US Stem Cell Inc (USRM)

[Dragon Lady]

SEC Microcap FRAUD UNIT "Warning" Signs

https://www.sec.gov/spotlight/microcap-fraud.shtml

Quoting from THEE SEC WARNING SITE ITSELF:

Watch out for these “Red Flags” when investing in Microcap Stock:

"
Odd Items in the Footnotes of Financial Statements

Unusual Auditing Issues

Insiders Own Large Amounts of Stock"

An "Average" USRM/Bioheart SEC filed 10-K typically "clocks-in" at something like 65 to 75 pages or more PLUS a whole slew of additional pages and pages labeled "F" for "FOOTNOTE" added on the end of each filing, for a company with 4 FULL TIME and usually ONE PART TIME "employee" (sometimes even less per their own SEC filing statement) and a company with very little revenues. There's often PAGES and PAGES of "footnotes" or supplemental pages added (like pages F-1 through F-31, "F" standing for FOOTNOTE) for example showing line after line after line of things like COMMON STOCK BEING ISSUED TO PAY COMMON BILLS w/ no more detail than "for services rendered", or "related party transactions" noted just before said SEC filing is released, or last minute toxic convertible debt financing deals done literally a day or two before the 10-Q or 10-K filing to boost the cash line... I can go on and on and on....just READ ALL past 5 years of USRM/BIOHEART SEC FILED 10-K's ....it's all there...including their own "auditor's comments" on their GOING-CONCERN status...

I've literally read SEC annual filings for Fortune 500 companies (some of the largest and most profitable and most successful companies on PLANET EARTH) filings with less pages and less complexity than a Bioheart/USRM SEC filed 10-K, literally. Filings for companies with $10's and $10's of BILLIONS in annual sales and 20,000 to often 100,000 or more world-wide employees spread across numerous operating divisions, etc. NO SH*T, but hey...that's just me I guess...

Thus, my answer to support thee SEC's recommendations as described above (the FEDERAL GOVT REGULATORY BODY who oversees all our financial markets and public traded companies)

SEE NORTHSTAR BIOTECH LLC recently filed lawsuit and ALL allegations contained therein, then look at USRM Board of Directors (the 5 who now remain after TWO of the longest standing BOD members recently left and/or were FIRED) look at the SIZE OF RECENT OPTION GRANTS on FORM 4 FILINGS RELATIVE TO TOTAL FLOAT/Shares Outstanding (BENEFICIAL OWNERSHIP PERCENTAGE THEY JUST GAVE TO THEMSELVES) and TIMING of recent FORM 4 OPTION GRANTS TO INSIDER BOD members left, as related to day company was served with Northstar Biotech LLC lawsuit-

NOTE also, the Northstar Biotech LLC lawsuit wording as related to "unusual accounting" and "other" allegations as to how USRM is being "managed" (do they have regular and transparent, open BOD meetings w/ ALL relevant parties at the table, as an example) noting all allegations being asserted by Northstar Biotech LLC in their court filed complaint (Words and allegations such as Management WASTE, FRAUD, SELF-DEALING, GOING-CONCERN STATUS, INSOLVENT, BARELY SURVIVING, TENUOUS (at best) FINANCIAL CONDITION THAT HAS ONLY WORSENED, REQUEST FOR COURT APPOINTED RECEIVERSHIP, ACTED BOTH NEFARIOUSLY AND RECKLESSLY, ANNUAL SALARY EXCEEDING COMPANY MARKET CAPITALIZATION, PROBABILITY THAT FRAUDULENT ACTIVITY HAS OCCURRED, IMMINENT DANGER THAT PROPERTY WILL BE CONCEALED, LOST, OR DIMINISHED IN VALUE, POTENTIAL SIDE DEALS, FIRE SALE, OR FAILURE TO MAINTAIN CRITICAL SCIENTIFIC PROTOCOLS, PROVEN INEPT AT MANAGING THE BUSINESS, NEED TO SAFEGUARD ANY REMAINING ASSETS...and on and on and on..it's all there in the lawsuit as filed)

https://www.browardclerk.org/Web2

Type in "U.S. Stem Cell" on the Broward County 17th circuit "case search" and you'll find the lawsuit.

Case: CACE16016085
Filed 8/30/2016
Plaintiff: Northstar Biotech Group, LLC
Judge ID / Name: 18 Garcia-Wood, Marina

Plaintiff's attorney retained: Brent A Friedman

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

And WHO IS NORTHSTAR BIOTECH LLC, one might ask- in other words, WHY would a lawsuit filed by them "carry a LOT of weight" before a court:

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

From the USRM latest SEC filed 10-K, PAGE 62/63:

"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 made up of INSIDERS, LONG TIME LARGE INVESTORS...some potentially going back to almost the founding of the company...and GUARANTORS OF THE COMPANY'S LARGEST LONG TERM DEBTS/BANK LOANS...loans that had gone into DEFAULT and nearly sent Bioheart to BK court...

http://www.bizjournals.com/southflorida/stories/2010/07/26/daily1.html

"Bioheart defaults on BofA loan
Jul 26, 2010, 9:43am EDT"

http://www.euro2day.gr/thomson/article/436373/brief-bioheart-defaults-on-loan-may-seek-bankrupt.html

https://www.lawinsider.com/contracts/6cF2Dbx4YWFmLlixeMKjXn/bioheart-inc/1388319/2009-02-03

https://www.sec.gov/Archives/edgar/data/1388319/000095014409000589/g17495e8vk.htm

http://www.bizjournals.com/southflorida/stories/2009/04/06/daily54.html

http://www.techagreements.com/agreement-preview.aspx?title=Bioheart,%20-%20Taylor%20Loan%20Guarantee%20Agreement&num=343666

Northstar Biotech LLC SAVED THIS COMPANY'S FAILING ASS FROM LITERAL BK COURT, years ago and then even accepted DEFAULT at least once, forgiving them at the time and still sticking with them (BIOHEART at that time), so they're likely to "carry some weight" before the court IMO. They, the members of the LLC, they had to pledge their personal assets (homes, cash in bank accounts, potentially personal small business assets, etc) as LOAN GUARANTEES to keep then Bioheart alive and still functioning as a company and not making a quick trip straight to BK COURT OF FLORIDA. SORTA, KINDA some "important" dudes who are now leveling VERY SERIOUS allegations at mainly USRM's current CEO Miguel Tomas and what they call "his board" he's created and installed....

nothing "trivial" to me, IMO, about Northstar LLC filing a suit against the company USRM formerly Bioheart IMO..Northstar and it's LLC "members" are about as "inside" and "committed" as one can get...seems to me. MY OPINIONS ONLY, PER ALL STATEMENTS ABOVE.