US Stem Cell Inc (USRM)

[Dragon Lady]

2 BILLION shares on a 2.7 CENT stock is generally, NEVER a "good thing" in probably 98% plus of cases, IMO. (actually 2.48 cent stock now as of this AM)

(98% percent is a guesstimate, I'm not an expert- but I've read in many, many places about the survival rate of stocks that reach the true "penny" range. I've personally had at least one go BK on me, wiping out my total investment/shares, and it happened when the "news/PR" on it was great, and happened with essentially no warning. Just woke up in the AM, and they were shutting down per the PR, filed BK, done, finished, over- share price had plummeted to .00X cents, before I could even hit the sell button.)

Still making lower highs and lower lows as this down-trend continues. Never has come close to a re-test or even reaching back to the 50 DMA for heading on about 6 weeks now, and is heading, IMO back to at least the 200 DMA of .019, perhaps much lower IMO.

Statistically, any public traded stock that ends up below about $1 has serious financial/operational problems typically, and decreasing chances for long term survival and will most often get delisted from a major exchange and end up in the land of the OTC or "pinks". Get down around 50 cents a share, and it nearly always ends bad- as in BK or similar. Get to the true "penny" range (true land of the OTCBB and "pinks), say, oh, like 5 cents or 2.7 cents and as low as 6/10ths of a cent (BHRT hit 6/10ths of 1 CENT on Dec 14th, 2013, .0063 per share, almost, only 6 months ago, to the day), and the statistics are like 90% or better, to end in BK or vanishing/dissolved or some form of total failure and total wipe out of the common shareholder. Even if reverse mergers are done and what not. 2 BILLION shares on a sub 3 cent stock, that has a market cap of about $11 million, is not a "good thing" in any way, shape or form, IMHO.

Remember, this latest 10-Q (just filed last week) contained (2) "going concern warnings" in it, and the specific words, "liquidity problems"- put in there by mgt.
Page 11/12 10-Q
"NOTE 2 – GOING CONCERN MATTERS"
Page 25 10-Q
"Our Ability to Continue as a Going Concern"

I can list numerous companies; huge companies, some 100 yrs old or more, hugely profitable companies, household name companies, cash rich and earnings rich companies that pay ever growing dividends- and most don't have 2 BILLION shares available or outstanding, or even have as many as 500 million shares already outstanding, in many cases. And that's after yrs of stock splits from so much growth and success. They have 1000's, if not 10's of thousands employees (as opposed to 4 full time, 1 part time) and tremendous assets like buildings and manufacturing plants or incredible intellectual property/patent portfolios, real estate holdings, mineral or oil wealth, etc

For all intents and purposes, the common shareholder has already been diluted out of existence on this one, IMHO. It's at sub 3 cents, with a recent (end of 2013) LOW of 6/10ths of ONE CENT in late 2013. The common shareholder also has no voting rights- none. The company "insider" structure has been set-up (Northstar and Sr. Mgt and a few others) to control it all. The common shareholder's views, input, vote, whatever- doesn't mean a thing to these guys, IMO. And this very recent form 14C, "Proxy" is one of the best examples, IMO- as they say right in it (paraphrasing) "We're doing this, here's a proxy statement, but don't bother mailing anything back or even voting- cause we don't need, nor WANT your vote anyway and it's a done deal already". That's pretty much how it's written, IMO.

The entire page regarding the "reason/future use" of shares must be read in entirety, IMO. It explains, essentially, via the power of the BOD and Sr. Mgt, that these shares can essentially be used for pretty much ANYTHING THEY WANT, as long as it falls under the "needs of the corporation".

Form 14C, PAGE 51, TOP OF PAGE to END OF PAGE. It's a SEC filing, so every single word is carefully chosen and in there for a reason, IMO. They don't just insert un-needed or spurious words for no reason. These things are reviewed multiple times, by the company counsel, Sr. Mgt, etc before being uploaded to the EDGAR database.

PAGE 51: (again, TOP OF PAGE to VERY END)- this is the complete explanation, per the company, as to why they're "authorizing more shares".
"INCREASE AUTHORIZED COMMON SHARES

Material Terms, Potential Risks and Principal Effects Of The Increase of Authorized Common Share

Our Board of Directors and the consenting majority stockholders have adopted and approved resolutions and an amendment to the Articles of Incorporation to effect an increase of the number of common shares of the Company that the Company may issue from nine hundred and fifty million (950,000,000) shares of common stock and twenty million (20,000,000) shares of preferred stock, both $.001 par value respectively, to two billion (2,000,000,000) shares of shares of common stock and twenty million (20,000,000) shares of preferred stock, both $.001 par value respectively. The Board of Directors and the consenting majority stockholder believes that the Increase in Authorized common shares is in the best interest of the Company and its stockholders because the increase in the number of authorized but unissued shares of Common Stock would enable the Company, without further stockholder approval, to issue shares from time to time as may be required for proper business purposes, such as providing for reserves that are often required when and if necessary to raise additional capital for ongoing operations, business and asset acquisitions, present and future employee benefit programs and other corporate purposes as we make every effort to become cash flow positive.

The increase in the authorized number of shares of Common Stock could have a number of effects on the Company's stockholders depending upon the exact nature and circumstances of any actual issuances of authorized but unissued shares. The increase could have an anti-takeover effect, in that additional shares could be issued (within the limits imposed by applicable law) in one or more transactions that could make a change in control or takeover of the Company more difficult. For example, additional shares could be issued by the Company so as to dilute the stock ownership or voting rights of persons seeking to obtain control of the Company, even if the persons seeking to obtain control of the Company offer an above-market premium that is favored by a majority of the independent shareholders. Similarly, the issuance of additional shares to certain persons allied with the Company's management could have the effect of making it more difficult to remove the Company's current management by diluting the stock ownership or voting rights of persons seeking to cause such removal. The Board is not aware of any attempt, or contemplated attempt, to acquire control of the Company, and this action is not being presented with the intent that it be utilized as a type of anti-takeover device.

Stockholders should recognize that, as a result of this proposal, they will own a fewer percentage of shares with respect to the total authorized shares of the Company, than they presently own, and will be diluted as a result of any issuances contemplated and potentially executed by the Company in the future.

Plans, arrangements, commitments or understandings for the issuance of the additional shares of Common Stock.

On November 20, 2013, we entered into an Investment Banking Agreement with Cassel Salpeter & Co. (“CSC”), who will act as exclusive third party financial advisor in connection with investment banking matters. The term of the Investment Banking Agreement shall be for a period of twenty four months unless terminated or extended in accordance with its terms. Part of these services may involve the closing of a Mezzanine Financing consisting of non-convertible subordinated debt and/or sale of equity securities. In the event a Mezzanine Financing is closed, additional securities may be issued. There are no definitive agreements at present for a Mezzanine Financing.

Apart from the above, there are currently no plans, arrangements, commitments or understandings for the issuance of the additional shares of Common Stock which are proposed to be authorized.
51"
END OF PAGE. END OF "explanation" of share authorization increase.

The words "currently no plans"- again, VERY KEY, IMO. That means, "as of the time of this filing". What it also means then, is the BOD/Sr Mgt could meet the NEXT DAY, have a BOD meeting and then say, "We want to issue some more shares for general "corporate needs" or for "employee benefit programs" or for "anti takeover effects" or for "ANYTHING WE WANT (OTHER corporate purposes) that meets our corporate needs" and it's a done deal (they also, clearly devoted a huge amount of wording/discussion for some reason- to anti-takeover and/or "attempts to remove current management"? Extremely "interesting, IMO).

That, IMO, is exactly how/why it's worded the way it is. It clearly explains in the opening, top paragraphs, all the powers the BOD has to use these shares - and they are broad IMO, nearly all encompassing IMO ("OTHER corporate needs"- pretty much makes it as wide-open, broad IMO, to mean anything, anything the BOD decides is a "corporate need"). It's all stated right there. And they say, they don't need any further outside approval or input from anyone.

Also, "mezzanine" financing is a very, very specific type of financing, only handled by certain banks/firms that typically specialize in "mezzanine" deals. They, as far as I've ever read, require strong cash flows (NO on BHRT), a history of profits and earnings (NO, on BHRT), strong growth as in growing cash flows, sales, profits, expansion, etc (NO on BHRT), etc. And the ability to pay back debt (NO, on BHRT- they're barely paying back the debt they have now: See numerous "going concern warnings" in 10-Ks and 10-Q filings). So, IMO, "mezzanine" financing is not very likely at all for BHRT. It clearly states there are "no definitive agreements at present for a mezzanine financing".

Mezzanine financing explained:
http://www.zacharyscott.com/insight/financing-types/mezzanine-financing.aspx
From "experts/article" above written by investment bankers:
"APPLICABLE SITUATIONS
Mezzanine capital is typically employed by middle-market companies (revenue of $20MM to $500MM)" (NO to BHRT, IMO)
Also,
"The most suitable mezzanine candidates are mature businesses with stable or growing margins, defensible market positions, well-defined strategies, and competent management teams. It is not a high-risk capital source (how many going concern warnings? "my words inserted) that will step up when the bank balks because of performance problems. Likewise, it is not suitable for early-stage, emergingtechnology, or turnaround situations."

(Well, that would pretty much eliminate BHRT, IMHO. They are "emerging" and have huge "financial/turnaround" type "problems" to overcome IMHO)

The new shares (up to 2 BILLION now), will IMO, simply be used for more and more "dilutive" type financing per SOP. They blew through their 190 MILLION limit only at end of 2012, and had to amend the corp. chart then- so they upped the shares to 950 million or so. Well, who'd of thought IMO, that only a little past 1 yr later, they'd now be at 500 MILLION fully diluted, already outstanding shares and climbing- no end in site?

This IMO, is just nothing more than a reason to get the increase/allocation out of the way. If the words "mezzanine" being slipped in, make it more "palatable", then so be it. It's a massive share increase in the end- and again, the top of the page 51 paragraph, IMO, makes it crystal clear- that the BOD and Sr. Mgt, at any point in time they want, and pretty much any purpose they want, can as they stated "without further stockholder approval, to issue shares from time to time as may be required for proper business purposes". That leaves it about as "wide open" as one can get/state in my opinion.