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Tuesday, 04/08/2014 4:12:57 PM

Tuesday, April 08, 2014 4:12:57 PM

Post# of 106841
Seaside Bank loan is specifically discussed in the most recent 10-K as having a need to be "renewed" in, or by, Q1 2014 (that would have already ended, end of March, 2014 ?), didn't notice the verbiage about it before. Went back and read some other PR/blog/past 10-K and it looks like this major loan only gets renewed for about 1 or 2 yrs max at a time, each time, or has at least had to be "renewed" already, previously?

10-K, PAGE F-21: This is the part that caught my eye and didn't see before:
"Seaside Bank

On October 25, 2010, the Company entered into a Loan Agreement with Seaside National Bank and Trust for a $980,000 loan at 4.25% per annum interest that was used to refinance the Company’s loan with Bank of America. The obligation is guaranteed by certain shareholders of the Company. The Loan Agreement was scheduled to mature on December 23, 2013, however the Company is renewing the loan with Seaside National Bank and Trust during the first quarter of 2014 to extend the maturity date. The loan is NOT IN DEFAULT as of December 31, 2013."

So, apparently that loan was "scheduled to mature on Dec 23, 2013" (Past date now) and BHRT is "renewing" to "extend" the maturity date in the first qtr of 2014? Well, the first qtr, March 31, 2014 has already passed that I am aware of? Wonder if it got successfully "renewed"? And they make a note, inserted language to point out, "The loan is not in DEFAULT as of December 31, 2013."??


What's interesting too IMO, is the section of the 10-K on "Northstar" - implying they are in "first position" on everything- so it appears this Seaside loan is not even getting any principal or interest payments being made on it- it's just being "guaranteed" - which is fascinating IMO and to me?
10-K page 27:
"As of December 31, 2013, we had an aggregate of $5.7 million in principal amount of outstanding indebtedness, excluding accounts payable and accruals. This amount includes approximately $362,000 outstanding indebtedness pursuant to a loan and security agreement held by Northstar Biotech Group, LLC, or Northstar, which is owned in part by certain of our existing directors and shareholders, including Dr. William P. Murphy Jr., Dr. Samuel Ahn and Charles Hart), approximately $980,000 outstanding pursuant to a Loan Agreement with Seaside National Bank, and approximately $1.5 million outstanding to the Guarantors in respect of payments made by them on our behalf in connection with our original loan with Bank of America." and "make any principal, interest or other payments arising under or in connection with our loan from Seaside National Bank or any other debt subordinate to Northstar loan;"

Meaning, it looks, IMO that the Seaside bank loan principal amount is unchanged at about $980K or so since 2010? Like it's not even getting paid down out of BHRT cash raising activities and is just accumulating interest I guess? Or is interest only being paid on it by someone? It's all very confusing IMHO?

I looked back at some past PR, a blog, and the 10-K of past and it appears this Seaside loan has had to be "renewed" more than once already? Like the bank is giving them only like a year or so at a time and then re-evaluating it or something? I totally missed that before when reading 10-K's and it seems pretty important- especially the part about inserting the "not in default as of this date"? Why put that in there? Is it at risk of possibly going into default?

A March 2012 blog said,
" We renewed our $980,000 loan from Seaside National Bank and Trust with the continued support of long time shareholders, Dan Marino and Jason Taylor, who reaffirmed their support of Bioheart by guaranteeing the Seaside Loan."

March 11th, 2013 blog said,
"We renewed our $980,000 loan from Seaside National Bank and Trust with the continued support of long time shareholders (via their letters of deposit) and they once again reaffirmed their support of Bioheart by guaranteeing the Seaside Loan"


So that's only 1 yr between those two "re-news" and now it has to be "re-newed" again by Dec 31st, 2103 again according to the 10-K? Interesting IMO?

And then the "guarantors" (looks like Marino among others) apparently have to go in and re-guarantee it, or the terms of this major loan have to be "re-negotiated" or something? Can't be a lot of confidence IMO on the part of Seaside Bank when they are going along with 1 yr "re-news", it appears, at a time? The "accrued interest" expense page on page F-20 of most recent 10-K shows also, that they owe those "guarantors" a total of $1,373,775 big ones.


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

Oct 1, 2010 PR
" announced today that the company received a preliminary commitment from Seaside National Bank and Trust for a $980,000 loan that will be used to refinance the Company’s loan with Bank of America. The loan is subject to completion of definitive documentation and the delivery to Seaside of certificates of deposit of third parties. The Company further advised that $367,244 of the Bank of America loan would be paid down by a member of the Company’s Board of Directors. In exchange, the Board Member will receive restricted common shares and warrants."

So it appears that $367K difference between the two loans was already "covered" with restricted common shares and warrants? So where is the $1.3 million owed to the "guarantors" now coming from- on a loan that originated in 2010? That a lot of fees and interest built up IMHO for 4 or so yrs on a $980K principal "guarantee"? For example, even at a high, 10% interest rate- that's about $100K a yr X 4 yrs or so would be about $400K total? But somehow it’s reached $1.3 million or more now? Wonder why these "key investors" didn't just step in and pay-off the remaining B of A loan balance and let BHRT make the loan payments/interest payments to them directly? Seems like it would have been cheaper for BHRT, better for cash flow, etc? Now they have a Seaside loan with a $980K balance or whatever, plus owe the "guarantors" like $1.3 million in "fees and interest" from the 10-K statement? Seems like the guarantors are owed as much or more than the original loan balance that was due at one time? Doesn't make sense to me? Maybe they made payments on the old B of A loan and have accumulated interest owed on that too? Just seems like a lot of fees and interest accumulating and being owed to lots of people still for an original loan that went into default with about $1.3 mil left on it to be paid (B of A loan default)?

Recent 10-K page F-20:
"Amounts payable to the Guarantors of the Company’s loan agreement with Bank of America and Seaside Bank, including fees and interest
$1,373,775"


Under the risks section of 10-K, page PAGE 25:
"Item 1A. Risk Factors

The risks and uncertainties described below are not the only ones facing us. Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations and financial condition. If any events described in the risk factors actually occur, our business, operating results, prospects and financial condition could be materially harmed. In connection with the forward looking statements that appear elsewhere in this annual report, you should also carefully review the cautionary statement referred to under “Cautionary Statement Regarding Forward Looking Statements.”

Risks Related to Our Financial Position and Need for Additional Financing

We will need to secure additional financing in 2014 in order to continue to finance our operations. If we are unable to secure additional financing on acceptable terms, or at all, we may be forced to curtail or cease our operations.

As of March 24, 2014, we had cash and cash equivalents of approximately $211,632.80 and a working capital deficit of approximately $13.4 million. As such, our existing cash resources are insufficient to finance even our immediate operations. Accordingly, we will need to secure additional sources of capital to develop our business and product candidates as planned. We are seeking substantial additional financing through public and/or private financing, which may include equity and/or debt financings, research grants and through other arrangements, including collaborative arrangements. As part of such efforts, we may seek loans from certain of our executive officers, directors and/or current shareholders. We may also seek to satisfy some of our obligations to the GUARANTORS of our loan with SEASIDE National Bank & Trust, or the Guarantors, through the issuance of various forms of securities or debt on negotiated terms. However, financing and/or alternative arrangements with the Guarantors MAY NOT BE AVAILABLE WHEN WE NEED IT, or may not be available on acceptable terms.

If we are unable to secure additional financing in the near term, we may be forced to:

• curtail or abandon our existing business plan;
• reduce our headcount;
• default on our debt obligations;
• file for bankruptcy;
• seek to sell some or all of our assets; and/or
• cease our operations.

If we are forced to take any of these steps, any investment in our common stock may be worthless."

Notice it points out that "reaching acceptable terms" with the "guarantors" and being able to work things out with the "guarantor" to certain, acceptable terms WHEN WE NEED IT (Q1, 2014 apparently?) is a key need/event/undertaking, whatever you want to call it.

"We may also seek to satisfy some of our obligations to the GUARANTORS of our loan with SEASIDE National Bank & Trust, or the Guarantors, through the issuance of various forms of securities or debt on negotiated terms. "

Meaning, it looks like they have to give them (guarantors) more stock shares, or warrants or more interest owed, or whatever to their satisfaction for them to re-up as the "guarantors" perhaps? It's interesting IMO to say the least?

As I read the 10-K, it seems that the only place "guarantors" is used is in relation to those who are "guaranteeing" that Seaside bank loan and I believe in regards to Northstar. Interesting stuff IMO? A bank that gives the loan terms for about, what appears to be about 1 yr periods at a time, then they have to go in and "renegotiate" with them each time?

Not sure what all the verbiage and needing to "renew" so often means or why it would be done that way and why they stuck that statement in that the loan was not in default "as of" Dec 31st, 2013?

Again, will have to wait and see and wait for some announcement I guess? Anyone else wants to crunch the 10-K numbers, or re-read all the info on the Seaside loan would be good input. I could be missing something here or be mis-reading it? But this need to “renew” in and by the first qtr 2014 and that the loan was maturing or ending at Dec 31st, 2013, and that wording, “it’s not in default as of Dec 31st, 2013”, is something I totally missed in prior reads of the 10-K. I'm also confused as to the amount of "fees and interest" owed the "guarantors" versus what the entire original, or now outstanding balances/remaining balances of the original loans were? Seems out of proportion or something, IMO?