As filed with the Securities and Exchange Commission on September 2, 2011

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.
Andrea L. Brown, Esq.
Lloyd Jeglikowski, 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

TABLE OF CONTENTS

CALCULATION OF REGISTRATION FEE (NEOSTEM, INC.)

Title of Each Class of Securities to Be Registered		Amount to Be Registered(1)				Proposed Maximum Offering Price Per Unit				Proposed Maximum Aggregate Offering Price				Amount of Registration Fee(3)
Common Stock, par value $0.001 per share			10,914,051				N/A			$	22.2525	(2)		$	1.00
$1.466 Warrants to purchase Common Stock			1,881,008				N/A				N/A				N/A
Common Stock underlying $1.466 Warrants			1,881,008				N/A				N/A				N/A
Total			14,676,067				N/A			$	22.2525			$	1.00

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may determine.

TABLE OF CONTENTS

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 SEPTEMBER 2, 2011

TO THE STOCKHOLDERS OF NEOSTEM, INC.
AND THE STOCKHOLDERS OF AMORCYTE, INC.

A MERGER — YOUR VOTE IS VERY IMPORTANT!

The Board of Directors of NeoStem, Inc., a Delaware corporation (“NeoStem”), and the Board of Directors of Amorcyte, Inc., a Delaware corporation (“Amorcyte”), have approved the merger (the “Amorcyte Merger”) of Amo Acquisition Company I, Inc., a newly formed wholly-owned subsidiary of NeoStem (“Subco”), with and into Amorcyte, with Amorcyte surviving as a wholly-owned subsidiary of NeoStem, pursuant to an Agreement and Plan of Merger, dated July 13, 2011, as such agreement may be amended from time to time (the “Agreement and Plan of Merger”), among NeoStem, Amorcyte, Subco and Amo Acquisition Company II, LLC, another newly formed wholly-owned subsidiary of NeoStem (“Subco II”).

NeoStem continues to develop as a company in the cell therapy arena following its January 2011 completion of the Progenitor Cell Therapy, LLC (“PCT”) acquisition. NeoStem views the PCT acquisition as a foundation in achieving its strategic mission of capturing the paradigm shift to cell therapy. Amorcyte is a development stage cell therapy company focusing on novel treatments for cardiovascular disease. Amorcyte’s lead product candidate, AMR-001, is ready to initiate a Phase 2 study for the treatment of acute myocardial infarction (AMI).

Pursuant to the terms of the Amorcyte Merger, all of the shares of Amorcyte common stock and Amorcyte Series A Preferred Stock, all options and warrants to acquire equity of Amorcyte, and all debt obligations issued by Amorcyte that are convertible into Amorcyte Series A Preferred Stock (to the extent not already converted, being treated as if actually converted), in each case, issued and outstanding immediately prior to the effective time of the Amorcyte Merger (the “Effective Time”), will be converted into the right to receive, in the aggregate, (1) 6,821,283 shares of common stock, par value $0.001 per share, of NeoStem (“NeoStem Common Stock”), (2) warrants to purchase an aggregate of 1,881,008 shares of NeoStem Common Stock, (3) subject to the satisfaction of certain specified business milestones, up to 4,092,768 additional shares of NeoStem Common Stock, and (4) if and when Amorcyte’s lead product candidate AMR-001 is approved and commercialized, certain earn out payments equal to 10% of net sales of Amorcyte’s lead product candidate AMR-001. Pursuant to the Agreement and Plan of Merger, within 90 days after the Effective Time of the Amorcyte Merger, Amorcyte will be merged with and into Subco II (the “Subco II Merger”). Subco II, in its capacity as the wholly-owned subsidiary of NeoStem surviving the transactions contemplated by the Agreement and Plan of Merger, is hereinafter sometimes referred to as the “Surviving Company.”

This joint proxy statement/prospectus provides you with detailed information about the proposed Amorcyte Merger, a description of which begins on page 89. THE AMORCYTE MERGER AND THE BUSINESS OF THE COMBINED COMPANY INVOLVE A HIGH DEGREE OF RISK. You should carefully read the section entitled “Risk Factors” beginning on page 25 for a discussion of specific risks that you should consider in determining how to vote on the proposed Amorcyte 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 [] [], 2011 and is first being mailed to stockholders of NeoStem and Amorcyte on or about [], 2011.

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 NeoStem Annual Meeting and/or the Amorcyte Special Meeting, as appropriate. We strongly support the proposed transactions and join with our Boards of Directors or Managers, as applicable, in enthusiastically recommending that you vote in favor of the proposals presented to you for approval.

Robin L. Smith, M.D. Chief Executive Officer NeoStem, Inc.		Paul J. Schmitt Chief Executive Officer Amorcyte, Inc.

TABLE OF CONTENTS

NEOSTEM, INC.

Notice of Annual Meeting of Stockholders
to be held October [], 2011

To the Stockholders of NeoStem, Inc.:

NOTICE IS HEREBY GIVEN that an annual meeting of stockholders of NeoStem, Inc. (“NeoStem”) will be held at the offices of NeoStem, Inc., 420 Lexington Avenue, Suite 450, New York, NY 10170, on October [_], 2011, at 11:00 a.m., local time (the “NeoStem Annual Meeting”), for the following purposes:

The foregoing items of business are more fully described in the joint proxy statement/prospectus that accompanies this notice. The NeoStem Board of Directors has fixed the close of business on August 17, 2011 as the record date for the determination of stockholders entitled to notice of and to vote at this NeoStem Annual Meeting and at any adjournment or postponement thereof.

TABLE OF CONTENTS

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS OF NEOSTEM, INC. TO BE HELD OCTOBER [], 2011. THIS PROXY STATEMENT AND THE ACCOMPANYING FORM OF PROXY CARD ARE AVAILABLE AT HTTP://NEOSTEM2011.INVESTORROOM.COM. Under Securities and Exchange Commission rules, 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 [] [], 2011

All NeoStem stockholders are cordially invited to attend the NeoStem Annual Meeting in person. Whether or not you expect to attend the NeoStem Annual 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 NeoStem Annual 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 NeoStem Annual Meeting, you must obtain from the record holder a proxy issued in your name.

TABLE OF CONTENTS

AMORCYTE, INC.

Notice of Special Meeting of Stockholders
to be held October [], 2011

To the Stockholders of Amorcyte, Inc.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Amorcyte, Inc. (“Amorcyte”) will be held at the offices of NeoStem, Inc., 420 Lexington Avenue, Suite 450, New York, NY 10170, on October [_], 2011, at 9:00 a.m., local time (the “Amorcyte Special Meeting”), for the following purposes:

The foregoing items of business are more fully described in the joint proxy statement/prospectus that accompanies this notice. The Amorcyte Board of Directors has fixed the close of business on August 17, 2011 as the record date for the determination of stockholders entitled to notice of and to vote at this Amorcyte Special Meeting and at any adjournment or postponement thereof.

		By Order of the Board of Directors of Amorcyte, Inc. Paul J. Schmitt Chief Executive Officer Allendale, New Jersey [] [], 2011

All Amorcyte stockholders are cordially invited to attend the Amorcyte Special Meeting in person. Whether or not you expect to attend the Amorcyte Special 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 Amorcyte Special Meeting.

TABLE OF CONTENTS

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE AMORCYTE MERGER AND OTHER PROPOSALS			1
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS			11
The Companies			11
Comparative Per Share Market Price and Dividend Information			14
Selected Unaudited Pro Forma Condensed Combined Financial Information			16
Comparative Per Share Data			17
Structure of the Amorcyte Merger			17
The Terms of the Agreement and Plan of Merger			18
Conversion of Equity Interests of Amorcyte; Adjustments			18
Escrow of Base Stock Consideration			20
Conditions to the Amorcyte Merger			20
Termination			21
The Reasons the Board of Directors of NeoStem and the Board of Directors of Amorcyte Approved the Amorcyte Merger and the Agreement and Plan of Merger			21
Fees and Expenses			22
Interests of Certain Persons in the Amorcyte Merger			22
The Recommendations of the Board of Directors of NeoStem			22
The Recommendations of the Board of Directors of Amorcyte			23
Risk Factors Related to the Amorcyte Merger			23
The Stockholders Meetings			24
Accounting Treatment			24
Governmental Approval of the Amorcyte Merger			24
Appraisal Rights			24
RISK FACTORS			25
RISKS RELATED TO THE AMORCYTE MERGER			25
RISKS RELATED TO AMORCYTE’S BUSINESS			32
Risks Related to Amorcyte’s Clinical Development Activities			32
Risks Related to the Commercialization of Amorcyte’s Product Candidate			36
Risks Related to Amorcyte’s Intellectual Property			41
Risks Related to Regulatory Approval and Other Government Regulations			43
Risks Related to Amorcyte’s Financial Condition			47
RISKS RELATED TO NEOSTEM'S BUSINESS AND FINANCIAL CONDITION			48
Risks Related to NeoStem’s Financial Condition			48
Risks Related To Cell Therapy — United States			49
Risks Related to Doing Business in China			65
RISKS RELATED TO NEOSTEM SECURITIES			74
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			79

TABLE OF CONTENTS

THE NEOSTEM ANNUAL MEETING OF STOCKHOLDERS			80
Purpose of the NeoStem Annual Meeting			80
Record Date and Outstanding Shares			83
Stock Ownership of Management and Certain Stockholders			81
Voting Rights and Solicitation of Proxies; Expenses			83
Vote Required			81
Quorum; Abstentions; Broker Non-Votes			84
Voting of Proxies; Revocation of Proxies			84
THE AMORCYTE SPECIAL MEETING OF STOCKHOLDERS			83
Purpose of the Amorcyte Special Meeting			83
Record Date and Outstanding Shares			83
Ownership of Management			83
Voting Rights and Solicitation of Proxies; Expenses			83
Vote Required			99
Quorum; Abstentions; Broker Non-Votes			84
Voting of Proxies; Revocation of Proxies			84
Rights of Dissenting Stockholders			85
Appraisal Rights Procedures			85
NEOSTEM PROPOSAL 1 TO APPROVE THE ISSUANCE OF SECURITIES IN CONNECTION WITH THE AMORCYTE MERGER PURSUANT TO THE AGREEMENT AND PLAN OF MERGER -AND- AMORCYTE PROPOSAL 1 TO ADOPT THE AGREEMENT AND PLAN OF MERGER.			89
Background of the Amorcyte Merger			89
What Am I Being Asked to Consider and Vote Upon?			91
The Amorcyte Merger			92
Reasons for the Amorcyte Merger			96
General — Board Considerations			96
Joint Reasons for the Amorcyte Merger			96
Reasons of the NeoStem Board			97
Reasons of the Amorcyte Board			98
RECOMMENDATIONS OF THE NEOSTEM AND THE AMORCYTE BOARDS			99
Recommendation of the NeoStem Board			99
Recommendation of the Amorcyte Board			99
Vote Required			99
Existing Business Relationships Between NeoStem and Amorcyte			99
Interests of Certain Persons in the Amorcyte Merger			101
Material United States Federal Income Tax Consequences of the Amorcyte Merger and the Subco II Merger			103
Anticipated Accounting Treatment of the Amorcyte Merger			107
Governmental Approval of the Amorcyte Merger			107

TABLE OF CONTENTS

THE AGREEMENT AND PLAN OF MERGER			108
The Amorcyte Merger			108
Description of Warrants to be Issued in the Amorcyte Merger			112
Date of Closing; Record Date			112
Management of NeoStem Following the Amorcyte Merger			113
Exchange for NeoStem Common Stock			113
Representations and Warranties			113
Conduct of Business Before Completion of the Amorcyte Merger			114
Stockholders Meetings			116
Conditions			116
Termination			118
Expenses			119
Amendment			119
Voting Agreement			120
COMPARISON OF RIGHTS OF HOLDERS OF NEOSTEM COMMON STOCK AND HOLDERS OF AMORCYTE CAPITAL STOCK			121
General			121
Authorized Equity Interests			122
Amendment of Governing Documents			125
Directors			127
Size of Board			127
Classified Board			127
Election of Directors			128
Removal of Directors			128
Vacancies			128
Board Quorum and Vote Requirements			129
Limitation of Personal Liability			129
Indemnification			130
Transactions with Officers and Directors/Conflicts of Interest			131
Stockholders			131
Special Meeting of Stockholders			131
Inspection of Books and Records			132
Notice Requirements for Stockholder Proposals, Including Director Nominations			133
Appraisal or Dissenters' Rights			136
Stockholder or Member Action Without Meeting			137
Dividends and Distributions			137
Amorcyte Shareholders Agreements			140
BUSINESS OF NEOSTEM			142
Overview			142
Cell Therapy — United States			142

TABLE OF CONTENTS

Competition — Cell Collection, Processing and Storage			154
Government Regulation: Cell Therapy — United States			154
Regenerative Medicine — China			159
PRC Corporate Legal Structure and Government Regulation			161
Pharmaceutical Manufacturing — China			162
Governmental Regulation — Pharmaceutical Manufacturing — China			165
Competition — Pharmaceutical Business in China			166
Strategic Alternatives With Respect to Erye			166
Intellectual Property			167
Employees			168
Properties			168
Legal Proceedings			200
NeoStem Corporate Information			170
NEOSTEM’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			171
Overview			171
Results of Operations			206
Liquidity and Capital Resources			183
Liquidity and Capital Requirements Outlook			187
Seasonality			191
Off-Balance Sheet Arrangements			191
NeoStem — Critical Accounting Policies and Estimates			191
BUSINESS OF AMORCYTE			195
Overview			195
Amorcyte’s Advantages			195
Amorcyte’s Business Strategy and Primary Market			196
Amorcyte’s Product Development Pipeline — AMR-001			196
Preclinical Research — Rationale for the Use of CD34+ Cell Populations for Cardiovascular Indications			196
Mechanism of Action of AMR-001			196
Clinical Development of AMR-001			197
Plans for Future Development			197
Manufacturing			197
Sales and Marketing			198
Intellectual Property			198
Competition			199
Employees			200
Facilities			200
Legal Proceedings			200
Government Regulation — Amorcyte			201
Amorcyte Corporate Information			205

TABLE OF CONTENTS

AMORCYTE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			206
Results of Operations			206
Liquidity and Capital Resources			206
OTHER RELATIONSHIPS BETWEEN THE PARTIES			208
MANAGEMENT OF THE COMBINED COMPANY AFTER THE AMORCYTE MERGER			210
NEOSTEM CORPORATE GOVERNANCE			218
Director Independence			218
Board Leadership Structurs and Role in Risk Oversight			218
Committees			218
Audit Committee			218
Statement of Audit Committee			220
Compensation Committee			220
Nominating and Governance Committee			222
Qualifications for Board Membership			221
Diversity Considerations in Director Nominations			222
Nominating and Governance Committee Procedures			221
Procedures for Considering Nominations Made by Stockholders			222
Stockholder Communications			223
Board and Committee Meeting Attendance			223
Director Attendance at Annual Meetings			223
Section 16(a) Beneficial Ownership Reporting Compliance			223
Code of Ethics			223
CAPITALIZATION			224
NEOSTEM PROPOSAL 2 TO ADOPT AN AMENDMENT TO NEOSTEM’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE CLASSIFICATION OF THE NEOSTEM BOARD OF DIRECTORS SO THAT THE TERMS OF ALL DIRECTORS EXPIRE AT THE NEOSTEM ANNUAL MEETING.			225
NEOSTEM PROPOSAL 3. IF NEOSTEM PROPOSAL 2 IS APPROVED, TO ELECT 7 NOMINEES TO THE NEOSTEM BOARD OF DIRECTORS, EACH TO SERVE A ONE-YEAR TERM EXTENDING UNTIL THE 2012 ANNUAL MEETING OF NEOSTEM STOCKHOLDERS. IF NEOSTEM PROPOSAL 2 IS NOT APPROVED, TO ELECT 2 NOMINEES AS CLASS II DIRECTORS TO THE NEOSTEM BOARD OF DIRECTORS, EACH TO SERVE FOR A THREE-YEAR TERM EXTENDING UNTIL THE 2014 ANNUAL MEETING OF NEOSTEM STOCKHOLDERS.			227
NEOSTEM PROPOSAL 4 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 BY 6,000,000 SHARES.			229
NEOSTEM PROPOSAL 5 TO RATIFY THE APPOINTMENT OF GRANT THORNTON LLP AS NEOSTEM’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2011.			237

TABLE OF CONTENTS

NEOSTEM PROPOSAL 6 TO APPROVE THE ADJOURNMENT OF THE NEOSTEM ANNUAL 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.			240
NEOSTEM EXECUTIVE COMPENSATION			241
NeoStem Summary Compensation Table			241
Employment Agreements and Equity Grants			243
NeoStem’s Outstanding Equity Awards at Fiscal Year-End			247
NeoStem Equity Compensation Plan Information			250
NEOSTEM DIRECTOR COMPENSATION			251
NEOSTEM'S DIRECTOR INDEPENDENCE			252
AMORCYTE EXECUTIVE COMPENSATION			253
Amorcyte Summary Compensation Table			253
Amorcyte Compensatory Arrangements			253
Outstanding Equity Awards at Fiscal Year-End			255
PRICE RANGE OF COMMON STOCK AND DIVIDEND INFORMATION			256
NeoStem			256
Amorcyte			256
DESCRIPTION OF SECURITIES			257
Common Stock			257
Preferred Stock			257
Options			268
Warrants			268
Anti-Takeover Effect of Certain Provisions of Delaware Law and NeoStem's Certificate of Incorporation and Bylaws			279
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF NEOSTEM			282
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF AMORCYTE			285
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			289
NeoStem			289
Amorcyte			292
AMORCYTE PROPOSAL 2 TO ADJOURN THE AMORCYTE SPECIAL MEETING IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES AT THE TIME OF THE MEETING TO APPROVE THE AMORCYTE PROPOSAL			293
EXPERTS			294
LEGAL MATTERS			294
WHERE YOU CAN FIND MORE INFORMATION			294
STOCKHOLDER PROPOSALS			295
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS			295
TRANSACTION OF OTHER BUSINESS			295

TABLE OF CONTENTS

NEOSTEM AND AMORCYTE: INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			F-1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			F-2
NEOSTEM FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			F-14
AMORCYTE FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			F-95
AGREEMENT AND PLAN OF MERGER			Annex A
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE, SECTION 262, APPRAISAL RIGHTS			Annex B
CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION (Declassification of NeoStem Board of Directors)			Annex C
AMENDMENT TO 2009 EQUITY COMPENSATION PLAN			Annex D
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS (NEOSTEM)			II-1
NEOSTEM SIGNATURES			II-12

TABLE OF CONTENTS

ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about NeoStem 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:

For NeoStem Stockholders or Amorcyte Stockholders:
NeoStem, Inc.
420 Lexington Avenue, Suite 450
New York, NY 10170
(212) 584-4180

Stockholders Meetings:  To obtain timely delivery of such information, you must request the information no later than five business days before the NeoStem Annual Meeting of Stockholders or the Amorcyte Special Meeting Stockholders, as applicable. Accordingly, if you would like to request any information, please do so no later than [_____], 2011.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE AMORCYTE 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 the Agreement and Plan of Merger, dated as of July 13, 2011, as such agreement may be amended from time to time (the “Agreement and Plan of Merger”), by and among NeoStem, Inc. (“NeoStem”), Amorcyte, Inc. (“Amorcyte”), Amo Acquisition Company I, Inc., a wholly-owned subsidiary of NeoStem (“Subco”) and Amo Acquisition Company II, LLC, another wholly-owned subsidiary of NeoStem (“Subco II”), Subco will merge (the “Amorcyte Merger”) with and into Amorcyte, with Amorcyte surviving as a wholly-owned subsidiary of NeoStem. Within 90 days after the effective time of the Amorcyte Merger (the “Effective Time”), Amorcyte will be merged with and into Subco II (the “Subco II Merger”). In its capacity as the wholly-owned subsidiary of NeoStem surviving the foregoing transactions, Subco II is sometimes referred to as the “Surviving Company.”

Q2: What will the stockholders of Amorcyte receive in the Amorcyte Merger?

A2: Pursuant to the terms of the Agreement and Plan of Merger, all of the shares of Amorcyte’s common stock, par value $0.001 per share (“Amorcyte Common Stock”), all of the shares of Amorcyte’s Series A Preferred Stock, par value $0.001 per share (“Amorcyte Series A Preferred Stock”), all options and warrants to acquire equity of Amorcyte, and all debt obligations issued by Amorcyte that are convertible into Amorcyte Series A Preferred Stock (to the extent not already converted, being treated as if they were actually converted), in each case, issued and outstanding immediately prior to the Effective Time, will, by virtue of the Amorcyte Merger, be cancelled and converted into the right to receive, in the aggregate:

The Contingent Shares will be issued only if certain business milestones are achieved, as follows:

Within 90 days following the end of each calendar quarter, NeoStem will pay Earn Out Payments (to the Amorcyte Representative in trust for the benefit of the former Amorcyte Securityholders) equal to 10% of the net sales of AMR-001, which payment obligation will begin following the date of first commercial sale of AMR-001 and continue until the latest date that a valid patent claim exists on a country by country basis covering AMR-001, provided that if NeoStem licenses or otherwise grants an unaffiliated third party the right to commercialize or otherwise exploit AMR-001 or any portion of AMR-001 (including, without limitation, a

TABLE OF CONTENTS

sublicense for all or part of any territory for AMR-001) then the applicable Earn Out Payment will be equal to 30% of any sublicensing fees, royalties and milestone fees or profit sharing payment (but not payments for development costs) actually received by NeoStem. NeoStem will be entitled to recover direct out-of-pocket clinical development costs not previously paid or reimbursed and any costs, expenses, damages, liabilities, and settlement amounts arising out of or related to claims with respect to patent infringement or otherwise challenging Amorcyte’s ownership of or right to use intellectual property, by reducing any Earn Out Payments due by 50% until such costs have been recouped in full.

Pursuant to the Agreement and Plan of Merger, prior to closing all Amorcyte options and warrants will be modified in writings executed by each optionholder and warrantholder, so that effective upon the Effective Time, all Amorcyte options and warrants will, by virtue of the Amorcyte Merger, be converted into the right to receive the share of any Earn Out Payments that the holders of such options and warrants would have received if they had exercised their Amorcyte options and/or warrants, as applicable, prior to the Effective Time (after taking into account the payment of any exercise price due had they actually exercised). The holders of Amorcyte options and warrants will be entitled to the merger consideration similar to the holders of Amorcyte Common Stock, minus the exercise price of the options and warrants.

The Base Stock Consideration to be issued in the Amorcyte Merger is subject to certain escrow provisions. See Q4 below.

When the merger consideration is distributed to Amorcyte’s stockholders, the liquidation preference accorded by Amorcyte’s amended and restated certificate of incorporation, as amended, to the holders of Amorcyte Series A Preferred Stock must be satisfied before the holders of Amorcyte Common Stock will receive any of the merger consideration. In accordance with an August 2011 amendment to Amorcyte’s Amended and Restated Certificate of Incorporation, for purposes of the Series A liquidation preference, all NeoStem Common Stock and all NeoStem Warrants paid to Amorcyte stockholders will be valued at the values set forth in the Agreement and Plan of Merger (i.e. at $1.466 per share and $1.063 per Warrant, respectively, or $12 million in the aggregate). Based on a liquidation preference of $1,197.975 per share and 10,459 shares of Amorcyte Series A Preferred Stock outstanding, the first $12,529,620.53 of consideration received by the Amorcyte stockholders will be distributed entirely to the holders of Amorcyte Series A Preferred Stock. As a result, all of the Base Stock Consideration and all of the Warrants will be distributed to holders of Amorcyte Series A Preferred Stock.

Q3: Is any of the merger consideration subject to adjustment?

A3: The Base Stock Consideration is subject to adjustment, provided that in no event will NeoStem be required to issue as Base Stock Consideration more than 6,821,283 shares of NeoStem Common Stock. The Agreement and Plan of Merger provides that to the extent the amount of Amorcyte’s liabilities (as defined and calculated in the manner described in the Agreement and Plan of Merger) on the closing date are more than $478,000 (the “Target Liabilities”), the Base Stock Consideration will be decreased by two times (2x) the amount by which Amorcyte’s liabilities are greater than the Target Liabilities. Any such decrease will reduce the Base Stock Consideration by two dollars for every dollar by which Amorcyte’s liabilities are greater than the Target Liabilities, with each share of the Base Stock Consideration valued at $1.466 (the average of the closing prices of sales of NeoStem Common Stock on the NYSE-Amex for the 10 trading days ending on the trading day prior to the date of execution of the Agreement and Plan of Merger) (the “Parent Per Share Value”).

Q4: When will the former equity holders of Amorcyte receive their merger consideration?

A4: After the Amorcyte Merger has been completed, the former equityholders of Amorcyte will receive a letter of transmittal describing how they may obtain the NeoStem securities to which they are entitled. No merger consideration will be issued to a former equityholder of Amorcyte until NeoStem receives a letter of transmittal, duly executed and properly completed, from such person. See Q22, below. The Warrants to be issued to the Amorcyte stockholders upon the consummation of the Amorcyte Merger will be delivered as promptly as possible after the Effective Time, which delivery may be by book entry.

TABLE OF CONTENTS

The Base Stock Consideration will be placed in escrow (the “Escrow Account”) pursuant to an escrow agreement to be executed at closing, for the purpose of paying any damages payable to NeoStem in accordance with the indemnification provisions contained in the Agreement and Plan of Merger. The escrow agent shall initially be NeoStem’s transfer agent (the “Escrow Agent”). The Escrow Account will continue from the closing until that date (the “Termination Date”) which is two (2) years and one day after the closing (the “Escrow Period”). Six months after the closing date, an aggregate of up to 20% of the shares of NeoStem Common Stock may be released from the Escrow Account and distributed to the Amorcyte Representative (as defined below) for distribution to Amorcyte’s former stockholders, optionholders and warrantholders (collectively, the “Amorcyte Securityholders”) in accordance with their proportional interests; provided, however, that NeoStem will not be required to release from escrow any shares of NeoStem Common Stock then being held with respect to pending claims by NeoStem. As soon as practicable after the one (1) year anniversary of the closing date (the “One-Year Release Date”), NeoStem will direct the Escrow Agent to release and distribute to the Amorcyte Representative for distribution to the former Amorcyte Securityholders in accordance with the terms of the Escrow Agreement all shares of NeoStem Common Stock then remaining in the Escrow Account except as follows: If no indemnification claims have been asserted by NeoStem prior to the One-Year Release Date, then NeoStem Common Stock with a Parent Per Share Value of $1,250,000 shall remain in the Escrow Account until the Termination Date. If any indemnification claims have been asserted by NeoStem prior to the One-Year Release Date, then NeoStem Common Stock with a Parent Per Share Value equal to the sum of (i) $2,500,000 plus (ii) the amount of any then pending indemnification claims shall remain in the Escrow Account until the Termination Date. As soon as practical after the Termination Date, all shares of NeoStem Common Stock then remaining in the Escrow Account will be released to the Amorcyte Representative for distribution to the former Amorcyte Securityholders; provided that NeoStem Common Stock representing 120% of the maximum amount of any claim made by NeoStem pursuant to the indemnification provisions of the Agreement and Plan of Merger during the Escrow Period will be withheld and remain in the Escrow Account pending resolution of such claim. In addition, a number of shares of NeoStem Common Stock in the Escrow Account which is necessary to satisfy any unsatisfied claims specified in any indemnification claim previously delivered by NeoStem prior to the Termination Date with respect to facts and circumstances existing prior to the expiration of the Escrow Period, shall remain in the Escrow Account until such claims have been resolved.

The Contingent Shares will be issued if and only if the business milestones specified in the Agreement and Plan of Merger are achieved. One-third of the Contingent Shares will be issued upon (a) the completion of Phase 2 clinical trial for Amorcyte’s product candidate AMR-001 and (b) issuance of a statistically significant analysis demonstrating satisfaction of the primary clinical end points from the Phase 2 clinical trial, which primary clinical endpoints are described in the Phase 2 clinical trial protocol submitted by Amorcyte to the FDA on July 5, 2011, and which may only be changed by a writing consented to by NeoStem and the Amorcyte Representative. One-third of the Contingent Shares will be issued following a Type B End of Phase 2/Pre-Phase 3 meeting with the FDA wherein AMR-001 is acknowledged in writing by the FDA to be ready for Phase 3. The remaining one-third of the Contingent Shares will be issued upon the first dosing of the first patient in the pivotal Phase 3 clinical study for AMR-001.

The Earn Out Payments will be made following approval and commercialization of Amorcyte’s lead product candidate, AMR-001, if ever. Within 90 days following the end of each calendar quarter, NeoStem will pay any Earn Out Payments (to the Amorcyte Representative in trust for the benefit of the former Amorcyte Securityholders) equal to 10% of the net sales of AMR-001, which payment obligation will begin following the date of first commercial sale of AMR-001 and continue until the latest date that a valid patent claim exists on a country by country basis covering AMR-001, provided that if NeoStem licenses or otherwise grants an unaffiliated third party the right to commercialize or otherwise exploit AMR-001 or any portion of AMR-001 (including, without limitation, a sublicense for all or part of any territory for AMR-001) then the applicable Earn Out Payment will be equal to 30% of any sublicensing fees, and provided further that NeoStem shall be entitled to deduct certain clinical development costs and other expenses.

TABLE OF CONTENTS

Q5: Who is the Amorcyte Representative and what is his role?

A5: By approval of the Amorcyte Merger at the Amorcyte Special Meeting, each stockholder of Amorcyte will be deemed to have irrevocably constituted and appointed Paul Schmitt (currently the Chief Executive Officer and a director of Amorcyte, and the Managing Director of Novitas Capital, a substantial stockholder of Amorcyte), as the “Amorcyte Representative” under the Agreement and Plan of Merger. The Amorcyte Representative will act on behalf of all of the stockholders of Amorcyte in executing various closing documents and in reviewing and, if he deems it appropriate, disputing, any indemnification claims made against the Escrow Account after the closing.

Q6: Will NeoStem stockholders receive anything in the Amorcyte Merger?

A6: NeoStem stockholders will not receive any consideration in the Amorcyte Merger, and the number of shares of NeoStem Common Stock that they hold will be unaffected, but their percentage ownership will decrease due to the number of shares being issued in the Amorcyte Merger.

Q7: What are the significant risks involved in the Amorcyte Merger?

A7: The Amorcyte Merger involves significant risks. For a detailed discussion of the risks involved see the “Risk Factors” section beginning on page 25 of this joint proxy statement/prospectus.

Q8: What are the U.S. tax consequences of the Amorcyte Merger and the Subco II Merger?

A8: NeoStem and Amorcyte intend that the Amorcyte Merger and the Subco II Merger will be treated for U.S. federal income tax purposes as a single integrated transaction that qualifies as a reorganization. Such treatment would mean that a holder of shares of Amorcyte Common Stock and/or Amorcyte Series A Preferred Stock exchanging such shares for NeoStem Common Stock, NeoStem Warrants, and Earn Out Payments generally would recognize taxable gain (but not loss) equal to the lesser of: (i) the amount of cash the holder receives pursuant to the mergers; and (ii) the excess of the amount of cash and the fair market value of NeoStem Common Stock and Warrants received by the holder over the holder’s tax basis in the shares of Amorcyte stock surrendered. Amorcyte and NeoStem, however, generally would not recognize any gain or loss resulting from the mergers. In addition, holders of NeoStem Common Stock generally would not recognize any gain or loss solely as a result of owning NeoStem Common Stock prior to the mergers.

If the mergers were not to qualify as a reorganization, a holder of shares of Amorcyte Common Stock and/or Amorcyte Series A Preferred Stock that exchanges such shares for NeoStem Common Stock, NeoStem Warrants, and Earn Out Payments generally would have taxable gain or loss equal to the value of the consideration the holder receives less the tax basis that the holder had in the shares of Amorcyte stock surrendered. For further discussion, see “Material United States Federal Income Tax Consequences of the Amorcyte Merger and the Subco II Merger.”

Tax matters are very complicated, and the tax consequences of the Amorcyte Merger and the Subco II Merger to holders of Amorcyte 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 mergers, including the applicability and effect of any federal, state, local and foreign income and other tax laws.

Q9: What are NeoStem stockholders being asked to vote upon?

A9: NeoStem stockholders are being asked to consider and vote upon the following proposals:

TABLE OF CONTENTS

Q10: Why are NeoStem’s stockholders being asked to adopt an amendment to NeoStem’s Amended and Restated Certificate of Incorporation to eliminate the classification of the NeoStem Board of Directors so that the terms of all directors expire at the NeoStem Annual Meeting?

A10: In October 2009, the NeoStem stockholders approved an amendment to NeoStem’s Amended and Restated Certificate of Incorporation providing that, at each annual meeting of NeoStem stockholders commencing in 2010, directors elected to succeed those directors whose terms then expire would be elected annually for terms of three years. Thus, as result of the 2009 amendment, approximately one-third of the directors currently stand for election each year.

Classified or staggered boards of directors have been widely adopted. In submitting the proposal to the NeoStem stockholders in 2009 to install the classified board, the NeoStem Board of Directors believed that a classified board would 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 the NeoStem stockholders. The 2009 amendment installing the classified board was also designed to assist the NeoStem stockholders in obtaining fair and equitable treatment in the event of a takeover of NeoStem, although the amendment was not in response to any effort to obtain control of NeoStem.

The NeoStem Board of Directors continues to believe that a classified board of directors can have the positive effects referenced above. However, the NeoStem Board of Directors also recognizes that classified boards are viewed by some as having the effect of reducing the accountability of directors to stockholders because a classified board limits the ability of stockholders to elect all directors on an annual basis and eliminates the ability of stockholders to remove directors without cause. Additionally, some view classified boards as deterring proxy contests and some tender offers that could give stockholders the ability to sell their shares at premium.

The NeoStem Board of Directors continually reviews the developments in the area of corporate governance and continues to maintain its commitment to the highest standards of corporate governance. The NeoStem Board of Directors has considered carefully the advantages and disadvantages of maintaining a classified board structure and has determined that it is advisable to declassify the NeoStem Board of Directors.

If the amendment to NeoStem’s cCertificate of Incorporation is approved by the stockholders of NeoStem at the NeoStem Annual Meeting, all of the NeoStem directors will be up for re-election at the NeoStem Annual Meeting.

TABLE OF CONTENTS

Q11: Why are NeoStem’s stockholders being asked to approve an 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 by 6,000,000 shares?

A11: The 2009 Plan was adopted by the Board of Directors in April 2009, and stockholder approval was first 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.

Approval of the amendment to the 2009 Plan is intended to ensure that NeoStem can continue to provide an incentive to its U.S.-based employees, directors and consultants, including those employees who join NeoStem if the Amorcyte Merger is consummated, by enabling them to share in NeoStem’s future growth. Currently, a total of 17,750,000 shares of NeoStem Common Stock are authorized under the 2009 Plan. However, assuming the consummation of the Amorcyte Merger, NeoStem will be a larger company. In the viewpoint of the NeoStem Board of Directors, the likely size of the post-Amorcyte Merger company renders it advisable that the number of shares authorized for issuance under the 2009 Plan be increased from 17,750,000 shares to 23,750,000 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 17,750,000 shares currently authorized for issuance under the 2009 Plan represented approximately 27.6% of the outstanding shares of NeoStem Common Stock as of the date the 2009 Plan was last approved by the stockholders. If the 2009 Plan is amended pursuant to NeoStem Proposal 4, the 23,750,000 shares authorized for issuance under the 2009 Plan would represent approximately 22.6% of the outstanding shares of NeoStem following the Amorcyte Merger based on the number of shares of NeoStem Common Stock outstanding as of the record date.

In the event the proposal to increase the number of shares authorized for issuance under the 2009 Plan is approved by the stockholders, the NeoStem Board will decrease the number of shares of NeoStem Common Stock available for issuance under the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”) by 3,000,000 shares, from 8,700,000 shares to 5,700,000 shares. While this reduction is not required, it is contemplated in light of NeoStem’s plan to focus its business on cell therapy manufacturing and development and other related activities in the United States and NeoStem’s consideration of the possible divestiture of its 51% interest in Erye. If consummated, the divestiture would reduce NeoStem’s activities in China and decrease the number of non-U.S.-based employees, directors and consultants, resulting in a smaller number of eligible participants to whom NeoStem would seek to provide incentives under its 2009 Non-U.S. Plan.

Q12: What are Amorcyte’s stockholders being asked to vote upon?

A12: Amorcyte’s stockholders are being asked to consider and vote upon the adoption of the Agreement and Plan of Merger. They are also being asked to grant the proxies the authority to consider and vote upon a proposal to approve the adjournment of the Amorcyte Special Meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the Amorcyte Special Meeting to approve any of the proposals submitted at the Amorcyte Special Meeting.

Q13: Who can attend the NeoStem Annual Meeting, and what security procedures apply to attendees?

A13: All NeoStem stockholders as of the record date, or their duly appointed proxies, may attend the NeoStem Annual 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.

You must comply with NeoStem’s pre-registration requirements. If you are a stockholder of record and plan to attend the NeoStem Annual Meeting, please contact Catherine M. Vaczy, Esq. by e-mail at cvaczy@neostem.com or by phone at (212) 584-4180 to register to attend the NeoStem Annual Meeting. If you hold shares through an intermediary, such as a bank or broker, and you plan to attend, you must send a

TABLE OF CONTENTS

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 M. Vaczy, Esq., Vice President and General Counsel or cvaczy@neostem.com. In accordance with the security procedures of the building in which NeoStem’s offices are located, you will be required to present a form of government-issued photograph identification (such as a drivers’ license) to security on the day of the NeoStem Annual Meeting. Please plan your arrival at NeoStem’s offices so that you allow a reasonable amount of time before the start time of the meeting.

Q14: What vote is required to approve the NeoStem proposals?

A14: Holders of record of NeoStem Common Stock at the close of business on August 17, 2011 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 August 17, 2011 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 holders of NeoStem Series B Preferred. Cumulative voting by stockholders is not permitted. Assuming that a quorum is present, votes required to approve the proposals presented to the NeoStem stockholders are as follows:

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

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.

There is no right to cumulate votes in the election of directors. Abstentions and broker “non-votes” will not have an effect on the election of directors.

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 NeoStem Annual Meeting.

Q15: Who can attend the Amorcyte Special Meeting and what security procedures apply to attendees?

A15: All Amorcyte stockholders as of the record date, or their duly appointed proxies, may attend the Amorcyte Special Meeting.

TABLE OF CONTENTS

In accordance with the security procedures of the building in which the Amorcyte Special Meeting will be held, you will be required to present a form of government-issued photograph identification (such as a drivers’ license) to security on the day of the Amorcyte Special Meeting. Please plan your arrival so that you allow a reasonable amount of time before the start time of the meeting.

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

A16: The approval of the proposal to adopt the Agreement and Plan of Merger will require the affirmative vote of (A) a majority of the outstanding voting power of the Amorcyte Common Stock and Amorcyte Series A Preferred Stock, voting together as a single class, with each share of Amorcyte Series A Preferred Stock treated on an “as if converted” basis AND (B) the holders of a majority of the outstanding voting power of the Amorcyte Series A Preferred Stock, 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 adoption of the Agreement and Plan of Merger.

Pursuant to a Right of First Refusal and Co-Sale Agreement among Amorcyte and certain of its stockholders, as amended, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to adopt the Agreement and Plan of Merger have agreed to vote all of the shares of Amorcyte capital stock held by them in favor of any “Change of Control Transaction” (which as defined includes the proposed Amorcyte Merger) that is approved by Amorcyte’s board of directors and by a majority of the holders of Amorcyte Series A Preferred Stock.

In addition, pursuant to a voting agreement (the “Amorcyte Voting Agreement”) dated the same date as the Agreement and Plan of Merger, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to adopt the Agreement and Plan of Merger have irrevocably agreed to vote in favor of the adoption of the Agreement and Plan of Merger. Such stockholders’ votes will be sufficient without any other votes to adopt the Agreement and Plan of Merger, and approve the Amorcyte Merger and all the transactions contemplated by the Agreement and Plan of Merger.

The proposal regarding the approval of an adjournment of the Amorcyte Special Meeting, if necessary, will require the affirmative vote of the holders of a majority of the outstanding voting power of Amorcyte Common Stock and Amorcyte Series A Preferred Stock treated on an “as if converted” basis, unless there is less than a quorum present, in which case the affirmative vote of the holders of a majority of the total voting power of Amorcyte Common Stock and Amorcyte Series A Preferred Stock present in person or by proxy will be required.

Q17: What constitutes a quorum at the NeoStem Annual Meeting?

A17: A quorum must exist for the transaction of business at the NeoStem Annual Meeting (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 shares of capital stock of NeoStem issued and outstanding and entitled to vote at the NeoStem Annual Meeting is necessary to constitute a quorum for the transaction of business at the NeoStem Annual 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.

Q18: What constitutes a quorum at the Amorcyte Special Meeting?

A18: A quorum must exist for the transaction of business at the Amorcyte Special Meeting (other than consideration of a motion to adjourn the meeting). For Amorcyte, a quorum will require the presence in person or by proxy of the holders of at least a majority of the outstanding stock entitled to vote at the Amorcyte 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 Amorcyte stock 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 joint proxy statement/prospectus, please submit your proxy in the manner described herein as soon as possible. If you are a NeoStem stockholder of record, you may submit a proxy by (i) marking, signing and dating the NeoStem proxy card enclosed herewith and

TABLE OF CONTENTS

returning it to NeoStem in the postage-paid envelope provided before the NeoStem Annual Meeting or (ii) following the instructions to submit proxies by telephone, internet or fax that appear on your proxy card.

If you are an Amorcyte stockholder of record, you may submit a proxy by (i) marking, signing and dating the Amorcyte proxy card enclosed herewith and returning it to Amorcyte in the postage-paid envelope provided before the Amorcyte Special Meeting or (ii) following the instructions to submit proxies by fax that appear on your proxy card.

Q20: If my shares of NeoStem 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 through a broker, bank or other representative, generally the broker, bank or representative may only vote the NeoStem 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 with 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 Amorcyte, as the case may be, before the applicable stockholders meeting. Finally, you can attend either the NeoStem Annual Meeting or the Amorcyte Special Meeting, as applicable, 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 an Amorcyte stockholder, how do I get my NeoStem Common Stock certificates and Warrants?

A22: After the Amorcyte Merger has been completed, you will receive a letter of transmittal describing how you may obtain the NeoStem securities to which you are entitled. As described elsewhere herein, the shares of NeoStem Common Stock issuable as the “Base Stock Consideration” to which you will be entitled after the Amorcyte Merger will be held in escrow for a specified period. Upon receipt of an executed letter of transmittal, you will receive the Warrants to which you are entitled. Warrants may be issued in book entry form. The pro rata portion of any Contingent Shares and/or Earn Out Payments to which you may be entitled will be delivered if and only if the requisite conditions precedent to such delivery are achieved. Your signature to the letter of transmittal must be guaranteed by a commercial bank, unless this requirement is waived. The executed letter of transmittal must:

If you do not execute and deliver an acceptable letter of transmittal to NeoStem within two years of the completion of the Amorcyte Merger, the shares of NeoStem Common Stock to which you were entitled may be cancelled and you will have no right to receive any payments.

TABLE OF CONTENTS

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
Attention:		Catherine M. Vaczy, Esq. Vice President and General Counsel
Telephone:		(212) 584-4180

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

Amorcyte, Inc. 4 Pearl Court, Suite C Allendale, NJ 07401
Attention:		Paul J. Schmitt Chief Executive Officer
Telephone:		(201) 883-1406

TABLE OF CONTENTS

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 294 and the Risk Factors on page 25.

THE COMPANIES

ABOUT NEOSTEM, INC.

Overview

NeoStem, Inc. (“we,” “NeoStem” or the “Company”) continues to develop its core capabilities in cell therapy to capitalize on the paradigm shift that we see occurring in medicine. Our acquisition of Progenitor Cell Therapy, LLC (“PCT”) provides the foundation to achieve our mission to become a premier cell therapy company. While our origins are in adult stem cell research, collection and storage, we came to understand that the catalyst for storage is therapy. People want to see that there are and will be uses for their cells should they need them in the future. NeoStem today has deployed significant resources to meet the basic research, manufacturing, regulatory, clinical and logistical demands of an integrated cell therapeutics company.

Currently, we operate our business in three reportable segments: (i) Cell Therapy — United States; (ii) Regenerative Medicine — China; and (iii) Pharmaceutical Manufacturing — China.

Cell Therapy — United States

PCT Merger

On January 19, 2011 we completed our acquisition of PCT (the “PCT Merger”) As a result of the consummation of the PCT Merger, PCT is now a wholly-owned subsidiary of our Company.

Founded by Dr. Andrew L. Pecora and Robert A. Preti, Ph.D., PCT became an internationally recognized cell therapy services and development company. It sought to create a business for “as needed” development and manufacturing services for the emerging cell therapy industry and to prepare for eventual commercialization. With its cell therapy manufacturing facilities and team of professionals, PCT offers a platform that can facilitate the preclinical and clinical development and commercialization of cellular therapies for clients throughout the world. Dr. Preti now serves as PCT’s President and Chief Scientific Officer and Dr. Pecora as its part-time Chief Medical Officer (and effective August 17, 2011, Dr. Pecora also serves as Chief Medical Officer of NeoStem).

PCT is engaged in a broad range of services in the cell therapy market for the treatment of human disease, PCT offers current Good Manufacturing Practices (cGMP)-compliant cell transportation, manufacturing, storage, and distribution services and supporting clinical trial design, product process development, logistics, regulatory and quality systems development services. In addition, through its network of contacts throughout the cell therapy industry, PCT is able to identify early stage development opportunities in the cell therapy field and opportunistically develop these cell therapies through proof of concept where they can be further developed and ultimately commercialized through NeoStem’s developing commercial structure. PCT’s expertise in the cell therapy arena includes therapeutic vaccines (oncology), various related cell therapeutics, cell diagnostics, and regenerative medicine. From this platform, we hope to develop product based therapeutics. Our goal is to develop internally, or through partnerships, allogeneic (cells from a third-party donor) or autologous (cells from oneself) therapeutic technologies that, in the aggregate, comprise the Cell Therapy — United States reportable segment of our business.

TABLE OF CONTENTS

Cell Collection, Processing and Storage Business

In the United States, we are a provider of family banking offering adult stem cell collection, processing and storage services for newborns as well as adults. This enables healthy individuals to donate and store their stem cells for personal therapeutic use in the future, if needed. Similar to the banking of cord blood, pre-donating cells at a younger age helps to ensure a supply of one’s own stem cells should they be needed for future medical treatment. We have established a network of adult stem cell collection centers in the U.S. With our acquisition of PCT, we acquired the expertise of cGMP cord blood banking. NeoStem Family Storage (formerly DomaniCell, LLC), a wholly owned subsidiary of PCT, assists hospitals by providing umbilical cord blood unit collection and long-term storage services to patients for potential future therapeutic use.

In July 2010, we were named “Best Stem Cell Company, 2010,” in the New Economy’s Biotech Awards.

Stem Cell Research

NeoStem conducts research and development activities in its own laboratory facilities In addition, through collaborations, we pursue therapeutic and potentially diagnostic applications for adult stem cells, including applications using our own VSEL^TM Technology (very small embryonic-like stem cells). VSEL^TM Technology, licensed from the University of Louisville, represents NeoStem’s proprietary pre-clinical platform. We believe VSEL stem cells hold significant potential for the Company, affording entry into the regenerative medicine arena with a cell product that may open up new areas in regenerative medicine. In April 2009, we entered into a License Agreement with Vincent Falanga, M.D., pursuant to which we acquired a world-wide, exclusive license to certain innovative stem cell technologies and applications for wound healing. In conjunction with that license we entered into a multi-year sponsored research agreement with the Roger Williams Medical Center in Providence, Rhode Island and Dr. Falanga’s laboratory, funded by the Department of Defense, to study the use of mesenchymal cells and VSEL stem cellsfor the treatment of chronic wounds. We have also in-licensed more mature technologies that use stem cells for regenerative applications, including rebuilding cartilage, repairing fractures and rejuvenating aging skin. Some of these products or treatments have recently launched commercially in Asia.

Regenerative Medicine — China

We are presently applying our cellular therapies in the People’s Republic of China (“China” or “PRC”). In 2009, we began several China-based, adult stem cell initiatives including: (i) creating a separate China-based stem cell operation, (ii) constructing a stem cell research and development laboratory and processing and manufacturing facility in Beijing, (iii) establishing relationships with hospitals to provide stem cell-based therapies, and (iv) obtaining product licenses covering several adult stem cell therapeutics focused on regenerative medicine. In 2010, we began offering our adult stem cell storage and anti-aging and cosmetic applications in Taiwan through an agreement with Enhance Biomedical Holdings. In June 2010 we launched a collaboration with Shandong Wendeng Orthopaedic Hospital, or Wendeng Hospital, which was the first hospital in the network we are establishing to offer orthopaedic treatments in China. In December 2010, we entered into the second hospital cooperation agreement with Shijiazhuang Third Hospital in the provincial capital of Hebei Province. We entered into a third hospital collaboration agreement in mid-2011. In the third quarter of 2010, Weihai Municipal Price Bureau, the local authority in charge of pricing for public medical services in Wendeng, approved the pricing for single side and bilateral arthroscopic orthopedic autologous adult stem cell based treatment licensed by us which is being administered at Wendeng Hospital. Importantly, the Weihai Municipal Labor Bureau Medical Insurance Office approved Wendeng Hospital’s application for reimbursement whereby patients are eligible to receive reimbursement for up to 80% of the cost of the orthopedic procedure under the new technology category.

Pharmaceutical Manufacturing — China

We acquired a 51% ownership interest in Suzhou Erye Pharmaceutical Company Ltd. (“Erye”) in October 2009. Erye was founded more than 50 years ago and represents an established, vertically-integrated pharmaceutical business. Historically, Erye has concentrated its efforts on manufacturing and distributing of generic antibiotic products. It has received more than 160 production certificates from the State Food and Drug Administration of China, or SFDA, covering both antibiotic prescription drugs and active pharmaceutical intermediates (APIs). Our current senior executive management team at Erye, Mr. Shi, Chairman, and

TABLE OF CONTENTS

Madame Zhang, General Manager, joined Erye in 1998, and in conjunction with others bought it from the PRC government in 2003. A majority of the drugs that Eyre manufactures are on China’s “essential drug” list, and Erye’s new facility under construction will enable greater production.

As part of our plan to focus our business on cell therapy manufacturing, development and other related activities, we are pursuing strategic alternatives with respect to Erye. In June 2011 we engaged a financial advisor to lead the effort to pursue the possible divestiture of our 51% interest in Erye, though we have not yet determined to sell our interest in Erye.

NeoStem Corporate Information

Our principal executive offices are located at 420 Lexington Avenue, Suite 450, New York, New York 10170, and our telephone number is (212) 584-4180. NeoStem Common Stock is currently traded on the NYSE Amex under the symbol “NBS.” We maintain a corporate website at www.neostem.com. The contents of our website are not incorporated by reference into this joint proxy statement/prospectus and should not be considered to be a part hereof or relied upon in connection herewith.

NeoStem, Inc. was incorporated under the laws of the State of Delaware in September 1980 under the name Fidelity Medical Services, Inc. and commenced operations in the adult stem cell collection, processing and storage services business in January 2006.

This joint proxy statement/prospectus and the information incorporated by reference includes trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included or incorporated by reference into this joint proxy statement/prospectus are the property of their respective owners.

ABOUT AMORCYTE, INC.

Overview

Amorcyte is a clinical stage therapeutics company pursuing cell-based therapies for cardiovascular diseases. Its therapeutic strategy focuses on developing product candidates designed to prevent subsequent major adverse cardiac events following a significant AMI by preserving heart muscle tissue. Amorcyte’s most advanced product candidate is AMR-001, a chemotactic hematopoietic stem cell product comprising autologous bone marrow-derived, CD34+/CXCR-4+ stem cells selected to treat damaged heart muscle following acute myocardial infarction (“AMI”). AMR-001 works by increasing microvascular blood flow in the myocardium (heart muscle) via neoangiogenesis (development and formation of new blood vessels), thereby reversing post-heart attack induced ischemia (restriction of blood supply) and rescuing tissue from hibernation and preventing eventual cell death (apoptosis). Amorcyte is developing a therapeutic to prevent the post-AMI deterioration of cardiac function by injecting a potent dose of autologous bone marrow (“BM”) derived CD34+/CXCR-4+ cells 7 – 11 days post AMI (the repair phase) into the peri-infarct zone (that is, the living tissue on the periphery of the dead tissue), which restores perfusion (or blood flow) surrounding the site of the heart attack.

Amorcyte successfully completed a Phase 1 trial of AMR-001 for the treatment of damaged heart muscle following AMI, and is preparing to move into Phase 2 testing. Amorcyte believes that its Phase 1 study is the first stem cell trial to show dose-related, statistically significant, improvement in perfusion following AMI, which remains a significant cause of morbidity and mortality in the United States and world-wide. Current interventions or medications have limited ability to prevent progressive myocardial cell apoptosis leading to cardiac functional deterioration and downstream major adverse cardiac events (“MACE”). Amorcyte also believes that there are applications for AMR-001 in congestive heart failure and expects to commence a Phase 1 study for that indication in 2012.

PCT, a cGMP cell manufacturer accredited by the Foundation for the Accreditation of Cell Therapies (“FACT”), did the manufacturing of cells for Amorcyte’s Phase 1 trial and will continue to offer its expertise in cell therapy and core process development to provide a cost advantage for AMR-001 manufacturing for Phase 2 through commercialization.

TABLE OF CONTENTS

Anticipated Phase 2 Trial of AMR-001

By no later than the end of first quarter of 2012, Amorcyte expects to commence a 150 patient Phase 2 multicenter, blinded, prospective, randomized, controlled U.S. clinical trial to evaluate the efficacy and safety of a single intra-coronary infusion of 10 million cells of AMR-001 post AMI in subjects with ejection fractions of 48% or less. The objective of the Phase 2 study will be to determine the effect of a 10 million cell infusion of CD34+/CXCR4+ enriched cells on cardiac function and outcomes of patients after significant AMI. The primary assessment for the effect of AMR-001 on cardiac function will be improvement in cardiac perfusion and preservation of ejection fraction. Amorcyte also intends to evaluate the impact of AMR-001 on cardiac function and adverse events post-myocardial infarction as defined by reduction in cumulative MACE at 12 and 18 months, premature death, recurrent heart attack, congestive heart failure, significant arrhythmias, and acute coronary syndrome.

Plans for Future Development

If successful in Phase 2, Amorcyte plans to proceed with a later stage trial(s) to demonstrate meaningful clinical benefit and seek approval to commercialize AMR-001 to prevent the adverse consequences of a large AMI.

Amorcyte Corporate Information

Amorcyte’s headquarters are located at 4 Pearl Court, Suite C, Allendale, NJ 07401 and its telephone number is (201) 883-1406.

Comparative Per Share Market Price and Dividend Information (page 256)

NeoStem Common Stock trades on the NYSE-Amex under the symbol “NBS.” Amorcyte Common Stock is not publicly traded.

The following table sets forth the high and low sales prices of NeoStem Common Stock for each quarterly period presented, as reported by the NYSE-Amex.

		NeoStem Common Stock
2011		High				Low
First Quarter		$	2.10			$	1.14
Second Quarter		$	2.08			$	1.31
Third Quarter (through August 30, 2011)		$	1.55			$	0.60

2010		High				Low
First Quarter		$	2.15			$	1.26
Second Quarter		$	3.50			$	1.58
Third Quarter		$	2.15			$	1.52
Fourth Quarter		$	2.15			$	1.10

2009		High				Low
First Quarter		$	1.08			$	0.43
Second Quarter		$	2.72			$	0.80
Third Quarter		$	2.33			$	1.40
Fourth Quarter		$	2.50			$	1.28

The following table sets forth the last sale prices of NeoStem Common Stock as reported on the NYSE-Amex on (1) July 13, 2011, the last trading day before the public announcement of the Amorcyte Merger and (2)         , 2011, the last trading day before the effective date of this joint proxy statement/prospectus. We urge you to obtain current market quotations for the NeoStem Common Stock.

When the merger consideration is distributed to Amorcyte’s stockholders, the liquidation preference accorded by Amorcyte’s amended and restated certificate of incorporation, as amended, to the holders of Amorcyte Series A Preferred Stock must be satisfied before the holders of Amorcyte Common Stock will receive any of the merger consideration. All NeoStem Common Stock and all NeoStem Warrants paid to

TABLE OF CONTENTS

Amorcyte stockholders will be valued at the values set forth in the Agreement and Plan of Merger (i.e. at $1.466 per share and $1.063 per Warrant, respectively). Based on a liquidation preference of $1,197.975 per share and 10,459 shares of Amorcyte Series A Preferred Stock outstanding, the first $12,529,620.53 of consideration received by the Amorcyte stockholders will be distributed entirely to the holders of Amorcyte Series A Preferred Stock. As a result, since the combined value of the Base Stock Consideration $10 million (6,821,283 shares @ $1.466) and the Warrants $2 million (1,881,008 warrants @ $1.063) is less than the aggregate liquidation preference, all Base Stock Consideration and Warrants will be distributed to holders of Amorcyte Series A Preferred Stock. The Contingent Shares and Earn Out Payments will be distributed to the Amorcyte Series A Preferred Stock holders until they receive aggregate consideration (inclusive of the value of the Base Stock Consideration actually received by them) of $12,529,620.53 in satisfaction of their liquidation preference. After that, Amorcyte Series A Preferred Stock holders and Amorcyte Common Stock holders will receive payments of any remaining Contingent Shares and Earn Out Payments on a proportionate basis (with Amorcyte Series A Preferred Stock holders being treated on an as converted basis). Amorcyte Options holders will receive distributions of a portion of any Contingent Shares and Earn Out Payments as if they had exercised their options only after the Amorcyte Common Stock holders have first received Contingent Shares and/or Earnout Payments equal to the exercise or strike price applicable to such Amorcyte Options.

Merger Consideration Per Share for Series A Preferred Shareholders

Merger Consideration Per Share of Amortcyte Common Stock and Option Holders

NeoStem Common Stock

Base Stock Consideration and Warrant Consideration(1)

Contingent Shares and Earn Out Payment Consideration(2)

Base Stock Consideration and Warrant Consideration(1)

Contingent Shares and Earn Out Payment Consideration(2)

July 13, 2011

$

1.44

1,126.99

*

—

*

, 2011

$

*

—

*

(1)

The Merger Consideration for Base Stock Consideration and Warrant Consideration will be distributed to Series A Preferred Shareholders only, based on liquidation preferences. Values have not been adjusted for any Base Consideration adjustements. The Agreement and Plan of Merger provides that to the extent the amount of Amorcyte’s liabilities (as defined and calculated in the manner described in the Agreement and Plan of Merger) on the closing date are more than $478,000 (the “Target Liabilities”), the Base Stock Consideration will be decreased by two times (2x) the amount by which Amorcyte’s liabilities are greater than the Target Liabilities. Any such decrease will reduce the Base Stock Consideration by two dollars for every dollar by which Amorcyte’s liabilities are greater than the Target Liabilities, with each share of the Base Stock Consideration valued at $1.466 (the average of the closing prices of sales of NeoStem Common Stock on the NYSE-Amex for the 10 trading days ending on the trading day prior to the date of execution of the Amorcyte Merger Agreement). The value of Base Stock Consideration and Warrant Consideration on July 13, 2011 and , 2011 should not viewed as a measurement of the reduction in the liquidation preferences due the Series A Preferred Shareholders; rather, the amount of value to be associated with the satisfaction of the Series A liquidation preferences upon the issuance of Base Stock Consideration and Warrant Consideration is determined by values defined in the Fifth Certificate of Amendment to the Certificate of Incorporation of Amorcyte, Inc.

NeoStem has never paid a dividend on NeoStem Common Stock and does not anticipate paying dividends on NeoStem Common Stock following the completion of the Amorcyte Merger.

TABLE OF CONTENTS

Selected Unaudited Pro Forma Condensed Combined Financial Information

The following selected unaudited pro forma condensed combined financial information has been derived from the unaudited pro forma condensed combined financial information presented for NeoStem and Amorcyte in this joint proxy statement/prospectus. (Please read and refer to the unaudited proforma condensed combined financial information and accompanying discussion and notes included in this joint proxy statement/prospectus.)

		As of and for the Six Months Ended June 30, 2011				For the Year Ended December 31, 2010
(In thousands, except per share figures)
Pro Forma Statement of Income Data
Revenues		$	37,991.7			$	69,821.3
Net loss attributable to common shareholders			(22,007.0	)			(24,647.0	)
Basic and diluted net loss per common share			(0.27	)			(0.43	)
Cash dividends per common share			—				—
Pro Forma Balance Sheet Data
Total assets			180,235.9
Total liabilities			79,697.6

TABLE OF CONTENTS

Comparative Per Share Data

The following table presents, for the six months ended June 30, 2011 and for the year ended December 31, 2010, selected historical per share data of NeoStem and Amorcyte as well as similar information, reflecting the combination of NeoStem and Amorcyte, as if the transaction had been effective for the period presented, which we refer to as the “unaudited pro forma condensed combined financial information”.

The unaudited pro forma condensed combined financial information is provided for informational purposes only and is not necessarily an indication of the results that would have been achieved had the transaction been completed as of the dates indicated or that may be achieved in the future. The December 31, 2010 selected comparative per share information displayed below, was derived for NeoStem from NeoStem’s audited consolidated financial statements, and for Amorcyte such information was derived from Amorcyte’s audited financial statements, both of which are included elsewhere herein. The June 30, 2011 selected comparative share information of NeoStem and Amorcyte set forth below was derived from each company’s unaudited interim financial statements included elsewhere herein. In the opinion of NeoStem’s and Amorcyte’s management, respectively, the unaudited interim financial statements have been prepared on the same basis as their respective audited financial statements. You should read the information in this section along with NeoStem’s and Amorcyte’s historical consolidated financial statements and accompanying notes for the period referred to above included in the documents described under “Where You Can Find More Information”. You should also read the unaudited pro forma condensed combined financial information and accompanying discussion and notes included in this joint proxy statement/prospectus.

		For the Six Months Ended June 30, 2011				For the Year Ended December 31, 2010
Basic and Diluted Loss Per Share
NeoStem historical		$	(0.27	)		$	(0.46	)
Amorcyte historical			(111.33	)			(141.05	)
Pro forma combined			(0.27	)			(0.43	)
Amorcyte equivalent(1)			(0.01	)			(0.02	)
Dividends Per Share
NeoStem historical		$	—			$	—
Amorcyte historical			—				—
Pro forma combined			—				—
Amorcyte equivalent(1)			—				—
Book Value Per Share at Period End
NeoStem historical		$	0.83
Amorcyte historical			(147.60	)
Pro forma combined			0.83
Amorcyte equivalent(2)			(0.01	)

Structure of the Amorcyte Merger (page 108)

In general terms, the proposed Amorcyte Merger involves the merger of Subco, a wholly-owned subsidiary of NeoStem, with and into Amorcyte, with Amorcyte surviving the Amorcyte Merger as a wholly-owned subsidiary of NeoStem, pursuant to the terms and subject to the conditions set forth in the Agreement and Plan of Merger. Within 90 days after the effective Time of the Amorcyte Merger, Amorcyte will be merged with and into Subco II, another wholly-owned subsidiary of NeoStem.

TABLE OF CONTENTS

The Terms of the Agreement and Plan of Merger

The Agreement and Plan of Merger is 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 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 Amorcyte Merger.

Conversion of Equity Interests of Amorcyte; Adjustments (page 108)

Aggregate Consideration.  Pursuant to the terms of the Agreement and Plan of Merger, all of the shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock, all options and warrants to acquire equity of Amorcyte, and all debt obligations issued by Amorcyte that are convertible into Amorcyte Series A Preferred Stock (to the extent not already converted, being treated as if it were actually converted), in each case, issued and outstanding immediately prior to the Effective Time, will, by virtue of the Amorcyte Merger, be cancelled and converted into the right to receive, in the aggregate:

Pursuant to the Agreement and Plan of Merger, prior to closing all Amorcyte options and warrants will be modified in writings executed by each optionholder and warrantholder, so that effective upon the Effective Time, all Amorcyte options and warrants will, by virtue of the Amorcyte Merger, be converted into the right to receive the share of any Earn Out Payments that the holders of such options and warrants would have received if they had exercised their Amorcyte options and/or warrants, as applicable, prior to the Effective Time (after taking into account the payment of any exercise price due had they actually exercised). The holders of Amorcyte options and warrants will be entitled to the merger consideration similar to the holders of Amorcyte Common Stock, minus the exercise price of the options and warrants.

Adjustment to Base Stock Consideration.  The Base Stock Consideration is subject to adjustment, provided that in no event will NeoStem be required to issue as Base Stock Consideration more than 6,821,283 shares of NeoStem Common Stock. The Agreement and Plan of Merger provides that to the extent the amount of Amorcyte’s liabilities (as defined and calculated in the manner described in the Agreement and Plan of Merger) on the closing date are more than $478,000 (the “Target Liabilities”), the Base Stock Consideration will be decreased by two times (2x) the amount by which Amorcyte’s liabilities are greater than the Target Liabilities. Any such decrease will reduce the Base Stock Consideration by two dollars for every dollar by which Amorcyte’s liabilities are greater than the Target Liabilities, with each share of the Base Stock Consideration valued at $1.466 (the average of the closing prices of sales of NeoStem Common Stock on the NYSE-Amex for the 10 trading days ending on the trading day prior to the date of execution of the Agreement and Plan of Merger) (the “Parent Per Share Value”).

TABLE OF CONTENTS

Contingent Share Milestones.  The Contingent Shares will be issued only if certain business milestones are achieved, as follows:

Upon achievement of these specified contingencies, the Contingent Shares will be issued to the former stockholders of Amorcyte.

Procedures for Earn Out Payments.  Within 90 days following the end of each calendar quarter, NeoStem will pay Earn Out Payments (to the Amorcyte Representative in trust for the benefit of the former Amorcyte Securityholders) equal to 10% of the net sales of AMR-001, which payment obligation will begin following the date of first commercial sale of AMR-001 and continue until the latest date that a valid patent claim exists on a country by country basis covering AMR-001, provided that if NeoStem licenses or otherwise grants an unaffiliated third party the right to commercialize or otherwise exploit AMR-001 or any portion of AMR-001 (including, without limitation, a sublicense for all or part of any territory for AMR-001) then the applicable Earn Out Payment will be equal to 30% of any sublicensing fees, royalties and milestone fees or profit sharing payment (but not payments for development costs) actually received by NeoStem. NeoStem will be entitled to recover direct out-of-pocket clinical development costs not previously paid or reimbursed and any costs, expenses, damages, liabilities, and settlement amounts arising out of or related to claims with respect to patent infringement or otherwise challenging Amorcyte’s ownership of or right to use intellectual property, by reducing any Earn Out Payments due by 50% until such costs have been recouped in full.

The Amorcyte Representative (Paul Schmitt or his duly appointed successor) (the “Amorcyte Representative”) shall be solely responsible for the distribution of the Earn Out Payments to the former Amorcyte Securityholders. At closing, for informational purposes, the Amorcyte Representative will deliver to NeoStem a certification setting forth the percentage of the aggregate Earn Out Payments to which each former Amorcyte Securityholder is entitled (subject to amendment to reflect the effects of any financing conducted by Amorcyte), which certification shall be conclusive and binding on the Amorcyte Securityholders (the “Earn Out Payment Certification”). Within 90 days following the end of each calendar quarter, NeoStem will send the Earn Out Payments, if any, to the Amorcyte Representative (who will be responsible for the appropriate division and distribution of the Earn Out Payments received by him, as well as any tax withholding or reporting related thereto).

Liquidation Preference of Amorcyte Series A Preferred Stock.  When the merger consideration is distributed to Amorcyte’s stockholders, the liquidation preference accorded by Amorcyte’s amended and restated certificate of incorporation, as amended, to the holders of Amorcyte Series A Preferred Stock must be satisfied before the holders of Amorcyte Common Stock will receive any of the merger consideration. In accordance with an August 2011 amendment to Amorcyte’s Amended and Restated Certificate of Incorporation, for purposes of the Series A liquidation preference, all NeoStem Common Stock and all NeoStem Warrants paid to Amorcyte stockholders will be valued at the values set forth in the Agreement and Plan of Merger (i.e. at $1.466 per share and $1.063 per Warrant, respectively, or $12 million in the aggregate). Based on a liquidation preference of $1,197.975 per share and 10,459 shares of Amorcyte Series A Preferred Stock outstanding, the first $12,529,620.53 of consideration received by the Amorcyte stockholders will be distributed entirely to the holders of Amorcyte Series A Preferred Stock. As a result, all of the Base Stock Consideration and all of the Warrants will be distributed to holders of Amorcyte Series A Preferred Stock.

TABLE OF CONTENTS

Escrow of Base Stock Consideration

The Agreement and Plan of Merger provides that the Base Stock Consideration will be placed in escrow (the “Escrow Account”) pursuant to an escrow agreement to be executed at closing, for the purpose of paying any damages payable to NeoStem in accordance with the indemnification provisions contained in the Agreement and Plan of Merger. The escrow agent shall initially be NeoStem’s transfer agent (the “Escrow Agent”). The Escrow Account will continue from the closing until that date (the “Termination Date”) which is two (2) years and one day after the closing (the “Escrow Period”). Six months after the closing date, an aggregate of up to 20% of the shares of NeoStem Common Stock may be released from the Escrow Account and distributed to the Amorcyte Representative (as defined below) for distribution to Amorcyte’s former stockholders, optionholders and warrantholders (collectively, the “Amorcyte Securityholders”) in accordance with their proportional interests; provided, however, that NeoStem will not be required to release from escrow any shares of NeoStem Common Stock then being held with respect to pending claims by NeoStem. As soon as practicable after the one (1) year anniversary of the closing date (the “One-Year Release Date”), NeoStem will direct the Escrow Agent to release and distribute to the Amorcyte Representative for distribution to the former Amorcyte Securityholders in accordance with the terms of the Escrow Agreement all shares of NeoStem Common Stock then remaining in the Escrow Account except as follows: If no indemnification claims have been asserted by NeoStem prior to the One-Year Release Date, then NeoStem Common Stock with a Parent Per Share Value of $1,250,000 shall remain in the Escrow Account until the Termination Date. If any indemnification claims have been asserted by NeoStem prior to the One-Year Release Date, then NeoStem Common Stock with a Parent Per Share Value equal to the sum of (i) $2,500,000 plus (ii) the amount of any then pending indemnification claims shall remain in the Escrow Account until the Termination Date. As soon as practical after the Termination Date, all shares of NeoStem Common Stock then remaining in the Escrow Account will be released to the Amorcyte Representative for distribution to the former Amorcyte Securityholders; provided that NeoStem Common Stock representing 120% of the maximum amount of any claim made by NeoStem pursuant to the indemnification provisions of the Agreement and Plan of Merger during the Escrow Period will be withheld and remain in the Escrow Account pending resolution of such claim. In addition, a number of shares of NeoStem Common Stock in the Escrow Account which is necessary to satisfy any unsatisfied claims specified in any indemnification claim previously delivered by NeoStem prior to the Termination Date with respect to facts and circumstances existing prior to the expiration of the Escrow Period, shall remain in the Escrow Account until such claims have been resolved.

By adopting the Agreement and Plan of Merger at the Amorcyte Meeting, each stockholder of Amorcyte will be deemed to have irrevocably constituted and appointed Paul Schmitt (currently the Chief Executive Officer and a director of Amorcyte, and the Managing Director of Novitas Capital, a substantial stockholder of Amorcyte), as the “Amorcyte Representative” under the Agreement and Plan of Merger. The Amorcyte Representative will act on behalf of all of the stockholders of Amorcyte in executing various closing documents and in reviewing and, if he deems it appropriate, disputing, any indemnification claims made against the Escrow Account after the closing.

Conditions to the Amorcyte Merger (page 116).

The obligations of Amorcyte, NeoStem, Subco and Subco II to consummate the transactions contemplated by the Agreement and Plan of Merger shall be subject to the satisfaction (or waiver by each party, to the extent such conditions can be waived) of the following conditions, among others:

TABLE OF CONTENTS

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:

See the section entitled “The Agreement and Plan of Merger — Termination,” beginning on page 118 for a discussion of these and other rights of the respective parties to terminate the Agreement and Plan of Merger.

Termination (page 118).

NeoStem and Amorcyte can jointly agree to terminate the Agreement and Plan of Merger at any time prior to the Effective Time. Either company may also terminate the Agreement and Plan of Merger if the closing does not occur on or prior to January 31, 2012 (provided that the party seeking to so terminate is not then in material breach of any material representation or warranty) or under other circumstances described in this document. Under certain circumstances if Amorcyte declines to close the Amorcyte Merger and instead is acquired in another acquisition transaction, Amorcyte may be required to pay NeoStem a termination fee of $1,500,000. See the section entitled “The Agreement and Plan of Merger — Termination” beginning on page 118 for a discussion of these and other rights of each of NeoStem and Amorcyte in connection with termination of the Agreement and Plan of Merger.

The Reasons the Board of Directors of NeoStem and the Board of Directors of Amorcyte Approved the Amorcyte Merger and the Agreement and Plan of Merger (page 96)

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

TABLE OF CONTENTS

Each Board also considered separate reasons for the Amorcyte Merger. The NeoStem Board ultimately determined that the Amorcyte Merger furthers NeoStem’s goal of focusing its business on cell therapy technologies. The NeoStem board considered the promise of Amorcyte’s stem cell therapy technologies and its successful Phase 1 trial. The NeoStem Board recognized that the acquisition of Amorcyte would give NeoStem the opportunity to pursue a cell therapy product (AMR-001) that is ready to initiate an already-designed Phase 2 study. The Amorcyte Board ultimately determined that the Amorcyte Merger may serve to protect and potentially diversify the value held by its securityholders, while the alternative to approving the Amorcyte Merger may expose Amorcyte to a significant decrease in value, particularly if it could not find financing for the planned Phase 2 trial of AMR-001 on its own. The Amorcyte Board recognized that Amorcyte securityholders will receive shares and other securities of NeoStem, an NYSE Amex listed adult stem cell company with market liquidity.

Fees and Expenses (page 119).

Unless the Amorcyte Merger is consummated, NeoStem and Amorcyte will each pay its own expenses incident to the Agreement and Plan of Merger and the transactions contemplated thereby. Amorcyte transaction expenses are included in determining Amorcyte’s closing date liabilities. See “The Agreement and Plan of Merger — The Amorcyte Merger” for a description of an adjustment to the Base Stock Consideration based on Amorcyte’s closing date liabilities.

Interests of Certain Persons in the Amorcyte Merger (page 101)

Directors and officers of Amorcyte collectively beneficially own 10,463.9 shares of Amorcyte Common Stock and 6,671.7 shares of Amorcyte Series A Preferred Stock, representing approximately 64.9% and 63.8% of such classes of stock, respectively. See the section entitled “Security Ownership of Certain Beneficial Owners and Management of Amorcyte” for further details.

During June 2010, NeoStem’s subsidiary PCT made an investment in Amorcyte through the purchase for $50,000 of 62.6 shares of Amorcyte’s Series A Redeemable Preferred Stock.

In June and July of 2011, respectively, Novitas Capital III, L.P. and Darren Blanton, each a substantial beneficial owner of Amorcyte Series A Preferred Stock, invested $1,000,000 and $350,000, respectively, in private placements of NeoStem Common Stock. In addition, in this same private placement, Crown Oaks Inc. Profit Sharing Plan & Trust and the William Herbert Hunt Trust Estate, each a substantial Amorcyte stockholder, invested $250,000 and $128,000, respectively, in NeoStem Common Stock.

Additionally, Robert A. Preti, Ph.D, an officer of NeoStem’s subsidiary PCT, beneficially owns 27.5 shares (or 0.3%) of Amorcyte Series A Preferred Stock and 1,219.7 shares (or 15.6%) of Amorcyte Common Stock. Dr. Preti also benefically owns 2,129,966 shares (or 2.2%) of the outstanding NeoStem Common Stock.

Currently Dr. Andrew Pecora (who is the Chief Scientific Officer of Amorcyte, the Chief Medical Officer of NeoStem and an officer of NeoStem’s subsidiary PCT) and Mr. George Goldberger (who is the Chief Financial Officer of Amorcyte and an officer of NeoStem’s subsidiary PCT) beneficially own 2,370,672 and 309,192 shares, respectively, of NeoStem’s Common Stock, representing respectively 2.4% and 0.3% of NeoStem’s outstanding Common Stock. Dr. Pecora’s beneficial ownership includes 78,125 shares of NeoStem Common Stock purchased by him in a NeoStem private placement consummated on March 3, 2011 at a price of $1.28 per share.

The Recommendations of the Board of Directors of NeoStem (page 99):

The Audit Committee of NeoStem’s Board of Directors considered and evaluated potential conflicts of interest presented by the Amorcyte Merger and unanimously determined that the Amorcyte Merger is fair to NeoStem and its stockholders. After evaluating the proposed transaction and the terms thereof (and considering the determination of the Audit Committee), the Mergers & Acquisitions Committee of the NeoStem Board has unanimously determined that the terms of the Agreement and Plan of Merger and the Amorcyte Merger are advisable for, and in the best interests of, NeoStem and the NeoStem stockholders. Upon such determinations, the NeoStem Board unanimously recommends that NeoStem stockholders vote FOR the proposal to approve the issuance of NeoStem Common Stock and Warrants pursuant to the Agreement and Plan of Merger.

TABLE OF CONTENTS

The NeoStem Board of Directors believes that adopting an amendment to NeoStem’s Amended and Restated Certificate of Incroproation to eliminate the classification of the NeoStem Board of Directors so that the terms of all directors expire at the NeoStem Annual Meeting, is in the best interests of NeoStem and its stockholders, has unanimously voted to approve the amendment, and unanimously recommends that the stockholders of NeoStem vote FOR the adoption of the amendment to NeoStem’s Certificate of Incorporation declassifying the NeoStem Board of Directors.

Upon the recommendation of its Nominating and Corporate Governance Committee, the NeoStem Board of Directors believes that the director candidates nominated as set forth in NeoStem Proposal 3 have the skills, attributes and qualifications necessary and desirable for service on the NeoStem Board, and the NeoStem Board unanimously recommends that the stockholders of NeoStem vote FOR the election of such director candidates as set forth in NeoStem Proposal 3.

The NeoStem Board of Directors believes that amending the 2009 Plan to increase the number of shares of NeoStem Common Stock authorized for issuance thereunder by 6,000,000 shares, is in the best interests of NeoStem and its stockholders, has unanimously voted to approve such amendment to the 2009 Plan, and unanimously recommends that the stockholders of NeoStem approve such amendment.

Upon the recommendation and approval of its Audit Committee, the NeoStem Board of Directors believes that ratification of the appointment of Grant Thornton LLP as NeoStem’s independent registered public accounting firm for the fiscal year ending December 31, 2011 is in the best interests of NeoStem and its stockholders, has unanimously voted to appoint Grant Thornton LLP as NeoStem’s auditor for the 2011 fiscal year, and unanimously recommends that the stockholders of NeoStem ratify such appointment.

The NeoStem Board of Directors believes that approving the adjournment of the NeoStem Annual Meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the NeoStem Annual 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 NeoStem stockholders vote FOR the approval of this proposal.

The Recommendations of the Board of Directors of Amorcyte (page 99):

The Amorcyte Board of Directors believes that the Amorcyte Merger is fair to, advisable for, and in the best interests of Amorcyte and its stockholders. The Amorcyte Board of Directors has unanimously voted to approve the Agreement and Plan of Merger, and unanimously recommends that the stockholders of Amorcyte vote FOR the adoption of the Agreement and Plan of Merger and approval of the Amorcyte Merger, including all transactions contemplated thereby. The Amorcyte Board of Directors believes that approving the adjournment of the Amorcyte 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 Agreement and Plan of Merger is in the best interest of Amorcyte and its stockholders, has unanimously voted to approve the proposal and unanimously recommends that Amorcyte’s stockholders vote FOR the approval of this proposal.

Risk Factors Related to the Amorcyte Merger (page 25)

THE AMORCYTE MERGER AND THE BUSINESS OF THE COMBINED COMPANY INVOLVE A HIGH DEGREE OF RISK.

The “Risk Factors” beginning on page 25 should be considered carefully by both NeoStem stockholders and Amorcyte 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 Amorcyte stockholders. These risk factors should be considered along with any other information included herein, including in conjunction with forward-looking statements made herein.

TABLE OF CONTENTS

The Stockholders Meetings (pages 116 and 120)

The annual meeting of the stockholders of NeoStem will be held on October [_], 2011 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 Amorcyte will be held on October [_], 2011 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 (page 107)

For accounting purposes, NeoStem will be the “accounting acquirer” of Amorcyte. The Amorcyte Merger will be accounted for under the “purchase” method of accounting. Under the purchase method of accounting, the assets and liabilities of Amorcyte, as of the completion of the Amorcyte 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 Amorcyte Merger (page 107)

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

Appraisal Rights (page 85)

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

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

Setion 4.9 of Amorcyte’s Amended and Restated Certificate of Incorporation filed on May 19, 2006, as amended, contains certain drag along rights under which the holders of greater than fifty percent (50%) of the Series A Preferred Stock have the right to require the other Amorcyte stockholders to vote their capital stock in favor of, and participate in, any offer to purchase all of the capital stock of Amorcyte.

Section 4 of Amorcyte’s Right of First Refusal and Co-Sale Agreement contains certain drag along rights under which each of the signatories to such agreement agreed to: (a) consent to and vote all of their shares in favor of any “Change of Control Transaction” which includes a merger; and (b) waive any dissenters’ rights, appraisal rights or similar rights in connection with such transaction, in each case in the event that such merger is approved by the Amorcyte Board of Directors and investors holding at least two-thirds (2/3) of the Series A Preferred Stock then outstanding.

TABLE OF CONTENTS

RISK FACTORS

You should carefully consider the risks described below regarding the Amorcyte Merger 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 AMORCYTE MERGER

Although NeoStem raised approximately $14.6 million in net proceeds in its July 2011 underwritten offering, NeoStem anticipates that it will need substantial additional financing in the future to continue its operations and, assuming the Amorcyte Merger is consummated, to continue the operations of the combined company. If NeoStem is unable to raise additional capital as needed, the combined company may be forced to delay, reduce or eliminate one or more of its product development programs, cell therapy initiatives or commercialization efforts.

NeoStem anticipates that (even after taking into account its recent July 2011 underwritten offering) it will require additional capital to fund the current operating plan, including NeoStem’s existing U.S.-based cell therapy operations (such as development of NeoStem’s VSEL^TM technology and a T-cell therapeutic, the stem cell collection and storage business, and cell manufacturing and processing operations) and NeoStem’s China-based initiatives.

In addition, the Amorcyte business to be acquired by NeoStem will require significant additional financing. Amorcyte is a development stage companywith no commercial products. Amorcyte’s product candidate, AMR-001, is being developed and will require significant investment before it can be commercialized. Amorcyte anticipates that AMR-001 will not be commercially available for several years, if ever.

The combined company’s research and development expenses will increase with the addition of the ongoing activities of the Amorcyte business, particularly as the Phase 2 clinical trial commences with respect to AMR-001. Even if NeoStem raises additional capital, in the event that Amorcyte’s Phase 2 clinical trial of AMR-001 produces positive results, it is anticipated it will be necessary to enter into one or more collaboration agreements with one or more third parties to conduct and fund additional clinical trials, including larger, potentially pivotal Phase 3 clinical trials. If NeoStem is not able to enter into collaboration agreements on terms that are acceptable to NeoStem, it will need to raise additional capital to fund these trials or otherwise delay or abandon the trials. In addition, subject to obtaining regulatory approval of any present or future Amorcyte product candidate, the combined company expects to incur significant commercialization expenses for product sales and marketing.

The future capital requirements of the combined company will depend on many factors, including:

TABLE OF CONTENTS

NeoStem would likely seek such funding through public or private financings or some combination of the two. The combined company may also seek funding through collaborative arrangements if NeoStem determines them to be necessary or appropriate. Additional funding may not be available to NeoStem on acceptable terms, or at all. If NeoStem obtains capital through collaborative arrangements, these arrangements could require NeoStem to relinquish rights to the combined company’s technology or product candidates and could result in NeoStem’s receiving only a portion of the revenues associated with the partnered product. If NeoStem raises capital through the sale of equity, or securities convertible into equity, it would result in dilution to NeoStem’s then existing stockholders. Issuances of NeoStem securities in connection with any future capital raise may additionally cause antidilution adjustments to NeoStem’s outstanding Series E 7% Senior Convertible Preferred Stock and to the warrants issued in connection therewith. If NeoStem raises additional capital through the incurrence of indebtedness, the documents governing the terms of such debt would likely contain terms restricting NeoStem’s business activities, and holders of debt instruments would have rights and privileges senior to those of NeoStem’s equity investors. In addition, servicing the interest and principal repayment obligations under debt facilities could divert funds that would otherwise be available to support research and development, clinical or commercialization activities.

Cash requirements of the combined company may vary materially from those now planned because of expenses relating to marketing, advertising, sales, distribution, research and development and regulatory affairs (including the expenses related to clinical trials), as well as the costs of maintaining, expanding and protecting NeoStem’s intellectual property portfolio, including potential litigation costs and liabilities. Additional financing may not be available when needed or may not be available on terms acceptable to NeoStem. The combined company’s inability to obtain necessary capital or financing to fund these needs could adversely affect the combined company’s business, results of operations and financial condition.

The consummation of the transactions contemplated by the Agreement and Plan of Merger is dependent upon NeoStem and Amorcyte obtaining all relevant and necessary consents and approvals.

A condition to consummation of the Amorcyte Merger is that NeoStem or Amorcyte obtains certain consents or approvals from third parties. In addition, the stockholders of NeoStem must approve the issuance of NeoStem securities pursuant to the Agreement and Plan of Merger. The stockholders of Amorcyte must adopt the Agreement and Plan of Merger and approve the Amorcyte Merger to be consummated pursuant thereto (and Amorcyte’s governing documents afford class voting rights to the holders of Amorcyte Series A Preferred Stock), but a Voting Agreement has been entered into pursuant to which holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock have agreed to vote such shares in favor of the transactions. There can be no assurance that NeoStem or Amorcyte will be able to obtain all such relevant consents and approvals 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 Amorcyte Merger. Any failure to obtain, or delay in obtaining, the necessary consents or 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. There is no guarantee that such approvals will be obtained or that such conditions will be satisfied.

TABLE OF CONTENTS

Failure to satisfy closing conditions and complete the Amorcyte Merger could cause NeoStem’s stock price to decline and could harm NeoStem’s business and operating results.

The Agreement and Plan of Merger contains conditions which NeoStem or Amorcyte, respectively, must meet in order to consummate the transactions. No assurance can be given that every closing condition will be satisfied or waived. In addition, the Agreement and Plan of Merger may be terminated by either NeoStem or Amorcyte under certain circumstances.

If the Amorcyte Merger is not completed for any reason, NeoStem may be subject to a number of risks, including the following:

Any acquisition exposes a company to additional risks.

Acquisitions may entail numerous risks for NeoStem, including:

NeoStem’s failure to successfully complete the integration of Amorcyte could have a material adverse effect on NeoStem’s business, financial condition and operating results.

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

NeoStem and Amorcyte expect that the combination of their businesses 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.

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

As part of the Amorcyte Merger, NeoStem will be issuing warrants to purchase up to an additional 1,881,008 shares of NeoStem Common Stock. NeoStem already had, at August 17, 2011, approximately 54,470,909 stock options and warrants outstanding. Holders of NeoStem’s outstanding warrants are given the opportunity to profit from a rise in the market price of NeoStem Common Stock. As long as these warrants are outstanding, the terms on which NeoStem could obtain additional capital may be adversely affected. The

TABLE OF CONTENTS

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.

If the market for the combined company’s products and/or technology (including AMR-001 and any other product candidates) 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.

NeoStem and Amorcyte 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:

While the acquisition of Amorcyte will further NeoStem’s strategy of focusing its business on cell therapies, the development and marketing of cell therapies is a new business direction for NeoStem.

Beginning with its January 2011 acquisition of PCT, NeoStem began to shift its business plan to focus on capturing the paradigm shift to cell therapies. It is anticipated that NeoStem’s acquisition of Amorcyte will help to further NeoStem’s expansion into the cell therapy field. However, NeoStem has limited experience in the areas of cell therapy development and marketing of cell therapy products, and the related regulatory issues and processes. While the current officers of PCT, including Dr. Andrew Pecora, Amorcyte’s Chief Scientific Officer, will continue to provide services to Amorcyte following the acquisition, and while Amorcyte will continue to rely on the expertise of PCT and its other current consultants and service providers, NeoStem can provide no assurances that its management will successfully oversee Amorcyte’s clinical development activities and integrate Amorcyte into the NeoStem business.

NeoStem is contemplating a possible significant change in the nature of its business.

As part of our plan to focus its business on capturing the paradigm shift to cell therapies following its January 2011 acquisition of PCT, NeoStem is pursuing strategic alternatives with respect to its 51% interest in Erye. NeoStem is planning to devote its resources and management efforts to cell therapy manufacturing and development, and other related activities, including adult stem cell collection and storage, and in further developing the Company’s regenerative medicine business in China. NeoStem believes that the proposed acquisition of Amorcyte is in keeping with NeoStem’s strategic mission. NeoStem also believes that if the Company could monetize Erye, NeoStem would have additional capital needed to pursue the development of multiple cell therapies. To that end, in June 2011, NeoStem engaged a financial advisor to lead the effort to pursue the possible divesture of its 51% interest in Erye. Marketing efforts have commenced; however, in addition to the factors set forth below, it is too early to determine whether such efforts will lead to a proposal to purchase at a price and on terms that NeoStem would consider acceptable or whether, in the event a proposal or proposals on prices and terms acceptable to NeoStem are received, whether a transaction would be completed.

Any sale of NeoStem’s interest would also be subject to a right of first refusal held by Suzhou Erye Economy & Co. Ltd. (“EET”) pursuant to the terms of the Joint Venture Agreement between a subsidiary of NeoStem and EET. EET owns the remaining 49% interest in Erye. A number of issues have arisen between EET and NeoStem with respect to the operation and financing of Erye. For instance, while EET is required to lend back to Erye dividends received by it to finance Erye’s move to its new facilities, Erye has recently reported to NeoStem that such arrangement is no longer tax efficient in light of the ratio of Erye’s shareholder

TABLE OF CONTENTS

loans to its registered capital. In connection with exploring ways to remedy the additional tax burden caused by the level of shareholder loans and in preparing for a sale process, other issues have also surfaced, including the issue of NeoStem and Erye needing to obtain all Chinese regulatory approvals (and associated registrations) required to reflect the legal title of NeoStem’s 51% interest in Erye as being held by the proper entity within NeoStem’s group which is its current beneficial owner as that term is used under U.S. law. NeoStem and Erye are determining what government approvals (and associated registrations) will need to be issued by the Suzhou Municipal Bureau of Foreign Investment and Commerce and the Suzhou Administration for Industry and Commerce to remediate these deficiencies. NeoStem’s management believes these regulatory deficiencies can be remediated within a reasonable period of time and should not delay a sale of NeoStem’s interest in Erye. However, no assurance can be given that any unremediated regulatory deficiencies would not have an adverse effect on the operating results and liquidity of Erye and NeoStem and will not impede or delay efforts to divest NeoStem’s interest in Erye. In addition, the remediation process is expected to trigger certain tax liabilities and penalties.

NeoStem has not yet determined to sell its interest in Erye, and will not do so until it can assess the level of interest generated, the potential price and transaction terms it might be offered and any regulatory impediments to a transaction. A sale of NeoStem’s interest in Erye, if a sale can be consummated, would have a material effect on the business, results of operations and balance sheet of NeoStem. Factors that may impede a sale may include, but not be limited to, EET’s right of first refusal and the significant time and money that exercise of such right could cause a potential purchaser, the need for any purchaser to negotiate a new Joint Venture Agreement and a shareholder loan repayment schedule with EET if EET does not wish to either sell its interest or exercise its right of first refusal, recent regulatory changes in China which reduce prices that may be charged for certain of Erye’s products and limit use of antibiotics, tax or regulatory issues affecting Erye, including those described above and other tax increases described in our filings which will adversely affect Erye going forward, availability of financing for a potential purchaser, and other factors typical of any sale process.

If the combined company is unable to manage growth in its business, its prospects may be limited and its future results of operations may be adversely affected.

The combined company intends to expand its processing and manufacturing activities, its research and development platform to provide innovative therapies, its sales and marketing programs and other activities as needed to meet future demand. Any significant expansion may strain the combined company’s managerial, financial and other resources. If the combined company is unable to manage its growth, its business, operating results and financial condition could be adversely affected. The combined company will need to improve continually its operations, financial and other internal systems to manage its growth effectively, and any failure to do so may lead to inefficiencies and redundancies, and result in reduced growth prospects and diminished operational results.

Certain current officers and directors of Amorcyte beneficially own large quantities of Amorcyte capital stock. Additionally, the Amorcyte Merger presents conflicts of interest that may cause the transactions contemplated by the Agreement and Plan of Merger to have consequences to NeoStem that are less favorable than might be attained in comparable transactions where such potential conflicts are absent.

The transactions contemplated by the Agreement and Plan of Merger present potential conflicts of interest, or, at a minimum, the appearance of conflicts of interest. For example, Paul Schmitt, currently a director and the CEO of Amorcyte, is also a managing director to the advisor of Novitas Capital III, L.P., which fund holds 3,693.7 shares of Amorcyte’s Series A Preferred Stock, representing 35.3% of the outstanding shares of such class. Darren Blanton, currently a director of Amorcyte, is also the founder and managing partner of Colt Ventures, Ltd. This entity’s ownership of 939.7 shares of Amorcyte’s Series A Preferred Stock, together with beneficial ownership of an additional 500.8 shares of Series A through two family trusts, results in Mr. Blanton having beneficial ownership of approximately 13.8% of Amorcyte’s outstanding Series A Preferred shares. Michael Starcher, an Amorcyte director, is the president of the general partner of CCP-AMOR, L.P., which fund owns 1,252.1 Series A shares of Amorcyte, resulting in Mr. Starcher’s beneficial ownership of approximately 11.8% of such class. Dr. Andrew L. Pecora, who is currently the Chief Scientific Officer of Amorcyte, the Chief Medical Officer of NeoStem, and the

TABLE OF CONTENTS

Chief Medical Officer of NeoStem’s subsidiary PCT, and who it is expected will be appointed in 2011 to NeoStem’s board of directors pursuant to the agreement governing NeoStem’s acquisition of PCT, beneficially owns 58.8 Amorcyte Series A shares (0.6% of the class), 1,219.7 of Amorcyte’s common shares (15.6% of the class), and 2,370,672 shares of NeoStem Common Stock (2.4% of the outstanding NeoStem Common Stock) including 78,125 shares of NeoStem Common Stock purchased in a March 2011 private placement. In June and July of 2011, respectively, Novitas Capital III, L.P. and Darren Blanton, each a substantial beneficial owner of Amorcyte Series A Preferred Stock, invested $1,000,000 and $350,000, respectively, in private placements of NeoStem Common Stock.

Amorcyte was initially formed as a wholly-owned subsidiary of PCT, and was spun off to PCT’s members in 2005. In January 2011, NeoStem acquired PCT. Certain current officers of NeoStem’s subsidiary PCT (including Dr. Pecora and Mr. Goldberger) provide services to Amorcyte pursuant to agreements with PCT. Dr. Pecora had also entered into an oral consulting arrangement with Amorcyte providing for compensation of $50,000 per year for serving as Amorcyte’s Chief Scientific Officer. By written agreement with Amorcyte, Dr. Pecora has relinquished all rights he had with respect to such compensation, while continuing to serve as Amorcyte’s Chief Scientific Officer. NeoStem’s subsidiary PCT is Amorcyte’s exclusive provider of cell processing services, which are performed entirely at PCT’s facilities. PCT is the holder of 62.6 shares of Amorcyte Series A Preferred Stock.

These relationships create, or, at a minimum, appear to create potential conflicts of interest with respect to the Agreement and Plan of Merger and the transactions contemplated thereby, as the persons involved have been faced with (or will face, on a going-forward basis, as applicable) decisions that could have different implications for Amorcyte, NeoStem, and any other entities with which such persons are associated.

Although NeoStem and Amorcyte have both established procedures designed to ensure that material related party transactions are fair to the respective company, no assurance can be given as to how potentially conflicted board members or officers of either company will evaluate the fiduciary duties owed by them to NeoStem, Amorcyte, and other entities to which they may owe fiduciary duties, respectively, or how such individuals will act in such circumstances.

Furthermore, the appearance of conflicts, even if such conflicts ultimately do not harm the combined company, might adversely affect the public’s perception of the combined company’s business, as well as its relationships with existing customers, licensors, licensees, and service providers and its ability to enter into new relationships in the future.

The Amorcyte Merger will result in dilution of the ownership interests of current NeoStem stockholders.

As a result of the Amorcyte Merger, the former equity holders of Amorcyte will have the right to receive approximately 6.5% of the outstanding NeoStem Common Stock immediately following the consummation of the transactions based on the number of shares outstanding as of the record date of August 17, 2011 (exclusive of the 1,881,008 shares of NeoStem common stock underlying the warrants to be issued to the Amorcyte equity holders and the maximum of 4,092,768 “Contingent Shares” that may be issued to Amorcyte equity holders in the event certain milestones specified in the Agreement and Plan of Merger are achieved). This represents dilution of the ownership interests and voting power of the current NeoStem stockholders.

Future sales of the combined company’s common stock may depress its stock price.

The shares of NeoStem Common Stock constituting the Base Stock Consideration issued at the closing of the Amorcyte Merger for the benefit of Amorcyte’s former equity holders will be freely tradable in the public market once released from escrow (approximately 20% to be released six months after closing; with additional shares to be released one year after closing such that $1.25 million in shares (852,660 shares in accordance with the escrow valuation mechanism) shall remain in the escrow if no indemnification claims have been asserted by NeoStem, provided that in the event NeoStem has asserted any indemnification claims within one year following the closing, in such case an amount of shares representing $2.5 million (1,705,320 shares in accordance with the escrow valuation mechanism) plus the amount of pending claims shall remain in escrow remaining in escrow; and the remainder of shares to be released two years after closing). 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 release of the shares or in response to the perception that sales of a large number

TABLE OF CONTENTS

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.

Any adverse development relating to any of the combined company’s product candidates, such as a significant clinical trial failure, could substantially depress NeoStem’s stock price and prevent NeoStem from raising additional capital.

The combined company’s ability to progress as a company will be significantly dependent on its product candidates, and on clinical trials. Any clinical, regulatory or other development that significantly delays or prevents the combined company from completing any of its trials, any material safety issue or adverse side effect to any study participant in any of these trials, or the failure of these trials to show the results expected would likely depress NeoStem’s stock price significantly and could prevent NeoStem from raising the substantial additional capital the combined company will need to further develop its product candidates and technologies. Moreover, any material adverse occurrence in early-phase clinical trials could substantially impair the combined company’s ability to initiate additional clinical trials to test its product candidates, whether for new indications or otherwise. This, in turn, could adversely impact NeoStem’s ability to raise additional capital and pursue the planned research and development efforts of the combined company.

The nature of Amorcyte’s business which is being acquired by NeoStem could subject the trading prices of NeoStem Common Stock to additional volatility.

The market price of NeoStem Common Stock has been historically volatile. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The clinical trials and other development activities intended to be undertaken by the combined company may contribute to additional volatility of the market price of NeoStem Common Stock, as investors react to the results of the combined company’s clinical trials of product candidates and those of NeoStem’s competitors. In addition to the foregoing, factors that could contribute to enhanced volatility of the combined company’s stock price include:

In addition, in the past stockholders have initiated class action lawsuits against biotechnology and pharmaceutical companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against the combined company, could cause NeoStem to incur substantial costs and divert management’s attention and resources.

TABLE OF CONTENTS

RISKS RELATED TO AMORCYTE’S BUSINESS

If the Amorcyte Merger is consummated, the business of Amorcyte will be highly speculative and subject to a high degree of risk. The risks and uncertainties described below are not the only ones that could affect Amorcyte. Additional risks and uncertainties of which Amorcyte is unaware, or currently believes are immaterial, may become important factors affecting Amorcyte’s business. If any of the following risks occur, Amorcyte’s business, financial condition and/or operating results could be materially harmed, or differ materially from those expressed in any forward-looking statements.

Risks Related to Amorcyte’s Clinical Development Activities

If clinical trials of Amorcyte’s product candidate AMR-001 or any future product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA or do not otherwise produce positive results, Amorcyte may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of its product candidates.

Before obtaining regulatory approval for the sale of AMR-001 or any other product candidate, Amorcyte must conduct, at its own expense, extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials conducted by or on behalf of Amorcyte can occur at any stage of testing. Amorcyte may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent its ability to receive regulatory approval or commercialize its product candidates, including the following:

After completion of Amorcyte’s Phase 1 trials of AMR-001, the FDA issued a clinical hold notice on August 31, 2010 effective until Amorcyte submits information acceptable to the FDA on its plans to manufacture AMR-001 with an appropriate cell separation device, disposables and reagent kit and the FDA lifts the clinical hold. Amorcyte is negotiating an alternative supply agreement for the needed kits and disposables for the Phase 2 trials. A response to the clinical hold was submitted to the FDA on July 5 and 6,

TABLE OF CONTENTS

2011. On August 5, 2011, Amorcyte received a letter from the FDA advising it that all clinical hold issues had been satisfactorily addressed, the clinical hold was removed and Amorcyte could proceed with its study.

During Amorcyte’s Phase 1 trial of AMR-001, serious adverse events in the treatment group were not significantly different in number compared to the placebo group. However, serious adverse events during the Phase 1 trial that occurred included one treatment group subject death from ventricular fibrillation soon after cell infusion that was attributed to recurrent myocardial infarction from stent thrombosis preceding cell infusion. This subject’s death resulted in a clinical hold during the Phase 1 trial; the hold letter was dated August 31, 2007. The hold was removed upon FDA’s review of the complete documentation on the patient and changes to enrollment procedures for additional subjects that was submitted by Amorcyte. Another treatment group subject was withdrawn because of acute stent thrombosis before cell infusion. One control subject and two additional treatment subjects experienced in-stent restenosis. One treatment subject experienced worsening of congestive heart failure.

There can be no assurance that similar or other events will not occur in future clinical trials of Amorcyte’s product candidates that could give rise to safety concerns, particularly in light of the impaired heart function of patients who will be the target subject population of Amorcyte’s future planned clinical trials.

If Amorcyte is required to conduct additional clinical trials or other testing of AMR-001 beyond those that Amorcyte currently contemplates, or if Amorcyte is required to conduct additional trials or testing of future product candidates more than Amorcyte expects, or if Amorcyte is unable to successfully complete clinical trials of its product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive, or if there are safety concerns, Amorcyte may:

Amorcyte’s product development costs will also increase if Amorcyte experiences delays in testing or approvals. Amorcyte cannot predict whether any clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays also could shorten any periods during which Amorcyte may have the exclusive right to commercialize product candidates or allow its competitors to bring products to market before Amorcyte does and impair Amorcyte’s ability to commercialize its product candidates and may harm Amorcyte’s business and results of operations.

The initiation of a pivotal Phase 3 clinical trial for AMR-001 will require the validation and establishment of manufacturing controls that may delay product development.

Amorcyte currently expects to initiate a Phase 2 clinical trial of AMR-001 by the end of the first quarter of 2012. If the results of the Phase 2 clinical trial are positive and support Phase 3 development, Amorcyte intends to initiate and complete one or more pivotal Phase 3 clinical trials before seeking regulatory approval to commercialize AMR-001. Amorcyte is required to have certain validated and established manufacturing controls with respect to AMR-001 related to its safety, purity and potency when administered to patients. Manufacturing control issues will need to be addressed and resolved with the FDA if Amorcyte seeks to initiate a Phase 3 clinical trial of AMR-001. Specifically, Amorcyte must develop a potency assay for AMR-001 and lot release specifications that correlate with AMR-001 activity or clinical response. Amorcyte may not be successful in its efforts to address these chemistry, manufacturing and controls (“CMC”) issues for AMR-001 in a manner satisfactory to the FDA. If Amorcyte cannot initiate, or if it is delayed in initiating, a pivotal Phase 3 clinical program of AMR-001, as a result of its failure to satisfy the FDA’s CMC concerns or otherwise, the timing of Amorcyte’s regulatory submission for commercialization of AMR-001 could be delayed, or Amorcyte may not be able to seek regulatory approval to commercialize AMR-001 at all.

TABLE OF CONTENTS

Development of Amorcyte’s AMR-001 and potential future product candidates is subject to uncertainty because the CD34⁺ cells are derived from human bone marrow, a source material that is inherently variable.

The number of CD34⁺/CXCR-4⁺cells and the composition of the CD34⁺ cell population from bone marrow vary from patient to patient. These cells are the basis of Amorcyte’s product candidate AMR-001, and may also be used in future product candidates. Such variability in composition could adversely affect the ability of Amorcyte to manufacture its product candidates derived from a patient’s bone marrow or to establish and meet acceptable specifications for release of the product candidate for treatment of a particular patient. As a consequence, the development and regulatory approval process for these product candidates could be delayed or may never be completed.

The results of preclinical studies may not correlate with the results of human clinical trials. In addition, early stage clinical trial results do not ensure success in later stage clinical trials, and interim trial results are not necessarily predictive of final trial results.

To date, Amorcyte has not completed the development of any products through regulatory approval. While Amorcyte and others have analyzed the potential of AMR-001 in preclinical studies with animals, the potential efficacy of AMR-001 in humans has only been evaluated in a Phase 1 clinical trial. The results of preclinical studies evaluating AMR-001 in animals may not be predictive of results in a clinical trial involving a small number of human subjects. Likewise, the outcomes of early clinical trials may not be predictive of the success of later clinical trials. The safety and efficacy data from Amorcyte’s anticipated Phase 2 clinical trials of AMR-001 may be less favorable than the data observed in the Phase 1 clinical trial of this product candidate, which was based on smaller numbers of patients. There can be no assurances that the clinical trials of any product candidate of Amorcyte will ultimately be successful. New information regarding the safety and efficacy of such product candidate may be less favorable than the data observed to date.

Amorcyte may experience delays in enrolling patients in its clinical trials, which could delay or prevent the receipt of necessary regulatory approvals.

Amorcyte may not be able to initiate or continue clinical trials of AMR-001 (or any future product candidate) if Amorcyte is unable to locate and enroll a sufficient number of eligible patients to participate in the clinical trials required by the FDA or other regulatory authorities. Amorcyte may also be unable to engage a sufficient number of clinical trial sites to conduct its trials. The challenge of enrolling patients will become more difficult if Amorcyte is required by the FDA or a similar regulatory agency outside the United States to conduct a trial on a larger population than it currently anticipates. In that event, Amorcyte might be required to seek patients to participate in its trials from Europe or other foreign jurisdictions, which could raise regulatory uncertainties and increase clinical trial costs. Moreover, because PCT does not currently have FDA registered manufacturing facilities outside of the United States, Amorcyte’s ability to conduct trials outside of the U.S. may be constrained by the capability of transporting trial materials to foreign destinations within the expiry period of such materials.

Amorcyte and its investigators may also face challenges in enrolling patients to participate in Amorcyte’s clinical trials due to the novelty of its stem cell-based therapies. Some patients may have concerns regarding stem cells that may negatively affect their perception of therapies under development and their decision to enroll in the trials. Furthermore, patients suffering from diseases within target indications may enroll in competing clinical trials, which could negatively affect Amorcyte’s ability to complete enrollment of its trials.

TABLE OF CONTENTS

Additional factors that may affect the ability of Amorcyte to enroll patients in clinical trials include:

Enrollment delays in clinical trials may result in increased development costs for product candidates, and inability to enroll a sufficient number of patients for any current or future clinical trials would result in significant delays or may require one or more clinical trials to be abandoned altogether.

The cell sorting system Amorcyte intends to use in the Phase 2 clinical trial is owned by an unaffiliated third party.

Amorcyte intends to purchase from a third party the essential cell sorting system that it expects to use in its planned Phase 2 clinical trial of AMR-001. Amorcyte currently does not have any agreement in place permitting it to use this system although negotiations are underway. Moreover, Amorcyte will need to provide the FDA with certain information regarding the design, use and operation of a device. The unavailability of the system, for any reason, would have a material adverse effect on Amorcyte’s AMR-001 product development and commercialization efforts. Although there are other available systems in the marketplace, Amorcyte has not evaluated their costs or safety and effectiveness, or whether AMR-001 would be compatible with such systems. Moreover, if the system becomes unavailable during or after Phase 2, Amorcyte would need to demonstrate that the Phase 2 data obtained with this system are still relevant to future trials with other systems.

Amorcyte has relied in the past, and expects to continue to rely, on research institutions, treatment centers, and contracted resources to conduct and oversee clinical trials of AMR-001, and in some case, to maintain regulatory files for the product candidate. If Amorcyte is not able to secure and maintain agreements with suitable research institutions, treatment centers, or contracted resources on acceptable terms to conduct and/or oversee its clinical trials, if these institutions do not perform as required, or if these institutions fail to timely transfer files/data held by them to Amorcyte, then Amorcyte may not be able to obtain regulatory approval for, or commercialize, its product candidates.

With respect to its planned Phase 2 clinical trial of AMR-001, Amorcyte holds the IND and will rely on additional entities to conduct the clinical trial. Amorcyte expects to enroll patients in its clinical trials of AMR-001 at numerous trial sites across the United States. The reliance of Amorcyte upon research institutions, hospitals and clinics provides Amorcyte with less control over the timing and cost of clinical trials and the ability to recruit subjects. If Amorcyte is unable to enter into and maintain agreements with these entities on acceptable terms, or if any engagement is terminated, Amorcyte may be unable to enroll patients on a timely basis or otherwise conduct its clinical trials in the manner it anticipates.

In addition, there is no guarantee that these entities or any other third parties, including contracted entities for clinical monitoring and operations, imaging support, data management and biostatistics, upon which Amorcyte relies for administration and conduct of clinical trials, will devote adequate time and resources to the clinical trials or perform as required by contract or in accordance with regulatory requirements. If these third parties fail to meet expected deadlines, fail to adhere to the clinical protocols or fail to act in accordance with regulatory requirements, or if they otherwise perform in a substandard manner, clinical trials of Amorcyte product candidates may be extended, delayed or terminated, and as a result Amorcyte may not be able to commercialize AMR-001 or other future product candidates.

TABLE OF CONTENTS

If the potential of product candidates to address the indications that Amorcyte is pursuing is not realized, or if Amorcyte is unable to demonstrate in clinical trials that AMR-001 is safe and effective for the indications pursued, the value of Amorcyte’s technology and its development programs could be significantly reduced.

Amorcyte is currently exploring the potential of AMR-001 to address certain targeted cardiovascular indications, and Amorcyte may in the future study the safety and efficacy of other product candidates, which may also be based on CD34+ cell technology. AMR-001 and the underlying CD34+/CXCR-4⁺ cell technology is still in early stages of discovery and development, and Amorcyte has not proven in clinical trials that its product candidate will be safe and effective for the indications for which Amorcyte intends to seek approval. AMR-001 (and potential future Amorcyte product candidates) are susceptible to various risks, including undesirable and unintended side effects, inadequate therapeutic efficacy or other characteristics that may prevent or limit their marketing approval or commercial use. Amorcyte has not treated a sufficient number of patients to allow Amorcyte to evaluate the most frequent or most serious adverse events that could occur with AMR-001. Any undesirable side effects that might be caused by AMR-001 (or future product candidates) could interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications. Amorcyte could also be required to change the manner in which a product candidate is administered, which could require that additional clinical trials be conducted. If the potential of AMR-001 and the CD34+/CXCR-4⁺ technology is not realized, whether as a result of unintended consequences or otherwise, the value of Amorcyte’s technology and development programs could be significantly reduced.

Risks Related to the Commercialization of Amorcyte’s Product Candidate

Amorcyte’s product candidate is based on novel stem cell technologies that are inherently risky and may not be understood or accepted by the marketplace.

Amorcyte is subject to the risks of failure inherent in the development and commercialization of therapeutic products based on new technologies. The novel nature of Amorcyte’s therapeutics based on adult stem cells creates significant challenges with regards to product development and optimization, manufacturing, government regulation, third-party reimbursement and market acceptance. For example, the FDA has relatively limited experience regulating therapies based on adult stem cells, and there are few approved treatments utilizing stem cells.

Even if Amorcyte successfully develops and obtains regulatory approval for AMR-001 or any future product candidate, the market may not understand or accept them, which could adversely affect future sales. The degree of market acceptance of any such product candidates will depend on a number of factors, including:

TABLE OF CONTENTS

Amorcyte faces substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than they do.

The cell therapy industry is subject to rapid and intense technological change. Amorcyte faces, and will continue to face, intense competition from pharmaceutical, biopharmaceutical and biotechnology companies, as well as numerous academic and research institutions and governmental agencies engaged in drug discovery activities or funding, both in the United States and abroad. Some of these competitors are pursuing the development of drugs and other therapies that target the same diseases and conditions that Amorcyte is targeting with its product candidate AMR-001.

Amorcyte’s product candidates generally target patients without other revascularization options. Therefore, Amorcyte does not believe that its product candidates will compete directly with pharmaceutical therapies being developed to treat less severe stages of Amorcyte’s target indications. However, to the extent that therapies are developed that reverse the progression of the ischemic damage or improve blood flow, they could have the effect of reducing demand for Amorcyte’s product candidates. In addition, because Amorcyte’s product candidates require the removal of bone marrow from the patient, potential competing products that do not require this invasive procedure may have a competitive advantage against Amorcyte products. New pharmaceutical agents or devices that improve the repair of cardiac injury after a heart attack, with the result that fewer patients develop ischemic heart failure, would also represent a competitive threat for AMR-001. Furthermore, cell-based therapies, such as skeletal myoblasts, bone marrow-derived stem cells and adipose cells are being pursued by companies such as Aastrom Biosciences, Inc., Angioblast Systems, Inc., Athersys, Inc., Pluristem Therapeutics, Inc., ReNeuron Group, Stemedica Cell Technologies Inc. and Bioheart, Inc. Some other companies, such as Cytori and Miltenyi, are developing devices to facilitate the production of therapeutic cell populations by clinicians for the treatment of Amorcyte’s target indications. Such devices may be approved by the FDA under a less rigorous regulatory process, and less extensive clinical testing and manufacturing controls than Amorcyte is required to pursue for AMR-001. Development and approval of such a device on the basis of this more limited dataset may take less time than development of AMR-001 and substantially affect Amorcyte’s ability to market its product candidate if approved.

Amorcyte may also face competition in the future from other companies that are researching and developing stem cell therapies. Amorcyte is aware of many companies working in this area. Many of the companies competing against Amorcyte have financial and other resources substantially greater than Amorcyte’s. In addition, many of these competitors have significantly greater experience in testing pharmaceutical and other therapeutic products, obtaining FDA and other regulatory approvals of products, and marketing and selling those products. If Amorcyte obtains necessary regulatory approval and commences significant commercial sales of any products, Amorcyte will also be competing with respect to manufacturing efficiency and marketing capabilities, areas in which Amorcyte has limited or no commercial-scale experience. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated by Amorcyte’s competitors. Competition may increase further as a result of advances made in the commercial applicability of Amorcyte technologies and greater availability of capital for investment in these fields.

As a result, competitors of Amorcyte may:

TABLE OF CONTENTS

The successful commercialization of AMR-001 (and any future Amorcyte product candidates), if any, will depend on obtaining reimbursement from third-party payors.

If it successfully obtains the necessary regulatory approvals, Amorcyte intends to sell AMR-001 initially in the United States. In the United States, the market for any pharmaceutical or biologic product is affected by the availability of reimbursement from third-party payors, such as government health administration authorities, private health insurers, health maintenance organizations and pharmacy benefit management companies. Amorcyte anticipates that AMR-001 and any future products, if approved, will be expensive. If Amorcyte cannot demonstrate a favorable cost-benefit relationship, it may have difficulty obtaining adequate reimbursement for Amorcyte products from these payors. Third-party payors may also deny coverage or offer inadequate levels of reimbursement for any potential product if they determine that the product is experimental, unnecessary or inappropriate.

Should Amorcyte seek to expand its commercialization internationally, it would be subject to the regulations of the European Union and other countries, where the pricing of prescription pharmaceutical products and services and the level of government reimbursement may be subject to governmental control. In these countries, pricing negotiations with governmental authorities can take six to twelve months or longer after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, Amorcyte may be required to conduct one or more clinical trials that compares the cost effectiveness of the respective product candidate or product to other available therapies. Conducting one or more of these clinical trials would be expensive and result in delays in commercialization of the products.

Managing and reducing healthcare costs has become a major priority of federal and state governments in the United States. As a result of healthcare reform efforts, Amorcyte might become subject to future regulations or other cost-control initiatives that materially restrict the price that Amorcyte can receive for its products. Third-party payors may also limit access and reimbursement for newly approved healthcare products generally or limit the indications for which they will reimburse patients who use any products that Amorcyte may develop. Cost control initiatives could decrease the price for products that Amorcyte may develop, which would result in lower product revenues to Amorcyte.

In the event of regulatory approval, Amorcyte may not be able to manufacture AMR-001 at commercial scale (or any other product that may be approved) in compliance with evolving regulatory standards or in quantities sufficient for commercial sale.

Components of therapeutic products approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with current good manufacturing practices, or cGMP, as required by the FDA. Manufacturers of cell-based product candidates such as AMR-001 also must comply with the FDA’s current good tissue practices, or cGTP. In addition, Amorcyte may be required to modify its manufacturing process from time to time for its product candidates in response to FDA requests. Manufacture of live cellular-based products is complex and subjects Amorcyte to significant regulatory burdens that may change over time. Amorcyte may encounter difficulties in the production of its product candidates due to its limited manufacturing experience. Although Amorcyte has negotiated an Amended and Restated Cell Processing Agreement with PCT, whereby PCT is engaged as Amorcyte’s exclusive provider of all cell processing services, Amorcyte (through PCT) may not have sufficient manufacturing capacity to meet any commercial demand that might develop should AMR-001demonstrate efficacy, receive necessary approvals and be cleared for commercialization. These difficulties could reduce sales of Amorcyte products, if any are approved for marketing, increase costs or cause production delays, any of which could damage the reputation and hurt the profitability of Amorcyte.

Amorcyte expects that it would need to significantly expand its manufacturing capabilities to meet potential demand for any products that might attain regulatory approval. Such expansion would require additional regulatory approvals. Amorcyte may also encounter difficulties in the commercial-scale manufacture that may be required following any regulatory approval. Amorcyte and PCT are currently developing new processes and are in discussions with other companies to develop new instruments to improve manufacturing efficiency. Improving the speed and efficiency of Amorcyte’s manufacturing process (through PCT) and the cell sorters and other instruments PCT uses in connection with Amorcyte production is a key element of Amorcyte’ business plan. Neither Amorcyte nor PCT can provide assurances that it will be able to develop

TABLE OF CONTENTS

process enhancements that are acceptable to the FDA, on a timely basis, on commercially reasonable terms, or at all. If they fail to develop these improvements, Amorcyte could face significantly higher capital expenditures than it anticipates, increased facility and personnel costs and other increased operating expenses. Amorcyte may need to demonstrate that product candidates manufactured using new processes or instruments are comparable to the product candidates used in clinical trials. Depending on the type and degree of differences, Amorcyte may be required to conduct additional studies or clinical trials to demonstrate comparability.

In addition, some changes in Amorcyte’s manufacturing processes or procedures, including a change in the location where a product candidate is manufactured, generally require FDA or foreign regulatory authority review and approval prior to implementation. Amorcyte may need to conduct additional preclinical studies and clinical trials to support approval of any such changes. Furthermore, this review process could be costly and time-consuming and could delay or prevent the commercialization of product candidates.

If PCT’s Allendale, New Jersey or Mountain View, California manufacturing facilities are damaged or destroyed, Amorcyte’s business and prospects would be negatively affected.

AMR-001 for Amorcyte’s clinical trials is produced by PCT at PCT’s facilities, pursuant to an Amended and Restated Cell Processing Agreement between Amorcyte and PCT. Because PCT serves as Amorcyte’s exclusive provider of all cell processing services (including production of AMR-001 for clinical trials), Amorcyte relies on PCT’s Allendale or Mountain View facilities and on the continuing suitability of PCT’s facility to provide necessary services. If PCT’s Allendale or Mountain View facilities (or the equipment therein) are significantly damaged or destroyed, Amorcyte will likely experience significant disruptions to the manufacturing capacity for AMR-001, which capacity might not be quickly or inexpensively replaced. In such a situation, Amorcyte may be required to negotiate new agreements for cell processing services, and Amorcyte may not be able to obtain terms as favorable as it obtains from PCT. In the event of a temporary or protracted loss of PCT’s facility or equipment, Amorcyte might not be able to transfer manufacturing to a third party. Even if Amorcyte could transfer manufacturing to a third party, the shift would likely be expensive and time-consuming, particularly since the new facility would need to comply with the necessary regulatory requirements and Amorcyte would need FDA approval before selling any products manufactured at that facility. Such an event could delay clinical trials or, if any Amorcyte product candidates are approved by the FDA, reduce sales of such products.

Following the Amorcyte Merger, NeoStem intends to institute coverage totaling $5,000,000 to cover business interruption and research and development restoration expenses prior to the initiation of Phase 2 trials. For its Allendale location, PCT maintains insurance coverage totaling $3,000,000 with respect to improvements and $600,000 for office and laboratory contents and equipment. If Amorcyte (or PCT, Amorcyte’s provider of cell processing services) has underestimated its respective insurance needs or fails to get such insurance in connection with interruption to clinical manufacturing of Amorcyte product candidates, there may not be adequate coverage for losses.

Amorcyte may use third-party collaborators to help it develop or commercialize AMR-001 or future product candidates, and Amorcyte’s ability to commercialize such candidates may be impaired or delayed if collaborations are unsuccessful.

Amorcyte may in the future selectively pursue strategic collaborations for the development and commercialization of AMR-001 or other product candidates and for the international development and commercialization of such product candidates. For example, Amorcyte anticipates that it would need to enter into a collaboration agreement with a third party to conduct and fund one or more pivotal Phase 3 clinical trials of AMR-001. In addition, Amorcyte may not be able to commercialize AMR-001 successfully without entering into an arrangement with a third party to provide an approved method of administration.

There can be no assurance that Amorcyte will be able to identify suitable collaborators or negotiate collaboration agreements on terms that are acceptable to Amorcyte, or at all. In any future third-party collaboration, Amorcyte would be dependent upon the success of the collaborators in performing their responsibilities and their continued cooperation. Such collaborators may not cooperate or perform their obligations under their agreements with Amorcyte. Amorcyte cannot control the amount and timing of its

TABLE OF CONTENTS

collaborators’ resources that will be devoted to performing their responsibilities under their agreements with them. Collaborators may choose to pursue alternative technologies in preference to those being developed in collaboration with Amorcyte. The development and commercialization of product candidates will be delayed if collaborators fail to conduct their responsibilities in a timely manner or in accordance with applicable regulatory requirements or if they breach or terminate their collaboration agreements. Disputes with collaborators could also result in product development delays, decreased revenues and litigation expenses.

If AMR-001 or a future Amorcyte product candidate receives marketing approval from the FDA, we would need either to hire a sales force with expertise in biologic products or to contract with a third party to provide a sales force to meet its needs.

Amorcyte does not currently have a sales or marketing organization, and Amorcyte has no experience in the selling, marketing or distribution of biologic products, nor does NeoStem. To achieve commercial success for any product that might be approved in the future for marketing, we would be required either to develop a sales and marketing organization or to outsource these functions to third parties.

Amorcyte (and post merger, NeoStem) may be unable to establish marketing, sales and distribution capabilities necessary to commercialize and gain market acceptance for any of its product candidates and to be competitive. In addition, co-promotion or other marketing arrangements with third parties to commercialize product candidates could significantly limit the revenues derived by Amorcyte from such product candidates, and these third parties may fail to commercialize the product candidates successfully.

Ethical and other concerns surrounding the use of stem cell-based therapy may negatively affect public perception of Amorcyte and/or its product candidates, thereby reducing potential demand for Amorcyte products.

The commercial success of Amorcyte’s product candidates, which are based on adult stem cells, will depend in part on general public acceptance of the use of stem cell-based therapy for the prevention or treatment of human diseases. The use of embryonic stem cells and fetal tissue for research and stem cell therapy has been the subject of substantial national and international debate regarding related ethical, legal and social issues. Although Amorcyte does not use embryonic stem cells or fetal tissue in any product candidate, the public may not be able to, or may fail to, differentiate Amorcyte’s use of adult stem cells from the use by others of embryonic stem cells or fetal tissue. This could result in a negative perception of Amorcyte’s product candidates.

The use of Amorcyte’s product candidates in human subjects may expose Amorcyte to product liability claims, for which Amorcyte may not be able to obtain adequate insurance.

Amorcyte faces an inherent risk of product liability exposure related to the testing of its product candidates in human clinical trials and will face an even greater risk if Amorcyte commercially sells any products that it may develop following requisite approvals therefor. No Amorcyte product candidate (including AMR-001) has been widely used over an extended period of time, and therefore safety data is limited. Amorcyte derives the raw materials for manufacturing of its product candidates from human cell sources, and therefore the manufacturing process and handling requirements are extensive, which increases the risk of quality failures and subsequent product liability claims.

Amorcyte intends to obtain product liability insurance upon initiation of the Phase 2 clinical trial with an aggregate limit of $5.0 million for its product candidates that are in clinical testing. Amorcyte will need to increase its insurance coverage when it begins commercializing its product candidates, if ever. Amorcyte may not be able to obtain or maintain product liability insurance on acceptable terms with adequate coverage or at all. If Amorcyte is unable to obtain and maintain adequate insurance, or if claims against Amorcyte substantially exceed its coverage, then Amorcyte’s financial position could be significantly impaired.

TABLE OF CONTENTS

Whether or not Amorcyte is ultimately successful in any product liability litigation, such litigation could consume substantial amounts of Amorcyte’s financial and managerial resources and could result in:

Risks Related to Amorcyte’s Intellectual Property

If Amorcyte’s patent position does not adequately protect its product candidates or any future products, others could compete against Amorcyte more directly, which would harm Amorcyte’s businesses.

The success of Amorcyte depends, in large part, on its ability to obtain and maintain patent protection for its product candidates. Issued patents may be challenged by third parties, resulting in patents being deemed invalid, unenforceable or narrowed in scope, or a third party may circumvent any such issued patents. The patent position of biotechnology companies is generally highly uncertain, involves complex legal and factual questions and has been the subject of much litigation and recent court decisions introduce uncertainty in the strength of patents owned by biotechnology companies. The legal systems of some foreign countries do not favor the aggressive enforcement of patents, and the laws of foreign countries may not protect Amorcyte’s rights to the same extent as the laws of the United States. Therefore, any patents that Amorcyte owns or licenses may not provide sufficient protection against competitors.

The claims of the issued patents, and the claims of any patents which may issue in the future and be owned by or licensed to Amorcyte, may not confer on Amorcyte significant commercial protection against competing products. Also, any pending patent applications may not issue, and Amorcyte may not receive any additional patents. The patents might not contain claims that are sufficiently broad to prevent others from utilizing the covered technologies. For instance, patents relating to Amorcyte’s AMR-001 product candidate are limited to isolation of a nonexpanded population of autologous mononuclear cells enriched for CD34+ cells, which further contains a subpopulation of potent CD34+/CXCR-4+ cells that have CXCR-4-mediated chemotactic activity. Consequently, Amorcyte’s competitors may independently develop competing products that do not infringe Amorcyte’s patents or other intellectual property. To the extent a competitor can develop similar products using a different chemistry, these patents will not prevent others from directly competing with Amorcyte.

Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any Amorcyte product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization of such product candidates, thereby reducing any advantages of the patent. For instance, one of Amorcyte’s patents relating to its technology will expire in 2028, subject to extension of the patent term for regulatory delay for any approved product for which Amorcyte is eligible. To the extent Amorcyte’s product candidates based on that technology are not commercialized significantly ahead of this date, or to the extent Amorcyte has no other patent protection on such product candidates, those product candidates would not be protected by patents beyond 2028 and Amorcyte would then rely solely on other forms of exclusivity, such as regulatory exclusivity provided by the Federal Food, Drug and Cosmetic Act, which may provide less protection of Amorcyte’s competitive position.

Similar considerations apply in any other country where Amorcyte is prosecuting patents, has been issued patents, or has licensed patents or patent applications relating to its technology. The laws of foreign countries may not protect intellectual property rights to the same extent as do laws of the United States.

TABLE OF CONTENTS

If Amorcyte is unable to protect the confidentiality of its proprietary information and know-how, Amorcyte’s competitive position would be impaired.

A significant amount of Amorcyte’s technology, especially regarding manufacturing processes, is unpatented and is maintained as trade secrets. The background technologies used in the development of Amorcyte’s product candidates are known in the scientific community, and it is possible to duplicate the methods that Amorcyte uses to create its product candidates. In an effort to protect these trade secrets, Amorcyte requires its employees, consultants and contractors to execute confidentiality agreements. These agreements require that all confidential information developed by the individual or made known to the individual by the disclosing company during the course of the individual’s relationship with such company be kept confidential and not disclosed to third parties. These agreements, however, may not provide Amorcyte with adequate protection against improper use or disclosure of confidential information, and these agreements may be breached. Adequate remedies may not exist in the event of unauthorized use or disclosure of confidential information. A breach of confidentiality could affect Amorcyte’s competitive position. In addition, in some situations, these agreements may conflict with, or be subject to, the rights of third parties with whom employees, consultants, collaborators or advisors have previous employment or consulting relationships. Also, others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to Amorcyte’s trade secrets. The disclosure of Amorcyte’s trade secrets would impair Amorcyte’s competitive position.

If Amorcyte infringes or is alleged to infringe intellectual property rights of third parties, Amorcyte’s business may be adversely affected.

The research, development and commercialization activities of Amorcyte, including any product candidates resulting from these activities, may infringe or be claimed to infringe patents or other proprietary rights owned by third parties and to which Amorcyte does not hold licenses or other rights. There may be applications that have been filed but not published that, when issued, could be asserted against Amorcyte. These third parties could bring claims against Amorcyte that would cause Amorcyte to incur substantial expenses and, if successful, could cause Amorcyte to pay substantial damages. Further, if a patent infringement suit were brought against Amorcyte, Amorcyte could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit.

Amorcyte has not conducted an exhaustive search or analysis of third-party patent rights to determine whether its research, development or commercialization activities, including any product candidates resulting from these activities, may infringe or be alleged to infringe any third-party patent rights.

As a result of intellectual property infringement claims, or in order to avoid potential claims, Amorcyte may choose, or be required, to seek a license from the third party. These licenses may not be available on acceptable terms, or at all. Even if Amorcyte is able to obtain a license, the license would likely obligate the licensee to pay license fees or royalties or both, and the rights granted to the licensee might be nonexclusive, which could result in competitors gaining access to the same intellectual property. Ultimately, Amorcyte could be prevented from commercializing a product, or be forced to cease some aspect of its business operations, if, as a result of actual or threatened patent infringement claims, Amorcyte is unable to enter into licenses on acceptable terms. All of the issues described above could also affect potential collaborators to the extent Amorcyte has any collaborations then in place, which would also affect the success of the collaboration and therefore the success of Amorcyte.

There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In addition to infringement claims, Amorcyte may become a party to other patent litigation and other proceedings, including interference or reexamination proceedings declared by the U. S. Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to its product candidates and technology. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on the ability of Amorcyte to compete in the marketplace.

TABLE OF CONTENTS

Amorcyte may become involved in lawsuits to protect or enforce patents (including the patents of potential collaborators or licensors), which could be expensive and time consuming.

Competitors may infringe patents held by, or the patents of the respective potential collaborators or licensors of, Amorcyte. As a result, Amorcyte may be required to file infringement claims to counter infringement or unauthorized use. The cost of any patent litigation or other proceeding, even if resolved in Amorcyte’s favor, could be substantial. Some of Amorcyte’s competitors may be able to sustain the costs of such litigation or proceedings more effectively than Amorcyte can because of their substantially greater financial resources. Patent litigation and other proceedings may also absorb significant management time. In addition, in an infringement proceeding, a court may decide that a patent is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that patents used by Amorcyte do not cover Amorcyte’s technology. An adverse determination of any litigation or defense proceedings could put one or more of such patents at risk of being invalidated or interpreted narrowly and could put patent applications at risk of not issuing. Amorcyte is aware of several companies that are employing stem cell sorting technology in their research and product development efforts. If these companies commercialize products that use cell sorting technology similar to that of Amorcyte, there can be no assurance that Amorcyte would have a basis for initiating patent infringement proceedings or that if initiated they would prevail in such proceedings.

Interference proceedings conducted within the U.S. Patent and Trademark Office may be necessary to determine the priority of inventions with respect to our patent applications or those of Amorcyte’s potential collaborators or licensors. Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distraction to Amorcyte’s management. Amorcyte may not be able, alone or with its potential collaborators and licensors, to prevent misappropriation of its proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Amorcyte’s confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments.

Amorcyte relies on its ability to stop others from competing by enforcing its patents; however, some jurisdictions may require patent holders to grant licenses to third parties. Such compulsory licenses could be extended to include Amorcyte’s product candidates including AMR-001, which may limit potential revenue opportunities of Amorcyte.

Many countries, including some countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, most countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may be limited to monetary relief and may be unable to enjoin infringement, which could materially diminish the value of the patent. Compulsory licensing of life-saving products is also becoming increasingly popular in developing countries, either through direct legislation or international initiatives. Such compulsory licenses could be extended to include Amorcyte’s respective product candidates, which may limit Amorcyte’s potential revenue opportunities, including with respect to any future revenues which may result from AMR-001.

Risks Related to Regulatory Approval and Other Government Regulations

Amorcyte’s business and product candidates are subject to extensive regulatory scrutiny. If Amorcyte is not able to obtain the necessary regulatory approvals for AMR-001 or future product candidates, Amorcyte may not be able to continue its business operations.

Amorcyte’s product candidates, and the activities associated with their development and commercialization, including their testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in states and in other countries. The failure of Amorcyte to obtain regulatory approval for a product candidate will prevent Amorcyte from commercializing the product candidate. Amorcyte has not received regulatory approval to

TABLE OF CONTENTS

market AMR-001 or any other product candidate in any jurisdiction. Securing FDA approval typically requires the submission of extensive preclinical and clinical data and supporting information to the FDA for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing FDA approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the FDA. AMR-001 and Amorcyte’s future products may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude the obtaining of regulatory approval or may prevent or limit commercial use.

The process of obtaining FDA and other regulatory approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved and challenges by competitors. In Amorcyte’s case, because all of its product candidates are based on its CD34⁺ stem cell technology, any adverse events in Amorcyte’s clinical trials of one of its product candidates could negatively affect the clinical trials and approval process for Amorcyte’s other product candidates. Changes in regulatory approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application or may make it easier for Amorcyte’s competitors to gain regulatory approval to enter the marketplace. The FDA has substantial discretion in the approval process and may refuse to accept any application or may decide that Amorcyte’s data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying agency interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent regulatory approval of a product candidate. Any regulatory approval Amorcyte ultimately obtains may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.

Any of the following factors, among others, may cause regulatory approval for Amorcyte’s product candidates to be delayed, limited or denied:

Any difficulties that Amorcyte encounters in obtaining regulatory approval could have a substantial adverse impact on Amorcyte’s ability to generate product sales, and could make any search for a collaborative partner more difficult.

If Amorcyte or any of its investigators are not able to conduct the clinical trials of its product candidates in accordance with regulations and accepted standards, and on schedule, regulatory approval by the FDA and other regulatory authorities may be delayed or denied.

To obtain marketing approvals for its product candidates in the United States, Amorcyte must, among other requirements, complete adequate and well-controlled clinical trials sufficient to demonstrate to the FDA that the product candidate is safe and effective, for each indication for which approval is sought. Several factors could prevent completion or cause significant delay of these trials, including an inability to enroll the required number of patients or failure to demonstrate adequately that Amorcyte’s product candidates are safe and effective for use in humans. Negative or inconclusive results from, or serious adverse events during, a clinical trial could cause the clinical trial to be repeated or a development program to be terminated, even if

TABLE OF CONTENTS

other studies or trials relating to the program are successful. A serious adverse event is an event that results in significant medical consequences, such as hospitalization, disability or death, and must be reported to the FDA. Amorcyte cannot predict whether safety concerns regarding its product candidates will or will not develop. The FDA can place a clinical trial on hold if, among other reasons, it finds that patients enrolled in the trial are or would be exposed to an unreasonable and significant risk of illness or injury. If safety concerns develop, Amorcyte may, or the FDA or an institutional review board may require Amorcyte to, stop the affected trials before completion.

One treatment group subject in the AMR-001 Phase 1 study died soon after cell infusion from ventricular fibrillation that was attributed to recurrent myocardial infarction from stent thrombosis preceding cell infusion. This subject’s death resulted in a clinical hold during the Phase 1 trial; the hold letter was dated August 31, 2007. The hold was removed upon FDA’s review of the complete documentation on the patient and changes to the enrollment process that were submitted by Amorcyte.

The completion of Amorcyte’s clinical trials may be delayed or terminated for many reasons, including if:

Amorcyte’s development costs will increase if there are material delays in its clinical trials, or if Amorcyte is required to modify, suspend, terminate or repeat a clinical trial. If Amorcyte is unable to conduct its clinical trials properly and on schedule, marketing approval may be delayed or denied by the FDA.

Any product for which Amorcyte obtains marketing approval will be subject to extensive ongoing regulatory requirements, and Amorcyte may be subject to penalties if it fails to comply with regulatory requirements or if it experiences unanticipated problems with its products, when and if any of them are approved.

Any product for which Amorcyte obtains marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by, the FDA and comparable regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration requirements, cGMP and cGTP requirements relating to quality control, quality assurance and corresponding maintenance of records and documents, requirements relating to product labeling, advertising and promotion, and recordkeeping. Even if regulatory approval of a product is granted, the approval may be subject to additional limitations on the indicated uses for which the product may be marketed or to other conditions of approval. In addition, approval may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. Discovery after approval of previously unknown problems with any such products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in actions such as:

TABLE OF CONTENTS

Failure to obtain regulatory approval in international jurisdictions would prevent Amorcyte from marketing products abroad.

Amorcyte may in the future seek to market AMR-001 or other product candidates outside the United States. In order to market such product candidates in the European Union and many other jurisdictions, Amorcyte must submit clinical data concerning its product candidates and obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval from foreign regulators may be longer than the time required to obtain FDA approval. The regulatory approval process outside the United States may include all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product candidate be approved for reimbursement before it can be approved for sale in that country. In some cases this may include approval of the intended price to be charged for the product, if approved. Amorcyte may not obtain approvals from regulatory authorities outside the United States on a timely basis, or at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA, but a failure or delay in obtaining regulatory approval in one country may negatively affect the regulatory process in other countries. Amorcyte may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize any products in any market and therefore may not be able to generate sufficient revenues to support its business.

Amorcyte’s business involves the use of hazardous materials that could expose the company to environmental and other liability.

The PCT facility located in Allendale, New Jersey at which Amorcyte’s cell processing functions are conducted, is subject to various local, state and federal laws and regulations relating to safe working conditions, laboratory and manufacturing practices and the use and disposal of hazardous or potentially hazardous substances, including chemicals, micro-organisms and various radioactive compounds used in connection with Amorcyte’s research and development activities. In the United States, these laws include the Occupational Safety and Health Act, the Toxic Test Substances Control Act and the Resource Conservation and Recovery Act. No assurances can be given that accidental contamination or injury to employees, service providers and third parties from hazardous materials will not occur. Amorcyte does not have insurance to cover claims arising from our use and disposal of these hazardous substances.

TABLE OF CONTENTS

Any regulatory exclusivity that Amorcyte may obtain upon approval of AMR-001 or any other product candidates may not adequately protect Amorcyte’s future products; accordingly, others could compete against Amorcyte more directly.

The success of Amorcyte will depend in large part on Amorcyte’s ability to obtain and maintain the regulatory exclusivity provided by the Public Health Service Act upon approval by the FDA of a biologics license application, or BLA, for its product candidates. This regulatory exclusivity is new, involves complex legal and factual questions and will likely be the subject of much litigation, and court decisions may introduce uncertainty in the enforceability or scope of regulatory exclusivity provided to an approved biologic product. Therefore, enforceability or scope of any regulatory exclusivity for an approved biologic product in the United States cannot be predicted with certainty, and may not provide sufficient protection against competitors.

Risks Related to Amorcyte’s Financial Condition

Amorcyte has experienced a history of significant recurring losses since inception. Amorcyte has limited resources to fund clinical operation and expects to continue to incur such losses for the foreseeable future and may never achieve or maintain profitability.

Amorcyte has incurred losses in each year since its inception and expects to continue to experience losses over the next several years. Amorcyte’s net losses were approximately $870,800 for the six months ended June 30, 2011, $1,103,300 for the year ended December 31, 2010 and $1,452,700 for the year ended December 31, 2009. As of June 30, 2011, Amorcyte had accumulated a deficit of approximately $9,670,900 during the development stage (i.e., since its inception on June 29, 2004).

To date, Amorcyte has financed its operations primarily through privately placed convertible stock sales. Additionally, Amorcyte received a grant of $298,200 for the funded period 2006-2007 from the State of New Jersey’s Commission on Science and Technology, and an award of $244,479 during 2010 under the federal government’s Qualifying Therapeutic Discovery Program (QTDP) initiative. Amorcyte’s losses have resulted principally from costs incurred in its research and development programs and from general and administrative expenses. Amorcyte has devoted substantially all of its time, money and efforts to the research and development of its product candidates. Amorcyte has no product revenue and to date has not received regulatory approval to commercialize any of its products under development. Amorcyte has not completed development of any of its product candidates. Because of the numerous risks associated with drug and biologics development, Amorcyte is unable to predict whether its development efforts will be successful. Amorcyte’s history of recurring losses from operations, its limited capital resources to fund clinical operations, and a provision in its certificate of incorporation requiring Amorcyte to redeem its Series A Preferred Stock over a three year period if requested by a majority of the preferred stockholders, raise substantial doubt about Amorcyte’s ability to continue as a going concern.

Amorcyte expects to continue to incur significant operating expenses and anticipates that its expenses and losses will increase in the foreseeable future as Amorcyte seeks to:

TABLE OF CONTENTS

To become and remain profitable, Amorcyte must succeed in developing and eventually commercializing products with significant market potential. This will require Amorcyte to be successful in a range of challenging activities, including successfully completing clinical trials of AMR-001 and future product candidates, obtaining regulatory approval for product candidates and manufacturing, marketing and selling any products for which such regulatory approval may be obtained. Amorcyte is only in the preliminary stages of many of these activities. Amorcyte may never succeed in these activities and may never generate revenues that are significant or large enough to achieve profitability. Even if Amorcyte does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. The failure of Amorcyte to become and remain profitable would depress the value of its business and could impair its ability to raise capital, expand its business or continue its operations.

RISKS RELATED TO NEOSTEM’S BUSINESS AND FINANCIAL CONDITION

Risks Related to NeoStem’s Financial Condition

We are a company with a limited operating history and have incurred substantial losses and negative cash flow from operations in the past, and expect to continue to incur losses and negative cash flow for the near term.

We are a company with a limited operating history, limited capital, and limited sources of revenue. Since our inception in 1980, we have incurred net losses of approximately $116.5 million through June 30, 2011. We incurred net losses attributable to common shareholders of approximately $21.1 million for the six months ended June 30, 2011, approximately $23.5 million for the year ended December 31, 2010, approximately $31.8 million for the year ended December 31, 2009 and approximately $9.2 million for the year ended December 31, 2008, and we expect to incur additional operating losses and negative cash flow in the future. The revenues from our United States Cell Therapy segment are not sufficient to cover costs attributable to that business. We expect to incur losses and negative cash flow for the foreseeable future as a result of development activities associated with our VSEL^TM Technology, a T-cell therapeutic and other research and development efforts to advance cell therapeutics, including those associated with AMR-001. We also expect to continue to incur significant expenses related to sales, marketing, general and administrative and product research and development in connection with the development of our business.

Although Erye, a Chinese pharmaceutical company in which we acquired a 51% interest, had revenues of approximately $34.3 million for the six months ended June 30, 2011, approximately $69.6 million for the year ended December 31, 2010 and $11.4 million in revenues for the year ended December 31, 2009 (this reflects Erye’s operations for the two months ended December 31, 2009 since the acquisition was effective October 30, 2009), it has only a limited history of earnings. Moreover, Erye is expected to incur significant expenses in the near term due to: (1) costs related to stabilizing and streamlining its operations; (2) costs related to the relocation of its production operations to a new facility; (3) research and development costs related to new drug projects; and (4) costs related to expanding its existing sales network for new drug distribution. Pursuant to the current joint venture agreement that governs the ownership and management of Erye, or the Joint Venture Agreement, for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement became effective distributions are made as follows: (i) 49% of undistributed profits, after tax, will be distributed to Suzhou Erye Economy and Trading Co. Ltd., or EET, which owns the remaining 49% of Erye, and loaned back to Erye for use in connection with its construction of and relocation to the new Erye facility; (ii) 45% of the net profit after tax due to the Company will be provided to Erye as part of the new facility construction fund, which will be characterized as paid-in capital for our 51% interest in Erye; and (iii) only 6% of the net profit will be distributed to us directly for our operating expenses. As a result, we will not be able to supplement our cash flow fully from the income expected to be generated by Erye.

PCT became a wholly-owned subsidiary of NeoStem on January 19, 2011, upon the closing of the PCT Merger. PCT has not generated any significant amount of revenue nor been profitable in any quarter since inception.

We cannot provide any assurance that we will generate a profit from our operations in the near future to fund our growth.

TABLE OF CONTENTS

If we are unable to manage the growth of our business, our prospects may be limited and the results of our operations and ability to continue as a going concern may be materially and adversely affected.

We intend to expand our sales and marketing programs, manufacturing capacity, and portfolios of innovative stem cell-based therapies and pharmaceutical products to meet future demand in the U.S. and China. 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 materially adversely affected. We will need to continually improve our operations, financial and other internal systems to manage our growth effectively, and any failure to do so may result in slower growth, diminished operating results and a failure to achieve profitability, which would materially and adversely affect our ability to continue as a going concern.

The first mortgage on the Allendale facility of our PCT subsidiary contains various covenants that limit PCT’s ability to take certain actions and PCT’s failure to comply with any of the covenants could have a material adverse effect on our business and financial condition.

The first of the two mortgages on PCT’s Allendale facility contains debt coverage and total debt to tangible net worth financial covenants which limit PCT’s ability to incur additional debt and make capital expenditures. Historically, PCT has not been able to meet one or both covenants and PCT did not meet them at June 30, 2011. While the bank has been willing to waive compliance in the past, no assurance can be given that the bank will continue to waive such compliance in the future. Additionally, the second mortgage also contains certain financial covenants which will need to be met in the future. Further, the Allendale subsidiary is restricted from taking certain actions without bank consent, including certain asset transfers.

Acquisitions intended to grow our business may expose us to additional risks.

We will continue to review acquisition prospects and other reorganizing activities that could complement or streamline our current business, increase the size and geographic scope of our operations or otherwise offer revenue generating or other growth opportunities. Any increase in debt in connection with an acquisition could result in increased interest expense. Additionally, acquisitions may dilute the interests of our stockholders, place additional constraints on our available cash and entail other risks, including: difficulties in assimilating acquired operations, technologies or products; the loss of key employees from acquired businesses; diversion of management’s attention from our core business; risks of successor liability for unknown claims; and risks of entering markets, including international markets, in which we have limited or no prior experience.

A significant portion of our PCT subsidiary’s current revenues are derived from a small number of customers.

PCT’s billings for the six months ended June 30, 2011 and for the years ended December 31, 2010 and 2009 are concentrated with three customers. These three customers make up 21.1%, 18% and 15.4% of billings (a total of 54.5% for all three) for the six months ended June 30, 2011 and 18%, 15% and 12% of billings (a total of 45% for all three) for the year ended December 31, 2010 and 18%, 15% and 12% of billings (a total of 45% for all three) for the year ended December 31, 2009. One of these is a related party. The loss of one or more of these customers or material changes to the contracts with or payment terms of these customers may result in significant business downturn through reduced revenues, reduced cash flows, and delays in revenues or cash flows, and such delays or reductions could have a material impact on our future revenue growth and profitability.

Risks Related to Cell Therapy — United States

Cell therapy is still a developing field and a significant global market for our services has yet to emerge.

Cell therapy is still a developing area of research, with few cell therapy products approved for clinical use. At the PCT level, the current market and current contracts principally consist of providing manufacturing of cell and tissue-based therapeutic products in clinical trial and processing of stem cell products for transplantation programs. We also provide services related to the collection and storage of umbilical cord blood units and adult stem cells. There currently is no significant global market for stem cell processing or their collection and storage, nor is there any guarantee that such markets will develop in the near future or at

TABLE OF CONTENTS

all. Major medical institutions currently do not recommend private storage generally, and we believe that the medical community is supportive of the public cord blood collective system. Patients can donate their cord blood to the system without charge. The market for cell and tissue-based therapies is early-stage, substantially research oriented, and financially speculative. Very few companies have been successful in their efforts to develop and commercialize a stem cell product. Stem cell products in general 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 their approval or commercial use. The demand for stem cell processing and the number of people who may use cell or tissue-based therapies is difficult to forecast. As there are no real experts who can forecast this market with accuracy, there is limited data from which the future use of our services may be forecasted. Our success is dependent on the establishment of a large global market for our products and services and our ability to capture a share of this market.

The University of Louisville has the ability to exercise significant influence over the future development of our VSEL^TM Technology.

The terms of our exclusive license of the VSEL^TM Technology from the University of Louisville provide for a collaborative approach on development decisions. For example, should we seek to collaborate with a third party on the VSEL^TM Technology programs, prior approval of the University of Louisville would be required for any sublicensing agreement. There can be no assurance they would grant approval for decisions requiring their consent. In addition, we entered into a sponsored research agreement with the University of Louisville, pursuant to which they perform certain research activities for us. Accordingly, although we engage in our own independent research and development activities with respect to the VSEL^TM Technology and have entered into additional sponsored research agreements, we are highly dependent on the University’s cooperation and performance in developing the VSEL^TM Technology. Further, the VSEL^TM Technology 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^TM Technology. The sponsored research agreement requires other periodic payments. Our failure to meet our financial or other obligations under the license or sponsored research agreement in a timely manner could result in the loss of some or all of our rights to proprietary technology, such as the loss of exclusive rights or even termination of the agreements, and/or we could lose our right to have the University of Louisville conduct research and development efforts on our behalf.

We have a very limited history of conducting our own research and development activities.

To support our own research and development activities for our VSEL^TM Technology and other stem cell technologies, in September 2009 we signed a lease for approximately 8,000 square feet of office and laboratory space in Cambridge, Massachusetts that has served as our research and development headquarters. The Company is assessing its need for the Cambridge facility going forward given the acquisition of PCT with its Allendale, NJ and Mountain View, CA facilities. In May 2011 we sublet a portion of our Cambridge facility to another life science company. To pursue our current business strategy, we must have in place appropriate research capabilities, either on our own or through relationships with third parties. There can be no assurance that we will be successful in these efforts. Our additional research and development capacity also will require adequate sources of funding. There can be no assurance that any of these development efforts will produce a successful product or technology. Our failure to develop new products would have a material adverse effect on our business, operating results and financial condition.

Even if we are successful in developing a therapeutic application using our VSEL^TM Technology or other potential stem cell technologies, we still may be unsuccessful in creating a commercially viable and profitable business.

The commercial viability of our VSEL^TM Technology and other stem cell technologies may depend upon our ability to successfully isolate and expand the number of stem cells collected through adult stem cell collection processes in order to achieve a therapeutically-viable dose. Today, the number of very small embryonic-like stem cells that can be isolated from the peripheral blood of an adult donor is relatively small and this volume of cells may not be sufficient for therapeutic applications. A critical component of our adult

TABLE OF CONTENTS

stem cell collection, processing and storage services relating to the VSEL^TM Technology and other potential stem cell technologies could therefore be the utilization of stem cell expansion processes. There are many biotechnology laboratories attempting to develop stem cell expansion technology, but to date stem cell expansion techniques remain very inefficient. There can be no assurance that such technology will be effective or available at all. The failure of cost effective and reliable expansion technologies to become available could severely limit the commercial opportunities of our VSEL^TM Technology programs and other potential stem cell technologies and limit our business prospects, which could have a material adverse effect on our business, operating results and financial condition.

Moreover, stem cell collection techniques are rapidly developing and could undergo significant change in the future. Such rapid technological development could result in our technologies becoming obsolete. Successful biotechnology development in general is highly uncertain and is dependent on numerous factors, many of which are beyond our control. While our VSEL^TM Technology and other stem cell technologies appear promising, such technologies may fail to be successfully commercialized for numerous reasons, including, but not limited to, competing technologies for the same indication. There can be no assurance that we will be able to develop a commercially successful therapeutic application for this technology or other potential stem cell technologies.

Our research and development activities using adult stem cells in therapeutic indications present additional risks.

Our research and development activities relating to our VSEL^TM Technology and other populations of adult stem cells are subject to many of the same risks as our stem cell collection, processing and storage business, and additional risks related to requirements for preclinical and clinical testing by regulatory authorities including the United States Food and Drug Administration, or FDA, to demonstrate the safety and efficacy of the underlying therapy. The development of new drugs and therapies is often a long, expensive and difficult process and most attempts fail. Our VSEL^TM Technology is in the very early stages of development and will require many steps, tests and processes before we will be able to commence clinical testing in humans. There can be no assurance that a biologics license application, or BLA, with the FDA will not be required for our VSEL^TM Technology or our other stem cell technologies. The approval process for a BLA can take years, require human clinical trials and cost several million dollars. There also can be no assurance that we independently, or through collaborations, will successfully develop, commercialize or market our VSEL^TM Technology or other stem cells for any therapeutic indication. Should we fail to develop our VSEL^TM Technology or other adult stem cell technologies pursued by us, our business prospects, operating results and financial condition will be materially and adversely affected.

Technological and medical developments or improvements in conventional therapies could render the use of stem cells and our services and planned products obsolete.

Advances in other treatment methods or in disease prevention techniques could significantly reduce or entirely eliminate the need for our stem cell services, planned products and therapeutic efforts. Additionally, technological or medical developments may materially alter the commercial viability of our technology or services, and require us to incur significant costs to replace or modify equipment in which we have a substantial investment. In either event, we may experience a material adverse effect on our business, operating results and financial condition.

If safety problems are encountered by us or others developing new stem cell-based therapies, our stem cell initiatives could be materially and adversely affected.

The use of stem cells for therapeutic indications is still in the very early stages of development. If an adverse event occurs during clinical trials related to one of our product candidates or those of others, the FDA and other regulatory authorities may halt our clinical trials or require additional studies. The occurrence of any of these events would delay, and increase the cost of, our product development and may render the commercialization of our product candidates impractical or impossible.

TABLE OF CONTENTS

Future therapies using adult stem cells may not develop, and demand for adult stem cell collection, processing and storage may never develop.

The value of our stem cell collection, processing and storage business and our development programs could be significantly impaired, and our ability to become profitable and continue our business could be materially and adversely affected, if cell therapies under development by us or by others to treat disease are not proven effective, demonstrate unacceptable risks or side effects or, where required, fail to receive regulatory approval. The therapeutic application of stem cells to treat serious diseases is currently being explored using adult stem cells like those that are the focus of our business, as well as embryonic stem cells. Cells collected and used for the same individual are referred to as autologous cells and those collected from an individual who is not the user of the cells are referred to as allogeneic cells. To our knowledge, the only allowed therapeutic uses of stem cells in the U.S., other than in connection with clinical trials, involves hematopoietic stem cell transplants to treat certain types of blood-based cancers (hematopoietic stem cells are the stem cells from which all blood cells are made) and adult autologous cultured cartilage cells for implantation for the repair of symptomatic cartilage defects of the femoral condyle (the distal end of the femur). No other stem cell therapeutic products have received regulatory approval for sale in the U.S. While stem cell-based therapy has been reported to be susceptible to various risks, including some undesirable side effects and immune system responses, these problems have been primarily associated with allogeneic use. Inadequate therapeutic efficacy also is a risk that may prevent or limit approval or commercial use of adult stem cells, whether for autologous use or allogeneic use. In addition, the time and cost necessary to complete the clinical development and to obtain regulatory approval of new therapies using stems cells are expected to be significant.

The demand for PCT’s services depends in part on our customers’ research and development and marketing efforts. Our business, financial condition and results of operations may be harmed if our customers spend less on, or are less successful in, these activities.

Many of PCT’s customers are engaged in research, development, production and marketing. The amount of customer spending on research, development, production and marketing has a large impact on our revenues and profitability, particularly the amount customers choose to spend on outsourcing. Customers determine the amounts that they will spend based upon, among other things, available resources and their need to develop new products, which, in turn, is dependent upon a number of factors, including their competitors’ research, development and production initiatives, and the anticipated reimbursement scenarios for specific products and therapeutic areas. In addition, consolidation in the industries in which our customers operate may have an impact on such spending as customers integrate acquired operations, including research and development departments and their budgets. Our customers finance their research and development spending from private and public sources. A reduction in spending by our customers could have a material adverse effect on our business, financial condition and results of operations. If our customers are not successful in attaining or retaining product sales due to market conditions, reimbursement issues or other factors, our results of operations may be materially impacted.

The nature and duration of PCT’s contracts can yield varying revenues and profits.

PCT’s contracts with customers may be subject to repeated renegotiation and amendments which change the objectives of our work and the milestones which determine when revenues are received by us. Due to the fact that our customers are engaged in businesses that are in many instances experimental, the objectives of such customer relationships with us are subject to change as customer research and development and business models develop. Additionally, most of these customers are subject to regulatory controls and approval processes over their businesses and products. If such customers fail to comply with such processes or do not receive necessary approvals, we may be required to alter or halt the activities for which such customers have contracted with us. Each of these factors may have an adverse affect on our revenues.

TABLE OF CONTENTS

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

Customers may experience adverse outcomes from our adult stem cell collection and storage process. These include: (i) the possibility of an infection acquired from the apheresis process, which is the process of extracting stem cells from a patient’s whole blood and it is an integral part of our collection process; (ii) collection of insufficient quantities of stem cells for therapeutic applications; (iii) failure of the equipment supporting our cryopreservation storage service to function properly and thus maintain a supply of usable adult stem cells; and (iv) specimen damage, including contamination or loss in transit to us. Should any of these events occur, our reputation could be harmed, our operations could be adversely affected and litigation could be filed against us. 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. 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.

Our adult stem cell collection, processing and storage business was not contemplated by many existing laws and regulations, and our ongoing compliance, therefore, is subject to interpretation and risk.

Our adult stem cell collection, processing and storage service is not a medical treatment, although it involves medical procedures. Our stem cell-related business is relatively new and is not addressed by many of the regulations applicable to our field. As a result, there is often considerable uncertainty as to the applicability of regulatory requirements. Although we have devoted significant resources to ensuring compliance with those laws that we believe to be applicable, it is possible that regulators may disagree with our interpretations, prompting additional compliance requirements or even enforcement actions.

We believe that the adult stem cells collected, processed and stored through our collection services are properly classified under the FDA’s human cells, tissues and cellular- and tissue-based products, or HCT/P, regulatory paradigm and should not be classified as a medical device, biologic or drug. There can be no assurance that the FDA will not reclassify the adult stem cells collected, processed and stored through our collection services. Any such reclassification 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.

The costs of compliance with such additional requirements or 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.

We operate in a highly regulated environment and may be unable to comply with applicable federal and state regulations, registrations and approvals or the standards of private accrediting entities. Failure to comply with applicable licensure, registration, certification, and accreditation standards may result in loss of licensure, certification or accreditation or other government enforcement actions.

Since January of 2004, registration with the FDA is required by facilities engaged in the recovery, processing, storage, labeling, packaging or distribution of any HCT/Ps, or the screening or testing of a donor. Any third party retained by us to process our samples must be similarly registered with the FDA and comply with HCT/P regulations. If we, or any third-party processors, 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, or cGTP. Adverse events in the field of stem cell therapy that may occur could result in greater governmental regulation of our business, creating increased expenses and potential delays relating to the approval or licensing of any or all of the processes and facilities involved in our stem cell collection and storage services.

Though not implicated for our adult stem cell collection services, our manufacture of certain cellular therapy products for ourselves or on behalf of our customers may trigger additional FDA requirements applicable to HCT/Ps, or products comprised of HCT/Ps, which are regulated as a drug, biological product, or medical device. FDA current Good Manufacturing Practices, or cGMP, requirements, set forth in Title 21,

TABLE OF CONTENTS

Parts 210 and 211, of the Code of Federal Regulations (21 C.F.R. Pts. 210 and 211) are federal regulations that govern the manufacture, processing, packaging and holding of drug and cell therapy products. We must comply with cGMP requirements demanded by customers and enforced by the FDA through its facilities inspection program. These requirements include quality control, quality assurance and the maintenance of records and documentation. We may be unable to comply with these cGMP requirements and with other FDA, state and foreign regulatory requirements. These requirements may change over time and we or third-party manufacturers may be unable to comply with the revised requirements.

We also are subject to state and federal laws regulating the proper disposal of biohazardous materials. 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 significant costs.

Some states impose additional regulation and oversight of clinical laboratories and stem cell laboratories operating within their borders and impose regulatory compliance 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 with which we must comply. Additionally, there may be state regulations affecting the use of HCT/Ps that would affect our business. Certain licensing requirements require employment of 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 or that the cost of retaining such individuals will not materially and adversely affect our ability to market or perform our services or our ability to do so profitably. There can be no assurance that we, our strategic partners or members of our collection center network, will be able to obtain or maintain any necessary licenses required to conduct business in any states or that the cost of compliance will not materially and adversely affect our ability to market or perform our services or our ability to do so profitably.

Currently, PCT is licensed as a blood bank with respect to its activities in New Jersey, as a tissue bank with respect to its activities in New York and as a drug manufacturer with respect to its facility in California. We believe that PCT and NeoStem Family Storage, LLC are in material compliance with current federal, state, and local stem cell laboratory licensure requirements. However, the licensing requirements in the states where we are currently licensed may change, and PCT and/or NeoStem Family Storage, LLC may become subject to the additional licensing, registration and/or compliance requirements of other states, local governments and/or the federal government as PCT and/or NeoStem Family Storage, LLC expands its network and as new regulations are implemented. If we fail to comply with the various licensure requirements, certification and accreditation standards to which we are subject, we may be subject to a loss of licensure, certification, or accreditation that could adversely affect them.

Additionally, certain private entities have promulgated standards for certification, accreditation and licensing of cord blood businesses that may apply to our operations. These organizations include, but may not be limited to, AABB, formerly the American Association of Blood Banks, the Foundation for the Accreditation of Cellular Therapy (FACT), and the American Association of Tissue Banks (AATB). While our compliance with the standards of these organizations currently are voluntary, in some cases compliance with such standards may be necessary for a cord blood business to be accepted and competitive in the marketplace. Compliance with these standards and obtaining the applicable accreditation, certification, or license from such private organizations can be costly and time-consuming. These accreditation, certification, or license requirements may also change and new standards may be developed. If we fail to comply with applicable standards, or fail to obtain or maintain applicable accreditations, certifications, or licenses, our business may be adversely affected.

There can be no assurance that we will be able, or will have the resources, to continue to comply with regulations that govern our operations currently, or that we will be able to comply with new regulations that govern our operations, or that the cost of compliance will not materially and adversely affect our ability to market or perform our services or our ability to do so profitably. A failure to comply with these requirements may result in fines and civil or criminal penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval. If the safety of any materials supplied

TABLE OF CONTENTS

by third parties is compromised due to their failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for, or successfully commercialize, product candidates that we may develop.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, requires that our business comply with state and federal privacy laws which increase the cost and administrative burden of providing stem cell banking services.

We are 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. Currently, we are obligated to comply with privacy and security standards adopted under HIPAA. Certain of these regulatory obligations will be changing over the next year as a result of amendments to HIPAA under the American Recovery and Reinvestment Act of 2009. Consequently, our 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 by us or our business partners to comply with these or other applicable regulatory requirements or any delay in compliance may result in, among other things, injunctions, operating restrictions, and civil fines and criminal prosecution and have a material adverse effect on the marketing and sales of our services and our ability to operate profitably or at all.

We have limited manufacturing capabilities.

We believe that we can provide services and produce materials for clinical trials and for human use at our existing facilities, which we believe are compliant with FDA requirements for cGMP and cGTP. We also believe that we have sufficient capacity to meet expected near term demand. However, we may need to, depending on demand, expand our manufacturing capabilities for cell therapy services and products in the future. In 2007, PCT acquired an additional facility in Allendale, New Jersey, which became a cGMP compliant facility in 2010. The demand for our services and products could, at times, exceed existing manufacturing capacity. If we do not meet rising demand for products and services on a timely basis or are not able to maintain cGMP compliance standards, then our clients and potential clients may elect to obtain the products and services from competitors, which could materially and adversely affect our revenues.

If our processing and storage facilities are damaged or destroyed, our business, programs, and prospects could be negatively affected and could adversely affect our value.

We process and store adult autologous stem cells from our network of U.S. adult stem cell collection centers and the umbilical cord blood of customers of NeoStem Family Storage, LLC at PCT’s facility in Allendale, New Jersey, and may do so at PCT’s Mountain View, California, facility in the future. We also process and store cellular therapy products for clinical trials at PCT’s facility in Allendale, New Jersey, and may do so at PCT’s Mountain View, California, facility. If these facilities or the equipment in these facilities was to be significantly damaged or destroyed, we could suffer a loss of some or all of the stored adult autologous stem cells, cord blood units, and cellular therapy products. Depending on the extent of loss, such an event could reduce the ability of us, NeoStem Family Storage, LLC, and PCT to provide stem cells when requested, could expose us, NeoStem Family Storage, LLC, and PCT to significant liability from our customers, and could affect the ability to continue to provide adult autologous stem cells and umbilical cord blood preservation services and manufacturing of cellular therapy services and products. While we believe that we have insured against losses from damage to or destruction of our facilities consistent with typical industry practices, if we have underestimated our insurance needs, we may not have sufficient insurance to cover losses beyond the limits on its policies. Such events could have a material adverse effect on our value.

TABLE OF CONTENTS

We and our customers conduct business in a heavily regulated industry. If we or one or more of our customers fail to comply with applicable current and future laws and government regulations, our business and financial results could be adversely affected.

The healthcare industry is one of the most highly regulated industries in the United States. The federal government, individual state and local governments and private accreditation organizations all oversee and monitor the activities of individuals and businesses engaged in the delivery of health care products and services. Current laws, rules and regulations that could directly or indirectly affect our ability and the ability of our strategic partners and customers to operate each of their businesses could include, without limitation, the following:

In addition, as we expand into other parts of the world (in addition to China), we will need to comply with the applicable laws and regulations in such foreign jurisdictions. We have not yet thoroughly explored the requirements or feasibility of such compliance. It is possible that we may not be permitted to expand our business into one or more foreign jurisdictions.

Although we intend to conduct our business in compliance with applicable laws and regulations and believe that we are in material compliance with applicable governmental healthcare laws and regulations, the laws and regulations affecting our business and relationships are complex, and many aspects of such relationships have not been the subject of judicial or regulatory interpretation. Furthermore, the cell therapy industry is the topic of significant government interest, and thus the laws and regulations applicable to us and our strategic partners and customers and to their business are subject to frequent change and/or reinterpretation and there can be no assurance that the laws and regulations applicable to us and our strategic partners and customers will not be amended or interpreted in a manner that adversely affects our business, financial condition, or operating results. For example, the federal government could issue tighter restrictions on private

TABLE OF CONTENTS

cord blood banking that prevents NeoStem Family Storage, LLC from collecting cord blood for private banking. While we are not aware of any such developments or that any court or federal or state government is reviewing our operations, it is possible that such a review could result in a determination that would have a material adverse effect on our business, financial condition and operating results. Thus, there can be no assurance that we and our strategic partners and customers will be able to maintain compliance with all such healthcare laws and regulations. Failure to comply with such healthcare laws and regulations, as well as the costs associated with such compliance or with enforcement of such healthcare laws and regulations, may have a material adverse effect on our operations or may require restructuring of our operations or impair our ability to operate profitably.

It is uncertain to what extent the government, private health insurers and third-party payors will approve coverage or provide reimbursement for the therapies and products to which our services relate. Availability for such reimbursement may be further limited by an increasing uninsured population and reductions in Medicare and Medicaid funding in the United States.

To the extent that the health care provider customers cannot obtain coverage or reimbursement for our therapies and products, they may elect not to provide such therapies and products to their patients and, thus, may not need our services. Further, as cost containment pressures are increasing in the health care industry, government and private payors adopt strategies designed to limit the amount of reimbursement paid to health care providers. Such cost containment measures may include:

Similarly, the trend toward managed health care and bundled pricing for health care services in the United States, which may accelerate under the health reform legislation approved by Congress on March 23, 2010 and thereafter signed into law (“Health Reform”), could significantly influence the purchase of healthcare services and products, resulting in lower prices and reduced demand for cancer therapies.

We currently receive a small portion of our revenues from services rendered to patients enrolled in federal health care programs, such as Medicare, and we may also directly or indirectly receive revenues from federal health care programs. Federal health care programs are subject to changes in coverage and reimbursement rules and procedures, including retroactive rate adjustments. These contingencies could materially decrease the range of services covered by such programs or the reimbursement rates paid directly or indirectly for our products and services. To the extent that any health care reform favors the reimbursement of other cancer therapies over stem cell therapies, such reform could affect our ability to sell our services, which may have a material adverse effect on our revenues.

The limitation on reimbursement available from private and government payors may reduce the demand for, or the price of, our services, which would have a material adverse effect on our revenues. Additional legislation or regulation relating to the health care industry or third-party coverage and reimbursement may be enacted in the future which could adversely affect the revenues generated from the sale of our products and services.

Furthermore, there has been a trend in recent years towards reductions in overall funding for Medicare and Medicaid. There has also been an increase in the number of people who do not have any form of health care coverage in recent years and who are not eligible for or enrolled in Medicare, Medicaid or other governmental programs. The extent to which the reforms brought about under Health Reform may be successful in reducing the number of such uninsured is unclear, and the reduced funding of governmental

TABLE OF CONTENTS

programs and increase in uninsured populations could have a negative impact on the demand for our services to the extent they relate to products and services which are reimbursed by government and private payors.

Health care companies have been the subjects of federal and state investigations, and we could become subject to investigations in the future.

Both federal and state government agencies have heightened civil and criminal enforcement efforts. There are numerous ongoing investigations of health care companies, as well as their executives and managers. In addition, amendments to the Federal False Claims Act, including under Health Reform, have made it easier for private parties to bring “qui tam” (whistleblower) lawsuits against companies under which the whistleblower may be entitled to receive a percentage of any money paid to the government. The Federal False Claims Act provides, in part, that an action can be brought against any person or entity that has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved. The government has taken the position that claims presented in violation of the federal anti-kickback law, Stark Law or other healthcare-related laws, including laws enforced by the FDA, may be considered a violation of the Federal False Claims Act. Penalties include substantial fines for each false claim, plus three times the amount of damages that the federal government sustained because of the act of that person or entity and/or exclusion from the Medicare program. In addition, a majority of states have adopted similar state whistleblower and false claims provisions.

We are not aware of any government investigations involving any of our facilities or management. While management believes that we are in material compliance with applicable governmental healthcare laws and regulations, any future investigations of our business or executives could cause us to incur substantial costs, and result in significant liabilities or penalties, as well as damage to our reputation.

Unintended consequences of recently adopted health reform legislation in the U.S. may adversely affect our business.

The healthcare industry is undergoing fundamental changes resulting from political, economic and regulatory influences. In the U.S., comprehensive programs are under consideration that seek to, among other things, increase access to healthcare for the uninsured and control the escalation of healthcare expenditures within the economy. On March 23, 2010, health reform legislation was approved by Congress and has been signed into law. While we do not believe this legislation will have a direct impact on our business, the legislation has only recently been enacted and requires the adoption of implementing regulations, which may have unintended consequences or indirectly impact our business. For instance, the scope and implications of the recent amendments pursuant to the Fraud Enforcement and Recovery Act of 2009 (“FERA”), have yet to be fully determined or adjudicated and as a result it is difficult to predict how future enforcement initiatives may impact our business. Also, in some instances our clients may be health insurers that will be subject to limitations on their administrative expenses and new federal review of “unreasonable” rate increases which could impact the prices they pay for our services. If the legislation causes such unintended consequences or indirect impact, it could have a material adverse effect on our business, financial condition and results of operations.

Recent legislation regarding the establishment and funding of public cord blood collection and storage may adversely affect the business of NeoStem Family Storage, LLC.

The Stem Cell Therapeutic and Research Act of 2005 established requirements for a national donor bank of cord blood and for a national network for matching cord blood to patients. The federal government has entered into contracts with the National Marrow Donor Program (NMDP) to carry out the provisions of this legislation. Under these contracts, the NMDP acts as the nation’s Cord Blood Coordinating Center and actively recruits parents for cord blood donations. The NMDP also administers the National Cord Blood Inventory (NCBI), which has a goal of collecting 150,000 cord blood units that may be used for patients throughout the United States. The legislation also authorized federal funding to support its goals and requirements. Parents may opt to donate their newborn’s cord blood to the public registry and to use the public registry if stem cells from cord blood are needed for treatment purposes. In this regard, an important advantage of the national, public cord blood collection system is that it costs nothing for patients to donate

TABLE OF CONTENTS

their cord blood. This national, public cord blood registry has also been widely accepted and supported by the medical community, so physicians and others in the health care community may be less willing to use or recommend a private cord blood facility when public collection is available. Additionally, major medical organizations, including the American Academy of Pediatrics (AAP), the American Medical Association (AMA), the American College of Obstetricians and Gynecologists (ACOG), and the American Society of Blood and Marrow Transplantation (ASBMT) do not recommend private storage, except in very limited instances. Further, we believe that the medical community is currently supportive of public cord blood donation and the national cord blood registry that is administered by the National Marrow Donor Program. For these reasons, a significant number of patients may choose to use to donate their cord blood to the national, public cord registry instead of privately banking cord blood. The medical community could also issue stronger recommendations and opinions that favor the use of the national registry. Therefore, the existence and proliferation of the national registry may adversely affect our business.

The market for services related to the preservation and expansion of stem cells has become increasingly competitive. Our competitors may have greater resources or capabilities or better technologies than do we, or may succeed in developing better service than do we and we may not be successful in competing with them.

The biotechnology and life science industries are highly competitive. They include multinational biotechnology and life science, pharmaceutical and chemical companies, academic and scientific institutions, governmental agencies, and public and private research organizations. Many of these companies or entities have significantly greater financial and technical resources and production and marketing capabilities than do we. The biotechnology and life science industries are characterized by extensive research and development, and rapid technological progress. Competitors may successfully develop services or products superior or less expensive than cell therapy services or products, rendering our services less valuable or marketable.

Historically in the U.S. we have faced competition from other established operators of stem cell preservation businesses and providers of stem cell storage services. Today, there is an established and growing market for cord blood stem cell banking. We are also aware of another company with established stem cell banking services that processes and stores stem cells collected from adipose, or fat, tissue. This type of stem cell banking requires harvesting fat by a liposuction procedure. Embryonic stem cells represent yet another alternative to pre-donated and stored adult stem cells. As techniques for expanding stem cells improve, thereby allowing therapeutic doses, the use of embryonic stem cells and other collection techniques of adult stem cells could increase and compete with our services. Finally, we are aware that other technologies are being developed to turn skin cells into cells that behave like embryonic stem cells or to harvest stem cells from the pulp of baby teeth. While these and other approaches remain in early stages of development, they may one day be competitive.

In addition, cord blood banks such as ViaCord, a PerkinElmer company, or LifebankUSA, a Celgene company, easily could enter the field of adult stem cell collection because of their processing labs, storage facilities and customer lists. We estimate that, combined, there are approximately 75 cord blood banks in the U.S., approximately 36 of which are private autologous banks, meaning that the donor and recipient are the same, and approximately 39 of which are public allogeneic banks, meaning that the 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. According to the National Marrow Donor Program, there are approximately 52 hospitals in the U.S. with stem cell transplant centers. These competitors may have better experience and access to greater financial resources than do we. In addition, other established companies may enter our markets and compete with us. There can be no assurance that we will be able to compete successfully.

The private umbilical cord banking business is a relatively new, highly competitive, and evolving field. NeoStem Family Storage, LLC competes with companies such as ViaCell, Inc., a subsidiary of the Perkin-Elmer Corporation, CBR Systems, Cryo-Cell International, Inc., CorCell, Inc., a subsidiary of Cord Blood America Inc., and LifeBank USA, a division of Celgene Cellular Therapeutics, a wholly owned subsidiary of Celgene Corporation. Any of these companies may choose to invest more in sales, marketing, and research and product development than NeoStem Family Storage, LLC.

TABLE OF CONTENTS

NeoStem Family Storage, LLC will also have to compete with the national, public cord blood banking program, which has the support of the medical community and which receives federal funding. In this regard, NeoStem Family Storage, LLC also competes with public cord blood banks such as the New York Blood Center (National Cord Blood Program), University of Colorado Cord Blood Bank, Milan Cord Blood Bank, Dusseldorf Cord Blood Bank, and other public cord blood banks around the world. Public cord blood banks provide families with the option of donating their cord blood for public use at no cost. The Stem Cell Therapeutic Act provides financing for a national system of public cord blood banks in the United States to encourage cord blood donations from an ethnically diverse population. In addition, many states are evaluating the feasibility of establishing cord blood repositories for transplantation purposes. An increase in the number and diversity of publicly available cord blood units from public banks would increase the probability of finding suitably matched cells for a family member, which may result in a decrease in the demand for private cord blood banking. If the science of human leukocyte antigens, or HLA, typing advances, then unrelated cord blood transplantation may become safer and more efficacious, similarly reducing the clinical advantage of related cord blood transplantation. Such events could negatively affect our business and revenues.

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

Although our stem cell business pertains to adult stem cells only, and does not involve the more controversial use of embryonic stem cells, the use of adult human stem cells for therapy could give rise to similar ethical, legal and social issues as those associated with embryonic stem cells, which could adversely affect its acceptance by consumers and medical practitioners. 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 adult and embryonic stem cells. Delays in achieving public acceptance may materially and adversely affect the results of our operations and profitability.

Building market acceptance of our U.S. autologous adult stem cell collection, processing and storage services, may be more costly and take longer than we expect.

The success of our U.S. autologous adult stem cell business depends on continuing and growing market acceptance of our collection, processing and storage services as well as stem cell therapy generally. Increasing the awareness and demand for our services requires expenditures for marketing and education 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 about 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 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 or clinical acceptance of our services by potential customers or physicians, respectively, 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.

Technologies for the treatment of cancer and other diseases and processes used by us are subject to rapid change, and the development of treatment strategies that are more effective than our products and services could render our services obsolete. Given our focus on the field of cell therapy, such obsolescence could jeopardize our success or future results.

Our activities involve treatment modalities and protocols influenced by advancements in technology. Various methods for treating cancer and other diseases, of which cell therapy is but only one, currently are, and in the future may be expected to be, the subject of extensive research and development. There is no assurance that cell therapies will achieve the degree of success envisioned by us in the treatment of cancer and other diseases. Nor is there any assurance that new technological improvements and techniques will not render processes currently used by us obsolete. In addition, the successful development and acceptance of any one or more alternative forms of treatment could render the need for our services obsolete. We are focused on cell therapy, and if this field is substantially unsuccessful, this could jeopardize our success or future results.

TABLE OF CONTENTS

There is a scarcity of experienced professionals in the field of cell therapy and we may not be able to retain key officers or employees or hire new key officers or employees needed to implement our business strategy and develop our products and businesses. If we are unable to retain or hire key officers or employees, we may be unable to continue to grow this business or to implement our business strategy, and our business may be materially and adversely affected.

Given the specialized nature of cell therapy and the fact that it is a young field, there is an inherent scarcity of experienced personnel in the field. The Company is substantially dependent on the skills and efforts of current senior management for their management and operations, as well as for the implementation of their business strategy. As a result of the difficulty in locating qualified new management, the loss or incapacity of existing members of management or unavailability of qualified management or as replacements for management who resign or are terminated could adversely affect the Company’s operations. The future success of the Company also depends upon our ability to attract and retain additional qualified personnel (including medical, scientific, technical, commercial, business and administrative personnel) necessary to support our anticipated growth, develop our business, perform contractual obligations under our University of Louisville and other license agreements and maintain appropriate licensure, on acceptable terms. There can be no assurance that we will be successful in attracting or retaining personnel required by us to continue and grow our operations. The loss of a key employee, the failure of a key employee to perform in his or her current position or our inability to attract and retain skilled employees, as needed, could result in our inability of to continue to grow our business or to implement our business strategy, or may have a material adverse effect on our business, financial condition and operating results.

Current cell therapy products have a limited biologic shelf life as a result of which there are constraints on transit times between the time stem cells are extracted from a patient and the time that a processed product leaves our facility and arrives for re-infusion in the patient. Thus, our current business model has to assume that, in order to effectively provide many of our services in a market, we need to have a suitable facility that can provide timely service in such market. This could add significantly to our capital requirements and be a limiting factor on our future growth and profitability.

Current cell therapy products have a limited shelf life, in certain instances limited to less than 12 hours. Thus, there are constraints on transit times between the time the cell product is extracted from a patient and the product arrives at one of our facilities for processing, as well as constraints on the time that a processed product leaves our facility and arrives for re-infusion in the patient. Therefore, cell therapy facilities need to be located in major population centers in which patients of the cell therapy products are likely to be located and within close proximity of major airports from which they can be timely delivered. Building new facilities requires significant commitments of time and capital, which we may not have available in a timely manner. Even if such new facilities are established, there may be challenges to ensuring that they are compliant with cGMP, other FDA requirements, and/or applicable state or local regulatory requirements. We cannot be certain that we would be able to recoup the costs of establishing a facility and attaining regulatory compliances in a given market. Thus, the limited biologic shelf life of cell therapy products is a hindrance on the rate at which we can expand our cell processing and manufacturing services into new geographic markets and requires significant capital risk by us, which we may or may not be able to recover.

Commercially available transportation systems are not set up for shipment of biological or other perishable goods and will not be able to meet the demands of the emerging cell therapy market. To succeed, the large-scale commercialization of cell therapy products will need to overcome the present weaknesses of the major air carriers.

Weaknesses in our existing transportation carriers include the lack of a true point-to-point chain of control, non-controlled X-ray and inspection, no guarantee of package orientation, handling or storage conditions and in many cases no standard, documented and tracked operating procedures. While reliable ground carriers with experience in the transport of blood products already exist in major metropolitan areas of the country, air carriers meeting such needs are limited. We evaluated the major domestic express carriers, and concluded that even their highest-level services are inadequate to meet the sector’s needs. However, we identified and validated only one specialty air carrier as a transportation partner, which specializes in shipping medical products, including whole blood and blood products, tissue for transplantation, and diagnostic

TABLE OF CONTENTS

specimens. There are presently few alternative sources for the safe transportation of cell therapy products. If this carrier should cease its medical shipping operations or otherwise be unable to properly meet our transportation needs, the lack of access to safe and effective transportation options could adversely affect our business.

Failure of the PCT Merger to achieve potential benefits could harm the business and operating results of the Company.

We expect that the combination of the respective businesses of PCT and NeoStem will result in potential benefits for our 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 Company.

We may experience difficulties in integrating PCT’s business and could fail to realize the potential benefits of the PCT Merger.

Achieving the anticipated benefits of the PCT Merger will depend in part upon whether we are able to integrate PCT’s business in an efficient and effective manner. We may not be able to accomplish this integration process smoothly or successfully. The difficulties of combining the two companies’ businesses could include, among other things:

Any inability to realize the potential benefits of the PCT Merger, as well as any delay in successfully integrating the two companies, could have an adverse effect upon the Company’s revenues, level of expenses and operating results, which could adversely affect the value of our Common Stock.

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

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

TABLE OF CONTENTS

Our success in developing future therapeutics 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, and to reduce the cost of research and development. 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. 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.

Relationships with licensed professionals such as physicians may be subject to state and federal laws restricting the referral of business, prohibiting certain payments to physicians, or otherwise limiting such collaborations. If our services become approved for reimbursement 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 business activities and relationships of licensed physicians or other licensed professionals. For example, many states restrict or prohibit the employment of licensed physicians by for-profit corporations, or the “corporate practice of medicine.” If we fail to structure our relationships with physicians in accordance with applicable laws or other regulatory requirements, it could have a material adverse effect on our business. 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.

We have a limited marketing staff and budget.

The degree of market acceptance of our products and services depends upon a number of factors, including the strength of our sales and marketing support. If our marketing is not effective, our ability to generate revenues could be significantly impaired. Due to capital constraints, our marketing and sales activities have been somewhat limited and thus we may not be able to make our services known to a sufficient number of potential customers and partners. Limitations in our marketing and sales activities, and the failure to attract enough customers, will affect our ability to operate profitably.

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

We own or hold exclusive rights to 30 issued patents and over 80 pending patent applications. Given the nature of our therapeutic programs, our patents and patent applications cover certain methods of isolating, storing and using stem cells, including very small embryonic stem cells, as well as compositions and methods relating to T regulatory cells. 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 us 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. Our success will depend, in part, on whether we can: obtain patents to protect our own products and technologies; obtain licenses to use the technologies of third parties if necessary, which may be protected by patents; and protect our trade secrets and know-how. Our inability to obtain and rely upon patents essential to our business may have a material adverse effect on our business, operating results and financial condition.

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. Our competitors may also independently develop similar technology, duplicate our processes or services or design around our intellectual property rights. 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, 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 or market our services in the future. This would also likely have an adverse effect on the revenues generated by any sale

TABLE OF CONTENTS

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 may be subject to costly litigation in the event our technology is claimed to infringe upon the proprietary rights of others. 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. 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 proceeding or in patent litigation could subject us to significant liabilities to third parties or require us to seek licenses from third parties. Such licenses may not be available on acceptable terms or at all. Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from commercializing our products, which would have a material adverse affect on our business, operating results and financial condition.

We may be unable to maintain our licenses, patents or other intellectual property and could lose important protections that are material to continuing our operations and growth and our ability to achieve profitability.

Our license agreement with the University of Louisville and other license agreements require us to pay license fees, royalties and milestone payments and fees for patent filings and applications. Obtaining and maintaining patent protection and licensing rights also 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. Additionally, our license agreements require us to meet certain diligence obligations in the development of the licensed products. Our failure to meet these diligence obligations under our license agreements could result in the loss of some or all of our rights under the license agreements. The loss of any or all of our intellectual property rights could materially limit our ability to develop and/or market our services, which would materially and adversely affect our business, operating results and financial condition.

Our inability to obtain reimbursement for our therapies from private or governmental insurers, could negatively impact demand for our services.

Successful sales of health care services and products generally depends, 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. Uncertainty exists as to the availability of reimbursement for new therapies such as stem cell-based therapies. There can be no assurance that such reimbursement will be available in the future at all or without substantial delay or, if such reimbursement is provided, that the approved reimbursement amounts will be sufficient to support demand for our services at a level that will be profitable.

We may be subject to significant product liability claims and litigation.

Our business exposes us to potential product liability risks inherent in the testing, processing and marketing of cell therapy products. Such liability claims may be expensive to defend and result in large judgments against us. We presently have product liability insurance limited to $10 million per incident and $10 million in annual aggregate. We also maintain errors and omissions, directors and officers, workers’ compensation and other insurance appropriate to our business activities. If we were to be subject to a claim in excess of this coverage or to a claim not covered by our insurance and the claim succeeded, we would be required to pay the claim from our own limited resources, which could have a material adverse effect on our financial condition, results of operations and business. Additionally, liability or alleged liability could harm our business by diverting the attention and resources of our management and damaging our reputation and that of our subsidiaries.

TABLE OF CONTENTS

Risks Related to Doing Business in China

Our operations are subject to risks associated with emerging markets.

The Chinese economy is not well established and is only recently emerging and growing as a significant market for consumer goods and services. Accordingly, there is no assurance that the market will continue to grow. Perceived risks associated with investing in China, or a general disruption in the development of China’s markets could materially and adversely affect the business, operating results and financial condition of Erye and us.

A significant portion of our assets is located in the PRC, and investors may not be able to enforce federal securities laws or their other legal rights.

A substantial portion of our assets is located in the PRC. As a result, it may be difficult for investors in the U.S. to enforce their legal rights, to effect service of process upon certain of our directors or officers or to enforce judgments of U.S. courts predicated upon civil liabilities and criminal penalties against our directors and officers located outside of the U.S.

The PRC government has the ability to exercise significant influence and control over our operations in China.

In recent years, the PRC government has implemented measures for economic reform, the reduction of state ownership of productive assets and the establishment of corporate governance practices in business enterprises. However, many productive assets in China are still owned by the PRC government. In addition, the government continues to play a significant role in regulating industrial development by imposing business regulations. It also exercises significant control over the country’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 China’s economic, political or legal systems will not develop in a way that becomes detrimental to our business, results of operations and financial condition. Our activities may be materially and adversely affected by changes in China’s economic and social conditions and by changes in the policies of the 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 we may experience in connection with having operations in China that may adversely affect our business and results of operations include:

Cultural, language and managerial differences may adversely affect our overall performance.

While Chinese merger and acquisition activity is increasing in frequency, assimilating cultural, language and managerial differences remains problematic. Personnel issues may develop as we endeavor to consolidate management teams from different cultural backgrounds. In addition, errors arising through language translations may cause miscommunications relating to material information. These factors may make the management of our operations in China more difficult. Should we be unable to coordinate the efforts of our U.S.-based management team with our China-based management team, our business, operating results and financial condition could be materially and adversely affected.

TABLE OF CONTENTS

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

China’s legal and judicial system may negatively impact foreign investors. The legal system in China is evolving rapidly, and enforcement of laws is inconsistent. It may be impossible to obtain swift and equitable enforcement of laws or enforcement of the judgment of one court by a court of another jurisdiction. China’s legal system is based on civil law or written statutes and 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.

There are substantial uncertainties regarding the interpretation and application to our business of PRC laws and regulations, since many of the rules and regulations that companies face in China are not made public. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that apply to future businesses may be applied retroactively to existing businesses. 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. We cannot assure you that we will be able to enforce our interests or our material agreements or that expected remedies will be available. The inability to enforce or obtain a remedy under any of our future agreements may have a material adverse impact on our operations.

Our businesses in China are subject to government regulation that limit or prohibit direct foreign investment, limiting our ability to control these businesses, as well as our ability to pursue new ventures and expand further into the Chinese market.

The PRC government has imposed regulations in various industries, including medical research and the stem cell business, that 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 as pursue new ventures and expand further into the Chinese market may be limited.

If new laws or regulations or policies forbid foreign investment in industries in which we want to expand or complete a business combination, they could severely impair our ability to grow our business. Additionally, if the relevant Chinese authorities find us or such business combination to be in violation of any laws or regulations, they would have broad discretion in dealing with such violation, including, without limitation: (i) levying fines; (ii) revoking our business and other licenses; (iii) requiring that we restructure our ownership or operations; and (iv) requiring that we discontinue any portion or all of our business. Accordingly, any of these regulations or violations could have a material adverse effect on our business, operating results and financial condition.

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

The Chinese Ministry of Commerce, or MOFCOM, and Ministry of Science and Technology of China, or 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 the approval of 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 PRC 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.

TABLE OF CONTENTS

The PRC government does not permit direct foreign investment in stem cell research and development businesses. Accordingly, we operate these businesses through local companies with which we have contractual relationships but in which we do not have controlling equity ownership.

PRC regulations prevent foreign companies from directly engaging in stem cell-related research, development and commercial applications in China. Therefore, to perform these activities, we operate our current stem cell-related business in China through domestic variable interest entities, or VIEs: Tianjin Niou Bio-Technology Ltd., or Tianjin Neo Bio-Technology, and Beijing Ruijieao Bio-Technology Ltd., or Beijing Ruijieao, each a Chinese domestic company controlled by the Chinese employees of NeoStem (China), Inc., our wholly foreign-owned entity, or the WFOE, through various business agreements, referred to, collectively, as the VIE documents. Tianjin Neo-Biotechnology conducts operations formerly conducted by another Company VIE, Qingdao Neo Biotechnology. We control these companies and operate these businesses through contractual arrangements with the companies and their individual owners, but we have no direct equity ownership or control over these companies. Our 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 the 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 PRC law, which may not be effective. In addition, we cannot be certain that the individual equity owners of the VIEs would always act in our best interests, especially if they have no other relationship with us.

Although other foreign companies have used WFOEs and VIE structures similar to ours and such arrangements are not uncommon in connection with business operations of foreign companies in China in industry sectors in which foreign direct investments are limited or prohibited, the application of a VIE structure to control companies in a sector in which foreign direct investment is specifically prohibited carries increased risks.

For example, if our structure is deemed in violation of PRC law, 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. We may also encounter difficulties in enforcing related contracts. Any of these events could materially and adversely affect our business, operating results and financial condition.

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

Substantially all profits generated from the 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. However, the tax authorities in China have not 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 the tax authorities in China could challenge the transfer prices that we will use for related party transactions among our entities in China and this could increase our tax liabilities and diminish the profitability of our business in China, which would materially and adversely affect our operating results and financial condition.

We expect to rely, in part, on dividends paid by our WFOE and/or Erye to supply cash flow for our U.S. business, and statutory or contractual restrictions may limit their ability to pay dividends to us.

We expect to rely partly on dividends paid to us by the WFOE under the contracts with the VIEs, and under the Joint Venture Agreement, attributable to our 51% ownership interest in Erye, to meet our future cash needs. However, there can be no assurance that the WFOE in China will receive payments uninterrupted or at all as arranged under the contracts with the VIEs. In addition, pursuant to the Joint Venture Agreement that governs the ownership and management of Erye, for the three-year period commencing on the first day of the first fiscal quarter after the Joint Venture Agreement became effective distributions are made as follows: (i) 49% of undistributed profits (after tax) will be distributed to EET and loaned back to Erye for use in

TABLE OF CONTENTS

connection with its construction of the new Erye facility; (ii) 45% of the net profit after tax will be provided to Erye as part of the new facility construction fund, which will be characterized as paid-in capital for our 51% interest in Erye; and (iii) only 6% of the net profit will be distributed to us directly for our operating expenses.

The payment of dividends by entities organized under PRC law to non-PRC entities is subject to limitations. Regulations in the PRC currently permit payment of dividends by our WFOE and Erye only out of accumulated distributable earnings, if any, as determined in accordance with accounting standards and regulations in China. Moreover, our WFOE and Erye are required to appropriate from PRC GAAP profit after tax to other non-distributable reserve funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits (i.e., 50% of the registered capital of relevant company), the general reserve fund requires annual appropriation at 10% of after tax profit (as determined under accounting principles generally accepted in the PRC at each year-end); the appropriation to the other funds are at the discretion of WFOE and Erye. In addition, if Erye incurs additional debt on its own behalf to finance the building of the new facility in the future, the instruments governing the debt may restrict Erye’s or the joint venture’s ability to pay dividends or make other distributions to us. This may diminish the cash flow we receive from Erye’s operations, which would have a material adverse effect on our business, operating results and financial condition.

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 particular, the initial capitalization and operating expenses of the VIEs are funded by our WFOE. In China, the State Administration for Foreign Exchange, or the SAFE, regulates the conversion of the Chinese Renminbi into foreign currencies and the conversion of foreign currencies into Chinese Renminbi. 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. According to the Notice of the General Affairs Department of the State Administration of Foreign Exchange on the Relevant Operating Issues Concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-invested Enterprises promulgated on August 29, 2008, or the SAFE Notice 142, to apply to a bank for settlement of foreign currency capital, a foreign invested enterprise shall submit the documents certifying the uses of the RMB funds from the settlement of foreign currency capital and a detailed checklist on use of the RMB funds from the last settlement of foreign currency capital. It is stipulated that only if the funds for the settlement of foreign currency capital are of an amount not more than US$50,000 and are to be used for enterprise reserve, the above documents may be exempted by the bank. This SAFE Notice 142, along with the recent practice of Chinese banks of restricting foreign currency conversion for fear of “hot money” going into China, limits and may continue to limit our ability to channel funds to the VIE entities for their operation. There can be no assurance that the PRC regulatory authorities will not impose further restrictions on the convertibility of the Chinese currency. Future restrictions on currency exchanges may limit our ability to use our cash flow for the distribution of dividends to our stockholders or to fund operations we may have outside of China, which could materially adversely affect our business and operating results.

Fluctuations in the value of the Renminbi relative to the U.S. dollar could affect our operating results.

We prepare our financial statements in U.S. dollars, while our underlying businesses operate in two currencies, U.S. dollars and Chinese Renminbi. It is anticipated that our Chinese operations will conduct their operations primarily in Renminbi and our U.S. operations will conduct their operations in dollars. At the present time, we do not expect to have significant cross currency transactions that will be at risk to foreign currency exchange rates. Nevertheless, the conversion of financial information using a functional currency of Renminbi will be subject to risks related to foreign currency exchange rate fluctuations. The value of Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things,

TABLE OF CONTENTS

changes in China’s political and economic conditions and supply and demand in local markets. As we have significant operations in China, and will rely principally on revenues earned in China, any significant revaluation of the Renminbi could materially and adversely affect our financial results. For example, to the extent that we need to convert U.S. dollars we receive from an offering of our securities into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar could have a material adverse effect on our business, financial condition and results of operations.

Beginning in July of 2005, the PRC government changed its policy of pegging the value of Renminbi to the U.S. dollar. Under the new policy, the value of the Renminbi has fluctuated within a narrow and managed band against a basket of certain foreign currencies. However, the Chinese government has come under increasing U.S. and international pressure to revalue the Renminbi or to permit it to trade in a wider band, which many observers believe would lead to substantial appreciation of the Renminbi against the U.S. dollar and other major currencies. There can be no assurance that Renminbi will be stable against the U.S. dollar. On June 19, 2010 the central bank of China announced that it will gradually modify its monetary policy and make the Renminbi’s exchange rate more flexible and allow the Renminbi to appreciate in value in line with its economic strength.

If China imposes economic restrictions to reduce inflation, future economic growth in China could be severely curtailed, reducing the profitability of our operations in China.

Rapid economic growth can lead to growth in the supply of money and rising inflation. If prices for any products or services in China are unable, for any reason, to increase at a rate that is sufficient to compensate for any increase in the costs of supplies, materials or labor, it may have an adverse effect on the profitability of Erye and our stem cell activities in China would be adversely affected. 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 and could adopt additional measures to further combat inflation. Such measures could harm the economy generally and hurt our business by (i) limiting the income of our customers available to spend on our products and services, (ii) forcing us to lower our profit margins, and (iii) 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 business will be adversely affected by slower economic growth in China.

Erye’s manufacturing operations in China may be adversely affected by changes in PRC government policies regarding ownership of assets and allocation of resources to various industries and companies.

While the PRC government has implemented economic and market reforms, a substantial portion of productive assets in China are still owned by the PRC government. The PRC 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. Should the PRC government change its policies regarding economic growth and private ownership of manufacturing and other assets of Erye, we may be unable to execute our business plan, we may lose rights to certain business assets and our business, operating results and financial condition may be materially harmed.

If there are any adverse public health developments in China, our business and operations may be disrupted and medical tourism in China may decline, which could delay the launch of our stem cell therapies in China.

Any prolonged occurrence of avian flu, severe acute respiratory syndrome, or SARS, or other adverse public health developments in China or other regions where we operate could disrupt our business and have a material adverse effect on our business and operating results. These could include the ability of our personnel to travel or to promote our services within China or in other regions where we operate, as well as temporary closure of our facilities.

Any closures or travel or other operational restrictions would severely disrupt our business operations and adversely affect our results of operations.

TABLE OF CONTENTS

If the anticipated growth of medical tourism in China does not occur, or if fewer people travel abroad for the purpose of cosmetic or medical therapies for any reason, including limitations imposed by governmental authorities, we may not achieve our revenue and profit expectations.

One part of our business plan involves launching innovative, safe, and effective cell therapies in China that have not yet been approved in the U.S., to generate sales revenues in advance of obtaining U.S. regulatory approvals. Different countries have different regulatory requirements and pathways resulting in the availability of therapeutics in one market prior to another. This phenomenon has led to the growth of an industry called “medical tourism” where patients travel to foreign locations and receive treatments that have not yet been approved in their home countries.

If the anticipated growth of medical tourism in China does not occur, or if fewer people travel abroad for the purpose of cosmetic or medical therapies for any reason, including limitations imposed by governmental authorities, we may not achieve our revenue and profit expectations. Any setbacks to the implementation of our business plan could materially and adversely affect our business, operating results and financial condition.

China is a developing nation governed by a one-party communist government and susceptible to political, economic, and social upheaval that could disrupt the economy.

China is a developing country governed by a one-party government. China is also a country with an extremely large population, wide 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 had to change rapidly to accommodate this growth. If China experiences political or economic upheaval, labor disruptions or other organized protests, nationalization of private businesses, civil strife, strikes, acts of war and insurrections, this may disrupt China’s economy and could materially and adversely affect our financial performance.

If political relations between China and the U.S. deteriorate, our business in China may be materially and adversely affected.

The relationship between China and the U.S. is subject to periodic tension. Relations may also be compromised if the U.S. becomes a more active advocate of Taiwan or if either government pressures the other regarding its monetary, economic or social policies. 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 U.S. or elsewhere that might cause the goods or services we may offer to become less attractive. If any of these events were to occur, it could materially and adversely affect our business, operating results and financial condition.

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

Some or all of our operations in China will be subject to oversight and regulation by the PRC’s 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 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 new products or services, we likely will need approvals 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 can be no assurance that we will obtain such approvals.

In 2004, the SFDA implemented new guidelines for the licensing of pharmaceutical products. All existing manufacturers with licenses were required to apply for the Good Manufacturing Practices, or cGMP, certifications. Erye has received the requisite certifications. However, should Erye fail to maintain its cGMP certifications or fail to obtain cGMP and other certifications for its new production facilities, this would have a material adverse effect on Erye’s and our business, results of operations and financial condition.

TABLE OF CONTENTS

In addition, delays, product recalls or failures to receive approval may be encountered based upon additional government regulation, legislative changes, administrative action or changes in governmental policy and interpretation applicable to the Chinese pharmaceutical industry. Our pharmaceutical activities also may subject us to government regulations with respect to product prices and other marketing and promotional related activities. Government regulations may substantially increase our costs for developing, licensing, manufacturing and marketing any products or services, which could have a material adverse effect on our business, operating results and financial condition.

The SFDA and other regulatory authorities in China have 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, the aggressive manner in which such enforcement is being conducted and the fact that newly-constituted local level branches are encouraged to issue such punishments and fines, there is the possibility of large scale and significant penalties being levied on manufacturers. 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 businesses in China and may have a material adverse effect on our business, operating results and financial condition.

Changes to PRC policies regarding drug pricing may have a material adverse effect on Erye’s and our results of operations and financial condition.

Erye’s financial performance is heavily dependent on government pricing policies and procedures, which are subject to change. The Rules on Introduction of Suzhou’s Local Enterprises Produced Drugs into Suzhou’s Local Medical Insurance Drugs Catalogue, which was promulgated in 2006, may soon cease to be effective. The cancellation of such Rules would reduce Erye’s sales and profits by an estimated $2 million and $1 million, respectively, calculated based on Erye’s sales and profits for 2010. On March 2, 2011, the National Development and Reform Commission issued price cuts for drugs covered by national medical insurance which greatly influences two of Erye’s drugs. It is anticipated that the price of Piperacillin Sodium Sulbactum Sodium will decrease by 50% and the price of Ligustrazine Phosphate will be cut by 75%. In 2010 Piperacillin Sodium Sulbactum Sodium accounted for approximately 3% of sales and Ligustrazine Phosphate accounted for approximately 2.5% of sales.

Erye’s production will be concentrated in two production lines and Erye will be operating in a new facility.

Erye began transferring its operations to its new manufacturing facility in January 2010. The relocation is continuing as the new production lines are completed and receive cGMP certification through 2011. In January 2010, Suzhou Erye received notification that the SFDA has approved Suzhou Erye’s application for cGMP certification to manufacture solvent crystallization sterile penicillin and freeze dried raw sterile penicillin at the new facility, which provides 50% and 100% greater manufacturing capacity, respectively, than its original facility. In June 2010, Suzhou Erye passed the government inspection by the SFDA to manufacture penicillin and cephalosporin powder for injection at the new facility. In May 2011, Suzhou Erye received cGMP production certification for freeze dried powder for injection issued by SFDA at the new facility. The facility is fully operational with respect to these lines. The combined production lines now certified by the SFDA were responsible for approximately 99% of Erye’s 2010 revenues with two of them responsible for over 90% of Erye’s 2010 revenues. Any interruptions in production with respect to those lines at the new facility will have a material adverse effect on Erye’s business and ours. There are inherent problems in commencing operations at any new production facility. If Erye encounters operational difficulties in commencing production at its new facility, it could have a material adverse effect on Erye’s business and ours.

As a result of Erye’s relocation to a new manufacturing facility, Erye may experience certain delays and disruptions in its manufacturing operations which could adversely affect our business.

Erye has built a new production facility for purposes of manufacturing its products and relocated substantially all of its manufacturing operations from its existing facility to the new facility. The new facility is expected to be fully operational in 2011. As a result of this relocation, Erye has and may continue to experience certain delays and disruptions in its manufacturing operations which may adversely impact our business.

TABLE OF CONTENTS

In China, we may conduct research and development activities related to cell therapy in cooperation with a domestic Chinese company. If these activities are regarded by PRC government authorities as “human genetic resources research and development activities,” additional approvals by PRC government authorities will be required.

Our research and development activities in cell therapy in China may be conducted in cooperation with Beijing Ruijieao Biotechnology Ltd. Pursuant to the Interim Measures for the Administration of Human Genetic Resources, or the Measures, that took effect on June 10, 1998, China maintains a reporting and registration system on important pedigrees and genetic resources in specified regions. All entities and individuals involved in sampling, collecting, researching, developing, trading or exporting human genetic resources or taking such resources outside China must abide by the Measures. “Human genetic resources” refers to genetic materials such as human organs, tissues, cells, blood specimens, preparations or any type of recombinant DNA constructs, which contain human genome, genes or gene products as well as to the information related to such genetic materials.

It is possible that our research and development activities conducted by the Lab in cooperation with us in China may be regarded by PRC government authorities as human genetic resources research and development activities, and thus will be subject to approval by PRC government authorities. The sharing of patents or other corresponding intellectual property rights derived from such research and development operations is also subject to various restrictions and approval requirements established under the Measures.

With regard to the ownership of intellectual property rights derived from human genetic resources research and development, the Measures provide that the China-based research and development institution shall have priority access to information about the human genetic resources within China, particularly the important pedigrees and genetic resources in the specified regions and the relevant data, information and specimens and any transfer of such human genetic resources to other institutions shall be prohibited without obtaining corresponding approval from the Human Genetic Resource Administration Office of China, among other governmental authorities or agencies. No foreign collaborating institution or individual that has access to the above-mentioned information may publicize, publish, apply for patent rights or disclose it by any other means without obtaining government approval. In a collaborative research and development project involving human genetic resources of China between any Chinese and foreign institutions, intellectual property rights shall be allocated according to the following principles: (i) patent rights shall be jointly applied for by both parties and the resulting patent rights shall be owned by both parties if an achievement resulting from the collaboration is patentable; (ii) either party has the right to exploit such patent separately or jointly in its own country, subject to the terms of the collaboration; however, the transfer of such patent to any third party or 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 (iii) 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 collaborative 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.

If the research and development operations conducted by the Lab in cooperation with us in China are regarded by PRC government authorities as human genetic resources research and development activities, we may be required to obtain approval from PRC governmental authorities to continue such operations and the Measures may adversely affect our rights to intellectual property developed from such operations. Our inability to access intellectual property, or our inability to obtain required approvals on a timely basis, or at all, could materially and adversely affect our operations in China, and our operating results and financial condition.

Erye has lost certain preferential tax concessions, which will cause its tax liabilities to increase and profitability to decline.

The National People’s Congress of China enacted a new PRC Enterprise Income Tax Law, or the EIT Law, that went into effect on January 1, 2008. Domestic-invested enterprises and foreign-invested entities now are subject to enterprise income tax at a uniform rate of 25% unless they qualify for limited exceptions.

TABLE OF CONTENTS

During the transition period for enterprises established before March 16, 2007, the tax rate is subject to a gradual increase which started in 2008 and will be equal to the new tax rate in 2011 or 2012. As a result, Erye has lost its preferential tax rates.

Because of the EIT Law, the tax liabilities of Erye have increased. Any future increase in the enterprise income tax rate applicable to Erye or other adverse tax treatments could increase Erye’s tax liabilities and reduce its net income, which could have a material adverse effect on Erye’s and our results of operations and financial condition.

Foreign-invested enterprises in China will be subject to city maintenance and construction tax and education expenses surtax starting from December 1, 2010.

According to relevant tax rules in China, foreign-invested enterprises (e.g., WFOE) were not subject to city maintenance and construction tax and education expenses surtax in the past; however, the State Council of PRC issued the Notice regarding Unifying Rules of City Maintenance and Construction Tax and Education Expenses Surtax Applicable to Foreign-invested Enterprises and Domestic Enterprises and Individuals (Guo Fa (2010) 35) on October 18, 2010, or the State Council Notice No. 35. According to the State Council Notice No. 35, starting from December 1, 2010, the Interim Measures on City Maintenance and Construction Tax promulgated by the State Council in the year of 1985 and the Interim Rules on Levying Education Expenses Surtax promulgated by the State Council in the year of 1986, and relevant rules, measures promulgated thereafter shall also apply to foreign-invested enterprises, foreign enterprises and foreign individuals. Accordingly, foreign-invested enterprises will be subject to city maintenance and construction tax and education expenses surtax starting from December 1, 2010 (Erye was already subject to such taxes). Both city maintenance and construction tax and education expense surtax are levied based on the value-added tax, consumer tax and business tax actually paid by the tax payer, depending on location of the tax payer, the tax rate of city maintenance and construction tax applicable could be 7%, 5% or 1%, and the tax rate of education expense surtax applicable is currently 3%.

Because of the State Council Notice No. 35, we expect that the tax liabilities of WFOE will increase, which could have a material adverse effect on our results of operations and financial condition.

Some of the laws and regulations governing our business in China are vague and subject to risks of interpretation.

Some of the PRC laws and regulations governing our business operations in China are vague and their official interpretation and enforcement may involve substantial uncertainty. These include, but are not limited to, 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. Despite their uncertainty, we will be required to comply.

New laws and regulations that affect existing and proposed businesses may be applied retroactively. Accordingly, the effectiveness of newly enacted laws, regulations or amendments may not be clear. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

In addition, pursuant to China’s Administrative Measures on the Foreign Investment in Commercial Sector, 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 regulations in this regard have been promulgated to date, which creates uncertainty. If specific regulations are not promulgated, or if any promulgated regulations contain clauses that cause an adverse impact to our operations in China, then our business, operating results and financial condition could be materially and adversely affected.

The laws and regulations governing the therapeutic use of stem cells in China are evolving. New PRC laws and regulations may impose conditions or requirements with 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

TABLE OF CONTENTS

PRC laws and regulations applicable to the stem cell therapy industry. There is no way to predict the content or scope of future Chinese stem cell regulation. There can be no assurance that the PRC government authorities will not issue new laws or regulations that impose conditions or requirements with which we cannot comply. Noncompliance could materially and adversely affect our business, results of operations and financial condition.

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, the 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,” referred to 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 the SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with the 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 2009 Non-U.S. Plan authorizes the grant of certain equity awards to our officers, directors and employees, some of whom are PRC citizens. Circular 78 may require our officers, directors and employees who receive option grants and are PRC citizens to register with the 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 officers, directors and employees through equity compensation would be hindered and our business operations may be adversely affected.

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

We are subject to the U.S. Foreign Corrupt Practices Act, which generally prohibits U.S. 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. There can be 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.

RISKS RELATED TO NEOSTEM SECURITIES

The market price and trading volume of NeoStem Common Stock has been and may continue to be volatile and issuances of large amounts of shares of NeoStem Common Stock could cause the market price of the NeoStem Common Stock to decline.

As of August 17, 2011, 98,232,590 shares of NeoStem Common Stock were outstanding. From January 1, 2011 through August 17, 2011, NeoStem Common Stock traded as low as $0.60 and as high as $2.10. In 2010, NeoStem Common Stock traded as low as $1.10 and as high as $3.50, and in 2009 traded as low as $0.43 and as high as $2.72. In addition to our low stock trading volume, some of the other factors contributing to our stock’s price volatility include the issuance of a significant number of shares of NeoStem Common Stock or securities convertible into NeoStem Common Stock in a short period of time, 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. We cannot assure you that the market price of our shares of common stock will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in

TABLE OF CONTENTS

fluctuations in the price or trading volume of our shares of common stock include those set forth under “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and in the information incorporated and deemed to be incorporated by reference herein.

Management will have broad discretion as to the use of the proceeds from our recent underwritten offering, and we may not use the proceeds effectively.

Our management will have broad discretion in the application of the net proceeds from our recent July 2011 Underwritten Offering of NeoStem Common Stock and warrants, and could spend the proceeds in ways that do not improve our results of operations or enhance the value of the NeoStem Common Stock. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development of our product candidates and cause the price of the NeoStem Common Stock to decline.

Holders of NeoStem Common Stock will experience dilution upon the issuance of common stock upon the conversion or in connection with redemption or dividend payments under our Series E Preferred Shares, if we issue additional equity securities in future fundraising transactions, if the Amorcyte Merger is consummated and if shares of our common stock underlying our significant number of outstanding warrants are purchased by the holders thereof.

The issuance of NeoStem Common Stock as mandatory redemption payments, dividend payments or upon conversion of some or all of our Series E Preferred Shares (as of August 17, 2011 convertible into an aggregate of 5,132,370 shares of NeoStem Common Stock) issued in November 2010 will dilute the ownership interests of our existing holders of shares of NeoStem Common Stock. We have, and expect to continue to make almost all of the mandatory redemption payments under the terms of the Series E Preferred Shares in shares of NeoStem Common Stock. Although the dollar amount of such redemption payments are known, the number of shares to be issued in connection with such redemption payments will fluctuate based on our stock price. Any sales or perceived sales in the public market of our shares of NeoStem Common Stock issuable upon such mandatory redemption payments or upon conversion could adversely affect prevailing market prices of shares of NeoStem Common Stock. The issuance of NeoStem Common Stock upon conversion of the Series E Preferred Shares or upon such redemption payments may also have the effect of reducing our net income per share. In addition, the existence of the Series E Preferred Shares may encourage short selling by market participants because the conversion of the Series E Preferred Shares or the existence of the redemption payments could depress the market price of the NeoStem Common Stock. The number of shares issuable upon conversion of the Series E Preferred Shares will be subject to weighted average antidilution adjustment. Additionally, pursuant to the Amorcyte Merger we may issue up to 12,795,059 shares of NeoStem Common Stock (including up to 4,092,768 Contingent Shares and warrants to purchase up to 1,881,008 shares of NeoStem Common Stock).

If in the future we issue additional NeoStem Common Stock, or securities convertible into or exchangeable or exercisable for NeoStem Common Stock, our stockholders will experience additional dilution, and any such issuances may result in downward pressure on the price of the NeoStem Common Stock.

In addition, we have a significant number of outstanding securities convertible into, or allowing the purchase of NeoStem Common Stock.

Investors will be subject to increased dilution upon conversion of our outstanding Series B preferred stock and upon the exercise of outstanding stock options and warrants. There were 98,232,590 shares of NeoStem Common Stock outstanding as of August 17, 2011. As of that date, Series B preferred stock outstanding could be converted into 10,000 shares of NeoStem Common Stock and stock options and warrants outstanding represented an additional 54,470,909 shares of NeoStem Common Stock that could be issued in the future. The number of shares issuable upon exercise of warrants issued with the Series E Preferred Stock are subject to weighted average antidilution adjustment. Most 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 not restricted from trading or have the contractual right to be registered. Also, the issuance of additional shares as a result of such conversion or purchase, or their subsequent sale, could adversely affect the price of the NeoStem Common Stock.

TABLE OF CONTENTS

Any significant increase in the number of shares offered for sale could cause the supply of NeoStem Common Stock available for purchase in the market to exceed the purchase demand for NeoStem Common Stock. Such supply in excess of demand could cause the market price of the NeoStem Common Stock to decline.

Future sales of a significant number of shares of NeoStem Common Stock in the public markets, or the perception that such sales could occur, could depress the market price of shares of NeoStem Common Stock.

Sales of a substantial number of shares of NeoStem Common Stock in the public markets, or the perception that such sales could occur, could depress the market price of the NeoStem Common Stock and impair our ability to raise capital through the sale of additional equity securities. It is anticipated that the purchasers of the Series E Preferred Shares will be selling shares of NeoStem Common Stock issued to them as mandatory redemption shares on each mandatory redemption date. A substantial number of shares of NeoStem Common Stock are issuable in connection with the Amorcyte Merger and we cannot predict if and when the receipients of the merger consideration may sell such shares of NeoStem Common Stock in the public markets. We cannot predict the number of these shares that might be sold nor the effect that future sales of shares of NeoStem Common Stock would have on the market price of the NeoStem Common Stock.

We have never paid dividends on the NeoStem Common Stock and we do not anticipate paying any cash dividends on the NeoStem Common Stock in the foreseeable future.

We have never declared or paid cash dividends on the NeoStem Common Stock. We do not anticipate paying any cash dividends on NeoStem Common Stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of NeoStem Common Stock stock will be our stockholders’ sole source of gain for the foreseeable future.

There is no public market for the warrants to purchase NeoStem Common Stock that will be issued in connection with the Amorcyte Merger.

There is no established public trading market for the warrants to be issued in connection with the Amorcyte Merger pursuant to the Agreement and Plan of Merger, and we do not expect a market to develop. In addition, we do not intend to apply for listing the warrants on any national securities exchange, including NYSE Amex. Without an active market, the liquidity of the warrants will be limited.

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

We had concluded that we did not have effective internal control over financial reporting as of December 31, 2010 as a result of a material weakness in our accounting for share-based payment arrangements, which the Company concluded was fully remediated as of March 31, 2011. However, if we fail to maintain the adequacy of internal control over our financial reporting, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control 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.

As a private company, PCT was not (and Amorcyte is not) subject to the requirements of Section 404 of the Sarbanes-Oxley Act. Now that the PCT Merger has been consummated (and upon consummation of the proposed Amorcyte Merger), we expect to devote management time and other resources to ensure that the combined company complies with the requirements of Section 404. During the course of testing our disclosure controls and procedures and internal control over financial reporting, we may identify and disclose material weaknesses or significant deficiencies in internal control over financial reporting (which may or may not be related to PCT or Amorcyte) that will have to be remedied. Implementing any appropriate changes to our internal control 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 control

TABLE OF CONTENTS

over financial reporting, and any failure to maintain that adequacy or inability to produce accurate financial statements on a timely basis could result in our financial statements being unreliable, increase our operating costs and materially impair our ability to operate our business.

Failure to achieve and maintain effective internal control over financial reporting could result in a loss of investor confidence in our financial reports and could have a material adverse effect on our stock price. Additionally, failure to maintain effective internal control over our financial reporting could result in government investigation or sanctions by regulatory authorities.

Actual and beneficial ownership of large quantities of NeoStem Common Stock by our executive officers and directors may substantially reduce the influence of other stockholders.

As of August 17, 2011, our executive officers and directors collectively owned 32,622,363 shares of NeoStem Common Stock, representing approximately 33.2% of the outstanding NeoStem Common Stock. As of such date, our executive officers and directors collectively beneficially owned 44,114,830 shares of NeoStem Common Stock. These beneficial holdings represent approximately 40.2% of the NeoStem Common Stock. As a result, such persons may have the ability to exercise enhanced control over the approval process for actions that require stockholder approval, including: the election of our directors and the approval of mergers, sales of assets or other significant corporate transactions or other matters submitted for stockholder approval. Because of the beneficial ownership position of these persons, other stockholders may have less influence over matters submitted for stockholder approval. Furthermore, at certain times the interests of our substantial stockholders may conflict with the interests of our other stockholders.

Some of our directors and officers have positions of responsibility with other entities, and therefore have loyalties and fiduciary obligations to both our company and such other entities. These dual positions subject such persons to conflicts of interest in related party transactions which may cause such related party transactions to have consequences to our company that are less favorable than those which we could have attained in comparable transactions with unaffiliated entities.

Eric H.C. Wei, a member of our Board of Directors, is also the Managing Partner of RimAsia Capital Partners, L.P., or RimAsia. RimAsia, a substantial stockholder of our company, beneficially owns approximately 25.9% of the NeoStem Common Stock as of August 17, 2011. Mr. Shi Mingsheng (the Chairman of the Board of Erye, and who became a director of our company in March 2010) and Madam Zhang Jian (our Vice President of Pharmaceutical Operations and the General Manager of Erye), together with certain other persons, have shared voting and dispositive power over the shares of NeoStem Common Stock held by Fullbright Finance Limited, or Fullbright. Fullbright is a substantial stockholder of our company, and together with Mr. Shi, and Madam Zhang, beneficially owns approximately 5.2% of the NeoStem Common Stock as of August 17, 2011. These relationships create, or, at a minimum, appear to create potential conflicts of interest when members of our company’s senior management are faced with decisions that could have different implications for our company and the other entities with which our directors or officers are associated.

Although our company has established procedures designed to ensure that material related party transactions are fair to the company, no assurance can be given as to how potentially conflicted board members or officers will evaluate their fiduciary duties to our company and to other entities that they may owe fiduciary duties, respectively, or how such individuals will act in such circumstances. Furthermore, the appearance of conflicts, even if such conflicts ultimately do not harm our company, might adversely affect the public’s perception of our business, as well as its relationship with its existing customers, licensors, licensees and service providers and its ability to enter into new relationships in the future.

We may not have the cash necessary to redeem the Series E Preferred Shares.

We have the obligation to make monthly redemption payments on the Series E Preferred Shares, which mandatory redemption payments may be made at our option in cash or in shares of NeoStem Common Stock at a discounted formula price, except that our right to make payment in shares of NeoStem Common Stock is dependent upon our satisfying certain Equity Conditions (defined in the certificate of designations for the Series E Preferred Stock) and is also subject to certain Dollar Volume Limitations (as defined). If we cannot

TABLE OF CONTENTS

satisfy the Equity Conditions, or if our trading prices and volume are such that we do not meet the Dollar Volume Limitations necessary for us to be able to make our monthly mandatory redemption payments in stock, we may be forced to make such monthly payments in cash. We may not have sufficient cash resources at the applicable time to make those cash payments, or to make such cash payments in full. Further, any failure to pay any amounts due to the holders of the Series E Preferred Shares, as well as certain other Trigger Events (as defined in the certificate of designations), including without limitation certain change in control transactions, our failure to timely deliver shares, our suspension of trading, and breaches of certain representations, warranties and covenants that are not timely cured, where a cure period is permitted, would permit the holders of our Preferred Shares to compel repurchase of such Series E Preferred Shares at a price per share equal to the sum of the liquidation preference plus accrued dividends plus the then applicable prepayment premium (15%, or 10% if the repurchase occurs more than 12 months after the initial issuance date). If we are required to repurchase the Series E Preferred Shares in cash prior to maturity, no assurance can be given that we would have the cash or financial resources available to us to make such a payment, and such an acceleration could have a material adverse effect on our business and financial condition and may impair our ability to continue in business as a going concern.

The Series E Preferred Shares are senior obligations of ours, and rank prior to the NeoStem Common Stock with respect to dividends, distributions and payments upon liquidation.

The rights of the holders of the Series E Preferred Shares rank senior to the obligations to holders of NeoStem Common Stock. Upon our liquidation, the holders of Series E Preferred Shares are entitled to receive a liquidation preference of $1.00 per share, plus all accrued but unpaid dividends at the rate of 7% per annum prior and in preference to any distribution to the holders of any other class of our equity securities. Further, no dividends can be paid without the consent of the holders of a majority of the outstanding Series E Preferred Shares, and the holders of Series E Preferred Shares, as well as the holders of the warrants being issued to the purchasers of Series E Preferred Shares, have the right to participate in any payment of dividends or other distributions made to the holders of NeoStem Common Stock to the same extent as if they had converted the Series E Preferred Shares or exercised the warrants. The existence of such a senior security could have an adverse effect on the value of the NeoStem Common Stock.

Holders of the Series E Preferred Shares have rights that may restrict our ability to operate our business.

Under the securities purchase agreement pursuant to which the Series E Preferred Shares were sold, we are subject to certain covenants that limit our ability to create new series of preferred stock, other than series junior to the Series E Preferred Shares. We are also limited, with certain exceptions, in our ability and the ability of our subsidiaries (other than Erye) to incur debt and to pledge our assets. Such restrictions may have an adverse effect on our ability to operate our business while the Series E Preferred Shares are outstanding.

The repurchase right in the Series E Preferred Shares triggered by a change in control could discourage a potential acquiror.

The repurchase rights in the Series E Preferred Shares triggered by certain change in control transactions could discourage a potential acquiror. The interests of the holders of the Series E Preferred Shares in deciding to exercise their repurchase right may not align with your interests as a holder of NeoStem Common Stock in potential change of control transactions. The holders of Series E Preferred Shares may exercise their repurchase right which may discourage potential acquirors even in situations where the holders of NeoStem Common Stock may have the opportunity to realize a premium in connection with such change in control transaction.

TABLE OF CONTENTS

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 Amorcyte Merger, future financial and operating results of the combined company and benefits of the pending Amorcyte 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 Amorcyte 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.

TABLE OF CONTENTS

THE NEOSTEM ANNUAL MEETING OF STOCKHOLDERS

The accompanying proxy is solicited by the NeoStem Board of Directors for use at the annual meeting of stockholders (the “NeoStem Annual Meeting”) to be held on October [_], 2011, 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 [__], 2011 to all stockholders entitled to vote at the meeting.

Purpose of the NeoStem Annual Meeting

The purpose of the NeoStem Annual Meeting is to consider and vote upon proposals:

Record Date and Outstanding Shares

The close of business on August 17, 2011 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 Annual Meeting or any postponement or adjournment of the NeoStem Annual 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 Annual Meeting. As of the record date, there were approximately 1,171 stockholders of record holding an aggregate of 98,232,590 shares of NeoStem Common Stock, and approximately one stockholder of record holding an aggregate of 10,000 shares of NeoStem Series B Preferred.

TABLE OF CONTENTS

Stock Ownership of Management and Certain Stockholders

As of August 17, 2011, NeoStem’s executive officers and directors collectively owned 32,622,363 shares of NeoStem Common Stock, representing approximately 33.2% of the outstanding NeoStem Common Stock. As of such date, NeoStem’s executive officers and directors collectively beneficially owned 44,114,830 shares of NeoStem Common Stock. These beneficial holdings represent approximately 40.2% of the NeoStem Common Stock.

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 intends to engage Alliance Advisors, a proxy solicitation firm, to provide services as proxy solicitor in connection with this joint proxy statement/prospectus, for a fee of approximately $5,000 plus reasonable and approved expenses. If you need assistance with the voting of your shares you may contact Alliance Advisors toll free at: (877) 777-4575.

Holders of record of NeoStem Common Stock at the close of business on the record date 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. The holders of Series E Preferred Shares have no voting rights at the NeoStem Annual Meeting.

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:

Abstentions and broker “non-votes” with regard to any such proposals are not considered to have been voted on the 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 the amendment to NeoStem’s Amended and Restated Certificate of Incorporation to eliminate the classification of the NeoStem Board of Directors so that the terms of all the directors expire at the NeoStem Annual Meeting (NeoStem Proposal 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.

(c) Directors will be elected by plurality vote (NeoStem Proposal 3).

There is no right to cumulate votes in the election of directors. Abstentions and broker “non-votes” will not have an effect on the election of directors.

TABLE OF CONTENTS

(d) The affirmative vote of the holders of a majority of the shares present at the NeoStem Annual Meeting and entitled to vote will be required to approve an adjournment of the NeoStem Annual Meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the NeoStem Annual Meeting to approve the proposals submitted at the NeoStem Annual Meeting (NeoStem Proposal 6).

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 NeoStem Annual Meeting.

Quorum; Abstentions; Broker Non-Votes

A quorum must exist for the transaction of business at the NeoStem Annual Meeting. The presence at the meeting, in person, by remote communication or by proxy, of the holders of a majority of the of the shares of capital stock of NeoStem issued and outstanding and entitled to vote at the NeoStem Annual Meeting, is necessary to constitute a quorum for the transaction of business at the NeoStem Annual 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 card and promptly return it in the enclosed envelope or otherwise mail it to NeoStem, or follow the instructions to submit your proxy by telephone, internet or fax that appear on the accompanying proxy card.

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.

TABLE OF CONTENTS

THE AMORCYTE SPECIAL MEETING OF STOCKHOLDERS

The accompanying proxy is solicited by the Amorcyte Board of Directors for use at the special meeting of stockholders (the “Amorcyte Special Meeting”) to be held on October [_], 2011, 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 Amorcyte Special Meeting will be held at the offices of NeoStem, Inc. located at 420 Lexington Avenue, Suite 450, New York, NY 10170.

This joint proxy statement/prospectus and proxy card will be mailed on or about [___], 2011 to all stockholders of Amorcyte entitled to vote at the Amorcyte Special Meeting.

Purpose of the Amorcyte Special Meeting

The purpose of the Amorcyte Special Meeting is to consider and vote upon proposals:

Record Date and Outstanding Shares

The close of business on August 17, 2011 has been fixed by the Amorcyte Board of Directors as the record date for determination of the stockholders of Amorcyte entitled to notice of, and to vote at, the Amorcyte Special Meeting or any postponement or adjournment of the Amorcyte Special Meeting. Holders of record of Amorcyte Common Stock and Amorcyte Series A Preferred Stock at the close of business on the record date are entitled to notice of, and to vote at, the Amorcyte Special Meeting. As of the record date, there were: (1) approximately 208 holders of record of Amorcyte Common Stock, holding an aggregate of 7,821.5 shares of Amorcyte Common Stock, and (2) approximately 38 holders of record of Amorcyte Series A Preferred Stock, holding an aggregate of 10,459 shares of Amorcyte Series A Preferred Stock.

Ownership of Management

As of the record date, the members of the Amorcyte Board of Directors and the executive officers of Amorcyte collectively owned beneficially approximately 64.9% of the outstanding Amorcyte Common Stock and approximately 63.8% of the Amorcyte Series A Preferred Stock. See the section titled “Security Ownership of Certain Beneficial Owners and Management of Amorcyte” for further details.

Voting Rights and Solicitation of Proxies; Expenses

This solicitation of proxies is made on behalf of the Amorcyte Board of Directors and the cost thereof will be borne by Amorcyte. Further solicitation of proxies may be made personally, by email or by telephone by Amorcyte’s Board of Managers, officers and employees who will not receive additional compensation for the solicitation.

TABLE OF CONTENTS

On the record date, there were outstanding 7,821.5 shares of Amorcyte Common Stock and 10,459 shares of Amorcyte Series A Preferred Stock, all of which are entitled to vote with respect to the proposals presented in this joint proxy statement/prospectus. Each holder of record of Amorcyte Common Stock at the close of business on the record date is entitled to one vote for each share of Amorcyte Common Stock held. With respect to any proposal on which the Amorcyte Series A Preferred Stock votes together with the Amorcyte Common Stock as a single class, each holder of record of Amorcyte Series A Preferred Stock at the close of business on the record date is entitled to 1.0414 votes for each share of Amorcyte Series A Preferred Stock held.

Vote Required

The approval of the proposal to adopt the Agreement and Plan of Merger will require the affirmative vote of (A) a majority of the outstanding Amorcyte Common Stock and Amorcyte Series A Preferred Stock, voting together as a single class, with each share of Amorcyte Series A Preferred Stock treated on an “as if converted” basis AND (B) the holders of a majority of the outstanding Series A Preferred Stock, 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 Amorcyte Merger.

Pursuant to a Right of First Refusal and Co-Sale Agreement among Amorcyte and certain of its stockholders, as amended, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to adopt the Agreement and Plan of Merger have agreed to vote all of the shares of Amorcyte capital stock held by them in favor of any “Change of Control Transaction” (which as defined includes the proposed Amorcyte Merger) that is approved by Amorcyte’s board of directors and by a majority of the holders of Amorcyte’s Series A Preferred Stock.

In addition, pursuant to a voting agreement (the “Amorcyte Voting Agreement”) dated the same date as the Agreement and Plan of Merger, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to adopt the Agreement and Plan of Merger have irrevocably agreed to vote in favor of adoption of the Agreement and Plan of Merger. Such stockholders’ votes will be sufficient without any other votes to approve the Agreement and Plan of Merger, the Amorcyte Merger and all the transactions contemplated by the Agreement and Plan of Merger.

The proposal regarding the approval of an adjournment of the Amorcyte Special Meeting, if necessary, will require the affirmative vote of the holders of a majority of the outstanding voting power of Amorcyte Common Stock and Amorcyte Series A Preferred Stock treated on an “as if converted” basis, unless there is less than a quorum present, in which case the affirmative vote of the holders of a majority of the total voting power of Amorcyte Common Stock and Amorcyte Series A Preferred Stock present in person or by proxy will be required.

Quorum; Abstentions; Broker Non-Votes

A quorum must exist for the transaction of business at the Amorcyte Special Meeting (other than consideration of a mortion to adjourn the meeting). For Amorcyte, a quorum is the presence in person or by proxy of the holders of at least a majority of the outstanding stock entitled to vote at the Amorcyte Special Meeting. Abstentions and broker non-votes 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 Amorcyte Board of Directors for use at the Amorcyte Special Meeting. Please complete, date, and sign the accompanying proxy and promptly return it in the enclosed envelope or otherwise mail it to Amorcyte. All properly signed proxies that Amorcyte 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 (1) the adoption of the Agreement and Plan of Merger and (2) the adjournment of the Amorcyte Special Meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the Amorcyte Special Meeting to approve any of the proposals submitted at the Amorcyte Special Meeting.

TABLE OF CONTENTS

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

The Amorcyte 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 Amorcyte Merger to the holders of Amorcyte Common Stock and Amorcyte Series A Preferred Stock. Under the General Corporation Law of the State of Delaware, Amorcyte stockholders may demand in writing that Amorcyte pay the fair value of their shares, together with interest, if any, 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 Amorcyte Merger. Stockholders who elect to exercise appraisal rights must comply with all of the procedures to preserve those rights. Amorcyte has attached a copy of the text 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. Amorcyte 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 Amorcyte 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.

Setion 4.9 of Amorcyte’s Amended and Restated Certificate of Incorporation filed on May 19, 2006, as amended, contains certain drag along rights under which the holders of greater than fifty percent (50%) of the Series A Preferred Stock have the right to require the other Amorcyte stockholders to vote their capital stock in favor of, and participate in, any offer to purchase all of the capital stock of Amorcyte.

Section 4 of Amorcyte’s Right of First Refusal and Co-Sale Agreement contains certain drag along rights under which each of the signatories to such agreement agreed to: (a) consent to and vote all of their shares in favor of any “Change of Control Transaction” which includes a merger; and (b) waive any dissenters’ rights, appraisal rights or similar rights in connection with such transaction, in each case in the event that such merger is approved by the Amorcyte Board of Directors and investors holding at least two-thirds (2/3) of the Series A Preferred Stock then outstanding.

Appraisal Rights Procedures

If you are an Amorcyte 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:

TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS

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.

TABLE OF CONTENTS

NEOSTEM PROPOSAL 1
TO APPROVE THE ISSUANCE OF SECURITIES IN CONNECTION WITH THE AMORCYTE
MERGER PUSUANT TO THE AGREEMENT AND PLAN OF MERGER

-AND-

AMORCYTE PROPOSAL 1
TO ADOPT THE AGREEMENT AND PLAN OF MERGER

This section of the joint proxy statement/prospectus describes the proposed Amorcyte Merger. While NeoStem and Amorcyte believe that the description in this section covers the material terms of the Amorcyte 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 Amorcyte have referred to in this joint proxy statement/prospectus for a more complete understanding of the Amorcyte Merger. The Agreement and Plan of Merger, dated as of July 13, 2011, is attached to this joint proxy statement/prospectus as Annex A.

Background of the Amorcyte Merger

Through the purchase of Progenitor Cell Therapy, LLC (“PCT”) in January 2011, NeoStem had the core expertise internally to cost effectively develop its own cell therapies. Having signed the PCT acquisition agreement in September 2010, in December 2010 NeoStem began to explore the possibility of acquiring more mature assets in the promising cell therapy field.

NeoStem was already aware of Amorcyte at the beginning of its search. Amorcyte had initially been formed in 2004 as a subsidiary of PCT, and was spun off to PCT’s members in 2005. In completing its Phase 1 study of its lead product candidate AMR-001 and preparing for a Phase 2 trial, Amorcyte used PCT as Amorcyte’s exclusive provider of cell processing and manufacturing services pursuant to a contractual arrangement. PCT and Amorcyte worked closely together during all phases of Amorcyte’s product development. Amorcyte also contracted with PCT to provide certain administrative functions. As a result, Dr. Andrew Pecora, who is currently PCT’s Chief Medical Officer in a part-time capacity, is Amorcyte’s founder and its Chief Scientific Officer, and George Goldberger, currently the Vice President-Business Development of PCT, also serves as Amorcyte’s Chief Financial Officer. In the view of the management of both NeoStem and Amorcyte, a merger would yield operational efficiencies and provide access to unique sources of investor capital supporting further product development. From the perspective of NeoStem, a merger would provide the capability to further its goal of being a therapeutics company and increase its suite of potential products. From the perspective of Amorcyte, a merger between the parties would enable it to secure funding for the Phase 2 trials of AMR-001.

Dr. Robin Smith, CEO of NeoStem, met with Dr Pecora, Paul Schmitt, CEO of Amorcyte, and Hans Muller, Chairman of Amorcyte, on December 22, 2010 to get a better understanding of the status of the Amorcyte business. NeoStem also began a process at about this time of exploring the potential acquisition of other cell therapies which continued through the first half of 2011. During this period, NeoStem entered into confidentiality agreements with 6 other companies involving possible acquisitions.

Jason Kolbert, who had been an analyst for 20 years, joined NeoStem in March 2011 as Vice President of Strategic Business Development, in part to assist the Company in determining the right therapeutic assets for NeoStem and to work with an investment banking firm that had been retained by NeoStem to source acquisition targets (although no investment banking firm was engaged by NeoStem with respect to Amorcyte). Amorcyte engaged Torrea Partners, an investment bank, to assist them as financial advisor in the potential transaction led by Tim Opler. Discussions with Amorcyte began in March 2011 among the parties’ principals and professionals with respect to financial and deal structure issues, including consideration, tax, accounting, securities and regulatory issues. Amorcyte’s negotiating team was led by Paul Schmitt, its CEO and Dr. Robin Smith, represented NeoStem. A first draft of a term sheet was provided on or about March 4, 2011. Later in the process, NeoStem also involved Catherine Vaczy, its General Counsel, Larry May, its Chief Financial Officer and Dr. Alan Harris, NeoStem’s Vice President of Regenerative Medicine, Drug Development and Regulatory Affairs. Dr. Andrew Pecora and Dr. Robert Preti, PCT’s President, provided information to the parties on request, but recused themselves from the negotiations for Amorcyte due to conflicts of interest.

TABLE OF CONTENTS

In March 2011 the parties also began to discuss intellectual property and regulatory diligence issues. Jason Kolbert and Alan Harris, were charged with assessing Amorcyte’s science and clinical development and began reviewing available information about AMR-001. On March 9, Mr. Kolbert received from Amorcyte a background report on AMR-001. Mr. Kolbert and Dr. Smith met with Mr. Schmitt and Tim Opler of Torreya Partners on March 10, 2011 to discuss the proposed acquisition, followed by discussions between Mr. Kolbert and Mr. Schmitt on March 17 and 18 regarding science and clinical development activities. On March 18 Mr. Schmitt debriefed Dr. Smith on information and new ideas resulting from a teleconference of the Amorcyte Scientific Advisory Board held on March 15.

On March 22, NeoStem management held a call to discuss Amorcyte and other potential acquisitions, which discussion included a comparative analysis of the various candidates. The next day, NeoStem received from Mr. Schmitt product rationale and published clinical data in respect of Amorcyte’s technology. Mr. Kolbert and Dr. Harris continued to review AMR-001 and other product candidates from other companies under consideration throughout the spring.

A revised draft of a summary term sheet was circulated on or about April 6. During this time NeoStem continued to evaluate other potential acquisitions, comparing such opportunities against the proposed Amorcyte transaction. On April 19 and 21, Dr. Smith and Mr. Schmitt discussed further revisions to the draft term sheet. Discussions continued on May 6 and 10. During this time Mr. Kolbert and Dr. Harris continued to have calls and meetings with experts, including Dr. Douglas LoSordo, a member of NeoStem’s Scientific Advisory Board and Director, The Feinberg Cardiovascular Research Institute of the Feinberg School of Medicine at Northwestern University to further analyze Amorcyte’s science and clinical development activities.

During early May 2011, there were also numerous conversations among Dr. Smith, Mr. Schmitt, and their respective counsel, Lowenstein Sandler PC and LeClair Ryan, regarding legal structure and terms of a possible transaction. After further discussion between the parties, more analysis of initial diligence materials, and additional negotiation, a further revised summary term sheet was circulated on May 19, 2011 and Amorcyte gave NeoStem a letter agreeing to an exclusive negotiation period. The summary term sheet provided for Amorcyte to receive total equity consideration of up to $18 million, consisting of (i) up to $16 million in NeoStem Common Stock (representing $10 million of base consideration to be held in escrow, together with $6 million in contingent shares subject to vesting conditions), plus (ii) up to $2 million in warrants to purchase NeoStem Common Stock. The term sheet also provided for a contingent payment for the benefit of Amorcyte’s stockholders on net sales equal to (i) 10% of net sales of AMR-001 actually received by NeoStem (if commercialized) or (ii) a share of payments equal to 30% of any sublicensing fees, royalties and milestone fees or profit sharing payments (but not payments for development costs) actually received by NeoStem if NeoStem were to outlicense or enter into an agreement with a third party to commercialize AMR-001; provided that NeoStem would be entitled to recover direct out-of-pocket clinical development costs not previously paid or reimbursed by reducing the payments to Amorcyte by 50% until such costs are recouped.

At a NeoStem Board meeting held on May 19, 2011, Dr. Smith reviewed a number of potential acquisitions with the Board, including Amorcyte. The Board discussed possible terms of an Amorcyte transaction and authorized management of NeoStem to move forward with discussions with Amorcyte and two other parties to see if a business arrangement could be reached on satisfactory terms. After the May 19, 2011 board meeting, NeoStem instructed Lowenstein Sandler to begin drafting a definitive merger agreement.

In May and June 2011, Amorcyte continued providing diligence materials to NeoStem, including financial statements, various corporate documents, material contracts and intellectual property information, regulatory documents and other information with respect to Amorcyte, especially with regard to the progress of the development of their lead drug candidate for acute myocardial infarction and congestive heart failure, AMR-001. Key in these discussions was the results of the Phase 1 trial for AMR-001 and the path forward for the Phase 2 trial, including with respect to optimal trial design. At this time, NeoStem’s Associate General Counsel and Counsel, Therapeutic Product Development became increasingly involved with the diligence process as did NeoStem’s outside FDA Regulatory counsel and Intellectual Property counsel. Over the next several weeks the companies engaged in due diligence, financial and otherwise, and further discussions

TABLE OF CONTENTS

relating to the terms and structure of the deal. During this period of time, NeoStem continued to review other acquisition opportunities and reviewed proposals with respect to financing activities.

On or about June 8, 2011, Lowenstein Sandler circulated a first draft of a merger agreement to Amorcyte and its counsel, LeClair Ryan.

At a telephonic meeting of Amorcyte’s Board on June 13, management of Amorcyte updated their Board on the status of negotiations for the final deal structure.

On June 15, 2011, NeoStem held another conference call with Dr. Losordo to discuss Amorcyte’s clinical trial design, and diligence with respect to the product and comparisons with other product candidates continued for the balance of the month. On June 20, 2011, counsel for NeoStem received a revised draft merger agreement from LeClair Ryan. On June 28, 2011, there was a conference call among counsel to negotiate the open issues in the merger agreement, including indemnification and share escrow provisions, triggers for release of the contingent shares, levels of assumed Amorcyte liabilities, third party contracts, treatment of outstanding Amorcyte stock options, and closing conditions.

On July 5, 2011, a conference call took place among Dr. Smith, Mr. May and Ms. Vaczy, for NeoStem, Mr. Schmitt, for Amorcyte, and representatives of Lowenstein Sandler, LeClair Ryan, Deloitte & Touche LLP, NeoStem’s auditors for 2010, and EisnerAmper LLP, Amorcyte’s auditors to discuss the merger agreement and the related SEC filing requrements. The parties discussed the necessary financial statements and disclosures for a transaction. The business parties and counsel reviewed the draft merger agreement and discussed outstanding transaction issues including those related to securities matters, indemnification, conditions to the merger, share escrow, levels of Amorcyte liabilities, and other deal terms. The merger agreement was finalized by the parties in the days following this call by NeoStem and its counsel Lowenstein Sandler, on the one hand, and Amorcyte and its counsel LeClairRyan, on the other hand.

On July 5, 2011 at a meeting of NeoStem’s Board of Directors, the Agreement and Plan of Merger was discussed. After discussion, the Board approved the Agreement and Plan of Merger, subject to any changes to the terms thereof that Mergers & Acquisitions Committee (the “M&A Committee”) of the NeoStem Board might approve. The Board appointed Robin Smith, Ed Geehr, Richard Berman and Steven Myers as the members of the M&A Committee. Following the July 5 board meeting, the members of NeoStem’s Audit Committee considered and evaluated certain potential conflicts of interest presented by the Amorcyte Merger, and on July 13, 2011, pursuant to a Unanimous Written Consent of the Audit Committee, the Audit Committee determined that the Agreement and Plan of Merger and the transactions contemplated thereby are fair to, advisable for and in the best interests of NeoStem and its stockholders. Also on July 13, 2011, the M&A Committee met and discussed a revised draft of the Agreement and Plan of Merger. After discussion, the M&A Committee unanimously approved the transaction and recommended that issuance of the consideration thereunder be submitted to the NeoStem stockholders for approval.

Amorcyte obtained the unanimous consent of its Board as of July 11, 2011.

On July 13, 2011, the Agreement and Plan of Merger and related documents, including the Voting Agreement, were formally executed. The transaction was announced on July 14, 2011.

What Am I Being Asked to Consider and Vote Upon?

NeoStem Stockholders

NeoStem stockholders, in considering NeoStem Proposal 1, are being asked to consider and vote upon the issuance of the NeoStem securities in connection with the Amorcyte Merger pursuant to the Agreement and Plan of Merger, as further described below.

Amorcyte Stockholders

Amorcyte stockholders, in considering Amorcyte Proposal 1, are being asked to consider and vote upon the adoption of the Agreement and Plan of Merger and the approval of the Amrocyte 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.

TABLE OF CONTENTS

The Amorcyte Merger

General

The Board of Directors of NeoStem, Inc., a Delaware corporation (“NeoStem”), and the Board of Directors of Amorcyte, Inc., a Delaware corporation (“Amorcyte”), have approved the merger (the “Amorcyte Merger”) of Amo Acquisition Company I, Inc., a newly formed wholly-owned subsidiary of NeoStem (“Subco”), with and into Amorcyte pursuant to an Agreement and Plan of Merger, dated July 13, 2011, as such agreement may be amended from time to time (the “Agreement and Plan of Merger”), among NeoStem, Amorcyte, Subco and Amo Acquisition Company II, LLC, another newly formed wholly-owned subsidiary of NeoStem (“Subco II”). Pursuant to the Agreement and Plan of Merger, within 90 days after the Effective Time of the Amorcyte Merger, Amorcyte will be merged with and into Subco II (the “Subco II Merger”). Subco II, in its capacity as the wholly-owned subsidiary of NeoStem surviving the transactions contemplated by the Agreement and Plan of Merger, is hereinafter sometimes referred to as the “Surviving Company.”

Amorcyte was initially formed as a wholly-owned subsidiary of Progenitor Cell Therapy, LLC (“PCT”). Amorcyte was spun off to PCT’s members during 2005. PCT, now a wholly-owned subsidiary of NeoStem, was acquired by NeoStem on January 19, 2011.

Aggregate Consideration

Pursuant to the terms of the Agreement and Plan of Merger, all of the shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock, all options and warrants to acquire equity of Amorcyte, and all debt obligations issued by Amorcyte that are convertible into Amorcyte Series A Preferred Stock (to the extent not already converted, being treated as if it were actually converted), in each case, issued and outstanding immediately prior to the Effective Time, will, by virtue of the Amorcyte Merger, be cancelled and converted into the right to receive, in the aggregate:

Pursuant to the Agreement and Plan of Merger, prior to closing all Amorcyte options and warrants will be modified in writings executed by each optionholder and warrantholder, so that effective upon the Effective Time, all Amorcyte options and warrants will, by virtue of the Amorcyte Merger, be converted into the right to receive the share of any Earn Out Payments that the holders of such options and warrants would have received if they had exercised their Amorcyte options and/or warrants, as applicable, prior to the Effective Time (after taking into account the payment of any exercise price due had they actually exercised). The holders of Amorcyte options and warrants will be entitled to the merger consideration similar to the holders of Amorcyte Common Stock, minus the exercise price of the options and warrants.

The NeoStem Common Stock that the securityholders of Amorcyte will be entitled to receive as a result of the Amorcyte Merger, and upon the exercise of the Warrants issued in the Amorcyte Merger, is traded and quoted on the NYSE Amex under the market symbol “NBS.”

TABLE OF CONTENTS

Adjustment to Base Stock Consideration

The Base Stock Consideration is subject to adjustment, provided that in no event will NeoStem be required to issue as Base Stock Consideration more than 6,821,283 shares of NeoStem Common Stock. The Agreement and Plan of Merger provides that to the extent the amount of Amorcyte’s liabilities (as defined and calculated in the manner described in the Agreement and Plan of Merger) on the closing date are more than $478,000 (the “Target Liabilities”), the Base Stock Consideration will be decreased by two times (2x) the amount by which Amorcyte’s liabilities are greater than the Target Liabilities. Any such decrease will reduce the Base Stock Consideration by two dollars for every dollar by which Amorcyte’s liabilities are greater than the Target Liabilities, with each share of the Base Stock Consideration valued at $1.466 (the average of the closing prices of sales of NeoStem Common Stock on the NYSE-Amex for the 10 trading days ending on the trading day prior to the date of execution of the Agreement and Plan of Merger) (the “Parent Per Share Value”).

Escrow of Base Stock Consideration

The Agreement and Plan of Merger provides that the Base Stock Consideration will be placed in escrow (the “Escrow Account”) pursuant to an escrow agreement to be executed at closing, for the purpose of paying any damages payable to NeoStem in accordance with the indemnification provisions contained in the Agreement and Plan of Merger. The escrow agent shall initially be NeoStem’s transfer agent (the “Escrow Agent”). The Escrow Account will continue from the closing until that date (the “Termination Date”) which is two (2) years and one day after the closing (the “Escrow Period”). Six months after the closing date, an aggregate of up to 20% of the shares of NeoStem Common Stock may be released from the Escrow Account and distributed to the Amorcyte Representative (as defined below) for distribution to Amorcyte’s former stockholders, optionholders and warrantholders (collectively, the “Amorcyte Securityholders”) in accordance with their proportional interests; provided, however, that NeoStem will not be required to release from escrow any shares of NeoStem Common Stock then being held with respect to pending claims by NeoStem. As soon as practicable after the one (1) year anniversary of the closing date (the “One-Year Release Date”), NeoStem will direct the Escrow Agent to release and distribute to the Amorcyte Representative for distribution to the former Amorcyte Securityholders in accordance with the terms of the Escrow Agreement all shares of NeoStem Common Stock then remaining in the Escrow Account except as follows: If no indemnification claims have been asserted by NeoStem prior to the One-Year Release Date, then NeoStem Common Stock with a Parent Per Share Value of $1,250,000 shall remain in the Escrow Account until the Termination Date. If any indemnification claims have been asserted by NeoStem prior to the One-Year Release Date, then NeoStem Common Stock with a Parent Per Share Value equal to the sum of (i) $2,500,000 plus (ii) the amount of any then pending indemnification claims shall remain in the Escrow Account until the Termination Date. As soon as practical after the Termination Date, all shares of NeoStem Common Stock then remaining in the Escrow Account will be released to the Amorcyte Representative for distribution to the former Amorcyte Securityholders; provided that NeoStem Common Stock representing 120% of the maximum amount of any claim made by NeoStem pursuant to the indemnification provisions of the Agreement and Plan of Merger during the Escrow Period will be withheld and remain in the Escrow Account pending resolution of such claim. In addition, a number of shares of NeoStem Common Stock in the Escrow Account which is necessary to satisfy any unsatisfied claims specified in any indemnification claim previously delivered by NeoStem prior to the Termination Date with respect to facts and circumstances existing prior to the expiration of the Escrow Period, shall remain in the Escrow Account until such claims have been resolved.

Contingent Share Milestones

The Contingent Shares will be issued only if certain business milestones are achieved, as follows:

TABLE OF CONTENTS

Upon achievement of these specified contingencies, the Contingent Shares will be issued to the former stockholders of Amorcyte.

Procedures for Earn Out Payments

Within 90 days following the end of each calendar quarter, NeoStem will pay Earn Out Payments (to the Amorcyte Representative in trust for the benefit of the former Amorcyte Securityholders) equal to 10% of the net sales of AMR-001, which payment obligation will begin following the date of first commercial sale of AMR-001 and continue until the latest date that a valid patent claim exists on a country by country basis covering AMR-001, provided that if NeoStem licenses or otherwise grants an unaffiliated third party the right to commercialize or otherwise exploit AMR-001 or any portion of AMR-001 (including, without limitation, a sublicense for all or part of any territory for AMR-001) then the applicable Earn Out Payment will be equal to 30% of any sublicensing fees, royalties and milestone fees or profit sharing payment (but not payments for development costs) actually received by NeoStem. NeoStem will be entitled to recover direct out-of-pocket clinical development costs not previously paid or reimbursed and any costs, expenses, damages, liabilities, and settlement amounts arising out of or related to claims with respect to patent infringement or otherwise challenging Amorcyte’s ownership of or right to use intellectual property, by reducing any Earn Out Payments due by 50% until such costs have been recouped in full.

The Amorcyte Representative (Paul Schmitt or his duly appointed successor) (the “Amorcyte Representative”) shall be solely responsible for the distribution of the Earn Out Payments to the former Amorcyte Securityholders. At closing, for informational purposes, the Amorcyte Representative will deliver to NeoStem a certification setting forth the percentage of the aggregate Earn Out Payments to which each former Amorcyte Securityholder is entitled (subject to amendment to reflect the effects of any financing conducted by Amorcyte), which certification shall be conclusive and binding on the Amorcyte Securityholders (the “Earn Out Payment Certification”). Within 90 days following the end of each calendar quarter, NeoStem will send the Earn Out Payments, if any, to the Amorcyte Representative (who will be responsible for the appropriate division and distribution of the Earn Out Payments received by him, as well as any tax withholding or reporting related thereto).

Liquidation Preference of Amorcyte Series A Preferred Stock

When the merger consideration is distributed to Amorcyte’s stockholders, the liquidation preference accorded by Amorcyte’s amended and restated certificate of incorporation, as amended, to the holders of Amorcyte Series A Preferred Stock must be satisfied before the holders of Amorcyte Common Stock will receive any of the merger consideration. In accordance with an August 2011 amendment to Amorcyte’s Amended and Restated Certificate of Incorporation, for purposes of the Series A liquidation preference, all NeoStem Common Stock and all NeoStem Warrants paid to Amorcyte stockholders will be valued at the values set forth in the Agreement and Plan of Merger (i.e. at $1.466 per share and $1.063 per Warrant, respectively, or $12 million in the aggregate). Based on a liquidation preference of $1,197.975 per share and 10,459 shares of Amorcyte Series A Preferred Stock outstanding, the first $12,529,620.53 of consideration received by the Amorcyte stockholders will be distributed entirely to the holders of Amorcyte Series A Preferred Stock. As a result, all of the Base Stock Consideration and all of the Warrants will be distributed to holders of Amorcyte Series A Preferred Stock.

Subject to Closing Conditions

The consummation of the transactions is subject to various conditions, including the approval by Amorcyte’s stockholders of the Amorcyte Merger and the Agreement and Plan of Merger; approval by NeoStem’s stockholders of the issuance of NeoStem securities in connection with the Amorcyte Merger; Amorcyte having terminated (with no liability to NeoStem) its Amended and Restated License, as amended to date, from Baxter Healthcare Corporation; receipt by NeoStem of evidence reasonably satisfactory to it that

TABLE OF CONTENTS

Amorcyte has entered into an agreement with a supplier for cell sorting on terms and conditions reasonably acceptable to NeoStem; the full payment and satisfaction by Amorcyte of all payables due to NeoStem’s subsidiary PCT through the closing date; the absence of any order or legal proceeding preventing consummation of the Amorcyte Merger; and other legal and regulatory requirements. Additionally, it is a condition to NeoStem’s and Subco’s obligations to close that (A) (i) holders of Amorcyte Common Stock and holders of Amorcyte Series A Preferred Stock entitled to 1% or more of the aggregate Stock Consideration shall not have voted against the adoption of the Agreement and Plan of Merger or withheld their consent thereto in writing or otherwise remain eligible to perfect appraisal rights in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), and (ii) holders who represent more than 5% of the issued and outstanding Amorcyte Common Stock shall not have voted against the adoption of the Agreement and Plan of Merger or withheld their consent thereto in writing or otherwise remain eligible to perfect appraisal rights in accordance with the DGCL, and that (B) no holders of the issued and outstanding Amorcyte Series A Preferred Stock shall have had any of their shares redeemed nor shall any holder of the Amorcyte Series A Preferred Stock have requested that Amorcyte redeem any shares of Amorcyte Series A Preferred Stock. Either NeoStem or Amorcyte may terminate the Agreement and Plan of Merger and the transactions contemplated thereby at any time prior to the Effective Time, if the closing does not occur on or prior to January 31, 2012; provided that the party seeking to terminate is not at such time in material breach of any material representation or warranty contained in the Agreement and Plan of Merger.

Voting Agreements

Pursuant to a Right of First Refusal and Co-Sale Agreement among Amorcyte and certain of its stockholders, as amended, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock have agreed to vote all of the shares of Amorcyte capital stock held by them in favor of any “Change of Control Transaction” (which as defined includes the proposed Amorcyte Merger) that is approved by Amorcyte’s board of directors and by a majority of the holders of Amorcyte’s Series A Preferred Stock.

In addition, pursuant to a voting agreement (the “Amorcyte Voting Agreement”) dated the same date as the Agreement and Plan of Merger, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to approve the Amorcyte Merger and the Agreement and Plan of Merger have irrevocably agreed to vote in favor of the Amorcyte Merger and adoption of the Agreement and Plan of Merger at any meeting of the stockholders of Amorcyte called to for such purpose (or in connection with any written consent of Amorcyte stockholders for such purpose) (the “Amorcyte Meeting”) and agreed to certain transfer restrictions with respect to their Amorcyte securities prior to the closing.

Amorcyte Representative

By adoption of the Agreement and Plan of Merger at the Amorcyte Meeting, each stockholder of Amorcyte will be deemed to have irrevocably constituted and appointed Paul Schmitt (currently the Chief Executive Officer and a director of Amorcyte, and the Managing Director of Novitas Capital, a substantial stockholder of Amorcyte), as the “Amorcyte Representative” under the Agreement and Plan of Merger. The Amorcyte Representative will act on behalf of all of the stockholders of Amorcyte in executing various closing documents and in reviewing and, if he deems it appropriate, disputing, any indemnification claims made against the Escrow Account after the closing.

Covenant to Develop AMR-001

Pursuant to the Agreement and Plan of Merger, NeoStem covenants to use commercially reasonable efforts to develop AMR-001 (currently, Amorcyte’s lead product candidate) or to use commercially reasonable efforts to locate a partner to develop AMR-001, and if and only if commercially reasonable, to file a Biologics License Application or its equivalent with the FDA for marketing and sale of AMR-001 in the United States, obtain approval for such marketing and sale in the United States and in such other territories to be agreed to by the parties, and commercialize or cause the commercialization of AMR-001 in the United States and in such additional territories, all in a timely fashion to the extent commercially reasonable.

TABLE OF CONTENTS

Additional Information

For further detail regarding the Amorcyte Merger and the transactions contemplated thereby, see the section “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 Amorcyte and thus any such descriptions are qualified in their entirety by reference to the Agreement and Plan of Merger, attached as Annex A hereto, which you are urged to read carefully and in its entirety.

Reasons for the Amorcyte Merger

General — Board Considerations

The NeoStem Board, at a meeting held on July 5, 2011, authorized NeoStem’s acquisition of Amorcyte, subject to the authority of the Mergers & Acquisitions Committee of the NeoStem Board to approve the Agreement and Plan of Merger. On July 13, 2011, the Mergers & Acquisitions Committee approved the Agreement and Plan of Merger and determined that the Amorcyte Merger is fair, advisable for, and in the best interests of, NeoStem and its stockholders, and unanimously resolved to recommend that the stockholders of NeoStem approve the issuance of the NeoStem Common Stock and Warrants issuable pursuant to the Agreement and Plan of Merger.

The Amorcyte Board, by unanimous written consent on July 11, 2011, unanimously approved the Agreement and Plan of Merger, and determined that the Amorcyte Merger is fair, advisable for, and in the best interests of, Amorcyte and its stockholders, and unanimously resolved to recommend that the stockholders of Amorcyte adopt and approve the Agreement and Plan of Merger and the Amorcyte Merger and all transactions related to the consummation of the Amorcyte Merger.

In reaching its separate decision, each Board (or committee thereof) 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, neither Board found it practical to qualify, rank or otherwise assign any relative or specific weights to the factors it considered. In addition, neither Board reached any specific conclusion with respect to each of the factors it considered, or any aspect of any particular factor. Instead, each Board conducted an overall analysis of the factors it considered. In considering those factors, individual members of each Board may have given weight to different factors. Each Board considered all of those factors as a whole and believed that those factors supported its decision.

The factors considered by one Board were not identical to the factors considered by the other Board. However, both Boards identified certain material benefits, common to both companies and their respective stockholders, that both Boards expect will result from the Amorcyte Merger, as well as certain risks affecting both companies in connection with the Amorcyte 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 separately considered are described. This section, read as a whole, includes the material factors considered by each Board in approving the Amorcyte Merger.

Joint Reasons for the Amorcyte Merger

The NeoStem Board of Directors (as well as its Mergers & Acquisition Committee) and the Amorcyte Board of Directors approved the Amorcyte Merger based on a number of factors, including, among other things, their belief that the combination of NeoStem and Amorcyte will create a stronger, more successful company, with enhanced prospects for continued viability, will be accretive in nature and will provide the stakeholders of both NeoStem and Amorcyte with the potential for more financial success than either company might have on its own.

Both Boards also recognize the risks inherent in the transaction, including:

TABLE OF CONTENTS

Both Boards determined that the potential benefits of the Amorcyte Merger outweigh the potential risks. In the course of their separate deliberations, each Board also considered the following factors:

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

Reasons of the NeoStem Board

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

TABLE OF CONTENTS

The NeoStem Board also considered a number of risks and potentially negative factors in its deliberations concerning the Amorcyte 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 determined that the Amorcyte Merger is desirable to the company and its shareholders.

Reasons of the Amorcyte Board

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

Amorcyte views the proposed Amorcyte Merger as being in the best interests of Amorcyte and its stakeholders. Amorcyte security holders will receive shares and other securities of NeoStem, an NYSE Amex listed adult stem cell company with market liquidity. In addition, Amorcyte security holders may also receive certain Earn Out Payments as more particularly described in Q-2 of the section entitled “Questions and Answers About the Amorcyte Merger and Other Proposals.” With added assets from Amorcyte, the Amorcyte Board believes NeoStem and its intellectual property portfolio will be greatly strengthened and will aim to move to the next stage of growth.

Additionally, with this transaction, Amorctye will be relieved of the need to obtain further funding on its own to develop its products. The Amorcyte Merger is a transaction in which the Amorcyte Board strongly believes that security holders’ value may be better protected and potentially enhanced and diversified. The alternative to approving the Amorcyte Merger may expose Amorcyte to a significant decrease in value, particularly if it could not find financing for the Phase 2 trial of AMR-001 on its own.

After serious consideration, the Amorcyte Board unanimously endorsed this transaction and recommended that its stockholders approve the Amorcyte Merger.

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

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

TABLE OF CONTENTS

RECOMMENDATIONS OF THE NEOSTEM AND THE AMORCYTE BOARDS

Recommendation of the NeoStem Board

The Audit Committee of NeoStem’s Board of Directors considered and evaluated conflicts of interest presented by the Amorcyte Merger and unanimously determined that the Amorcyte Merger is fair to NeoStem and its stockholders. After evaluating the proposed transaction and the terms thereof (and considering the determination of the Audit Committee), the Mergers & Acquisitions Committee of the NeoStem Board has unanimously determined that the terms of the Agreement and Plan of Merger and the Amorcyte Merger are advisable for, and in the best interests of, NeoStem and the NeoStem stockholders. Upon such determinations, the NeoStem Board unanimously recommends that NeoStem stockholders vote FOR the proposal to approve the issuance of NeoStem Common Stock and Warrants pursuant to the Agreement and Plan of Merger.

Recommendation of the Amorcyte Board

The Amorcyte Board has unanimously determined that the terms of the Agreement and Plan of Merger and the Amorcyte Merger are fair to, advisable for, and in the best interests of Amorcyte and the Amorcyte stockholders. The Amorcyte Board recommends that Amorcyte stockholders vote FOR the proposal to adopt the Agreement and Plan of Merger and approve the Amorcyte Merger. Approval of the proposal to adopt the Agreement and Plan of Merger will constitute approval of all transactions contemplated by the Agreement and the Plan of 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 Amorcyte Merger pursuant to the Agreement and Plan of Merger. 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.

Amorcyte

The approval of the proposal to adopt the Agreement and Plan of Merger will require the affirmative vote of (A) a majority of the outstanding Amorcyte Common Stock and Amorcyte Series A Preferred Stock, voting together as a single class, with each share of Amorcyte Series A Preferred Stock treated on an “as if converted” basis AND (B) the holders of a majority of the outstanding Amorcyte Series A Preferred Stock, 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 Amorcyte Merger.

Pursuant to a Right of First Refusal and Co-Sale Agreement among Amorcyte and certain of its stockholders, as amended, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to adopt the Agreement and Plan of Merger have agreed to vote all of the shares of Amorcyte capital stock held by them in favor of any “Change of Control Transaction” (which as defined includes the proposed Amorcyte Merger) that is approved by Amorcyte’s board of directors and by a majority of the holders of the Amorcyte Series A Preferred Stock.

In addition, pursuant to a voting agreement (the “Amorcyte Voting Agreement”) dated the same date as the Agreement and Plan of Merger, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to adopt the Agreement and Plan of Merger have irrevocably agreed to vote in favor of adoption of the Agreement and Plan of Merger. Such stockholders’ votes will be sufficient without any other votes to adopt the Agreement and Plan of Merger, the Amorcyte Merger and all the transactions contemplated by the Agreement and Plan of Merger.

Existing Business Relationships Between NeoStem and Amorcyte

Amorcyte was initially formed as a wholly owned subsidiary of Progenitor Cell Therapy, LLC (“PCT”) and was spun off to PCT’s members during 2005. PCT (now a wholly-owned subsidiary of NeoStem) was acquired by NeoStem on January 19, 2011. The Amorcyte spin off was an example of PCT’s strategy, which

TABLE OF CONTENTS

historically has included the periodic formation of companies intended to develop specific therapeutic products, which companies could subsequently be spun-out while remaining revenue-generating clients of PCT. Through its acquisition of PCT, NeoStem has an ownership interest in Amorcyte consisting of 62.6 shares of Amorcyte’s Series A Preferred Stock owned by PCT (representing less than 1% of Amorcyte’s outstanding Series A shares). Additionally, Amorcyte is now a NeoStem customer (through NeoStem’s subsidiary PCT), resulting in revenues to NeoStem for R&D services of $105,329 during fiscal year 2010. Former members of PCT have remained stockholders of Amorcyte post spin-off.

Since its spin-off from PCT, Amorcyte has remained dependent on PCT for certain administrative and development services. For example, on May 31, 2005, Amorcyte entered into a Cell Processing Agreement with PCT (subsequently amended and restated effective March 13, 2009), pursuant to which PCT is the exclusive evergreen provider of cell processing services and related services to Amorcyte at rates specified in the Agreement and anticipates processing the cells for the 150 patients expected to be enrolled in Amorcyte’s Phase 2 trial expected to start by the end of first quarter 2012. In exchange for entering into this Agreement, Amorcyte paid PCT $200,000. The rates set forth by the Agreement initially included $25,000 per month during the clinical trial period for oversight services. This monthly fee was amended to $22,000 (or less if Amorcyte asked PCT to perform a lesser amount of services) in 2008 through March 2011. Under the March 13, 2009 agreement Amorcyte has contracted with PCT to provide certain administrative financial and accounting functions and use of certain space at PCT’s Allendale, New Jersey facility at a fee of $15,000 per month. Fees for additional services are determined by mutual agreement of the parties. Costs incurred by Amorcyte (and corresponding revenues recognized by PCT) under this Agreement amounted to $45,000 for each of the three month periods ended March 31, 2011 and 2010, $180,000 for each of the years ended December 31, 2010 and 2009, and approximately $1,269,000 since Amorcyte’s inception. Since the execution of the Amended and Restated Cell Processing Agreement, PCT and Amorcyte have mutually agreed on various proposals provided to Amorcyte by PCT addressing various services, including process development and preparatory services related to anticipated Phase 2 trials of AMR-001.

Certain officers of NeoStem’s subsidiary PCT provide services to Amorcyte pursuant to this arrangement. For example, George Goldberger, currently PCT’s Vice President — Business Development, also serves as the Chief Financial Officer of Amorcyte. Dr. Andrew L. Pecora, who currently serves in a part-time capacity as PCT’s Chief Medical Officer and as of August 17, 2011 is also NeoStem’s Chief Medical Officer and who pursuant to the agreement governing NeoStem’s January 2011 acquisition of PCT will be invited to join NeoStem’s board of directors (appointment anticipated during 2011), also serves as Amorcyte’s Chief Scientific Officer. Pursuant to an oral consulting agreement with Amorcyte, Dr. Pecora was to receive $50,000 per year in compensation for service as Amorcyte’s Chief Scientific Officer, but by written agreement Dr. Pecora has relinquished all rights he had with respect to such compensation, while continuing to serve as Amorcyte’s Chief Scientific Officer.

On May 19, 2006, PCT entered into a line of credit agreement with Amorcyte, whereby PCT agreed to loan Amorcyte up to $500,000 at an annual interest rate of 5%. The line of credit agreement was a condition to Amorcyte closing a Series A Preferred Stock Financing completed during 2006. To date, PCT has not loaned any amount to Amorcyte under this agreement. The line of credit agreement expires on the earlier of (i) the date on which PCT declares the outstanding principal and accrued interest due and payable based on an event of default as defined within the agreement, or (ii) the date of closing of the first debt or equity financing of Amorcyte following the initial borrowing of the principal. These events have not occurred to date.

Pursuant to the Agreement and Plan of Merger, the full payment and satisfaction by Amorcyte of all payables due to NeoStem’s subsidiary PCT through the closing date is a condition to NeoStem’s obligation to close the Amorcyte Merger.

During June 2010, PCT made an investment in Amorcyte through the purchase for $50,000 of 62.6 shares of Amorcyte Series A Preferred Stock.

In June and July of 2011, respectively, Novitas Capital III, L.P. and Darren Blanton, each a substantial beneficial owner of Amorcyte Series A Preferred Stock, invested $1,000,000 and $350,000, respectively, in private placements of NeoStem Common Stock. In addition, in this same private placement, Crown Oaks Inc.

TABLE OF CONTENTS

Profit Sharing Plan & Trust and the William Herbert Hunt Trust Estate, each a substantial Amorcyte stockholder, invested $250,000 and $128,000, respectively, in NeoStem Common Stock.

Additionally, Robert A. Preti, Ph.D., an officer of NeoStem’s subsidiary PCT, beneficially owns 27.5 shares (or 0.3%) of Amorcyte Series A Preferred Stock and 1,219.7 shares (or 15.6%) of Amorcyte Common Stock. Dr. Preti also beneficially owns 2,129,966 shares (or 2.2%) of the outstanding NeoStem Common Stock.

In accordance with the terms of the agreement (the “PCT Merger Agreement”) governing NeoStem’s acquisition of PCT (which closed on January 19, 2011) (the “PCT Merger”), the stock consideration paid by NeoStem in exchange for the membership interests of PCT was deposited into an escrow account for eventual distribution to the former members of PCT. Dr. Pecora, Dr. Robert A. Preti (PCT’s President and Chief Scientific Officer prior to the PCT merger, and who following the PCT merger serves as PCT’s President pursuant to an employment agreement that became effective upon the closing of the PCT Merger and also as PCT’s Chief Scientific Officer) and Mr. Goldberger beneficially owned approximately 17.2%, 17.0% and 2.5%, respectively, of the membership interests of PCT that were outstanding immediately prior to the closing of the PCT Merger. Certain of the shares of NeoStem Common Stock issued to these three individuals in connection with the January 2011 PCT Merger have been and/or will be released from escrow earlier than the first release of shares for other former members of PCT for the purpose of enabling them to pay taxes that will be due as a result of the PCT merger. Currently Dr. Pecora, Dr. Preti and Mr. Goldberger beneficially own 2,370,672, 2,129,966 and 309,192 shares, respectively, of NeoStem’s Common Stock, representing respectively 2.4%, 2.2% and 0.3% of NeoStem’s outstanding Common Stock. Dr. Pecora’s beneficial ownership includes 78,125 shares of NeoStem Common Stock purchased by him in a NeoStem private placement consummated on March 3, 2011 at a price of $1.28 per share.

Pursuant to the PCT Merger Agreement, NeoStem agreed to pay off PCT’s credit line with Northern New Jersey Cancer Associates (“NNJCA”), in an amount up to $3,000,000, shortly after the closing of the PCT Merger. On January 21, 2011, NeoStem paid NNJCA $3,000,000 in full satisfaction of all of borrower PCT’s obligations to lender NNJCA arising from the underlying line of credit and security agreement. Dr. Pecora has served as Managing Partner of NNJCA since 1996.

Interests of Certain Persons in the Amorcyte Merger

Interests of Certain Amorcyte Officers and Directors

Beneficial Ownership of Amorcyte Capital Stock.  Certain Amorcyte officers and directors beneficially own Amorcyte Common Stock and Amorcyte Series A Preferred Stock, as follows:

Name of Stockholder		Common Shares(1)				Percentage of Class				Series A Preferred Shares				Percentage of Class
Dr. Andrew L. Pecora			1,219.7				15.6 %				58.8				0.6 %
Paul Schmitt			0.0				0.0 %				3,693.7	(2)			35.3 %
George S. Goldberger			177.1				2.3 %				38.8				0.4 %
Darren Blanton			0.0				0.0 %				939.7	(3)			9.0 %
Desmond O’Connell			0.0				0.0 %				187.8	(4)			1.8 %
Michael Starcher			0.0				0.0 %				1,252.1	(5)			12.0 %

TABLE OF CONTENTS

Also, the following Amorcyte directors and officers hold options to purchase shares of common stock of Amorcyte in the following quantities: Dr. Andrew Pecora (1,069 options), Darren Blanton (152 options), Paul Schmitt (1,389 options), Dr. Hans Mueller (602 options), Dr. Thomas Moss (152 options), Michael Starcher (152 options), and Desmond O’Connell (152 options). In addition, Astrid Werner, a former Amorcyte consultant, and Dr. Linda Nardone, Amorcyte’s former Vice President of Operations and currently an Amorcyte consultant, each holds an option to purchase 152 shares of Amorcyte common stock. Each of the foregoing options is exercisable at $185.87 per share.

For further details with respect to the beneficial ownership of Amorcyte’s directors and officers, see the section captioned “Security Ownership of Certain Beneficial Owners and Management of Amorcyte.”

Additional Cross-Ownership.  During June 2010, NeoStem’s subsidiary PCT made an investment in Amorcyte through the purchase for $50,000 of 62.6 shares of Amorcyte Series A Preferred Stock.

In June and July of 2011, respectively, Novitas Capital III, L.P. and Darren Blanton, each a substantial beneficial owner of Amorcyte Series A Preferred Stock, invested $1,000,000 and $350,000, respectively, in private placements of NeoStem Common Stock. In addition, in this same private placement, Crown Oaks Inc. Profit Sharing Plan & Trust and the William Herbert Hunt Trust Estate, each a substantial Amorcyte stockholder, invested $250,000 and $128,000, respectively, in NeoStem Common Stock.

Currently Dr. Pecora (who is the Chief Scientific Officer of Amorcyte, the Chief Medical Officer of NeoStem and an officer of NeoStem’s subsidiary PCT) and Mr. Goldberger (who is the Chief Financial Officer of Amorcyte and an officer of NeoStem’s subsidiary PCT) beneficially own 2,370,672 and 309,192 shares, respectively, of NeoStem’s Common Stock, representing respectively 2.4% and 0.3% of NeoStem’s outstanding Common Stock. Dr. Pecora’s beneficial ownership includes 78,125 shares of NeoStem Common Stock purchased by him in a NeoStem private placement consummated on March 3, 2011 at a price of $1.28 per share.

TABLE OF CONTENTS

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
AMORCYTE MERGER AND THE SUBCO II MERGER

The following is a general summary of the material United States (“U.S.”) federal income tax consequences of the Amorcyte Merger and the Subco II Merger (together, the “Transaction”) to U.S. Holders (as defined below) that exchange Amorcyte Common Stock and/or Amorcyte Series A Preferred Stock (together, “Amorcyte Stock”) for NeoStem Common Stock, NeoStem Warrants, and Earn Out Payments pursuant to the Transaction.

This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), the regulations of the U.S. Treasury Department (“Treasury Regulations”), Internal Revenue Service (“IRS”) rulings, and judicial and administrative rulings and decisions in effect on the date of this joint 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, nor does it address any U.S. federal laws other than U.S. federal income tax laws. In addition, this discussion does not purport to consider all aspects of U.S. federal income taxation that might be relevant to a particular U.S. Holder in light of the U.S. Holder’s personal circumstances. Further, this discussion does not address the tax consequences that may be relevant to a U.S. Holder that receives special treatment under some U.S. federal income tax laws. Holders receiving this special treatment include, but are not limited to, the following:

This discussion assumes that U.S. Holders hold their Amorcyte Stock as capital assets within the meaning of Section 1221 of the Code (generally, as property held as an investment and not as a dealer or for sale to customers in the ordinary course of the U.S. Holder’s trade or business), and will hold their NeoStem Common Stock and Warrants as capital assets as well. This discussion does not address the receipt of NeoStem Common Stock, Warrants, or Earn Out Payments by anyone other than in their capacity as a U.S. Holder, or the receipt of NeoStem Common Stock, Warrants or Earn Out Payments in exchange for services, or in exchange for property other than Amorcyte Stock.

None of the analysis in this discussion will be binding on the IRS. NeoStem does not intend to request any ruling from the IRS as to the U.S. federal income tax consequences of the Transaction. Consequently, no assurance can be given that the IRS will not assert, or that a court would not sustain, a position contrary to any of those set forth below. In addition, 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.

TABLE OF CONTENTS

Holders of Amorcyte Stock are strongly urged to consult with their own tax advisors as to the tax consequences of the Transaction under U.S. federal, state, local, foreign, and other tax laws in light of their particular circumstances.

As used in this summary, the term “U.S. Holder” means a beneficial owner of Amorcyte Stock that is for U.S. federal income tax purposes:

Material Federal Income Tax Consequences of the Transaction to Amorcyte, NeoStem, U.S. Holders, and Holders of NeoStem Common Stock

NeoStem and Amorcyte intend that the Transaction will be treated for U.S. federal income tax purposes as a single integrated transaction that qualifies as a reorganization pursuant to Section 368(a) of the Code (a “Reorganization”), but it is unclear under present U.S. federal tax law whether the Transaction will so qualify.

The discussion below under “Tax Treatment if the Transaction Qualifies as a Reorganization” assumes that the Transaction qualifies as a Reorganization. The discussion below under “Effects of Failure to Qualify as a Reorganization” provides a brief explanation of how the Transaction could fail to qualify as a Reorganization and explains the tax consequences to U.S. Holders if the Transaction fails to qualify as a Reorganization.

Tax Treatment if the Transaction Qualifies as a Reorganization

Exchange of Amorcyte Common Stock for a Combination of NeoStem Common Stock, NeoStem Warrants, and Cash. Except as discussed below under “Imputed Interest”, “Cash in Lieu of Fractional Shares”, and “Cash in Satisfaction of Dissenters’ Rights”, if the Transaction were to qualify as a Reorganization a U.S. Holder generally would recognize taxable gain, but not loss, equal to the lesser of:

Imputed Interest.  A portion of the consideration (including a portion of the NeoStem Common Stock) received in the Transaction may be treated as imputed interest income, which is subject to tax at ordinary income tax rates. Any amount so treated would not count as consideration received by the U.S. Holder in calculating the amount of gain recognized by the U.S. Holder as a result of the Transaction or in calculating the U.S. Holder’s tax basis in the NeoStem Common Stock and Warrants received.

Tax Basis and Holding Period.  A U.S. Holder’s aggregate tax basis in the NeoStem Common Stock and Warrants that the U.S. Holder receives in the Transaction would equal the aggregate basis that such U.S. Holder had in the shares of Amorcyte Stock surrendered in the Transaction, reduced by the amount of any cash received and increased by any gain recognized by such stockholder in the Transaction. Such basis must be allocated between the NeoStem Common Stock and Warrants received based upon the relative fair market values of each. The holding period of a U.S. Holder in the shares of NeoStem Common Stock and Warrants received in the Transaction would include the holding period for the shares of Amorcyte Stock surrendered in exchange therefor. Any U.S. Holder having varying bases or holding periods in respect of the U.S. Holder’s shares of Amorcyte Stock, or a U.S. Holder owning both Amorcyte Common Stock and Amorcyte Series A Preferred Stock, should consult the U.S. Holder’s tax advisors prior to the exchange in order to identify the bases or holding periods of the particular shares of NeoStem Common Stock and the particular NeoStem Warrants received in the Transaction.

TABLE OF CONTENTS

Character of Recognized Gain.  Subject to the above discussion regarding imputed interest, any gain that a U.S. Holder recognizes will be treated as capital gain unless the receipt of cash by the U.S. Holder has the effect of the distribution of a dividend for U.S. federal income tax purposes. Capital gain will be long-term capital gain if the U.S. Holder’s holding period in the Amorcyte Stock surrendered is greater than one year as of the Effective Time. In the case of certain non-corporate U.S. Holders, long-term capital gain is currently eligible for reduced rates of U.S. federal income tax. U.S. Holders that acquired Amorcyte Stock at different times are urged to consult their tax advisors regarding the treatment of any gain as long-term or short-term capital gain.

If the receipt of an Earn Out Payment has the effect of the distribution of a dividend, the gain therefrom will be treated as dividend income to the extent of the U.S. Holder’s share of Amorcyte’s accumulated earnings and profits. While the law is unclear on this point, NeoStem’s accumulated earnings and profits may also have to be included in determining the extent to which an Earn Out Payment results in dividend income. To the extent that the U.S. Holder’s recognized gain exceeds the U.S. Holder’s share of Amorcyte’s (and, possibly, NeoStem’s) accumulated earnings and profits, such gain will be treated as capital gain. In the case of certain non-corporate U.S. Holders, dividends from domestic corporations are currently eligible for reduced rates of U.S. federal income tax. Absent further legislative action, the reduced rates of U.S. federal income tax on dividends will not apply for taxable years of a U.S. Holder beginning after December 31, 2012.

In general, the determination of whether the receipt of an Earn Out Payment has the effect of the distribution of a dividend for federal income tax purposes will depend upon whether and to what extent the Earn Out Payment reduces the U.S. Holder’s deemed percentage stock ownership of NeoStem. For purposes of this determination, the U.S. Holder is treated as if such U.S. Holder first exchanged all of such U.S. Holder’s shares of Amorcyte Stock solely for NeoStem Common Stock and Warrants and NeoStem then immediately redeemed (the “deemed redemption”) a portion of the NeoStem Common Stock in exchange for the Earn Out Payment. The gain recognized in the exchange followed by the deemed redemption will be not be treated as having the effect of the distribution of a dividend if the deemed redemption is (i) substantially disproportionate with respect to the U.S. Holder, or (ii) not essentially equivalent to a dividend.

The deemed redemption generally will be substantially disproportionate with respect to a U.S. Holder if, immediately after the deemed redemption, the U.S. Holder owns, actually or constructively, (i) less than 50% of the total combined voting power of all classes of NeoStem stock entitled to vote and (ii) less than 80% of the percentage of NeoStem stock the stockholder actually or constructively owned before the deemed redemption.

Whether the deemed redemption is not essentially equivalent to a dividend with respect to a U.S. Holder will depend upon the particular circumstances of the U.S. Holder. At a minimum, however, in order for the deemed redemption to be not essentially equivalent to a dividend, the deemed redemption must result in a “meaningful reduction” in the U.S. Holder’s actual and constructive percentage stock ownership of NeoStem stock. In general, that determination requires a comparison of (i) the percentage of the outstanding stock of NeoStem the U.S. Holder is deemed to own (actually and constructively) immediately before the deemed redemption, and (ii) the percentage of the outstanding stock of NeoStem the U.S. Holder is deemed to own (actually and constructively) immediately after the deemed redemption.

In determining whether the deemed redemption is substantially disproportionate or not essentially equivalent to a dividend, a U.S. Holder is deemed to own NeoStem stock actually owned and, in some cases, constructively owned, by certain family members, by certain estates and trusts of which the stockholder is a beneficiary, and by certain affiliated entities. As these rules are complex, each U.S. Holder potentially subject to these rules should consult the U.S. Holder’s tax advisor.

Installment Method for Earn Out Payments.  The installment method may allow a U.S. Holder receiving Earn Out Payments after the taxable year of the U.S. Holder in which the Transaction is consummated to allocate a portion of the U.S. Holder’s taxable gain from the Transaction to the taxable year(s) in which such Earn Out Payments are received. U.S. Holders should consult their own tax advisors concerning the applicability and tax consequences of the installment method of reporting (including the advisability of electing out of the installment method with respect to the U.S. Holder’s gain arising from the Transaction) in their individual circumstances.

TABLE OF CONTENTS

Cash in Lieu of Fractional Shares.  If a U.S. Holder receives cash instead of a fractional share of Amorcyte Stock, the U.S. Holder will recognize a taxable gain or loss equal to the difference between the amount of cash that the U.S. Holder receives with respect to such fractional share and the basis allocated to such fractional share.

Cash in Satisfaction of Dissenters’ Rights.  The cash received by a dissenting U.S. Holder in exchange for its Amorcyte Common Stock would be treated as having been received by such shareholder as a distribution in redemption of such U.S. Holder’s Amorcyte Stock, except to the extent deemed a dividend under Section 302 of the Code. The tax consequences of cash received, whether treated as a dividend or as received in exchange for Amorcyte Stock, may vary depending on the individual circumstances of the U.S. Holder. Each U.S. Holder who contemplates exercising statutory dissenters’ rights should consult the U.S. Holder’s tax advisor as to the possibility that all or a portion of the payment received pursuant to the exercise of such rights will be treated as dividend income.

Treatment of Amorcyte and NeoStem.  No gain or loss would be recognized by Amorcyte or NeoStem solely as a result of the Transaction.

Treatment of Holders of NeoStem Common Stock.  No gain or loss would be recognized by holders of NeoStem Common Stock solely as a result of holding NeoStem Common Stock prior to the Transaction.

Two-Step Merger.  The goal of the two-step merger structure (i.e., the Amorcyte Merger followed by the Subco II Merger) is to qualify the Transaction as a Reorganization while reducing the risk that Amorcyte would incur corporate-level income tax if the Transaction does not qualify as a Reorganization. If the Transaction were not treated as a Reorganization and the Amorcyte Merger were deemed (independently of the Subco II Merger) a “qualified stock purchase” under Section 338 of the Code: (i) the Amorcyte Merger likely would be treated as a purchase of Amorcyte Stock by NeoStem, and (ii) the Subco II Merger likely would be treated as a tax-free liquidation of Amorcyte into NeoStem pursuant to Section 332 of the Code. By contrast, if the acquisition of Amorcyte were structured as a single forward merger of Amorcyte into Subco II, and such merger were to fail to qualify as a Reorganization, corporate-level tax generally would result.

Certain Reporting Obligations.  Certain U.S. Holders may be required to attach a statement to their tax returns for the year in which the Transaction is consummated that contains the information listed in Section 1.368-3(b) of the Treasury Regulations, if applicable. U.S. Holders are urged to consult their own tax advisors with respect to the applicable reporting requirements.

Effects of Failure to Qualify as a Reorganization

The Transaction will qualify as a Reorganization only if the Transaction satisfies the “continuity of interest” requirement specified in Section 1.368-1(e) of the Treasury Regulations — i.e., if NeoStem acquires a “proprietary interest” in Amorcyte in exchange for NeoStem Common Stock. The determination of whether NeoStem has acquired a “proprietary interest” in Amorcyte in exchange for NeoStem Common Stock generally is based on the percentage (by value) of the consideration paid by NeoStem that consists of NeoStem Common Stock (as compared to the percentage that consists of NeoStem Warrants and Earn Out Payments). For example, if NeoStem were to acquire all of the Amorcyte Stock in exchange solely for cash, NeoStem would not have acquired a “proprietary interest” in Amorcyte in exchange for NeoStem Common Stock. The percentage of consideration paid by NeoStem that must consist of NeoStem Common Stock in order to satisfy the “continuity of interest” requirement is based on all of the facts and circumstances, and therefore cannot be determined with certainty. Treasury Regulations, however, indicate that total consideration consisting of at least 40% NeoStem Common Stock would satisfy the continuity of interest requirement.

A portion of the consideration to be paid by NeoStem in the Transaction will consist of the contingent right to receive cash (i.e., the Earn Out Payments). In addition, 100% of the Base Stock Consideration will be placed in escrow, subject to forfeiture, and the remaining stock consideration (i.e., the Contingent Shares) may or may not be issued. Consequently, it will be unclear as of the Effective Time what the mix of stock and cash consideration will be. If the mix is such that NeoStem has not acquired a proprietary interest in Amorcyte in exchange for NeoStem Common Stock, the Transaction will not qualify as a Reorganization.

TABLE OF CONTENTS

If the Transaction were not to qualify as a Reorganization, a U.S. Holder generally would recognize taxable gain or loss equal to the difference, if any, between (i) the amount of cash and the fair market value of the NeoStem Common Stock and Warrants received by the U.S. Holder and (ii) the U.S. Holder’s tax basis in the Amorcyte Stock surrendered.

Backup Withholding

A U.S. Holder may be subject to backup withholding at a rate of 28% on the consideration received in connection with the Amorcyte Merger (which may increase for consideration received after December 31, 2012), unless the U.S. Holder certifies its exemption from backup withholding or provides a correct taxpayer identification number and certain other certifications, and otherwise complies with applicable requirements of the backup withholding rules. A U.S. Holder that does not provide the U.S. Holder’s 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 U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.

The preceding discussion does not purport to be a complete analysis or discussion of all potential tax consequences relevant to the Transaction. 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 Transaction to you, including tax return and information reporting requirements, the applicability and effect of federal, state, local, and other tax laws, the effects of any proposed changes in the tax laws, and your obligation to retain information regarding the Transaction.

Anticipated Accounting Treatment of the Amorcyte Merger

For accounting purposes, NeoStem will be the “accounting acquirer” of Amorcyte. The Amorcyte Merger will be accounted for under the “purchase” method of accounting. Under the purchase method of accounting, the assets and liabilities of Amorcyte, as of the completion of the Amorcyte 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 Amorcyte Merger

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

TABLE OF CONTENTS

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 Amorcyte and thus this description is qualified in its entirety by reference to the Agreement and Plan of Merger, attached as Annex A hereto, which you are urged to read carefully and in its entirety.

The Amorcyte Merger

The Board of Directors of NeoStem, Inc., a Delaware corporation (“NeoStem”) and the Board of Directors of Amorcyte, Inc. (“Amorcyte”), have approved the merger (the “Amorcyte Merger”) of Amo Acquisition Company I, Inc., a newly formed wholly-owned subsidiary of NeoStem (“Subco”), with and into Amorcyte pursuant to an Agreement and Plan of Merger, dated July 13, 2011, as such agreement may be amended from time to time (the “Agreement and Plan of Merger”), among NeoStem, Amorcyte, Subco and Amo Acquisition Company II, LLC, another newly formed wholly-owned subsidiary of NeoStem (“Subco II”). Pursuant to the Agreement and Plan of Merger, within 90 days after the Effective Time of the Amorcyte Merger, Amorcyte will be merged with and into Subco II (the “Subco II Merger”). Subco II, in its capacity as the wholly-owned subsidiary of NeoStem surviving the transactions contemplated by the Agreement and Plan of Merger, is hereinafter sometimes referred to as the “Surviving Company.”

Amorcyte was initially formed as a wholly-owned subsidiary of Progenitor Cell Therapy, LLC (“PCT”). Amorcyte was spun off to PCT’s members during 2005. PCT, now a wholly-owned subsidiary of NeoStem, was acquired by NeoStem on January 19, 2011.

Aggregate Consideration

Pursuant to the terms of the Agreement and Plan of Merger, all of the shares of Amorcyte common stock and Amorcyte Series A Preferred Stock, all options and warrants to acquire equity of Amorcyte, and all debt obligations issued by Amorcyte that are convertible into Amorcyte Series A Preferred Stock (to the extent not already converted, being treated as if it were actually converted), in each case, issued and outstanding immediately prior to the Effective Time, will, by virtue of the Amorcyte Merger, be cancelled and converted into the right to receive, in the aggregate:

Pursuant to the Agreement and Plan of Merger, prior to closing all Amorcyte options and warrants will be modified in writings executed by each optionholder and warrantholder, so that effective upon the Effective Time, all Amorcyte options and warrants will, by virtue of the Amorcyte Merger, be converted into the right to receive the share of any Earn Out Payments that the holders of such options and warrants would have received if they had exercised their Amorcyte options and/or warrants, as applicable, prior to the Effective Time (after taking into account the payment of any exercise price due had they actually exercised). The holders of Amorcyte options and warrants will be entitled to the merger consideration similar to the holders of Amorcyte common stock, minus the exercise price of the options and warrants.

The NeoStem Common Stock that the equityholders of Amorcyte will be entitled to receive as a result of the Amorcyte Merger, and upon the exercise of the Warrants issued in the Amorcyte Merger, is traded and quoted on the NYSE Amex under the market symbol “NBS.”

TABLE OF CONTENTS

Adjustment to Base Stock Consideration

The Base Stock Consideration is subject to adjustment, provided that in no event will NeoStem be required to issue as Base Stock Consideration more than 6,821,283 shares of NeoStem Common Stock. The Agreement and Plan of Merger provides that to the extent the amount of Amorcyte’s liabilities (as defined and calculated in the manner described in the Agreement and Plan of Merger) on the closing date are more than $478,000 (the “Target Liabilities”), the Base Stock Consideration will be decreased by two times (2x) the amount by which Amorcyte’s liabilities are greater than the Target Liabilities. Any such decrease will reduce the Base Stock Consideration by two dollars for every dollar by which Amorcyte’s liabilities are greater than the Target Liabilities, with each share of the Base Stock Consideration valued at $1.466 (the average of the closing prices of sales of NeoStem Common Stock on the NYSE-Amex for the 10 trading days ending on the trading day prior to the date of execution of the Agreement and Plan of Merger) (the “Parent Per Share Value”).

Escrow of Base Stock Consideration

The Agreement and Plan of Merger provides that the Base Stock Consideration will be placed in escrow (the “Escrow Account”) pursuant to an escrow agreement to be executed at closing, for the purpose of paying any damages payable to NeoStem in accordance with the indemnification provisions contained in the Agreement and Plan of Merger. The escrow agent shall initially be NeoStem’s transfer agent (the “Escrow Agent”). The Escrow Account will continue from the closing until that date (the “Termination Date”) which is two (2) years and one day after the closing (the “Escrow Period”). Six months after the closing date, an aggregate of up to 20% of the shares of NeoStem Common Stock may be released from the Escrow Account and distributed to the Amorcyte Representative (as defined below) for distribution to Amorcyte’s former stockholders, optionholders and warrantholders (collectively, the “Amorcyte Securityholders”) in accordance with their proportional interests; provided, however, that NeoStem will not be required to release from escrow any shares of NeoStem Common Stock then being held with respect to pending claims by NeoStem. As soon as practicable after the one (1) year anniversary of the closing date (the “One-Year Release Date”), NeoStem will direct the Escrow Agent to release and distribute to the Amorcyte Representative for distribution to the former Amorcyte Securityholders in accordance with the terms of the Escrow Agreement all shares of NeoStem Common Stock then remaining in the Escrow Account except as follows: If no indemnification claims have been asserted by NeoStem prior to the One-Year Release Date, then NeoStem Common Stock with a Parent Per Share Value of $1,250,000 shall remain in the Escrow Account until the Termination Date. If any indemnification claims have been asserted by NeoStem prior to the One-Year Release Date, then NeoStem Common Stock with a Parent Per Share Value equal to the sum of (i) $2,500,000 plus (ii) the amount of any then pending indemnification claims shall remain in the Escrow Account until the Termination Date. As soon as practical after the Termination Date, all shares of NeoStem Common Stock then remaining in the Escrow Account will be released to the Amorcyte Representative for distribution to the former Amorcyte Securityholders; provided that NeoStem Common Stock representing 120% of the maximum amount of any claim made by NeoStem pursuant to the indemnification provisions of the Agreement and Plan of Merger during the Escrow Period will be withheld and remain in the Escrow Account pending resolution of such claim. In addition, a number of shares of NeoStem Common Stock in the Escrow Account which is necessary to satisfy any unsatisfied claims specified in any indemnification claim previously delivered by NeoStem prior to the Termination Date with respect to facts and circumstances existing prior to the expiration of the Escrow Period, shall remain in the Escrow Account until such claims have been resolved.

Contingent Share Milestones

The Contingent Shares will be issued only if certain business milestones are achieved, as follows:

TABLE OF CONTENTS

Upon achievement of these specified contingencies, the Contingent Shares will be issued to the former stockholders of Amorcyte.

Procedures for Earn Out Payments

Within 90 days following the end of each calendar quarter, NeoStem will pay Earn Out Payments (to the Amorcyte Representative in trust for the benefit of the former Amorcyte Securityholders) equal to 10% of the net sales of AMR-001, which payment obligation will begin following the date of first commercial sale of AMR-001 and continue until the latest date that a valid patent claim exists on a country by country basis covering AMR-001, provided that if NeoStem licenses or otherwise grants an unaffiliated third party the right to commercialize or otherwise exploit AMR-001 or any portion of AMR-001 (including, without limitation, a sublicense for all or part of any territory for AMR-001) then the applicable Earn Out Payment will be equal to 30% of any sublicensing fees, royalties and milestone fees or profit sharing payment (but not payments for development costs) actually received by NeoStem. NeoStem will be entitled to recover direct out-of-pocket clinical development costs not previously paid or reimbursed and any costs, expenses, damages, liabilities, and settlement amounts arising out of or related to claims with respect to patent infringement or otherwise challenging Amorcyte’s ownership of or right to use intellectual property, by reducing any Earn Out Payments due by 50% until such costs have been recouped in full.

The Amorcyte Representative (Paul Schmitt or his duly appointed successor) (the “Amorcyte Representative”) shall be solely responsible for the distribution of the Earn Out Payments to the former Amorcyte Securityholders. At closing, for informational purposes, the Amorcyte Representative will deliver to NeoStem a certification setting forth the percentage of the aggregate Earn Out Payments to which each former Amorcyte Securityholder is entitled (subject to amendment to reflect the effects of any financing conducted by Amorcyte), which certification shall be conclusive and binding on the Amorcyte Securityholders (the “Earn Out Payment Certification”). Within 90 days following the end of each calendar quarter, NeoStem will send the Earn Out Payments, if any, to the Amorcyte Representative (who will be responsible for the appropriate division and distribution of the Earn Out Payments received by him, as well as any tax withholding or reporting related thereto).

Liquidation Preference of Amorcyte Series A Preferred Stock

When the merger consideration is distributed to Amorcyte’s stockholders, the liquidation preference accorded by Amorcyte’s amended and restated certificate of incorporation, as amended, to the holders of Amorcyte Series A Preferred Stock must be satisfied before the holders of Amorcyte Common Stock will receive any of the merger consideration. In accordance with an August 2011 amendment to Amorcyte’s Amended and Restated Certificate of Incorporation, for purposes of the Series A liquidation preference, all NeoStem Common Stock and all NeoStem Warrants paid to Amorcyte stockholders will be valued at the values set forth in the Agreement and Plan of Merger (i.e. at $1.466 per share and $1.063 per Warrant, respectively, or $12 million in the aggregate). Based on a liquidation preference of $1,197.975 per share and 10,459 shares of Amorcyte Series A Preferred Stock outstanding, the first $12,529,620.53 of consideration received by the Amorcyte stockholders will be distributed entirely to the holders of Amorcyte Series A Preferred Stock. As a result, all of the Base Stock Consideration and all of the Warrants will be distributed to holders of Amorcyte Series A Preferred Stock.

Subject to Closing Conditions

The consummation of the transactions is subject to various conditions, including the approval by Amorcyte’s stockholders of the Amorcyte Merger and the Agreement and Plan of Merger; approval by NeoStem’s stockholders of the issuance of NeoStem securities in connection with the Amorcyte Merger; Amorcyte having terminated (with no liability to NeoStem) its Amended and Restated License, as amended to date, from Baxter Healthcare Corporation; receipt by NeoStem of evidence reasonably satisfactory to it that

TABLE OF CONTENTS

Amorcyte has entered into an agreement with a supplier for cell sorting on terms and conditions reasonably acceptable to NeoStem; the full payment and satisfaction by Amorcyte of all payables due to NeoStem’s subsidiary PCT through the closing date; the absence of any order or legal proceeding preventing consummation of the Amorcyte Merger; and other legal and regulatory requirements. Additionally, it is a condition to NeoStem’s and Subco’s obligations to close that (A) (i) holders of Amorcyte Common Stock and holders of Amorcyte Series A Preferred Stock entitled to 1% or more of the aggregate Stock Consideration shall not have voted against adoption of the Agreement and Plan of Merger or withheld their consent thereto in writing or otherwise remain eligible to perfect appraisal rights in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), and (ii) holders who represent more than 5% of the issued and outstanding Amorcyte Common Stock shall not have voted against the adoption of the Agreement and Plan of Merger or withheld their consent thereto in writing or otherwise remain eligible to perfect appraisal rights in accordance with the DGCL, and that (B) no holders of the issued and outstanding Amorcyte Series A Preferred Stock shall have had any of their shares redeemed nor shall any holder of Amorcyte Series A Preferred Stock have requested that Amorcyte redeem any shares of Amorcyte Series A Preferred Stock. Either NeoStem or Amorcyte may terminate the Agreement and Plan of Merger and the transactions contemplated thereby at any time prior to the Effective Time, if the closing does not occur on or prior to January 31, 2012; provided that the party seeking to terminate is not at such time in material breach of any material representation or warranty contained in the Agreement and Plan of Merger.

Voting Agreements

Pursuant to a Right of First Refusal and Co-Sale Agreement among Amorcyte and certain of its stockholders, as amended, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock have agreed to vote all of the shares of Amorcyte capital stock held by them in favor of any “Change of Control Transaction” (which as defined includes the proposed Amorcyte Merger) that is approved by Amorcyte’s board of directors and by a majority of the holders of Amorcyte’s Series A Preferred Stock.

In addition, pursuant to a voting agreement (the “Amorcyte Voting Agreement”) dated the same date as the Agreement and Plan of Merger, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to approve the Amorcyte Merger and the Agreement and Plan of Merger have irrevocably agreed to vote in favor of the Amorcyte Merger and adoption of the Agreement and Plan of Merger at any meeting of the stockholders of Amorcyte called to for such purpose (or in connection with any written consent of Amorcyte stockholders for such purpose) (the “Amorcyte Meeting”) and agreed to certain transfer restrictions with respect to their Amorcyte securities prior to the closing.

Amorcyte Representative

By adoption of the Agreement and Plan of Merger at the Amorcyte Meeting, each stockholder of Amorcyte will be deemed to have irrevocably constituted and appointed Paul Schmitt (currently the Chief Executive Officer and a director of Amorcyte, and the Managing Director of Novitas Capital, a substantial stockholder of Amorcyte), as the “Amorcyte Representative” under the Agreement and Plan of Merger. The Amorcyte Representative will act on behalf of all of the stockholders of Amorcyte in executing various closing documents and in reviewing and, if he deems it appropriate, disputing, any indemnification claims made against the Escrow Account after the closing.

Covenant to Develop AMR-001

Pursuant to the Agreement and Plan of Merger, NeoStem covenants to use commercially reasonable efforts to develop AMR-001 (currently, Amorcyte’s lead product candidate) or to use commercially reasonable efforts to locate a partner to develop AMR-001, and if and only if commercially reasonable, to file a Biologics License Application or its equivalent with the FDA for marketing and sale of AMR-001 in the United States, obtain approval for such marketing and sale in the United States and in such other territories to be agreed to by the parties, and commercialize or cause the commercialization of AMR-001 in the United States and in such additional territories, all in a timely fashion to the extent commercially reasonable.

TABLE OF CONTENTS

Description of Warrants to be Issued in the Amorcyte Merger

General.  The Warrants will be evidenced by a “Global Warrant” and delivered following the effective time in book entry form to the former stockholders of Amorcyte, such delivery subject to NeoStem’s receipt of appropriate letters of transmittal from the former stockholders. Each Warrant will entitle the holder to purchase one share of NeoStem Common Stock at an exercise price per share of $1.466. The exercise price per share of each Warrant will be subject to adjustment upon the occurrence of certain events as provided in the form of global Warrant certificate and summarized below. The Warrants may be exercised at any time during their seven year term, unless redeemed; provided, however, that transfer of any shares of NeoStem Common Stock issuable upon exercise of the Warrants will be restricted until the one year anniversary of the closing date of the Amorcyte Merger. The Warrants which have not been previously exercised will expire at the expiration date. A Warrant holder will not be deemed to be a holder of the underlying NeoStem Common Stock for any purpose until the Warrant is exercised.

Redemption.  In the event NeoStem Common Stock is trading at a per share price equal to or exceeding the redemption threshold of $3.466 per share for twenty (20) out of thirty (30) consecutive trading days, NeoStem has the option to call the Warrants. If the holders of Warrants have not exercised the Warrants within 14 days of the redemption notice, NeoStem may redeem the Warrants at $0.0001 per warrant. NeoStem will send the redemption notice by first class mail to Warrant holders at their last known addresses appearing on the registration records maintained by the transfer agent of the Warrants. No other form of notice by publication or otherwise will be required. If NeoStem calls any Warrants for redemption, they will be exercisable until close of business on the business day next preceding the specified redemption date.

Adjustments of Exercise Price.  The exercise price and redemption price of the Warrants will be subject to adjustment in specified circumstances, including in the event (i) there is a merger or consolidation and NeoStem is not the surviving corporation; (ii) there is subdivision, combination or reclassification of securities, recapitalization, automatic conversion, or other similar event affecting the number or character of outstanding shares of NeoStem Common Stock; or (iii) NeoStem declares any stock dividend to stockholders or effects any split or reverse split with respect to the NeoStem Common Stock after the issuance thereof. The Warrants do not contain provisions protecting against dilution resulting from the sale of additional shares of NeoStem Common Stock for less than the exercise price of the Warrants or the current market price of the NeoStem Common Stock.

No Voting and Dividend Rights.  Until exercised, the Warrants will have no voting, dividend or other stockholder rights.

Registration Rights.  NeoStem shall use commercially reasonable efforts to maintain the effectiveness of the Registration Statement on Form S-4 which covers the shares of NeoStem Common Stock underlying the Warrants or file and maintain the effectiveness of another registration statement covering the shares of NeoStem Common Stock issuable upon exercise of the Warrants at any time that both (a) the Warrants are exercisable and (b) the exercise price of the Warrants is less than 105% of the price at which the NeoStem Common Stock is trading on the NYSE Amex (or if the NeoStem Common Stock is no longer trading on the NYSE Amex, such other stock exchange on which such shares trade). In no event will any holder of a Warrant be entitled to receive a “net cash settlement” in lieu of physical settlement in shares of NeoStem Common Stock regardless of whether NeoStem complies with the obligation described in the preceding sentence.

Date of Closing; Record Date

The Agreement and Plan of Merger provides that the Amorcyte Merger will close as soon as practicable (but in any event within five business days) following the date on which each of the conditions to the Amorcyte Merger, including the approval and adoption of the Agreement and Plan of Merger by the stockholders of Amorcyte and the approval of the issuance of NeoStem securities in connection with the Amorcyte Merger by the stockholders of NeoStem. The Agreement and Plan of Merger provides that within 90 days after the Effective Time of the Amorcyte Merger, Amorcyte will be merged with and into Subco II.

TABLE OF CONTENTS

Each of the NeoStem Board of Directors and the Amorcyte Board of Directors has fixed the close of business on August 17, 2011 as the record date for the determination of stockholders entitled to notice of and to vote at the applicable stockholders meeting, and at any adjournment or postponement thereof.

Management of NeoStem Following the Amorcyte Merger

The management of NeoStem will not change as a result of the Amorcyte Merger. Pursuant to the Agreement and Plan of Merger, on or prior to the closing date, Amorcyte shall deliver to NeoStem a written resignation from each director and officer of Amorcyte; provided, however, that is a condition to NeoStem’s obligations to close the Amorcyte Merger (i) that Andrew L. Pecora, M.D. (currently Amorcyte’s Chief Scientific Officer) shall have entered into an amendment to his existing employment agreement with NeoStem and PCT, effective upon closing, reflecting his additional duties as Chief Scientific Officer of Amorcyte for no additional consideration, and (ii) that Thomas J. Moss, M.D. (currently Amorcyte’s Chief Medical Officer) shall have given NeoStem a written acknowledgement providing for the continuation of his existing offer letter with Amorcyte and Dr. Moss’s agreement to supervise Amorcyte’s anticipated Phase II trial. Individuals designated by NeoStem prior to the Effective Time of the Amorcyte Merger will be the officers and directors of NeoStem after the Effective Time. Following the merger of Amorcyte into Subco II, the manager and the officers of Subco II will continue as the manager and officers of Subco II.

Exchange for NeoStem Common Stock

After the Amorcyte Merger has been completed, the former equityholders of Amorcyte will receive a letter of transmittal describing how they may obtain the NeoStem securities to which they are entitled. As described elsewhere herein, the shares of NeoStem Common Stock issuable as the “Base Stock Consideration” to be distributed to the former equityholders of Amorcyte after the Amorcyte Merger will be held in escrow for a specified period. Upon receipt of an executed letter of transmittal, the Warrants will be issued in book entry form to the former Amorcyte equityholders. The pro rata portion of any Contingent Shares and/or Earn Out Payments to which former Amorcyte equityholders may be entitled will be delivered if and only if the requisite conditions precedent to such delivery are achieved. Each former Amorcyte equityholder’s signature to the letter of transmittal must be guaranteed by a commercial bank, unless this requirement is waived. The executed letter of transmittal must:

If any former Amorcyte equityholder does not execute and deliver an acceptable letter of transmittal to NeoStem within two years of the completion of the Amorcyte Merger, the shares of NeoStem Common Stock to which such former Amorcyte equityholder was entitled may be cancelled.

After the completion of the Amorcyte Merger, each share of capital stock will be deemed, for all purposes, to evidence only the right to receive the portion of the merger consideration that the holder of such formerly-outstanding share of Amorcyte capital stock is entitled to receive. No former Amorcyte equityholder will be issued any shares of NeoStem Common Stock or Warrants until NeoStem receives a properly completed, duly executed letter of transmittal from such former equityholder.

Representations and Warranties

NeoStem, Subco and Amorcyte 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 Amorcyte Merger. Such representations and warranties are qualified by confidential disclosure schedules that were exchanged by NeoStem and Amorcyte. The representations of

TABLE OF CONTENTS

NeoStem and Subco to Amorcyte and of Amorcyte 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 Amorcyte Merger

Amorcyte agreed that prior to the closing of the Amorcyte Merger, it will, among other things:

TABLE OF CONTENTS

In addition, Amorcyte agreed that prior to the closing of the Amorcyte Merger, it will not:

NeoStem agreed that until the closing of the Amorcyte Merger, it and its subsidiaries will, among other things:

In addition, NeoStem agreed that until the closing of the Amorcyte Merger, it will not:

TABLE OF CONTENTS

Stockholders Meetings

NeoStem and Amorcyte agreed to take all action necessary in accordance with Delaware law and their respective organizational 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 Amorcyte Merger and adopt the Agreement and Plan of Merger, in the case of Amorcyte, and the issuance of NeoStem securities in connection with the Amorcyte, in the case of NeoStem. Subject to the limitations set forth below, NeoStem and Amorcyte 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

The obligations of Amorcyte, NeoStem, Subco and Subco II to consummate the transactions contemplated by the Agreement and Plan of Merger shall be subject to the satisfaction (or waiver by each party, to the extent such conditions can be waived) 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:

TABLE OF CONTENTS

The obligations of Amorcyte to consummate the transactions contemplated by the Agreement and Plan of Merger shall be subject to the fulfillment (or waiver by Amorcyte) 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.

TABLE OF CONTENTS

Termination

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

TABLE OF CONTENTS

For purposes of the Agreement and Plan of Merger, an “Amorcyte Acquisition Proposal” means any proposal for a merger or other business combination involving Amorcyte or any of its affiliates or any proposal or offer to acquire in any manner, directly or indirectly, an equity interest in Amorcyte or any of its affiliates, any voting securities of Amorcyte or any of its affiliates or a substantial portion of the assets of Amorcyte or a license to Amorcyte’s intellectual property.

Pursuant to the Agreement and Plan of Merger, Amorcyte agrees that it will not, nor will it authorize or permit any affiliate, stockholder, officer, director, employee, investment banker, attorney or other adviser or representative to (i) solicit, initiate, or encourage the submission of any Amorcyte Acquisition Proposal, (ii) enter into any agreement or understanding with respect to any Amorcyte Acquisition Proposal or (iii) participate in any discussions or negotiations regarding, or furnish to any person any information for the purpose of facilitating the making of, or take any other action to facilitate any inquiries or the making of, any proposal that constitutes, or may reasonably be expected to lead to, any Amorcyte Acquisition Proposal. Amorcyte has the obligation to cease and cause to be terminated in all respects all existing discussions or negotiations with any parties conducted before the signing of the Agreement and Plan of Merger with respect to an Amorcyte Acquisition Proposal.

The Agreement and Plan of Merger provides that the parties will be entitled to an injunction to prevent breaches of the Agreement and Plan of Merger and to enforce specifically the terms and provisions of the Agreement and Plan of Merger, in addition to any other remedies to which they are entitled to in law or in equity. Included within this right is NeoStem’s right to have specific enforcement of the provisions prohibiting Amorcyte’s pursual of an Amorcyte Acquisition Proposal. If Amorcyte breaches the obligations with respect to the prohibitions against pursual of an Amorcyte Acquisition Proposal and if such obligations are not specifically enforced in accordance with the Agreement and Plan of Merger, then, if Amorcyte consummates a transaction related to or arising out of an Amorcyte Acquistion Proposal, upon the closing of such transaction, Amorcyte shall pay to NeoStem an amount equal to $1,500,000.

Expenses

Unless the Amorcyte Merger is consummated, NeoStem and Amorcyte will each pay its own expenses incident to the Agreement and Plan of Merger and the transactions contemplated thereby. Amorcyte Expenses are included in determining Amorcyte’s closing date liabilities. See “The Agreement and Plan of Merger — The Amorcyte Merger” for a description of an adjustment to the Base Stock Consideration based on Amorcyte’s closing date liabilities. “Amorcyte Expenses” is defined in the Agreement and Plan of Merger as all costs and expenses incurred by Amorcyte in connection with the negotiation, preparation and execution of the Agreement and Plan of Merger and the consummation of the transactions contemplated thereby or obtaining any requisite consents or approvals of the Agreement and Plan of Merger or the transactions contemplated thereby, including any brokerage, investment bankers or similar fees and any attorneys’ or accounting fees, but excluding the “NeoStem Related Expenses,” which consist of expenses first incurred by Amorcyte after the date of the Agreement and Plan of Merger that are required solely for NeoStem to comply with its obligations under federal securities laws but not expenses related to the Amorcyte Merger and obtaining approval of the Amorcyte Merger, such as the Forms 8-K required to be filed as a result of the execution of the Agreement and Plan of Merger and the closing of the Amorcyte Mergers, this joint proxy statement/prospectus, and other Amorcyte Expenses.

Amendment

The Agreement and Plan of Merger may not be amended except by an instrument in writing signed by the party against whom enforcement of such amendment or modification is sought. After the adoption of the Agreement and Plan of Merger by the stockholders of Amorcyte, no amendment shall be made to the Agreement and Plan of Merger, which by law requires the approval or authorization of the stockholders of Amorcyte, without such further approval or authorization.

Any of the terms or conditions of the Agreement and Plan of Merger maybe waived at any time by the party or parties entitled to the benefit thereof. Any agreement on the part of a party or parties to the Agreement and Plan of Merger to a waiver shall be valid only if set forth in a written instrument signed by the party or parties waiving such terms or conditions.

TABLE OF CONTENTS

Voting Agreement

Voting.  Pursuant to a voting agreement (the “Amorcyte Voting Agreement”) dated the same date as the Agreement and Plan of Merger, holders of a sufficient number of shares of Amorcyte Common Stock and Amorcyte Series A Preferred Stock to approve the Amorcyte Merger and adopt the Agreement and Plan of Merger have irrevocably agreed to vote in favor of the Amorcyte Merger and the Agreement and Plan of Merger at any meeting of the stockholders of Amorcyte called to for such purpose (or in connection with any written consent of Amorcyte stockholders for such purpose) (the “Amorcyte Meeting”) and agreed to certain transfer restrictions with respect to their Amorcyte securities prior to the closing.

Proxy.  Each of the Amorcyte stockholders who executed the Amorcyte Voting Agreement agreed to execute, upon request, a proxy for use at the Amorcyte Special Meeting to adopt the Agreement and Plan of Merger.

Restrictions on Transfer of Equity Interests.  Each of the Amorcyte stockholders who executed the Amorcyte Voting Agreement agreed that until the earlier of the consummation of the Amorcyte Merger or termination of the Agreement and Plan of Merger (the occurrence of the earlier of such events, the “Termination Date”), such stockholder shall not, directly or indirectly, (i) except for certain permitted transfers described in the Amorcyte Voting Agreement, and except as contemplated by the Agreement and Plan of Merger, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of any such stockholder’s equity interests in Amorcyte, whether such equity interests were owned as of the date of the Amorcyte Voting Agreement or are acquired by such stockholder after such date, (ii) except as contemplated by the Amorcyte Voting Agreement, grant any proxies or powers of attorney, deposit any Amorcyte shares into a voting trust or enter into a voting agreement with respect to such equity interests, (iii) to the extent such stockholder owns any shares of Amorcyte Series A Preferred Stock, redeem or request Amorcyte to redeem any such shares of Amorcyte Series A Preferred Stock, or (iv) take any action that would make any representation or warranty of such stockholder contained in the Amorcyte Voting Agreement untrue or incorrect or have the effect of preventing or disabling such stockholder from performing such stockholder’s obligations under the Amorcyte Voting Agreement.

Termination.  The voting agreements and the accompanying proxies, and all obligations of the parties thereunder, shall terminate immediately, without any further action being required, upon the earlier of the date which the Agreement and Plan of Merger is terminated or the Amorcyte Merger becomes effective.

TABLE OF CONTENTS

COMPARISON OF RIGHTS OF HOLDERS OF NEOSTEM COMMON STOCK AND
HOLDERS OF AMORCYTE CAPITAL STOCK

This section of the joint proxy statement/prospectus describes material differences between the rights of holders of NeoStem Common Stock and the rights of holders of the capital stock of Amorcyte. Upon consummation of the Amorcyte Merger, the stockholders of Amorcyte will become stockholders of NeoStem. The rights of NeoStem stockholders are governed by and subject to the provisions of the General Corporation Law of the State of Delaware (the “DGCL”) and NeoStem’s amended and restated certificate of incorporation, as amended, and by-laws. The rights of Amorcyte stockholders are governed by and subject to the provisions of the DGCL, Amorcyte’s amended and restated certificate of incorporation, as amended, and by-laws. In addition, certain Amorcyte stockholders have agreed to be bound to the terms and conditions of Amorcyte’s Investors’ Rights Agreement, as amended (the “Investors’ Rights Agreement”) and Amorcyte’s Right of First Refusal and Co-Sale Agreement, as amended (the “Right of First Refusal Agreement”), which agreements will be terminated on or prior to the consummation of the Amorcyte Merger and the stockholders that were parties to such agreements will have no further rights or obligations thereunder. While NeoStem and Amorcyte believe that these descriptions address the material differences, this summary may not contain all of the information that is important to stockholders of NeoStem and stockholders of Amorcyte. NeoStem stockholders and Amorcyte stockholders should read this entire document and the documents referred to in this summary carefully for a more complete understanding of the differences between the rights of NeoStem stockholders, on the one hand, and Amorcyte stockholders, on the other hand.

NeoStem		Amorcyte
GENERAL
•   NeoStem is a Delaware corporation and a public company subject to the provisions of the DGCL.		•   Amorcyte is a Delaware corporation that is not registered under the Securities Exchange Act of 1934, as amended, and has not registered any offering of securities under the Securities Act of 1933, as amended.
•   The rights of NeoStem stockholders are governed by NeoStem’s amended and restated certificate of incorporation and bylaws, in addition to the DGCL.		•   The rights of Amorcyte stockholders are governed by Amorcyte’s amended and restated certificate of incorporation and bylaws, in addition to the DGCL. In addition, certain Amorcyte stockholders have agreed to be bound by the Investors’ Rights Agreement and the Right of First Refusal Agreement and, accordingly, they have certain rights and obligations under such agreements to which they are parties.
•   NeoStem’s certificate of incorporation and by-laws will not be affected by the Amorcyte Merger.
		•   Upon consummation of the Amorcyte Merger, Amo Acquisition Company I, LLC will merge with and into Amorcyte, the stockholders of Amorcyte will become stockholders of NeoStem, and the Amorcyte certificate of incorporation, as amended, Amorcyte’s by-laws, the Investors’ Rights Agreement and the Right of First Refusal Agreement will no longer be in effect.

TABLE OF CONTENTS

NeoStem		Amorcyte
AUTHORIZED EQUITY INTERESTS
•   The authorized capital stock of NeoStem consists of 500,000,000 shares of common stock, par value $0.001 per share, (the “NeoStem Common Stock”) and 20,000,000 shares of preferred stock, par value $0.01 per share (the “NeoStem Preferred Stock”), of which 825,000 shares are designated as Series B Convertible Preferred Stock (the “NeoStem Series B Preferred Stock”) and 10,582,011 shares are designated as Series E 7% Senior Convertible Preferred Stock (“NeoStem Series E Preferred Stock”).		•   The authorized capital stock of Amorcyte consists of 31,000 shares of common stock, $.001 par value per share (“Amorcyte Common Stock”) and 11,000 shares of preferred stock, $.001 par value per share, all of which are designated Series A Preferred Stock, $.001 par value per share (“Amorcyte Series A Preferred Stock”).
•   The NeoStem Board of Directors is authorized, without further action by the stockholders, and subject to any limitations prescribed by law, to designate and issue the NeoStem Preferred Stock in one or more series, and can fix the voting power, the designations and the relative preferences, powers, participating, optional or other special rights and the qualifications, limitations or restrictions thereof, of the shares of each said series. The NeoStem Board of Directors may authorize the issuance of preferred stock with voting, conversion or other rights that could adversely impact the voting power or other rights of the holders of NeoStem Common Stock.		•   Because all of the authorized shares of preferred stock have been designated as Amorcyte Series A Preferred Stock in Amorcyte’s certificate of incorporation, as amended, Amorcyte’s Board of Directors is not authorized, without further action by Amorcyte’s stockholders, to designate and issue any series of preferred stock, other than Amorcyte Series A Preferred Stock.
•   As of August 17, 2011, there were outstanding 98,232,590 shares of NeoStem Common Stock, 10,000 shares of NeoStem Series B Preferred Stock and 8,622,381 shares of NeoStem Series E Preferred Stock. As of such date, the outstanding shares of NeoStem Series B Preferred Stock were convertible into 10,000 shares of NeoStem Common Stock, and the outstanding shares of Series E Preferred Stock were convertible into 5,132,370 shares of NeoStem Common Stock.		•   As of August 17, 2011, there were outstanding 7,821.5 shares of Amorcyte Common Stock and 10,459 shares of Amorcyte Series A Preferred Stock outstanding. As of such date, the outstanding shares of Amorcyte Series A Preferred Stock were convertible into 10,892 shares of Amorcyte Common Stock.
•   As of August 17, 2011, NeoStem has reserved 25,532,106 shares of NeoStem Common Stock for issuance pursuant to its 2009 Plan, 2009 Non-U.S. Plan and 2003 Equity Participation Plan and 35,349,581 shares of NeoStem Common Stock for issuance pursuant to outstanding warrants (exclusive of Warrants issuable in the Amorcyte Merger).		•   As of August 17, 2011, Amorcyte has reserved 5,000 shares of Amorcyte Common Stock for issuance to its employees, consultants and directors under its Performance Recognition Plan, pursuant to which options to purchase an aggregate of 3,972 shares of Amorcyte Common Stock are currently outstanding.

TABLE OF CONTENTS

NeoStem		Amorcyte
•   The provisions governing NeoStem’s capital stock (including conversion and redemption of preferred stock), options and warrants are described in greater particularity in the discussion set forth under the caption “Description of Securities.”		•   Pursuant to the Amorcyte certificate of incorporation, as amended, a holder of Amorcyte Series A Preferred Stock shares has the right to convert Amorcyte Series A Preferred Stock shares, at the option of such holder, at any time, into shares of Amorcyte Common Stock. Each Amorcyte Series A Preferred Stock share will automatically be converted into shares of Amorcyte Common Stock, at its then effective conversion rate, upon the earlier to occur of (i) immediately prior to the closing of a firm commitment underwritten public offering pursuant to an effective registration statement on Form S-1 under the Securities Act, covering the offer and sale of Amorcyte Common Stock to the public for the account of Amorcyte, or (ii) the date upon which the holders of at least two-thirds (2/3) of the then outstanding Amorcyte Series A Preferred Stock shares elect to convert their shares. The total number of shares of Amorcyte Common Stock into which each share of Amorcyte Series A Preferred Stock may be converted is determined by dividing $798.65 per share by the “Conversion Price.” The Conversion Price is currently $766.90, after giving effect to certain anti-dilution adjustments in connection with prior issuances of capital stock by the Amorcyte. The Conversion Price is subject to adjustments for subsequent Amorcyte Common Stock splits, combinations, dividends or recapitalizations, as well as for certain Amorcyte Common Stock issuances below the then effective Conversion Price.

TABLE OF CONTENTS

NeoStem		Amorcyte
		•   Pursuant to the Amorcyte certificate of incorporation, as amended, upon receipt of a written request from the holders of not less than a majority of the then outstanding shares of Series A Preferred Stock (the “Redemption Request”), at any time after the fifth (5th) anniversary of the date on which Amorcyte first issued shares of Series A Preferred Stock (which was in June 2005), Amorcyte will redeem all outstanding shares of Series A Preferred Stock in three (3) equal annual installments (each installment or payment date, a “Redemption Date”). Amorcyte will on each such Redemption Date redeem up to the maximum amount that Amorcyte may lawfully redeem out of funds legally available therefor. The Redemption Price will be an amount equal to the lesser of: (i) $798.65 per share plus an additional amount equal to any dividends declared but unpaid on each such share; and (ii) the then current fair market value of such share. In the event that Amorcyte fails to redeem the total number of Amorcyte Series A Preferred Stock shares required to be redeemed on a Redemption Date, or if the funds of Amorcyte legally available for the redemption of Amorcyte Series A Preferred Stock shares on any Redemption Date are insufficient to redeem the total number of shares of Amorcyte Series A Preferred Stock required to be redeemed on such date, then upon the request of at least two-thirds (2/3) of the shares of Amorcyte Series A Preferred Stock then outstanding, the number of directors will be increased by one member, and the holders of shares of Series A Preferred Stock, voting separately as a single class will have the power to elect an individual to fill such vacancy. The director so elected by the holders of shares of Amorcyte Series A Preferred Stock will be entitled to cast a number of votes on each matter considered by the Board of Directors equal to the sum of the number of votes entitled to be cast by all of the other then serving directors plus one (1). This special right terminates when all shares of Amorcyte Series A Preferred Stock have been redeemed and paid in full by Amorcyte.
		•   The holders of Amorcyte Common Stock have no right to require the redemption of such shares under Amorcyte’s certificate of incorporation, as amended.

TABLE OF CONTENTS

NeoStem		Amorcyte
AMENDMENT OF GOVERNING DOCUMENTS
•   The DGCL requires a vote of the corporation’s board of directors followed by the affirmative vote of a majority in voting power of the outstanding stock entitled to vote, and the affirmative vote of a majority in voting power of the outstanding stock of each class entitled to vote for any amendment to the certificate of incorporation, unless a greater level of approval is required by the certificate of incorporation.		•   The DGCL requires a vote of the corporation’s board of directors followed by the affirmative vote of a majority of the outstanding stock entitled to vote, and the affirmative vote of a majority of the outstanding stock of each class entitled to vote for any amendment to the certificate of incorporation, unless a greater level of approval is required by the certificate of incorporation.

TABLE OF CONTENTS

NeoStem		Amorcyte
•   NeoStem’s Amended and Restated Certificate of Incorporation may be amended, altered, changed or repealed in the manner now or hereafter prescribed by law and all rights conferred on officers, directors and stockholders therein are granted subject to such reservation.		•   Amorcyte’s certificate of incorporation, as amended to date, may be further amended, altered, changed or repealed in the manner now or hereafter prescribed by law and all rights conferred on officers, directors and stockholders therein are granted subject to such reservation. However, so long as any shares of Amorcyte Series A Preferred Stock are outstanding, Amorcyte may not, without the consent of holders of at least a majority of the shares of Amorcyte Series A Preferred Stock, voting as a single class and on an as-converted basis, either directly or by amendment, merger, consolidation or otherwise, take any of the following actions: (i) amend Amorcyte’s certificate of incorporation, as previously amended, in a way that materially and adversely affects the rights, preferences or privileges of the Amorcyte Series A Preferred Stock; (ii) additional issuances of equity securities which rank senior or pari passu to the Amorcyte Series A Preferred Stock; (iii) dividends or distributions on, or redemptions of, Amorcyte’s capital stock (other than as required by Amorcyte’s certificate of incorporation, as previously amended, or pursuant to repurchase rights in favor of Amorcyte with respect to stock issued to employees, directors, consultants and advisors); (iv) extraordinary corporate transactions, including the sale or exclusive license of all or substantially all of the assets of Amorcyte, mergers, consolidations and liquidations; (v) increase the number of authorized shares; or (vi) increase the number of directors. In addition, Amorcyte’s certificate of incorporation, as amended, provides that: (a) each holder of Amorcyte Series A Preferred Stock will be entitled to the number of votes equal to the whole shares of Amorcyte Common Stock into which the shares of Amorcyte Series A Preferred Stock held by such holder are then convertible, and (b) except as provided by law, as described above or by the provisions establishing any other series of Amorcyte preferred stock, holders of Amorcyte Series A Preferred Stock will vote together with the holders of Amorcyte Common Stock as a single class on all actions taken, or to be considered, by stockholders of Amorcyte (including, but not limited to, actions amending the Amorcyte’s certificate of incorporation, as previously amended, to increase or decrease the number of authorized shares of Amorcyte Common Stock).

TABLE OF CONTENTS

NeoStem		Amorcyte
•   The NeoStem Board of Directors has authority to make, alter or repeal NeoStem’s bylaws by a vote of the NeoStem Board of Directors. The NeoStem stockholders also may alter, amend or repeal or adopt new bylaws by the affirmative vote of the holders of at least 75% of the voting power of all the then outstanding shares of capital stock of NeoStem entitled to vote at any regular meeting of stockholders or at any special meeting of stockholders, voting together as a single class; provided notice of such alteration, repeal or adoption of new bylaws shall have been stated in the notice of such meeting.		•   Except as otherwise provided in the Amorcyte certificate of incorporation, as amended, the Amorcyte stockholders may alter, amend or repeal or adopt new bylaws by the affirmative vote of a majority of the holders of the Amorcyte shares of capital stock at the time entitled to vote in the election of any directors. Amorcyte’s bylaws may also be amended or repealed or new bylaws adopted by Amorcyte’s Board of Directors, provided that any bylaw adopted by the affirmative vote of a majority of the Board of Directors may be amended by Amorcyte’s stockholders entitled to vote thereon.
DIRECTORS
Size of Board
•   The number of directors which shall constitute the whole NeoStem Board of Directors shall be determined by resolution of the NeoStem Board of Directors, but in no event shall be less than three. Subject to the preceding sentence, the number of directors may be decreased at any time and from time to time by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation or removal or expiration of the term of one or more directors. Currently, NeoStem has seven directors.		•   Pursuant to Amorcyte’s certificate of incorporation, as amended, Amorcyte’s whole Board of Directors consists of seven (7) directors, four of whom are elected by holders of shares of Amorcyte Common Stock and three (3) of whom (the “Series A Directors”) are elected by holders of Amorcyte Series A Preferred Stock. Currently Amorcyte has five directors.
Classified Board
•   NeoStem’s directors are currently divided into three classes and are elected to three-year terms. The classes are 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. In the event NeoStem Proposal 2 is approved by the stockholders, NeoStem’s Amended and Restated Certificate of Incorporation will be amended to eliminate the classification of NeoStem’s board of directors so that, beginning with the NeoStem Annual Meeting to which this joint proxy statement/prospectus relates, directors will be elected annually at each annual meeting of stockholders to hold office for a one-year term expiring at the next annual meeting, with each director to hold office until his or her successor is duly elected and qualified.		•   Amorcyte does not have a classified Board of Directors. However, pursuant to Amorcyte’s certificate of incorporation, as amended, Amorcyte’s whole Board of Directors consists of seven (7) directors, four of whom are elected by holders of shares of Amorcyte Common Stock and three (3) of whom are elected by holders of Amorcyte Series A Preferred Stock.

TABLE OF CONTENTS

NeoStem		Amorcyte
Election of Directors
•   Assuming a quorum is present at the annual or special meeting of stockholders called for the purposes of electing directors to serve on the Board; directors will be elected by a plurality vote. NeoStem stockholders do not have cumulative voting rights.		•   Assuming a quorum is present at the annual or special meeting of stockholders called for the purposes of electing directors to serve on the Board, directors will be elected by the plurality vote of the shares of the applicable class of capital stock voting for directors. Amorcyte stockholders do not have cumulative voting rights.
Removal of Directors
•   Currently, under NeoStem’s certificate of incorporation, members of the board of directors may be removed by the stockholders before the expiration of their terms only for cause. If Proposal 2 is approved, NeoStem’s certificate of incorporation will be amended to provide that any director (other than those who may be elected by the holders of any classes or series of stock having a preference over the NeoStem Common Stock as to dividends or upon liquidation) may be removed from office at any time, with or without cause by the affirmative vote of at least a majority of the voting power of the then outstanding capital stock entitled to vote on the matter, voting together as a single class.		•   Under Amorcyte’s certificate of incorporation, as amended, members of Amorcyte’s Board of Directors may be removed, with or without cause, by the affirmative vote of the holders of a majority of the shares of the class or series that elected such director.
Vacancies
•   Unless and until filled by the stockholders, any vacancy on the NeoStem Board of Directors, however occurring, including a vacancy resulting from an enlargement thereof, may be filed only by vote of a majority of the NeoStem directors then in office, although less than a quorum, or by a sole remaining NeoStem director. A NeoStem director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office or until his or her earlier death, resignation or removal. A NeoStem director chosen to fill a position resulting from an increase in the number of NeoStem directors shall hold office until the remainder of the full term of the class of directors in which the new directorship was created, or until his or her earlier death, resignation or removal.		•   Vacancies in Amorcyte’s Board of Directors may be filled by a majority of the remaining directors originally elected by the same series or class of shares that elected the member who created the vacancy (or the remaining director so elected, if there is but one, or if there is no such director remaining, by the affirmative vote of the holders of a majority of the shares of that class or series). The stockholders entitled to vote upon the election of directors may elect directors at any time to fill any vacancies not filled by the directors. A director who is elected or otherwise appointed to fill in a vacancy, will hold office until the next annual meeting of stockholders and until such director’s successor is qualified, or until such director’s earlier death, resignation or removal.

TABLE OF CONTENTS

NeoStem		Amorcyte
Board Quorum and Vote Requirements
•   A majority of the total number of directors then in office shall constitute a quorum. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each so disqualified; provided, however, that in no case shall less than one third of the entire board of directors constitute a quorum for the transaction of business.		•   A majority of the total number of directors then in office shall constitute a quorum.
•   NeoStem’s bylaws provide that the act of a majority of NeoStem’s directors present at any meeting at which there is quorum shall be the act of its board of directors.		•   Amorcyte’s bylaws provide that the act of a majority of all of the directors (not just a majority of the quorum) shall be the act of Amorcyte’s Board of Directors, except as specifically provided by statute or by Amorcyte’s certificate of incorporation, as amended.
Limitation of Personal Liability
•   Pursuant to NeoStem’s Amended and Restated Certificate of Incorporation, a NeoStem director shall not be personally liable to NeoStem or its stockholders for monetary damages for breach of fiduciary duty except: (i) for any breach of the director’s duty of loyalty to NeoStem or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) for any unlawful payment of dividends or unlawful stock purchase or redemption; or (iv) for any transaction from which the director derived an improper personal benefit.		•   Pursuant to Amorcyte’s certificate of incorporation, as amended, to the fullest extent permitted by the DGCL, as currently in effect and as it may subsequently be amended, an Amorcyte director will not be personally liable to Amorcyte or its stockholders for monetary damages for breach of fiduciary duty as a director.

TABLE OF CONTENTS

NeoStem		Amorcyte
Indemnification
•   Pursuant to NeoStem’s Amended and Restated Certificate of Incorporation, NeoStem has the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee, or agent of NeoStem, or is or was serving at the request of NeoStem as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was unlawful. The termination of any action, upon a plea of nolo contendere or equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was lawful. NeoStem has entered into indemnification agreements with certain of its officers and other employees and each of its directors pursuant to which NeoStem has agreed to indemnify such party to the full extent permitted by law, subject to certain exceptions, if such party becomes subject to an action because such party is our director, officer, employee, agent or fiduciary.		•   Pursuant to Amorcyte’s certificate of incorporation, as amended, Amorcyte, to the fullest extent permitted by applicable law, is authorized to provide indemnification of, and advancement of expenses to, directors, officers, employees and other agents of Amorcyte to which the DGCL permits Amorcyte to provide indemnification. Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation, a derivative action, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses including attorneys’ fees incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.

TABLE OF CONTENTS

NeoStem		Amorcyte
Transactions with Officers and Directors/Conflicts of Interest
•   The DGCL provides that a transaction between a corporation and one of its directors or officers or between the corporation and an entity with which a director or officer is affiliated shall not be void or voidable solely for such reason, or soley because the director or officer participates in the meeting or solely because the director’s or officer’s votes are counted, if:		•   The DGCL provides that a transaction between a corporation and one of its directors or officers or between the corporation and an entity with which a director or officer is affiliated shall not be void or voidable solely for such reason, or soley because the director or officer participates in the meeting or solely because the director’s or officer’s votes are counted, if:
•   the director/officer discloses the material facts to the board of directors and the transaction is approved in good faith by a majority of disinterested directors, even though less than a quorum;		•   the director/officer discloses the material facts to the board of directors and the transaction is approved in good faith by a majority of disinterested directors, even though less than a quorum;
•   the director/officer discloses the material facts to the stockholders and the stockholders approve in good faith the transaction; or		•   the director/officer discloses the material facts to the stockholders and the stockholders approve in good faith the transaction; or
•   the transaction is fair to the corporation as of the time it is authorized, approved, or ratified by the directors or the stockholders.		•   the transaction is fair to the corporation as of the time it is authorized, approved, or ratified by the directors or the stockholders.
		•   Under certain circumstances, the Investors’ Rights Agreement requires Amorcyte Board approval, including the affirmative vote of a majority of the Series A Directors, in order to authorize certain related party transactions.
STOCKHOLDERS
Special Meeting of Stockholders
•   Special meetings of the NeoStem stockholders may, unless otherwise prescribed by law or by NeoStem’s Amended and Restated Certificate of Incorporation, be called by the NeoStem Chairman of the Board (if any), the NeoStem Board of Directors or the NeoStem Chief Executive Officer and shall be held at such place, on such date and at such time as shall be fixed by the NeoStem Board of Directors or the person calling the meeting. Business transacted at any special meeting shall be limited to matters relating to the purpose or purposes stated in the notice of the meeting		•   Special meetings of the Amorcyte stockholders may, unless otherwise prescribed by law or by Amorcyte’s certificate of incorporation, as amended, be called by Amorcyte’s Chief Executive Officer, and shall be called by the Chief Executive Officer, the President or the Secretary of Amorcyte at the request in writing of a majority of the Amorcyte Board of Directors or at the request in writing of stockholders owning a majority in amount of the entire capital stock of Amorcyte issued and outstanding and entitled to vote. Such meetings shall be held at such place, on such date and at such time as shall be set forth in the notice of meeting or in a duly executed waiver of notice. Business transacted at any special meeting shall be limited to matters relating to the purpose or purposes stated in the notice of the meeting.

TABLE OF CONTENTS

NeoStem		Amorcyte
Inspection of Books and Records
•   Under the DGCL, stockholders of NeoStem may inspect the books and records of NeoStem during normal business hours as long as such inspection is for a proper purpose, and as long as the stockholder has made proper written demand stating the purpose of the inspection. A proper purpose is any purpose reasonably related to the interests of the inspecting person as a stockholder.		•   Under the DGCL, stockholders of Amorcyte may inspect the books and records of Amorcyte during normal business hours as long as such inspection is for a proper purpose, and as long as the stockholder has made proper written demand stating the purpose of the inspection. A proper purpose is any purpose reasonably related to the interests of the inspecting person as a stockholder. Any holder of at least one hundred twenty five (125) shares of Amorcyte Series A Preferred Stock has the right, under the Investors’ Rights Agreement, in addition to such holder’s rights under the DGCL, to visit and inspect Amorcyte’s properties, to examine its books of account and records and to discuss Amorcyte’s affairs, finances and accounts with Amorcyte’s officers, at such reasonable times as may be requested by such holder; provided that Amorcyte shall not be obligated to provide such access, under the Investors’ Rights Agreement, to any information that it reasonably considers in good faith to be a trade secret or similar confidential information.
•   Pursuant to NeoStem’s bylaws, any stockholder may inspect the complete list of stockholders and the number of share held by each, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the stockholder meeting and during such meeting.		•   Pursuant to Amorcyte’s bylaws, any stockholder may inspect the complete list of stockholders and the number of share held by each, for any purpose germane to the meeting, during ordinary business hours, during the time of the stockholder meeting and for a period of at least ten (10) days prior to the stockholder meeting.

TABLE OF CONTENTS

NeoStem		Amorcyte
Notice Requirements for Stockholder Proposals, Including Director Nominations
•   Nominations of persons for election to the NeoStem Board of Directors may be made by any stockholder of NeoStem who was a stockholder of record at the time of giving of notice provided for herein, who is entitled to vote at the meeting and who complies with the notice procedures. For nominations, the stockholder must have given timely notice thereof in writing to the Secretary of the NeoStem. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of NeoStem not later than the close of business on the 120th day nor earlier than the close of business on the 150th day prior to the first anniversary of the date of the proxy statement delivered to stockholders in connection with the preceding year’s annual meeting; provided, however, that if either (i) the date of the annual meeting is more than 30 days before or more than 60 days after such an anniversary date or (ii) no proxy statement was delivered to stockholders in connection with the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of (x) the 60th day prior to such annual meeting and (y) the 10th day following the day on which public announcement of the date of such meeting is first made by NeoStem. Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (i) the name and address of such stockholder, as they appear on NeoStem’s books, and of such beneficial owner and (ii) the class and number of shares of capital stock of NeoStem that are owned beneficially and held of record by such stockholder and such beneficial		•   Neither Amorcyte’s certificate of incorporation, as amended, nor its bylaws, provide for any procedures for nominating persons for election to its Board of Directors.
		•   As described below under the caption “Investors’ Rights Agreement,” the Investors’ Rights Agreement obligates the parties to vote their shares in favor of certain nominees for director.

TABLE OF CONTENTS

NeoStem		Amorcyte
owner. In the event that the number of directors to be elected to the Board of Directors of NeoStem is increased and there is no public announcement by NeoStem naming all of the nominees for director or specifying the size of the increased Board of Directors at least 70 days prior to the first anniversary of the preceding year’s annual meeting (or, if the annual meeting is held more than 30 days before or 60 days after such anniversary date, at least 70 days prior to such annual meeting), a stockholder’s notice shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive office of NeoStem not later than the close of business on the 10th day following the day on which such public announcement is first made by NeoStem.

TABLE OF CONTENTS

NeoStem		Amorcyte
•   Other business may be properly brought before an annual meeting of stockholders by any stockholder of NeoStem who was a stockholder of record at the time of giving of notice provided for herein, who is entitled to vote at the meeting and who complies with the notice procedures. For other business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the NeoStem. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of NeoStem not later than the close of business on the 120th day nor earlier than the close of business on the 150th day prior to the first anniversary of the date of the proxy statement delivered to stockholders in connection with the preceding year’s annual meeting; provided, however, that if either (i) the date of the annual meeting is more than 30 days before or more than 60 days after such an anniversary date or (ii) no proxy statement was delivered to stockholders in connection with the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of (x) the 60th day prior to such annual meeting and (y) the 10th day following the day on which public announcement of the date of such meeting is first made by NeoStem. Such stockholder’s notice shall set forth (a) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made (i) the name and address of such stockholder, as they appear on NeoStem’s books, and of such beneficial owner and (ii) the class and number of shares of capital stock of NeoStem that are owned beneficially and held of record by such stockholder and such beneficial owner.		•   Neither Amorcyte’s certificate of incorporation, as amended, nor its bylaws, provide for any procedures for bringing other business before an annual meeting of stockholders by any stockholder.

TABLE OF CONTENTS