NovelStem Announces Material Developments and Strategic Repositioning of the Company

Rhea-AI Summary

NovelStem International Corp. (NSTM) announced significant developments and a strategic repositioning focused on seeking merger opportunities. The company's 29.5% interest in NewStem Ltd. has been impacted as NewStem ceased operations and was liquidated, with its technology reverting to Yissum. NovelStem retains rights to share up to $3.75M from future monetization of NewStem's IP platform.

The company has successfully extinguished $3.0M in litigation funding debt through the sale of its 50% stake in Netco Partners. Additionally, NovelStem is in discussions to reduce approximately $1.7M of notes payable and convertible debt. The company has also satisfied a $650,000 derivative liability guarantee. Directors and officers currently own about 48% of total shares, with 46,881,475 shares outstanding and 9.4M in options and warrants.

Positive

• Extinguishment of $3.0M in litigation funding debt through strategic asset sale
• Potential to receive up to $3.75M from future NewStem IP monetization
• High insider ownership at 48% indicates management alignment with shareholders
• Active pursuit of debt reduction and merger opportunities to create shareholder value

Negative

• NewStem subsidiary ceased operations and was liquidated due to insufficient funding
• Still carries approximately $1.7M in outstanding debt
• Uncertainty regarding timing and value of NewStem IP monetization
• Loss of 50% interest in Netco Partners joint venture

BOCA RATON, Fla., May 20, 2025 (GLOBE NEWSWIRE) -- NovelStem International Corp. (OTC Pink: NSTM) today announced recent material developments and the Company’s new strategic focus on seeking a merger partner in an effort to create shareholder value. In support of this goal, NovelStem’s Board is initiating discussions with potential merger prospects and a simultaneous process to reduce outstanding debt and to enhance its cash position. Additionally, NovelStem announced the extinguishment of approximately $3.0M in litigation funding debt.

NewStem Update
In its 2024 Form 10-K, NovelStem disclosed, with respect to its 29.5% interest in NewStem Ltd., that due to insufficient funding, NewStem has ceased operations and has been liquidated. As a result, the technology and license held by NewStem for a novel stem-cell-based technology platform has reverted to the original licensee, Yissum, the technology transfer company of the Hebrew University of Jerusalem.

NovelStem expects to recover some value from its investment in NewStem through its right to share up to $3.75M of future monetization of the NewStem IP platform, however the timing and value of such realization is not certain. Yissum is currently pursuing monetization of the technology, and they have a long history of successfully commercializing innovations and intellectual property (IP) developed at the university.

Debt Reduction Progress
Effective May 19, 2025, NovelStem has fully extinguished the note payable and accrued interest totaling approximately $3.0M related to its litigation funding agreement with Omni Bridgeway. The debt extinguishment was achieved through the sale of NovelStem’s 50% interest in the Netco Partners joint venture to its partner C.P. Group, Inc. for an undisclosed amount, which proceeds were paid to Omni Bridgeway in exchange for a full release of NovelStem’s liability to Omni of approximately $3.0M.

NovelStem has commenced discussions seeking to substantially reduce or eliminate approximately $1.7M of notes payable and convertible debt to existing shareholders and related parties, including certain Directors and the Company’s Executive Chairman. There can be no assurances as to the timing or outcome of these discussions. Included in the $1.7M of debt is a note payable that allowed NovelStem to satisfy a $650,000 derivative liability guarantee, which will remove the $650,000 liability from the Company’s balance sheet.

NovelStem Chairman, Jan Loeb, commented, “We are hard at work at repositioning the Company for a new opportunity to create meaningful shareholder value following the liquidation of our NewStem investment. Directors and officers currently own approximately 48% of total shares outstanding, and we are optimistic regarding the value creation potential of this process.

“We have negotiated the potential to secure up to $3.75M in future payments from the monetization of the NewStem technology and are now seeking to enhance NovelStem’s financial position to make it more attractive to possible merger partners. In support of this goal, we were able to eliminate $3.0M in litigation debt via the sale of our joint venture interest in Netco Partners, and we satisfied a $650,000 derivative liability guarantee. We are now focused on the restructuring or elimination of the Company’s remaining liabilities. We will update investors on the progress of our debt reduction efforts as well as any material developments in our M&A process.”

NovelStem had 46,881,475 shares of common stock outstanding as of April 7, 2025. In addition, the Company has outstanding options and warrants to purchase 9.4M common shares at an average exercise price of $0.1347 per share.

About NovelStem International Corp. www.novelstem.com
NovelStem is a publicly traded SEC reporting company focused on merging with a compelling business, in a not yet determined industry, that offers substantial potential to create long term value for NovelStem shareholders.

About the NewStem Technology
The NewStem technology, the ownership of which has reverted to Yissum, is a bio-platform for genome-wide screenings based on patented Haploid human Embryonic Stem Cells (HhESCs) technology. Haploid cells are superior to other cells used for whole genome screenings and could improve and/or accelerate the development of biomarker-driven therapeutics and diagnostics. The NewStem technology has applications for the discovery and development of precision oncology drugs based on synthetic lethal interaction modality and for diagnostics of anti-cancer drug resistance. The NewStem technology is based on the research of Professor Nissim Benvenisty, Director of the Azrieli Center for Stem Cells and Genetic Research at the Hebrew University. The NewStem technology includes the intellectual property, reagents and experience required for HhESC isolation, differentiation, genetic manipulation, immunogenicity and tumorigenicity. NovelStem believes that Yissum will seek funding and/or license agreements aiming to monetize the NewStem technology, which process has the potential to generate payments and/or royalties of up to $3.75M to NovelStem.

NovelStem Investor Relations
Bill Jones and David Collins
Catalyst IR
(212) 924-9800
NSTM@catalyst-ir.com

FAQ

What happened to NovelStem's (NSTM) investment in NewStem Ltd?

NewStem Ltd. ceased operations and was liquidated due to insufficient funding. The technology reverted to Yissum, but NovelStem retains rights to share up to $3.75M from future IP monetization.

How much debt did NovelStem (NSTM) eliminate in May 2025?

NovelStem eliminated approximately $3.0M in litigation funding debt through the sale of its 50% stake in Netco Partners to C.P. Group, Inc.

What is NovelStem's (NSTM) new strategic direction?

NovelStem is actively seeking merger opportunities while working to reduce outstanding debt and enhance its cash position to create shareholder value.

How many shares of NovelStem (NSTM) were outstanding as of April 2025?

NovelStem had 46,881,475 shares outstanding, plus 9.4M in options and warrants at an average exercise price of $0.1347 per share.

What percentage of NovelStem (NSTM) is owned by directors and officers?

Directors and officers own approximately 48% of NovelStem's total outstanding shares.