Newsletter

February 11, 2006

Volume VII, Issue 16

Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com

To OTC Journal Members:

Do RTO's Ever Work? Check Out True Religion (NASDAQ: TRLG)

RTO stands for "Reverse Take Over". It's a fast track way for a private company to go public. The private company is acquired by a "shell" company that has no functioning business, but is already publicly traded. It's a big cottage industry, and many of the companies I cover found their way into the public markets this way. There is an article entitled "What is a Reverse Merger" at the OTC Journal web site. Read it if you want to learn more.

Have you seen this commercial for Ameritrade on CNBC? A teenager girl tells her dad she needs $80 for designer jeans. Dad asks: Are all your friends wearing them? She says yes- they are the latest thing and everyone is wearing them. Who's the designer asks Dad? Gurelii, replies daughter. Dad then goes to the computer, looks up Gurelli's stock, and buys 300 shares. Teenager gets her $80 and heads off to buy her absurdly overpriced jeans.

I love this commercial as it incorporates a couple of investing principles I believe in. I like investing in businesses I can see, feel, touch, and understand. This is a very Peter Lynchian approach. He was the greatest mutual fund manager of all time, and wrote "One Up On Wall Street"- to this day one of the best books ever written for individual investors.

So, what does all this have to do with True Religion? TRLG is a designer jean manufacturer that is the hottest high end brand on the market today.

On August 18, 2003, the former "Gusana Explorations" became True Religion through a reverse take over. You could have bought shares of TRLG from September '03 to July of '04 anywhere from $.70 ot $1.50 on the OTC Bulletin Board; Then - the brand became viral, every teenager had the have the jeans, the stock took off, and the rest is history. As you can see from the chart, a mere 18 months later the stock has approached the $25 level.

Here's how it all ties in. Ameritrade runs that commercial often. It is a live metaphor for True Religion, and a great example of buying what you know. It's a living example of making money in the market by observing the habits of those around you.

It is also an example of a specific and current huge success from a reverse take over. There's a lot of potential profit because the pricing starts so low. There are many more. Here's our most current offering which I hope becomes the next True Religion. Consider the possibilities:

Medistem (OTC BB: MDSM); Licensee One Step Closer To Treating Patients

In the original presentation on Medistem I called them the Nike of the Stem Cell world- why? Because like Nike, their slogan is "Just Do It". People with a variety of ailments want stem cell treatments, and they want them today.

Medistem is a Phoenix based company with a great deal of expertise in stem cell treatments. They have a licensee in Costa Rica that will be providing treatment for patients, and MDSM will collect fees directly from the clinic. They only use non controversial stem cells for both moral and efficacy reasons.

Friday, after the market closed, MDSM announced the formation of an expert ethics and medical board to advise the clinic on therapies and ethics issues. The members of the advisory board represent a powerful cross section of industry experts. You can read about them below in the text of the press release.

MDSM is closing in on starting operations in Costa Rica. While they are certainly not selling designer jeans, there are some parallels between MDSM and TRLG. For example, both companies came public through an RTO.

More importantly, both companies have a very Peter Lynchian quality about them. Stem Cell treatments are in the news everyday. There is a growing body of evidence suggesting Stem Cells can be a very effective treatment for previously untreatable diseases. I am certain nearly everyone reading today's edition knows unfortunate person with a disease that could be treated with Stem Cells.

Once the MDSM licensee begins treating patients and making announcements concerning results, I would expect the company to receive a lot of publicity. It could be positive or negative depending on your interpretation. Nevertheless, it will put a lot of eyeballs on the stock. Awareness leads to volume, liquidity, and interest.

Here's an hourly chart which we generated from the first day I covered the company. You could have picked up the stock anywhere from $.52 to $.60 that day. Friday, we closed at $.62- so everyone who acted early is in the money to a small degree.

I expect a lot to develop over the coming months on MDSM. Stand by for further progress towards their goal of actually treating patients with Stem Cells. For the high risk end of your account: Own it- accumulate MDSM.

Here is the complete text of Friday's news from MediStem:

Press Release Source: Medistem Laboratories, Inc.

Medistem International Licensee ICM Establishes Ethical Advisory Board to Guide Advanced Stem Cell Research

Friday February 10, 4:03 pm ET

Prominent Ethics and Medical Experts Appointed to Oversee Standards and Protocols in Development of Stem Cell Treatments

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Feb. 10, 2006--Medistem Laboratories, Inc. (OTCBB:MDSM - News; FWB:S2U), committed to the ethical development of next-generation medical therapies from non-controversial adult stem cell sources, has announced that its international laboratory and clinical licensee, the Institute for Cellular Medicine (ICM) in Costa Rica, has established an Ethical Advisory Board that will oversee all treatment protocols at ICM, to ensure the highest ethical practices in clinical research and therapeutic applications of Medistem's proprietary adult stem cell treatments.

Two distinguished professors of ethics and a medical doctor have so far been appointed to serve on the Ethical Advisory Board, all recognized authorities who bring a variety of backgrounds and expertise. They include:

    * Prof. Luis Jimenez, Ph.D., professor of ethics at the Institute of External Affairs, a Fulbright Scholar and a former consultant to the United Nations;
    * Dr. Thelma Sanchez, M.D., a respected cardiologist affiliated with hospitals in Florida and in Costa Rica, with extensive experience in medical and regulatory affairs for pharmaceutical leader Merck & Co.;
    * Prof. Walter Piedra, M.D., a pediatrician and professor of medical ethics at the Latin University, who has held numerous academic and professional positions in the medical ethics field.

Additional appointments to the Ethical Advisory Board are expected to follow.

The Ethical Advisory Board's mission is to ensure that ICM will adhere to the highest standards of ethical scientific and medical practices as it develops advanced stem cell science and therapeutics at its newly established state-of-the-art laboratory and clinical facilities in Costa Rica.

"We feel it is crucial that all of Medistem's affiliated operations at the Institute for Cellular Medicine be clearly aligned with the highest ethical and moral standards of scientific and medical practice," said Neil Riordan, Ph.D., Medistem's CEO.

"We are extremely gratified that Dr. Jimenez, Dr. Sanchez and Dr. Piedra, respected scholars and recognized authorities in this very important area, have agreed to serve on ICM's Ethical Advisory Board," added Dr. Fabio Solano, Medical Director of ICM.

Medistem recently announced it has executed a technology licensing and royalty agreement with the Institute for Cellular Medicine that allows ICM to perform clinical programs to further develop Medistem's stem cell technologies and therapies. The agreement also enables ICM to treat patients on a fee-for-service basis at ICM's laboratory and clinic facility in San Jose, Costa Rica, expected to open fully before the end of the second quarter, following receipt of all applicable government approvals.

Further professional details of the new appointees to ICM's Ethical Advisory Board include:

    * Prof. Luis Jimenez, Ph.D. -- A professor of ethics at the Institute of External Affairs, Manuel Maria de Peralta, University of Costa Rica, he also holds a Master's Degree in Divinity/Theology. He has been called to testify as an ethics expert and has delivered presentations for such bodies as the United Nations, the Costa Rican Ministry of External Affairs, and the Costa Rican Embassy at the Holy See in Italy.
    * Dr. Thelma Sanchez, MD, MBA, an accomplished cardiologist who is now in private practice at Hospital CIMA in Costa Rica. Dr. Sanchez has additional expertise in organizational, analytical, medical, regulatory and business administrative affair, and served for several years as Regional Director of Medical and Regulatory Affairs for Merck Sharp & Dohme.
    * Professor Walter Piedra, M.D. -- A Professor Of Medical Ethics at the Latin University in Costa Rica and a Pediatrician, who trained at the University of Navarra, Spain. Prof. Piedra is also a longstanding member of the Association for the Defense of Life (since 1988) and of the Bioethical Committee of Coopesalud R.L. (since 1999).

About Medistem Laboratories, Inc.

Medistem Laboratories is an innovative biotechnology company committed to the creation and commercialization of advanced medical therapies based on non-controversial adult stem cells. Medistem's corporate mission is to transform these stem cells into valuable medical treatments. The Company intends to create these treatments from adult stem cells derived from muscle, bone marrow and fat of adult patients seeking treatment, as well as from full-term, healthy placentas and umbilical cords, but not the controversial embryonic or fetal stem cells that are the focus of ethical and moral debates in some communities. The Company's business strategy calls for the establishment of a series of clinics and laboratories around the world to deliver unprecedented, next-generation cell therapies to help millions of patients. Initial development and treatment focus will use proprietary technology and cells sourced from umbilical cords, fat, bone marrow, and muscle for advanced treatment of cerebral palsy, stroke, cardiovascular disease and orthopedic diseases, primarily for the international marketplace. Additional applications ultimately will be targeted to the treatment of neurological disorders such as Parkinson's, Alzheimer's and certain types of cancer. Medistem believes it may hold a substantial competitive edge in the worldwide emerging market for stem cell-sourced medical solutions, positioning it to become a leading global provider of stem cell treatments on a fee-for-service basis, while accumulating intellectual property based on clinical and laboratory findings. For more information, please visit http://www.trilogy-capital.com/tcp/medistem/. To read or download Medistem's Investor Fact Sheet, please visit http://www.trilogy-capital.com/tcp/medistem/factsheet.html. To obtain daily and historical Company stock quote data, and recent Company news releases, visit http://www.trilogy-capital.com/tcp/medistem/quote.html. Medistem is traded on the Frankfurt, Germany, stock exchange under the symbol S2U.

Cautionary Statement

This document does not constitute an offer to sell or a solicitation of an offer to buy any of our securities. This document contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward looking statements contained herein can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. We wish to caution the reader that these forward-looking statements that are not historical facts, are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved.

Contact:

Medistem Laboratories, Inc.
Neil Riordan, Ph.D, 954-727-3662
riordan@medisteminc.com

Source: Medistem Laboratories, Inc.

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The markets have become quite quiet since it was spooked by the dual threat of oil/interest rates. Early in the year the market was convinced the FED would stop raising interest rates in the near future. When oil challenged the $70 mark again last week, all bets were off. January's gains were replaced by February losses, leaving this year at a neutral level so far. There isn't a lot of volatility to report on, and therefore only one new BLOG entry. Number 1 most Blogged and followed stock HDY got an entry again this week. I'm not excited about the length of time it is taking HDY to lock down its new deal with the Guinea government, so I decided to sell 1/2 of my position as an insurance policy. Check the BLOG to read my comments.

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