US Stem Cell Inc (USRM)

[Dragon Lady]

The best piece of financial journalism ever done IMO, to explain what is happening here- to the likes of BHRT and many other cash desperate, failing penny stocks, was done recently by the highly reputable financial news firm and TV outlet, Bloomberg.

They explain it all in great deal with this piece of investigative financial reporting here- it's specifically about the firm Magna, who BHRT did qty-2 deals with end of 2014, but IMO, it covers any convertible debt lender such as Asher, KBM Worldwide (believed to be Asher's "sister" company run by the same two brothers), Daniel James, Fourth Man, Vis Vires group etc all of whom BHRT has inked convertible debt financing deals with recently - and numerous other penny hedge firm lenders of last resort.

http://www.bloomberg.com/news/articles/2015-03-12/josh-sason-made-millions-from-penny-stock-financing

Just a stunning, revealing peak into the sorted world of "floorless" convertible debt deals (aka debt-for-shares deals with no bottom pricing, aka the "reset provision" built in to them), aka "Death spiral" financing as the SEC and other's call it (what BHRT is experiencing now for all intents and purposes IMO), desperation, floorless, convertible debt financing and how it "works" and how the lenders who create and structure these deals, now they "do what they do" - it even shows the actual "death spiral graphic" with an explanation about it, on the left column of the reporter's piece.

Just an excellent piece of financial reporting IMO, one of the best I've ever read or watched. Stunning in what it reveals of the sorted world of the OTC markets and companies that make use of toxic, convertible debt financing as their means of running their businesses.

More info about the same topic can be found all over the internet- here's just a few other samples, explaining essentially what the Bloomberg piece is discussing:

http://www.sec.gov/answers/convertibles.htm

http://en.wikipedia.org/wiki/Death_spiral_financing

http://www.investopedia.com/terms/d/deathspiral.asp

http://www.stockpatrol.com/article/key/deathspiral

Here's just a few examples of some of the recent deals BHRT inked- from their most recent filed 10-K, PAGE F-34/35 (one can see the "toxic" language where the "reset" and floorless pricing is written in to the contract terms) and the steep share discount, classic "toxic" convertible debt deals:

"Subsequent financing

On January 7, 2015, the Company entered into a Securities Purchase Agreement with KBM Worldwide, Inc. (“KBM”), for the sale of an 8% convertible note in the principal amount of $38,000 (the “Note”).

The Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on October 9, 2015. The Note is convertible into common stock, at KBM’s option, at a 45% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. In the event the Company prepays the Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 140% if prepaid during the period commencing on the closing date through 179 days thereafter. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.

On January 28, 2015, the Company entered into a Securities Purchase Agreement with Fourth Man, LLC., for the sale of an 9.5% convertible note in the principal amount of $25,000 (the “Note”).

The Note bears interest at the rate of 9.5% per annum. All interest and principal must be repaid on January 27, 2016. The Note is convertible into common stock, at Asher’s option, at a 47% discount to the lowest daily closing trading price of the common stock during the 10 trading day period prior to conversion. In the event the Company prepays the Note in full, the Company is required to pay off all principal at 150%, interest and any other amounts.

On February 19, 2015, the Company entered into a Securities Purchase Agreement with Vis Vires Group, Inc. (“VIS”), for the sale of an 8% convertible note in the principal amount of $38,000 (the “Note”).

The Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on November 23, 2015. The Note is convertible into common stock, at VIS’s option, at a 45% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. In the event the Company prepays the Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 140% if prepaid during the period commencing on the closing date through 179 days thereafter. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment."