UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
__________
FORM 10-Q
☒ |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
|
|
For
the quarterly period ended June 30, 2015 |
|
|
OR |
☐ |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
|
|
For the transition period from ____ to ____ |
|
|
Commission File Number: 001-33718 |
BIOHEART,
INC.
(Exact name of registrant as specified in its
charter)
__________
Florida |
|
(State or other jurisdiction of |
65-0945967 |
incorporation or organization) |
(I.R.S. Employer Identification
No.) |
13794 NW
4th Street,
Suite 212, Sunrise, Florida 33325
(Address of principal executive offices) (Zip Code)
(954) 835-1500
(Registrants telephone number, including area code)
Securities registered
under Section 12(b) of the Exchange Act:
None
Securities registered
under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value per
share
(Title of Class)
__________
Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ☒ No ☐
Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.045 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes ☒ No ☐
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule
12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
|
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
|
Smaller reporting company |
☒ |
(Do
not check if a smaller reporting company) |
|
|
|
|
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes ☐ No ☒.
As of August 3, 2015, there
were 838,164,633 outstanding shares of the Registrants common stock, par value
$0.001 per share. Transitional Small Business Disclosure Format Yes ☐ No
☒
BIOHEART, INC.
INDEX
TO FORM 10-Q FILING
JUNE
30, 2015
TABLE OF CONTENTS
|
|
|
Page |
|
|
|
Number |
PART I |
|
Financial Information |
|
|
|
|
|
|
|
Item 1. |
|
Financial Information |
3 |
|
|
|
|
|
|
|
|
Condensed Balance Sheets June 30, 2015
(Unaudited) and December 31, 2014 |
4 |
|
|
|
|
|
|
|
|
Unaudited Condensed Statements of Operations
(Unaudited) Three and Six Months Ended June 30, 2015 and 2014 |
5 |
|
|
|
|
|
|
|
|
Unaudited Condensed Statements of
Stockholders Deficit (Unaudited) Six Months Ended June 30,
2015 |
6 |
|
|
|
|
|
|
|
|
Unaudited Condensed Statements of Cash Flows
(Unaudited) Six Months Ended June 30, 2015 and 2014 |
7 |
|
|
|
|
|
|
|
|
Notes to Unaudited Condensed Financial
Statements |
8 |
|
|
|
|
|
|
Item 2. |
|
Managements Discussion and Analysis of
Financial Condition and Results of Operations |
26 |
|
|
|
|
|
|
Item 3. |
|
Quantitative and Qualitative Disclosures
About Market Risk |
36 |
|
|
|
|
|
|
Item 4. |
|
Controls and Procedures |
36 |
|
|
|
|
|
|
PART II |
|
Other Information |
|
|
|
|
|
|
|
Item 1. |
|
Legal Proceedings |
36 |
|
|
|
|
|
|
Item 1A. |
|
Risk Factors |
37 |
|
|
|
|
|
|
Item 2. |
|
Unregistered Sales of Equity Securities and
Use of Proceeds |
37 |
|
|
|
|
|
|
Item 3. |
|
Defaults Upon Senior Securities |
37 |
|
|
|
|
|
|
Item 4. |
|
Mine Safety Disclosures |
37 |
|
|
|
|
|
|
Item 5. |
|
Other Information |
37 |
|
|
|
|
|
|
Item 6. |
|
Exhibits |
38 |
|
|
|
|
|
|
SIGNATURES |
|
|
44 |
|
|
|
|
|
|
EX-31.1 |
|
Management Certification |
|
|
|
|
|
|
|
EX-32.1 |
|
Sarbanes-Oxley Act |
|
|
|
|
2 |
|
PART I FINANCIAL
INFORMATION
Item 1.
Interim Condensed
Financial Statements and Notes to Interim Financial Statements
General
The accompanying reviewed
condensed interim financial unaudited statements have been prepared in
accordance with the instructions to Form 10-Q. Therefore, they do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders equity in
conformity with generally accepted accounting principles. Except as disclosed
herein, there has been no material change in the information disclosed in the
notes to the financial statements included in the Companys annual report on
Form 10-K for the year ended December 31, 2014. In the opinion of management,
all adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature. Operating results for the three and six months
ended June 30, 2015 are not necessarily indicative of the results that can be
expected for the year ending December 31, 2015.
3
BIOHEART,
INC.
CONDENSED BALANCE
SHEETS
|
June
30, |
|
December 31, |
|
2015 |
|
2014 |
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash
and cash equivalents |
$ |
93,534 |
|
|
$ |
36,674 |
|
Accounts receivable, net |
|
98,504 |
|
|
|
95,409 |
|
Prepaid and other |
|
1,783 |
|
|
|
9,255 |
|
Total
current assets |
|
193,821 |
|
|
|
141,338 |
|
|
Property and equipment, net |
|
10,961 |
|
|
|
12,686 |
|
|
Other assets |
|
|
|
|
|
|
|
Investments |
|
62,905 |
|
|
|
40,597 |
|
Deposits |
|
10,160 |
|
|
|
10,160 |
|
|
Total
assets |
$ |
277,847 |
|
|
$ |
204,781 |
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
2,056,274 |
|
|
$ |
1,991,979 |
|
Accrued expenses |
|
611,342 |
|
|
|
2,373,615 |
|
Advances, related party |
|
155,363 |
|
|
|
148,759 |
|
Deferred revenue |
|
37,100 |
|
|
|
- |
|
Deposits |
|
478,286 |
|
|
|
478,286 |
|
Promissory note, short term portion, net of
debt discount of $82,645 and $-0-, |
|
|
|
|
|
|
|
respectively |
|
67,355 |
|
|
|
1,500,000 |
|
Notes payable, related party |
|
2,242,262 |
|
|
|
2,333,059 |
|
Notes payable, net of debt discount |
|
1,582,477 |
|
|
|
1,531,812 |
|
Derivative liabilities |
|
938,752 |
|
|
|
741,271 |
|
Total
current liabilities |
|
8,169,211 |
|
|
|
11,098,781 |
|
|
Long
term debt: |
|
|
|
|
|
|
|
Promissory note, long term portion, net of debt
discount of $279,225 |
|
1,268,537 |
|
|
|
- |
|
Total
liabilities |
|
9,437,748 |
|
|
|
11,098,781 |
|
|
Commitments and contingencies |
|
- |
|
|
|
- |
|
|
Stockholders' deficit: |
|
|
|
|
|
|
|
Preferred stock, par value $0.001; 20,000,000
shares authorized, 20,000,000 |
|
|
|
|
|
|
|
issued and outstanding |
|
20,000 |
|
|
|
20,000 |
|
Common stock, par value $0.001; 2,000,000,000
shares authorized, 803,720,019 |
|
|
|
|
|
|
|
and
581,433,153 shares issued and 795,376,819 and 581,433,153 outstanding
as |
|
|
|
|
|
|
|
of
June 30, 2015 and December 31, 2014, respectively |
|
803,720 |
|
|
|
581,433 |
|
Additional paid in capital |
|
110,662,768 |
|
|
|
108,939,061 |
|
Treasury stock, 8,343,200 shares outstanding as
of June 30, 2015 |
|
(50,272 |
) |
|
|
- |
|
Accumulated deficit |
|
(120,596,117 |
) |
|
|
(120,434,494 |
) |
Total
stockholders' deficit |
|
(9,159,901 |
) |
|
|
(10,894,000 |
) |
|
Total liabilities and stockholders'
deficit |
$ |
277,847 |
|
|
$ |
204,781 |
|
See the accompanying notes
to these financial statements
4
BIOHEART,
INC.
CONDENSED STATEMENTS
OF OPERATIONS
(unaudited)
|
Three months ended June 30, |
|
Six
months ended June 30, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
$ |
342,773 |
|
|
$ |
353,624 |
|
|
$ |
628,122 |
|
|
$ |
587,260 |
|
Services |
|
222,534 |
|
|
|
225,622 |
|
|
|
426,742 |
|
|
|
384,160 |
|
Total revenue |
|
565,307 |
|
|
|
579,246 |
|
|
|
1,054,864 |
|
|
|
971,420 |
|
|
Cost
and operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales |
|
223,592 |
|
|
|
189,331 |
|
|
|
471,216 |
|
|
|
353,379 |
|
Research and development |
|
130,373 |
|
|
|
15,478 |
|
|
|
180,518 |
|
|
|
25,335 |
|
Marketing, general and administrative |
|
690,248 |
|
|
|
831,362 |
|
|
|
1,688,381 |
|
|
|
1,669,691 |
|
Depreciation and amortization |
|
1,318 |
|
|
|
1,123 |
|
|
|
2,619 |
|
|
|
1,986 |
|
Total operating
expenses |
|
1,045,531 |
|
|
|
1,037,294 |
|
|
|
2,342,734 |
|
|
|
2,050,391 |
|
|
Net
loss from operations |
|
(480,224 |
) |
|
|
(458,048 |
) |
|
|
(1,287,870 |
) |
|
|
(1,078,971 |
) |
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
on settlement of debt |
|
1,979,180 |
|
|
|
93,422 |
|
|
|
2,038,610 |
|
|
|
2,187,054 |
|
(Loss) gain on change of fair value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivative liability |
|
(236,455 |
) |
|
|
311,414 |
|
|
|
(113,731 |
) |
|
|
(177,957 |
) |
Income from equity investment |
|
8,343 |
|
|
|
- |
|
|
|
12,309 |
|
|
|
- |
|
Other income |
|
- |
|
|
|
- |
|
|
|
3,151 |
|
|
|
- |
|
Interest expense |
|
(384,250 |
) |
|
|
(398,194 |
) |
|
|
(814,092 |
) |
|
|
(704,092 |
) |
Total other income
(expenses) |
|
1,366,818 |
|
|
|
6,642 |
|
|
|
1,126,247 |
|
|
|
1,305,005 |
|
|
Net
income (loss) before income taxes |
|
886,594 |
|
|
|
(451,406 |
) |
|
|
(161,623 |
) |
|
|
226,034 |
|
|
Income taxes (benefit) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
NET
INCOME (LOSS) |
$ |
886,594 |
|
|
$ |
(451,406 |
) |
|
$ |
(161,623 |
) |
|
$ |
226,034 |
|
|
Net
income (loss) per common share, basic |
$ |
0.001 |
|
|
$ |
(0.001 |
) |
|
$ |
(0.000 |
) |
|
$ |
0.001 |
|
|
Net
income (loss) per common share, diluted |
$ |
0.001 |
|
|
$ |
(0.001 |
) |
|
$ |
(0.000 |
) |
|
$ |
0.000 |
|
|
Weighted average number of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding, basic |
|
741,090,932 |
|
|
|
471,842,494 |
|
|
|
684,183,630 |
|
|
|
436,892,204 |
|
|
Weighted average number of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding, diluted |
|
936,144,349 |
|
|
|
471,842,494 |
|
|
|
684,183,630 |
|
|
|
553,719,873 |
|
See the accompanying notes
to these financial statements
5
BIOHEART, INC.
CONDENSED
STATEMENT OF STOCKHOLDERS'
DEFICIT
SIX MONTHS ENDED JUNE 30, 2015
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
Common stock |
|
Paid
in |
|
Treasury |
|
Accumulated |
|
|
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Stock |
|
Deficit |
|
Total |
Balance, December 31, 2014 |
20,000,000 |
|
$ |
20,000 |
|
581,433,153 |
|
$ |
581,433 |
|
$ |
108,939,061 |
|
$ |
- |
|
|
$ |
(120,434,494 |
) |
|
$ |
(10,894,000 |
) |
Common stock issued in settlement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
accounts payable and accrued expenses and interest |
- |
|
|
- |
|
13,015,750 |
|
|
13,016 |
|
|
99,751 |
|
|
|
|
|
|
- |
|
|
|
112,767 |
|
Common stock issued in settlement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
guarantor fees |
- |
|
|
- |
|
24,353,285 |
|
|
24,354 |
|
|
145,747 |
|
|
|
|
|
|
- |
|
|
|
170,101 |
|
Common stock issued in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
connection with settlement of other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
debt |
- |
|
|
- |
|
93,803,679 |
|
|
93,803 |
|
|
706,227 |
|
|
|
|
|
|
- |
|
|
|
800,030 |
|
Proceeds from issuance of common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock |
- |
|
|
- |
|
84,464,152 |
|
|
84,464 |
|
|
449,481 |
|
|
|
|
|
|
- |
|
|
|
533,945 |
|
Common stock issued in settlement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
litigation |
- |
|
|
- |
|
6,650,000 |
|
|
6,650 |
|
|
53,200 |
|
|
|
|
|
|
- |
|
|
|
59,850 |
|
Purchase of 8,343,200 shares of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company's common stock at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average cost of $0.006 per share |
- |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
(50,272 |
) |
|
|
- |
|
|
|
(50,272 |
) |
Stock based compensation |
- |
|
|
- |
|
- |
|
|
- |
|
|
269,301 |
|
|
- |
|
|
|
- |
|
|
|
269,301 |
|
Net
loss |
- |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
(161,623 |
) |
|
|
(161,623 |
) |
Balance, June 30,
2015 |
20,000,000 |
|
$ |
20,000 |
|
803,720,019 |
|
$ |
803,720 |
|
$ |
110,662,768 |
|
$ |
(50,272 |
) |
|
$ |
(120,596,117 |
) |
|
$ |
(9,159,901 |
) |
See the accompanying notes to these financial statements
6
BIOHEART,
INC.
CONDENSED STATEMENTS
OF CASH FLOWS
(unaudited)
|
Six
months ended June 30, |
|
2015 |
|
2014 |
CASH
FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net
(loss) income |
$ |
(161,623 |
) |
|
$ |
226,034 |
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
2,619 |
|
|
|
1,986 |
|
Bad
debt expense |
|
- |
|
|
|
28,732 |
|
Discount on convertible debt |
|
425,629 |
|
|
|
201,615 |
|
Change in fair value of derivative liability |
|
113,731 |
|
|
|
177,957 |
|
Gain
on settlement of debt |
|
(2,038,611 |
) |
|
|
(2,187,054 |
) |
Common stock issued in settlement of litigation |
|
59,850 |
|
|
|
|
|
Non-cash interest expense |
|
188,303 |
|
|
|
280,876 |
|
Warrants issued in connection with joint venture
agreement |
|
- |
|
|
|
112,070 |
|
Income on equity investments |
|
(12,308 |
) |
|
|
- |
|
Stock based compensation |
|
269,301 |
|
|
|
282,119 |
|
(Increase) decrease in: |
|
|
|
|
|
|
|
Receivables |
|
(3,095 |
) |
|
|
(114,391 |
) |
Prepaid and other current assets |
|
7,472 |
|
|
|
(3,048 |
) |
Increase (decrease) in: |
|
|
|
|
|
|
|
Accounts payable |
|
242,956 |
|
|
|
255,392 |
|
Accrued expenses |
|
221,950 |
|
|
|
230,653 |
|
Deferred revenue |
|
37,100 |
|
|
|
- |
|
Net cash used in
operating activities |
|
(646,726 |
) |
|
|
(507,059 |
) |
CASH
FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Payments for investments |
|
(10,000 |
) |
|
|
- |
|
Purchase of treasury stock |
|
(50,272 |
) |
|
|
- |
|
Acquisitions of property and equipment |
|
(894 |
) |
|
|
(6,366 |
) |
Net cash used by
investing activities |
|
(61,166 |
) |
|
|
(6,366 |
) |
CASH
FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Proceeds from issuance of common stock, net |
|
533,945 |
|
|
|
371,000 |
|
Proceeds (repayments) from related party advances |
|
6,604 |
|
|
|
(13,241 |
) |
Proceeds from exercise of stock options and
warrants |
|
- |
|
|
|
136,000 |
|
Proceeds from notes payable |
|
315,000 |
|
|
|
288,000 |
|
Repayments of notes payable |
|
(90,797 |
) |
|
|
(223,340 |
) |
Net cash provided in
financing activities |
|
764,752 |
|
|
|
558,419 |
|
Net increase in cash and
cash equivalents |
|
56,860 |
|
|
|
44,994 |
|
Cash
and cash equivalents, beginning of period |
|
36,674 |
|
|
|
46,227 |
|
Cash
and cash equivalents, end of period |
$ |
93,534 |
|
|
$ |
91,221 |
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
Interest paid |
$ |
191,773 |
|
|
$ |
161,532 |
|
Income taxes paid |
$ |
- |
|
|
$ |
- |
|
Non-cash financing activities: |
|
|
|
|
|
|
|
Common stock issued in settlement of notes payable, and
accrued interest |
$ |
388,259 |
|
|
$ |
787,289 |
|
Common stock issued in settlement of accounts payable, and
accrued expenses and interest |
$ |
112,767 |
|
|
$ |
549,448 |
|
Common stock issued in settlement of guarantor fees |
$ |
170,101 |
|
|
$ |
- |
|
Promissory note issued in exchange for subordinated debt and
accrued expenses |
$ |
1,697,762 |
|
|
$ |
- |
|
Common stock issued in settlement of related party notes and
advances payable |
$ |
- |
|
|
$ |
728,806 |
|
See the accompanying notes
to these financial statements
7
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES
A summary of the
significant accounting policies applied in the presentation of the accompanying
unaudited condensed financial statements follows:
General
The accompanying unaudited
condensed financial statements of Bioheart, Inc., (the Company), have been
prepared in accordance with the rules and regulations (Regulation S-X) of the
Securities and Exchange Commission (the SEC) and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.
In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results from
operations for the three and six month periods ended June 30, 2015 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2015. The unaudited condensed financial statements should be read
in conjunction with the December 31, 2014 financial statements and notes thereto
included in the Companys Annual Report on Form 10-K.
Basis and business
presentation
Bioheart, Inc. (the
Company) was incorporated under the laws of the State of Florida in August,
1999. The Company is in the cardiovascular sector of the cell technology
industry delivering cell therapies and biologics that help address congestive
heart failure, lower limb ischemia, chronic heart ischemia, acute myocardial
infarctions and other issues. Our business includes the development of
proprietary cell therapy products as well as revenue generating physician and
patient based regenerative medicine/cell therapy training services, cell
collection and cell storage services, the sale of cell collection and treatment
kits for humans and animals, and the operation of a cell therapy clinic. To
date, the Company has not generated significant sales revenues in that they
remain less than their total operating expenses, has incurred expenses, and has
sustained losses. Consequently, its operations are subject to all the risks
inherent in the establishment of a research and development business
enterprise.
Revenue
Recognition
The Company recognizes
revenue in accordance with Accounting Standards Codification subtopic 605-10,
Revenue Recognition (ASC 605-10) which requires that four basic criteria must
be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred; (3) the selling price is fixed
and determinable; and (4) collectability is reasonably assured. Determination of
criteria (3) and (4) are based on managements judgments regarding the fixed
nature of the selling prices of the products delivered and the collectability of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded.
At the time of each
transaction, management assesses whether the fee associated with the transaction
is fixed or determinable and whether or not collection is reasonably assured.
The assessment of whether the fee is fixed or determinable is based upon the
payment terms of the transaction. Collectability is assessed based on a number
of factors, including past transaction history with the client and the
creditworthiness of the client.
8
Revenues for test kits and
equipment sold are not recorded until test kits are delivered. The Company has
revenue sharing arrangements for the sale of goods whereby the Company is the
primary obligor, sets pricing with the customers and bears all associated credit
risks with the customers. Sales under revenue share arrangements are recorded as
gross sales and any portion shared with third parties under such arrangements
are classified as selling expense due to the nature of the marketing activities
performed by the third party. Revenues from trainings are not recorded until the
completion of the training. Any cash received as a deposit for trainings are
recorded by the company as a liability.
Patent treatments and
laboratory services revenue are recognized when those services have been
completed or satisfied.
Revenues for bank sales are
accounted for as Multiple-Element Arrangements under ASC 605-10 which
incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element
Arrangements (ASC 605-25). ASC 605-25 addresses accounting for arrangements
that may involve the delivery or performance of multiple products, services
and/or rights to use assets.
At June 30, 2015 and
December 31, 2014, the Company had deferred revenues of $37,100 and $-0-,
respectively.
Accounts
Receivable
Trade receivables are
carried at their estimated collectible amounts. Trade credit is generally
extended on a short-term basis; thus trade receivables do not bear interest.
Trade accounts receivable are periodically evaluated for collectability based on
past credit history with customers and their current financial
condition.
Allowance for Doubtful
Accounts
Any changes to the
allowance for doubtful accounts on accounts receivable are changed to operations
in amounts sufficient to maintain the allowance for uncollectible accounts at a
level management believes is adequate to cover any probable losses. Management
determines the adequacy of the allowance based on historical write-off
percentages and the current status of accounts receivable. Accounts receivable
are charged off against the allowance when collectability is determined to be
permanently impaired. As of June 30, 2015 and December 31, 2014, allowance for
doubtful accounts was $-0-.
Investments
The Company has adopted
Accounting Standards Codification subtopic 323-10, Investments-Equity Methods
and Joint Ventures (ASC 323-10) which requires the accounting for investments
where the Company can exert significant influence, but not control of a joint
venture or equity investment. The Company accounted for its 33 percent ownership
of U.S. Stem Cell Clinic, LLC utilizing the equity method of
accounting.
Comprehensive
Income
The Company does not have
any items of comprehensive income in any of the periods presented.
9
Net Loss per Common
Share, basic and diluted
The Company has adopted
Accounting Standards Codification subtopic 260-10, Earnings Per Share (ASC
260-10) specifying the computation, presentation and disclosure requirements of
earnings per share information. Basic loss per share has been calculated based
upon the weighted average number of common shares outstanding. Shares issuable
upon conversion of convertible debt, stock options and warrants have been
excluded as common stock equivalents in the diluted loss per share for the six
months ended June 30, 2015 and three months ended June 30, 2014 because their
effect is anti-dilutive on the computation. Fully diluted shares outstanding
were 936,144,349 and 588,670,163 for the three months ended June 30, 2015 and
2014, respectively and 879,237,047 and 553,719,873 for the six months ended June
30, 2014 and 2013, respectively.
Stock based
compensation
The Company measures the
cost of services received in exchange for an award of equity instruments based
on the fair value of the award. For employees and directors, the fair value of
the award is measured on the grant date and for non-employees, the fair value of
the award is generally re-measured on vesting dates and interim financial
reporting dates until the service period is complete. The fair value amount is
then recognized over the period during which services are required to be
provided in exchange for the award, usually the vesting period. Stock-based
compensation expense is recorded by the Company in the same expense
classifications in the statements of operations, as if such amounts were paid in
cash. As of June 30, 2015, there were outstanding stock options to purchase
73,900,497 shares of common stock, 33,001,632 shares of which were vested.
Concentrations of Credit
Risk
The Companys financial
instruments that are exposed to a concentration of credit risk are cash and
accounts receivable. Generally, the Companys cash and cash equivalents in
interest-bearing accounts does not exceed FDIC insurance limits. The financial
stability of these institutions is periodically reviewed by senior management.
As of June 30, 2015, four
customers represented 13%, 7%, 6% and 16% respectively for an aggregate
of 42% of the Companys accounts receivable. As of December 31, 2014, two
customers represented 38% and 17%, for an aggregate of 55%, of the Companys
accounts receivable.
For the three months ended
June 30, 2015, the Companys revenues earned from the sale of products and
services were $565,307, of which two customers represented 5% and 6% of the
Companys revenues. For the three months ended June 30, 2014, the Companys
revenues earned from the sale of products and services were $579,246, of which
two customers represented 11% and 12% of the Companys revenues.
For the six months ended
June 30, 2015, the Companys revenues earned from the sale of products and
services were $1,054,864, of which two customers represented 6% and 7% of the
Companys revenues. For the six months ended June 30, 2014, the Companys
revenues earned from the sale of products and services were $971,420, of which
one customer represented 13% of the Companys revenues.
10
Research and
Development
The Company accounts for research and development costs in
accordance with Accounting Standards Codification subtopic 730-10, Research and
Development (ASC 730-10). Under ASC 730-10, all research and development costs
must be charged to expense as incurred. Accordingly, internal research and
development costs are expensed as incurred. Third-party research and development
costs are expensed when the contracted work has been performed or as milestone
results have been achieved as defined under the applicable agreement.
Company-sponsored research and development costs related to both present and
future products are expensed in the period incurred. The Company incurred
research and development expenses of $130,373 and $180,518 for the three and six
months ended June 30, 2015, respectively; and $15,478 and $25,335 for the three
and six months ended June 30, 2014, respectively.
Fair
Value
Accounting Standards
Codification subtopic 825-10, Financial Instruments (ASC 825-10) requires
disclosure of the fair value of certain financial instruments. The carrying
value of cash and cash equivalents, accounts payable and accrued liabilities,
and short-term borrowings, as reflected in the balance sheets, approximate fair
value because of the short-term maturity of these instruments. All other
significant financial assets, financial liabilities and equity instruments of
the Company are either recognized or disclosed in the financial statements
together with other information relevant for making a reasonable assessment of
future cash flows, interest rate risk and credit risk. Where practicable the
fair values of financial assets and financial liabilities have been determined
and disclosed; otherwise only available information pertinent to fair value has
been disclosed.
The Company follows
Accounting Standards Codification subtopic 820-10, Fair Value Measurements and
Disclosures (ASC 820-10) and Accounting Standards Codification subtopic
825-10, Financial Instruments (ASC 825-10), which permits entities to choose
to measure many financial instruments and certain other items at fair value.
Derivative Instrument
Liability
The Company accounts for
derivative instruments in accordance with ASC 815, which establishes accounting
and reporting standards for derivative instruments and hedging activities,
including certain derivative instruments embedded in other financial instruments
or contracts and requires recognition of all derivatives on the balance sheet at
fair value, regardless of hedging relationship designation. Accounting for
changes in fair value of the derivative instruments depends on whether the
derivatives qualify as hedge relationships and the types of relationships
designated are based on the exposures hedged. At June 30, 2015 and December 31,
2014, the Company did not have any derivative instruments that were designated
as hedges.
At June 30, 2015 and
December 31, 2014, the Company had outstanding convertible notes that contained
embedded derivatives. These embedded derivatives include certain conversion
features and reset provisions. (See Note 7 and Note 9)
Reliance on Key
Personnel and Consultants
The Company has four
full-time employees and one part-time employees. The Company is heavily
dependent on the continued active participation of its two current executive
officers, one employee and key consultants. The loss of any of the senior
management or key consultants could significantly and negatively impact the
business until adequate replacements can be identified and put in place.
11
Reclassification
Certain reclassifications have been made to prior periods data
to conform with the current years presentation. These reclassifications had no
effect on reported income or losses.
Recent Accounting
Pronouncements
There were various updates
recently issued, most of which represented technical corrections to the
accounting literature or application to specific industries and are not expected
to a have a material impact on the Companys financial position, results of
operations or cash flows.
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 six months ended June 30, 2015, the
Company incurred an operating loss of $1,287,870 and used $646,726 in cash for
operating activities. As of June 30, 2015, the Company had a working capital
deficit (current liabilities in excess of current assets) of approximately $8.0
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 Companys existence is
dependent upon managements ability to develop profitable operations and to
obtain additional funding sources. There can be no assurance that the Companys
financing efforts will result in profitable operations or the resolution of the
Companys liquidity problems. The accompanying statements do not include any
adjustments that might result should the Company be unable to continue as a
going concern.
NOTE 3
INVESTMENTS
Investment is comprised of
a 33% ownership of U.S. Stem Cell Clinic, LLC, accounted for using the equity
method of accounting. The initial investment in 2014 and 2015 of cash and
expenses paid on U.S. Stem Cell Clinic, LLCs behalf was an aggregate of
$59,714. The Companys 33% income earned by U.S. Stem Cell Clinic, LLC of $8,343
and $12,309 for the three and six months ended June 30, 2015, respectively,
(inception to date income of $3,191) was recorded as other income/expense in the
Companys Statement of Operations in the appropriate periods and increased the
carrying value of the investment to $62,905.
NOTE 4 PROPERTY AND
EQUIPMENT
Property and equipment as
of June 30, 2015 and December 31, 2014 summarized as follows:
|
June 30, |
|
December 31, |
|
2015 |
|
2014 |
Laboratory and medical equipment |
$ |
353,252 |
|
|
$ |
352,358 |
|
Furniture, fixtures and equipment |
|
125,634 |
|
|
|
125,634 |
|
Computer equipment |
|
47,647 |
|
|
|
47,647 |
|
Leasehold improvements |
|
362,046 |
|
|
|
362,046 |
|
|
|
888,579 |
|
|
|
887,685 |
|
Less accumulated depreciation and
amortization |
|
(877,618 |
) |
|
|
(874,999 |
) |
|
$ |
10,961 |
|
|
$ |
12,686 |
|
12
Property and equipment are
recorded on the basis of cost. For financial statement purposes, property, plant
and equipment are depreciated using the straight-line method over their
estimated useful lives.
Expenditures for repair and maintenance which do
not materially extend the useful lives of property and equipment are charged to
operations. When property or equipment is sold or otherwise disposed of, the
cost and related accumulated depreciation are removed from the respective
accounts with the resulting gain or loss reflected in operations. Management
periodically reviews the carrying value of its property and equipment for
impairment in accordance with the guidance for impairment of long lived assets.
NOTE 5 ACCRUED
EXPENSES
Accrued expenses consisted
of the following as of June 30, 2015 and December 31, 2014:
|
June 30, |
|
December 31, |
|
2015 |
|
2014 |
Amounts payable to the Guarantors of the
Companys loan agreement with Bank of America |
|
|
|
|
|
and
Seaside Bank, including fees and interest |
$ |
17,090 |
|
$ |
1,533,217 |
Interest payable on notes payable |
|
415,073 |
|
|
685,575 |
Vendor accruals and other |
|
134,896 |
|
|
120,836 |
Employee commissions, compensation,
etc. |
|
44,283 |
|
|
33,987 |
|
$ |
611,342 |
|
$ |
2,373,615 |
During the six months ended
June 30, 2014, the Company issued an aggregate of 31,052,689 shares of its
common stock in settlement of outstanding accounts payable and accrued expenses.
In connection with the issuance, the Company incurred $190,966 loss in
settlement of debt.
During the six months ended
June 30, 2015, the Company issued an aggregate of 11,652,719 shares of its
common stock in settlement of outstanding accounts payable. In connection with
the issuance, the Company incurred $78,528 gain in settlement of debt.
During the six months ended
June 30, 2015, the Company issued an aggregate of 24,353,285 shares of its
common stock in settlement of accumulative outstanding accounts payable due to
Guarantors of the Company of $961,124. In connection with the issuance, the
Company incurred a $791,024 gain in settlement of debt.
During the six months ended
June 30, 2015, the Company settled an outstanding subordinated debt, related
accrued interest and accounts payable due to the guarantor by issuing a five
year, non-interest bearing note payable. (See Note 7). In connection with the
note issuance, the Company settled $624,737 of outstanding guarantor
fees.
NOTE 6 STOCK PURCHASE
AGREEMENT
On October 23, 2014, the
Company, entered into a common stock purchase agreement (the Purchase
Agreement) with Magna Equities II, LLC, a New York limited liability company
(the Investor). The Purchase Agreement provides that, upon the terms and
subject to the conditions set forth therein, the Investor is committed to
purchase up to $3,000,000 (the Total Commitment) worth of the Companys common
stock, $0.001 par value (the Shares), over the 24-month term of the Purchase
Agreement.
13
From time to time over the
term of the Purchase Agreement, commencing on the trading day immediately
following the date on which the initial registration statement is declared
effective by the Securities and Exchange Commission (the Commission), the
Company may provide the Investor with a draw down notice to purchase a specified
dollar amount of Shares, with each draw down subject to certain limitations. The
Company may not deliver any Draw Down Notice to the Investor if the Initial
Purchase Price with respect to the Shares subject to such Draw Down Notice is
less than $0.0025 as of the date the applicable Draw Down Notice is received by
the Investor (the Draw Down Exercise Date).
The applicable Initial
Purchase Price, the Initial Purchase Price, is defined as a price equal to 93%
of the lowest of (i) the arithmetic average of the three lowest daily volume
weighted average prices for the Companys common stock (the VWAP)
during the 10 consecutive trading days ending on the trading day immediately
preceding the applicable Draw Down Exercise Date, (ii) the arithmetic average of
the three lowest closing sale prices for the Companys common stock during the
10 consecutive trading days ending on the trading day immediately preceding the
applicable Draw Down Exercise Date and (iii) the closing sale price for the
Companys common stock on the trading day immediately preceding the applicable
Draw Down Exercise Date.
In 2014, the Company paid
to the Investor as a commitment fee for entering into the Purchase Agreement
equal an aggregate of to 12,000,000 shares of the Companys common stock.
During the six months ended
June 30, 2015, the Company issued an aggregate of 76,612,184 shares of its
common stock in exchange for $472,675 under the stock Purchase Agreement. (See
note 10)
NOTE 7 NOTES
PAYABLE
Notes payable were
comprised of the following as of June 30, 2015 and December 31, 2014:
|
June
30, |
|
December 31, |
|
2015 |
|
2014 |
Seaside Bank note payable |
$ |
980,000 |
|
|
$ |
980,000 |
|
Hunton & Williams notes payable |
|
384,972 |
|
|
|
384,972 |
|
Asher notes payable |
|
180,000 |
|
|
|
151,000 |
|
Daniel James Management note payable |
|
75,000 |
|
|
|
75,000 |
|
Fourth Man, LLC note payable |
|
75,000 |
|
|
|
75,000 |
|
Magna Group |
|
130,000 |
|
|
|
205,000 |
|
Total notes payable |
|
1,824,972 |
|
|
|
1,870,972 |
|
Less
unamortized debt discount |
|
(242,495 |
) |
|
|
(339,160 |
) |
Total notes payable net of unamortized debt
discount |
$ |
1,582,477 |
|
|
$ |
1,531,812 |
|
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
Companys 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.
Hunton & Williams
Notes
At June 30, 2015 and
December 31, 2014, 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.
14
Asher Notes (During
this period)
During the six months ended
June 30, 2015, the Company entered into Securities Purchase Agreements with
Asher Enterprises, Inc. (Asher) or affiliates, for the sale of 8% convertible
notes in aggregate principal amount of $180,000 (the Asher Notes). The Company
incurred legal fees in the amount of $15,000 which were deducted from the
proceeds of the notes.
The Asher Notes bear
interest at the rate of 8% per annum. As of the six months ended June 30, 2015,
all interest and principal must be repaid nine months from the issuance date,
with the last note being due February 6, 2016. The Asher Notes are convertible
into shares of common stock, at Ashers option, at a 45% discount to the average
of the three lowest closing bid prices of the shares of common stock during the
10 trading day period prior to conversion. The Company has identified the
embedded derivatives related to the Asher Notes.
These embedded derivatives
included certain conversion features and reset provision. The accounting
treatment of derivative financial instruments requires that the Company record
fair value of the derivatives as of the inception date of Asher Notes and to
fair value as of each subsequent reporting date, which at June 30, 2015 was
$307,285. At the inception of the Asher Notes, the Company determined the
aggregate fair value of $211,575 of the embedded derivatives.
During the six months ended
June 30, 2015, $151,000 of notes that were outstanding at December 31, 2014,
plus accrued interest, were converted into shares of the Companys common stock
(see Note 10).
The remaining aggregate
Asher Notes unconverted principle balance as of June 30, 2015 was
$180,000.
Daniel James
Management (During this period)
During the six months ended
June 30, 2015, the Company entered into Securities Purchase Agreements with
Daniel James Management (Daniel) for the sale of 9.5% convertible note in
aggregate principal amount of $75,000 (the Daniel Note).
The Daniel Notes bear
interest at the rate of 9.5% per annum. As of the six months ended June 30,
2015, all interest and principal must be repaid one year from the issuance date,
with the last note being due June 28, 2016. The Daniel Notes are convertible
into common stock, at holders option, at a 47% discount to the average of the
three lowest closing bid prices of the common stock during the 10 trading day
period prior to conversion. The Company has identified the embedded derivatives
related to the Daniel Notes. These embedded derivatives included certain
conversion features and reset provision.
The accounting treatment of
derivative financial instruments requires that the Company record fair value of
the derivatives as of the inception date of Daniel Notes and to fair value as of
each subsequent reporting date which at June 30, 2015 was $151,894. At the
inception of the Daniel Notes, the Company determined the aggregate fair value
of $137,578 of the embedded derivatives.
During the six months ended
June 30, 2015, $75,000 of notes that were outstanding at December 31, 2014, plus
accrued interest were converted into shares of the Companys common stock (see
Note 10).
The remaining aggregate
Daniel Notes unconverted principle balance as of June 30, 2015 was
$75,000.
15
Fourth Man, LLC
(During this period)
During the six months ended
June 30, 2015, the Company entered into Securities Purchase Agreements with
Fourth Man, LLC. (Fourth Man), for the sale of a 9.5% convertible notes in the
aggregate principal amount of $75,000 (the Note).
The Notes bears interest at
the rate of 8% to 9.5% per annum. As of the six months ended June 30, 2015, all
interest and principal must be repaid one year from the issuance date, with the
last note being due May 31, 2016. The Notes are convertible into shares of
common stock, at Fourth Mans option, at a 47% discount to the lowest closing
bid price of the common stock during the 10 trading day period prior to
conversion. The Company has identified the embedded derivatives related to the
Fourth Man Notes. These embedded derivatives included certain conversion
features and reset provision.
The accounting treatment of
derivative financial instruments requires that the Company record fair value of
the derivatives as of the inception date of Fourth Man Notes and to fair value
as of each subsequent reporting date which at June 30, 2015 was $150,554. At the
inception of the Fourth Man Notes, the Company determined the aggregate fair
value of $143,097 of the embedded derivatives.
During the six months ended
June 30, 2015, $75,000 of notes that were outstanding at December 31, 2014, plus
accrued interest, were converted into shares of the Companys common stock (see
Note 10).
The remaining aggregate
Fourth Man, LLC Notes unconverted principle balance as of June 30, 2015 was
$75,000.
Magna Group (During
this period)
During the six months ended
June 30, 2015, $75,000 of notes that were outstanding at December 31, 2014, plus
accrued interest, were converted into shares of the Companys common stock (see
Note 10). The remaining aggregate Magna notes unconverted principle balance as
of June 30, 2015 was $130,000.
The Company has identified
the embedded derivatives related to the Magna notes. The accounting treatment of
derivative financial instruments requires that the Company record fair value of
the derivatives as of the inception date of Magna notes and to fair value as of
each subsequent reporting date which at June 30, 2015 was $217,540. The fair
value of the embedded derivatives of the Asher, Daniel and Fourth Man Notes, was
determined using the Binomial Option Pricing Model based on the following
assumptions: (1) dividend yield of 0%, (2) expected volatility of 111.98% to
147.97%, (3) weighted average risk-free interest rate of 0.17% to 0.27%, (4)
expected lives of 0.75 to 1.00 years, and (5) estimated fair value of the
Companys common stock from $0.0058 to $0.0127 per share. The initial fair value
of the embedded debt derivative of $492,249 was allocated as a debt discount up
to the proceeds of the notes ($313,964) with the remainder ($178,285) charged to
current period operations as interest expense. For the three and six months
ended June 30, 2015, the Company amortized an aggregate of $193,834 and $425,629
of debt discounts to current period operations as interest expense,
respectively.
Promissory
note
At December 31, 2014, the
Companys former officers and directors have provided notes in aggregate of
$1,500,000. As of December 31, 2014, these notes were not considered as related
party. The notes range from 4.75% to 8% per annum and are due upon payoff of the
Northstar note payable described in Note 8.
On June 1, 2015, the
Company issued an amended and restated promissory note of $1,697,762 in
settlement of the $1,500,000 outstanding subordinated debt (See Note 12),
related accrued interest of $373,469 and accumulated and unpaid guarantor fees
of $624,737 (See Note 5).
16
The note is unsecured and
non-interest bearing with four semi-annual payments of $75,000 beginning on
December 31, 2015 with the remaining unpaid balance due June 1, 2020.
The Company imputed an
interest rate of 5% and discounted the promissory note accordingly. The imputed
debt discount of $368,615 is amortized to interest expense using the effective
interest method.
In connection with the
settlement, the Company recorded a gain on settlement of debt of
$1,169,058.
For the three and six
months ended June 30, 2015, the Company amortized $6,745 of debt discounts to
current period operations as interest expense.
NOTE 8 RELATED PARTY
TRANSACTIONS
Advances
As of June 30, 2015 and
December 31, 2014, the Companys officers and directors have provided advances
in the aggregate of $155,363 and $148,759, respectively, for working capital
purposes. The advances are unsecured, due on demand and non-interest bearing.
Notes payable-related
party
Northstar
Biotechnology Group, LLC
On February 29, 2012, a
note issued to BlueCrest Master Fund Limited was assigned to 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. At the date of the assignment, the principal amount
of the BlueCrest note was $544,267.
On March 30, 2012, the
Company and Northstar agreed to extend until May 1, 2012 the initial payment
date for any and all required monthly under the Note, such that the first of the
four monthly payments required under the Note will be due and payable on May,
2012 and all subsequent payments will be due on a monthly basis thereafter
commencing on June 1, 2012, and to waive any and all defaults and/or events of
default under the Note with respect to such payments. The Company did not make
the required payment, and as a result, was in default of the revised agreement
The Company renegotiated the terms of the Note and Northstar agreed to suspend
the requirement of principal payments by the Company and allow payment of
interest-only in common stock.
On September 21, 2012, the
Company issued 5,000,000 common stock purchase warrants to Northstar that was
treated as additional interest expense upon issuance.
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.
17
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.
Effective October 1, 2012,
the effective interest rate was 12.85% per annum. The parties agreed, as of
February 28, 2013, to reduce the interest rate to 7% per annum.
In connection with the
consideration paid, Northstar waived, from the effective date through the
earlier of termination or expiration of the agreement, satisfaction of the
obligations as described in the forbearance agreement.
In 2012, 5,000,000 shares
of Series A Convertible Preferred Stock were approved to be issued, which was
subsequently increased to 20,000,000 shares of preferred stock as Series A
Convertible Preferred Stock. In addition, the Company is obligated to issue
additional preferred stock equal in lieu of payment of cash of accrued and
unpaid interest on each six month anniversary of the effective date (October 1,
2012). In lieu of the initial two payments in preferred stock, the parties have
determined to modify the voting rights of the Series A Convertible Preferred
Stock from 20 votes per share on matters to be voted on by the common stock
holders to 25 votes per share on matters to be voted on by the common stock
holders and all prior and subsequent payments of interest will be in common
stock. The Company is required to issue additional shares of its common stock
(as amended), in lieu of cash, each six month anniversary of the effective date
for any accrued and unpaid interest.
As described above, during
the year ended December 31, 2013, the Company issued the 5,000,000 shares of
Series A Convertible Preferred Stock and the 10,000,000 of common stock
described above in exchange for the $210,000 as payment towards outstanding
principle of the debt. In addition, the Company issued 15,000,000 shares of
Series A Convertible Preferred Stock as a penalty in settlement of the terms of
the forbearance agreement. The fair value of the Preferred Stock of $274,050 was
included in interest expense for the year ended December 31, 2013.
On September 30, 2013, the
Company issued 8,771,929 shares of its common stock as payment of $100,000
towards cash advances.
On December 24, 2013, the
Company issued 3,915,662 shares of its common stock as payment of accrued
interest through June 30, 2013 of $85,447.
On April 2, 2014, the
Company issued 274,681 shares of its common stock in lieu of payment in cash of
accrued and unpaid interest of $12,635 due April 1, 2014 per the forbearance
agreement.
On September 17, 2014,
limited waiver and forbearance agreement entered into on October 1, 2012 to
provide that the perpetual license on products as described for resale,
relicensing and commercialization outside the United States was amended as such
to condition upon NorthStar providing certain financing, which financing the
Company, in its sole discretion, could decline and retain the license.
On October 3, 2014, the
Company issued 514,886 shares of its common stock in lieu of payment in cash of
accrued and unpaid interest of $12,705 due October 1, 2014 per the forbearance
agreement.
On April 3, 2015, the
Company issued 1,363,031 shares of its common stock in lieu of payment in cash
of accrued and unpaid interest of $12,635 due April 1, 2015 per the forbearance
agreement.
As of June 30, 2015 and
December 31, 2014, the principle of this note was $362,000.
18
Officer and Director
Notes
|
June
30, |
|
December 31, |
|
2015 |
|
2014 |
Notes payable, Dr. Murphy |
$ |
465,240 |
|
$ |
465,240 |
Note
payable, Mr. Tomas |
|
252,250 |
|
|
331,354 |
Note
payable, Mr. Tomas |
|
375,000 |
|
|
375,000 |
Note
payable, Mr. Tomas |
|
500,000 |
|
|
500,000 |
Note
payable, Ms. Comella |
|
287,772 |
|
|
299,465 |
Total |
$ |
1,880,262 |
|
$ |
1,971,059 |
Notes payable, Dr.
Murphy
At June 30, 2015 and
December 31, 2014, the Company has outstanding notes payable to Dr. Murphy with
interest at 8% per annum due at maturity in aggregate $465,240. Of the
outstanding balance, certain subordinated notes totaling $100,000 and $140,000 were
previously due on November 30, 2012 and June 4, 2011 respectively, and are
unsecured. The Company is not obligated to make payment until Northstar (or successor) Loan is
paid off.
Notes payable, Mr.
Tomas
In 2013, the Company issued
a promissory note payable for previous advances and accrued compensation. The
promissory note bears interest of 5% per annum and due on demand. During the six
months ended June 30, 2015, the Company paid off $79,104 of the outstanding
promissory note. The principle outstanding balance of this note as of June 30,
2015 is $252,250.
On August 1, 2013, the
Company issued a $375,000 promissory note due on demand in settlement of
accrued compensation. The promissory note bears interest of 5% per annum and is due
on demand. The principle outstanding balance of this note as of June 30, 2015 is
$375,000.
On July 1, 2014, the
Company issued a $500,000 promissory note in settlement of accrued compensation.
The promissory note bears interest of 5% per annum and was due on January 1, 2015.
The principle outstanding balance of this note as of June 30, 2015 is $500,000.
Notes payable, Ms.
Comella
On July 1, 2014, the
Company issued a $300,000 promissory note in settlement of accrued compensation.
The promissory note bears interest of 5% per annum and due on January 1, 2015.
During the six months ended June 30, 2015, the Company paid off $11,693 of the
outstanding promissory note. The principle outstanding balance of this note as
of June 30, 2015 is $287,772.
During the three and six
months ended June 30, 2015, the Company purchased $80,504 and $172,298 lab kits,
respectively, from Pavillion, Inc., a related party, whose owner is related to an officer of the Company.
NOTE 9 DERIVATIVE
LIABILITIES
Reset warrants
On October 1, 2012, in
connection with the forbearance agreement with Northstar as discussed in Note 8
above, the Company issued an aggregate of 15,000,000 common stock purchase
warrants to purchase the Companys common stock with an exercise price of $0.014
per share for ten years with anti-dilutive (reset) provisions.
19
The Company has identified
embedded derivatives related to the issued warrants. These embedded derivatives
included certain and anti-dilutive (reset) provisions. The accounting treatment
of derivative financial instruments requires that the Company record fair value
of the derivatives as of the inception date and to fair value as of each
subsequent reporting date.
At June 30, 2015, the fair
value of the reset provision related to the embedded derivative liability of
$82,511 was determined using the Binomial Option Pricing model with the
following assumptions: dividend yield: 0%; volatility: 113.63%; risk free rate:
2.07%; and expected life: 7.26 years. The Company recorded a gain on change in
derivative liabilities of $31,837 and $67,409 during the three and six months
ended June 30, 2015, respectively.
Convertible
notes
In 2014 and the six months
ended June 30, 2015, the Company issued convertible notes (see Note 7 above).
These notes are convertible
into common stock, at holders option, at a discount to the market price of the
Companys common stock. The Company has identified the embedded derivatives
related to these notes relating to certain anti-dilutive (reset) provisions.
These embedded derivatives included certain conversion features. The accounting
treatment of derivative financial instruments requires that the Company record
fair value of the derivatives as of the inception date of these notes and to
fair value as of each subsequent reporting date.
The fair value of the
embedded derivatives at June 30, 2015, in the amount of $856,241, was determined
using the Binomial Option Pricing Model based on the following assumptions: (1)
dividend yield of 0%; (2) expected volatility of 113.63%, (3) weighted average
risk-free interest rate of 0.01 to 0.28%, (4) expected lives of 0.10 to 0.92
years, and (5) estimated fair value of the Companys common stock of $0.0066 per
share. The Company recorded a loss on change in derivative liabilities of
$268,292 and $181,140 during the three and six months ended June 30, 2015,
respectively.
Based upon ASC 840-15-25
(EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach
regarding the application of ASC 815-40 to its outstanding convertible notes.
Pursuant to the sequencing approach, the Company evaluates its contracts based
upon earliest issuance date.
NOTE 10 STOCKHOLDERS
EQUITY
During the six months ended
June 30, 2015, the Company issued an aggregate of 11,652,719 shares of its
common stock in the amount of $100,132 for the settlement of outstanding
accounts payable and accrued expenses. In connection with the issuance of the
shares the Company recognized a gain on settlement of accounts payable and
accrued expenses in the amount of $78,528 (see Note 5).
During the six months ended
June 30, 2015, the Company issued 6,650,000 shares of common stock in settlement
of litigation. In connection with the issuances, the Company recognized a loss
in the amount of $59,850, which is included in the marketing, general and
administration expense in the Statement of Operations (see Note 12).
On April 3, 2015, the
Company issued 1,363,031 shares of its common stock in lieu of payment in cash
of accrued and unpaid interest of $12,635 due April 1, 2015 per the forbearance
agreement on Northstar note (See Note 8).
During the six months ended
June 30, 2015, the Company issued an aggregate of 93,803,679 shares of its
common stock for the conversion of $388,258 of notes payable and related accrued
interest. Upon conversion of the notes, the Company recorded an adjustment to
the derivative liability in the amount of $411,772 (see Note 13).
20
During the six months ended
June 30, 2015, the Company purchased 8,343,200 shares of the Companys common
stock in the open market at an average cost of $0.006 per share.
During the six months ended
June 30, 2015, the Company issued an aggregate of 76,612,184 shares of common
stock in exchange for $472,675 under the stock purchase agreement with Magna
Equities II, LLC (see Note 6), and issued an aggregate of 7,851,968 shares of
common stock in exchange for $61,270. In connection with the stock sale, the
Company issued an aggregate of 1,443,656 warrants to purchase the Companys
common stock (see Note 11).
During the six months ended
June 30, 2015, the Company issued an aggregate of 24,353,285 shares of its
common stock in settlement of accumulative outstanding accounts payable due to
Guarantors of the Company of $961,125. In connection with the issuance, the
Company incurred a $791,024 gain in settlement of debt.
NOTE 11 STOCK OPTIONS
AND WARRANTS
Stock
Options
In December 1999, the Board
of Directors and shareholders adopted the 1999 Officers and Employees Stock
Option Plan, or the Employee Plan, and the 1999 Directors and Consultants Stock
Option Plan, or the Director Plan. The Employee Plan and the Director Plan are
collectively referred to herein as the Plans. The Plans are administered by the
Board of Directors and the Compensation Committee. The objectives of the Plans
include attracting and retaining key personnel by encouraging stock ownership in
the Company by such persons. In February 2010, the Directors & Consultants
Plan was amended to extend the termination date of the Plan to December 1, 2011.
On April 1, 2013, the Board
of Directors approved, subject to shareholder approval, the establishment of the
Bioheart 2013 Omnibus Equity Compensation Plan, or the 2013 Omnibus Plan. The
2013 Omnibus Plan reserves up to fifty million shares of common stock for
issuance. On August 4, 2014, the Board of Directors approved to set the reserve
to one hundred million shares of common stock for issuance and to close the 1999
Officers and Employees Stock Option Plan. On February 2, 2015, at the annual meeting of shareholders, the majority of shareholders approved the 2013 Omnibus Equity Compensation Plan.
A summary of options at
June 30, 2015 and activity during the three months then ended is presented
below:
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
Average |
|
|
|
|
Weighted- |
|
Remaining |
|
|
|
|
Average |
|
Contractual |
|
Shares |
|
Exercise Price |
|
Term (in years) |
Options outstanding at January 1,
2014 |
23,912,943 |
|
|
$ |
0.15 |
|
9.0 |
Granted |
43,148,487 |
|
|
$ |
0.023 |
|
10.0 |
Exercised |
|
|
|
$ |
|
|
|
Forfeited/Expired |
(136,221 |
) |
|
$ |
5.2 |
|
|
Options outstanding at December 31,
2014 |
66,925,209 |
|
|
$ |
0.056 |
|
8.9 |
Granted |
7,000,000 |
|
|
$ |
0.01116 |
|
10.0 |
Exercised |
|
|
|
|
|
|
|
Forfeited/Expired |
(24,712 |
) |
|
$ |
0.71 |
|
|
Options outstanding at June 30, 2015 |
73,900,497 |
|
|
$ |
0.05147 |
|
8.5 |
Options exercisable at June 30, 2015 |
33,001,632 |
|
|
$ |
0.08939 |
|
8.5 |
Available for grant at June 30,
2015 |
89,500,000 |
|
|
|
|
|
|
21
The following information
applies to options outstanding and exercisable at June 30, 2015:
|
|
Options Outstanding |
|
Options Exercisable |
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
Weighted- |
|
|
|
Weighted- |
|
|
|
|
Remaining |
|
Average |
|
|
|
Average |
|
|
|
|
Contractual |
|
Exercise |
|
|
|
Exercise |
|
|
Shares |
|
Term |
|
Price |
|
Shares |
|
Price |
$0.00 $0.70 |
|
73,438,487 |
|
8.6 |
|
$ |
0.024 |
|
32,539,622 |
|
$ |
0.03 |
$0.71 $1.28 |
|
125,218 |
|
4.0 |
|
$ |
0.828 |
|
125,218 |
|
$ |
0.83 |
$5.25 $5.67 |
|
312,080 |
|
1.1 |
|
$ |
5.53 |
|
312,080 |
|
$ |
5.53 |
$7.69 |
|
24,712 |
|
1.1 |
|
$ |
7.69 |
|
24,712 |
|
$ |
7.69 |
|
|
73,900,497 |
|
8.5 |
|
$ |
0.05147 |
|
33,001,632 |
|
$ |
0.08939 |
On February 2, 2015, the
Company issued an aggregate 7,000,000 options to purchase the Companys common
stock at $0.01116 per share to members of the Board of Directors, vesting
immediately and exercisable over 10 years. The aggregate fair value of $121,735,
determined using the Black Scholes option pricing model with the following
assumptions: Dividend yield: 0%; Volatility: 142.65% and Risk free rate: 1.68%.
The fair value of all
options vesting during the three and six months ended June 30, 2015 of $75,275
and $272,241, respectively, was charged to current period operations. The fair
value of all options vesting during the three and six months ended June 30, 2014
of $48,805 and $243,370, respectively, was charged to period operations.
Warrants
A summary of common stock
purchase warrants at June 30, 2015 and activity during the period then ended is
presented below:
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
Average |
|
|
|
|
Weighted- |
|
Remaining |
|
|
|
|
Average |
|
Contractual |
|
|
|
|
Exercise |
|
Term
(in |
|
Shares |
|
Price |
|
years) |
Outstanding at January 1, 2014 |
118,078,856 |
|
|
$ |
0.22 |
|
6.3 |
Issued |
57,582,469 |
|
|
$ |
0.02 |
|
8.2 |
Exercised |
(11,918,181 |
) |
|
$ |
0.01 |
|
|
Expired |
(13,178,145 |
) |
|
$ |
0.08 |
|
|
Outstanding at December 31, 2014 |
150,564,999 |
|
|
$ |
0.17 |
|
6.6 |
Issued |
1,443,656 |
|
|
$ |
0.01127 |
|
10.0 |
Exercised |
|
|
|
$ |
|
|
|
Expired |
(10,325,002 |
) |
|
$ |
0.0240 |
|
|
Outstanding at June 30, 2015 |
141,683,653 |
|
|
$ |
0.1783 |
|
6.6 |
Exercisable at June 30, 2015 |
134,695,547 |
|
|
$ |
0.10 |
|
6.6 |
22
The following information
applies to common stock purchase warrants outstanding and exercisable at June
30, 2015:
|
|
Warrants Outstanding |
|
Warrants Exercisable |
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
Weighted- |
|
|
|
Weighted- |
|
|
|
|
Remaining |
|
Average |
|
|
|
Average |
|
|
|
|
Contractual |
|
Exercise |
|
|
|
Exercise |
|
|
Shares |
|
Term |
|
Price |
|
Shares |
|
Price |
$0.01 $0.50 |
|
135,434,520 |
|
6.7 |
|
$ |
0.02 |
|
129,990,864 |
|
$ |
0.02 |
$0.52 $0.68 |
|
2,699,675 |
|
3.8 |
|
$ |
0.58 |
|
2,699,675 |
|
$ |
0.58 |
$0.70 $1.62 |
|
848,176 |
|
4.5 |
|
$ |
0.71 |
|
848,176 |
|
$ |
0.71 |
$5.67 $7.69 |
|
2,701,282 |
|
7.4 |
|
$ |
7.55 |
|
1,156,832 |
|
$ |
7.35 |
|
|
141,683,653 |
|
6.6 |
|
$ |
0.1783 |
|
134,695,547 |
|
$ |
0.10 |
In conjunction with the
authorized issuance of common stock, the Company granted 1,443,656 common stock
purchase warrants during the six months ended June 30, 2015. The warrants are
exercisable at an exercise price of approximately $0.01127 per share for ten
years.
NOTE 12 COMMITMENTS
AND CONTINGENCIES
Litigation
On March 19 2015, the
Company settled a prospective dispute with a third party over the use of
proprietary information through the issuance of 6,650,000 shares of common
stock. (See Note 10)
On November 10, 2014, the
Company was served with a lawsuit by an alleged assignee and a guarantor to a
Loan Guarantee, Payment and Security Agreement. These parties claim breach of
that Agreement and damages of approximately $2.3 Million plus interest. The
assignor and assignee also sued the Companys directors and two past directors
and an affiliate shareholder for breach of fiduciary duty, claiming damages as
alleged creditors arising out of these parties alleged participation in
Northstar Biotech Group, LLC, a secured creditor of the Company. On June 1,
2015, the Company settled the lawsuit. As part of the settlement, the Company
recorded a gain of $1,169,058. The Company provided a note to the original
guarantor in the amount of $1,697,762, to be paid over a five year period with a
0% interest rate.
The Company is subject to
other legal proceedings that arise in the ordinary course of business. In the
opinion of management, as of June 30, 2015, the amount of ultimate liability
with respect to such matters, if any, in excess of applicable insurance
coverage, is not likely to have a material impact on the Companys business,
financial position, results of operations or liquidity. However, as the outcome
of litigation and other claims is difficult to predict significant changes in
the estimated exposures could exist.
NOTE 13 FAIR VALUE
MEASUREMENT
The Company adopted the
provisions of Accounting Standards Codification subtopic 825-10, Financial
Instruments (ASC 825-10) on January 1, 2008. ASC 825-10 defines fair value as
the price that would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. When determining the fair value measurements for assets and
liabilities required or permitted to be recorded at fair value, the Company
considers the principal or most advantageous market in which it would transact
and considers assumptions that market participants would use when pricing the
asset or liability, such as inherent risk, transfer restrictions, and risk of
nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an
entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 825-10 establishes three
levels of inputs that may be used to measure fair value:
23
Level 1 Quoted prices in
active markets for identical assets or liabilities.
Level 2 Observable inputs
other than Level 1 prices such as quoted prices for similar assets or
liabilities; quoted prices in markets with insufficient volume or infrequent
transactions (less active markets); or model-derived valuations in which all
significant inputs are observable or can be derived principally from or
corroborated by observable market data for substantially the full term of the
assets or liabilities.
Level 3 Unobservable
inputs to the valuation methodology that are significant to the measurement of
fair value of assets or liabilities.
All items required to be
recorded or measured on a recurring basis are based upon level 3 inputs.
To the extent that
valuation is based on models or inputs that are less observable or unobservable
in the market, the determination of fair value requires more judgment. In
certain cases, the inputs used to measure fair value may fall into different
levels of the fair value hierarchy. In such cases, for disclosure purposes, the
level in the fair value hierarchy within which the fair value measurement is
disclosed and is determined based on the lowest level input that is significant
to the fair value measurement.
Upon adoption of ASC
825-10, there was no cumulative effect adjustment to beginning retained earnings
and no impact on the financial statements.
The carrying value of the
Companys cash and cash equivalents, accounts receivable, accounts payable,
short-term borrowings (including convertible notes payable), and other current
assets and liabilities approximate fair value because of their short-term
maturity.
As of June 30, 2015 or
December 31, 2014, the Company did not have any items that would be classified
as level 1 or 2 disclosures.
The Company recognizes its
derivative liabilities as level 3 and values its derivatives using the methods
discussed in notes 7 and 9. While the Company believes that its valuation
methods are appropriate and consistent with other market participants, it
recognizes that the use of different methodologies or assumptions to determine
the fair value of certain financial instruments could result in a different
estimate of fair value at the reporting date. The primary assumptions that would
significantly affect the fair values using the methods discussed in Notes 7 and
9 are that of volatility and market price of the underlying common stock of the
Company.
As of June 30, 2015 and
December 31, 2014, the Company did not have any derivative instruments that were
designated as hedges.
The derivative liability as
of June 30, 2015, in the amount of $938,752 has a level 3 classification.
24
The following table
provides a summary of changes in fair value of the Companys Level 3 financial
liabilities as of June 30, 2015:
|
Warrant |
|
Debt |
|
Liability |
|
Derivative |
Balance, December 31, 2013 |
|
146,855 |
|
|
$ |
256,956 |
|
Total (gains) losses |
|
|
|
|
|
|
|
Initial fair value of debt derivative at note
issuance |
|
|
|
|
|
1,443,708 |
|
Initial fair value of derivative relating to reset
warrants |
|
|
|
|
|
|
|
Mark-to-market at December 31, 2014: |
|
3,065 |
|
|
|
(429,018 |
) |
Transfers out of Level 3 upon increase in authorized
shares |
|
|
|
|
|
|
|
Transfers out of Level 3 upon conversion and settlement
of |
|
|
|
|
|
|
|
notes |
|
|
|
|
|
(680,295 |
) |
Balance, December 31, 2014 |
$ |
149,920 |
|
|
$ |
591,351 |
|
Total (gains) losses |
|
|
|
|
|
|
|
Initial fair value of debt derivative at note
issuance |
|
|
|
|
|
495,522 |
|
Mark-to-market at June 30, 2015: |
|
(67,409 |
) |
|
|
181,140 |
|
Transfers out of Level 3 upon conversion or payoff of
notes |
|
|
|
|
|
|
|
payable |
|
|
|
|
|
(411,772 |
) |
Balance, June 30, 2015 |
$ |
82,511 |
|
|
$ |
856,241 |
|
Net
Gain (loss) for the period included in earnings relating to |
|
|
|
|
|
|
|
the
liabilities held at June 30, 2015 |
$ |
67,409 |
|
|
$ |
(181,140 |
) |
Fluctuations in the
Companys stock price are a primary driver for the changes in the derivative
valuations during each reporting period. The Companys stock price decreased
approximately 37% from December 31, 2014 to June 30, 2015. As the stock price
decreases for each of the related derivative instruments, the value to the
holder of the instrument generally decreases.. Additionally, stock price
volatility is one of the significant unobservable inputs used in the fair value
measurement of each of the Companys derivative instruments.
The estimated fair value of
these liabilities is sensitive to changes in the Companys expected volatility.
Increases in expected volatility would generally result in a higher fair value
measurement.
NOTE 14 SUBSEQUENT
EVENTS
Subsequent stock
issuances
In July 2015, the Company
issued 19,948,340 shares of its common stock in settlement of $51,250 of
outstanding convertible note payable and $1,520 accrued interest; 6,782,873
shares of its common stock in settlement of services of approximately $38,000. 6,368,040 shares of its
common stock in exchange of $33,954 drawn down on the Magna debt and issued 1,345,364 shares of its common stock in settlement as true up shares
pursuant to the draw down on the equity line.
Subsequent financing
In July 2015, the Company borrowed an aggregate of $180,000 under unsecured revenue based factoring agreements at an annual interest rate of 5% to 15% with aggregate daily payments of $1,464, including interest, over the term of the loan (189 days).
On August 1, 2015, the Company entered into a Securities Purchase Agreement with Fourth Man, LLC., for the sale
of a 9.5% convertible note in the principal amount of $25,000 (the Note).
The Note bears interest at the rate of 9.5% per annum. All interest and principal must be repaid on July 31, 2016.
The Note is convertible into common stock, at Fourth Man LLCs option, at a 47% discount to the lowest daily
closing trading price of the common stock during the 10 trading day period prior to conversion. In the event the
Company prepays the Note in full, the Company is required to pay off all principal at 150%, interest and any other
amounts.
25
Item 2. Managements
Discussion and Analysis of Financial Condition and Results of
Operations
Unless otherwise
indicated, references in this Quarterly Report on Form 10-Q to we, us, and
our are to the Company, unless the context requires otherwise. The following
discussion and analysis by our management of our financial condition and results
of operations should be read in conjunction with our unaudited condensed interim
financial statements and the accompanying related notes included in this
quarterly report and our audited financial statements and related notes and
Managements Discussion and Analysis of Financial Condition and Results of
Operations included in our Annual Report on Form 10-K for the year ended
December 31, 2014 filed with the Securities and Exchange
Commission.
Cautionary Statement
Regarding Forward-Looking Statements
This report may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act, and we intend that such
forward-looking statements be subject to the safe harbors created thereby. These
forward-looking statements are based on our managements beliefs and assumptions
and on information currently available to our management. Any such
forward-looking statements would be contained principally in Managements
Discussion and Analysis of Financial Condition and Results of Operations and
Risk Factors. Forward-looking statements include information concerning our
possible or assumed future results of operations, business strategies, financing
plans, competitive position, industry environment, potential growth
opportunities and the effects of regulation. Forward-looking statements include
all statements that are not historical facts and can be identified by terms such
as anticipates, believes, could, estimates, expects, hopes,
intends, may, plans, potential, predicts, projects, should,
will, would or similar expressions.
Forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
our actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by the
forward-looking statements. We discuss many of these risks in greater detail in
Risk Factors. Given these uncertainties, you should not place undue reliance
on these forward-looking statements. Also, forward-looking statements represent
our managements beliefs and assumptions only as of the date of this report. You
should read this report and the documents that we reference in this report and
have filed as exhibits to the report completely and with the understanding that
our actual future results may be materially different from what we expect.
Except as required by law, we assume no obligation to update these
forward-looking statements publicly, or to update the reasons actual results
could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
Additional information
concerning these and other risks and uncertainties is contained in our filings
with the Securities and Exchange Commission, including the section entitled
Risk Factors in our Annual Report on Form 10-K for the year ended December 31,
2014.
Unless otherwise indicated
or the context otherwise requires, all references in this Form 10-Q to we,
us, our, our company, Bioheart or the Company refer to Bioheart, Inc.
and its subsidiaries.
Our Ability to Continue
as a Going Concern
Our independent registered
public accounting firm has issued its report dated March 16, 2015, in connection
with the audit of our annual financial statements as of December 31, 2014, 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 June 30, 2015
also describes the existence of conditions that raise substantial doubt about
our ability to continue as a going concern.
26
Overview
We are an emerging enterprise in the regenerative
medicine/cellular therapy industry. We are focused on the
discovery, development and commercialization of cell
based therapeutics that prevent, treat or
cure disease by repairing and
replacing damaged or aged tissue, cells and
organs and restoring their normal function.
Our business includes the
development of proprietary cell therapy
products as well as revenue generating physician and patient based regenerative medicine / cell therapy training services, cell collection and cell storage services,
the sale of cell collection and treatment kits for humans and
animals, and the operation of a cell therapy clinic.
US Stem Cell Training, (SCT), an
operating division of our company, is a
content developer of regenerative medicine/cell
therapy informational and training materials for
physicians and patients. SCT also provides
in-person and online training courses
which are delivered through in-person presentations at SCTs
state of the art facilities and globally at
university, hospital and physicians office
locations as well as through online webinars. Additionally,
SCT provides hands-on clinical application
training for physicians and health care
professionals interested in providing regenerative medicine / cell therapy procedures.
Vetbiologics, (VBI), an operating
division of our company, is a veterinary regenerative medicine company committed to providing veterinarians with the ability to
deliver the highest quality regenerative medicine therapies to dogs, cats and horses. VBI provides veterinarians with extensive
regenerative medicine capabilities including the ability to isolate regenerative stem cells from a patients own adipose
(fat) tissue directly on-site within their own clinic or stall-side.
US Stem Cell Clinic, LLC, (SCC), a
partially owned investment of our
company, is a physician run regenerative
medicine/cell therapy clinic providing
cellular treatments for patients afflicted with
neurological, autoimmune, orthopedic and
degenerative diseases. SCC is operating
in compliance with the FDA 1271s which allow for
same day medical procedures to be considered
the practice of medicine. We isolate stem
cells from bone marrow and adipose tissue and
also utilize platelet rich plasma.
Biohearts comprehensive map of products and services:
Regenerative medicine is defined as the
process of replacing or regenerating human cells, tissues or
organs to restore normal
function. Among the categories of therapeutic technology
platforms within this field are cell therapy;
tissue engineering; tools, devices and diagnostics, and aesthetic medicine. Our business model
is focused on two of these areas:
first, cell therapy, in which we introduce cells
(adult, donor or patient, stem cell or
differentiated) into the body to
prevent and treat disease; and second, we are
a provider of services and products to
physicians and veterinaries who
provide or seek to provide cellular therapies and direct
patient care for individuals and animals who
may benefit from cellular therapy.
27
All living complex organisms start as a single cell that replicates,
differentiates(matures) and perpetuates in an adult organism through its
lifetime. Cellular therapy is the process that uses cells to prevent, treat or
cure disease, or regenerate damaged or aged tissue. To date, the most common
type of cell therapy has been the replacement of mature, functioning cells such
as through blood and platelet transfusions. Since the 1970s, first bone marrow
and then blood and umbilical cord-derived stem cells have been used to restore
bone marrow, as well as blood and immune system cells damaged by the
chemotherapy and radiation that are used to treat many cancers. These types of
cell therapies are standard of practice world-wide and are typically reimbursed
by insurance.
Within the field of cell therapy, research and development using stem
cells to treat a host of diseases and conditions has greatly expanded. Stem
cells (in either embryonic or adult forms) are primitive and undifferentiated
cells that have the unique ability to transform into or otherwise affect many
different cells, such as white blood cells, nerve cells or heart muscle cells.
Our cell therapy development efforts are focused on the use of adult stem cells;
those cells which are found in the muscle, fat tissue and peripheral blood.
There are two general classes of cell therapies: Patient Specific Cell
Therapies ("PSCTs") and Off-the-Shelf Cell Therapies ("OSCTs"). In PSCTs, cells
collected from a person (donor) are transplanted, with or without
modification, to a patient (recipient). In cases where the donor and the
recipient are the same individual, these procedures are referred to as
autologous. In cases in which the donor and the recipient are not the same
individual, these procedures are referred to as allogeneic. Autologous cells
offer a low likelihood of rejection by the patient and we believe the long-term
benefits of these PSCTs can best be achieved with an autologous product. In the
case of OSCT, donor cells are expanded many fold in tissue culture, and large
banks of cells are frozen in individual aliquots that may result in treatments
for as many as 10,000 people from a single donor tissue. By definition, OSCTs
are always allogeneic in nature.
Various adult stem cell therapies are in clinical development for an
array of human diseases, including autoimmune, oncologic, neurologic and
orthopedic, among other indications. While no assurances can be given regarding
future medical developments, we believe that the field of cell therapy holds the
promise to better the human experience and minimize or ameliorate the pain and
suffering from many common diseases and/or from the process of aging.
According to Robin R. Youngs Stem Cell Summit Executive Summary-Analysis
and Market Forecasts 2014-2024, the United States stem cell therapy market is
estimated to grow from an estimated $237 million in 2013 to more than $5.7
billion in 2020.
Specific to cellular therapy, we are focused on the discovery,
development and commercialization of autologous cellular therapies for the
treatment of chronic and acute heart damage as well as vascular and autoimmune
diseases.
In our pipeline, we have multiple product candidates for the treatment of
heart damage, including MyoCell and Myocell SDF-1. MyoCell and MyoCell SDF-1 are
autologous muscle-derived cellular therapies designed to populate regions of
scar tissue within a patients heart with new living cells for the purpose of
improving cardiac function in chronic heart failure patients.
MyoCell SDF-1 is intended to be an improvement to MyoCell. MyoCell SDF-1
is similar to MyoCell but the myoblast cells to be injected for use in MyoCell
SDF-1 are modified prior to injection by an adenovirus vector or non-viral
vector so that they will release extra quantities of the SDF-1 protein, which
expresses angiogenic factors.
AdipoCell is a patient-derived cell therapy proposed for the treatment of
lower limb ischemia and potentially, among other autoimmune diseases, rheumatoid
arthritis. We hope to demonstrate that these product candidates are safe and
effective complements to existing therapies for chronic and acute heart damage.
28
Our Clinical Development Pipeline
Chart:
Our mission
is to advance to market novel regenerative
medicine and cellular therapy products
that substantially benefit humankind. Our business strategy is, to the
extent possible, finance our clinical development pipeline through revenue
(cash in-flows) generated through the
marketing and sales of unique educational and training services, animal
health products and personalized cellular
therapeutic treatments.
A fundamental shift in venture capital investment
strategies where, management believes, financial sponsorship is now directed
toward commercial or near commercial enterprises
has required us to adapt our mission combining
immediate revenue generating opportunities with longer-term
development programs. Accordingly, we have
developed a multifaceted portfolio of revenue generating
products and services in our US Stem Cell Training,
Vetbiologics, and US Stem Cell Clinic,
operating divisions that will, if successful,
financially support its clinical development
programs. Our goal is to maximize shareholder value through the generation of short-term profits that increase cash
in-flows and decrease the need for venture financings a modern biotechnology company
development strategy.
Today, our
company is a combination of opportunistic business
enterprises. We estimate that the products and
services we offer through US Stem Cell
Training, Vetbiologics, and US Stem Cell Clinics has
the potential, although we
cannot provide assurances as to if and when it will be accomplished, to drive up to $100 million dollars
in cumulative peak annual revenues. What we
are establishing is a foundation of value
in the products and services we are and plan
to sell from US Stem Cell Training, Vetbiologics, and
US Stem Cell clinics. Our strategy is to
expand the revenues generated from each of
these operating divisions and to reinvest
the profits we generate into our clinical
development pipeline.
On January
29th, 2015 we announced an update and
diversification of our clinical development
pipeline. Our cardiovascular and vascular
product candidates have been streamlined,
putting, we believe, our best opportunities
at the forefront of our efforts. The MYOCELL
and MYOCELL SDF-1 candidates
will, in our opinion, advance forward in the
treatment of chronic heart failure (CHF). We are in
active prospective partnering discussion for the
MYOCELL SDF-1 program. Partnering, we contend, will
enhance our capabilities, reduce our
development cost through cost
sharing and potentially accelerate our time to
approval and commercialization. We
will apply our ADIPOCELL technology to
the treatment of critical limb ischemia.
Additionally, we have expanded and diversified our clinical development
pipeline to include autoimmune disease, specifically
applying ADIPOCELL to the treatment of Rheumatoid
Arthritis (RA). We believe that updating
and diversifying our clinical development
programs increases the probability of our success,
brings operational and fiscal clarity to our
company, and will ultimately enhance shareholder
value.
29
We will continue to evaluate and act upon opportunities to increase our
top line revenue position and that correspondingly increase cash in-flows. These
opportunities include but are not limited to the development and marketing of
new products and services, mergers and acquisitions, joint ventures, licensing
deals and more.
Further, if the opportunity presents itself whereby we can raise
additional capital at a reasonable fair market value, our management will do so.
Accordingly, we plan to continue in our efforts to restructure, equitize or
eliminate legacy balance sheet issues that are obstacles to market
capitalization appreciation and capital fund raising.
Results of Operations
Overview
We are a research and development company and our MyoCell product
candidate has not received regulatory approval or generated any material
revenues and is not expected to until 2016, if ever. We have generated
substantial net losses and negative cash flow from operations since inception
and anticipate incurring significant net losses and negative cash flows from
operations for the foreseeable future as we continue clinical trials, undertake
new clinical trials, apply for regulatory approvals, make capital expenditures,
add information systems and personnel, make payments pursuant to our license
agreements upon our achievement of certain milestones, continue development of
additional product candidates using our technology, establish sales and
marketing capabilities and incur the additional cost of operating as a public
company.
Three Months Ended June
30, 2015 as compared to the Three Months Ended June 30, 2014
Revenues
We recognized revenues of
$565,307 for the three months ended June 30, 2015, generated from the sales of
kits and equipment, services, MyoCath Catheters, AdipoCell, and laboratory
services. We recognized revenues of $579,246 for the three months ended June 30,
2014 from the sale of MyoCath catheters, AdipoCell, physician training, patient
studies and laboratory services. The differential in revenue reflected a
moderate decrease based on the products and services provided.
Cost of
Sales
Cost of sales consists of
the costs associated with the production of MyoCath, laboratory supplies
necessary for laboratory services, production of AdipoCell systems and
materials, physician course materials, and clinic supplies required for patient
studies.
Cost of sales was $223,592
and $189,331 in the three month periods ended June 30, 2015 and 2014,
respectively. Associated gross margins were $341,715 (60.4%) and $389,915
(67.3%) for the three months periods ended June 30, 2015 and 2014, respectively.
The decrease in gross margin, quarter over quarter, is attributed to the mix of
product sales and the testing of lower pricing models to attempt to increase the
volume of certain product and service sales.
Research and
Development
Our research and
development expenses consist of costs incurred in identifying, developing and
testing our products and services. Research and development expenses were
$130,373 in the three month period ended in June 30, 2015, an increase of
$114,895 from the research and development expenses of $15,478 in the three
month period ended in June 30, 2014. Our increase is proportionate to our
increase in management focus on research and development and its corresponding
ongoing costs. The timing and amount of our planned research and development
expenditures is dependent on our ability to obtain additional
financing.
30
Marketing, General
and Administrative
Our marketing, general and
administrative costs were $690,248 for the three month period ended June 30,
2015 compared to $831,362 for the three month period ended June 30, 2014, a
decrease of $141,114. The decrease in costs primarily due to the reduction of
stock based compensation of $63,963 and reduction in commission expense of $74,377.
Our marketing, general and
administrative expenses primarily consist of the costs associated with our
general management and product and service marketing programs, including, but
not limited to, salaries and related expenses for executive, administrative and
marketing personnel, rent, insurance, legal and accounting fees, consulting
fees, travel and entertainment expenses, conference costs and other clinical
marketing and trade program expenses.
Gain on settlement of
debt
During the three months
ended June 30, 2015, we settled $1,585,862 in guarantor fees, accrued interest
of $373,469, and an outstanding note payable of $1,500,000, for a net gain of
$1,960,082. In addition, we incurred a gain of $19,098 in open accounts payable
during the current period as compared to a net aggregate gain of $93,422 for the
same period last year.
Interest
Expense
Interest expense during the
three months ended June 30, 2015 was $384,250 compared to $398,194 three months
ended June 30, 2014. Interest expense primarily consists of interest incurred on
the principal amount of the Northstar loan, our former Bank of America loan, the
Seaside National Bank loan, accrued fees and interest payable to the Guarantors,
the amortization of debt discounts and non-cash interest incurred relating to
our issued convertible notes payable. The debt discounts amortization and
non-cash interest incurred during the three months ended June 30, 2015 and 2014
was $293,558 and $224,130, respectively.
Six Months Ended June
30, 2015 as compared to the Six Months Ended June 30, 2014
Revenues
We recognized revenues of
$1,054,864 for the six months ended June 30, 2015, generated from the sales of
kits and equipment, services, MyoCath Catheters, AdipoCell, and laboratory
services. We recognize revenues of $971,420 for the six months ended June 30,
2014 from the sale of MyoCath catheters, AdipoCell, physician training, patient
studies and laboratory services. The increase in revenue resulted from the
growth of the sale of our products and services.
Cost of
Sales
Cost of sales consists of
the costs associated with the production of MyoCath, laboratory supplies
necessary for laboratory services, production of AdipoCell systems and
materials, physician course materials and clinic supplies required for patient
studies.
Cost of sales was $471,216
and $353,379 in the six month periods ended June 30, 2015 and 2014,
respectively. Associated gross margins were $583,648 (55.3%) and $618,041
(63.6%) for the six months periods ended June 30, 2015 and 2014, respectively.
The decrease in gross margin, period over period, is attributed to the mix of
product sales and the testing of lower pricing models to attempt to increase the
volume of certain product and service sales.
31
Research and
Development
Our research and
development expenses consist of costs incurred in identifying, developing and
testing our products and services. Research and development expenses were
$180,518 in the six month period ended in June 30, 2015, an increase of $155,183
from the research and development expenses of $25,335 in the six month period
ended in June 30, 2014. Our increase is proportionate to our increase in
management focus on research and development and its corresponding ongoing
costs. The timing and amount of our planned research and development
expenditures is dependent on our ability to obtain additional
financing.
Marketing, General
and Administrative
Our marketing, general and
administrative costs were $1,688,381 for the six month period ended June 30,
2015 compared to $1,669,691 for the six month period ended June 30, 2014, an
increase of $18,690 . The increase in costs primarily due to increases in
salaries from $325,000 for the six months ended June 30, 2014 to $436,558 for
the current period, an increase of $111,558, and our legal and consulting fees
decreased by $70,046 and $35,507, respectively, due to services
provided.
Our marketing, general and
administrative expenses primarily consist of the costs associated with our
general management and product and service marketing programs, including, but
not limited to, salaries and related expenses for executive, administrative and
marketing personnel, rent, insurance, legal and accounting fees, consulting
fees, travel and entertainment expenses, conference costs and other clinical
marketing and trade program expenses.
Gain on settlement of
debt
During the six months ended
June 30, 2015, we settled $1,585,862 in guarantor fees, accrued interest of
$373,469 and an outstanding note payable of $1,500,000 for a net gain of
$1,960,082. In addition, we incurred a gain of $78,528 in open accounts payable.
In the six month ended June 30, 2014, we settled outstanding debt and related
accrued interest for a net gain of $81,568, licensing fees settled for a gain of
$2,122,130, net with a loss on settlement of accounts payable of
$16,644.
Interest
Expense
Interest expense during the
six months ended June 30, 2015 was $814,092 compared to $704,092 six months
ended June 30, 2014. Interest expense primarily consists of interest incurred on
the principal amount of the Northstar loan, our former Bank of America loan, the
Seaside National Bank loan, accrued fees and interest payable to the Guarantors,
the amortization of debt discounts and non-cash interest incurred relating to
our issued convertible notes payable. The debt discounts amortization and
non-cash interest incurred during the six months ended June 30, 2015 and 2014
was $613,932 and $482,491, respectively.
Stock-Based
Compensation
Stock-based compensation
reflects our recognition as an expense of the value of stock options and other
equity instruments issued to our employees and non-employees over the vesting
period of the options and other equity instruments. We have granted to our
employees options to purchase shares of common stock at exercise prices equal to
the fair market value of the underlying shares of common stock at the time of
each grant, as determined by our Board of Directors, with input from
management.
32
The Company follows
Accounting Standards Codification subtopic 718-10. Compensation (ASC 718-10)
which requires that all share-based payments to both employee and non-employees
be recognized in the income statement based on their fair values.
In awarding our common
stock, our Board of Directors considered a number of factors, including, but not
limited to:
● |
our financial position and historical financial
performance; |
● |
arms length sales of our common stock; |
● |
the development status of our product
candidates; |
● |
the business risks we face; |
● |
vesting restrictions imposed upon the equity
awards; and |
● |
an evaluation and benchmark of our competitors;
and |
● |
prospects of a liquidity
event. |
In April 1, 2013, the Board
of Directors authorized, (and approved by our shareholders on February 2, 2015), the establishment
of the Bioheart 2013 Omnibus Equity Compensation Plan, or the 2013 Omnibus
Plan. The 2013 Omnibus Plan reserves up to fifty million shares of common stock
for issuance, subsequently increased to 100,000,000 on November 3, 2014. We
currently have 89,500,000 available to future issuances.
Critical Accounting
Policies
Our discussion and analysis
of our financial condition and results of operations is based upon our financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. While our critical
accounting policies are described in Note 1 to our financial statements
appearing elsewhere in this report, we believe the following policies are
important to understanding and evaluating our reported financial
results:
Revenue
Recognition
We recognize revenue in
accordance with Accounting Standards Codification subtopic 605-10, Revenue
Recognition (ASC 605-10) which requires that four basic criteria must be met
before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and
determinable; and (4) collectability is reasonably assured. Determination of
criteria (3) and (4) are based on managements judgments regarding the fixed
nature of the selling prices of the products delivered and the collectability of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded.
At the time of each
transaction, management assesses whether the fee associated with the transaction
is fixed or determinable and whether or not collection is reasonably assured.
The assessment of whether the fee is fixed or determinable is based upon the
payment terms of the transaction. Collectability is assessed based on a number
of factors, including past transaction history with the client and the
creditworthiness of the client.
33
Revenues for test kits and
equipment sold are not recorded until test kits are delivered. We have revenue
sharing arrangements for the sale of goods whereby the Company is the primary
obligor, sets pricing with the customers and bears all associated credit risks
with the customers. Sales under revenue share arrangements are recorded as gross
sales and any portion shared with third parties under such arrangements are
classified as selling expense due to the nature of the marketing activities
performed by the third party. Revenues from trainings are not recorded until the
completion of the training. Any cash received as a deposit for trainings are
recorded by the company as a liability.
Patent treatments and
laboratory services revenue are recognized when those services have been
completed or satisfied.
Revenues for bank sales are
accounted for as Multiple-Element Arrangements under ASC 605-10 which
incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element
Arrangements (ASC 605-25). ASC 605-25 addresses accounting for arrangements
that may involve the delivery or performance of multiple products, services
and/or rights to use assets.
Research and
Development Activities
We account for research and
development costs in accordance with Accounting Standards Codification subtopic
730-10, Research and Development (ASC 730-10). Under ASC 730-10, all research
and development costs must be charged to expense as incurred. Accordingly,
internal research and development costs are expensed as incurred. Third-party
research and development costs are expensed when the contracted work has been
performed or as milestone results have been achieved as defined under the
applicable agreement. Company-sponsored research and development costs related
to both present and future products are expensed in the period
incurred.
Derivative financial
instruments
Accounting Standards
Codification subtopic 815-40, Derivatives and Hedging, Contracts in Entitys own
Equity (ASC 815-40) became effective for the Company on October 1, 2009. The
Company has identified the embedded derivatives related to the issued Notes and
anti-dilutive warrants. These embedded derivatives included in our debt contain
certain conversion features and reset provision. The accounting treatment of
derivative financial instruments requires that the Company record fair value of
the derivatives as of the inception date of Asher Notes and to fair value as of
each subsequent reporting date.
Inflation
Our opinion is that
inflation has not had, and is not expected to have, a material effect on our
operations.
Climate
Change
Our opinion is that neither
climate change, nor governmental regulations related to climate change, have
had, or are expected to have, any material effect on our operations.
Concentrations of Credit
Risk
As of June 30, 2015, four
customers represented 13%, 7%, 6% and 16%, respectively aggregate of 42%
of the Companys accounts receivable. As of December 31, 2014, two customers
represented 38% and 17%, aggregate of 55%, of the Companys accounts
receivable.
34
Liquidity and Capital
Resources
In the six months ended
June 30, 2015, we continued to finance our considerable operational cash needs
with cash generated from financing activities.
Operating
Activities
Net cash used in operating
activities was $646,726 in the six month period ended June 30, 2015 as compared
to $507,059 of cash used in the six month period ended in June 30,
2014.
Our use of cash for
operations in the six months ended June 30, 2015 reflected a net loss generated
during the period of $161,623, adjusted for non-cash items such as stock-based
compensation of $269,301, depreciation of $2,619, amortization of debt discounts
of $425,629, and non-cash interest expense of $188,303, loss on change in fair
value of derivative liabilities of $113,731, net gain on settlement of debt of
$2,038,611 and income from investments of $12,308. In addition we had a net
decrease in operating assets of $4,377 and an increase in accrued expenses of
$221,950, in accounts payable of $242,956 and deferred revenue of
$37,100.
Investing
Activities
Net cash used in investing
activities was $61,166 for the six months ended June 30, 2015 were to acquire
office equipment of $894, additional investment of $10,000 and purchase of
treasury stock of $50,272 as compared to $6,366 of cash used for the purchase of equipment for the same period of
2014.
Buy-Back
Program
On January 13, 2015, we
issued a press release announcing that our Board of Directors approved a share
repurchase program authorizing us to repurchase outstanding common stock when
beneficially prudent for our company and our shareholders As of June 30, 2015,
we have purchased 8,343,200 shares of our common stock pursuant to our share
repurchase program.
Financing
Activities
Net cash provided by
financing activities was an aggregate of $764,752 in the six month period ended
June 30, 2015 as compared to $558,419 in the six month period ended in June 30,
2014. In the six month period ended June 30, 2015 we sold, in private
placements, shares of common stock and common stock purchase warrants for
aggregate net cash proceeds of $533,945 and received proceeds from issuance of
note payable of $315,000 net with repayments of related party notes payable of
$90,797 and received $6,604 related party advances.
Existing Capital
Resources and Future Capital Requirements
Our MyoCell product
candidate has not received regulatory approval or generated any material
revenues. We do not expect to generate any material revenues or cash from sales
of our MyoCell product candidate until commercialization of MyoCell, if ever. We
have generated substantial net losses and negative cash flow from operations
since inception and anticipate incurring significant net losses and negative
cash flows from operations for the foreseeable future. Historically, we have
relied on proceeds from the sale of our common stock and our incurrence of debt
to provide the funds necessary to conduct our research and development
activities and to meet our other cash needs.
35
At June 30, 2015, we had
cash and cash equivalents totaling $93,534. However our working capital deficit
as of such date was approximately $8 million. Our independent registered public
accounting firm has issued its report dated March 16, 2015 in connection with
the audit of our financial statements as of December 31, 2014 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 June 30, 2015 addresses
the issue of our ability to continue as a going concern.
Off-Balance Sheet
Arrangements
We do not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.
Item 3. Quantitative and
Qualitative Disclosures About Market Risk
Not required under
Regulation S-K for smaller reporting companies.
Item 4. Controls and
Procedures
Disclosure Controls
and Procedures
We maintain disclosure
controls and procedures, which are designed to ensure that information required
to be disclosed in the reports we file or submit under the Securities Exchange
Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions rules and
forms, and that such information is accumulated and communicated to our
management, including our CEO and Chief Accounting Officer, as appropriate, to
allow timely decisions regarding required disclosure.
Based on their evaluation,
as of June 30, 2015, our management has concluded that our disclosure controls
and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended) are effective to provide reasonable assurance
that information required to be disclosed by us in reports that we file or
submit under the Securities Exchange Act of 1934, as amended, is recorded,
summarized, processed and reported within the time periods specified in the
SECs rules and forms and to provide reasonable assurance that such information
is accumulated and communicated to our management as appropriate to allow timely
decisions regarding required disclosure.
Changes In Internal
Control Over Financial Reporting
There were no changes in
the Companys internal controls over financial reporting during the most
recently completed fiscal quarter that have materially affected or are
reasonably likely to materially affect the Companys internal control over
financial reporting.
PART II OTHER
INFORMATION
Item 1. Legal
Proceedings
On November 10, 2014, the
Company was served with a lawsuit by an alleged assignee and a guarantor to a
Loan Guarantee, Payment and Security Agreement. These parties claim breach of
that Agreement and damages of approximately $2.3 Million plus interest. The
assignor and assignee also sued the Companys directors and two past directors
and an affiliate shareholder for breach of fiduciary duty, claiming damages as
alleged creditors arising out of these parties alleged participation in
Northstar Biotech Group, LLC, a secured creditor of the Company. On June 1,
2015, the Company settled the lawsuit.
36
Apart from the above, our
Company is not involved in any material litigation pursuant to Item 103 of
Regulation S-K. However, the biotechnology and medical device industries have
been characterized by extensive litigation regarding patents and other
intellectual property rights. In addition, from time to time, we may become
involved in litigation relating to claims arising from the ordinary course of
our business.
Item 1A. Risk
Factors
Not required under
Regulation S-K for smaller reporting companies.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
During the six months ended
June 30, 2015, the Company sold an aggregate of 7,851,968 shares of the
Companys common stock and common stock purchase warrants to purchase 1,443,656
shares of the Companys common stock for aggregate gross cash proceeds of
$61,270. The warrants are (i) exercisable solely for cash at an exercise prices
of approximately $0.01127 per share, (ii) non-transferable for six months
following issuance and (iii) exercisable, in whole or in part, at any time
during the period commencing on the date that is six months and one day
following the date of issuance and ending on the tenth year anniversary of the
date of issuance.
The issuance of such shares
of our common stock was effected in reliance on the exemptions for sales of
securities not involving a public offering, as set forth in Rule 506 promulgated
under the Securities Act of 1933, as mended (the Securities Act) and in
Section 4(2) of the Securities Act, based on the following: the investors
confirmed to us that they were accredited investors, as defined in Rule 501 of
Regulation D promulgated under the Securities Act and had such background,
education and experience in financial and business matters as to be able to
evaluate the merits and risks of an investment in the securities; (b) there was
no public offering or general solicitation with respect to the offering; (c) the
investors were provided with certain disclosure materials and all other
information requested with respect to our company; (d) the investors
acknowledged that all securities being purchased were restricted securities
for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the Securities Act; and (e) a legend was placed on the certificates
representing each such security stating that it was restricted and could only be
transferred if subsequent registered under the Securities Act or transferred in
a transaction exempt from registration under the Securities Act.
Item 3. Defaults Upon
Senior Securities
There were no defaults upon
senior securities during the period ended June 30, 2015.
Item 4. Mine Safety
Disclosures
Not applicable.
Item 5. Other
Information
None
37
Item 6.
Exhibits
Exhibit
No. |
|
Exhibit
Description |
3.1(6) |
|
Amended and Restated Articles of Incorporation
of the registrant, as amended |
3.2(9) |
|
Articles of Amendment to the Articles of
Incorporation of the registrant |
3.3(8) |
|
Amended and Restated Bylaws |
4.1(5) |
|
Loan and Security Agreement, dated as of May
31, 2007 by and between BlueCrest Capital Finance, L.P. and the
registrant |
4.2(12) |
|
Notice of Event of Default, from BlueCrest
Venture Finance Master Fund Limited to the Company, dated January 28,
2009 |
4.3(12) |
|
Notice of Acceleration, from BlueCrest Venture
Finance Master Fund Limited to the Company, dated February 2,
2009 |
4.4(13) |
|
Amendment to Loan and Security Agreement,
between the Company and BlueCrest Venture Finance Master Fund Limited,
dated as of April 2, 2009 |
4.5(13) |
|
Grant of Security Interest (Patents), between
the Company and BlueCrest Venture Finance Master Fund Limited, dated as of
April 2, 2009 |
4.6(13) |
|
Security Agreement (Intellectual Property),
between the Company and BlueCrest Venture Finance Master Fund Limited,
dated as of April 2, 2009 |
4.7(13) |
|
Subordination Agreement, by Hunton &
Williams, LLP in favor of BlueCrest Venture Finance Master Fund Limited,
entered into and effective April 2, 2009 |
4.8(13) |
|
Amended and Restated Promissory Note, dated
April 2, 2009, by the Company to BlueCrest Venture Finance Master Fund
Limited |
4.9(13) |
|
Warrant to purchase 1,315,542 shares of the
registrants common stock, dated April 2, 2009, issued to BlueCrest
Venture Finance Master Fund Limited |
4.10(14) |
|
Warrant to purchase 451,043 shares of the
registrants common stock, dated April 2, 2009, issued to Rogers
Telecommunications Limited |
4.11(14) |
|
Warrant to purchase 173,638 shares of the
registrants common stock, dated April 2, 2009, issued to Hunton &
Williams, LLP |
4.12(4) |
|
Warrant to purchase shares of the registrants
common stock issued to Howard J. Leonhardt and Brenda
Leonhardt |
4.12(19) |
|
10% Convertible Promissory Note Due July 23,
2010, in the amount of $20,000, payable to Dana Smith |
4.13(19) |
|
10% Convertible Promissory Note Due July 23,
2010, in the amount of $100,000, payable to Bruce Meyers |
4.14(19) |
|
Registration Rights Agreement, dated July 23,
2009 |
4.15(4) |
|
Warrant to purchase shares of the registrants common stock issued to
the R&A Spencer Family Limited Partnership |
4.15(19) |
|
Subordination Agreement, dated July 23,
2009 |
4.16(19) |
|
Note Purchase Agreement, dated July 23,
2009 |
4.17(19) |
|
Closing Confirmation of Conversion Election,
dated July 23, 2009 |
4.20(6) |
|
Warrant to purchase shares of the registrants
common stock issued to Samuel S. Ahn, M.D. |
4.23(7) |
|
Warrant to purchase shares of the registrants
common stock issued to Howard and Brenda Leonhardt |
4.27(11) |
|
Form of Warrant Agreement for October 2008
Private Placement |
4.30(19) |
|
10% Convertible Promissory Note Due July 23, 2010, in
the amount of $100,000, payable to Bruce Meyers |
4.31(34) |
|
Series A Convertible Preferred
Stock |
38
4.32(35) |
|
Amendment to the Series A
Convertible Preferred Stock |
10.1**(1) |
|
1999
Officers and Employees Stock Option Plan |
10.2**(1) |
|
1999 Directors and Consultants
Stock Option Plan |
10.3(1) |
|
Form
of Option Agreement under 1999 Officers and Employees Stock Option
Plan |
10.4(3) |
|
Form of Option Agreement under
1999 Directors and Consultants Stock Option Plan |
10.5**(4) |
|
Employment Letter Agreement between the registrant and Scott
Bromley, dated August 24, 2006. |
10.6(1) |
|
Lease Agreement between the
registrant and Sawgrass Business Plaza, LLC, as amended, dated November
14, 2006. |
10.7(1) |
|
Asset Purchase Agreement between the registrant and Advanced
Cardiovascular Systems, Inc., dated June 24, 2003. |
10.8(4) |
|
Conditionally Exclusive License
Agreement between the registrant, Dr. Peter Law and Cell Transplants
International, LLC, dated February 7, 2000, as amended. |
10.9(4) |
|
Loan
Guarantee, Payment and Security Agreement, dated as of June 1, 2007, by
and between the registrant, Howard J. Leonhardt and Brenda
Leonhardt |
10.10(4) |
|
Loan Guarantee, Payment and
Security Agreement, dated as of June 1, 2007, by and between the
registrant and William P. Murphy Jr., M.D. |
10.11(4) |
|
Loan
Agreement, dated as of June 1, 2007, by and between the registrant and
Bank of America, N.A. |
10.13(4) |
|
Warrant to purchase shares of the
registrants common stock issued to Howard J. Leonhardt and Brenda
Leonhardt |
10.14(4) |
|
Warrant to purchase shares of the registrants common stock
issued to William P. Murphy, Jr., M.D. |
10.16(4) |
|
Material Supply Agreement, dated
May 10, 2007, by and between the registrant and Biosense
Webster |
10.17(5) |
|
Warrant to purchase shares of the registrants common stock
issued to BlueCrest Capital Finance, L.P. |
10.18(6) |
|
Loan Guarantee, Payment and
Security Agreement, dated as of September 12, 2007, by and between the
registrant and Samuel S. Ahn, M.D. |
10.19(6) |
|
Loan
Guarantee, Payment and Security Agreement, dated as of September 12, 2007,
by and between the registrant and Dan Marino |
10.21(6) |
|
Loan Guarantee, Payment and
Security Agreement, dated as of September 19, 2007, by and between the
registrant and Jason Taylor |
10.22(7) |
|
Loan
Guarantee, Payment and Security Agreement, dated as of October 10, 2007,
by and between the registrant and Howard and Brenda Leonhardt |
10.24(7) |
|
Second Amendment to Loan
Guarantee, Payment and Security Agreement, dated as of October 10, 2007,
by and between the registrant and Howard and Brenda Leonhardt |
10.25(7) |
|
Second Amendment to Loan Guarantee, Payment and Security
Agreement, dated as of October 10, 2007, by and between the registrant and
William P. Murphy, Jr., M.D. |
10.26**(10) |
|
Bioheart, Inc. Omnibus Equity
Compensation Plan |
10.28(11) |
|
Form
of Registration Rights Agreement for October 2008 Private
Placement |
10.29(19) |
|
10% Convertible Promissory Note
Due July 23, 2010, in the amount of $20,000, payable to Dana
Smith |
10.31(19) |
|
Registration Rights Agreement, dated July 23,
2009 |
10.32(19) |
|
Subordination Agreement, dated
July 23, 2009 |
10.33(19) |
|
Note
Purchase Agreement, dated July 23, 2009 |
10.34(19) |
|
Closing Confirmation of Conversion
Election, dated July 23, 2009 |
10.35**(20) |
|
Amended and Restated 1999 Directors and Consultants Stock
Option Plan |
10.36(21) |
|
Preliminary Commitment Letter with
Seaside National Bank and Trust, dated September 30, 2010. |
10.37(22) |
|
Loan
Agreement with Seaside National Bank and Trust, dated October 25,
2010. |
10.38(22) |
|
Promissory Note with Seaside
National Bank and Trust, dated October 25, 2010. |
10.39(22) |
|
Amended and Restated Loan and Security Agreement with
BlueCrest Venture Finance Master Fund Limited, dated October 25,
2010. |
39
10.40(23) |
|
Form of Subscription Agreement, executed
November 30, 2010. |
10.41(23) |
|
Form
of Common Stock Purchase Warrant, issued November 30, 2010. |
10.42(23) |
|
Form of Registration Rights Agreement, dated
November 30, 2010. |
10.43(24) |
|
Unsecured Convertible Promissory Note for
$25,000, with Magna Group, LLC, dated January 3, 2011. |
10.44(24) |
|
Promissory Note for $139,728.82 with Magna
Group, LLC, dated January 3, 2011. |
10.45(24) |
|
Securities Purchase Agreement with Magna Group,
LLC, dated January 3, 2011. |
10.46(24) |
|
Subordination Agreement, dated January 3,
2011. |
10.47(24) |
|
Notice of Conversion Election, dated January 3,
2011. |
10.48(25) |
|
Unsecured Convertible Promissory Note for
$34,750, with Magna Group, LLC, dated May 16, 2011. |
10.49(25) |
|
Promissory Note for $139,728.82 with Magna
Group, LLC, dated May 16, 2011. |
10.50(25) |
|
Securities Purchase Agreement with Magna Group,
LLC, dated May 16, 2011. |
10.51(25) |
|
Subordination Agreement, dated May 16,
2011. |
10.52(26) |
|
Promissory Note for $139,728.82 with Lotus
Funding Group, LLC, dated June 15, 2011. |
10.53(26) |
|
Partial Assignment and Modification Agreement,
dated June 15, 2011. |
10.54(26) |
|
Subordination Agreement, dated June 15,
2011. |
10.55(27) |
|
Promissory Note for $140,380.21 with Greystone
Capital Partners, dated July 8, 2011. |
10.56(27) |
|
Partial Assignment and Modification Agreement,
dated July 8, 2011. |
10.57(28) |
|
Subordination Agreement, dated July 8,
2011. |
10.58(29) |
|
Promissory Note for $139,728.82 with Greystone
Capital Partners, dated August 1, 2011. |
10.59(29) |
|
Partial Assignment and Modification Agreement,
dated August 1, 2011. |
10.60(29) |
|
Subordination Agreement, dated August 1,
2011. |
10.61(30) |
|
Promissory Note for $139,728.82 with Greystone
Capital Partners, dated September 1, 2011. |
10.62(30) |
|
Partial Assignment and Modification Agreement,
dated September 1, 2011. |
10.63(30) |
|
Subordination Agreement, dated September 1,
2011. |
10.64(31) |
|
Standby Equity Distribution Agreement dated as
of November 2, 2011. |
10.65(31) |
|
Registration Rights Agreement dated as of
November 2, 2011. |
10.66(32) |
|
Promissory Note for $139,728.82 with Greystone
Capital Partners, dated January 3, 2012 |
10.67(32) |
|
Term
Note B Promissory Note for $139,728.82 with Greystone Capital Partners,
dated January 3, 2012 |
10.68(32) |
|
Unsecured Convertible Promissory Note for
$63,000, with Asher Enterprises, Inc. dated April 2, 2012 |
10.69(32) |
|
Unsecured Convertible Promissory Note for
$125,000, with IBC Funds LLC., dated January 9, 2013 |
10.70(32) |
|
Unsecured Convertible Promissory Note for
$37,500, with Asher Enterprises, Inc. dated February 20, 2013 |
10.71(32) |
|
Unsecured Convertible Promissory Note for
$42,500, with Asher Enterprises, Inc. dated January 9, 2013 |
10.80(33) |
|
2013 Bioheart, Inc. Omnibus Equity Compensation
Plan |
10.81(34) |
|
Securities Purchase Agreement, dated as of
October 7, 2014, by and between Magna Holdings I, LLC and Bioheart,
Inc. |
10.82(34) |
|
Registration Rights Agreement, dated as of
October 7, 2014, by and between Magna Holdings I, LLC and Bioheart,
Inc. |
10.83(34) |
|
Common Stock Purchase Agreement, dated as of
October 23, 2014, by and between Magna Equities II, LLC and Bioheart,
Inc. |
10.84(34) |
|
Registration Rights Agreement, dated as of
October 23, 2014, by and between Magna Equities II, LLC and Bioheart,
Inc. |
10.85**(35) |
|
2013
Omnibus Equity Compensation Plan Amendment One. |
14.2(2) |
|
Code
of Business Conduct and Ethics |
31.1* |
|
Certification Pursuant to 18 U.S.C. Section
1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
32.1* |
|
Certification Pursuant to 18 U.S.C. Section
1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 |
40
* |
|
Filed herewith |
** |
|
Indicates management contract or compensatory
plan. |
(1) |
|
Incorporated by reference to the Companys Form
S-1 filed with the Securities and Exchange Commission (the SEC) on
February 13, 2007. |
(2) |
|
Incorporated by reference to Amendment No. 1 to
the Companys Form S-1 filed with the SEC on June 5, 2007. |
(3) |
|
Incorporated by reference to Amendment No. 2 to
the Companys Form S-1 filed with the SEC on July 12, 2007. |
(4) |
|
Incorporated by reference to Amendment No. 3 to
the Companys Form S-1 filed with the SEC on August 9, 2007. |
(5) |
|
Incorporated by reference to Amendment No. 4 to
the Companys Form S-1 filed with the SEC on September 6,
2007. |
(6) |
|
Incorporated by reference to Amendment No. 5 to
the Companys Form S-1 filed with the SEC on October 1, 2007. |
(7) |
|
Incorporated by reference to Post-effective
Amendment No. 1 to the Companys Form S-1 filed with the SEC on October
11, 2007. |
(8) |
|
Incorporated by reference to the Companys
Current Report on Form 8-K filed with the SEC on July 3,
2008. |
(9) |
|
Incorporated by reference to the Companys
Current Report on Form 8-K filed with the SEC on August 8,
2008. |
(10) |
|
Incorporated by reference to the Companys
Quarterly Report on Form 10-Q filed with the SEC on August 14,
2008. |
(11) |
|
Incorporated by reference to the Companys
Quarterly Report on Form 10-Q filed with the SEC on November 14,
2008. |
(12) |
|
Incorporated by reference to the Companys
Current Report on Form 8-K filed with the SEC on February 3,
2009. |
(13) |
|
Incorporated by reference to the Companys
Current Report on Form 8-K filed with the SEC on April 8,
2009. |
(14) |
|
Incorporated by reference to the Companys
Annual Report on Form 10-K filed with the SEC on April 15,
2009. |
(15) |
|
Incorporated by reference to the Companys
Annual Report on Form 10-K/A filed with the SEC on April 30,
2009. |
(16) |
|
Incorporated by reference to the Companys
Current Report on Form 8-K filed with the SEC on May 18,
2009. |
(17) |
|
Incorporated by reference to the Companys
Quarterly Report on Form 10-Q filed with the SEC on May 20,
2009. |
(18) |
|
Incorporated by reference to the Companys
Current Report on Form 8-K filed with the SEC on July 9,
2009. |
41
(19) |
|
Incorporated by reference to the
Companys Current Report on Form 8-K filed with the SEC on August 3,
2009. |
(20) |
|
Incorporated by reference to Exhibit 4.6 to the Companys
Post-Effective Amendment to Registration Statement on Form S-8/A, filed
with the SEC on June 2, 2010. |
(21) |
|
Incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the
SEC on October 6, 2010. |
(22) |
|
Incorporated by reference to the Companys Current Report on
Form 8-K filed with the SEC on October 29, 2010. |
(23) |
|
Incorporated by reference to the
Companys Current Report on Form 8-K filed with the SEC on December 6,
2010. |
(24) |
|
Incorporated by reference to the Companys Current Report on
Form 8-K filed with the SEC on January 12, 2011. |
(25) |
|
Incorporated by reference to the
Company Current Report on Form 8-K filed with the SEC on May 25,
2011 |
(26) |
|
Incorporated by reference to the Company Current Report on
Form 8-K filed with the SEC on June 21, 2011 |
(27) |
|
Incorporated by reference to the
Companys Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on August 15. 2011 |
(28) |
|
Incorporated by reference to the Companys Quarterly Report
on Form 10-Q filed with the Securities and Exchange Commission on November
14, 2011 |
(29) |
|
Incorporated by reference to the
Company Current Report on Form 8-K filed with the SEC on January 13,
2012 |
(30) |
|
Incorporated by reference to the Company Current Report on
Form 8-K filed with the SEC on January 30, 2012 |
(31) |
|
Incorporated by reference to the
Company Registration Statement on Form S-1/A filed with the SEC on
February 8, 2012 |
(32) |
|
Incorporated by reference to the Company Annual Report on
Form 10-K filed with the SEC on March 29, 2013 |
(33) |
|
Incorporated by reference to the
Company Quarterly Report on Form 10-Q filed with the SEC on May 9,
2013 |
(34) |
|
Incorporated by reference to the Companys Registration
Statement on Form S-1/A filed with the SEC on December 12,
2014. |
(35) |
|
Incorporated by reference to the
Companys Definitive Proxy Statement on Schedule 14A filed with the SEC on
December 19, 2014. |
42
Exhibit
No. |
|
Exhibit
Description |
31.1* |
|
Certification Pursuant to 18 U.S.C. Section
1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
32.1* |
|
Certification Pursuant to 18 U.S.C. Section
1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 |
101.INS |
|
XBRL Instance Document |
101.SCH |
|
XBRL
Taxonomy Extension Schema Document |
101.CAL |
|
XBRL Taxonomy Calculation Linkbase
Document |
101.LAB |
|
XBRL
Taxonomy Labels Linkbase Document |
101.PRE |
|
XBRL Taxonomy Presentation Linkbase
Document |
101.DEF |
|
XBRL
Definition Linkbase Document |
43
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
|
|
Bioheart, Inc. |
|
Date: August 3, 2015 |
By: |
/s/Mike Tomas |
|
|
Mike
Tomas |
|
|
Chief Executive Officer & |
|
|
President and Principal Financial |
|
|
and
Accounting Officer |
44
Exhibit 31.1
Certification of Chief
Executive Officer and Principal Accounting Officer
I, Mike Tomas, certify
that:
1. |
I have reviewed this report on Form 10-Q of Bioheart,
Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report; |
|
3. |
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
report; |
|
4. |
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
a. |
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, is made known to us
by others within those entities, particularly during the period in which
this report is being prepared; |
|
|
b. |
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles; |
|
|
c. |
evaluated
the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and |
|
|
d. |
disclosed
in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent
fiscal quarter (the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial
reporting; and |
|
5. |
The registrants other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions): |
|
|
a. |
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrants ability to record,
process, summarize and report financial information; and |
|
|
b. |
any fraud,
whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over
financial reporting. |
|
Date: August 3, 2015 |
|
|
|
|
/s/ Mike Tomas |
|
Name: |
Mike
Tomas |
|
|
President and Chief Executive
Officer |
|
|
Chief Financial Officer and
Principal |
|
|
Accounting
Officer |
Exhibit
32.1
CERTIFICATION OF CHIEF
EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT
TO
18 U.S.C. SECTION
1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Mike Tomas, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge, Bioheart, Inc.s Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2015 fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 and that
(1) The Report fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and
(2) The information
contained in the Report fairly presents, in all material respects, the financial
condition and result of operations of the Company.
Date: August 3,
2015
|
/s/ Mike Tomas |
Name: |
Mike
Tomas |
|
President and Chief Executive Officer
Chief |
|
Financial Officer and Principal
Accounting |
|
Officer |
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