Agree, wouldn't say it the absolute "worst" financial they ever put out, they had a 10-Q a while back (not that long ago) where the cash, balance sheet entry was actually a dash, - , as in GOOSE EGG.
But, and this is a big one- they have increased their spending, meaning they need more cash now coming in than then- or else something has to give, i.e. you cut something, cut people, cut projects as in R&D spending "trials", etc.
Also, the more they dilute, the more the "funding" environment gets tougher/worse, the harder and harder it gets and the terms get worse, for each financing "deal" inked. The terms on those latest Asher deals, I believe by memory, are about the worse I remember seeing (could be wrong, but I'd say close to the worse terms).
Also, they had/have a "stand by equity agreement" with Greystone that they've been drawing on heavily. I've been reading and re-reading it to try and figure out if it comes to an end? It appears to me there may be a closure date on it and that would be major, if they can't re-negotiate or re-up it as they've been using it for a pretty good chunk of their cash in 2013.
Page F-20: 10-K
NOTE 6 – STANDBY EQUITY DISTRIBUTION AGREEMENT
On November 2, 2011, the Company and Greystone Capital Partners (“Greystone”) entered into a Standby Equity Distribution Agreement (the “Agreement”). Pursuant to the Agreement, Greystone has agreed to provide the Company with up to $1,000,000 of funding for the 24-month period following the date February 10, 2012, the registration statement of the Company’s common stock was declared effective by the SEC (the “Equity Line”).
During this 24-month period, commencing on the date on which the SEC first declared the registration statement effective, the Company may request a draw down under the Equity Line by which the Company would sell shares of its common stock to Greystone, which is obligated to purchase the shares under the Agreement.
For each share of the Company common stock purchased under the Agreement, Greystone will pay eighty percent (80%) of the average of the lowest daily volume weighted average price for five consecutive trading days immediately preceding Advance Notice (the "Valuation Period") commencing the date an Advance Notice (the "Advance Notice") is delivered to Greystone in a manner provided by the Agreement. Subject to certain limitations and floor price reductions, the Company may, at its sole discretion, issue a Put Notice to Greystone and Greystone will then be irrevocably bound to acquire such shares. The registration statement of the Company's common stock pursuant to the Agreement was declared effective on February 10, 2012 and a Post-Effective Amendment was declared effective on May 7, 2013. On December 1, 2012, the parties to the Equity Line agreed that the Purchase Price be adjusted to seventy-five percent (75%) of the lowest daily volume weighted average price of the Common Stock as quoted by Bloomberg, LP, during the five (5) consecutive Trading Days (as such term is defined in the Equity Line) immediately subsequent to the date of the relevant Advance Notice.
During the year ended December 31, 2013, the Company issued an aggregate of 31,052,141 shares of its common stock in exchange for $346,914 draw down on the equity line. During the year ended December 31, 2012, the Company “put” 8,797,859 shares of common stock for a total of $150,000."
See that language about 24 months from Feb 10, 2012? That's the one that caught my eye? That would be Feb 10, 2014 which just passed? So is this equity line type deal GONE, TAPPED OUT, CLOSED? I can't be sure reading it- just don't understand the language enough, not seen this kinda deal before? But it sure seems like it may be closed or ended? And they've used it for a fair amount of cash in 2013. So if it's not there now as of just last month or so, that could also be a major factor. Not sure?
They've also been relying on "delayed interest" payments due to Northstar, and "loans" from insiders, maybe even appears delaying salaries (bonuses were delayed as there appears no cash to pay such), they've had internal loans-delayed payments to insiders it appears, etc. In other words, you can only work so many "shuffling the chairs around on deck" and "pull the rabbit out so many time" and such, IMO and finally you get backed further and further into the proverbial corner and just run out of options? Know what I'm saying? It's the ole using one credit card to pay the other while you got your other item at the pawn shop and got a payday advance and all- it eventually gets harder and harder to get out of the box, IMO.
So, no matter how you slice it, dice it, etc CASH IS TIGHT and CASH IS KING in keeping a biz open and functioning, let alone taking on aggressive projects and grand undertakings like FDA trials and cutting edge research or creating a marketing/sales team to sell all this new stuff worldwide or whatever. They need CASH, need it all the time and made statements alluding to the fact that if ANY key "window" of borrowing, or share selling (lets say Asher says NO next time perhaps- speculating), etc- they have made indications that they, BHRT would be in the serious squeeze. Again, I don't think Sr Mgt puts that stuff in the 10-K, willy-nilly and signs off on it. I mean who would want that stuff in their 10-K when it makes your company look weak, unless they felt that legally and fiduciary wise and audit wise, they HAD TO PUT IT IN THERE to give fair disclosure? I don't think for a second they put those warnings in their lightly or as "boiler plate". They know they need to be on the full-up disclosure and tell it straight. That's my opinion.
Page 25, 10-K:
Item 1A. Risk Factors
The risks and uncertainties described below are not the only ones facing us. Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations and financial condition. If any events described in the risk factors actually occur, our business, operating results, prospects and financial condition could be materially harmed. In connection with the forward looking statements that appear elsewhere in this annual report, you should also carefully review the cautionary statement referred to under “Cautionary Statement Regarding Forward Looking Statements.”
Risks Related to Our Financial Position and Need for Additional Financing
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."
