US Stem Cell Inc (USRM)

[Dragon Lady]

Quote: "There are cash flow opportunities today in addition to a potential MyoCell FDA approved therapy. They are making revenues QTR after QTR. They are becoming a cash flow company now in my opinion."

"revenues" do not = positive "cash flows" for a business. Not how it works. "cash flows" come from operations, from financing activities and investing of cash.

BHRT does not come close to generating enough cash from operations to be cash flow positive. They don't even generate enough cash when using dilutive, toxic convertible debt financing combined w/ cash from operations to be even close to "cash flow positive".

They, BHRT, finished last qtr with a grand total of $46K cash left on-hand, despite top-line "revenues" and a lot of borrowing and paying of bills using common shares of stock and issuing of "notes" (debt owed) to various people/firms for bills owed, etc (Read the last 10-Q cover to cover). They ended that last qtr with over $2 million in just "accounts payable" and owing 2 people in the company $800K in bonuses while possessing only $46K total cash left in their cash account. That is "ill-liquid" or nearly insolvent. Not "cash flow positive" by any stretch of an imagination.

A company with "cash flow problems" aka "liquidity" problems- is known as a "going concern" risk, aka possibility of filing BK. Meaning the company does not have adequate amounts of cash coming into the company in a timely manner to meet the daily, weekly, monthly needs of cash going out to pay and properly service all the bills and expenses they owe as they come due.

http://www.sec.gov/Archives/edgar/data/1388319/000114544314001305/d31740.htm

From their, BHRT's own last filed 10-Q statement, 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."

Company's DO NOT stick statements (WARNINGS) like that into their 10-Q filings with the SEC just willy-nilly cause it's no "big deal". A "going concern" risk statement is about as grave a warning a company can issue that they are having cash and liquidity problems and are a very high risk of becoming insolvent. That's what that warning is in their SEC filing for- it's not just some "boiler plate" nothing statement. It's a serious statement and put in their to legally protect the Sr Mgt from full disclosure laws as to the true financial condition of the company as required in the SEC reporting requirements for public traded stock companies. It's a serious deal IMO.

Same SEC filed 10-Q, they, BHRT stick ANOTHER "going concern" warning in on PAGE 28. So ONE was not enough, they stuck it in there again:

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."

TWO times was not enough, so in the SAME 10-Q FILING they, BHRT insert a THIRD instance to warn investors of "going concern" problem.

SAME filed 10-Q, most recent, 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."

So THREE TIMES in the same 10-Q filing, Sr Mgt felt it necessary to use and discuss the terms "going concern" and also specifically use the wording of "liquidity problems".

That's not by mistake IMO and is not some "generic" or "boiler plate" blah, blah language. It does not make it into a company's SEC filings unless specifically written in there. Again, it's about as serious a warning as to a company's weak financial and cash position that any company can issue IMO.