US Stem Cell Inc (USRM)

[Dragon Lady]

"Why does a pesky suit matter when this could be worth billions?"

1) $2.3 MILLION plus interest for a company that for all intents and purposes is CASH BROKE is hardly "pesky" in my book. It can BK um in a heartbeat if they lose this case. Further, this company is already cash poor and now needs to spend a boat load on lawyers to defend this case. They spend nothing essentially on R&D or "trials" as of right now (less than $3K a month last qtr) and now they've got to divert even more cash they don't have off to pay very expensive law firms on retainer. Hardly a "pesky" matter? The suit is also questioning the legality and inner workings of Northstar Biotech LLC which could get real interesting IMO as it's now gonna go under the microscope before a court, judge and maybe jury. They, Northstar LLC didn't just start scrambling and filing a bunch of change papers with the Florida Secretary of State for no reason IMO. Why did BHRT BOD member Chuck Hart just pull himself off as the Northstar LLC controlling mgr title and they handed it to "some guy" named Greg Knutson who appears to own a "construction company" down the road a few miles in Ham Lake MN, not far from Chuck Hart's place (which is for sale on Zillow now) and which was always listed as the "headquarters" of Northstar Biotech LLC? Why now? Who is "Greg Knutson" and how did he just gain control over 500 MILLION plus BHRT share votes by being named the Northstar LLC "manager director" or whatever the title is- but gives him "control" over all Northstar votes, which is 500 MILLION just for the 20 MILLION preferred shares they were "given" which carry a 25 to 1 controlling vote. Right as a ASM and "proxy vote" is coming up to re-elect the same BOD and self-vote pay increases etc? A vote in which Northstar has total proxy control- no common shareholder's vote makes a wit of difference as the majority, by a vast margin, is all in the hands of Northtar LLC and now "some guy" from remote MN named "Greg Knutson" who no one of the public shareholders even know who the guy is. Ole BHRT missed a "pesky" ole "PR" on that one, what a surprise, eh?

BHRT had $46K total cash on hand left as of their last 10-Q filing. They have about $250K (thousand) in total, yes total assets on their books- the price of a one bedroom condo in a dumpy neighborhood in my neck of the woods. They, in the past 1 yr has tapped the most desperate of desperation lenders for desperation survival cash for amounts like $200K Magna, Asher $258K, Daniel James $85K, Fourth Man $75K. A company who isn't BROKE doesn't to toxic, convertible debt, death spiral "financing" deals for a pittance like $75K or $85K unless they're down to their last dollar and need anything to pay the next month's survival.

BHRT has been sitting on the brink of insolvency for an extended period of time per their own SEC filing "going concern" warnings and that's despite hacking out nearly all of their R&D spending- they're not a "heart research and FDA trials" company anymore, not by a long shot. They aren't spending any money to do "research and development", have no real scientific staff left and have conducted no FDA level phase 2/3 trials since the 2009/2010 period, other than dangling a carrot about a supposed "Mirror" phase 3 trials which died on the vine as fast as they put the hype PR about it that ONE "patient had been enrolled", then never heard about again, never progressed further for "lack of funding" - see 10-Q SEC filing.

2) It "could" be worth supposed $BILLIONS? LOL. Well, the market today is valuing it at about 8/10ths of ONE CENT per share with a total market cap of about $5 MILLION. When one subtracts out their present $10 MILLION plus in current debts they'd owe they'd be worth ZERO if liquidated. They have ZERO positive shareholder equity and almost no assets. They have close to zero cash at any given time against very large debts owed. It's far closer to being valued at ZERO by the market than some imaginary $BILLIONS number, that's past laughable. $BILLIONS based on what? Read their last 10-Q and the Magna share prospectus- they don't even hold patent or licenses anymore to their supposed "flagship products" Myocell and Myocell SF-1 or whatever it's called and it's not even clear if they hold the license to Adipocell, it only says they signed a "term sheet" for that license after losing the "Lipicell" license to another lawsuit- the lawsuit involving Comella that's on-going ( more lawyer fees and expenses).

$BILLIONS imaginary "worth" versus the reality of a present market cap of about $5 million while loaded with $10 million plus in debts and cash poor and $250K TOTAL ASSETS to the company name and little to no intellectual property or patent portfolio left. What, by any stretch, makes this supposedly worth $BILLIONS? Why has no major partner or venture firm or high quality finance group ever stepped up to go after these imagined $BILLIONS in worth? Why just massive dilution using the most desperation type convertible debt and toxic financing a nano cap OTC penny stock can use- for years? Why? Where's all the smart, big money beating the doors down to get at the imaginary $BILLIONS here? They're a lot closer to BK per their own SEC filings than some imaginary $BILLIONS, that's for sure. Companies worth BILLIONS don't have "going concern" statements and the words "liquidity problems" plastered into every SEC filing and duly signed off by the CEO and their own audit firm. $BILLION worth companies don't end their qtrs with $46K total cash left on hand, not even the price of a mid-range Lexus out the door.

A "pesky" REAL LAWSUIT seeking REAL LARGE damages for unpaid debts to a large creditor versus IMAGINARY "worth" of supposed $BILLIONS in imaginary dollars?

http://lawsuitpressrelease.com/investors-sue-bioheart-inc-millions-unpaid-debt

http://lawsuitpressrelease.com/wp-content/uploads/2014/12/Leonhardt-v.-Bioheart.pdf

http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResultDetail?inquirytype=EntityName&directionType=Initial&searchNameOrder=NORTHSTARBIOTECHGROUP%20L120000248400&aggregateId=flal-l12000024840-bd33dc0c-23e3-4df8-9590-ecf4bbbe3d0d&searchTerm=northstar%20biotech&listNameOrder=NORTHSTARBIOTECHGROUP%20L120000248400

Who is "Greg Knutson" who now holds power to over 500 MILLION voting shares of BHRT stock? Why did Chuck Hart remove himself as head of the LLC? Why now? Where's a big ole PR about that? Why was he just handed the keys to the car on 1/5/2015, right when the "pesky lawsuit" broke in PUBLIC NEWS, never being mentioned once in a good ole BHRT style PR? BHRT will PR pretty much anything IMO, no matter how trivial- but they somehow just "missed" and forgot about the PESKY LAWSUIT THING to tell the shareholder's about it? Wonder why that is?

https://www.clerk-17th-flcourts.org/Clerkwebsite/BCCOC2/OdysseyPA/CaseSummary.aspx?CaseID=7862332&hidSearchType=party_case&DisplayCitation=no&CaseNumber=CACE14021256&SearchType=

That's a LOT of lawyering to not tell the shareholders about it in a PR IMHO. Sorta missed a PR about that? Only Magna had um put it in the ole share prospectus, buried in a few line blurb on some page deep in the document.

Good thing we have a public press that prints these "pesky things".

http://lawsuitpressrelease.com/investors-sue-bioheart-inc-millions-unpaid-debt

http://www.bizjournals.com/southflorida/news/2015/01/08/sunrise-biotech-company-sued-for-2-3m.html

https://www.clerk-17th-flcourts.org/Clerkwebsite/BCCOC2/OdysseyPA/CaseSummary.aspx?CaseID=7155410&hidSearchType=party_case&DisplayCitation=no&CaseNumber=CACE13024037&SearchType=

http://search.sunbiz.org/Inquiry/CorporationSearch/GetDocument?aggregateId=flal-l12000024840-bd33dc0c-23e3-4df8-9590-ecf4bbbe3d0d&transactionId=l12000024840-4d74a27e-288a-4b72-bbd3-bac6b7264bde&formatType=PDF

http://www.whereorg.com/g-e-knutson-construction-8294240

http://www.sec.gov/Archives/edgar/data/1388319/000114544315000029/d31977.htm

Recent filed SEC form SCHEDULE 13G:

"Names of reporting persons: Northstar Biotech Group, LLC"

" Shared voting power: 52,368,582 capital shares (32,368,582 shares of common and 20,000,000 shares of preferred)"

"Shared dispositive power: 52,368,582 capital shares (32,368,582 shares of common and 20,000,000 preferred (each share of preferred stock has voting power equal to twenty-five common shares)"

" Greg Knutson, Chairman of Board of Managers, is deemed to have voting and dispositive power"

So ole "Greg", whoever he is, will hold the entire majority voting block of share voting power in this opcoming proxy vote as announced. The 350 or so "common shareholders" can vote away to their heart's content- and it won't make a wit of difference. What ever vote "Greg" casts- that's the way the vote will end and be decided, right then and there. 552 MILLION votes trumps all. End of story.

http://www.sec.gov/Archives/edgar/data/1388319/000114544310001842/d27040.htm

SEC filed 10-K showing that Brenda Leonhardt indeed lent the money to Bioheart that is being sought after in the lawsuit, the "pesky" lawsuit.

PAGE 17:

"In March 2009, the Company’s Chief Science and Technology Officer and his former spouse repaid $3.0 million of principal and a pro rata portion of accrued interest on behalf of the Company. The Company then owed this $3.0 million to the Company's Chief Science and Technology Officer and his former spouse. . This liability was reflected on the Company’s consolidated balance sheet on a separate line titled “Subordinated related party loan.” This amount continued to accrue interest at an annual rate of the prime rate plus 5.0%.

In February 2010 the Company’s Chief Science and Technology Officer and his spouse filed divorce papers. Pursuant to the divorce, their jointly owned shares and [color=red]their ownership of the loan to Bioheart which they hold as a result of their payment of $3 million of principal and related interest to Bank of America on behalf of Bioheart, would be divided equally between them.[/color]"

Nothing "pesky" about being owed $2.3 MILLION bucks and waiting to get paid, while insiders are nicely self enriching themselves for years, not in my book. Not when the same insiders set up this "LLC thing" via which they grant themselves a "lien" on essentially everything Bioheart might own, could own, ever will own, etc Nothing "pesky" about that IMO and Brenda Leonhardt's fairly large law firm seems to think the same, as does Bryan Collins of Greystone Capital, a very experienced lender to public traded firms- including being a large lender to Bioheart many times in the past. I'd say he knows their business well and know "lending" and how to collect pretty well- since he lends in the $millions of dollars every single day as his professional business. See SEC filings for how much money and how many times Greystone has lent $millions to Bioheart in the past. They and their large law firm don't look like any duffer ambulance chasers to me. Seeking $2.3 MILLION isn't some "pesky lawsuit" IMO.

Inner workings and legality of Northstar LLC is also being questioned in the suit. If some judge were to "unwind" or undo Northstar LLC for any reason- the implications to that are enormous as they're all wrapped up in a bunch of debt that Bioheart still owes to other creditors besides Brena Leonhardt as being asserted in the lawsuit. There's a whole chain of oled loans, totaling $millions that are all tied to the existence of Northstar LLC. Who knows what the implications behind that could mean?

Latest filed 10-Q, PAGE 17:

"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 10,000,000 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.
"

Northstar presently "thinks" they pretty much OWN BIOHEART the public traded company and hold "lien" to it all- that's now being legally challenged. Creating Northstar is fascinating IMO as it creates a tiny LLC that essentially "owns" the rights to an entire public traded company, leaving the common shareholders really owning or having the rights to nothing. It's about time IMO, that Northstar LLC got a court challenge. The lawsuit is questioning its very validity and legality.

Same 10-Q PAGE 18:

"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 Company renewed the loan with Seaside National Bank and Trust during the first quarter of 2014 to extend the maturity date to December 23, 2015."

So that's another $million wrapped up and all entangled with the "guarantors" right there and tied back to the original B of A loan to which Brenda Leonhartd acted as a "guarantor" (who's the mystery "guarantors" for the Seaside loan? It could partly be Brenda Leonhardt and/or Northstar) and BHRT has been delaying paying on that $980K for ages. If this Northstar thing gets unwound in court or if this present lawsuit prevails- it may cascade into this Seasie loan now being "called" or coming unraveled too. There's all kinds of loans tied up and related to Northstar LLC and these mystery "guarantors" who are never named by name in the SEC filings. Look at that loan from Seaside- they just managed to get it extended to end of this yr, Dec 23 2015 as they never have any cash or ability to pay on it. It's been sitting, parked at $980K on their books for yrs. If that loan went default that could sink um right there too. There's nothing "pesky" about this suit- it's got debts and debts upon debts all inter-tangled in its implications IMO.

Same 10-Q PAGE 15:

"Hunton & Williams Notes
At September 30, 2014 and December 31, 2013, the Company has two outstanding notes payable with interest at 8% per annum due at maturity. The two notes, $61,150 and $323,822 , are payable in one balloon payment upon the date the Noteholder provides written demand, however the Company is not obligated to make payments until the Northstar (or successor) Loan is paid off."

So there's more money BHRT owes that they've been delaying paying on via this creation of Northstar LLC. Again, if a judge or court un-winds Northstar or it crumbles via being deemed not a legal construct or whatever- there's some more money that would come due on the spot one would have to assume, since BHRT's SEC filing says they get to delay paying on it because of the existence of Northstar LLC. See how "pesky" this "little" lawsuit gets in it implications?