US Stem Cell Inc (USRM)

[Dragon Lady]

Hello Bioheart. I had a couple of questions:

(By the way, the volume is GONE, IMO- look at today. Did about $17K total in trading today. That's like qty-16, $1K trades, for an entire day. Noise level, IMO. One major sell order/short from big boy- and it might do a 15 to 20% drop day again, IMO. Today's close "up", 9% was a total "paint the tape" on probably a single, $500 or less, single buy order, IMO.)

Oh, and before the questions: it’s been fascinating to say the least, to read recent commentary by what is apparently your former CEO, CTO among other titles, “HowardLeonhardt”, he has actually specifically addressed several commentaries to me. Very fascinating, as he seems to lack even a basic understanding of the correct forms used by public companies when filing with the SEC (U.S. Securities and Exchange Commission), which IMHO, is just extremely “interesting” to say the least, for what would have been the most Sr. Executive for day to day operations of a public traded firm. Since it’s typical- for a public traded stock, company CEO to have to interact in detail with very sophisticated members of the investment community- such as doing an IPO “roadshow” or giving the annual and/or each quarterly report to investment analysts, all of who would pick-up on, in an INSTANT, IMHO, if the CEO wasn’t intimately familiar and well versed in how to read, understand and know what each SEC filing is for, how to explain it, know in detail what’s in it, etc., how a "CEO" would not know a 10-K is not the annual filing, is well, fascinating to say the least IMO.

Or, could this possibly help explain why the stock was de-listed from the NASDAQ, only about 1 yr after going public and never traded above its IPO price, and in fact, had essentially, a steadily declining stock price from essentially the IPO day, to today, where it is now a sub 3 cent stock? I don’t know, and don’t have an opinion, but it would personally be a concern to me, in a public company, if the CEO didn’t know the difference between, for example, a form 10-K filing and a form “4” filing? Also, to see a former CEO, of a public traded stock point at, and use a site called “10Kcrunch” would also, IMHO, be of great concern to me? As, all experienced, well versed CEO’s, Sr company officers, investment analysts, etc that I am familiar with- know that the only place one would go to reference SEC filed, public company documents, with any reliability (certainly not 10Kcrunch IMO, see disclaimer bottom of their web page- “Disclaimers: Information is provided “as is” and solely for informational purposes") I mean, the only place I know that professional caliber executives or essentially any investment community professional goes for SEC document information- is the U.S. Securities and Exchange Commission “EDGAR” database- the govt. “official” filing place and repository (library) of all filed information, for all public traded companies in the U.S. markets- but apparently the former CEO is not familiar with this? Very “odd” IMHO? (again, this is based on his own recent commentary- several directly addressed to me in public)
https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001388319&type=&dateb=&owner=include&count=40

Also, there was follow on commentary, that appears to not understand that a form "4" for example, that list shares "acquired" via being one being granted "options" or "warrants" (a right to purchase a security at a set price, for a set period of time into the future), that those are not "buys" as in money was spent from one's pockets, but those are shares "acquired" and are "given" as incentive and for various other reasons- but on a site such as 10KCrunch, for example, they may be mislead to be listed as "buys"- a common mistake and misunderstanding to those who are not familiar with SEC filing, common, well known, form terminology. That same commentary also pointed out (paraphrasing),"heck, it doesn't really matter what SEC form is referred to, getting the name right or wrong, it's not really a big deal". Wow, I really didn't know that at all? I mean, I thought all these forms were very detailed and specifically written and are signed off-on, filed and uploaded to the SEC EDGAR database and all- as in "kinda" important and all? But, I guess not maybe? What the heck do I know? Oh well, I guess if it's no big deal to understand SEC forms, and what they are, and how they are filed, read, understood, etc- then maybe that explains a lot, IMHO. Who knows- again, I don't really have an opinion on it, I don't really know a thing, I was just reading "commentary" specifically sent to me by “HowardLeonhardt”(stated to be the former CEO in his own words/statements to me specifically), apparently to "inform" me? I read it with great interest to say the least.

Oh well, anyway- on to the "questions"- since there were some others earlier, I had a few too, so just thought I would add them:

1) Why if you're "thee world leader" (exact wording, taken from your own PR's, web site and similar)- is your public traded stock at sub 3 cents and the entire company (3 employees per your latest 10-K) only have a total market cap, of about $11 million dollars? Which means, when your debt and cash deficits are taken in to account, IMO, "the market" is assigning a "Value" of pretty much "ZERO" for the "company" - meaning any intellectual property, plant and facilities, assets, inventory, etc? Why would that be? Curious IMHO?

2) Why if this is a "great" company (3 employees total?)- why do you have a "going concern warning" in your own 10-K? (most recent 10-K, PAGE F-2)
Definition of a "going concern warning" from 3rd party source-
http://wiki.fool.com/Going_concern

"While the term itself is a positive one, the term going concern is usually only encountered when there is a problem with a company. If a publicly traded company has discovered that there is a significant risk to ability to survive (e.g. lack of funds, impending government regulation, pending litigation etc.) it is required to disclose the risk it may go bankrupt to investors in its SEC filings. This is known as a going concern warning. Obviously a going concern warning is a huge red flag for would be investors."

3) If the tech is so great, and all these "conferences" and "PR" and all are going on, then why has no one wanted to "finance/fund" the company- resulting in mgt, making a statement, in mgt's own words like what's on page 25, most recent SEC 10-K filing?:
"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."

4) Why have the MARVEL an REGEN trials, the phase II/III trials never really advanced/moved forward since about 2009/2010 if the technology is so "great" and sought after? Most recent 10-K, PAGE 53
"We are seeking to secure sufficient funds to reinitiate enrollment in the MARVEL and REGEN trials. If we successfully secure such funds, we intend to re-engage a contract research organization, or CRO, investigators and certain suppliers to advance such trials."
Why did they "stop" and/or stall out, never really progressing again, for at least about 4 yrs now?

5) Why was MIRROR announced in big, IMO, "PR"- but has never been spoken about again, since about July 9th, 2013? Other than to say (from PR, July 9th, 2013)
"Bioheart has enrolled our first patient in the MIRROR Phase III trial." ONE?
Most recent 10-K, PAGE 2, was apparently, the only place the words "MIRROR" were mentioned, and all it said was:
"We have also initiated the MIRROR trial, which is a Phase III, double-blind placebo controlled study for centers outside the US. The SEISMIC, MYOHEART,MARVEL and MIRROR Trials have been designed to test the safety and efficacy of MyoCell in treating patients with severe, chronic damage to the heart. Upon regulatory approval of MyoCell, we intend to generate revenue in the United States from the sale of MyoCell cell-culturing services for treatment of patients by qualified physicians."
Is it still "ONE enrolled"?

6) Why, at the end of 2013, per the 10-K, PAGE F-3, dated Dec 31st, 2013- did the company show a cash balance of only :
$46,227 (yes, $46 thousand dollars? The price of probably a mid-level, semi-luxury car in today's market place?)
Why only $46K cash left, after diluting the shares by an increase of essentially doubling of the outstanding shares- but no advancement of the MARVEL or REGEN trials, and MIRROR only "one enrolled", etc? All that share dilution and only about $46K cash at end of yr, but really no "progress" on these key heart trials, IMHO?
End of 2012 10-K, PAGE 1: The number of shares outstanding of the registrant’s Common Stock, $0.001 par value, as of March 26, 2013 was 190,496,693.
End of 2013 10-K, PAGE 1: The number of shares outstanding of the registrant’s Common Stock, $0.001 par value, as of March 24, 2014 was 420,920,157.
And as of the most recent, FORM 14, SEC filing, Page 1, 463,274,232 common shares

7) Why in some very recent "PR" - did the ANGEL, 5 person "trial" in Mexico, appear to show results that are "worse" than a "study/trial" announced in another recent PR, that was also, apparently done on "5 patients" at the same facility in Mexico, but about 4 yrs ago? Why would the most "recent technology"- produce worse outcomes (outcomes inconsistent at a minimum IMO) - with a study done about 4 yrs ago as of today? That doesn't seem like "progress" or consistency IMO? Why would that be?
(also, why is the name "ADIPOCELL used in referring to a study from 2010, when it appears that "ADIPOCELL" did not come into existence until recently? It was formerly called "Lipicell" - and was stated as "licensed" from a different source? So how could Adipocell have been used in 2010? Just "curious" IMO? Most recent 10-K, PAGE 3:
"AdipoCell:
Bioheart has successfully completed various trials using adipose stem cells. In August 2013, the Company canceled its license agreement with the Ageless Regenerative Institute for adipose derived stem cells called LipiCell. Bioheart has entered into a term sheet agreement with Invitrx to License their adipose derived stem cell products. Bioheart has changed its adipose derived stem cell product name to AdipoCell. "
So, if "Adipocell" didn't even exist apparently as a "product/process" name, licensed specifically from a different source then (2010) and was "Lipicell", not licensed as "Adipocell" from a totally different source as stated today- until about Aug, 2013, then how could it have been used in Mexico (specifically called "Adipocell" in PR, referring to events in 2010)- how could it have been used in 2010? 2010 would have been "Lipicell" would it now, licensed from the then source/supplier and under a specific patent/process/preparation, different that today's "Adipocell" which is sourced from a different source, under a totally different license, as stated clearly in the 10-K? It's just confusing IMHO, just to me anyway? Oh well, again, what the heck do I know?

Recent PR release, dated May 5th, 2014:
"Approximately four years ago in April, 2010, Bioheart initiated a study using adipose derived stem cells (AdipoCell™) in congestive heart failure patients. In collaboration with the Regenerative Medicine Institute of Tijuana, Mexico, five congestive heart failure patients were successfully treated in the initial pilot trial at Hospital Angeles Tijuana. Patients underwent a mini-lipoaspiration procedure where 60ccs of fat were removed. This fat was processed to obtain the stromal vascular fraction (SVF) which contains mesenchymal stem cells, progenitor/endothelial cells, pericytes, hematopoetic stem cells and more. The SVF was injected into the damaged areas of the heart using Bioheart's MyoCath® catheter allowing for a minimally invasive delivery. Patients were followed on protocol for 6 months and demonstrated on average, an absolute improvement of 13 percentage points in ejection fraction and an increase of 100 meters in their 6 minute walk distance."

A recent "PR" about the "ANGEL trial" (one would assume is the most recent technology)- stated the following results, apparently worse, or less, than those produced in 2010?
PR dated 4/30/14:
"At
the 6 month time point, patients are demonstrating an average improvement in exercise
capacity or a six minute walk test of approximately 68 meters (p=.07) as compared to an
average improvement of 47 meters at 3 months (p=0.12). Eighty percent of the patients
showed an improvement in their exercise capacity from 3 months to 6 months post stem cell injection.
Another end point in the study is ejection fraction (EF) by echocardiogram. At the 3 month time point, 100% of the patients demonstrated either improvement or stayed
the same. After 3 months, patients showed an average absolute improvement of 3 percentage points in ejection fraction (p=0.17). The patients continued to improve from
3 months to 6 months with a statistically significant average absolute improvement of 10 percentage points (p=0.01)"
I don't know- but isn't that "worse" um "outcome performance" in the most recent, ANGEL trial, than what was reported to have occurred back in 2010? 100 meters is more than 68, correct? Must just be me? I don't understand it I guess?

8) Why if the company is essentially "cash poor" and struggling financially- per mgt's own SEC filed, 10-K statements (see references above) and has a "going concern warning" from their own auditors in most recent 10-K (see references above) and can't move key trials forward, for lack of "funding" (stated in 10-K, in company's own wording, see 10-K references)- why then did qty-2, of the 3 total employees (10-K states 3 total employees)- why did they get extremely large pay increases in yr 2013 per the compensation table, most recent 10-K, PAGE 71? (what "performance" did they do, to warrant large pay increases AND "bonuses" per the table on page 71?)
They essentially increased their base salaries by 50%- and their total compensation packages essentially tripled in one yr, in an economy when most "employees" are receiving no raises/pay increases, and the common share holders of the company have been diluted, nearly wiped out by the common share price- it saw its lowest price in it's history in 2013, touching .0063 (6/10ths) of one penny? Why would that result in "bonuses" and enormous (percentage wise) pay increases to these two "employees"? Just very "curious" IMHO.
Mike Tomas total compensation yr 2012: $347,585
Mike Tomas total compensation yr 2013: $936,804

Kristin Comella total compensation yr 2012: $105,671
Kristin Comella total compensation yr 2013: $366,083

Why would that make sense, IMHO, given the extremely poor performance of the common stock, the company's extremely weak financial position, the fact it has a "going concern" auditor warning, and key trials have not advanced because of "funding"- per statements in the company's own 10-K?

9) Why does a company named BioHEART, who stated (past, IMO) that's its "big opportunity" to be a huge success (paraphrasing) would come from "heart related trials of a product known as "Myocell" getting FDA approval)- why does the company put out a barrage of PR (IMO) in the past 6 months to 1 yr, where "Myocell" seems to hardly get a mention anymore IMO- but a vast range of topics/"treatments" are stated to be now in "studies" and "deals" or similar (all via a 3 "employee" company) - technologies ranging from ED (erectile dysfunction) to "eye" related problems (Macular whatever), to "orthopedic" to "animals" to a recent talk/tweet about a "conference" now discussing "sports medicine" apparently, to "deals" involving what appears to be "medical tourism" in 2nd and 3rd world countries- in a vast array of countries around the world? How, why would all this be possible, let alone "funded", when the company says it can't even advance it's "flagship product" known as "Myocell" for "lack of funding"? Why would one branch out into probably at least a dozen more undertakings, when it can't even advance or progress on, IMO, what IMO, was always touted as the company's "core competency" and key to success? Why would that be the case? Very "curious" IMHO?

10) If "Myocell" is the flagship product- even if it ever could reach FDA approval, it's no longer protected under patent, so how will it be successfully monetized, when much larger, better financed competitors exist IMO? From company 10-K, PAGE 16:
"Patents and Proprietary Rights
We hold limited patent rights in our product candidates. Our MyoCath product candidate is protected by a patent, expiring in September 2017, in which we have an irrevocable co-exclusive license. Our MyoCell product candidate is no longer protected by patents, which means that competitors will be free to sell products that incorporate the same or similar technologies that are used in MyoCell without infringing our patent rights. As a result, MyoCell, if approved for use, may be vulnerable to competition in the form of products that use the same or similar technologies. We have previously licenses certain patents and patent applications relating to our MyoCell product candidate. These licenses have all lapsed as of the date of this report, .."

11)Given all this stated "world leading technology" and all (see company's own web site, numerous yrs of "PR", etc to see specific "claims" made, over a period of at least 4 yrs IMO)- why has the company undergone qty-3 CEO changes since about 2008, numerous departures from the BOD, numerous layoffs/and or firing of nearly all former personnel at the company (now 3 employees remaining), and why would the common stock be down, about 99.39%, to a sub 3 cent level, when viewed on a "max" chart- covering pretty much from the IPO date, to today? Why would that "performance" be the case? Again, just curious IMHO? Why? Why did the company default on a key loan, the BofA loan, and "need" to create the entity now known as "Northstar"? Again, just curious and "interesting" IMHO?

12) Given the already extremely poor return given to the common shareholders in general (see stock chart and steep share price decline)- why would the outstanding shares available be further increased, from about 950,000 million shares today, to a stated 2 BILLION shares, and no common shareholder vote is even required? Why did BHRT set up the share voting structure, so that when a "proxy" comes up- the common shareholder have no vote or voting rights anyway? Just curious? Do the common shareholders even matter to the company mgt or BOD? Again, just curious, given the common share performance, and now, what appears to be pre-arrangements being made to further dilute the common shareholders.

Thanks in advance!