US Stem Cell Inc (USRM)

[Dragon Lady]

Quote, "The settlement of the U.S. Stem Cell Clinic lawsuit for blinding a patient has nothing to do with the current lawsuit brought by former directors.

The lawsuit by NorthStar and the former directors could easily result in the bankruptcy of USRM after it's placed into receivership by the court. Hard to believe that the judge won't side with the plaintiffs after the last round of shenanigans by Miguel to take beneficial control of the company.
"

BINGO, SPOT ON CORRECT IMO. Exactly as I see it too.

One of the biggest "keys" to the puzzle of this Northstar Biotech LLC suit..as I see it...is they are ALL either former BOD members, or huge stakeholders who put up large amounts of money into the company as far back as 2007 or earlier and they also pledged their own assets as "guarantors" of the company's largest and oldest debts..debts still being carried on the books to this day...NEVER having one CENT of their principal being paid back while Miguel as been CEO...that carries huge weight before the court IMO.

In other words, this isn't some "shareholder class action" or some disgruntled ex-employee small timer making VERY SERIOUS ALLEGATIONS "out of spite" or whatever against the CEO (words like self-dealing, operating rogue w/ lack of proper BOD oversight, non transparency, potential gross financial mis-management, etc)...these are "inside baseball" big hitters, once BOD members, early "angel" big investors, dude's who once literally saved the company from BK when keys loans went into default, they all at Northstar LLC go way, way, way back with the company. Many having close relationships with it's founder and once CEO/Chairman, Howard Leonhardt. They pledged money and assets to this company- and they're alleging it's basically "gone off the rails" and is being squandered away under the CEO Miguel's gross mis-management. Some pretty serious claims, by people who likely have more "skin in the game" (financial risk) than Tomas has ever had. THAT, IMO..it's what's gonna carry a lot of weight before some court and judge- it's WHO these people are that are bringing the suit, they're "insiders", they once knew all the "inner workings" until, as they allege, Miguel began to go "rogue" and hide all that from them, he began "cutting them out of the loop", no longer informed them of key decisions being made in violation of the "forbearance agreement" terms that Bioheart signed with Northstar Biotech LLC- that's what the suit is stating, in a long and detailed complaint, written by a very reputable, very experienced biz law, SEC law, and public traded corp law attorney.

It's hard to believe that Miguel and what the suit/Northstar calls "his board" had the brass ones (or just plain gross stupidity or whatever one wants to call it), to take such an action as filing a butt load of SEC FORM 4 INSTA-VEST OPTIONS, in an amount NEARLY EQUAL TO THE OUTSTANDING SHARE COUNT OF THE COMPANY (gawd...what a "move" ??), a FREAKING DAY after being served a lawsuit calling for a judge/court to appoint a RECEIVERSHIP based on Plaintiff's mistrust in CEO's apparent lack of competency at correctly and transparently managing the biz, as well as, STRONG LANGUAGE by Plaintiff's attorney asserting things like need for court to assure CEO is not acting in his own self-interest or "self-dealing" which has huge implications in a public traded company, etc ALL wording that is in the Plaintiff's complaint as filed)

IMO, it looks like a slap in the face at any judge or court who's going to be reviewing this and having to take under consideration the CALL FOR A RECEIVERSHIP.....as if an experienced court/judge isn't gonna say, "WHAT, you don't think we're smart enough or bright enough to understand what the issuing of all these options means, and is meant to accomplish?". AND, don't think for a New York SECOND, that Northstar's attorney doesn't already know about those FORM 4's being filed and isn't gonna bring up the conspicuous, near perfect "timing" of them being issued- relative to the suit filing and then when USRM was process served, according to the clerk of the court site. That attorney IMO qill bring it up as topic #1 when he gets his time in front of the judge on that filed motion FOR RECEIVERSHIP.

It would sure seem to me that this Northstar attorney sorta, kinda knows how to present a MOTION FOR RECEIVERSHIP before the court and present it properly:

http://brentafriedman.com/index.php/attorney-profile/

Again, about as bold (or else stupid IMO) a move one could have made, seems to me. As if trying to maneuver and restructure the company ownership (and likely voting rights even)- knowing you're about to face a judge and a call for APPOINTING A RECEIVERSHIP...LIKE IT'S NOT OBVIOUS?

I agree also...the end of all of this may be the judge/court who first looks at this mess...may just end up sending it right on over to the BK COURT division and letting them figure it all out... as Northstar LLCs extremely experienced attorney didn't slip the word "INSOLVENT" in there by accident and also use words like "COMPANY IS BARELY SURVIVING" (see line where he describes company since Leonhardt left, no trials, no progress and states it's BARELY SURVIVED)...etc

WHO IS NORTHSTAR BIOTECH LLC EXACTLY- why would the court/judge "give them weight" (IMO) when listening to their arguments and serious allegations against the present CEO, Miguel (Mike) Tomas?

https://www.sec.gov/Archives/edgar/data/1388319/000118518516003859/usstemcell10k123115.htm

MOST RECENT SEC FILED 10-K, PAGE 62:

"Notes payable-related party

Northstar Biotechnology Group, LLC

On February 29, 2012, a note issued to BlueCrest Master Fund Limited was assigned to Northstar Biotechnology Group, LLC (“Northstar”), owned partly by certain directors and existing shareholders of the Company, including Dr. William P. Murphy Jr., Dr. Samuel Ahn and Charles Hart. At the date of the assignment, the principal amount of the BlueCrest note was $544,267.

On March 30, 2012, the Company and Northstar agreed to extend until May 1, 2012 the initial payment date for any and all required monthly under the Note, such that the first of the four monthly payments required under the Note will be due and payable on May, 2012 and all subsequent payments will be due on a monthly basis thereafter commencing on June 1, 2012, and to waive any and all defaults and/or events of default under the Note with respect to such payments. The Company did not make the required payment, and as a result, was in default of the revised agreement The Company renegotiated the terms of the Note and Northstar agreed to suspend the requirement of principal payments by the Company and allow payment of interest-only in common stock.

On September 21, 2012, the Company issued 5,000 common stock purchase warrants to Northstar that was treated as additional interest expense upon issuance.

On October 1, 2012, the Company and Northstar entered into a limited waiver and forbearance agreement providing a recapitalized new note balance comprised of all sums due Northstar with a maturity date extended perpetually. The Company agreed to issue 5,000,000 shares of Series A Convertible Preferred Stock and 10,000 of common stock in exchange for $210,000 as payment towards outstanding debt, default interest, penalties, professional fees outstanding and due Northstar. In addition, the Company executed a security agreement granting Northstar a lien on all patents, patent applications, trademarks, service marks, copyrights and intellectual property rights of any nature, as well as the results of all clinical trials, know-how for preparing Myoblasts, old and new clinical data, existing approved trials, all right and title to Myoblasts, clinical trial protocols and other property rights.

In addition, the Company granted Northstar a perpetual license on products as described for resale, relicensing and commercialization outside the United States. In connection with the granted license, Northstar shall pay the Company a royalty of up to 8% on revenues generated.


Effective October 1, 2012, the effective interest rate was 12.85% per annum. The parties agreed, as of February 28, 2013, to reduce the interest rate to 7% per annum.

In connection with the consideration paid, Northstar waived, from the effective date through the earlier of termination or expiration of the agreement, satisfaction of the obligations as described in the forbearance agreement.

In 2012, 5,000,000 shares of Series A Convertible Preferred Stock were approved to be issued, which was subsequently increased to 20,000,000 shares of preferred stock as Series A Convertible Preferred Stock. In addition, the Company is obligated to issue additional preferred stock equal in lieu of payment of cash of accrued and unpaid interest on each six month anniversary of the effective date (October 1, 2012). In lieu of the initial two payments in preferred stock, the parties have determined to modify the voting rights of the Series A Convertible Preferred Stock from 20 votes per share on matters to be voted on by the common stock holders to 25 votes per share on matters to be voted on by the common stock holders and all prior and subsequent payments of interest will be in common stock. The Company is required to issue additional shares of its common stock (as amended), in lieu of cash, each six month anniversary of the effective date for any accrued and unpaid interest.

As described above, during the year ended December 31, 2013, the Company issued the 5,000,000 shares of Series A Convertible Preferred Stock and the 10,000 of common stock described above in exchange for the $210,000 as payment towards outstanding principle of the debt. In addition, the Company issued 15,000,000 shares of Series A Convertible Preferred Stock as a penalty in settlement of the terms of the forbearance agreement. The fair value of the Preferred Stock of $274,050 was included in interest expense for the year ended December 31, 2013.

On September 30, 2013, the Company issued 8,772 shares of its common stock as payment of $100,000 towards cash advances.

On December 24, 2013, the Company issued 3,916 shares of its common stock as payment of accrued interest through June 30, 2013 of $85,447.

On April 2, 2014, the Company issued 275 shares of its common stock in lieu of payment in cash of accrued and unpaid interest of $12,635 due April 1, 2014 per the forbearance agreement.

On September 17, 2014, limited waiver and forbearance agreement entered into on October 1, 2012 to provide that the perpetual license on products as described for resale, relicensing and commercialization outside the United States was amended as such to condition upon NorthStar providing certain financing, which financing the Company, in its sole discretion, could decline and retain the license.

On October 3, 2014, the Company issued 515 shares of its common stock in lieu of payment in cash of accrued and unpaid interest of $12,705 due October 1, 2014 per the forbearance agreement.

On April 3, 2015, the Company issued 1,363 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 October 2, 2015, the Company issued 4,156 shares of its common stock in lieu of payment in cash of accrued and unpaid interest of $12,705 due October 1, 2015 per the forbearance agreement.

On October 7, 2015, the Company issued 34,522 shares of its common stock in settlement of $100,000 principal payment towards the outstanding debt.

As of December 31, 2015 and 2014, the principle of this note was $262,000 and $362,000, respectively."

Northstar Biotech LLC, is "guaranteeing" USRM's LARGEST AND OLDEST LONG TERM DEBTS ....AND...Northstar holds a "lien" to essentially EVERYTHING USRM owns, might own, might invent, might ever sell, all INTELLECTUAL PROPERTY...etc. NOT some "off the street" ole "yahoos" just filing a frivolous lawsuit. FORMER BOD members and "insiders", some going all the way back almost to when this company was founded and funded by Howard Leonhardt, original CEO and even Chairman of the BOD for a period of time.