Notes from The Chairman Concerning ISCO Price Fluctuations

By Dr. Matthew Watson

As a matter of policy, we at ISCO refrain from commenting on movements in the price of our stock. However, events yesterday were so unusual and have resulted in so many questions, that I think it is our duty to our shareholders to tell you what we know.

As best we can determine, Patrick Cox, who has been and continues to be a strong supporter of our company, was required yesterday by his publisher to cease coverage of our stock and issue a sell recommendation because he has an equity interest in a company with which we do business that could have been perceived as a conflict of interest. That has resulted in numerous negative comments on investor message boards that referred to the sell recommendation without giving the background or a full explanation. As a result, I felt it was important that we put the day's events into proper context. The following are what I believe to be the relevant excerpts from Patrick's article:

As you know, I've been a huge promoter of International Stem Cell Corp.'s (OTCBB: ISCO) parthenogenic stem cell technology. I've not only told you about the company, but I appeared on John Mauldin's podcast show with ISCO board chairman Ken Aldrich about six months ago. Aldrich and Mauldin subsequently became friends and found that their organizations were a perfect fit for marketing ISCO's cosmeceutical skin care product.

John Mauldin asked me to be a part of that organization. We looked hard at Agora Financial's policies as well as applicable SEC regulations and concluded that there would be no conflict of interest because the position gave me no direct interest in ISCO or its stock price....

My publisher, however, has grown increasingly uncomfortable with this arrangement. The reason is not that Agora Financial believes that there would be an actual conflict of interest. Rather, it is that it might be perceived as one by some, in particular SEC lawyers....

My publisher's trading policy's aim, however, is to keep me purely objective and disinterested. This policy is debatable, but I respect it. My only option, therefore, is to issue a sell order or face the wrath of a disappointed spouse.

You can probably guess what that means. I'm going to have to issue a sell order.

Patrick followed that with a supplement, in which he said, in part,

Just to re-iterate, now that I've seen the price action from this afternoon's sell alert, I'm not parting with the shares of International Stem Cell Corp. (OTCBB: ISCO) because I believe they are a bad investment (my feelings, as you probably know, are quite the opposite)...ISCO still has the transformational potential that I've told you about. The only real change is that I won't be able to update you from here on out -- due to an over abundance of caution from my publisher.

Obviously, we can't know for certain if these articles caused the price movement yesterday, but we believe they were a major factor. Moreover, the comments and the response of investors to them are beyond our control, but we do want to reassure all interested parties that there is no information of which we are aware to justify the price fluctuation that occurred yesterday.

I hope this will prove helpful.

Sincerely,

Ken Aldrich

Chairman

FORWARD-LOOKING STATEMENTS:

Statements pertaining to anticipated developments, the potential benefits of collaborations, affiliations, and other opportunities for the company and its subsidiaries, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact (including, but not limited to statements that contain words such as "will," "believes," "plans," "anticipates," "expects," "estimates,") should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization of potential products and the management of collaborations, regulatory approvals, need and ability to obtain future capital, application of capital resources among competing uses, and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the company's business, particularly those mentioned in the cautionary statements found in the company's Securities and Exchange Commission filings. The company disclaims any intent or obligation to update forward-looking statements.