US Stem Cell Inc (USRM)

[Dragon Lady]

Quote: "GREAT WEEK FOR BHRT!! ONLY GOING TO GET BETTER WITH MORE REVENUE!!! Great staff with smart smart people and great pipeline which will make it eventually. Just gotta keep scratching and clawing like they have done the last decade. They were doing such with no sales. Now they are continuously bringing in more money and eventually more money will be made than outgoing monthly debt and grenier pastures with more financiers and phase 2/3 will be started... Not something that happens overnight!"

1) There's no proof a shred of that is true. So far, "revenue" made no difference- as they spent more and had greater expense growth than any "top line" revenues coming in? Also, back out the high cost of sales and the picture looks even worse (See last filed SEC 10-Q PAGE 5 and increase in loss from operations, NOT a decrease from "revenues"). Just the cash bonuses paid out (they had no cash so they're now paid as debt/promissory notes owed, meaning those bonuses now earn interest and will get paid out of any cash coming in before any R&D or actual trials or research or similar)just those "bonuses" consume any bottom line "revenue" results for the most part. Meaning any cash that might of come in- is for all intents and purposes already spent and owed to those two insiders. READ the SEC filing.

2) Hacking the R&D budget to near zero (less than $3K a month, see last 10-Q SEC filing) and they're still not even remotely close to cash flow positive- but just put out some supposed future laundry list of supposed "new trials" to start, but gave no specifics, no details on how they'd be funded and said "We'll let you know at a FUTURE DATE". Well, MIRROR was a supposed phase 3 trial and it turns out it NEVER HAPPENED and never was "FULLY FUNDED BY BIOHEART" as was "claimed" in PR originating about 1.5 yrs ago. The "We'll let you know at a future date" ole update on that one is CANCELLED and by the way IT NEVER EVEN HAPPENED. What credibility is there that any of the vast claims of supposed "trials and projects" released on Jan 25th will now happen? How is it MIRROR was so hyped, so promise- but in reality never even took place? How can that be? How does that work?

3) Grenier (greener?) pastures with what supposed "financiers"? Where? When? Which ones? What are the names of these imaginary "financiers" and how much are they supposedly "financing" and at what terms? Dilutive, highly dilutive like all the rest going back 4 or more yrs, like those? What "financiers"?

4) It's not true they had "no sales" in the past? Read all 10-K's and 10-Q's going clear back to when Leonhardt was CEO. There's been sales before- that's a 100% false statement. What proof is there that this is some "smart smart" or whatever "staff"?? No one on "staff" has any experience or track record at ever getting a product through the FDA gauntlet to a successful FDA approval- per their own posted resumes. The entire company "staff" right now per their SEC filings is 4 full time employees- two of which are getting annual base pay and bonuses totaling $1,575,000 now per the last 10-Q SEC filing (consuming a huge part of any cash coming into the company), all from a company that's essentially cash broke at any given time per their own SEC filings and numerous "going concern" and "liquidity problems" warnings (finished the last qtr w/ $46K total cash on-hand despite top line "revenues"). What supposed "smart smart" and all- what proof? The common stock has lost over 99.7% of its value since going public in 2008. It was delisted from the NASDAQ only one yr later in 2009. The stock has lost about 98% of its common value under the mgt of the present CEO as we passed through probably the greatest bull market in world stock market's history. What "smart smart"- what proof is there of that? They have a history of defaulting on key loans like the B of A loan- leading to near BK and insolvency. They presently operate under a "going concern" warning in every SEC 10-Q or 10-K filing, saying their financial liquidity and solvency is highly questionable. What "brilliance"?? What proof of that exists?

5) Again, there's no proof yet that anything has "gotten better with more revenue"- what proof is there of that? Where?

From the latest filed 10-Q, the one followed by several PR boasting of "revenue"- here's what the SEC filed 10-Q had to say about the reality of their situation:

10-Q, latest:

PAGE 4:
Cash and cash equivalents: $46,592
Accounts payable: $2,068,256

PAGE 5:
Net loss from operations period of 2013: $(1,067,153)
Net loss from operations same period of 2014:$(1,466,732)

(LOSS got larger despite "revenues" as expenses grew more than "revenues", and that's despite R&D spending getting hacked out by over $400K, an easy way to sand-bag the loss to look smaller, but sending nothing to R&D spending, aka "trials" aka explaining IMO why MIRROR was never "FULLY FUNDED BY BIOHEART" as claimed in the original PR)

PAGE 9
" Fully diluted shares outstanding were 659,543,477 and 323,296,916 for the three months ended September 30, 2014 and 2013, respectively and 605,015,919 and 336,682,241 for the nine months ended September 30, 2014 and 2013, respectively."

(a staggering, massive amount of share dilution more than doubling the O/S share count in less than a 1 yr period- and despite all that dilution, despite hacking out R&D spending down to near zero, they still finished that qtr near cash broke with $46K left on-hand against just accounts payable of $2 million plus dollars and now $800K in bonuses owed a "promissory notes" as there was no cash to pay them when issued)

Yet despite being cash poor and not spending more than $3K lousy dollars a month on R&D, aka "trials" being funded- they handed out enormous pay increases to only two select people, of a company of 4 full time employees:

PAGE 23:

"Employment agreements
On July 28, 2014, the Company’s Board of Directors approved the 2014/2015 salary for Mike Tomas, Chief Executive Officer, at $525,000 per year, beginning July 1, 2014 with an incentive bonus ranging from $150,000 to $500,000. In addition, the Board of Directors will grant Mr. Tomas options to be determined on or before June 30, 2015. The Company’s Board of Directors approved a bonus of $500,000 and options to acquire 10,000,000 shares of the Company’s common stock for ten years with four year vesting and a cashless exercise provision at an exercise price equal to the five day average closing price of the Company’s common stock as of August 1, 2014. The cash bonus may be paid in the form of a six month promissory note.

On July 28, 2014, the Company’s Board of Directors approved the 2014/2015 salary for Kristin Comella, Chief Scientific Officer, at $250,000 per year, beginning July 1, 2014 with an incentive bonus ranging from $100,000 to $300,000. In addition, the Board of Directors will grant Ms. Comella options to be determined on or before June 30, 2015. The Company’s Board of Directors approved a bonus of $300,000 and options to acquire 5,000,000 shares of the Company’s common stock for ten years with four year vesting and a cashless exercise provision at an exercise price equal to the five day average closing price of the Company’s common stock as of August 1, 2014. The cash bonus may be paid in the form of a six month promissory note."

So they self issue huge pay and bonuses to themselves (those two make up 2/5ths or 2/6th of the BOD, the rest all being the NORTHSTAR LLC members) So while they're issuing huge pay increases and "Cash bonuses" while they've cut R&D, aka "trial spending" to near zero dollars- they then issue the following statement in the same 10-Q SEC filing;

PAGE 28:

"Our Ability to Continue as a Going Concern
Our independent registered public accounting firm has issued its report dated March 24, 2014, in connection with the audit of our financial statements as of December 31, 2013, that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern and Note 2 to the unaudited financial statements for the period ended September 30, 2014 also describes the existence of conditions that raise substantial doubt about our ability to continue as a going concern."

PAGE 36:

"At September 30, 2014, we had cash and cash equivalents totaling $46,592. However our working capital deficit as of such date was approximately $10 million. Our independent registered public accounting firm has issued its report dated March 24, 2014 in connection with the audit of our financial statements as of December 31, 2013 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern and Note 2 of our unaudited financial statement for the quarter ended September 30, 2014 addresses the issue of our ability to continue as a going concern."

PAGE 12:

"NOTE 2 — GOING CONCERN MATTERS
The accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed financial statements, during nine months ended September 30, 2014, the Company incurred an operating loss of $1,247,199 and used $747,184 in cash for operating activities. As of September 30, 2014, the Company had a working capital deficit (current liabilities in excess of current assets) of approximately $10.0 million. These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern."

THREE TIMES in the same SEC filed 10-Q they, the Sr Mgt, the CEO felt it necessary to use the words, "GOING CONCERN WARNING" and to discuss the doubt surrounding their ability to stay liquid and continue as a "GOING CONCERN" aka stay in business. And that's before they even had all these new lawsuit/lawyer fees they will now have with this large lawsuit they're now defending per recent public released info.

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

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

There's ZERO PROOF IMO of any "greener pastures" or whatever? Where? Where in the most up to date SEC filing is any of that proven out to be true? Where? I don't see it and that's despite so called "revenues" and at the same time hacking out the R&D budget to near zero? When the R&D budget is near zero- what exactly is going to pay for all the pie in the sky dream talk supposed "programs" of the Jan 25th, 2015 "PR" release? How, how is all that going to get funded and paid for- like the MIRROR trial that never happened was "FULLY FUNDED BY BIOHEART" in their own PR wording? I'd love to see the details explaining all that? Lets see the funding details for that pie-in-the sky "chart" of supposed projects. What exactly, to the detail is going to fund them? How?

They just tapped Magna, one of the most desperation lenders/hedge funds an OTC firm can tap. Why? Cause BHRT is in supposed great financial condition from "revenues"? The dilution resulting from Magna (let alone Asher, Fourth Man, Daniel James, etc) is going to be a long term share price crushing IMO. That's what I've seen with Magna "financing deals", numerous, numerous times in the past, from all different types of companies that relied on, needed Magna for survival cash.

My 2 cents.