACCOMPANYING FORM OF PROXY CARD ARE AVAILABLE AT HTTP://WWW.CSTPROXY.COM/CHINABIOPHARMA/2009. Under new rules issued by the Securities and Exchange Commission, we are providing access to our proxy materials both by sending you this full set of proxy materials, and by notifying you of the availability of our proxy materials on the Internet.

		By Order of the Board of Directors of China Biopharmaceuticals Holdings, Inc.
		Chris Peng Mao Chief Executive Officer

Suzhou, Jiangsu Province, China
[] [], 2009

All stockholders are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy as promptly as possible in order to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for that purpose. Even if you have given your proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain from the record holder a proxy issued in your name.

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		Page
QUESTIONS AND ANSWERS ABOUT THE MERGER AND OTHER PROPOSALS			1
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS			14
The Companies			14
Comparative Market Price Information			17
Structure of the Merger			18
The Terms of the Agreement and Plan of Merger			20
Conversion of CBH Common Stock; Exchange Ratio			20
Conditions to the Merger			21
Termination			23
The Reasons the Boards of Directors of NeoStem and CBH Approved the Merger			23
Fees and Expenses			24
Interests of Certain Persons in the Merger			24
Board Composition Following the Merger			27
Relative Percentages of Ownership			28
The Recommendations of the Board of Directors of NeoStem			29
The Recommendations of the Board of Directors of CBH			30
Risk Factors Related to the Merger			30
The Stockholders’ Meetings			31
Accounting Treatment			31
Governmental Approval of the Merger			31
Appraisal Rights for NeoStem Stockholders and for CBH Stockholders			31
RISK FACTORS			33
Risks Related to the Merger			33
Risks Related to the Joint Venture Agreement			45
Risks Related to the Combined Company			46
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			75
THE NEOSTEM SPECIAL MEETING OF STOCKHOLDERS			76
Purpose of the NeoStem Special Meeting			76
Record Date and Outstanding Shares			77
Stock Ownership of Management and Certain Stockholders			77
Voting Rights and Solicitation of Proxies; Expenses			77
Vote Required			77
Quorum; Abstentions; Broker Non-Votes			79
Voting of Proxies; Revocation of Proxies			79
THE CBH SPECIAL MEETING			81
Purpose of Special Meeting			81
Record Date and Outstanding Shares			81
Stock Ownership of Management and Certain Stockholders			81
Voting Rights and Solicitation of Proxies; Expenses			81
Vote Required			82
Quorum; Abstentions; Broker Non-Votes			82
Voting of Proxies; Revocation of Proxies			83
Rights of Dissenting Stockholders			83
Appraisal Rights Procedures			83

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NEOSTEM PROPOSAL NO. 1 TO APPROVE THE ISSUANCE OF SECURITIES IN CONNECTION WITH THE MERGER PURSUANT TO THE AGREEMENT AND PLAN OF MERGER     -AND- CBH PROPOSAL NO. 1 TO ADOPT THE AGREEMENT AND PLAN OF MERGER			86
Background of the Merger			86
What Am I Being Asked to Consider and Vote Upon?			86
The Merger			87
Issuance of Equity Grants in Connection with the Merger			89
Reasons for the Merger			89
RECOMMENDATIONS OF THE NEOSTEM AND THE CBH BOARDS OF DIRECTORS			93
Recommendation of the NeoStem Board			93
Recommendation of the CBH Board			93
Vote Required			93
Existing Business Relationships Between NeoStem and CBH			94
Interests of Certain NeoStem Persons in the Merger			94
Interests of Certain CBH Persons in the Merger			95
Interests of Rim Asia in the Merger			96
Interests of EET in the Merger			96
Board Composition			97
Relative Percentages of Ownership			98
Structure of the Merger			99
Material United States Federal Income Tax Consequences of the Merger			102
Fairness Opinion			104
Anticipated Accounting Treatment of the Merger			108
Governmental Approval of the Merger			108
THE AGREEMENT AND PLAN OF MERGER			109
The Merger			109
Date of Closing; Record Date			111
Management of NeoStem Following the Merger			111
Conversion of Securities; Exchange Ratio			111
Exchange of Certificates			112
Representations and Warranties			113
Conduct of Business Before Completion of the Merger			113
Meetings of Stockholders			115
Conditions			115
Termination			117
Expenses			119
Amendment; Extension and Waiver			119
Lock-Up and Voting Agreement			119
Proxy and Waiver			120
Restrictions on Transfer of Securities and Voting Rights			120
Termination			120
COMPARISON OF RIGHTS OF HOLDERS OF NEOSTEM COMMON STOCK AND CBH COMMON STOCK			121
Size of the Board			121

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Classification			121
Removal of Directors			121
Vacancies			122
Limitation on Director Liability			122
Indemnification of Directors and Officers			122
Amendments to Certificates of Incorporation			123
Amendments to Bylaws			123
Authorized Capital Stock			123
Dividends			124
Stock Repurchases, Redemptions and Conversions			124
Election of Directors			125
Appraisal or Dissenters’ Rights			125
Action by Written Consent			126
Annual Meeting of Stockholders			126
Special Meeting of Stockholders			126
Advance Notice Requirements of Stockholder Nominations			126
Advance Notice Requirements of Stockholder Business			127
Rights of Inspection			127
Transactions Between the Corporation and its Directors and Officers			127
Stockholders’ Rights Plan			128
BUSINESS OF NEOSTEM			129
Business Overview			129
Research & Development; Therapeutics Marketplace; Expansion Into China			139
Financing Activities			149
Employees			156
Properties			156
Legal Proceedings			158
NEOSTEM’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			159
Overview			159
Critical Accounting Policies			162
Recent Accounting Pronouncements			163
Results of Operations			167
Liquidity and Capital Resources			170
Inflation			174
Seasonality			175
Off-Balance Sheet Arrangements			175
BUSINESS OF CBH			176
Business Overview			176
Business Description			178
Employees			181
Properties			181
Legal Proceedings			182
CBH’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			183

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		Page
Overview			183
Critical Accounting Policies			183
Results of Operations			186
Liquidity and Capital Resources			190
Recent Accounting Pronouncements			191
MANAGEMENT OF THE COMBINED COMPANY AFTER THE MERGER			194
NEOSTEM’S CORPORATE GOVERNANCE			200
CAPITALIZATION			205
NEOSTEM PROPOSAL NO. 2 TO APPROVE AN AMENDMENT TO NEOSTEM’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AGGEGATE NUMBER OF SHARES OF PREFERRED STOCK AUTHORIZED FOR ISSUANCE FROM 5,000,000 SHARES TO 20,000,000 SHARES (AND A CORRESPONDING INCREASE IN NEOSTEM’S TOTAL AUTHORIZED SHARES FROM 505,000,000 TO 520,000,000)			206
NEOSTEM PROPOSAL NO. 3 TO APPROVE THE ISSUANCE OF NEOSTEM COMMON STOCK IN ORDER TO PERMIT THE POTENTIAL CONVERSION OF THE SERIES C CONVERTIBLE PREFERRED STOCK INTO 9,086,124 SHARES OF NEOSTEM COMMON STOCK UPON THE ELECTION OF THE HOLDERS THEREOF			208
NEOSTEM PROPOSAL NO. 4 TO APPROVE THE ISSUANCE OF NEOSTEM COMMON STOCK IN ORDER TO PERMIT (I) THE POTENTIAL EXERCISE OF UP TO 13,932,512 WARRANTS AND (II) THE AUTOMATIC CONVERSION OF THE SERIES D CONVERTIBLE PREFERRED STOCK INTO 12,932,510 SHARES OF NEOSTEM COMMON STOCK, TOGETHER WITH THE ELIMINATION OF CERTAIN RESTRICTIONS REGARDING CERTAIN WARRANT EXERCISES AND STOCK CONVERSIONS			210
NEOSTEM PROPOSAL NO. 5 TO AUTHORIZE AN AMENDMENT TO NEOSTEM’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF NEOSTEM COMMON STOCK AT A RATIO WITHIN THE RANGE OF 1:2 TO 1:5, AS DETERMINED BY THE NEOSTEM BOARD OF DIRECTORS, SOLELY IN THE EVENT IT IS DEEMED BY THE NEOSTEM BOARD OF DIRECTORS NECESSARY FOR NEOSTEM TO MAINTAIN ITS LISTING WITH THE NYSE AMEX OR TO LIST NEOSTEM COMMON STOCK ON ANY OTHER EXCHANGE			213
NEOSTEM PROPOSAL NO. 6 TO APPROVE AN AMENDMENT TO THE NEOSTEM, INC. 2009 EQUITY COMPENSATION PLAN TO INCREASE THE NUMBER OF SHARES OF NEOSTEM COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER FROM 3,800,000 SHARES TO 9,750,000 SHARES			219
NEOSTEM PROPOSAL NO. 7 TO ADOPT THE NEOSTEM, INC. 2009 NON-U.S. BASED EQUITY COMPENSATION PLAN (THE “2009 NON-U.S. PLAN”) WITH RESPECT TO THE 4,700,000 SHARES OF NEOSTEM COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER			228
NEOSTEM PROPOSAL NO. 8 TO APPROVE AN AMENDMENT TO NEOSTEM’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE FOR THE CLASSIFICATION OF THE BOARD OF DIRECTORS INTO THREE CLASSES, AND CERTAIN RELATED PROVISIONS REGARDING THE BOARD OF DIRECTORS			235

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NEOSTEM PROPOSAL NO. 9 TO APPROVE (I) AN AMENDMENT TO NEOSTEM’S 2003 EQUITY PARTICIPATION PLAN TO GRANT THE NEOSTEM BOARD OF DIRECTORS OR AN APPROPRIATE COMMITTEE THEREOF THE AUTHORITY TO REPRICE OPTIONS, (II) A ONE-TIME REPRICING OF THE EXERCISE PRICE OF CERTAIN NEOSTEM OPTIONS AND WARRANTS TO PURCHASE SHARES OF NEOSTEM COMMON STOCK AND (III) GIVING THE BOARD OF DIRECTORS OR AN APPROPRIATE COMMITTEE THEREOF DISCRETION TO ISSUE CERTAIN CASH OR EQUITY AWARDS IN CONNECTION WITH THE REPRICING			239
NEOSTEM PROPOSAL NO. 10 TO APPROVE THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES AT THE TIME OF THE MEETING TO APPROVE ANY OF THE NEOSTEM PROPOSALS			247
NEOSTEM EXECUTIVE COMPENSATION			248
Employment Agreements, Post-Employment Payments and Equity Grants			251
Post-Employment Payments			256
Outstanding Equity Awards at Fiscal Year-End			258
NEOSTEM DIRECTOR COMPENSATION			263
CBH EXECUTIVE COMPENSATION			265
CBH DIRECTOR COMPENSATION			266
PRICE RANGE OF COMMON STOCK AND DIVIDEND INFORMATION			267
NeoStem			267
CBH			267
DESCRIPTION OF SECURITIES			269
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF NEOSTEM			276
NEOSTEM EQUITY COMPENSATION PLAN INFORMATION			280
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF CBH			281
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF NEOSTEM AFTER THE MERGER AND SERIES D PREFERRED STOCK CONVERSIONS			282
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE			285
NeoStem			285
CBH			291
DESCRIPTION OF EXCHANGE OFFER			293
CBH PROPOSAL NO. 2 TO ADJOURN THE SPECIAL MEETING IF NECESSARY			310
EXPERTS			311
LEGAL MATTERS			311
WHERE YOU CAN FIND MORE INFORMATION			311
STOCKHOLDER PROPOSALS			312
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS			312
TRANSACTION OF OTHER BUSINESS			312
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			F-1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS			F-2
NEOSTEM FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			F-12
CBH FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			F-78

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AGREEMENT AND PLAN OF MERGER, and AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER			Annex A
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE, SECTION 262. APPRAISAL RIGHTS			Annex B
FAIRNESS OPINION			Annex C
CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION (Preferred Stock Amendment)			Annex D
CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION (Reverse Split Amendment Authorization)			Annex E
NEOSTEM, INC. 2009 EQUITY COMPENSATION PLAN			Annex F
NEOSTEM, INC. 2009 NON-U.S. BASED EQUITY COMPENSATION PLAN			Annex G
CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION (Board Classification Amendment)			Annex H
NEOSTEM, INC. FORM OF PROXY CARD			Annex I
CBH FORM OF PROXY CARD			Annex J
FORM OF LETTER OF TRANSMITTAL (Exchange Offer)			Annex K
FORM OF WITHDRAWAL LETTER (Exchange Offer)			Annex L
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS (NEOSTEM)			II-1
NEOSTEM SIGNATURES			II-9

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ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about NeoStem and CBH from other documents filed with the Securities and Exchange Commission that is not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon oral or written request to:

To obtain timely delivery of such information, you must request the information no later than five business days before the stockholder meetings. Accordingly, if you would like to request any information, please do so no later than [], 2009.

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND OTHER PROPOSALS

Q1: What is the merger transaction?

A1:  In general terms, pursuant to the terms and subject to the conditions set forth in an Agreement and Plan of Merger, dated as of November 2, 2008, as such agreement may be amended from time to time (the “Agreement and Plan of Merger”), by and among NeoStem, Inc. (“NeoStem”), China Biopharmaceuticals Holdings, Inc. (“CBH”), CBH Acquisition LLC (“Subco”) and China Biopharmaceuticals Corp (“CBC”), CBH will merge with and into Subco, a wholly-owned subsidiary of NeoStem, with Subco as the surviving entity (the “Merger”). The Agreement and Plan of Merger provides that at the time of the Merger, the only material assets of CBH will be CBH’s 51% ownership interest in Suzhou Erye Pharmaceuticals Company Ltd. (“Erye”), a Sino-foreign joint venture with limited liability organized under the laws of the People’s Republic of China (“China” or the “PRC”) and at least $550,000 cash. A condition of the Merger is that CBH sell or transfer its subsidiary CBC prior to the Merger.

Upon consummation of the Merger, NeoStem will own 51% of the ownership interests in Erye, and Suzhou Erye Economy and Trading Co. Ltd., a limited liability company organized under the laws of the PRC (“EET”), will own the remaining 49% ownership interest. In connection with the execution of the Agreement and Plan of Merger, Subco and EET have negotiated a revised joint venture agreement (the “Joint Venture Agreement”), which, subject to approval by the requisite PRC governmental authorities, will become effective and will govern the rights and obligations with respect to their respective ownership interests in Erye. Pursuant to the terms and conditions of the Joint Venture Agreement, dividend distributions to EET and Subco will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses. In the event of the sale of all of the assets of Erye or liquidation of Erye, NeoStem will be entitled to receive the return of such additional paid-in capital before distribution of Eyre’s assets is made based upon the ownership percentages of NeoStem and EET, and upon an initial public offering of Erye which raises at least 50,000,000 RMB (or approximately U.S. $7,300,000), NeoStem will be entitled to receive the return of such additional paid-in capital.

Pursuant to the terms of the Merger, all of the shares of common stock, par value $0.01 per share, of CBH (the “CBH Common Stock”), issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will be converted into the right to receive, in the aggregate, 7,150,000 shares of common stock, par value $0.001 per share, of NeoStem (the “NeoStem Common Stock”). Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia Capital Partners, L.P. (“RimAsia”), a principal stockholder of NeoStem and the sole holder of shares of Series B Convertible Preferred Stock, par value $0.01 per share, of CBH (the “CBH Series B Preferred Stock”), all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, (i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of Series C Convertible Preferred Stock, par value $0.01 per share, of NeoStem (the “NeoStem Series C Preferred Stock”), each with a liquidation preference of $1.125 per share and initially convertible into 9,086,124 shares of NeoStem Common Stock at an initial conversion price of $0.90 per share.

At the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Steven Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of CBH to Messrs. Globus and Mao. NeoStem will bear 50% of up to $450,000 of CBH’s expenses post-merger, and satisfaction of the liabilities of Messrs. Globus and Mao will count toward that obligation.

For assistance in effecting the Merger, 125,000 shares of NeoStem Common Stock will be issued to EET. In addition, an aggregate of 203,338 shares of NeoStem Common Stock will be issued to Shi Mingsheng (the Chairman of the Board of Directors of Erye and a holder of approximately two-thirds of EET) and Madam

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Zhang Jian (General Manager of Erye and a holder of approximately 10% of EET) in connection with the transactions contemplated by the Merger after the timely receipt of all PRC approvals.

Pursuant to the terms of the Exchange Offer (as defined on page [293]) and only in the event the Merger is consummated and the related post-closing obligations are satisfied, each holder of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may exchange all of such holder’s warrants to purchase one share of CBH Common Stock for Class C Warrants to purchase 0.24038 shares of NeoStem Common Stock at an exercise price of $2.50 per share. It is a condition to the consummation of the transactions contemplated by the Agreement and Plan of Merger that the holders of ALL of the outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) must tender their Existing CBH Warrants in exchange for the Class C Warrants being offered by NeoStem in the Exchange Offer; however, such condition may be waived by NeoStem in its sole discretion. In the event NeoStem, in its sole discretion, waives such closing condition and the transactions contemplated by the Agreement and Plan of Merger are consummated, then holders of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may, in accordance with the terms of such holder’s warrants, elect to receive a cash payment for their Existing CBH Warrants equal to the Black Scholes value of the warrant on the date of such request. If the holder of the warrant does not make such election, then all of such holder’s warrants to purchase shares of CBH Common Stock shall be replaced with a new warrant (each a “NeoStem Class E Warrant”) substantially in the form of such holder’s existing warrant evidencing the right to purchase 0.19255 shares of NeoStem Common Stock with the exercise price per share adjusted such that the aggregate exercise price of the NeoStem Class E Warrant is the same as the aggregate exercise price of the warrant in effect immediately prior to the Effective Time.

The Agreement and Plan of Merger also provides that the Compensation Committee of the NeoStem Board of Directors (the “Compensation Committee”) has the authority to grant as bonuses in connection with the transactions contemplated by the Merger, in its discretion, up to an aggregate of 1,000,000 shares, or options to purchase up to 1,000,000 shares of NeoStem Common Stock, in any combination, under any equity compensation plan (the “Merger Bonus Shares”). Any such grants would be made under the NeoStem, Inc. 2009 Equity Compensation Plan (the “2009 Plan”) or the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”), as appropriate. Accordingly, NeoStem stockholders are also being asked to consider and vote upon an amendment to the 2009 Plan to increase the number of shares of NeoStem Common Stock authorized for issuance thereunder from 3,800,000 to 9,750,000 shares, which increase includes certain shares to be allocated to the Merger Bonus Shares. At NeoStem’s special meeting, the stockholders of NeoStem will also consider the adoption of the 2009 Non-U.S. Plan. For further details, see NeoStem Proposal No. 1 (regarding the Merger and the Agreement and Plan of Merger), NeoStem Proposal No. 6 (regarding the increase in shares authorized for issuance under the 2009 Plan) and NeoStem Proposal No. 7 (regarding the adoption of the 2009 Non-U.S. Plan).

Pursuant to the Agreement and Plan of Merger, NeoStem’s Board of Directors will be increased from five directors to seven directors. Eric Wei will be added to the Board of Directors of NeoStem immediately after the Effective Time, and Shi Mingsheng will be added to the Board of Directors immediately after receipt of all PRC approvals following the Effective Time. The four directors elected at NeoStem’s annual meeting held in May 2009 (Robin L. Smith, Richard Berman, Steven S. Myers and Joseph Zuckerman) as well as the director appointed by the NeoStem Board of Directors on June 9, 2009 (Drew Bernstein) will continue to serve. Therefore, the NeoStem Board of Directors will consist of the following seven members promptly following the consummation of the Merger and the receipt of all PRC approvals: Robin L. Smith (Chairman), current Chairman of the Board and Chief Executive Officer of NeoStem; Eric Wei, the managing partner of RimAsia; Shi Mingsheng, a Director of and the Chief Operating Officer of CBH, the Chairman of the Board of Directors of Erye, and a holder of approximately two-thirds of EET (which is the holder of a 49% interest in Erye and a 100% interest in Fullbright Finance Limited, a greater than 5% beneficial owner of NeoStem); and Richard Berman, Drew Bernstein, Steven S. Myers and Joseph Zuckerman, each of the latter four a current director of NeoStem (the latter four are independent directors, as defined under the NYSE Amex listing standards). In the event that NeoStem Proposal No. 8 attains stockholder approval at the special meeting and the Board of Directors determines to file the Board Classification Amendment (as defined therein) with the Secretary of State of the State of Delaware, NeoStem’s Board of Directors would be divided into

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three separate classes of directors, as nearly equal in number as possible, with each respective class to serve a three-year term. The classes would be elected on a rotating or staggered basis, with each class being elected at the annual stockholder meeting coinciding with the expiration of that class’s term. For details regarding the proposed classification of NeoStem’s Board, see NeoStem Proposal No. 8 of this joint proxy statement/ prospectus.

NeoStem believes, as its business moves into China, that it would also be desirable to have one or more independent directors who reside in the PRC and have relevant experience. The Nominating Committee of NeoStem’s board of directors intends to continue its search for such potential director candidates.

As a result of the Merger, the ownership of the NeoStem Common Stock outstanding immediately after the Merger (and after giving effect to the conversion of the Series D Preferred Stock) will be as follows:

		Number of Shares				Percentage Ownership
Current Neostem Shareholders – including Series D Convertible Redeemable Preferred Stock Private Placement (excluding RimAsia, EET and Enhance Biomedical)			12,080,321				33.28	%
Current CBH Shareholders			5,150,821				14.19	%
Erye Economy & Trading Ltd/Fullbright Finance Limited			3,604,569				9.93	%
Enhance Biomedical Holding Corporation			4,000,000				11.03	%
Rim Asia			11,458,009				31.57	%
			36,293,720				100.00	%

Q2: What will I receive in the Merger?

A2:  NeoStem stockholders will not receive any consideration in the Merger, and the number of shares of NeoStem Common Stock that they hold will be unaffected but their percentage ownership will decrease substantially due to the number of shares being issued in the Merger.

Q3: What are the significant risks involved in the Merger?

A3:  The Merger involves significant risks. In particular, many industries in China, including the stem cell industry in which NeoStem operates, are subject to government regulations that limit or prohibit foreign investments in such industries, which may limit or prohibit NeoStem’s potential to control certain businesses, acquire specific interests, or participate in particular ventures. NeoStem is pursuing multiple business initiatives in China but NeoStem lacks any experience in doing business in China and our directors, officers, managers, and employees will be encountering for the first time the economic, political, and legal climate that is unique to China, which may present risk and uncertainties to our operations; NeoStem may have to unwind the Merger or pursue other remedies in the event that following the consummation of the Merger NeoStem in unable to obtain the requisite government approvals of its acquisition via the Merger transaction of CBH’s 51% interest in the Erye business. For a detailed discussion on the risks involved see the “Risk Factors” section beginning on page [33] of this Registration Statement on Form S-4.

Q4: What are the tax consequences of the Merger?

A4:  The closing of the Merger is conditioned (which condition may be waived) on the receipt of tax opinions of counsel by each of NeoStem and CBH, in the form and substance reasonably satisfactory to NeoStem and CBH, with respect to the tax-free status of the Merger. The Merger may qualify as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the “Code” or “Internal Revenue Code”). In that case, holders of shares of CBH Common Stock that exchange such shares for shares of NeoStem Common Stock would generally not have any gain or loss resulting from the Merger. In addition, CBH generally would not recognize any gain or loss resulting from the Merger. However, the Merger may not qualify as a reorganization. In that case, holders of shares of CBH Common Stock that exchange such shares for shares of NeoStem Common Stock would generally have taxable gain or loss equal to the value of the consideration each holder receives in the Merger less the tax basis that she or he had in the shares of CBH stock exchanged therefore. In addition, CBH would have taxable gain or loss equal to the value of the consideration paid by NeoStem less the tax basis that CBH has in its assets. The parties do

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not expect to receive the aforementioned tax opinions if the Merger becomes effective under state law without prior approval from any PRC Governmental Authority, and NeoStem exercises its right to defer delivery of NeoStem securities to holders of CBH. For further discussion, see “Material United States Federal Income Tax Consequences of the Merger.”

Tax matters are very complicated, and the tax consequences of the Merger to holders of CBH stock will depend on the facts of the holder’s particular situation. Holders are encouraged to consult their own tax advisor regarding the specific tax consequences of the Merger, including the applicability and effect of any federal, state, local and foreign income and other tax laws.

Q5: What are NeoStem Stockholders being asked to vote upon?

A5:  NeoStem stockholders are being asked to consider and vote upon the issuance of the NeoStem securities in connection with the Merger pursuant to the Agreement and Plan of Merger. Further, NeoStem stockholders are being asked to consider and vote upon:

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Q6: Why are NeoStem stockholders being asked to approve an amendment to NeoStem’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of NeoStem preferred stock from 5,000,000 to 20,000,000 (and a corresponding increase in NeoStem’s total authorized shares from 505,000,000 to 520,000,000)?

A6:  If the Merger is approved, NeoStem will be required to designate a series of the NeoStem preferred stock as “Series C Convertible Preferred Stock,” each share of which will have a liquidation preference of $1.125 per share and be convertible into shares of NeoStem Common Stock at an initial conversion price of $0.90 per share, and NeoStem will be required to issue 8,177,512 shares of Series C Preferred Stock to RimAsia pursuant to the terms of the Agreement and Plan of Merger. With 10,000 Series B Preferred shares and 1,293,251 Series D shares currently outstanding, NeoStem does not have enough authorized preferred stock to issue the Series C Preferred Stock. The NeoStem Board of Directors believes that the amendment to NeoStem’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of NeoStem preferred stock from 5,000,000 to 20,000,000 is advisable in order to have preferred shares of NeoStem available for issuance to RimAsia as required by the Agreement and Plan of Merger, and also to have additional preferred shares available for other potential acquisitions, to maintain NeoStem’s financing and capital-raising flexibility and for other corporate purposes. As of the date of this proxy statement, other than the issuance of 8,177,512 shares of Series C Preferred Stock in connection with the Merger, there are no present agreements or arrangements for the issuance of any of the additional shares of NeoStem preferred stock that would be authorized by the amendment to NeoStem’s Amended and Restated Certificate of Incorporation to increase the number of shares of NeoStem preferred stock authorized for issuance.

Q7: Why are the NeoStem stockholders being asked to approve the issuance of NeoStem Common Stock in order to permit (i) the potential exercise of up to 13,932,512 warrants, (ii) the potential conversion of the Series C Convertible Preferred Stock into 9,086,124 shares of NeoStem Common Stock upon the election of the holders thereof and (iii) the automatic conversion of the Series D Convertible Preferred Stock into 12,932,510 shares of NeoStem Common Stock, together with the elimination of certain restrictions regarding certain warrant exercises and stock conversions?

A7:  Under the rules of the NYSE Amex, stockholder approval is required prior to the issuance of voting securities which could cause a change of control. The potential issuances described below require obtaining such stockholder approval.

In April 2009, NeoStem consummated a private placement (the “April 2009 Private Placement”), pursuant to which three entities, including RimAsia, acquired an aggregate of 880,000 shares of NeoStem Series D Convertible Preferred Stock (the “Series D Stock”) and warrants to purchase an aggregate of 8,800,000 shares of NeoStem Common Stock at an exercise price of $2.50 per share. In June and July 2009, NeoStem consummated a private placement (the “June/July 2009 Private Placement”) pursuant to which an additional 20 persons and entities, including Fullbright, acquired an aggregate of 400,280 shares of Series D Stock and warrants to purchase an aggregate of 4,002,800 shares of NeoStem Common Stock, plus 12,971 shares of Series D Stock and warrants to purchase an aggregate of 129,712 shares of NeoStem Common Stock were issued as placement agent fees. The April and June/July 2009 private placements are sometimes referred to collectively as the “Series D Preferred Private Placements.” Upon approval by the stockholders, each share of Series D Stock will be automatically converted into ten (10) shares of NeoStem Common Stock at an initial conversion price of $1.25 per share. If such affirmative vote is not achieved by October 31, 2009, NeoStem would be required to redeem all shares of Series D Stock at a redemption price of $12.50 per share ($16,165,637.50 in the aggregate) plus the accrued dividends, which dividends accrue at a rate of ten percent (10%) per annum.

In September 2008, NeoStem consummated a private placement with RimAsia, pursuant to which RimAsia received, among other securities, redeemable warrants for up to 1,000,000 shares of NeoStem Common Stock, exercisable at $1.25 per share.

Pursuant to the terms of the Agreement and Plan of Merger, RimAsia’s shares of CBH Series B Preferred Stock will be converted into the right to receive, in the aggregate, 6,458,009 shares of NeoStem Common Stock and 8,177,512 shares of NeoStem Series C Convertible Preferred Stock (the “Series C Stock”), initially convertible into 9,086,124 shares of NeoStem Common Stock.

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In order to avoid change of control issues, on December 18, 2008, NeoStem and RimAsia entered into a certain Blocker Letter (the “Blocker Letter”) pursuant to which, among other things, all warrants issued to or issuable to RimAsia were amended to restrict their exercisability in the event that such exercise would increase RimAsia’s beneficial ownership of NeoStem Common Stock to above 19.9% of the class. The restriction also applies to the conversion of the Series C Stock. Stockholder approval is necessary to remove the restrictions imposed by the Blocker Letter.

The Board of Directors now is seeking stockholder approval authorizing the issuance of NeoStem Common Stock to the extent necessary upon the potential exercise of the above-mentioned warrants into 13,932,512 shares of NeoStem Common Stock, the potential conversion of the Series C Stock into 9,086,124 shares of NeoStem Common Stock upon the election of the holders thereof and the automatic conversion of the Series D Stock into 12,932,510 shares of NeoStem Common Stock, together with the elimination of the restrictions contained in the Blocker Letter. The Board of Directors deems it prudent to seek such stockholder approval so that NeoStem, an NYSE Amex-listed company, can ensure that the above-referenced warrant exercises and stock conversions comply with Section 713 of the NYSE Amex Company Guide (the “Company Guide”) and that such shares can be listed on the NYSE Amex. Section 713 requires stockholder approval for the issuance of common shares under certain circumstances, including a situation where the issuance or potential issuance of additional shares will result in a change of control.

Since RimAsia could potentially beneficially own up to 37.6% of NeoStem on a fully diluted basis after giving effect to all of the proposed issuances above, such beneficial ownership could be deemed to result in a change of control. Alternatively, the NYSE Amex could deem the issuance or potential issuance of up to 25,865,022 shares of NeoStem Common Stock in connection with the conversion or exercise, as applicable, of the securities issued in the Series D Preferred Private Placements (3.23 times the number of NeoStem’s outstanding shares as of the date of the last issuance of the Series D Stock) to be a change of control.

Though stockholder approval of the above-mentioned stock issuances will ensure that these particular issuances comply with Section 713, there is no guarantee that NeoStem will remain eligible for listing on the NYSE Amex. That is, the merger with CBH will be deemed to be a reverse merger by NYSE Amex, in which case continued listing will depend on the post-transaction entity’s meeting the standards for initial listing. To attempt to meet the standards for initial listing, NeoStem in part is seeking stockholder approval for the potential reverse stock split as per NeoStem Proposal No. 5. For a further discussion of NeoStem’s efforts directed at maintaining its NYSE Amex listing, see NeoStem Proposal No. 5, below, as well as “Risk Factors  — Risks Relating to NeoStem’s Business — Our Stock and Class A warrants may be delisted from the NYSE Amex.”

Q8: Why are NeoStem stockholders being asked to authorize an amendment to NeoStem’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of NeoStem Common Stock at a ratio within the range of 1:2 to 1:5, as determined by the NeoStem Board of Directors, solely in the event it is deemed by the NeoStem Board of Directors necessary to maintain its listing with the NYSE Amex or to list NeoStem Common Stock on any other exchange?

A8:  The NeoStem Board of Directors’ primary objective in proposing authorization for a potential reverse stock split is to raise the per-share trading price of NeoStem Common Stock in the event such action is necessary to enable NeoStem to maintain its listing with the NYSE Amex or to list NeoStem Common Stock on any other exchange. While the Board of Directors believes that continued listing on the NYSE Amex is itself in the best interests of NeoStem and its stockholders, it is also the case that CBH’s obligation to consummate the Merger is conditioned upon obtaining approval to list the NeoStem Common Stock to be issued in connection with the Merger.

By way of further elaboration, in connection with the consummation of the Merger, NeoStem will be issuing more shares of NeoStem Common Stock and securities convertible or exchangeable into NeoStem Common Stock than are currently outstanding. As such, the NYSE Amex takes the position that such a transaction is a “reverse merger” and will require the combined company to meet the initial listing standards and have, among other qualifications, a per-share price of at least $2.00. On July 10, 2009, a share of NeoStem Common Stock traded at $1.92 on the NYSE Amex.

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In addition, the change in control scenario could also be implicated by NeoStem’s recent private placements, in which securities convertible into shares of NeoStem Common Stock were issued. The Series D Preferred Private Placement makes possible the potential issuance of 25,865,022 shares of NeoStem Common Stock. NeoStem Proposal No. 4 of this joint proxy statement/prospectus seeks stockholder approval for the issuance of NeoStem Common Stock to permit the exercise of certain NeoStem warrants (including the Series D Warrants) and the conversion of the Series D preferred stock. The amount of NeoStem Common Stock for which NeoStem Proposal No. 4 seeks authorization for issuance constitutes approximately 3.36 times the amount of NeoStem Common Stock outstanding as of July 2, 2009.

The NeoStem Board of Directors believes that authorization to effect a reverse split may be helpful in, but would by no means guarantee, achievement of the relevant minimum share price. The NeoStem Board of Directors also believes that the reverse stock split would, among other things, (i) facilitate higher levels of stock ownership by institutions whose investment policies generally prohibit investments in lower-priced securities and (ii) better enable NeoStem to raise funds to finance its planned operations.

PLEASE NOTE THAT UNLESS SPECIFICALLY INDICATED TO THE CONTRARY, THE DATA CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS, INCLUDING BUT NOT LIMITED TO SHARE NUMBERS, CONVERSION PRICES AND EXERCISE PRICES OF WARRANTS AND OPTIONS, DOES NOT REFLECT THE IMPACT OF ANY REVERSE STOCK SPLIT THAT MAY BE EFFECTED PURSUANT TO THE TERMS OF NEOSTEM PROPOSAL NO. 5.

Q9: Why are NeoStem stockholders being asked to approve an amendment to the NeoStem, Inc. 2009 Equity Compensation Plan to increase the number of shares of NeoStem Common Stock authorized for issuance thereunder from 3,800,000 shares to 9,750,000 shares?

A9:  The NeoStem, Inc. 2009 Equity Compensation Plan (the “2009 Plan”) was adopted by the Board of Directors in March 2009, and stockholder approval was obtained in May 2009. The general purpose of the 2009 Plan is to advance NeoStem’s interests by enhancing its ability to (a) attract and retain employees, consultants and directors who are in a position to make significant contributions to NeoStem’s success; (b) reward NeoStem’s employees, consultants and directors for these contributions; and (c) encourage employees, consultants and directors to take into account NeoStem’s long-term interests through ownership of shares.

However, the current version of the 2009 Plan as adopted by the Board of Directors and approved by the stockholders authorizes for issuance a maximum of only 3,800,000 shares. Assuming the consummation of the Merger, NeoStem will be a larger company with additional employees, consultants and directors. An increased number of eligible plan participants requires that the number of shares authorized for issuance under the 2009 Plan be increased. In addition, it will be necessary to increase the number of shares authorized for issuance under the 2009 Plan in order to accommodate the anticipated Merger-related grants to be made under the 2009 Plan (such Merger-related grants are discussed in detail in NeoStem Proposal No. 6, below, in the section “Issuance of Equity Grants in Connection with the Merger”). In the viewpoint of the NeoStem Board of Directors, the likely size of the post-Merger company renders it advisable that the number of shares authorized for issuance under the 2009 Plan be increased from 3,800,000 shares to 9,750,000 shares. With a larger pool of issuable shares to draw upon, the plan administrator will be in a better position to adequately incentivize and reward the employees, consultants and directors of the combined company, and the ultimate objectives of the 2009 Plan will be better served.

The 3,800,000 shares authorized for issuance under the current version of the 2009 Plan represent 47.49% of the outstanding shares of NeoStem as of the record date. If the 2009 Plan is amended pursuant to NeoStem Proposal No. 6, the 9,750,000 shares authorized for issuance under the 2009 Plan would represent 27.17% of the outstanding shares of NeoStem following the Merger and Series D Preferred conversion. If NeoStem Proposal No. 5 attains stockholder approval, and NeoStem’s Board thereafter determines to effect a reverse split, the number of shares authorized for issuance under the 2009 Plan would be proportionately reduced.

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Q10: Why are NeoStem stockholders being asked to approve (i) an amendment to NeoStem’s 2003 Equity Participation Plan (the “2003 Plan”) to grant the NeoStem Board of Directors or an appropriate committee thereof the authority to reprice options, (ii) a one-time repricing of the exercise price of certain NeoStem options and warrants to purchase shares of NeoStem Common Stock and (iii) giving the Board of Directors or an appropriate committee thereof discretion to issue certain cash or equity awards in connection with the one-time repricing?

A10:  NeoStem’s options and warrants are for the most part significantly under-water and essentially have very limited value to the holders thereof. NeoStem’s Board of Directors believes that the repricing measures contained in the proposal would re-incentivize the holders of options as originally intended at the time of grant and increase the probability that the NeoStem warrants would be exercised, potentially raising capital for NeoStem.

In addition, NeoStem’s Board of Directors believes that the repricing provisions contained in the proposal will make NeoStem’s capital structure more equitable in light of the transactions contemplated by the Agreement and Plan of Merger. The Agreement and Plan of Merger specifically contemplates that NeoStem has the power to effect a repricing, and further provides for an exchange offer with the CBH warrant holders, described under “The Agreement and Plan of Merger — Conversion of Securities; Exchange Ratio,” that has the effect of reducing the exercise prices of the CBH warrants if accepted.

Q11: Why are NeoStem stockholders being asked to adopt the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”) with respect to the 4,700,000 shares of NeoStem Common Stock authorized for issuance thereunder?

A11:  The general purpose of the 2009 Non-U.S. Plan is to provide an incentive to NeoStem’s employees and consultants who are providing services to NeoStem outside the United States by enabling them to share in the future growth of NeoStem’s business. The adoption of this plan is motivated by NeoStem’s impending acquisition of CBH, and as a result of the Merger, a majority interest in Suzhou Erye Pharmaceuticals Company, Ltd (“Erye”), a Sino foreign joint venture organized under the laws of the People’s Republic of China, as well as by NeoStem’s other China initiatives. As a result of these initiatives, NeoStem will benefit from the services of a number of individuals providing services to NeoStem or to one of its subsidiaries outside of the United States and in particular in the People’s Republic of China. As with U.S.-based employees, the Board of Directors believes that the granting of warrants, restricted stock awards, unrestricted stock awards and similar kinds of equity-based compensation to NeoStem’s employees and consultants who are providing services to NeoStem outside the United States promotes continuity of management and increases incentive and personal interest in the welfare of NeoStem by those who are primarily responsible for shaping and carrying out NeoStem’s long range plans and securing its growth and financial success. NeoStem Proposal No. 7 describes with greater particularity certain grants that are anticipated to be made under the 2009 Non-U.S. Plan, under the headings “Issuance of Equity Grants in Connection with the Merger” and “New Plan Benefits — Other Equity Grants Approved Under the 2009 Non-U.S. Plan.”

The Board believes that the 2009 Non-U.S. Plan will advance NeoStem’s interests by enhancing its ability to attract and retain employees and consultants who are able to provide services outside of the United States and are in a position to make significant contributions to NeoStem’s success; reward NeoStem’s overseas employees and consultants for these contributions; and encourage employees and consultants providing services overseas to take into account NeoStem’s long-term interests through ownership of its shares. The 2009 Non-U.S. Plan authorizes 4,700,000 shares for issuance. If NeoStem Proposal No. 5 attains stockholder approval, and NeoStem’s Board thereafter determines to effect a reverse split, the number of shares authorized for issuance under the 2009 Non-U.S. Plan would be proportionately reduced.

Q12: Why are NeoStem stockholders being asked to approve an amendment to NeoStem’s Amended and Restated Certificate of Incorporation to provide for a classification of the Board of Directors into three classes and certain related provisions regarding the Board of Directors?

A12:  At the present time, NeoStem has an unclassified board. Currently, a director elected to the NeoStem Board serves for a one-year term and until his or her successor is elected and qualified. The proposed amendment to classify the Board (the “Board Classification Amendment”) would operate to divide NeoStem’s Board into three separate classes of directors, as nearly equal in number as possible, with each respective class to serve a three-year term and until their successors are duly elected and qualified. The classes

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would be elected on a rotating or staggered basis, with each class being elected at the annual stockholder meeting coinciding with the expiration of that class’s term.

Since directors will be serving for longer terms which expire at different times, and may be removed only for cause by vote of the majority of the voting power outstanding, NeoStem’s Board of Directors believes that a classified Board will promote continuity of management and, thereby enhance the ability of NeoStem to carry out long-range plans and goals for its benefit and the benefit of its stockholders. Although NeoStem has not experienced difficulties in the past in maintaining continuity of the Board and management, the Board of Directors believes that a classified Board will assist NeoStem in maintaining this continuity of management into the future.

Additionally, the Board Classification Amendment may have certain anti-takeover effects that the Board believes may deter unsolicited takeover attempts and protect the value of each stockholder’s investment in NeoStem. A classified Board would extend the time it would take for holders of a majority of the shares to obtain control of the Board of Directors, thereby limiting such abusive takeover tactics as ‘two-tiered’ tender offers. Assuming each class of directors is approximately equal in size, a majority stockholder could not obtain control of the Board until the second annual stockholder’s meeting after it acquired a majority of the voting stock. During this time, the Board of Directors believes that it would have a better opportunity to negotiate with any such majority stockholder to obtain more favorable price and terms in any merger or tender offer.

Q13: What are CBH stockholders being asked to vote upon?

A13:  CBH stockholders are being asked to consider and vote upon the adoption of the Agreement and Plan of Merger. CBH stockholders are also being asked to grant the proxies the authority to consider and vote upon a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve any of the proposals submitted at the special meeting.

Q14: Who can attend the NeoStem special meeting, and what security procedures apply to attendees?

A14:  All stockholders as of the record date, or their duly appointed proxies, may attend the NeoStem special meeting. Please note that if you hold your shares in “street name” (that is, through a broker or other nominee), you will need to bring a copy of your proxy card delivered to you by your broker or a legal proxy given to you by your broker and check in at the registration desk at the meeting.

In accordance with NeoStem’s security procedures, you must comply with NeoStem’s pre-registration requirements: specifically, you must present a form of government-issued photograph identification to security on the day of the NeoStem special meeting and you must arrive at least thirty minutes prior to the meeting in order to attend the NeoStem special meeting. If you are a stockholder of record and plan to attend the NeoStem special meeting, please contact Catherine Vaczy, Esq. by e-mail at cvaczy@neostem.com or by phone at (212) 584-4180 to register to attend the NeoStem special meeting. If you hold shares through an intermediary, such as a bank or broker, and you plan to attend, you must send a written request to attend either by regular mail or e-mail, along with proof of share ownership, such as a bank or brokerage firm account statement, confirming ownership to: NeoStem, Inc., 420 Lexington Avenue, Suite 450, New York, NY 10170, Attn: Catherine Vaczy, Esq., Vice President and General Counsel or cvaczy@neostem.com. Attendance at the NeoStem special meeting will be limited to persons who pre-registered on or before [], 2009, who present a form of government-issued photograph identification (such as a driver’s license) on the day of the NeoStem special meeting and who arrive by 10:30 a.m. local time.

Q15: What vote is required to approve the NeoStem proposals?

A15:  Holders of record of NeoStem Common Stock at the close of business on July 2, 2009 will be entitled to one vote for each share held on each matter submitted to a vote of the stockholders of NeoStem. Holders of record of NeoStem Series B Convertible Redeemable Preferred Stock (the “NeoStem Series B Preferred”) at the close of business on July 2, 2009 will be entitled to ten votes per share on each matter submitted to a vote of the stockholders of NeoStem. Shares of NeoStem Common Stock and NeoStem Series B Preferred vote together as one class. Unless the context otherwise requires, all references to NeoStem

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“stockholders” in this proxy statement refer to holders of NeoStem Common Stock and holders of NeoStem Series B Preferred. Cumulative voting by stockholders is not permitted. Votes required to approve the proposals presented to the NeoStem stockholders are as follows:

(a) The affirmative vote of the holders of a majority of the total votes cast in person or by proxy will be required for the approval of each of the following proposals:

Abstentions and broker “non-votes” with regard to any such proposal are not considered to have been voted on the proposal.

(b) The affirmative vote of the holders of a majority of the voting power outstanding as of the record date will be required for the approval of each of the following proposals:

If you abstain or do not instruct your broker how to vote with respect to these proposals, your abstention or broker non-vote will have the same effect as a vote against each of these proposals.

(c) The affirmative vote of the holders of a majority of the voting power outstanding as of the Record Date of (i) NeoStem Common Stock and NeoStem Series B Preferred Stock, voting together as a single class, and (ii) NeoStem Series B Preferred Stock and NeoStem Series D Preferred Stock, voting together as a single class, is required to approve the amendment to NeoStem’s Amended and Restated Certificate of Incorporation to increase the number of shares of NeoStem preferred stock authorized for issuance from 5,000,000 shares to 20,000,000 shares (and a corresponding increase in NeoStem’s total authorized shares from 505,000,000 to 520,000,000) (NeoStem Proposal No. 2).

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If you abstain or do not instruct your broker how to vote with respect to this proposal, your abstention or broker non-vote will have the same effect as a vote against this proposal.

(d) The affirmative vote of a majority of the stockholders present in person or represented by proxy at the Special Meeting and entitled to vote will be required to approve an adjournment of the Special Meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the Special Meeting to approve the proposals submitted at the special Meeting (NeoStem Proposal No. 10).

NeoStem’s stockholders will not have any rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon at the special meeting.

Each director and officer of NeoStem, as well as RimAsia, Fullbright and EET, has entered into a lock-up and voting agreement and agreed to vote all shares of NeoStem Common Stock held by them (collectively, the “NeoStem Lock-Up Shares”) in favor of the issuance of NeoStem securities in connection with the Merger. The NeoStem Lock-Up Shares represent approximately 27.4% of the shares of NeoStem Common Stock outstanding as of July 2, 2009.

Q16: What vote is required to approve the CBH proposals?

A16:  The approval of the proposal regarding the adoption of the Agreement and Plan of Merger will require the affirmative vote of the holders of at least a majority of the outstanding voting power of the CBH Common Stock and the CBH Series A Convertible Preferred Stock (“CBH Series A Preferred Stock”), voting together as a single class. In addition, the adoption of the Agreement and Plan of Merger will require the approval of the holders of at least a majority of the shares of CBH Series B Preferred Stock outstanding as of the record date, voting as a separate class. If you abstain or do not vote, your abstention or non-vote will have the same effect as a vote against the Merger proposal.

In connection with execution of the Agreement and Plan of Merger, each of the officers and directors of CBH, and each of RimAsia, Erye and EET and certain holders of CBH Common Stock have entered into a lock-up and voting agreement, pursuant to which they have agreed to vote their shares of CBH Common Stock (collectively, the “CBH Lock-Up Shares”) in favor of the Merger and to the other transactions contemplated by the Agreement and Plan of Merger. The CBH Lock-Up Shares represent approximately 34.30% of the voting power of the CBH Common Stock and the CBH Series A Preferred Stock outstanding as of July 2, 2009 and also applies to additional shares beneficially owned by certain of such persons including spouses. In addition, the sole holder of the CBH Series B Preferred Stock has entered into a lock-up and voting agreement pursuant to which it has agreed to vote all shares of CBH Series B Preferred Stock held by it in favor of such proposal.

There had recently been one holder of CBH Series A Preferred Stock, and such holder elected to convert the 25,000 shares of CBH Series A Preferred Stock held by her into CBH Common Stock, and to receive the merger consideration for the CBH Common Stock for such shares. Thereafter, the holder agreed to vote all shares of CBH Common Stock or CBH Series A Preferred Stock held by her in favor of the Merger, to the extent any such shares are outstanding as of the Record Date.

The proposal regarding the approval of an adjournment of the special meeting, if necessary, will require the affirmative vote of a majority of shares entitled to vote on adjournment and represented either in person or by proxy at the special meeting.

Q17: What constitutes a quorum at the NeoStem special meeting?

A17:  A quorum must exist for the transaction of business at the stockholders’ meetings (other than consideration of a motion to adjourn the meeting). For NeoStem, the presence at the meeting, in person or by proxy, of the holders of a majority of the total outstanding voting power is necessary to constitute a quorum for the transaction of business at NeoStem’s special meeting. Abstentions and broker “non-votes” (as defined below) are counted as present and entitled to vote for purposes of determining a quorum. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be considered part of the quorum.

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Q18: What constitutes a quorum at the CBH special meeting?

A18:  A quorum must exist for the transaction of business at the stockholders’ meetings. For CBH, a quorum will require (i) the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting AND (ii) the presence in person or by proxy of the holders of a majority of the outstanding shares of CBH Series B Preferred Stock. Abstentions and broker “non-votes” (as defined below) are counted as present and entitled to vote for purposes of determining a quorum. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be considered part of the quorum.

Q19: What do I need to do now?

A19:  After you read and consider the information in this document, mail your signed proxy card in the enclosed return envelope as soon as possible, so that your shares may be represented at the appropriate stockholders’ meeting. You should return your proxy card whether or not you plan to attend your stockholders’ meeting. If you attend your stockholders’ meeting, you may revoke your proxy at any time before it is voted and vote in person if you wish.

Q20: If my shares of NeoStem Common Stock or CBH Common Stock are held in “street name” by my broker, will my broker vote my shares for me?

A20:  If you hold shares of NeoStem Common Stock or CBH Common Stock through a broker, bank or other representative, generally the broker, bank or representative may only vote the NeoStem Common Stock or CBH Common Stock that it holds for you in accordance with your instructions. However, if the broker, bank or representative has not timely received your instructions, it may vote on certain matters for which it has discretionary voting authority. A broker “non-vote” on a matter occurs when a broker, bank or your representative may not vote on a particular matter because it does not have discretionary voting authority and has not received instructions from the beneficial owner.

Q21: What do I do if I want to change my vote after I have sent in my proxy card?

A21:  You can change your vote at any time before your proxy is voted at the appropriate stockholders’ meeting. You can do this in one of three ways. First, you can send a written notice stating that you would like to revoke your proxy. Second, you can complete and submit a new proxy card at a later date. If you choose either of these methods, you must submit your notice of revocation or your new proxy card to NeoStem or CBH, as the case may be, before your stockholders’ meeting. Finally, you can attend your stockholders’ meeting and vote in person. Simply attending your stockholders’ meeting, however, will not revoke your proxy. If you have instructed a broker to vote your shares, you must follow directions received from your broker to change your vote.

Q22: If I am a holder of CBH capital stock, how should I send in my stock certificates for exchange?

A22:  Do not send in your stock certificates with your proxy card. You must keep your stock certificates until after the Merger has been completed, after which you will receive a letter of transmittal describing how you may exchange your CBH stock certificates for certificates representing the NeoStem securities. At that time, you will have to submit your CBH stock certificates to the exchange agent with your completed letter of transmittal.

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Q23: Whom may I call with questions?

A23:  If you have any questions regarding the proposals or how to submit your proxy, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instructions, you should contact the individuals listed below:

If you are a NeoStem stockholder and you have questions regarding the proposals or the solicitation of your proxy, you should contact:

NeoStem, Inc.
420 Lexington Avenue, Suite 450
New York, NY 10170

If you are a CBH stockholder and you have questions regarding the Merger, or questions regarding the solicitation of your proxy, you should contact:

China Biopharmaceuticals Holdings, Inc.
No. 859, Pan Xu Road, Suzhou,
Jiangsu Province, China 215000

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SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this document and may not contain all of the information that is important to you. Even though we have highlighted what we believe is the most important information, we encourage you to read the entire joint proxy statement/prospectus for a complete understanding of the proposed transactions for your consideration. You should also review the other available information referred to in “Where You Can Find More Information” on page [311] and the Risk Factors on page [33].

The Companies

NeoStem, Inc.

NeoStem is engaged in a platform business of operating a commercial autologous (donor and recipient are the same) adult stem cell bank and is pioneering the pre-disease collection, processing and long-term storage of stem cells from adult donors so that they can access such stem cells for their own future medical treatment. NeoStem is managing a network of adult stem cell collection centers in major metropolitan areas of the United States, and believes that as adult stem cell therapies obtain necessary regulatory approvals and become standard of care, individuals will need the infrastructure, methods and procedures being developed by NeoStem to have their stem cells safely collected and conveniently stored for future therapeutic use. Stem cells, which are very primitive and undifferentiated cells that have the unique ability to transform into many different cells (such as white blood cells, nerve cells or heart muscle cells), can be found in the bone marrow or peripheral blood of adults. NeoStem only works with adult (not embryonic) stem cells. Using NeoStem’s process, stem cells migrate, as a result of a mobilizing agent administered in the days preceding collection, from the bone marrow in which they reside to the peripheral blood and are collected through a safe, minimally invasive procedure called “apheresis.” NeoStem has also entered the research and development arena, through the acquisition of a worldwide exclusive license to an early-stage technology to identify and isolate rare stem cells from adult human bone marrow, called VSEL (very small embryonic-like) stem cells. VSELs have many physical characteristics typically found in embryonic stem cells, including the ability to differentiate into specialized cells found in substantially all the different types of cells and tissue that make up the body. Additionally, NeoStem is pursuing other technologies to advance its position in the field of stem cell tissue regeneration.

The adult stem cell industry is a field independent of embryonic stem cell research which NeoStem believes is more likely to be burdened by regulatory, legal, ethical and technical issues than adult stem cell research. Medical researchers, scientists, medical institutions, physicians, pharmaceutical companies and biotechnology companies are currently developing therapies for the treatment of disease using adult stem cells. As these adult stem cell therapies obtain necessary regulatory approvals and become standard of care, patients will need a service to collect, process and bank their stem cells. NeoStem intends to provide this service.

Initial participants in NeoStem’s collection center network have been single physician practices who opened collection centers in California, Pennsylvania and Nevada. Revenues generated by these early adopters have not been significant and are not expected to become significant. However, these centers have served as a platform for the development of NeoStem’s business model and today NeoStem is focusing on multi-physician and multi-specialty practices joining its network in major metropolitan areas.

NeoStem also entered the research and development arena through its acquisition from the University of Louisville of the worldwide exclusive license to the VSEL technology. VSELs have many physical characteristics typically found in embryonic stem cells, including the ability to differentiate into specialized cells found in different types of tissue that would be able to interact with the specific organ in order to repair degenerated, damaged or diseased tissue (the three “Ds” of aging). NeoStem has the ability to harvest and cryopreserve these VSELs from individual patients, setting the stage for their use in personalized regenerative medicine. If VSELs can be expanded from individual patients and their potential to develop into different types of tissue cells maintained, it would represent a significant step toward overcoming the two major limitations in the development of stem cell therapies today, the ethical dilemma regarding use of embryonic stem cells and the immunological problems associated with using cells from a third party donor. In connection with the license agreement, NeoStem also entered into a sponsored research agreement with the University of Louisville pursuant to which NeoStem is funding research relating to its VSEL technology at the laboratory of its co-inventor, Mariusz Ratajczak, M.D., Ph.D., head of the Stem Cell Biology Program at the James Graham

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Brown Cancer Center at the University of Louisville. The acquisition of the VSEL technology was made through NeoStem’s acquisition of its new subsidiary Stem Cell Technologies, Inc. (“SCTI”) in a stock-for-stock exchange.

NeoStem is also taking certain other initiatives to expand its operations into China. The rationale behind NeoStem’s expansion into China is to accelerate stem cell therapy, research and development and creation of intellectual property positions in an environment that is more readily accepting of stem cell therapies. Because certain PRC regulations currently restrict or prohibit foreign-invested entities from holding certain licenses and controlling businesses in certain industries, NeoStem has created a wholly foreign owned entity (a “WFOE”) as part of its plans for implementing its expansion in China. The WFOE has established control over these initiatives in China through a series of contractual arrangements memorialized through several documents known as variable interest entity documents (collectively, “VIE Documents”). No assurance can be given that this structure will be effective to permit NeoStem to participate in these initiatives where PRC regulations prohibit or restrict foreign ownership.

In order to advance its regenerative medicine business here and abroad, in February 2009, NeoStem entered into a License Agreement with Vincent Giampapa, M.D., F.A.C.S pursuant to which NeoStem acquired a world-wide, exclusive, royalty bearing, perpetual and irrevocable license, with the right to sublicense, to certain innovative stem cell technology and applications for cosmetic facial and body procedures and skin rejuvenation. In addition, in January 2009, NeoStem and Dr. Giampapa entered into a three year consulting agreement whereby Dr. Giampapa will provide consulting services in the anti-aging area.

In order to advance its regenerative medicine business abroad and expand its expertise into a new area, effective March 2009, NeoStem entered into a License Agreement with Regenerative Sciences, LLC (“RSI”), pursuant to which NeoStem acquired an exclusive, royalty bearing, perpetual and irrevocable license, with the right to sublicense, for the Asia territory, to use an innovative process that rapidly grows a patient’s own adult stem cells to treat a variety of musculoskeletal diseases. The licensed procedure has been developed by RSI, a Colorado-based company focused on developing a medical procedure for the treatment of chronic orthopedic conditions. In addition, effective March 2009, NeoStem and RSI entered into a three year consulting agreement whereby RSI will provide to NeoStem consulting services in the area of stem cell therapy in orthopedics for the development of business in Asia.

In April 2009, NeoStem entered into a License Agreement with Vincent Falanga, M.D., pursuant to which NeoStem acquired a world-wide, exclusive, royalty bearing license, with the right to sublicense, to certain innovative stem cell technology and applications for wound healing, continuing until the later of ten years from the first commercial sale or the last to expire patent claim.

In June 2009, NeoStem signed an agreement (the “Network Agreement”) with Enhance BioMedical Holdings Limited (“Enhance BioMedical”), a Shanghai corporation, to develop a stem cell collection and treatment network using NeoStem’s proprietary stem cell technologies in Shanghai, Taiwan as well as the Chinese provinces of Jiangsu, Zhejiang, Fujian, Anhui and Jiangxi. Enhance BioMedical is a subsidiary of Enhance Holding Corporation, a multinational conglomerate with successful businesses in various market sectors including healthcare. The conglomerate’s CEO, Jackson Ling, recently invested $5 million in an $11-million private placement financing for NeoStem. Enhance BioMedical has healthcare provider relationships with numerous hospitals and doctors in Taiwan and Shanghai, as well as in the five provinces in China to which the Network Agreement relates. Enhance BioMedical operates the Anti-Aging and Prevention Medical Center in Taipei, Taiwan, with facilities focused on stem cell research and development and anti-aging therapies. Under the Network Agreement, Enhance BioMedical is given the exclusive rights to utilize NeoStem’s proprietary adult stem cell technologies identified by NeoStem from time to time to provide adult stem cell services and therapies in the Asian territory. NeoStem will arrange for training Enhance BioMedical staff in the proprietary knowledge, technology and operating procedures to provide Enhance BioMedical clients with these services. In return, NeoStem is entitled to a six figure technical assistance fee. NeoStem also will be entitled to a stated royalty on gross revenues generated by Enhance BioMedical from providing the NeoStem stem cell services for the duration of the renewable 10 year Network Agreement and also may receive other fees in connection with assisting in the launching of the network.

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All of the activities above are designed to broaden the scope of NeoStem’s operations and to enter into the arena of advanced stem cell and regenerative medicine therapies in the United States and China. While NeoStem continues to pursue its platform business of operating a commercial autologous adult stem cell bank, it has made a determination that the platform business will be enhanced if NeoStem acquires and develops advanced stem cell regenerative medicine therapies.

NeoStem is also pursuing other businesses that are related to its platform business of collection, processing and storage of adult stem cells which include (i) “medical tourism” due to advanced stem cell therapies developing at a faster pace outside the United States, (ii) supplying collected stem cells for the conduct of adult stem cell research, (iii) storing excess cells collected from a patient at oncology transplant centers, and (iv) supplying stem cells for diagnostic and therapeutic use.

The above activities are also separate and apart from NeoStem’s proposed creation of a separate pharmaceutical division by acquiring a 51% ownership interest in Suzhou Erye Pharmaceutical Company Ltd. (“Erye”), which had gross revenues in 2008 of approximately $50 million, through the Merger of CBH, which currently holds a 51% ownership interest in Erye, with and into CBH Acquisition LLC, a wholly-owned subsidiary of NeoStem.

On August 29, 2006, NeoStem’s stockholders approved an amendment to its certificate of incorporation to effect a reverse stock split of the NeoStem Common Stock at a ratio of one-for-ten shares and to change its name from “Phase III Medical, Inc.” to “NeoStem, Inc.” On June 14, 2007, NeoStem’s stockholders approved an amendment to NeoStem’s certificate of incorporation to effect a reverse split of the NeoStem Common Stock at a ratio of up to one-for-ten shares in the event it was deemed necessary by the NeoStem Board of Directors in order to be accepted onto a securities exchange. On July 9, 2007, the NeoStem Board of Directors approved a one-for-ten reverse stock split to be effective upon the initial closing of NeoStem’s public offering in order to satisfy the listing requirements of the NYSE Amex. On August 9, 2007, the reverse split was effective and NeoStem Common Stock commenced trading on the NYSE Amex under the symbol “NBS.” ACCORDINGLY, ALL NUMBERS IN THIS JOINT PROXY STATEMENT/PROSPECTUS HAVE BEEN ADJUSTED TO REFLECT BOTH THE ONE-FOR-TEN REVERSE STOCK SPLIT WHICH WAS EFFECTIVE AS OF AUGUST 31, 2006 AND THE ONE-FOR-TEN REVERSE STOCK SPLIT WHICH WAS EFFECTIVE AS OF AUGUST 9, 2007. NO ADJUSTMENT HAS BEEN MADE IN THIS JOINT PROXY STATEMENT/PROSPECTUS FOR THE EFFECTS OF ANY FURTHER REVERSE STOCK SPLIT THAT WOULD BE AUTHORIZED IF NEOSTEM PROPOSAL NO. 5 IS APPROVED.

NeoStem was incorporated under the laws of the State of Delaware in September 1980 under the name Fidelity Medical Services, Inc. NeoStem’s corporate headquarters is located at 420 Lexington Avenue, Suite 450, New York, NY 10170. NeoStem’s telephone number is (212) 584-4180. NeoStem’s website address is www.neostem.com. Information on NeoStem’s website does not constitute a part of this joint proxy statement/prospectus.

China Biopharmaceuticals Holdings, Inc.

China Biopharmaceuticals Holdings, Inc. (“CBH”) is a bio-pharmaceutical company focused on developing, manufacturing and distributing innovative drugs in the PRC.

China Biopharmaceuticals, Inc., a Delaware corporation, was originally organized as a corporation under the laws of the State of New York on August 6, 1976 under the name of “Globuscope, Inc.” On August 7, 1984, its name was changed to “Globus Growth Group, Inc.,” which was its name until it was merged into CBH, its wholly owned subsidiary in the State of Delaware on August 28, 2004 through an internal re-organizational merger.

Effective August 28, 2004, CBH completed the acquisition of CBC, a British Virgin Islands corporation, as the parent, the management company and holder of 90% of the ownership interest in its then only operating subsidiary and asset, Nanjing Keyuan Pharmaceutical R&D Co., Ltd., doing business in English a.k.a. Nanjing Chemsource Pharmaceutical R&D Co. Ltd (“Keyuan” or “Chemsource”), a company established in China and engaged in the discovery, development and commercialization of innovative drugs and related bio-pharmaceutical products in China. Nanjing Keyuan Pharmaceutical R&D Co., Ltd. was established in

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March 2000 in Nanjing City of Jiangsu Province, China. It was founded and spear-headed by graduates from China Pharmaceutical University to engage in new drug research and discovery and in the development of new drug screening technologies. However, due to continuing operating losses and lack of funding and the virtual stoppage of approval of new drugs by the State Food and Drug Administration of China (“SFDA”), Keyuan’s R&D has been considerably affected and CBH has written off Keyuan on its books as a result recently. CBC has de minimis value, if any. A condition of the Merger is that CBH sell or transfer its subsidiary CBC prior to the Merger. CBH intends to effect a sale, spin-off or other disposition of CBC in a manner acceptable to NeoStem such that the only material assets of CBH at the time of the Merger shall be CBH’s 51% ownership interest in Erye and at least $550,000 cash, and CBH shall have no liabilities except transaction related expenses of $450,000 or less.

On June 11, 2005, CBH signed a purchase agreement, which was amended on August 3, 2005, under which CBH acquired a controlling ownership interest (approximately 51%) in Erye. Total consideration paid by CBH to acquire 51% ownership interest in Erye was $3,000,000 cash to be paid in installments, and 3,300,000 shares of CBH Common Stock valued at $0.50 per share or $1,650,000. Out of the $3,000,000 payable in cash, $2,200,000 was contributed to the acquired Erye for working capital and/or expansion purposes.

On November 19, 2007, CBH entered into an agreement with RimAsia as a follow-up to letters of intent signed on July 14, 2007 and August 2, 2007, under which the principal amount of the $11.5 million loan owed to RimAsia in connection with the acquisition of Enshi plus unpaid interest of $1,008,534 (total of $12,508,534) was converted in full into 6,185,607 shares of senior redeemable convertible preferred shares of CBH at a conversion price of $2.0222 for each such preferred share. Each preferred share may be converted into two shares of CBH Common Stock. Additionally, the exercise price of $1.375 for the 12 million existing warrants exercisable into CBH Common Stock previously issued to and currently held by RimAsia in connection with the extension of the loan financing (“Existing Warrants”) was lowered to $1.26 per share and the term of the Existing Warrants extended to 4.5 years from the closing date. This was conditioned on CBH signing a letter of intent for acquisition of a new company (or for the injection of the remaining 49% equity stake of Erye not already owned by CBH) before January 15, 2008, having such acquisition closed before June 30, 2008 and then extended to October 31, 2009. In connection therewith, the parties also entered into a registration rights agreement and certain other agreements, and CBH issued an additional common stock purchase warrant and a modified common stock purchase warrant. RimAsia has the right to convert such preferred shares back to a loan, to accelerate and foreclose back on all the assets of CBH wiping out all common stock value.

The shares of CBH Common Stock are quoted on the Over the Counter Bulletin Board (“OTC Bulletin Board”) under the symbol CHBP.OB.

Although to date CBH has been successful in developing its business and products, CBH faces many challenges typically faced by a growing company, including limited access to capital, competition, research and development risks, among many other risks. CBH’s inability to overcome these risks could have an adverse effect on its operations, financial condition and prospects. Investments in CBH may also be materially and adversely affected by the fluctuation of the Renminbi.

CBH’s principal executive offices are located at No. 859, Pan Xu Road, Suzhou, Jiangsu Province, China 215000. CBH’s telephone number is (86) 512 6855 0568.

Comparative Market Price Information and Dividend Information (Page [267])

NeoStem Common Stock trades on the NYSE Amex under the symbol “NBS.” NeoStem Common Stock traded on the Over-the-Counter Bulletin Board under the symbol “NEOI” from August 31, 2006 to August 8, 2007, and traded under the symbol “PHSM” from July 24, 2003 to August 30, 2006. CBH Common Stock began trading on the Over-the-Counter Bulletin Board on December 19, 2005, and is currently traded under the symbol “CHBP.OB.” Upon completion of the Merger, CBH Common Stock will no longer trade on the Over-the-Counter Bulletin Board.

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The following table sets forth the high and low sales prices and high and low bid prices (as applicable) of NeoStem Common Stock and CBH Common Stock for each quarterly period within the two most recent fiscal years, as reported by the NYSE Amex and Nasdaq Trading and Market Services (as applicable) and the Over-the-Counter Bulletin Board, respectively. Information set forth in the table below reflects inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions.

		NeoStem Common Stock								CBH Common Stock
2009		High				Low				High				Low
First Quarter		$	1.08			$	0.43			$	0.14			$	0.095
Second Quarter		$	2.72			$	0.80			$	0.29			$	0.05
Third Quarter (through July 10, 2009)		$	2.20			$	1.68			$	0.28			$	0.23

2008		High				Low				High				Low
First Quarter		$	2.24			$	1.18			$	0.28			$	0.15
Second Quarter		$	1.48			$	0.41			$	0.27			$	0.14
Third Quarter		$	1.80			$	0.70			$	0.28			$	0.17
Fourth Quarter		$	2.15			$	0.41			$	0.34			$	0.09

2007		High				Low				High				Low
First Quarter		$	8.00			$	2.50			$	1.00			$	0.45
Second Quarter		$	6.40			$	3.70			$	0.47			$	0.28
Third Quarter		$	7.65			$	3.65			$	0.42			$	0.28
Fourth Quarter		$	4.75			$	1.28			$	0.51			$	0.22

The following table sets forth the last sale prices of NeoStem Common Stock and CBH Common Stock as reported on the NYSE Amex and the Over-the-Counter Bulletin Board, respectively, on (1) October 31, 2008, the last trading day before the public announcement of the Merger and (2) [], 2009, the last trading day before the distribution of this joint proxy statement/prospectus. We urge you to obtain current market quotations for the NeoStem Common Stock and CBH Common Stock.

		NeoStem Common Stock				CBH Common Stock
October 31, 2008		$	1.13			$	0.11
[], 2009		$	[]			$	[]

Structure of the Merger (Page [99])

In general terms, the proposed Merger involves the merger of CBH with and into Subco, which is a wholly-owned subsidiary of NeoStem, with Subco as the surviving entity, pursuant to the terms and subject to the conditions set forth in the Agreement and Plan of Merger. The Agreement and Plan of Merger provides that at the time of the Merger, the only material assets of CBH will be CBH’s 51% ownership interest in Suzhou Erye Pharmaceuticals Company Ltd. (“Erye”), a Sino-foreign joint venture with limited liability organized under the laws of the People’s Republic of China (“China” or the “PRC”) and at least $550,000 cash, as more particularly described herein. A condition of the Merger is that CBH sell or transfer its subsidiary CBC prior to the Merger.

Upon consummation of the Merger, NeoStem will own 51% of the ownership interests in Erye, and EET will own the remaining 49% ownership interest. In connection with the execution of the Agreement and Plan of Merger, Subco and EET have negotiated a revised joint venture agreement (the “Joint Venture Agreement”), which, subject to approval by the requisite PRC governmental authorities, will become effective and will govern the rights and obligations with respect to their respective ownership interests in Erye. Pursuant to the terms and conditions of the Joint Venture Agreement, dividend distributions to EET and Subco will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes

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effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses. In the event of the sale of all of the assets of Erye or liquidation of Erye, NeoStem will be entitled to receive the return of such additional paid-in capital before distribution of Eyre’s assets is made based upon the ownership percentages of NeoStem and EET, and upon an initial public offering of Erye which raises at least 50,000,000 RMB (or approximately U.S. $7,300,000), NeoStem will be entitled to receive the return of such additional paid-in capital.

Pursuant to the terms of the Merger, all of the shares of CBH Common Stock, issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, 7,150,000 shares of NeoStem Common Stock. Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia, a principal stockholder of NeoStem and the sole holder of shares of CBH Series B Preferred Stock, all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, (i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of NeoStem Series C Preferred Stock, each with a liquidation preference of $1.125 per share and initially convertible into 9,086,124 shares of NeoStem Common Stock at an initial exercise price of $0.90, contingent upon RimAsia’s supplying $1,600,000 in transaction funding pursuant to the terms of the Funding Agreement, of which RimAsia has already provided approximately $1,000,000. Three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited (a wholly-owned subsidiary of EET, the holder of 49% of the interests in Erye) to incentivize such recipients to approve and/or assist with Merger-related transactions.

At the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Steven Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of CBH to Messrs. Globus and Mao. NeoStem will bear 50% of up to $450,000 of CBH’s expenses post-merger, and satisfaction of the liabilities of Messrs. Globus and Mao will count toward that obligation.

For assistance in effecting the Merger, 125,000 shares of NeoStem Common Stock will be issued to EET. In addition, an aggregate of 203,338 shares of NeoStem Common Stock will be issued to Shi Mingsheng (the Chairman of the Board of Directors of Erye and a holder of approximately two-thirds of EET) and Madam Zhang Jian (General Manager of Erye and a holder of approximately 10% of EET) in connection with the transactions contemplated by the Merger after the timely receipt of all PRC approvals.

Pursuant to the terms of the Exchange Offer (as defined on page [293]) and only in the event the Merger is consummated and the related post-closing obligations are satisfied, each holder of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may exchange all of such holder’s warrants to purchase one share of CBH Common Stock for Class C Warrants to purchase 0.24038 shares of NeoStem Common Stock at an exercise price of $2.50 per share. It is a condition to the consummation of the transactions contemplated by the Agreement and Plan of Merger that the holders of ALL of the outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) must tender their Existing CBH Warrants in exchange for the Class C Warrants being offered by NeoStem in the Exchange Offer; however, such condition may be waived by NeoStem in its sole discretion. In the event NeoStem, in its sole discretion, waives such closing condition and the transactions contemplated by the Agreement and Plan of Merger are consummated, then holders of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may, in accordance with the terms of such holder’s warrants, may elect to receive a cash payment for their Existing CBH Warrants equal to the Black Scholes value of the warrant on the date of such request. If the holder of the warrant does not make such election, then all of such holder’s warrants to purchase shares of CBH Common Stock shall be replaced with a new warrant (each a “NeoStem Class E Warrant”) substantially in the form of such holder’s existing warrant evidencing the right to purchase 0.19255 shares of NeoStem Common Stock with the exercise price per

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share adjusted such that the aggregate exercise price of the NeoStem Class E Warrant is the same as the aggregate exercise price of the warrant in effect immediately prior to the Effective Time.

The transactions will require, among other things, the approval by the relevant PRC and other governmental organizations of the Agreement and Plan of Merger, the Joint Venture Agreement, and the articles of incorporation of Erye. More specifically, the Agreement and Plan of Merger, and the Joint Venture Agreement, and the articles of incorporation of Erye will need to be approved by the Suzhou Bureau of Foreign Trade and Economic Cooperation Foreign Investment Administration Department and all other requisite authorities, and the articles of incorporation of Eyre will need to be filed with and the new business license of Eyre will need to be issued by, the Suzhou Administration of Industry and Commerce or other requisite authorities. The approval and registration process will normally take approximately one month. There is no assurance that the requisite approvals and registrations can be obtained and completed at a timely basis, if at all, or can be obtained and completed without the Agreement and Plan of Merger, and/or the Joint Venture Agreement, and/or the articles of incorporation of Erye being amended or revised materially pursuant to the requests of corresponding approval and/or registration authorities.

There can be no assurance the governmental approvals from the relevant PRC government authorities and other governmental organizations will be received on a timely basis or at all. The parties understand that under PRC law, they may not be able to obtain certain approvals until after closing. If the Merger closes without prior approval from any PRC Governmental Authority, the parties shall at Closing either permit NeoStem to defer delivery of any NeoStem securities to holders of CBH securities through a provision in the certificate of merger or otherwise, or enter into an escrow agreement on terms satisfactory to NeoStem, such that in either event consummation of the Merger or issuance of all consideration to be paid or issued by NeoStem in connection with, related to, or contingent upon the consummation of the Merger may be deferred or held back by NeoStem, or held in escrow, in each case subject to an absolute right of NeoStem to receive back all such consideration and rescind the Merger and all related transactions if any such PRC regulatory approvals are not obtained within a reasonable period of time after Closing (such time period to be fixed in the escrow agreement, but not in excess of 45 days).

The Terms of the Agreement and Plan of Merger

The Agreement and Plan of Merger, together with Amendment No. 1 dated July 1, 2009 are attached as Annex A to this joint proxy statement/prospectus. All references to and descriptions of the “Agreement and Plan of Merger” are references to and descriptions of the Agreement and Plan of Merger as amended by the Amendment No. 1 dated as of July 1, 2009, as such agreement may be amended from time to time. We encourage you to read the Agreement and Plan of Merger, as it is the legal document that governs the Merger.

Conversion of CBH Common Stock; Exchange Ratio (Page [111])

As soon as practical after the effectiveness of the Merger, each holder of CBH Common Stock shall be entitled to receive as a distribution from CBH for each share of CBH Common Stock held by such CBH stockholder, a fraction of a share of NeoStem Common Stock equal to the exchange ratio (as defined herein). The “exchange ratio” shall be equal to the quotient of 7,150,000 divided by the sum of (x) the number of shares of CBH Common Stock outstanding at the Effective Time, and (y) the number of shares of CBH Common Stock issuable upon exercise of in-the-money warrants of CBH immediately prior to the Effective Time. Each holder of CBH Common Stock shall be entitled to receive, for each share of CBH Common Stock held by such holder, 0.19255 shares. Any shares of NeoStem Common Stock held in escrow shall be distributed pro rata to the same record stockholders as the initial distribution.

Pursuant to the terms of the Exchange Offer (as defined on page [293]) and only in the event the Merger is consummated and the related post-closing obligations are satisfied, each holder of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may exchange all of such holder’s warrants to purchase one share of CBH Common Stock for Class C Warrants to purchase 0.24038 shares of NeoStem Common Stock at an exercise price of $2.50 per share. It is a condition to the consummation of the transactions contemplated by the Agreement and Plan of Merger that the holders of ALL of the outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) must tender their Existing CBH Warrants in exchange for the Class C Warrants being offered by NeoStem in the Exchange Offer; however, such condition may be waived by NeoStem in its sole discretion. In the event

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NeoStem, in its sole discretion, waives such closing condition and the transactions contemplated by the Agreement and Plan of Merger are consummated, then holders of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may, in accordance with the terms of such holder’s warrants, may elect to receive a cash payment for their Existing CBH Warrants equal to the Black Scholes value of the warrant on the date of such request. If the holder of the warrant does not make such election, then all of such holder’s warrants to purchase shares of CBH Common Stock shall be replaced with a new warrant (each a “NeoStem Class E Warrant”) substantially in the form of such holder’s existing warrant evidencing the right to purchase 0.19255 shares of NeoStem Common Stock with the exercise price per share adjusted such that the aggregate exercise price of the NeoStem Class E Warrant is the same as the aggregate exercise price of the warrant in effect immediately prior to the Effective Time.

The NeoStem Common Stock that holders of CBH Common Stock will be entitled to receive as a result of the Merger is traded and quoted on the NYSE Amex under the market symbol “NBS.”

Conditions to the Merger (Page [115])

The obligations of CBH, NeoStem and Subco to consummate the Merger shall be subject to the satisfaction (or waiver by each party, to the extent permitted by law) of the following conditions, among others:

The obligations of NeoStem and Subco to consummate the transactions contemplated by the Agreement and Plan of Merger shall be subject to the fulfillment (or waiver by NeoStem) of the following conditions, among others:

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The obligations of CBH to consummate the transactions contemplated by the Agreement and Plan of Merger shall be subject to the fulfillment (or waiver by CBH) of each of the following conditions, among others:

Any of the conditions in the Agreement and Plan of Merger may be waived by the party benefited thereby, except those conditions imposed by law.

Termination (Page [117])

Subject to certain exceptions, either NeoStem or CBH may terminate the Agreement and Plan of Merger if the Merger is not completed by October 31, 2009, and in various other circumstances.

The Reasons the Boards of Directors of NeoStem and CBH Approved the Merger (Page [89])

The CBH Board of Directors and a special committee of the NeoStem Board of Directors each approved the Merger based on a number of factors, including, among other things, their belief that the combination of Subco and CBH will create a stronger, more successful company, with enhanced prospects for continued viability, and will provide the stockholders of both NeoStem and CBH with the potential for more financial success than either company has on its own.

Each board of directors (or special committee thereof, as applicable) also considered separate reasons for the Merger. The NeoStem Board of Directors considered, among other things, the potential that the Merger could open new markets, distribution channels and capabilities for production of stem cell related products in the PRC. The CBH Board of Directors considered, among other things, that in connection with the Merger: (i) CBH would be relieved of the burden of servicing approximately $13.5 million of acquisition financing, as to which CBH’s failure to do so has resulted in CBH’s default under the terms of such acquisition financing; (ii) CBH security holders will be entitled to receive shares and other securities of NeoStem, a NYSE Amex listed stem cell company with greater potential for market liquidity and for appreciation than CBH; and (iii) that with added assets from CBH, NeoStem may be strengthened, with substantial revenue and net income and GMP-certified plants in the PRC, and may be in a position to move to the next stage of growth.

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Fees and Expenses (Page [119])

If the Agreement and Plan of Merger and the transactions contemplated thereby are not consummated, in general, all fees and expenses incurred in connection therewith shall be paid by the party incurring such expenses, except that those expenses incurred in connection with filing, printing and mailing this prospectus/joint proxy statement (including filing fees related thereto but excluding legal and accounting fees and expenses) and related registration statement and the fees and disbursements of any third party will be shared equally by NeoStem and CBH.

Interests of Certain Persons in the Merger (Page [94])

NeoStem

The Agreement and Plan of Merger gives the NeoStem Compensation Committee the authority to grant as bonuses (the “Merger Bonus Shares”) an aggregate of 1,000,000 shares (or shares and options to purchase 1,000,000 shares, in any combination) of NeoStem Common Stock to (i) its officers, consultants and advisors upon the Closing of the Merger and (ii) such officers, significant employees and/or directors of Erye following the receipt of all PRC approvals after the Closing of the Merger, as the Compensation Committee shall determine and to pay withholding taxes thereon. It is currently anticipated that the following persons will receive shares, or options to purchase shares, of NeoStem Common Stock pursuant to this authority: Robin L. Smith (175,000 shares), Catherine M. Vaczy (150,000 shares), Shi Mingsheng (175,000 shares), Madam Zhang Jian (175,000 shares), and two NeoStem consultants or advisors (an aggregate of 200,000 shares or options). Based on the closing price of the NeoStem Common Stock on June 25, 2009 of $2.00, the amount of U.S. withholding taxes that NeoStem would pay in connection with the grants as allocated to the individuals above would be approximately $841,000. Such Merger-related grants are discussed in detail in NeoStem Proposal No. 6, below, in the section “Issuance of Equity Grants in Connection with the Merger,” and in NeoStem Proposal No. 7, below, in the section “Issuance of Equity Grants in Connection with the Merger.”

The Agreement and Plan of Merger also provides that any or all NeoStem stock options outstanding immediately prior to the closing, in the sole discretion of the Compensation Committee, may be amended, cancelled and reissued or otherwise modified so that the exercise price shall be adjusted to the greater of $0.80 or fair market value (to the extent the exercise price exceeds such amount); provided that if NeoStem lowers the exercise price of eligible options to a fair market value price that is greater than $0.80, NeoStem may also issue to any eligible optionee additional options, stock or other consideration (including cash) such that the fair value of the overall consideration granted to such optionee is generally equivalent, in the judgment of NeoStem’s Compensation Committee, to the value that would have been provided if the exercise price had been reduced to $0.80. An amendment to the 2003 Equity Compensation Plan (the “2003 Plan”), together with a Repricing (as defined below) of certain options and warrants (see below) and other related matters, are presented for stockholder consideration in NeoStem Proposal No. 9 of this joint proxy statement/prospectus.

The Agreement and Plan of Merger provides that the exercise price of certain outstanding warrants of NeoStem will be reduced as provided for in a schedule. Certain officers and directors of NeoStem are holders of warrants to purchase shares of NeoStem Common Stock at $8.00 per share, that will have their exercise prices reduced to approximately $6.18 per share. Such warrants are held by NeoStem officers and directors in the following quantities: Robin L. Smith (27,511), Catherine M. Vaczy (4,084), Richard Berman (11,364), Steven Myers (22,728) and Joseph Zuckerman (2,084).

Robin L. Smith, NeoStem’s Chairman and Chief Executive Officer, and Steven Myers, a member of NeoStem’s Board of Directors and Audit, Compensation and Nominating Committees, are holders of CBH Common Stock. Dr. Smith is the beneficial owner of 389,966 shares of CBH Common Stock that were acquired commencing in 2005. Mr. Myers is the beneficial owner of 285,714 shares of CBH Common Stock that were acquired in 2005. Accordingly, a special committee of NeoStem’s Board of Directors (initially comprised of Mark Weinreb, Richard Berman and Joseph Zuckerman, and now comprised of Richard Berman, Joseph Zuckerman and Drew Bernstein) approved on behalf of the Company the execution of the Agreement and Plan of Merger and the transactions contemplated thereby.

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Certain options to purchase shares of NeoStem Common Stock held by Dr. Smith (130,000), Mr. Weinreb (20,000), Mr. May (20,000) and Ms. Vaczy (20,000) are scheduled to vest upon the achievement of specific business milestones. These milestones would be achieved upon consummation of the Merger and such options would vest provided they are outstanding immediately prior thereto. See “Outstanding Equity Awards at Fiscal Year-End.”

CBH

Pursuant to the Agreement and Plan of Merger, Shi Mingsheng will be added to the Board of Directors of NeoStem immediately after receipt of all PRC approvals following the Effective Time. Currently, Shi Mingsheng is a Director of and the Chief Operating Officer of CBH, the Chairman of the Board of Directors of Erye, and a holder of approximately two-thirds of EET (which is the holder of a 49% interest in Erye and a 100% interest in Fullbright Finance Limited, a greater than 5% beneficial owner of NeoStem).

At the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Steven Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of CBH to Messrs. Globus and Mao.

Madam Zhang and Shi Mingsheng, each a director of CBH, will continue their existing employment agreements with Erye post-Merger as general manager, and board chairman, respectively.

Madam Zhang and Shi Mingsheng will each receive 175,000 shares of NeoStem Common Stock as Merger Bonus Shares after receipt of all PRC approvals following the Effective Time. Such Merger-related grants are discussed in detail in NeoStem Proposal No. 7, below, in the section “Issuance of Equity Grants in Connection with the Merger.”

Three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited (a wholly-owned subsidiary of EET, which is the holder of 49% of the interests in Erye) to incentivize such recipients to approve and/or assist with Merger-related transactions.

Cai Jianqian, the mother of CBH Chief Executive Officer Chris Peng Mao and a CBH stockholder, serves as the PRC Scientific Advisor to NeoStem pursuant to an April 23, 2009 Consulting Agreement with Shandong Life Science and Technology Research Institute (“SLSI”), of which Ms. Cai Jianqian is President. It is anticipated that Cai Jianqian and SLSI will continue in this role following the Merger. In return for the consulting services, NeoStem will pay SLSI an annual fee of $100,000 and issue SLSI an aggregate of 250,000 options under the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”), subject to the approval of the 2009 Non-U.S. Plan at the Special Meeting, to become exercisable over approximately a two year period. In addition, in connection with NeoStem’s expanding its relationship with SLSI in July 2009, NeoStem has agreed to grant to SLSI an additional 100,000 shares under the 2009 Non-U.S. Plan, subject to approval of the 2009 Non-U.S. Plan at the Special Meeting.

In a private placement of units by NeoStem in November 2008, Fullbright Finance Limited (“Fullbright”), a corporation organized in the British Virgin Islands and a wholly-owned subsidiary of EET (the principal shareholders of which are Madam Zhang Jian, Chairman and Chief Financial Officer of CBH, Shi Mingsheng, Chief Operating Officer of CBH, and Ding Weihua, a director of CBH), purchased 400,000 units for an aggregate consideration of $500,000, each unit comprised of one share of NeoStem Common Stock and one redeemable five-year warrant to purchase one share of NeoStem Common Stock at a purchase price of $1.75 per share, at a per-unit price of $1.25. In connection with Fullbright’s purchase of the units, EET borrowed $500,000 from RimAsia, and the units acquired by Fullbright were pledged to RimAsia as collateral therefor. Further, in the June/July 2009 private placement (as defined and described below), Fullbright acquired 64,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon stockholder approval), together with warrants to purchase 640,000 shares of NeoStem Common Stock.

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For information on additional interests of Shi Mingsheng and Madam Zhang Jian, each a current director of CBH, in the Merger, see “Interests of Certain Persons in the Merger — NeoStem.”

RimAsia

Pursuant to the Agreement and Plan of Merger, Eric Wei, the managing partner of RimAsia, will be added to the current Board of Directors of NeoStem immediately after the Effective Time.

Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia and partially to satisfy the approximately $1.6 million in transaction expenses advanced or to be advanced by RimAsia, a principal stockholder of NeoStem and the sole holder of shares of CBH Series B Preferred Stock, all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, (i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of NeoStem Series C Preferred Stock, each with a liquidation preference of $1.125 per share and convertible into 9,086,124 shares of NeoStem Common Stock at an initial exercise price of $0.90. In the event the Merger and the related transactions are not consummated, RimAsia may not be able to recover some or all of the $1.6 million that it advanced to cover transaction expenses.

In addition, Fullbright pledged the units it acquired in NeoStem’s November 2008 private placement (as defined and described below) to RimAsia as collateral for the $500,000 loan made by Rim Asia to EET in connection therewith. Further, in the April 2009 private placement (as defined and described below), RimAsia acquired 400,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon shareholder approval), together with warrants to purchase 4,000,000 shares of NeoStem Common Stock.

CBH has defaulted under the terms of an acquisition financing in the amount of approximately $13.5 million provided by RimAsia. Such amount has been converted into CBH Series B Preferred Stock, subject to the condition that CBH merge with another company meeting certain pre-agreed financial benchmarks or that is approved by RimAsia. If CBH does not consummate such a merger, RimAsia has the right to convert such amount back into the original loan and accelerate which would put CBH in immediate default and potentially in insolvency, and severely impair the value of CBH securities to its holders. Through the Merger, NeoStem has agreed to assume the convertible preferred stock with modified rights given to RimAsia, and eliminate the default risk. However, in the event the Merger is not consummated, RimAsia may not be able to recover some or all of the approximately $13.5 million it is owed by CBH.

EET

125,000 shares of NeoStem Common Stock will be issued to EET or its designee for assistance in effecting the Merger. In addition, an aggregate of 203,338 shares of NeoStem Common Stock will be issued to Shi Mingsheng and Madam Zhang Jian, as well as an aggregate of 350,000 Merger Bonus shares to Shi Mingsheng and Madam Zhang Jian (175,000 each), in connection with the transactions contemplated by the Merger after the receipt of PRC Approvals following the Effective Time.

In connection with the closing of the Merger, in order to satisfy CBH’s obligations under a Memorandum of Understanding with EET, CBH shall have caused Erye and EET to enter into binding agreements whereby (a) Erye is bound to transfer the land and building for its principal manufacturing facility to EET or its affiliate for a sum to be agreed upon by the parties, with such transfer reported and accounted for in the financial records of Erye and CBH prior to Closing, and (b) EET or its affiliate is bound to lease such principal manufacturing facility back to Erye at a nominal fee for a term through the construction and validation period of Erye’s new manufacturing facility and until such date as Erye’s new facility is completed and fully operational, such that Erye is assured that there is no interruption of its operations by reason of such transfers and agreements. However, in the event the Merger and related transactions are not approved, EET may not receive such land and building and EET may have to pursue other remedies to obtain the property to which it is entitled pursuant to the Memorandum of Understanding between EET and CBH. The land and building have a book value on CBH’s books of approximately $6.7 million (and an unknown estimated fair market value).

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Pursuant to the Joint Venture Agreement between Sub Co. and EET, during the three year period commencing from the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, 45% of the net profit after tax will be given to Erye, rather than distributed to NeoStem, to fund construction of Erye’s new plant, thereby benefitting EET. Shi Mingsheng and Madam Jian own approximately 63% and 10%, respectively, of EET.

Pursuant to the Agreement and Plan of Merger, Shi Mingsheng will be added to the Board of Directors of NeoStem immediately after receipt of all PRC approvals following the Effective Time.

Three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited (a wholly-owned subsidiary of EET, the holder of 49% of the interests in Erye) to incentivize such recipients to approve and/or assist with Merger-related transactions.

In a private placement of units by NeoStem in November 2008, Fullbright Finance Limited (“Fullbright”), a corporation organized in the British Virgin Islands and a wholly-owned subsidiary of EET (the principal shareholders of which are Madam Zhang Jian, Chairman and Chief Financial Officer of CBH and Erye, Shi Mingsheng, Chief Operating Officer of CBH and Chairman of Erye, and Ding Weihua, a director of CBH), purchased 400,000 units for an aggregate consideration of $500,000, each unit comprised of one share of NeoStem Common Stock and one redeemable five-year warrant to purchase one share of NeoStem Common Stock at a purchase price of $1.75 per share, at a per-unit price of $1.25. In connection with Fullbright’s purchase of the units, EET borrowed $500,000 from RimAsia, and the units acquired by Fullbright were pledged to RimAsia as collateral therefor. Further, in the June/July 2009 private placement (as defined and described below), Fullbright acquired 64,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon stockholder approval), together with warrants to purchase 640,000 shares of NeoStem Common Stock.

Board Composition Following the Merger (Page [97] and Page [111])

Pursuant to the Agreement and Plan of Merger, NeoStem’s Board of Directors will be increased from five directors to seven directors. Eric Wei will be added to the Board of Directors of NeoStem immediately after the Effective Time, and Shi Mingsheng will be added to the Board of Directors immediately after receipt of all PRC approvals following the Effective Time. The four directors elected at NeoStem’s annual meeting held in May 2009 (Robin L. Smith, Richard Berman, Steven S. Myers and Joseph Zuckerman) as well as the director appointed by the NeoStem Board of Directors on June 9, 2009 (Drew Bernstein) will continue to serve. Therefore, the NeoStem Board of Directors will consist of the following seven members promptly following the consummation of the Merger and the receipt of all PRC approvals: Robin L. Smith (Chairman), current Chairman of the Board and Chief Executive Officer of NeoStem; Eric Wei, the managing partner of RimAsia; Shi Mingsheng, a Director of and the Chief Operating Officer of CBH, the Chairman of the Board of Directors of Erye, and a holder of approximately two-thirds of EET (which is the holder of a 49% interest in Erye and a 100% interest in Fullbright Finance Limited, a greater than 5% beneficial owner of NeoStem); and Richard Berman, Drew Bernstein, Steven S. Myers and Joseph Zuckerman, each of the latter four a current director of NeoStem (the latter four are independent directors, as defined under the NYSE Amex listing standards). In the event that NeoStem Proposal No. 8 attains stockholder approval at the special meeting and the Board of Directors determines to file the Board Classification Amendment (as defined therein) with the Secretary of State of the State of Delaware, NeoStem’s Board of Directors would be divided into three separate classes of directors, as nearly equal in number as possible, with each respective class to serve a three-year term. The classes would be elected on a rotating or staggered basis, with each class being elected at the annual stockholder meeting coinciding with the expiration of that class’s term. For details regarding the proposed classification of NeoStem’s Board, see NeoStem Proposal No. 8 of this joint proxy statement/prospectus.

NeoStem believes, as its business moves into China, that it would also be desirable to have one or more independent directors who reside in the PRC and have relevant experience. The Nominating Committee of NeoStem’s Board of Directors intends to continue its search for such potential director candidates.

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Relative Percentages of Ownership (Page [98])

The following tables indicate basic and fully diluted ownership at July 2, 2009, (i) giving effect to the Series D Convertible Redeemable Preferred Stock private placement, assuming that the proposals relating to the conversion of the Series D Preferred and the exercisability of the Series D warrants have been approved and the Series D Preferred has converted into NeoStem Common Stock, and (ii) giving effect to the Series D Convertible Redeemable Preferred Stock private placement as described above and also giving effect to the consummation of the Merger (including stock bonuses to be issued as part of the Merger, and assuming that all Proposals set forth herein are approved):

After Private Placement Conversions		Basic Outstanding Shares				%				Fully Diluted Ownership(1)				%
NeoStem – Public Shareholders			5,877,004				27.4	%			11,373,408				25.9	%
NeoStem – Officer & Directors*			1,255,701				5.9	%			3,723,289				8.5	%
CBH – Public Shareholders			—				0.0	%			—				0.0	%
CBH – Officers & Directors*			—				0.0	%			—				0.0	%
EET/Fullbright			1,040,000				4.8	%			2,080,000				4.8	%
RimAsia			5,000,000				23.3	%			10,000,000				22.9	%
Enhance Biomedical Holding Corporation			4,000,000				18.6	%			8,000,000				18.3	%
Series D Convertible Redeemable Preferred Stock Private Placement (excluding RimAsia, EET and Enhance Biomedical)			4,292,510				20.0	%			8,585,022				19.6	%
			21,465,215				100.0	%			43,761,719				100.0	%

After Private Placement Conversions & Merger		Basic Outstanding Shares				%				Fully Diluted Ownership(1)				%
NeoStem – Public Shareholders			6,077,004				16.7	%			11,573,408				16.6	%
NeoStem – Officer & Directors *(2)			1,710,807				4.7	%			4,178,395				6.0	%
CBH – Public Shareholders			4,793,176				13.2	%			6,805,273				9.8	%
CBH – Officers & Directors*(2)(3)			357,644				1.0	%			357,644				0.5	%
EET/Fullbright(4)(5)			3,604,570				9.9	%			4,644,570				6.7	%
RimAsia			11,458,009				31.6	%			25,544,133				36.7	%
Enhance Biomedical Holding Corporation			4,000,000				11.0	%			8,000,000				11.5	%
Series D Convertible Redeemable Preferred Stock Private Placement (excluding RimAsia, EET and Enhance Biomedical)			4,292,510				11.8	%			8,585,022				12.3	%
			36,293,720				100.0	%			69,688,445				100.0	%

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The Recommendations of the Board of Directors of NeoStem (Page [93]):

Robin Smith and Steven Myers hold shares of CBH Common Stock. Accordingly, a special committee of the NeoStem Board of Directors, initially comprised of Mark Weinreb, Joseph Zuckerman and Richard Berman, which is now comprised of Joseph Zuckerman, Richard Berman and Drew Bernstein, was formed and such committee believes that that the proposed Merger is fair to, advisable for, and in the best interests of NeoStem and its stockholders. In addition, the special committee as currently constituted approved Amendment No. 1 to the Agreement and Plan of Merger dated as of July 1, 2009, as being fair to, advisable for, and in the best interests of NeoStem and its stockholders. The special committee of the NeoStem Board of Directors has unanimously voted to approve the terms and provisions of the Agreement and Plan of Merger, and the full Board of Directors unanimously recommends that you vote FOR the issuance of the NeoStem securities in connection with the Merger pursuant to the Agreement and Plan of Merger.

The NeoStem Board of Directors believes that approving the amendment to NeoStem’s Amended and Restated Certificate of Incorporation to increase the aggregate number of authorized shares of NeoStem preferred stock from 5,000,000 shares to 20,000,000 shares (and a corresponding increase in NeoStem’s total authorized shares from 505,000,000 to 520,000,000) is in the best interests of NeoStem and its stockholders, has unanimously voted to approve the proposed amendment, and unanimously recommends that you vote FOR the approval of such amendment.

The NeoStem Board of Directors believes that the proposed issuance of NeoStem Common Stock in order to permit the potential conversion of the Series C Convertible Preferred Stock into 9,086,124 shares of NeoStem Common Stock upon the election of the holders thereof, is in the best interests of NeoStem and its stockholders. The NeoStem Board of Directors has unanimously voted to approve such issuance and unanimously recommends that you vote FOR such issuance of the NeoStem Common Stock.

The NeoStem Board of Directors believes that the proposed issuance of NeoStem Common Stock in order to permit (i) the potential exercise of up to 13,932,512 warrants and (ii) the automatic conversion of the Series D Convertible Preferred Stock into 12,932,510 shares of NeoStem Common Stock, together with the elimination of the restrictions set forth in the Blocker Letter entered into by NeoStem and RimAsia, is in the best interests of NeoStem and its stockholders. The NeoStem Board of Directors has unanimously voted to approve such issuance and unanimously recommends that you vote FOR such issuance of the NeoStem Common Stock and the removal of the restrictions set forth in the Blocker Letter.

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The NeoStem Board of Directors believes that approving an amendment to NeoStem’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of NeoStem Common Stock at a ratio within the range of 1:2 to 1:5, as determined by the NeoStem Board of Directors, solely in the event it is deemed by the NeoStem Board of Directors necessary to maintain its listing with the NYSE Amex or to list the NeoStem Common Stock on any other exchange, is in the best interests of NeoStem and its stockholders, has unanimously voted to approve the reverse split and unanimously recommends that you vote FOR the approval of such amendment.

The NeoStem Board of Directors believes that approving the adoption of the amendment to the NeoStem, Inc. 2009 Equity Compensation Plan (the “2009 Plan”) to increase the number of shares of NeoStem Common Stock authorized for issuance thereunder from 3,800,000 shares to 9,750,000 shares is in the best interests of NeoStem and its stockholders, has unanimously voted to approve the amendment to the 2009 Plan, and unanimously recommends that you vote FOR the approval of the amendment to the 2009 Plan.

The NeoStem Board of Directors believes that adopting the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”) with respect to the 4,700,000 shares of NeoStem Common Stock authorized for issuance thereunder is in the best interests of NeoStem and its stockholders, has unanimously voted to approve the adoption of the 2009 Non-U.S. Plan, and unanimously recommends that you vote FOR the adoption of the 2009 Non-U.S. Plan.

The NeoStem Board of Directors believes that approving an amendment to NeoStem’s Amended and Restated Certificate of Incorporation to provide for the classification of the Board of Directors into three classes and certain related provisions regarding the Board of Directors is in the best interests of NeoStem and its stockholders, has unanimously voted to approve the proposed amendment, and unanimously recommends that you vote FOR the approval of such amendment.

The NeoStem Board of Directors believes that (i) an amendment to NeoStem’s 2003 Equity Participation Plan (the “2003 Plan”) to grant the NeoStem Board of Directors or an appropriate committee thereof the authority to reprice options, (ii) a one-time repricing of the exercise price of certain NeoStem options and warrants to purchase shares of NeoStem Common Stock and (iii) giving the Board of Directors or an appropriate committee thereof discretion to issue certain cash or equity awards in connection with the one-time repricing. The NeoStem Board of Directors has unanimously voted to approve the amendment to the 2003 Plan and repricings and unanimously recommends that you vote FOR the approval of the amendment and the repricings.

The NeoStem Board of Directors believes that approving the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the proposals submitted at the special meeting is in the best interests of NeoStem and its stockholders, has unanimously voted to approve the proposal and unanimously recommends that you vote FOR the approval of this proposal.

The Recommendations of the Board of Directors of CBH (Page [93]):

The CBH Board of Directors believes that the Merger is fair to, advisable for, and in the best interests of CBH and its stockholders, and will preserve value for stockholders and prevent a foreclosure by RimAsia on all of CBH’s assets. CBH has unanimously voted to approve the Agreement and Plan of Merger, and unanimously recommends that you vote FOR the adoption of the Agreement and Plan of Merger and approval of the Merger, including all transactions contemplated thereby.

The CBH Board of Directors believes approving the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the proposals submitted at the special meeting is in the best interests of CBH and its stockholders, has unanimously voted to approve the proposal and unanimously recommends that you vote FOR the approval of this proposal.

Risk Factors Related to the Merger (Page [33])

THE MERGER AND THE BUSINESS OF THE COMBINED COMPANY INVOLVE A HIGH DEGREE OF RISK. Government regulation in the People’s Republic of China may interfere with or

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prohibit all or certain of the Company’s business initiatives in China, and NeoStem lacks any prior experience in doing business in China.

The “Risk Factors” beginning on page [33] should be considered carefully by both NeoStem and CBH stockholders in evaluating whether to approve the issuance of the NeoStem securities, in the case of the NeoStem stockholders, and whether to approve the adoption of the Agreement and Plan of Merger, in the case of the CBH Stockholders. These risk factors should be considered along with any other information included herein, including in conjunction with forward-looking statements made herein.

The Stockholders’ Meetings (Pages [76] and [81])

The special meeting of the stockholders of NeoStem will be held on August [], 2009 at 11:00 a.m., local time, at the offices of NeoStem, Inc. located at 420 Lexington Avenue, Suite 450, New York, NY 10170.

The special meeting of the stockholders of CBH will be held on August [], 2009 at 9:00 a.m., local time, at the offices of NeoStem, Inc. located at 420 Lexington Avenue, Suite 450, New York, NY 10170.

Accounting Treatment

For accounting purposes, NeoStem will be the “accounting acquirer” of CBH. The Merger will be accounted for under the “purchase” method of accounting. Under the purchase method of accounting, the assets and liabilities of CBH, as of the completion of the Merger, will be recorded at their fair values and the excess of purchase price over the fair value of net assets will be allocated to goodwill and any other applicable intangible assets.

Governmental Approval of the Merger (Page [108])

NeoStem and CBH have determined that filing of a notification under the HSR Act is not required in connection with the Merger.

The transactions will require, among other things, the approval by the relevant PRC and other governmental organizations of the Agreement and Plan of Merger, the Joint Venture Agreement, and the articles of incorporation of Erye. More specifically, the Agreement and Plan of Merger, and the Joint Venture Agreement, and the articles of incorporation of Erye will need to be approved by the Suzhou Bureau of Foreign Trade and Economic Cooperation Foreign Investment Administration Department and all other requisite authorities, and the articles of incorporation of Eyre will need to be filed with and the new business license of Eyre will need to be issued by, the Suzhou Administration of Industry and Commerce or other requisite authorities. The approval and registration process will normally take approximately one month. There is no assurance that the requisite approvals and registrations can be obtained and completed at a timely basis, if at all, or can be obtained and completed without the Agreement and Plan of Merger, and/or the Joint Venture Agreement, and/or the articles of incorporation of Erye being amended or revised materially pursuant to the requests of corresponding approval and/or registration authorities.

There can be no assurance the governmental approvals from the relevant PRC government authorities and other governmental organizations will be received on a timely basis or at all. The parties understand that under PRC law, they may not be able to obtain certain approvals until after closing. If the Merger closes without prior approval from any PRC Governmental Authority, the parties shall at Closing either permit NeoStem to defer delivery of any NeoStem securities to holders of CBH securities through a provision in the certificate of merger or otherwise, or enter into an escrow agreement on terms satisfactory to NeoStem, such that in either event consummation of the Merger or issuance of all consideration to be paid or issued by NeoStem in connection with, related to, or contingent upon the consummation of the Merger may be deferred or held back by NeoStem, or held in escrow, in each case subject to an absolute right of NeoStem to receive back all such consideration and rescind the Merger and all related transactions if any such PRC regulatory approvals are not obtained within a reasonable period of time after Closing (such time period to be fixed in the escrow agreement, but not in excess of 45 days).

Appraisal Rights for NeoStem Stockholders and for CBH Stockholders (Page [83])

Under Delaware law, NeoStem stockholders do not have appraisal rights in connection with the issuance of the securities of NeoStem in connection with the Merger.

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Under Delaware law, the holders of CBH Common Stock will have appraisal rights and may be entitled to receive cash equal to the fair market value of their CBH Common Stock. To do so, they must follow the procedures set forth under Section 262 of the General Corporation Law of the State of Delaware. Section 262 is attached as Annex B to this joint proxy statement/prospectus.

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RISK FACTORS

You should carefully consider the risks described below regarding the Merger, the Joint Venture Agreement and the NeoStem business post merger, together with all of the other information included in this joint proxy statement/prospectus, before making a decision about voting on the proposals submitted for your consideration.

Risks Related to the Merger

Following the Merger, a substantial portion of NeoStem’s assets will be located in the PRC and a substantial portion of NeoStem’s revenue will be derived from operations in the PRC. Since this is one of NeoStem’s first ventures into the Chinese market, NeoStem’s operations may be subject to additional risks and uncertainties.

Because NeoStem does not have any experience in doing business in the PRC, our directors, officers, managers, and employees will be encountering for the first time the economic, political, and legal climate that is unique to the PRC, which may present risk and uncertainties to NeoStem’s operations. Although in recent years the PRC’s government has implemented measures emphasizing the use of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in the PRC is still owned by the PRC’s government. In addition, the PRC’s government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over the PRC’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

There can be no assurance that the PRC’s economic, political or legal systems will not develop in a way that becomes detrimental to our business, results of operations and prospects. NeoStem’s activities may be materially and adversely affected by changes in the PRC’s economic and social conditions and by changes in the policies of the PRC’s government, such as measures to control inflation, changes in the rates or method of taxation and the imposition of additional restrictions on currency conversion.

Additional factors that NeoStem may experience in connection with having operations in the PRC that may adversely affect NeoStem’s business and results of operations include the following:

The consummation of the transactions contemplated by the Agreement and Plan of Merger is dependent upon obtaining all relevant and necessary governmental approvals from the relevant PRC government authorities.

Pursuant to the Agreement and Plan of Merger, NeoStem will acquire, indirectly through NeoStem’s ownership in Subco, a 51% ownership interest in Erye, with EET owning the remaining 49% ownership interest in Erye. Subco and EET must enter into the Joint Venture Agreement to govern the rights and obligations of Subco and EET with respect to their ownership in Erye. The Joint Venture Agreement, together with the articles of incorporation of Erye, must be delivered to the relevant PRC governmental organizations for inspection, approval and registration, and the closing of the transactions contemplated by the Agreement and Plan of Merger are contingent upon, among other things, obtaining all relevant and necessary governmental approvals and registrations from the relevant PRC government authorities for the Joint Venture Agreement, the

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articles of incorporation and the transactions contemplated thereby. There can be no assurance that all such relevant and necessary governmental approvals from the relevant PRC government authorities can be obtained on a timely basis or at all.

NeoStem has incurred, and expects to continue to incur, significant costs and expenses in connection with the proposed Merger. Any failure to obtain, or delay in obtaining, the necessary PRC government approvals would prevent NeoStem from being able to consummate, or delay the consummation of, the transactions contemplated by the Agreement and Plan of Merger, which could materially adversely affect the business, financial condition and results of operations of NeoStem.

The consummation of the Merger and related transactions is contingent upon the satisfaction of certain closing conditions, and the failure or delay in satisfying such closing conditions could result in increased costs and enhanced expenditure of resources or a decline in NeoStem’s or CBH’s stock price.

The transactions contemplated by the Agreement and Plan of Merger are subject to the satisfaction of several closing conditions. In order to consummate the Merger, the stockholders of NeoStem must approve both the issuance of securities in connection with the Merger and the amendment to NeoStem’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of NeoStem preferred stock and the CBH stockholders must approve the Merger. In addition, in order to consummate the Merger, the shares of NeoStem Common Stock to be issued in connection with the Merger must be authorized for listing on the NYSE Amex (or any other stock exchange on which shares of NeoStem Common Stock are listed); approval by the relevant PRC and other governmental authorities of NeoStem’s acquisition of 51% ownership interest in Erye, as described above, must be obtained; NeoStem must receive a re-affirmation of the fairness opinion issued by vFinance; NeoStem shall have received evidence satisfactory to it that CBH has effected a sale, spin-off or other disposition of CBC in a manner satisfactory to NeoStem and other customary closing conditions set forth in the Agreement and Plan of Merger must be satisfied. There is no guarantee that such approvals will be obtained or that such conditions will be satisfied.

Any failure to satisfy or delay in satisfying any condition to closing, could result in increased costs as a result of additional efforts directed towards attempting to consummate the transactions, as well as decreased operational performance pending the outcome of the efforts directed at completion of the transactions. Legal, accounting, and printing fees must be paid whether or not the Merger is consummated, and the amount of any or all of these fees may be enhanced if there is any failure or delay in satisfying the closing conditions. Any such delays or failures to satisfy conditions could materially adversely affect NeoStem’s and/or CBH’s business, financial condition and results of operations. In addition, a failure to complete the Merger, or a delay in completing any of the transactions contemplated thereby, could result in a decline of the market price of NeoStem Common Stock to the extent that the relevant current market price reflects a market assumption that the Merger will be completed.

CBH’s obligations to consummate the Merger and related transactions are, among other things, contingent upon NeoStem’s ability to cause shares of NeoStem Common Stock to continue to list on the NYSE Amex (or any other stock exchange on which shares of NeoStem Common Stock are listed).

The obligations of CBH to consummate the Merger are predicated on a listing for the NeoStem Common Stock to be issued in connection with the Merger. While this condition could be waived by the Board of Directors of CBH, there can be no assurances that CBH would waive this condition if listing of the shares to be issued in the Merger were not obtained. In connection with the Merger, NeoStem will be issuing more shares of NeoStem Common Stock and securities convertible or exchangeable into NeoStem Common Stock than are currently outstanding. As such, the NYSE Amex takes the position such a transaction is deemed a “reverse merger” pursuant to Section 341 of the Company Guide. Therefore, the combined company will be eligible for continued listing on the NYSE Amex only if the post-transaction entity can meet the standards for initial listing. There are a number of ways for NeoStem to satisfy the conditions for initial listing. Among other criteria, most likely the common stock of the combined company would need to have a minimum market price of $2 per share. In attempting to address the minimum price-per-share requirement, NeoStem is asking its stockholders to authorize an amendment to NeoStem’s Amended and Restated Certificate of Incorporation to allow for a reverse stock split within the range of 1:2 to 1:5 (see NeoStem Proposal No. 5 of this joint proxy statement/prospectus). However, there can be no guarantee that effecting such a reverse stock split

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would put the market price of the combined company’s common shares above the requisite minimum for initial listing on the NYSE Amex. Furthermore, even if the NeoStem Common Stock satisfies the minimum price per share threshold, there can be no guarantee that NeoStem could comply with the other applicable Company Guide rules. For instance, on a pro forma basis, while NeoStem currently meets the initial listing standards regarding the market value of its public float, this test will be determined based upon the market value of the NeoStem Common Stock at the time of the Merger. Other tests which will be similarly impacted include stockholders equity and market capitalization. NeoStem has filed with the NYSE Amex a new listing application relating to the post-transaction combined company. There is no guarantee that the NYSE Amex will accept NeoStem’s application relating to the post-transaction combined company.

In the event the stock of the combined company were not listed with the NYSE Amex, there is no guarantee that the combined company could satisfy the listing requirements necessary to list on any other public exchange. In such a scenario, the Merger may not be consummated.

Sales of substantial amounts of NeoStem Common Stock in the open market, or the availability of such shares for sale, could adversely affect the price of NeoStem Common Stock and other securities, and this effect will be exacerbated if certain currently outstanding options and warrants are re-priced.

There were 8,532,705 shares of NeoStem Common Stock outstanding as of July 8, 2009. Upon approval of Proposal No. 4 of this joint proxy statement/prospectus, which seeks stockholder approval for the issuance of NeoStem Common Stock to permit the automatic conversion of NeoStem’s Series D preferred stock issued in connection with the private placements, there would be 21,465,215 shares of NeoStem Common Stock outstanding. Upon consummation of the Merger, approximately 36,293,720 shares of NeoStem Common Stock will be outstanding, plus Series C preferred stock convertible into another 9,086,124 shares.

There will be a similar increase in the number of options and warrants outstanding. There were options and warrants to purchase 9,353,992 shares of NeoStem Common Stock outstanding as of July 8, 2009 (not including the warrants issued in the Series D private placement). Upon approval of NeoStem Proposal No. 4 of this joint proxy statement/prospectus, which seeks stockholder approval for the issuance of NeoStem Common Stock upon the exercise of warrants issued in connection with the private placements, warrants to purchase an additional 12,932,512 shares of NeoStem Common Stock would become exercisable, as well as the remaining portion of a warrant issued to RimAsia in September 2008 to purchase 1,000,000 shares of NeoStem Common Stock. Upon consummation of the Merger, a total of options and warrants to purchase approximately 24,298,601 shares of NeoStem Common Stock will be outstanding. An additional 1,250,000 options are anticipated to be granted upon approval of NeoStem Proposals No. 1 and 6, which if granted will be at an exercise price equal to fair market value on the date of grant.

Further, effective upon the consummation of the Merger, NeoStem may reprice currently outstanding options and warrants to purchase an aggregate of approximately 3,973,983 shares of NeoStem Common Stock pursuant to the terms of the Agreement and Plan of Merger. It is currently anticipated that options to purchase an aggregate of approximately 2,539,300 shares of NeoStem Common Stock with a current range of exercise prices of $0.95 to $25.00 per share will be eligible to be repriced to the greater of $0.80 and fair market value on the date of closing of the Merger (to the extent that the respective exercise prices exceed the applicable amount). In connection with such repricing, pursuant to the Agreement and Plan of Merger, NeoStem may also, in its sole discretion, grant to any or all respective holders of any such outstanding options that are eligible to be repriced, additional stock, options or other consideration (including cash) such that the value of the overall consideration granted to such optionee is generally equivalent to the value that would have been provided if the exercise price of such options had been reduced to $.80. The effect of any such additional issuances cannot be determined at this time. It is also anticipated that warrants to purchase an aggregate of approximately 1,464,983 shares of NeoStem Common Stock with a current range of exercise prices of $4.00 to $8.00 per share will be repriced to a range of approximately $3.82 to $6.18. After giving effect to the repricing (but without giving effect to any potential additional issuances in connection with the option repricing or the 1,250,000 additional options which are currently anticipated to be granted upon approval of NeoStem Proposal Nos. 1 and 6), the private placement and the consummation of the Merger, the following securities that may be exercised for, or are convertible into, shares of NeoStem Common Stock are currently anticipated to be outstanding:

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The vast majority of the outstanding shares of NeoStem Common Stock, as well as the vast majority of the shares of NeoStem Common Stock that may be issued under our outstanding options and warrants, are or have the contractual right to be registered or are otherwise not restricted from trading.

The issuance of NeoStem securities in recent private placements, and in connection with the Merger, will result in a substantial dilution of the NeoStem Common Stock.

In connection with recent private placements, we issued our Series D preferred stock which, if NeoStem Proposal No. 4 is approved, will result in the issuance of 12,932,510 shares of Common Stock, plus warrants to buy another 12,932,512 shares will become exercisable. In connection with the Merger, we will be issuing 14,828,505 more shares of NeoStem Common Stock and securities convertible or exchangeable into 11,098,221 more shares of NeoStem Common Stock than are currently outstanding. The amount of NeoStem Common Stock for which NeoStem Proposals No.1, 3 and 4 seeks authorization for issuance (not including the removal of the blocker restriction on the warrant issued to RimAsia in September 2008 to purchase 1,000,000 shares of NeoStem Common Stock) constitutes 6.07 times the number of outstanding shares of NeoStem Common Stock as of July 8, 2009. These pending issuances of NeoStem Common Stock will lead to a substantial dilution of the currently-outstanding shares of NeoStem Common Stock.

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To illustrate the above, the following tables indicate basic and fully diluted ownership at July 2, 2009, (i) giving effect to the Series D Convertible Redeemable Preferred Stock private placement, assuming that the proposals relating to the conversion of the Series D Preferred and the exercisability of the Series D warrants have been approved and the Series D Preferred has converted into NeoStem Common Stock, and (ii) giving effect to the Series D Convertible Redeemable Preferred Stock private placement as described above and also giving effect to the consummation of the Merger (including stock bonuses to be issued as part of the Merger, and assuming that all Proposals set forth herein are approved):

After Private Placement Conversions		Basic Outstanding Shares				%				Fully Diluted Ownership(1)				%
NeoStem – Public Shareholders			5,877,004				27.4	%			11,373,408				25.9	%
NeoStem – Officer & Directors*			1,255,701				5.9	%			3,723,289				8.5	%
CBH – Public Shareholders			—				0.0	%			—				0.0	%
CBH – Officers & Directors*			—				0.0	%			—				0.0	%
EET/Fullbright			1,040,000				4.8	%			2,080,000				4.8	%
RimAsia			5,000,000				23.3	%			10,000,000				22.9	%
Enhance Biomedical Holding Corporation			4,000,000				18.6	%			8,000,000				18.3	%
Series D Convertible Redeemable Preferred Stock Private Placement (excluding RimAsia, EET and Enhance Biomedical)			4,292,510				20.0	%			8,585,022				19.6	%
			21,465,215				100.0	%			43,761,719				100.0	%

After Private Placement Conversions & Merger		Basic Outstanding Shares				%				Fully Diluted Ownership(1)				%
NeoStem – Public Shareholders			6,077,004				16.7	%			11,573,408				16.6	%
NeoStem – Officer & Directors*(2)			1,710,807				4.7	%			4,178,395				6.0	%
CBH – Public Shareholders			4,793,176				13.2	%			6,805,273				9.8	%
CBH – Officers & Directors*(2)(3)			357,644				1.0	%			357,644				0.5	%
EET/Fullbright(4)(5)			3,604,570				9.9	%			4,644,570				6.7	%
RimAsia			11,458,009				31.6	%			25,544,133				36.7	%
Enhance Biomedical Holding Corporation			4,000,000				11.0	%			8,000,000				11.5	%
Series D Convertible Redeemable Preferred Stock Private Placement (excluding RimAsia, EET and Enhance Biomedical)			4,292,510				11.8	%			8,585,022				12.3	%
			36,293,720				100.0	%			69,688,445				100.0	%

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This represents substantial dilution of the ownership interests and voting power of the current NeoStem stockholders. As a result of the Series D Preferred Private Placements and the Merger, NeoStem’s existing stockholders will not be able to control the management or affairs of NeoStem, including the election of directors and approval of significant corporate transactions.

The Merger may not qualify as a reorganization and thus may be taxable to CBH and to holders of shares of CBH Common Stock that exchange such shares for shares of NeoStem Common Stock in the Merger.

The closing of the Merger is conditioned (which condition may be waived) on the receipt of tax opinions of counsel by each of NeoStem and CBH, in the form and substance reasonably satisfactory to NeoStem and CBH, with respect to the tax-free status of the Merger. The Merger may qualify as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the “Code” or “Internal Revenue Code”). In that case, holders of shares of CBH Common Stock that exchange such shares for shares of NeoStem Common Stock would generally not have any gain or loss resulting from the Merger. In addition, CBH generally would not recognize any gain or loss resulting from the Merger. However, the Merger may not qualify as a reorganization. In that case, holders of shares of CBH Common Stock that exchange such shares for shares of NeoStem Common Stock would generally have taxable gain or loss equal to the value of the consideration each holder receives in the Merger less the tax basis that she or he had in the shares of CBH stock exchanged therefore. In addition, CBH would have taxable gain or loss equal to the value of the consideration paid by NeoStem less the tax basis that CBH has in its assets. The parties do not expect to receive the aforementioned tax opinions if the Merger becomes effective under state law without prior approval from any PRC Governmental Authority, and NeoStem exercises its right to defer delivery of NeoStem securities to holders of CBH. For further discussion, see “Material United States Federal Income Tax Consequences of the Merger.”

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Officers and directors of NeoStem will receive benefits that may have influenced them to support or approve the Merger.

Some of the directors and officers of NeoStem have arrangements that give them interests in the Merger that are different from the interests of the stockholders of NeoStem.

The Agreement and Plan of Merger acknowledges that in its discretion the Compensation Committee of NeoStem’s Board of Directors may grant bonuses (the “Merger Bonus Shares”) of up to 1,000,000 shares or options under any equity compensation plan in connection with the closing of the transactions under the Agreement and Plan of Merger and to pay the applicable withholding taxes thereon. It is currently anticipated that the following current executive officers of Neostem will receive shares, or options to purchase shares, of NeoStem Common Stock pursuant to this authority: Robin L. Smith (175,000 shares) and Catherine M. Vaczy (150,000 shares). Based on the closing price of NeoStem Common Stock on June 25, 2009 of $2.00 per share the amount of U.S. withholding tax that NeoStem would pay in connection with all Merger Bonus Shares would be approximately $841,000. The Agreement and Plan of Merger also provides that options outstanding immediately prior to the closing of the transactions under the Agreement and Plan of Merger to purchase shares of NeoStem Common Stock, in the sole discretion of the Compensation Committee, may be amended, cancelled and reissued or otherwise modified so that the exercise price shall be adjusted to the greater of $0.80 or fair market value (to the extent the exercise price exceeds either such amount); provided that if NeoStem lowers the exercise price to a fair market value price that is greater than $0.80, NeoStem may also issue to any eligible optionee additional options, stock or other consideration (including cash) such that the fair value of the overall consideration granted to such optionee is generally equivalent, in the judgment of NeoStem’s Compensation Committee or Board of Directors, to the value that would have been provided if the exercise price had been reduced to $0.80. An amendment to the 2003 Equity Compensation Plan (the “2003 Plan”), together with a Repricing (as defined below) of certain options and warrants (see below) and other related matters, are presented for stockholder consideration in NeoStem Proposal No. 9 of this joint proxy statement/prospectus.

The Agreement and Plan of Merger provides that the exercise price of certain outstanding warrants of NeoStem will be reduced as provided for in a schedule. Certain officers and directors of NeoStem are holders of warrants to purchase shares of NeoStem Common Stock at $8.00 per share, that will have their exercise prices reduced to approximately $6.18 per share. Such warrants are held by NeoStem officers and directors in the following quantities: Robin L. Smith (27,511), Catherine M. Vaczy (4,084), Richard Berman (11,364), Steven Myers (22,728) and Joseph Zuckerman (2,084).

Robin L. Smith, NeoStem’s Chairman and Chief Executive Officer, and Steven Myers, a member of NeoStem’s Board of Directors and Audit, Compensation and Nominating Committees, are holders of CBH Common Stock. Dr. Smith is the beneficial owner of 389,966 shares of CBH Common Stock that were acquired commencing in 2005. Mr. Myers is the beneficial owner of 285,714 shares of CBH Common Stock that were acquired in 2005. Accordingly, a special committee of NeoStem’s Board of Directors (initially comprised of Mark Weinreb, Richard Berman and Joseph Zuckerman, and now comprised of Richard Berman, Joseph Zuckerman and Drew Bernstein) approved on behalf of the Company the execution of the Agreement and Plan of Merger and the transactions contemplated thereby.

Certain options to purchase shares of NeoStem Common Stock held by Dr. Smith (130,000), Mr. Weinreb (20,000), Mr. May (20,000) and Ms. Vaczy (20,000) are scheduled to vest upon the achievement of specific business milestones. These milestones would be achieved upon consummation of the Merger and such options would vest provided they are outstanding immediately prior thereto. See “Outstanding Equity Awards at Fiscal Year-End.”

For the above reasons, certain of the directors and officers of NeoStem could be more likely to vote to approve the terms of the Merger than if they did not have these interests. NeoStem stockholders should consider whether these interests may have influenced these directors and officers to support or recommend the Merger. See “Interests of Certain NeoStem Persons in the Merger,” beginning on page [94].

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Officers and directors of CBH will receive benefits that may have influenced them to support or approve the Merger.

Some of the directors and officers of CBH have arrangements that give them interests in the Merger that are different from the interests of the stockholders of CBH. For example, at the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Stephen Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of CBH to Messrs. Globus and Mao.

Madam Zhang (the Chairman of CBH and the General Manager of Erye) and Shi Mingsheng (the Chief Operating Officer and a director of CBH) will each receive 175,000 shares of NeoStem Common Stock as Merger Bonus Shares after receipt of all PRC approvals following the Effective Time. Such Merger-related grants are discussed in detail in NeoStem Proposal No. 7, below, in the section “Issuance of Equity Grants in Connection with the Merger.” Madam Zhang and Shi Mingsheng shall also receive an aggregate of 203,338 shares of NeoStem Common Stock upon the receipt of all necessary PRC approvals following consummation of the Merger.

Three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited (a wholly-owned subsidiary of EET, which is the holder of 49% of the interests in Erye) to incentivize such recipients to approve and/or assist with Merger-related transactions.

In a private placement of units by NeoStem in November 2008, Fullbright Finance Limited (“Fullbright”), a corporation organized in the British Virgin Islands and a wholly-owned subsidiary of EET (the principal shareholders of which are Madam Zhang Jian, Chairman and Chief Financial Officer of CBH, Shi Mingsheng, Chief Operating Officer and a director of CBH, and Ding Weihua, a director of CBH), purchased 400,000 units for an aggregate consideration of $500,000, each unit comprised of one share of NeoStem Common Stock and one redeemable five-year warrant to purchase one share of NeoStem Common Stock at a purchase price of $1.75 per share, at a per-unit price of $1.25. In connection with Fullbright’s purchase of the units, EET borrowed $500,000 from RimAsia, and the units acquired by Fullbright were pledged to RimAsia as collateral therefor. Further, in the June/July 2009 private placement (as defined and described below), Fullbright acquired 64,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon stockholder approval), together with warrants to purchase 640,000 shares of NeoStem Common Stock.

For the above reasons, certain of the directors and officers of CBH could be more likely to vote to approve the terms of the Merger than if they did not have these interests. CBH stockholders should consider whether these interests may have influenced these directors and officers to support or recommend the Merger. See “Interests of Certain CBH Persons in the Merger,” beginning on page [95].

RimAsia, currently a significant stockholder of CBH and NeoStem, will have received benefits that may have influenced them to support or approve the Merger.

Pursuant to the Agreement and Plan of Merger, Eric Wei, the managing partner of RimAsia, will be added to the current Board of Directors of NeoStem immediately after the Effective Time.

Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia and partially to satisfy the approximately $1.6 million in transaction expenses advanced or to be advanced by RimAsia, a principal stockholder of NeoStem and the sole holder of shares of CBH Series B Preferred Stock, all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, (i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of NeoStem Series C Preferred Stock, each with a liquidation preference of $1.125 per share and convertible into 9,086,124 shares of NeoStem Common Stock at an initial exercise price of $0.90. In the event the Merger and the related transactions are not consummated, RimAsia may not be able to recover some or all of the $1.6 million that it advanced to cover transaction expenses.

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In addition, Fullbright pledged the units it acquired in NeoStem’s November 2008 private placement (as defined and described below) to RimAsia as collateral for the $500,000 loan made by RimAsia to EET in connection therewith. Further, in the April 2009 private placement (as defined and described below), RimAsia acquired 400,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon stockholder approval), together with warrants to purchase 4,000,000 shares of NeoStem Common Stock.

CBH has defaulted under the terms of an acquisition financing in the amount of approximately $13.5 million provided by RimAsia. Such amount has been converted into CBH Series B Preferred Stock, subject to the condition that CBH merge with another company meeting certain pre-agreed financial benchmarks or that is approved by RimAsia. If CBH does not consummate such a merger, RimAsia has the right to convert such amount back into the original loan and accelerate which would put CBH in immediate default and potentially in insolvency, and severely impair the value of CBH securities to its holders. Through the Merger, NeoStem has agreed to assume the convertible preferred stock with modified rights given to RimAsia, and eliminate the default risk. However, in the event the Merger are not consummated, RimAsia may not be able to recover some or all of the approximately $13.5 million it is owed by CBH.

EET will receive benefits that may have influenced them to support or approve the Merger.

EET, its subsidiaries and its affiliates have arrangements that give them interests in the Merger that are different from the interests of the stockholders of CBH or NeoStem. For example, three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited, a wholly-owned subsidiary of EET which is the holder of 49% of the interests in Erye (“Fullbright”), to incentivize such recipients to approve and/or assist with Merger-related transactions.

In a private placement of units by NeoStem in November 2008, Fullbright, a corporation organized in the British Virgin Islands and a wholly-owned subsidiary of EET (the principal shareholders of which are Madam Zhang Jian, Chairman and Chief Financial Officer of CBH, Shi Mingsheng, Chief Operating Officer and a director of CBH, and Ding Weihua, a director of CBH), purchased 400,000 units for an aggregate consideration of $500,000, each unit comprised of one share of NeoStem Common Stock and one redeemable five-year warrant to purchase one share of NeoStem Common Stock at a purchase price of $1.75 per share, at a per-unit price of $1.25. In connection with Fullbright’s purchase of the units, EET borrowed $500,000 from RimAsia, and the units acquired by Fullbright were pledged to RimAsia as collateral therefore. Further, in the June/July 2009 private placement (as defined and described below), Fullbright acquired 64,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon stockholder approval), together with warrants to purchase 640,000 shares of NeoStem Common Stock.

In addition, in connection with the Agreement and Plan of Merger, CBH will cause Erye and EET to enter into binding agreements whereby (a) Erye is bound to transfer the land and building for its principal manufacturing facility to EET or its affiliate for a sum to be agreed upon by the parties, with such transfer reported and accounted for in the financial records of Erye and CBH prior to Closing, and (b) EET or its affiliate is bound to lease such principal manufacturing facility back to Erye at a nominal fee for a term through the construction and validation period of Erye’s new manufacturing facility and until such date as the new facility is completed and fully operational, such that Erye is assured that there is no interruption of its operations by reason of such transfers and agreements.

For the above reasons, certain of the directors and officers of CBH (who are also shareholders of EET, and therefore have an interest in Fullbright and also its ownership in NeoStem securities), could be more likely to vote to approve the terms of the Merger than if they did not have these interests. NeoStem stockholders and CBH stockholders should consider whether these interests may have influenced these directors and officers to support or recommend the Merger. See “Interests of Certain EET Persons in the Merger,” beginning on page [96].

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The fair value of the assets of CBH and Erye may not equal or exceed the fair value of the equities being offered to the stockholders of CBH.

The consideration for the Merger is stated in a fixed number of shares of NeoStem Common Stock and NeoStem Preferred Stock and warrants to purchase shares of Neostem Common Stock, and the value of the Merger has fluctuated considerably based on the fluctuations of the price of the NeoStem Common Stock. The Agreement and Plan of Merger does not allow for any adjustments in the amount of consideration to be given if there are significant changes in the value of NeoStem’s equities. The closing prices of the NeoStem Common Stock since November 3, 2008, the date this proposed Merger was announced, and June 25, 2009 has ranged between $0.42 and $2.53 and the value of this transaction has ranged from $10.5 million to $63.4 million and the excess of purchase price over net deficit is currently estimated to be approximately $52.4million, based on the financial position of CBH at March 31, 2009 and the closing price of the NeoStem Common Stock on June 25, 2009. We expect that the fair value of current assets and machinery and equipment of Erye will approximate the book value of these assets and that the excess of purchase price over net deficit will be assigned to Goodwill, land rights and intangible assets including patents and trademarks, customer lists, in process research and development and any non-compete clauses. It possible that the amount of purchase price that is assigned to Goodwill may not be equal to or less than the net present value of NeoStem’s share of Erye’s future cash flows. If the initial amount of Goodwill determined at the date of the merger is in excess of Erye’s future cash flows then the Goodwill asset will be judged to be impaired and an adjustment will be recognized immediately for the amount of such impairment.

The fairness opinion provided by vFinance is based on various assumptions and is subject to various limitations.

In its review and analysis and in formulating its opinion, vFinance, assumed and relied, without independent verification, upon the accuracy and completeness of the financial and other information provided to it by NeoStem and CBH, and assumed that the financial information was reasonably prepared on bases reflecting the best currently available judgments and estimates of NeoStem’s and CBH’s management. vFinance has not assumed any responsibility for making or obtaining an independent valuation or appraisal of the assets or liabilities of NeoStem or CBH, and no such independent valuation or appraisal was provided to vFinance.

vFinance previously had a relationship with CBH and currently owns shares of CBH Common Stock and warrants to purchase shares of CBH Common Stock which may influence their judgment in formulating the fairness opinion.

CBH previously had a relationship with vFinance. CBH entered into an Engagement Letter dated February 22, 2006, with vFinance, pursuant to which vFinance acted as private placement agent to offer and sell up to Six Million Dollars ($6,000,000) worth of securities with a 20% over allotment option at the sole discretion of CBH and closed on a financing. The engagement was for a term of sixty (60) days commencing upon the execution of the engagement letter by CBH, which could be extended by mutual agreement. In consideration, CBH made the following aggregate payments to vFinance and its selected dealers: (i) $697,000 in cash; (ii) the issuance of 50,000 shares of restricted common stock of CBH; and (iii) warrants to purchase up to 538,614 shares of common stock of CBH at an exercise price of $1.26 per share, expiring March 10, 2010. As of July 2, 2009, principals of vFinance continued to own 43,750 shares of common stock of CBH and vFinance in its individual capacity continued to own warrants to purchase up to 204,763 (and together with its principals, approximately 271,636) shares of common stock of CBH. vFinance’s (and its principals’) ownership of CBH securities and previous relationship with CBH may influence its judgment in rendering the fairness opinion in connection with the Merger.

CBH and/or its affiliates may have unknown liabilities that would become liabilities of a subsidiary of the combined company following the Merger.

There may be liabilities of CBH and/or its affiliates that are unknown at the current time and that may remain unknown at the time of the consummation of the Merger. As a result of the Merger, any such unknown liabilities may become liabilities of the combined company. In the event any such liabilities become known following the Merger, they may lead to claims against a subsidiary of the combined company, including but not limited to lawsuits, administrative proceedings, and other claims. Any such liabilities may subject the

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combined company to increased expenses for attorneys’ fees, fines, litigation expenses, and expenses associated with any subsequent settlements or judgments. There can be no assurances that such unknown liabilities do not exist. To the extent that such liabilities become known following the Merger, any such liability-related expenses may materially impact the combined company’s profitability and results of operations.

Cultural, language and managerial differences may result in the reduction of our overall performance.

While Chinese mergers and acquisitions are increasing in frequency, assimilating cultural, language and managerial differences remains problematic. Friction may result due to the consolidation of management teams from different cultural backgrounds. In addition, errors arising through language translations may cause miscommunications relating to material information, which could adversely affect our business operations. These factors may make the management of our operations in China more difficult.

The volatility of the market price of NeoStem Common Stock may reduce the value of the NeoStem shares received in the Merger by CBH stockholders.

The price of NeoStem Common Stock has fluctuated in the past and may be more volatile in the future. Factors such as the announcements of government regulation, new products or services introduced by us or by our competition, healthcare legislation, trends in health insurance, litigation, fluctuations in operating results, our success in commercializing our business, market conditions for healthcare stocks in general as well as economic recession could have a significant impact on the future price of NeoStem Common Stock. The historically low volume of trading in NeoStem Common Stock has made it more vulnerable, and it may continue to be more vulnerable, to rapid changes in price in response to market conditions. Accordingly, you should obtain recent market quotations for NeoStem Common Stock in order to assess the market value of the NeoStem securities that will be issued in connection with the Merger. If the market price of NeoStem Common Stock declines prior to the closing of the Merger, the value of the NeoStem securities to be received by stockholders of CBH in the Merger will be reduced.

Failure of the Merger to achieve potential benefits could harm the business and operating results of the combined company.

NeoStem and CBH expect that the combination of NeoStem and CBH will result in potential benefits for the combined company. Achieving these potential benefits will depend on a number of factors, some of which include:

The failure to achieve anticipated benefits could harm the business, financial condition and operating results of the combined company.

The announcement of the Merger may adversely affect us.

In response to the announcement of the Merger, customers or suppliers of NeoStem and/or CBH may delay, defer or cancel product purchase or other decisions. Any delay, deferral or cancellation in product purchase or other decisions by customers or suppliers could harm the business of the relevant company, regardless of whether the Merger is completed. Similarly, current and prospective NeoStem and CBH employees may experience uncertainty about their future roles with NeoStem or CBH, respectively, until the Merger is completed. As a result, the ability of NeoStem and/or CBH to attract and retain key management, sales, marketing and technical personnel could suffer. Any such disruption of purchases and/or orders, as well as any uncertainty regarding professional roles could harm the business, financial condition and operating results of the constituent entities, and such setbacks could carry over into the combined entity.

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Future sales of NeoStem Common Stock issued in connection with the Merger may depress NeoStem’s stock price.

The shares of NeoStem Common Stock issued to CBH security holders, including RimAsia, will be freely tradable in the public market; provided, however that many of such shares shall be prohibited from being sold through the expiration of the six-month period immediately following the consummation of the Merger pursuant to the terms of lock-up and voting agreements with NeoStem. The market price of NeoStem Common Stock could fall in response to sales of a large number of shares of NeoStem Common Stock in the market after the Merger or in response to the perception that sales of a large number of shares could occur. In addition, these sales could create the perception by the public of difficulties or problems with NeoStem’s products and services. As a result, these sales also might make it more difficult for NeoStem to sell equity or equity-related securities in the future at a time and price that its board of directors deems appropriate.

If the necessary approvals for the Merger are not obtained and the Merger is not consummated, CBH will fail to comply with its agreement with RimAsia, which may cause irreparable damage to CBH’s business and operations.

On November 19, 2007, CBH entered into an agreement (the “Agreement”) with RimAsia as a follow-up to letters of intent signed on July 14, 2007 and August 2, 2007, under which, among other things, the principal amount of the $11.5 million loan owed to RimAsia in connection with the acquisition of Enshi, plus unpaid interest of $1,008,534 (total of $12,508,534), was converted in full into 6,185,607 shares of senior redeemable convertible preferred shares of CBH (“Preferred Shares”) at a conversion price of $2.0222 per Preferred Share. This was conditioned on CBH signing a letter of intent for acquisition of a new company (or for the injection of the remaining 49% equity stake of Erye not already owned by CBH) before January 15, 2008, having such acquisition closed before June 30, 2008, then extended to January 1, 2009 and then extended to October 31, 2009. If CBH fails to obtain the necessary approvals for the Merger and the Merger is not consummated, then CBH will fail to comply with its Agreement with RimAsia, which in turn may convert the Preferred Shares back to the original senior secured loan, accelerate and foreclose back on CBH’s assets causing irreparable damage to CBH’s business and operations and wiping out all common stock value. CBH would be insolvent and would not be able to continue its operations.

The rights of holders of CBH Common Stock will change as a result of the Merger.

Following the Merger, holders of CBH Common Stock and some of the holders of CBH Preferred Stock outstanding immediately prior to the Merger will become holders of NeoStem Common Stock and NeoStem Preferred Stock. There are differences between the rights of NeoStem stockholders under NeoStem’s Amended and Restated Certificate of Incorporation and bylaws, as amended, and the rights of CBH stockholders under CBH’s certificate of incorporation and bylaws, each as amended. As a result of these differences, the holders of CBH common and preferred stock may have less control over corporate actions proposed to be taken by NeoStem than those holders had over corporate actions proposed to be taken by CBH. For more information, see “Comparison of Rights of Holders of NeoStem Common Stock and CBH Common Stock,” beginning on page [121].

Upon consummation of the Merger, CBH stockholders will cease to own a direct interest in CBH and will be unable to directly benefit from any future growth of CBH.

If the merger is consummated, CBH shareholders will cease to own a direct interest in CBH. Instead, they will own shares of NeoStem common stock and CBH will be a wholly-owned subsidiary of NeoStem. Any increase in the value of CBH assets should theoretically be reflected as an increase in value of NeoStem, but there will not be a direct correlation as to the amount of increased value.

Failure to successfully integrate CBH into our business could prevent us from realizing some or all of the anticipated benefits of the Merger.

We expect to gain certain benefits from the Merger, including increased revenues, market penetration in CBH’s product areas and certain operating efficiencies and synergies. Achievement of these expected benefits will depend in part on how we manage the integration of the CBH business into our operations. The challenges we may face in connection with these integration efforts include combining and simplifying product

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and service offerings, customer plans and sales and marketing approaches. If we are not successful in integrating the CBH business in a cost-effective manner, we may not realize any or all of the anticipated benefits of the Merger and our financial results may be adversely affected.

Risks Related to the Joint Venture Agreement

Erye has a limited history of earnings.

Erye has only a limited history of earnings. Although Erye earned $8,140,000 in net income for the year ended December 31, 2008, Erye had incurred a net loss of $3,142,000 for the year ended December 31, 2007. Erye’s continued development depends on stabilizing and streamlining its operation, relocating to the new factory that is now under construction, continuing the research and development for more selected new drug projects and building up a sales network for new drug distribution. There can be no guarantees that Erye will be profitable, which would jeopardize any potential value to be realized from the Joint Venture Agreement.

Even if Erye is profitable, NeoStem will be entitled to receive only 6% of the net profits of Erye for a three-year period commencing on the first day of the fiscal quarter after the consummation of the Merger, which could adversely affect NeoStem’s results of operations.

Upon consummation of the transactions contemplated by the Merger, NeoStem will own 51% of the ownership interests in Erye, and EET, will own the remaining 49% ownership interest. Pursuant to the terms and conditions of the Joint Venture Agreement, dividend distributions to EET and NeoStem will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses. There can be no assurance that Erye will become profitable following the consummation of the Merger, if at all, or that NeoStem will ever receive any distributions from Erye whatsoever.

The income obtained by NeoStem as a shareholder of Erye from the relocation of Erye will be transferred to EET, which could adversely affect NeoStem’s results of operations.

Pursuant to the terms of the Joint Venture Agreement, after the relocation of Erye, the old plant shall cease all its current business and all income in the form of relocation compensation by the government, and total payments generated from any lease or transfer to third party shall be vested in EET, which could adversely affect NeoStem’s results of operations. Furthermore, prior to the closing of the Merger, CBH, in order to satisfy its obligations under a Memorandum of Understanding with EET, shall have caused Erye and EET to enter into binding agreements whereby (a) Erye is bound to transfer the land and building for its principal manufacturing facility to EET or its affiliate for a sum to be agreed upon by the parties, with such transfer reported and accounted for in the financial records of Erye and CBH prior to Closing, and (b) EET or its affiliate is bound to lease such principal manufacturing facility back to Erye at a nominal fee for a term through the construction and validation period of Erye’s new manufacturing facility and until such date as Erye’s new facility is completed and fully operational, such that Erye is assured that there is no interruption of its operations by reason of such transfers and agreements. Therefore, NeoStem will not receive such real estate assets (which appears on the balance sheet of CBH as of March 31, 2009) in the Merger.

Many terms of the Joint Venture Agreement, as well as the location of its operations, limit NeoStem’s ability to unilaterally effect major decisions regarding or changes to Erye’s business, which could adversely affect NeoStem’s business.

Pursuant to the Joint Venture Agreement, Erye’s Board of Directors shall be comprised of two individuals designated by EET and three individuals designated by NeoStem; provided, that one of the positions designated by NeoStem shall be assumed by the member of the NeoStem Board of Directors designated by EET. Pursuant to the terms of the Joint Venture Agreement, the affirmative vote of all of the Erye Board of Directors is required for several major decisions of Erye including the amendment of the Joint Venture Agreement

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or Articles of Association of Erye, the termination or dissolution of Erye, increase or reduction of the registered capital of Erye and merger or spin-off of Erye. Pursuant to the terms of the Joint Venture Agreement, the affirmative vote of more than 75% of the Erye Board of Directors is required for several major decisions of Erye, including, among others, the disposition of all material assets of Erye, a change of more than 50% of the equity interest in Erye (which under PRC law requires the affirmative vote of all of the members of Erye Board of Directors), changes in more than 50% of the directors of Erye within any consecutive 24 month period, decisions on the material strategy and operation and development of Erye and the entrance in to related party transactions with Erye’s shareholders and their affiliates. In addition, since many of Erye’s officers will reside in China and NeoStem’s officers reside in the United States, Erye’s officers will manage the day-to-day operations of Erye with limited participation from NeoStem.

Some terms of the Joint Venture Agreement limit NeoStem’s ability of future acquisitions and investments in chemical drug manufacturing companies, which could adversely affect NeoStem’s business.

Pursuant to the terms of the Joint Venture Agreement, prior to the investment by NeoStem in any chemical drug manufacturing company that competes directly with the business of Erye, NeoStem must obtain the consent from Erye. NeoStem shall consult with Erye prior to introducing any new small molecule drug in China with respect to whether it can be produced more cheaply or efficiently by Erye. There can be no assurance that Erye will give its consent to NeoStem’s investment in any chemical drug manufacturing company, which could adversely affect the development of NeoStem’s business.

The effectiveness of the Joint Venture Agreement is subject to approval of competent PRC government authorities.

Under PRC laws, the Joint Venture Agreement cannot become effective unless and until, among other things, being approved by competent PRC government authorities. Therefore, the terms and conditions in the Joint Venture Agreement cannot take effect until the Joint Venture Agreement is approved by the Suzhou Foreign Trade and Economic Cooperation Bureau or other requisite authorities. There is no assurance that the requisite approval can be obtained and completed at a timely basis, if at all, or can be obtained and completed without the Joint Venture Agreement being amended or revised materially pursuant to the requests of corresponding approval and/or registration authorities.

Risks Related to the Combined Company

The following section describes risks related to the business of NeoStem following consummation of the Merger. Unless otherwise indicated in this section, references to “NeoStem”, “we”, “us” or “our company” in this section of the risk factors refer to the combined company.

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Risks Related to Doing Business in China

A substantial portion of NeoStem’s assets are located in the PRC and a substantial portion of NeoStem’s revenue will be derived from operations in the PRC. In addition to the Erye business, which has operated in China for more than 50 years, we are beginning to pursue new business opportunities in China, and it is expected that our business will develop an increasingly significant presence in China. Please consult the “Business Overview” section of this Registration Statement on Form S-4, which contains a discussion of our new initiatives in China. Because China’s economy, laws, regulations and policies are different from those typically found in the west and are continually changing, we will face risks including those summarized below:

A substantial portion of our assets are now located in the PRC and a substantial portion of our revenue will be derived from operations in the PRC. Since NeoStem is unfamiliar with managing business operations in China, our operations may be subject to additional risks and uncertainties.

Because NeoStem does not have experience in doing business in the PRC, NeoStem’s directors, officers, managers, and employees will be encountering for the first time the economic, political, and legal climate that is unique to the PRC, which may present risk and uncertainties to NeoStem’s operations. Although in recent years the PRC government has implemented measures emphasizing the use of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in the PRC is still owned by the PRC’s government. In addition, the PRC’s government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over the PRC’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. There can be no assurance that the PRC’s economic, political or legal systems will not develop in a way that becomes detrimental to our business, results of operations and prospects. Our activities may be materially and adversely affected by changes in the PRC’s economic and social conditions and by changes in the policies of the PRC’s government, such as measures to control inflation, changes in the rates or method of taxation and the imposition of additional restrictions on currency conversion.

Many industries in China are subject to government regulations that limit or prohibit foreign investments in such industries, which may limit our ability to control our current China-based businesses, as well as our ability to participate in new ventures and expand further into the Chinese market.

The Chinese government has imposed regulations in various industries, such as publishing, media, market research, medical research (including the stem cell business) and social research industries, that would limit foreign investors’ equity ownership or prohibit foreign investments altogether in companies that operate in such industries. As a result, our ability to control our existing China-based businesses as well to partake in new ventures and expand further in to the Chinese market may be limited.

Further, many of the rules and regulations that companies face in China are not made public. If new laws or regulations or policies forbid foreign investment in industries in which we want to complete a business combination, they could severely impair our choice of candidate pool of potential target businesses. Additionally, if the relevant Chinese authorities find us or the target business with which we ultimately complete a business combination to be in violation of any existing or future Chinese laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation:

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In order to comply with PRC regulatory requirements, we operate our China-based businesses, with the exception of the Erye business, through companies with which we have contractual relationships but in which we do not have controlling ownership. If the PRC government determines that our agreements with these companies are not in compliance with applicable regulations, our business in the PRC could be adversely affected.

The Chinese government does not permit foreign direct investment in stem cell research and development businesses. Accordingly, we operate our stem cell-related businesses in China through two VIEs that are owned principally or completely by certain of PRC employees of the WFOE. We control these companies and operate these businesses through contractual arrangements with the respective companies and their individual owners, but we have no direct equity control over these companies. Although other foreign companies have used VIE structures similar to ours and such restrictions and arrangements are not uncommon in other PRC companies, the application of a VIE structure to control companies in a sector in which foreign direct investment is specifically not permitted carries heightened risks.

We cannot be sure that the PRC government would view our operating arrangements to be in compliance with PRC regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. If we are determined not to be in compliance, the PRC government could revoke the business license of the WFOE, require us to discontinue or restrict our operations, restrict our right to collect revenues, require us to restructure our business, corporate structure or operations, impose additional conditions or requirements with which we may not be able to comply, impose restrictions on our business operations or on our customers, or take other regulatory or enforcement actions against us that could be harmful to our business. We may also encounter difficulties in obtaining performance under or enforcement of related contracts.

We rely on contractual arrangements with our VIEs for our China operations, which may not be as effective in providing control over these entities as direct ownership.

Because PRC regulations prevent us from directly engaging in stem cell related research, development and commercial applications in China, we are dependent on our VIEs in which we have little or no equity ownership interest and must rely on contractual arrangements to control and operate these businesses. These contractual arrangements may not be as effective in providing control over these entities as direct ownership. For example, the VIEs could fail to take actions required for our business or fail to conduct business in a manner we desire despite their contractual obligation to do so. These companies are able to transact business with parties not affiliated with us. If these companies fail to perform under their agreements with us, we may have to rely on legal remedies under Chinese law, which we cannot be sure would be effective. In addition, we cannot be certain that the individual equity owners of the VIEs would always act in the best interests of NeoStem, especially if they leave NeoStem.

Pursuant to the Certain Opinions regarding Administration of Not-for-profit Research Institution (Trial), or the Opinion promulgated and became effective on December 19, 2000, not-for-profit research institution shall have independent legal person status, and shall operate independently under the guidance and supervison of corresponding government authorities. Not-for-profit research institution shall conduct science research, technical consulting and technical service mainly for purpose of social benefits, and shall not be operated for profits. No person or institution shall obtain any investment return from not-for-profit research institution in any manner, and all of the income generated by not-for-profit research institution during its provision of for-profit services to the society, and which is permitted to be kept by the not-for-profit research institution pursuant to relevant rules, shall be used for the development of the not-for-profit research institution. Through various VIE contractual agreements, NeoStem is expected to obtain, directly or indirectly, part of the management and operation rights and benefits from SLSI. If any of SLSI, NeoStem or the contractual arrangement between them is regarded as breaching any clause in the Opinion, the contractual agreements between SLSI and NeoStem shall have to be terminated, and NeoStem will not obtain benefits, directly or indirectly, from SLSI as expected.

Further, the shareholders of the VIEs have pledged their equity interests in the VIEs to the WFOE as collateral for non-payment of loans or for fees on technical and other services due to us. On March 16, 2007, the PRC Property Law was promulgated and took effect on October 1, 2007. According to the PRC Property

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Law, a pledge of the equity interest of a company in China cannot be legally established until it is duly registered with the relevant administration of industry and commerce. On September 1, 2008, the Measures on Registration of Pledge of Equity Interest with the Administration of Industry and Commerce was promulgated by the PRC State Administration of Industry and Commerce and took effect on October 1, 2008, which contains the procedure for registration of a pledge of the equity interest of a company. The pledges under the equity pledge agreements between the WFOE and the shareholders of VIEs are yet to be registered with the relevant administration of industry and commerce, and as such, we cannot assure you about the effectiveness of these pledges. We will make efforts to register the pledges with the administration as soon as practically possible.

Due to the relationship between the WFOE and our VIEs, the PRC tax authorities may challenge our VIE structure, including the transfer prices that we will use for related party transactions among our entities in China.

Substantially all profits generated from our VIEs will be paid to the WFOE in China through related party transactions under contractual agreements. We believe that the terms of these contractual agreements are in compliance with the laws in China. The tax authorities in China have not yet examined these contractual agreements. Due to the uncertainties surrounding the interpretation of the transfer pricing rules relating to related party transactions in China, it is possible that in the future when the VIEs generate profits the tax authorities in China may challenge the transfer prices that we will use for related party transactions among our entities in China.

For example, due to our operating and tax structures in the PRC, we have entered into technical and other service agreements between the WFOE and our VIEs in the PRC, pursuant to which the WFOE provides technical and other services to our VIEs in exchange for substantially all net income of these VIEs. We will incur a 5% business tax when the WFOE receives the fees from the VIEs, which we will include in our operating expenses as the cost of transferring economic benefit generated from these VIEs. We believe that the terms of such service agreements are in compliance with the laws of the PRC. It is possible that the tax authorities in the PRC may challenge this arrangement. In the event the tax authorities challenge our VIE structure, we may be forced to restructure our business operation, which could have a material adverse effect on our business.

NeoStem will partly rely on dividends paid by our WFOE and/or Erye business for our cash needs. Statutory or contractual restrictions limit their ability to pay dividends to us and therefore our cash needs may not be met.

We will partly rely on dividends paid by our Erye subsidiary to meet our cash needs, including the funds necessary to pay any dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. In the future, we also expect dividend payments from the WFOE in China for our revenues after they receive payments from our VIEs in China under various services and other arrangements. We cannot make any assurance that the WFOE in China will receive payments uninterrupted as arranged under our contracts with those VIEs.

The payment of dividends in China is subject to limitations. Regulations in the PRC currently permit payment of dividends by our PRC subsidiaries only out of accumulated distributable earnings, if any, as determined in accordance with accounting standards and regulations in China. Moreover, our Chinese subsidiaries will be required to set aside at least 10% of their accumulated after-tax profit each year, if any, to fund certain mandated reserve funds until such reserves have reached at least 50% of their registered capital, and these reserves are not payable or distributable as cash dividends. In addition, Erye is also required to reserve a portion of its after-tax profits for its employee welfare and bonus fund, the amount of which is subject to the discretion of the Erye board of directors. Pursuant to the Joint Venture Agreement, Erye’s Board of Directors shall be comprised of two individuals designated by EET and three individuals designated by NeoStem; provided, that one of the positions designated by NeoStem shall be assumed by the member of the NeoStem Board of Directors designated by EET. In addition, if Erye incurs debt on its own behalf in the future, the instruments governing the debt may restrict either company’s ability to pay dividends or make other distributions to us.

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New drug registration policies and or practices in the PRC may pose risks to Erye and/or the combined company.

The State Food and Drug Administration of China (“SFDA”) has engaged in a virtual stoppage of the approval of new drugs. Such practices have greatly dampened the enthusiasm of the pharmaceutical enterprises of China to continue their new drug R&D. Such practices may pose potential risks to the revenue, growth and net income of Erye and/or the combined company.

Restrictions on currency exchange may limit our ability to utilize our cash flow effectively.

Our interests in China will be subject to China’s rules and regulations on currency conversion. In China, China’s State Administration for Foreign Exchange (SAFE) regulates the conversion of the Chinese Renminbi into foreign currencies. Currently, foreign investment enterprises are required to apply to the SAFE for Foreign Exchange Registration Certificates or IC Cards of Enterprises with Foreign Investment. Foreign investment enterprises holding such registration certificates, which must be renewed annually, are allowed to open foreign currency accounts including a “basic account” and “capital account.” Currency translation within the scope of the “basic account,” such as remittance of foreign currencies for payment of dividends, can be effected without requiring the approval of the SAFE. However, conversion of currency in the “capital account,” including capital items such as direct investments, loans, and securities, require approval of the SAFE. We cannot assure you that the Chinese regulatory authorities will not impose further restrictions on the convertibility of the Chinese currency. Any future restrictions on currency exchanges may limit our ability to use our cash flow for the distribution of dividends to our shareholders or to fund operations we may have outside of China.

Fluctuations in the value of the Renminbi relative to foreign currencies could affect our operating results.

We will prepare our financial statements in United States dollars however our business will operate in two currencies, United States dollars and Chinese Renminbi. It is anticipate that our Chinese operations will be self sufficient and conduct its operations exclusively in Renminbi and therefore day to day operations in China will not be affected by fluctuations in foreign exchange rates. At the present time we do not expect to have significant cross currency transactions that will be at risk to foreign currency exchange rates. Never-the-less the conversion of financial position and results of operations with a functional currency of Renminbi will be subject to risks related to foreign currency exchange rate fluctuations that could have material adverse affect on our business, financial condition and operating results. The value of Renminbi against the United States dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. As we will have significant operations in China, any significant revaluation of the Renminbi may materially and adversely affect our cash flows, revenues and financial condition. For example, to the extent that we need to convert United States dollars into Chinese Renminbi for our operations, appreciation of this currency against the United States dollar could have a material adverse effect on our business, financial condition and results of operations. Conversely, if we decide to convert our Renminbi into United States dollars for other business purposes and the United States dollar appreciates against this currency, the United States dollar equivalent of the Renminbi we convert would be reduced.

Recent changes in China’s currency policies may increase the fluctuation of the Chinese currency which could impact our operating results and cash flows.

We are subject to the effects of exchange rate fluctuations with respect to the currency. For example, the value of the Renminbi depends to a large extent on Chinese government policies and China’s domestic and international economic and political developments, as well as supply and demand in the local market. Starting July 2005, the Chinese government changed its policy of pegging the value of Chinese Renminbi to the U.S. dollar. Under the new policy, Chinese Renminbi has fluctuated within a narrow and managed band against a basket of certain foreign currencies. As a result of this policy change, Chinese Renminbi has appreciated significantly in the past few years. It is possible that the Chinese government could adopt a more flexible currency policy, which could result in more significant fluctuation of Chinese Renminbi against the U.S. dollar. We can offer no assurance that Chinese Renminbi will be stable against the U.S. dollar or any other foreign currency.

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Our operations are subject to risks associated with emerging markets.

The Chinese economy is vulnerable to market downturns and to economic slowdowns elsewhere in the world. As has happened in the past, financial problems or an increase in the perceived risks associated with investing in China or in emerging economies in general could dampen foreign investment in China and businesses could face severe liquidity constraints, further materially adversely affecting these economies. As a result, disruptions in the development of the global economy could have a material adverse effect on the financial condition and results of operations of our subsidiaries in China.

Our existing and future manufacturing operations in China may be adversely affected by changes in Chinese government’s policies regarding allocation of resources, in particular land use grants, to various industries and companies.

In terms of industry regulations and policies, the economy of China has been transitioning from a planned economy to market oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reforms, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China are still owned by the Chinese government. For example, all urban lands are state owned and are leased to business entities or individuals through governmental granting of State-owned Land Use Rights. The granting process is typically based on government policies at the time of granting and it could be lengthy and complex. This process may adversely affect our company’s future manufacturing expansions. The Chinese government also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency and providing preferential treatment to particular industries or companies.

China is a developing nation governed by a one party government and may be more susceptible to political, economic, and social upheaval than other nations.

China is a developing country governed by a one-party government. China is also a country with an extremely large population, widening income gaps between rich and poor and between urban and rural residents, minority ethnic and religious populations, and growing access to information about the different social, economic, and political systems found in other countries. China has also experienced extremely rapid economic growth over the last decade, and its legal and regulatory systems have changed rapidly to accommodate this growth. These conditions make China unique and may make it susceptible to major structural changes. Such changes could include a reversal of China’s movement to encourage private economic activity, labor disruptions or other organized protests, nationalization of private businesses, civil strife, strikes, acts of war and insurrections. If any of these events were to occur, it would significantly affect our financial performance.

If political relations between China and the Unites States deteriorate, it could cause a downturn in our financial condition; disruptions to our operations; or a less receptive public response to the goods or services we may offer.

The relationship between China and the United States is subject to sudden fluctuation and periodic tension. Relations may also be compromised if the U.S. becomes a more vocal advocate of Taiwan or proceeds to sell certain military weapons and technology to Taiwan. Changes in political conditions in China and changes in the state of Sino-U.S. relations are difficult to predict and could adversely affect our operations or financial condition. In addition, because of our involvement in the Chinese market, any deterioration in political relations might cause a public perception in the United States or elsewhere that might cause the goods or services we may offer to become less attractive.

China’s State Food and Drug Administration’s regulations, and changes to them, may limit or adversely affect our ability to develop, license, manufacture and market our products and services.

Some or all of our operations in China will be subject to the actions of PRC government regulators such as the State Food and Drug Administration (“SFDA”). Government regulations, among other things, cover the inspection of and controls over testing, manufacturing, safety and environmental considerations, efficacy, labeling, advertising, promotion, record keeping and sale and distribution of pharmaceutical products. Such

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government regulations may increase our costs and prevent or delay the licensing, manufacturing and marketing of any of our products or services. In the event we seek to license, manufacture, sell or distribute any products or services, we might need the proper approval from certain government agencies such as the SFDA. The future growth and profitability of any operations in China would be contingent on obtaining the requisite approvals. There is no assurance that we will obtain such approvals.

The SFDA recently implemented new guidelines for licensing of pharmaceutical products. All existing manufacturers with licenses, which are currently valid under the previous guidelines, are required to apply for the Good Manufacturing Practices (“GMP”) certifications by June 30, 2004, and to receive approvals by December 31, 2004. We have received our certifications. However, should we fail to receive or maintain the GMP certifications under the new guidelines in the future; our businesses would be materially and adversely affected.

In addition, delays or rejections may be encountered based upon additional government regulation from future legislation, administrative action or changes in governmental policy and interpretation. Any marketing activities we might engage in also may subject us to government regulations with respect to the prices that we intend to charge or any other marketing and promotional related activities. Government regulations may substantially increase our costs for developing, licensing, manufacturing and marketing any products or services, impacting negatively on our operation, revenue, income and cash flow. There could be changes in government regulations applicable to pharmaceutical industries, which changes may adversely affect our business.

The SFDA and other relevant authorities in China have also implemented a series of new punitive and stringent measures regarding the pharmaceuticals industry to redress certain past misconducts in the industry and certain deficiencies in public health reform policies. Given the nature and extent of such new enforcement measures and the aggressive manner in which such enforcement is being conducted, there may be possibilities of large scale and significant penalties meted out to manufacturers given the regulatory environment and the fact that newly constituted local level branches are encouraged to issue such punishments and fines. These new measures may include fines, restriction and suspension of operations and marketing and other unspecified penalties. This new regulatory environment has added significantly to the risks of our business and may have material negative impact on our operation results.

If the research and development operations conducted by the Beijing Stemcell Research Center (“Lab”) or the Shandong Life and Science Institute (“SLSI”) cooperated with NeoStem in China is regarded by corresponding government authorities in China as human genetic resources research and development activities, the cooperation between the Lab and/or the SLSI, and NeoStem are subject to approval of competent government authorities in China.

Pursuant to the Interim Measures for the Administration of Human Genetic Resources, or the Measures, promulgated and took effect on June 10, 1998, China adopts a reporting and registration system on important pedigrees and genetic resources in specified regions. Whoever is involved in such activities in China as sampling, collecting, researching, developing, trading or exporting human genetic resources or taking such resources outside the territory of the People’s Republic of China shall abide by the Measures. The term “human genetic resources” in the Measures refers to the genetic materials such as human organs, tissues, cells, blood specimens, preparations of any types or recombinant DNA constructs, which contain human genome, genes or gene products as well as to the information related to such genetic materials.

Any institution or individual who discovers or holds important pedigrees and genetic resources in the specified regions shall immediately report to the relevant government authorities. No institution or individual may sample, collect, trade, export human genetic resources or take them outside the territory of the People’s Republic of China, or provide them to other countries in any form without obtaining corresponding approval. Where human genetic resources in China are involved in any international collaborative project, the Chinese collaborating party shall be responsible for going through the due formalities of application for approval.

With regard to the ownership of corresponding intellectual property rights, pursuant to the Measures, the Chinese research and development institution shall have the priority to access information about the human genetic resources within the territory of the People’s Republic of China, particularly the important pedigrees and genetic resources in the specified regions and the relevant data, information and specimens and any

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transfer of such human genetic resources to other institutions shall be prohibited without obtaining corresponding approval. No foreign collaborating institution or individual that has access to the above mentioned information may publicize, publish, apply for patent right or disclose it by any other means without obtaining corresponding approval. In a collaborative research and development of human genetic resources of China between any Chinese and foreign institutions, intellectual property right therefore shall be disposed according to the following principles: (i) patent shall be jointly applied by both parties and the consequent patent right shall be owned by both parties if an achievement resulted from the collaboration is patentable. Either party has the right to implement such patent separately or jointly in its own country in accordance with the contract; however, the transfer of such patent to any third party or the permission of authorizing any third party to implement such patent shall be carried out upon agreement of both parties, and the benefits obtained thereof shall be shared in accordance with their respective contributions; and (ii) the right of utilizing, transferring and sharing any other scientific achievement resulted from the collaboration shall be specified in the collaborative contract or agreement signed by both parties. Both parties are equally entitled to make use of the achievement which is not specified in the contract or agreement; however, the transfer of such achievement to any third party shall be carried out upon agreement of both parties, and the benefits obtained thereof shall be shared in accordance with their respective contributions.

It is possible that the research and development operations conducted by the Beijing Stemcell Research Center (“Lab”) or the Shandong Life and Science Institute (“SLSI”) cooperated with NeoStem in China may be regarded by corresponding government authorities in China as human genetic resources research and development activities, and thus, the Measures may apply. If the Measures apply to the cooperation between the Lab and/or the SLSI, and NeoStem, such cooperations are subject to approval of competent government authorities in China. The sharing of patents or other corresponding intellectual property rights derived from such research and development operations is also subject to various restriction and approval requirements established under the Measures. If NeoStem is unable to obtain corresponding approvals on a timely basis, or at all, NeoStem’s operation in China will be materially affected.

We expect that our Erye business will lose certain preferential tax concessions, which may cause our tax liabilities to increase and our profitability to decline.

On March 16, 2007, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law (the “EIT Law”), under which domestic-invested enterprises and foreign-invested entities will be subject to enterprise income tax at a uniform rate of 25% unless they qualify under certain limited exceptions. The new law became effective on January 1, 2008. During the transition period for enterprises established before March 16, 2007, the tax rate will gradually increase starting in 2008 and will be equal to the new tax rate in 2012. As a result our Erye business will lose its preferential tax rates.

Because of the EIT Law, the tax liabilities of Erye will increase and Erye’s profits may accordingly decline as Erye’s reduced income tax rate is no longer applicable and/or the tax relief on investment in PRC is no longer available. Any future increase in the enterprise income tax rate applicable to us or other adverse tax treatments will increase our tax liabilities and reduce our net income. Further, any future increase in the enterprise income tax rate applicable to us or other adverse tax treatments, such as the discontinuation of preferential tax treatments for high and new technology enterprises altogether, would have a material adverse effect on our results of operations and financial condition.

We may not be able to enforce our rights in China.

China’s legal and judicial system may negatively impact foreign investors. In 1982, the National People’s Congress amended the Constitution of China to authorize foreign investment and guarantee the “lawful rights and interests” of foreign investors in the China. However, China’s system of laws in this area is not yet comprehensive. The legal and judicial systems in the China are still rudimentary, and enforcement of existing laws is inconsistent. Many judges in China lack the depth of legal training and experience that would be expected of a judge in a more developed country. Because the China judiciary is relatively inexperienced in enforcing the laws that do exist, anticipation of judicial decision-making is more uncertain than would be expected in a more developed country. It may be impossible to obtain swift and equitable enforcement of laws that do exist, or to obtain enforcement of the judgment of one court by a court of another jurisdiction. China’s

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legal system is based on civil law, or written statutes; a decision by one judge does not set a legal precedent that must be followed by judges in other cases. In addition, the interpretation of Chinese laws may vary to reflect domestic political changes.

PRC laws and regulations that may govern our business operations in China are sometimes vague and uncertain. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to the laws and regulations governing our business and the enforcement and performance of our contractual arrangements in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. We will be required to comply with certain PRC laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

The laws of China are likely to govern many of our material agreements, including, without limitation the Joint Venture Agreement and the VIE documents. We cannot assure you that we will be able to enforce our interests or our material agreements or that remedies will be available outside of certain regions. For example, the system of laws and the enforcement of existing laws in China may not be as certain in implementation and interpretation as in the United States. The Chinese judiciary is relatively inexperienced in enforcing corporate and commercial law, leading to a higher than usual degree of uncertainty as to the outcome of any litigation. The inability to enforce or obtain a remedy under any of our future agreements may have a material adverse impact on our operations.

If China imposes restrictions to reduce inflation, future economic growth in China could be severely curtailed, which could lead to a significant decrease in the efficiency and/or profitability of our operations in China.

While the economy of China has experienced rapid growth, this growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the supply of money and rising inflation. If prices for any products or services being developed in China rise at a rate that is insufficient to compensate for the rise in the costs of supplies, materials or labor, it may have an adverse effect on our profitability. In order to control inflation in the past, China has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. In the further, the PRC government could adopt additional measures to further combat inflation, including the establishment of price freezes or moratoriums on certain projects or transactions. Such measures could harm the economy generally and hurt our business by (i) limiting the income of our customers available to spend on our services, (ii) by forcing us to lower our profit margins, and (iii) by limiting our ability to obtain credit or other financing to pursue our expansion plans or maintain our business. We cannot predict with any certainty the degree to which our line of business will be affected by any slow-down of economic growth.

The laws and regulations governing the stem cell therapy industry in China are developing and subject to future changes. Future PRC laws may impose conditions or requirements with which we may not be able to comply, which could materially and adversely affect our business.

As the stem cell therapy industry is at an early stage of development in China, new laws and regulations may be adopted in the future to address new issues that arise from time to time. As a result, substantial uncertainties exist regarding the interpretation and implementation of current and any future PRC laws and regulations applicable to the stem cell therapy industry. There is no way to predict the content or scope of applicability of future Chinese stem cell regulation. There can be no assurances that in the future the PRC government authorities will not issue laws or regulations which may impose conditions or requirements with which we may not be able to comply, which could materially and adversely affect our business, financial condition and results of operations.

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Ethical and other concerns surrounding the use of stem cell therapy may increase the regulation of or negatively impact the public perception of our stem cell services, thereby reducing demand for our services.

The use of embryonic stem cells for research and stem cell therapy has been the subject of debate regarding related ethical, legal and social issues. The Ministry of Science and Technology and the Ministry of Health of the PRC issued “The Ethical Guiding Principles for the Research of Human Embryonic Stem Cell” on December 24, 2003, which are formulated for the purpose of aligning the research of human embryonic stem cell in the biomedical field in China with the ethical criterion of life, ensuring the respect and observance of internationally recognized ethical standards of life and the relevant provisions of our country, as well as promoting the healthy development of the research on human embryonic stem cell. According to the Ethical Guiding Principles, all those engaging in activities concerning the research of human embryonic stem cell within the territory of PRC shall abide by the present Guiding Principles, according to which, any research on reproductive cloning is prohibited, and no human gamete, germ cell, embryo or fetus tissues may be bought or sold. Although our business does not involve the more controversial use of embryonic stem cells, the use of other types of human stem cells for therapy could give rise to similar ethical, legal and social issues as those associated with embryonic stem cells. Additionally, it is possible that our business could be negatively impacted by any stigma associated with the use of embryonic stem cells if the public fails to appreciate the distinction between the use of adult versus embryonic stem cells. The commercial success of our business will depend in part on public acceptance of the use of stem cell therapy, in general, for the prevention or treatment of human diseases. Public attitudes may be influenced by claims that stem cell therapy is unsafe or unnecessary, and stem cell therapy may not gain the acceptance of the public or the medical community. Public pressure or adverse events in the field of stem cell therapy that may occur in the future also may result in greater governmental regulation of our business creating increased expenses and potential regulatory delays relating to the approval or licensing of any or all of the processes and facilities involved in our stem cell banking services. In the event that the use of stem cell therapy becomes the subject of adverse commentary or publicity, our business could be adversely affected and the market price for our common stock could be significantly harmed.

The import into China or export from China of technology relating to stem cell therapy may be prohibited or restricted.

The Ministry of Commerce (MOFCOM) and Ministry of Science and Technology of China (MOST) jointly publish the Catalogue of Technologies the Export of which from China is Prohibited or Restricted, and the Catalogue of Technologies the Import of which into China Prohibited or Restricted. Stem cell related technologies are not listed in the current versions of these catalogues, and therefore their import or export should not be forbidden or require that approval MOFCOM and MOST. However, these catalogues are subject to revision and, as the PRC authorities develop policies concerning stem cell technologies, it is possible that the categories would be amended or updated should the Chinese government want to regulate the export or import of stem cell related technologies to protect material state interests or for other reasons. Should the catalogues be updated so as to bring any activities of the planned stem cell processing, storage and manufacturing operation in Beijing and related research and development activities under their purview, any such limitations or restrictions imposed on the operations and related activities could materially and adversely affect our business, financial condition and results of operations.

Regulations relating to the transfer of state-owned property rights in enterprises may increase the cost of any acquisitions or transactions, and may therefore impose an additional administrative burden on us.

The legislation governing the acquisition of a China state-owned company contains stringent governmental regulations. The transfer of state-owned property rights in enterprises must take place through a government approved “state-owned asset exchange,” and the value of the transferred property rights must be evaluated by those Chinese appraisal firms qualified to do “state-owned assets evaluation.” The final price must not be less than 90.0% of the appraisal price. Additionally, bidding/auction procedures are essential in the event that there is more than one potential transferee. In the case of an acquisition by foreign investors of state-owned enterprises, the acquirer and the seller must make a resettlement plan to properly resettle the employees, and the resettlement plan must be approved by the Employees’ Representative Congress. The

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seller must pay all unpaid wages and social welfare payments from the existing assets of the target company to the employees. These regulations may adversely affect our ability to acquire a state-owned business or assets.

In the event that our future expansion creates a scenario where certain directors and/or officers will live outside the United States and a significant portion of our assets will be located outside the United States, investors may not be able to enforce federal securities laws or their other legal rights.

Future expansion may require that many of our directors and/or officers will reside outside of the United States, and a substantial portion of our assets may be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon certain of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties against our directors and officers pursuant to United States laws.

Most of our assets will be located in China, any dividends of proceeds from liquidation is subject to the approval of the relevant Chinese government agencies.

Our assets will be predominantly located inside China. Under the laws governing foreign invested enterprises in China, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividend payment will be subject to the decision of the board of directors and subject to foreign exchange rules governing such repatriation. Any liquidation is subject to both the relevant government agency’s approval and supervision as well the foreign exchange control. This may generate additional risk for our investors in case of dividend payment and liquidation.

We may be subject to fines and legal sanctions imposed by the SAFE or other PRC government authorities if we or our PRC employees fail to comply with recent PRC regulations relating to employee stock options granted by offshore listed companies to PRC citizens.

On April 6, 2007, SAFE issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company,” also known as “Circular 78.” It is not clear whether Circular 78 covers all forms of equity compensation plans or only those which provide for the granting of stock options. For any plans which are so covered and are adopted by a non-PRC listed company after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas listed company’s covered equity compensation plan prior to April 6, 2007. The adoption of the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”) is the subject of NeoStem Proposal No. 7 of this joint proxy statement/prospectus. The 2009 Non-U.S. Plan would authorize the grant of certain equity awards to our officers and directors, some of whom following the Merger are expected to be PRC citizens. Circular 78 may require our officers and directors who receive option grants and are PRC citizens to register with SAFE. We believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time consuming. If it is determined that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and participants of our equity incentive plan who are PRC citizens to fines and legal sanctions and prevent us from being able to grant equity compensation to our PRC employees. In that case, our ability to compensate our employees and directors through equity compensation would be hindered and our business operations may be adversely affected.

Dividends payable by us to our foreign investors and gain on the sale of our shares may become subject to withholding taxes under the PRC tax laws.

Under the new PRC EIT Law and its implementation regulations issued by the PRC State Council, a 10% withholding tax will be imposed on dividends, interest, royalties and capital gains payable to recipients who are not tax resident of the PRC (in certain cases, the withholding tax rate on outgoing interest has been reduced to 7%, royalties to 6% and dividends to 5%).

It remains unclear how the PRC tax authority will determine the sources of such income in the case of transfer of shares of an offshore company which holds shares/equity interests in a PRC operating company.

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The PRC tax authorities may invoke the general anti-tax avoidance provisions under the EIT Law to disregard the form and look to the substance of the transactions to determine if the dividends, capital gains and other passive income of tax non-PRC residents are subject to PRC withholding tax.

Therefore, it is unclear whether the dividends we pay with respect to our ordinary shares or the gain a shareholder realizes from the transfer of our ordinary shares, would be treated as income derived from sources within the PRC and be subject to withholding tax under the PRC EIT Law. It is also unclear regarding the method of payment of such tax under the PRC EIT Law. If we are required to deduct PRC withholding tax on our dividends payable to our foreign stockholders, or if PRC withholding tax is payable on the gains realized from the transfer of our ordinary shares, the value of an investment in our shares may be materially and adversely affected.

Failure by our stockholders or beneficial owners who are PRC citizens or residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liabilities under PRC laws, which could adversely affect our business and financial condition.

In October 2005, the State Administration of Foreign Exchange, or the SAFE, issued Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles, or SAFE Circular 75. SAFE Circular 75 states that since October of 2005, PRC citizens or residents must register, prior to establishing or controlling an offshore entity, with the SAFE or its local branch in connection with their establishment or control of the offshore entity established or controlled for the purpose of overseas equity financing involving an investment whereby the offshore entity acquires or controls onshore assets or equity interests from the PRC citizens or residents.

In addition, such PRC citizens or residents must update their SAFE registrations when the offshore SPV undergoes material events relating to increases or decreases in investment amount, transfers or exchanges of shares, mergers or divisions, long-term equity or debt investments or external guarantees, or other material events that do not involve return investments. To further clarify the implementation of SAFE Circular 75, on May 29, 2007, the SAFE issued SAFE Circular 106. Under SAFE Circular 106, PRC subsidiaries of an offshore company governed by SAFE Circular 75 are required to coordinate and supervise the filing of SAFE registrations in a timely manner by the offshore holding company’s stockholders who are PRC citizens or residents. If these stockholders fail to comply, the PRC subsidiaries are required to report to the local SAFE authorities. Therefore, if any of our stockholders who are PRC citizens or residents do not complete their registration with the SAFE or its local branch, our PRC subsidiaries may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries.

Further, since we are a public company in the United States and our stockholders often hold their shares in street name, we may not be fully aware or informed of the identities of all our beneficial owners who are PRC citizens or residents, and we may not always be able to compel our beneficial owners to comply with the SAFE Circular 75 requirements. As a result, we cannot assure you that all of our stockholders or beneficial owners who are PRC citizens or residents will at all times comply with, or in the future make or obtain any applicable registrations or approvals required by SAFE Circular 75. Failure to register by these stockholders could subject us and our subsidiaries to, among other things, potential fines or legal sanctions.

Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

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The absence of express laws and regulations in China regarding foreign investment in China’s pharmaceutical distribution sector may cause uncertainty.

Pursuant to China’s Administrative Measures on the Foreign Investment in Commercial Sector, as of December 11, 2004, foreign enterprises are permitted to establish or invest in wholly foreign-owned enterprises or joint ventures that engage in wholesale or retail sales of pharmaceuticals in China subject to the implementation of relevant regulations. However, no specific regulation in this regard has been promulgated to date. If specific regulations are not promulgated, or if any promulgated regulations contain clauses that will cause an adverse impact to our current and future acquisitions in China, our operations and business strategy will be adversely affected.

Price control regulations may decrease our profitability.

The prices of certain medicines we distribute, including those listed in the Chinese government’s catalogue of medications that are reimbursable under the Insurance Catalogue, which is the official Chinese catalogue that lists drugs for which reimbursement is available, are subject to control by the relevant state or provincial price administration authorities. In practice, price control with respect to these medicines sets a ceiling on their retail price. The actual price of such medicines set by manufacturers, wholesalers and retailers cannot historically exceed the price ceiling imposed by applicable government price control regulations. Although, as a general matter, government price control regulations have resulted in drug prices tending to decline over time, there has been no predictable pattern for such decreases. Such price controls, especially downward price adjustment, may negatively affect our revenue and profitability.

The bidding process with respect to the purchase of pharmaceutical products may lead to reduced revenue.

Chinese regulations require non-profit medical organizations established in China to implement bidding procedures for the purchase of drugs. It is intended that the implementation of a bidding purchase system will be extended gradually and will cover, among other drugs, those drugs consumed in large volume and commonly used for clinical uses. Pharmaceutical wholesalers must have the due authorization of the pharmaceutical manufacturers in order to participate in the bidding process. If, for the purpose of reducing the bidding price, pharmaceutical manufacturers participate in the bidding process on their own and enter into purchase and sales contracts with medical organizations directly without authorizing a pharmaceutical distributor, the revenue of our Chinese subsidiary may be adversely affected.

Risks Related to Our Financial Condition

We have incurred substantial losses in the past and we expect to continue to incur losses for the near term.

Since NeoStem’s inception in 1980, it has generated only limited revenues from sales and has incurred substantial net losses of $1,867,200 for the quarter ended March 31, 2009 and $9,242,071, $10,445,473 and $6,051,400 for the years ended December 31, 2008, 2007 and 2006, respectively. NeoStem expects to incur additional operating losses as well as negative cash flow from its adult stem cell collection, processing and storage business operations until it successfully commercializes and develops this business, if ever. It is also expected that, beyond the utilization of the SCTI funds to support the near-term costs relating to NeoStem’s VSEL technology under the license and sponsored research agreements with the University of Louisville Research Foundation, NeoStem will incur losses and negative cash flow for the near term as a result of its new research and development activities until such operations can be successfully implemented, integrated into our business and commercialized, if ever.

Although Erye earned $8,140,000 in net income for the year ended December 31, 2008 and $3,149,000 for the year ended December 31, 2007, Erye has only a limited history of earnings. Moreover, due to the following significant planned costs, Erye expects to incur losses in the near term: (1) stabilizing and streamlining the Erye operation; (2) relocating Erye to a new factory which is under construction; (3) continuing the research and development for more selected new drug projects; and (4) building up sales network for new drug distribution.

It is expected that the combined company will continue to incur significant sales, marketing, general and administrative and product development expenses in connection with the development of its business. The combined company may never be profitable.

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We have a history of liquidity problems, which may affect our ability to raise capital to fund our operations.

At March 31, 2009, NeoStem had a cash balance of $392,800, negative working capital of $(2,074,000) and a negative stockholders’ equity of $(804,400). Our history of illiquidity and losses may make it difficult for us to raise capital on favorable terms. NeoStem has from time to time raised capital for our activities through the sale of our equity securities and promissory notes. On April 9, 2009, NeoStem completed a private placement financing totaling $11 million from three Asia-based investors, including RimAsia. In June 2009, NeoStem consummated a private placement, pursuant to which an additional 20 persons and entities, including Fullbright, acquired an aggregate of 400,280 shares of Series D stock and warrants to purchase an aggregate of 4,002,800 shares of NeoStem Common Stock. For a more complete discussion, see “Business of NeoStem — Financing Activities — 2009 Financing Activities.” In addition, NeoStem raised an aggregate of $1,150,000 in 2009 through the issuance of promissory notes, and in 2008 NeoStem raised an aggregate of $2,900,000 through the private placement sale of our common stock and warrants to purchase our common stock. Such capital raising activities have enabled us to pursue our business plan and begin to grow our adult stem cell collection and storage business, including expanding marketing and sales activities, as well as to pursue acquisition opportunities and other expansion activities in China. The funds NeoStem obtained through the acquisition of SCTI funded certain early obligations under our agreements relating to our VSEL technology; however, NeoStem expects that substantial additional funds will need to be raised in order for us to continue to fund additional research and development activities relating to the VSEL and other technology, support marketing efforts relating to the adult stem cell collection centers in the Company’s network and to pursue related business opportunities, including medical tourism and the Company’s expansion activities in China. The Company has applied for SBIR grants and also anticipates seeking to obtain funds through applications for other State and Federal grants, grants abroad, strategic arrangements as well as other funding sources to help offset all or a portion of these costs; however, there can be no assurance that such funding will be received.

At March 31, 2009, CBH had a cash balance of $2,226,777, a working capital of $2,354,450 and stockholders’ equity of $10,314,715. CBH’s history of illiquidity and losses may make it difficult for it to raise capital on favorable terms. CBH has from time to time raised capital for its activities through the sale of its equity securities and promissory notes. CBH expects that its primary requirements for cash following the Merger will be for: (1) stabilizing and streamlining the Erye operation; (2) relocating Erye to a new factory which is under construction; (3) continuing the research and development for more selected new drug projects; and (4) building up sales network for new drug distribution. CBH’s operating activities may not enable us to meet the anticipated cash requirements.

We will need substantial additional financing revenues to continue operations.

Even though in 2009 (to date) NeoStem raised an aggregate of approximately $16 million gross proceeds in financing, the combined company will require substantial additional capital to fund the current operating plan for its business, including the development of its VSEL and other technology and support marketing efforts relating to the adult stem cell collection centers in the combined company’s network, Erye’s relocation to a new factory and to pursue related business opportunities, including medical tourism. In addition, the combined company’s cash requirements may vary materially from those now planned because of expenses relating to marketing, advertising, sales, distribution, research and development and regulatory affairs, as well as the costs of maintaining, expanding and protecting the combined company’s intellectual property portfolio, including potential litigation costs and liabilities.

NeoStem’s outstanding warrants may negatively affect our ability to raise additional capital.

During the terms of NeoStem’s outstanding warrants, including but not limited to, Class A Warrants (five years), Class C Warrants (approximately eighteen months) and Class D Warrants (five years), the holders thereof are given the opportunity to profit from a rise in the market price of the NeoStem Common Stock. So long as these warrants are outstanding, the terms on which we could obtain additional capital may be adversely affected. The holders of these warrants might be expected to exercise them at a time when NeoStem would, in all likelihood, be able to obtain any needed capital by a new offering of securities on terms more favorable than those provided by these warrants.

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If we are unable to obtain future capital on acceptable terms, this will negatively affect our business operations and current investors.

We expect that in the future we will seek additional capital through public or private financings. Additional financing may not be available on acceptable terms, or at all. If additional capital is raised through the sale of equity, or securities convertible into equity, further dilution to then existing stockholders will result. If additional capital is raised through the incurrence of debt, our business could be affected by the amount of leverage incurred. For instance, such borrowings could subject us to covenants restricting our business activities, paying interest would divert funds that would otherwise be available to support commercialization and other important activities, and holders of debt instruments would have rights and privileges senior to those of equity investors. If we are unable to obtain adequate financing on a timely basis, we may be required to delay, reduce the scope of or eliminate some of our planned activities, any of which could have a material adverse effect on the business.

We will continue to experience cash outflows.

We expect to continue to incur expenses, including the salary of our executive officers; rent; legal, marketing and accounting fees; and insurance and general administrative expenses. We are building the infrastructure for our business and will experience additional cash outflows in the near term. It is not possible at this time to state whether we will be able to finance these cash outflows or when we will be able to achieve and sustain a positive cash position. Our ability to become profitable will depend on many factors, including our ability to successfully commercialize and develop the business. We cannot assure that we will ever become profitable and we expect to continue to incur losses. NS California, the company from which NeoStem initially acquired its adult stem cell collection, processing and storage business, had nominal operations and nominal assets at the time of acquisition. From its inception in 2002 through September 30, 2005, NS California had aggregate revenues of $25,500, and aggregate losses of $2,357,940. We cannot guarantee that the combined company will be more successful than NS California in achieving sufficient revenues for profitability from NeoStem’s collection, processing and storage business. In addition, the therapeutic application of adult stem cells pursuant to NeoStem’s licensed technology is a relatively new concept in medical treatment and there can be no assurance that the combined company will achieve sufficient activities to become profitable. Even if we do achieve profitability, we cannot guarantee that we can sustain or increase profitability in the future. If revenues grow slower than we anticipate, or if operating expenses exceed our expectations or cannot be adjusted accordingly, then our business, results of operations, financial condition and cash flows will be materially and adversely affected. Because our strategy might include acquisitions of other businesses, products or technologies, acquisition expenses and any cash used to make these acquisitions will reduce our available cash.

In addition, Erye expects that its primary requirements for cash in the near term will be for: (1) stabilizing and streamlining the Erye operation; (2) relocating Erye to a new factory which is under construction; (3) continuing the research and development for more selected new drug projects; and (4) building up sales network for new drug distribution. Erye’s operating activities may not generate sufficient cash to meet the anticipated cash requirements. Pursuant to the terms and conditions of the Joint Venture Agreement, although future dividend distributions to EET and NeoStem will be made in proportion to their respective ownership interests in Erye, for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses.

General economic recession could negatively impact demand for our services.

Economic recession, including attendant job loss and reduced consumer spending, could negatively impact the demand for our services.

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Any future acquisitions may expose us to additional risks.

We will continue to review acquisition prospects that would complement our current business, increase the size and geographic scope of our operations or otherwise offer revenue generating or other growth opportunities. The financing for any of these acquisitions could dilute the interests of our stockholders, result in an increase in our indebtedness or both. Acquisitions may entail numerous risks, including:

Our failure to successfully complete the integration of any acquired business could have a material adverse effect on our business, financial condition and operating results. In addition, there can be no assurance that we will be able to identify additional suitable acquisition candidates or consummate additional acquisitions on favorable terms.

If the market for the combined company’s products and/or technology does not experience significant growth or if the combined company’s products and/or technology do not achieve broad acceptance, the combined company’s operations will suffer.

We cannot accurately predict the future growth rate or the size of the market for the combined company’s products and technology. The expansion of this market depends on a number of factors, such as:

If we are unable to manage growth in our business, our prospects may be limited and our future results of operations may be adversely affected.

We intend to expand our sales and marketing programs, our manufacturing capacity, and our provision of innovative therapies as needed to meet future demand. Any significant expansion may strain our managerial, financial and other resources. If we are unable to manage our growth, our business, operating results and financial condition could be adversely affected. We will need to continually improve the combined company’s operations, financial and other internal systems to manage our growth effectively, and any failure to do so may lead to inefficiencies and redundancies, and result in reduced growth prospects and diminished operational results.

Risks Related to our Common Stock

NeoStem Common Stock has historically had limited trading volume.

NeoStem’s Common Stock currently trades on the NYSE Amex (formerly known as the American Stock Exchange) and, until August 9, 2007, was traded on the Over-the-Counter Bulletin Board, an electronic, screen-based trading system operated by the National Association of Securities Dealers, Inc. NeoStem Common Stock has generally been thinly traded and, although trading volume has increased since it has commenced trading on the NYSE Amex, we cannot assure you that the NeoStem Common Stock will continue to have improved liquidity or that it will increase above current levels. NeoStem’s Class A Warrants also trade on the NYSE Amex, but have had very limited trading volume. As a result, an investor may find it difficult to dispose of NeoStem Common Stock or NeoStem Class A Warrants.

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Our stock price could be volatile.

The price of NeoStem’s Common Stock has fluctuated widely in the past and may be more volatile in the future. Factors such as the announcements of government regulation, new products or services introduced by us or by our competition, healthcare legislation, trends in health insurance, litigation, fluctuations in operating results, our success in commercializing our business, market conditions for healthcare stocks in general as well as economic recession could have a significant impact on the future price of our common stock. The historically low volume of trading in NeoStem’s Common Stock has made it more vulnerable, and it may continue to be more vulnerable, to rapid changes in price in response to market conditions.

Our stock and Class A Warrants may be delisted from the NYSE Amex.

In connection with the Merger, NeoStem will be issuing more shares of NeoStem Common Stock and securities convertible or exchangeable into NeoStem Common Stock than are currently outstanding. As such, the NYSE Amex takes the position such a transaction is deemed a “reverse merger” pursuant to Section 341 of the Company Guide. Therefore, the combined company will be eligible for continued listing on the NYSE Amex only if the post-transaction entity can meet the standards for initial listing. There are a number of ways for NeoStem to satisfy the conditions for initial listing. Among other criteria, most likely the common stock of the combined company would need to have a minimum market price of $2 per share. In attempting to address the minimum price-per-share requirement, NeoStem is asking its stockholders to authorize an amendment to NeoStem’s Amended and Restated Certificate of Incorporation to allow for a reverse stock split within the range of 1:2 to 1:5 (see NeoStem Proposal No. 5 of this joint proxy statement/prospectus). However, there can be no guarantee that effecting such a reverse stock split would put the market price of the combined company’s common shares above the requisite minimum for initial listing on the NYSE Amex. Furthermore, even if the NeoStem Common Stock satisfies the minimum price per share threshold, there can be no guarantee that NeoStem could comply with the other applicable Company Guide rules. For instance, on a pro forma basis, while NeoStem currently meets the initial listing standards regarding the market value of its public float, this test will be determined based upon the market value of the NeoStem Common Stock at the time of the Merger. Other tests which will be similarly impacted include stockholders equity and market capitalization. NeoStem has filed with the NYSE Amex a new listing application relating to the post-transaction combined company. There is no guarantee that the combined company will continue to meet the criteria for initial listing or that the NYSE Amex will accept NeoStem’s application relating to the post-transaction combined company.

In the event the stock of the combined company were not listed with the NYSE Amex, there is no guarantee that the combined company could satisfy the listing requirements necessary to list on any other public exchange. In such a scenario, the value of NeoStem’s securities could be materially adversely affected.

Risks related to penny stocks.

Our common stock may be subject to regulations prescribed by the SEC relating to “Penny Stock.” The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price (as defined in such regulations) of less than $5.00 per share, subject to certain exceptions. If our common stock meets the definition of a penny stock, it will be subject to these regulations, which impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (as defined in Rule 501 of the Securities Act.

Future sales of NeoStem Common Stock issued in connection with the Merger may depress its stock price.

The shares of NeoStem Common Stock issued to CBH security holders, including RimAsia, will be freely tradable in the public market; provided, however that of such shares, approximately 17,414,060 shares shall be prohibited from being sold through the expiration of the six-month period immediately following the consummation of the Merger pursuant to the terms of lock-up and voting agreements with NeoStem. The market price of NeoStem Common Stock could fall in response to sales of a large number of shares of NeoStem Common Stock in the market after the Merger or in response to the perception that sales of a large number of shares could occur. In addition, these sales could create the perception by the public of difficulties or problems with NeoStem’s products and services. As a result, these sales also might make it more difficult for NeoStem to sell equity or equity-related securities in the future at a time and price that its board of directors deems appropriate.

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Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

The company we are acquiring in the Merger reported several material weaknesses in its internal controls and concluded that it did not have effective internal control over financial reporting as of December 31, 2008. If (i) we fail to (a) remediate the material weaknesses identified in CBH’s internal control over financial reporting and (b) integrate the internal controls of CBH and NeoStem, or (ii) we fail to maintain the adequacy of internal controls over the combined company, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, as such standards are modified, supplemented or amended from time to time (the “Sarbanes-Oxley Act”). Failure to achieve and maintain an effective internal control environment could have a material adverse effect on our stock price and could result in our financial statements being unreliable or loss of investor confidence in our financial reports. Additionally, failure to maintain effective internal control over our financial reporting could result in government investigation or sanctions by regulatory authorities.

During the course of testing our internal controls, we may identify, and have to disclose, material weaknesses or significant deficiencies in our internal controls that will have to be remediated. Implementing any appropriate changes to our internal controls may require specific compliance training of our directors, officers and employees, entail substantial costs in order to modify our existing accounting systems, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. In addition, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements may negatively affect our stock price.

Risks Related to the Nature of NeoStem’s Business

NeoStem is beginning to pursue business opportunities in China in addition to those contemplated by the Agreement and Plan of Merger, and it is expected that NeoStem’s business will develop an increasingly significant presence in China. Please see “Risks Related to the Combined Company — Risks Related to Doing Business in China” above.

If the potential of stem cell therapy to treat serious disease is not realized, the value of our stem cell collection, processing and storage business and our development programs and licensed technology could be significantly reduced.

The potential of stem cell therapy to treat serious disease is currently being explored. Stem cell therapy is not a commonly used procedure and it has not been proven in clinical trials that stem cell therapy will be an effective treatment for diseases other than those currently addressed by hematopoietic stem cell transplants (hematopoietic stem cells are the stem cells from which all blood cells are made). No stem cell products have been successfully developed and commercialized to date, and none have received regulatory approval in the United States or internationally. Stem cell therapy may be susceptible to various risks, including undesirable and unintended side effects, unintended immune system responses, inadequate therapeutic efficacy or other characteristics that may prevent or limit its approval or commercial use. The value of our stem cell collection, processing and storage business and our development programs could be significantly reduced if the use of stem cell therapy to treat disease is not proven effective in the near future.

Because the stem cell industry is subject to rapid technological and therapeutic changes, our future success will materially depend on the viability of the commercial use of stem cells for the treatment of disease.

Our success materially depends on the development of therapeutic treatments and cures for disease using stem cells. The broader medical and research environment for such treatments and cures critically affects the utility of stem cells, the services we offer to the public, and our future success. The value of stem cells in the treatment of disease is subject to potentially revolutionary technological, medical and therapeutic changes. However, future technological and medical developments or improvements in conventional therapies could render the use of stem cells and our services and equipment obsolete and unmarketable. As a result, there can be no assurance that our services will provide competitive advantages over other technologies. If technological

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or medical developments arise that materially alter the commercial viability of our technology or services, we may be forced to incur significant costs in replacing or modifying equipment in which we have already made a substantial investment prior to the end of its anticipated useful life. Alternatively, significant advances may be made in other treatment methods or in disease prevention techniques which could significantly reduce or entirely eliminate the need for the services we provide. The materialization of any of these risks could have a material adverse effect on our business, financial condition, our results of operations or our ability to operate at all.

We may be forced to undertake lengthy and costly efforts to build market acceptance of our stem cell collection, processing and storage services as well as stem cell therapy in general, the success of which is critical to our profitability. There can be no assurance that our services or stem cell therapy in general will gain market acceptance. To date, only a minimal number of collections have been performed at the collection centers in our network.

Our future success in the adult stem cell business depends on the successful and continued market acceptance of our collection, processing and storage services as well as stem cell therapy in general. Broad use and acceptance of our service requires marketing expenditures and education and awareness of consumers and medical practitioners who, under present law, must order stem cell collection and treatment on behalf of a potential customer. The time and expense required to educate and to build awareness of our services and their potential benefits and stem cell therapy in general could significantly delay market acceptance and our ultimate profitability. The successful commercialization of our services will also require that we satisfactorily address the concerns of medical practitioners in order to avoid potential resistance to recommendations for our services and ultimately reach our potential consumers. No assurances can be given that our business plan and marketing efforts will be successful, that we will be able to commercialize our services, or that there will be market acceptance of our services or clinical acceptance of our services by physicians sufficient to generate any material revenues for us. To date, only a minimal number of collections have been performed at the collection centers in our network.

Ethical and other concerns surrounding the use of stem cell therapy may increase the regulation of or negatively impact the public perception of our stem cell services, thereby reducing demand for our services.

The use of embryonic stem cells for research and stem cell therapy has been the subject of debate regarding related ethical, legal and social issues. Although our business only utilizes adult stem cells and does not involve the more controversial use of embryonic stem cells, the use of other types of human stem cells for therapy could give rise to similar ethical, legal and social issues as those associated with embryonic stem cells. Additionally, it is possible that our business could be negatively impacted by any stigma associated with the use of embryonic stem cells if the public fails to appreciate the distinction between the use of adult versus embryonic stem cells. The commercial success of our business will depend in part on public acceptance of the use of stem cell therapy, in general, for the prevention or treatment of human diseases. Public attitudes may be influenced by claims that stem cell therapy is unsafe or unnecessary, and stem cell therapy may not gain the acceptance of the public or the medical community. Public pressure or adverse events in the field of stem cell therapy that may occur in the future also may result in greater governmental regulation of our business creating increased expenses and potential regulatory delays relating to the approval or licensing of any or all of the processes and facilities involved in our stem cell banking services. In the event that the use of stem cell therapy becomes the subject of adverse commentary or publicity, our business could be adversely affected and the market price for our common stock could be significantly harmed.

We operate in a highly regulated environment, and our failure to comply with applicable regulations, registrations and approvals would materially and adversely affect our business.

Historically, the FDA has not regulated banks that collect and store stem cells. More recent changes, however, require establishments engaged in the recovery, processing, storage, labeling, packaging or distribution of any Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) or the screening or testing of a cell tissue donor to register with the FDA. The registration requirement was effective as of January 2004. We registered our California lab in accordance with FDA HCT/Ps regulations but have since closed the lab and are in the process of updating our status with the FDA. Any third party processor that we retain to

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process our samples must be similarly registered with FDA and comply with HCT/Ps regulations. If we or our third party processor fail to register or update registration information in a timely way, we will be out of compliance with FDA regulations which could adversely affect our business. The FDA also adopted rules in May 2005 that regulate current Good Tissues Practices (cGTP). We may be or become subject to such regulations, and there can be no assurance that we will be able, or will have the resources, to comply. Future FDA regulations could also adversely impact or limit our ability to market or perform our services. In order to collect and store blood stem cells we must conduct (or arrange for the conduct of) a variety of laboratory tests which are regulated under the federal Clinical Laboratory Improvement Amendments (CLIA). Any facility conducting regulated tests must obtain a CLIA certificate of compliance and submit to regular inspection.

Some states require additional regulation and oversight of clinical laboratories operating within their borders and some impose obligations on out-of-state laboratories providing services to their residents. Many of the states in which we, our strategic partners or members of our collection network engage in collection, processing or storage activities have licensing requirements that must be complied with. Additionally, there may be state regulations impacting the use of blood products that would impact our business. We currently have a biologics license from the State of California. We also have two provisional licenses from the State of New York, which permit the Company to collect, process and store hematopoietic progenitor cells (“HPCs”) collected from New York residents, and also permit the solicitation in New York relating to the collection of HPCs. We received a third provisional license in January 2008, permitting the California facility to collect, process, store and use for medical research HPCs collected from New York residents. We are in the process of notifying the State of New York of the closure of our California facility. New England Cryogenic Center, Inc., or NECC, the cryogenic laboratory with whom we have formed a strategic alliance to provide processing and storage for consumers on the East Coast, to process and store for certain research purposes; and PCT, the facility with whom we have formed a strategic alliance to provide additional processing and storage capacity for commercial purposes at the cGMP level at its California and New Jersey facilities, have each represented to the Company that each has such licenses as are required to perform the services provided for under their respective agreements with the Company. Each such license is subject to certain limitations. There can be no assurance that we, our strategic partners or members of our collection center network will be able to obtain any necessary licenses required to conduct business in any states, or maintain licenses that are required and obtained with respect to such states, including California and New York. Failure by us or by any of our strategic partners to obtain or retain required licenses could negatively impact our business. Certain licensing requirements involve the need to hire medical directors and others with certain training and technical backgrounds and there can be no assurance that such individuals can be retained or will remain retained.

We may also be subject to state and federal privacy laws related to the protection of our customers’ personal health information and state and federal laws related to the security of such personal health information and other personal data to which we would have access through the provision of our services. In particular, we serve as a “business associate” of various health care providers in our collection center network who are obligated to comply with privacy and security standards adopted under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). As a business associate, we incur certain regulatory obligations, which will be changing over the next year as a result of amendments to HIPAA under the American Recovery and Reinvestment Act of 2009 (ARRA). Under ARRA, our privacy and security compliance burden will increase, and we will be subject to audit and enforcement by the federal government and in some cases, enforcement by state authorities. We will also be obligated to publicly disclose wrongful disclosures or losses of personal health information. We may be required to spend substantial amounts of time and money to comply with these requirements, any regulations and licensing requirements, as well as any future legislative and regulatory initiatives. Failure to comply with applicable regulatory requirements or delay in compliance may result in, among other things, injunctions, operating restrictions, and civil fines and criminal prosecution which would have a material adverse effect on the marketing and sales of our services and impair our ability to operate profitably or preclude our ability to operate at all in the future. NeoStem has transferred its processing and storage operations to NECC and PCT due to space constraints at its California, facility, which has been closed. Any delay in complying with licensing requirements applicable to such new processing and storage facilities could have a material adverse impact on our business.

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Our adult stem cell collection, processing and storage business was not contemplated by many existing laws and regulations.

The service that we provide is unique. It is not medical treatment, although it involves medical procedures. It is not clinical research, although we have recently entered the research and development arena relating to the VSEL technology and additional research participation is part of our business plan. Our research activities are subject to different regulations than our commercial activities. Our adult stem cell collection, processing and storage business was not contemplated by many of the regulations in the field in which we operate and as a result, there is often considerable uncertainty when we are analyzing the applicability of regulatory requirements. We have devoted significant resources to ensuring compliance with those laws that we believe to be applicable and when applicability of a law is in doubt, we have opted to comply in order to minimize risk. It is possible, however, that regulators may disagree with some of our interpretations of the law prompting additional compliance requirements or even enforcement actions. Such enforcement may have a material adverse effect on our operations or may require restructuring of our operations or impair our ability to operate profitably.

Our failure to comply with laws related to hazardous materials could materially harm us.

We are subject to state and federal laws regulating the proper disposal of biohazardous material. Although we believe we are currently in compliance with all such applicable laws, a violation of such laws, or the future enactment of more stringent laws or regulations, could subject us to liability for noncompliance and may require us to incur costs and/or otherwise have a material adverse effect on our ability to do business.

Side effects or limitations of the stem cell collection process or a failure in the performance of our cryopreservation storage facility or systems could harm our business and reputation.

To the extent a customer experiences adverse side effects from the stem cell collection process, the quantities of stem cells collected through our process are ultimately determined to be in inadequate therapeutic amounts, or our cryopreservation storage service is disrupted, discontinued or our ability to provide banked stem cells is impaired for any reason, our business and operations could be adversely affected. Any equipment failure that causes a material interruption or discontinuance in our cryopreservation storage of stem cell specimens could result in stored specimens being damaged and unable to be utilized. Adverse side effects of the collection process, limitations of the collection process (such as whether the collection process produces a sufficient quantity of stem cells for all future therapeutic applications) or specimen damage (including contamination or loss in transit to us), could result in litigation against us and reduced future revenue, as well as harm to our reputation. Our insurance may not adequately compensate us for any losses that may occur due to any such adverse side effects, limitations or failures in our system or interruptions in our ability to maintain proper, continued, cryopreservation storage services. Our systems and operations are vulnerable to damage or interruption from fire, flood, equipment failure, break-ins, tornadoes and similar events for which we do not have redundant systems or a formal disaster recovery plan and we may not carry sufficient business interruption insurance to compensate us for losses that may occur. Any claim of adverse side effects or limitations or material disruption in our ability to maintain continued uninterrupted storage systems could have a material adverse effect on our business, operating results and financial condition.

We are dependent on existing relationships with third parties to conduct our business.

Our process of collecting stem cells involves the injection of a “mobilizing agent” which causes the stem cells to leave the bone marrow and enter into the blood stream. The injection of this mobilizing agent is an integral part of the collection process. There is currently only one supplier of this mobilizing agent, and we are currently dependent upon our relationship with such supplier to maintain an adequate supply. Although we continue to explore alternative methods of stem cell collection, there can be no assurance that any such methods will prove to be successful. In the event that our supplier is unable or unwilling to continue to supply a mobilizing agent to us on commercially reasonable terms, and we are unable to identify alternative methods or find substitute suppliers on commercially reasonable terms, we may not be able to successfully commercialize our business. We are also currently using only one outside “apheresis” provider that also is expected to be the apheresis provider to certain of our collection centers being operated by members of our network. “Apheresis” is the process through which stem cells are extracted from a patient’s whole blood and it is an integral

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part of our collection process. Although other third parties could provide apheresis services, any disruption in the relationship with this service would cause a delay in the delivery of our services. In order to successfully commercialize our business, we will continue to depend upon our relationship with such companies or we or the collection centers operated by members of our network will need to develop internal capabilities to provide this service and obtain appropriate licensure. See also “Our research and development activities present additional risks” for additional risks related to our dependence on third parties for development of our VSEL technology.

Our success will depend in part on establishing and maintaining effective strategic partnerships and collaborations, which may impose restrictions on our business and subject us to additional regulation.

A key aspect of our business strategy is to establish strategic relationships in order to gain access to critical supplies, to expand or complement our research and development or commercialization capabilities, or to reduce the cost of research and development or commercializing services on our own. There can be no assurance that we will enter into such relationships, that the arrangements will be on favorable terms or that such relationships will be successful. Relationships with licensed professionals such as physicians may be subject to state and federal laws including fraud and abuse regulations restricting the referral of business, prohibiting certain payments to physicians, or otherwise limiting our options for structuring a relationship. If our services become widely reimbursable by government or private insurers, we could be subject to additional regulation and perhaps additional limitations on our ability to structure relationships with physicians. Additionally, state regulators may impose restrictions on the types of business relationships into which licensed physicians or other licensed professionals may enter. For example, many states restrict or prohibit the employment of licensed physicians by for-profit corporations, or the “corporate practice of medicine.” Failure to comply with applicable fraud and abuse regulations or other regulatory requirements could result in civil fines, criminal prosecution or other sanctions. Even if we do enter into these arrangements, we may not be able to maintain these relationships or establish new ones in the future on acceptable terms. If we fail to structure our relationships with physicians in accordance with applicable fraud and abuse laws or other regulatory requirements it could have a material adverse effect on our business. Furthermore, our research arrangements may require us to grant certain rights to third parties, including exclusive rights or may have other terms that are burdensome to us. If any of our research partners terminate their relationship with us or fail to perform their obligations in a timely manner, our research and development activities or commercialization of our services may be substantially impaired or delayed.

We are dependent upon our management, scientific and medical personnel and we may face difficulties in attracting qualified employees or managing the growth of our business.

Our future performance and success are dependent upon the efforts and abilities of our management, medical and scientific personnel. Furthermore, our future growth will require hiring a significant number of qualified technical, medical, scientific, commercial, business and administrative personnel. In some cases, licensure laws impose certain personnel requirements. Accordingly, recruiting and retaining such personnel in the future will be critical to our success. If we are not able to attract and retain, on acceptable terms, the qualified personnel necessary for the continued development of our business, including those required in order for us to obtain and maintain appropriate licensure, we may not be able to sustain our operations or achieve our business objectives. Our failure to manage growth effectively could limit our ability to achieve our commercialization and other goals relating to, and we may fail in developing, our new business.

Our research and development activities present additional risks.

Our research and development activities relating to the VSEL technology are subject to many of the same risks as our adult stem cell collection, processing and storage business, and there can be no assurance that we independently or through collaborations will successfully develop, commercialize or market the VSEL technology. Any sublicensing arrangements we may desire to enter into in connection with the development of this technology are subject to the prior approval of the University of Louisville and there can be no assurance they will give such approvals although they may not unreasonably withhold their approval. Further, we have development obligations under our exclusive license agreement with the University of Louisville pursuant to which we have licensed the VSEL technology. As we currently have minimal capacity to conduct research and

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development activities, to assist in meeting such development obligations we have entered into a sponsored research agreement with the University of Louisville pursuant to which research services are being provided. Accordingly, we are dependent on the University’s performance in developing the VSEL technology. Additional research projects are also being pursued. We will, however, require additional research and development capacity, and access to funds to undertake additional research projects and to meet our obligations under the license agreement and fully develop the VSEL technology and integrate it into our business, and expect losses to increase as our research and development efforts progress. In this regard, we have identified laboratory space in Cambridge, Massachusetts and are engaged in negotiations with the landlord. We have applied for SBIR grants and also anticipate seeking to obtain such funds through applications for other State and Federal grants, grants abroad, direct investments into SCTI, strategic arrangements as well as other funding sources to help offset all or a portion of these costs; however, there can be no assurance that such funds will be received. We must also develop increased internal research capability and sufficient laboratory facilities or establish relationships to provide such research capability and facilities. There can be no assurance that we will be able to establish such facilities or establish and maintain such relationships on commercially acceptable terms, if at all. Further, we must meet payment and other obligations under the VSELs license and sponsored research agreements. The VSELs license agreement requires the payment of certain license fees, royalties and milestone payments, payments for patent filings and applications and the use of due diligence in developing and commercializing the VSEL technology. The sponsored research agreement requires periodic and milestone payments. Our failure to meet financial or other obligations under the license or sponsored research agreements in a timely manner could result in the loss of some or all of our rights to proprietary technology (as an example, portions of the license may be converted to a non-exclusive license or could be terminated entirely), and/or we could lose our right to have the University of Louisville conduct research and development efforts.

The commercial viability of our VSEL technology is subject to substantially the same risks as our adult stem cell collection, processing and storage business, but it may also depend upon our ability to successfully expand the number of VSELs collected through our adult stem cell collection process into a therapeutically viable amount as well as the utility of VSELs for therapeutic purposes. As the number of VSELs which can be isolated from the adult peripheral blood collected is relatively small, the ability to create a therapeutic quantity of VSELs from a small number of cells may be essential to effectively using VSELs. There are many biotechnology laboratories attempting to develop stem cell expansion technology, but to date, stem cell expansion techniques are very inefficient and typically the target cells stop dividing naturally, keeping the yield low. A critical aspect of our adult stem cell collection and banking service relating to the VSEL technology could therefore be the utilization of stem cell expansion processes, and there can be no assurance that such technology will be effective or available at all.

Moreover, stem cell collection and harvesting techniques are rapidly developing and could undergo significant change in the future. Such rapid technological development could result in our VSEL technology becoming obsolete prior to its successful integration into our collection, processing and storage business. Successful biotechnology development in general is highly uncertain and is dependent on numerous factors, many of which are beyond our control. Technology that appears promising in the early phases of development may fail to be successfully commercialized for numerous reasons, including, but not limited to competing technologies for the same indication.

We believe that the VSEL technology is properly classified under the FDA’s HCT/P regulatory paradigm and should not be classified as a medical device or as a biologic or drug. There can be no assurance that the FDA would agree that this category of regulatory classification applies to the VSEL technology, and the reclassification of VSELs technology could have adverse consequences for us and make it more difficult or expensive for us to conduct our business by requiring regulatory clearance, approval and/or compliance with additional regulatory requirements.

If there is any decline in interest in medical tourism, there could be a material adverse effect on the business, financial condition and results of operations of the combined company.

We plan to include medical tourism in our business strategy by providing innovative, safe, and effective therapies abroad that are not yet approved in the United States. If the anticipated growth of medical tourism does not occur over the next few years, or if fewer people travel abroad for the purpose of medical care, there

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could be a resulting decline in our results of operations. Also, any American governmental approval of therapies and technologies offered in China by us could decrease the American public’s reliance on medical tourism, and could therefore detract from the combined company’s business. Any such setbacks to our business strategy could harm the business, financial condition and operating results of the combined company.

Uninsured claims and litigation could adversely impact our operating results.

We expect to have insurance coverage against operating hazards, including product liability claims and personal injury claims related to our products and services, to the extent deemed prudent by our management and to the extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be sufficient to fully indemnify us against liabilities arising out of pending and future claims and litigation. This insurance has deductibles or self-insured retentions and contains certain coverage exclusions. The insurance does not cover damages from breach of contract by us or based on alleged fraud, gross negligence, misrepresentation or other deceptive trade practices. Insurance and customer agreements do not provide complete protection against losses and risks, and our results of operations could be adversely affected by unexpected claims not covered by insurance.

Risks Related to Competition — NeoStem Business

The stem cell preservation market has and continues to become increasingly competitive.

We may face competition from companies with far greater financial, marketing, technical and research resources, name recognition, distribution channels and market presence than us, who are marketing or developing new services that are similar to the services that are now being or may in the future be developed by us. There can be no assurance that we will be able to compete successfully.

For example, in the established market for cord blood stem cell banking, the growth in the number of families banking their newborn’s cord blood stem cells has been accompanied by an increasing landscape of competitors. Our business, which has been more recently developed, already faces competition from other established operators of stem cell preservation businesses and providers of stem cell storage services. We believe that certain of our competitors have established stem cell banking services to process and store stem cells collected from adipose tissue (fat tissue). This type of stem cell banking will require partnering with cosmetic surgeons who perform liposuction procedures. In addition, we believe the use of adult stem cells from adipose tissue will require extensive clinical trials to prove the safety and efficacy of such cells and the enzymatic process required to extract adult stem cells from fat. From a technology perspective this ability to expand a small number of stem cells could present a competitive alternative to stem cell banking. The ability to create a therapeutic quantity of stem cells from a small number of cells is essential to using embryonic stem cells and would be desirable to treat patients who can only supply a small number of their own stem cells. There are many biotechnology laboratories attempting to develop stem cell expansion technology, but to date, stem cell expansion techniques are very inefficient and typically the target cells stop dividing naturally, keeping the yield low. Failure of stem cell expansion technology could have an adverse effect on our ability to fully utilize our VSEL technology, which will be dependent upon access to reliable stem cell expansion technology. However, even though reliable stem cell expansion technology may ease some of the limitations of the competitive alternatives to our business, it would also allow us to utilize the VSEL technology and also complement adult stem cell banking by allowing individuals to extend the banking of an initial collection of cells for many applications.

We also understand that other technologies are being developed which claim the ability to harvest stem cells through a variety of other techniques, such as turning skin cells into cells that behave like embryonic stem cells or harvesting stem cells from the pulp of baby teeth. It is possible that such technologies, or other technologies, will prove to be more successful, have a faster rate of market penetration or have broader application than ours. It is also possible that technological or medical breakthroughs by our current or future competitors will render NeoStem’s business of stem cell preservation commercially or otherwise unappealing or obsolete. In addition, NeoStem believes that one’s use of his or her own (autologous) stem cells presents fewer risks and increases therapeutic value of stem cell therapy but NeoStem could nonetheless face competition from companies seeking to promote the benefits of third party donors.

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In the event that we are not able to compete successfully with our current or potential competitors, it may be difficult for us to grow our revenue and maintain our existing business without incurring significant additional expenses to try to refine our technology, services or approach to our business to better compete, and even then there would be no guarantee of success.

To the extent NeoStem is enabling the delivery of therapies in the PRC from which it may derive revenues, others may provide competing therapies.

We may face competition in the future from established cord blood banks and some hospitals.

Cord blood banks such as ViaCord (a division of ViaCell International, a wholly-owned subsidiary of PerkinElmer, Inc.) or Cryo-Cell International may be drawn to the field of stem cell collection because their processing labs and storage facilities can be used for processing adult stem cells from peripheral blood and their customer lists may provide them with an easy access to the market. We estimate that there are approximately 56 cord blood banks in the United States, approximately 27 of which are autologous (donor and recipient are the same) and approximately 29 of which are allogeneic (donor and recipient are not the same). Hospitals that have transplant centers to serve cancer patients may elect to provide some or all of the services that we provide. We estimate that there are approximately 197 hospitals in the United States with stem cell transplant centers. All of these competitors may have access to greater financial resources. In addition, other established companies with greater access to financial resources may enter our markets and compete with us. There can be no assurance that we will be able to compete successfully.

Since healthcare insurers and other organizations may not pay or be permitted to pay for our products or may impose limits on reimbursements, our ability to become profitable could be reduced.

Successful sales of health care services and products depend in part upon the availability and amounts of reimbursement from third party healthcare payor organizations, including government agencies, private healthcare insurers and other healthcare payors, such as health maintenance organizations and self-insured employee plans. There is considerable pressure to reduce the cost of therapeutic products, and government and other third party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement for new therapeutic products. Uncertainty exists as to the reimbursement status of newly approved healthcare products or novel therapies such as ours. We can give no assurance that reimbursement will be provided by such payors at all or without substantial delay or, if such reimbursement is provided, that the approved reimbursement amounts will be sufficient to enable us to sell products we develop on a profitable basis.

Risks Related to Intellectual Property — NeoStem Business

There is significant uncertainty about the validity and permissible scope of patents in the biotechnological industry. We may not be able to obtain patent protection.

There can be no assurance that the patent applications to which we hold rights will result in the issuance of patents, or that any patents issued or licensed to our company will not be challenged and held to be invalid or of a scope of coverage that is different from what we believe the patent’s scope to be. Further, there can be no assurance that any future patents related to these technologies will ultimately provide adequate patent coverage for or protection of our present or future technologies, products or processes. Our success will depend, in part, on whether we can obtain patents to protect our own technologies; obtain licenses to use the technologies of third parties if necessary, which may be protected by patents; protect our trade secrets and know-how; and operate without infringing the intellectual property and proprietary rights of others.

We may be unable to protect our intellectual property from infringement by third parties.

Despite our efforts to protect our intellectual property, third parties may infringe or misappropriate our intellectual property or may develop intellectual property competitive to ours. Our competitors may independently develop similar technology, duplicate our processes or services or design around our intellectual property rights. As a result, we may have to litigate to enforce and protect our intellectual property rights to determine their scope, validity or enforceability. Intellectual property litigation is costly, time-consuming,

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diverts the attention of management and technical personnel and could result in substantial uncertainty regarding our future viability. The loss of intellectual property protection or the inability to secure or enforce intellectual property protection would limit our ability to develop and/or market our services in the future. This would also likely have an adverse affect on the revenues generated by any sale or license of such intellectual property. Furthermore, any public announcements related to such litigation or regulatory proceedings could adversely affect the price of our common stock.

Third parties may claim that we infringe on their intellectual property.

We also may be subject to costly litigation in the event our technology infringes upon another party’s proprietary rights. Third parties may have, or may eventually be issued, patents that would be infringed by our technology. Any of these third parties could make a claim of infringement against us with respect to our technology. We may also be subject to claims by third parties for breach of copyright, trademark or license usage rights. An adverse determination in any litigation of this type could require us to design around a third party’s patent, license alternative technology from another party or otherwise result in limitations in our ability to use the intellectual property subject to such claims. Litigation and patent interference proceedings could result in substantial expense to us and significant diversion of efforts by our technical and management personnel. An adverse determination in any such interference proceedings or in patent litigation to which we may become a party could subject us to significant liabilities to third parties or, as noted above, require us to seek licenses from third parties. If required, the necessary licenses may not be available on acceptable financial or other terms or at all. Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us, in whole or in part, from commercializing our products, which could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to obtain future financing when needed, we may not be able to pay fees relating to our licenses, patents or other intellectual property on a timely basis or at all, which could result in a loss of any or all of our intellectual property rights.

Our License Agreement with the University of Louisville requires, and other license agreements to which we are or may become a party in the future will or may require, us to pay license fees, royalties and milestone payments and fees for patent filings and applications. In addition, obtaining and maintaining patent protection depends, in part, on our ability to pay the applicable filing and maintenance fees. Our failure to meet financial obligations under our license agreements in a timely manner or our non-payment or delay in payment of our patent fees, could result in the loss of some or all of our rights to proprietary technology or the inability to secure or enforce intellectual property protection. The loss of any or all of our intellectual property rights would limit our ability to develop and/or market our services, which would materially adversely affect our business, financial condition and results of operations.

Risks Related to the SEC Informal Request — NeoStem Business

We have received an informal request for documents in connection with an SEC investigation of a third party matter

In connection with the SEC’s investigation of a matter referred to as a matter of a third party (the “Third Party”), we have received an informal request from the SEC, dated December 23, 2008, for the voluntary production of documents and information concerning the issuance, distribution, registration, purchase, sale and/or offer to sell our securities from January 1, 2007 to the present. The Third Party served as the lead underwriter of our public offering that was consummated in August 2007. We are cooperating fully with the SEC’s request. While there is no indication to date that we are the target of an investigation and the letter stated that the request should not be construed as an indication by the SEC or its staff that any violation of the federal securities laws has occurred, nor should it be considered a reflection upon any person, entity or security, there can be no assurance that the SEC will not take any action against us. Any determination by the SEC to take action against us could be costly and time consuming, could divert the efforts and attention of our directors, officers and employees from the operation of our business and could result in sanctions against us, any or all of which could have a material adverse effect on our business and operating results.

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Risks Related to the Nature of Erye’s Business

The following section described risks related to Erye’s business. Unless otherwise indicated in this section, references to “we,” “us” or “our company” in this section of the risk factors refer to Erye. Please see “Risks Related to the Combined Company — Risks Related to Doing Business in China” for a description of the risks Erye may encounter in China. For additional risk factors relating to the Merger with NeoStem, see “Risks Related to the Merger” and “Risks Related to the Joint Venture” above.

Risks related to our strategy and risks related to our inability to carry out such strategy.

Our strategy may be based on wrong assumptions and may be seriously flawed and may even in fact damage our performance, competitive position in the market and even our ability to survive in the market place. Even if the strategy is correct, we may never be able to successfully implement our strategy or implement the strategy in the desired fashion. These risk factors may cause major risks to our performance and even survival.

Risks related to the implementation of our operational and marketing plan.

Our operational plan and marketing plan may be seriously flawed and even in fact damage our performance, competitive position in the market and even our ability to survive in the market place. Even if the operational plan and the marketing plan are correct, we may never be able to successfully implement the plans or implement the strategy in the desired fashion. These risk factors may cause major risks to our performance and even survival.

Risks related to our products and services.

Our products and services involve direct or indirect impact on human health and life. The drugs, products and services provided may be flawed and cause dangerous side effects and even fatality in certain cases and lead to major business losses and legal and other liabilities and damages to us.

Risks related to product liability claims.

We face the risk of loss resulting from, and adverse publicity associated with, product liability lawsuits, whether or not such claims are valid. We may not be able to avoid such claims. In addition, our product liability insurance may not be adequate to cover such claims and we may not be able to obtain adequate insurance coverage in the future at acceptable costs. A successful product liability claim that exceeds our policy limits could require us to pay substantial sums.

Risks related to our technology and our platforms.

Our technologies and platforms may be seriously defective and flawed producing wrong and harmful results, exposing us to significant liabilities. Even if they are not defective or flawed, these technologies and platforms may become outdated, losing their value and thus affecting our competitive advantages.

Risks related to competition.

We compete with other companies, many of whom are developing or can be expected to develop products similar to ours. Our market is a large market with many competitors. Many of our competitors are more established than we are, and have significantly greater financial, technical, marketing and other resources than we presently possess. Some of our competitors have greater name recognition and a larger customer base. These competitors may be able to respond more quickly to new or changing opportunities and customer requirements and may be able to undertake more extensive promotional activities, offer more attractive terms to customers, and adopt more aggressive pricing policies. We cannot assure you that we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not harm our business.

Marketing risks.

Newly developed drugs and technologies may not be compatible with market needs. Because markets for drugs differentiate geographically inside China, we must develop and manufacture our products to accurately target specific markets to ensure product sales. If we fail to invest in extensive market research to understand

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the health needs of consumers in different geographic areas, we may face limited market acceptance of our products, which could have a material adverse effect on our sales and earnings.

Risks related to research and the ability to develop new drugs.

Our growth and survival depends on our ability to consistently discover, develop and commercialize new products and find new and improve on existing technologies and platforms. As such, if we fail to make sufficient investments in research, be attentive to consumer needs or do not focus on the most advanced technologies, our current and future products could be surpassed by more effective or advanced products of other companies.

Risks relating to difficulty in defending intellectual property rights from infringement.

Our success depends, in large part, on our ability to protect our current and future technologies and products and to defend our intellectual property rights. If we fail to protect our intellectual property adequately, competitors may manufacture and market products similar to ours. Numerous patents covering our technologies have been issued to us, and we have filed, and expect to continue to file, patent applications seeking to protect newly developed technologies and products in various countries, including China. Some patent applications in China are maintained in secrecy until the patent is issued. Because the publication of discoveries tends to follow their actual discovery by many months, we may not be the first to invent, or file patent applications on any of our discoveries. Patents may not be issued with respect to any of our patent applications and existing or future patents issued to or licensed by us may not provide competitive advantages for our products. Patents that are issued may be challenged, invalidated or circumvented by our competitors. Furthermore, our patent rights may not prevent our competitors from developing, using or commercializing products that are similar or functionally equivalent to our products.

We also rely on trade secrets, non-patented proprietary expertise and continuing technological innovation that we seek to protect, in part, by entering into confidentiality agreements with licensees, suppliers, employees and consultants. These agreements may be breached and there may not be adequate remedies in the event of a breach. Disputes may arise concerning the ownership of intellectual property or the applicability of confidentiality agreements. Moreover, our trade secrets and proprietary technology may otherwise become known or be independently developed by our competitors. If patents are not issued with respect to products arising from research, we may not be able to maintain the confidentiality of information relating to these products.

Risks relating to third parties that may claim that we infringe on their proprietary rights and may prevent us from manufacturing and selling certain of our products.

There has been substantial litigation in the pharmaceutical industry with respect to the manufacturing, use and sale of new products. These lawsuits relate to the validity and infringement of patents or proprietary rights of third parties. We may be required to commence or defend against charges relating to the infringement of patent or proprietary rights. Any such litigation could:

Although patent and intellectual property disputes within the pharmaceutical industry have often been settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and could include the long-term payment of royalties. These arrangements may be investigated by regulatory agencies and, if improper, may be invalidated. Furthermore, the required licenses may not be made available to us on acceptable terms. Accordingly, an adverse determination in a judicial or administrative proceeding or a failure to obtain necessary licenses could prevent us from manufacturing and selling some of our products or increase our costs to market these products.

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In addition, when seeking regulatory approval for some of our products, we are required to certify to regulatory authorities, including the SFDA, that such products do not infringe upon third party patent rights. Filing a certification against a patent gives the patent holder the right to bring a patent infringement lawsuit against us. Any lawsuit would delay regulatory approval by the SFDA. A claim of infringement and the resulting delay could result in substantial expenses and even prevent us from manufacturing and selling certain of our products.

Our launch of a product prior to a final court decision or the expiration of a patent held by a third party may result in substantial damages to us. Depending upon the circumstances, a court may award the patent holder damages equal to three times its loss of income. If we are found to infringe a patent held by a third party and become subject to such treble damages, these damages could have a material adverse effect on the results of our operations and financial condition.

Risks related to growth and the ability to manage growth.

For our company to survive and to succeed, we have to consistently grow. However, the management and we may not be able to achieve or manage such growth. The inability to achieve and maintain and manage growth will significantly affect our survival and market position.

Dependence on key personnel.

We depend on our key management and technological personnel. The unavailability or departure of such key personnel may seriously disrupt and harm our operations, business and the implementation of our business strategy and plans. Although most of these personnel are founders and shareholders of our company, there can be no assurance that we can be successful in retaining them.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the information in this joint proxy statement/prospectus, including the risk factors in this section, contains forward-looking statements that involve risks and uncertainties. These statements relate to, among other things, consummation of the Merger, future financial and operating results of the combined company and benefits of the pending Merger. In many cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these terms and other comparable terminology. These statements are only predictions. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including the risks factors described below, elsewhere in this joint proxy statement/prospectus and in NeoStem’s periodic filings with the SEC. Before making a decision regarding the Merger, you should be aware that the occurrence of the events described in these risk factors could harm NeoStem’s business, operating results, and financial condition.

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THE NEOSTEM SPECIAL MEETING OF STOCKHOLDERS

The accompanying proxy is solicited by the NeoStem Board of Directors for use at the special meeting of stockholders to be held on August [], 2009, at 11:00 a.m., local time, or at any postponement or adjournment thereof. The meeting will be held at the offices of NeoStem, Inc. located at 420 Lexington Avenue, Suite 450, New York, NY 10170. NeoStem’s telephone number is (212) 584-4180.

These proxy solicitation materials will be mailed on or about [], 2009 to all stockholders entitled to vote at the meeting.

Purpose of the NeoStem Special Meeting

The purpose of the NeoStem special meeting is to consider and vote upon proposals:

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In addition, the special meeting may involve the transaction of such other business as may properly come before the special meeting or any adjournment or postponement thereof.

Record Date and Outstanding Shares

The close of business on July 2, 2009 has been fixed by the NeoStem Board of Directors as the record date for determination of the stockholders of NeoStem entitled to notice of, and to vote at, the NeoStem special meeting or any postponement or adjournment of the NeoStem special meeting. Holders of record of NeoStem Common Stock and NeoStem Series B Preferred at the close of business on the record date are entitled to notice of, and to vote at, the NeoStem special meeting. As of the record date, there were approximately 1,291 stockholders of record holding an aggregate of 8,001,455 shares of NeoStem Common Stock, and approximately one stockholder of record holding an aggregate of 10,000 shares of NeoStem Series B Preferred.

Stock Ownership of Management and Certain Stockholders

As of the record date, the directors and executive officers of NeoStem collectively owned beneficially approximately 9.9% of the outstanding shares. Each director and officer of NeoStem, as well as RimAsia and Fullbright/EET, has entered into a lock-up and voting agreement and agreed to vote all shares of NeoStem Common Stock held by them (collectively, the “NeoStem Lock-Up Shares”) in favor of the issuance of NeoStem securities in connection with the Merger, which NeoStem Lock-Up Shares represent approximately 27.4% of the shares of NeoStem Common Stock outstanding as of July 2, 2009.

Voting Rights and Solicitation of Proxies; Expenses

This solicitation of proxies is made on behalf of the NeoStem Board of Directors and the cost thereof will be borne by NeoStem. Expenses will include reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation material regarding the special meeting to beneficial owners of NeoStem Common Stock and NeoStem Series B Preferred. Further solicitation of proxies may be made personally, by email or by telephone by NeoStem’s directors, officers and employees who will not receive additional compensation for the solicitation. NeoStem and CBH have retained the firm of The Altman Group, Inc. to provide services as proxy solicitor in connection with this joint proxy statement/prospectus. NeoStem and CBH estimate that the costs for such services will be in the aggregate amount of $17,500, including reimbursements for telephone call charges and out-of-pocket expenses. In paying the fees of The Altman Group, Inc., NeoStem will bear $10,000 of the cost and CBH will pay $7,500.

On July 2, 2009, there were outstanding 8,001,455 shares of NeoStem Common Stock and 10,000 shares of NeoStem Series B Preferred. Holders of record of NeoStem Common Stock at the close of business on July 2, 2009 will be entitled to one vote for each share held on each matter submitted to a vote of the stockholders of NeoStem. Holders of record of NeoStem Series B Preferred will be entitled to ten votes per share on each matter submitted to a vote of the stockholders of NeoStem. Shares of NeoStem Common Stock and NeoStem Series B Preferred vote together as one class. Unless the context otherwise requires, all references to NeoStem “stockholders” in this proxy statement refer to holders of NeoStem Common Stock and NeoStem Series B Preferred. Cumulative voting by stockholders is not permitted.

Vote Required

Votes required to approve the proposals presented to the NeoStem stockholders are as follows:

(a) The affirmative vote of a majority of the total votes cast in person or by proxy will be required for the approval of each of the following proposals:

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Abstentions and broker “non-votes” with regard to any such proposal are not considered to have been voted on the proposal and therefore will not have any effect on the vote for such proposals.

(b) The affirmative vote of the holders of a majority of the voting power outstanding as of the record date will be required for the approval of each of the following proposals:

If you abstain or do not instruct your broker how to vote with respect to these proposals, your abstention or broker non-vote will have the same effect as a vote against each of these proposals.

(c) The affirmative vote of the holders of a majority of the voting power outstanding as of the Record Date of (i) NeoStem Common Stock and NeoStem Series B Preferred Stock, voting together as a single class, and (ii) NeoStem Series B Preferred Stock and NeoStem Series D Preferred Stock, voting together as a single class, is required to approve the amendment to NeoStem’s Amended and Restated Certificate of Incorporation to increase the number of shares of NeoStem preferred stock authorized for issuance from 5,000,000 shares to 20,000,000 shares (and a corresponding increase in NeoStem’s total authorized shares from 505,000,000 to 520,000,000) (NeoStem Proposal No. 2).

If you abstain or do not instruct your broker how to vote with respect to this proposal, your abstention or broker non-vote will have the same effect as a vote against this proposal.

(d) The affirmative vote of a majority of the stockholders present in person or represented by proxy at the Special Meeting and entitled to vote will be required to approve an adjournment of the Special Meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the Special Meeting to approve the proposals submitted at the special Meeting (NeoStem Proposal No. 10).

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NeoStem’s stockholders will not have any rights of appraisal or similar dissenter’s rights with respect to any matter to be acted upon at the special meeting.

Each director and officer of NeoStem, as well as RimAsia and Fullbright, has entered into a lock-up and voting agreement and agreed to vote all shares of NeoStem Common Stock held by them (collectively, the “NeoStem Lock-Up Shares”) in favor of the issuance of NeoStem securities in connection with the Merger, which NeoStem Lock-Up Shares represent approximately 27.4% of the shares of NeoStem Common Stock outstanding as of July 2, 2009.

Quorum; Abstentions; Broker Non-Votes

A quorum must exist for the transaction of business at the stockholders’ meetings. For NeoStem, the presence at the meeting, in person, by remote communication or by proxy, of the holders of a majority of the total outstanding voting power is necessary to constitute a quorum for the transaction of business at NeoStem’s special meeting. Abstentions and broker “non-votes” (as defined below) are counted as present and entitled to vote for purposes of determining a quorum. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be considered part of the quorum.

Voting of Proxies; Revocation of Proxies

The proxy accompanying this joint proxy statement/prospectus is solicited on behalf of the NeoStem Board of Directors for use at the meeting. Please complete, date, and sign the accompanying proxy and promptly return it in the enclosed envelope or otherwise mail it to NeoStem.

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You may revoke your proxy at any time before it is exercised at the meeting by taking any of the following actions:

The NeoStem Board of Directors does not know of any matter that is not referred to in this joint proxy statement/prospectus to be presented for action at the meeting. If any other matters are properly brought before the meeting, the persons named in the proxies will have discretion to vote on such matters in accordance with their best judgment.

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THE CBH SPECIAL MEETING

The accompanying proxy is solicited by the CBH Board of Directors for use at the special meeting of stockholders to be held on August [], 2009, at 9:00 a.m., local time, or at any postponement or adjournment thereof, for the purposes set forth herein and in the accompanying Notice of Special Meeting of Stockholders. The special meeting will be held at the offices of NeoStem, Inc. located at 420 Lexington Avenue, Suite 450, New York, NY 10170. CBH’s telephone number is (86) 512 6855 0568.

These proxy solicitation materials will be mailed on or about [], 2009 to all stockholders entitled to vote at the meeting.

Purpose of the CBH Special Meeting

The purpose of the CBH special meeting is to consider and vote upon proposals for:

Record Date and Outstanding Shares

The close of business on July 2, 2009 has been fixed by the CBH Board of Directors as the record date for determination of the stockholders of CBH entitled to notice of, and to vote at, the CBH special meeting or any postponement or adjournment of the CBH special meeting. Holders of record of CBH Common Stock, CBH Series A Preferred Stock and CBH Series B Preferred Stock at the close of business on the record date are entitled to notice of, and to vote at, the CBH special meeting. As of the record date, there were approximately 279 stockholders of record holding an aggregate of 37,132,313 shares of CBH Common Stock and one stockholder of record holding an aggregate of 6,653,656 shares of CBH Series B Preferred Stock.

There had recently been one holder of CBH Series A Convertible Preferred Stock (“CBH Series A Preferred Stock”), and such holder elected to convert the 25,000 shares of CBH Series A Preferred Stock held by her into CBH Common Stock, and to receive the merger consideration for the CBH Common Stock for such shares. Thereafter, the holder agreed to vote all shares of CBH Common Stock or CBH Series A Preferred Stock held by her in favor of the Merger, to the extent any such shares are outstanding as of the Record Date.

Stock Ownership of Management

As of the record date, the directors and executive officers of CBH collectively owned beneficially approximately 28.71% of the outstanding shares of CBH Common Stock. As of the record date, the directors and executive officers of NeoStem collectively owned beneficially approximately 1.82% of the outstanding shares of CBH Common Stock. In connection with execution of the Agreement and Plan of Merger, each of the officers and directors of CBH, and each of RimAsia, Erye and EET and certain holders of CBH Common Stock have entered into a lock-up and voting agreement, pursuant to which they have agreed to vote their shares of CBH Common Stock (collectively, the “CBH Lock-Up Shares”) in favor of the Merger and to the other transactions contemplated by the Agreement and Plan of Merger. The CBH Lock-Up Shares represent approximately 34.30% of the voting power of the CBH Common Stock and the CBH Series A Preferred Stock outstanding as of July 2, 2009 and also applies to additional shares beneficially owned by certain of such persons including spouses. In addition, the sole holder of the CBH Series B Preferred Stock has entered into a lock-up and voting agreement pursuant to which it has agreed to vote all shares of CBH Series B Preferred Stock held by it in favor of such proposal.

Voting Rights and Solicitation of Proxies; Expenses

This solicitation of proxies is made on behalf of the CBH Board of Directors and the cost thereof will be borne by CBH. Expenses will include reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation material regarding the special meeting to beneficial owners of CBH Common Stock, CBH Series A Preferred Stock and CBH Series B Preferred Stock. Further solicitation of proxies

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may be made personally, by email or by telephone by CBH’s directors, officers and employees who will not receive additional compensation for the solicitation. CBH and NeoStem have retained the firm of The Altman Group, Inc. to provide services as proxy solicitor in connection with this joint proxy statement/prospectus. NeoStem and CBH estimate that the costs for such services will be in the aggregate amount of $17,500, including reimbursements for telephone call charges and out-of-pocket expenses. In paying the fees of The Altman Group, Inc., CBH will bear $7,500 of the cost and NeoStem will pay $10,000.

On July 2, 2009, there were outstanding 37,132,313 shares of CBH Common Stock and 6,653,656 shares of CBH Series B Preferred Stock, all of which are entitled to vote with respect to the proposals presented in this joint proxy statement/prospectus. Each holder of CBH Common Stock and each holder of CBH Series B Preferred Stock of record at the close of business on July 2, 2009, is entitled to one vote for each share of CBH Common Stock held and one vote for each share of CBH Series B Preferred stock held.

Vote Required

The approval of the proposal regarding the adoption of the Agreement and Plan of Merger will require the affirmative vote of the holders of at least a majority of the outstanding voting power of the CBH Common Stock and the CBH Series A Preferred Stock, voting together as a single class. In addition, the adoption of the Agreement and Plan of Merger will require the approval of the holders of at least a majority of the shares of CBH Series B Preferred Stock outstanding as of the record date, voting as a separate class. If you abstain or do not vote, your abstention or non-vote will have the same effect as a vote against the Merger proposal.

In connection with execution of the Agreement and Plan of Merger, each of the officers and directors of CBH, and each of RimAsia, Erye and EET and certain holders of CBH Common Stock have entered into a lock-up and voting agreement, pursuant to which they have agreed to vote their shares of CBH Common Stock (collectively, the “CBH Lock-Up Shares”) in favor of the Merger and to the other transactions contemplated by the Agreement and Plan of Merger. The CBH Lock-Up Shares represent approximately 34.30% of the voting power of the CBH Common Stock and the CBH Series A Preferred Stock outstanding as of July 2, 2009 and also applies to additional shares beneficially owned by certain of such persons including spouses. In addition, the sole holder of the CBH Series B Preferred Stock has entered into a lock-up and voting agreement pursuant to which it has agreed to vote all shares of CBH Series B Preferred Stock held by it in favor of such proposal.

There had recently been one holder of CBH Series A Preferred Stock, and such holder elected to convert the 25,000 shares of CBH Series A Preferred Stock held by her into CBH Common Stock, and to receive the merger consideration for the CBH Common Stock for such shares. Thereafter, the holder agreed to vote all shares of CBH Common Stock or CBH Series A Preferred Stock held by her in favor of the Merger, to the extent any such shares are outstanding as of the Record Date.

The proposal regarding the approval of an adjournment of the special meeting, if necessary, will require the affirmative vote of a majority of shares entitled to vote on adjournment and represented either in person or by proxy at the special meeting.

Quorum; Abstentions; Broker Non-Votes

A quorum must exist for the transaction of business at the CBH special meeting. A quorum will require (i) the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the special meeting AND (ii) the presence in person or by proxy of the holders of a majority of the outstanding shares of CBH Series B Preferred Stock. Broker non-votes (i.e., shares held by brokers or nominees which are represented at the meeting, but that such broker or nominee is not empowered to vote an a particular proposal) and abstentions are counted as present and entitled to vote for purposes of determining a quorum. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be considered part of the quorum.

Abstentions and broker non-votes will have the same effect as a negative vote on the proposal relating to the Merger.

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Voting of Proxies; Revocation of Proxies

The proxy accompanying this joint proxy statement/prospectus is solicited on behalf of the CBH Board of Directors for use at the meeting. Please complete, date, and sign the accompanying proxy and promptly return it in the enclosed envelope or otherwise mail it to CBH. All properly signed proxies that CBH receives prior to the vote at the meeting and that are not revoked will be voted at the meeting according to the instructions indicated on the proxies or, if no direction is indicated, will be voted FOR the adoption and approval of the Agreement and Plan of Merger.

You may revoke your proxy at any time before it is exercised at the meeting by taking any of the following actions:

The CBH Board of Directors does not know of any matter that is not referred to in this joint proxy statement/prospectus to be presented for action at the meeting. If any other matters are properly brought before the meeting, the persons named in the proxies will have discretion to vote on such matters in accordance with their best judgment.

Rights of Dissenting Stockholders

The General Corporation Law of the State of Delaware grants appraisal rights in the Merger to the holders of CBH Common Stock and CBH Series B Preferred Stock. Under the General Corporation Law of the State of Delaware, CBH stockholders may demand in writing that CBH pay the fair value of their shares, together with interest, as determined by the Delaware Court of Chancery. Fair value takes into account all relevant factors but excludes any appreciation or depreciation from the accomplishment or expectation of the Merger. Stockholders who elect to exercise appraisal rights must comply with all of the procedures to preserve those rights. CBH has attached a copy of Section 262 of the General Corporation Law of the State of Delaware (which sets forth the appraisal rights) as Annex B to this joint proxy statement/prospectus.

Section 262 sets forth the required procedure a stockholder requesting appraisal rights must follow. The procedural rules are specific and must be followed completely. Failure to comply with the procedure may cause a termination of your appraisal rights. CBH is providing you only a summary of your rights and the procedure. The following information is qualified in its entirety by the provisions of Section 262. Please review Section 262 for the complete procedure. Neither NeoStem nor CBH will give you any notice other than as described in this joint proxy statement/prospectus and as required by the General Corporation Law of the State of Delaware.

Appraisal Rights Procedures

If you are a CBH stockholder and you wish to exercise your appraisal rights, you must satisfy the provisions of Section 262 of the General Corporation Law of the State of Delaware. Section 262 requires, in part, the following:

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An appraisal proceeding in the Chancery Court cannot be dismissed unless the Chancery Court approves. The Chancery Court may condition its approval upon any terms that it deems just.

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NEOSTEM PROPOSAL NO. 1
  
TO APPROVE THE ISSUANCE OF SECURITIES IN CONNECTION WITH THE MERGER
PURSUANT TO THE AGREEMENT AND PLAN OF MERGER
  
-AND-
  
CBH PROPOSAL NO. 1
  
TO ADOPT THE AGREEMENT AND PLAN OF MERGER

This section of the joint proxy statement/prospectus describes the proposed Merger. While NeoStem and CBH believe that the description in this section covers the material terms of the Merger and the related transactions, this summary may not contain all of the information that is important to you. You should carefully read this entire document and the other documents NeoStem and CBH have referred to in this joint proxy statement/prospectus for a more complete understanding of the Merger. The Agreement and Plan of Merger, dated as of November 2, 2008, together with Amendment No. 1 thereto, dated as of July 1, 2009, is attached to this joint proxy statement/prospectus as Annex A. All references to the “Agreement and Plan of Merger” refer to the agreement as amended.

Background of the Merger

Robin Smith, NeoStem’s Chairman and CEO, was introduced to CBH in 2005. She personally invested in CBH around that time and sat on its advisory board for approximately a one year period during the time in which CBH acquired its 51% interest in Erye. As an investor, Dr. Smith followed the progress of CBH and contacted Chris Peng Mao, CBH’s CEO approximately one and one-half years ago to better understand circumstances at the time surrounding an acquisition by CBH of Sheyang Enshi Pharmaceuticals and the subsequent decline in the trading price of the CBH Common Stock. These discussions also included acknowledgement by Dr. Smith and Mr. Mao of the value of Erye and means by which this value could be recognized. Further conversations led to discussion of the future of medical therapies and the advantages of merging eastern and western medicine as it relates to translational pharmaceutical remedies and stem cell therapy. Mr. Mao, at that time, began looking into stem cell companies in China that might enhance the NBS business model and expand CBH’s pipeline. Representatives of NeoStem and CBH visited multiple stem cell companies in China in early 2008. On May 16, 2008, after several days of meetings in New York City among representatives of NeoStem, CBH and the Shandong New Medicine Research Institute of Integrated Traditional and Western Medicine Limited Liability Company and counsel to such parties, the parties signed a letter of intent for the combination of all three parties. Following the letters of intent, the parties negotiated definitive documents in a series of numerous meetings and telephone calls over the next six months, resulting in the Agreement and Plan of Merger and the Share Exchange Agreement on November 2, 2008. The Share Exchange Agreement, described in NeoStem’s Current Report on Form 8-K filed on November 6, 2008, provided for a transaction whereby NeoStem would acquire rights in Shandong New Medicine Research Institute of Integrated Traditional and Western Medicine Limited Liability Company (“Shandong New Medicine”). Beginning in 2009, NeoStem embarked on other activities to expand its operations into the PRC through a stem cell division that will be in place of closing on the Share Exchange Agreement. NeoStem is terminating the Share Exchange Agreement and is in discussions with regard to acquiring an option to purchase Shandong New Medicine during the next three years.

What Am I Being Asked to Consider and Vote Upon?

NeoStem Stockholders

NeoStem stockholders, in considering NeoStem Proposal No. 1, are being asked to consider and vote upon the issuance of the NeoStem securities in connection with the Merger pursuant to the Agreement and Plan of Merger, as further described below.

CBH Stockholders

CBH stockholders, in considering CBH Proposal No. 1, are being asked to consider and vote upon the adoption of the Agreement and Plan of Merger and the approval of the Merger. Approval of the proposal to adopt the Agreement and Plan of Merger will constitute approval of all transactions contemplated by the

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Agreement and Plan of Merger, including, without limitation, the conversion of all outstanding shares of CBH preferred stock to CBH Common Stock immediately prior to the Merger.

The Merger

General

In general terms, the proposed Merger involves the merger of CBH with and into Subco, which is a wholly-owned subsidiary of NeoStem, with Subco as the surviving entity, pursuant to the terms and subject to the conditions set forth in the Agreement and Plan of Merger. The Agreement and Plan of Merger provides that at the time of the Merger, the only material assets of CBH will be CBH’s 51% ownership interest in Suzhou Erye Pharmaceuticals Company Ltd. (“Erye”), a Sino-foreign joint venture with limited liability organized under the laws of the People’s Republic of China (the “PRC”) and at least $550,000 cash, as more particularly described herein. A condition of the Merger is that CBH sell or transfer its subsidiary CBC prior to the Merger.

Upon consummation of the Merger, NeoStem will own 51% of the ownership interests in Erye, and EET will own the remaining 49% ownership interest. In connection with the execution of the Agreement and Plan of Merger, Subco and EET have negotiated a revised joint venture agreement (the “Joint Venture Agreement”), which, subject to approval by the requisite PRC governmental authorities, will become effective and will govern the rights and obligations with respect to their respective ownership interests in Erye. Pursuant to the terms and conditions of the Joint Venture Agreement, dividend distributions to EET and Subco will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses. In the event of the sale of all of the assets of Erye or liquidation of Erye, NeoStem will be entitled to receive the return of such additional paid-in capital before distribution of Eyre’s assets is made based upon the ownership percentages of NeoStem and EET, and upon an initial public offering of Erye which raises at least 50,000,000 RMB (or approximately U.S. $7,300,000), NeoStem will be entitled to receive the return of such additional paid-in capital. For a further discussion of the Joint Venture Agreement, see the section “The Agreement and Plan of Merger — The Joint Venture Agreement,” below.

Pursuant to the terms of the Merger, all of the shares of CBH Common Stock, issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, 7,150,000 shares of NeoStem Common Stock. Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia, a principal stockholder of NeoStem and the sole holder of shares of CBH Series B Preferred Stock, all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, (i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of NeoStem Series C Preferred Stock, each with a liquidation preference of $1.125 per share and initially convertible into 9,086,124 shares of NeoStem Common Stock at an initial exercise price of $0.90, contingent upon RimAsia’s supplying $1,600,000 in transaction funding pursuant to the terms of the Funding Agreement, of which RimAsia has already provided approximately $1,000,000. Three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited (a wholly-owned subsidiary of EET, which is the holder of 49% of the interests in Erye) to incentivize such recipients to approve and/or assist with Merger-related transactions.

At the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Steven Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of CBH to Messrs. Globus and Mao. NeoStem will bear 50% of up to $450,000 of CBH’s expenses post-merger, and satisfaction of the liabilities of Messrs. Globus and Mao will count toward that obligation.

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For assistance in effecting the Merger, 125,000 shares of NeoStem Common Stock will be issued to EET. In addition, an aggregate of 203,338 shares of NeoStem Common Stock will be issued to Shi Mingsheng (the Chairman of the Board of Directors of Erye and a holder of approximately two-thirds of EET) and Madam Zhang Jian (General Manager of Erye and a holder of approximately 10% of EET) in connection with the transactions contemplated by the Merger after the timely receipt of all PRC approvals.

Pursuant to the terms of the Exchange Offer (as defined on page [293]) and only in the event the Merger is consummated and the related post-closing obligations are satisfied, each holder of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may exchange all of such holder’s warrants to purchase one share of CBH Common Stock for Class C Warrants to purchase 0.24038 shares of NeoStem Common Stock at an exercise price of $2.50 per share. It is a condition to the consummation of the transactions contemplated by the Agreement and Plan of Merger that the holders of ALL of the outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) must tender their Existing CBH Warrants in exchange for the Class C Warrants being offered by NeoStem in the Exchange Offer; however, such condition may be waived by NeoStem in its sole discretion. In the event NeoStem, in its sole discretion, waives such closing condition and the transactions contemplated by the Agreement and Plan of Merger are consummated, then holders of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may, in accordance with the terms of such holder’s warrants, may elect to receive a cash payment for their Existing CBH Warrants equal to the Black Scholes value of the warrant on the date of such request. If the holder of the warrant does not make such election, then all of such holder’s warrants to purchase shares of CBH Common Stock shall be replaced with a new warrant (each a “NeoStem Class E Warrant”) substantially in the form of such holder’s existing warrant evidencing the right to purchase 0.19255 shares of NeoStem Common Stock with the exercise price per share adjusted such that the aggregate exercise price of the NeoStem Class E Warrant is the same as the aggregate exercise price of the warrant in effect immediately prior to the Effective Time.

The transactions will require, among other things, the approval by the relevant PRC and other governmental organizations of the Agreement and Plan of Merger, the Joint Venture Agreement, and the articles of incorporation of Erye. More specifically, the Agreement and Plan of Merger, and the Joint Venture Agreement, and the articles of incorporation of Erye will need to be approved by the Suzhou Bureau of Foreign Trade and Economic Cooperation Foreign Investment Administration Department and all other requisite authorities, and the articles of incorporation of Eyre will need to be filed with and the new business license of Eyre will need to be issued by, the Suzhou Administration of Industry and Commerce or other requisite authorities. The approval and registration process will normally take approximately one month. There is no assurance that the requisite approvals and registrations can be obtained and completed at a timely basis, if at all, or can be obtained and completed without the Agreement and Plan of Merger, and/or the Joint Venture Agreement, and/or the articles of incorporation of Erye being amended or revised materially pursuant to the requests of corresponding approval and/or registration authorities.

There can be no assurance the governmental approvals from the relevant PRC government authorities and other governmental organizations will be received on a timely basis or at all. The parties understand that under PRC law, they may not be able to obtain certain approvals until after closing. If the Merger closes without prior approval from any PRC Governmental Authority, the parties shall at Closing either permit NeoStem to defer delivery of any NeoStem securities to holders of CBH securities through a provision in the certificate of merger or otherwise, or enter into an escrow agreement on terms satisfactory to NeoStem, such that in either event consummation of the Merger or issuance of all consideration to be paid or issued by NeoStem in connection with, related to, or contingent upon the consummation of the Merger may be deferred or held back by NeoStem, or held in escrow, in each case subject to an absolute right of NeoStem to receive back all such consideration and rescind the Merger and all related transactions if any such PRC regulatory approvals are not obtained within a reasonable period of time after Closing (such time period to be fixed in the escrow agreement, but not in excess of 45 days).

The Agreement and Plan of Merger acknowledges that the share numbers and prices applicable to the Agreement and Plan of Merger and the transactions contemplated thereby will be appropriately adjusted to reflect any reverse stock split that NeoStem may undertake at the time of the Merger.

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Additional Information

For further detail regarding the Merger and the transactions contemplated thereby, see the sections “Structure of the Merger” and “The Agreement and Plan of Merger,” below. Any summary information contained in this joint proxy statement/prospectus may not contain all of the information that is important to the stockholders of NeoStem and CBH and thus any such descriptions are qualified in their entirety by reference to the Agreement and Plan of Merger and the Amendment No. 1 thereto, attached as Annex A hereto, which you are urged to read carefully and in their entirety.

Issuance of Equity Grants in Connection with the Merger

Please note that the Agreement and Plan of Merger acknowledges that in its discretion the Compensation Committee of NeoStem’s Board of Directors shall have the authority to grant, under any equity compensation plan or arrangement, an aggregate of 1,000,000 shares (or shares and options to purchase 1,000,000 shares, in any combination) of NeoStem Common Stock (the “Merger Bonus Shares”) to (i) its officers, consultants and advisors upon the Closing of the Merger and (ii) such officers, significant employees and/or directors of Erye following receipt of all PRC approvals after the Closing of the Merger, as the Compensation Committee shall determine in connection with the closing of the Merger transactions.

Any such grants would be made under the NeoStem, Inc. 2009 Equity Compensation Plan (the “2009 Plan”) or the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”), as appropriate, and subject to the approval of the 2009 Non-U.S. Plan at the Special Meeting. It is anticipated that 650,000 Merger Bonus Shares would be allocated for issuance under the 2009 Plan, and 350,000 Merger Bonus Shares would be allocated for issuance under the 2009 Non-U.S. Plan. Accordingly, NeoStem stockholders are also being asked to consider and vote upon an amendment to the 2009 Plan to increase the number of shares of NeoStem Common Stock authorized for issuance thereunder from 3,800,000 to 9,750,000 shares, which increase includes certain shares to be allocated to the Merger Bonus Shares. At NeoStem’s special meeting, the stockholders of NeoStem will also consider the adoption of the 2009 Non-U.S. Plan. For further details, see NeoStem Proposal No. 6 (regarding the increase in shares authorized for issuance under the 2009 Plan) and NeoStem Proposal No. 7 (regarding the adoption of the 2009 Non-U.S. Plan).

It is currently anticipated that the following persons will receive shares, or options to purchase shares, of NeoStem Common Stock as Merger Bonus Shares and in connection with the Merger: Robin L. Smith (175,000 shares), Catherine M. Vaczy (150,000 shares), Shi Mingsheng (175,000 shares), Madam Zhang Jian (175,000 shares), and two NeoStem consultants or advisors (an aggregate of 200,000 shares or options). The grants to Dr. Smith, Ms. Vaczy and the two consultants or advisors would be made under the 2009 Plan. The grants to Mr. Shi and Madam Zhang would be made under the 2009 Non-U.S. Plan, subject to approval of the 2009 Non-U.S. Plan at the Special Meeting. Based on the closing price of the NeoStem Common Stock on June 25, 2009 of $2.00, the amount of U.S. withholding taxes that NeoStem would pay in connection with the grants as allocated to the individuals above would be approximately $841,000. Such Merger-related grants are discussed in detail in NeoStem Proposal No. 6, below, in the section “Issuance of Equity Grants in Connection with the Merger,” and in NeoStem Proposal No. 7, below, in the section “Issuance of Equity Grants in Connection with the Merger.”

Reasons for the Merger

General — Board Considerations

Robin Smith and Steven Myers hold shares of CBH Common Stock. Accordingly, a special committee of the NeoStem Board of Directors, initially comprised of Mark Weinreb, Joseph Zuckerman and Richard Berman, which is now comprised of Joseph Zuckerman, Richard Berman and Drew Bernstein, was formed and such committee believes that that the proposed Merger is fair to, advisable for, and in the best interests of NeoStem and its stockholders. (The Special Committee, at a meeting on October 31, 2008, unanimously approved the Agreement and Plan of Merger.) In addition, the special committee as currently constituted approved Amendment No. 1 to the Agreement and Plan of Merger on July 1, 2009, as being fair to, advisable for, and in the best interests of NeoStem and its stockholders. The special committee of the NeoStem Board of Directors has unanimously voted to approve the terms and provisions of the Agreement and Plan of Merger, and the full Board of Directors unanimously recommends that you vote FOR the issuance of the NeoStem

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securities in connection with the Merger pursuant to the Agreement and Plan of Merger, together with the approval of the issuance of certain equity grants in connection with the Merger.

The CBH Board of Directors, by unanimous written consent on November 2, 2008, approved the Agreement and Plan of Merger, and determined that the Merger is fair to, advisable for, and in the best interests of, CBH and its stockholders, and unanimously resolved to recommend that the stockholders of CBH adopt and approve the Agreement and Plan of Merger and the Merger and all transactions related to the consummation of the Merger.

In reaching its separate decision, each Board of Directors consulted with its senior management and legal advisors, and considered a number of factors. In view of the complexity and wide variety of information and factors, both positive and negative, considered by each Board of Directors, neither Board of Directors found it practical to qualify, rank or otherwise assign any relative or specific weights to the factors it considered. In addition, neither Board of Directors reached any specific conclusion with respect to each of the factors it considered, or any aspect of any particular factor. Instead, each Board of Directors conducted an overall analysis of the factors it considered. In considering those factors, individual members of each Board of Directors may have given weight to different factors. Each Board of Directors considered all of those factors as a whole and believed that those factors supported its decision.

The factors considered by each Board of Directors were not identical to the factors considered by the other Board of Directors. However, both boards of directors identified certain material benefits, common to both companies and their respective stockholders, that both boards of directors expect will result from the Merger, as well as certain risks affecting both companies in connection with the Merger and certain other considerations common to both companies. These benefits, risks and other considerations are described immediately below. Following the discussion of those matters, the separate factors, both positive and negative, that each Board of Directors separately considered are described. This section, read as a whole, includes the material factors considered by each Board of Directors in approving the Merger.

Joint Reasons for the Merger

The NeoStem Board of Directors and the CBH Board of Directors approved the Merger based on a number of factors, including, among other things, their belief that the combination of Subco and CBH will create a stronger, more successful company, with enhanced prospects for continued viability, and will provide the stockholders of both NeoStem and CBH with the potential for more financial success than either company has on its own.

Both boards of directors also recognize the risks inherent in the transaction, including:

Both boards of directors determined that the potential benefits of the Merger outweigh the potential risks. In the course of their separate deliberations, each board of directors also considered the following factors:

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Each board of directors also determined that the provisions of the Agreement and Plan of Merger, including the exchange ratio, the parties’ representations, warranties and covenants, and the conditions to their respective obligations, were the reasonable product of vigorous arms-length negotiations. Each board of directors concluded that the provisions of the relevant documents reasonably protected the interests of the applicable company’s stockholders and did not present any significant impediments to proceeding with the Merger considering all of the circumstances.

Reasons of the NeoStem Board of Directors

In the course of its deliberations, the NeoStem Board of Directors considered the following additional factors:

The NeoStem Board also considered a number of risks and potentially negative factors in its deliberations concerning the Merger, including the risk factors described elsewhere in this joint proxy statement/prospectus, and in particular:

Based on its consideration of these factors, the NeoStem Board of Directors determined that the Merger is preferable to the other alternatives which might be available to NeoStem, such as pursuing its current business strategy as a small public company with limited revenues and limited resources.

Reasons of the CBH Board of Directors

In the course of its deliberations, the CBH Board of Directors considered the following additional factors:

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CBH views the proposed merger with NeoStem as being in the best interests of CBH and its stockholders. CBH security holders will receive shares and other securities of NeoStem, a NYSE Amex listed stem cell company with greater market liquidity than CBH and the CBH Board of Directors believes greater potential for appreciation than CBH. With added assets from CBH, the CBH Board of Directors believes NeoStem will be greatly strengthened, with substantial revenue and net income and GMP-certified plants in China, and will aim to move to the next stage of growth.

Furthermore, in considering whether to approve the merger, the CBH Board of Directors considered that NeoStem’s other expansion efforts in China may enable NeoStem to access valuable treatment data denied to companies based in the U.S. due to various legal restrictions in the U.S. This could allow NeoStem to significant gain a competitive advantage over its peers. In addition, the opening of the China market to NeoStem is expected to greatly increase its stem cell revenues by accessing a heretofore untapped market. The CBH Board of Directors strongly believes that this will add to the value of the NeoStem securities that CBH security holders will obtain through such a merger.

Finally, with this transaction, CBH will be relieved of the burden of servicing approximately $13.5 million of acquisition financing. The inability to do so had resulted in the default under the terms of such acquisition financing. This financing was provided by RimAsia Capital Partners, L.P. (“RimAsia”) for the acquisition of Enshi which was subsequently entirely written off by CBH as a bad acquisition. Although such amount has been converted into convertible preferred stock, this conversion carries the condition that CBH merges with another company meeting certain pre-agreed financial benchmarks or is approved by RimAsia, failing which RimAsia is able to convert such amount back into the original loan, and accelerate. The consequence of this would be to put CBH in immediate default and potentially in insolvency, and severely impair the value of CBH securities to its holders. Notwithstanding this, RimAsia has been continuously supportive of CBH’s endeavors in seeking alternatives to extricate itself from the financial and operational challenges posed by the Enshi acquisition, and has not only held in abeyance its legal and contractual right with respect to the default on the loan by CBH, but has worked diligently to assist and support CBH both financially and operationally. Through the merger with NeoStem, NeoStem has agreed to assume the convertible preferred stock with modified rights given to RimAsia, and eliminate the default risk.

The merger is a transaction in which the Board of CBH strongly believes that security holders’ value may be better protected and indeed potentially enhanced and diversified. The alternative to approving this merger may expose CBH to a significant decrease in value, possibly even insolvency, and prolonged and wasteful legal proceedings that it cannot afford.

After serious consideration, the CBH board of directors unanimously endorses this transaction and recommends that its security holders approve this transaction.

The CBH Board of Directors also considered a number of risks and potentially negative factors in its deliberations concerning the Merger, including the risk factors described elsewhere in this joint proxy statement/prospectus, and in particular:

Based on its consideration of these factors, the CBH Board of Directors determined that the Merger is preferable to the other alternatives which might be available to CBH, such as remaining independent and growing internally and through future acquisitions or financings, or engaging in a capital-raising transaction with another party.

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RECOMMENDATIONS OF THE NEOSTEM AND THE CBH BOARDS OF DIRECTORS

Recommendation of the NeoStem Board

Robin Smith and Steven Myers hold shares of CBH Common Stock. Accordingly, a special committee of the NeoStem Board of Directors, initially comprised of Mark Weinreb, Joseph Zuckerman and Richard Berman, which is now comprised of Joseph Zuckerman, Richard Berman and Drew Bernstein, was formed and such committee believes that that the proposed Merger is fair to, advisable for, and in the best interests of NeoStem and its stockholders. In addition, the special committee as currently constituted approved Amendment No. 1 to the Agreement and Plan of Merger on July 1, 2009, and re-affirmed that the Agreement and Plan of Merger as so amended is fair to, advisable for, and in the best interests of NeoStem and its stockholders. The special committee of the NeoStem Board of Directors has unanimously voted to approve the terms and provisions of the Agreement and Plan of Merger, and the full Board of Directors unanimously recommends that you vote FOR the issuance of the NeoStem securities in connection with the Merger pursuant to the Agreement and Plan of Merger.

Recommendation of the CBH Board

The CBH Board of Directors has unanimously determined that the terms of the Agreement and Plan of Merger and the Merger are fair to, advisable for, and in the best interests of CBH and the CBH stockholders. The CBH Board of Directors recommends that CBH stockholders vote FOR the proposal to adopt the Agreement and Plan of Merger and approve the Merger. Approval of the proposal to adopt the Agreement and Plan of Merger will constitute approval of all transactions contemplated by the Agreement and Plan of Merger, including, without limitation, the conversion of all outstanding shares of CBH preferred stock to CBH Common Stock immediately prior to the Merger.

Vote Required

NeoStem

The affirmative vote of a majority of the total votes cast in person or by proxy will be required to approve the issuance of the NeoStem securities in connection with the Merger pursuant to the Agreement and Plan of Merger. The directors and officers of NeoStem, as well as RimAsia and Fullbright, have signed a lock-up and voting agreement pursuant to which they have agreed, among other things, to vote the NeoStem shares held by them (collectively, the “NeoStem Lock-Up Shares”) in favor of the issuance of the NeoStem securities in connection with the Merger. The NeoStem Lock-Up Shares represent 27.4% of the outstanding shares of NeoStem Common Stock as of July 2, 2009. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of quorum. Abstentions and broker “non-votes” for such proposal are not considered to have been voted on the proposal.

CBH

The approval of the proposal regarding the adoption of the Agreement and Plan of Merger will require the affirmative vote of the holders of at least a majority of the outstanding voting power of the CBH Common Stock and the CBH Series A Preferred Stock, voting together as a single class. In addition, the adoption of the Agreement and Plan of Merger will require the approval of the holders of at least a majority of the shares of CBH Series B Preferred Stock outstanding as of the record date, voting as a separate class. If you abstain or do not vote, your abstention or non-vote will have the same effect as a vote against the Merger proposal.

In connection with execution of the Agreement and Plan of Merger, each of the officers and directors of CBH, and each of RimAsia, Erye and EET and certain holders of CBH Common Stock have entered into a lock-up and voting agreement, pursuant to which they have agreed to vote their shares of CBH Common Stock (collectively, the “CBH Lock-Up Shares”) in favor of the Merger and to the other transactions contemplated by the Agreement and Plan of Merger. The CBH Lock-Up Shares represent approximately 34.30% of the voting power of the CBH Common Stock and the CBH Series A Preferred Stock outstanding as of July 2, 2009 and also applies to additional shares beneficially owned by certain of such persons including spouses. In addition, the sole holder of the CBH Series B Preferred Stock has entered into a lock-up and voting agreement pursuant to which it has agreed to vote all shares of CBH Series B Preferred Stock held by it in favor of such proposal.

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There had recently been one holder of CBH Series A Preferred Stock, and such holder elected to convert the 25,000 shares of CBH Series A Preferred Stock held by her into CBH Common Stock, and to receive the merger consideration for the CBH Common Stock for such shares. Thereafter, the holder agreed to vote all shares of CBH Common Stock or CBH Series A Preferred Stock held by her in favor of the Merger, to the extent any such shares are outstanding as of the Record Date.

Existing Business Relationships Between NeoStem and CBH

Other than the Agreement and Plan of Merger and the transactions contemplated thereby, no material business relationships exist between NeoStem and CBH.

Interests of Certain Persons in the Merger

Interests of Certain NeoStem Persons in the Merger

Pursuant to the Agreement and Plan of Merger, Eric Wei, the managing partner of RimAsia and a substantial beneficial owner of NeoStem, will be added to the current Board of Directors of NeoStem immediately after the Effective Time.

The Agreement and Plan of Merger gives NeoStem’s Compensation Committee the authority to grant as bonuses (the “Merger Bonus Shares”) an aggregate of 1,000,000 shares (or shares and options to purchase 1,000,000 shares, in any combination) of NeoStem Common Stock to (i) its officers, consultants and advisors upon the Closing of the Merger and (ii) such officers, significant employees and/or directors of Erye following the receipt of all PRC approvals after the Closing of the Merger, as the Compensation Committee shall determine and to pay withholding taxes thereon. It is currently anticipated that the following persons will receive shares, or options to purchase shares, of NeoStem Common Stock pursuant to this authority: Robin L. Smith (175,000 shares), Catherine M. Vaczy (150,000 shares), Shi Mingsheng (175,000 shares), Madam Zhang Jian (175,000 shares), and two NeoStem consultants or advisors (an aggregate of 200,000 shares). Based on the closing price of the NeoStem Common Stock on June 25, 2009 of $2.00, the amount of U.S. withholding taxes that NeoStem would pay in connection with such grants as allocated to the individuals above would be approximately $841,000. Such Merger-related grants are discussed in detail in NeoStem Proposal No. 6, below, in the section “Issuance of Equity Grants in Connection with the Merger,” and in NeoStem Proposal No. 7, below, in the section “Issuance of Equity Grants in Connection with the Merger.”

The Agreement and Plan of Merger also provides that any or all NeoStem stock options outstanding immediately prior to the Closing, in the sole discretion of the Compensation Committee, may be amended, cancelled and reissued or otherwise modified so that the exercise price shall be adjusted to the greater of $0.80 or fair market value (to the extent the exercise price exceeds such amount); provided that if NeoStem lowers the exercise price of eligible options to a fair market value price that is greater than $0.80, NeoStem may also issue to any eligible optionee additional options, stock or other consideration (including cash) such that the fair value of the overall consideration granted to such optionee is generally equivalent, in the judgment of NeoStem’s Compensation Committee, to the value that would have been provided if the exercise price had been reduced to $0.80. An amendment to the 2003 Equity Compensation Plan (the “2003 Plan”), together with a Repricing (as defined below) of certain options and warrants (see below) and other related matters, are presented for stockholder consideration in NeoStem Proposal No. 9 of this joint proxy statement/prospectus.

The Agreement and Plan of Merger provides that the exercise price of certain outstanding warrants of NeoStem will be reduced as provided for in a schedule. Certain officers and directors of NeoStem are holders of warrants to purchase shares of NeoStem Common Stock at $8.00 per share, that will have their exercise prices reduced to approximately $6.18 per share. Such warrants are held by NeoStem officers and directors in the following quantities: Robin L. Smith (27,511), Catherine M. Vaczy (4,084), Richard Berman (11,364), Steven Myers (22,728) and Joseph Zuckerman (2,084).

In connection with the execution of the Agreement and Plan of Merger, each of the officers and directors of NeoStem, as well as RimAsia and EET/Fullbright, has entered into a lock-up and voting agreement, pursuant to which they have agreed to vote their shares of NeoStem Common Stock (collectively, the “NeoStem Lock-Up Shares”) in favor of the issuance of securities of NeoStem pursuant to the terms and conditions of

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the Agreement and Plan of Merger and are prohibited from selling their NeoStem Common Stock from November 2, 2008 through the expiration of the six-month period immediately following the consummation of the transactions contemplated by the Merger Agreement (the “Lock-Up Period”).

Robin L. Smith, NeoStem’s Chairman and Chief Executive Officer, and Steven Myers, a member of NeoStem’s Board of Directors and Audit, Compensation and Nominating Committees, are holders of CBH Common Stock. Dr. Smith is the beneficial owner of 389,966 shares of CBH Common Stock that were acquired commencing in 2005. Mr. Myers is the beneficial owner of 285,714 shares of CBH Common Stock that were acquired in 2005. Accordingly, a special committee of NeoStem’s Board of Directors (initially comprised of Mark Weinreb, Richard Berman and Joseph Zuckerman, and now comprised of Richard Berman, Joseph Zuckerman and Drew Bernstein) approved on behalf of the Company the execution of the Agreement and Plan of Merger and the transactions contemplated thereby.

Certain options to purchase shares of NeoStem Common Stock held by Dr. Smith (130,000), Mr. Weinreb (20,000), Mr. May (20,000) and Ms. Vaczy (20,000) are scheduled to vest upon the achievement of specific business milestones. These milestones would be achieved upon consummation of the Merger and such options would vest provided they are outstanding immediately prior thereto. See “Outstanding Equity Awards at Fiscal Year-End.”

Interest of Certain CBH Persons in the Merger

Pursuant to the Agreement and Plan of Merger, Shi Mingsheng will be added to the Board of Directors of NeoStem immediately after receipt of all PRC approvals following the Effective Time.

At the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Steven Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of CBH to Messrs. Globus and Mao.

In connection with execution of the Agreement and Plan of Merger, each of the officers and directors of CBH, and each of RimAsia, Erye and EET, as well as certain holders of CBH Common Stock, have entered into a lock-up and voting agreement, pursuant to which they have agreed to vote their shares of CBH Common Stock and Series B Preferred Stock, as applicable (collectively, the “CBH Lock-Up Shares”) in favor of the Merger and to the other transactions contemplated by the Merger Agreement and are prohibited from selling their CBH Common Stock and/or NeoStem Common Stock from November 2, 2008 through the expiration of the six-month period immediately following the consummation of the transactions contemplated by the Merger Agreement (the “Lock-Up Period”). The lock-up and voting agreement also applies to additional shares beneficially owned by certain of such persons including spouses.

Madam Zhang and Shi Mingsheng, each a director of CBH, will continue their existing employment agreements with Erye post-Merger as general manager, and board chairman, respectively.

Madam Zhang and Shi Mingsheng, each a principal shareholder of EET will each receive 175,000 shares, of NeoStem Common Stock as Merger Bonus Shares after receipt of PRC approvals following the Effective Time. Such Merger-related grants are discussed in detail in NeoStem Proposal No. 7, below, in the section “Issuance of Equity Grants in Connection with the Merger.”

Three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited (a wholly-owned subsidiary of EET, which is the holder of 49% of the interests in Erye) to incentivize such recipients to approve and/or assist with Merger-related transactions.

Cai Jianqian, the mother of CBH Chief Executive Officer Chris Peng Mao and a CBH stockholder, serves as the PRC Scientific Advisor to NeoStem pursuant to an April 23, 2009 Consulting Agreement with Shandong Life Science and Technology Research Institute (“SLSI”), of which Ms. Cai Jianqian is President. It is anticipated that Cai Jianqian and SLSI will continue in this role following the Merger. In return for the consulting services, NeoStem will pay SLSI an annual fee of $100,000 and issue SLSI an aggregate of 250,000

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options under the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”), subject to the approval of the 2009 Non-U.S. Plan at the Special Meeting, to become exercisable over approximately a two year period. In addition, in connection with NeoStem’s expanding its relationship with SLSI in July 2009, NeoStem has agreed to grant to SLSI an additional 100,000 shares under the 2009 Non-U.S. Plan, subject to approval of the 2009 Non-U.S. Plan at the Special Meeting.

In a private placement of units by NeoStem in November 2008, Fullbright Finance Limited (“Fullbright”), a corporation organized in the British Virgin Islands and a wholly-owned subsidiary of EET (the principal shareholders of which are Madam Zhang Jian, Chairman and Chief Financial Officer of CBH, Shi Mingsheng, Chief Operating Officer and a director of CBH, and Ding Weihua, a director of CBH), purchased 400,000 units for an aggregate consideration of $500,000, each unit comprised of one share of NeoStem Common Stock and one redeemable five-year warrant to purchase one share of NeoStem Common Stock at a purchase price of $1.75 per share, at a per-unit price of $1.25. In connection with Fullbright’s purchase of the units, EET borrowed $500,000 from RimAsia, and the units acquired by Fullbright were pledged to RimAsia as collateral therefor. Further, in the June/July 2009 private placement (as defined and described below), Fullbright acquired 64,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon stockholder approval), together with warrants to purchase 640,000 shares of NeoStem Common Stock.

For information on additional interests of Shi Mingsheng and Madam Zhang Jian, each a current director of CBH, in the Merger, see “Interests of Certain Persons in the Merger — NeoStem.”

Interests of Certain RimAsia Persons in the Merger

Pursuant to the Agreement and Plan of Merger, Eric Wei, the managing partner of RimAsia, will be added to the current Board of Directors of NeoStem immediately after the Effective Time.

Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia and partially to satisfy the approximately $1.6 million in transaction expenses advanced or to be advanced by RimAsia, a principal stockholder of NeoStem and the sole holder of shares of CBH Series B Preferred Stock, all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, (i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of NeoStem Series C Preferred Stock, each with a liquidation preference of $1.125 per share and convertible into 9,086,124 shares of NeoStem Common Stock at an initial exercise price of $0.90. In the event the Merger and the related transactions are not consummated, RimAsia may not be able to recover some or all of the $1.6 million that it advanced to cover transaction expenses.

In addition, Fullbright pledged the units it acquired in NeoStem’s November 2008 private placement (as defined and described below) to RimAsia as collateral for the $500,000 loan made by Rim Asia to EET in connection therewith. Further, in the April 2009 private placement (as defined and described below), RimAsia acquired 400,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon stockholder approval), together with warrants to purchase 4,000,000 shares of NeoStem Common Stock.

CBH has defaulted under the terms of an acquisition financing in the amount of approximately $13.5 million provided by RimAsia. Such amount has been converted into CBH Series B Preferred Stock, subject to the condition that CBH merge with another company meeting certain pre-agreed financial benchmarks or that is approved by RimAsia. If CBH does not consummate such a merger, RimAsia has the right to convert such amount back into the original loan and accelerate which would put CBH in immediate default and potentially in insolvency, and severely impair the value of CBH securities to its holders. Through the Merger, NeoStem has agreed to assume the convertible preferred stock with modified rights given to RimAsia, and eliminate the default risk. However, in the event the Merger are not consummated, RimAsia may not be able to recover some or all of the approximately $13.5 million it is owed by CBH.

Interests of Certain EET Persons in the Merger

125,000 shares of NeoStem Common Stock will be issued to EET or its designee for assistance in effecting the Merger. In addition, an aggregate of 203,338 shares of NeoStem Common Stock will be issued to Shi

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Mingsheng and Madam Zhang Jian, as well as an aggregate of 350,000 Merger Bonus shares to Shi Mingsheng and Madam Zhang Jian (175,000 each), in connection with the transactions contemplated by the Merger after the receipt of PRC Approvals.

In connection with the closing of the Merger, in order to satisfy CBH’s obligations under a Memorandum of Understanding with EET, CBH shall have caused Erye and EET to enter into binding agreements whereby (a) Erye is bound to transfer the land and building for its principal manufacturing facility to EET or its affiliate for a sum to be agreed upon by the parties, with such transfer reported and accounted for in the financial records of Erye and CBH prior to Closing, and (b) EET or its affiliate is bound to lease such principal manufacturing facility back to Erye at a nominal fee for a term through the construction and validation period of Erye’s new manufacturing facility and until such date as Erye’s new facility is completed and fully operational, such that Erye is assured that there is no interruption of its operations by reason of such transfers and agreements. However, in the event the Merger and related transactions are not approved, EET may not receive such land and building and EET may have to pursue other remedies to obtain the property to which it is entitled pursuant to the Memorandum of Understanding between EET and CBH. The land and building have a book value on CBH’s books of approximately $ 6.7 million (and an unknown estimated fair market value).

Pursuant to the Joint Venture Agreement between Sub Co. and EET, during the three year period commencing from the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, 45% of the net profit after tax will be given to Erye, rather than distributed to NeoStem, to fund construction of Erye’s new plant, thereby benefitting EET. Shi Mingsheng and Madam Jian own approximately 63% and 10%, respectively, of EET.

Pursuant to the Agreement and Plan of Merger, Shi Mingsheng will be added to the Board of Directors of NeoStem immediately after receipt of all PRC approvals following the Effective Time.

Three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited (a wholly-owned subsidiary of EET, which is the holder of 49% of the interests in Erye) to incentivize such recipients to approve and/or assist with Merger-related transactions.

In a private placement of units by NeoStem in November 2008, Fullbright Finance Limited (“Fullbright”), a corporation organized in the British Virgin Islands and a wholly-owned subsidiary of EET (the principal shareholders of which are Madam Zhang Jian, Chairman and Chief Financial Officer of CBH and Erye, Shi Mingsheng, Chief Operating Officer and a director of CBH and Chairman of Erye, and Ding Weihua, a director of CBH), purchased 400,000 units for an aggregate consideration of $500,000, each unit comprised of one share of NeoStem Common Stock and one redeemable five-year warrant to purchase one share of NeoStem Common Stock at a purchase price of $1.75 per share, at a per-unit price of $1.25. In connection with Fullbright’s purchase of the units, EET borrowed $500,000 from RimAsia, and the units acquired by Fullbright were pledged to RimAsia as collateral therefor. Further, in the June/July 2009 private placement (as defined and described below), Fullbright acquired 64,000 shares of NeoStem Series D Stock (each Series D share being automatically convertible into ten (10) shares of NeoStem Common Stock upon stockholder approval), together with warrants to purchase 640,000 shares of NeoStem Common Stock.

Board Composition Following the Merger

Pursuant to the Agreement and Plan of Merger, NeoStem’s Board of Directors will be increased from five directors to seven directors. Eric Wei will be added to the Board of Directors of NeoStem immediately after the Effective Time, and Shi Mingsheng will be added to the Board of Directors immediately after receipt of all PRC approvals following the Effective Time. The four directors elected at NeoStem’s annual meeting held in May 2009 (Robin L. Smith, Richard Berman, Steven S. Myers and Joseph Zuckerman) as well as the director appointed by the NeoStem Board of Directors on June 9, 2009 (Drew Bernstein) will continue to serve. Therefore, the NeoStem Board of Directors will consist of the following seven members promptly following the consummation of the Merger and the receipt of all PRC approvals: Robin L. Smith (Chairman), current Chairman of the Board and Chief Executive Officer of NeoStem; Eric Wei, the managing partner of RimAsia; Shi Mingsheng, a Director of and the Chief Operating Officer of CBH, the Chairman of the Board of Directors of Erye, and a holder of approximately two-thirds of EET (which is the holder of a 49% interest

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in Erye and a 100% interest in Fullbright Finance Limited, a greater than 5% beneficial owner of NeoStem); and Richard Berman, Drew Bernstein, Steven S. Myers and Joseph Zuckerman, each of the latter four a current director of NeoStem (the latter four are independent directors, as defined under the NYSE Amex listing standards). In the event that NeoStem Proposal No. 8 attains stockholder approval at the special meeting and the Board of Directors determines to file the Board Classification Amendment (as defined therein) with the Secretary of State of the State of Delaware, NeoStem’s Board of Directors would be divided into three separate classes of directors, as nearly equal in number as possible, with each respective class to serve a three-year term. The classes would be elected on a rotating or staggered basis, with each class being elected at the annual stockholder meeting coinciding with the expiration of that class’s term. For details regarding the proposed classification of NeoStem’s Board, see NeoStem Proposal No. 8 of this joint proxy statement/prospectus.

NeoStem believes, as its business moves into China, that it would also be desirable to have one or more independent directors who reside in the PRC and have relevant experience. The Nominating Committee of NeoStem’s Board of Directors intends to continue its search for such potential director candidates.

Relative Percentages of Ownership

The following tables indicate basic and fully diluted ownership at July 2, 2009, (i) giving effect to the Series D Convertible Redeemable Preferred Stock private placement, assuming that the proposals relating to the conversion of the Series D Preferred and the exercisability of the Series D warrants have been approved and the Series D Preferred has converted into NeoStem Common Stock, and (ii) giving effect to the Series D Convertible Redeemable Preferred Stock private placement as described above and also giving effect to the consummation of the Merger (including stock bonuses to be issued as part of the Merger, and assuming that all Proposals set forth herein are approved):

After Private Placement Conversions		Basic Outstanding Shares				%				Fully Diluted Ownership(1)				%
NeoStem – Public Shareholders			5,877,004				27.4	%			11,373,408				25.9	%
NeoStem – Officer & Directors*			1,255,701				5.9	%			3,723,289				8.5	%
CBH – Public Shareholders			—				0.0	%			—				0.0	%
CBH – Officers & Directors*			—				0.0	%			—				0.0	%
EET/Fullbright			1,040,000				4.8	%			2,080,000				4.8	%
RimAsia			5,000,000				23.3	%			10,000,000				22.9	%
Enhance Biomedical Holding Corporation			4,000,000				18.6	%			8,000,000				18.3	%
Series D Convertible Redeemable Preferred Stock Private Placement (excluding RimAsia, EET and Enhance Biomedical)			4,292,510				20.0	%			8,585,022				19.6	%
			21,465,215				100.0	%			43,761,719				100.0	%

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After Private Placement Conversions & Merger		Basic Outstanding Shares				%				Fully Diluted Ownership(1)				%
NeoStem – Public Shareholders			6,077,004				16.7	%			11,573,408				16.6	%
NeoStem – Officer & Directors*(2)			1,710,807				4.7	%			4,178,395				6.0	%
CBH – Public Shareholders			4,793,176				13.2	%			6,805,273				9.8	%
CBH – Officers & Directors*(2)(3)			357,644				1.0	%			357,644				0.5	%
EET/Fullbright(4)(5)			3,604,570				9.9	%			4,644,570				6.7	%
RimAsia			11,458,009				31.6	%			25,544,133				36.7	%
Enhance Biomedical Holding Corporation			4,000,000				11.0	%			8,000,000				11.5	%
Series D Convertible Redeemable Preferred Stock Private Placement (excluding RimAsia, EET and Enhance Biomedical)			4,292,510				11.8	%			8,585,022				12.3	%
			36,293,720				100.0	%			69,688,445				100.0	%

Structure of the Merger

Pursuant to the terms of the Merger, all of the shares of CBH Common Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, 7,150,000 shares of NeoStem Common Stock. Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia, a principal stockholder of NeoStem and the sole holder of shares of CBH Series B Preferred Stock, all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate,

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(i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of NeoStem Series C Preferred Stock, each with a liquidation preference of $1.125 per share and initially convertible into 9,086,124 shares of NeoStem Common Stock at an initial conversion price of $0.90 per share.

At the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Steven Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of CBH to Messrs. Globus and Mao. NeoStem will bear 50% of up to $450,000 of CBH’s expenses post-merger, and satisfaction of the liabilities of Messrs. Globus and Mao will count toward that obligation.

For assistance in effecting the Merger, 125,000 shares of NeoStem Common Stock will be issued to EET. In addition, an aggregate of 203,338 shares of NeoStem Common Stock will be issued to Shi Mingsheng (the Chairman of the Board of Directors of Erye and a holder of approximately two-thirds of EET) and Madam Zhang Jian (General Manager of Erye and a holder of approximately 10% of EET) in connection with the transactions contemplated by the Merger after the timely receipt of all PRC approvals.

Pursuant to the terms of the Exchange Offer (as defined on page [293]) and only in the event the Merger is consummated and the related post-closing obligations are satisfied, each holder of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may exchange all of such holder’s warrants to purchase one share of CBH Common Stock for Class C Warrants to purchase 0.24038 shares of NeoStem Common Stock at an exercise price of $2.50 per share. It is a condition to the consummation of the transactions contemplated by the Agreement and Plan of Merger that the holders of ALL of the outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) must tender their Existing CBH Warrants in exchange for the Class C Warrants being offered by NeoStem in the Exchange Offer; however, such condition may be waived by NeoStem in its sole discretion. In the event NeoStem, in its sole discretion, waives such closing condition and the transactions contemplated by the Agreement and Plan of Merger are consummated, then holders of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may, in accordance with the terms of such holder’s warrants, may elect to receive a cash payment for their Existing CBH Warrants equal to the Black Scholes value of the warrant on the date of such request. If the holder of the warrant does not make such election, then all of such holder’s warrants to purchase shares of CBH Common Stock shall be replaced with a new warrant (each a “NeoStem Class E Warrant”) substantially in the form of such holder’s existing warrant evidencing the right to purchase 0.19255 shares of NeoStem Common Stock with the exercise price per share adjusted such that the aggregate exercise price of the NeoStem Class E Warrant is the same as the aggregate exercise price of the warrant in effect immediately prior to the Effective Time.

As a result of the Merger, CBH stockholders would own approximately 24% of NeoStem Common Stock (assuming stockholder approval of NeoStem Proposal No. 4 of this joint proxy statement/prospectus and the automatic conversion into NeoStem Common Stock of all outstanding shares of Series D Convertible Preferred Stock, par value $0.01 per share, of NeoStem). The exchange ratio shall be equal to the quotient of 7,150,000 divided by the sum of (x) the number of shares of CBH Common Stock outstanding at the Effective Time, and (y) the number of shares of CBH Common Stock issuable upon exercise of in-the-money warrants of CBH immediately prior to the Effective Time.

Upon consummation of the transactions contemplated by the Merger, NeoStem will own 51% of the ownership interests in Erye, and EET, will own the remaining 49% ownership interest. In connection with the execution of the Agreement and Plan of Merger, Subco and EET have negotiated a Joint Venture Agreement, which, subject to approval by the requisite PRC governmental authorities, will become effective and will govern the rights and obligations with respect to their respective ownership interests in Erye. Pursuant to the terms and conditions of the Joint Venture Agreement, dividend distributions to EET and NeoStem will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as

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paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses. In the event of the sale of all of the assets of Erye or liquidation of Erye, NeoStem will be entitled to receive the return of such additional paid-in capital before distribution of Eyre’s assets is made based upon the ownership percentages of NeoStem and EET, and upon an initial public offering of Erye which raises at least 50,000,000 RMB (or approximately U.S. $7,300,000), NeoStem will be entitled to receive the return of such additional paid-in capital.

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following is a discussion of the material U.S. federal income tax consequences of the Merger to the holders of CBH stock. This discussion is based upon the Code, the regulations of the United States Treasury Department, Internal Revenue Service rulings, and judicial and administrative rulings and decisions in effect on the date of this proxy statement/prospectus. These authorities may change at any time, possibly retroactively, and any change could affect the continuing validity of this discussion. This discussion does not address any tax consequences arising under the laws of any state, locality or foreign jurisdiction, and accordingly, is not a comprehensive description of all of the tax consequences that may be relevant to any given holder of CBH stock.

This discussion does not address the tax consequences that may be relevant if any holder receives special treatment under some U.S. federal income tax laws. Holders receiving this special treatment include but are not limited to:

This discussion assumes that holders of CBH stock hold their CBH stock as capital assets (generally for investment and not as a dealer or for sale to customers in the ordinary course of the holder’s trade or business). This discussion does not address the receipt of any NeoStem stock by anyone other than in their capacity as a holder of stock of CBH, or the receipt of NeoStem stock in exchange for services, or property other than CBH stock, including but not limited to the issuance of certain NeoStem shares to Mr. Globus and Mr. Mao in exchange for indebtedness owed by CBH to them. In addition, this discussion does not address the receipt by Mr. Globus and/or related persons of certain shares of NeoStem stock upon the cancellation of certain shares of CBH Series A Preferred Stock held by Mr. Globus. Further, this discussion does not address the tax consequences of the issuance of any shares of NeoStem stock to CBC, or the issuance of shares to EET or its designee for assistance in the effecting of the Merger. The discussion also does not address the tax consequences of the Merger to the holders of CBH preferred stock or the ownership of shares of preferred stock of NeoStem after the Merger. Finally, the parties have represented to tax counsel, and this discussion assumes, that none of the terms negotiated by NeoStem pursuant to the Joint Venture Agreement is related to the consideration to be issued by NeoStem pursuant to the Merger, and that the consideration payable to the stockholders of the CBH pursuant to the Merger has not been reduced, increased or otherwise adjusted as a result of the terms of the Joint Venture Agreement, including any distributions to be received by NeoStem pursuant to the Joint Venture Agreement.

As a condition to the completion of the Merger (which condition may be waived), CBH will receive an opinion of Lowenstein Sandler PC, and NeoStem will receive an opinion of Troutman Sanders LLP in the

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form and substance reasonably satisfactory to NeoStem and CBH with respect to the tax-free status of the Merger. The opinions of Lowenstein Sandler PC and Troutman Sanders LLP will be based upon representation letters of NeoStem and CBH as to certain material facts relating to the Merger and certain assumptions which are set forth herein. Any inaccuracy in the representations or assumptions, or any future actions by NeoStem and CBH contrary to the representations or assumptions, could adversely affect the conclusions reached in the opinions and the tax discussion set forth below. The parties expect to receive opinions that the Merger qualifies as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Code unless the Merger becomes effective under state law without prior approval from any PRC Governmental Authority, and NeoStem exercises its right to defer delivery of NeoStem securities to holders of CBH. In that case, the parties do not expect to receive opinions that the Merger qualifies as a reorganization.

The opinions represent the best judgment of tax counsel as to the U.S. federal income tax treatment of the Merger and as to the U.S. federal income tax consequences of the Merger to the CBH stockholders, but will not be binding on the Internal Revenue Service or the courts. No rulings have been or will be requested from the Internal Revenue Service with respect to any of the matters discussed in this summary. There can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this summary.

Material Federal Income Tax Consequences of the Merger to CBH and CBH Stockholders

Tax Treatment of CBH and the CBH Stockholders if the Merger Qualifies as a Reorganization

If the Merger qualifies as a reorganization, CBH would not recognize taxable gain or loss as a result of the Merger, and CBH stockholders who receive NeoStem Common Stock in exchange for their shares of CBH Common Stock would recognize no gain or loss for federal income tax purposes. A CBH stockholder’s aggregate tax basis in the NeoStem Common Stock that she or he receives in the Merger would equal the aggregate basis that such stockholder had in the shares of CBH Common Stock surrendered in the Merger in exchange therefor. The holding period of a CBH stockholder in the shares of NeoStem Common Stock received in the Merger would include the holding period for the shares of CBH Common stock surrendered in exchange therefor. A CBH stockholder having differing bases or holding periods in respect of his/her shares of CBH Common Stock should consult their tax advisors prior to the exchange with regard to identifying the bases or holding periods of the particular shares of NeoStem Common Stock received in the Merger.

Effects of Failure to Qualify as a Reorganization

If the Merger fails to qualify as a reorganization described in section 368(a) of the Code, then the holders of CBH stock would have taxable gain or loss equal to the value of the consideration each holder receives in the Merger less the tax basis that she or he had in the shares of CBH stock exchanged therefore. A CBH stockholder’s aggregate tax basis in the NeoStem Common Stock that she or he receives in the Merger would equal the aggregate fair market value of the shares of CBH Common Stock surrendered in the Merger in exchange therefor. The holding period of a CBH stockholder in the shares of NeoStem Common Stock received in the Merger would not include the holding period for the shares of CBH Common stock surrendered in exchange therefor. In addition, CBH would have taxable gain or loss equal to the value of the consideration paid by NeoStem less the tax basis that CBH has in its assets.

Dissenting Stockholders and Appraisal Rights

The cash received by a dissenting holder of CBH Common Stock in exchange for its CBH Common Stock would be treated as having been received by such shareholder as a distribution in redemption of his or her stock, subject to the provisions and limitations of Section 302 of the Code (if the Merger qualifies as a reorganization). The tax consequences of cash received, whether treated as a dividend or as received in exchange for stock, may vary depending on the individual circumstances of the stockholder. Each holder of CBH stock who contemplates exercising statutory dissenters’ rights should consult its tax advisor as to the possibility that all or a portion of he payment received pursuant to the exercise of such rights will be treated as dividend income.

Backup Withholding

A holder of CBH stock may be subject to backup withholding at a rate of 28% on the consideration received in connection with the Merger, unless such holder certifies its exemption from backup withholding or

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provides a correct taxpayer identification number and certain other certifications, and otherwise complies with applicable requirements of the backup withholding rules. A holder of CBH stock that does not provide its correct taxpayer identification number may also be subject to penalties imposed by the IRS. Any amounts withheld under the backup withholding rules are not an additional tax and may be refunded or credited against the holder’s United States federal income tax liability, provided the required information is furnished to the IRS.

Material Federal Income Tax Consequences of the Merger to NeoStem and NeoStem Stockholders.

NeoStem will not recognize taxable gain or loss solely as a result of the Merger. NeoStem shareholders will not, solely by reason of holding NeoStem stock, recognize taxable gain or loss in the Merger.

Material Federal Income Tax Consequences of the Exchange Offer to CBH Warrantholders

A holder of CBH Common Stock Purchase Warrants that exchanges such warrants for NeoStem Class C Warrants pursuant to the Exchange Offer will not recognize gain or loss upon such exchange. The holder’s basis in the NeoStem Class C Warrants received will be equal to the tax basis such holder had in the CBH Common Stock Purchase Warrants exchanged therefor. The holding period for the NeoStem Class C Warrants will include the holding period for the CBH Common Stock Purchase Warrants exchanged therefor. A holder of CBH warrants having differing bases or holding periods in respect of his/her shares of CBH warrants should consult his or her tax advisor with regard to identifying the bases or holding periods of the particular warrants of NeoStem received in the Merger. The Merger is conditioned on the holders of CBH Common Stock Purchase Warrants agreeing to the exchange Offer. This discussion does not address the tax consequences to the holders of the CBH Common Stock Purchase Warrants if they do not agree to such an exchange and instead receive different rights or property; in such case, they may have differing tax consequences from those described herein.

Material Federal Income Tax Consequences to CBH of the Sale or Transfer of Stock of CBC

CBH will recognize taxable gain or loss on the sale of the stock of CBC, but CBH believes that its net operating losses will offset any taxable gain resulting from the sale of stock of CBC for U.S. federal income tax purposes.

Tax matters are very complicated, and the tax consequences of the Merger will depend on the facts of the holder’s particular situation. Holders are encouraged to consult their own tax advisors regarding the specific tax consequences of the Merger, including the applicability and effect of any federal, state, local and foreign income and other tax laws.

The preceding discussion does not purport to be a complete analysis or discussion of all potential tax consequences relevant to the Merger. Moreover, the discussion does not address any non-income tax consequences nor any foreign, state or local tax consequences. Again, you are urged to consult your own tax advisor as to the specific consequences of the Merger to you, including tax return reporting requirements, the applicability and effect of federal, state, local, and other tax laws, including the effects of any proposed changes in the tax laws, and your obligation to retain information regarding the transaction.

FAIRNESS OPINION

On October 31, 2008, at a meeting of the NeoStem Board of Directors called to discuss the proposed agreement with CBH, vFinance Investments, Inc. (“vFinance”) gave the Board preliminary guidance that it thought that on completion of its full analysis, it would be able to opine in favor of the fairness of the proposed transaction. Following such analysis, on April 1, 2009, vFinance provided its written opinion to the NeoStem Board of Directors and its written report to the Special Committee of the NeoStem Board of Directors (collectively, the “Fairness Opinion”), to the effect that, as of such date, and based upon and subject to certain matters stated therein, the transactions contemplated by the Agreement and Plan of Merger are fair, from a financial point of view, to the non-affiliated stockholders of NeoStem. Representatives of vFinance then met with the Board on April 9, 2009 to present its findings and answer questions.

vFinance, as part of its investment banking business, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, going private transactions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for

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corporate and other purposes. vFinance is a registered broker-dealer with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority, or FINRA. vFinance does not perform tax, accounting, legal services, or appraisal services, nor render such advice.

NeoStem considered several factors in selecting vFinance to render the Fairness Opinion in connection with the transactions contemplated by the Agreement and Plan of Merger. Among the factors considered was the fact that vFinance led the financing round for CBH’s purchase of the 51% interest in Erye. NeoStem believed that vFinance’s knowledge of CBH would be useful in vFinance’s analysis of the contemplated transactions and ultimate rendering of the opinion.

vFinance has been retained by NeoStem to render the Fairness Opinion in connection with the transactions contemplated by the Agreement and Plan of Merger and will receive a fee and reimbursement of its expenses for such services (as described below). No portion of such fee is contingent upon consummation of the transactions contemplated by the Agreement and Plan of Merger nor is it contingent upon any recommendation of the Board of Directors. In addition, NeoStem has agreed to indemnify vFinance for certain liabilities arising out of its engagement, including the rendering of the Fairness Opinion. vFinance has not participated in, or provided advice with respect to, the pricing determination, structuring or negotiation of transactions contemplated by the Agreement and Plan of Merger. In the ordinary course of business, vFinance may trade the NeoStem Common Stock for its own account and for the accounts of customers, and, accordingly, may at any time hold a long or short position in such securities.

On September 30, 2008, NeoStem entered into the Opinion Engagement Agreement with vFinance, pursuant to which vFinance was engaged to render the Fairness Opinion. This agreement provided for (i) an aggregate fee of $105,000, of which (a) $17,500 was due and paid upon the execution of the agreement, (b) an additional $17,500 was due and paid upon the execution of the definitive agreement for the transaction, (c) an additional $35,000 would become due upon notification by vFinance of its intent and ability to effectuate delivery of the Fairness Opinion, and (d) the remaining $35,000 would become due upon vFinance’s delivery of the Fairness Opinion; (ii) reasonable expenses in accordance with the terms and schedule set forth in the Engagement Agreement; and (iii) indemnification of vFinance as provided in the Engagement Agreement. The term of this engagement was for 16 weeks, to be automatically extended on a month-to-month basis (unless terminated by NeoStem) if the transaction was still in progress. All payments under this agreement have been made for a total of $105,987 including expenses. On April 8, 2009, NeoStem entered into an Opinion Engagement Agreement with National Securities Corporation (“National”) in National’s capacity as successor to vFinance in relation to investment banking activities, which superseded NeoStem’s Opinion Engagement Agreement with vFinance. Such agreement is effectively a continuation of the vFinance Agreement and provided for an additional payment of $5,000 to National upon execution thereof, which was so paid.

On July 3, 2009, NeoStem entered into another engagement agreement with National, pursuant to which National was engaged to render a valuation to the NeoStem Board of Directors as to the fair market value of the 51% ownership interest in Erye and to value the shares of Series C Convertible Preferred Stock to be issued in connection with the Merger. This agreement provided for (i) an aggregate fee of $50,000, of which (a) $25,000 was due and paid upon the execution of the agreement and (b) the balance of $25,000 will become due upon notification by National that it is prepared to deliver the valuation; (ii) reasonable expenses not to exceed $5,000; and (iii) indemnification of National as provided in the agreement.

CBH previously had a relationship with vFinance. CBH entered into an Engagement Letter dated February 22, 2006, with vFinance Investment, Inc. (“vFinance”), pursuant to which vFinance acted as private placement agent to offer and sell up to Six Million Dollars ($6,000,000) worth of securities with a 20% over allotment option at the sole discretion of CBH and closed on a financing. The engagement was for a term of sixty (60) days commencing upon the execution of the engagement letter by CBH, which could be extended by mutual agreement. In consideration, CBH made the following aggregate payments to vFinance and its selected dealers: (i) $697,000 in cash; (ii) the issuance of 50,000 shares of restricted common stock of CBH; and (iii) warrants to purchase up to 538,614 shares of common stock of CBH at an exercise price of $1.26 per share, expiring March 10, 2010. As of July 2, 2009, principals of vFinance continued to own 43,750 shares of common stock of CBH and vFinance in its individual capacity continued to own warrants to purchase up to

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204,763 (and together with its principals, approximately 271,636) shares of common stock of CBH. vFinance’s (and its principals’) ownership of CBH securities and previous relationship with CBH may influence its judgment in rendering the fairness opinion in connection with the Merger.

The full text of the Fairness Opinion, which sets forth the assumptions made, matters considered and limitations in the review undertaken, is attached as Annex C to this prospectus and joint proxy statement, and is incorporated herein by reference. The Fairness Opinion, as well as a detailed analysis, also will be made available for inspection and copying at the principal executive offices of NeoStem during its regular business hours by any interested equity security holder of NeoStem or representative who has been so designated in writing. A copy of the Fairness Opinion, as well as a detailed analysis, will be transmitted by NeoStem to any interested equity security holder of NeoStem or representative who has been so designated in writing upon written request and at the expense of the requesting security holder. You should read the Fairness Opinion carefully and in its entirety.

In conducting its analyses and arriving at the opinion expressed in the Fairness Opinion, vFinance took into account its assessment of general economic, market and financial conditions, as of the date of the Fairness Opinion and its experience in connection with similar transactions and securities valuations generally, and, among other things:

In connection with its review and analyses and in arriving at its opinion, vFinance assumed and relied upon the accuracy and completeness of the financial and other information provided to it or which was publicly available, and did not attempt to verify independently any such information. vFinance relied solely on the information and estimates provided to it by NeoStem’s management and its advisors and neither made nor obtained any independent appraisals of any properties, other assets or facilities of NeoStem. With respect to certain financial information, including financial analyses and projections, relating to NeoStem’s business and

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prospects provided by NeoStem’s management and its advisors, vFinance assumed that the financial information was reasonably prepared on a basis reflecting best currently available estimates and good faith judgments of the management of NeoStem as to the future financial performance of NeoStem.

The Fairness Opinion does not constitute a recommendation to any stockholder of NeoStem as to how any such stockholder should vote at the Annual Meeting. The Fairness Opinion contains no opinion as to the prices at which shares of NeoStem Common Stock would trade at any time following the announcement or consummation of the transactions and should not be viewed as providing any assurance that the market value of the shares of NeoStem Common Stock to be held by the stockholders of NeoStem after the consummation of the transactions will be in excess of the market value of the shares of NeoStem Common Stock owned by such stockholders at any time prior to the announcement or the consummation of the transactions.

NeoStem did not request vFinance to opine to, and the Fairness Opinion does not in any manner address, the underlying business decision of NeoStem to proceed with or effect the transactions. In addition, NeoStem did not request vFinance to explore, any alternatives to the transactions, and the Fairness Opinion does not address the relative merits of the proposed transactions as compared to any alternative business strategy that might exist for NeoStem. vFinance did not provide services other than the delivery of the Fairness Opinion. vFinance did not participate in negotiations on the terms of the Merger or related transactions, which were the product of direct negotiations among the parties.

In arriving at its opinion, vFinance first determined the value of the consideration being offered, which included a valuation of the NeoStem Common Stock, Warrants and Series C Convertible Preferred Stock to be issued in accordance with the Agreement and Plan of Merger. In order to calculate the value of the shares of NeoStem Common Stock, vFinance used the closing price per share of NeoStem Common Stock on the NYSE Amex as of April 1, 2009, which was $.97 per share. In order to derive the value of the Warrants, vFinance used the Black Scholes Option Pricing Model, utilizing a number of different data points, including stock price, exercise price, years to expiration, volatility of the stock and the risk free rate of return. In order to derive the value of the Series C Convertible Preferred Stock, vFinance utilized two approaches, the first of which was to examine the Series C Convertible Preferred Stock on an “as converted” basis, which assumes immediate conversion into NeoStem Common Stock on the day of closing, and the second of which examines the net present value of the dividend streams and the agreed stated value of the Series C Convertible Stock. Through such analyses, vFinance valued the total consideration offered pursuant to the Agreement and Plan of Merger at a range between approximately $20.2 million and $23.9 million.

vFinance then determined the approximate value of the companies and/or assets being acquired for the consideration through three methodologies, the Comparable Public Company Trading Multiple Analysis, the Comparable Mergers and Acquisitions Multiple Analysis and the Discounted Cash Flow Analysis, each of which is discussed below.

Comparable Public Company Trading Multiple Analysis.  Under the Comparable Public Company Trading Multiple Analysis, vFinance identified nine companies, including manufacturers of pharmaceutical and/or nutraceutical products operating and marketing products primarily in the PRC, that might be considered comparable to Erye. The following companies were considered for the comparable analysis: 3SBio, Inc., Aida Pharmaceuticals, Inc., Benda Pharmaceutical, Inc., China Biologic Products, Inc., China Pharma Holdings, Inc., China Sky One Medical, Inc., China Biotics, Inc., Huifeng Bio-pharmaceutical Technology, Inc. and Shengtai Pharmaceutical, Inc. vFinance derived a set of market-based valuation multiples based off these companies to assign value to Erye based on five operating statistics, estimated revenue, EBITDA, EBIT, earnings and shareholders equity. Having derived these multiples from the sample set, vFinance multiplied each corresponding multiple to each of the five different operating statistics for Erye. The resulting range of equity values for Erye was $20.2 million to $49.2 million, and the corresponding value of the proposed 51% ownership of Erye by NeoStem ranged between $10.3 million and $25.1 million.

Comparable Mergers and Acquisitions Multiple Analysis.  Under the Comparable Mergers and Acquisitions Analysis, vFinance examined comparable merger and acquisition transactions involving China-based pharmaceutical and nutraceutical companies it deemed to be comparable to Erye based on the same parameters as discussed above, and identified ten transactions. vFinance then derived a set of market-based valuation multiples based off these transactions to assign value to Erye based on two operating statistics, revenue and

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book value. The resulting range of equity values for Erye was $31.6 million to $47.4 million, and with the corresponding value of NeoStem’s proposed 51.0% ownership in Erye ranged between $16.1 million and $24.2 million.

Discounted Cash Flow Analysis.  Under the Discounted Cash Flow Analysis, vFinance analyzed net present value of certain cash flow streams for each of Erye’s business. Future cash flows were evaluated using required returns and discount rates that mirror the weighted average cost of capital to NeoStem and vFinance’s experience as to what would be appropriate for the entity at NeoStem’s particular stage of its life-cycle. For Erye, the resulting enterprise values for Erye ranged from $27.1 million to $50.1 million, which as adjusted with the acquired cash and debt, ranged from $23.3 million to $46.2 million, and based on the proposed 51.0% ownership by NeoStem of Erye ranged between $11.8 million and $23.6 million.

vFinance then summarized the results of all three valuation methodologies and established a range of $10.3 million to $25.1 million for the value of NeoStem’s proposed ownership in Erye, and determined that the consideration offered pursuant to the Agreement and Plan of Merger of between $20.2 million and $23.9 million was within the stated range. Based on the foregoing, vFinance provided its opinion that the transactions contemplated by the Agreement and Plan of Merger, from a financial point of view, to the non-affiliated shareholders of NeoStem.

Anticipated Accounting Treatment of the Merger

For accounting purposes, NeoStem will be the “accounting acquirer” of CBH. The Merger will be accounted for under the “purchase” method of accounting. Under the purchase method of accounting, the assets and liabilities of CBH, as of the completion of the Merger, will be recorded at their fair values and the excess of purchase price over the fair value of net assets will be allocated to goodwill and any other applicable intangible assets.

Governmental Approval of the Merger

NeoStem and CBH have determined that filing of a notification under the HSR Act is not required in connection with the Merger.

The transactions will require, among other things, the approval by the relevant PRC and other governmental organizations of the Agreement and Plan of Merger, the Joint Venture Agreement, and the articles of incorporation of Erye. More specifically, the Agreement and Plan of Merger, and the Joint Venture Agreement, and the articles of incorporation of Erye will need to be approved by the Suzhou Bureau of Foreign Trade and Economic Cooperation Foreign Investment Administration Department and all other requisite authorities, and the articles of incorporation of Eyre will need to be filed with and the new business license of Eyre will need to be issued by, the Suzhou Administration of Industry and Commerce or other requisite authorities. The approval and registration process will normally take approximately one month. There is no assurance that the requisite approvals and registrations can be obtained and completed at a timely basis, if at all, or can be obtained and completed without the Agreement and Plan of Merger, and/or the Joint Venture Agreement, and/or the articles of incorporation of Erye being amended or revised materially pursuant to the requests of corresponding approval and/or registration authorities.

There can be no assurance the governmental approvals from the relevant PRC government authorities and other governmental organizations will be received on a timely basis or at all. The parties understand that under PRC law, they may not be able to obtain certain approvals until after closing. If the Merger closes without prior approval from any PRC Governmental Authority, the parties shall at Closing either permit NeoStem to defer delivery of any NeoStem securities to holders of CBH securities through a provision in the certificate of merger or otherwise, or enter into an escrow agreement on terms satisfactory to NeoStem, such that in either event consummation of the Merger or issuance of all consideration to be paid or issued by NeoStem in connection with, related to, or contingent upon the consummation of the Merger may be deferred or held back by NeoStem, or held in escrow, in each case subject to an absolute right of NeoStem to receive back all such consideration and rescind the Merger and all related transactions if any such PRC regulatory approvals are not obtained within a reasonable period of time after Closing (such time period to be fixed in the escrow agreement, but not in excess of 45 days).

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THE AGREEMENT AND PLAN OF MERGER

The following is a summary of the material provisions of the Agreement and Plan of Merger. This summary may not contain all of the information that is important to the stockholders of NeoStem and CBH and thus this description is qualified in its entirety by reference to the Agreement and Plan of Merger and the Amendment No. 1 thereto, attached as Annex A hereto, which you are urged to read carefully and in its entirety.

The Merger

In general terms, the proposed Merger involves the merger of CBH with and into Subco, which is a wholly-owned subsidiary of NeoStem, with Subco as the surviving entity, pursuant to the terms and subject to the conditions set forth in the Agreement and Plan of Merger. The Agreement and Plan of Merger provides that at the time of the Merger, the only material assets of CBH will be CBH’s 51% ownership interest in Suzhou Erye Pharmaceuticals Company Ltd. (“Erye”), a Sino-foreign joint venture with limited liability organized under the laws of the People’s Republic of China (the “PRC”) and at least $550,000 cash, as more particularly described herein. A condition of the Merger is that CBH sell or transfer its subsidiary CBC prior to the Merger.

Upon consummation of the Merger, NeoStem will own 51% of the ownership interests in Erye, and EET will own the remaining 49% ownership interest. In connection with the execution of the Agreement and Plan of Merger, Subco and EET have negotiated a revised joint venture agreement (the “Joint Venture Agreement”), which, subject to approval by the requisite PRC governmental authorities, will become effective and will govern the rights and obligations with respect to their respective ownership interests in Erye. Pursuant to the terms and conditions of the Joint Venture Agreement, dividend distributions to EET and Subco will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses. In the event of the sale of all of the assets of Erye or liquidation of Erye, NeoStem will be entitled to receive the return of such additional paid-in capital before distribution of Eyre’s assets is made based upon the ownership percentages of NeoStem and EET, and upon an initial public offering of Erye which raises at least 50,000,000 RMB (or approximately U.S. $7,300,000), NeoStem will be entitled to receive the return of such additional paid-in capital. For a further discussion of the Joint Venture Agreement, see the section “— The Joint Venture Agreement,” below.

Pursuant to the terms of the Merger, all of the shares of CBH Common Stock, issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, 7,150,000 shares of NeoStem Common Stock. Subject to the cancellation of outstanding warrants to purchase shares of CBH Common Stock held by RimAsia, a principal stockholder of NeoStem and the sole holder of shares of CBH Series B Preferred Stock, all of the shares of CBH Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive, in the aggregate, (i) 6,458,009 shares of NeoStem Common Stock and (ii) 8,177,512 shares of NeoStem Series C Preferred Stock, each with a liquidation preference of $1.125 per share and initially convertible into 9,086,124 shares of NeoStem Common Stock at an initial exercise price of $0.90. Three of the current directors of CBH, An Lufan, Liu Xiaohao and Chris Peng Mao, and certain of their affiliates, will give up their personal portions of the NeoStem Common Stock to be received in the Merger (an aggregate of approximately 1,886,232 shares) to Fullbright Finance Limited (a wholly-owned subsidiary of EET, which is the holder of 49% of the interests in Erye) to incentivize such recipients to approve and/or assist with Merger-related transactions.

At the Effective Time, NeoStem will issue 9,532 shares of NeoStem Common Stock to Steven Globus, a director of CBH, and 7,626 shares of NeoStem Common Stock to Chris Peng Mao, the Chief Executive Officer of CBH, in exchange for the cancellation and the satisfaction in full of indebtedness in the aggregate principal amount of $90,000, plus any and all accrued but unpaid interest thereon, and other obligations of

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CBH to Messrs. Globus and Mao. NeoStem will bear 50% of up to $450,000 of CBH’s expenses post-merger, and satisfaction of the liabilities of Messrs. Globus and Mao will count toward that obligation.

For assistance in effecting the Merger, 125,000 shares of NeoStem Common Stock will be issued to EET. In addition, an aggregate of 203,338 shares of NeoStem Common Stock will be issued to Shi Mingsheng (the Chairman of the Board of Directors of Erye and a holder of approximately two-thirds of EET) and Madam Zhang Jian (General Manager of Erye and a holder of approximately 10% of EET) in connection with the transactions contemplated by the Merger after the timely receipt of all PRC approvals.

Pursuant to the terms of the Exchange Offer (as defined on page [293]) and only in the event the Merger is consummated and the related post-closing obligations are satisfied, each holder of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may exchange all of such holder’s warrants to purchase one share of CBH Common Stock for Class C Warrants to purchase 0.24038 shares of NeoStem Common Stock at an exercise price of $2.50 per share. It is a condition to the consummation of the transactions contemplated by the Agreement and Plan of Merger that the holders of ALL of the outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) must tender their Existing CBH Warrants in exchange for the Class C Warrants being offered by NeoStem in the Exchange Offer; however, such condition may be waived by NeoStem in its sole discretion. In the event NeoStem, in its sole discretion, waives such closing condition and the transactions contemplated by the Agreement and Plan of Merger are consummated, then holders of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may, in accordance with the terms of such holder’s warrants, may elect to receive a cash payment for their Existing CBH Warrants equal to the Black Scholes value of the warrant on the date of such request. If the holder of the warrant does not make such election, then all of such holder’s warrants to purchase shares of CBH Common Stock shall be replaced with a new warrant (each a “NeoStem Class E Warrant”) substantially in the form of such holder’s existing warrant evidencing the right to purchase 0.19255 shares of NeoStem Common Stock with the exercise price per share adjusted such that the aggregate exercise price of the NeoStem Class E Warrant is the same as the aggregate exercise price of the warrant in effect immediately prior to the Effective Time.

The Joint Venture Agreement

In connection with the execution of the Agreement and Plan of Merger, Subco and EET have negotiated a revised joint venture agreement (the “Joint Venture Agreement”), which, subject to approval by the requisite PRC governmental authorities, will become effective and will govern the rights and obligations with respect to their respective ownership interests in Erye. Pursuant to the terms and conditions of the Joint Venture Agreement, dividend distributions to EET and NeoStem/Subco will be made in proportion to their respective ownership interests in Erye; provided, however, that for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement becomes effective, (i) 49% of undistributed profits (after tax) will be distributed to EET and lent back to Erye by EET for use by Erye in connection with the construction of a new plant for Erye; (ii) 45% of the net profit (after tax) will be provided to Erye as part of the new plant construction fund, which will be characterized as paid-in capital for NeoStem’s 51% interest in Erye; and (iii) 6% of the net profit will be distributed to NeoStem directly for NeoStem’s operating expenses. In the event of the sale of all of the assets of Erye or liquidation of Erye, NeoStem will be entitled to receive the return of such additional paid-in capital before distribution of Eyre’s assets is made based upon the ownership percentages of NeoStem/Subco and EET, and upon an initial public offering of Erye which raises at least 50,000,000 RMB (or approximately U.S. $7,300,000), NeoStem will be entitled to receive the return of such additional paid-in capital. The Joint Venture Agreement also gives each party the right of first refusal in the event the other party to the Joint Venture Agreement intends to transfer its equity interests in the Joint Venture Company to a third party.

The Joint Venture Agreement further provides that the Board of Directors of the Joint Venture Company shall consist of five (5) directors. Erye shall have the right to designate two (2) of the directors. NeoStem or Subco shall have the right to designate three (3) of the directors, provided however that one of such directors designated by NeoStem or Subco shall be the NeoStem board member, who had been designated by Erye to serve on the NeoStem Board of Directors, which initially shall be Shi Mingsheng, and shall represent the interests of NeoStem consistent with his fiduciary duties as a director of NeoStem. Further, certain significant corporate events require unanimous approval or approval of 75% of the Board of Directors pursuant to the

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terms of the Joint Venture Agreement. Erye shall also have the right to designate or recommend the Chairman and Chief Financial Officer of the Joint Venture Company.

Date of Closing; Record Date

The Agreement and Plan of Merger provides that the Merger will close no later than the third business day following the satisfaction or waiver of each of the conditions to the Merger, including the approval and adoption of the Agreement and Plan of Merger by the stockholders of CBH and the approval of the issuance of NeoStem securities in connection with the Merger by the stockholders of NeoStem. Each of the NeoStem Board of Directors and the CBH Board of Directors has fixed the close of business on July 2, 2009 as the record date for the determination of stockholders entitled to notice of and to vote at its special meeting, and at any adjournment or postponement thereof.

Management of NeoStem Following the Merger

Pursuant to the Agreement and Plan of Merger, NeoStem’s Board of Directors will be increased from five directors to seven directors. Eric Wei will be added to the Board of Directors of NeoStem immediately after the Effective Time, and Shi Mingsheng will be added to the Board of Directors immediately after receipt of all PRC approvals following the Effective Time. The four directors elected at NeoStem’s annual meeting held in May 2009 (Robin L. Smith, Richard Berman, Steven S. Myers and Joseph Zuckerman) as well as the director appointed by the NeoStem Board of Directors on June 9, 2009 (Drew Bernstein) will continue to serve. Therefore, the NeoStem Board of Directors will consist of the following seven members promptly following the consummation of the Merger and the receipt of all PRC approvals: Robin L. Smith (Chairman), current Chairman of the Board and Chief Executive Officer of NeoStem; Eric Wei, the managing partner of RimAsia; Shi Mingsheng, a Director of and the Chief Operating Officer of CBH, the Chairman of the Board of Directors of Erye, and a holder of approximately two-thirds of EET (which is the holder of a 49% interest in Erye and a 100% interest in Fullbright Finance Limited, a greater than 5% beneficial owner of NeoStem); and Richard Berman, Drew Bernstein, Steven S. Myers and Joseph Zuckerman, each of the latter four a current director of NeoStem (the latter four are independent directors, as defined under the NYSE Amex listing standards). In the event that NeoStem Proposal No. 8 attains stockholder approval at the special meeting and the Board of Directors determines to file the Board Classification Amendment (as defined therein) with the Secretary of State of the State of Delaware, NeoStem’s Board of Directors would be divided into three separate classes of directors, as nearly equal in number as possible, with each respective class to serve a three-year term. The classes would be elected on a rotating or staggered basis, with each class being elected at the annual stockholder meeting coinciding with the expiration of that class’s term. For details regarding the proposed classification of NeoStem’s Board, see NeoStem Proposal No. 8 of this joint proxy statement/prospectus.

NeoStem believes, as its business moves into China, that it would also be desirable to have one or more independent directors who reside in the PRC and have relevant experience. The Nominating Committee of NeoStem’s Board of Directors intends to continue its search for such potential director candidates.

Conversion of Securities; Exchange Ratio

As soon as practical after the effectiveness of the Merger, each holder of CBH Common Stock shall be entitled to receive for each share of CBH Common Stock held by such CBH stockholder, a fraction of a share of NeoStem Common Stock equal to the exchange ratio (as defined herein). The “exchange ratio” shall be equal to the quotient of 7,150,000 divided by the sum of (x) the number of shares of CBH Common Stock outstanding at the Effective Time, and (y) the number of shares of CBH Common Stock issuable upon exercise of in-the-money warrants of CBH immediately prior to the Effective Time. Each holder of CBH Common Stock shall receive, for each share of CBH Common Stock held by such holder, 0.19255 shares.

Pursuant to the terms of the Exchange Offer (as defined on page [293]) and only in the event the Merger is consummated and the related post-closing obligations are satisfied, each holder of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may exchange all of such holder’s warrants to purchase one share of CBH Common Stock for Class C Warrants to purchase 0.24038 shares of NeoStem Common Stock at an exercise price of $2.50 per share. It is a condition to the consummation of the transactions contemplated by the Agreement and Plan of Merger that the holders of ALL of the

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outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) must tender their Existing CBH Warrants in exchange for the Class C Warrants being offered by NeoStem in the Exchange Offer; however, such condition may be waived by NeoStem in its sole discretion. In the event NeoStem, in its sole discretion, waives such closing condition and the transactions contemplated by the Agreement and Plan of Merger are consummated, then holders of outstanding warrants to purchase shares of CBH Common Stock (other than warrants held by RimAsia) may, in accordance with the terms of such holder’s warrants, may elect to receive a cash payment for their Existing CBH Warrants equal to the Black Scholes value of the warrant on the date of such request. If the holder of the warrant does not make such election, then all of such holder’s warrants to purchase shares of CBH Common Stock shall be replaced with a new warrant (each a “NeoStem Class E Warrant”) substantially in the form of such holder’s existing warrant evidencing the right to purchase 0.19255 shares of NeoStem Common Stock with the exercise price per share adjusted such that the aggregate exercise price of the NeoStem Class E Warrant is the same as the aggregate exercise price of the warrant in effect immediately prior to the Effective Time.

The NeoStem Common Stock that holders of CBH Common Stock will receive as a result of the Merger is traded and quoted on the NYSE Amex under the market symbol “NBS.”

Exchange of Certificates

Promptly following the Effective Time, NeoStem shall deposit with Continental Stock Transfer & Trust Company or such other exchange agent as may be designated by NeoStem (the “Exchange Agent”), for the benefit of CBH Stockholders, for distribution certificates representing 7,150,000 shares of NeoStem Common Stock for distribution to holders of outstanding shares of CBH Common Stock. As soon as practicable after the Effective Time, CBH shall instruct the Exchange Agent to mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of CBH Common Stock, a certificate or certificates for the shares of NeoStem Common Stock to which such holder is entitled.

After the completion of the Merger, each certificate evidencing CBH Common Stock, until so surrendered and exchanged, will be deemed, for all purposes, to evidence only the right to receive the shares of NeoStem Common Stock which the holder of such certificate is entitled to receive. The holder of such unexchanged certificate will not be entitled to receive any dividends or other distributions payable by the combined company until the certificate has been exchanged. Subject to applicable laws, such dividends and distributions will be paid without interest.

Issuance of Equity Grants

The Agreement and Plan of Merger provides that the Compensation Committee of the NeoStem Board of Directors shall have the authority to grant as bonuses (the “Merger Bonus Shares”) under any equity compensation plan, an aggregate of 1,000,000 shares (or shares and options to purchase 1,000,000 shares, in any combination) of NeoStem Common Stock to (i) its officers, consultants and advisors upon the Closing of the Merger and (ii) such officers, significant employees and/or directors of Erye following the receipt of all PRC approvals after the Closing of the Merger, as the Compensation Committee shall determine in connection with the closing of the transactions contemplated by the Agreement and Plan of Merger, and to pay withholding taxes thereon. It is currently anticipated that the following persons will receive shares, or options to purchase shares, of NeoStem Common Stock pursuant to this authority: Robin L. Smith (175,000 shares), Catherine M. Vaczy (150,000 shares), Shi Mingsheng (175,000 shares), Madam Zhang Jian (175,000 shares), and two NeoStem consultants or advisors (an aggregate of 200,000 shares). Based on the closing price of the NeoStem Common Stock on June 25, 2009 of $2.00, the amount of U.S. withholding taxes that NeoStem would pay in connection with the grants as allocated to the individuals listed above would be approximately $841,000. Any such grants would be made under the NeoStem, Inc. 2009 Equity Compensation Plan (the “2009 Plan”) or the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”), as appropriate. The adoption of the 2009 Non-U.S. Plan is the subject of NeoStem Proposal No. 7 of this joint proxy statement/prospectus, and any grants under the 2009 Non-U.S. Plan would be subject to the approval of the 2009 Non-U.S. Plan at the NeoStem special meeting. Such Merger-related grants are discussed in detail in NeoStem Proposal No. 6, below, in the section “Issuance of Equity Grants in Connection with the Merger,” and in NeoStem Proposal No. 7, below, in the section “Issuance of Equity Grants in Connection with the Merger.”

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Representations and Warranties

NeoStem, CBH, Subco and CBC made a number of mutual, customary representations and warranties in the Agreement and Plan of Merger regarding aspects of their respective businesses, financial condition, structure and other facts pertinent to the Merger. Such representations and warranties are qualified by confidential disclosure schedules that were exchanged by NeoStem and CBH. The representations of NeoStem and Subco to CBH and of CBH and CBC to NeoStem and Subco cover the following topics, among others, as they relate to each company and its subsidiaries:

Conduct of Business Before Completion of the Merger

The parties agreed that until the earlier of the completion of the Merger or the termination of the Agreement and Plan of Merger, each party and its subsidiaries will, amongst other things:

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CBH agreed that until the earlier of the completion of the Merger or the termination of the Agreement and Plan of Merger, in addition to customary negative covenants agreed to by each of NeoStem and CBH, CBH would not:

NeoStem agreed that until the earlier of the completion of the Merger or the termination of the Agreement and Plan of Merger, in addition to customary negative covenants agreed to by each of NeoStem and CBH, NeoStem would not:

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Meetings of Stockholders

NeoStem and CBH agreed to take all action necessary in accordance with Delaware law and their respective charter documents to convene meetings of their respective stockholders, to be held as promptly as practicable after the registration statement of which this joint proxy statement/prospectus is a part is declared effective, for the purpose of voting on a proposal to approve the Merger and Agreement and Plan of Merger, in the case of CBH and the issuance of NeoStem securities in connection with the Merger and other specified matters relating to the consummation of the Merger, in the case of NeoStem. Subject to the limitations set forth below, NeoStem and CBH agreed to use commercially reasonable efforts to solicit from their respective stockholders proxies in favor of their respective Merger proposals and to take all other action necessary or advisable to secure the vote required to approve such proposals.

Conditions to the Merger

The obligations of CBH, NeoStem and Subco to consummate the Merger shall be subject to the satisfaction (or waiver by each party, to the extent permitted by law) of the following conditions, among others:

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The obligations of NeoStem and Subco to consummate the transactions contemplated by the Agreement and Plan of Merger shall be subject to the fulfillment (or waiver by NeoStem) of the following conditions, among others:

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The obligations of CBH to consummate the transactions contemplated by the Agreement and Plan of Merger shall be subject to the fulfillment (or waiver by CBH) of each of the following conditions, among others:

Any of the conditions in the Agreement and Plan of Merger may be waived by the party benefited thereby, except those conditions imposed by law.

Termination

The Agreement and Plan of Merger may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of the Agreement and Plan of Merger by NeoStem’s stockholders and/or CBH’s stockholders):