US Stem Cell Inc (USRM)

[Dragon Lady]

Quote, "So if BHRT went bk these people we are talking about would be 1st in line to get money repaid before commons?"

IMO, 100% absolutely of course. Always that way for holders of "loans/debt" versus equity holders. Always.

Read the Northstar LLC "lien" agreement- they hold rights to everything this company has for all intents and purposes and are a "secret" structured LLC, meaning no one in the public is even fully certain who all the members of the LLC are. It says so right in the lawsuit filing- that part of their discovery process is to figure out who else "might" be part of Northstar LLC as the SEC filings of BRHT always say something like, "Made up of certain BOD members and "other" shareholders and/or guarantors" (some wording similar to that - see SEC filings) aka the mystery guarantors IMO. As far as I know- Bioheart has never stated who they all are- who ALL the "members" are that have a stake or ownership rights to Northstar LLC.

But yes, read the balance sheet- there's $10 million in current "debts" and at least $2 million or more of that is for example "accounts payable" - those are like vendors, people doing recent business with the company, etc. They would ALWAYS make a first claim to any monies in a BK proceeding and as "creditors" would always be ahead of equity (stock) shareholders.

Bioheart has no assets for all intents and purposes (about $250K worth as of last SEC filings) so it really makes no difference anyways- they have no cash left to pay anyone in the event of a default and nothing to sell or liquidate to generate even a fraction of what it would take to make even a tiny dent in paying anyone back - they don't really own anything (no real estate buildings, no plant and equipment, nothing really of value- just look at their assets, about $250K listed). There'd be nobody getting paid back IMO if this goes BK, there's nothing there to pay anyone with. They're in debt up to their eyebrows, cash poor and relying on finance houses like Magna who I'd guess get first dibs probably along with "accounts payable" and especially Northstar LLC per the "lien" security agreement.

Look at BK filings for even mega corps (not sub ONE CENT penny stocks)- the bond holders usually even only end up with pennies on the dollar- as the companies were upside down in debt, which is how they ended up BK in the first place. Equity holders (aka common stock) never get anything- the stock literally goes worthless in nearly all cases. "If" the company even manages to emerge years later from BK- they typically issue new stock and the old stock is rendered worthless- often even pensions and other obligations get wiped out (airlines had it happen many times: Delta, Continental, Northwest etc resulting in pilot union lawsuits to try and reclaim their pensions owed - I know a good pilot friend who was part of a big suit when his airline went BK, Captains w/ 25 yrs suddenly watching their pensions go up in smoke, sorry no money left to pay you). MCI/Worldcom, Enron, Lehman, Nortel, Tyco, Delphi, recently Radio Shack, GM, Chrysler, practically every airline that ever was- what did the common shareholders get left for table scraps in the end? Usually nothing in most every case. Bondholders and creditors first- and they usually settle for pennies on the dollar- a fraction of the face value of the debts they're owed, always.

Just read the SEC filings:

Examples:

Last filed 10-K, PAGE 25:

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.
"

Last 10-K, PAGE 28 (The Northstar "Lien" - they, Northstar effectively own pretty much everything this company has, could have, or might have for all intents and purposes IMO)

"On October 1, 2012, the Company and Northstar entered into a limited waiver and forbearance agreement whereby 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 Myblasts, 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."

I mean read that and ponder it- Bioheart could go belly up IMO, and then the Northstar LLC members IMO would/could walk away with essentially EVERYTHING that's "Bioheart the public traded company" including even all results to clinical trials, etc and then just re-start under some new name company and pick right back up where they left off. That's the way I read that statement above- I mean what's not in that list that would be "owned" or of any value to Bioheart that Northstar now doesn't have the rights too?

A "lien" - like what a mortgage holder gets on your house when they make you a loan. THEY OWN THE HOUSE until paid off- not you. That's what a "lien" means- and read what Northstar has a "lien" on- pretty much everything that is Bioheart, the public traded company. I've always wondered how that's even legally possible- and am now fascinated to see this suit essentially claiming the same thing or question the same thing. Now does a tiny group of insiders set up a small, private LLC (Limited Liability Company) who's "headquarters" is a residential "house" (per the Florida Secretary of State filings) a "house" apparently of one of the BOD members in rural MN and then "sign over to that little group" all the rights to ownership to pretty much all the technology, future sales, any assets, all intellectual property (if any even exists for this company?) of a public traded stock company? How is that possible?

Same 10-K, most recent, PAGE 77 (the mystery of who even makes up the membership of Northstar LLC, there's some secret, un-named "members" never named as far as I know). Read the lawsuit- it's alleging "breach of fiduciary duties" of the BHRT Sr Mgt and BOD and this is one of the specific reasons per reading the claims- you can't set up a secret sub corporation and then give it control and rights of ownership to the assets of a public traded stock company? How is that possible and that's what the lawsuit is asking per my reading of the complaint. The suit is saying that's a "breach of fiduciary" duties of the Sr. Mgt and BOD to have set that up and grant if the "lien" and all- they just can't do that according to the suit per the legalities and transparency required of public traded stock companies- that's what the suit is alleging and wants a judge to rule on.

PAGE 77: (not all the Northstar members are ever even listed- so who's the mystery members that hold all this power over a public traded company, BHRT?)

"Excludes Northstar Biotechnology Group, LLC (“Northstar”), owned partly by certain directors and existing shareholders of the Company, including Dr. William P. Murphy Jr., Dr. Samuel Ahn and Charles Hart."

Notice the wording- "owned PARTLY BY"? Ok, then who owns the OTHER PARTS? Who's the mystery owners and why are they never named? It's a public stock company- how can their be secrets?

Then, the lawsuit is filed by Brenda Leonhardt and suddenly they, Northstar Biotech LLC file documents (public of course) with the State of Florida Secretary of State and suddenly change control and location of Northstar LLC to some guy in MN "Gregory Knutson" (not sure on spelling, see filing documents) and he's shown as being an owner of some "construction company" in rural MN. So now BOD Chuck Hart is no longer listed as running Northstar- which at least Chuck Hart is a sitting Board Member of Bioheart- so there's at least some sense to it perhaps- but now some "guy" who's a construction company owner per public records- now he's in charge of Northstar LLC and the 500 MILLION plus votes it holds and controls over the public traded company Bioheart- 20 million preferred stock shares with 25:1 votes each over common stock votes. 500 MILLION voting right- like they just handed the keys to the car IMO to "some guy" that as far as I'm aware of- no one as a public shareholder has a clue as to who he is, or why he now runs Northstar and the control it has over Bioheart- and Bioheart of course is saying nothing about it, as per standard operating procedure IMO

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

That's the LLC filings for Northstar Biotech- all LLC's or Corps must be on file with the Secretary of State in which they exist.

Now, here's the latest document they filed- removing BOD Chuck Hart as being the "Managing Director" (or President or whatever title they use, of the LLC, and inserting this new guy, Gregory Knutson?) What sense does that make? Why did this happen now? Why's it not at least Sam Ahn who's an M.D. and a sitting BOD member or someone like him- why isn't he "Managing Director of this Northstar LLC "thing" they created? Instead a "construction company" guy in rural MN now has the managing power over it all? What? Why?

http://search.sunbiz.org/Inquiry/CorporationSearch/GetDocument?aggregateId=flal-l12000024840-bd33dc0c-23e3-4df8-9590-ecf4bbbe3d0d&transactionId=l12000024840-46773435-d124-47a2-a180-a768590a4a43&formatType=PDF

Title Manager : Knutson, Gregory
Ham Lake, MN

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

There's a public record with the EXACT address now listed as "Northstar Biotech, LLC "headquarters" or "main contact" per the Florida Secretary of State website and it's Gregory Knutson a "concrete construction" company in some small town in MN. Who is that guy and why does he now sit as "controlling manager" of a high tech biotech public traded company via a "lien" given to a tiny LLC and over 500 MILLION voting share rights per 20 million preferred stock shares over which he now has the controlling vote power? How does that "work"?

Here's the latest SEC filed "ownership shares" document for Northstar Biotech LLC and sure enough- it says right on it, that "Gregory Knutson" now has the "voting control rights" to the 20 MILLION preferred shares of Bioheart stock which at 25:1 voting rights if 500 MILLION plus votes- as Northstar also holds shares of common stock.

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

From that SEC filing:

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

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

Same SEC filing:
" 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)"

Again, in the past it was always Chuck Hart, who at least sat on the Board of Directors of Bioheart. Who is "Greg Knutson" of MN? Why is he now running and got the voting control power to Northstar Biotech LLC and all the power it has over the public traded company known as Bioheart? How does all that "work" or make any sense IMO?

It just gets more bizzaro IMO as it goes along. I'll be fascinated to see where this lawsuit goes if the local Florida biz press follow it- to see if it indeed "peels back the layers" on the ole Northstar LLC onion.

I find it very fascinating IMO. I never understood Northstar existing from day one. Don't see how it's even possible when this is a public traded stock company.

My 2 cents. IMO, shareholders (and it says so right in the 10-K filing) likely get the goose egg, nothing in the event this company goes into default on any of their large debts, goes BK or whatever. Almost always the way it works, always IMO.