US Stem Cell Inc (USRM)

[Dragon Lady]

I would assume the "notes" (aka convertible debt) are all able to be "converted" at anytime from reading the SEC filings- there's typically no restriction written in that I'm aware of?

And yes, the conversion steeply discounted price remains the same no matter if they split the stock or not- as it's based on a percentage.

For example, the discount is typically 45% to 47% on many of the current notes that BHRT has done with toxic debt financiers (see 10-Q or 10-K for Asher, KBM Worldwide, Vis Vires Group, Daniel James, Fourth Man, etc)-

So if they split the stock and say it becomes $3 a share tomorrow- nothing changes about the note holders a) Being able to convert anytime they want- which I'd assume they will continue to do in their common "stair-step" down patterns of lower lows and lower highs (the SEC calls it "ratchet" financing on their website, as in "ratcheting" down in stair steps, or the "death spiral" as described in Bloomberg and many other places, spiraling down in steps as each block is converted, then dumped/sold driving price lower so the note holder gets even more shares on each subsequent conversion) and b) Their discount does not change-

So at $3 a share for example post a 1000:1 massive R/S split-

$3 x .55 (the 45% discount) = $1.65 for say an Asher or Fourth Man or whoever the toxic note holder is.

And the entire sell/dump dilution spiral, one would assume, just continues on and repeats itself all over again- never ending essentially.

Most stocks that massively reverse split, just continuing to lose value, declining more- it was explained in the Bloomberg finance journalism piece about Josh Sason of Magna, and how many companies he lent toxic notes to- by the time they were .001 or whatever, had R/S split their stock several times attempting to prop their price back up- but spiraled right back down to sub $1 and then pennies and then sub pennies all over again, usually pretty rapidly.

Why would BHRT keep 2 BILLION shares available to be issued (LOL) if they don't expect massive dilution to continue? Would make no sense ImO. I think they'll continue to issue common share dilution by the dump truck full- as it's all they have for survival cash seems to me, just look at the last 10-Q, w/ $93K total cash left and a train-wreck balance sheet IMO.

I also think this massive R/S also has something to do with keeping Northstar LLC in full voting control via the preferred shares it looks like to me. If one looks at the vote in the 8-K, the insider's vote used to pass this thing- it was just barely a margin over 50% looks like. That means to me- as the massive dilution has been occurring, that the insiders were about to lose their voting edge they gave themselves by design- a huge part of which involve Northstar LLC who's one in the same as several BOD members along with some mystery members, them have 25 to 1 votes in the 20 million preferred shares, giving them 500 MILLION shares right there. Remember, Vis Vires (who I believe is Curt Kramer of Asher, another toxic lending company of his)- they filed a SEC 13G or whatever the form is, saying they'd hit the 9.99% share level (whatever the exact number is) - where they now needed to file a SEC ownership form, as they'd been granted so many dilution shares from convertible debt being "converted". I'd guess that w/ all the other's converting, especially Magna, that BHRT insiders could see it coming that they wouldn't hold a 50% proxy vote majority anymore, real soon like IMO. So they did the R/S but it appears to me from the SEC filing that Northstar LLC keeps their 20 MILLION preferred shares with their 500 MILLION common share votes- putting the insiders back in guaranteed voting control, which IMO is the way they've always meant it to be, and one of the key reasons IMO that they invented this odd-ball insider "LLC" called Northstar in the first place. That's my .003 or so CENTS worth on that - the real reason behind this massive, massive R/S split IMO. It's not like a 10 to 1 or 100 to 1 split which is common. It's freaking 1000:1, about as big as I can ever remember seeing, even for one of these sub penny plays.

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

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

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

From some of the most recent BHRT SEC filings- showing the toxic note financing terms of some of the most recent deals- there's nothing about any restrictions on "converting" I can see- other than a time limit when the note is "due and payable", at which point one would assume that lender will fully have converted by then. Also the discount is a percentage- so a stock split makes ZERO difference. They get their 47% or whatever, no matter what the stock price is or does.

Last filed 10-Q, PAGE 16:

"Fourth Man, LLC (During this period)

During the six months ended June 30, 2015, the Company entered into Securities Purchase Agreements with Fourth Man, LLC. (“Fourth Man”), for the sale of a 9.5% convertible notes in the aggregate principal amount of $75,000 (the “Note”).

The Notes bears interest at the rate of 8% to 9.5% per annum. As of the six months ended June 30, 2015, all interest and principal must be repaid one year from the issuance date, with the last note being due May 31, 2016. The Notes are convertible into shares of common stock, at Fourth Man’s option, at a 47% discount to the lowest closing bid price of the common stock during the 10 trading day period prior to conversion. The Company has identified the embedded derivatives related to the Fourth Man Notes. These embedded derivatives included certain conversion features and reset provision.

The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of Fourth Man Notes and to fair value as of each subsequent reporting date which at June 30, 2015 was $150,554. At the inception of the Fourth Man Notes, the Company determined the aggregate fair value of $143,097 of the embedded derivatives.

During the six months ended June 30, 2015, $75,000 of notes that were outstanding at December 31, 2014, plus accrued interest, were converted into shares of the Company’s common stock (see Note 10).

The remaining aggregate Fourth Man, LLC Notes unconverted principle balance as of June 30, 2015 was $75,000."

Last BHRT filed 10-K, PAGE F-34/F-35:

"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.
"

So that's qty-4, "toxic" notes right there- with various companies/hedge lenders. The terms are all pretty much the same- the steep discount is not affected by any R/S split- and the dilution will just continue as these notes are converted. ALL say "convertible AT THE OPTION" of the note holder, I don't see a single restriction as to when they can convert- so I'd assume every last convertible note BHRT has will be converted prior to its expiration/due date- as the company really has no cash to pay any of these notes back and I don't think has ever used cash to pay one back that I can ever remember reading about in any SEC filing?

I'd assume also of course- that BHRT is doing more convertible notes in near real-time as happens each qtr, else they'd be out of cash by now it seems to me? They ended last qtr with a pittance of $93K total cash left on-hand, and had just immediate bills like "accounts payable" exceeding $2 MILLION bucks. If they hadn't already done more convertible debt deals by now, or are doing them likely right now, they'd be literally cash broke as far as I can tell- from reading all their past SEC filings. I'd assume that split or no split, they just go right on mass diluting the common shares- via use of convertible debt, using shares to pay common bills as they have no cash, etc. ALL the same "stuff" one sees in any of their recent 10-K or 10-Q filings going back for at least the past several YEARS.

Most recent 10-Q filing, PAGE 20/21:

"NOTE 10 — STOCKHOLDERS’ EQUITY

During the six months ended June 30, 2015, the Company issued an aggregate of 11,652,719 shares of its common stock in the amount of $100,132 for the settlement of outstanding accounts payable and accrued expenses. In connection with the issuance of the shares the Company recognized a gain on settlement of accounts payable and accrued expenses in the amount of $78,528 (see Note 5).

During the six months ended June 30, 2015, the Company issued 6,650,000 shares of common stock in settlement of litigation. In connection with the issuances, the Company recognized a loss in the amount of $59,850, which is included in the marketing, general and administration expense in the Statement of Operations (see Note 12).

On April 3, 2015, the Company issued 1,363,031 shares of its common stock in lieu of payment in cash of accrued and unpaid interest of $12,635 due April 1, 2015 per the forbearance agreement on Northstar note (See Note 8).

During the six months ended June 30, 2015, the Company issued an aggregate of 93,803,679 shares of its common stock for the conversion of $388,258 of notes payable and related accrued interest. Upon conversion of the notes, the Company recorded an adjustment to the derivative liability in the amount of $411,772 (see Note 13).

During the six months ended June 30, 2015, the Company issued an aggregate of 76,612,184 shares of common stock in exchange for $472,675 under the stock purchase agreement with Magna Equities II, LLC (see Note 6), and issued an aggregate of 7,851,968 shares of common stock in exchange for $61,270. In connection with the stock sale, the Company issued an aggregate of 1,443,656 warrants to purchase the Company’s common stock (see Note 11).

During the six months ended June 30, 2015, the Company issued an aggregate of 24,353,285 shares of its common stock in settlement of accumulative outstanding accounts payable due to Guarantors of the Company of $961,125. In connection with the issuance, the Company incurred a $791,024 gain in settlement of debt."

See, just look at those numbers, MASSIVE dilution shares being issued-out. That won't change because a R/S is implemented- cause it all stays the same percentage wise. The numbers will change by the 1000:1 factor, but the float, O/S change by the same amount- so the massive dilution effect stays exactly the same. Notice- the 92 MILLION and 76 MILLION share numbers- as a percentage of the 850 MILLION or so O/S share count given recently, that means those firms were gaining approx 10% ownership portions or more in the company. I think the R/S, again IMO, has to do with Northstar LLC gaining back full voting control rights via the use of the preferred shares having their 25 to 1 voting rights.

That's my .003 or so CENTS worth, on a RED OPENING MONDAY, selling off hard again looks like to me. No surprise there.